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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Cleardebt Grp | LSE:CLEA | London | Ordinary Share | GB0003083390 | ORD 0.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMCLEA
RNS Number : 5039R
Cleardebt Group PLC
20 November 2012
ClearDebt Group plc ("ClearDebt" or "the Group")
Preliminary announcement of un-audited results for the year ended 30 June 2012
ClearDebt presents another good set of financial results
Financial Highlights: Good financial performance in the year. Total clients now number over 13,000. Disappointing numbers of new IVAs in the second half of the financial year, which has continued since the year-end, offset by a stronger debt management performance.
Hot Features
Premium
% increase 2012 2011
Revenue 18 GBP9,203,453 GBP7,776,362
Gross Profit 18 GBP4,678,074 GBP3,963,959
EBITDA 23 GBP2,737,967 GBP2,222,411
Operational Highlights: Disappointing new IVA numbers, although revenue from the provision of consultancy services related to the IVA business has been strong. Good performance from our debt management business which continues to grow.
Number of new IVAs
Period % increase/(decrease) 2012 2011
First quarter 37 488 355
Second quarter (15) 345 407
Third quarter (34) 273 411
Fourth quarter (18) 353 428
-- Abacus, ClearDebt's debt management plan subsidiary continues to make a profit and handles all of the Group's sales activity. It has benefited from an increase in debt management clients.
-- In line with trends in the market place ClearDebt has seen a reduction in new IVA numbers as well as average income from new IVAs. Revenue from financial consultancy related to the IVA business has grown strongly in the year although this is not expected to continue at current levels.
-- ClearCash prepaid master card successfully migrated to a new service platform giving cardholders the ability to set up direct debits as well as allocating them their own sort code and account number. Some duplication of costs arising from migration was incurred. However we now have the ability of offering similar facilities to those of a traditional bank account by the use of ClearCash's on-line iCount.
Outlook
-- The IVA market has plateaued and the numbers of new cases are not rising as expected due to declining disposable incomes of consumers and some resistance by certain creditors to the solution. New initiatives to increase market penetration whilst also considering new models to offer IVAs at much reduced levels of contribution are being examined.
-- Revenue from financial consultancy related to the IVA business has been excellent although part of this is one off in nature which is not expected to continue at these levels in the current year. Now focused on accumulating cash to repay the convertible bond in April 2013 with cash balances in excess of GBP1 m and increasing.
-- Current economic outlook in the UK with unemployment showing no signs of falling together with high taxation and continued public sector cuts leaves the Group well placed for another profitable year.
David Mond, CEO of ClearDebt commented
"The Group has enjoyed a good year in terms of profitability and cash flow although this has to be tempered by lower numbers of new IVA cases particularly in the second half of the financial year. This is a disappointing result but one that I feel is being mirrored by many in the sector as the IVA market as a whole remains flat at best. Against this we have been successful in generating substantial income from consultancy related to the IVA business, although it is not expected to continue at these levels in the current financial year.
I am pleased however to report that Abacus has returned to growth in DMP client numbers and profitability. Additionally I am very pleased with the number of new clients taking up our ClearCash prepaid MasterCard which now has similar features to those of a traditional bank account using its on-line platform (iCount).
We are now focused on accumulating cash to repay the convertible bond in April 2013 with cash balances currently now in excess of GBP1m and increasing.
Given the current economic outlook in the UK with unemployment showing no signs of falling substantially, together with high taxation and continued public sector cuts, I believe the Group is still well placed for another profitable year."
Enquiries:
ClearDebt Group plc David Mond, Chief Executive Officer
Tel No: 0161 968 6806
Seymour Pierce Limited Guy Peters (Corporate Finance)
(Broker and Nominated Adviser) David Banks/Katie Ratner (Corporate Broking)
Tel No: 020 7107 8000
Chairman's Statement
I am delighted to present the Group's results for the year ended 30 June 2012.
The Group increased revenue to GBP9,203,453 (2011: GBP7,776,362) producing an increased gross profit of GBP4,678,074 (2011: GBP3,963,959). Earnings before interest, tax, depreciation and amortisation increased to GBP2,737,967 (2011: GBP2,222,411) resulting in a substantial pre-tax profit for the year of GBP834,758 (2011: GBP227,219) after finance charges of GBP585,611 (2011: GBP532,404) and amortisation relating to the acquisition of back books and other intangibles of GBP1,199,481 (2011: GBP1,388,809). Profit after taxation was GBP591,257 (2011: GBP71,036).
During the first quarter of the financial year the Group acquired a further tranche of new IVAs for GBP259,880 resulting in a gain on bargain purchase of GBP27,089.
At the year end the group had net assets of GBP5,827,562 (2011: GBP5,150,582) including cash of GBP462,459 (2011: GBP336,636) after spending GBP259,880 on back book acquisitions (2011: GBP1,088,783) in the year financed out of cash flow. In addition GBP700,000 of loans was repaid in the year (2011: net new loans of GBP315,000).
Following the Paymex ruling the Group received some GBP750,000, including interest, prior to the year end in respect of our claim to recover VAT which had been incorrectly charged on IVAs. The money has been placed into a client account although we have since the year end refunded the VAT due to the open cases and the element of VAT that is due to the Group in respective of nominee fees. We will shortly commence the process of distributing the VAT on closed cases. At the 30 June 2012 the Group had accrued revenue of GBP338,000 based upon estimates of the revenues expected to arise to the Group out of the VAT refund process.
I am pleased to say that, excluding acquired back books of debt management clients, Abacus has started again to grow the number of clients under debt management despite current market conditions.
The numbers of new IVAs have, however, particularly in the second half of the year, been disappointing with only 1,459 new IVAs passed in the year (2011: 1,601). Whilst sales of new IVAs have been disappointing the Group has benefitted from significant income in the year generated from consultancy related to the IVA business. This income includes items which are one off in nature and whilst it will continue in the current financial year we expect it will be at lower levels than have been seen previously.
We continue to invest in various marketing activities to increase the number of new IVAs being passed and continue to concentrate on managing overheads as we accumulate cash in readiness to repay the convertible bond due in April 2013.
Gerald Carey FCIB
Chairman
19 November 2012
Chief Executive's Statement
The Group has enjoyed a good year in terms of profitability and cash flow although this has to be tempered by lower numbers of new IVA cases particularly in the second half of the financial year. During the year 1,459 (2011: 1,601) new IVAs were passed. In addition some 120 new IVAs were acquired in the first quarter of the financial year and as at 30 June 2012 the total number of IVAs and PTDs generating income was 6,504 (2011: 5,893).
The number of new IVAs is disappointing but I feel that this position is being mirrored by many in the sector as the IVA market as a whole remains flat at best. In addition, clients' average disposable incomes after basic living expenses continue to fall as household food and energy costs remain high which has the effect of reducing fees for new IVAs as they are geared towards the level of contributions paid by clients.
I am pleased however to report that Abacus has returned to growth in DMP client numbers, excluding acquired back books, and as at 30 June 2012, the total number of active DMPs under management was 6,566 (2011: 5,761).
We have been successful in generating substantial income from consultancy related to the IVA business to offset the lower IVA numbers. Income from this source has increased substantially in the current year with revenue generated of GBP1,307,992 (2011: GBP361,341). Whilst I expect revenue from this source to continue into the new financial year it will continue at lower levels as certain elements of a non-recurring nature drop out.
We continue to invest in the training of our staff with many having obtained the Certificate of Debt Resolution (CertDR), exclusively offered by the Debt Resolution Forum ("DRF"), and many more are progressing towards the qualification. I am proud of the culture within our organisation for training and the focus on the highest ethical standards which will keep us well ahead of industry standards and compliance in the United Kingdom. I am also pleased with our commitment in supporting the DRF in all of its activities especially ensuring representation on many government and industry wide committees in our sector.
We have continued to reduce our dependency on internet advertising and increasingly are focused upon referral sources for client leads together with the acquisition of good quality data for our now well established call centre. We constantly try to diversify and expand our referral base in an effort to boost the numbers of new clients to the business.
Cash flow remains good and we are now focused on accumulating cash to repay the convertible bond in April 2013 with cash balances currently now in excess of GBP1m and increasing.
OPERATIONAL REVIEW
ClearDebt - IVA Division
Since 1 July 2011 (2011: 1 July 2010), the following numbers of new IVAs have been arranged through ClearDebt:-
Year ended Year ended
30 June 2012 30 June 2011
First quarter 488 355
Second quarter 345 407
Third quarter 273 411
Fourth quarter 353 428
____ ____
1,459 1,601
____ ____
The numbers of new IVAs in the second half of the financial year have been disappointing and this has continued since the year end. New IVAs passed in the year declined by 9% to 1,459 from 1,601 new cases in 2010/11. We acquired the income stream from some 120 IVAs in the year and, including this purchase, we had as at 30 June 2012 a total of 6,566 (2011: 5,893) IVAs and PTDs generating income.
Revenue of GBP1,307,992 (2011: GBP361,341) from consultancy income related to the IVA business has increased substantially in the year to offset the lower numbers of new IVAs. This year has benefitted from items which are one off in nature and whilst we continue to expect significant revenue from this source we expect income to be lower in the new financial year as it returns to more normal levels.
The Board monitors several key performance indicators ("KPIs") for the business on a monthly basis including the number of cases passed, various conversion ratios from lead to cases passed, the cost per case acquired and the staff to caseload numbers. Whilst reduced numbers of leads and referrals has led to lower numbers of cases passed, all other indicators remain within expectations.
Abacus- Debt Management Division
The division made a pleasing profit in the period with DMP client numbers, excluding acquired back books, starting to increase again month on month since January 2012.
As at 30 June 2012, the total number of DMPs generating income was 6,566 (2011: 5,761). Our attrition rates on DMPs are well within our normal expectations and we continue to look to acquire back books as a means of boosting income over the short and medium term.
The Board has KPIs to monitor the number of active income generating plans as well as the value of monthly payments made by debtors. The costs of acquisition of cases and plans are also monitored closely. We continue to resist the temptation to grow the book through lead sources providing leads at what are, in our view, uneconomic prices.
ClearCash - prepaid MasterCard
Steady progress continues to be made with our Pre-Paid MasterCard, ClearCash, although it has yet to reach a break even position. Increased losses in the current year as compared to 2011 have arisen due to the decision in December 2011 to switch service providers to enhance the card functionality. This has led to duplicated costs whilst we wind down the old card and switch clients to the new ClearCash card which was successfully migrated in July 2012 - but we believe the switch will be a worthwhile one for future card sales.
The new ClearCash card has increased functionality, in particular giving card holders their own unique sort code and account number. This not only gives cardholders the feel of a traditional bank account but also allows them to set up direct debits for the first time giving them the full functionality they require. Following the successful migration of current card holders we will start actively marketing the new card to our extensive database.
As card numbers increase we expect the card to produce a profit next year.
FINANCIAL REVIEW
Group turnover increased by 18% to GBP9,203,453 (2011: GBP7,776,362) and gross profit by 18% toGBP4,678,074 (2011: GBP3,963,959). The performance was driven by the consultancy income related to the IVA business as well as revenue generated from our substantial IVA and DMP back books. Amortisation charges in respect of acquisitions and impairment amounted to GBP1,199,481 (2011: GBP1,388,809).
Finance costs rose to GBP585,611 (2011: GBP532,404 ) reflecting the continued accrual of interest due in respect of the three year 10% secured convertible loan notes which are due for repayment in April 2013. Actual interest paid in respect of the convertible totalled GBP230,000 with the balance being an accounting charge for the redemption premium due on maturity in 2013.
Cash resources at the year-end amounted to GBP462,459 (2011: GBP336,636) after back-book acquisitions of some GBP259,880 (2011: GBP1,088,783) and repayment of loans of GBP700,000 (2011: net loans advanced GBP315,000). Operational cash flow remains strong and cash balances at the end of September 2012 were in excess of GBP1m as we continue to build cash for repayment of the convertible.
GOING CONCERN
As part of its going concern review the Board has followed the guidelines published by the Financial Reporting Council entitled "Going Concern and Liquidity Risk: Guidance for UK Companies 2009". The Board has prepared detailed financial forecasts and cash flows for the three years to 30 June 2015 and in drawing up these forecasts the Board has made assumptions based upon its view of the current and future economic conditions in the UK that will prevail over the forecast period - given that the business is likely to be solely focused on the UK market for the foreseeable future. The timing of the cash flows in respect of loans provided has been taken into consideration and in addition to the forecasts we have produced sensitivities to these forecasts to test our ability to trade as a going concern for at least the following 12 months.
The Board believes that the use of the going concern basis of accounting is appropriate based upon a review of these forecasts and finance available to the Group.
FUTURE OUTLOOK
The IVA market has plateaued and the numbers of new cases are not rising as expected due to declining disposable incomes of consumers and some resistance by certain creditors to the solution. We are working on initiatives to increase our penetration whilst also considering new models to offer IVAs at much reduced levels of contribution to enable consumers to enter this solution.
We continue to look for acquisitions of client books wherever we can at reasonable prices to supplement our growth as we know these can be highly profitable given the ease with which we can assimilate them into our scalable business model and systems.
Given the current economic outlook in the UK with unemployment showing no signs of falling together with high taxation and continued public sector cuts I believe the Group is still well placed for another profitable year.
I would like to take this opportunity to thank all our staff for their dedication and hard work over the last year and for their continuing advice and assistance to our thousands of clients.
David Emanuel Merton Mond FCA FCCA
Chief Executive Officer
19 November 2012
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2012
2012 2011
Notes GBP GBP
Revenue
- on-going 2 9,056,403 7,582,367
- acquisitions 147,050 193,995
_________ _________
9,203,453 7,776,362
Cost of sales (4,525,379) (3,812,403)
_________ _________
Gross profit 4,678,074 3,963,959
Administrative expenses (1,854,384) (1,678,623)
Share based payment (85,723) (62,925)
_________ _________
Profit before interest, tax,
depreciation and amortisation 2,737,967 2,222,411
Depreciation (147,490) (132,437)
Amortisation (1,199,481) (1,388,809)
Gain on bargain purchase 3 27,089 54,985
_________ _________
Profit from operations 2 1,418,085 756,150
Profit from continuing operations 1,371,105 747,112
Profit from acquisitions 46,980 9,038
Finance costs 4 (585,611) (532,404)
Finance income 2,284 3,473
_________ _________
Profit before taxation 834,758 227,219
Taxation 5 (243,501) (156,183)
_________ _________
Profit after taxation and total comprehensive
income for year 591,257 71,036
_________ _________
Amount attributable to:
Owners of the parent 591,257 71,036 _________ _________
Earnings per ordinary share - basic (pence) 6 0.19p 0.02p
Earnings per ordinary share - diluted (pence) 6 0.19p 0.02p
_________ _________
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2012
Notes 2012 2011
GBP GBP
Assets
Non-current assets
Intangible assets 5,626,779 6,476,691
Property, plant and equipment 375,593 252,998
Deferred taxation 72,034 78,188 __________ _________
6,074,406 6,807,877
Current assets
Trade and other receivables 3,428,878 2,181,959
Cash and cash equivalents 462,459 336,636
__________ _________
3,891,337 2,518,595
__________ _________
Total assets 9,965,743 9,326,472
__________ _________
Equity and liabilities
Equity
Issued capital 6,166,812 6,166,812
Share premium 279,948 279,948
Share based compensation 289,035 203,312
Other reserves 96,495 96,495
Retained losses (1,004,728) (1,595,985)
__________ _________
Total equity attributable to the owners of the parent 5,827,562 5,150,582
__________ _________
Current liabilities 7
Trade and other payables 912,166 698,255
Corporation tax payable 263,970 92,662
Current financial liabilities 2,597,306 - __________ _________
3,773,442 790,917
Non-current liabilities
Financial liabilities 8 315,000 3,318,309
Deferred taxation 49,739 66,664
__________ _________
Total liabilities 4,138,181 4,175,890
__________ _________
Total equity and liabilities 9,965,743 9,326,472
__________ _________
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
Issued Share Share Share Based Other Retained Total
Capital Premium Compensation Reserves Losses Equity
GBP GBP GBP GBP GBP GBP
Balance as at 1 July 2010 6,166,812 279,948 140,387 96,495
(1,667,021) 5,016,621
Share based compensation - - 62,925 - - 62,925
Total comprehensive income - - - - 71,036 71,036
for the year
________ ________ ________ _______ ________ ________
Balance as at 30 June 2011 6,166,812 279,948 203,312 96,495
(1,595,985) 5,150,582
Share based compensation - - 85,723 - - 85,723
Total comprehensive income - - - - 591,257 591,257
for the year
________ ________ ________ _______ _________ ________
Balance as at 30 June 2012 6,166,812 279,948 289,035 96,495
(1,004,728) 5,827,562
________ ________ ________ _______ _________ ________
Share capital
Share capital has arisen on the issue of shares and represents the nominal value of shares issued.
Share premium
The share premium account arose from the issue of equity shares above the nominal value less share issue costs.
Share based compensation
This reserve is the result of the Company's grant of equity settled share options and warrants and measured in accordance with IFRS2 share-based payment.
Other reserve
This reserve is the result of the Company's issue of secured convertible loan notes in April 2010 in accordance with IAS 32 - Financial Instruments: Presentation.
Retained losses
The retained losses reflect losses incurred to date.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2012
2012 2011
GBP GBP
Cash flow from continuing operating activities
Profit before taxation 834,758 227,219
Depreciation of property, plant and equipment 147,490 132,437
Amortisation of intangible assets 1,199,481 1,388,809
Gain on bargain purchase (27,089) (54,985)
Profit on sale of fixed assets (1,739) -
Share based payment 85,723 62,925
Increase in trade and other receivables (1,246,980) (928,733)
Finance costs 585,611 532,404
Finance income (2,284) (3,473)
Increase/(decrease)in trade and other payables 213,973 (310,896)
_________ _________
Cash generated by operations 1,788,944 1,045,707
Corporation tax (paid)/refunded (91,995) 8,794
_________ _________
Net cash generated by operating activities 1,696,949 1,054,501
Investing activities
Acquisition of business and assets (267,080) (1,088,783)
Acquisition of intangibles (46,370) (37,170)
Acquisition of property, plant and equipment (270,085) (157,443)
Finance income 2,284 3,473
Sale of property, plant and equipment 1,739 -
_________ _________
Net cash used in investing activities (579,512) (1,279,923)
Financing activities
Repayment of existing loans (700,000) -
Proceeds from new loans advanced - 315,000
Interest on loans (291,614) (294,446)
_________ _________
Cash (used by)/generated from financing activities (991,614) 20,554
Increase/(decrease) in cash and cash equivalents 125,823 (204,868)
Opening cash and cash equivalents 336,636 541,504
_________ _________
Closing cash and cash equivalents 462,459 336,636
_________ _________
1. Basis of Preparation
The preliminary financial information does not constitute full accounts within the meaning of section 434 of the Companies Act 2006 but is derived from accounts for the years ended 30 June 2012 and 30 June 2011 and is unaudited.
The auditors anticipate issuing a qualified report on the 30 June 2012 financial statements arising as a result of a limitation of scope. That limitation arises from the auditors' inability, in respect of consultancy revenues recognised during the year totalling GBP1,307,992, to obtain sufficient appropriate evidence as to:
1) the substance of the services provided; or
2) whether the amounts recognised have been correctly stated and/or recognised in the correct accounting period, or in accordance with the terms of the contract which governs these revenues.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not in itself contain sufficient information to comply with IFRSs.
ClearDebt Group plc is incorporated and domiciled in the United Kingdom. The consolidated financial information of ClearDebt Group plc set out in this announcement is presented in Pounds Sterling (GBP), which is also the functional currency of the parent. The consolidated financial information has been approved for issue by the Board of Directors on 19 November 2012.
Statutory accounts for the year ended 30 June 2011 have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis, without qualifying their report, and did not contain any statement under Section 498 (2) or 498 (3) of the Companies Act 2006.
2. Segmental Information
The Group's total income, profit before taxation and net assets were all derived from its principal activities being the provision of IVAs and other financial advice and appropriate solutions to individuals experiencing personal debt problems. All the Group's activities were undertaken wholly in the United Kingdom.
During the year ClearDebt Limited had one customer which accounted for revenue of GBP1,443,351 (2011: GBP361,341). Of this revenue, GBP1,307,992 (2011: GBP361,341) is from the provision of consultancy services and has been reported on as part of the insolvency segment of the business as it is not separately identified to, and reviewed by, the Group's chief operating decision maker. A further GBP135,359 (2011: GBPnil) relates to the management of debt management clients and is recorded within the debt management segment of the business.
Year ended 30 June 2012
Debt Total Debt Total
Insolvency Management 2012 Insolvency Management 2011
GBP GBP GBP GBP GBP GBP
Revenue
- On-going 6,144,226 2,912,177 9,056,403 4,843,540 2,738,827 7,582,367
- Acquisition 147,050 - 147,050 - 193,995 193,995
_________ _________ _________ _________ _________ _________
Total Revenue 6,291,276 2,912,177 9,203,453 4,843,540 2,932,822 7,776,362
Cost of sales (2,796,908) (1,728,471) (4,525,379)
(2,355,997) (1,456,406) (3,812,403)
_________ _________ _________ _________ _________ _________
Gross Profit 3,494,368 1,183,706 4,678,074 2,487,543 1,476,416 3,963,959
Administrative expenses (1,174,368) (680,016) (1,854,384) (1,072,653)
(605,970) (1,678,623)
Share based payment (47,310) (38,413) (85,723) (30,380) (32,545) (62,925)
________ _________ _________ _________ _________ _________
Profit before interest, tax
depreciation and amortisation 2,272,690 465,277 2,737,967 1,384,510
837,901 2,222,411
Depreciation (106,183) (41,307) (147,490) (59,674) (72,763) (132,437)
Amortisation (1,031,677) (167,804) (1,199,481) (892,425) (496,384) (1,388,809)
Gain on bargain purchase 27,089 - 27,089 33,648 21,337 54,985
________ _________ _________ _________ _________ _________
Profit from operations 1,161,919 256,166 1,418,085 466,059 290,091 756,150
Finance costs (468,489) (117,122) (585,611) (374,368) (158,036) (532,404)
Finance income 2,284 - 2,284 3,473 - 3,473
_________ _________ _________ _________ _________ _________
Profit before taxation 695,714 139,044 834,758 95,164 132,055 227,219
Taxation (178,059) (65,442) (243,501) (121,849) (34,334) (156,183)
_________ _________ _________ _________ _________ _________
Profit after tax 517,655 73,602 591,257 (26,685) 97,721 71,036
_________ _________ _________ _________ _________ _________
Net operating assets are reconciled to equity funds as follows:
2012 2011
GBP GBP
Gross assets
Insolvency 9,717,031 7,492,638
Debt management 248,712 1,833,834
_________ _________
9,965,743 9,326,472
_________ _________
Gross liabilities
Insolvency 3,242,955 2,530,762
Debt management 895,226 1,645,128
_________ _________
4,138,181 4,175,890
_________ _________
Capital expenditure to acquire property, plant and equipment
Insolvency 240,240 152,063
Debt management 29,845 5,380
_________ _________
270,085 157,443
_________ _________
Capital expenditure to acquire intangible assets
Insolvency 349,569 799,806
Debt management - 300,647
_________ _________
349,569 1,100,453
_________ _________
Depreciation of property, plant and equipment
Insolvency 106,183 59,674
Debt management 41,307 72,763
_________ _________
147,490 132,437
_________ _________
Amortisation of intangible assets
Insolvency 1,031,677 892,425
Debt management 167,804 496,384
_________ _________
1,199,481 1,388,809
_________ ________
3. Acquisition
Between July and November 2011 a number of new IVA cases were purchased by ClearDebt Limited from Invocas Group plc.
The assets acquired were intangible assets represented by the future income due from the book of IVA cases. At the date of acquisition the fair values of the assets purchased comprised the following:
Fair value
Book value Adjustment Fair Value
GBP GBP GBP
Other intangible assets- Debt
Management - 295,999 295,999
Deferred taxation - (9,030) (9,030)
Gain on bargain purchase - negative
goodwill - (27,089) (27,089)
- 259,880 259,880
Settled by: GBP
Cash consideration 259,880
The intangible IVA assets acquired are being amortised over 4 years which, in the directors' opinion, is the useful economic life of the assets.
Included in the results for the year are revenues of GBP147,050 (2011: GBP193,995) and a pre-tax profit of GBP46,980 (2011: GBP9,038) excluding the gain on purchase of a bargain asset of GBP27,089 (2011: GBP54,985).The gain on purchase of bargain assets represents the excess of the directors' assessment of the fair value of the assets acquired over the acquisition price.
We have estimated the timing of, and the expected future income due from, the back books acquired less a provision for future expected delinquency together with the estimated costs necessary to collect in the income. This has been produced on a net present value basis to provide an estimate of the fair value of the intangible assets acquired.
The fair value of the net assets acquired was GBP259,880 which equates to the cash consideration.
4. Finance Costs
2012 2011
GBP GBP
Interest payable on loans 61,614 64,444
Interest payable on convertible loan notes 230,000 230,000
Interest payable on redemption of convertible loan notes 293,997
237,960
________ _______
585,611 532,404
________ _______
5. Taxation
2012 2011 GBP GBP
Analysis of current year
Current tax
UK corporation tax payable 264,637 92,662
Over provision from prior years (667) (422)
________ ________
Total corporation tax 263,970 92,240
________ ________
Deferred tax
Temporary differences, origination and reversal (14,851) (7,170)
Provision for irrecoverable losses - 75,000
Effect of tax rate changing on opening balance (5,618) (3,887)
________ ________
Total deferred tax charge (20,469) 63,943
________ ________
Tax on profit for the year 243,501 156,183
________ ________
Factors affecting charge for year
2012 2011
GBP GBP
Profit before taxation 834,758 227,219
________ ________
Profit multiplied by standard rate of corporation tax
in the UK of 25.75% (2011: 26%) 214,950 59,077
Effects of:
Expenses not deductible 6,169 4,878
Adjustment due to change of tax rate (5,618) (3,887)
Unrelieved tax losses - 75,000
Other adjustments 28,000 21,115
___________ __________
Current tax expense for year 243,501 156,183
________ ________
6. Earnings per Ordinary Share
2012 2011
GBP GBP
Profit for the financial year 591,257 71,036
__________ __________
Weighted average number of ordinary shares in issue during the year 308,340,567 308,340,567
Dilutive potential of share options - -
Dilutive potential of convertible loan notes - -
__________ __________
308,340,567 308,340,567
__________ __________
Earnings per share
Basic 0.19p 0.02p
Diluted 0.19p 0.02p
__________ __________
The calculation of the basic earnings per ordinary share of 0.19p (2011: 0.02p) each has been based on the profit for the relevant financial year and on 308,340,567 shares (2011: 308,340,567). This represents the weighted average number of ordinary shares in issue. The profit for the period for the purpose of calculating the diluted earnings per share is the same as for the basic earnings per share calculation adjusted in respect of the interest charges in relation to the convertible loan notes. After using this adjusted profit the diluted earnings per share is higher than the basic earnings per share and would therefore not be dilutive under the terms of IAS 33.
7. Current Liabilities
2012 2011
GBP GBP
Trade and other payables:
Trade payables 224,903 167,700
Accruals 391,213 331,845
Other payables 296,050 198,710
________ ________
912,166 698,255
________ ________
The directors consider that the carrying value of trade and other payables approximates to their fair value.
Corporation tax payable 263,970 92,662
________ ________
Current financial liabilities
Secured convertible loan notes (note 8) 2,597,306 -
________ ________
8. Financial Liabilities
Loans outstanding at the reporting date were as follows:-
2012 2011
GBP GBP
Secured convertible loan notes - 2,303,309
Loans 315,000 1,015,000
________ ________
315,000 3,318,309
________ ________
On 16 April 2010 GBP2.3m of 3 year 10% Secured Convertible Loan notes were issued by CDG (Guernsey) Limited, a wholly owned subsidiary of ClearDebt Group plc, to investors. Holders of the loan notes are entitled to interest on the loan notes at a rate of 10% per annum payable on a quarterly basis and have an option to convert all or part of their holdings at par into ordinary shares of ClearDebt Group plc at any time at a price of 1.8p per share. At the end of the 3 year period the principal is repayable in cash plus a premium of 25% in respect of any holdings that are not converted into ordinary shares at the loan note holder's option.
The Loan Notes are secured by way of a debenture dated 19 April 2010 over the assets of the Group. The Company has also entered into a cross guarantee with CDG (Guernsey) Limited in respect of the convertible loan notes.
In 2010 the directors determined the financial liability component of this compound instrument by calculating the net present values of the cash flows in respect of the interest and principal payments (assuming all are redeemed in cash and not taken as shares) over the next three years using a discount rate of 17% which the directors consider would have been the interest payable on a bank loan without the convertible element. Accordingly the loan notes are recorded at GBP2,597,306 (2011: GBP2,303,309).
At 30 June 2012 D E M Mond was interested in GBP500,000 of the secured convertible loan notes (2011: GBP500,000).
The loan from D E M Mond of GBP315,000 (2011: GBP1,015,000) is repayable on 31 March 2014 or earlier at the Group's discretion although there is a confirmation in place that this support will continue should the Group not be in a position to repay the loan and continue to meet other liabilities as they fall due. Loan repayments of GBP700,000 (2011: nil) were made in the year with the approval of the secured convertible loan note holders. Interest at a rate of 10.5% totalling GBP60,984 (2011: GBP64,444) was paid by the Group to D E M Mond in the year in respect of his loans. Interest of GBP230,000 was paid to the secured convertible loan note holders in the year (2011: GBP230,000).
9. Copies of the Annual Report
Copies of the Annual Report, when posted to shareholders, will also be available from the Company Secretary at the registered office which is situated at Nelson House, Park Road, Timperley, Cheshire WA14 5BZ. The annual report and AGM notice will also be available for download on the Company's website www.cleardebtgroup.co.uk at that time.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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