TIDMCLEA
RNS Number : 4097Z
Cleardebt Group PLC
07 March 2013
ClearDebt Group plc
("ClearDebt" or "the Group")
Unaudited Interim Results for the six months ended 31 December
2012
ClearDebt, the AIM quoted personal debt resolution adviser,
announces its Interim Results for the six months ended 31 December
2012.
We have experienced difficult trading conditions and the
expected growth has not materialised during this half-year period
notwithstanding the on-going high levels of personal debt in the
UK. Steps are being taken to reduce our cost base for the
foreseeable future and whilst new income streams have opened up the
potential for an ultimate increase in future profitability, the low
level of new IVAs has curbed current growth and profitability.
Financial Highlights:
Ø Revenues increased by 2% to GBP4,660,098 (2011:
GBP4,551,314)
Ø EBITDA down by 32% to GBP974,119 (2011: GBP1,443,107)
Ø Profit before tax decreased by 73% to GBP123,232(2011:
GBP451,648)
Operational Highlights:
Ø Decrease in number of IVAs passed to 689 (2011: 833)
Ø Now managing 7,115 IVAs and PTDs (2011: 6,111)
Ø Abacus, the Group's debt management arm, now has 7,543 (2011:
7,130) debt management plans under management.
Ø Use of ClearCash, the Group's prepaid MasterCard continues
progress in attracting new clients with its new enhanced
functionality and individual sort code and account number.
Outlook:
Ø Slowdown in new IVA acquisition. Actively seeking to expand
referral base and reduce costs elsewhere in the business.
Ø New debt management protocol welcomed although on its
introduction there may be short term pressure on income as set up
fees are set to be spread over a six month period.
Ø Existing pipeline of new business indicates a slow rate of
growth through to the year-end offset by the benefit of additional
IVA income from payment protection mis-selling receipts expected
into our IVAs as claims are processed over the coming months.
David Mond, CEO of ClearDebt commented:
"This was a disappointing and difficult half-year borne out by a
continuation of the general trend of falling personal insolvency
numbers in the UK over recent quarters. We have felt the effect of
this with poor volumes of new IVAs passed in the period although we
have increased the numbers of clients under debt management. We are
however expecting increased fee income derived from mis-sold
payment protection insurance claims as claims for our clients in an
IVA are submitted and proceeds are received into the IVAs.
ClearCash is making progress on its new platform with its
enhanced product offering proving more attractive to
consumers".
7 March 2013
For further information, please contact:
ClearDebt Group plc David Mond, Chief Executive
Officer
Tel No: 0161 968 6806
Seymour Pierce Guy Peters, David Banks or
(Broker and Nominated Katie Ratner
Adviser) Tel No: 020 7107 8000
Chairman's Statement
I present our Interim results for the 6 months ended 31 December
2012.
The Group recorded a disappointing profit before taxation of
only GBP123,232 as compared to GBP451,648 in the equivalent period
last year. This was after reduced amortisation costs of GBP469,675
(2011: GBP624,330) and slightly higher interest charges of
GBP303,503 (2011: GBP296,592). Earnings before interest, tax,
depreciation and amortisation ("EBITDA") were also down to
GBP974,119 (2011: GBP1,443,107) reflecting a difficult trading
period. Despite a 2% increase in turnover to GBP4,660,098 (2011:
GBP4,551,314) gross margins were reduced substantially to 41%
(2011: 53%) reflecting increased marketing costs and high sales
focused payroll costs spread over poor levels of new business in
the period.
Although profitability has suffered in the period, cash flow has
been good, with cash at 31 December 2012 standing at GBP1,406,333
as compared to GBP462,459 at 30 June 2012 as we build our reserves
to repay the GBP2.3m convertible loan in April 2013.
ClearDebt - IVAs
Revenues in the division decreased by 12% to GBP2,882,478 (2011:
GBP3,263,833) although EBITDA decreased by only 7% to GBP1,017,617
(2011: GBP1,092,643) due in part to continued income from
consultancy services related to the IVA business. Overall profit
before tax for the division fell to GBP242,793 (2011:
GBP350,518).
ClearDebt approved a disappointing total of 689 (2011: 833) new
IVAs in the period - a fall of 17% on the same period last year.
Referrals from OFT compliant lead sources are proving harder to
come by as many are increasingly restricted to fewer legitimate
data sources driving prices up in some cases but mainly reducing
the volumes of referrals. Clients' average monthly disposable
income continues to fall as their incomes are static at best and
they suffer continued rises in food and energy costs which in turn
reduces the IVA fees charged under the protocol.
We continue to seek to expand our compliant referral base and
look for new referral sources. As at 31 December 2012 ClearDebt had
7,115 IVA and protected trust deed clients (2011: 6,111).
Abacus - DMPs
The Abacus debt management division and our group sales
operations made a loss before tax of GBP119,561 against a profit in
2011 of GBP101,130. Revenues in the half year increased to
GBP1,777,620 (2011: GBP1,287,481) mainly due to income from PPI
mis-selling, however this was more than offset by high call centre
payroll costs and marketing costs which produced disappointing
levels of business particularly for IVA but also for DMPs.
After the period end the Insolvency Service announced a Debt
Management protocol which we welcome and should enable plans to be
more sustainable in the long term and ultimately benefit consumers
and creditors alike. Whilst the spreading of set up fees over the
first six months of the plan may affect short term profitability we
expect that reputable providers, such as ourselves, who offer
protocol compliant debt management plans, will see an increased
demand as debtors seek such providers out.
As at 31 December 2012 Abacus is managing a total of 7,543DMPs
(2011: 7,130).
ClearCash prepaid MasterCard -
The completion of the migration progress for existing ClearCash
cardholders to a new provider was successfully completed in the
period and although we have incurred one off costs of some
GBP32,500 we are already seeing the benefits of the improved
functionality that the new card platform provides including the
ability to offer direct debits, individual account numbers and sort
codes as well as credit building capabilities. This additional
functionality gives the ClearCash prepaid MasterCard most of the
functionality that is seen of a traditional bank account, on a pay
per transaction basis or pay monthly basis, which importantly does
not allow cardholders to inadvertently go overdrawn, often saving
cardholders from incurring substantial charges from traditional
bank accounts.
We have seen a positive effect on new client recruitment since
the new platform and functionality was introduced and from the July
2012 launch to 31 December 2012 we have received 7,799 card
applications. This compares favourably with a total of 9,679 for
the old card from launch in May 2009 until migration in July
2012.
We continue to see the ClearCash offering as an integral service
opportunity for our clients, especially for those who have
difficulty accessing traditional bank accounts due to their poor
credit status.
Outlook
In the absence of any major new lead sources the short term
outlook for the rest of the year in terms of new client
recruitment, particularly in respect of IVAs, looks poor. This will
impact profitability but have little short term impact on cash flow
which is largely driven by revenue from the existing back books of
clients. Despite this we are confident of achieving a profit for
the full year, particularly as we start to see the benefit of
additional fees related to the receipts of PPI mis-selling claims
which are starting to be received for our IVA clients.
We continue to conserve cash and cut costs wherever possible as
we approach April when the convertible loans will be repaid from
our cash reserves and additional funding which David Mond has made
available should it be required.
As part of the Board's review of costs in the business we have
reluctantly come to the conclusion that the not insignificant
financial costs of maintaining the Group's AIM listing together
with the senior management time involved can no longer be justified
and we have today published notice of our intention to cancel our
AIM listing. We have been unable to obtain funding from the AIM
markets for some time now and we see no prospect of doing so in the
near future due to our low market capitalisation and our business
sector and continue to rely on funding from our main shareholder in
order to make acquisitions and finance the business. We intend to
put in place a matched bargain facility for shareholders who wish
to buy or sell the Group's shares once we have delisted. We will
write to shareholders with details of how the facility will operate
once it is finalised.
Gerald Carey FCIB
7 March 2013
ClearDebt Group plc 6 Months 6 Months Year
Consolidated Income Statement ended ended ended
31 December 2012 31 December 2011 30 June 2012
Unaudited Unaudited Audited
Note GBP GBP GBP
Revenue 4 4,660,098 4,551,314 9,203,453
Cost of sales (2,728,576) (2,157,930) (4,525,379)
__________ __________ __________
Gross profit 1,931,522 2,393,384 4,678,074
Administrative expenses (924,331) (910,999) (1,854,384)
Share based payment (33,072) (39,278) (85,723)
__________ __________ __________
Profit before interest, tax,
depreciation and amortisation 974,119 1,443,107 2,737,967
Depreciation (82,390) (71,427) (147,490)
Amortisation (469,675) (624,330) (1,199,481)
Gain on bargain purchase - - 27,089
_________ __________ __________
Profit from operations 422,054 747,350 1,418,085
Finance costs (303,503) (296,592) (585,611)
Finance income 4,681 890 2,284
_________ __________ __________
Profit before taxation 123,232 451,648 834,758
Taxation 6 (36,006) (117,429) (243,501)
_________ __________ __________
Profit after taxation for period 87,226 334,219 591,257
_________ __________ __________
Earnings per ordinary share -
basic (pence) 5 0.03p 0.11p 0.19p
Earnings per ordinary share -
diluted (pence) 5 0.03p 0.11p 0.19p
The results for the period are derived from continuing
activities.
ClearDebt Group plc As at As at As at
Consolidated Statement of Financial 31 December 31 December 30 June
Position 2012 2011 2012
Unaudited Unaudited Audited
GBP GBP GBP
Assets
Non-current assets
Intangible assets 5,229,700 6,140,598 5,626,779
Property, plant and equipment 457,668 341,742 375,593
Deferred taxation 72,034 78,188 72,034
------------- -------------- ------------
5,759,402 6,560,528 6,074,406
Current assets
Trade receivables 2,491,540 2,026,641 2,669,662
Other receivables 664,193 294,616 759,216
Cash and cash equivalents 1,406,333 625,324 462,459
------------- -------------- ------------
4,562,066 2,946,581 3,891,337
Total assets 10,321,468 9,507,109 9,965,743
============= ============== ============
Equity and liabilities
Issued capital 6,166,812 6,166,812 6,166,812
Share premium account 279,948 279,948 279,948
Share based compensation 322,107 242,590 289,035
Other reserves 96,495 96,495 96,495
Retained losses (917,502) (1,261,766) (1,004,728)
Total equity 5,947,860 5,524,079 5,827,562
Current liabilities
Trade and other payables 940,569 749,660 912,166
Corporation tax payable 309,159 210,091 263,970
Current financial liabilities 2,768,327 - 2,597,306
------------- -------------- ------------
4,018,055 959,751 3,773,442
Non-current liabilities
Financial liabilities 315,000 2,956,615 315,000
Deferred taxation 40,553 66,664 49,739
------------- -------------- ------------
Total liabilities 4,373,608 3,983,030 4,138,181
------------- -------------- ------------
Total equity and liabilities 10,321,468 9,507,109 9,965,743
============= ============== ============
6 Months 6 Months Year
ClearDebt Group plc ended ended ended
Consolidated Statement of Cash 31 December 31 December 30 June
flows 2012 2011 2012
Unaudited Unaudited Audited
GBP GBP GBP
Cash flow from continuing operating
activities
Profit before taxation 123,232 451,648 834,758
Depreciation of property, plant
and equipment 82,390 71,427 147,490
Amortisation of intangible assets 469,675 624,330 1,199,481
Gain on bargain purchase - - (27,089)
Profit on sale of fixed assets - - (1,739)
Share based payment 33,072 39,278 85,723
Decrease/(increase) in trade and
other receivables 273,142 (139,298) (1,246,980)
Finance costs 303,503 296,592 585,611
Finance income (4,681) (890) (2,284)
Increase in trade and other payables 27,341 50,462 213,973
------------------------- ------------- ------------
Cash generated by operations 1,307,674 1,393,549 1,788,944
Corporation tax payment - - (91,995)
Interest paid loans (131,538) (157,341) (291,614)
--------------------- ------------- ------------
Net cash generated by operating
activities 1,176,136 1,236,208 1,405,335
Investing activities
Acquisition of business and assets - - (267,080)
Acquisition of intangibles (72,596) (288,238) (46,370)
Acquisition of property, plant
and equipment (164,347) (160,172) (270,085)
Finance income 4,681 890 2,284
Sale of property, plant and equipment - - 1,739
-------------------------
Net cash used in investing activities (232,262) (447,520) (579,512)
Financing activities
Repayment of existing loans - (500,000) (700,000)
Cash used in financing activities - (500,000) (700,000)
------------------------- ------------- ------------
Increase in cash and cash equivalents 943,874 288,688 125,823
Opening cash and cash equivalents 462,459 336,636 336,636
------------------------- ------------- ------------
Closing cash and cash equivalents 1,406,333 625,324 462,459
============= ============
ClearDebt Group Share Total
plc Issued premium Share based Other Retained
Consolidated Statement Capital account compensation Reserves losses
of Changes in Equity
GBP GBP GBP GBP GBP GBP
Balance at 1 Jul
2011 6,166,812 279,948 203,312 96,495 (1,595,985) 5,150,582
Share based compensation - - 39,278 - - 39,278
Profit for the period - - - - 334,219 334,219
Balance at 31 Dec
2011 6,166,812 279,948 242,590 96,495 (1,261,766) 5,524,079
Share based compensation - - 46,445 - - 46,445
Profit for the period - - - - 257,038 257,038
As at 1 Jul 2012 6,166,812 279,948 289,035 96,495 (1,004,728) 5,827,562
Share based compensation - - 33,072 - - 33,072
Profit for the period - - - - 87,226 87,226
Balance at 31 Dec
2012 6,166,812 279,948 322,107 96,495 (917,502) 5,947,860
=========== ========= ============== ========== ============= ===========
Notes to the Interim Financial Statements
1. General information
The Group's interim financial information consolidates the
results of ClearDebt Group plc and its subsidiary companies made up
to 31 December 2012. 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
This interim financial information does 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 2012, which have been prepared in accordance with IFRSs as
adopted by the European Union. The Group's statutory accounts for
the year ended 30 June 2012 have been delivered to the Registrar of
Companies.
The report of the auditors was modified in relation to revenues
of GBP1,307,992 which were reported in the Group financial
statements for the year ended 30 June 2012 (2011: GBP361,341) for
consultancy services provided to a corporate entity which in the
auditors opinion was a related party under the definitions of IAS
24 "Related Party Disclosures". In respect of these revenues, they
were not able to obtain sufficient appropriate evidence as to:
1) the substance of the services provided; or
2) whether the amounts recognised have been correctly stated
and/or recognised in the correct accounting period, or in
accordance with the terms of the contract which, we are informed,
governs these revenues.
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 2012.
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 2013. The Group financial statements for the year ended 30
June 2012 were prepared under International Financial Reporting
Standards as adopted by the European Union.
The intangible insolvency assets are being amortised over four
years which the directors have selected to approximate as closely
as possible to the period over which it is estimated that the vast
majority of income will be received.
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. The timing of the cash
flows in respect of loans provided has been taken into
consideration and David Mond has provided the Board with an
undertaking of support in the event that the Group should require
additional finance.
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, profit before taxation and net assets
were all derived from its principal activities being the provision
of IVA and other financial advice and appropriate solutions to
individuals experiencing personal debt problems. All the Group's
activities were undertaken wholly in the United Kingdom.
Debt
6 months to 31 December Insolvency Management Total
2012
GBP GBP GBP
Revenue 2,882,478 1,777,620 4,660,098
Cost of sales (1,198,146) (1,530,430) (2,728,576)
Gross profit 1,684,332 247,190 1,931,522
Administrative expenses (646,311) (278,020) (924,331)
Share based payment (20,404) (12,668) (33,072)
Profit/(loss) before interest,
tax,
depreciation and amortisation 1,017,617 (43,498) 974,119
Depreciation (67,028) (15,362) (82,390)
Amortisation (469,675) - (469,675)
Profit/(loss) from operations 480,914 (58,860) 422,054
Finance costs (242,802) (60,701) (303,503)
Finance income 4,681 - 4,681
Profit/(loss) before taxation 242,793 (119,561) 123,232
Taxation (70,939) 34,933 (36,006)
Profit/(loss) after taxation
for period 171,854 (84,628) 87,226
4. Segmental Information (continued)
Debt
6 months to 31 December 2011 Insolvency Management Total
GBP GBP GBP
Revenue 3,263,833 1,287,481 4,551,314
Cost of sales (1,527,079) (630,851) (2,157,930)
Gross profit 1,736,754 656,630 2,393,384
Administrative expenses (622,897) (288,102) (910,999)
Share based payment (21,214) (18,064) (39,278)
Profit before interest, tax,
depreciation and amortisation 1,092,643 350,464 1,443,107
Depreciation (47,397) (24,030) (71,427)
Amortisation (492,217) (132,113) (624,330)
Profit from operations 553,029 194,321 747,350
Finance costs (203,401) (93,191) (296,592)
Finance income 890 - 890
Profit before taxation 350,518 101,130 451,648
Taxation (83,095) (34,334) (117,429)
Profit after taxation for
period 267,423 66,796 334,219
4. Segmental Information (continued)
Debt Management
Year ended 30 June 2012 Insolvency Total
GBP GBP GBP
Revenue 6,291,276 2,912,177 9,203,453
Cost of sales (2,796,908) (1,728,471) (4,525,379)
Gross profit 3,494,368 1,183,706 4,678,074
Administrative expenses (1,174,368) (680,016) (1,854,384)
Share based payment (47,310) (38,413) (85,723)
Profit before interest, tax,
depreciation and amortisation 2,272,690 465,277 2,737,967
Depreciation (106,183) (41,307) (147,490)
Amortisation (1,031,677) (167,804) (1,199,481)
Gain on bargain assets 27,089 - 27,089
Profit from operations 1,161,919 256,166 1,418,085
Finance costs (468,489) (117,122) (585,611)
Finance income 2,284 - 2,284
Profit before taxation 695,714 139,044 834,758
Taxation (178,059) (65,442) (243,501)
Profit after taxation for
period 517,655 73,602 591,257
4. Segmental Information (continued)
6 months ended
6 months ended As at Year ended
31 Dec 2012 31 Dec 2011 30 Jun 2012
GBP GBP GBP
Capital expenditure to acquire
intangible assets
Insolvency 72,596 288,238 349,569
Debt management - - -
72,596 288,238 349,569
Capital expenditure to acquire
property, plant and equipment
Insolvency 142,349 146,711 240,240
Debt management 21,998 13,461 29,845
164,347 160,172 270,085
Depreciation of property,
plant and equipment
Insolvency 67,029 47,397 106,183
Debt management 15,361 24,030 41,307
82,390 71,427 147,490
Amortisation of intangible
assets
Insolvency 469,675 492,217 1,031,677
Debt management - 132,113 167,804
469,675 624,330 1,199,481
5. Earnings per ordinary share
6 Months
ended 6 Months ended Year ended
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
GBP GBP GBP
Profit attributable to equity
holders of parent 87,226 334,219 591,257
Weighted average number of
shares in issue - basic 308,340,567 308,340,567 308,340,567
Weighted average number of
shares in issue - diluted 308,340,567 308,340,567 308,340,567
Earnings per share - basic
(pence) 0.03 0.11 0.19
Earnings per share - diluted
(pence) 0.03 0.11 0.19
The weighted average number of ordinary shares for calculating
the diluted earnings per share above is identical to those for the
basic earnings per share. This is because the outstanding share
warrants, share options and potential shares issued under the
convertible loan would not be dilutive under the terms of
International Accounting Standard ("IAS") 33.
6. Taxation
6 Months ended 6 Months ended Year Ended
31 December 31 December 30 June
2012 2011 2012
GBP GBP GBP
Analysis of current year
Current tax
UK corporation tax due 45,192 117,429 264,637
Over provision from prior
years - - (667)
Deferred tax
Temporary differences, origination
and reversal (9,186) - (20,469)
Tax on profit for the period 36,006 117,429 243,501
7. The Board of Directors approved the interim report on 7 March
2013. 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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