RNS Number:8031U
Debtmatters Group PLC
29 November 2005
DEBTMATTERS GROUP PLC
("the Company")
Interim results for the Six Months Ended 30 September 2005
Financial Highlights
* Strong growth delivered across business
* Revenues up 230% to #2.44million (2004: #0.74million)
* Profit before tax up 530% to #818,000 (2004: #130,000)
* Strong balance sheet with #1million cash at bank and no debt
* "Approved" IVA cases exceed 200 for first time in September (ahead of
schedule)
* Cost of case acquisition reducing alongside rapid expansion in case
numbers
* 2 additional Insolvency Practitioners recruited to support business
growth
* Staff numbers up since float by over 50% to 75
* Agreement with established money advice organisation for exclusive
supply of IVAs
* Acquisition of Unique Business Finance Limited broadens range of
services offered
* New software system purchased enhancing operating efficiency
* Directors confident of continued growth
Ges Ratcliffe, Chief Executive of Debtmatters, commented,
"I am delighted to announce a strong set of results, which reflects growth
across the entire business, particularly as it has been achieved with an
improvement in operating profit margin. We processed 230 IVAs in September which
represents a 78% increase over our numbers in April 2005. We have recruited
additional staff to support this growth as well as making an acquisition which
will enable us to offer complimentary insolvency services. Whilst we are
concentrating on organic growth through direct marketing channels, we are also
pursuing third party relationships in order to develop further IVA referral
streams. The Board is confident of steady and sustained growth"
Enquiries:
Ges Ratcliffe CEO, Debtmatters Group plc 01204 845 700
Dugald Carlean / Freddy Crossley Charles Stanley & Co. Ltd 020 7739 8200
Shane Dolan Biddicks 020 7448 1000
Debtmatters Group plc
Interim results for the six months ended 30 September 2005
Chairman's Statement
I am delighted to report Debtmatters' maiden interim financial results for the
six months ended 30th September 2005.
During the period under review, the Company, which provides permanent solutions
to consumers in debt via Individual Voluntary Arrangements (IVAs) has made rapid
progress in pursuit of its growth strategy.
Key achievements during the period include a successful AIM flotation in June
2005 via an oversubscribed institutional placing which raised #3m. These funds
are enabling our business to widen its geographic reach and accelerate its
growth within a market place which offers significant opportunities for both
organic growth and consolidation. In April 2005 we processed 129 IVA cases and
in September 2005 we processed 230 IVAs, a 78% increase in five months.
This sustained growth has been underpinned by the appointment of two additional
Insolvency Practitioners in July, which has significantly enhanced our IVA
processing capability as well as secured our reputation for offering industry
leading service levels.
Since the period end, we have consolidated our organic growth by entering into
an exclusive agreement with a South East based money advice organisation to
process their IVA cases, which currently number in the region of 50 per month.
The Board will examine the opportunities for similar relationships in the short
to medium term. In addition, we have acquired Unique Business Finance Limited,
which brings on board complementary insolvency services broadening Debtmatters'
offering in its key markets.
In the New Year, I intend to strengthen our Board further with the appointment
of a non-executive director with substantial industry experience who will play a
significant role during the next phase of our planned growth. The Board is
confident of further progress in the current year and beyond and strongly
believes that Debtmatters is well placed to deliver steady and sustained growth
in a growing market. I look forward to updating shareholders with further
progress in due course.
Noel Guilford BA FCA MSI
Non Executive Chairman
Debtmatters Group plc
Interim results for the six months ended 30 September 2005
Chief Executive's Statement
Business
Following the flotation of Debtmatters Group plc on AIM in June 2005, I am
delighted to present our first set of interim results for the six months to 30
September 2005. I would also like to take this opportunity to welcome new
shareholders to the Company.
Results for the period under review are very encouraging. The business, which
was profitable pre float has accelerated its profitability with the benefit of
the #3m proceeds from our flotation.
Revenues were up 230% to #2.44million (2004: #0.74million) and profit before tax
increased by 530% to #818,000 (2004: #130,000). In addition, this performance is
underpinned by a strong balance sheet with #1million of cash. These numbers
reflect the strength of our business model as well as the solid foundations in
place from which we will drive further growth.
We have dramatically increased the levels of business undertaken in recent
months and have successfully supported this growth by ongoing investment in
infrastructure and capacity.
It is worth highlighting that Debtmatters delivered 100 "approved" cases per
month for the first time in March 2005 and during September 2005 this rose to
230 cases. This significant growth has been made possible by the effective
business processes already in place and further growth has been facilitated by
the appointment of two additional Insolvency Practitioners ("IPs") in July. I am
pleased to report that this growth, which includes a 50% increase in staff
numbers to 75 has been achieved without impacting negatively on profitability.
Strategy
Our continued growth will be derived from a number of sources:
Our direct marketing channels, which attract new clients will be strengthened
over the next six months. This has been the most significant contributor to the
increased activity levels since flotation and will continue to be our main
source of business. Additional funds for advertising have enabled us to
negotiate better discounts with various media resulting in a decreasing cost of
case acquisition as we had anticipated at the time of flotation. The Board
continues to review a variety of advertising media and will take advantage of
these when appropriate but not at over inflated costs.
We will continue to invest time and effort in developing new strategic alliances
with various organisations. One such deal has already been successfully
concluded with an established "money advice organisation" in the South East from
whom we are already receiving around 50 new clients each month. There are
several other parties with whom we are in early stage negotiations and we
anticipate that a few will develop into beneficial relationships in due course.
Another notable development since flotation is the acquisition of Unique
Business Finance Limited. This business brings with it certain experienced
staff, who will be of considerable benefit to Debtmatters and enable the company
to undertake a broader range of insolvency activities. Whilst the core business
will remain IVAs, an ability to undertake other types of work will enable
Debtmatters to provide a wider range of services which will be particularly
useful when negotiating strategic alliances with various sources of work.
In addition, the acquisition also provides our IPs with exposure to a broader
insolvency remit which in turn develops their wider commercial experience. Such
experience will provide an attractive incentive in future recruitment campaigns
for IPs.
People
Our business is growing and has developed a leading reputation for excellent
client service. This has been achieved as a result of the dedication of our
people who have invested significant time and effort to make our business a
success. I am especially pleased therefore that so many staff, several of whom
have been with the Company for many years, decided to invest in the initial
float and have added to their holdings subsequently. This continues to reflect
the high commitment levels and loyalty shown by our staff and results in very
low staff turnover, all of which is important in a "people business." I would
like to thank all our staff for their commitment to date and look forward to
further shared successes in the short to medium term.
Outlook
We will continue to strengthen and develop our established business as well as
pursue strategic relationships with third parties in order to secure referrals
of IVA business. This strategy has begun and we anticipate in the years ahead it
will develop into a solid revenue stream. We have also strengthened our
insolvency services via a recent acquisition and as a result are well placed to
capitalise on significant market opportunities.
In addition, we have invested in our IT infrastructure since float, which will
consolidate our position in the market place as a provider of fast and effective
debt advice to clients and where appropriate the quick delivery of a concluded
IVA solution. Such service levels differentiate our business from many of our
competitors and will help to grow our market share over the short to medium
term.
The Directors are confident of continued progress and look forward to updating
shareholders in due course.
Ges Ratcliffe
Chief Executive
Debtmatters Group plc
Interim results for the six months ended 30 September 2005
Group Profit and Loss Account
Notes Unaudited 6 Unaudited 6 Year ended 31
months ended 30 months ended 30 March 2005
September 2005 September 2004
# # #
Turnover 3 2,439,143 741,238 2,553,843
Cost of sales (955,018) (340,989) (1,208,894)
-------- ------- --------
Gross Profit 1,484,125 400,249 1,344,949
Administrative
expenses (671,084) (257,653) (805,460)
-------- ------- --------
Operating
Profit 813,041 142,596 539,489
Net interest
(payable)/receivable 4,830 (12,386) (34,954)
-------- ------- --------
Profit on
ordinary
activities
before
taxation 817,871 130,210 504,535
-------- ------- --------
Taxation 4 (245,361) (38,599) (133,761)
-------- ------- --------
Retained
profit on
ordinary
activities 572,510 91,611 370,774
-------- ------- --------
Earnings per share
Basic 5 2.54p 0.46p 1.85p
-------- ------- --------
Diluted 5 2.51p 0.46p 1.85p
-------- ------- --------
There were no recognised gains or losses other than the profit for the period
Debtmatters Group plc
Interim results for the six months ended 30 September 2005
Group Balance Sheet
Notes Unaudited 6 Unaudited 6 Year ended 31
months ended 30 months ended 30 March 2005
September 2005 September 2004
# # #
Fixed assets
Tangible assets 186,603 76,423 102,483
Intangible
assets 28,098 21,542 19,532
-------- -------- --------
214,701 97,965 122,015
Current assets
Work in
progress 443,336 54,911 94,519
Debtors 2,384,400 848,925 1,368,620
Cash at bank
and in hand 1,534,081 13,897 20,456
-------- -------- --------
4,361,817 917,733 1,483,595
Creditors:
amounts
falling due
within one
year (1,044,524) (909,753) (1,191,728)
-------- -------- --------
Net current
assets 3,317,293 7,980 291,867
-------- -------- --------
Total assets
less current
liabilities 3,531,994 105,945 413,882
Creditors:
amounts
falling due
after more
than one year (180,234) (33,521) (57,636)
Provisions for liabilities
and charges
Deferred
taxation (6,369) (1,710) (6,369)
-------- -------- --------
Net assets 3,345,391 70,714 349,877
-------- -------- --------
Capital and reserves
Called up
share capital 6 2,461,539 2,000,000 2,000,000
Share premium
account 6 1,961,465 - -
Merger reserve 6 (1,999,996) (1,999,996) (1,999,996)
Profit and
loss account 6 922,383 70,710 349,873
-------- -------- --------
Total
shareholders'
funds 3,345,391 70,714 349,877
-------- -------- --------
Debtmatters Group plc
Interim results for the six months ended 30 September 2005
Group Cash Flow Statement
Notes Unaudited 6 Unaudited 6 Year ended 31
months ended 30 months ended 30 March 2005
September 2005 September 2004
# # #
Net cash
inflow from
operating
activities 8 (439,473) (73,675) (51,243)
Returns on investments and
servicing of finance
Interest
received 16,686 - -
Interest paid (9,344) (11,380) (30,731)
Interest
element of
hire purchase (2,512) (1,006) (4,223)
--------- ------- -------
4,830 (12,386) (34,954)
--------- ------- -------
Taxation - - -
Capital expenditure
Payments to
acquire
intangible
fixed assets (11,610) (9,610) (9,610)
Payments to
acquire
tangible fixed
assets (101,833) (20,010) (59,575)
Sale of
tangible fixed
assets - 2,900 6,775
--------- ------- -------
(113,443) (26,720) (62,410)
--------- ------- -------
Financing
Proceeds on
issue of
ordinary
shares 3,000,000 - -
Share issue
costs (576,996) - -
Capital
element of
hire purchase (25,967) (9,721) 15,561
--------- ------- -------
2,397,037 (9,721) 15,561
--------- ------- -------
--------- ------- -------
Increase/(decrease) in cash 1,848,951 (122,502) (133,046)
--------- ------- -------
Debtmatters Group plc
Interim results for the six months ended 30 September 2005
Reconciliation of Net Cash Flow to Movement in Net Funds
Notes Unaudited 6 Unaudited 6 Year ended 31
months ended 30 months ended 30 March 2005
September 2005 September 2004
# # #
Increase/(decrease) in cash 1,848,951 (122,502) (133,046)
Cash
outflow/(inflow)
in respect
of hire
purchase 25,967 9,721 (15,561)
-------- -------- --------
Change in net
debt 1,874,918 (112,781) (148,607)
Other non cash movements:
Hire purchase
contracts - (54,886) (31,712)
Net
funds/(debt)
at start of
the period (552,008) (371,689) (371,689)
-------- -------- --------
Net
funds/(debt)
at end of the
period 1,322,910 (539,356) (552,008)
-------- -------- --------
Debtmatters Group plc
Interim results for the six months ended 30 September 2005
Notes to the Interim Financial Statements
1. Interim accounts
The interim financial information contained in this statement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. It has been prepared on the basis of the accounting policies set out in
the statutory accounts for the year ended 31 March 2005. The financial
information for the full preceding year is based upon the financial statements
for the year ended 31 March 2005. These accounts, upon which the auditors issued
an unqualified opinion and which did not contain a statement under s237 (2) or
(3) Companies Act 1985, have been delivered to the Registrar of Companies.
2. Basis of consolidation
Under a group reconstruction on the 8 June 2005, the Company acquired the whole
of the issued share capital of Debtmatters Limited and Debtmatters Commercial
Limited in exchange for shares. The reconstruction has been accounted for in
accordance with the principles of merger accounting set out in the Financial
Reporting Standard No 6 (FRS 6) and in accordance with Schedule 4a of the
Companies Act 1985. The Interim Results have been prepared as if Debtmatters
Limited and Debtmatters Commercial Limited had been owned and controlled by the
company throughout the periods ended 30 September 2005, 30 September 2004 and 31
March 2005.
3. Turnover
Turnover in the profit and loss account represents amounts billed or to be
billed in respect of services performed on behalf of clients. The amounts taken
to turnover are calculated as follows:
Nominee fees: on approval of a proposal in a formal creditors meeting the full
amount of the nominee fee is taken less a provision for cases on which the full
fee may not be recoverable.
Supervisory fees: on a monthly basis as billed following the creditors' meeting
4. Taxation
Taxation is provided for at an estimated effective rate of 30%, being the
standard rate of corporation tax for UK companies.
5. Earnings per share
Earnings and the number of shares used in the calculations of earnings per share
are set out below:
Unaudited 6 Unaudited 6 Year ended 31
months ended 30 months ended 30 March 2005
September 2005 September 2004
# # #
Profit for the
period 572,510 91,611 370,774
Weighted average number of shares
in issue: No. No. No.
For basic
earnings per
share 22,547,289 20,000,000 20,000,000
For diluted
earnings per
share 22,835,585 20,000,000 20,000,000
For adjusted
earnings per
share 24,615,385 20,000,000 20,000,000
Earnings per share:
Basic 2.54p 0.46p 1.85p
Diluted 2.51p 0.46p 1.85p
Adjusted 2.33p 0.46p 1.85p
The diluted earnings per share for the period includes 288,296 shares arising
from the dilutive effect of share options.
The adjusted earnings per share for the period has been calculated on the basis
that Debtmatters Group plc had in issue throughout the period, the 4,615,385
shares which were issued on admission to AIM on 22 June 2005.
6. Reconciliation of Shareholders funds and movement on reserves
Share capital Share Merger reserve Profit and loss Total
premium account
# # # # #
At 1 April
2004 as
previously
reported:
Debtmatters
Limited 2 - - (20,901) (20,899)
Debtmatters
Commercial
Limited 2 - - - 2
Merger
adjustment 1,999,996 - (1,999,996) - -
------- ------- -------- ------- -------
At 1 April
2004
restated 2,000,000 - (1,999,996) (20,901) (20,897)
Profit for
the year - - - 370,774 370,774
-------- ------- -------- ------- -------
As at 31
March 2005 2,000,000 - (1,999,996) 349,873 349,877
Share issue 461,539 2,538,461 - - 3,000,000
Share issue
costs - (576,996) - - (576,996)
Profit for
the period - - - 572,510 572,510
-------- -------- -------- ------- --------
As at 30
September
2005 2,461,539 1,961,465 (1,999,996) 922,383 3,345,391
-------- -------- -------- ------- --------
7. Called up share capital
No #
Authorised
Ordinary shares of 10p each 35,200,000 3,520,000
--------- ---------
Allocated, called up and full paid
Issued subscriber shares 2 2
Subdivision of ordinary shares 18 -
Issued to former shareholders of Debtmatters Limited 15,999,980 1,599,998
Issued to former shareholders of Debtmatters
Commercial 4,000,000 400,000
Issued on admission to Alternative Investment Market 4,615,385 461,539
--------- ---------
At 30 September 2005 24,615,385 2,461,539
--------- ---------
On 4 February 2005 the Company was incorporated with an authorised share capital
of #1,000 divided into 1,000 ordinary shares of #1 each of which two were issued
fully paid.
On 8 June 2005 the authorised share capital was increased to #3,520,000 and each
ordinary share was sub divided into 10p ordinary shares.
On 8 June 2005 the Company entered into an agreement, as disclosed in the
admission document, to acquire the entire share capital of Debtmatters Limited
and Debtmatters Commercial Limited, satisfied by the issue of 15,999,980
ordinary shares of 10p each together with the 20 issued ordinary shares of 10p
each, and 4,000,000 ordinary shares of 10p each respectively each credited as
fully paid.
On 22 June 2005 following admission to the Alternative Investment Market of the
London Stock Exchange, 4,615,385 ordinary shares of 10p each were issued at a
price of 65p per ordinary share.
8. Reconciliation of operating profit to net cash inflow from operating activities
Unaudited 6 Unaudited 6 Year ended 31
months ended 30 months ended 30 March 2005
September 2005 September 2004
# # #
Operating
profit 813,041 142,596 539,489
Depreciation
on tangible
fixed assets 17,713 10,125 23,070
Amortisation
on intangible
fixed assets 3,044 1,710 4,020
Increase in
work in
progress (348,817) (33,236) (72,844)
Increase in
debtors (1,109,589) (469,505) (989,196)
Increase/(Decrease)
in creditors 185,135 274,635 444,218
-------- ------- -------
Net cash
outflow from
operating
activities (439,473) (73,675) (51,243)
-------- ------- -------
9. Post balance sheet events
On 31 October 2005 the Company acquired the entire issued share capital of
Unique Business Finance Limited for a cash consideration of #400,000.
Debtmatters Group plc
Interim results for the six months ended 30 September 2005
INDEPENDENT REVIEW REPORT TO DEBTMATTERS GROUP PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 September 2005, which comprises the Group Profit and
Loss Account, Group Balance Sheet, Group Cash Flow Statement and the related
notes and we have read the other information contained in the interim statement
and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report, including the conclusion, has been prepared for and only for the
Company for the purpose of their interim report and for no other purpose. We do
not, therefore in producing this report, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
Directors' Responsibilities
The interim statement, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Interim Statement in accordance with the AIM Rules
which require that the accounting policies and presentation applied to the
interim figures must be consistent with those that will be adopted in the
company's annual accounts.
Review Work Performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board as if that Bulletin applied. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit opinion
on the financial information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2005.
BAKER TILLY
Chartered Accountants
Brazennose House
Lincoln Square
Manchester
M2 5BL
28 November 2005
This information is provided by RNS
The company news service from the London Stock Exchange
END
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