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ClearDebt Group Limited

REPORT AND FINANCIAL STATEMENTS

for the year ended 30 June 2015

Registration Number 02441375

ClearDebt Group Limited CONTENTS

Page

Financial highlights 1

Directors and advisers 2

Chairman’s statement 3

Chief Executive’s statement 4-6

Directors’ report 7-10

Strategic review 11-12

Corporate governance 13-14

Directors’ remuneration report 15-16

Accounts

Independent Auditor’s report to the members of ClearDebt Group Limited 17-18

Consolidated statement of comprehensive income 19

Consolidated statement of financial position 20

Consolidated statement of changes in equity 21

Consolidated statement of cash flows 22

Notes to the consolidated financial statements 23-44

Company balance sheet 45

Notes to the company financial statements 46-51

Shareholder information 52

ClearDebt Group Limited FINANCIAL HIGHLIGHTS For the year ended 30 June 2015

1

2015 2014

£ £

Revenue 7,837,962 8,674,436

Gross profit 2,807,803 3,029,715

Loss before interest, tax, depreciation and amortisation (360,570) (255,067)

Loss from operations (820,100) (901,322)

Loss before taxation (841,559) (1,195,763)

Loss after taxation (852,591) (1,661,399)

Cash generated by operations 1,307,219 78,626

Since 1 July 2014 (2014: 1 July 2013), the following numbers of new Individual Voluntary Arrangements (IVA’s)

have been arranged through ClearDebt: -

Year ended Year ended

30 June 2015 30 June 2014

First quarter 477 669

Second quarter 393 608

Third quarter 231 620

Fourth quarter 296 733

_____ _____

1,397 2,630

_____ _____

As at 30 June 2015 the total number of active IVA’s and Protected Trust Deeds (“PTD’s”) was 9,516 (2014:

10,028). No new IVA or PTD cases were acquired during the year.

As at 30 June 2015 the total number of Debt Management Plans (“DMP’s”) under management was 627 (2014:

205).

ClearDebt Group Limited DIRECTORS AND ADVISERS

2

DIRECTORS

G Carey FCIB

D E M Mond FCA FCCA

D M Shalom ACA

A F Smith

A J Leon FCA

S Lee

SECRETARY

D E M Mond FCA FCCA

REGISTERED OFFICE

Nelson House

Park Road

Timperley

Altrincham

Cheshire

WA14 5BZ

AUDITORS

UHY Hacker Young Manchester LLP

Chartered Accountants

St James Buildings

79 Oxford Street

Manchester

M1 6HT

REGISTRARS

Britdaq Limited

Richmond House

Eastbourne Road

Blindley Heath

Lingfield

Surrey

RH7 6JX

BANKERS

The Royal Bank of Scotland PLC

P O Box 5429 Macclesfield & Stockport CRT

3rd Floor

38 Mosley Street Manchester M61 OHW

SOLICITORS DAC Beachcroft LLP

3 Hardman Street

Manchester

M3 3HF

DWF LLP

1 Scott Place

2 Hardman Street

Manchester

M3 3AA

ClearDebt Group Limited CHAIRMAN’S STATEMENT

3

I present the Group’s financial statements for the year ended 30 June 2015.

Group revenue was £7,837,962 (2014: £8,674,436) and gross profit was £2,807,803 (2014: £3,029,715). Earnings

before interest, tax, depreciation and amortisation resulted in a loss of £360,570 (2014: £255,067) after taking into

account a further exceptional profit of £76,321 (2014: £2,280,455) relating to further monies due on disposal of

the majority of the Group’s debt management book in 2014 and a further goodwill impairment of £938,927 (2014:

£3,463,353). After accounting for the above the Group made a loss after taxation of £852,591 (2014: £1,661,399)

after reduced net finance charges of £21,459 (2014: £294,441) and depreciation and amortisation charges of

£459,530 (2014: £646,255).

At the year end the Group’s net assets decreased to £3,233,861 (2014: £4,079,286). Cash flow remained positive

and cash balances increased to £969,791 (2014: £338,970) after the repayment of some £100,000 of loans leaving

the Group with a remaining debt of only £103,165 (2014: £203,750)

During the year our advice and debt management subsidiary Abacus (Financial Consultants) Limited (“Abacus”)

applied for authorisation by the Financial Conduct Authority (“FCA”) and is currently going through the approval

process but continues to operate under its interim permission with the FCA. Prices for DMP back books have

fallen substantially with the uncertainty of the FCA process and many industry buyers have now paused

acquisition of these books at any price until the FCA landscape becomes clearer.

Our Individual Voluntary Arrangement (“IVA”) subsidiary ClearDebt Limited has given up its FCA Interim

Permission as at 31 December 2014 and has not applied for a full FCA licence as it only deals with insolvency

cases. It has therefore taken advantage of the exclusion from the requirement for an FCA licence where the

Insolvency Practitioner is acting in reasonable contemplation of an Insolvency appointment.

In terms of numbers of new IVAs passed, the Group passed 1,397 new IVAs compared to 2,630 in 2014. The

numbers of IVAs in the marketplace peaked at the end of the June 2014 quarter and have been falling quarter on

quarter since. We believe this has occurred both as a result of the economic recovery, as well as the introduction

of the FCA regime in April 2014 which has led to large reductions in the number of referral organisations – who

have been unwilling or unable to comply with the new FCA requirements on debt advice.

We have had another successful year in recovering compensation for IVA clients who have often been mis-sold

Payment Protection Insurance (PPI). This continues to generate good additional supervisory income as mis-sold

PPI claims monies are paid into the IVA estate of our customers for the benefit of creditors. The majority of these

claims have however now been realised and we expect this income stream to drop off in the coming financial

year.

We continue to reduce our overheads wherever possible to enable us to continue to trade profitably going forward

without the benefit of the related supervisory income from PPI mis-sales. We anticipate a tough year ahead with

the increased costs of FCA regulation and the reduced IVA numbers in the marketplace although any anticipated

rises in UK interest rates may provide a boost to demand for our services.

We also intend to further tidy up our balance sheet by the cancellation of the deferred share capital and to facilitate

this we sought and received on 27 October 2015 shareholders’ approval to change our plc status back to that of a

private limited company. Hence, we are proposing at the forthcoming Annual General Meeting in December to

cancel the deferred share capital. The private limited company status will not affect the ability for shareholders to

trade our shares on the matched bargain facility provided by Britdaq.

Gerald Carey FCIB

Chairman

25 November 2015

ClearDebt Group Limited CHIEF EXECUTIVE’S STATEMENT

4

The Group has recorded a loss of £841,559 before taxation in the year.

Our debt management and advice subsidiary Abacus (Financial Consultants) Limited (“Abacus”) applied for its

full FCA authorisation on 19 December 2014 and is going through the approval process presently. We expect to

be granted full authorisation by the end of this calendar year and in the meantime Abacus continues to operate

under its interim permission.

The decision to sell the bulk of the debt management book and our timing in the latter part of the last financial

year appears to have been astute with prices falling substantially since then as the implications of the FCA regime

have been now fully understood by the market. Indeed, many buyers have paused or withdrawn from the industry

whilst they re-assess the value of such books given the substantial extra work the FCA require any purchasers to

do in reviewing the quality of the advice given to customers by the vendor. Invariably the books that are available

have become available due to vendor compliance issues with the FCA meaning substantial work needs to be

undertaken in both due diligence and in ensuring post acquisition in a short timescale that all plans acquired are

still appropriate for the customer’s current needs.

Abacus did however complete a purchase of a small back book of approximately 100 DMP’s in May 2015 for

some £39,000.

Substantial management time continues to be taken up with the FCA approval process for Abacus as the continual

requests for further information by the FCA is dealt with.

We have made substantial improvements to our systems and processes over the year and whilst time consuming,

it has enabled us to generate substantial management information to understand our business and customer needs

more clearly.

Following a review of the IVA business it was determined that it did not require FCA authorisation as it could

rely on the statutory Insolvency exclusion granted to licensed insolvency practitioners as ClearDebt Limited

(“ClearDebt”) only deals with insolvency cases. We therefore surrendered our interim permission on 31 December

2014 in respect of the ClearDebt business and did not seek FCA authorisation. IVAs remain the focus of the Group

although we continue to run a small debt management book to service customers who are not suitable for an IVA

and to whom a debt management plan is the most appropriate solution for them.

OPERATIONAL REVIEW

ClearDebt – IVA Division

The numbers of new IVA’s passed dropped markedly in the year reducing by 47% to 1,397 (2014: 2,630). The

insolvency statistics show that IVA numbers have been falling throughout the period and we continue to be

disciplined in our costs of acquisition in the face of many of our competitors who still appear to us to be paying

unsustainable rates for the provision of information required to put forward new cases.

No new IVA books were acquired during the year and as at 30 June 2015 we had a total of 9,516 (2014: 10,028)

IVA’s and PTD’s generating income. In April 2015 we completed the approval of a mass variation to our IVA

book with the agreement of creditors which enabled us to close large numbers of cases where the payments by the

customer were complete but the case had remained open solely pending the completion of PPI mis-selling

investigations.

The division made a loss before taxation of £632,208 (2014: £1,610,317) after Group recharges during the year

and after a goodwill write down of £938,927 (2014: £1,942,059). This represents a small decrease in profitability

when compared to last year where, excluding the goodwill write down, the division made a profit of £306,719

(2014: £331,742). Supervisory fees relating to PPI mis-selling redress once again made a good contribution to

profitability although we expect this to now tail off as the majority of the mis-sold PPI claims have now been

processed.


5

The Board monitors (on a monthly basis) several key performance indicators (“KPIs”) for the business and

continues to monitor the number of cases passed, the cost per case acquired and the staff heads to caseload

numbers. We continue to only adopt referral and marketing relationships where the cost of acquisition is in our

view economic to make a profit over the life of a case as well as focusing on the compliance of lead introducers.

Where we find evidence of non–compliant selling with any of our partners we continue to insist on immediate

changes to ensure compliance or have terminate relationships. This has resulted in lower numbers of cases being

passed although encouraging new lead sources are starting to reverse that trend in recent months.

Abacus– Debt Management Division

The division made a loss before tax of £209,351 (2014: profit £414,554) after Group recharges. The profit last

year however included a net gain of £759,161 from the sale of the back book less goodwill write downs. The main

role of the division continues to be to provide debt advice although we have started to rebuild our debt management

book to service customers whose most appropriate solution is a debt management plan. As at 30 June 2015, the

total number of active DMP’s was 627 (2014: 205). We also received a further £76,321 of deferred consideration

in respect of the prior year sale of the back book.

The Board has KPIs to monitor the number of active income generating plans as well as the value of monthly

contributions made by debtors. The costs of acquisition of cases and plans are also monitored closely. IVA plans

remain our focus and we will only grow the book where customers unsuitable for an IVA require a DMP.

ClearCash – prepaid MasterCard

The division was sold just prior to the year end as we decided to focus on our core activities. We achieved a small

profit on the sale of the shares of the subsidiary ClearCash Limited although this was after the write down of the

start-up costs of the division of some £253,000 from the previous financial years.

The division made a small profit before taxation in the year, to the date of disposal, of £16,443 (2014: loss £27,837)

but the level of profitability and potential of the business was felt to be insufficient to justify the management time

going forward.

FINANCIAL REVIEW

Group turnover reduced to £7,837,962 (2014: £8,674,436) reflecting the reduced numbers of new IVAs passed.

Gross profit however declined by 7% to £2,807,803 (2014: £3,029,715) reflecting the continuing pressure on fees

and the costs of new customer acquisition. Losses before interest, tax, depreciation and amortisation amounted to

£360,570 (2014: £255,067) which included some £76,321 of deferred consideration in respect of the DMP back

book sales in 2014 and a further impairment of £938,927 against the carrying value of goodwill related to the

insolvency business (2014: £3,463,353). Finance costs decreased as expected to £21,962 (2014: £295,877)

following the repayment of the majority of the debt of the Group in 2014.

Cash resources increased during the year and at the year-end amounted to £969,791 (2014: £338,970). This is

pleasing especially after the payment of some £500,000 in taxation liabilities due in respect of the year ended 30

June 2014.

Operational cash flow remains satisfactory from the IVA casebook backed by our royalty income and PPI mis-

selling claims related supervisory income.


6

GOING CONCERN

As part of the Groups going concern review the Board has followed the guidelines published by the Financial

Reporting Council entitled “Going Concern and Liquidity Risk: Guidance for UK Companies 2009”. The Board

has prepared detailed financial forecasts and cash flows for the two years to 30 June 2017 and in drawing up these

forecasts the Board has assumed that its application for Full Permission will be granted by the FCA to enable it

to continue to trade. The forecast assumptions are based upon its view of the current and future economic

conditions in the UK that will prevail over the forecasted period - given that the business is likely to be solely

focused on the UK market for the foreseeable future. We have produced sensitivities to these forecasts to test our

ability to trade as a going concern for at least the following 12 months. In addition, D E M Mond has provided

the Board with an undertaking of financial support in the event that the Group should require additional finance.

The Board believes that the use of the going concern basis of accounting is appropriate based upon a review of

these forecasts and the finance available to the Group.

FUTURE OUTLOOK

The IVA market is holding steady at similar levels to the past few years and whilst we have been increasing market

share the declining disposable incomes of indebted consumers continue to impact on IVA fees and our margins.

Profitability remains favourable although this is mainly due to the contribution from mis-sold PPI related

supervisory receipts which are expected to reduce over the next 12 months.

We continue to reduce our cost base wherever possible and we are carefully monitoring the cost of referrals and

marketing spend to ensure that new cases are acquired at an affordable level to achieve sustainable profitability

once mis-sold PPI claims related contributions reduce.

I would like to take this opportunity to thank all our employees for their dedication and hard work during the year

in providing our customers with the fair and sustainable solutions they require appropriate to their circumstances.

I would also especially like to thank all the staff for their efforts in documenting our systems and processes to

further enforce the high level principles of the FCA throughout our business and ensure that the customer’s best

interests remain at the heart of all we do.

Finally, the Board continues to look for ways in which value can be realised for shareholders although this is

proving difficult to achieve at present whilst the new FCA regime is currently being rolled out. We anticipate that

many participants and referrers in the industry may lose their licences to trade or take on new business in the next

few months making it hard to plan for until we know who the winners and losers under the new FCA regime will

be.

David Emanuel Merton Mond FCA FCCA

Chief Executive Officer

25 November 2015

ClearDebt Group Limited DIRECTORS’ REPORT

7

The Directors present their report and the financial statements of the Group for the year ended 30 June 2015.

ClearDebt Group Limited is a parent company, incorporated and domiciled in England.

Principal Activities and Review of the Business

The principal activity of the Group is the provision of financial advice and appropriate solutions to individuals

experiencing personal debt problems.

The principal activity of the Company is that of a holding company.

A review of the Group’s activities and its future prospects is detailed in the Chairman’s Statement on page 3 and

the Chief Executive’s Statement on pages 4 to 6.

Results and Dividends

The trading results for the year and the Group’s financial position at the end of the year are set out in the attached

financial statements.

The Directors do not recommend payment of a dividend (2014: nil).

Share Capital

The Company is aware of the following substantial interests in the ordinary share capital as at 25 November 2015:

Number of shares held % of Total

D E M Mond 119,054,616 38.61

O Mond 17,459,800 5.66

A Mond 15,373,733 4.99

S Mond 15,232,602 4.94

D Murray 11,921,125 3.87

Mrs M Rose 11,328,466 3.67

The Directors are not aware of any other person who is beneficially interested in 3% or more of the issued share

capital.

Directors who held office during the year The Directors of the Company who held office during the year are as follows:

G Carey FCIB (Non-Executive Chairman)

D E M Mond FCA FCCA

A F Smith

D M Shalom ACA

S Lee

A J Leon FCA (Non-Executive)

Payment of Creditors

It is the Group’s policy to consider the terms of payment with suppliers when agreeing the terms of the transaction,

to ensure that suppliers are aware of these terms and abide by them. Trade creditor days for the Group at 30 June

2015, were 10 days (2014: 13 days). This represents the ratio, expressed in days, between the amounts invoiced

to the Group in the period by its suppliers and the amounts due, at the year end, to trade creditors falling due for

payment within one year.

Employee Involvement The Group recognises and seeks to encourage the involvement of its employees, with the aim being the

recruitment, motivation and retention of quality employees throughout the Group.

The Group’s employment policies, including the commitment to equal opportunity, are designed to attract, retain

and motivate employees regardless of sex, race, religion or disability. The Group is committed to ensuring and

communicating the requirements for a safe and healthy working environment for all employees, consistent with

health and safety legislation and, wherever practicable, gives full consideration to applications for employment

from disabled persons.

Principal Risks and Uncertainties


8

All businesses face a range of risks and uncertainties, being subject to risk factors from internal and external

sources. The Board considers the likelihood and significance of risk factors when putting in place risk management

procedures to ensure risk mitigation.

The following are considered to be the key risks facing the Group: -

1. Compliance – the industry is adapting to a strict new compliance regime regulated by the FCA. Businesses

and their referral partners have to apply for the first time for Full Permission from the FCA to continue to

trade. The licence application made by Abacus (Financial Consultants) Limited was submitted by the 31

December 2014 deadline and we expect to receive Full Permission before the end of 2015. There are

therefore risks that Full Permission may not be received or restrictions are placed upon our activities. In

addition, there are risks that some of our key referral partners may not achieve licence approval. We continue

to invest heavily in our compliance regime and we are also providing advice and assistance to those referral

partners we have carefully selected to help them meet the standards required by the FCA.

2. Competition - the market for debt resolution solutions remains highly competitive. The Group seeks to

manage the risk of losing referrers through providing innovative solutions supported by high quality delivery.

The Group’s main marketing channel is through referrals and the internet and the Group monitors closely

the strategies of competitors and the prices paid in the market place and reacts appropriately where necessary.

3. Credit risk – the Group’s credit risk is attributable to its trade receivables and is managed by daily monitoring

of customer’s payments into their programmes versus agreed contracted terms.

4. Funding arrangements – the Group monitors cash flow as part of its normal activities. Cash flow positions

are discussed with the Board on a monthly basis to ensure that all possible treasury benefits are being taken

and facilities are available if necessary. Advertising and marketing spend is monitored closely as it is a key

component of funding requirements.

5. Royalty income - substantial revenue has been earned from royalty income from a third party which provides

outsourced services to ClearDebt Limited and other companies which manage IVA’s and Protected Trust

Deeds (PTD’s). These services are provided to and paid for by, the estates of the respective IVA’s and PTD’s.

Calculation of the amount of revenue due to ClearDebt Limited is based on the revenue invoiced by the third

party. Should these services cease to be chargeable to the estates then the reduction in royalty income would

significantly affect the reported revenues and profits of ClearDebt Limited and the Group.

6. Economic environment – the current economic climate remains favourable as the market for indebted

consumers is likely to continue to grow in the next few years although the amount of disposable income that

consumers have available for solutions remains depressed - leading to pressure on margins.

7. Creditor Pressure – Creditors can restrict the market for personal debt resolutions by refusing to agree to

proposals which they do not deem acceptable. This can have the effect of restricting approvals and therefore

the timing of fees or the receipt of any fees at all. The Group is actively involved in talking to creditors both

independently and through its Trade Association, Debt Resolution Forum constantly to ensure that all Group

products are in line with creditor approval criteria as much as possible.

Risks associated with financial instruments entered into by the Group are detailed in note 20.


9

Directors’ Responsibilities The directors are responsible for preparing the Annual Report and the financial statements in accordance with

applicable laws and regulations.

Company law requires the directors to prepare such financial statements for each financial year. Under that law

the directors have chosen to prepare group financial statements in accordance with International Financial

Reporting Standards (IFRSs) as adopted by the European Union and have chosen to prepare the parent company

financial statements under in accordance with United Kingdom Generally Accepted Accounting Practice (United

Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the

accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of

the profit or loss of the company for that period.

In preparing the parent company financial statement, the directors are required to:

- select suitable accounting policies and apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether UK Accounting Standards have been followed, subject to any material departures disclosed

and explained in the financial statements; and

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

company will continue in business.

In preparing the group financial statements, International Accounting Standard 1 requires that the directors:

- properly select and apply accounting policies;

- present information, including accounting policies, in a manner that provides relevant, reliable, comparable

and understandable information;

- provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to

enable users to understand the impact of particular transactions, other events and conditions on the entity's

financial position and financial performance; and

- make an assessment of the Company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company’s transactions and disclose with reasonable accuracy at any time the financial position of the company

and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also

responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

The directors are also responsible for the maintenance and integrity of the corporate and financial information

included on the company’s website. Legislation in the United Kingdom governing the preparation and

dissemination of financial statements may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:

1. the financial statements, prepared in accordance with the relevant financial reporting framework, give a true

and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings

included in the consolidation taken as a whole; and

2. the strategic review, includes a fair review of the development and performance of the business and the position

of the company and the undertakings included in the consolidation taken as a whole, together with a description

of the principal risks and uncertainties that they face.

Statement as to Disclosure of Information to Auditors

The directors who were in office on the date of approval of these financial statements have confirmed, as far as

they are aware, that there is no relevant audit information of which the auditors are unaware. Each of the directors

has confirmed that they have taken all the steps that they ought to have taken as directors in order to make

themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.


10

Auditors UHY Hacker Young Manchester LLP, Chartered Accountants has indicated its willingness to continue in office

and a resolution that they should be re-appointed as auditors will be put to the members at the annual general

meeting.

By order of the Board

D E M Mond

Company Secretary

25 November 2015

ClearDebt Group Limited STRATEGIC REVIEW

11

The Companies Act 2006 requires the Board of Directors to regularly review its operations against its strategic

objectives and to report on an annual strategic review. The following section summaries the Board’s review for

the financial year of this report.

Activities and status

The principal activity of the Group is the provision of financial advice and appropriate solutions to individuals

experiencing personal debt problems. In addition to this review statement the Chairman’s and Chief Executives’

Statements on pages 3 - 6 and the financial report give a review of developments during the year and of future

prospects.

The directors consider that the Company was not at any time up to the date of this report a close company within

the meaning of Section 414 of the Act.

Our Strategic Approach

Our strategy remains to provide the highest standard of debt advice to indebted consumers in the UK ensuring

that they receive the solution most appropriate for their circumstances. We listen to our customers and take a

collaborative working approach to map out a bespoke solution for their specific requirements. By treating our

customers fairly and providing successful outcomes we aim to build a trusted partner relationship which may be

used to provide additional services once their debt solution has been completed.

As we build our brand so the costs of customer acquisition and the costs of failed solutions will reduce and ensure

we can produce sustainable long term profits to our shareholders.

Our Strategy is driven by our Values At the core of our vision – satisfactory returns for our shareholders through sustainable long term profits - three

values guide how we conduct our business. We work to be:

a. Ethical and responsible

i. For people - our shareholders and the public

ii. For standards in business practice

iii. For the environment

b. Open

iv. Having honest relationships with our customers and shareholders

c. Transparent

v. In our approach to all so that we can take responsibility for all we do and be held to account for our

advice and solutions at all times.

Business Objectives - A Partner of Choice

Our vision is to create long term sustainable returns for our shareholders by being the partner of choice for both

our customers and referrers.

Principal risks and uncertainties

The principal risks and uncertainties facing the Group are set out in page 8 of the director’s report.

Environmental matters and our business in Society

a. Our Commitment to the Community

We believe that as a responsible business working in the community we should support those organisations

we can to help improve the world in which we live. In 2015 we have supported several local charities and

have made donations to a locally based charity to enable free debt advice to indebted individuals to be

provided both locally and across the country.

ClearDebt Group Limited STRATEGIC REVIEW

12

b. Our Environment

We are committed to improving the environment and minimising any negative impact our activities may have

upon it. We encourage our partners to make similar commitments.

We are committed to energy efficiency and to reducing our carbon footprint. We will select, configure and

use any vehicles we acquire to ensure the maximum efficiency. We encourage the use of public transport

whenever possible. We will encourage energy efficient lighting, heating and air-conditioning systems and

practice building energy management.

c. People

We believe we can only become better at what we do and more successful as a business by encouraging and

supporting our people to discover their talents and make the most of their capabilities.

We are committed to invest time and resources to ensuring that all of our people at every level in our own

company and in those of our partners are equipped with the necessary skills to meet current and future

business needs and to aid their own professional and personal development. We believe in structured

continuing professional development is the key to personal fulfilment and to delivering better services

competitively.

Health and safety is of paramount importance to us all and we encourage both our partners and our own

management to pursue the highest possible standards meeting all regulatory requirements.

d. Business Ethics

Trust is important today more than ever and building and maintaining our reputation is absolutely the key to

us.

The long term trusted relationships we build with our partners are rooted in our open, trusting and positive

values.

We recognise the vital importance that clarity, open communication and delivery to expectation have in

building confidence and trust.

Key performance indicators

The financial key performance indicators are set out in the operational review of the Chief Executive on pages 4

and 5.

Financial Instruments

Information in respect of the Group’s policies on financial risk management objectives including policies to

manage credit risk, liquidity risk and foreign currency risk are given in note 20 to the financial statements.

By order of the Board

D E M Mond

Director

25 November 2015

ClearDebt Group Limited CORPORATE GOVERNANCE

13

Principles of Corporate Governance The Group’s Board appreciates the value of good corporate governance not only in the areas of accountability and

risk management but also as a positive contribution to business prosperity. It believes that corporate governance

involves more than a simple “box ticking” approach to establish whether a company has met the principles

(including those set out in the corporate governance guidelines for AIM companies published by the Quoted

Companies Alliance in September 2010) of a number of specific rules and regulations. Rather the issue is one of

applying corporate governance in a sensible and pragmatic fashion having regard to the individual circumstances

of a particular company’s business. The key objective is to enhance and protect shareholder value.

Board Structure

The Board is responsible to shareholders for the proper management of the Group. A statement of Directors’

responsibilities in respect of the accounts is set out in the directors’ report.

The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by the

Executive Directors are fully considered.

To enable the Board to discharge its duties, all Directors have full and timely access to all relevant information

and there is a procedure for all Directors, in furtherance of their duties, to take independent professional advice,

if necessary, at the expense of the Group. The Board has a formal schedule of matters reserved to it and meets

monthly. It is responsible for overall group strategy, approval of major capital expenditure projects and

consideration of significant financing matters.

The following Committees have been set up, which have written terms of reference and deal with specific aspects

of the Group’s affairs.

1. The Remuneration Committee, which includes D E M Mond and the two Non-Executive Directors, is

responsible for making recommendations to the Board on the Company’s framework of executive

remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits

for each of the Executive Directors, including pension rights and compensation payments. The Board itself

determines the remuneration of D E M Mond and the Non-Executive Directors. The Committee meets as

required.

2. The Audit Committee includes the two Non-Executive Directors. Its prime tasks are to review the scope of

the external audit, to review reports from the auditors and to review the half-yearly and annual accounts

before they are presented to the Board, focusing in particular on accounting policies and areas of

management judgment and estimation. The Committee is responsible for monitoring the controls, which are

in force to ensure the integrity of the information reported to the shareholders. The Committee acts as a

forum for discussion of internal control issues and contribute to the Board’s review of the effectiveness of

the Group’s internal control and risk management systems and processes. It advises the Board on the

appointment of external auditors and on their remuneration for both audit and non-audit work and discusses

the nature and scope of the audit with the external auditors. It reviews and monitors the independence of the

auditors especially with regard to non-audit work. It meets at least twice a year including immediately before

the submission of the annual and interim financial statements to the Board.

Any new Non-Executive Directors will be asked to join both Committees.

No formal nomination Committee exists in view of the stage of development of the Group. Instead appointments

to the Board by the Chief Executive and other Executive Directors are discussed with the Non-Executive

Chairman. Appointments are made after an evaluation of the skills, knowledge, and expertise required ensuring

that the Board as a whole has the ability to ensure that the Group can continue to compete effectively in its market

place.

Internal Control

The Directors are responsible for the Group’s system of internal control and for reviewing its effectiveness. The

Board has designed the Group’s system of internal control in order to provide the Directors with reasonable

assurance that its assets are safeguarded, that transactions are authorised and properly recorded and that material

errors and irregularities are either prevented or would be detected within a timely period. However, no system of

internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance

against material misstatement or loss. The key elements of the control system in operation are:

ClearDebt Group Limited CORPORATE GOVERNANCE

14

a. The Board meets regularly with a formal schedule of matters reserved to it for decision and has put in place

an organisational structure with clear lines of responsibility defined and with appropriate delegation of

authority;

b. There are procedures for planning, approval and monitoring of capital expenditure and information systems

for monitoring the Group’s financial performance against approved budgets and projections;

The process adopted by the Group accords with the guidance contained in the document “Internal Control

Guidance for Directors on the Combined Code” issued by the Institute of Chartered Accountants in England and

Wales.

The Audit Committee receives reports from the external auditors on a regular basis and from Executive Directors

of the Group. The Board has considered whether the Group’s internal controls processes would be significantly

enhanced by an internal audit function and has taken the view that at the Group’s current stage of development,

this is not required. The Board will continue to review this matter each year. The Board receives periodic reports

from all Committees.

There are no significant issues disclosed in the financial statements for the period ended 30 June 2015 and up to

the date of approval of the report and financial statements that have required the Board to deal with any related

material internal control issues.

Relations with Shareholders The Group values its dialogue with both institutional and private investors. Effective two-way communication

with fund managers, institutional investors and analysts is pursued and this encompasses issues such as

performance, policy and strategy. During the year the Directors have not had any meetings with analysts and

institutions, though have had discussions with a number of shareholders when requested.

There is also an opportunity, at the Company’s Annual General Meeting for individual shareholders to raise

general business matters with the full Board and notice of the Company’s Annual General Meeting is circulated

to all shareholders at least 20 working days before such meeting. The Chairman of the Audit and Remuneration

Committee will be available at the Annual General Meeting to answer questions.

ClearDebt Group Limited DIRECTORS’ REMUNERATION REPORT

15

The Board’s Remuneration Committee, which currently comprises Gerald Carey (Non-Executive Chairman),

Anthony Leon (Non-executive director) and David Mond (Chief Executive Officer), makes recommendations to

the Board within agreed terms of reference in determining specific remuneration packages for each of the

Directors, including pension rights.

Members of the Committee who have a personal financial interest in the matters to be decided are not involved in

decisions. In arriving at its recommendations, the Committee has access to professional advice from both within

and outside the Company.

Remuneration Policy

Each remuneration package is reviewed against a background of published comparative information on the

remuneration of Executive Directors in similar positions, taking into account the industry, the region of

employment, the type of work and the size of the Company. The extent to which the recommended remuneration

is above or below average takes account of the Director’s qualifications and length of service with the Company,

the Director’s actual performance and the performance of the Company. This will remain the policy for

forthcoming years.

Directors’ Emoluments The emoluments of the Directors from the date of their appointment during the financial year ended 30 June 2015

were as follows:

2015 2014

2015 Total Total

Salary & 2015 Salary & Salary &

Benefits Pensions Benefits Benefits

£’000 £’000 £’000 £’000

Executive Directors

David Mond (Chief Executive Officer) 273 - 273 195

David Shalom (Finance Director) 223 - 223 146

Andrew Smith (Marketing & External Affairs Director) 52 - 52 51

Simon Lee (Chief Operating Officer) 200 - 200 120

Non-Executive Directors Gerald Carey (Chairman) 23 - 23 23

Anthony Leon 15 - 15 15

___ ___ ___ ___

Aggregate remuneration 786 - 786 550

___ ___ ___ ___

On 1 August 2014, in line with UK legislation on pensions, the executive directors and employees of the Group

were auto enrolled into a defined contribution pension scheme set up to satisfy the legislation. David Shalom opted

out of the scheme. The 3 remaining executive directors received less than £500 each in payments made on their

behalf by the Group in accordance with the scheme rules.

Under the terms of the scheme those members of staff that did not opt out had 1% of their gross salary deducted

and paid into the scheme on their behalf whilst the employing company paid in a further 1% into the scheme on

their behalf. The level of contributions and company funding will increase in line with the present statutory

requirements under the legislation.

Directors’ Options

Options have been granted to directors under an EMI scheme. The granting of options ensures that the holders are

incentivised to concentrate on growing shareholder value. No share options were granted during the year leaving

options outstanding over 5,500,000 ordinary shares at a weighted average exercise price of 1.82p per ordinary

share.

Directors’ Service Agreements

Anthony Leon, Gerald Carey and David Mond all have agreements subject to 6 months’ notice. David Shalom,

Andrew Smith and Simon Lee all have service agreements subject to 12 months’ notice.

ClearDebt Group Limited DIRECTORS’ REMUNERATION REPORT

16

Directors’ Interests The interests of the Directors in the ordinary shares of the Company were as follows:

Ordinary Shares

At 0.5p each At 0.5p each

At 30 June At 30 June

2015 2014

David Mond 119,054,616 119,054,616

Andrew Smith 6,750,000 6,750,000

David Shalom 2,150,000 2,150,000

Gerald Carey 1,020,000 1,020,000

Anthony Leon 500,000 500,000

The directors held the following interests in share options as at 30 June 2015 and 25 November 2015.

At 30 June At 30 June Option Date Expiry

Scheme 2015 2014 Price Exercisable Date

David Mond EMI 375,000 375,000 2.00p 07.10.12 07.10.19

David Mond EMI 500,000 500,000 1.75p 21.09.13 21.09.20

David Mond EMI 750,000 750,000 1.75p 31.10.14 31.10.21

Andrew Smith EMI 375,000 375,000 2.00p 07.10.12 07.10.19

Andrew Smith EMI 750,000 750,000 1.75p 31.10.14 31.10.21

David Shalom EMI 375,000 375,000 2.00p 07.10.12 07.10.19



Simon Lee EMI 375,000 375,000 2.00p 07.10.12 07.10.19

Simon Lee EMI 750,000 750,000 1.75p 31.10.14 31.10.21

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF CLEARDEBT GROUP LIMITED

17

We have audited the Group and Parent Company financial statements which comprise the Consolidated Statement

of Comprehensive Income, Consolidated Statement of Financial Position, the Company Balance Sheet, the

Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related notes.

The financial reporting framework that has been applied in the preparation of the Group financial statements is

applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The

financial reporting framework that has been applied in the preparation of the Parent Company financial statements

is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting

Practice).

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members

those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s

members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors As more fully explained in the Directors’ Responsibilities Statement, the directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility

is to audit and express an opinion on the financial statements in accordance with applicable law and International

Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s

(APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to

give reasonable assurance that the financial statements are free from material misstatement, whether caused by

fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's

circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant

accounting estimates made by the directors; and the overall presentation of the financial statements. In addition,

we read all the financial and non-financial information in the annual report to identify material inconsistencies with

the audited financial statements and to identify any information that is apparently materially incorrect based on, or

materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become

aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on the financial statements

In our opinion the financial statements:

- the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s

affairs as at 30 June 2015 and of the Group’s loss for the year then ended;

- the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the

European Union;

- the Parent Company financial statements have been properly prepared in accordance with United Kingdom

Generally Accepted Accounting Practice; and

- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the Directors’ Report for the financial year for which the financial

statements are prepared is consistent with the financial statements.

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF CLEARDEBT GROUP LIMITED

18

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report

to you if, in our opinion:

- adequate accounting records had been kept; or

- returns adequate for our audit have not been received from branches not visited by us; or

- the Parent Company financial statements are not in agreement with the accounting records and returns; or

- certain disclosures of directors’ remuneration specified by law are not made.

- we have not received all the information and explanations that we considered necessary for the purpose of

our audit.

Michael D Wasinski

(Senior Statutory Auditor)

For and on behalf of

UHY HACKER YOUNG MANCHESTER LLP

Chartered Accountants and Statutory Auditor

25 November 2015

St James Building

79 Oxford Street

Manchester

M1 6HT

ClearDebt Group Limited CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2015

19

2015 2014

Notes £ £

Revenue 3 7,837,962 8,674,436

Cost of sales (5,030,159) (5,644,721)

_________ _________

Gross profit 2,807,803 3,029,715

Administrative expenses (2,303,090) (2,071,919)

Profit on disposal of debt management books 76,321 2,280,455

Profit on disposal of subsidiary 6 4,489 -

Goodwill impairment 10 (938,927) (3,463,353)

Share based payment 17 (7,166) (29,965)

_________ _________

Loss before interest, tax,

depreciation and amortisation (360,570) (255,067)

Depreciation 11 (182,431) (193,118)

Amortisation 10 (277,099) (453,137)

Gain on bargain purchase - -

_________ _________

Loss from operations 4 (820,100) (901,322)

Finance costs 5 (21,962) (295,877)

Finance income 503 1,436

_________ _________


Taxation 8 (11,032) (465,636)

_________ _________

Loss after taxation and total comprehensive

loss for year (852,591) (1,661,399)

_________ _________

Amount attributable to:

Owners of the parent (852,591) (1,661,399)

_________ _________

Loss per ordinary share - basic (pence) 9 (0.28p) (0.54p)

Loss per ordinary share - diluted (pence) 9 n/a n/a

_________ _________

ClearDebt Group Limited CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As At 30 June 2015 Company Number 02441375

20

2015 2014

Notes £ £

Assets

Non-current assets Intangible assets 10 91,209 1,264,758

Property, plant and equipment 11 241,676 337,899

Deferred taxation 15 20,349 19,918

__________ _________

353,234 1,622,575

Current asset

Trade and other receivables 12 2,870,754 4,123,800

Cash and cash equivalents 969,791 338,970

__________ _________

3,840,545 4,462,770

__________ _________

Total assets 4,193,779 6,085,345

__________ _________

Equity and liabilities

Equity Issued capital 16 6,166,812 6,166,812

Share premium 279,948 279,948

Share based compensation 376,484 369,318

Retained losses (3,589,383) (2,736,792)

__________ _________

Total equity attributable to the owners of the parent 3,233,861 4,079,286

__________ _________

Current liabilities Trade and other payables 13 847,141 1,301,457

Corporation tax payable 13 9,612 500,852

Current financial liabilities 13 103,165 150,000

__________ _________

959,918 1,952,309

Non-current liabilities Financial liabilities 14 - 53,750

__________ _________

Total liabilities 959,918 2,006,059

__________ _________

Total equity and liabilities 4,193,779 6,085,345

__________ _________

The financial statements were approved by the Board of Directors and authorised for issue on 25 November 2015

and are signed on its behalf by:

D E M Mond

Director

ClearDebt Group Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


21

Issued Share Share Share Based Other Retained Total

Capital Premium Compensation Reserves Losses Equity

£ £ £ £ £ £

Balance as at 30 June 2013 6,166,812 279,948 339,353 - (1,075,393) 5,710,720

Share based compensation - - 29,965 - - 29,965

Total comprehensive loss - - - - (1,661,399) (1,661,399)

for the year

________ ________ ________ _______ _________ ________

Balance as at 30 June 2014 6,166,812 279,948 369,318 - (2,736,792) 4,079,286

Share based compensation - - 7,166 - - 7,166

Total comprehensive loss - - - - (852,591) (852,591)

for the year

________ ________ ________ _______ ________ ________

Balance as at 30 June 2015 6,166,812 279,948 376,484 - (3,589,383) 3,233,861 ________ ________ ________ _______ _________ ________

Share capital

Share capital has arisen on the issue of shares and represents the nominal value of shares issued.

Share premium

The share premium account arose from the issue of equity shares above the nominal value less share issue costs.

Share based compensation

This reserve is the result of the Company’s grant of equity settled share options and warrants and measured in

accordance with IFRS2 share-based payment.

Retained losses

The retained losses reflect losses incurred to date.

ClearDebt Group Limited CONSOLIDATED STATEMENT OF CASH FLOWS


22

2015 2014

£ £

Cash flow from continuing operating activities


Depreciation of property, plant and equipment 182,431 193,118

Amortisation of intangible assets 277,099 453,137

Profit on sale of subsidiary (4,489) -

Profit on disposal of debt management books (76,321) (2,280,455)

Goodwill impairment 938,927 3,463,353

Loss on disposal of fixed assets 2,339 101,246

Share based payment 7,166 29,965

Decrease/ (increase) in trade and other receivables 1,254,483 (1,166,260)

Finance costs 21,962 295,877

Finance income (503) (1,436)

(Decrease)/ increase in trade and other payables (454,316) 185,844

_________ _________ Cash generated by operations 1,307,219 78,626

Corporation tax (paid)/ refund (500,151) 52,832

Interest on loans (21,962) (295,877)

_________ _________

Net cash generated by/ (used in) operating activities 785,106 (164,419)

Investing activities Acquisition of intangibles (42,542) (288,690)

Acquisition of property, plant and equipment (88,482) (66,467)

Disposal of intangible assets 76,321 2,819,035

Sale of subsidiary 500 -

Finance income 503 1,436

_________ _________

Net cash (used in) /generated by investing activities (53,700) 2,465,314

Financing activities Repayment of existing loans (200,585) (2,250,000)

Proceeds from new loans advanced 100,000 200,000

_________ _________

Cash used by financing activities (100,585) (2,050,000)

Increase in cash and cash equivalents 630,821 250,895

Opening cash and cash equivalents 338,970 88,075

_________ _________

Closing cash and cash equivalents 969,791 338,970

_________ _________

ClearDebt Group Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


23

1. General information

ClearDebt Group Limited is a company incorporated and domiciled in the United Kingdom under the Companies

Act 2006. The Group’s functional and presentational currency is £ sterling.

Interpretations of standards The following accounting standards, interpretations and amendments have been adopted by the Company since 1

July 2014 with no significant impact on its results or financial position:

IAS 27 “Separate Financial Statements (2011)

IAS 28 “Investments in Associates and Joint Ventures”

IAS 32 “Offsetting Financial Assets and Financial Liabilities”

IFRS10 “Consolidated Financial Statements”

IFRS 11 “Joint Arrangements”

IFRS 12 “Disclosures of Interest in Other Entities”

The following standards, interpretations and amendments to existing standards have been published and are

mandatory for the Company’s accounting periods beginning on or after 1 July 2015 or later periods, but which

have not been adopted by the Company:

Annual improvements to IFRSs 2010-2012 cycle and 2011-2013 Cycle.

IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation effective from 1

January 2016

IFRS 7 Amendment related to transition to IFRS is effective from 1 January 2016

IFRS 9 “Financial Instruments” is effective from 1 January 2018.

The Directors anticipate that the adoption of these standards and interpretations in future periods will have no

material impact on the financial statements of the Group.

2. Significant Accounting Policies

Basis of Preparation The financial statements have been prepared in accordance with International Financial Reporting Standards and

IFRIC interpretations as endorsed by the European Union (IFRS) and the requirements of the Companies Act 2006

applicable to companies reporting under IFRS.

The financial statements have been prepared on the historic cost basis. The principal accounting policies adopted

are set out below.

Going concern As part of the Groups going concern review the Board has followed the guidelines published by the Financial

Reporting Council entitled “Going Concern and Liquidity Risk: Guidance for UK Companies 2009”. The Board

has prepared detailed financial forecasts and cash flows for the two years to 30 June 2016 and in drawing up these

forecasts the Board has assumed that its application for Full Permission will be granted by the FCA to enable it to

continue to trade. The forecast assumptions are based upon its view of the current and future economic conditions

in the UK that will prevail over the forecasted period - given that the business is likely to be solely focused on the

UK market for the foreseeable future. We have produced sensitivities to these forecasts to test our ability to trade

as a going concern for at least the following 12 months. In addition, D E M Mond has provided the Board with an

undertaking of financial support in the event that the Group should require additional finance.

The Board believes that the use of the going concern basis of accounting is appropriate based upon a review of

these forecasts and the finance available to the Group.



24

2. Significant Accounting Policies (continued)

Critical Accounting Estimates and Judgements

The preparation of the financial information in conformity with IFRS requires management to make judgements,

estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities,

income and expenses. The estimates and associated assumptions are based on historical experience and various

other factors that are believed to be reasonable under the circumstances, the results of which form the basis of

making the judgements about carrying values of assets and liabilities. Actual results may differ from these

estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in

the period of the revision and future periods if the revision affects both current and future periods.

The principal balances that have been estimated relate to: -

- estimates as to the recoverability of goodwill. The Group is required to review, on an annual basis, whether

goodwill has suffered any impairment. The recoverable amount is determined based on value in use

calculations. The use of this method requires the estimation of future cash flows and the choice of a discount

rate in order to calculate present value - actual outcomes may vary. The carrying amount of goodwill at the

balance sheet date was £nil after impairment losses of £938,927 identified during the year.

- estimates relating to provisions required for uncollectable debtor balances (see note 12).

Basis of Consolidation

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, it is classified as a subsidiary. The

consolidated financial statements present the results of the company and its subsidiaries (“the Group”) as if they

formed a single entity. Inter-company transactions are therefore eliminated in full.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies

used in line with those used by the Group.

Business Combinations The consolidated financial statements incorporate the results of business combinations using the purchase method.

In the consolidated statement of financial position, the acquiree’s identifiable assets, liabilities and contingent

liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are

included in the consolidated income statement from the date on which control is obtained.

Goodwill represents the excess of the cost of a business combination over the interest in the fair value of

identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair values of assets given,

liabilities assumed and equity instruments issued.

Goodwill Goodwill arising on acquisition of subsidiaries or business is recognised as a separate asset on the statement of

financial position after the recognition at fair value of any other intangible assets identified at the time of

acquisition.

Goodwill is capitalised as an intangible asset. Where the fair value of identifiable assets, liabilities and contingent

liabilities exceeds the fair value of consideration paid, the excess is credited in full to the Group income statement

on the acquisition date. The Group carries out annual impairment tests for goodwill. Impairment losses in respect

of goodwill are recognised immediately in the income statement and are not reversed.



25


Impairment

At each reporting date, the Group reviews the carrying amounts of its intangibles and property, plant and

equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any

such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the

impairment loss (if any). Where the asset does not generate cash flows that are independent of other assets, the

Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current

market assessments of the time value of money and the risks specific to the asset for which the estimates of future

cash flows have been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the

carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount, in which case the

impairment loss is treated as expenses in the consolidated income statement.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is

increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not

exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset

(cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately.

Other Intangible Assets Internal and externally acquired intangible assets are initially recognised at cost and subsequently amortised over

their useful economic lives. The amortisation expense is shown separately on the face of the Consolidated Income

Statement. The significant intangibles recognised by the Group, their useful economic lives and the methods used

to determine the cost of intangibles acquired in a business combination are as follows: -

Software and other development costs - 4 years’ straight line

Intangible assets - Debt management back books - 12 months’ straight line

Intangible assets - Insolvency back books - 3-4 years’ straight line

Expenditure arising from the Group’s development costs and software development is recognised only if all of the

following conditions are met:

- an asset is created that can be identified;

- it is probable that the asset created will generate future economic benefits;

- the development cost of the asset can be measured reliably;

- the Group has the intention to complete the asset and the ability and intention to use or sell it;

- sufficient resources are available to complete the development and to either sell or use the asset.

Where the criteria have not been achieved, software development expenditure is recognised as an expense in the

period in which it is incurred.

Segmental Reporting Management determines its operating segments by identifying components:

a) that engage in business activities that earn revenues and incur expenses (including revenues and expenses

relating to transactions with other components of the Group),

b) whose operating results are regularly reviewed by the entity’s chief operating decision maker, the board of

directors of ClearDebt Group Limited, to make decisions about resources to be allocated to the segment, and

c) for which discrete financial information is available.



26


Revenue

Revenue is recognised at the fair value of amounts receivable or received in relation to a range of services provided

to customers as follows:

Individual Voluntary Arrangements (IVA’s)

Fees are earned for arranging and administering IVA’s on behalf of individuals experiencing debt problems.

Generally, revenue is accrued based upon the stage of completion of specific customer contracts where the

outcome can be assessed with reasonable certainty and the value for that service has been agreed between the

Group and the customer.

Nominee fees

Nominee fees are recognised upon the approval of an IVA proposal at a creditors meeting.

Supervisory fees

Supervisory fees are accrued on a monthly basis over the duration of the arrangement as the service is provided.

Protected Trust Deeds (PTD’s)

Fees earned in respect of PTD’s are recognised when received.

Debt Management Services

Fees are receivable for the management of debts on behalf of customers experiencing financial difficulties. Fees

are recognised upon receipt of customer payments on the basis that these arrangements are informal and there is

no certainty that economic benefits will accrue until a payment is received.

Commissions and Payment Protection Mis-selling Claims Income

The Group also receives commission income from the referral of loans and other products as well as fees in respect

of non IVA claims for mis-sold payment protection products. Commissions are recorded as they are received.

Royalty Income

Revenue from royalty income is accrued in accordance with contractual agreements in place. Revenue is calculated

as a proportion of the revenue invoiced by that third party.

Prepayment Card Services

The Group receives a revenue share from the issue and usage charges in respect of the ClearCash prepaid

MasterCard. Income and charges are recognised in the period in which they were incurred by the card user.

Property, Plant and Equipment All property, plant and equipment are initially recorded at cost. Depreciation is provided at rates calculated to

write off the cost less residual value of each asset over its expected useful life, as follows:

Leasehold improvements - 25% straight line

Fixtures and fittings - 25% straight line

Residual value and estimated remaining lives are reviewed annually.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event

where it is probable that it will result in an outflow of economic benefits that can be reliably estimated. If the

effect of time value of money is material, provisions are determined by discounting the expected future cash flows

at a pre-tax rate that reflects current market assessments of the time value of money.



27


Share-based Compensation

Equity-settled share-based payments are measured at the fair value of services received in exchange for the grant

of options or warrants. The fair value determined is recognised as an expense if it relates to trading activities or

in the share premium account if it relates to the issue of equity instruments. The total amount to be expensed over

the vesting period is determined by reference to the fair value of the options or warrants granted, excluding the

impact of any non-market vesting conditions (for example, profitability and growth targets). Non-market vesting

conditions are included in the assumptions about the number of options or warrants that are expected to become

exercisable.

At each reporting date, the Group revises its estimates of the number of options or warrants that are expected to

become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement,

and a corresponding adjustment to reserves over the remaining vesting period.

The proceeds received net of any attributed transaction costs are credited to share capital (nominal value) and

share premium when the options or warrants are exercised. Non vesting conditions which are not satisfied during

the vesting period are treated as cancellations and any remaining expense is accelerated in the period of failure.

Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted,

based on management’s best estimate, for the effect of non-transferability, exercise restrictions and behavioural

considerations.

Leasing Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant

lease.

Financial Instruments Financial assets and financial liabilities are recognised in the statement of financial position when the Group has

become a party to the contractual provisions of the instrument.

Trade and other receivables

Trade receivables are classified as loans and other receivables in accordance with IAS 39, measured on initial

recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method.

Appropriate allowances for estimated irrecoverable amounts are recognised in the consolidated income statement

when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference

between the asset’s carrying amount and the present value of estimated future cash flows discounted at the

effective interest rate computed at initial recognition.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand, deposits held at call with banks and other short-

term highly liquid investments with original maturities of three months or less and are classified as other loans

and receivables in accordance with IAS 39.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of amounts as defined above.

Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into. An

instrument will be classified as a financial liability when there is a contractual obligation to deliver cash or another

financial asset to another enterprise.

Trade and other payables

Trade payables are initially recognised at fair value and subsequently at amortised cost using the effective interest

method. They are classified as “Other liabilities” in accordance with IAS 39.



28


Borrowings

Interest-bearing bank loans and overdrafts are classified as “other liabilities” in accordance with IAS 39. They

are initially recorded at their fair value, net of any transaction costs associated with borrowings. Borrowings are

subsequently stated at amortised cost.

Finance charges, including premiums payable on settlement or redemption, are expensed to the income statement

over the term of the instrument using an effective rate of interest and are added to the carrying amount of the

instrument to the extent that they are not settled in the period in which they arise. Borrowings are classified as

current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12

months after the reporting date.

Taxation

The tax expense represents the sum of the current tax expense and deferred tax expense. Taxable profits differ

from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or

expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible.

The Group’s liability for current tax is calculated by using tax rates that have been enacted or substantively enacted

by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets

and liabilities in the financial statements are the corresponding tax bases used in the computation of taxable profit,

and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable

temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits

will be available against which the deductible temporary differences can be utilised. Such assets and liabilities

are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial

recognition (other than in a business combination) of other assets and liabilities in a transaction which affects

neither the tax profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the

liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged

directly to equity, in which case the deferred tax is also dealt with in equity.



29

3. Segmental Information The Group’s total income, profit before taxation and net assets were all derived from its principal activities being

the provision of IVA’s and other financial advice and appropriate solutions to individuals experiencing personal

debt problems. All the Group’s activities were undertaken wholly in the United Kingdom.

Debt Total Debt Total

Insolvency Management 2015 Insolvency Management 2014

£ £ £ £ £ £

Revenue 7,682,467 155,495 7,837,962 7,629,135 1,045,301 8,674,436

Intersegment Recharges (1,622,814) 1,622,814 - (827,710) 827,710 -

Cost of sales (3,289,832) (1,740,327) (5,030,159) (3,981,307) (1,663,414) (5,644,721)

_________ _________ _________ _________ _________ _________ Gross Profit 2,769,821 37,982 2,807,803 2,820,118 209,597 3,029,715

Administrative expenses (2,005,377) (297,713) (2,303,090) (1,750,765) (321,154) (2,071,919)

Sale of subsidiary 4,489 - 4,489 - - -

Profit on sale of debt

management book - 76,321 76,321 - 2,280,455 2,280,455

Goodwill impairment (938,927) - (938,927) (1,942,059) (1,521,294) (3,463,353)

Share based payment (5,104) (2,062) (7,166) (21,724) (8,241) (29,965)

________ _________ _________ _________ _________ _________

(Loss)/profit before interest, tax

depreciation & amortisation (175,098) (185,472) (360,570) (894,430) 639,363 (255,067)

Depreciation (169,780) (12,651) (182,431) (175,213) (17,905) (193,118)

Amortisation (270,593) (6,506) (277,099) (308,671) (144,466) (453,137)

________ _________ _________ _________ _________ _________ (Loss)/profit from operations (615,471) (204,629) (820,100) (1,378,314) 476,992 (901,322)

Finance costs (17,240) (4,722) (21,962) (232,263) (63,614) (295,877)

Finance income 503 - 503 260 1,176 1,436

_________ _________ _________ _________ _________ _________ (Loss)/profit

before taxation (632,208) (209,351) (841,559) (1,610,317) 414,554 (1,195,76)

Taxation (54,998) 43,966 (11,032) (70,486) (395,150) (465,636)

_________ _________ _________ _________ _________ _________ (Loss)/profit after tax (687,206) (165,385) (852,591) (1,680,803) 19,404 (1,661,399)

_________ _________ _________ _________ _________ _________



30

3. Segmental Information (continued)

Net operating assets are reconciled to equity funds as follows:

2015 2014

£ £

Gross assets Insolvency 4,063,129 5,855,998

Debt management 130,650 229,347

_________ _________

4,193,779 6,085,345

_________ _________

Gross liabilities

Insolvency 872,148 1,454,342


_________ _________

959,918 2,006,059

_________ _________

Capital expenditure to acquire property, plant and equipment

Insolvency 87,990 62,470

Debt management 492 3,997

_________ _________

88,482 66,467

_________ _________

Capital expenditure to acquire intangible assets Insolvency 3,507 54,486


_________ _________

42,542 288,690

_________ _________

Depreciation of property, plant and equipment Insolvency 169,780 175,213


_________ _________

182,431 193,118

_________ _________

Amortisation of intangible assets

Insolvency 270,593 308,671


_________ _________

277,099 453,137

_________ _________



31

4. Loss from Operations

2015 2014

£ £

Loss from operations is stated after charging:

Depreciation of owned assets 182,431 193,118

Amortisation 277,099 453,137

Loss on disposal of fixed assets 2,339 (101,246)

Share based payment 7,166 29,965

Operating lease rentals – buildings 161,503 161,503

Operating lease rentals – other 63,463 43,372

_______ _______

Amounts payable to the auditors and their associates in respect of both audit and non-audit services:

2015 2014

£ % £ %

Audit services

- Statutory audit of parent and consolidated accounts 14,515 39% 15,000 36%

Other services

Fees payable to the company’s auditor and its associates for

other services:

- Audit of subsidiaries pursuant to legislation 22,561 61% 25,000 60%

- Tax compliance services - -

- Other services - - 2,000 4%

_______ _______

37,076 42,000

_______ _______

5. Finance Costs 2015 2014

£ £ Interest payable on loans 21,160 293,550

Interest payable on corporation tax liability 802 2,327

________ ________

21,962 295,877 ________ ________



32

6. Disposal of subsidiary

On 29 May 2015 the Group disposed of the shares in its subsidiary ClearCash Limited to Samuel Mond, the son

of David Mond for the sum of £25,000. Consideration of £500 was paid on completion with further instalment

payments due on each anniversary of the completion date over the next 5 years.

ClearCash operates a prepaid MasterCard which provides a virtual bank account to consumers and is used by

many of our IVA customers who need to set up a new bank account quickly in readiness for the passing of their

IVA. We continue to refer potential customers to ClearCash which is being rebranded as Icount. Whilst ClearCash

made a small profit in the year to the date of disposal it has been viewed as a non-core part of the business for

some time.

At the date of disposal the fair values of the assets sold comprised the following:

Book value

Fair value

adjustment

Fair Value

£ £ £

Trade debtors and prepayments 12,536 - 12,536

Deferred tax asset 1,042 - 1,042

Cash 11,730 - 11,730

Trade payables (1,157) - (1,157)

Other payables (3,640) - (3,640)

_______ _______

20,511

_______

20,511

_______

Sale Consideration

Less fair value of assets disposed

Profit on sale of subsidiary

Settled by:

25,000

(20,511)

_______

4,489

_______

£

Cash

Deferred consideration

500

24,500

-------------

25,000

_________

Included in the results for the year are revenues of £96,562 and a post-tax profit of £12,850 excluding the profit

on the sale of the subsidiary.



33

7. Employees Number of Employees The average monthly numbers of employees (including the Directors) during the period was:

2015 2014

Number Number Directors 6 6

Sales and marketing 34 39

Management and administration 17 23

Compliance 6 5

IVA and PTD processing team 38 39

DMP processing team 6 9

________ ________

107 121 ________ ________

Employment costs 2015 2014

£ £ Wages and salaries 3,684,749 3,959,698

Social security costs 382,189 381,891

Pension costs 18,767 5,121 ________ ________

4,085,705 4,346,710 ________ ________

For the year ended 30 June 2015, staff costs of £3,248,268 (2014: £3,776,293) have been included in cost of sales

and £837,437 (2014: £570,417) in administration expenses.

Directors’ Emoluments 2015 2014

£ £ Directors’ fees 37,500 37,500

Directors’ emoluments 749,052 512,527

________ ________

Key management compensation – short term benefits 786,552 550,027 ________ ________

Key management consist of the statutory directors of the Group. The share based payment with regard to key

management amounted to £3,583 (2014: £12,050).

Number Number Number of directors to whom retirement benefits are accruing under a

money purchase scheme 3 - ________ ________

Number Number

Number of directors who exercised share options in the year - - ________ ________

Further information about the remuneration of the individual directors is disclosed in the Directors’ Remuneration

Report on pages 15 and 16. The remuneration of the highest paid director was £273,375 (2014: £195,000)



34

8. Taxation

2015 2014

£ £

Analysis of current year

Current tax UK corporation tax payable 13,207 500,852

Over provision from prior years (702) (1,068)

________ ________

Total corporation tax 12,505 499,784

Deferred tax

Deferred tax credit taken to income (1,473) (34,148)

________ ________

Tax charge on loss for the year 11,032 465,636

________ ________

Factors affecting charge for year

2015 2014

£ £


________ ________ Loss multiplied by standard rate of

corporation tax in the UK of 20.75% (2014: 22.5%) (174,623) (269,046)

Effects of:

Expenses not deductible 176,725 679,234

Adjustment due to change of tax rate - (45)

Over provision from prior year (693) (1,068)

Other adjustments 9,623 56,561

________ ________

Current tax expense for year 11,032 465,636

________ ________



35

9. Loss per Ordinary Share

2015 2014

£ £

Loss for the financial year (852,591) (1,661,399)

__________ __________

Weighted average number of ordinary shares in issue during the year 308,340,567 308,340,567 Dilutive potential of share options - -

__________ __________

308,340,567 308,340,567

__________ __________

Loss per share

Basic (0.28p) (0.54p)

Diluted n/a n/a

__________ __________

The calculation of the basic loss per ordinary share of 0.28p (2014: 0.54p) each has been based on the loss for the

relevant financial year and on 308,340,567 shares (2014: 308,340,567). This represents the weighted average

number of ordinary shares in issue.

Where the Group reports a loss for the current period, then in accordance with IAS 33, the share options are not

considered dilutive. Details of such instruments which could potentially dilute basic earnings per share in the

future are included in note 16.

10. Intangible Assets

Other Software

Intangibles - Development

Goodwill back books costs Total

£ £ £ £

Cost – 2015

At 1 July 2014 938,927 3,179,170 147,423 4,265,520

Arising on purchase of debt management books - 39,035 - 39,035

Additions - - 3,507 3,507

Goodwill impairment (938,927) - - (938,927)

Disposals - (2,892,200) (47,016) (2,939,216)

_________ _________ _________ _________

At 30 June 2015 - 326,005 103,914 429,919

_________ _________ _________ _________

Amortisation – 2015

At 1 July 2014 - 2,896,503 104,259 3,000,762

Charge for year - 264,116 12,983 277,099

Disposals - (2,892,200) (46,951) (2,939,151)

_________ _________ _________ _________

At 30 June 2015 - 268,419 70,291 338,710

_________ _________ _________ _________

Net book value

At 30 June 2015 - 57,586 33,623 91,209

_________ _________ _________ _________



36

10. Intangible Assets (continued)

Other Software

Intangibles - Development

Goodwill back books costs Total

£ £ £ £

Cost – 2014 At 1 July 2013 4,402,280 4,891,681 233,402 9,527,363

Arising on purchase of debt management books - 234,204 - 234,204

Additions - - 54,486 54,486

Arising on disposal of debt management books (1,946,715) - (1,946,715)

Goodwill impairment (3,463,353) - - (3,463,353)

Disposals - - (140,465) (140,465)

_________ _________ _________ _________

At 30 June 2014 938,927 3,179,170 147,423 4,265,520

_________ _________ _________ _________

Amortisation – 2014

At 1 July 2013 - 3,989,054 89,273 4,078,327

Charge for year - 388,524 64,613 453,137

Disposals - (1,481,075) (49,627) (1,530,702)

_________ _________ _________ _________

At 30 June 2014 - 2,896,503 104,259 3,000,762

_________ _________ _________ _________

Net book value

At 30 June 2014 938,927 282,667 43,164 1,264,758

_________ _________ _________ _________

Debt management books comprise the entitlement to future income arising from customer contracts acquired from

third parties.

Impairment reviews

Goodwill is reviewed annually for impairment.

Goodwill arising on ClearDebt acquisition (insolvency business) – critical accounting estimates and

judgements in relation to the impairment review on the insolvency business

For the purposes of the impairment review the recoverable amount has been calculated as the value in use based

on discounted future cash flow projections for a 3 year period based upon budgets for 3 years and thereafter at

rates in perpetuity assuming no growth from year 3 onwards or a run off of the business if it is loss making.

Assumptions are based on recent experience and estimates of how economic conditions may affect levels of

activity in the business taking into account management’s strategy for growth.

On this basis the review has determined that a full impairment of the remaining of the goodwill of the insolvency

business is required and the carrying value of the goodwill has therefore been written down by £938,927 to nil.



37

11. Property, Plant and Equipment

Fixtures Leasehold

and fittings improvements Total

£ £ £

Cost – 2015

At 1 July 2014 765,827 - 765,827

Additions 88,482 - 88,482

Disposals (41,792) - (41,792)

________ ________ ________

At 30 June 2015 812,517 - 812,517

________ ________ ________

Depreciation – 2015

At 1 July 2014 427,928 - 427,928

Charge for the year 182,431 - 182,431

Disposals (39,518) - (39,518)

________ ________ ________

At 30 June 2015 570,841 - 570,841

________ ________ ________

Net book value

At 30 June 2015 241,676 - 241,676

________ ________ ________

Fixtures Leasehold

and fittings improvements Total

£ £ £

Cost – 2014 At 1 July 2013 801,254 10,069 811,323

Additions 66,467 - 66,467

Disposals (101,894) (10,069) (111,963)

________ ________ ________

At 30 June 2014 765,827 - 765,827

________ ________ ________

Depreciation – 2014 At 1 July 2013 336,512 6,733 343,245

Charge for the year 190,736 2,382 193,118

Disposals (99,320) (9,115) (108,435)

________ ________ ________

At 30 June 2014 427,928 - 427,928

________ ________ ________

Net book value

At 30 June 2014 337,899 - 337,899

________ ________ ________



38

12. Trade and other receivables

2015 2014

£ £

Trade receivables 2,353,969 3,714,613

Prepayments 320,774 188,686

Other receivables 196,011 220,501

________ ________

2,870,754 4,123,800

________ ________

Trade receivables are all due in less than one year and represent monies due in respect of insolvency and debt

management related income. The trade receivables figure is shown net of provisions in respect of IVA failures

amounting to £770,523 (2014: £1,300,076). There are no trade receivables that are past due that have not been

impaired.

An analysis of the provision for impairment of receivables is as follows:

2015 2014

£ £

At the beginning of the year 1,300,076 671,796

Charge for the year 870,447 707,409

Utilised during the year (1,400,000) (79,129)

________ ________

At end of year 770,523 1,300,076

________ ________

The directors consider that the carrying value of trade and other receivables approximates to their fair value.

13. Current Liabilities 2015 2014

£ £

Trade and other payables:

Trade payables 138,364 219,368

Accruals 240,132 796,740

Other payables 468,645 285,349

________ ________

847,141 1,301,457

________ ________

The directors consider that the carrying value of trade and other payables approximates to their fair value.

2015 2014

£ £

Corporation tax payable 9,612 500,852

________ ________

Current financial liabilities

Current financial liabilities - (note 14) 103,165 150,000

________ ________



39

14. Financial Liabilities

Loans outstanding at the reporting date were as follows:-

2015 2014

£ £

Loans - current 103,165 150,000

Loans – non-current - 53,750

________ ________

103,165 203,750

________ ________

At 30 June 2015 loans outstanding included £3,165 due to D E M Mond (2014: £53,750) and is unsecured. A

further loan of £100,000 is due to a third party and is unsecured. This earns interest at 10% per annum.

15. Deferred Taxation

2015 2014

£ £

Temporary differences 20,349 11,016

Losses - 8,902

________ ________

At 30 June 20,349 19,918

________ ________

Analysed as follows: 2015 2014

£ £

Deferred tax asset 20,349 19,918

Deferred tax liability - -

________ ________

At 30 June 20,349 19,918

________ ________

Movement in the period

2015 2014

£ £

At 1 July 19,918 (14,230)

Deferred tax charge taken to the income statement 5,493 39,210

Arising on acquisition of intangible assets (5,062) (5,062)

________ ________

At 30 June 20,349 19,918

________ ________



40

15. Deferred Taxation (continued)

Due to the uncertainty as to whether the tax losses available in the holding company can be recovered in future

periods it is the directors’ opinion that the potential value of these losses should not be recognised as a deferred

tax asset in these accounts. The value of the losses carried forward at the balance sheet date which have not been

recognised is as follows: -

Unrecognised deferred tax

2015 2014

£ £

Losses 124,853 140,178

________ ________

At 30 June 124,853 140,178

________ ________

16. Share Capital

2015 2014

£ £

Authorised share capital:

Ordinary share capital 750,000,000 (2014: 750,000,000) 3,750,000 3,750,000

Ordinary shares of 0.5 pence each

Deferred ordinary share capital

750,000,000 (2014: 750,000,000) 11,250,000 11,250,000

Deferred shares of 1.5p each

_________ _________

15,000,000 15,000,000

_________ _________

Allotted, called up and fully paid:

Ordinary share capital

308,340,567 (2014: 308,340,567) 1,541,703 1,541,703


Deferred ordinary share capital 308,340,567 (2014: 308,340,567) 4,625,109 4,625,109


_________ _________

6,166,812 6,166,812

_________ _________

The Deferred Ordinary Shares of 1.5p each carry no rights to vote at general meetings or any rights to receive

dividends. The Deferred Ordinary Shares are not capable of transfer at any time without the prior written consent

of the Directors and have the right to repayment of the paid up capital only on any winding up or return of capital.

It is the intention of the Board to cancel the Deferred Ordinary Shares and the Share Premium Account in due

course.



41

16. Share Capital (continued)

The Company has granted equity settled share options to selected directors and employees under an EMI scheme.

The exercise price is the market value of the shares at the date of grant. The vesting period is three years. If the

options remain unexercised after a period of ten years from the date of grant then they are forfeited.

At 30 June 2015 there were 13,237,500 (2014: 14,112,500) share options outstanding over the Company’s

ordinary shares at a weighted average exercise price of 1.88p per share.

Details of the share options issued during the year and outstanding at 30 June 2015 are as follows: -

2015 2014

Weighted Weighted

Number of average exercise Number of average exercise

Options price in (p) options price in (p)

Outstanding at beginning of year 14,112,500 1.89 15,125,000 1.88

Granted during year - - - -

Forfeited during year (875,000) 2.00 (1,012,500) 1.86

__________ _____ __________ _____

Outstanding at the end of the year 13,237,500 1.88 14,112,500 1.89

__________ _____ __________ _____

Exercisable at 30 June 13,237,500 1.88 8,687,500 1.97

__________ _____ __________ _____

These share options are normally exercisable between 7 October 2012 and 31 October 2021 providing the

employee has been in continuous service for 3 years following the granting of the options.

The options outstanding at 30 June 2015 had a weighted average exercise price of 1.88p and a weighted average

remaining contractual life of 5 years and 2 months.

17. Share Based Compensation

The Group recognised the following expense related to share-based payments in the year relating to the issue of

EMI share options to certain directors and employees of the Group.

2015 2014

£ £

Charged to consolidated income statement 7,166 29,965

______ ______



42

18. Acquisition

In May 2015 Abacus (Financial Consultants) Limited (“Abacus”) acquired a small back book of some 100 DMP

clients.

The assets acquired were intangible assets represented by the future income due from the book of DMP cases. At

the date of acquisition the fair values of the assets purchased comprised the following:

Fair Value

£

Other intangible assets- DMP 39,035

Gain on bargain purchase -

39,035

Settled by: £ Cash consideration 39,035

The intangible DMP assets acquired are being amortised over 12 months which, in the directors’ opinion, is the

useful economic life of the assets.

Included in the results for the year are revenues of £4,309 and a pre-tax profit of £1,250.

19. Related party transactions

D E M Mond is the owner of Hodgsons, Chartered Accountants, by whom ClearDebt Group Limited (“Group”),

ClearDebt Limited (“ClearDebt”) and Abacus were recharged at cost for advertising, book-keeping, accountancy

and bankruptcy services to the value of £115,504 in the year (2014: £383,359). ClearDebt and Abacus have also

re-charged Hodgsons at cost £16,934 (2014: £54,617) for certain expenditure including rent, rates and other outlays

borne by ClearDebt during the year. The Group made no payments on behalf of Hodgsons during the year.

As at 30 June 2015 Group had net amounts due to Hodgsons of £69,369 (2014: £354,620). No interest is charged

on the outstanding amounts.

D E M Mond made further loans to the Group during the year of £100,000 (2014: £200,000) and received

repayments of £150,585 (2014: £2,250,000). As at 30 June 2015 the loan balance was £3,165 (2014: £53,750).

The loan is repayable by 31 December 2016 or earlier at the Group’s discretion.

Interest at a fixed rate of 10% per annum of £5,921 (2014: £68,447) was paid by the Group to D E M Mond in the

year in respect of his loans.

During the year ClearDebt incurred charges rendered by Money MayDay Limited (“Money MayDay”) for the

development of processes and the supply of cost savings reviews to customers of ClearDebt. Costs totalling

£146,886 (2014: £47,891) were incurred during the year. The amount was provided against and there was

therefore no balance outstanding at the year end. Money Mayday is a company which is owned and run

independently by Samuel Mond the son of D E M Mond a director and shareholder in ClearDebt Group Limited.



43

20. Financial instruments

It is not the Group’s policy to enter into financial derivatives. The nature of the Group’s operating activities

exposes it to credit risk. The Group finances its operations from cash resources and short term loans. At present

the financial risks arising from the Group’s financing arrangements are considered to be minimal but the Board

will continue to review its existing policies on an on-going basis.

Interest rate risk

The Group’s objective is to minimise its exposure to the effects of fluctuations in interest rates whilst balancing

this against the need to minimise borrowing costs. To manage exposure to interest rate risk the Group has taken

all borrowings on a fixed interest rate of 10%. The only assets that attract an interest rate risk are cash and cash

equivalents.

Liquidity risk

It is the Group’s policy to manage liquidity in order to achieve continuity of funding. This is managed by detailed

projections and monitoring of expenditure with significant items of expenditure requiring approval of senior

management.

Foreign currency risk

The Group has no overseas assets or liabilities.

Interest rate risk profile of financial assets All the financial assets of the Group were floating rate or non-interest bearing assets. Floating rate financial assets

comprise cash deposits on call and interest was received at rates of between 0.05% and 0.15%. At 30 June 2015

interest bearing financial assets of the Group totalled £800,485 (2014: £260).

Credit risk and reliance on a single customer The Group’s objective is to minimise credit risk as far as possible whilst maximising returns on financial assets.

The financial assets of the Group are placed on money markets with the Group’s bankers and other banks. As

such the Group is exposed to counter party risks with respect to deposits placed with its bankers. Financial

institutions in which deposits are made are selected based on their credit rating as well as the returns offered.

There is an inherent risk of default in trade receivables. The Group minimises its risk by ensuring that IVA’s are

only entered into appropriately to minimise the risk of failure of the IVA. The risk of default will generally only

arise if an IVA fails in the first 6 months.

Details of exposure of the trade receivables are shown at note 12.

The Group presently derives turnover of £2,767,947 (2014: £2,044,140) from one customer and the loss of this

customer would have a material effect on the performance of the Group in the future.

Capital

The Group defines capital as equity and long term debt.

The Group’s objective for managing capital is to balance the risk and reward to shareholders by ensuring an

appropriate level of gearing. There are no restrictions on the makeup of the Group’s capital.

Interest rate risk profile of financial liabilities

The financial liabilities of the Group are all non-interest bearing other than the loans which attract a fixed rate of

interest as described in note 13.



44

20. Financial instruments (continued)

Maturity of financial liabilities

The maturity profile of the Group’s loans as at 30 June 2015 was as follows:

2015 2014

£ £

Payable within one year 103,165 150,000

Payable between one and two years - 53,750

_________ _________

All other financial liabilities are due within one year.

Currency exposures

The Group has no foreign currency assets or liabilities.

Fair values of financial assets and financial liabilities

The fair values, based upon the market value or discounted cash flows of the financial instruments detailed above

was not materially different from their book values.

21. Operating Lease Commitments

The future minimum lease payments under operating leases that have initial or remaining terms in excess of one

year at 30 June 2015 were as follows:

2015 2014

£ £


Payable between one and five years 287,713 258,401

________ ________

315,804 475,775

________ _________

The operating leases represent leases on the office premises used by the Group at its Timperley and Staveley

(Chesterfield) sites as well as office equipment and motor vehicles. These leases are due to expire between July

2015 and July 2017.

ClearDebt Group Limited COMPANY BALANCE SHEET COMPANY NUMBER: 02441375

As at 30 June 2015

45

2015 2014

Notes £ £

Fixed Assets

Investments 2 4,594,774 4,815,295

_________ _________

4,594,774 4,815,295

Current Assets

Debtors: amounts falling due within one year 3 28,151 99,361

Debtors: amounts falling due after one year 4 - 9,004

Cash at bank 808,440 7,731

_________ _________

836,591 116,096

Creditors: amounts falling due within one year 5 (1,687,908) (1,096,542)

_________ _________

Net current liabilities (851,317) (980,446)

_________ _________

Total assets less current liabilities 3,743,457 3,834,849

Creditors: amounts falling due after one year 6 - (53,750)

_________ _________

Net Assets 3,743,457 3,781,099

_________ _________

Capital and Reserves Called up share capital 7 6,166,812 6,166,812

Share premium account 9 279,948 279,948

Share based compensation reserve 9 376,484 369,318

Profit and loss account 9 (3,079,787) (3,034,979)

_________ _________

Equity Shareholders’ Funds 3,743,457 3,781,099

_________ _________

The financial statements were approved by the Board of Directors and authorised for issue on 25 November 2015

and are signed on its behalf by:

D E M Mond

Director

ClearDebt Group Limited NOTES TO THE COMPANY FINANCIAL STATEMENTS


46

1. Significant Accounting Policies

Basis of Accounting

The financial statements have been prepared on a going concern basis, under the historical cost convention and in

accordance with the Companies Act 2006 and the applicable accounting standards in the United Kingdom.

Deferred Taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance

sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay

less tax in the future have occurred at the balance sheet date. Timing differences are the differences between the

Company taxable profits and its results as stated in the financial statements that arise from the inclusion of gains

and losses in tax arrangements in periods different from those in which they are recognised in the financial

statements.

Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that

there will be suitable taxable profits from which the future reversal of the underlying timing differences can be

deducted. Deferred tax is calculated at the rates that are expected to apply in the periods in which timing differences

reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Deferred tax is

measured on a non-discounted basis.

Cash Flow Statement The Company has taken advantage of the exemption permitted by FRS1 not to present a cash flow statement.

Investments Fixed asset investments are stated at cost except where in the opinion of the directors, there has been permanent

diminution in the value of the investments, in which case an appropriate adjustment is made.

Share-Based Compensation Equity-settled share based payments are measured at the fair value of services received in exchange for the grant

of options or warrants. The fair value determined is recognised as an expense if it relates to trading activities or

in the share premium account if it relates to the issue of equity instruments. The total amount to be expensed over

the vesting period is determined by reference to the fair value of the options or warrants granted, excluding the

impact of any non-market vesting conditions (for example, profitability and growth targets). Non-market vesting

conditions are included in the assumptions about the number of options or warrants that are expected to become

exercisable. At each balance sheet date, the company revises its estimates of the number of options or warrants

that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in

the income statement, and a corresponding adjustment to reserves over the remaining vesting period.

The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and

share premium when the options or warrants are exercised.

Non vesting conditions which are not satisfied during the vesting period are treated as cancellations and any

remaining expense is accelerated in the period of failure. Share based payments associated with share options

granted to employees of subsidiaries of the parent company are treated as an expense of the subsidiary company

to be settled by equity of the parent company. The share based payment expense increases the value of the parent

company’s investment in the subsidiaries and is credited to the Share based payment reserve.

Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted,

based on management’s best estimate, for the effect of non-transferability, exercise restrictions and behavioural

considerations.

Share based payments associated with share options granted to employees of subsidiaries of the parent company

are treated as an expense of the subsidiary company to be settled by equity of the parent company. The share based

payment expense increases the value of the parent company’s investment in the subsidiaries and is credited to the

Share based payment reserve.



47


Tangible Fixed Assets

All tangible fixed assets are initially recorded at cost. Depreciation is provided at rates calculated to write off the

cost less residual value of each asset over its expected useful life, as follows:

Fixtures and fittings - 25% straight line

Residual value and estimated remaining lives are reviewed annually.

Other Intangible Assets Internal and externally acquired intangible assets are initially recognised at cost and subsequently amortised over

their useful economic lives. The significant intangibles recognised by the Group, their useful economic lives and

the methods used to determine the cost of intangibles acquired in a business combination are as follows: -

Other intangibles - Software development costs - 3 years straight line

Loss attributable to the Members of the Parent Company

The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own profit

and loss account for these financial statements. The loss dealt within the accounts of the parent company was

£44,808 (2014: £53,953).

2. Fixed Asset Investments Shares in

Subsidiary undertakings

£

Cost As at 1 July 2014 4,815,295

Investment in subsidiaries - share based payments 4,479

Write down in investment in Abacus (225,000)

________

As at 30 June 2015 4,594,774

________

Shares in subsidiary undertakings are stated at cost. Following a review of the carrying value of the investment

in Abacus the directors have written down the carrying value of the investment to the net asset value of the

subsidiary at 30 June 2015.

The company owns directly the following principal subsidiaries which are all incorporated in the United Kingdom

and included in the consolidated accounts:

Profit/ Reserves

Class of (loss) for 30 June

Company Activity Shares Holding period 2015

£ £

ClearDebt Limited IVA Services Ordinary 100% (182,277) 2,670,639

Abacus (Financial Consultants) Limited Debt Management Ordinary 100% (161,466) 1,414,536

The Debt Advice Portal Limited Dormant Ordinary 100% - -

Clear Finance Solutions Limited Dormant Ordinary 100% - -

Reclaim Assistance Limited Dormant Ordinary 100% - -

Clearly Money Limited Dormant Ordinary 100% - -



48

3. Debtors: amounts falling due within one year

2015 2014

£ £

Trade debtors 24,451 -

Prepayments and accrued income 3,700 3,660

Amounts owed by Group undertakings - 95,701

_______ ________

28,151 99,361

_______ ________

4. Debtors: amounts falling due after one year

2015 2014

£ £

Deferred tax asset - 9,004

_______ ________

Due to the uncertainty as to whether the tax losses available in the holding company can be recovered in future

periods it is the directors’ opinion that the potential value of these losses should not be recognised as a deferred

tax asset in these accounts. Total deferred tax losses potentially available amount to £124,853.

5. Creditors: amounts falling due within one year

2015 2014

£ £

Loans 103,165 150,000

Amounts owed to Group Undertakings 1,533,102 891,453

Trade creditors 1,484 610

Accruals 50,157 54,479

_______ ________

1,687,908 1,096,542

_______ ________

6. Creditors: amounts falling due after one year

2015 2014

£ £

Loan - 53,750

_______ ________

D E M Mond made further loans to the Group in the year of £100,000 (2014: £200,000) and received repayments

of £150,585 (2014: £2,250,000). As at 30 June 2015 the loan balance due to him was £3,165 (2014: £53,750). The

loan is repayable by 31 December 2016 or earlier at the Group’s discretion. Interest is payable at 10% per annum

on the principal. This borrowing and other loans are unsecured.

An unsecured loan of £100,000 (2014: £150,000) was also advanced by a third party at an interest rate fixed at

10% per annum.

Interest at a fixed rate of 10% per annum of £5,921 (2014: £68,447) was paid by the Group to D E M Mond in the

year in respect of his loans. Interest at a fixed rate of 10% per annum of £11,938 (2014: £18,205) was paid by the

Group in the year in respect of the loan due to the third party.



49

7. Share Capital

2015 2014

£ £

Authorised share capital:

Ordinary share capital 750,000,000 (2014: 750,000,000) 3,750,000 3,750,000


Deferred ordinary share capital

750,000,000 (2014: 750,000,000) 11,250,000 11,250,000


_________ _________

15,000,000 15,000,000

_________ _________

Allotted, called up and fully paid:

Ordinary share capital

308,340,567 (2014: 308,340,567) 1,541,703 1,541,703


Deferred ordinary share capital 308,340,567 (2014: 308,340,567) 4,625,109 4,625,109


_________ _________

6,166,812 6,166,812

_________ ________

The Deferred Ordinary Shares of 1.5p each carry no rights to vote at general meetings or any rights to receive

dividends. The Deferred Ordinary Shares are not capable of transfer at any time without the prior written consent

of the Directors and have the right to repayment of the paid up capital only on any winding up or return of capital.

It is the intention of the Board to seek Court approval to cancel the Deferred Ordinary Shares and the Share

Premium Account in due course.

The Company has granted equity settled share options to selected directors and employees under an EMI scheme.

The exercise price is the market value of the shares at the date of grant. The vesting period is three years. If the

options remain unexercised after a period of ten years from the date of grant then they are forfeited.

At 30 June 2015 there were 13,237,500 (2014: 14,112,500) share options outstanding over the Company’s

ordinary shares at a weighted average exercise price of 1.88p per share.



50

7. Share Capital (continued)

Details of the share options issued during the year and outstanding at 30 June 2015 are as follows:-

2015 2014

Weighted Weighted

Number of average exercise Number of average exercise

Options price in (p) options price in (p)

Outstanding at beginning of year 14,112,500 1.89 15,125,000 1.88

Granted during year - - - -

Forfeited during year (875,000) 2.00 (1,012,500) 1.86

__________ _____ __________ _____

Outstanding at the end of the year 13,237,500 1.88 14,112,500 1.89

__________ _____ __________ _____

Exercisable at 30 June 13,237,500 1.88 8,687,500 1.97

__________ _____ __________ _____

These share options are normally exercisable between 7 October 2012 and 31 October 2021 providing the

employee has been in continuous service for 3 years following the granting of the options.

The options outstanding at 30 June 2015 had a weighted average exercise price of 1.88p and a weighted average

remaining contractual life of 5 years and 2 months.

8. Related party transactions

D E M Mond is the owner of Hodgsons, Chartered Accountants, by whom ClearDebt Group Limited (“Group”)

accrued for the costs of certain expenses to be recharged including, book-keeping and accountancy charges

amounting to £47,020. At 30 June 2015 £41,508 was owed to Hodgsons (2014: £43,979). The highest balance in

the year was £43,979 and the lowest balance £41,508.

The directors have taken advantage of the exemption under FRS 8 from disclosing transactions with other wholly

owned group companies.

9. Equity reserves

Share based Share Profit and

compensation premium loss account

£ £ £

Company at 1 July 2014 369,318 279,948 (3,034,979)

Share based compensation 7,166 - -

Loss for the year - - (44,808)

________ ________ _________

At 30 June 2015 376,484 279,948 (3,079,787)

________ ________ _________



51

10. Operating Lease Commitments

At 30 June 2015 the company was committed to making the following payments under non-cancellable operating

leases in the year to 30 June 2016:

2015 2014

£ £


Payable between one and five years 145,708 193,816

________ ________

154,636 217,373

________ _________

The operating leases assets above reflect those for which the company has contracted for in its own right. The

majority of the leased assets are used by its subsidiary companies and are also included in their accounts to reflect

the fact that the charges for the leases are paid for by these companies and expensed through their financial

statements.

These leases are due to expire between December 2015 and May 2017.

ClearDebt Group Limited SHARHOLDER INFORMATION

52

Trading Record

2015 2014 2013 2012 2011

£ £ £ £ £

Revenue 7,837,962 8,674,436 8,702,254 9,203,453 7,776,362

(Loss)/profit for the financial period (852,591) (1,661,399) (167,160) 591,257 71,036

Cash generated by operations 1,307,219 78,626 1,972,779 1,788,944 1,045,707

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