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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Money Debt | LSE:MDCG | London | Ordinary Share | GB00B1G6VJ48 | 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% | 4.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number : 3614E Money Debt & Credit Group Plc 26 September 2008 MONEY DEBT & CREDIT GROUP PLC Unaudited Interim Results for the six months ended 30 June 2008 Money Debt & Credit Group PLC ("Money Debt & Credit Group" or "the Group") is a leading provider of financial solutions to over-indebted individuals who are seeking to manage and reduce their debt burden in a responsible manner. EXECUTIVE CHAIRMAN'S STATEMENT Financial Overview The trading environment in the first half of 2008 has continued to present opportunities and challenges for the Group. Revenues have grown strongly. Turnover for the 26 week period to 30 June 2008 was £2.5m, an increase of £1.1m compared with the same period in 2007. The Group made a loss of £868,000 in the period (2007: £1,778,000 loss.) Net cash inflow was £74,000 (2007: £465,000.)The significant narrowing of the trading loss and the decline in the rate of cash utilisation represents further progress towards profitability and positive cash flow for the Group. As at 30 June 2008, the Group was currently managing a portfolio of 2,325 active IVAs and 1,523 Debt Management Plans (DMPs), building a firm base to achieve the Group's financial objectives. The cash flows from the IVA business model were always likely to take at least 2 years to mature to the extent that they would cover operating costs. The challenges faced by the debt solutions industry in the last 2 years undoubtedly made it more difficult than expected to generate positive net cash flow from the IVA business. The need to broaden the Group's product range into Debt Management last year also required significant investment, making it more difficult than expected to bridge this operating cash flow gap. However, the Group is now benefiting from the annuity effect from its growing portfolio of debt solutions built over the last two years and consistent positive net cash flow is within sight over the next 12 months. We continue to see further opportunity to grow and develop our business, our infrastructure and our staff resources for the long term and take investment decisions which will ultimately benefit investors, despite the fact that these decisions may reduce cash flow in the very short term. The Group continues to have access to adequate cash resources to reach profitability and take advantage of these opportunities. I am pleased to report that the Group has now reached gross profitability, an important financial milestone and proof that our strategy of investing and building our case load is set to deliver positive returns for shareholders. Further growth in our case load during the rest of 2008, will position the Group for profitable trading for 2009. Operating Review: IVA Business The Group completed 873 new IVAs during the 6 months ended 30 June 2008, an increase of 28% compared with the same period in 2007. Fee levels on new cases have stabilised and the Group is being selective in relation to case volumes and fee levels to ensure that only work which can make a positive contribution to fixed costs and cash flow is undertaken. The flow of new leads through our network of referral partners has continued to perform satisfactorily. However, the Group is mindful that referral fees have to be sustainable and reflect the economic value provided by the partner. There is some evidence that higher referral fees are on offer elsewhere in the market, but we believe this unrealistic pricing is unlikely to continue for long. Ultimately, the businesses in the sector which will prosper will be those with the optimum marketing mix, the highest standards of professional services to clients and creditors, the most efficient processes, and the lowest transaction costs. The Group believes it has made significant progress in all these areas and the results are encouraging. In August 2008, the last full month for which data is available, 193 new IVAs were agreed with creditors. In our forecasts for 2008, we set 200 IVAs as our monthly target and it is encouraging to report a performance close to the budget level as our business model and our process continues to develop. Operating Review: Debt Management Business The Group took the decision in June last year to form its debt management subsidiary to address the growing demand for informal debt solutions and the hardening of creditors' attitudes towards IVAs and fees. This investment decision was critical to the long term success of the Group to ensure we could offer a full range of services to clients and reduce dependence on a single product. The debt management business required significant investment in staff and infrastructure but I am pleased to report that this investment is now yielding a positive contribution to the business and covering its direct costs. Monthly case volumes in debt management now regularly exceed those in the IVA business. In August 2008, the latest complete month for which data is available, 248 new DMPs were completed, a strong performance from our recently re-organised and expanded team of debt management specialists. We also see an opportunity to develop a Full & Final Settlement service alongside our debt management business. Full & Final Settlement can be an appropriate solution for clients able to offer a lump sum to settle their debts but the offer to creditors needs to be professionally constructed to meet the needs of all parties. Strategy and Market Outlook Whilst most of the Group's existing referral arrangements for prospective clients involve payments of referral fees only on satisfactory completion of a debt solution, the Group is now working with a number of lead providers to purchase leads meeting strict criteria which are expected to build into a valuable source of new business over the rest of 2008. The Group also plans to broaden its marketing mix in 2008/9 with a new on-line strategy and other direct routes to market to complement our referral programmes. The official statistics on bankruptcies and IVAs appear to show little correlation with the numbers of individuals actively seeking help to resolve debt problems. Debt enquires to the Citizens Advice Bureau are at an all time high, increasing by 20% in the last year and bringing the total to 1.7 million in 2006/07. However, the Insolvency Service data for IVAs for Q2 2008 show a 3.2% decline in IVAs completed compared with the previous quarter and a decrease of 12.4% on the corresponding quarter of the previous year. This tends to point to an increase in non-statutory debt solutions such as debt management and refinancing and re-mortgaging which benefits creditors in the short term as there is often no write-off of debt, merely a rescheduling of the term and the interest cost. Even before the recent turmoil in the banking sector, the Governor of the Bank of England had indicated that the mortgage market was unlikely to ever return to pre-credit crunch levels, when 100% mortgages or even higher loan-to-value multiples were commonplace to finance and re-finance consumer debt. Undoubtedly, the economic climate is continuing to develop in the Group's favour. There is growing evidence that the problems of consumer debt are accelerating but at the same time there remains reluctance on the part of consumers and creditors to recognise the extent of these problems and deal with them effectively. Economic slow-down or recession, combined with rising unemployment will inevitably force these problems to be addressed probably in the next 12-18 months. The Group is particularly well placed to take advantage of this with our highly trained and motivated workforce, infrastructure investment, marketing programmes and relationships with referral partners and creditors. I remain confident of reporting further significant progress for the Group in 2008. Simon Johnson Executive Chairman INDEPENDENT REVIEW REPORT TO MONEY DEBT & CREDIT GROUP PLC Introduction We have been engaged by the company to review the financial information in the half-yearly financial report for the six months ended 30 June 2008 which comprises the Consolidated Income Statement, Consolidated Balance Sheet, Consolidated Statement of Changes in Shareholders' Equity, Consolidated Cash Flow Statement and notes 1 to 6. We have read the other information contained in the half yearly financial report which comprises only the Chairman's Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusion we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the interim figures are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts. As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with the basis of preparation. Our responsibility Our responsibility is to express to the Company a conclusion on the financial information in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the financial information in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 1. GRANT THORNTON UK LLP Auditor Hemel Hempstead 25 September 2008 CONSOLIDATED INCOME STATEMENTS for the 6 months ended 30 June 2008 Unaudited Unaudited 6 month 6 month Audited period period Year ended ended ended 31 December 30 June 2008 30 June 2007 2007 £'000 £'000 £'000 Revenue 2,535 1,460 4,115 Cost of Sales (1,850) (1,843) (4,492) Gross profit 685 (383) (377) Administrative expenses (1,372) (1,322) (2,820) Operating loss (687) (1,705) (3,197) Interest payable (185) (115) (259) Interest receivable 4 42 47 Loss before tax (868) (1,778) (3,409) Tax - - - Loss for the period (868) (1,778) (3,409) Loss per share Basic and diluted loss per 2.2p 4.4p 8.5p ordinary share CONSOLIDATED BALANCE SHEETS as at 30 June 2008 Unaudited Unaudited Audited As at As at Year ended 30 June 2008 30 June 2007 31 December £'000 £'000 2007 £'000 Assets Non-current assets Property, plant & equipment 623 681 677 Total non-current assets 623 681 677 Current assets Trade and other receivables 1,757 1,579 1,575 Cash and cash equivalents 74 465 Total current assets 1,831 2,044 1,575 Total assets 2,454 2,725 2,252 Equity and liabilities Share capital 4,000 4,000 4,000 Share premium account 1,635 1,635 1,635 Merger reserve 4,200 4,200 4,200 Reverse acquisition reserve (7,000) (7,000) (7,000) Retained loss (7,108) (4,609) (6,240) Total equity (4,273) (1,774) (3,405) Non-current financial liabilities Hire purchase obligations 220 274 246 Shareholder loan 4,615 3,216 3,714 Total non-current liabilities 4,835 3,490 3,960 Current liabilities Trade & other payables 1,770 899 1561 Hire purchase obligations 122 110 132 Bank overdraft - - 4 Total current liabilities 1,892 1,009 1,697 Total liabilities 6,727 4,499 5,657 Total equity & liabilities 2,454 2,725 2,252 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY for the 6 months ended 30 June 2008 Reverse Share Share Merger Retained Acquisi Capit Premi Reserv Earnings tion al um e £'000 Reserve Total £'000 £'000 £'000 £'000 £'000 Balance as at 1 January 2007 4,000 1,635 4,200 (2,831) (7,000) 4 Loss for the period - - - (1,778) - (1,778) Balance as at 4,000 1,635 4,200 (4,609) (7,000) (1,774) 30 June 2007 Loss for the period - - - (1,631) - (1,631) Balance as at 4,000 1,635 4,200 (6,240) (7,000) (3,405) 31 December 2007 Loss for the period - - - (868) - (868) Balance as at 4,000 1,635 4,200 (7,108) (7,000) (4,273) 30 June 2008 CONSOLIDATED CASH FLOW STATEMENTS for the 6 months ended 30 June 2008 Unaudited Unaudited 6 month 6 month Audited period period Year ended ended ended 31 December 30 June 2008 30 June 2007 2007 £'000 £'000 £'000 Cash flows from operating activities Net loss before taxation (868) (1,778) (3,409) Adjustments for: Depreciation 102 85 187 Cost of raising equity share - - - capital Loss on sale of property, plant & 14 equipment Interest payable 185 115 259 Interest received (5) (42) (47) Cash used by operations before (586) (1,620) (2,996) changes in working capital Movement in trade and other (182) (421) (417) receivables Movement in trade and other 209 265 914 payables Cash used by operating activities (559) (1,776) (2,499) Cash flows from investing activities Finance Leases 30 - 361 Proceeds from sale of property, 13 - 49 plant and equipment Purchase of property, plant and (62) - (460) equipment Net cash used in investing (19) - (50) activities Cash flows from financing activities Hire purchase principal repayments (66) (38) (93) Proceeds from shareholder loan 731 - 518 Proceeds of issue of shares - - - Costs of share issue - - - Interest receivable 5 42 47 Interest payable (14) (95) (259) Net cash from financing activities 656 (91) 213 Net (decrease)/increase in cash 78 (1,867) (2,336) and cash equivalents Cash and cash equivalents at (4) 2,332 2,332 beginning of the period Cash and cash equivalents at the 74 465 (4) end of the period NOTES TO THE INTERIM ACCOUNTS 1. Basis of Preparation The accounts of the Group for the half year ended 30 June 2008 were approved by the Board on 25 September 2008. The interim financial statements for the six months ended 30 June 2008 are unaudited and do not constitute statutory accounts as defined under S240 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 December 2007. The comparative information for the year ended 31 December 2007 has been extracted from the statutory accounts for that year. These accounts received an unqualified audit report and did not contain a statement made under sections 237(2) or (3) (accounting records or returns inadequate, accounts not agreeing with records and returns or failure to obtain necessary information and explanations) of the Companies Act 1985. These accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. This interim report has been prepared in accordance with the recognition and measurements requirements of those IFRSs as adopted by the EU expected to be applicable to the financial statements for the year ended 31 December 2008 and with the AIM listing rules. 2. Loss per Share The earnings per share (basic) has been calculated using the loss for the period of £867,862 and a weighted average number of ordinary shares in issue during the six month period from 1 January 2008 to 30 June 2008 of 40,000,000. The share options currently in issue are options over existing shares held by the Directors and are deemed to be anti-dilutive. 3. Comparative Figures The comparative figures represent the unaudited results for the six month period to 30 June 2007 and the audited results for the year ended 31 December 2007. 4. Related Party Transactions During the period, interest of £171,193 was accrued on the loan from Simon Johnson and interest of £187,478 was paid. Included within current liabilities is an accrual of £403,260 in respect of salary due but not paid to Directors at 30 June 2008. The Group paid £8,727 to Michael Bartman the father of Jon Bartman for data collection services. 5. Going Concern After making enquiries, examining revenue and expenditure projections and cash flow forecasts, and taking into consideration the facilities available to the Group, the Directors have a reasonable expectation that the Group has access to adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of approval of the financial statements. For this reason they continue to adopt the going concern basis in preparing the financial statements. 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 Secretary at the registered office: 45 Clarendon Road, Watford WD17 1SZ. In addition, an electronic version will be available on the Company's website: http://www.moneydebtandcredit.com/investor-relations Enquiries: Money Debt & Credit Group plc Jon Bartman, Chief Executive Officer Tel: 01923 636800 Money Debt & Credit Group plc Gerard Kelly, Finance Director Tel: 01923 636800 Smith & Williamson Corporate Finance Limited David Abbott, Director Tel: 0117 376 2213 This information is provided by RNS The company news service from the London Stock Exchange END IR ILFEEATIEFIT
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