20th Nov 2006 07:01
Debt Free Direct Group PLC20 November 2006 20 November 2006 DEBT FREE DIRECT GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2006 Debt Free Direct Group (DFD), the leading debt advice and solutions company,today announces its interim results for the six months ended 31 October 2006. Highlights for the period include : • Strong financial growth - Turnover Up 91% to £12.24m (£6.43m in 2005) - Gross profit Up 110% to £9.97m (£4.74m in 2005) - Adjusted PBT Up 128% to £4.26m (£1.86m in 2005) - EPS Up 146% to 7.66p (3.11p in 2005) - Growth in the incremental, contracted for but not yet recognised, supervisory profits up 100% to £5.2m (£2.6m in 2005). • Balance sheet continues to strengthen - Net assets £19.97m (£17.58m in April 2006) - Gross off-balance sheet, contracted for but not yet recognised, supervisory fee income up 102% to £31.4m (£15.5m in 2005). • Significant cash generated from trading - Cash inflows from trading £1.86m (£93k in 2005) • Reduced advertising cost per new IVA - Average cost per new IVA £640 (£850 in 2005) • Increased operational efficiency - Annual turnover per employee Up 15% to £93k (£81k in 2005) - Annual adjusted PBT per employee Up 43% to £33k (£23k in 2005) • Significant growth in new IVA run-rate - New IVA case run-rate Up 101% to 536 pm (266pm in 2005) • Looking ahead - Anticipated profits for the financial year ended 30 April 2007 will comfortably meet market expectations. Michael Blackburn, Chairman, said: "This is another very impressive set of results. On the back of our strongstart to the year, and with the benefit of our new premises, the Board isconfident of making further considerable progress in the remainder of the year. Having commenced dividend payments a year ago with a maiden interim distributionof 1.5p per share, I am pleased to report that the Board has declared an interimdividend of 3p per share. The board anticipates that it will be recommending adividend of at least 6p in aggregate for the full year. The interim dividendpayment will be made on 29 December 2006 to shareholders on the register on 1December 2006. Although legislation enabling individual voluntary arrangements has been inplace since 1986, this is still a young and growing marketplace which attractsnew entrants. During the year there have been many calls made for increasedregulation of the sector to which we are sympathetic. Our own processes are "regulation ready" and we welcome banks and other lenders to visit our operationsand witness both the consistency and rigour which we apply to each and everycase. Independent research clearly demonstrates the superior returns we achievefor lenders, whilst treating over-indebted customers fairly. Furthermore, we continue to develop new routes to market and new products in theUK and we are excited about the long term prospects of Debt Free DirectAustralia, which commenced trading in August 2006 and will be fully operationalby the end of this calendar year. Personal insolvency is set to increase as more borrowers pass the point of noreturn insofar as their debt/income ratio is concerned. Whilst the growth inthat ratio has started to slow down, nonetheless the annual growth rate ofconsumer credit in September 2006 was 6.3%, whereas average earnings, includingbonuses, was only rising by 4.2%. Coupled with rising inflation and higherborrowing costs, the scene is inexorably set for further growth in our business." Andrew Redmond, Chief Executive Officer, said: "We are delighted by the results we have achieved by doing what is right forboth consumers and lenders. We have clearly demonstrated that a responsible andsocially aware enterprise can compete with, and beat, those organisations moreconcerned with making short term profit, than in doing what is right. We will continue to work hard to ensure that everybody else in our marketplacewill either have to match the standards of the ethical organisations, or beforced to face the consequences. Compliance with ethical principles is anecessity, not a luxury. As a result of our long term growth in IVA cases under supervision, we aredelighted by the significant increase in cash generated from trading. This hasallowed us to increase our interim dividend in line with the progressive policywe first announced last year. The last six months have seen significant progress, both operationally andfinancially, and it has also been a critical period in the company'sdevelopment. We have relocated and recruited to give us the capacity to growsignificantly in the future. These steps have been successfully completed inthe period and the benefits will be seen in performance in the latter part ofthe financial year." Enquiries: Debt Free Direct Group plcAndrew Redmond, Chief Executive Officer 0845 296 0100Paul Latham, Finance Director 0845 296 0200 Numis SecuritiesIain McDonald 020 7776 1500Lee Aston Financial DynamicsEd Gascoigne-Pees 020 7269 7132Nick Henderson 020 7269 7114 Notes Debt Free Direct helps individuals find the best solution to their debtproblems, 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 asolution suitable for that individual's particular financial circumstances. Thesolutions offered range from basic advice, such as simply destroying creditcards and curbing unnecessary expenditure, to the following solutions: • consolidation loan• re-mortgage• informal arrangement• individual voluntary arrangement (IVA)• bankruptcy Debt Free Direct, based in Chorley, Lancashire and admitted to AIM in December2002, is unique in the marketplace in that, unlike most of its competitors whosell specific products, Debt Free Direct looks to provide the best advice to theconsumer and recommends them the most appropriate service. CONSOLIDATED PROFIT AND LOSS ACCOUNTPERIOD FROM 1 MAY 2006 TO 31 OCTOBER 2006 Period from Period from Year from 1 May 06 to 1 May 05 to 1 May 05 to 31 Oct 06 31 Oct 05 30 Apr 06 Restated Restated Unaudited Unaudited Audited £'000 £'000 £'000 TURNOVER 12,235 6,427 16,230Cost of sales (2,264) (1,683) (3,938) GROSS PROFIT 9,971 4,744 12,292 Administrative expenses (5,645) (2,982) (7,290) EBITDA 4,326 1,762 5,002 Depreciation (170) (94) (208)Goodwill amortisation (156) (156) (312) OPERATING PROFIT 4,000 1,512 4,482 Interest receivable 105 158 289Interest payable and similar charges (4) (6) (16) PROFIT ON ORDINARY ACTIVITIES BEFORETAXATION 4,101 1,664 4,755 Tax on profit on ordinary activities (1,237) (512) (1,553) PROFIT ON ORDINARY ACTIVITIES AFTERTAXATION 2,864 1,152 3,202 Dividends (561) 0 (558) RETAINED PROFIT FOR THE YEAR 2,303 1,152 2,644 Profit per share - basic 7.66p 3.11p 8.62pProfit per share - diluted 7.38p 3.03p 8.39pProfit per share - diluted and adjusted 7.68p 3.35p 9.29p The group has no recognised gains or losses other than the results for theperiod as set out above. All of the activities of the group are classed as continuing. CONSOLIDATED BALANCE SHEETAS AT 31 OCTOBER 2006 As at 31 Oct 06 As at 31 Oct 05 As at 30 Apr 06 Restated RestatedFIXED ASSETS £000 £000 £000 Intangible assets 1,804 2,096 1,942Tangible assets 2,339 738 928 4,143 2,834 2,870 CURRENT ASSETSDebtors 15,566 8,369 11,964Cash at bank 3,996 6,966 5,367 19,562 15,335 17,331 CREDITORS: Amounts falling due within one year (3,702) (2,079) (2,559) NET CURRENT ASSETS 15,860 13,256 14,772 TOTAL ASSETS LESS CURRENT LIABILITIES 20,003 16,090 17,642 CREDITORS: Amounts falling due after more than (11) (51) (25)one year PROVISION FOR LIABILITIES AND CHARGES (21) (64) (39) 19,971 15,975 17,578 CAPITAL AND RESERVESCalled-up equity share capital 374 372 373Share premium account 13,644 13,489 13,577Capital reserve on share options 86 42 64Profit and loss account 5,867 2,072 3,564 SHAREHOLDERS' FUNDS 19,971 15,975 17,578 CONSOLIDATED CASH FLOW STATEMENTPERIOD FROM 1 MAY 2006 TO 31 OCTOBER 2006 Period from 1 Period from 1 May 05 Year from 1 May 05 May 06 to 31 Oct 06 to 31 Oct 05 to 30 Apr 06 £'000 £'000 £'000 Restated Restated NET CASH INFLOW FROM OPERATING ACTIVITIES 1,857 93 565 RETURNS ON INVESTMENTS AND SERVICING OFFINANCE Interest received 105 158 288Interest element of finance lease rental payments (4) (6) (11) NET CASH INFLOW FROM RETURNS ONINVESTMENTS AND SERVICING OF FINANCE 101 152 277 TAXATION (1,022) 0 (1,202) CAPITAL EXPENDITURE Payments to acquire tangible fixed assets (1,750) (68) (481)Payments to acquire intangible fixed assets (28) 0 (4) NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (1,778) (68) (485) ACQUISITIONS Acquisition of DFD Limited preference shares and 0 0 (68)loan notes EQUITY DIVIDENDS PAID (561) 0 (558) NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (1,403) 177 (1,471) FINANCING Issue of equity share capital 67 35 124Capital element of finance lease rental payments (35) (28) (69) NET CASH INFLOW FROM FINANCING 32 7 55 (DECREASE)/INCREASE IN CASH (1,371) 184 (1,416) RECONCILIATION OF OPERATING PROFIT TONET CASH INFLOW FROM OPERATING ACTIVITIES Operating profit 4,000 1,512 4,482Amortisation 156 156 312Depreciation 170 94 289Loss on disposal of fixed assets 0 0 1Increase in debtors (3,602) (1,700) (5,305)Increase/(decrease) in creditors 1,111 (11) 722Share option charge (FRS 20) 22 42 64 Net cash inflow from operating activities 1,857 93 565 RECONCILIATION OF NET CASH FLOW (Decrease)/Increase in cash in the period (1,371) 184 (1,416) (1,371) 184 (1,416) CONSOLIDATED ACCOUNTS FOR THE PERIOD FROM 1 MAY 2006 TO 31 OCTOBER 2006 NOTES 1. BASIS OF PREPARATION The group profit and loss accounts, balance sheets and cash flow statements for the six month periodsended 31 October 2006 and 31 October 2005 have been prepared on a basis consistent with the accounting policies disclosed in the group's annual report for the year ended 30 April 2006, with the exception of the adoption of FRS 20, Share based payments, which has been applied from 1 May 2006. 2. EARNINGS PER SHARE The earnings per share (basic) has been calculated using the profit for the financial period and aweighted average number of ordinary shares in issue during the six month period to 31 October 2006 of 37,373,577, 37,019,872 for the period ended 31 October 2005 and 37,143,181 for the year ended 30 April 2006. The diluted EPS number takes the weighted average number of ordinary shares in issue during the sixmonth period to 31 October 2006 and increases this to take account of the dilutive share options existing at this date, resulting in a denominator of 38,894,179, 38,021,058 for the period ending 31 October 2005 and 38,185,719 for the year ended 30 April 2006. The diluted and adjusted EPS number uses the same number of shares as above, but is based on profitsbefore tax with amortisation charges added back, with the new profit number then subjected to a 30% tax charge 3. SHARE BASED PAYMENTS The group has applied the requirements of FRS20 to all grants of equity instruments after 7 November2002 that were unvested at 1 May 2006. This has resulted in the figures for the six months ended 31 October 2005 and the year ended 30 April2006 being restated as shown below. Six Six months months Year ended ended ended 31-Oct 31-Oct 30-Apr 2006 2005 2006 As restated As restated Unaudited Unaudited Audited £'000 £'000 £'000 Profit for the financial period under previous 2,325 1,194 2,708accounting policies FRS 20 Share based payments -22 -42 -64 Restated profit 2,303 1,152 2,644 4. COMPARATIVE FIGURES The comparative figures represent the 6 month period to 31 October 2005 and the year from 1 May 2005 to 30 April 2006. 5. STATUS OF FINANCIAL INFORMATION The accounts of the Group for the six months to 31 October 2006 were approved by the Board on 17th November 2006.The interim financial statements have not been audited and do not constitute statutory accounts as defined under s.240of the Companies Act 1985. The interim financial statements have been prepared in accordance with applicable accounting standards and areconsistent with those adopted and disclosed in the Group's statutory accounts for the year ended 30 April 2006. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 6. DISTRIBUTION OF THE INTERIM REPORT Copies of the Interim Report are being sent to shareholders. Further copies of the Interim and Annual Report andAccounts may be obtained from the Company's Registered Office, Cloth Hall Court, Infirmary Street, Leeds. In addition, an electronic version will be available on the Company's website, www.debtfreedirect.co.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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