Annual Report & Accounts 2006
              
55510_abf_debts_44pp perf.indd   1 31/1/07   08:40:38 Growing – Profitable – Strong 
Contents
Highlights 01
Chairman’s Statement 02
Chief Executive’s Statement 04
Board of Directors 10
Directors’ Report 12
Corporate Governance 15
Independent Auditor’s Report  17
Consolidated Income Statement 19
Consolidated Balance Sheet 20
Statement of Changes in Equity 21
Consolidated Cash Flow Statement 22
Notes to the Consolidated  
Financial Statements 23
Officers and Professional Advisers 40
Debts.co.uk plc is a leading provider of a 
range of solutions, including IVAs, debt 
management programmes, bankruptcy 
and secured loans or second mortgages, 
to over-indebted individuals
Growing – Profitable – Strong 
Debts.co.uk plc 
Carter Place 
Gisborne Close 
Staveley 
Chesterfield S43 3JT
0800 9 15 15 16
www.debts.co.uk
55510_abf_debts_44pp perf.indd   2 31/1/07   08:40:41 01
Strong maiden results:
Proforma Turnover up 79.3% to £6.1 million 
(2005: £3.4m)
Proforma Gross profit up 77.8% to £4.8 million 
(2005: £2.7m)
Proforma Reported pre-tax profit up 61.9% to 
£2.1m (2005: £1.3m) 
Admission to AIM on 24 May 2006 
Acquisition of Neville Eckley & Co broadens the  
Group’s range of services and geographical base and is 
expected to generate between 50 and 100 additional IVAs 
per month 
First phase of office relocation completed with new offices 
in Borehamwood  
The move to new 30,000 sq ft offices in Chesterfield due  
to commence with scope to process more IVAs per month 
in response to significant increasing demand for the 
Group’s services 
Commencement in October 2006 of new advertising 
campaign showing positive response rates 
Ongoing investment in infrastructure to maintain high 
quality advice already provided to indebted individuals 
Directors welcome future regulatory changes should  
these arise  
Significant opportunities to grow organically and through 
further acquisitions 
Future prospects extremely positive and outlook exciting 
in dynamic market place
•
»
»
»
•
•
•
•
•
•
•
•
•
Turnover (million)
03       04       05       06
Gross Profit (million)
03       04       05       06
Highlights
Revenues up
+79.3%
Profit before tax (million)
03       04       05       06
6.1
3.4
1.9
0.7
4.8
2.7
1.6
0.6
2.1
1.3
0.8
0.1
DB2118 - AR06 AW05.indd   1 31/1/07   08:42:15 02
The board believes future 
prospects for the business 
are extremely positive
Chairman’s Statement
Gross profi t up
+77.8%
Bernard Asher
Chairman
DB2118 - AR06 AW05.indd   2 31/1/07   08:42:18 03
I am pleased to present the 
inaugural set of Financial 
Statements for Debts.co.uk plc 
as an AIM listed company for the 
period ended 31 July 2006.
On its admission to the AIM 
market on 24 May 2006, the 
Board set out its objectives of 
investing in the future marketing 
to indebted individuals, building 
our infrastructure to provide 
a platform for the anticipated 
growth in the IVA and debt 
solutions market place and to 
ensure the current high quality of 
advice from our debt counsellors 
is maintained and developed 
ahead of any potential regulatory 
changes.  The Board also stated 
that where complimentary 
opportunities were identifi ed we 
would consider growth through 
acquisition.  
I am pleased to announce that 
the funds raised have enabled 
the Group to achieve a number of 
these objectives and additionally, 
we are well advanced in meeting 
all of these future goals in the 
near future.
Through the successful 
delivery of a range of services 
to fi nancially over committed 
individuals and the development 
of our team of debt counsellors 
who are specifi cally trained to 
provide impartial advice to our 
customers we have continued to 
see signifi cant growth of all our 
services.
Additionally, we continually 
look to improve our systems 
and controls where necessary 
to ensure that we meet all 
current and future regulatory 
requirements. Much of these 
developments are overseen 
by our team of insolvency 
practitioners who are themselves 
the subject of tight regulatory 
controls.
The Group will continue to work 
with other debt management 
companies to provide a collective 
response to calls for increased 
regulation and is part of the newly 
formed Debt Forum. The Board 
welcome these changes and 
believe the Group is well placed 
to be at the forefront of all future 
developments.
Through the acquisition of 
Neville Eckley & Co, the Group 
has extended its client base into 
new services including individual 
bankruptcies, company voluntary 
arrangements and corporate 
insolvencies. 
By continuing to focus on these 
objectives the Board believes the 
future prospects for the business 
to be extremely positive.
Bernard Asher
Chairman
23 January 2007
The board welcomes 
[sic] the call for 
regulatory changes and 
believe the Group is 
well paced to be at the 
forefront of all changes
I am pleased to 
present the inaugural 
set of Financial 
Statements
Growing – Profi table – Strong
03
Growing – Profi table – Strong
DB2118 - AR06 AW05.indd   3 31/1/07   08:42:24 04
Turnover growth and 
profi tability have grown 
by 79.3% and 61.9% 
respectively 
Chief Executive’s Statement 
Pre-tax profi t up
+61.9%
04
Paul Carter
Chief Executive
%
DB2118 - AR06 AW05.indd   4 31/1/07   08:42:26 05
Significant growth
We are pleased to report excellent 
results following a year of 
considerable activity leading 
up to and following our recent 
admission to AIM.  
We continue to deliver on all our 
key performance indicators and 
not just in relation to turnover 
growth and profitability which 
have grown by 79.3% and 61.9% 
respectively over the 12 months 
to 31 July 2006. Indeed our 
profitability for the current year 
exceeded our expectations at  
the time of the flotation by  
nearly 25%. 
We commenced our new 
advertising and marketing 
campaign on 16 October 2006 
following which we expect 
these already buoyant trading 
levels to continue to accelerate. 
Our initial assessment of the 
effectiveness of this campaign is 
extremely positive and we would 
expect this to increase over 
time as the campaign gathers 
momentum. The quality of leads 
being generated is expected 
to result in higher conversion 
rates than those previously 
experienced.
Additionally, with the total 
number of IVAs expected to 
exceed 40,000 in 2006 and with 
some reports suggesting that 
the total number of IVAs will 
continue to grow to over 100,000 
by 2010, the signs remain that the 
significant demand for the Group’s 
range of services will continue in 
the future.
Welcome regulatory change 
and best advice
The Board welcome the recent 
calls to increase the current levels 
of regulation in the IVA market 
and will ensure that best practice 
advice continues to be offered 
to our customers through our 
experienced debt counsellors 
at our Borehamwood offices, 
giving the Group the ability to 
continue to expand its business, 
with the benefit of the substantial 
increase in the Group’s marketing 
spend. Initial enquiries already 
indicate increased levels of 
trading. Additionally, through 
our experienced team of 
insolvency practitioners, who 
are themselves subject to tight 
regulation by various regulatory 
bodies including the Institute 
of Chartered Accountants of 
England and Wales (‘ICAEW’) 
and the Association of Chartered 
Our initial assessment 
of the effectiveness of 
our new marketing 
campaign is extremely 
positive
The Board welcome 
the recent calls to 
increase the levels of 
regulation in the IVA 
market
05
Proforma Group
2006 2005 Change %
Revenues £6.1m £3.4m 79.3
Gross margin £4.8m £2.7m 77.8
Profit before tax £2.1m £1.3m 61.9
DB2118 - AR06 AW05.indd   5 31/1/07   08:42:26 06
I am pleased to 
welcome Bernard Asher 
to the board as our non-
executive Chairman 
who brings with him 
a wealth of experience 
of the consumer 
orientated financial 
services industry
It is through the broad base 
of our service offering to the 
customer that we are able to 
provide impartial advice
Chief Executive’s Statement continued
Certified Accountants (‘ACCA’) we 
are already the subject of external 
scrutiny and examination.  
At the time of our AIM 
admission we highlighted that 
we offer a full range of services, 
including debt management, 
IVAs, and secured loans to our 
customers.  We are pleased to 
announce that these services 
have been complemented 
through the acquisition of 
Neville Eckley & Co which will 
enable us to offer a bankruptcy 
option for the first time as well 
as allowing us to enter the 
corporate market with company 
voluntary arrangements and 
corporate insolvencies. It is 
through the broad base of our 
service offering to the customer 
that we are able to provide 
impartial advice. 
An important measure of 
performance is the current 
average level of dividend we 
deliver on IVAs to the creditor 
which stands at approximately 
42p in the pound.  We would 
expect to maintain this level 
of dividend by leveraging our 
administration costs and through 
our cost effective marketing 
strategies developed over the last 
nine years.
Growth in resources
In the short time since coming 
to the market, we have further 
strengthened the board and 
senior management team. 
I am pleased to welcome 
Bernard Asher to the board as 
our non-executive Chairman 
who brings with him a wealth 
of experience of the consumer 
orientated financial services 
industry which will prove to be 
invaluable to us as we develop 
the business further. Bernard was 
an executive director of HSBC 
Holdings from 1986 to 1998 and 
chairman of HSBC Investment 
Bank. In 1998 Bernard became 
non-executive vice chairman 
of Legal & General Group plc, 
chairman of Lonrho Africa plc 
and is currently a non-executive 
director of Morgan Sindall plc, 
China Shoto plc and Investment 
Management Holdings plc 
(formerly Seymour Pierce Group 
plc). Bernard is also the chairman 
of Liontrust Asset Management 
Holdings plc, a UK based equity 
investment fund.
Additionally, I am delighted to 
welcome Neville Eckley and his 
team following the acquisition of 
his business earlier this month. 
The acquisition of 
Neville Eckley & Co, 
will enable us to offer 
a bankruptcy option 
for the first time
DB2118 - AR06 AW05.indd   6 31/1/07   08:42:27 07
Neville, who joins our Insolvency 
Management Committee, is a 
highly respected insolvency 
practitioner who brings with 
him over 30 years of experience 
of the insolvency industry. His 
input into the ongoing regulatory 
environment and best practices 
and procedures of the Group in 
the future will be a valued asset 
to the Group.  The acquisition of 
Neville Eckley & Co brings with 
it a staff of 18 highly experienced 
administrators and a client base 
of over 300 IVAs currently under 
supervision. With limited further 
recruitment we anticipate that 
Neville Eckley & Co will be able 
to process approximately 50, 
rising to 100 new IVAs a month 
by early 2007. 
The Board has also invested 
heavily in improving the 
overall infrastructure of the 
business, the first stage of 
which was completed earlier 
this month following the 
move into new purpose built 
offices in Borehamwood. 
the Group has also recently 
relocated its Chesterfield 
operations into a 30,000 sq 
ft purpose built office. This 
gives us the ability to continue 
to expand the businesses 
following the increase in the 
Group’s marketing spend 
which commenced with the 
new advertising campaign in 
October 2006. The new premises 
will give the Group capacity 
to employ up to 400 people 
who would enable the Group 
to process in excess of 500 
IVAs a month, together with 
substantially increasing its debt 
management, bankruptcy and 
secured loan businesses and 
provide capacity to enter into 
the mortgage market in 2007.
Acquisition of  
Neville Eckley & Co.
On 12 October 2006, we 
announced the acquisition of 
Neville Eckley & Co, chartered 
accountants and licensed 
insolvency practitioners. The 
business operates out of four 
offices in the South East with 
some 18 employees, including 
one Insolvency Practitioner, 
and offers a range of services 
to both individual and 
corporate clients including 
IVAs and Company Voluntary 
Arrangements.  In the year to  
31 December 2005, Neville 
Eckley & Co had sales of 
£769,000 and EBITDA of 
The Group relocated 
its Chesterfield 
operations into its 
30,000 sq ft purpose 
built offices
The Group has the 
capacity to employ up 
to 400 people who 
would enable the 
Group to process in 
excess of 500 IVAs a 
month
Neville Eckley will 
be able to process 
approximately 50, rising 
to 100, new IVAs a 
month by early 2007
DB2118 - AR06 AW05.indd   7 31/1/07   08:42:29 08
Chief Executive’s Statement continued
£122,000.  Based on the balance 
sheet as at 31 December 2005, 
the net assets acquired as 
part of the acquisition were 
£100,000.
We are delighted that Neville 
Eckley and his team have joined 
Debts.co.uk plc and in the short 
time they have been part of the 
Group the level of synergies and 
ability to leverage the resources 
of the combined Group have 
proved to be significant.
We firmly believe that selective 
acquisitions form an important 
part of the overall development 
of the Group and have identified 
a number of suitable candidates 
which we hope will become part 
of the Group.
Marketing strategies 
Historically, the initial approach 
from a prospective customer 
was normally through one of 
the Group’s websites or by 
telephone to our Borehamwood 
initial contact centre. A 
material part of the strategy 
for raising additional capital 
was to create awareness of 
the Group’s services and to 
generate potential customer 
leads through the investment in 
marketing on a broad range of 
media including TV advertising, 
radio, national and local press 
as well as online marketing 
strategies.
We have maintained our previous 
online advertising expenditure 
whilst we developed other 
advertising strategies, including 
a new TV advertising campaign 
which has been run in parallel 
with an extensive national press 
campaign. As I mentioned earlier, 
the response rates have been 
extremely encouraging in both 
the level and the quality of the 
leads generated.
In addition, we have invested 
in new phone systems and 
software to provide a more 
detailed and accurate analysis 
of responses to our advertising 
which will enable us to 
maximise the return on our 
investment in marketing over 
the coming weeks and months.
Other marketing strategies 
include the development of 
affiliation links with a select 
number of preferred partners. 
The Board believes this strategy 
will be extremely complementary 
to our off- and online advertising 
strategies.
We firmly believe that selective 
acquisitions form an important 
part of the overall development 
of the Group
A material part of the 
strategy for raising 
capital was to create 
awareness of the Group’s 
services and to generate 
potential customer leads 
through the investment 
in marketing on a 
broad range of media 
including TV advertising, 
radio, national and local 
press as well as online 
marketing strategies
DB2118 - AR06 AW05.indd   8 31/1/07   08:42:30 09
Current business overview
The Group has continued its 
progress and profitability since 
July 2006.
With the commencement of our 
current marketing campaign 
and the move to new offices 
together with the continued 
organic growth of the business 
in a dynamic and ever changing 
market place, we view the 
outlook for the Group to be 
extremely exciting and I look 
forward to the challenges over  
the next 12 months and the 
further development of the 
enlarged Group.
Paul Carter 
Chief Executive 
23 January 2007
With the commencement 
of our current marketing 
campaign and the move to 
new offices together with 
the continued organic 
growth of the business 
in a dynamic and ever 
changing market place, 
we view the outlook for 
the Group to be extremely 
exciting
I look forward to the 
challenges over the 
next 12 months and the 
further development of 
the enlarged Group
Growing – Profitable – Strong
DB2118 - AR06 AW05.indd   9 31/1/07   08:42:31 In the short time since coming 
to the market, we have further 
strengthened the board and 
senior management team
Board of Directors
Bernard Asher 
Non-Executive 
Chairman 
Paul Carter 
Chief Executive
Barry Krite  
Group Managing 
Director 
Stuart 
Cumberland ACA 
Finance Director
10
Growing – Profitable – Strong
Basic earnings per ordinary share up
+46%
DB2118 - AR06 AW05.indd   10 31/1/07   08:42:33 Bernard Asher
Bernard was an executive 
director of HSBC Holdings from 
1986 to 1998 and chairman 
of HSBC Investment Bank. In 
1998 Bernard became non-
executive vice chairman of 
Legal & General Group plc, 
chairman of Lonrho Africa plc 
and is currently a non-executive 
director of Morgan Sindall plc, 
China Shoto plc and Investment 
Management Holdings plc 
(formerly Seymour Pierce 
Group plc). Mr Asher is also 
the chairman of Liontrust Asset 
Management Holdings plc, a UK 
based equity investment fund. 
Paul Carter
Paul Carter has worked in the 
fi eld of insolvency for the whole 
of his career.
Until he set up Debtcare in 1998 
he was involved in corporate 
insolvency as a self employed 
consultant, and later consulted on 
personal insolvency.  In the eight 
years since Paul set up Debtcare 
he has dedicated his time and 
effort into building a group of 
companies that has led to the 
formation of Debts.co.uk.
 
Barry Krite 
Barry Krite has held several posts 
in management, marketing and IT.
As well as developing the 
marketing plan for Debt 
Counsellors, Barry also designed 
the automated database system 
that has helped the Group 
become more effi cient at data 
processing. He fi rst realised the 
opportunity for marketing IVAs 
on the internet in 1998 and was 
amongst the fi rst in the industry in 
using this form of marketing.
Together with Paul, Barry has 
been instrumental in forming 
and growing the several Group 
companies forming Debts.co.uk plc.
Stuart Cumberland ACA 
Stuart has extensive corporate 
fi nance and board level experience 
built up over 17 years with roles 
in Mazars and Ernst & Young 
and subsequently founded the 
corporate fi nance department at 
Morley and Scott. Stuart is also 
the co-founder and partner in 
Olivine Partners LLP, a specialist 
corporate fi nance and tax advisory 
practice based in London and is 
also fi nance director of Ekay plc, a 
leading direct response advertising 
and marketing agency.
11
DB2118 - AR06 AW05.indd   11 31/1/07   08:42:36 12
The directors present their report and the audited fi nancial statements of the 
Group for the period ending 31 July 2006.
The Company was incorporated on 29 December 2005 as Debts.co.uk Limited 
and commenced trading on 5 May 2006 following the completion of the share 
purchase agreement for the purchase of the subsidiary companies set out in 
note 9.  Hence these fi nancial statements are for a 3 month period only.
On 16 May 2006, the Company changed its name to Debts.co.uk plc and 
re-registered as a public company.
Principal Activities
The principal activity of the Group during the period was the provision of a range 
of solutions including IVA’s, debt management programmes and secured loans or 
second mortgages, to over-indebted individuals.  A more detailed review of the 
period and future developments are given in the Chief Executive’s statement.
Results and Dividends
The trading results for the period and the Group’s fi nancial position at the end of 
the period are shown in the attached fi nancial statements.
The Statements have been prepared under International Financial Reporting 
Standards (IFRS). 
Proforma results for the 2 years ended 31 July 2006 have been presented on 
page 19 as the entities have been under common management and control but 
did not form part of a group. For the purpose of providing a better understanding 
the fi nancial performance of the Group the historic information is presented on an 
aggregated basis as if the Group had existed for the entire period from 1 August 2003.  
Under this method the results of the relevant entities are aggregated with 
eliminations for inter company transactions.
Revenue for the Year ended 31 July 2006 was £6.1m and the profi t for the period 
before taxation was £2.1m.
The directors do not recommend the payment of a fi nal dividend in respect of the 
results for the period.
Directors
The following directors have held offi ce during the period: 
Bernard Asher Non-Executive Chairman (Appointed 7 July 2006)
Paul Carter Chief Executive Ofﬁ ce (Appointed 29 December 2005)
Barry Krite  Group Managing Director (Appointed 29 December 2005)
Stuart Cumberland ACA Finance Director (Appointed 5 May 2006)
Directors’ Report
period ended 31 July 2006
DB2118 – AR06 (Back) AW06.indd   12 31/1/07   08:51:49 13
Directors’ Interest in Shares
Directors’ interests in the share capital of the Group, including family and pension 
scheme interests were as follows:
Ordinary shares
£1 each 
31 July 2006
Bernard Asher –
Paul Carter 5,011,238
Barry Krite 4,725,101
Stuart Cumberland –
The were no interests of directors in share options as at 31 July 2006.
Substantial Shareholdings
On 31 July 2006, the Company was notified that the following were interested in 
3% or more of the issued share capital of the Company:
Ordinary shares 
£1 each
% of issued 
share capital
Paul Carter  5,011,238 25.77%
Barry Krite 4,725,101 24.30% 
David Krite 2,004,671 10.31%
Colin Sefton 2,004,671 10.31%
Eaglet Investment Trust PLC 605,000 3.11%
Subsequent Events
Details of subsequent events are set out in note 23.
Financial Risk Management
The Group’s exposure to financial risk is set out in note T in the accounting policies.
Policy on Payments to Suppliers
It is the policy of the Group in respect of all its suppliers, where reasonably 
practicable, to settle the terms of payment with those suppliers when agreeing 
the terms of each transaction, to ensure that those suppliers are made aware of 
the terms of payment, and to abide by these terms. Creditor days at the end of the 
period were 64 days.
Health Safety and the Environment
Debts.co.uk plc operates responsibly with regard to its shareholders, employees, 
other stakeholders, the environment and the wider community.  The Group and 
Company is committed to the wellbeing of all employees and ensures that their 
health, safety and general welfare is paramount at all times.  We also maintain 
open and fair relationships with all clients and suppliers while ensuring that all 
transactions are operated on an arms-length, commercial basis.
Political and Charitable Contributions
No political or charitable donations were made during the period.
Directors’ Report
period ended 31 July 2006 continued
DB2118 – AR06 (Back) AW06.indd   13 31/1/07   08:51:50 14
Statement of Directors Responsibilities
Company law requires the directors to prepare fi nancial statements for each 
fi nancial period, which give a true and fair view of the state of affairs of the Group 
and of the profi t or loss of the Group for that period.  In preparing those fi nancial 
statements the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to 
any material departures disclosed and explained in the fi nancial statements; and
prepare the fi nancial statements on the going concern basis unless it is 
inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping proper accounting records which 
disclose with reasonable accuracy at any time the fi nancial position of the Group 
and to enable them to ensure that the fi nancial statements comply with the 
requirements of the Companies Act 1985 and Article 4 of the IAS regulation.  They 
are also responsible for safeguarding the assets of the Group 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 fi nancial information included on the Company’s website.  Legislation in 
the United Kingdom governing the preparation and dissemination of fi nancial 
statements may differ from legislation in other jurisdictions.
So far as the directors are aware, there is no relevant audit information of which 
the Group’s auditors are unaware and we have taken all the steps that we ought 
to have taken as directors in order to make ourselves aware of any relevant 
audit information and to establish that the Group’s auditors are aware of that 
information.
Independent Auditor
On 1 May 2006, the practice of AGN Shipleys transferred its business to Shipleys 
LLP, a limited liability partnership incorporated under the Limited Liability 
Partnership Act 2000.  The company’s consent has been given to treating the 
appointment of AGN Shipleys as extending to Shipleys LLP with effect from 1 May 
2006 under the provisions of section 26(5) Companies Act 1989.  Shipleys LLP has 
indicated its willingness to remain in offi ce and a resolution to reappoint them as 
auditors will be proposed at the Annual General Meeting.
Signed by order of the Board
Stuart Cumberland
Company Secretary
23 January 2007
a.
b.
c.
d.
Directors’ Report
period ended 31 July 2006 continued
DB2118 – AR06 (Back) AW06.indd   14 31/1/07   08:51:50 15
The requirements of the combined code of principles of corporate governance set 
out in the listing rules of the Financial Services Authority are not mandatory for 
companies traded on AIM. However, the directors are committed to complying 
with best practice in this area, and have adopted its principles where they have 
been considered appropriate.
Shareholder Communication
The Group seeks to ensure that all shareholders are kept informed about the 
Group and its activities. A comprehensive annual report and accounts is sent to 
shareholders and an interim report is published.
The Annual General Meeting is a forum for shareholders’ participation with the 
opportunity to meet and question Board members including the non-executive 
members and the Chairmen of the Board committees.
Additionally, the Group operates an investors section on its website to provide 
further details of the Groups activities.
Board of Directors and Board Committees
The Board of Directors, which consists of three executive and one non-executive 
Directors, is responsible for the Group’s system of corporate governance. The 
role of the non-executive Director is to bring independent judgement to Board 
discussions and decisions.
The Board meets regularly throughout the period. It has a schedule of matters referred 
to it for decision, which includes Group strategy and future developments, allocation 
of financial resources, investments, annual and interim results, and risk management.
The Group has three Board committees, which operate within defined terms of 
reference.
Audit Committee
The Audit Committee, comprising Bernard Asher (Chairman) is responsible 
for reviewing the full and half period results. In addition, the Audit Committee 
monitors the framework of internal control.
Remuneration Committee
The Remuneration Committee, comprising Bernard Asher (Chairman) reviews the 
remuneration of the Executive Directors and any senior executive of the Group 
and considers the grant of options and payment of performance related bonuses.
Nomination Committee
The Nomination Committee, comprising Bernard Asher (Chairman) reviews the 
nomination of the Executive Directors and any new senior executive of the Group.
Internal Control
The Directors are responsible for ensuring that the group maintains a system 
of internal control to provide them with reasonable assurance regarding the 
reliability of financial information used within the business and for publication 
and that assets are safeguarded. There are inherent limitations in any system 
of internal financial control. On the basis that such a system can only provide 
reasonable but not absolute assurance against material misstatement or loss and 
Corporate Governance
for the period ended 31 July 2006
DB2118 – AR06 (Back) AW06.indd   15 31/1/07   08:51:50 16
that it relates only to the needs of the business at the time, the system as a whole 
was found by the Directors at the time of approving the accounts to be generally 
appropriate to the size of the business.
Going Concern
After reviewing budgets and forecasts, the directors have a reasonable 
expectation that the Group and Company has adequate resources to continue as 
an operational business for the foreseeable future.  The fi nancial statements have 
therefore been prepared on a going concern basis.
Employment Policy
The Board places considerable value on the involvement of its employees and 
has effective arrangements for communicating the Group’s results and signifi cant 
business issues to them.
The directors recognise that continued and sustained improvement of the Group 
depends on its ability to attract, motivate and retain employees of the highest 
calibre.  Furthermore the directors believe that the Group’s ability to sustain the 
competitive advantage in the long term depends on ensuring that all employees 
contribute to the maximum of their potential.  The Group is committed to 
improving the performance of all its employees through appropriate development 
and training.
Share ownership is at the heart of the Group’s remuneration philosophy 
and the directors believe that the key to the Group’s future success lies in a 
motivated workforce holding a stake in the Group.  For this reason the Board has 
implemented an Enterprise Management Incentive share option scheme which is 
available to all Group employees subject to meeting certain qualifying rules.
The Group is an equal opportunity employer.  Entry into and progression within 
the Group is solely determined on the basis of work criteria and individual merit.
The Group gives full and fair consideration to applications for employment made 
by disabled persons, having regard to their respective aptitudes and abilities.  The 
policy includes, where practicable, the continued employment of those who may 
become disabled during their employment and the provision of training and career 
development and promotion, where appropriate.
Corporate Responsibility
Debts.co.uk plc operates responsibly with regard to its shareholders, employees, 
other stakeholders, the environment and the wider community.  The Group is 
committed to the wellbeing of all employees and ensures that their health, safety 
and general welfare is paramount at all times.  We also maintain open and fair 
relationships with all clients and suppliers while ensuring that all transactions are 
operated on an arms-length, commercial basis.  As part of this culture, the Group 
ensures that all suppliers are paid in a timely fashion, unless there are sound 
commercial reasons why payment should not be made.
Corporate Governance
for the period ended 31 July 2006 continued
DB2118 – AR06 (Back) AW06.indd   16 31/1/07   08:51:51 17
We have audited the Group and parent Company financial statements (the 
“financial statement”) of Debts.co.uk plc for the period ended 31 July 2006, which 
comprise the Consolidated Income Statement, the Statement of Changes in Equity, 
the Balance Sheets, the Consolidated Cash Flow Statements, and the related 
notes.  The financial statements have been prepared under the accounting policies 
set out therein.
This report is made solely to the Company’s members, as a body, in accordance 
with Section 235 of the Companies Act 1985.  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 auditors’ 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
The directors’ responsibilities for preparing the Annual Report and the financial 
statements in accordance with applicable law and International Financial 
Reporting Standards (IFRSs) as adopted for use in the European Union are set out 
in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant 
legal and regulatory requirements and International Standards on Auditing (UK 
and Ireland). 
We report to you our opinion as to whether the financial statements give a true 
and fair view and are properly prepared in accordance with the Companies Act 
1985 and whether, in addition, the Group financial statements have been properly 
prepared in accordance with Article 4 of the IAS regulation.  
We also report to you whether, in our opinion, the information given in the 
Directors’ Report is consistent with the financial statements.  The information 
given in the Directors’ Report includes that specific information presented in the 
Chief Executive Officer’s Statement that is cross referred from the Business Review 
section of the Directors’ Report.
In addition we report to you if, in our opinion, the company has not kept proper 
accounting records, if we have not received all the information and explanations 
we require for our audit, or if information specified by law regarding directors’ 
remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report, and consider whether 
it is consistent with the audited financial statements.  The other information 
comprises only the Chairman’s Statement, Chief Executive Officer’s Statement, 
Directors’ Report and the Corporate Governance Statement. We consider the 
implications for our report if we become aware of any apparent misstatements or 
material inconsistencies with the financial statements.  Our responsibilities do not 
extend to any other information.
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on Auditing 
(UK and Ireland) issued by the Auditing Practices Board.  An audit includes 
examination, on a test basis, of evidence relevant to the amounts and disclosures 
in the financial statements.  It also includes an assessment of the significant 
estimates and judgements made by the directors in the preparation of the financial 
Independent Auditor’s Report
to the members of Debts.co.uk plc
DB2118 – AR06 (Back) AW06.indd   17 31/1/07   08:51:51 18
statements, and of whether the accounting policies are appropriate to the Group’s, 
and Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and 
explanations which we considered necessary in order to provide us with suffi cient 
evidence to give reasonable assurance that the fi nancial statements are free from 
material misstatement, whether caused by fraud or other irregularity or error.  In 
forming our opinion we also evaluated the overall adequacy of the presentation of 
information in the fi nancial statements.
Opinion
In our opinion:
the Group fi nancial statements give a true and fair view, in accordance with 
IFRSs as adopted by the European Union, of the state of the Group’s affairs as 
at 31 July 2006 and of its profi t for the period then ended;
the parent company fi nancial statements give a true and fair view, in 
accordance with IFRSs as adopted by the European Union as applied in 
accordance with the provisions of the companies Act 1985, of the state of the 
parent company’s affairs as at 31 July 2006;
the fi nancial statements have been properly prepared in accordance with the 
Companies Act 1985 and, as regards the Group fi nancial statements, Article 4 
of the IAS Regulation; and
the information contained in the Directors’ Report is consistent with the 
fi nancial statements.
Shipleys LLP 10 Orange Street
Chartered Accountants Haymarket
Registered Auditors London WC2H 7DQ
23 January 2007
•
•
•
•
Independent Auditors Report
to the members of Debts.co.uk plc continued
DB2118 – AR06 (Back) AW06.indd   18 31/1/07   08:51:51 19
Consolidated Income Statement
for the period ended 31 July 2006
Note
   Audited Group Unaudited Pro forma Group
Year ended
31 July 2006
£,000 
Year ended
31 July 2005
£,000
Period ended
31 July 2006
£,000
Revenue 1 1,593 6,105 3,404
Direct Costs (314) (1,346) (693)
Gross profit 1,279 4,759 2,711
Operating costs 2 (737) (2,673) (1,409)
Operating profits 542 2,086 1,302
Net finance income/(cost) 5 21 17 (3)
Profit before taxation 563 2,103 1,299
Income tax expense 6 (165) (640) (316)
Profit for the year attributable to 
equity holders of the parent 398 1,463 983
Earnings per share
Basic earnings per ordinary share 14 2.35p 8.63p 5.90p
Diluted earnings per ordinary share 14 2.34p 8.59p 5.90p
There were no other gains and losses other than those recognised in the income 
statement.  All activities relate to continuing operations.
On 5 May 2006, the Group carried out a corporate restructuring including the 
introduction of a new holding company. The Income Statement has been prepared 
using merger accounting and is presented on a pro forma basis as if the new holding 
company has been in existence throughout both the current and prior periods.  
Additionally, a consolidated Income Statement from the date of incorporation of 
the new Group is also given above.
The pages 19 to 39 form part of the Annual Report.
DB2118 – AR06 (Back) AW06.indd   19 31/1/07   08:51:51 20
Group Company
Note
As at 
31 July 2006
£,000
As at
 31 July 2006
£,000
Assets
Non-current assets
Property, plant and equipment 7 110 –
Investments 8 – 1,513
110 1,513
Current assets
Trade and other receivables 10 3,195 1,205
Cash and short term deposits 11 3,988 3,547
7,183 4,752
Total assets 7,293 6,265
Equity and liabilities
Equity attributable to equity holders of 
the parent
Share capital 13 1,944 1,944
Share premium 16 4,033 4,033
Merger reserve 17 (1,513) -
Retained earnings 18 814 2
5,278 5,979
Current liabilities
Trade and other payables 19 884 286
Corporate income tax payable 959 –
1,843 286
Liabilities due after one year 20 172 –
Total liabilities 2,015 286
Total equity and liabilities 7,293 6,265
The fi nancial statements on pages 19 to 39 were approved by the Board of 
directors and authorised for issue on 23 January 2007 and are signed on its 
behalf by 
Paul Carter Barry Krite
Director Director
The pages 19 to 39 form part of the Annual Report.
Consolidated Balance Sheet
as at 31 July 2006
DB2118 – AR06 (Back) AW06.indd   20 31/1/07   08:51:52 21
Group 
Share 
Capital
£,000
Share 
Premium
£,000
Merger 
Reserve
£,000
Retained 
Earnings
£,000
Total
£,000
Changes in equity for the period  
to 31 July 2006
Profit for the year – – – 398 398
Total recognised income and 
expense for the year – – – 398 398
Reorganisation 1,513 – (1,513) 570 570
Bonus issue on 16 May 2006 154 – – (154) –
Issue of share capital on 24 May 2006 277 4,723 – – 5,000
Issue costs – (690) – – (690)
Balance as at 31 July 2006 1,944 4,033 (1,513) 814 5,278
Company 
Share 
Capital
£,000
Share 
Premium
£,000
Merger 
Reserve
£,000
Retained 
Earnings
£,000
Total
£,000
Changes in equity for the period  
to 31 July 2006
Profit for the year – – – 156 156
Total recognised income and 
expense for the year – – – 156 156
Reorganisation 1,513 – – – 1,513
Bonus issue on 16 May 2006 154 – – (154) –
Issue of share capital on 24 May 2006 277 4,723 – – 5,000
Issue costs – (690) – – (690)
Balance as at 31 July 2006 1,944 4,033 – 2 5,979
The pages 19 to 39 form part of the Annual Report.
Statement of Changes in Equity
for the period ended 31 July 2006
DB2118 – AR06 (Back) AW06.indd   21 31/1/07   08:51:52 22
Group Company
Period ended
 31 July 2006
£,000
Period ended
 31 July 2006
£,000
Cash ﬂ ows from operating activities
Profi t from operations 542 129
Depreciation of property, plant and equipment 7 –
Operating cash ﬂ ows before movement in 
working capital 549 129
Increase in receivables (936) (1,205)
Increase in payables (99) 286
Cash generated from operations (486) (790)
Income taxes paid (220) –
Net cash from operating activities (706) (790)
Cash ﬂ ows from investing activities
Net interest received 21 27
Net cash from investment activities 21 27
Cash ﬂ ows from fi nancing activities
Net increase in borrowings 246 –
Proceeds on issues of shares 5,000 5,000
Cost of share issue (690) (690)
Cost of reorganisation (94) –
Net cash from fi nancing activities 4,462 4,310
Net increase in cash and cash equivalents 3,777 3,547
Cash and cash equivalents introduced at
date of merger 211 –
Cash and cash equivalents at 31 July 2006 3,988 3,547
The pages 19 to 39 form part of the Annual Report.
Consolidated Cash Flow Statement
for the period ended 31 July 2006 
DB2118 – AR06 (Back) AW06.indd   22 31/1/07   08:51:53 23
A) Significant Accounting Policies 
Debts.co.uk PLC (the Company) is a company domiciled in the United 
Kingdom. The consolidated financial statements of the Company for the period 
ended 31 July 2006 comprise the Company and its subsidiaries (together 
referred to as the Group).
B) Statement of Compliance
The consolidated financial statements of Debts.co.uk plc have been prepared 
in accordance with International Financial Reporting Standards incorporating 
International Accounting Standards as issued by the International Accounting 
Standards Board (IFRS) and with those parts of the Companies Act, 1985 
applicable to companies reporting under IFRS. The disclosure required by 
IFRS1 (First Time Adoption of International Financial Reporting) concerning 
the transition from applicable accounting standards in the United Kingdom 
(UK GAAP) to IFRS are shown where relevant.
C) Basis of Preparation
The financial reports have been prepared under the historical cost convention.
Non-current assets are stated at the lower of carrying amount and fair value 
less costs to sell.
The preparation of financial statements in conformity with generally accepted 
accounting principles requires the use of estimates and assumptions that 
affect the reported amounts of assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period.  Although these estimates are based on management’s best 
knowledge of the amount, event or actions, actual results ultimately may differ 
from those 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 a period of the 
revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRSs that have a 
significant effect on the financial statements and estimates with a significant 
risk of material adjustment in the next period are discussed where appropriate.
The accounting policies set out below have been applied consistently to all 
periods presented in these consolidated financial statements.
The accounting policies have been applied consistently by Group entities.
D) Basis of Consolidation
i. Reorganisation
On 5 May 2006, the Group carried out a corporate restructuring including 
the introduction of a new holding company which acquired the entire share 
capital of the subsidiary undertakings through the allotment of 1,512,931 
ordinary shares of the Company pursuant to a share purchase agreement 
dated 3 March 2006.
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006
DB2118 – AR06 (Back) AW06.indd   23 31/1/07   08:51:53 Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
24
The above transaction has been accounted for as a Group reconstruction 
under merger accounting principles.  The results and cash fl ows of the 
relevant entities are combined from the beginning of the period in which the 
merger occurred and their assets and liabilities combined at the amounts at 
which they were previously recorded.
In accordance with merger accounting principles, the comparative income 
statements are presented as if the companies in the Debts.co.uk plc Group 
had been owned and controlled by the Company throughout the periods 
ended 31 July 2005 and 2006.  
Additionally, a consolidated income statement from the date of incorporation 
of the new holding company is also given above.
ii. Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when a 
Company has the power, directly or indirectly, to govern the fi nancial and 
operational policies of an entity so as to obtain benefi ts from its activities. 
In assessing control, potential voting rights that presently are exercisable or 
convertible are taken into account. The fi nancial statements of subsidiaries are 
included in the consolidated fi nancial statements from the date that control 
commences until the date that control ceases.
iii. Transactions Eliminated on Consolidation
Intragroup balances and any unrealised gains and losses or income and 
expenses arising from intragroup transactions, are eliminated in preparing 
the consolidated fi nancial statements. Unrealised losses are eliminated in the 
same way as unrealised gains, but only to the extent that there is no evidence 
of impairment.
E) Profi t for the Financial Period
The Parent Company has taken advantage of section 230 of the Companies 
Act 1985 and has not included its own income statement in these fi nancial 
statements.  The Group profi t for the period includes a profi t of £2,000 which is 
dealt with in the fi nancial statements of the Company.  This result is stated after 
charging auditors remuneration of £3,000 relating to audit services.
F) Foreign Currencies
Transactions in foreign currencies are initially recorded at the rates of 
exchange prevailing on the dates of the transactions.  Monetary assets 
and liabilities denominated in such currencies are retranslated at the rates 
prevailing on the balance sheet date.  Profi ts and losses arising on exchange 
are included in the income statement for the period.
DB2118 – AR06 (Back) AW06.indd   24 31/1/07   08:51:53 25
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
G) Property, Plant and Equipment
i. Owned Assets
Items of property, plant and equipment are stated at cost as deemed cost less 
accumulated depreciation (see below) and impairment losses (see accounting 
policy K). 
ii. Leased Assets
Leases in terms of which the Group assumes substantially all the risks and 
rewards of ownership are classified as finance leases.
iii. Depreciation
Depreciation is charged to the income statement over the estimated useful 
lives of each part of an item of property, plant and equipment. The estimated 
useful lives are as follows:
Fixtures and fittings 25% on a reducing balance basis 
Motor vehicles 25% on a reducing balance basis 
Computer equipment  33% on a straight line basis
The residual value, if not significant, is reassessed annually.
H) Investments
i. Investments in Debt and Equity Securities
The Group classifies its investments depending on the purpose for which the 
investments were acquired.  The Directors determine the classification of its 
investment at initial recognition and re-evaluates this designation at every 
reporting date.
The fair value of unquoted investments is based on valuation techniques.  The 
Group assess at each balance sheet date whether there is objective evidence 
that a financial asset or a group of financial assets is impaired.
I) Trade and Other Receivables
Trade and other receivables are started at their cost less impairment losses 
(see accounting policy K).
J) Cash and Cash Equivalents
Cash and cash equivalents comprises cash balances and call deposits. Bank 
overdrafts that are repayable on demand and form an integral part of the 
Group’s cash management are included as a component of cash and cash 
equivalents for the purpose of the statement of cash flows.
DB2118 – AR06 (Back) AW06.indd   25 31/1/07   08:51:54 Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
26
K) Impairment
The carrying amounts of the Group’s assets, other than deferred tax assets (see 
accounting policy R), are reviewed at each balance sheet date to determine 
whether there is any indication of impairment. If any such indication exists, 
the asset’s recoverable amount is estimated.
For goodwill, assets have an indefi nite useful life and intangible assets that are 
not yet available for use, the recoverable amount is estimated at each balance 
sheet date.
An impairment loss is recognised whenever the carrying amount of an asset 
or its cash-generating unit exceeds its recoverable amount. Impairment losses 
are recognised in the income statement.
Impairment losses recognised in respect of cash-generating units are 
allocated fi rst to reduce the carrying amount of any goodwill allocated to 
cash-generating units are allocated fi rst to reduce the carrying amount of 
any goodwill allocated to cash-generating units (group of units) and then, to 
reduce the carrying amount of other assets in the unit (group of units) on a pro 
rata basis.
The recoverable amount of the Group’s receivables carried at amortised cost is 
calculated as the present value of the estimated future cash fl ows, discounted 
at the original effective interest rate.  Receivables with a short duration are not 
discounted.
The recoverable amount of other assets is the greater of their net selling price 
and the value in use. In assessing value in use, the estimated future cash fl ows 
are discounted to their present value using a pre-tax discount rate that refl ects 
current market assessments of the time value of money and the risks specifi c 
to the asset. For an asset that does not generate largely independent cash 
infl ows, the recoverable amount is determined for the cash-generating unit to 
which the asset belongs.
An impairment loss in respect of a receivable carried at amortised cost is 
reversed if the subsequent increase in recoverable amount can be related 
objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed.
In respect of other assets, an impairment loss is reversed if there has been a 
change in the estimates used to determine the recoverable amount.
An impairment loss is only reversed to the extent that the asset’s carrying 
amount does not exceed the carrying amount that would have been 
determined, net of depreciation or amortisation, if no impairment loss as 
been recognised.
L) Share Capital
Dividends on ordinary share capital are recognised as a liability in the period 
in which they are declared.
DB2118 – AR06 (Back) AW06.indd   26 31/1/07   08:51:54 27
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
M) Interest-bearing Borrowings
Interest-bearing borrowings are recognised initially at fair value, net of 
transaction costs incurred.  Borrowings are subsequently stated at amortised 
cost; any difference between proceeds (net of transaction costs) and the 
redemption value is recognised in the income statement over the period of  
the borrowings using the effective interest rate method.
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 balance sheet date.
N) Employee Benefits 
i. Defined Contribution Plans
Obligations for contributions to defined contribution pension plans are 
recognised as an expense in the income statement as incurred.
ii. Share-based Payment Transactions
The fair value of employee share option schemes is measured by a Black-
Scholes pricing model. Further details are set out in note 15. In accordance 
with IFRS 2 ‘Share-based Payments’ the resulting cost is charged to the 
income statement over the vesting period of the options. The value of the 
charge is adjusted to reflect expected and actual levels of options vesting.
O) Provisions
A provision is recognised in the balance sheet when the Group has a present 
legal or constructive obligation as a result of a past event, and it is probable 
that an outflow of economic benefits will be required to settle the obligation.  
If the effect is material, provisions are determined by discounting the expected 
future cash flows at a pre-tax rate that reflects current market assessments  
of the time value of money and, where appropriate, the risks specific to  
the liability.
P) Trade and Other Payables
Trade payables are stated at cost.
Q) Revenue Recognition
Revenue from services rendered is recognised in the income statement in 
proportion to the stage of completion of the transaction at the balance sheet 
date. The stage of completion is assessed by reference to a review of work 
performed. No revenue is recognised if there are significant uncertainties 
concerning the recovery of the consideration due or associated costs.
Revenue is largely derived from nominee and supervisory fees which 
result from individual voluntary arrangements (IVA). These fees are 
recognised as follows:
Nominee fees: on issue of a finalised IVA proposal to the debtor, which is 
subject to provision for an estimate of those cases that may not be approved 
by the meeting of creditors.
Supervisory fees: on a monthly basis, commencing one month after the IVA 
has been agreed at the creditors’ meeting. 
DB2118 – AR06 (Back) AW06.indd   27 31/1/07   08:51:54 Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
28
R) Expenses
i. Operating Lease Payments
Payments made under operating leases are recognised in the income 
statement on a straight-line basis over the term of the lease. Lease incentives 
received are recognised in the income statement as an integral part of the 
total lease expense.
ii. Finance Lease Payments
Minimum lease payments are apportioned between the fi nance charge and 
the reduction of the outstanding liability. The fi nance charge is allocated to 
each period during the lease term so as to produce a constant periodic rate of 
interest on the remaining balance of the liability.
iii. Net Financing Costs
Net fi nancing costs comprise interest payable on borrowings calculated using 
the effective interest rate method and interest received on funds invested.
Interest income is recognised in the income statement as it accrues, using he 
effective interest method. The interest expense component of fi nance lease 
payments is recognised in the income statement using the effective interest 
rate method.
S) Income Tax
The charge for current tax is based on the results for the period as adjusted for 
items which are non-assessable or disallowed.  It is calculated using rates that 
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the liability method in respect of temporary 
differences arising from differences between the carrying amount of assets 
and liabilities in the fi nancial statements and the corresponding tax basis used 
in the computation of taxable profi t.  In principle, deferred tax liabilities are 
recognised for all taxable temporary differences and deferred tax assets are 
recognised to the extent that it is probable that taxable profi ts will be available 
against which deductible temporary differences can be utilised.  Such assets 
and liabilities are not recognised if the temporary difference arises from 
goodwill (or negative 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 profi t nor the accounting profi t.
Deferred tax liabilities are recognised for taxable temporary differences arising 
on investments in subsidiaries and associates, and interest in joint ventures, 
except where the Group is able to control the reversal of the temporary 
difference and it is probable that the temporary difference will not reverse in 
the foreseeable future.
Deferred tax is calculated at the rates that are expected to apply when the 
asset or liability is settled.  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.
Deferred tax assets and liabilities are offset when they relate to income taxes 
levied by the same taxation authority and the Group intends to settle its 
current tax assets and liabilities on a net basis.
DB2118 – AR06 (Back) AW06.indd   28 31/1/07   08:51:54 29
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
T) Financial Risk Management
The Group uses a limited number of financial instruments, comprising cash, 
short-term deposits, bank loans and overdrafts and various items such as 
trade receivables and payables, which arise directly from operations. The 
Group does not trade in financial instruments. 
Financial Risk Factors 
The Group’s activities expose it to a variety of financial risks: market risk 
(including currency risk and interest rate risk), credit risk, liquidity risk and 
cash flow interest rate risk. The Group’s overall risk management programme 
focuses on the unpredictability of financial markets and seeks to minimise 
potential adverse effects on the Group’s financial performance. 
a) Market Risk 
(i) Foreign exchange risk 
The Group operates internationally and is exposed to foreign exchange risk 
arising from various currency exposures, primarily with respect to the UK 
pound and US dollar. Foreign exchange risk arises from future commercial 
transactions, recognised assets and liabilities and net investments in foreign 
operations. Foreign exchange risk arises when future commercial transactions 
or recognised assets or liabilities are denominated in a currency that is not the 
Group’s functional currency.
b) Credit Risk 
The Group has no significant concentrations of credit risk and has policies  
in place to ensure that sales are made to customers with an appropriate  
credit history.
c) Liquidity Risk 
Prudent liquidity risk management implies maintaining sufficient cash and 
available funding through an adequate amount of committed credit facilities. 
The Group ensures it has adequate cover through the availability of bank 
overdraft and loan facilities. 
d) Cash Flow and Interest Rate Risk 
The Group finances its operations through a mix of cash flow from current 
operations together with cash on deposit and bank and other borrowings.  
Borrowings are generally at floating rates of interest and no use of interest rate 
swaps has been made.
1. Segmental Reporting
Revenue and profit before tax are attributable to the one principal activity of 
the Group, that of the provision of specific advice and solutions to individuals 
who are facing difficulties. The Groups principal services are IVA’s, debt 
management programmes and arranging secured loans or second charge 
mortgages. All revenue originated in the UK.
DB2118 – AR06 (Back) AW06.indd   29 31/1/07   08:51:55 Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
30
2. Operating Costs
Note
Group 
Period ended 
31 July 2006
£,000
Total staff costs 3 593
Establishment costs 35
Other operating costs (net) 109
Total operating costs 737
Operating costs include:
Depreciation of property, plant and equipment 7 7
Operating lease rentals:
Property 32
Plant and equipment 5
Auditors remuneration:
Services as auditors 30
Other assurance services 130
Audit fees paid to Shipleys LLP include £10,000 in respect of the parent 
company. In the period fees paid to Shipley LLP in respect of reporting 
accountants on the admission to the AIM market, in other assurance services 
above, of £130,000 were included in net share proceeds and deducted from 
share premium and reserves.
3.  Personnel Expenses
Group 
Period ended 
31 July
2006
£,000
Wages and salaries 541
Compulsory social security costs 52
593
Compensation for key personnel is disclosed in note 23.
DB2118 – AR06 (Back) AW06.indd   30 31/1/07   08:51:55 31
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
4. Our People
Our staff numbers averaged 103 in the period, as follows:
Period ended 
31 July
2006
£,000
Directors 4
Senior managers 4
Licensed insolvency practitioners 5
Debt councellors 19
Administration and supervisors 71
103
5. Net Financing Income
Period ended 
31 July
2006
£,000
Interest income 27
Interest cost (6)
Net financing income 21
6. Income Tax Expenses 
Period ended 
31 July
2006
£,000
Current income tax
Current period 165
Taxation attributable to the Company and  
its subsidiaries 165
Domestic income tax is calculated at 30% (2005: 30%) of the estimated 
assessable profit for the period.
The charge for the period can be reconciled to the profit per the income 
statement as follows.
Group
Period ended 
31 July
2006
£,000 %
Profit before tax 563 100
Tax on the domestic income tax rate 169 30
Tax effect of expenses that are not deductible in determining 
taxable profit 3 0.5
Tax effect of capital allowances for the period in excess of 
depreciation (7) (1.2)
Tax expense and effective tax rate for the period 165 29.3
DB2118 – AR06 (Back) AW06.indd   31 31/1/07   08:51:55 Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
32
7. Property, Plant and Equipment
Group
Fixtures and 
Fittings
£,000
Motor Vehicles
£,000
Total
£,000
Cost or valuation
Acquisition on merger 195 83 278
At 31 July 2006 195 83 278
Accumulated depreciation
Acquisition on merger 111 50 161
Depreciation charge for 
the period 5 2 7
At 31 July 2006 116 52 168
Carrying amount
At 31 July 2006 79 31 110
8. Investments
Company
Period ended 
31 July 2006
£,000
Shares in subsidiary undertakings 
Additions on merger 1,513
At 31 July 2006 1,513
The directors consider that the carrying amount of investments approximates 
their fair value.
9. Subsidiaries
Details of the Company’s subsidiaries at 31 July 2006 are as follows. 
Name of Subsidiary
Principal 
Activity
Proportion of 
benefi cial ownership 
interest and voting 
power held
The Loan Group Limited Non-trading 100%
The Debt Counsellors Limited Financial services 100%
Debtcare Limited Financial services 100%
Synergi Partners Limited Financial intermediation 100%
Switch Mortgages Limited* Non-trading 100%
Scarlet Money Limited* Financial intermediation 100%
Scarlet Loans and Mortgages 
Limited** Non-trading 100%
Debtcare Direct Limited Non-trading 100%
Debtcare Financial Services 
Limited Non-trading 100%
All the companies are incorporated in Great Britain and registered in England and Wales.
*   100% subsidiary of The Loan Group Limited
** 100% subsidiary of Switch Mortgages Limited
DB2118 – AR06 (Back) AW06.indd   32 31/1/07   08:51:56 33
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
10. Other Financial Assets
Group
Period ended 
31 July 2006
£,000
Company
Period ended 
31 July 2006
£,000
Trade receivables 171 –
Other receivables:
Amount due from Group undertakings – 810
Other debtors 908 395
Prepayments and accrued income 2,116 –
3,195 1,205
The directors consider that the carrying amount of trade and other receivables 
approximates their fair value.  All trade and other receivables are due within 
one period.
11. Cash and Cash Equivalents 
Cash and cash equivalents comprise cash and short-term deposits held by the 
Group treasury function.  The carrying amount of these assets approximates 
their fair value.
12. Other Financial Assets
Credit Risk
The Group’s credit risk is primarily attributable to its trade receivables.  The 
amounts presented in the balance sheet are net of any allowances for doubtful 
receivables, estimated by the Group’s management base on prior experience 
and the current economic environment.
The credit risk on liquid funds is limited because the counterparties are banks 
with high credit ratings assigned by international credit-rating agencies.
DB2118 – AR06 (Back) AW06.indd   33 31/1/07   08:51:56 Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
34
13. Share Capital
Company
31 July
2006
£,000
Authorised:
Ordinary shares of £0.10 each 5,000
Issued and fully paid:
Ordinary shares of £0.10 each 1,944
On incorporation the Company’s authorised share capital was £1,000 divided 
into 1,000 Ordinary Shares of £1 each.
There have been the following changes in the share capital of the Company in 
the period since incorporation:
On 29 December 2005, 2 ordinary shares of £1 each were issued for cash at 
par as the original subscriber shares.
On 6 March 2006, the authorised share capital of the Company was increased 
from £1,000 to £1,512,933 by the creation of an additional 1,511,933 ordinary 
shares of £1 each.
On 5 May 2006, the Company allotted 545,902 Ordinary Shares to Paul Carter, 
514,708 Ordinary Shares to Barry Krite, 218,362 Ordinary Shares to David 
Krite, 218,362 Ordinary Shares to Colin Sefton and 15,597 Ordinary Shares to 
Tara Krite pursuant to a share purchase agreement dated 3 March 2006.
On 16 May 2006, each of the existing ordinary shares of £1 each in the capital 
of the Company was subdivided into 10 ordinary shares of £0.10 each having 
the rights set out in the Articles.
On 16 May 2006, the Company’s authorised share capital was increased to 
£5,000,000.
On 16 May 2006, the Company allotted an additional 1,537,336 Ordinary 
Shares in aggregate to the shareholders of the Company as at the date by way 
of a bonus issue. 
On 24 May 2006, the Company issued 2,777,778 new Ordinary Shares at a 
placing price of 180p per Ordinary Share.
On 24 May 2006, the Company’s shares commenced trading on AIM.
At 31 July 2006, 258,329 options over ordinary shares under the Debts.co.uk 
Enterprise Management Incentive (EMI) Plan were outstanding.
Date of 
grant Granted
Exercised
/vested Forfeits
At
31 July
2005
Exercise/ 
Share 
price
Exercise/Vesting 
date
From To
16 May
2006 55,550 – – 55,550 0.10
24 May
2009
16 May
2016
23 May 
2006 202,779 – – 202,779 1.80
24 May
2009
16 May
2016
DB2118 – AR06 (Back) AW06.indd   34 31/1/07   08:51:57 35
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
14. Earnings Per Share 
Group Proforma Group
Earnings 
Period ended
 31 July 
2006
Year ended 
31 July
2006
Year ended 
31 July
2005
Basic EPS
Reported earnings (£,000) 398 1,463 983
Reported EPS 2.35p 8.63p 5.90p
Diluted EPS
Diluted reported earnings (£,000) 398 1,463 983
Reported diluted EPS 2.34p 8.59p 5.90p
Group Proforma Group
Note
Period ended
 31 July 
2006
No.
Year ended
31 July
2006
No.
Year ended
31 July
2005
No.
Weighted average number  
of ordinary shares:
Issued ordinary shares  
brought forward 16,666,666 16,666,666 16,666,666
Effect of share issue on 24 May 2006 13 281,583 281,583 –
Weighted average number of 
ordinary shares 16,948,249 16,948,249 16,666,666
Average shares used in calculating 
the Basic EPS calculation 16,948,249 16,948,249 16,666,666
Dilutive share options outstanding 71,013 71,013 –
Fully dilutive weighted average 
number of ordinary shares 17,019,262 17,019,262 16,666,666
15. Share-based Payment
During the period ending 31 July 2006 the Company had one share-based 
payment arrangement in operation, as described below.
Employee Share Options
Options over shares in the holding company are awarded to eligible 
employees and directors of Debts.co.uk Plc.   
The options exercise period commences on the third anniversary of the date 
of admission to AIM and ends on the day which is the day before the tenth 
such anniversary of the date of grant of the options.  Exceptionally and subject 
to the discretion of the Board options may be exercised earlier than three 
periods following admission to AIM on the cessation of the option holder’s 
employment.
DB2118 – AR06 (Back) AW06.indd   35 31/1/07   08:51:57 Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
36
15. Share-based Payment continued
Employee Share Options continued
The estimated fair value of each option granted in the EMI share option plan 
was calculated by applying the Black-Scholes option pricing model.  The 
assumptions used in the calculation are as follows:
Date of grant
16 and 
23 May 2006
Notional share price at grant date 180p
Exercise price 10p/180p
Number of employees 12
Shares under option 258,329
Expected volatility 5%
Expected dividend 0%
Contractual life 3 periods
Risk free rate 5%
Estimated fair value of each option 170p
Further details of the share option plan are as follows:
Group
Period ended
31 July 2006
Number of 
options
Weighted 
average price 
pence
Granted during the period 258,329 1.43
Forfeited – –
Exercised – –
Outstanding at the end of the period 258,329 1.43
Exercisable at the end of the period NIL –
Expenses charged to the profi t and loss in the period in respect of share based 
payments are as follows:
Group
Period ended 
31 July 2006
£,000
Expenses arising from
- share option plans –
16. Share Premium
 
Group and 
Company
31 July 2006
£,000
On 24 May 2006
Issue of shares 4,723
Issue costs (690)
Balance at 31 July 2006 4,033
DB2118 – AR06 (Back) AW06.indd   36 31/1/07   08:51:57 37
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
17. Merger Reserve
 
Group
31 July 2006
£,000
Adjustment on reorganisation (1,513)
Balance at 31 July 2006 (1,513)
18. Retained Earnings
Group Company
31 July 2006
£,000
31 July 2006
£,000
Net profit for the period 398 156
Adjustment on reorganisation 570 –
Bonus issue on 16 May 2006 (154) (154)
Balance at 31 July 2006 814 2
19. Trade and Other Payables
Group Company
31 July 2005
£,000
31 July 2006
£,000
Trade payables 404 256
Other payables:
Bank loans and overdraft 22 –
Social security and other taxes 88 28
Accruals and deferred income 370 2
884 286
Trade and other payables principally comprise amounts outstanding for 
purchases and ongoing costs. The directors consider that the carrying amount 
of trade payables approximates to their fair value.
20. Liabilities Due After One Year
Group Company
31 July 2006
£,000
31 July 2006
£,000
Bank loan and overdraft 172 –
172 –
DB2118 – AR06 (Back) AW06.indd   37 31/1/07   08:51:58 Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
38
21. Operating Lease Commitments
Lessee Activity
Land and buildings:
Group
Period ended 
31 July 2006
£,000
Company
Period ended
31 July 2006
£,000
Minimum lease payments under operating leases 12 –
Recognised in income for the period 12 –
At the balance sheet date, the Group had no outstanding commitments under 
non-cancellable leases.
Operating lease payments represent rentals payable by the Group for its 
offi ce property.
The property rental lease is for a 3 month period term and rentals are fi xed for 
the term of the lease. 
A lease agreement dated 16 May 2006 between Paul Carter and the Company 
provides for the grant of four leases for four separate offi ce buildings at 
Ireland Business Park, Stavelely, Chesterfi eld, on a site which is owned and 
is currently being developed by Paul Carter. The offi ces when completed will 
be in excess of approximately 22,000 square feet in aggregate. Paul Carter 
has obtained planning permission for the development, although changes 
to the position of one of the buildings being let requires further consent and 
the grant of the lease of this particular building will be subject to this consent 
being obtained. The agreement imposes development obligations on Paul 
Carter to construct the development, to provide warranties for the tenant from 
certain of the professional team (including the building contractor) and to 
grant the four leases.
The leases to be granted provide for an annual rent based on £12.50 per 
square foot, will be for terms of ten years each with provision for rent review 
on the fi fth year of the term. The leases will have the benefi t of the security 
of tenure provisions of the Landlord and Tenant Act 1954 and are on full 
repairing and insuring terms.
The offi ce buildings were occupied during December 2006. 
22. Related Party Transactions
All inter group transactions between group enterprises have been eliminated 
on consolidation.
During the period ended 31 July 2006, the Group engaged Olivine Partners LLP 
and Olivine Capital Partners Limited of which Stuart Cumberland is a Member 
and Director respectively to undertake corporate fi nance and tax advisory 
services. Fees payable totalled £104,890 in the period to 31 July 2006, of which 
£59,311 has been included in the share issue costs.
On 16 May 2006 the Company entered into a lease agreement with Paul Carter 
for the provision of four separate offi ce buildings. Details are set out in note 21.
During the period Paul Carter rented a Porche Cayenne to the Company.  The 
total cost of hire during the period was £2,872.
DB2118 – AR06 (Back) AW06.indd   38 31/1/07   08:51:58 39
Notes to the Consolidated Financial Statements
for the period ended 31 July 2006 continued
23. Directors’ and Executives’ Remuneration
Remuneration paid to directors and other members of key management during 
the period was as follows:
Group
Period ended 
31 July 2006
£,000
Salaries 62
Consultancy fees 11
The amounts set out above include remuneration in respect of the highest paid 
director as follows:
Group
Period ended 
31 July 2006
£,000
Salary 31
There were no contributions to personal pension schemes of any director 
during the year.
24. Subsequent Events
On 12 October, the Group acquired the trade and certain assets of Neville Eckley 
& Co, Chartered Accountants and licensed Insolvency Practitioners for an initial 
consideration of £330,000 to be satisfied in cash and deferred consideration of 
£30,000 to be satisfied by the issue of 14,851 ordinary shares, credited as fully 
paid, in the capital of Debts.co.uk, to be issued 18 months following completion.
The business operates out of four offices in the South East with some 18 
employees, including one Insolvency Practitioner, and offers a range of services 
to both individual and corporate clients including IVAs and Company Voluntary 
Arrangements.  In the year to 31 December 2005, Neville Eckley & Co had  
sales of £769,000 and EBITDA of £122,000.  Based on the balance sheet as at  
31 December 2005, the net assets acquired as part of the acquisition were £100,000.
On 24 January 2007, the Group appointed Robin Williams as a non-executive 
director.
25. Capital Commitments
The Group has capital commitments of £530,000 in respect of the fit out 
of new offices in Borehamwood and Chesterfield together with related 
investment in telephony and computer infrastructure.
26. Accounting Estimates and Judgements
Management discussed with the Audit Committee the development, selection 
and disclosure of the Group’s critical accounting policies and estimates and 
the application of these policies and estimates.
27. Bank Balances Held on Behalf of Individuals
Total bank balances of £3,609,881 was held by the Group in trustee accounts 
on behalf of individuals who have entered into IVA’s at 31 July 2006. The bank 
balances are not recognised in the Group or Company balance sheets.
Additionally, total bank balances of £171,007 was held by the Group in trustee 
accounts on behalf of individuals who have entered into a debt management 
programme at 31 July 2006. The bank balances are included in the Group or 
Company balance sheets.
DB2118 – AR06 (Back) AW06.indd   39 31/1/07   08:51:58 40
Offi cers and Professional Advisers
for the period ended 31 July 2006
The Board of Directors
Bernard Asher
Non-Executive Chairman
Paul Carter  
Chief Executive 
Barry Krite 
Managing Director
Stuart Cumberland ACA 
Finance Director
Secretary
Stuart Cumberland
Registered Offi ce 
Carter Place
Gisborne Close
Staveley 
Chesterfi eld S43 3JT
Bankers
Barclays Bank PLC 
P.O. Box 190
2nd Floor
1 Park Row
Leeds LS1 5WU
Auditors
Shipleys LLP
Chartered Accountants
Registered Auditors
10 Orange Street 
Haymarket
London WC2H 7DQ 
Nominated Adviser and Broker
Seymour Pierce Limited
Bucklersbury House 
3 Queen Victoria Street
London EC4N 8EL
Solicitors
Halliwells LLP
1 Threadneedle Street
London EC2R 8AW
Finanicial PR
Adventis Financial PR
93-95 Wigmore Street
London W1U 1HH
Registrar 
Computershare Investor Services PLC
PO Box 82, The Pavilions
Bridgwater Road
Bristol BS99 7NH
Company Number
05663957 (England and Wales)
Website
www.debts.co.uk
DB2118 – AR06 (Back) AW06.indd   40 31/1/07   08:51:59 Growing – Profitable – Strong 
Contents
Highlights 01
Chairman’s Statement 02
Chief Executive’s Statement 04
Board of Directors 10
Directors’ Report 12
Corporate Governance 15
Independent Auditor’s Report  17
Consolidated Income Statement 19
Consolidated Balance Sheet 20
Statement of Changes in Equity 21
Consolidated Cash Flow Statement 22
Notes to the Consolidated  
Financial Statements 23
Officers and Professional Advisers 40
Debts.co.uk plc is a leading provider of a 
range of solutions, including IVAs, debt 
management programmes, bankruptcy 
and secured loans or second mortgages, 
to over-indebted individuals
Growing – Profitable – Strong 
Debts.co.uk plc 
Carter Place 
Gisborne Close 
Staveley 
Chesterfield S43 3JT
0800 9 15 15 16
www.debts.co.uk
55510_abf_debts_44pp perf.indd   2 31/1/07   08:40:41 Annual Report & Accounts 2006
Debts.co.uk plc 
Carter Place 
Gisborne Close 
Staveley 
Chesterfield S43 3JT
0800 9 15 15 16
www.debts.co.uk
Debts.co.uk plc                       Annual Report & Accounts 2006
55510_abf_debts_44pp perf.indd   1 31/1/07   08:40:38