TIDMMDCG
RNS Number : 8477U
Money Debt & Credit Group Plc
30 June 2009
Money Debt & Credit Group PLC
('Money Debt & Credit Group' or 'the Group')
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
Money Debt & Credit Group PLC, a leading provider of financial solutions to
over-indebted individuals who are seeking to manage and reduce their debt burden
in a responsible manner, announces its results for the year ended 31 December
2008.
HIGHLIGHTS
+------+--------------------------------------------------------------------------------------------+
| | * Continued growth in debt solution case numbers and revenues during the Groups third |
| | year: |
| | * Turnover: GBP6.0m (2007: GBP4.1) |
| | * Loss for the period: GBP2.1m (2007: GBP3.4m) |
+------+--------------------------------------------------------------------------------------------+
| | |
+------+--------------------------------------------------------------------------------------------+
| | * IVA division now achieving profitability as a result of improved margins |
+------+--------------------------------------------------------------------------------------------+
| | |
+------+--------------------------------------------------------------------------------------------+
| | * Debt management division providing an effective low cost informal solution for debtors |
| | and creditors |
+------+--------------------------------------------------------------------------------------------+
| | |
+------+--------------------------------------------------------------------------------------------+
| | * 3,500 IVA cases and 3,000 Debt Management Plans live on our systems |
+------+--------------------------------------------------------------------------------------------+
| | |
+------+--------------------------------------------------------------------------------------------+
| | * Strategic partnerships and referral relationships for clients actively looking for a |
| | debt solution are now the Groups principal route to market |
+------+--------------------------------------------------------------------------------------------+
| | |
+------+--------------------------------------------------------------------------------------------+
| | * New shareholder loan agreement entered into reflecting a further advance of GBP300,000 |
| | to the Group |
+------+--------------------------------------------------------------------------------------------+
| | |
+------+--------------------------------------------------------------------------------------------+
CHAIRMAN'S STATEMENT
This has been another year of strong growth in volumes and revenues for the
Group. At the end of 2008 the Group had 3,401 Individual Voluntary Arrangements
(IVAs) and 3,096 Debt Management Schemes (DMSs) under supervision, an increase
of 57% and 253% respectively compared with 2007. Total revenue rose to GBP6m
(2007: GBP4.1m). The Group made a retained loss of GBP2.1m in 2008 (2007:
GBP3.4m loss) reflecting expenditure in excess of revenues to build resources
and infrastructure for future growth. Since the year end I have entered into a
new loan agreement with the Group and advanced a further GBP300,000 to the Group
to help fund our growth.
External factors have continued to play a major part in shaping the fortunes of
our industry and our business. During 2006 and 2007 these external influences
had tended to be negative in their impact. Creditors sought to reduce IVA
volumes, drive down fee levels and payment frequency. In 2008 the overriding
external factor became the economic downturn, the challenge it presents for
creditors to avoid devastating asset write-downs and the opportunity it creates
for our business to deal with the growing volume of over-indebted consumers. In
the fourth quarter of 2008, the Insolvency Service reported that bankruptcies
had increased by 22.2% on the previous year and IVAs by 12.2%. The full effects
of the recession on these statistics will only start to become clear in 2009 and
beyond but the likelihood is a significant rise in personal insolvencies. The
increase in debt management schemes, which as informal arrangements are not
reflected in these statistics, is likely to be even higher judging by our
experience.
Performance and Strategy
There were three key drivers to our growth during the year: operational
effectiveness, our marketing strategy and the economic environment.
During 2008 the Group continued to invest significantly in infrastructure and
resources to facilitate growth in the current year and beyond. Technology is a
significant source of competitive advantage in our business. In 2008 the Group
increased its IT development resources and we launched our own bespoke CRM
(customer relationship management) application to improve the effectiveness of
lead handling, reporting and management information. A number of systems
integration projects to improve workflow and efficiency were also completed and
others are on-going. As case volumes grow, operational efficiency in the
back-office becomes more and more critical. Service levels to clients and
creditors in areas such as electronic communications and faster payments out
from IVA's and DMS's are being closely monitored and targeted for further
technology investment in 2009.
The Group's marketing strategy continues to deliver leads in growing numbers.
Currently our debt advisors are receiving 6,500 enquiries per month with
approximately 2,700 individuals being transferred through to our advice teams
and 800 of these resulting in a completed IVA or DMS. Our referral partnerships
as our source of new clients are performing strongly. These partners carry out
an initial evaluation of clients' circumstances, and refer only those cases to
the Group where a debt solution may be appropriate, thereby increasing the
Group's conversion rates.
It's clear that almost all marketing campaigns are delivering improved numbers
of leads as the worsening economic situation and recession means that more
consumers are having to find a permanent solution to their debt problems. Every
adult in the UK now owes on average over GBP30,000 (Source: Credit Action.) For
existing clients the possibility of reduced incomes or unemployment does
increase the risk that IVAs and DMSs may not run for the term originally
expected and may be subject to formal variation or re-negotiation. However
overwhelmingly the influence on new case number as a result of the economic
downturn is a positive one and the growth in debt management is particularly
significant. R3, the leading professional association for insolvency, believes
that the true number of individuals unable to pay their debts in the UK could be
three times higher than the Insolvency Service's figures due to those in Debt
Management Plans not being counted. However our experience is that currently for
every client entering into an IVA which we supervise, 5 other new clients enter
into a debt management plan and this ratio shows no sign of narrowing.
People
At the end of 2008 we had 152 staff, up from 143 a year ago. Staff costs are our
single largest cost and the Group has sought to reduce this expenditure wherever
possible. However recruiting, developing and retaining staff that can deliver
the highest standards of client service and performance continues to be a key
focus for our management team. An effect of the downturn in lending and other
financial services is that the Group has been able to recruit experienced and
qualified staff more readily to fill positions critical to our growth.
At the beginning of 2009 we made a number of changes to our Board:
+------+---------------------------------------------------------------------+
| * | I took up the role of Chief Executive and Chairman |
+------+---------------------------------------------------------------------+
| | |
+------+---------------------------------------------------------------------+
| * | Ian Holland, previously Insolvency Director retired from his |
| | executive position to become a non-executive director |
+------+---------------------------------------------------------------------+
| | |
+------+---------------------------------------------------------------------+
| * | Graham Oates retired as a non-executive director |
+------+---------------------------------------------------------------------+
| | |
+------+---------------------------------------------------------------------+
| * | Jon Bartman, previously chief Executive was appointed Marketing |
| | Director |
+------+---------------------------------------------------------------------+
| | |
+------+---------------------------------------------------------------------+
| * | Karl Pykerman, previously Managing Director - Debt Management |
| | Division became Operations Director |
+------+---------------------------------------------------------------------+
| | |
+------+---------------------------------------------------------------------+
| * | Dan Reardon, previously Managing Director - IVA Division, became |
| | Sales Director |
+------+---------------------------------------------------------------------+
| | |
+------+---------------------------------------------------------------------+
| * | Denise Moran joined the Board as Human Resources Director |
+------+---------------------------------------------------------------------+
The appointments were intended to ensure we have experienced executives heading
every key discipline in our business to drive profitability and cash generation.
Developments
The Group has stepped-up its marketing initiatives significantly for 2009. In
addition to our successful on-going introducer and referral programmes, the
Group has started new campaigns on satellite and terrestrial TV, radio, national
newspapers and internet. Online marketing is now a key focus for the Group
through new websites, affiliate links, and search engine optimization.
The Group is also evaluating other products and services which are complimentary
to its debt solutions for launch in the near future. These include payment
protection insurance, client banking and other products consistent with our
strategy of creating a Group focused on advising servicing and rehabilitating
over-indebted consumers. When the property market recovers and mortgage lending
begins to grow, the Group's mortgage broking subsidiary will be well placed to
assist our IVA and DMS clients raise funds to refinance debt although it seems
clear that 2010 might be earliest this could occur.
The hardening of creditor attitudes towards IVA fees which began in 2007 has
already lead to substantial growth in debt management. A DMS, without the burden
of statutory regulation and reporting carries lower operating costs. The shift
towards this product is likely to improve margins and cash flows. Whilst IVAs,
as the premium product, remain suitable for a large number of clients with
higher levels of indebtedness, DMSs are replacing IVAs as the preferred debt
solution for the majority of clients by volume. The increase in demand for
formal DMSs professionally evaluated and operated is likely to lead to firmer
pricing for this product in 2009.
The growth in debt management is also likely to result in calls for informal
regulation by creditor groups which we welcome, however statutory regulation
does not appear to be on any legislative agenda.
Indeed the government seems willing to let informal resolution of most consumer
debts increase further judging by the decision by the Insolvency Service in
December 2008 to withdraw plans for simplified IVAs. Debt Relief Orders which
came into force in April 2009 are not likely to impact on IVA or DMS volumes as
clients with a disposable income of more than GBP50 per month will not be
eligible for a DRO.
Outlook
We are pleased with the improving trends in our business since the year end.
Current business levels in Q2 are ahead by 95% compared with Q4 2008 and we
expect levels of trading in the current year to meet our budget expectations.
Demand for both our IVA and Debt Management solutions is likely to increase
significantly during 2009. Firmer pricing, the effectiveness of our marketing
strategy, and the opportunity to help more clients struggling with their debt
burden in the present economic climate, is likely to lead to a significant
uplift in revenues.
The debt solutions sector is likely to consolidate further as investors
recognise the counter-cyclical opportunity provided by our industry compared
with other sectors, particularly other financial services businesses. Ours is
one of the few sectors and businesses which will prosper in this economic
environment. We intend to play a full part in this consolidation process as
opportunities arise which the board believes will benefit shareholders.
Based on this evidence I am confident that the Group will continue to build upon
improving trends and is well placed for continued growth in the year ahead.
Simon Johnson
Chairman and Chief Executive
30th June, 2009
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2008
+------------------------+-------+--+-----------------+-+-------------+
| | Note | | Year ended | | Year ended |
| | | | 31 December | | 31 December |
| | | | 2008 | | 2007 |
| | | | GBP000 | | GBP000 |
+------------------------+-------+--+-----------------+-+-------------+
| Revenue | 3 | | 5,963 | | 4,115 |
+------------------------+-------+--+-----------------+-+-------------+
| Cost of Sales | | | (4,961) | | (4,492) |
+------------------------+-------+--+-----------------+-+-------------+
| Gross Profit | | | 1,002 | | (377) |
+------------------------+-------+--+-----------------+-+-------------+
| | | | | | |
+------------------------+-------+--+-----------------+-+-------------+
| Administration | | | (2,763) | | (2,820) |
| expenses | | | | | |
+------------------------+-------+--+-----------------+-+-------------+
| Operating loss | 4 | | (1,761) | | (3,197) |
+------------------------+-------+--+-----------------+-+-------------+
| | | | | | |
+------------------------+-------+--+-----------------+-+-------------+
| Finance costs | 7 | | (367) | | (259) |
+------------------------+-------+--+-----------------+-+-------------+
| Finance income | 7 | | 9 | | 47 |
+------------------------+-------+--+-----------------+-+-------------+
| Loss before tax | | | (358) | | (3,409) |
+------------------------+-------+--+-----------------+-+-------------+
| | | | | | |
+------------------------+-------+--+-----------------+-+-------------+
| Tax | 8 | | - | | - |
+------------------------+-------+--+-----------------+-+-------------+
| Loss for the period | 16 | | (2,119) | | (3,409) |
+------------------------+-------+--+-----------------+-+-------------+
| | | | | | |
+------------------------+-------+--+-----------------+-+-------------+
| LOSS per share | | | | | |
+------------------------+-------+--+-----------------+-+-------------+
| Basic and diluted loss | 9 | | 5.2p | | 8.5p |
| per ordinary share | | | | | |
+------------------------+-------+--+-----------------+-+-------------+
BALANCE SHEETS
as at 31 December 2008
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| | Note | | Group | | Company | | Group | | Company |
| | | | 31 | | 31 Dec | | 31 | | 31 Dec |
| | | | Dec | | 2008 | | Dec | | 2007 |
| | | | 2008 | | GBP000 | | 2007 | | GBP000 |
| | | | GBP000 | | | | GBP000 | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Assets | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Non-current assets | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Property, plant & | 10 | | 529 | | - | | 677 | | - |
| equipment | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Investments | 11 | | - | | 7,000 | | - | | 7,000 |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Other receivables | | | - | | 2,626 | | - | | - |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Total non-current | | | 529 | | 9,626 | | 677 | | 7,000 |
| assets | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Current assets | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Trade and other | 12 | | 1,501 | | - | | 1,575 | | 2,626 |
| receivables | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Cash and cash | | | 28 | | - | | - | | - |
| equivalents | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Total current assets | | | 1,529 | | - | | 1,575 | | 2,626 |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Total assets | | | 2,508 | | 9,626 | | 2,252 | | 9,626 |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Equity and | | | | | | | | | |
| liabilities | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Share capital | 15 | | 4,000 | | 4,000 | | 4,000 | | 4,000 |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Share premium | 15 | | 1,635 | | 1,635 | | 1,635 | | 1,635 |
| account | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Merger reserve | 15 | | 4,200 | | 4,200 | | 4,200 | | 4,200 |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Reverse acquisition | 15 | | (7,000) | | - | | (7,000) | | - |
| reserve | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Retained loss | 16 | | (8,359) | | (209) | | (6,240) | | (209) |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Total equity | | | (5,524) | | 9,626 | | (3,405) | | 9,626 |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Non-current | | | | | | | | | |
| financial | | | | | | | | | |
| liabilities | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Finance lease | 14 | | 73 | | - | | 246 | | - |
| obligations | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Shareholder loan | 14 | | 4,909 | | - | | 3,714 | | - |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Total non-current | | | 4,982 | | - | | 3,960 | | - |
| liabilities | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Current liabilities | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Trade & other | 13 | | 2,397 | | - | | 1,561 | | - |
| payables | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Financial liability: | 13 | | 204 | | - | | 132 | | - |
| finance lease | | | | | | | | | |
| obligations | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Bank overdraft | | | | | - | | 4 | | - |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Total current | | | 2,601 | | - | | 1,697 | | - |
| liabilities | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Total liabilities | | | 7,583 | | - | | 5,657 | | - |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| Total equity & | | | 2,508 | | 9,626 | | 2,252 | | 9,626 |
| liabilities | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
| | | | | | | | | | |
+----------------------+-------+--+---------+--+----------+--+---------+--+----------+
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the year ended
31 December 2008
+----------+---------+---------+---------+----------+-------------+---------+
| | Share | Share | Merger | Retained | Reverse | Total |
| | Capital | Premium | Reserve | | | GBP'000 |
| | GBP'000 | GBP'000 | GBP'000 | Earnings | Acquisition | |
| | | | | GBP'000 | Reserve | |
| | | | | | GBP'000 | |
+----------+---------+---------+---------+----------+-------------+---------+
| Balance | 4,000 | 1,635 | 4,200 | (2,831) | (7,000) | 4 |
| as at | | | | | | |
| 31 | | | | | | |
| December | | | | | | |
| 2006 | | | | | | |
+----------+---------+---------+---------+----------+-------------+---------+
| Loss | - | - | - | (3,409) | - | (3,409) |
| for | | | | | | |
| the | | | | | | |
| period | | | | | | |
| | | | | | | |
+----------+---------+---------+---------+----------+-------------+---------+
| Balance | 4,000 | 1,635 | 4,200 | (6,240) | (7,000) | (3,405) |
| as at | | | | | | |
| 31 | | | | | | |
| December | | | | | | |
| 2007 | | | | | | |
+----------+---------+---------+---------+----------+-------------+---------+
| | | | | | | |
+----------+---------+---------+---------+----------+-------------+---------+
+----------+--------+--------+--------+---------+---------+---------+
| Balance | 4,000 | 1,635 | 4,200 | (6,240) | (7,000) | (3,405) |
| as at | | | | | | |
| 31 | | | | | | |
| December | | | | | | |
| 2007 | | | | | | |
+----------+--------+--------+--------+---------+---------+---------+
| Loss | - | - | - | (2,119) | - | (2,119) |
| for | | | | | | |
| the | | | | | | |
| period | | | | | | |
| | | | | | | |
+----------+--------+--------+--------+---------+---------+---------+
| Balance | 4,000 | 1,635 | 4,200 | (8,359) | (7,000) | (5,524) |
| as at | | | | | | |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+----------+--------+--------+--------+---------+---------+---------+
| | | | | | | |
+----------+--------+--------+--------+---------+---------+---------+
CASH FLOW STATEMENTS
for the year ended 31 December 2008
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Cash flows from | Note | | Group | | Company | | Group | | Company |
| operating activities | | | 31 Dec | | 31 Dec | | 31 Dec | | 31 Dec |
| | | | 2008 | | 2008 | | 2007 | | 2007 |
| | | | GBP000 | | GBP000 | | GBP000 | | GBP000 |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Net (loss)/profit | | | (2,119) | | - | | (3,409) | | 175 |
| before taxation | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Adjustments for: | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Depreciation | 10 | | 211 | | - | | 187 | | - |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Loss on sale of | | | - | | - | | 14 | | - |
| property, plant and | | | | | | | | | |
| equipment | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Interest payable | | | 367 | | - | | 259 | | - |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Interest receivable | | | (8) | | - | | (47) | | (175) |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Cash used by | | | (1,549) | | - | | (2,006) | | - |
| operations before | | | | | | | | | |
| changes in | | | | | | | | | |
| Working capital | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Movement in trade and | | | 73 | | - | | (417) | | - |
| other receivables | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Movement in trade and | | | 837 | | - | | 914 | | - |
| other payables | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Cash used by | | | (639) | | - | | (2,499) | | - |
| operating activities | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Cash flows from | | | | | | | | | |
| investing activities | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Proceeds from sale of | | 13 | | - | | 49 | | - |
| property, plant and equipment | | | | | | | | |
+--------------------------------+--+----------+--+----------+--+---------+--+----------+
| Purchase of property, plant | | (78) | | - | | (460) | | - |
| and equipment | | | | | | | | |
+--------------------------------+--+----------+--+----------+--+---------+--+----------+
| Net cash used in | | | (65) | | - | | (411) | | - |
| investing activities | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Cash flows from | | | | | | | | | |
| financing activities | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Finance lease loans | | | 47 | | - | | 361 | | - |
| received | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Finance lease | | | (148) | | - | | (93) | | - |
| principal repayments | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Proceeds from | 14 | | 853 | | - | | (228) | | - |
| shareholder loan | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Interest paid on | | | - | | - | | - | | - |
| shareholder loan | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Other interest paid | | | (25) | | - | | (31) | | - |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Interest received | | | 8 | | - | | 47 | | - |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Net cash from | | | 735 | | - | | 574 | | - |
| financing activities | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Net increase in cash | | | 31 | | - | | (2,336) | | - |
| and cash equivalents | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Cash and cash | | | (4) | | - | | 2,332 | | - |
| equivalents at | | | | | | | | | |
| beginning of the | | | | | | | | | |
| period | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
| Cash and cash | | | 27 | | - | | (4) | | - |
| equivalents at the | | | | | | | | | |
| end of the period | | | | | | | | | |
+-----------------------+--------+--+----------+--+----------+--+---------+--+----------+
Notes
1. Basis of Preparation
The financial statements have been prepared in accordance with IFRS as adopted
by the European Union and with those parts of the Companies Act 1985 applicable
to companies reporting under IFRS.
The financial statements of Money Debt & Credit Group PLC consolidate the
results of the Company and all its subsidiary undertakings.
The principal accounting policies adopted in the preparation of the consolidated
financial statements are set out below. The financial statements have been
prepared in accordance with International Financial Reporting Standards (IFRSs
and IFRIC interpretations) as adopted by the EU. They have been prepared under
the historical cost convention.
The Group has adopted for the first time IFRS 7 Financial Instruments:
Disclosures in its 2007 consolidated financial statements. This has been applied
retrospectively, ie with amendments to the 2006 presentation. The adoption of
IFRS 7 had no impact on the reported income and losses or the financial position
of the Group.
Other Standards or Interpretations relevant for IFRS financial statements did
not become effective during the current financial year.
2 . Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
31 December 2008.
Where the Company has the power, either directly or
indirectly, to govern the financial and operating policies of another entity or
business, so as to obtain benefits from its activities, then that business or
entity is classified as a subsidiary.
Inter-company balances and transactions including unrealised profits on
transactions arising from intra-group transactions have been eliminated in
full.
3. Revenue Recognition
Revenue is recognised in the Group Income Statement by reference to the fair
value of the services provided by the Group to individuals, who are experiencing
personal debt problems, when it can be measured reliably. Impairment losses are
calculated separately and charged to cost of sales.
These revenues consist principally of nominee and supervisory fees arising
from Individual Voluntary Arrangements (IVAs) and set-up fees and monthly
management fees from Debt Management Schemes (DMSs).
IVA revenues are recognised, net of VAT, as follows:
* Nominee fees are recognised on approval of a proposal in a formal creditors
meeting.
* Supervisory fees are recognised on a monthly basis throughout the duration of an
arrangement, commencing in the month in which the IVA has been approved at the
creditors meeting.
Revenues from DMSs are recognised at the point when the fees become payable by
the client under the terms of the scheme and there is sufficient surplus in the
client's account for the fees to be drawn.
4. Cost of Sales
Cost of sales represents the direct costs of acquiring new business and
generating fee income. It includes marketing costs, client services staff costs,
insolvency staff costs and disbursements. All of these costs are charged to the
Income Statement as incurred. A provision on IVA's is recognised in Cost of
Sales for cases on which a full fee may not be recoverable.
5. Financial Assets
Trade and other receivables are recognised at fair value and subsequently
carried at amortised cost less an allowance for doubtful receivables
(impairments). A provision for impairment is established when there is objective
evidence that the Group may not be able to collect all amounts due in full
according to the original terms of the receivables. Balances are written off in
the Income Statement when the probability of recovery is assessed as being
remote based on client payment histories and changes in client's financial
circumstances.
6. Going Concern
After making enquiries, examining revenue and expenditure projections and cash
flow forecasts, and taking into consideration the facilities available to the
Group, the Directors have a reasonable expectation that the Group has access to
adequate resources to continue in operational existence for at least 12 months
from the date of approval of the financial statements and for the foreseeable
future. For this reason they continue to adopt the going concern basis in
preparing the financial statements.
7. Critical Accounting Judgements and Key Sources of Estimation Uncertainty
In the process of applying the Group's accounting policies, the Directors have
considered which judgements have the most significant effect on the amounts
recognised in the financial statements. The Directors consider that there are no
other key sources of estimation uncertainty and the impairment of receivables is
the most significant judgement exercised.
8. Status of Financial Information
The financial information set out in this announcement does not constitute the
Group's statutory accounts for the year ended 31 December 2008 but is derived
from those accounts. Statutory accounts for the year ended 31 December 2008 will
be delivered to the Registrar of Companies shortly. The auditors have reported
on those accounts. Their report was unqualified but included the following
emphasis of matter:
'Emphasis of matter - going concern
In forming our opinion on the financial statements, which is not qualified, we
have considered the evidence available of the adequacy of funding available for
the next 12 months. The group is reliant on funding from the Chairman, but we
have not been given independent verification of the available funds. The
directors have considered the impact on the group of this situation but have
concluded that the group has sufficient resources to continue trading in the
next 12 months, as detailed in the going concern section of the accounting
policies note. However, in the light of the insufficient evidence available, we
draw your attention to this matter which indicates the existence of an
uncertainty which may cast doubt about the Group's ability to continue as a
going concern. '
The Report and Financial Statements for the year ended 31 December 2008 will be
posted to shareholders today and will be available on the Company's
website: www.moneydebtandcredit.com.
Contacts:
+-----------------------------------------+-----------------+
| Money Debt & Credit Group PLC | |
| Simon Johnson, Chairman and CEO | |
| | Tel: 01926 636 |
| | 800 |
| | |
+-----------------------------------------+-----------------+
| | |
+-----------------------------------------+-----------------+
| Smith & Williamson Corporate Finance | Tel: 0117 376 |
| Limited | 2177 |
| David Abbott | |
+-----------------------------------------+-----------------+
| | |
+-----------------------------------------+-----------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR CKKKNABKDAAN
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