ClearDebt Group plc 
FINANCIAL STATEMENTS 
for the year ended 30 June 2011 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Registration Number 02441375 ClearDebt Group plc 
CONTENTS 
 
 
 
 Page 
 
Financial highlights 1 
Chairman’s statement 2 
Chief Executive’s statement 3-7 
Directors and advisers 8 
Directors’ report 9-11 
Corporate governance 12-13 
Statement of directors’ responsibilities 14 
Directors’ remuneration report 15-16 
 
 
 
Accounts 
Independent Auditor’s report to the members of ClearDebt Group plc 17-18 
Consolidated income statement 19 
Consolidated statement of comprehensive income 20 
Consolidated statement of financial position  21 
Consolidated statement of changes in equity 22 
Consolidated statement of cash flows 23 
Notes to the consolidated financial statements 24-47 
Company balance sheet 48 
Notes to the company financial statements 49-55 
Shareholder information 56  ClearDebt Group plc 
FINANCIAL HIGHLIGHTS 
For the year ended 30 June 2011 
 
   1 
 
 
 2011 2010 
 £ £ 
 
Revenue 7,776,362 6,633,995 
Gross profit 3,963,959 3,300,688 
Profit before interest, tax, depreciation and amortisation* 2,222,411 1,515,271 
Profit from operations    756,150  671,330 
Profit before taxation 227,219 465,709 
Profit after taxation 71,036 342,235 
Cash generated by operations 1,045,707 1,466,180 
 
* after separately disclosable items (note 5) 
 
Since 1 July 2010 (2010: 1 July 2009), the following numbers of new Individual Voluntary Arrangements (IVAs) 
have been arranged through ClearDebt:- 
 
 Year ended Year ended 
 30 June 2011 30 June 2010 
First quarter 355 176 
Second quarter 407 173 
Third quarter 411 184 
Fourth quarter 428 266 
 ____ ____ 
 1,601 799 
 ____ ____ 
 
In June 2011  953 IVAs were acquired from Invocas Group plc and as at 30 June 2011 the total number of IVAs and 
PTDs generating income was 5,893 (2010: 4,894). 
 
During the year, two books of Debt Management Plans (DMPs) aggregating in total to approximately 1,000 DMP’s 
were acquired.  As at 30 June 2011, the total number of DMPs generating income was 5,761 (2010: 6,316). 
  ClearDebt Group plc 
CHAIRMAN’S STATEMENT 
 
2 
 
Chairman’s Statement 
 
I am delighted to present the Group’s financial statements for the year ended 30 June 2011.  The Group performance 
has again been driven by the IVA division which doubled the number of new IVAs arranged during the year. 
 
The Group increased revenue to £7,776,362 (2010: £6,633,995) producing a much increased gross profit of 
£3,963,959 (2010: £3,300,688).  Earnings before interest, tax, depreciation and amortisation increased to £2,222,411 
(2010: £1,515,271) resulting in a pre-tax profit for the year of £227,219 (2010: £465,709).  This was after finance 
charges of £532,404 (2010: £206,660) relating to the convertible secured loan note issued in 2010 and other loans 
together with amortisation relating to the acquisition of back books and other intangibles of £1,388,809 (2010: 
£993,980).   
 
During the year the Group acquired two further back books of Debt Management Plans (DMPs) and completed the 
purchase of a sizeable IVA book from Invocas Group plc (Invocas) just prior to the year end.  The acquisitions 
resulted in a gain on bargain purchase of £54,985 which was offset by the write off of £55,612 of goodwill relating 
to the Debt Advice Portal acquisition in January 2009.  A tax charge of £156,183 for the year includes a £75,000 
provision against holding company tax losses previously recognised as a deferred tax asset which, although they 
may ultimately be recoverable, will take a number of years to be fully utilised. 
  
In June 2011, just prior to the year end,  a decision was made in favour of  Paymex Limited against HM  Revenue & 
Customs (HMRC) which ruled that fees for services in relation to IVAs should be treated as exempt from VAT. 
HMRC confirmed in July that they would not appeal the outcome of the case.  Accordingly, as a result of the ruling, 
we have put a protective claim into HMRC to recover net output tax of some £850,000 incorrectly paid to HMRC 
over the last 4 years. A proportion of this VAT may be due to us and a proportion due to creditors. The timing, 
quantum and split of any refunds received will very much be dependent on the stance that HMRC adopt in relation 
to such reclaims by us and many other companies in the sector. No entries have been made in the accounts due to the 
uncertainty on the timing and recoverability of any claim. We expect the loss of input tax recovery on our costs 
going forward to be broadly neutral. 
 
At the year end the group had net assets of £5,150,582 (2010: £5,016,621) including cash of £336,636 (2010: 
£541,504) after spending some £1.1m on acquisitions (2010: £2.7m) in the year financed out of cash flow and net 
new loans of £315,000. 
 
The Group finances continue on a sound footing and I am pleased to report continued growth in the number of new 
IVAs being passed since the year end with a record number of cases passed in August 2011.  Client retention of debt 
management clients remains excellent which is a testament to the service our teams provide to creditors and clients 
alike.  Growth in new debt management clients remains limited going forward, given an increasing acceptance by 
debtors and creditors alike that the IVA product is generally more appropriate to debtor’s circumstances than a 
DMP. 
 
I look forward to another profitable year as we continue to nurture and expand our referral base whilst maintaining 
our web marketing presence and we continue to look for opportunities to acquire back books of clients wherever 
possible at sensible prices. 
 
 
 
 
Gerald Carey FCIB 
Chairman 
 
23 September 2011  ClearDebt Group plc 
CHIEF EXECUTIVE’S STATEMENT 
 
3 
 
The Group has enjoyed another excellent year underpinned by further substantial growth in the numbers of new IVA 
cases arranged during the past financial year, which doubled to 1,601 (2010: 799). In addition 953 IVAs were 
acquired from Invocas in June 2011 and as at 30 June 2011 the total number of IVAs and PTDs generating income 
was 5,893 (2010: 4,894). 
 
This is a pleasing result against a backdrop of an IVA market that has remained flat over the last 2 years at 
approximately 50,000 new IVAs per annum with slight declines in case numbers being seen in the first 2 quarters of 
2011. 
 
During the year, two books of DMPs totalling approximately 1,000 clients were acquired and as at 30 June 2011, the 
total number of active DMPs was 5,761 (2010: 6,316). Client retention rates remain at excellent levels although the 
fall in numbers reflects natural attrition in the DMP books, the majority of new clients opting for an IVA rather than 
DMP, together with existing DMP clients converting to an IVA where appropriate.  
 
For the majority of clients we see, the IVA remains the most appropriate solution freezing interest and charges and 
writing off the balance of debts generally after 5 years. Whereas in previous years clients have preferred to opt for 
the DMP solution as a short term fix awaiting improved prospects to clear their debts, there is now general 
acceptance that this will not happen in the short to medium term and the IVA solution is now the preferred option. 
ClearDebt has always felt that DMP’s are only applicable for clients who expect to see a rapid recovery in their 
finances. 
 
In November 2010 we rationalised the debt management operation in Staveley and closed the office transferring the 
DMP book to our main operation in Timperley where it was absorbed without the need for any additional staff 
recruitment. 
 
The IVA operation in Staveley continues to perform well and is now receiving new IVAs drafted by Timperley as 
spare capacity has been freed up through the natural completion of the older IVA cases acquired in 2009. The 
Invocas cases acquired in June have been transferred to Staveley and the electronic case management data will 
shortly be migrated onto our standard systems. In addition we are continuing to purchase new cases referred to us by 
Invocas on a monthly basis over the next few months on a trial basis. We continue to balance our workload between 
the two sites as required.   
 
I would like to take this opportunity to thank all our staff for their dedication and hard work over the last year and I 
am proud of the work they do to provide continuing advice and assistance to our thousands of clients - as well as 
advice to many others to whom we have spoken over the same period. We continue to train and encourage all of our 
staff to obtain the Certificate of Debt Resolution (CertDR), exclusively offered by the DRF and presently all of our 
client advisers who have been with us over 3 months are qualified, which we believe is one of the highest rates in 
the industry. Industry regulation and consultation are increasingly focusing on the formal training and qualification 
of staff and we are therefore well placed to deal with the ever changing demands being made by the regulatory 
authorities. 
 
Cash flow from the former Relax cases remains good and well ahead of our expectations at the time of acquisition in 
December 2009. Total fees of £5.7m have been received to the end of June 2011 against a purchase price inclusive 
of costs of circa £3.2m, showing the value that can be generated by acquisitions bought at the right price and 
successfully and efficiently integrated into our systems and processes. 
 
We continue to maintain our internet activities across the Group acquiring web leads at cost effective rates wherever 
possible although we continue to see competitors paying for leads at prices we view as uneconomic. We have in the 
last year actively expanded our referral base and continue to explore new opportunities for lead sources and 
referrals. We have a strong pipeline of potential referrers whom we are currently in discussions with, some of whom 
may substantially boost the numbers of leads to our sales operation. We are also investing in new software to 
manage our sales operation which we expect to be in place in the next month or so which we anticipate will boost 
conversion and allow the marketing of more products to our substantial databases of leads and clients. 
 
 
 
   ClearDebt Group plc 
CHIEF EXECUTIVE’S STATEMENT 
 
4 
 
We are closely monitoring consolidation opportunities within our industry and will finance smaller acquisitions 
through cash flow. Our successful history in profitably integrating acquired back books - both operationally and 
financially means we are confident of raising additional finance for larger acquisitions, although the cost of such 
funding in the current economic climate is high. 
 
THE CONSUMER DEBT MARKET 
 
ClearDebt Group operates within the debt resolution sector, an established sub-category of financial services. 
Personal insolvencies saw a step change in 2006 with a 58% increase in individual insolvencies to over 100,000 per 
annum which has grown steadily each year to 136,000 in 2010.  In 2010 IVAs showed growth of 6% although the 
first half of 2011 has seen a decline of 13% on the same period last year.  
 
Traditional refinancing options through secured or unsecured lending remain closed to the majority of people 
leading us to believe that demand in our sector will remain robust although slightly off its peak in 2011/12.  
 
Against this background the government is actively looking to increase regulation and has already started to enforce 
much stricter compliance monitoring of companies in the sector and it is now much more difficult to renew existing 
consumer credit licences or obtain new ones. We continue to see this as an opportunity for ourselves and those 
larger organisations with cash who maintain the highest standards to purchase back books and consolidate the sector 
as the many smaller players are unwilling or unable to comply with the increased regulation.  
 
THE CLEARDEBT MODEL – IVAs and PTDs 
  
Unlike most of its major competitors in the consumer IVA market, ClearDebt has developed a low overhead, high 
quality model, based on Kaizen manufacturing principles and an intelligent internet interface - www.cleardebt.co.uk. 
This model allows the company’s cost base to be kept to a minimum level whilst still providing high levels of 
service even on lower levels of debt and disposable income.   
 
Demand for lower value IVAs has been evident which favours our low cost model allowing us to service levels of 
the market other providers will not touch. Due to this distinctive operating model, ClearDebt is able to offer a more 
effective debt resolution solution than many of its rivals.  
 
THE ABACUS MODEL – Debt Management Plans 
 
Abacus provides services to indebted individuals by negotiating and putting in place a debt management plan with 
their creditors. The debtor makes a monthly payment to Abacus who then distributes the payment to the creditors as 
agreed in the plan less an administration fee at an agreed percentage of the debtor’s monthly payment. An initial set 
up fee is also charged.   
 
Such plans are suitable for individuals whose debts are more manageable and rely on the goodwill of creditors as 
they are not a formal insolvency procedure and interest usually continues to accrue on outstanding debts although 
today the majority of creditors that we work with are prepared to waive the interest for short periods.  
 
Many clients are cross referred between ClearDebt and Abacus allowing the Group to offer an appropriate advice 
solution to all individuals.  
 
As a leading member of the trade body, The Debt Resolution Forum, ClearDebt has been in regular communication 
with the creditor community, the Office of Fair Trading (OFT), the Department of Business Innovation and Skills 
and the Ministry of Justice who have issued several consultation papers intending that stricter guidance on practices 
in the debt resolution industry which will need to be adhered to if operators wish to maintain their Consumer Credit 
Licence without which they cannot operate. 
 
   ClearDebt Group plc 
CHIEF EXECUTIVE’S STATEMENT 
 
5 
 
OPERATIONAL REVIEW 
 
ClearDebt – IVA Division 
 
Since 1 July 2010 (2010: 1 July 2009), the following numbers of new IVAs have been arranged through ClearDebt:- 
 
 Year ended Year ended 
 30 June 2011 30 June 2010 
First quarter 355 176 
Second quarter 407 173 
Third quarter 411 184 
Fourth quarter 428 266 
 ____ ____ 
 1,601 799 
 ____ ____ 
 
The growth of new IVAs continues to be strong and ClearDebt enjoyed an excellent year with a 100% increase in 
the number of IVAs passed in the year with 1,601 new cases (2010: 799).  I am pleased to say this growth has 
continued and case numbers in the first quarter of our current financial year are expected to be ahead of the fourth 
quarter with 362 cases already passed by the end of August. 
 
In addition we purchased 953 IVAs from Invocas in June 2011 which will generate additional income in the new 
financial year and we continue to be referred a number of new cases by them going forward. Including this purchase, 
we had as at 30 June 2011 a total of 5,893 (2010: 4,894) IVAs and PTDs generating income.  
 
The Board monitors several key performance indicators  (“KPIs”) for the business on a monthly basis including the 
number of cases passed, various conversion ratios from lead to cases passed, the cost per case acquired and the staff 
to caseload numbers. Your Board is pleased to advise that these KPIs continue to deliver positive messages about 
the business and we are hopeful of gaining additional referral sources in the first half of the current year. 
 
Revenue in respect of nominee fees is recognised on the approval of the IVA whilst supervisory fees are recognised 
evenly over the expected life of the IVA. 
 
Abacus– Debt Management Division  
 
The division made a profit in the period although we have seen a slowdown in the recruitment of new clients and an 
increase in the number of plans that cease as the age of the relatively young DMP book at Abacus matures.  There 
have also been a number of clients who have ceased a DMP and commenced an IVA with us.  
 
In the year 2010/11, Abacus has arranged 1,570 new plans (2009/10: 2,366). During the year two books of DMPs 
totalling approximately 1,000 were acquired and as at 30 June 2011 the total number of DMPs generating income 
was 5,761 (2010: 6,316). Our attrition rates on DMPs are well within our normal expectations and we are actively 
looking for further back books to acquire as a means of boosting income over the short and medium term. 
 
The Board has KPIs to monitor the number of active income generating plans as well as the value of monthly 
payments made by debtors.  Revenue is only recognised by Abacus upon receipt of fees which are drawn from 
debtor payments as received.  
 
Generally the costs of acquisition of cases and plans are also monitored closely. We continue to resist the temptation 
to grow the book through lead sources providing leads at what are, in our view uneconomic prices. 
 
   ClearDebt Group plc 
CHIEF EXECUTIVE’S STATEMENT 
 
6 
 
ClearCash – prepaid MasterCard 
  
Steady progress continues to be made with our Pre-Paid MasterCard, ClearCash, as the new version of the card, 
without a monthly fee, is taken up in larger numbers than the original which included the monthly fee.  The rate of 
new card signings continues to grow and as at 30 June 2011 there were 5,749 ClearCash cards in issue (2010: 
1,662).  The card currently makes a small loss each month after referral costs, but revenue from card usage has 
increased steadily month on month since inception. 
  
The card can effectively be used as a bank account with the exception of direct debit and we see the ClearCash card 
as an integral service offering to our clients who often find it difficult to obtain normal banking facilities. As 
numbers increase we expect it to produce a profit in due course. 
 
FINANCIAL REVIEW 
 
Group turnover increased by 17% to £7,776,362 (2010: £6,633,995) and gross profit by 20% to £3,963,959 (2010: 
£3,300,688). The performance was driven by good demand for IVAs and the benefit of the increased supervisory 
revenue which is growing steadily as the number of IVA cases under management grows. Amortisation charges in 
respect of acquisitions and impairment amounted to £1,388,809 (2010: £993,980). 
 
Finance costs rose to £532,404 (2010: £206,660 ) reflecting a full years charge of £467,960 (2010:£91,147) in 
respect of the 3yr 10% secured convertible loan notes issued in April 2010. Actual interest paid in respect of the 
convertible totalled £230,000 with the balance being an accounting charge for the redemption premium due on 
maturity in 2013. 
 
Cash resources at the year end amounted to £336,636 (2010: £541,504) after acquisitions of £1.1m in the year 
financed with net new loans of £315,000 advanced by David Mond. Operational cash flow remains strong and 
£350,000 of loans have been repaid since the year end. 
 
GOING CONCERN 
  
As part of its 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 three years to 30 June 2014 and in drawing up these forecasts the 
Board has made assumptions based upon its view of the current and future economic conditions in the UK that will 
prevail over the forecast period - given that the business is likely to be solely focused on the UK market for the 
foreseeable future. The timing of the cash flows and covenants to the debt holders in respect of loans provided have 
been taken into consideration and in addition to the forecasts we have also produced sensitivities to these forecasts 
to test our ability to trade as a going concern for at least the following 12 months based upon a 12% rise or fall in 
projected turnover without any reduction in overhead costs. In practice the Board believes that it can quickly realign 
overheads, in particular marketing spend, to allow for any reduced levels of activity within the business that may 
occur going forward. 
 
The Board believes that the use of the going concern basis of accounting is appropriate and there are no material 
uncertainties related to events or conditions that may cast significant doubt about the ability of the company to 
continue as a going concern. 
 
FUTURE OUTLOOK 
 
The IVA market is still at high levels and we continue to gain market share as our monthly run rate for new IVAs 
grows against the background of a static to slightly declining IVA market. 
 
The last quarter of the financial year produced a record number of IVAs for the Group and the first two months of 
the current year have continued in a similar vein. 
  ClearDebt Group plc 
CHIEF EXECUTIVE’S STATEMENT 
 
7 
 
We continue to look for acquisitions of client books wherever we can at reasonable prices to supplement our growth 
as we know these can be highly profitable given the ease with which we can assimilate them into our scaleable 
business model and systems.  
 
Given the current economic outlook in the UK with unemployment showing no signs of falling together with high 
taxation and continued public sector cuts I believe the Group is well placed for another highly profitable and 
successful year.  
 
Once again I would like to pay tribute to all our employees who continue to offer the highest standards of service 
and commitment to all our clients at all levels.  
 
 
 
David Emanuel Merton Mond FCA FCCA 
Chief Executive Officer 
 
23
 
September 2011  ClearDebt Group plc 
DIRECTORS AND ADVISERS 
 
8 
 
 
DIRECTORS 
G Carey FCIB 
D E M Mond FCA FCCA 
D M Shalom ACA 
A F Smith  
A J Leon FCA 
 
SECRETARY 
D E M Mond FCA FCCA 
 
REGISTERED OFFICE 
Nelson House 
Park Road 
Timperley 
Altrincham  
Cheshire 
WA14 5BZ 
 
AUDITORS 
Baker Tilly UK Audit LLP 
3 Hardman Street 
Manchester  
M3 3HF 
 
BROKERS AND NOMINATED ADVISER 
Seymour Pierce Limited 
20 Old Bailey 
London   
EC4M 7EN 
 
REGISTRARS 
Neville Registrars 
Neville House 
18 Laurel Lane 
Halesowen 
West Midlands 
 
SOLICITORS 
DWF LLP 
1 Scott Place  
2 Hardman Street 
Manchester   
M3 3AA
 
BANKERS 
Barclays Bank PLC 
1 Bridge Street 
Stockport 
Cheshire 
SK1 1XU 
 
The Royal Bank of Scotland PLC 
P O Box 157  
2 Chestergate  
Macclesfield  
SK11 6BQ  
 
 
  ClearDebt Group plc 
DIRECTORS’ REPORT 
 
9 
 
The Directors present their report and the financial statements of the Group for the year ended 30 June 2011. 
 
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 2 and the 
Chief Executive’s Statement on pages 3 to 7. 
 
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 final dividend (2010: nil). 
 
Share Capital 
The Company is aware of the following substantial interests in the ordinary share capital as at 23 September 2011.  
 
    Number of shares held % of Total 
 
D E M Mond   119,054,616 38.61 
O Mond    17,459,800 5.66 
S Mond   15,305,734 4.96 
A Mond    14,555,733 4.72 
D Murray   11,921,125 3.87 
Ms M Joseph   11,351,467 3.68 
 
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  
A J Leon FCA (Non-Executive) 
 
Payment of Creditors 
It is the Group’s policy to settle 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 2011, 
were 16 days (2010: 35 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.   
 
Charitable and Political Contributions 
The Group made no political contributions or donations to charities during the year (2010: £nil). 
 
 
  ClearDebt Group plc 
DIRECTORS’ REPORT 
 
10 
 
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. 
 
Going Concern 
As part of its 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 three years to 30 June 2014 and in drawing up these forecasts the 
Board has made assumptions based upon its view of the current and future economic conditions in the UK that will 
prevail over the forecast period - given that the business is likely to be solely focused on the UK market for the 
foreseeable future. The timing of the cash flows and covenants to the debt holders in respect of loans provided have 
been taken into consideration and in addition to the forecasts we have also produced sensitivities to these forecasts 
to test our ability to trade as a going concern for at least the following 12 months based upon a 12% rise or fall in 
projected turnover without any reduction in overhead costs. In practice the Board believes that it can quickly realign 
overheads, in particular marketing spend, to allow for any reduced levels of activity within the business that may 
occur going forward. 
 
The Board believes that the use of the going concern basis of accounting is appropriate and there are no material 
uncertainties related to events or conditions that may cast significant doubt about the ability of the company to 
continue as a going concern.  
 
Principal Risks and Uncertainties 
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. 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 still continues to be the internet and the Group monitors 
closely the strategies of competitors and the prices paid in the market place and reacts appropriately 
where necessary.  
 
2. Credit risk – the Group’s credit risk is attributable to its trade receivables and is managed by daily 
monitoring of client’s payments into their programmes versus agreed contracted terms. 
 
3. 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. 
 
4. Economic environment – the current economic climate is extremely favourable and the market for 
indebted consumers is likely to grow in the next few years. 
 
5. 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. The Group is actively involved in talking to creditors 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.  ClearDebt Group plc 
DIRECTORS’ REPORT 
 
11 
 
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. 
 
Auditors 
Baker Tilly UK Audit 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 
 
23 September 2011 ClearDebt Group plc 
CORPORATE GOVERNANCE 
 
12 
 
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 on page 14.   
 
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, 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 receive regular reports from Baker Tilly UK Audit LLP, 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. 
 
 
 
 
 
  ClearDebt Group plc 
CORPORATE GOVERNANCE 
 
13 
 
Internal Control 
The Directors are responsible for the Group’s system of internal control and 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: 
 
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 ICAEW. 
 
The Audit Committee receives reports from the external auditors on a regular basis and from Executive Directors of 
the Group. During the period, the Board has reviewed the effectiveness of the system of internal control as described 
above. 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 2011 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 actively pursued and this encompasses issues such as 
performance, policy and strategy. During the period the Directors have had meetings with analysts and institutions 
and will continue to do so. 
 
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 plc 
STATEMENT OF DIRECTORS’ RESPONSIBILITIES 
IN RESPECT OF THE FINANCIAL STATEMENTS 
 
14 
 
The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with 
applicable law and regulations. 
  
Company law requires the directors to prepare Group and Company Financial Statements for each financial year.  
The directors are required by the AIM Rules of the London Stock Exchange to prepare Group financial statements in 
accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union (“EU”) 
and have elected under company law to prepare the company financial statements in accordance with United 
Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 
  
The Group financial statements are required by law and IFRS adopted by the EU to present fairly the financial 
position and performance of the group; the Companies Act 2006 provides in relation to such financial statements 
that references in the relevant part of that Act to financial statements giving a true and fair view are references to 
their achieving a fair presentation. 
 
Under company law the directors must not approve the financial statements unless they are satisfied that they give a 
true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that 
period.  
  
In preparing each of the Group and Company financial statements, the directors are required to: 
  
a. select suitable accounting policies and then apply them consistently; 
  
b. make judgements and accounting estimates that are reasonable and prudent; 
  
c.  for the Group financial statements, state whether they have been prepared in accordance with IFRSs 
adopted by the EU;  
 
d. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 
Group and the Company will continue in business; 
 
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the 
Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of 
the Group and 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 Group and the Company and 
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 
 
The directors are responsible for the maintenance and integrity of the corporate and financial information included 
on the ClearDebt Group plc website. Legislation in the United Kingdom governing the preparation and 
dissemination of financial statements may differ from legislation in other jurisdictions. 
  ClearDebt Group plc 
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 during the financial year ended 30 June 2011 were as follows: 
 
    2011 2010 
   2011 Total Total 
  2011 Pensions/ Salary & Salary & 
  Salary Benefits Benefits Benefits 
  £’000 £’000 £’000 £’000 
Executive Directors 
David Mond (Chief Executive) 125 - 125 72 
David Shalom (Finance Director) 79 4 83 35 
Andrew Smith (Marketing Director) 50 4 54 48 
 
Non-Executive Directors 
Gerald Carey (Chairman) 18 - 18 18 
Anthony Leon 12 - 12 12 
  ___ ___ ___ ___ 
Aggregate remuneration 284 8 292 185 
  ___ ___ ___ ___ 
  
 
The present Directors’ positions are currently not pensionable although David Shalom entered into an agreement on 
1
st
 February 2011 to sacrifice part of his salary in return for pension payments into his SIPP. 
 
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.  During the year 1,000,000 options were granted leaving 
options outstanding over 2,125,000 ordinary shares at a weighted average exercise price of 1.98p per ordinary share.   
 
The mid-market price of the Company’s shares on 30 June 2011 was 2.37p and the high and low share prices during 
the year were 1.35p and 3.38p respectively.   
 
Directors’ Service Agreements 
Andrew Smith has a service agreement subject to 12 months notice. David Mond and Gerald Carey both have 
agreements subject to 6 months notice. A service agreement is presently being drawn up for David Shalom. 
 
 
  ClearDebt Group plc 
DIRECTORS’ REMUNERATION REPORT 
 
16 
 
 
Directors’ Interests 
The interests of the Directors in the ordinary shares of the Company as at 30 June 2011 and 23 September 2011 were 
as follows:- 
 
 Ordinary Shares                                                                                                
 At 0.005p each         At 0.005p each 
 At 30 June At 30 June 
 2011 2010 
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 2011 and 23 September 2011. 
 
  At 30 June At 30 June Option Date Expiry 
 Scheme 2011 2010 Price Exercisable Date 
 
 
David Mond EMI 375,000 375,000 2.0p 07.10.12 07.10.19 
David Mond EMI 500,000 - 1.75p 21.09.13 21.09.20 
Andrew Smith EMI 375,000 375,000 2.0p 07.10.12 07.10.19 
David Shalom EMI 375,000 375,000 2.0p 07.10.12 07.10.19 
David Shalom EMI 500,000 - 1.75p 21.09.13 21.09.20 
 
 
  ClearDebt Group plc 
INDEPENDENT AUDITOR’S REPORT  
TO THE MEMBERS OF CLEARDEBT GROUP PLC 
 
17 
 
We have audited the Group and Parent company financial statements (“the financial statements”) which comprise 
the Consolidated Income Statement, 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 set out on page 14 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 
A description of the scope of an audit of financial statements is provided on the APB’s website at 
www.frc.org.uk/apb/scope/private.cfm. 
 
Opinion on the financial statements 
In our opinion  
• 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 2011 and of the Group’s profit 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. 
 
 
 
 
 
 
 
 
 
 
  ClearDebt Group plc 
INDEPENDENT AUDITOR’S REPORT  
TO THE MEMBERS OF CLEARDEBT GROUP PLC 
 
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 have not been kept by the parent company, 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; or 
• we have not received all the information and explanations we require for our audit.  
 
 
 
GRAHAM BOND FCA (Senior Statutory Auditor) 
For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor  
Chartered Accountants 
3 Hardman Street 
Manchester 
M3 3HF 
 
 
23 September 2011  ClearDebt Group plc 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  
For the year ended 30 June 2011 
 
19 
 
   2011  2010 
 Notes  £  £ 
Revenue 
- ongoing 3  7,582,367  6,633,995 
- acquisitions   193,995  - 
   _________  _________ 
   7,776,362  6,633,995 
 
Cost of sales   (3,812,403)  (3,333,307) 
   _________  _________ 
Gross profit   3,963,959  3,300,688 
 
Administrative expenses (before  
separately identifiable items)   (1,678,623)  (1,293,371) 
Separately identifiable items 5  -  (449,473) 
 
Administrative expenses   (1,678,623)  (1,742,844) 
Share based payment  17  (62,925)  (42,573) 
   _________  _________ 
Profit before interest, tax,  
depreciation and amortisation   2,222,411  1,515,271 
 
Depreciation 11  (132,437)  (102,875) 
Amortisation 10  (1,388,809)  (993,980) 
Gain on bargain purchase 18  54,985  252,914 
   _________  _________ 
Profit from operations 3 & 4  756,150  671,330 
 
Finance costs 6  (532,404)  (206,660) 
Finance income   3,473  1,039 
   _________  _________ 
Profit before taxation   227,219  465,709 
 
Taxation 8  (156,183)  (123,474) 
   _________  _________ 
Profit after taxation for year   71,036  342,235 
   _________  _________ 
Amount attributable to: 
 
Owners of the parent    71,036  342,235 
   _________  _________ 
  
Earnings per ordinary share - basic (pence) 9          0.02p 0.11p
  
 
Earnings per ordinary share - diluted (pence) 9 0.02p 0.11p 
   _________ _________ 
 
 
 
The results for the period are derived from continuing activities.  
   ClearDebt Group plc 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  
For the year ended 30 June 2011 
 
20 
 
 
  2011 2010 
  £ £ 
 
Profit for the year  71,036 342,235 
 
Other comprehensive income net of tax  - - 
  _______ _______ 
 
Total comprehensive income for the year  71,036 342,235 
  _______ _______ 
 
Attributable to: 
 
Owners of the parent  71,036 342,235 
  _______ _______ ClearDebt Group plc 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
As At 30 June 2011      Company Number 02441375 
 
21 
 
 
  2011 2010 
 Notes £ £ 
Assets 
 
Non-current assets 
Intangible assets 10 6,476,691 6,765,047 
Property, plant and equipment 11 252,998 227,992 
Deferred taxation  15 78,188 163,720 
  __________ _________ 
  6,807,877 7,156,759 
Current assets 
Trade and other receivables 12 2,181,959 1,153,226 
Corporation tax receivable  - 8,372 
Cash and cash equivalents  336,636 541,504 
  __________ _________ 
  2,518,595 1,703,102 
  __________ _________ 
Total assets  9,326,472 8,859,861 
  __________ _________ 
 
Equity and liabilities 
 
Equity 
Issued capital 16 6,166,812 6,166,812 
Share premium  279,948 279,948 
Share based compensation  203,312 140,387 
Other reserves  96,495 96,495 
Retained losses  (1,595,985) (1,667,021) 
  __________ _________ 
Total equity attributable to the owners of the parent  5,150,582 5,016,621 
  __________ _________ 
 
Current liabilities 
Trade and other payables 13 698,255 1,009,151 
Corporation tax payable 13 92,662 - 
  __________ _________ 
  790,917 1,009,151 
Non-current liabilities 
Financial liabilities 14 3,318,309 2,765,350 
Deferred taxation 15 66,664 68,739 
  __________ _________ 
Total liabilities  4,175,890 3,843,240 
  __________ _________ 
Total equity and liabilities  9,326,472 8,859,861 
  __________ _________ 
 
The financial statements were approved by the Board of Directors and authorised for issue on 23 September 2011 
and are signed on its behalf by: 
 
 
D E M Mond 
Director  ClearDebt Group plc 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
For the year ended 30 June 2011 
 
22 
 
 
 Share Share   Share Based Other Retained Total 
 Capital Premium Compensation Reserve Losses Equity 
 £ £ £ £ £ £ 
 
Balance as at 1 July 2009 6,166,812 279,948 97,814 - (2,009,256) 4,535,318 
 
Equity component on issue of  - - - 96,495 - 96,495 
convertible loan notes  
 
Share based compensation - - 42,573 - - 42,573 
 
Total comprehensive income 
for the year  - - - - 342,235 342,235 
 ________ ________ ________ _______ ________ ________ 
 
Balance as at 30 June 2010 6,166,812 279,948 140,387 96,495 (1,667,021) 5,016,621 
 
Share based compensation - - 62,925 - - 62,925 
 
Total comprehensive income 
for the year  - - - - 71,036 71,036 
 ________ ________ ________ _______ _________ ________ 
 
Balance as at 30 June 2011 6,166,812 279,948 203,312 96,495 (1,595,985) 5,150,582 
 ________ ________ ________ _______ _________ ________ 
 
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 transactions. 
 
Other reserve   
This reserve is the result of the Company’s issue of convertible loan notes in April 2010 in accordance with IAS 32 
– Financial Instruments: Presentation. 
 
Retained losses 
The retained losses reflect losses incurred to date. 
  ClearDebt Group plc 
CONSOLIDATED STATEMENT OF CASH FLOWS 
For the year ended 30 June 2011 
 
23 
 
   
 Notes 2011 2010 
  £ £ 
Cash flow from continuing operating activities 
 
Profit before taxation  227,219 465,709 
Depreciation of property, plant and equipment  132,437 102,875 
Amortisation of intangible assets  1,388,809 993,980 
Gain on bargain purchase   (54,985) (252,914) 
Share based payment  62,925 42,573 
Increase in trade and other receivables  (928,733) (423,916) 
Finance costs  532,404 206,660 
Finance income  (3,473) (1,039) 
(Decrease)/increase in trade and other payables  (310,896) 332,252 
  _________ _________ 
Cash generated by operations  1,045,707 1,466,180 
Corporation tax refund  8,794 10,317 
  _________ _________ 
 Net cash generated by operating activities  1,054,501 1,476,497 
 
Investing activities 
 
Acquisition of business and assets 18 (1,088,783) (2,700,000) 
Acquisition of intangibles  (37,170) (143,728) 
Acquisition of property, plant and equipment  (157,443) (144,251) 
Finance income  3,473 1,039 
Sale of property, plant and equipment  - 3,184 
  _________ _________ 
Net cash used in investing activities  (1,279,923) (2,983,756) 
 
Financing activities 
 
Proceeds from issue of convertible loan notes   - 1,800,000 
Issue costs   - (184,379) 
Proceeds from new loans advanced  315,000 - 
Interest on loans  (294,446) (151,451) 
  _________ _________ 
Cash generated by financing activities  20,554 1,464,170 
 
Decrease in cash and cash equivalents  (204,868) (43,089)  
Opening cash and cash equivalents  541,504 584,593 
  _________ _________ 
Closing cash and cash equivalents  336,636 541,504 
  _________ _________  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
24 
 
1. General information 
 
ClearDebt Group plc 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 and interpretations became effective during the period: 
 
IAS 27 (revised), “Consolidated and Separate Financial Statements” requires the effects of all transactions with non-
controlling interests to be recorded in equity if there is no change in control.  These transactions no longer result in 
the recognition of goodwill or gains and losses.  When control is lost, any remaining interest in the entity is re-
measured to fair value, and a gain or loss is recognised in profit or loss.  The Company has applied the revised 
standard from 1 July 2010 with no material impact in the year ended 30 June 2011. The revision to IAS 27 
contained consequential amendments to IAS 28, “Investments in Associates” and IAS 31 “Interests in  Joint 
Ventures”. 
 
The following accounting standards, interpretations and amendments have been adopted by the Company since 1 
July 2010 with no significant impact on its results or financial position: 
 
IFRS 1 (revised), “First-time Adoption” and amendment to IFRS1 for Additional Exemptions.  
IFRIC 15 Agreements for the Construction of Real Estate 
IFRIC 16 Hedges of a Net Investment in a Foreign Operation  
IFRIC 17 Distributions of Non-cash Assets to Owners 
IFRIC 18 Transfers of Assets from Customers 
IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments” is effective from 1 July 2010. 
IFRS 2 Amendment “Group Cash-settled Share-based Payment Transactions” 
IAS 32 Amendment “Financial Instruments: Presentation - Classification of Rights Issues” 
IAS 39 Amendment “Financial Instruments: Recognition and Measurement – Eligible Hedged Items” 
 
Annual Improvement to IFRSs (2009)   
 
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 2011 or later periods, but which have 
not been adopted by the Company: 
 
IAS 24 Amendment “Related Party Disclosures” is effective from 1 January 2011. 
IFRIC 14 Amendment “Pre-payments of a Minimum Funding Requirement” is effective from 1 January 2011. 
IFRS 1 Amendment “Hyperinflation and Fixed Dates” is effective from 1 July 2011. 
IFRS 7  Amendment “Financial Instrument Disclosures”: Transfers of Financial Assets is effective from  
 1 July 2011. 
IAS 12  Amendment “Deferred Tax: Recovery of Underlying Assets” is effective from 1 January 2012. 
IAS 27  (revised 2011) “Separate Financial Statements” is effective from 1 January 2013. 
IAS 28 (revised) “Associate and Joint Venture” is effective from 1 January 2013. 
IFRS 9  “Financial Instruments” is effective from 1 January 2013. 
IFRS 10  “Consolidated Financial Statements” is effective from 1 January 2013. 
IFRS 11  “Joint Arrangements” is effective from 1 January 2013. 
IFRS 12  “Disclosures of Interest in Other Entities” is effective from 1 January 2013. 
IFRS 13  “Fair Value Measurement” is effective from 1 January 2013. 
 
Annual improvements to IFRSs (2010) is primarily effective from 1 January 2011. 
 
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
25 
 
2. Significant Accounting Policies 
 
Basis of Preparation 
The financial statements have been prepared in accordance with International Financial Reporting Standards, as 
adopted 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 a going concern basis for the reasons outlined in the Directors’ 
Report on page 10. 
 
The financial statements have been prepared on the historic cost basis.  The principal accounting policies adopted 
are set out below. 
 
Critical Accounting Estimate 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 that are both readily apparent from other 
sources.  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 in the revision affects both 
current and future periods. 
 
The principal balances that have been estimated relate to:- 
- estimates of future cash flows for the goodwill impairment review ( see note 10) 
- estimates in respect of the future recoverability of the deferred tax asset in respect of losses brought 
forward ( see note 15) 
- estimates of the fair value of intangible assets acquired ( see note 18) 
 
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. 
 
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, plus any direct costs of acquisition. 
 
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 with any impairment in carrying value being recognised immediately 
and charged to the consolidated income statement.  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  
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
26 
 
2. Significant Accounting Policies (continued) 
 
statement on the acquisition date.  The Group carries out annual impairment tests for goodwill.  Impairment losses 
in respect of goodwill are not reversed. 
 
Negative Goodwill 
Negative goodwill arising on acquisition of subsidiaries or business is recognised in full on the date of acquisition 
and is recorded in the consolidated income statement. 
 
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 is 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, unless 
the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a 
revaluation increase. 
 
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:- 
 
Development costs   - 4 years straight line 
Software development costs  - 4 years straight line 
Intangible assets - Debt management back books - 12-18 months straight line 
Intangible assets – Insolvency back books  - 3-4 years straight line  
Other intangibles   - 1 year 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. 
   ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
27 
 
2. Significant Accounting Policies (continued) 
 
Segmental Reporting  
Management determines its operating segments by identifying components: 
 
a) That engages 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 plc, to make decisions about resources to be allocated to the segment, and 
c) For which discrete financial information is available. 
 
Revenue 
Revenue is recognised at the fair value of amounts receivable or received in relation to a range of services provided 
to clients as follows: 
 
Individual Voluntary Arrangements (IVA) 
Fees are earned for arranging and administering IVAs on behalf of individuals experiencing debt problems.  
Generally, revenue is accrued based upon the stage of completion of specific client contracts where the outcome can 
be assessed with reasonable certainty and the value for that service has been agreed between the Group and the 
client. 
 
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) 
Fees earned in respect of PTDs are recognised when received. 
 
Debt management services 
Fees are receivable for the management of debts on behalf of clients experiencing financial difficulties.  Fees are 
recognised upon receipt of client 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 
The Group also receives commission income from the referral of loans and other products.  Commissions are 
recorded as they become due. 
 
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 
which it is probable 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 as a pre-
tax rate that reflects current market assessments of the time value of money.  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
28 
 
2. Significant Accounting Policies (continued) 
 
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. 
 
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. 
 
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. 
 
 
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
29 
 
2. Significant Accounting Policies (continued) 
 
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. 
 
Borrowings 
Interest-bearing bank loads and overdrafts are classified as “other liabilities” in accordance with IAS 39.  They are 
initially recorded at their fair value, net of any issue 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. 
 
Secured Convertible Loan notes 
Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity 
component. At the date of issue, the fair value of the liability component is estimated using the prevailing market 
interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan 
notes and the fair value assigned to the liability component, representing the embedded option to convert the 
liability into equity of the Group, is included in equity. 
 
Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their 
relative carrying amounts at the date of issue.  The portion relating to the equity component is charged directly 
against equity. 
 
The interest expense on the liability component is calculated by applying the prevailing market interest rate for 
similar non-convertible debt to the instrument. The difference between this amount and the interest paid is added to 
the carrying value of the convertible loan note. 
 
Taxation 
The tax expense represents the sum of the current tax expense and deferred tax expense.  Taxable losses 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 next 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 probably 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. 
 
 
   ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
30 
 
2. Significant Accounting Policies (continued) 
 
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 exacted 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. 
 
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 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. 
 
 
Year ended 30 June 2011 
  Debt Total  Debt Total 
 Insolvency Management 2011 Insolvency Management 2010 
 £ £ £ £ £ £ 
Revenue 
- Ongoing 4,843,540 2,738,827 7,582,367 3,408,373 3,225,622 6,633,995 
- Acquisition  - 193,995 193,995 - - -  
 _________ _________ _________ _________ _________ _________ 
 
Total Revenue 4,843,540 2,932,822 7,776,362 3,408,373 3,225,622 6,633,995 
 
Cost of sales (2,355,997) (1,456,406) (3,812,403) (1,522,269) (1,811,038) (3,333,307) 
 _________ _________ _________ _________ _________ _________ 
 
Gross Profit  2,487,543 1,476,416 3,963,959 1,886,104 1,414,584 3,300,688 
 
Administrative expenses (1,072,653) (605,970) (1,678,623) (701,513) (591,858) (1,293,371) 
Share based payment  (30,380) (32,545) (62,925) (19,579) (22,994) (42,573) 
Separately disclosable items - - - (363,543) (85,930) (449,473) 
 ________ _________ _________ _________ _________ _________ 
Profit before interest, tax 1,384,510 837,901 2,222,411 801,469 713,802 1,515,271 
depreciation and amortisation   
 
Depreciation (59,674) (72,763) (132,437) (30,307) (72,568) (102,875) 
Amortisation (892,425) (496,384) (1,388,809) (468,193) (525,787) (993,980) 
Gain on bargain purchase  33,648 21,337 54,985 202,914 50,000 252,914 
 ________ _________ _________ _________ _________ _________ 
 
Profit from operations  466,059 290,091 756,150 505,883 165,447 671,330 
 
Finance costs (374,368) (158,036) (532,404) (67,577) (139,083) (206,660) 
Finance income 3,473 - 3,473 1,039 - 1,039 
 _________ _________ _________ _________ _________ _________ 
 
Profit before taxation 95,164 132,055 227,219 439,345 26,364 465,709 
  
Taxation (121,849) (34,334) (156,183) (116,093) (7,381) (123,474) 
 _________ _________ _________ _________ _________ _________ 
  
Profit after tax (26,685) 97,721 71,036 323,252 18,983 342,235 
 _________ _________ _________ _________ _________ _________  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
31 
 
3. Segmental Information (continued) 
 
Net operating assets are reconciled to equity funds as follows: 
 
  2011 2010 
  £ £ 
Gross assets 
Insolvency  7,492,638 6,752,690 
Debt management  1,833,834 2,107,171 
  _________ _________ 
  9,326,472 8,859,861 
  _________ _________ 
Gross liabilities  
Insolvency  2,530,762 2,597,551 
Debt management  1,645,128 1,245,689 
  _________ _________ 
  4,175,890 3,843,240 
  _________ _________ 
Capital expenditure to acquire property, plant and equipment 
Insolvency  152,063 86,337 
Debt management  5,380 57,914 
  _________ _________ 
  157,443 144,251 
  _________ _________ 
Capital expenditure to acquire intangible assets 
Insolvency   799,806 2,260,728 
Debt management  300,647 961,000 
  _________ _________ 
  1,100,453 3,221,728 
  _________ _________ 
Depreciation of property, plant and equipment 
Insolvency  59,674 30,307 
Debt management  72,763 72,568 
  _________ _________ 
  132,437 102,875 
  _________ _________ 
Amortisation of intangible assets 
Insolvency  892,425 468,193 
Debt management  496,384 525,787 
  _________ _________ 
  1,388,809 993,980 
  _________ _________ 
 
   ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
32 
 
4.   Profit from Operations 
  2011 2010 
  £ £ 
Profit from operations is stated after charging: 
Depreciation of owned assets  132,437 102,875 
Amortisation  1,388,809 993,980 
Share based payment   62,925 42,573 
Operating lease rentals – buildings  133,591 95,395 
Operating lease rentals – other   20,022 6,075 
Auditor’s remuneration – audit  11,250 10,750 
Auditor’s remuneration – other services  34,175 45,895 
  _______ _______ 
 
  
Amounts payable to Baker Tilly UK Audit LLP and their associates in respect of both audit and non audit services: 
 
 
  2011  2010 
 £ % £ % 
Audit services 
- Statutory audit of parent and consolidated accounts 11,250 25% 10,750 19% 
Other services 
Fees payable to the company’s auditor and its associates for  
other services: 
- Audit of subsidiaries pursuant to legislation  24,775 55% 22,200 39% 
- Tax compliance services 2,500 5% 2,500 4% 
- Corporate finance transactions 4,500 10% 11,000 20% 
- Other services  2,400 5% 10,195 18% 
 _______  _______ 
 45,425  56,645 
 _______  _______ ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
33 
 
5. Separately Identifiable Items 
   2011 2010 
  £ £ 
Administrative expenses 
 
Expenses relating to the acquisition and restructuring of the business of Relax - (449,473) 
  ________ ________ 
 
 
On 2 December 2009 the Group acquired the back books of IVA, DMP and PTD cases from the Administrator of 
various companies of Relax Group plc.  In 2010 included in administration expenses were various legal costs 
related to the acquisition, restructuring and shareholders circular as well as additional costs and incidentals 
incurred as part of the acquisition process.  
 
 
 
6. Finance Costs   
   2011 2010 
   £ £ 
 
Interest payable on loans  64,444 115,513 
Interest payable on convertible loan notes  230,000 44,924 
Interest payable on redemption of convertible loan notes  237,960 46,223 
  ________ ________ 
   532,404 206,660 
   ________ ________ 
 
7. Employees 
 
 
Number of Employees 
 
The average monthly numbers of employees (including the Directors) during the period was: 
 
 
   2011 2010 
   Number Number 
 
Directors  4 5 
Sales and marketing  30 24 
Advice team, management and administration  19 13 
IVA and PTD processing team  29 27 
DMP processing team  30 35 
  ________ ________ 
  112 104 
  ________ ________ 
 
 
 
 
 
 
 
 
 
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
34 
 
7. Employees (continued) 
 
Employment costs  2011 2010 
  £ £ 
 
Wages and salaries  2,545,435 2,276,166 
Social security costs  195,847 161,015 
Pension costs  4,253 - 
  ________ ________ 
  2,745,535 2,437,181 
  ________ ________ 
 
 
Directors’ Emoluments  2011 2010 
  £ £ 
 
Directors’ fees  30,000 101,500 
Directors’ emoluments  262,176 83,000 
  ________ ________ 
  292,176 184,500 
Social security costs  30,827 10,624 
  ________ ________ 
Key management compensation – short term benefits  323,003 195,124 
  ________ ________ 
 
 
Key management consist of the statutory directors of the Group.  The share based payment with regard to key 
management amounted to £4,938 (2010 £4,098). 
 
  Number Number 
    
Number of directors to whom retirement benefits are accruing under a    
money purchase scheme  - - 
  ________ ________ 
 
  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. ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
35 
 
8. Taxation   
   2011 2010 
   £ £ 
Analysis of current year   
 
Current tax 
UK corporation tax payable  92,662 - 
UK corporation tax repayment due  - (8,372) 
Over provision from prior years   (422) (15,273) 
   ________ ________ 
 
Total corporation tax   92,240 (23,645) 
   ________ ________ 
 
Deferred tax 
Temporary differences, origination and reversal  (7,170) 147,119 
Provision for irrecoverable losses  75,000 - 
Effect of tax rate changing on opening balance  (3,887) - 
   ________ ________ 
 
Total deferred tax charge  63,943 147,119 
   ________ ________ 
 
Tax on profit for the year  156,183 123,474 
   ________ ________ 
 
 
Factors affecting charge for year   
   2011 2010 
   £ £ 
 
Profit before taxation  227,219 465,709 
   ________ ________ 
Profit multiplied by standard rate of corporation tax  
in the UK of 26% (2010: 28%)  59,077 130,398 
 
Effects of: 
 
Expenses not deductible  4,878 1,873 
Adjustment due to change of tax rate  (3,887) - 
Unrelieved tax losses   75,000 6,476 
Other prior year adjustment  21,115 (15,273) 
   ________ ________ 
 
Current tax expense for year  156,183 123,474 
   ________ ________  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
36 
 
9. Earnings per Ordinary Share   
   2011 2010 
   £ £ 
Profit for the financial year  71,036 342,235 
   __________ __________ 
 
Weighted average number of ordinary shares in issue during the year   308,340,567 308,340,567 
 
Dilutive potential of share options   - - 
Dilutive potential of convertible loan notes  - - 
   __________ __________ 
   308,340,567 308,340,567 
   __________ __________ 
Earnings per share  
 
Basic  0.02p 0.11p 
Diluted  0.02p 0.11p 
   __________ __________ 
 
The calculation of the basic earnings per ordinary share of 0.02p (2010:  0.11p) each has been based on the profit 
for the relevant financial year and on 308,340,567 shares (2010: 308,340,567).  This represents the weighted 
average number of ordinary shares in issue.  The profit for the period for the purpose of calculating the diluted 
earnings per share is the same as for the basic earnings per share calculation adjusted in respect of the interest 
charges in relation to the convertible loan notes. After using this adjusted profit the diluted earnings per share is 
higher than the basic earnings per share and would therefore not be dilutive under the terms of IAS 33.   
 
10. Intangible Assets 
 
    Other Software 
    Intangibles Development 
   Goodwill - back books costs Total 
   £ £ £ £ 
Cost – 2011 
 
At 1 July 2010  4,457,892 3,078,000 258,493 7,794,385 
Arising on acquisition of back books   - 1,063,283 - 1,063,283 
Additions   - - 37,170 37,170 
   _________ _________ _________ _________ 
At 30 June 2011  4,457,892 4,141,283 295,663 8,894,838 
   _________ _________ _________ _________ 
Amortisation – 2011 
 
At 1 July 2010  - 944,234 85,104 1,029,338  
Charge for year  55,612 1,267,224 65,973 1,388,809 
   _________ _________ _________ _________ 
At 30 June 2011  55,612 2,211,458 151,077 2,418,147 
   _________ _________ _________ _________ 
Net book value  
At 30 June 2011  4,402,280 1,929,825 144,586 6,476,691 
   _________ _________ _________ _________ 
 
 
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
37 
 
10. Intangible Assets (continued) 
    Other Software 
    Intangibles Development 
   Goodwill - back books costs Total 
   £ £ £ £ 
Cost – 2010 
At 1 July 2009  4,457,892 178,000 208,789 4,844,681 
Arising on acquisition of back books   - 3,078,000 - 3,078,000 
Additions   - - 143,728 143,728 
Disposals  - (178,000) (94,024) (272,024) 
   _________ _________ _________ _________ 
At 30 June 2010  4,457,892 3,078,000 258,493 7,794,385 
   _________ _________ _________ _________ 
Amortisation – 2010 
At 1 July 2009  - 178,000 129,382 307,382 
Charge for year  - 944,234 49,746 993,980 
Disposals  - (178,000) (94,024) (272,024) 
   _________ _________ _________ _________ 
At 30 June 2010  - 944,234 85,104 1,029,338 
   _________ _________ _________ _________ 
Net book value 
At 30 June 2010  4,457,892 2,133,766 173,389 6,765,047 
   _________ _________ _________ _________ 
 
Impairment reviews 
 
The total carrying value of £4,402,280 relating to goodwill is reviewed annually for impairment.  This comprises 
£3,013,374 relating to the insolvency business and £1,388,906 relating to the debt management business.  
 
During the year the goodwill of £55,612 relating to the acquisition of the Debt Advice Portal was provided for in 
full. Whilst the software is still available for use the referrals that might be received are not presently being 
channelled through the Portal and accordingly the goodwill has been written down.  
 
For the purposes of impairment review the recoverable amount has been calculated as the value in use based on 
discounted future cash flow projections for a five year period based on approved budgets for 3 years and assuming 
no growth for the remaining 2 years. 
 
Goodwill arising on ClearDebt acquisition (insolvency business) – critical accounting estimates and 
judgements in relation to the impairment review on the insolvency business 
 
Monthly revenue projections assume that the number of IVA cases approved will double over the next 2 years 
through the acquisition of new lead sources and remain steady thereafter. Nominee fees per case are expected to 
remain at current levels together with average supervisory fees, and IVAs lasting a maximum of 5 years.  Expenses 
are expected to rise 25% in the first year and remaining steady thereafter.  The appropriate discount factor used in 
the calculations is 10%. 
 
Assumptions are based on recent experience and estimates of how economic conditions may affect levels of activity 
in the business taking into account managements strategy for growth.  
 
The Group’s cost of capital could increase to 43% or insolvency income fall short of projections by 31% without a 
matching fall in expenses before the carrying value of this part of goodwill would exceed the value in use. 
 
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
38 
 
10. Intangible Assets (continued) 
 
Impairment review on the debt management business 
 
Projections have been produced covering a five year period.  Revenues are expected to fall by 10% in the first and 
second year and remain flat over the remaining period.  Expenses are expected to increase by 10% in year 1 and 
remain constant in the remaining years.  
 
The assumptions are based on recent experience of monthly growth and estimates of how economic conditions will 
affect levels of activity in the business.  The discount factor used in the calculations is 10%. 
 
The Group’s debt management income would need to fall short of projections by 68% without a matching fall in 
expenses or the Group’s cost of capital increase to 34% before the carrying value of this part of goodwill would 
exceed the value in use. 
 
11. Property, Plant and Equipment 
 
  Fixtures Leasehold  
  and fittings improvements Total 
  £ £ £ 
Cost – 2011 
At 1 July 2010 466,679 48,698 515,377 
Additions 156,293 1,150 157,443 
  ________ ________ ________ 
At 30 June 2011 622,972 49,848 672,820 
  ________ ________ ________ 
Depreciation – 2011 
At 1 July 2010 264,373 23,012 287,385 
Charge for the year 121,854 10,583 132,437 
  ________ ________ ________ 
At 30 June 2011 386,227 33,595 419,822 
  ________ ________ ________ 
Net book value 
At 30 June 2011 236,745 16,253 252,998 
  ________ ________ ________ 
 
Cost – 2010 
At 1 July 2009 348,295 26,015 374,310  
Additions 121,568 22,683 144,251 
Disposals  (3,184) - (3,184) 
  ________ ________ ________ 
At 30 June 2010 466,679 48,698 515,377 
  ________ ________ ________ 
Depreciation – 2010 
At 1 July 2009 171,539 12,971 184,510 
Charge for the year 92,834 10,041 102,875 
  ________ ________ ________ 
At 30 June 2010 264,373 23,012 287,385 
  ________ ________ ________ 
Net book value 
At 30 June 2010 202,306 25,686 227,992 
  ________ ________ ________  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
39 
 
12. Trade and other Receivables 
  2011 2010 
  £ £ 
 
Trade receivables 1,420,150 1,005,163 
Prepayments 265,164 126,134 
Other receivables 496,645 21,929 
  ________ ________ 
  2,181,959 1,153,226 
  ________ ________ 
 
Trade receivables are all due in less than one year and represent monies due in respect of IVA nominee and 
supervisors’ fees.  These monies are collected from monthly debtor receipts.  The trade receivables figure is shown 
net of provisions in respect of IVA failures amounting to £189,799(2010: £135,674).  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: 
  2011 2010 
  £ £ 
 
At the beginning of the year 135,674 52,133 
Charge for the year 191,943 124,480 
Utilised during the year (137,818) (40,939) 
  ________ ________ 
At end of year 189,799 135,674 
  ________ ________ 
 
The directors consider that the carrying value of trade and other receivables approximates to their fair value.  
 
 
13. Current Liabilities 
  2011 2010 
  £ £ 
Trade and other payables: 
 
Trade payables  167,700 315,562 
Accruals 331,845 458,620 
Other payables 198,710 234,969 
  ________ ________ 
  698,255 1,009,151 
  ________ ________ 
 
The directors consider that the carrying value of trade and other payables approximates to their fair value.  
 
 
Corporation tax payable 92,662 - 
  ________ ________ 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
40 
 
14. Financial Liabilities 
 
Loans outstanding at the reporting date were as follows:- 
  2011 2010 
  £ £ 
 
Secured convertible loan notes  2,303,309 2,065,350 
Loans 1,015,000 700,000 
  ________ ________ 
 
  3,318,309 2,765,350 
  ________ ________ 
 
 
On 16 April 2010 £2.3m of 3 year 10% Secured Convertible Loan notes were issued by CDG (Guernsey) Limited,  a 
wholly owned subsidiary of ClearDebt Group plc, to investors. Holders of the loan notes are entitled to interest on 
the loan notes at a rate of 10% per annum payable on a quarterly basis and have an option to convert all or part of 
their holdings at par into ordinary shares at any time in ClearDebt Group plc at a price of 1.8p per share. At the end 
of the 3 year period the principal is repayable in cash plus a premium of 25% in respect of any holdings that are not 
converted into ordinary shares at the loan note holder’s option. 
 
The Loan Notes are secured by way of a debenture dated 19 April 2010 over the assets of the Group. The Company 
has also entered into a cross guarantee with CDG (Guernsey) Limited in respect of the convertible loan notes. 
 
In 2010 the directors determined the financial liability component of this compound instrument by calculating the 
net present values of the cash flows in respect of the interest and principal payments (assuming all are redeemed in 
cash and not taken as shares) over the next three years using a discount rate of 17% which the directors consider 
would have been the interest payable on a bank loan without the convertible element. Accordingly the loan notes are 
recorded at £2,303,309 (2010:  £2,065,350).  
 
At 30 June 2011 D E M Mond was interested in £500,000 of the secured convertible loan notes (2010: £500,000). 
 
The loan from D E M Mond of £1,015,000 ( 2010: £700,000) is repayable on 31 March 2013 or earlier at the 
Group’s discretion although there is a confirmation in place that this support will continue should the Group not be 
in a position to repay the loan and continue to meet other liabilities as they fall due.  Loan repayments may only be 
made with permission of the secured convertible loan note holders on condition that forecasts show minimum 
working capital of £500,000 for the 6 months following repayment.  Interest at a rate of 10.5% totalling £64,444 
(2010: £115,513) was paid by the Group to D E M Mond in the year in respect of his loans. Interest of £230,000 was 
paid to the secured convertible loan note holders in the year (2010: £44,924).  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
41 
 
15. Deferred Taxation 
  2011 2010 
  £ £ 
Temporary differences (61,510) (92,147) 
Losses  73,034 187,128 
  ________ ________ 
At 30 June 11,524 94,981 
  ________ ________ 
 
Analysed as follows: 
  2011 2010 
  £ £ 
 
Deferred tax asset 78,188 163,720 
Deferred tax liability (66,664) (68,739) 
  ________ ________ 
At 30 June 11,524 94,981 
  ________ ________ 
    
Movement in the period  
  2011 2010 
  £ £ 
 
At 1 July 94,981 347,940 
Arising on acquisition of intangible assets (19,514) (105,840) 
Deferred tax charge taken to the income statement (63,943) (147,119) 
  ________ ________ 
At 30 June 11,524 94,981 
  ________ ________ 
 
The deferred tax asset primarily relates to tax losses available to offset against future taxable profits in ClearDebt 
Group plc. Forecasts have been prepared for the next 5 years which show that there will be insufficient profits in the 
holding company to enable all of the losses brought forward to be utilised in this time frame. Accordingly an 
additional provision of £75,000 has been charged to the income statement in respect of these losses carried forward. 
It is the directors’ opinion that the remaining losses will be recoverable over this time period.  
 
Unrecognised deferred tax 
  2011 2010 
  £ £ 
 
Losses 222,000 147,000 
  ________ ________ 
At 30 June 222,000 147,000 
  ________ ________ 
 
Provision for liabilities and charges – deferred taxation  
 
During the year the Group purchased goodwill and assets from certain companies (see note 18). Following the 
estimation of the fair values of the assets purchased the Group provided £19,514 (2010:£105,840) in respect of 
deferred taxation in relation to the acquisitions. During the year £49,986 (2010: £37,101) of provision relating to 
acquisitions has been released to the profit and loss account based upon the revenue received to date as a 
proportion of the total estimated revenue to be received at the time of acquisition. 
 
   ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
42 
 
16. Share Capital 
  2011 2010 
  £ £ 
 
Allotted, called up and fully paid:  
 
Ordinary share capital  
308,340,567 (2010: 308,340,567)  1,541,703 1,541,703 
Ordinary shares of 0.5 pence each  
 
Deferred ordinary share capital  
308,340,567 (2010: 308,340,567)  4,625,109 4,625,109 
Deferred shares of 1.5p each   
  _________ _________ 
  
  6,166,812 6,166,812 
  _________ ________ 
 
 
The Deferred Ordinary Shares of 1.5p each carry the same rights as the Ordinary 0.5p shares save that they do not 
carry any 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 2011 there were 11,312,500 (2010: 11,750,000) share options outstanding over the Company’s ordinary 
shares at a weighted average exercise price of 1.98p per share.  
 
Details of the share options issued during the year and outstanding at 30 June 2011 are as follows:- 
 
  2011  2010 
   Weighted  Weighted 
  Number of average exercise Number of average exercise 
  Options  price in (p) options  price in (p) 
 
Outstanding at beginning of year 11,750,000 2.00 - - 
Granted during year 1,000,000 1.75 13,062,500 2.00 
Forfeited during year (1,437,500)    2.00 (1,312,500) 2.00 
  __________ _____ __________ _____ 
 
Outstanding at the end of the year 11,312,500 1.98 11,750,000 2.00 
  __________ _____ __________ _____ 
 
Exercisable at 30 June  - - - - 
  __________ _____ __________ _____ 
 
 
These share options are normally exercisable between 7 October 2012 and 21 September 2020 providing the 
employee has been in continuous service for 3 years following the granting of the options.  
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
43 
 
16. Share Capital (continued) 
 
The options outstanding at 30 June 2011 had a weighted average exercise price of 1.98p and a weighted average 
remaining contractual life of 8 years and 4 months. 
 
The fair value of options granted under the scheme is measured by use of the Black-Scholes model. The inputs into 
the Black-Scholes model for options granted during the year are as follows: 
Grant date 
    
 
21 September 2010 
Share price at grant date 
    1.75p 
Exercise price 
    1.75p 
Number of employees 
    2 
Share options granted     1,000,000 
Vesting period (years) 
    3 
Expected volatility 
    211% 
Option life (years) 
    10 
Expected life (years) 
    3 
Risk free rate 
    5.75% 
Expected dividends expressed as a dividend yield     0% 
Fair value per option 
    1.75p 
  
Expected volatility was based upon the historical volatility of the Company’s share price.  The expected life is based 
upon historical data and has been adjusted based on management’s best estimates for the effects of non-
transferability, exercise restrictions and behaviour considerations. 
 
Details of the warrants issued during the year and outstanding at 30 June 2011 are as follows: 
 
 2011 2010 
   Weighted  Weighted 
  Number of average exercise Number of average exercise 
  warrants price in pence warrants price in pence 
 
Outstanding at beginning of year 9,137,717 2.0 9,137,717 2.0 
Granted during year - - - - 
Lapsed during year (9,137,717) 2.0 - 2.0 
  __________ _____ __________ _____ 
 
Outstanding at the end of the year - - 9,137,717 2.0 
  __________ _____ ________ _____ 
 
 
 
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. 
 
    2011 2010 
    £ £ 
 
Charged to consolidated income statement    62,925 42,573 
    ______ ______ 
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
44 
 
18. Acquisition 
 
In November 2010 and February 2011 the Company purchased two back books of Debt Management clients from 
One Aim Group Limited which has subsequently gone into liquidation.  
 
The assets acquired were exclusively intangible assets represented by the future income due from the collection of 
the back book of DMP cases.  
 
At the date of acquisition the fair values of the assets purchased comprised the following: 
 
  
Book value 
Fair value 
Adjustment 
 
 Fair Value 
 £ £  £ 
Other intangible assets- Debt Management  - 330,282  330,282 
Deferred taxation  - (8,298)  (8,298) 
Gain on bargain purchase – negative goodwill - (21,337)  (21,337) 
 
 - 300,647  300,647 
    
 
Settled by:    £ 
Cash consideration   300,647
    
 
The intangible debt management assets acquired are being amortised over 18 months which, in the directors’ 
opinion, is the useful economic life of the assets. 
 
On 22 June 2011 the Company purchased from Invocas a book of IVA cases together with certain debtors relating 
to the cases and the right to the future income due on those cases. The total consideration due to Invocas was 
£788,136 which has been paid in full in cash. 
 
The assets acquired were intangible assets represented by the future income due from the collection of the back 
book of IVA cases together with certain debtors in relation to invoices already raised for fees on the cases which 
had not yet been paid. At the date of acquisition the fair values of the assets purchased comprised the following: 
 
  
Book value 
Fair value 
Adjustment 
 
 Fair Value 
 £ £  £ 
Other intangible assets  - 733,000  733,000 
Trade receivables 216,000 (116,000)  100,000 
Deferred taxation 
Gain on bargain purchase 
- 
- 
(11,216) 
(33,648) 
 (11,216) 
 (33,648) 
    
 216,000 572,136  788,136 
    
 
Settled by:    £ 
 
Cash consideration   788,136
    
 
 
 
The intangible IVAs acquired are being amortised over 4 years which, in the directors’ opinion, is the useful      
economic life of the assets.  
   ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
45 
 
18. Acquisition (continued) 
 
Included in the results for the year are revenues of £193,995 and a pre-tax profit of £9,038 excluding the gain on 
purchase of a bargain asset of £54,985. 
 
We have estimated the timing of, and the expected future income due, from the back books acquired less a provision 
for future expected delinquency together with the estimated costs necessary to collect in the income. This has been 
produced on a net present value basis to provide an estimate of the fair value of the intangible assets acquired.  
 
The fair value of the net assets acquired was £1,143,768 which is in excess of the £1,088,783 cost of acquisition. 
Accordingly under IFRS the Consolidated Income Statement has been credited with a gain on bargain purchase of 
£54,985 in the period. 
 
 
19. Related party transactions 
 
D E M Mond is a partner in Hodgsons, Chartered Accountants, by whom ClearDebt Group plc (“Group”), 
ClearDebt Limited (“ClearDebt”) and Abacus (Financial Consultants) Ltd (“Abacus”) were recharged at cost for 
Google advertising, travelling, book-keeping, accountancy and utility charges to the value of £85,820 in the year 
(2010: £340,854).  ClearDebt and Abacus have also re-charged Hodgsons at cost £69,704 (2010: £154,954) for 
certain staff salaries, council taxes and office refurbishment borne by ClearDebt in the year.  At 30 June 2011 
Hodgsons owed ClearDebt and Abacus £22,595 (2010: £102,304).  Group made no payments on behalf of 
Hodgsons in the year. 
 
As at 30 June 2011 Group had net amounts due from Hodgsons of £49,788 (2010: due to Hodgsons £47,376).   
 
Overall as at 30 June 2011 Hodgsons owed ClearDebt £72,384 (2010: £54,928). No interest is being charged on the 
outstanding amounts.   
 
D E M Mond made a further loan of £625,000 in the year to 30 June 2011 (2010: £ nil) and received a partial 
repayment of £310,000 (2010: £nil).  As at 30 June 2011 the loan balance was £1,015,000 (2010: £700,000). The 
loan is repayable on 31 March 2013 or earlier at the Group’s discretion.  The loan carries interest at a fixed rate of 
10.5% per annum and £64,444 (2010: £115,113) was paid by the Group to D E M Mond in the year in respect of 
interest on the loan. 
 
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, short term loans and convertible debt. 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 ongoing 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.  The only assets that attract a cash flow 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. 
 
 
 
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
46 
 
20. Financial instruments (continued) 
 
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 a rate of 1.25%.  At 30 June 2011 interest bearing 
financial assets of the Group totalled £53,489 (2010: £30,016). 
 
Credit risk 
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 IVAs 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 total exposure to the Group at 30 June 2011 
in respect of trade receivables and cash amounts to £1,756,786 (2010: £1,546,667). 
 
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 14. 
 
 
Maturity of financial liabilities 
The maturity profile of the Group’s loans as at 30 June 2011 was as follows: 
 
    2011 2010 
    £ £ 
 
Payable within one year   336,575 303,848 
Payable between one and two years   3,739,931 285,386 
Payable between two and five years   - 2,928,974 
    _________ _________ 
 
All other financial liabilities are due within one year. 
 
Currency exposures 
The Group has no overseas 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. 
 
  ClearDebt Group plc 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
For the year ended 30 June 2011 
 
47 
 
21. Operating Lease Commitments 
 
Total rentals under operating leases charged to the income statement were as follows:- 
 
    2011 2010 
    £ £ 
 
Operating leases   153,613 101,470 
    ________ ________ 
 
 
The future minimum lease payments under operating leases that have initial or remaining terms in excess of one 
year at 30 June 2011 were as follows: 
    2011 2010 
    £ £ 
 
Payable within one year   133,142 163,156 
Payable between one and five years   70,444 127,005 
Payable in more than five years   4,685 - 
    ________ ________ 
     
    208,271 290,161 
    ________ _________ 
 
The operating leases represent leases on the office premises used by the Group at its Timperley and Chesterfield 
sites as well as office equipment and motor vehicles.  These leases are due to expire between April 2012 and May  
2017. 
 
22.   Contingent Liabilities  
 
In December 2009 certain insolvency assets of Relax were purchased from its Administrator and the insolvency 
related employees were taken on as part of the purchase. Claims have been received from four former employees of 
Relax Group plc who did not work in the insolvency businesses alleging that they should have transferred to 
Company as a result of the acquisition. These claims are being vigorously defended and are listed for tribunal 
hearings over the coming months. We are confident of success given the legal advice received at the time of the 
acquisition. To date all legal costs have been borne by the Company’s employment insurers although there may be 
potential liabilities in respect of any awards that may ultimately be made against the Company.  
 
The directors are satisfied on the basis of information presently held that no provision is required at the present time.  ClearDebt Group plc 
COMPANY BALANCE SHEET  
AS AT 30 JUNE 2011   Company Number 02441375 
 
48 
 
 
    2011 2010 
   Notes £ £ 
Fixed Assets 
Intangible assets    2 18,472 30,139 
Tangible assets  3 6,944 8,112 
Investments  4 4,697,757 4,644,769 
    _________ _________ 
 
    4,723,173 4,683,020 
Current Assets 
Debtors: amounts falling due within one year  5 82,118 185,090 
Debtors: amounts falling due after one year  6 2,840,771 2,626,159 
Cash at bank    65,853 350,657 
    _________ _________ 
 
    2,988,742 3,161,906 
Creditors: amounts falling due within one year  7 (32,535) (118,098) 
    _________ _________ 
 
Net Current Assets   2,956,207 3,043,808 
    _________ _________ 
 
Total assets less current liabilities   7,679,380 7,726,828 
 
Creditors: amounts falling due after one year  8 (3,414,805) (2,861,846) 
    _________ _________ 
 
Net Assets   4,264,575 4,864,982 
    _________ _________ 
 
Capital and Reserves 
Called up share capital  9 6,166,812 6,166,812 
Share premium account  11 279,948 279,948 
Share based compensation reserve  11 203,312 101,912 
Profit and loss account  11 (2,385,497) (1,683,690) 
    _________ _________ 
 
Equity Shareholders’ Fund   4,264,575 4,864,982 
    _________ _________ 
 
The financial statements were approved by the Board of Directors and authorised for issue on 23 September 2011 
and are signed on its behalf by: 
 
 
 
 
D E M Mond 
Director 
  ClearDebt Group plc 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 
 
49 
 
1.     Significant Accounting Policies 
 
Basis of Accounting 
The financial statements have been prepared under the historical cost convention and in accordance with UK 
Generally Accepted Accounting Principles (UK GAAP). 
 
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.  ClearDebt Group plc 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 
 
50 
 
1.   Significant Accounting Policies (continued) 
 
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 – websites and databases  - 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 with in the accounts of the parent company was 
£701,807 (2010: £435,574). 
 
 
2.     Intangible Assets     
   Other  
   Intangibles  
     £  
Cost – 2011 
At 1 July 2010 and 30 June 2011  35,000 
   _______  
Amortisation – 2011   
At 1 July 2010  4,861  
Charge for year  11,667  
   _______ 
At 30 June 2011  16,528  
   _______  
Net book value  
At 30 June 2011  18,472  
   _______  
Net book value 
At 30 June 2010  30,139 
   _______  
  
  ClearDebt Group plc 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 
 
51 
 
3.    Tangible assets 
   Fixtures 
   and fittings 
   £ 
Cost – 2011  
At 1 July 2010  9,316 
Additions    2,405 
   _______ 
At 30 June 2011  11,721 
   _______ 
Depreciation – 2011  
At 1 July 2010  1,204 
Charge for the year  3,573 
   _______ 
At 30 June 2011  4,777 
   _______ 
Net book value 
At 30 June 2011  6,944 
   _______ 
Net book value 
At 30 June 2010  8,112 
   _______ 
 
 
4. Fixed Asset Investments    Shares in 
    Subsidiary undertakings 
     £ 
Cost 
As at 1 July 2010     4,644,769 
Investment in subsidiaries -Share based payments     52,988 
    ________ 
 
As at 30 June 2011     4,697,757 
    ________ 
 
 
Shares in subsidiary undertakings are stated at cost.  Group owns directly the following principal subsidiaries which 
are included in the consolidated accounts: 
 
     Profit/ Reserves 
  Class of   (loss) for 30 June 
Company Activity shares  Holding period 2011 
     £ £ 
 
ClearDebt Limited Financial Advisors Ordinary 100% 780,471 748,089 
ClearCash Limited Pre-Paid Card Ordinary 100% (41,154) (48,121) 
Abacus (Financial Consultants) Limited Debt Management Ordinary 100% 80,867 254,082 
The Debt Advice Portal Limited Dormant  Ordinary 100% - - 
Clear Finance Solutions Limited  Dormant  Ordinary  75.1% - - 
Reclaim Assistance Limited  Dormant  Ordinary 100% - - 
CDG (Guernsey) Limited     Investments       Ordinary 100% - 96,496 
 
 
 
 
  ClearDebt Group plc 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 
 
52 
 
5.    Debtors: amounts falling due within one year 
   2011 2010 
   £ £ 
 
Other debtors   55,188 - 
Prepayments and accrued income   26,930 26,117 
Deferred tax asset    - 158,973 
   ________ ________ 
  
   82,118 185,090 
   ________ ________ 
 
The deferred tax asset relates to tax losses available to offset against future taxable profits. The balance in 2010 has 
been reclassified to debtors amounts falling due after more than one year. Detailed forecasts have been prepared for 
the next 5 years. A provision of £75,000 has been made in 2011 against the recoverability of the brought forward 
balance as present forecasts show that these will not be utilised in the next 5 years. See note 6. 
 
6.    Debtors: amounts falling due after one year 
   2011 2010 
   £ £ 
 
Amounts owed by Group undertakings   2,762,583 2,626,159 
Deferred tax asset    78,188 - 
   ________ ________ 
   2,840,771 2,626,159 
   ________ ________ 
 
7.   Creditors: amounts falling due within one year 
   2011 2010 
   £ £ 
 
Trade creditors   16,069 23,958 
Accruals   16,466 94,140 
    ________ ________ 
 
    32,535 118,098 
    ________ ________ 
 
8.    Creditors: amounts falling due after one year 
   2011 2010 
   £ £ 
 
Amounts owed to Group undertakings   2,399,805 2,161,846 
Loan    1,015,000 700,000 
    ________ ________ 
 
    3,414,805 2,861,846 
    ________ ________ 
     
The loan to D E M Mond of £1,015,000 (2010: £700,000) is repayable on 31 March 2013 or earlier at the 
Company’s discretion although there is a confirmation in place that this support will continue should the Company 
not be in a position to repay the loan and continue to meet other liabilities as they fall due.  Loan repayments may 
only be made with permission of the secured convertible loan note holders on condition that forecasts show 
minimum working capital of £500,000 for the 6 months following repayment.  Interest of £64,444 (2010: £115,513) 
was paid by the Company to D E M Mond in the year in respect of his loans.   ClearDebt Group plc 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 
 
53 
 
9.    Share capital 
   2011 2010 
   £ £ 
Company 
 
Allotted, called up and fully paid:  
 
Ordinary share capital  
308,340,567 (2010: 308,340,567)  1,541,703 1,541,703 
Ordinary shares of 0.5 pence each   
 
Deferred ordinary share capital 308,340,567 (2010: 308,340,567)  4,625,109 4,625,109 
Deferred shares of 1.5p each  
  _________ _________
   
  6,166,812 6,166,812 
  _________ ________ 
 
The Deferred Ordinary Shares of 1.5p each carry the same rights as the Ordinary 0.5p shares save that they do not 
carry any 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. 
   
Details of the share options issued during the year and outstanding at 30 June 2011 are as follows:- 
 
  2011  2010 
   Weighted  Weighted 
  Number of average exercise Number of average exercise 
  Options  price in (p) options  price in (p) 
 
Outstanding at beginning of year 11,750,000 2.00 - - 
Granted during year 1,000,000 1.75 13,062,500 2.00 
Forfeited during year (1,437,500) 2.00 (1,312,500) 2.00 
  __________ _____ __________ _____ 
Outstanding at the end of the year 11,312,500 1.98 11,750,000 2.00 
  __________ _____ __________ _____ 
 
Exercisable at 30 June  - - - - 
  __________ _____ __________ _____ 
 
 
These share options are normally exercisable between 7 October 2012 and 21 September 2020 providing the 
employee has been in continuous service for 3 years following the granting of the options.  
 
The options outstanding at 30 June 2011 had a weighted average exercise price of 1.98p and a weighted average 
remaining contractual life of 8 years and 4 months. 
 
 
 
 
 
 
 
 
 
 
  ClearDebt Group plc 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 
 
54 
 
9.    Share capital (continued) 
 
The fair value of options granted under the scheme is measured by use of the Black-Scholes model. The inputs into 
the Black-Scholes model for options granted during the year are as follows: 
Grant date 
    
 
21 September 2010 
Share price at grant date 
    1.75p 
Exercise price 
    1.75p 
Number of employees 
    2 
Share options granted     1,000,000 
Vesting period (years) 
    3 
Expected volatility 
    211% 
Option life (years) 
    10 
Expected life (years) 
    3 
Risk free rate 
    5.75% 
Expected dividends expressed as a dividend yield     0% 
Fair value per option 
    1.75p 
  
Expected volatility was based upon the historical volatility of the Company’s share price.  The expected life is based 
upon historical data and has been adjusted based on management’s best estimates for the effects of non-
transferability, exercise restrictions and behaviour considerations. 
 
Details of the warrants issued during the year and outstanding at 30 June 2011 are as follows: 
 
  2011  2010 
   Weighted  Weighted 
  Number of average exercise Number of average exercise 
  warrants price in (p) warrants price in (p) 
 
Outstanding at beginning of year 9,137,717 2.0 9,137,717 2.0 
Granted during year - - - - 
Lapsed during year (9,137,717) 2.0 - - 
  __________ _____ __________ _____ 
 
Outstanding at the end of the year - - 9,137,717 2.0 
  __________ _____ __________ _____ 
 
 
10.   Related party transactions 
 
At 30 June 2011 £49,788 was owed by Hodgsons and D E M Mond (2010: owed to £47,377).The highest balance in 
the year was £55,188 and the lowest balance £39,457. 
 
 
 
 
 
 
 
 
 
 
 
 
 
  ClearDebt Group plc 
NOTES TO THE COMPANY FINANCIAL STATEMENTS 
 
55 
 
11. Equity reserves 
  
   Share Share Profit and 
  based compensation premium loss account 
   £ £ £ 
Company 
At 1 July 2010  101,912 279,948 (1,683,690) 
Share based compensation   101,400 - - 
Loss for the year  - - (701,807) 
   ________ ________ _________ 
 
At 30 June 2011  203,312 279,948 (2,385,497) 
   ________ ________ _________ 
 
 
12.   Contingent Liabilities  
 
In December 2009 certain insolvency assets of Relax were purchased from its Administrator and the insolvency 
related employees were taken on as part of the purchase. Claims have been received from four former employees of 
Relax Group plc who did not work in the insolvency businesses alleging that they should have transferred to 
Company as a result of the acquisition.  These claims are being vigorously defended and are listed for tribunal 
hearings over the coming months. We are confident of success given the legal advice received at the time of the 
acquisition. To date all legal costs have been borne by the Company’s employment insurers although there may be 
potential liabilities in respect of any awards that may ultimately be made against the Company.  
 
The directors are satisfied on the basis of information presently held that no provision is required at the present time.  ClearDebt Group plc 
SHAREHOLDER INFORMATION 
 
56 
 
 
Trading Record 
 
 
  IFRS IFRS IFRS IFRS 
  2011 2010 2009 2008 
  £ £ £ £ 
 
 
Revenue 7,776,362 6,633,995 3,386,935 1,869,190 
 
  
Profit/(loss) for the financial period 71,036 342,235 407,062 (697,264) 
 
 
Cash generated by/(used in) operations 1,045,707 1,466,180 380,807 (652,233)