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

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
James Ferguson: How bad data is driving fear of a second wave of Covid-19
UK Economy

James Ferguson: How bad data is driving fear of a second wave of Covid-19

Merryn and John talk to MoneyWeek regular James Ferguson about the rise in infections in coronavirus and what the data is really telling us.
17 Sep 2020