Final Results

 

TIDMRLX 
 
RNS Number : 4938T 
Relax Group PLC 
08 June 2009 
 

 
 
 
 
 
 
 
 
 
 
Relax Group plc 
Results for the five-month period ended 31 December 2008 
 
 
Highlights 
  *  Revenue increases by 20.9% pro rata up to GBP6.5m 
  *  Trade receivables down by16.1% to GBP11.2m due to improved collection of debts 
  *  Five-month period following change of accounting date 
  *  Revenue and profit continue to rise strongly 
  *  Successful ongoing integration of Relax finance limited acquisition 
  *  Key Financial indicators continue to improve 
  *  Development of new product areas 
  *  Economic background and outlook continue to favour the company's activities 
 
Chairman's Statement 
 
 
I am pleased to present the report to shareholders for the five-month period to 
31 December 2008. Shareholders will be aware that the Company recently announced 
a change in its accounting period, from a July year end to a December year end. 
 
 
The reason for the change was the seasonality of our business. Levels of 
activity have always been at their lowest in August, December and early January, 
primarily because of holidays. This meant that in previous years our first half 
contained all of these months. 
 
 
As a result the first half was considerably weaker than the second half and 
consequently it was felt that by making this change of year end the first half 
should be much more in balance with the second half and thus enable the market 
to have a more accurate and realistic guide to the full-year outcome. 
 
 
This period was once again extremely satisfying and rewarding for the Company. 
As we indicated in the previous annual report, the acquisition of Relax Finance 
has progressed very well and the work of integration continued throughout the 
period under review. 
 
 
The economic climate for the average consumer is still extremely difficult and 
the number of people seeking advice about borrowings and personal financial 
problems continues to rise. Our corporate strategy of offering the widest 
possible range of solutions has continued to demonstrate its efficacy and our 
client base is still growing strongly. 
 
 
Whilst the areas of Relax Finance engaged in new lending have been held back by 
the decline in both demand for mortgages and availability of funds, we have 
successfully introduced other new product lines such as life insurance. 
 
 
Meanwhile we have made great progress in consolidating our operations into our 
Chesterfield head office. The efforts put into the development of our 
infrastructure have been extremely successful and cash collection has been, and 
continues to be, speeded up with benefits to our cash flow and balance sheet. 
 
 
Overview 
We look forward to an excellent 2009, and continued growth in the business. I 
should like to thank the Board of Directors and all our staff for their hard 
work and continued efforts to achieve our objectives. 
 
 
 
 
 
 
Bernard Asher 
Chairman 
4 June 2009 
 
 
 
 
Chief Executive Officer's Statement 
 
 
The prevailing economic conditions are providing a number of opportunities. The 
strategies that we have implemented at a Group level have had a favourable 
impact upon our current trading performance and we look forward to the year 
ahead. 
 
 
To enable us to demonstrate our ongoing success to the market, and be able to 
reflect this in future half and full year reporting, we chose to change the 
accounting reference date to 31 December. Traditionally the demand for DMP and 
IVA programmes is low in August, December and January, resulting in a weaker 
first half year compared to the second half. It was therefore felt that the 
change in accounting reference date will give two relatively balanced half years 
whilst the business continues to grow. 
 
 
Trading overview 
Our reported revenue for the period was GBP6.5m, showing a 20.9% pro rata 
increase from GBP12.9m in the year ended 31 July 2008, on the back of the 
continued integration of Relax Finance Limited. EBITDA was GBP0.8m compared to 
GBP2.3m in the year ended 31 July 2008. The fall in EBITDA was largely due to 
the change in fee structures resulting in less profitability on IVAs. 
However, our volumes have increased significantly since the year end following 
the acquisition of Relax Finance Limited. In addition, the efficiency gains from 
IT infrastructure improvements, renewed operational rigor, reorganising the 
Group into two main trading centres and refocusing our customer acquisition 
strategies will further improve profitability levels going forward. 
 
 
Current customer enquires remain strong, with approximately 10,000 enquiries 
generated per month via our customer service centre and enquiries "Hot-keyed" 
via third party relationships. These result in approximately 881 new sales each 
month; 490 DMPs, 191 IVA s and PTDs, and 200 Secured Loans, Unsecured Loans and 
Mortgages. Demand for DMP s, IVA s and PTD s has been increasing as the "credit 
crunch" bites and, despite the resulting negative impact on secured loans and 
mortgages due to a lack of credit in the market, we are of the opinion that as 
the fall out of the credit crunch gathers pace, the need and requirement for our 
services in 2009 will significantly increase. Mortgage sales are now increasing, 
with the volume of applications, lender acceptance and pipeline revenues 
increasing. 
 
 
Great progress is being made in training sales staff to sell general insurance. 
Accreditation has been achieved with five major life insurance companies as well 
as buildings and contents insurance providers. Revenue streams already look to 
be in line with previous secured figures. With nearly 200 sales per month in 
test mode, the insurance model is scalable and we are confident that this will 
grow over the next year to become a significant part of our strategy. The Group 
has been offered managed bank accounts with the leading provider and will look 
to implement this for customers in the second half of 2009. These, together with 
the existing core service lines, will complete our strategy of creating a 
diversified financial group providing services to over-indebted individuals, and 
we believe this strategy will provide significant enhancement to shareholder 
value in the future. 
 
 
Effects of restructuring 
Benefits of rationalising and restructuring the Group continue to filter 
through, especially from improvements in operational efficiency and 
effectiveness. We continue to look for further means of making cost savings from 
our operations, whilst ensuring that these changes are performed without any 
material impact upon our capacity to handle new and existing work. One 
significant improvement was the closure of the Doncaster office and the 
integration of the sales staff into Chesterfield. Not only did this save around 
20 heads, the increased skills that were transported have allowed the 
development of all sales staff in Chesterfield. We therefore expect conversions 
of DMPs and IVAs to improve significantly in 2009. 
 
 
The rationalisation has resulted in ongoing cost savings and we continue to 
drive forward a number of key strategies, the impact of which is felt in the 
current trading period, namely: 
 
 
  *  leveraging introducers to provide DMP, IVA and PTD leads. This has the 
  added advantage of removing uncertainty in the acquisition of customers by 
  agreeing back-ended commission arrangements, providing certainty of profits and 
  improving cash flow; 
 
  *  generating better returns from online marketing strategies through the 
  Group's enlarged base of websites, affiliate links and search engine 
  optimisation; 
 
  *  significant improvements in cross-selling opportunities, conversion rates and 
  call handling efficiencies, due to the merger of the front-end customer service 
  centre into our Chesterfield operations; 
 
  *  further development and integration of the Group's database, enabling technology 
  and significant cross-selling opportunities based on historical enquiries; 
 
  *  utilising our bespoke RAPS IT system to manage and control lead generation 
  through engaged customer to commission/fee earned and third party commission 
  arrangements. The Group is working to develop a number of relationships which 
  will give controlled growth over a period of time; and 
 
  *  despite the lack of available credit to lend to individuals, the Group has 
  managed to retrain its secured lending team to sell remortgages. Accreditation 
  has been achieved and volumes already show the Group to be in the top 
  three introducers for the northern region within the Santander Group. 
 
Throughout 2009 Chesterfield has been undertaking and administering an 
increasing number of Trust Deeds. This gives greater control over the Scottish 
business. 
 
 
Marketing 
Our multifaceted customer acquisition model has continued to reduce the cost of 
client acquisition since the integration of Relax Finance Limited; the volume 
of applications has increased dramatically over the period and further exciting 
opportunities lie ahead. We are particularly pleased that Confused.com, one of 
our premier partners, has signed up to extend our exclusive relationship on a 
long-term basis with an additional commitment to significantly step up their 
marketing efforts for debt solutions.Other key partnership deals are coming 
to fruition which we are confident will only enhance our Group's position. 
 
 
We are shortly due to launch a new technology platform which will enable 
authorised third parties to engage in the sale of Debt Management plans (DMPs) 
remotely using our technology, subsequently passing the completed cases to us 
for on going management within our client portfolio. In particular this 
technology will enable IFA s and mortgage networks to sell DMPs to their client 
banks and refer to us for ongoing management. This will enable us to operate 
in a similar way to "mortgage packagers" and take on more new business without 
the requirement of increasing headcount at our customer contact centres. 
 
 
Overview 
Market conditions for the industry and trading levels for the Group are very 
encouraging. We look forward to the challenges over the next few years and are 
confident that the Group is well placed to take advantage of the 
prevailing circumstances, ensuring that we continue to maintain levels of growth 
and profitability, whilst also managing cash flow. 
 
 
 
 
Paul Carter 
Chief Executive Officer 
4 June 2009 
 
 
Consolidated Income Statement 
 
 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
|                                          |    |  |   |    |           |    Period |      Year | 
|                                          |    |  |   |    |           |     ended |     ended | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
|                                          |    |  |   |    |           |        31 |   31 July | 
|                                          |    |  |   |    |           |  December |           | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
|                                          |    |  |   |    |           |      2008 |      2008 | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
|                                          |    |  |   |    |           |   GBP'000 |   GBP'000 | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Revenue                                  |    |  |   |    |           |     6,510 |    12,923 | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Direct costs                             |    |  |   |    |           |   (1,926) |   (3,168) | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Gross profit                             |    |  |   |    |           |     4,584 |     9,755 | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Operating costs                          |    |  |   |    |           |   (3,788) |   (7,389) | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Operating profit prior to exceptional    |    |  |   |    |           |       796 |     2,366 | 
| costs                                    |    |  |   |    |           |           |           | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Exceptional costs                        |    |  |   |    |           |         - |   (2,131) | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Net finance cost                         |    |  |   |    |           |     (128) |     (221) | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Profit before taxation                   |    |  |   |    |           |       668 |        14 | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Income tax expense                       |    |  |   |    |           |         - |         8 | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Profit for the period/(year)             |    |  |   |    |           |       668 |        22 | 
| attributable to equity holders of the    |    |  |   |    |           |           |           | 
| parent company                           |    |  |   |    |           |           |           | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
|                                          |    |  |   |    |           |           |           | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Earnings per share                       |    |  |   |    |           |           |           | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Basic earnings per ordinary share        |    |  |   |    |           |     2.19p |     0.09p | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
| Diluted earnings per ordinary share      |    |  |   |    |           |     2.19p |    0.09p  | 
+------------------------------------------+----+--+---+----+-----------+-----------+-----------+ 
 
 
There were no other gains and losses other than those recognised in the Income 
Statement. All activities relate to continuing operations. 
Consolidated Balance Sheet 
 
 
 
 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
|                                                       | | |  |  |     |     As at |     As at | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
|                                                       | | |  |  |     |        31 |   31 July | 
|                                                       | | |  |  |     |  December |           | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
|                                                       | | |  |  |     |      2008 |      2008 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
|                                                       | | |  |  |     |   GBP'000 |   GBP'000 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Assets                                                | | |  |  |     |           |           | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Non-current assets                                    | | |  |  |     |           |           | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Intangibles                                           | | |  |  |     |     7,696 |     4,608 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Goodwill                                              | | |  |  |     |     4,205 |     4,517 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Property, plant and equipment                         | | |  |  |     |       644 |       620 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
|                                                       | | |  |  |     |    12,545 |    9,745  | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Current assets                                        | | |  |  |     |           |           | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Trade and other receivables                           | | |  |  |     |    11,204 |    13,351 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Cash and short-term deposits                          | | |  |  |     |        -  |       186 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
|                                                       | | |  |  |     |    11,204 |    13,537 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Total assets                                          | | |  |  |     |    23,749 |   23,282  | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Equity and liabilities                                | | |  |  |     |           |           | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Equity attributable to equity holders of the parent   | | |  |  |     |           |           | 
| company                                               | | |  |  |     |           |           | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Share capital                                         | | |  |  |     |     3,049 |     3,049 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Share premium                                         | | |  |  |     |     8,708 |     8,708 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Merger reserve                                        | | |  |  |     |   (1,513) |   (1,513) | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Retained earnings                                     | | |  |  |     |     4,006 |     3,338 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
|                                                       | | |  |  |     |    14,250 |    13,582 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Current liabilities                                   | | |  |  |     |           |           | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Trade and other payables                              | | |  |  |     |     8,979 |     8,112 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Corporate income tax payable                          | | |  |  |     |       484 |     1,299 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
|                                                       | | |  |  |     |     9,463 |     9,411 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Liabilities due after one year                        | | |  |  |     |        36 |       289 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Total liabilities                                     | | |  |  |     |     9,499 |     9,700 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
| Total equity and liabilities                          | | |  |  |     |    23,749 |    23,282 | 
+-------------------------------------------------------+-+-+--+--+-----+-----------+-----------+ 
 
 
The financial statements were approved by the Board of Directors and authorised 
for issue on 4 June 2009 and are signed on its behalf by 
Paul Carter TRevor Moore 
chief executive officer      Finance director 
 
 
 
 
Statement of Changes in Equity 
 
 
+------------------------------------------+---------+----------+----------+----------+----------+ 
|                                          |   Share |    Share |   Merger | Retained |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
|                                          | capital |  premium |  reserve | earnings |    Total | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
|                                          | GBP'000 |  GBP'000 |  GBP'000 |  GBP'000 |  GBP'000 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Group                                    |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Changes in equity for the year           |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| to 31 July 2008                          |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Brought forward at 1 August 2007         |   2,109 |    5,527 |  (1,513) |    3,316 |    9,439 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Total recognised income and expense for  |       - |        - |        - |       22 |       22 | 
| the year                                 |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Issue of share capital                   |     940 |    3,290 |        - |        - |    4,230 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Issue costs                              |       - |    (109) |        - |        - |    (109) | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Balance as at 31 July 2008               |   3,049 |    8,708 |  (1,513) |    3,338 |   13,582 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Group                                    |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Changes in equity for the period         |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| to 31 December 2008                      |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Total recognised income and expense for  |       - |        - |        - |      668 |      668 | 
| the period                               |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Balance as at 31 December 2008           |   3,049 |    8,708 |  (1,513) |    4,006 |   14,250 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Company                                  |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Changes in equity for the year           |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| to 31 July 2008                          |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Brought forward at 1 August 2007         |   2,109 |    5,527 |        - |       91 |    7,727 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Total recognised income and expense for  |       - |        - |        - |        - |        - | 
| the year                                 |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Issue of share capital                   |     940 |    3,290 |        - |        - |    4,230 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Issue costs                              |       - |    (109) |        - |        - |    (109) | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Balance as at 31 July 2008               |   3,049 |    8,708 |        - |       91 |   11,848 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Company                                  |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Changes in equity for the period         |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| to 31 December 2008                      |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Total recognised income and expense for  |       - |        - |        - |        - |        - | 
| the period                               |         |          |          |          |          | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
| Balance as at 31 December 2008           |   3,049 |    8,708 |        - |       91 |   11,848 | 
+------------------------------------------+---------+----------+----------+----------+----------+ 
 
 
Consolidated Cash Flow Statement 
 
 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
|                                                          |  |  | |  |  |   Period |     Year | 
|                                                          |  |  | |  |  |    ended |    ended | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
|                                                          |  |  | |  |  |       31 |  31 July | 
|                                                          |  |  | |  |  | December |          | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
|                                                          |  |  | |  |  |     2008 |     2008 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
|                                                          |  |  | |  |  |  GBP'000 |  GBP'000 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Cash flows from operating activities                     |  |  | |  |  |          |          | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Profit from operations                                   |  |  | |  |  |      796 |      235 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Depreciation of property, plant and equipment            |  |  |  |  |  |       74 |      147 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Impairment of goodwill                                   |  |  | |  |  |      312 |        - | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Profit on disposal of property, plant and equipment      |  |  | |  |  |       -  |      (8) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Other non-cash movement                                  |  |  | |  |  |      (1) |       20 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Decrease/(increase) in receivables                       |  |  | |  |  |    2,147 |    (757) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Decrease/(Increase) in payables                          |  |  | |  |  |      143 |    (649) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Income taxes paid                                        |  |  | |  |  |    (815) |    (648) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Net cash INFLOW/(OUTFLOW) FROM operating activities      |  |  | |  |  |    2,658 |  (1,660) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Cash flows from investing activities                     |  |  | |  |  |          |          | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Net interest paid                                        |  |  | |  |  |    (128) |    (221) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Acquisition of Relax Finance Limited (including costs of |  |  | |  |  |       -  |  (1,099) | 
| GBP123,000)                                              |  |  | |  |  |          |          | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Acquisition of PB Recovery Limited (including costs of   |  |  | |  |  |       -  |  (1,314) | 
| GBP104,000)                                              |  |  | |  |  |          |          | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Acquisition of property, plant and equipment             |  |  | |  |  |     (98) |     (83) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Disposal of property, plant and equipment                |  |  | |  |  |        - |       63 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Acquisition of intangible fixed assets                   |  |  | |  |  |  (3,088) |  (2,390) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Net cash used in investment activities                   |  |  | |  |  |  (3,314) |  (5,044) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Cash flows from financing activities                     |  |  | |  |  |          |          | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Net increase/(decrease) in borrowings                    |  |  | |  |  |      250 |    2,663 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Proceeds on issue of shares                              |  |  | |  |  |        - |    2,730 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Cash outflow from decrease in debt and HP and finance    |  |  | |  |  |    (268) |        - | 
| leasing                                                  |  |  | |  |  |          |          | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Cost of share issue                                      |  |  | |  |  |       -  |    (109) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Net cash from financing activities                       |  |  | |  |  |     (18) |    5,284 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Net INCREASE/(decrease) in cash and cash equivalents     |  |  | |  |  |    (674) |  (1,420) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Cash and cash equivalents at start of year               |  |  | |  |  |    (201) |    1,219 | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
| Cash and cash equivalents at end of year                 |  |  | |  |  |    (875) |    (201) | 
+----------------------------------------------------------+--+--+-+--+--+----------+----------+ 
 
 
 
 
 
 
Notes to the Consolidated Financial Statements 
 
 
 
 
1. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION 
 
 
A) SIGNIFICANT ACCOUNTING POLICIES 
The consolidated financial statements of the Company for the period ended 31 
December 2008 comprise the Company and its subsidiaries (together referred to as 
the "Group"). 
 
 
B) STATEMENT OF COMPLIANCE 
The consolidated financial statements of Relax Group PLC (formerly Debts.co.uk 
plc) have been prepared in accordance with IFRS incorporating International 
Accounting Standards as issued by the International Accounting Standards Board 
(IASB) and with those parts of the Companies Act 2006 applicable to companies 
reporting under IFRS. 
 
 
C) BASIS OF PREPARATION 
The financial reports have been prepared under the historical cost convention. 
 
 
Non current assets are stated at the lower of carrying amount and fair value 
less costs to sell. 
 
 
The preparation of financial statements in conformity with generally accepted 
accounting principles requires the use of estimates and assumptions that affect 
the reported amounts of assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting year. Although these estimates are based on management's best 
knowledge of the amount, event or actions, actual results ultimately may differ 
from those estimates. 
 
 
Judgements made by management in the application of IFRS that have a significant 
effect on the financial statements and estimates with a significant risk of 
material adjustment in the next year are discussed where appropriate. The 
estimates and underlying assumptions are reviewed on an ongoing basis. 
 
 
Revisions to accounting estimates are recognised in the period in which the 
estimate is revised if the revision effects only that period, or in the 
period of revision and future periods if the revision affects both current and 
future periods. The critical judgements applied within the financial 
statements are in respect of the accounting for databases, as noted at F (ii) 
below, and the net realisable value of work in progress shown as accrued income. 
 
 
D) BASIS OF CONSOLIDATION 
i. SUBSIDIARIES 
Subsidiaries are entities controlled by the Company. Control exists when a 
company has the power, directly or indirectly, to govern the financial and 
operational policies of an entity so as to obtain benefits from its activities. 
In assessing control, potential voting rights that presently are exercisable 
or convertible are taken into account. The financial statements of subsidiaries 
are included in the consolidated financial statements from the date that control 
commences until the date that control ceases. 
ii. TRANSACTIONS ELIMINATED ON CONSOLIDATION 
Intragroup balances, and any unrealised gains and losses or income and expenses 
arising from intragroup transactions, are eliminated in preparing the 
consolidated financial statements. Unrealised losses are eliminated in the same 
way as unrealised gains but only to the extent that there is no evidence 
of impairment. 
 
 
E) PROPERTY, PLANT AND EQUIPMENT 
i. OWNED ASSETS 
Items of property, plant and equipment are stated at cost less accumulated 
depreciation (see below) and impairment losses (see accounting policy J). 
ii. LEASED ASSETS 
Leases in terms of which the Group assumes substantially all the risks and 
rewards of ownership are classified as finance leases. 
iii. DEPRECIATION 
Depreciation is charged to the income statement over the estimated useful life 
of each part of an item of property, plant and equipment. The estimated useful 
lives are as follows: 
+----------------------------------------+-------------------------------------------------------------+ 
| Buildings                              | 50 years                                                    | 
+----------------------------------------+-------------------------------------------------------------+ 
| Leaseholds                             | Over the term of the lease or life of the asset, if shorter | 
+----------------------------------------+-------------------------------------------------------------+ 
| Fixtures and fittings                  | 25% on a reducing balance basis                             | 
+----------------------------------------+-------------------------------------------------------------+ 
| Motor vehicles                         | 25% on a reducing balance basis                             | 
+----------------------------------------+-------------------------------------------------------------+ 
| Computer equipment                     | 33% on a straight line basis                                | 
+----------------------------------------+-------------------------------------------------------------+ 
The residual value, if significant, is reassessed annually. 
 
 
F) INTANGIBLE ASSETS 
i. GOODWILL 
All business combinations are accounted for by applying the purchase method. 
Goodwill represents the amount arising on acquisition of subsidiaries. 
In respect of business acquisitions, goodwill represents the difference between 
the cost of the acquisition and the fair value of the net identifiable assets 
acquired. 
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is 
allocated to cash generating units and is no longer amortised but is 
tested annually for impairment (see accounting policy J). 
Negative goodwill arising on acquisition is recognised directly in the income 
statement. 
ii. DATABASES 
Following the acquisition of Relax Finance Limited the Directors reconsidered 
the Group's accounting for databases. The cost of databases has now been 
capitalised as an intangible fixed asset and comprises the fair value of 
databases acquired as part of a business combination or the data purchase and 
data capture costs of internally developed databases. The Directors consider 
that this new policy better reflects the value to the business of these assets 
and the treatment required by IAS 38. 
Databases are held at cost and have an indefinite useful life. They are tested 
annually for impairment. 
 
 
G) INVESTMENTS IN DEBT AND EQUITY SECURITIES 
The Group classifies its investments depending on the purpose for which the 
investments were acquired. The Directors determine the classification of its 
investment at initial recognition and re-evaluates this designation at every 
reporting date. 
The fair value of unquoted investments is based on valuation techniques. The 
Group assesses at each balance sheet date whether there is objective evidence 
that a financial asset or a group of financial assets is impaired. 
 
 
H) TRADE AND OTHER RECEIVABLES 
Trade and other receivables are stated at their cost less impairment losses (see 
accounting policy J). 
 
 
I) CASH AND CASH EQUIVALENTS 
Cash and cash equivalents comprises cash balances and call deposits. Bank 
overdrafts that are repayable on demand and form an integral part of the Group's 
cash management are included as a component of cash and cash equivalents for the 
purpose of the statement of cash flows. 
 
 
J) IMPAIRMENT 
The carrying amounts of the Group's assets, other than deferred tax assets (see 
accounting policy R), are reviewed at each balance sheet date to determine 
whether there is any indication of impairment. If any such indication exists, 
the asset's recoverable amount is estimated. 
For goodwill, assets that have an indefinite useful life and intangible assets 
that are not yet available for use, the recoverable amount is estimated at each 
balance sheet date. 
An impairment loss is recognised whenever the carrying amount of an asset or its 
cash-generating unit exceeds its recoverable amount. Impairment losses are 
recognised in the income statement. 
Impairment losses recognised in respect of cash generating units are allocated 
first to reduce the carrying amount of any goodwill allocated to cash generating 
units (group of units) and then to reduce the carrying amount of other assets in 
the unit (group of units) on a pro rata basis. 
The recoverable amount of the Group's receivables carried at amortised cost is 
calculated as the present value of the estimated future cash flows, discounted 
at the original effective interest rate. Receivables with a short duration are 
not discounted. 
The recoverable amount of other assets is the greater of their net selling price 
and the value in use. In assessing value in use, the estimated future cash flows 
are discounted to their present value using a pre-tax discount rate that 
reflects current market assessments of the time value of money 
and the risks specific to the asset. For an asset that does not generate largely 
independent cash inflows, the recoverable amount is determined for the 
cash generating unit to which the asset belongs. 
An impairment loss in respect of a receivable carried at amortised cost is 
reversed if the subsequent increase in recoverable amount can be 
related objectively to an event occurring after the impairment loss was 
recognised. 
An impairment loss in respect of goodwill is not reversed. 
In respect of other assets, an impairment loss is reversed if there has been a 
change in the estimates used to determine the recoverable amount. 
An impairment loss is only reversed to the extent that the asset's carrying 
amount does not exceed the carrying amount that would have been determined, net 
of depreciation or amortisation, if no impairment loss had been recognised. 
 
 
K) SHARE CAPITAL 
Dividends on ordinary share capital are recognised as a liability in the year in 
which they are paid. 
 
 
L) INTEREST BEARING BORROWINGS 
Interest bearing borrowings are recognised initially at fair value, net of 
transaction costs incurred. Borrowings are subsequently stated at amortised 
cost; any difference between proceeds (net of transaction costs) and the 
redemption value is recognised in the income statement over the year of the 
borrowings using the effective interest rate method. 
Borrowings are classified as current liabilities unless the Group has an 
unconditional right to defer settlement of the liability for at least twelve 
months after the balance sheet date. 
 
 
M) EMPLOYEE BENEFITS 
i. DEFINED CONTRIBUTION PLANS 
Obligations for contributions to defined contribution pension plans are 
recognised as an expense in the income statement as incurred. 
ii. SHARE-BASED PAYMENT TRANSACTIONS 
The fair value of employee share option schemes is measured by a Black Scholes 
pricing model. Further details are set out in note 18. In accordance with IFRS 2 
"Share based Payments" the resulting cost is charged to the income statement 
over the vesting year of the options. The value of the charge is adjusted to 
reflect expected and actual levels of options vesting period. 
 
 
N) PROVISIONS 
A provision is recognised in the balance sheet when the Group has a present 
legal or constructive obligation as a result of a past event and it is 
probable that an outflow of economic benefits will be required to settle the 
obligation. If the effect is material, provisions are determined by discounting 
the expected future cash flows at a pre-tax rate that reflects current market 
assessments of the time value of money and, where appropriate, the risks 
specific to the liability. 
 
 
O) TRADE AND OTHER PAYABLES 
Trade payables are non-interest bearing and are repayable within one year. 
 
 
P) REVENUE RECOGNITION 
Revenue from services rendered is recognised in the income statement in 
proportion to the stage of completion of the transaction at the balance sheet 
date. 
The stage of completion is assessed by reference to a review of work performed. 
No revenue is recognised if there are significant uncertainties concerning 
the recovery of the consideration due or associated costs. 
 
 
Q) EXPENSES 
i. OPERATING LEASE PAYMENTS 
Payments made under operating leases are recognised in the income statement on a 
straight-line basis over the term of the lease. Lease incentives 
received are recognised in the income statement as an integral part of the total 
lease expense. 
ii. FINANCE LEASE PAYMENTS 
Minimum lease payments are apportioned between the finance charge and the 
reduction of the outstanding liability. The finance charge is allocated 
to each year during the lease term, so as to produce a constant rate of interest 
on the remaining balance of the liability. 
iii. NET FINANCING COSTS 
Net financing costs comprise interest payable on borrowings calculated using the 
effective interest rate method and interest received on funds invested. 
Interest income is recognised in the income statement as it accrues, using the 
effective interest method. The interest expense component of finance lease 
payments is recognised in the income statement using the effective interest rate 
method. 
 
 
R) INCOME TAX 
The charge for current tax is based on the results for the year as adjusted for 
items which are non assessable or disallowed. It is calculated using rates that 
have been enacted or substantively enacted by the balance sheet date. 
Deferred tax is accounted for using the liability method in respect of temporary 
differences arising from differences between the carrying amount of assets and 
liabilities in the financial statements and the corresponding tax basis used in 
the computation of taxable profit. In principle, deferred tax liabilities are 
recognised for all taxable temporary differences and deferred tax assets are 
recognised to the extent that it is probable that taxable profits will be 
available against which deductible temporary differences can be utilised. Such 
assets and liabilities are not recognised if the temporary difference arises 
from goodwill (or negative goodwill) or from the initial recognition (other than 
in a business combination) of other assets and liabilities in a 
transaction which affects neither the tax profit nor the accounting profit. 
Deferred tax liabilities are recognised for taxable temporary differences 
arising on investments in subsidiaries and associates and interest in joint 
ventures, 
except where the Group is able to control the reversal of the temporary 
difference and it is probable that the temporary difference will not reverse in 
the foreseeable future. 
Deferred tax is calculated at the rates that are expected to apply when the 
asset or liability is settled. Deferred tax is charged or credited in the income 
statement, except when it relates to items credited or charged directly to 
equity, in which case the deferred tax is also dealt with in equity. 
Deferred tax assets and liabilities are offset when they relate to income taxes 
levied by the same taxation authority and the Group intends to settle its 
current tax assets and liabilities on a net basis. 
 
 
S) FINANCIAL RISK MANAGEMENT 
The Group uses a limited number of financial instruments, comprising cash, 
short-term deposits, bank loans and overdrafts and various items such as trade 
receivables and payables, which arise directly from operations. The Group does 
not trade in financial instruments. 
FINANCIAL RISK FACTORS 
The Group's activities expose it to a variety of financial risks: credit risk, 
liquidity risk and cash flow interest rate risk. The Group's overall risk 
management programme focuses on the unpredictability of financial markets and 
seeks to minimise potential adverse effects on the Group's financial 
performance. 
i. Credit Risk 
The Group has no significant concentrations of credit risk and has policies in 
place to ensure that sales are made to customers with an appropriate credit 
history. 
ii . Liquidity Risk 
Prudent liquidity risk management implies maintaining sufficient cash and 
available funding through an adequate amount of committed credit facilities. 
The Group ensures it has adequate cover through the availability of bank 
overdraft and loan facilities. 
iii . Cash Flow and Interest Rate Risk 
The Group finances its operations through a mix of cash flow from current 
operations together with cash on deposit and bank and other borrowings. 
Borrowings are generally at floating rates of interest and no use of interest 
rate swaps has been made. 
 
 
2.  Earnings per Share 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
|                                   |          |          |                          Group                          | 
+-----------------------------------+----------+----------+---------------------------------------------------------+ 
|                                   |          |          |      Period ended 31      |    Year ended 31 July     | | 
|                                   |          |          |      December 2008        |           2008            | | 
+-----------------------------------+----------+----------+---------------------------+---------------------------+-+ 
|                                   |          |          |         Pre |        Post |         Pre |        Post | | 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
| Earnings                          |          |          | exceptional | exceptional | exceptional | exceptional | | 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
| Basic EPS                         |          |          |             |             |             |             | | 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
| Reported earnings (GBP'000)       |          |          |         668 |         668 |       2,153 |          22 | | 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
| Reported EPS (p)                  |          |          |       2.19p |       2.19p |       8.99p |       0.09p | | 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
| Diluted EPS                       |          |          |             |             |             |             | | 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
| Diluted reported earnings         |          |          |         668 |         668 |       2,153 |          22 | | 
| (GBP'000)                         |          |          |             |             |             |             | | 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
| Reported diluted EPS (p)          |          |          |       2.19p |       2.19p |       8.80p |       0.09p | | 
+-----------------------------------+----------+----------+-------------+-------------+-------------+-------------+-+ 
 
 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
|                                                         | | |   | | |      Period |       Year | 
|                                                         | | |   | | |       ended |      ended | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
|                                                         | | |   | | |          31 |   31 July  | 
|                                                         | | |   | | |    December |            | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
|                                                         | | |   | | |        2008 |       2008 | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
|                                                         | | |   | | |      Number |     Number | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
| Weighted average number of ordinary shares:             | | |   | | |             |            | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
| Issued ordinary shares at 1 August 2008                 | | |   | | | 30,493,255  | 21,093,254 | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
| Effect of 18 March 2008 share issue                     | | |   | | |          -  |  2,243,836 | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
| Effect of 23 May 2008 share issue                       | | |   | | |          -  |    630,137 | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
| Weighted average number of ordinary shares              | | |   | | | 30,493,255  | 23,967,227 | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
| Average shares used in calculating the Basic EPS        | | |   | | | 30,493,255  | 23,967,227 | 
| calculation                                             | | |   | | |             |            | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
| Dilutive share options outstanding                      | | |   | | | 36,309      |          - | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
| Weighted average number of ordinary shares              | | |   | | | 30,529,564  | 23,967,227 | 
+---------------------------------------------------------+-+-+---+-+-+-------------+------------+ 
 
 
 
 
3. Subsequent Events 
There are no post balance sheet events. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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