Final Results
Debt Free Direct Group PLC
09 July 2003
9th July 2003
DEBT FREE DIRECT GROUP PLC
PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2003
HIGHLIGHTS
Debt Free Direct, a leading debt advice and solutions company, announces an
encouraging maiden set of results for the year ended 30 April 2003.
Highlights include:
• The Group was admitted to the Alternative Investment Market of the
London Stock Exchange in December 2002 following its acquisition of
Debt Free Direct Ltd earlier in that month
• Debt Free Direct Ltd had invested heavily in both IT and people to
support its philosophy of best advice, laying a firm foundation for
future growth
• Group EBITDA for the period was in line with expectations at £54,000
with strong improvement quarter on quarter, resulting in the final
quarter showing EBITDA of £190,000
• The Group has continued to make progress since the year-end
• Debt Free Direct is in a strong position to exploit its distinct
position in a large and growing market.
Grenville Folwell, Chairman, said:
'I am delighted to report the solid progress the Group has achieved in its first
year as a public listed company with particularly impressive fourth quarter
results. By providing best advice to our target sector and by maintaining our
high ethical and regulated standards, we aim to become the leading provider of
advice and appropriate solutions to over-indebted consumers in a rapidly
expanding marketplace'.
Enquiries
Debt Free Direct 0207 638 9571
Andrew Redmond
Paul Latham
Citigate Dewe Rogerson 0207 638 9571
Michael Berkeley
Daphne Claude
Notes to Editors
Debt Free Direct helps individuals find the best solution to their debt
problems, based upon an analysis of their particular financial circumstances.
Financial information on an individual is processed through a computer model
(the Best Advice Model) developed by Debt Free Direct in order to recommend a
solution suitable for that individual's particular financial circumstances. The
solutions offered range from basic advice, such as simply destroying credit
cards and curbing unnecessary expenditure, to the following solutions:
• consolidation loan
• re-mortgage
• informal arrangement
• individual voluntary arrangement (IVA)
• bankruptcy
Debt Free Direct has a distinct position in the marketplace in that unlike most
of its competitors who sell specific products, Debt Free Direct looks to provide
the best advice to the consumer and recommends to them the most appropriate
service.
Debt Free Direct is based in Chorley, Lancashire and was admitted to AIM in
December, 2002.
CHAIRMAN'S STATEMENT
The past year has been characterised by many significant factors within the
business, which have laid the foundations to support the performance of the
Group in the future.
There have been important and exciting operational improvements at all levels.
These have been primarily directed towards our core objectives of providing best
advice for every over-indebted consumer who calls us.
Our people have embraced these changes with energy and enthusiasm. They are
looking forward to the challenges ahead with both optimism and passion. Above
all else, our people are at the heart of our philosophy of best advice and
providing a service for people who turn to us for help. They are a significant
part of why we are different from our competition.
Indeed our philosophy now and for the future is clear. By providing best advice
to our target sector and by maintaining our high ethical and regulated
standards, we aim to become the leading provider of advice and appropriate
solutions to over-indebted consumers in a rapidly expanding marketplace.
I have every confidence that Debt Free Direct will build successfully on the
foundation now in place and create true value for all our shareholders.
G J Folwell
Chairman
9 July 2003
CHIEF EXECUTIVE OFFICER'S STATEMENT
Background
The principal activity of the Group is the provision of financial advice and
solutions to individuals experiencing personal debt problems.
On 2 December 2002, the Group acquired the entire issued ordinary share capital
of Debt Free Direct Limited by the issue of 19,230,807 ordinary share of 1p
each. Debt Free Direct Limited had already embarked on a significant growth
strategy prior to its acquisition by the Debt Free Direct Group Plc in December
2002. By that date, the business had:-
• an embedded culture and philosophy of providing best advice to all
over-indebted consumers;
• developed it's best advice model and route to market which we believe
is better than anything else on offer in the market;
• built an operating platform, which was ready to support the
anticipated growth of the business.
On 16 December 2002, the Group acquired the entire issued ordinary share capital
of DFD (Investments) Limited by the issue of 2,335,066 ordinary of 1p each. On
the same day, the Group was successfully floated on AIM, and a further 9,337,927
shares were issued at 40p per share.
As well as providing a review of operating performance and current trading, this
statement provides background information on the group philosophy and the
business.
Operating performance
As a result of the above growth strategy, the Group was well placed to achieve
early success.
The EBITDA of the Group for the period were £54,000. Even more significant were
the results in the final quarter. In this period the Group accounts showed
EBITDA of approximately £190,000.
The trading results for the period and the Group's financial position at the end
of the period are shown in the financial statements which follow this review.
Current Trading and Prospects
The Group has continued to make progress in the period since 30 April 2003.
We believe that we are well placed to build shareholder value in the future.
The fundamentals are all in place; we have the right philosophy complimented by
the best advice model and we have existing high ethical and regulated standards
in a market which will become increasingly regulated. Our results in recent
months demonstrate that our model is working.
The model is based upon continuing to take a share of the existing market and
all our budgets and forecasts have been made upon that assumption. However
there is the potential for accelerated growth if the market, or our share of it,
increases. We believe that we are living through a period of quite exceptional
levels of:-
• high employment;
• low inflation;
• low interest rates; and
• rising house prices.
The above have dynamically combined and resulted in ever increasing record
levels of secured and unsecured debt. This is increasingly being used to fund
expenditure in excess of income. Essentially, too many people are living beyond
their means and are funding the gap with secured and unsecured debt.
At this time most people can afford the repayments on increased debt because the
interest they pay, notably on their mortgage, has been falling.
However the economic factors outlined above will not last indefinitely. We
believe that the time will arrive when interest rates will rise and this will
impact on the existing delicate economic balance prompting a vicious circle
resulting in ever increasing numbers of over-indebted people requiring our help.
We are confident that we are well placed to help them and that our business will
continue to grow even more rapidly in the years ahead.
Our purpose
Briefly our purpose is to:-
• provide the best advice to every over-indebted person who calls us;
and
• be the leading provider of advice and appropriate financial solutions
to over-indebted consumers with particular focus on the 'quality
sector'.
The 'quality sector'
Essentially these are generally responsible, mature people who through
unforeseen life events have become unable to pay their bills on time. This is a
situation that they do not like and they are 'the unfortunates' in what is often
perceived as an irresponsible market.
These are people, who having been pointed in the right direction will stick to
the most appropriate solution found for them and will become good customers for
us.
Building shareholder value
To continue to build shareholder value we will:
• target the appropriate market sector;
• provide the appropriate advice to a high technical and ethical
standard;
• provide appropriate empathy to their difficulties; and
• use the law and the regulatory framework which is appropriate for
their benefit.
In other words, shareholder value will be derived by doing what is right and
appropriate for all of our customers in every circumstance.
Debt Free Direct is different
We offer free, impartial, best advice to every caller........without exception.
Best advice is systematically delivered through a sophisticated computer advice
model. This has been independently recognised as an industry leader.
Furthermore, in a largely unregulated market our business operations are highly
regulated; something which we welcome. We provide advice in all financial areas
to include the most formal, legal insolvency processes and we employ highly
qualified Licensed Insolvency Practitioners whose advice and working practices
are monitored and regulated by the appropriate authorities,
We believe that this is a market which is ripe for increased regulation in the
future and we will positively welcome that when it happens.
We are encouraged to see that others share our view as highlighted by the OFT
guidelines issued to debt management companies and the recently announced
investigation into consolidation loans. Any increased regulations resulting
from these or any other government initiatives can only strengthen our position
in the marketplace.
We will particularly benefit as others struggle to embrace the cultural change
required from higher regulatory standards imposed upon them.
A Redmond
Chief Executive Officer
9 July 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
PERIOD FROM 26 APRIL 2002 TO 30 APRIL 2003
Period from
26 Apr 02 to
30 Apr 03
£
TURNOVER 1,058,248
Cost of sales (738,877)
_________
GROSS PROFIT 319,371
Administrative expenses
Goodwill amortisation (126,641)
Other administrative expenses (288,041)
_______
(414,682)
_________
(95,311)
OPERATING LOSS
Interest receivable 963
Interest payable and similar charges (80,443)
_________
LOSS ON ORDINARY ACTIVITIES BEFORE AND AFTER
TAXATION (174,791)
Tax on loss on ordinary activities 59,941
_________
LOSS FOR THE FINANCIAL PERIOD (114,850)
=========
Loss per share - basic and diluted (1.28p)
The group has no recognised gains or losses other than the results for the
period as set out above. All of the activities of the group are classed as
continuing.
CONSOLIDATED BALANCE SHEET
AS AT 30 APRIL 2003
FIXED ASSETS £
Intangible assets 2,791,424
Tangible assets 211,349
_________
3,002,773
CURRENT ASSETS
Debtors 1,254,124
Cash at bank 81,249
_________
1,335,373
CREDITORS: Amounts falling due within one
year (1,672,471)
_________
NET CURRENT LIABILITIES (337,098)
_________
TOTAL ASSETS LESS CURRENT LIABILITIES 2,665,675
CREDITORS: Amounts falling due after more than
one year (168,392)
PROVISION FOR LIABILTIES AND CHARGES (1,987,98)
_________
509,296
=========
CAPITAL AND RESERVES
Called-up equity share capital 225,000
Share premium account 399,146
Profit and loss account (114,850)
_________
SHAREHOLDERS' FUNDS 509,296
=========
CONSOLIDATED CASH FLOW STATEMENT
PERIOD FROM 26 APRIL 2002 TO 30 APRIL 2003
£
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (369,093)
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 963
Interest paid (29,783)
________
NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (28,820)
CAPITAL EXPENDITURE
Payments to acquire tangible fixed assets (33,281)
________
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (33,281)
ACQUISITIONS
Cash acquired with subsidiaries 271,822
________
NET CASH INFLOW FROM ACQUISITIONS 271,822
_______
CASH OUTFLOW BEFORE FINANCING (159,372)
FINANCING
Issue of equity share capital 373,572
Professional costs charged to the share premium
account (168,167)
________
NET CASH INFLOW FROM FINANCING 205,405
_______
INCREASE IN CASH 46,033
=======
RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
Period from
26 Apr 02 to
30 Apr 03
£
Operating loss (95,311)
Amortisation 126,641
Depreciation 23,074
Increase in debtors (402,548)
Decrease in creditors (20,949)
________
Net cash outflow from operating activities (369,093)
========
CONSOLIDATED CASH FLOW STATEMENT (continued)
PERIOD FROM 26 APRIL 2002 TO 30 APRIL 2003
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
£
Increase in cash in the period 81,249
Hire purchase agreements acquired with subsidiary (35,216)
_________
46,033
Loans acquired with subsidiary (1,346,185)
_________
Change in net debt (1,300,152)
Net debt at 26 April 2002 -
_________
Net debt at 30 April 2003 (1,300,152)
=========
NOTES
1. TAX ON LOSS ON ORDINARY ACTIVITIES
Period from
26 Apr 02 to
30 Apr 03
£
Current tax:
UK Corporation tax based on the results for the period at 19% -
Deferred taxation 59,941
______
59,941
======
2. LOSS PER SHARE
The calculation of loss per share is based on the loss of £114,850 and a
weighted average number of ordinary shares in issue during the period of
8,961,260.
STATUS OF FINANCIAL INFORMATION
The financial information set out in this report does not constitute the
company's statutory accounts for the year ended 30 April 2003, but is derived
from those accounts. Statutory accounts for the year ended 30 April 2003 will
be delivered to the Registrar of Companies shortly. The auditors have reported
on the statutory accounts for the year ended 30 April 2003 and their opinion was
unqualified for these financial statements.
The group's full financial statements will be issued to shareholders on 11 July
2003.
This information is provided by RNS
The company news service from the London Stock Exchange
Wednesday, 15th May 2024
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