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ClearDebt to delist as Abacus makes loss 7 March 2013

ClearDebt – the IVA and debt management group – has announced its intention to delist from the Alternative Investment Market (AIM).

The announcement comes ahead of a general meeting with shareholders which has been convened for Monday 25 March 2013 at the company’s premises in Timperley (Cheshire), to approve the move.

Today’s news comes after a difficult trading period for the company where growth projected by the firm failed to materialise in the last six months of 2012.

Revenue in the ClearDebt IVA division decreased by 12% to £2.9 million, down from £3.3 million in 2011. On an EBITDA-basis this translated as a fall of only 7% due in part to continued income from consultancy services related to the IVA business. Overall profit before tax for the division fell to £242,793 from £350,518 in 2011.

The Abacus debt management division made a loss before tax of £119,561 against a profit in 2011 of £101,130. Revenues in the half year increased to £1.8 million from £1.3 million due to income from PPI mis-selling, however this was more than offset by high call centre payroll costs and marketing costs.

In a statement to the stock exchange, Gerald Carey, who chairs the audit committee and sits on the remuneration committee at the group said that in the absence of any major new lead sources the short term outlook for the rest of the [financial] year looks poor.

He added: “As part of the board’s review of costs in the business we have reluctantly come to the conclusion that the not insignificant financial costs of maintaining the group’s AIM listing together with the senior management time involved can no longer be justified and we have today published notice of our intention to cancel our AIM listing.

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

“We intend to put in place a matched bargain facility for shareholders who wish to buy or sell the group’s shares once we have delisted. We will write to shareholders with details of how the facility will operate once it is finalised.”

David Mond, chief executive officer of ClearDebt, said it had been a disappointing and difficult half-year borne out by a continuation of the general trend of falling personal insolvency numbers in the UK over recent quarters.

He said: “We have felt the effect of this with poor volumes of new IVAs passed in the period although we have increased the numbers of clients under debt management.

“We are, however, expecting increased fee income derived from mis-sold payment protection insurance claims as claims for our clients in an IVA are submitted and proceeds are received into the IVAs.”

ClearDebt was founded in 2004 by insolvency practitioner David Mond and today now has around 140 staff.

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