Cleardebt to de-list from AIM as profits sink on reduced margins

Shares in Cleardebt Group lost over 60 per cent of their value on Thursday after announcing plans to cancel its admission on AIM on the back of a disappointing set of half year results.

Shares in Cleardebt Group lost over 60 per cent of their value on Thursday after announcing plans to cancel its admission on AIM on the back of a disappointing set of half year results.

Hit by a reducation in individual voluntary arrangements (IVAs), pre-tax profit for the second half of 2012 fell 73% from £0.45m to £0.12m, on revenues of £4.66m, which were up two per cent compared to £4.55m the prior year.

Gross margins for the period were reduced substantially to 41% (2011: 53%), reflecting increased marketing costs and high sales focused payroll costs spread over poor levels of new business in the period.

New IVAs in the period declined to 689 (2011: 833), largely due to the fact that referrals from OFT-compliant lead sources are proving harder to come by as many are increasingly restricted to fewer legitimate data sources, driving prices up in some cases but mainly reducing the volumes of referrals. The group said it is continuing to expand its compliant referral base and look for new referral sources.

More positively, cash at the period end stood at £1.41m, compared to £0.46m at June 30th.

Chief Executive Officer David Mond said: "This was a disappointing and difficult half-year borne out by a continuation of the general trend of falling personal insolvency numbers in the UK over recent quarters. We have felt the effect of this with poor volumes of new IVAs passed in the period although we have increased the numbers of clients under debt management.

"We are however expecting increased fee income derived from mis-sold payment protection insurance claims as claims for our clients in an IVA are submitted and proceeds are received into the IVAs. ClearCash is making progress on its new platform with its enhanced product offering proving more attractive to consumers."

The group also said that it can no longer justify the costs associated with its AIM listing.

"We have been unable to obtain funding from the AIM markets for some time now and we see no prospect of doing so in the near future due to our low market capitalisation and our business sector and continue to rely on funding from our main shareholder in order to make acquisitions and finance the business," it said.

"We intend to put in place a matched bargain facility for shareholders who wish to buy or sell the Group's shares once we have delisted."

The share price fell 62.50% to 0.30p by 13:37.

NR

Recommended

Share tips of the week – 15 October
Share tips

Share tips of the week – 15 October

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
15 Oct 2021
Trading: stash the family cash in this cheap wealth management firm
Trading

Trading: stash the family cash in this cheap wealth management firm

Wealth management is a growth market. Rathbone Brothers should be a prime beneficiary – and looks cheap. Matthew Partridge explains the best way to pl…
12 Oct 2021
What the best-performing investment trusts of the past 20 years can teach us
Investment trusts

What the best-performing investment trusts of the past 20 years can teach us

Forty-two trusts have risen more than tenfold over the last two decades. What made the winners stand out? And how can we identify future outperformers…
12 Oct 2021
Activision Blizzard: a cheap play on videogames
Share tips

Activision Blizzard: a cheap play on videogames

Videogame maker Activision Blizzard has been in the news for the wrong reasons lately. But it has a bright future, says Stephen Connolly.
11 Oct 2021

Most Popular

How to invest in SMRs – the future of green energy
Energy

How to invest in SMRs – the future of green energy

The UK’s electricity supply needs to be more robust for days when the wind doesn’t blow. We need nuclear power, says Dominic Frisby. And the future of…
6 Oct 2021
Inflation is still one of the biggest threats to your personal finances
Investment strategy

Inflation is still one of the biggest threats to your personal finances

Central bankers and economists insist inflation will be gone by next year. We're not so sure, says Merryn Somerset Webb. So if you haven’t started to …
1 Oct 2021
How to invest as we move to a hydrogen economy
Energy

How to invest as we move to a hydrogen economy

The government has started to roll out its plans for switching us over from fossil fuels to hydrogen and renewable energy. Should investors buy in? St…
8 Oct 2021