Frp Advisory Group Regulatory News (FRP)

11 Jan 2005 07:00

Debt Free Direct Group PLC11 January 2005 11 JANUARY 2005 DEBT FREE DIRECT GROUP PLC INTERIM RESULTS FOR SIX MONTHS ENDED 31 OCTOBER 2004 Strong Pre-Christmas Trading, Turnover For Period Up 66% Debt Free Direct Group PLC, the leading debt advice and solutions company,announces its results for the six months ended 31 October 2004. Results Highlights : • Sales for the six months to October 2004 are up 66% to £3.09 million compared to £1.86 million in the corresponding period to October 2003. • The above growth in turnover reflects a continuing trend, which can be demonstrated as follows: Average monthly Employee New IVA Turnover numbers Annualised case £ (period end) run rate - 5 months to 30 April 2003 211,650 51 699- 6 months to 31 October 2003 309,472 57 870- 6 months to 30 April 2004 392,280 88 1140- 6 months to 31 October 2004 514,901 117 1320 • Gross profit margin on advertising has been maintained at 65%, which is consistent with previous periods. • As demonstrated above, overheads and, in particular, employee numbers have increased significantly to expand our operating capacity and facilitate future growth. This has had a short-term impact on EBITDA during their initial training period. • Financial performance is in line with management expectations, with EBITDA profit of £251,169 and loss before tax of £8,496. • Net assets were £5.4m at 31 October 2004. Whilst we remain confident that the monthly case run-rate by the end of ourfinancial year will exceed our previous expectations, it remains too soon topredict whether that excess run-rate will be achieved early enough to compensatefully in the current financial year for the investment in future growth made inboth the first and second half year. Chief Executive's Report: Current trading and prospects • Strong trading in the pre-Christmas period saw the trend growth in turnover continue, with monthly turnover for both November and December being in excess of £600,000 (and new IVA annualised case run rate had grown to 1764). • We previously announced our ambition to considerably expand our operating capacity, notably with the recruitment of significant numbers of new employees. In recent months the emphasis has been on the recruitment of sufficient numbers of call handling and IVA processing staff. Whilst the pace of recruitment had initially proven to be slower than hoped, we have now recruited more staff than originally envisaged, to enable us to achieve our target number of cases for the year and continue to increase the pace of growth in the business. Total employee numbers now stand at 128. Consequently, this means that we will be in a stronger position moving into the next financial year than previously anticipated. The market • As we said in our trading update, released on 11 November 2004: "The board is increasingly confident that the scale of the consumer debt problem is significantly greater than previously estimated. We have recently commissioned independent research and, as a result, our assessment of the size of both the existing market and the potential future market has once again had to be revised upwards. This assessment allows for our view that interest rates are probably near to, or at the top of, their cycle. With regard to the existing market, the research shows that rising interest rates have already taken their toll, as 865,000 people have considered (or are considering) bankruptcy as an option. One in three people is concerned about the impact of rising interest rates on their ability to pay off debts. This is not surprising, given that 9% (4.8 million people) spend more than they earn on a regular basis and 5% (2.5 million people) do so every month". This view was expressed in November 2004 and has been substantiated by our callvolumes for early January, which have generated "qualifying responses" (forIVAs), which are up 95% on the same period last year. Therefore, we confidentlyanticipate that the number of over-indebted consumers requiring our services inthe future will increase substantially. Growing our business • As stated above, the increase in staff means that we are now in a stronger position to meet the anticipated increase in demand. • We have enjoyed considerable success in securing media buying deals at less than forecast costs. The benefits of this will be felt over the forthcoming year. In particular, these savings will allow us to continue our growth through increased advertising spend in the more expensive, high volume media areas, whilst still maintaining our overall gross margin. • We have agreed bank facilities sufficient to fund the Company's anticipated future growth. • Additional premises (5,000 square feet) have been taken on, sufficient to accommodate the IVA case supervisory team requirements for the foreseeable future. Furthermore, this will free up space in our existing premises to better accommodate future growth in call handling and IVA processing staff. A RedmondChief Executive Officer11 January 2004 Grenville Folwell, Chairman said: "I am delighted that the Group has continued to make successful progress duringthe six months to 31 October 2004. The Group is well placed to exploit its distinct position in a dynamic market.By providing best advice to our target sector and by maintaining our highethical and regulated standards, we aim to become the most respected provider ofadvice and appropriate solutions to over-indebted consumers in a rapidlyexpanding marketplace." Enquiries Debt Free DirectAndrew Redmond (CEO) 01257 240599Paul Latham (FD) 01257 240529 Citigate Dewe Rogerson 0207 638 9571Michael BerkeleySarah GestetnerFiona Mulcahy Note to Editors 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 process through a computer model (TheBest Advice Model) developed by Debt Free Direct in order to recommend asolution suitable for that individual's particular financial circumstances. Thesolutions offered range from basis 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 is unique in the marketplace in that, unlike most of itscompetitors who sell specific products, Debt Free Direct looks to provide thebest advice to the consumer and recommends them the most appropriate service. Debt Free Direct is based in Chorley, Lancashire, and was admitted to AIM inDecember 2002. DEBT FREE DIRECT GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT PERIOD FROM 1 MAY 2004 TO 31 OCTOBER 2004 Period from 1 Period from Period from 1 Year from 1 May 04 to 31 1 Nov 03 to May 03 to 31 May 03 to 30 Oct 04 30 Apr 04 Oct 03 Apr 04 £'000 £'000 £'000 £'000 Turnover 3,089 2,354 1,857 4,211Cost of Sales (1,076) (847) (590) (1,437) GROSS PROFIT 2,013 1,507 1,267 2,774 Administrative expenses (1,762) (1,317) (949) (2,266) EBITA 251 190 318 508 Depreciation (77) (69) (26) (96)Goodwill amortisation (157) (160) (152) (312) OPERATING PROFITS 17 (39) 140 100 Interest receivable 14 35 7 43Interest payable and similar charges (40) (43) (36) (79) (LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE (9) (47) 111 64TAXATION Tax on (loss)/Profit on ordinary activities (45) (8) 0 (8) (LOSS)/PROFIT FOR THE FINANCIAL PERIOD (54) (55) 111 (56) (Loss)/Profit per share - basic and diluted -0.17p -0.23p 0.47p 0.21p The group has no recognized gains or losses other than the results for theperiod as set out above. All of the activities of the group are classed as continuing. DEBT FREE DIRECT GROUP PLC CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 2004 As at 31 Oct As at 31 Oct As at 30 Apr 04 03 04 £000 £000 £000FIXED ASSETS Intangible assets 2,400 2,639 2,558Tangible assets 602 207 564 3,002 2,846 3,122 CURRENT ASSETSDebtors 3,753 1,641 2,642Cash at bank (182) 3,682 1,171 3,571 5,323 3,813 CREDITORS: Amounts falling due within one year (1,044) (1,717) (1,330) NET CURRENT ASSETS 2,527 3,606 2,483 CREDITORS: Amounts falling due after more than one year (42) (156) (64) PROVISION FOR LIABILITIES AND CHARGE (94) (1,988) (94) 5,393 4,308 5,447 CAPITAL AND RESERVES 309 289 309Called-up equity share capital 5,196 4,023 5,196Share premium account (112) (4) (58)Profit and loss account SHAREHOLDERS' FUNDS 5,393 4,308 5,447 DEBT FREE DIRECT GROUP PLC CONSOLIDATED CASH FLOW STATEMENT PERIOD FROM 1 MAY 2004 TO 31 OCTOBER 2004 Period from Period from Year from 1 1 May 04 to 1 May 03 to May 03 to 30 31 Oct 04 31 Oct 03 Apr 04 £'000 £'000 £'000 NET CASH FLOW FROM OPERATING ACTIVITIES (1,168) (37) (764) RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 14 7 43Interest paid (35) (36) (85)Interest element of finance lease rental payments (4) 0 (9) NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (25) (29) (51) CAPITAL EXPENDITURE Payments to acquire tangible fixed assets (87) (22) (318) NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (87) (22) (318) ACQUISITIONS Acquisition of DFD Limited preference shares and loan notes 0 0 (1,360) NET CASH (OUTFLOW) / INFLOW FROM ACQUISITIONS 0 0 (1,360) NET CASH OUTFLOW BEFORE FINANCING (1,280) (87) (2,493) FINANCING Issue of equity share capital 0 3,850 3,850Professional costs charged to the share premium account 0 (162) (188)Capital element of finance lease rental payments (28) (162) (188)Repayments of loans 0 0 (33) NET CASH INFLOW FROM FINANCING (28) 3,688 3,583 (DECREASE)/INCREASE IN CASH (1,308) 3,601 1,090 RECONCILIATION OF OPERATING PROFIT TO NETCASHOUTFLOW FROM OPERATING ACTIVITIES Operating profit 17 140 100Amortisation 157 152 312Depreciation 77 26 96Increase in debtors (1,111) (387) (1,396)Increase in creditors (308) 32 124 Net cash outflow from operating activities (1,168) (37) (764) RECONCILIATION OF NET CASH FLOW (Decrease)/Increase in cash in the period (1,308) 3,601 1,090Hire purchase agreements acquired with subsidiary 0 (1,308) 3,601 1,090 DEBT FREE DIRECT GROUP PLCCONSOLIDATED ACCOUNTS FOR THE PERIOD FROM 1 MAY 2004 TO 31 OCTOBER 2004 NOTES 1. EARNINGS PER SHARE The earnings per share has been calculated using the loss for the financialperiod and a weighted average number of ordinary shares in issue during the sixmonth period to 31 October 2004 of 30,949,200 (23,790,308 for the period ended31 October 2003 and 26,744,493 for the year ended 30 April 2004). 2. COMPARATIVE FIGURES The comparative figures represent the 6 month periods to 30 April 2004 and 31October 2003 and the year from 1 May 2003 to 30 April 2004. 3. STATUS OF FINANCIAL INFORMATION The accounts of the Group for the six months to 31 October 2004 were approved bythe Board on 7 January 2005. The interim financial statements have not been audited and do not constitutestatutory accounts as defined under s.240 of the Companies Act 1985. The interim financial statements have been prepared in accordance withapplicable accounting standards and are consistent with those adopted anddisclosed in the Group's statutory accounts for the year ended 30 April 2004.Those accounts, upon which the auditors issued an unqualified opinion, have beendelivered to the Registrar of Companies. 4. DISTRIBUTION OF THE INTERIM REPORT Copies of the Interim Report are being sent to shareholders. Further copies ofthe Interim and Annual Report and Accounts may be obtained from the Company'sRegistered Office, Cloth Hall Court, Infirmary Street, Leeds. In addition, anelectronic 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 Exchange