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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Debts.Co | LSE:DETS | London | Ordinary Share | GB00B14TH533 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 22.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:6664T
Debts.co.uk PLC
26 March 2007
For release at 07.00 Monday March 26th 2007
Debts.co.uk plc
Interim Results for the 6 months to 31 January 2007
Debts.co.uk plc is a leading provider of a range of solutions, including IVAs,
debt management programmes, bankruptcy and secured loans or second mortgages, to
over-indebted individuals.
HIGHLIGHTS
* Revenues up 63.3% to #5.0m (#3.0m in 2006)
* Gross profit up 60.9% to #3.8m (#2.4m in 2006)
* Operating profits up 28.7% to #1.3m (#1.0m in 2006)
* EPS up 28.5% to 4.69p (3.65p in 2006)
* Currently processing 1,064 IVAs expected to be completed within the next
8-10 weeks
* Increase in the number of Insolvency Practitioners to six (four at
flotation)
* Infrastructure significantly improved following move to new office
locations in Chesterfield and Borehamwood with operational efficiencies
starting to show which will lead to a stronger performance in the second
half of the year
* Acquisition of Neville Eckley now fully integrated and performing ahead of
expectations
* Debtcare, our debt management business, showing good growth in client
acquisition rate
* Scarlet loans, our secured loan business is performing well and has
recently commenced its own advertising campaign
26 March 2007
Enquiries:
Paul Carter, Chief Executive Officer 01246 561156
Debts.co.uk plc
Chris Steele 07979 604 687
Adventis Financial PR
Mark Percy / Parimal Kumar 0207 107 8000
Seymour Pierce Limited
CHAIRMAN'S STATEMENT
The results for last year were extremely pleasing and the progress of the Group
has continued into the first half of the current year.
The spread of income streams is a key part of our strategy and the Group's
constituent parts have each been trading for some time and are well established
in their own right. The board continues to focus its activities on a range of
products specifically targeted to support over indebted individuals.
Additionally, we will continue to review strategic acquisitions which enhance
our services offering following the successful acquisition of Neville Eckley in
October 2006.
In December 2006, we successfully completed the final phase of our move into
purpose built office accommodation in Chesterfield and Borehamwood. Prior to the
move the Group was significantly restricted in its operations due to the lack of
available space.
Our marketing strategy continues to perform well with a clear focus on the
internet. With the continued growth or acquisition of complementary businesses
we will be able to leverage further our marketing spend and the cost of our
client contact centre in Borehamwood.
The recent steps to bring change to the industry are welcomed and we anticipate
that the uncertainty in the IVA market place will shortly be resolved.
It is through this strategy of diversification and leverage of core skills and
services that the Group will continue to see positive results.
I should like to thank all our staff for their hard work and commitment and we
look forward to the future development of the Group with great confidence.
Bernard Asher
Chairman
26 March 2007
CHIEF EXECUTIVE'S STATEMENT
We are delighted with our results over the first six months of the year which
have seen significant progress both operationally and financially. We have
moved into our 30,000 sq ft purpose built offices in Chesterfield and our new
debt counselling and call centre operation in Borehamwood which will ultimately
enable us to process in excess of 500 new IVAs per month.
Additionally, we have completed and integrated our first acquisition following
the purchase of the business of Neville Eckley & Co. in October 2006, which has
exceeded our expectations after only three months of trading within the Group.
Our Insolvency Practitioner numbers has increase by 50% to six across the Group
and we are now looking to leverage their skills across our entire employee base
which now totals over 150.
We are seeing good growth in all our service lines. In particular Debtcare, our
debt management business has seen significant growth in the period and continues
to go from strength to strength and now has over 2,000 clients and is increasing
each month by over 100 additional customers.
The core of the Group's trading activities continues to be Synergi Partners, our
insolvency practice, which was further strengthened by the acquisition of
Neville Eckley in October 2006. Following the successful move to new premises
in December 2006, Synergi Partners has now been able to expand its operations
and with general improvements in infrastructure and specific recruitment is now
able to significantly increase the volume of business.
Whilst the benefits of this move are not visible in the results for the first
half of the year, the second half will see significant growth in terms of volume
of trading as well as the ability to leverage off the cost base, skills and
knowledge within the combined Group.
Synergi Partners and Neville Eckley are currently processing 712 and 352 IVAs,
respectively, a majority of which should be approved within the next 8-10 weeks.
This will result in a current run rate exceeding 200 IVAs per month within
Synergi and 80-100 within Neville Eckley.
Scarlet Loans, our secured loan broker, is also performing well and we have
commenced direct marketing of its services for the first time which will result
in an increase in revenues from this business in the second half of the year.
The period has seen significant investment across the Group to handle the
increasing number of clients with a consequential increase in operating costs by
#1.165m in the period compared to the same period in 2006. It is difficult to
compare like-for-like the level of operating costs as the directors of the
respective Group companies were historically remunerated by way of a dividend
and as such approximately #350,000 of additional salary costs would have been
charged in the prior period, this together with the increased costs associated
with being a quoted company, higher legal and other consultancy costs in the
current period account for a further #236,000 of additional costs. Also, the
expansion of the business with the acquisition of Neville Eckley & Co has added
a further #150,000 to costs in the period. The balance of cost increases are
primarily due to the increase in staff numbers from 71 at January 2006 to the
current level of 133 excluding Neville Eckley staff.
The increase in operating costs has had the expected impact on the cash flows
within the business. In additional certain restrictions on the cash available
for draw down against our fees imposed by some lenders has deferred the timing
of cash receipts under each IVA, which we see as a fore-runner of the likely
effect of the current review by creditors of the IVA process. We expect the
outcome of this to become clearer over the next few months and impact more on
cash flow rather than overall economic patterns in the IVA market.
We continue to work within the various industry forums to ensure that the Group
is at the centre of regulatory change. The Group continues to ensure that best
practice advice continues to be offered to our customers through our experienced
debt counsellors.
We look forward to the next six months and the further progress of the Group.
Paul Carter
CEO
26 March 2007
Debts.co.uk plc
Group income statement for the period to 31 January 2007
Unaudited Audited Unaudited
Proforma Proforma
Six months ended Six months Year
ended ended
31 January 31 January 31 July
2007 2006 2006
#000 #000 #000
Revenue - continuing operations 4,958 3,035 6,105
Direct costs (1,112) (644) (1,346)
Gross profit 3,846 2,391 4,759
Operating costs (2,545) (1,380) (2,673)
Operating profits - continuing operations 1,301 1,011 2,086
Net finance income/ (cost) 1 (4) 17
Profit on ordinary activities before taxation 1,302 1,007 2,103
Income tax expense (391) (297) (640)
Profit for the period attributable to equity holders of 911 710 1,463
the parent
Earnings per share Note
Basic earnings per ordinary share 2 4.69p 3.65p 8.63p
Diluted earnings per ordinary share 2 4.64p 3.62p 8.59p
There were no changes in equity other than the profit for the period
attributable to equity holders of the parent as shown in the above Group Income
Statement.
Debts.co.uk plc
Group consolidated balance sheet as at 31 January 2007
Audited
Pro forma Audited
Unaudited Group Group
As at As at As at
31 January 2007 31 January 2006 31 July 2006
#000 #000 #000
Assets
Non-current assets
Goodwill 231 - -
Property, plant and equipment 770 90 110
1,001 90 110
Current Assets
Trade and other receivables 6,426 1,887 3,195
Cash and short term deposits 1,717 273 3,988
8,143 2,160 7,183
Total assets 9,144 2,250 7,293
Equity and liabilities
Equity attributable to equity holders of the
parent
Share capital 1,944 1 1,944
Share premium 4,033 - 4,033
Merger reserve (1,513) - (1,513)
Retained earnings 1,725 649 814
6,189 650 5,278
Current liabilities
Trade and other payables 1,325 370 884
Corporate income tax payable 1,389 1,209 959
2,714 1,579 1,843
Liabilities due after one year 241 21 172
Total liabilities 2,955 1,600 2,015
Total equity and liabilities 9,144 2,250 7,293
Debts.co.uk plc
Group consolidated cash flow statement for the six monthly ended 31 January 2007
Unaudited Audited Unaudited
Pro forma Pro forma
Six months Six months Year ended
ended ended 31 July
31 January 2007 31 January 2006 2006
#000 #000 #000
Cash flows from operating activities
Profit from operations 1,301 1,011 2,086
Depreciation of property, plant and equipment 102 31 39
Operating cash flows before movement in 1,403 1,042 2,125
working capital
Increase in receivables (3,116) (658) (1,952)
Increase in payables 358 604 447
Cash generated from operations (1,355) 988 620
Income taxes paid - (220) (220)
Net cash (used in)/ from operating activities (1,355) 768 400
Cash flows from investing activities
Net interest paid/ (received) (13) (4) 1
Acquisition of property, plant and equipment (550) (34) (65)
Disposal of property, plant and equipment - 3
Acquisition of subsidiary undertaking (331)
Net cash used in investment activities (894) (38) (61)
Cash flows from financing activities
Net increase in borrowings - (2) 246
Proceeds on issues of shares - - 5,000
Cost of share issue - - (690)
Cost of reorganisation - - (94)
Dividends paid - (626) (967)
Net Cash (used in)/from financing activities - (628) 3,495
Net (decrease)/increase in cash and cash (2,249) 102 3,834
equivalents
Cash and cash equivalents at beginning of the 3,966 95 132
period
Cash and cash equivalents at the end of the 1,717 197 3,966
period
DEBTS.CO.UK PLC
Group Consolidated Accounts for the Six Months Ended 31 January 2007
EXPLANATORY NOTES
1. BASIS OF PREPARATION
The accounts of the Group for the year ended 31 July 2006 were approved by the
Board on 23 January 2007.
The interim financial statements have not been audited and do not constitute
statutory accounts as defined under s.240 of the Companies Act 1985.
The interim financial statements have been prepared in accordance with
applicable accounting standards and are consistent with those adopted and
disclosed in the Group's statutory accounts for the year ended 31 July 2006.
Those accounts, upon which the auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
2. EARNING PER SHARE
The earnings per share (basic) has been calculated using the profit for the
financial period and a weighted average number of ordinary shares in issue
during the six month period to 31 January 2007, the period ended 31 January 2006
and for the year ended 31 January 2006 of 19,444,444.
The diluted EPS number takes the weighted average number of ordinary shares in
issue during the six month period to 31 January 2007, the period ending 31
January 2006 and for the year ended 31 July 2006 and increase this to take
account of the dilutive share options existing at this date, resulting in a
denominator of 19,637,427.
3. COMPARATIVE FIGURES
The comparative figures represent the audited results for the six month period
to 31 January 2006 and the unaudited proforma results for the year from 1 August
2005 to 31 July 2006. In accordance with merger accounting principles, the
comparatives are presented as if the companies in the Debts.co.uk plc Group had
been owned and controlled by the Company throughout the six month period to 31
January 2006 and the year ended 31 July 2006.
4. ACQUISITION OF NEVILLE ECKLEY
The Group acquired the business and certain assets of Neville Eckley & Co,
chartered accountants and licensed insolvency practitioners for an initial
consideration of #330,000 to be satisfied in cash and deferred consideration of
#30,000 to be satisfied by the issue of 14,851 ordinary shares, credited as
fully paid, in the capital of Debts.co.uk, to be issued 18 months following
completion. The assets acquired were fair valued at the date of acquisition of
#100,000 leaving a payment for goodwill of #260,000 with costs relating to the
acquisition of #71,000.
5. RELATED PARTY TRANSACTIONS
During the period the Group incurred rent in respect of the premises at Carter
Place, Gisborne Close, Staveley, Chesterfield S43 3JT of which Paul Carter is
the Landlord. The total cost of the rent in the period was #46,125.
Additionally, the Group purchased services to the value of #233,317 from Ekay
PLC, and AIM quoted company of which Stuart Cumberland is a director. Stuart
Cumberland is not a shareholder in Ekay PLC.
6. DISTRIBUTION OF THE INTERIM REPORT
Copies of the Interim Report are being sent to shareholders. Further copies of
the Interim and Annual Report and Accounts may be obtained from the Company's
Registered office, Carter Place, Gisborne Close, Staveley, Chesterfield S43 3JT.
In addition, an electronic version will be available on the Company's website,
www.debts.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR JAMLTMMATBAR
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