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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 |
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TIDMCLEA
RNS Number : 2049J
Cleardebt Group PLC
26 March 2010
ClearDebt Group plc
("ClearDebt" or "the Group")
Unaudited Interim Results for the six months ended 31 December 2009
ClearDebt, the AIM quoted personal debt resolution adviser is very pleased to
announce its Interim Results for the six months ended 31 December 2009. The
period saw significant growth in revenues from the provision of both Individual
Voluntary Arrangements ("IVAs") and Debt Management Plans ("DMPs"), with the
prospect of continued growth to the year-end. The acquisition of some 6,500
clients through the purchase of IVAs, DMPs and Protected Trust Deeds ("PTDs")
from a number of the subsidiaries of Relax Group plc (in Administration) (who
were based in Staveley, Chesterfield) in December 2009 has more than doubled
the number of clients under management.
Financial Highlights:
Ø Revenues increased to GBP2.3m (2008: GBP1.5m) up 57%
Ø Profit before tax of GBP425,185 (2008: GBP101,393) after the recognition of a
gain on bargain purchase of GBP252,914
Operational Highlights
Ø Significant increase in number of IVAs passed: 350 agreed in period (2008:
200)
Month2009/102008/09Month2009/102008/09
July 65 23 Oct
68 35
Aug 59 26 Nov
55 40
Sep 52 34 Dec
51 42
Total 176 83 Total
174 117
Ø Alternative cash flow/business diversity continues to be provided by Abacus,
the Group's debt management arm who now have:
o 3,949 debt management plans providing income
o Expansion into other services is beginning to show progress
Ø Acquisition of 2,400 IVAs, 1,300 PTDs and 2,800 DMPs from certain Relax Group
subsidiaries in December 2009. Integration is proceeding well with cases
transferred to our systems this week following the successful relocation of a
reduced staff base to a smaller office in Staveley.
Outlook
Ø Number of IVAs passed continues to increase and future looks highly positive
Month2009/102008/09
Jan 20 29
Feb 74 41
Pipeline of new business suggests strong continued growth through to the
year-end
Ø Current economic environment creates increasing demand for personal debt
resolution. ClearDebt is in a position to cope with substantial growth due to
its scalable model based around web-based algorithms - thereby helping to
minimise the cost per case and enhancing profitability
David Mond, CEO of ClearDebt commented:
"We are very pleased by our performance throughout the period and are encouraged
by what appear to be highly positive signs for continued future growth across
all product lines. The Group is becoming a major player in the industry. As a
profitable and highly scalable debt resolution group, we are confident that we
will be able to manage our growth for the benefit of our shareholders.
Although the current macro economic conditions are of significant benefit to
ClearDebt, we understand that this is a time of considerable personal pain and
anxiety to many. Through our leading position in the Debt Resolution Forum, we
are committed to the highest of standards in the industry, ensuring that
consumers will get the most appropriate solution for their needs.
The combination of the wider economy forcing more individuals into debt, our
diversified and scalable business model and crucially the realisation by the
major lenders that a well-designed IVA is in their best interests leads us to
believe that prospects for further growth are encouraging for the foreseeable
future."
25 March 2010
For further information, please contact:
+----------------------------------+----------------------------------+
| ClearDebt Group plc | David Mond, Chief Executive |
| | Officer |
| | Tel No: 0161 968 6805 |
+----------------------------------+----------------------------------+
| Seymour Pierce Limited | John Cowie or Nicola Marrin |
| (Broker and Nominated Adviser) | Tel No: 020 7107 8000 |
+----------------------------------+----------------------------------+
INTERIM FINANCIAL STATEMENTS
FOR THE 6 MONTHS ENDED
31 DECEMBER 2009
Chairman's Statement
I present our Interim results for the 6 months ended 31 December 2009.
I am delighted to report that during this period the Group made a profit before
taxation of GBP425,185 (2008: GBP101,393), after the recognition of a gain on
bargain purchase of GBP252,914 on revenue of GBP2,265,316 (2008: GBP1,444,784).
These results reflect continued progress across all the Group's business
activities and include the first month's revenue from the back books of
Individual Voluntary Arrangements ("IVAs"), Protected Trust Deeds ("PTDs") and
Debt Management Plans ("DMPs") purchased from the Administrator of Relax Group
plc on 2 December 2009.
Relax Acquisition
On 3 December 2009 it was announced that we had acquired certain assets of Relax
Group plc (in administration).
These assets comprised 2,400 IVAs, 1,300 PTDs and 2,800 DMPs. The total
consideration to be paid amounts to GBP2.7m of which GBP350,000 had been paid at
31 December 2009 which, together with estimated restructuring, relocation and
financing costs estimated at GBP500,000 will bring the total cash cost to
GBP3.2m. These costs will be expensed in the second half of the year in
accordance with current accounting standards
The Board of ClearDebt see this acquisition as the opportunity to expand its
operations in the growing IVA and Debt Management sector. It enables us to
review the acquired debt management cases for possible IVAs and now give us the
capability to take on new business in Scotland rather than referring PTDs onto
third parties as we have done previously.
The acquisition of these assets should provide strong and predictable additional
cash flow for the Group and our lean administration means we are very confident
that we will manage these cases effectively and at a higher margin than Relax
found possible. The timing of cash flows from the cases to date has exceeded our
expectations.
Existing businesses
ClearDebt - IVAs
As the general economic climate has worsened, the last two quarters of 2009 have
seen increasing numbers of IVAs being approved, and the quarterly numbers are
now above the record levels recorded during 2006.
The number of Individual Voluntary Arrangements (IVAs) approved in the six
months ended 31 December 2009 was 350 (2008: 200). These results not only
represent a substantial increase over the equivalent period last year and the
previous six months, but also demonstrate a step change in the numbers of new
IVAs being passed each month compared to the first six months of calendar year
2009.
1st Quarter
2nd Quarter
2009/102008/092009/102008/09
July 65 23 Oct
68 35
Aug 59 26 Nov
55 40
Sep 52 34 Dec
51 42
Total 176 83 Total
174 117
In the first two months of 2010 (the third quarter of our 2009-10 financial
year) the number of IVAs increased by approximately 34% when compared to the
same two months of 2009.
2009/102008/09
Jan 20 29
Feb 74 41
January case numbers habitually dip (there is less effective time in December in
which to book creditor meetings), but this year the extensive disruption caused
by the snow to our postage collections in late December and January led to
delays in holding creditor meetings and the corresponding numbers of cases
approved in January.
Importantly, March 2010 looks like being a record month, with some 95 meetings
(as at 19 March 2010) already held, or booked to be held in the month for
creditor approval of IVA proposals.
ClearDebt continues to benefit from its low overhead, high quality model, which
allows the company's cost base to be kept to a minimum level whilst still
providing high levels of service. More importantly, the model also facilitates
efficient and rapid growth as there is minimal need to hire new staff until high
customer number thresholds have been breached.
This continues to give ClearDebt the capacity to handle lower levels of debt
than many of our major competitors and thereby broadens our addressable market.
Moreover, with IVAs increasingly demonstrating their value as an effective debt
recovery tool and with re-financing options for debtors still very difficult the
growth in market acceptance of IVAs should continue for the foreseeable future.
Abacus - DMPs
Excellent progress continues to be made by Abacus, with 3,949 DMPs (as at 19
March 2010) currently generating income. A steady run rate of approximately 250
new DMPs per month is currently being achieved.
Abacus provides services to indebted individuals by negotiating and putting in
place a DMP with their creditors. The debtor makes a monthly payment to Abacus
which then distributes the payment to the creditors as agreed in the plan, less
an administration fee at an agreed percentage of the monthly payment. An initial
set up fee is also charged. DMPs are suitable for individuals whose debts are
more manageable and rely on the goodwill of creditors as they are not a formal
insolvency procedure and interest usually continues to accrue on outstanding
debts, though attempts are made to suspend interest wherever possible and some
bank creditors do agree to same.
Many clients are cross referred between ClearDebt and Abacus allowing the Group
to offer an appropriate advice solution to all individuals.
These intra-Group synergies may become more prevalent when the current
consultation process being undertaken by the Ministry of Justice into the
possibility of Regulated Debt Management Plans is completed. Representatives of
the Group are closely involved with this consultation process which should
introduce important changes to the industry in 2011. Abacus is well placed and
prepared to benefit from these changes.
Related Debt Advisory Services
Through Abacus, the Group has extended its activities into related services,
such as helping to prevent repossession of debtors' homes and obtaining redress
for debtors who have had payment protection insurance ("PPI") incorrectly sold
to them. These activities continue to provide a worthwhile income and we are
starting to see some acceleration in the settlement of PPI claims and receipt of
commissions from the large pipeline of potential fees that has been built up
over the last 12 months.
ClearCash card
Steady progress is being made in the new offering of our Pre-Paid MasterCard
ClearCash. Over 1,200 clients (as at 19 March 2010) have signed up taking
advantage of the online icount and our exclusive BudgetMaster tool.
Significantly we were pleased to win the award of Best New Unbanked Pre-Paid
Card and coming runner up as Best Newcomer at the Prepaid365 Card Awards 2010.
We anticipate a higher rate of growth during the next 12 months.
Outlook
ClearDebt has now successfully integrated a debt management offering, a third
party introducer and a contact management system into the Group, thereby
diversifying our offering, allowing larger and more stable income streams and
providing a strong platform for continued growth.
I therefore continue to be optimistic about the Group's prospects for the rest
of the financial year to June 2010; the number of IVAs passed and DMPs being
arranged continues to grow strongly and this growth is being augmented by the
new services we have introduced.
The Abacus debt management business is extremely busy and is now generating
significant profits and cash flows as it maximises the cross selling
opportunities and marketing synergies between it and the ClearDebt business. As
at 19 March 2010, our cash at bank amounted to GBP311,053, which gives us
sufficient flexibility for current purposes.
I believe that the Group is well positioned to continue its growth and to
benefit from any consolidation opportunities which may occur in our industry.
Gerald Carey FCIB
25 March 2010
ClearDebt Group plc 6
Months 6 Months Year
Consolidated Income Statementended ended
ended
31 December 2009 31 December 2008 30 June 2009
Unaudited Unaudited Audited
Note
GBP GBP GBP
Revenue
- ongoing
1,999,836 1,444,784 3,386,935
- acquisitions
265,480 - -
__________ __________ __________
4
2,265,316 1,444,784 3,386,935
Cost of sales
(1,430,828) (912,952) (1,950,570)
__________ __________ __________
Gross profit834,488 531,832 1,436,365
Administrative expenses
(396,391) (361,747) (770,835)
Separately Disclosable items 8
- 77,500 77,500
__________ __________ __________
Profit before interest, tax,
depreciation and amortisation 438,097
247,585 743,030
Depreciation
(48,675) (45,574) (90,279)
Amortisation
(154,834) (41,541) (76,623)
Gain on bargain purchase 252,914
- -
__________ __________ __________
Profit from operations
487,502 160,470 576,128
Finance costs
(63,300) (63,300) (126,600)
Finance income
983 4,223 11,395
__________ __________ __________
Profit before taxation
425,185 101,393 460,923
Taxation 6
(119,052) (21,293) (53,861)
__________ __________ __________
Profit after taxation for period 306,133
80,100 407,062
______________________________
Earnings per ordinary share -
basic (pence) 5
0.10 0.03 0.13
Earnings per ordinary share -
diluted (pence) 5
0.10 0.03 0.13
The results for the period are derived from continuing activities.
There was no recognised income or expenditure other than the profit for the
period. Accordingly no Statement of Recognised Gains and Losses has been
prepared.
ClearDebt Group plc 6 Months
6 Months Year
Consolidated statement of ended
ended ended
comprehensive income - unaudited 31 December 2009 31 December 2008 30
June 2009
Unaudited Unaudited Audited
GBP GBP GBP
Profit for the period
306,133 80,100 407,062
Other comprehensive income net of tax -
- -
__________ __________ __________
Total comprehensive profit for the period306,133 80,100
407,062
__________ __________ __________
Attributable to:
Owners of the parent 306,133
80,100 407,062
______________________________
+-----------------------------+------+-------------+--------------+-------------+
| ClearDebt Group plc | As at | As at | As at |
| Consolidated Statement of | 31 | 31 December | 30 June |
| Financial Position | December | 2008 | 2009 |
| | 2009 | | |
+------------------------------------+-------------+--------------+-------------+
| | | Unaudited | Unaudited | Audited |
| | | GBP | GBP | GBP |
+-----------------------------+------+-------------+--------------+-------------+
| | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Assets | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Non-current assets | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Intangible assets | | 7,516,756 | 4,463,273 | 4,537,299 |
+-----------------------------+------+-------------+--------------+-------------+
| Property, plant and | | 222,758 | 208,032 | 189,800 |
| equipment | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Deferred taxation | | 328,098 | 382,103 | 347,940 |
+-----------------------------+------+-------------+--------------+-------------+
| | | 8,067,612 | 5,053,408 | 5,075,039 |
+-----------------------------+------+-------------+--------------+-------------+
| Current assets | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Trade receivables | | 662,131 | 444,476 | 729,310 |
+-----------------------------+------+-------------+--------------+-------------+
| Corporation tax receivables | | - | 108,173 | - |
+-----------------------------+------+-------------+--------------+-------------+
| Other receivables | | 120,350 | 119,615 | - |
+-----------------------------+------+-------------+--------------+-------------+
| Cash and cash equivalents | | 378,241 | 222,517 | 584,593 |
+-----------------------------+------+-------------+--------------+-------------+
| | | 1,160,722 | 894,781 | 1,313,903 |
+-----------------------------+------+-------------+--------------+-------------+
| | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Total assets | | 9,228,334 | 5,948,189 | 6,388,942 |
+-----------------------------+------+-------------+--------------+-------------+
| | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Equity and liabilities | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Issued capital | | 6,166,812 | 6,091,812 | 6,166,812 |
+-----------------------------+------+-------------+--------------+-------------+
| Share premium account | | 279,948 | 279,948 | 279,948 |
+-----------------------------+------+-------------+--------------+-------------+
| Share based compensation | | 112,641 | 97,814 | 97,814 |
+-----------------------------+------+-------------+--------------+-------------+
| Retained losses | | (1,703,123) | (2,336,218) | (2,009,256) |
+-----------------------------+------+-------------+--------------+-------------+
| | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Total equity | | 4,856,278 | 4,133,356 | 4,535,318 |
+-----------------------------+------+-------------+--------------+-------------+
| | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Current liabilities | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Trade and other payables | | 3,066,216 | 614,833 | 639,807 |
+-----------------------------+------+-------------+--------------+-------------+
| Corporation tax payables | | - | - | 13,817 |
+-----------------------------+------+-------------+--------------+-------------+
| | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| | | 3,066,216 | 614,833 | 653,624 |
+-----------------------------+------+-------------+--------------+-------------+
| Non-current liabilities | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| Financial liabilities | | 1,200,000 | 1,200,000 | 1,200,000 |
+-----------------------------+------+-------------+--------------+-------------+
| Deferred taxation | | 105,840 | - | - |
+-----------------------------+------+-------------+--------------+-------------+
| | | 1,305,840 | 1,200,000 | 1,200,000 |
+-----------------------------+------+-------------+--------------+-------------+
| | | 4,372,056 | 1,814,833 | 1,853,624 |
| Total liabilities | | | | |
+-----------------------------+------+-------------+--------------+-------------+
| | | 9,228,334 | 5,948,189 | 6,388,942 |
| Total equity and | | | | |
| liabilities | | | | |
+-----------------------------+------+-------------+--------------+-------------+
+-----------------------------+-----+--------------+----------------+-----------+
| ClearDebt Group plc | | 6 Months | 6 Months | Year |
| Consolidated Statement of | | ended | ended | ended |
| Cashflows | | 31 | 31 | 30 |
| | | December | December | June |
| | | 2009 | 2008 | 2009 |
+-----------------------------+-----+--------------+----------------+-----------+
| | | Unaudited | Unaudited | Audited |
+-----------------------------+-----+--------------+----------------+-----------+
| | | GBP | GBP | GBP |
+-----------------------------+-----+--------------+----------------+-----------+
| Cash flow from continuing | | | |
| operating activities | | | |
+-----------------------------------+--------------+----------------+-----------+
| Profit before taxation | | 425,185 | 101,393 | 460,923 |
+-----------------------------+-----+--------------+----------------+-----------+
| Depreciation of property, plant | 48,675 | 45,574 | 90,279 |
| and equipment | | | |
+-----------------------------------+--------------+----------------+-----------+
| Amortisation of intangible | | 154,834 | 41,541 | 76,623 |
| assets | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| Increase in trade and other | | (53,171) | (96,647) | (256,486) |
| receivables | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| Finance costs | | 63,300 | 63,300 | 126,600 |
+-----------------------------+-----+--------------+----------------+-----------+
| Finance income | (983) | (4,223) | (11,395) |
+-----------------------------------+--------------+----------------+-----------+
| Negative goodwill arising on | (252,914) | - | - |
| purchase of assets | | | |
+-----------------------------------+--------------+----------------+-----------+
| Share based payment charge | 14,827 | - | - |
+-----------------------------------+--------------+----------------+-----------+
| Decrease in trade and other | (66,182) | (125,331) | (105,737) |
| payables | | | |
+-----------------------------------+--------------+----------------+-----------+
| Cash generated in operations | 333,571 | 25,607 | 380,807 |
+-----------------------------------+--------------+----------------+-----------+
| Income tax refund | | 10,317 | - | 123,585 |
+-----------------------------+-----+--------------+----------------+-----------+
| Cash generated in operating | 343,888 | 25,607 | 504,392 |
| activities | | | |
+-----------------------------------+--------------+----------------+-----------+
| | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| Cash flow from investing | | | | |
| activities | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| Acquisition of business and | (350,000) | - | (10,612) |
| assets | | | |
+-----------------------------------+--------------+----------------+-----------+
| Acquisition of intangibles | (56,290) | - | (23,496) |
+-----------------------------------+--------------+----------------+-----------+
| Acquisition of property, plant | (81,633) | (9,550) | (36,023) |
| and equipment | | | |
+-----------------------------------+--------------+----------------+-----------+
| Finance income | 983 | 4,223 | 11,395 |
+-----------------------------------+--------------+----------------+-----------+
| | | | |
+-----------------------------------+--------------+----------------+-----------+
| Net cash absorbed by | | (486,940) | (5,327) | (58,736) |
| investing activities | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| Cash flow from financing | | | | |
| activities | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| Interest on loans | | (63,300) | (63,300) | (126,600) |
+-----------------------------+-----+--------------+----------------+-----------+
| Cash absorbed by financing | (63,300) | (63,300) | (126,600) |
| activities | | | |
+-----------------------------------+--------------+----------------+-----------+
| | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| Decrease in cash and cash | (206,352) | (43,020) | 319,056 |
| equivalents | | | |
+-----------------------------------+--------------+----------------+-----------+
| Opening cash and cash | | 584,593 | 265,537 | 265,537 |
| equivalents | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| Closing cash and cash | | 378,241 | 222,517 | 584,593 |
| equivalents | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
| | | | | |
+-----------------------------+-----+--------------+----------------+-----------+
+-----------------+-----------+------------+--------------+-----------+--+-----------+
| | | | | | |
| | | | | | |
+-----------------+-----------+------------+--------------+-----------+--------------+
| | | | |
| | | | |
| | | | |
+------------------------------------------+--------------+-----------+--------------+
| ClearDebt Group | Issued | Share | | Retained | Total |
| plc | capital | premium | Share | losses | |
| Consolidated | | account | based | | |
| Statement | | | compensation | | |
| of Changes in | | | | | |
| Equity | | | | | |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | GBP | GBP | GBP | GBP | GBP |
+-----------------+-----------+------------+--------------+--------------+-----------+
| Balance at 1 | | | | | |
| Jul 2008 | 6,091,812 | 279,948 | 97,814 | (2,416,318) | 4,053,256 |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | |
| Profit for the | - | - | - | 80,100 | 80,100 |
| period | | | | | |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | |
+-----------------+-----------+------------+--------------+--------------+-----------+
| Balance at 31 | | | | | |
| Dec 2008 | 6,091,812 | 279,948 | 97,814 | (2,336,218) | 4,133,356 |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | |
| Issue of shares | 75,000 | - | - | - | 75,000 |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | |
| Profit for the | - | - | - | 326,962 | 326,962 |
| period | | | | | |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | |
| As at 1 Jul | 6,166,812 | 279,948 | 97,814 | (2,009,256) | 4,535,318 |
| 2009 | | | | | |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | |
| Share based | | | | | |
| compensation | - | - | 14,827 | - | 14,827 |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | |
| Profit for the | - | - | - | 306,133 | 306,133 |
| period | | | | | |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | |
| Balance at 31 | 6,166,812 | 279,948 | 112,641 | (1,703,123) | 4,856,278 |
| Dec 2009 | | | | | |
+-----------------+-----------+------------+--------------+--------------+-----------+
| | | | | | | |
+-----------------+-----------+------------+--------------+-----------+--+-----------+
Notes to the Interim Financial Statements
1. General information
The Group's interim financial statements consolidate the results of ClearDebt
Group plc and its subsidiary companies made up to 31 December 2009.
The Group's functional currency is the GBP Sterling.
ClearDebt Group plc is a limited liability company incorporated and domiciled in
England and Wales whose shares have been admitted to trading on AIM, a market
operated by the London Stock Exchange.
2. Accounting policies and basis of preparation
These interim financial statements do not constitute statutory accounts as
defined by section 434 of the Companies Act 2006. It does not therefore include
all the information and disclosures required in the annual financial statements
and should be read in conjunction with the Group's annual financial statements
as at 30 June 2009, which have been prepared in accordance with IFRS's as
adopted by the European Union. The Group's statutory accounts for the year
ended 30 June 2009 have been delivered to the Registrar of Companies. The report
of the auditors was (i) unqualified, (ii) did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under Section 498
(2) or (3) of the Companies Act 2006.
The Group has not applied IAS 34, Interim Financial Reporting, which is not
mandatory for UK Groups, in the preparation of these interim financial
statements.
The preparation of the interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income and
expenses. Estimates and judgements are continually evaluated and are based on
historical experience and other factors, such as expectations of future events
and are believed to be reasonable under the circumstances. Actual results may
differ from these estimates. In preparing these interim financial statements,
the significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
applied to the audited consolidated financial statements for the year ended 30
June 2009.
The interim financial statements have been prepared using the same accounting
policies and estimation techniques as will be adopted in the Group financial
statements for the year ending 30 June 2010. The Group financial statements for
the year ended 30 June 2009 were prepared under International Financial
Reporting Standards.
The Relax acquisition comprised back books of insolvency and debt management
cases. The future estimated income from these cases net of provisions and the
costs of realisation have been discounted at the Groups weighted average cost of
capital back to the date of acquisition to produce a fair value for the assets.
The intangible insolvency assets are being amortised over a period of three
years and the debt management assets over one year. These periods have been
selected by the directors to approximate as closely as possible to the period
over which it is estimated that the vast majority of income will be received.
These interim financial statements have been prepared on a consistent basis and
format except for the adoption of IAS 1 'Presentation of Financial Statements
(Revised 2007)', IFRS 8 'Operating Segments' and the amendment to IFRS 2,
"Share-based payments: vesting conditions and cancellations.
Changes in accounting policies
In the current financial year, the Group has adopted IAS 1, "Presentation of
Financial Statements" (Revised), IFRS 8, "Operating Segments" and the amendment
to IFRS 2, "Share-based payments: vesting conditions and cancellations".
IAS 1 Presentation of Financial Statements (Revised) includes the requirement to
present a Statement of Changes in Equity as a primary statement and introduces
the possibility of either a single Statement of Comprehensive Income (combining
the Income Statement and a Statement of Comprehensive Income) or to retain the
Income Statement with a supplementary Statement of Comprehensive Income. The
second option has been adopted by the Group. As this standard is concerned with
presentation only it does not have any impact on the results or net assets of
the Group.
IFRS 8, Operating Segments requires operating segments to be identified on the
basis of internal reports about components of the Group that are regularly
reviewed by the Chief Operating Decision Maker ("CODM"). By contrast IAS 14,
"Segmental Reporting" required business and geographical segments to be
identified on a risks and rewards approach. The business segmental reporting
bases used by the Group in previous years are those which are reported to the
CODM, so the changes to the segmental reporting for 2009 are in respect of the
additional disclosure only.
3. Going Concern
The Group manages its cash requirements through its existing cash resources and
operating cash flows. The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the Group should
be able to operate within the level of its current resources. Consequently,
after making enquires, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern basis
of accounting in preparing the interim financial statements.
4. Segmental Information
The Group's total income, result before taxation and net assets were all derived
from its principal activities being the provision of insolvency services (IVAs
and PTDs) and DMPs to individuals experiencing personal debt problems. All the
Group's activities were undertaken wholly in the United Kingdom.
+------------------------+---------------+--------------+-------------+
| 6 months to 31 | Insolvency | Debt | Total |
| December 2009 | | Management | |
+------------------------+---------------+--------------+-------------+
| | GBP | GBP | GBP |
+------------------------+---------------+--------------+-------------+
| Revenue | | | |
+------------------------+---------------+--------------+-------------+
| -ongoing | 644,847 | 1,354,989 | 1,999,836 |
+------------------------+---------------+--------------+-------------+
| -acquisitions | 168,201 | 97,279 | 265,480 |
+------------------------+---------------+--------------+-------------+
| Inter segment trading | 122,375 | (122,375) | - |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| | 935,423 | 1,329,893 | 2,265,316 |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Cost of sales | (561,222) | (869,606) | (1,430,828) |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Gross profit | 374,201 | 460,287 | 834,488 |
+------------------------+---------------+--------------+-------------+
| Administrative | (143,044) | (253,347) | (396,391) |
| expenses | | | |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Profit before | 231,157 | 206,940 | 438,097 |
| interest, tax, | | | |
| depreciation and | | | |
| amortisation | | | |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Depreciation | (14,337) | (34,338) | (48,675) |
+------------------------+---------------+--------------+-------------+
| Amortisation | (81,640) | (73,194) | (154,834) |
+------------------------+---------------+--------------+-------------+
| Gain on bargain assets | 202,914 | 50,000 | 252,914 |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Profit from | 338,094 | 149,408 | 487,502 |
| operations | | | |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Finance costs | - | (63,300) | (63,300) |
+------------------------+---------------+--------------+-------------+
| Finance income | 983 | - | 983 |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Profit before | 339,077 | 86,108 | 425,185 |
| taxation | | | |
+------------------------+---------------+--------------+-------------+
| Taxation | (99,094) | (19,958) | (119,052) |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Profit after taxation | 239,983 | 66,150 | 306,133 |
| for period | | | |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
4. Segmental Information (continued)
6 months to 31 December 2008
+------------------------+---------------+--------------+------------+
| | | Debt | |
| | Insolvency | Management | Total |
+------------------------+---------------+--------------+------------+
| | GBP | GBP | GBP |
+------------------------+---------------+--------------+------------+
| Revenue | | | |
+------------------------+---------------+--------------+------------+
| -ongoing | 376,458 | 1,068,326 | 1,444,784 |
+------------------------+---------------+--------------+------------+
| Cost of sales | (268,081) | (644,871) | (912,952) |
+------------------------+---------------+--------------+------------+
| | | | |
+------------------------+---------------+--------------+------------+
| Gross profit | 108,377 | 423,455 | 531,832 |
+------------------------+---------------+--------------+------------+
| Administrative | (129,509) | (232,238) | (361,747) |
| expenses | | | |
+------------------------+---------------+--------------+------------+
| Separately disclosable | 77,500 | - | 77,500 |
| items | | | |
+------------------------+---------------+--------------+------------+
| | | | |
+------------------------+---------------+--------------+------------+
| Profit before | 56,368 | 191,217 | 247,585 |
| interest, tax, | | | |
| depreciation and | | | |
| amortisation | | | |
+------------------------+---------------+--------------+------------+
| | | | |
+------------------------+---------------+--------------+------------+
| Depreciation | (15,279) | (30,295) | (45,574) |
+------------------------+---------------+--------------+------------+
| Amortisation | (34,041) | (7,500) | (41,541) |
+------------------------+---------------+--------------+------------+
| | | | |
+------------------------+---------------+--------------+------------+
| Profit from | 7,048 | 153,422 | 160,470 |
| operations | | | |
+------------------------+---------------+--------------+------------+
| Finance costs | - | (63,300) | (63,300) |
+------------------------+---------------+--------------+------------+
| Finance income | 4,223 | - | 4,223 |
+------------------------+---------------+--------------+------------+
| | | | |
+------------------------+---------------+--------------+------------+
| Profit before | 11,271 | 90,122 | 101,393 |
| taxation | | | |
+------------------------+---------------+--------------+------------+
| Taxation | (2,367) | (18,926) | (21,293) |
+------------------------+---------------+--------------+------------+
| | | | |
+------------------------+---------------+--------------+------------+
| Profit after taxation | 8,904 | 71,196 | 80,100 |
| for period | | | |
+------------------------+---------------+--------------+------------+
| | | | |
+------------------------+---------------+--------------+------------+
+------------------------+---------------+--------------+-------------+
| Year ended 30 June | Insolvency | Debt | Total |
| 2009 | | Management | |
+------------------------+---------------+--------------+-------------+
| | GBP | GBP | GBP |
+------------------------+---------------+--------------+-------------+
| Revenue | | | |
+------------------------+---------------+--------------+-------------+
| -ongoing | 766,366 | 2,620,569 | 3,386,935 |
+------------------------+---------------+--------------+-------------+
| Inter segment trading | 175,125 | (175,125) | - |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| | 941,491 | 2,445,444 | 3,386,935 |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Cost of sales | (463,787) | (1,486,783) | (1,950,570) |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Gross profit | 477,704 | 958,661 | 1,436,365 |
+------------------------+---------------+--------------+-------------+
| Administrative | (258,926) | (511,909) | (770,835) |
| expenses | | | |
+------------------------+---------------+--------------+-------------+
| Separately disclosable | 77,500 | - | 77,500 |
| items | | | |
+------------------------+---------------+--------------+-------------+
| | | | |
| | | | |
+------------------------+---------------+--------------+-------------+
| Profit before | | | |
| interest, tax, | 296,278 | 446,752 | 743,030 |
| depreciation and | | | |
| amortisation | | | |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Depreciation | (30,508) | (59,771) | (90,279) |
+------------------------+---------------+--------------+-------------+
| Amortisation | (65,373) | (11,250) | (76,623) |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Profit from | 200,397 | 375,731 | 576,128 |
| operations | | | |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Finance costs | - | (126,600) | (126,600) |
+------------------------+---------------+--------------+-------------+
| Finance income | 11,395 | - | 11,395 |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Profit before | 211,792 | 249,131 | 460,923 |
| taxation | | | |
+------------------------+---------------+--------------+-------------+
| Taxation | 53,266 | (107,127) | (53,861) |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
| Profit after taxation | 265,058 | 142,004 | 407,062 |
| for period | | | |
+------------------------+---------------+--------------+-------------+
| | | | |
+------------------------+---------------+--------------+-------------+
4. Segmental Information (continued)
+--------------------------------------+------------+-----------+------+------+----------+
| | |
+----------------------------------------------------------------------+-----------------+
| Net operating assets are | As at | As at | As at | |
| reconciled | 31 Dec | 31 Dec | 30 Jun | |
| to equity funds as follows: | 2009 | 2008 | 2009 | |
+--------------------------------------+------------+-----------+-------------+----------+
| | GBP | GBP | GBP |
+--------------------------------------+------------+-----------+------------------------+
| Gross operating assets | | | |
+--------------------------------------+------------+-----------+------------------------+
| Insolvency | 6,659,432 | 4,209,850 | 4,674,784 |
+--------------------------------------+------------+-----------+------------------------+
| Debt management | 2,568,902 | 1,738,339 | 1,714,158 |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| | 9,228,334 | 5,948,189 | 6,388,942 |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| Gross liabilities | | | |
+--------------------------------------+------------+-----------+------------------------+
| Insolvency | 2,666,906 | 247,936 | 413,347 |
+--------------------------------------+------------+-----------+------------------------+
| Debt management | 1,705,150 | 1,566,897 | 1,440,277 |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| | 4,372,056 | 1,814,833 | 1,853,624 |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| Capital expenditure to acquire | | | |
| property, plant and equipment | | | |
+--------------------------------------+------------+-----------+------------------------+
| Insolvency | 32,222 | 5,955 | 11,715 |
+--------------------------------------+------------+-----------+------------------------+
| Debt management | 49,411 | 3,595 | 24,308 |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| | 81,633 | 9,550 | 36,023 |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| Capital expenditure to acquire | | | |
| business and assets | | | |
+--------------------------------------+------------+-----------+------------------------+
| Insolvency | 200,000 | - | - |
+--------------------------------------+------------+-----------+------------------------+
| Debt management | 150,000 | - | - |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| | 350,000 | - | - |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| Capital expenditure to acquire | | | |
| intangible assets | | | |
+--------------------------------------+------------+-----------+------------------------+
| Insolvency | 56,290 | - | 23,496 |
+--------------------------------------+------------+-----------+------------------------+
| Debt management | - | - | - |
+--------------------------------------+------------+-----------+------------------------+
| | 56,290 | - | 23,496 |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| Depreciation of property, plant and | | | |
| equipment | | | |
+--------------------------------------+------------+-----------+------------------------+
| Insolvency | 14,337 | 15,279 | 30,508 |
+--------------------------------------+------------+-----------+------------------------+
| Debt management | 34,338 | 30,295 | 59,771 |
+--------------------------------------+------------+-----------+------------------------+
| | 48,675 | 45,574 | 90,279 |
+--------------------------------------+------------+-----------+------------------------+
| | | | |
+--------------------------------------+------------+-----------+------------------------+
| Amortisation of intangible assets | | | |
+--------------------------------------+------------+-----------+------------------------+
| Insolvency | 81,640 | 34,041 | 65,373 |
+--------------------------------------+------------+-----------+------------------------+
| Debt management | 73,194 | 7,500 | 11,250 |
+--------------------------------------+------------+-----------+------------------------+
| | 154,834 | 41,541 | 76,623 |
+--------------------------------------+------------+-----------+------+------+----------+
The total income, result before taxation and net assets are attributable to the
one principal activity of the Group, being the provision of financial solutions
to individuals experiencing personal debt problems and the provision of advice
regarding structured settlements and related financial services. All revenue and
costs originate within the United Kingdom. The revenue shown in the Group Income
Statement represents amounts in respect of the provision of financial solutions
to individuals experiencing personal debt problems. Revenue is largely derived
from IVA and PTDs which we define as Insolvency services (where a licensed
insolvency practitioner is required by statute to manage the case) and the fees
charged for the arrangement of debt management plans.
5. Earnings per ordinary share
+------------------------+--+-------------+-------------+----+------------+----+----------+
| 55555 | | 6 Months | 6 Months | Year | |
+------------------------+--+-------------+-------------+----------------------+----------+
| | | ended | ended | ended | |
| | | 31 | 31 December | 30 June | |
| | | December | 2008 | 2009 | |
| | | 2009 | | | |
+------------------------+--+-------------+-------------+----------------------+----------+
| | | Unaudited | Unaudited | Audited | |
+------------------------+--+-------------+-------------+----------------------+----------+
| | | GBP | GBP | GBP | |
+------------------------+--+-------------+-------------+----------------------+----------+
| | | | | | |
+------------------------+--+-------------+-------------+----------------------+----------+
| Profit attributable to | | 306,133 | 80,100 | 407,062 | |
| equity holders of | | | | | |
| parent | | | | | |
+------------------------+--+-------------+-------------+----------------------+----------+
| | | | | | |
+------------------------+--+-------------+-------------+----------------------+----------+
| Weighted average | | 308,340,567 | 304,590,550 | 306,213,855 | |
| number of shares in | | | | | |
| issue - basic | | | | | |
+------------------------+--+-------------+-------------+----------------------+----------+
| | | | | | |
+------------------------+--+-------------+-------------+----------------------+----------+
| Weighted average | | 308,340,567 | 304,590,550 | 306,213,855 | |
| number of shares in | | | | | |
| issue - diluted | | | | | |
+------------------------+--+-------------+-------------+----------------------+----------+
| | | | | |
+------------------------+--+-------------+------------------+----------------------------+
| Earnings per share - | | 0.100 | 0.030 | 0.13 | |
| basic (pence) | | | | | |
+------------------------+--+-------------+------------------+------------+---------------+
| | | | | | |
+------------------------+--+-------------+------------------+------------+---------------+
| Earnings per share - | | 0.100 | 0.030 | 0.13 | |
| diluted (pence) | | | | | |
+------------------------+--+-------------+------------------+------------+---------------+
| | | | | | |
+------------------------+--+-------------+-------------+----+------------+----+----------+
The weighted average number of ordinary shares for calculating the diluted
earnings per share above are identical to those for the basic earnings per
share. This is because the outstanding share warrants and share options would
not be dilutive under the terms of International Accounting Standard ("IAS") 33
6. Taxation
+------------------------------------+-----------+-----------+---------+
| | 6 Months | 6 Months | Year |
+------------------------------------+-----------+-----------+---------+
| | | | Ended |
| | ended | ended | 30 June |
| | 31 | 31 | 2009 |
| | December | December | |
| | 2009 | 2008 | |
+------------------------------------+-----------+-----------+---------+
| | GBP | GBP | GBP |
+------------------------------------+-----------+-----------+---------+
| Analysis of current year | | | |
| | | | |
+------------------------------------+-----------+-----------+---------+
| Current tax | | | |
+------------------------------------+-----------+-----------+---------+
| UK corporation tax repayment due | - | - | - |
+------------------------------------+-----------+-----------+---------+
| UK corporation tax due | 48,237 | 21,293 | (1,595) |
+------------------------------------+-----------+-----------+---------+
| | | | |
+------------------------------------+-----------+-----------+---------+
| Deferred tax | | | |
+------------------------------------+-----------+-----------+---------+
| Temporary differences, | 70,815 | - | 55,456 |
| origination and reversal | | | |
+------------------------------------+-----------+-----------+---------+
| | | | |
+------------------------------------+-----------+-----------+---------+
| Tax on profit for the period | 119,052 | 21,293 | 53,861 |
+------------------------------------+-----------+-----------+---------+
| | | | |
+------------------------------------+-----------+-----------+---------+
7.Acquisition
On 2 December 2009 the Group purchased from the Administrator of Relax Group plc
and a number of its subsidiaries ("Relax") the goodwill and assets of certain
subsidiaries of Relax. The assets purchased comprised the goodwill and fixtures
of; the IVA business which traded as Synergi Partners; the Debt Management
business which traded under the name of Debtcare; and the Protected Trust Deeds
which traded under the name of Adie Financial Services or AFS.
The total consideration due was GBP2,700,000, of which GBP350,000 had been paid
to the Administrator as at 31 December 2009 with the balance due included in
other payables. Currently at 25 March 2010 there remains a balance payable of
GBP1,150,000 which will be discharged in the not too distant future.
The assets acquired were exclusively intangible assets represented by the future
income due from the collection of the back book of IVA, PTD and DMP cases
managed by each business. At the date of acquisition the relevant Relax assets
comprised the following:
+-----------------------------------+------------+---------------------+-----------+
| | | Fair value | |
| | Book value | adjustment | Fair |
| | | | Value |
+-----------------------------------+------------+---------------------+-----------+
| | GBP | GBP | GBP |
+-----------------------------------+------------+---------------------+-----------+
| Other intangible assets- | - | 2,152,000 | 2,152,000 |
| Insolvency | | | |
+-----------------------------------+------------+---------------------+-----------+
| Other intangible assets- Debt | - | 926,000 | 926,000 |
| Management | | | |
+-----------------------------------+------------+---------------------+-----------+
| Deferred taxation | - | (105,840) | (105,840) |
+-----------------------------------+------------+---------------------+-----------+
| Other payables | - | (19,246) | (19,246) |
+-----------------------------------+------------+---------------------+-----------+
| Gain on bargain purchase | - | (252,914) | (252,914) |
+-----------------------------------+------------+---------------------+-----------+
| | - | 2,700,000 | 2,700,000 |
+-----------------------------------+------------+---------------------+-----------+
| | | | |
+-----------------------------------+------------+---------------------+-----------+
| | | | |
+-----------------------------------+------------+---------------------+-----------+
| Settled by: | | | GBP |
+-----------------------------------+------------+---------------------+-----------+
| Cash consideration | | | 2,700,000 |
+-----------------------------------+------------+---------------------+-----------+
| | | | |
+-----------------------------------+------------+---------------------+-----------+
Included in the results for the half year to 31 December 2009 is revenue of
GBP265,480 and a pre tax profit of GBP5,395 after excluding the profit on
purchase of a bargain asset of GBP252,194.
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 arrived of the intangible assets acquired was
GBP2,952,914 which is in excess of the GBP2.7m cost of acquisition. Accordingly
under IFRS the profit and loss account has been credited with a gain on bargain
purchase of GBP252,914 in the period.
8. Separately disclosable items
6 Months 6 Months Year
Ended Ended Ended
31 December 31 December 30 June
2009 2008 2009
Unaudited Unaudited Audited
GBP GBP
GBP
Administration expenses
Release of provision for litigation costs
- 77,500 77,500
ClearDebt Limited took legal action against several parties involved with the
IVA Council for defamation and libel after the IVA Council sent correspondence
to ClearDebt's customers (and customers of other IVA companies) alleging that
they had been mis-sold IVAs. The case was settled in November 2008 with a full
apology and award covering costs. A provision of GBP100,000 had previously been
made in relation to legal costs incurred to 30 June 2008 in the event the case
was not successful. Following the successful judgement GBP77,500 of this
provision was released in the half year to 31 December 2008.
9. The Board of Directors approved the interim report on 25 March
2010. A copy of this Interim Statement is being sent to shareholders and copies
are available for download by visiting our website at www.cleardebtgroup.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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