ClearDebt Group plc - Britdaq · Independent Auditor’s report to the members of ClearDebt Group plc 15-16 . ... statement of financial position 18 . Consolidated statement of changes

ClearDebt Group plc REPORT AND FINANCIAL STATEMENTS

for the year ended 30 June 2013

Registration Number 02441375

ClearDebt Group plc CONTENTS

Page Financial highlights 1

Directors and advisers 2

Chairman’s statement 3

Chief Executive’s statement 4-6

Directors’ report 7-10

Corporate governance 11-12

Directors’ remuneration report 13-14

Accounts

Independent Auditor’s report to the members of ClearDebt Group plc 15-16

Consolidated statement of comprehensive income 17

Consolidated statement of financial position 18

Consolidated statement of changes in equity 19

Consolidated statement of cash flows 20

Notes to the consolidated financial statements 21-42

Company balance sheet 43

Notes to the company financial statements 44-50

Shareholder information 51

ClearDebt Group plc FINANCIAL HIGHLIGHTS For the year ended 30 June 2013

1

2013 2012 £ £

Revenue 8,702,254 9,203,453

Gross profit 3,529,166 4,678,074

Profit before interest, tax, depreciation and amortisation 1,384,125 2,737,967

Profit from operations 472,652 1,418,085

(Loss)/profit before taxation (206,674) 834,758

(Loss)/profit after taxation (167,160) 591,257

Cash generated by operations 1,972,779 1,788,944

Since 1 July 2012 (2012: 1 July 2011), the following numbers of new Individual Voluntary Arrangements

(IVA’s) have been arranged through ClearDebt:-

Year ended Year ended 30 June 2013 30 June 2012

First quarter 350 488

Second quarter 339 345

Third quarter 316 273

Fourth quarter 450 353 ____ ____

1,455 1,459 ____ ____

As at 30 June 2013; the total number of IVA’s and Protected Trust Deeds (“PTD’s”) generating income was 7,696 (2012: 6,504). No new IVA or PTD cases were acquired during the year. As at 30 June 2013; the total number of Debt Management Programmes (“DMP’s”) generating income and under management was 6,187 (2012: 6,566). Income from a back book of 1,502 DMP’s was acquired during the year which had previously been managed by Abacus on behalf of a third party.

ClearDebt Group plc DIRECTORS AND ADVISERS

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DIRECTORS G Carey FCIB D E M Mond FCA FCCA D M Shalom ACA A F Smith A J Leon FCA S Lee SECRETARY D E M Mond FCA FCCA REGISTERED OFFICE Nelson House Park Road Timperley Altrincham Cheshire WA14 5BZ AUDITORS UHY Hacker Young Manchester LLP Chartered Accountants St James Buildings 79 Oxford Street Manchester M1 6HT REGISTRARS Britdaq Limited Richmond House Eastbourne Road Blindley Heath Lingfield Surrey RH7 6JX

BANKERS Barclays Bank PLC 1 Bridge Street Stockport Cheshire SK1 1XU The Royal Bank of Scotland PLC P O Box 5429 Macclesfield & Stockport CRT 3rd Floor 38 Mosley Street Manchester M61 OHW SOLICITORS DAC Beachcroft LLP 3 Hardman Street Manchester M3 3HF DWF LLP 1 Scott Place 2 Hardman Street Manchester M3 3AA

ClearDebt Group plc CHAIRMAN’S STATEMENT

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I present the Group’s financial statements for the year ended 30 June 2013. Group revenue declined to £8,702,254 (2012: £9,203,453) and gross profit also declined to £3,529,166 (2012: £4,678,074). Earnings before interest, tax, depreciation and amortisation amounted to £1,384,125 (2012: £2,737,967) which after net finance charges of £679,326 (2012: £583,327) and depreciation and amortisation charges of £911,473 (2012: £1,319,882 resulted in a loss before taxation of £206,674 (2012: profit £834,758). The loss after taxation was £167,160 (2012: profit £591,257). The Group did not acquire any new IVA book’s during the financial year although it did acquire a debt management book of 1,502 clients in April 2013. This resulted in a gain on bargain purchase of £3,000. At the year end the group had net assets of £5,710,720 (2012: £5,827,562) including cash of £88,075 (2012: £462,459) after spending £410,000 on back book acquisitions (2012: £267,080) during the year financed out of cash flow. In addition the Group’s convertible loan notes were repaid in April 2013 totalling £2,875,000 which was financed out of cash flow as well as additional loans of £1,570,000 provided in the main from D E M Mond. (2012: net loan repayments of £700,000). Overall the business had a difficult financial year, partly due to cash constraints on marketing whilst we conserved cash to ensure the convertible loans were repaid in full on the due date in April 2013 and partly due to competition and general market conditions. Abacus suffered a decline in client numbers with the majority of new clients acquired continuing to be referred for an IVA which for most clients is usually, the most appropriate solution, leaving them debt free after 5 years. This continued trend towards IVA’s reflects the fact that most new clients would take substantially longer to repay their debts in full on a debt management plan and an increasing acceptance by clients that the IVA will lead them to be debt free faster. The numbers of new IVA’s have remained static in the year at 1,455 (2012: 1,459) although we have seen a marked increase in new IVA numbers in the last quarter to 30 June 2013 which I am pleased to say has continued into the new financial year. The rise in IVA numbers referred to us from a number of very promising lead sources is leading us to gain market share, in what is a static IVA market in general, is pleasing to note. We have continued to actively pursue PPI mis-selling claims for IVA clients on their behalf and this has generated increased supervisory income as claims monies are paid into the IVA estate as additional realisations for the benefit of creditors. Just prior to year end we completed a total review of the business having recognised that our cost base had grown far beyond the number of new clients being acquired each month and the cash flow difficulties the repayment of the convertible bond had created. We therefore implemented a plan to restructure the sales and back end of the business reducing staff heads and other overheads to better align them to the levels of new business being generated. We also took the decision (in August 2013) to sell approximately 5,000 debt management programmes to a third party to raise cash and enable us to radically reduce the overhead base of the back end of the Abacus business and combine what was left with the remaining IVA back end. The sale was completed in September 2013 and enabled the Group to become largely debt free again and substantially re-pay the loans from D E M Mond. Gerald Carey FCIB Chairman 19 November 2013

ClearDebt Group plc CHIEF EXECUTIVE’S STATEMENT

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The Group had a disappointing year in terms of profitability with all internal cash flow that was being generated from the back books having to be conserved to ensure the repayment of the Group’s convertible loan notes could be met in April 2013. This led to restrictions on marketing spend and correspondingly disappointing new client numbers as a whole, although I am happy with the eventual outturn of new client numbers with this in mind. During the year 1,455 (2012: 1,459) new IVA’s were passed and as at 30 June 2013 the total number of IVA’s and PTD’s generating income was 7,696 (2012: 6,504). Clients’ average disposable incomes after basic living expenses continue to fall as household food and energy costs remain high which has the continued effect of reducing fees for new IVA’s as they are geared towards the level of contributions paid by clients. This issue is something we and others are taking up via our trade association, The Debt Resolution Forum (“DRF”), as fees are approaching levels that mean we would be unable to run an IVA programme profitably and which could force us to propose a less beneficial solution than an IVA to a debtor, which is something that we could not realistically do and fall foul of the Office of Fair Trading Debt Management Guidance. Abacus suffered a decline in DMP client numbers and as at 30 June 2013, the total number of active DMP’s under management was 6,187 (2012: 6,566). We acquired the beneficial ownership of income from 1,502 DMP’s in April 2013 which hitherto had been managed by Abacus on behalf of a third party. Following a review of the business as a whole prior to the year-end we concluded that both our staff heads and overheads required realigning to the level of new business being generated. Our marketing activity had been centred on an outbound call centre plus inbound referrals and we decided to focus exclusively on the more cost effective option of inbound referral only. Our call centre operations have since the year end been realigned to inbound referrals resulting in a reduction in staff heads and other overheads. We also took the decision to seek offers for approximately 5,000 of our DMP’s which would enable us to raise cash flow to pay down our debt and put the business on a near debt free footing as well as enabling us to substantially rationalise the Abacus and ClearDebt servicing of clients. In September 2013, post year end, we completed the sale of these DMP’s to a third party for cash and at the same time have created one combined customer services department to service both IVA and DMP clients. This has created a more streamlined department which will enable us to manage more clients per head of customer service staff. We continue to invest in the training of our staff with a large proportion of them now having obtained the Certificate of Debt Resolution (CertDR), offered by the DRF. We continue to progress our plans to ensure all client facing staff obtain this qualification. OPERATIONAL REVIEW ClearDebt – IVA Division Since 1 July 2012 (2012: 1 July 2011), the following numbers of new IVA’s have been arranged through ClearDebt:- Year ended Year ended 30 June 2013 30 June 2012

First quarter 350 488

Second quarter 339 345

Third quarter 316 273

Fourth quarter 450 353 ____ ____

1,455 1,459 ____ ____

The numbers of new IVA’s in the final quarter of the financial year has been most pleasing compared to the earlier quarters and I am pleased to say has continued at similar levels since the year end. New IVA’s passed in the year were static at 1,455 from 1,459 new cases in 2011/12. No new IVA’s were acquired during the year and as at 30 June 2013 we had a total of 7,696 (2012: 6,504) IVA’s and PTD’s generating income.


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The division made a profit before taxation of £233,084 (2012: £695,714) after Group recharges during the year. 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 heads to caseload numbers. We experienced lower numbers during the early part of the year, but latterly numbers have increased as we have switched marketing strategy to referral only and away from call centre generated leads. Recently, numbers have increased as we have brought on stream a number of new referrers whilst all other indicators remain within expectations. Abacus– Debt Management Division The division made a loss before tax of £439,758 (2012: profit £139,044) after recharges and the poor performance reflected high costs of marketing in the early part of the financial year when we focused marketing activity on buying data for the out bound call centre. The returns on the monies spent on data up until December 2012 were disappointing which when added to the significant call centre staff overhead incurred as well, meant that profitability suffered. This coupled with the need to conserve cash for repayment of the secured convertible loan notes in April 2013 led to minimal marketing activity during our third quarter and new case numbers were disappointing for both DMP’s and IVA’s. Again staff and overheads were higher than the level of new business required and our change of marketing focus to referral only, led to a decline in new DMP numbers in favour of new IVA clients. In April 2013 we acquired the beneficial income to some 1,502 DMP plans which previously we had managed for a third party. As at 30 June 2013, the total number of DMP’s generating income was 6,187 (2012: 6,566). Our attrition rates on DMP’s were well within our normal expectations. The Board has KPIs to monitor the number of active income generating plans as well as the value of monthly payments made by debtors. 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. As outlined above following a strategic review we took the decision to sell approximately 5,000 DMP programmes to a third party in September 2013 for a cash payment. We continue to manage the remaining clients and with the reduced client base are in a better position to take on sufficient new clients to more than offset those we lose each month through natural attrition. ClearCash – prepaid MasterCard The new ClearCash platform has performed exceedingly well during the year and good progress has been made to achieve a break even position. Losses after management recharges were similar to last year although the business is now close to break even on a monthly basis. We are close to achieving the figure of 2,500 active client cards each month which will reduce on-going costs further. FINANCIAL REVIEW Group turnover decreased by 5% to £8,702,254 (2012: £9,203,453) and gross profit by 25% to £3,529,166 (2012: £4,678,074). Earnings before interest, tax, depreciation and amortisation dropped to £1,384,125 (2012:£2,737,967). Finance costs rose to £686,755 (2012: £585,611). Cash resources at the year-end amounted to just £88,075 (2012: £462,459) following the repayment of the secured convertible loan notes and the back-book acquisition of £410,000 (2012: £267,080) which was financed by new loans of £1,625,000 (2012: net loans repaid £700,000). Operational cash flow remains satisfactory largely backed by our royalty income and the recent sale of the DMP programmes in September 2013 which has largely cleared our year end debt.


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GOING CONCERN As part of the Groups going concern review the Board has followed the guidelines published by the Financial Reporting Council entitled “Going Concern and Liquidity Risk: Guidance for UK Companies 2009”. The Board has prepared detailed financial forecasts and cash flows for the three years to 30 June 2016 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 forecasted 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 in respect of loans provided has been taken into consideration and in addition to the forecasts we have produced sensitivities to these forecasts to test our ability to trade as a going concern for at least the following 12 months. In addition, I have provided the Board with an undertaking of support in the event that the Group should require additional finance. The Board believes that the use of the going concern basis of accounting is appropriate based upon a review of these forecasts and the finance available to the Group. FUTURE OUTLOOK The IVA market in the calendar year of 2013 appears to be holding steady at similar levels to 2012 although declining disposable incomes continue to impact on IVA fees. We have brought on several new referral sources and are working hard to reduce our cost base to achieve sustainable profitability. I would like to take this opportunity once again to thank all our employees for their dedication and hard work in what has been a difficult year especially with the restructuring of departments that we have had to undertake. Finally, the Board is looking at ways in which value can be achieved for shareholders having regard to the difficulties in obtaining finance to support any on-going development of the business. David Emanuel Merton Mond FCA FCCA Chief Executive Officer 19 November 2013

ClearDebt Group plc DIRECTORS’ REPORT

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The Directors present their report and the financial statements of the Group for the year ended 30 June 2013. ClearDebt Group plc is a parent company, incorporated and domiciled in England. Principal Activities and Review of the Business The principal activity of the Group is the provision of financial advice and appropriate solutions to individuals experiencing personal debt problems. The principal activity of the Company is that of a holding company. A review of the Group’s activities and its future prospects is detailed in the Chairman’s Statement on page 3 and the Chief Executive’s Statement on pages 4 to 6. Results and Dividends The trading results for the year and the Group’s financial position at the end of the year are set out in the attached financial statements. The Directors do not recommend payment of a dividend (2012: nil). Share Capital The Company is aware of the following substantial interests in the ordinary share capital as at 19 November 2013: Number of shares held % of Total D E M Mond 119,054,616 38.61 O Mond 17,459,800 5.66 A Mond 15,373,733 4.99 S Mond 15,232,602 4.94 D Murray 11,921,125 3.87 Mrs M Rose (formerly) Joseph 11,328,466 3.67 The Directors are not aware of any other person who is beneficially interested in 3% or more of the issued share capital. Directors who held office during the year The Directors of the Company who held office during the year are as follows: G Carey FCIB (Non-Executive Chairman) D E M Mond FCA FCCA A F Smith D M Shalom ACA S Lee A J Leon FCA (Non-Executive) Payment of Creditors It is the Group’s policy to consider the terms of payment with suppliers when agreeing the terms of the transaction, to ensure that suppliers are aware of these terms and abide by them. Trade creditor days for the Group at 30 June 2013, were 28 days (2012: 18 days). This represents the ratio, expressed in days, between the amounts invoiced to the Group in the period by its suppliers and the amounts due, at the year end, to trade creditors falling due for payment within one year. Employee Involvement The Group recognises and seeks to encourage the involvement of its employees, with the aim being the recruitment, motivation and retention of quality employees throughout the Group. The Group’s employment policies, including the commitment to equal opportunity, are designed to attract, retain and motivate employees regardless of sex, race, religion or disability. The Group is committed to ensuring and communicating the requirements for a safe and healthy working environment for all employees, consistent with health and safety legislation and, wherever practicable, gives full consideration to applications for employment from disabled persons.


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

provides outsourced services to ClearDebt Limited and other companies which manage IVA’s and Protected Trust Deeds (PTD’s). These services are provided to and paid for by, the estates of the respective IVA’s and PTD’s. Calculation of the amount of revenue due to ClearDebt Limited is based on the revenue invoiced by the third party. Should these services cease to be chargeable to the estates then the reduction in royalty income would significantly affect the reported revenues and profits of ClearDebt Limited and the Group.

5. Economic environment – the current economic climate is extremely favourable and the market for

indebted consumers is likely to grow in the next few years.

6. Creditor Pressure – Creditors can restrict the market for personal debt resolutions by refusing to agree to proposals which they do not deem acceptable. This can have the effect of restricting approvals and therefore the timing of fees or the receipt of any fees at all. The Group is actively involved in talking to creditors both independently and through its Trade Association, The Debt Resolution Forum constantly to ensure that all Group products are in line with creditor approval criteria as much as possible.

Risks associated with financial instruments entered into by the Group are detailed in note 19. The directors are responsible for preparing the Directors’ Report and the financial statements in accordance with applicable law and regulations.


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Directors’ Responsibilities The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations. Company law requires the directors to prepare such financial statements for each financial year. Under that law the directors have chosen to prepare group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and have chosen to prepare the parent company financial statements under in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the company for that period. In preparing the parent company financial statement, the directors are required to: - select suitable accounting policies and apply them consistently; - make judgements and accounting estimates that are reasonable and prudent; - state whether UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. In preparing the group financial statements, International Accounting Standard 1 requires that the directors: - properly select and apply accounting policies; - present information, including accounting policies, in a manner that provides relevant, reliable, comparable

and understandable information; - provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to

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

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are also responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. We confirm that to the best of our knowledge: 1. the financial statements, prepared in accordance with the relevant financial reporting framework, give a true

and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

2. the business review, which is incorporated into the directors’ report, includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Statement as to Disclosure of Information to Auditors The directors who were in office on the date of approval of these financial statements have confirmed, as far as they are aware, that there is no relevant audit information of which the auditors are unaware. Each of the directors has confirmed that they have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.


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Auditors UHY Hacker Young Manchester LLP, Chartered Accountants has indicated its willingness to continue in office and a resolution that they should be re-appointed as auditors will be put to the members at the annual general meeting. By order of the Board D E M Mond Company Secretary 19 November 2013

ClearDebt Group plc CORPORATE GOVERNANCE

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Principles of Corporate Governance The Group’s Board appreciates the value of good corporate governance not only in the areas of accountability and risk management but also as a positive contribution to business prosperity. It believes that corporate governance involves more than a simple “box ticking” approach to establish whether a company has met the principles (including those set out in the corporate governance guidelines for AIM companies published by the Quoted Companies Alliance in September 2010) of a number of specific rules and regulations. Rather the issue is one of applying corporate governance in a sensible and pragmatic fashion having regard to the individual circumstances of a particular company’s business. The key objective is to enhance and protect shareholder value. Board Structure The Board is responsible to shareholders for the proper management of the Group. A statement of Directors’ responsibilities in respect of the accounts is set out in the directors’ report. The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by the Executive Directors are fully considered. To enable the Board to discharge its duties, all Directors have full and timely access to all relevant information and there is a procedure for all Directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group. The Board has a formal schedule of matters reserved to it and meets monthly. It is responsible for overall group strategy, approval of major capital expenditure projects and consideration of significant financing matters. The following Committees have been set up, which have written terms of reference and deal with specific aspects of the Group’s affairs. 1. The Remuneration Committee, which includes D E M Mond and the two Non-Executive Directors, is

responsible for making recommendations to the Board on the Company’s framework of executive remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits for each of the Executive Directors, including pension rights and compensation payments. The Board itself determines the remuneration of D E M Mond and the Non-Executive Directors. The Committee meets as required.

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

the external audit, to review reports from the auditors and to review the half-yearly and annual accounts before they are presented to the Board, focusing in particular on accounting policies and areas of management judgment and estimation. The Committee is responsible for monitoring the controls, which are in force to ensure the integrity of the information reported to the shareholders. The Committee acts as a forum for discussion of internal control issues and contribute to the Board’s review of the effectiveness of the Group’s internal control and risk management systems and processes. It advises the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work and discusses the nature and scope of the audit with the external auditors. It reviews and monitors the independence of the auditors especially with regard to non-audit work. It meets at least twice a year including immediately before the submission of the annual and interim financial statements to the Board.

Any new Non-Executive Directors will be asked to join both Committees. No formal nomination Committee exists in view of the stage of development of the Group. Instead appointments to the Board by the Chief Executive and other Executive Directors are discussed with the Non-Executive Chairman. Appointments are made after an evaluation of the skills, knowledge, and expertise required ensuring that the Board as a whole has the ability to ensure that the Group can continue to compete effectively in its market place. Internal Control The Directors are responsible for the Group’s system of internal control and for reviewing its effectiveness. The Board has designed the Group’s system of internal control in order to provide the Directors with reasonable assurance that its assets are safeguarded, that transactions are authorised and properly recorded and that material errors and irregularities are either prevented or would be detected within a timely period. However, no system of internal control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against material misstatement or loss. The key elements of the control system in operation are:

ClearDebt Group plc CORPORATE GOVERNANCE

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a. The Board meets regularly with a formal schedule of matters reserved to it for decision and has put in place an organisational structure with clear lines of responsibility defined and with appropriate delegation of authority;

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

systems for monitoring the Group’s financial performance against approved budgets and projections; The process adopted by the Group accords with the guidance contained in the document “Internal Control Guidance for Directors on the Combined Code” issued by the Institute of Chartered Accountants in England and Wales. The Audit Committee receives reports from the external auditors on a regular basis and from Executive Directors of the Group. 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 2013 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. 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 DIRECTORS’ REMUNERATION REPORT

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The Board’s Remuneration Committee, which currently comprises Gerald Carey (Non-Executive Chairman), Anthony Leon ( Non-executive director) and David Mond (Chief Executive Officer), makes recommendations to the Board within agreed terms of reference in determining specific remuneration packages for each of the Directors, including pension rights. Members of the Committee who have a personal financial interest in the matters to be decided are not involved in decisions. In arriving at its recommendations, the Committee has access to professional advice from both within and outside the Company. Remuneration Policy Each remuneration package is reviewed against a background of published comparative information on the remuneration of Executive Directors in similar positions, taking into account the industry, the region of employment, the type of work and the size of the Company. The extent to which the recommended remuneration is above or below average takes account of the Director’s qualifications and length of service with the Company, the Director’s actual performance and the performance of the Company. This will remain the policy for forthcoming years. Directors’ Emoluments The emoluments of the Directors from the date of their appointment during the financial year ended 30 June 2013 were as follows: 2013 2012 2013 Total Total Salary & 2013 Salary & Salary & Benefits Pensions Benefits Benefits £’000 £’000 £’000 £’000 Executive Directors David Mond (Chief Executive Officer) 175 - 175 125 David Shalom (Finance Director) 116 10 126 89 Andrew Smith (Marketing & External Affairs Director) 52 - 52 52 Simon Lee (Chief Operating Officer) (appointed 25 May 2012) 102 - 102 5 Non-Executive Directors Gerald Carey (Chairman) 23 - 23 18 Anthony Leon 15 - 15 12 ___ ___ ___ ___

Aggregate remuneration 483 10 493 301 ___ ___ ___ ___ The present Directors’ positions are currently not pensionable although David Shalom has entered into an agreement to sacrifice part of his salary in return for pension payments into his SIPP. Directors’ Options Options have been granted to directors under an EMI scheme. The granting of options ensures that the holders are incentivised to concentrate on growing shareholder value. No share options were granted during the year leaving options outstanding over 5,500,000 ordinary shares at a weighted average exercise price of 1.82p per ordinary share. Directors’ Service Agreements Anthony Leon, Gerald Carey and David Mond all have agreements subject to 6 months’ notice. David Shalom, Andrew Smith and Simon Lee all have service agreements subject to 12 months’ notice.

ClearDebt Group plc DIRECTORS’ REMUNERATION REPORT

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Directors’ Interests The interests of the Directors in the ordinary shares of the Company were as follows: Ordinary Shares At 0.5p each At 0.5p each At 30 June At 30 June 2013 2012

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 2013 and 19 November 2013.

At 30 June At 30 June Option Date Expiry Scheme 2013 2012 Price Exercisable Date David Mond EMI 375,000 375,000 2.00p 07.10.12 07.10.19

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

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

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

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

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



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

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

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CLEARDEBT GROUP PLC

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We have audited the Group and Parent Company financial statements which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As more fully explained in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the directors’ report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Basis for qualified opinion on the financial statements In the year to 30 June 2012 the audit opinion was modified in respect of Group revenues of £1,307,992 reported in the financial statements (2011: £361,341) for consultancy services provided in respect of which there was insufficient evidence as to the substance of the services provided and of whether the amounts were recognised in the correct accounting period under the agreement which governed these revenues. We were appointed as auditors during the current year and consequently were unable to satisfy ourselves in respect of these matters. Since the position at 30 June 2012 affects the determination of the results of operations for the current year, we were therefore unable to determine whether adjustments to the results of Group operations and opening retained earnings might be necessary for the current year. Our opinion on the current period’s financial statements is modified because of the possible effect of this matter on the Group result and on the comparability of the current period figures and the corresponding figures. Qualified opinion on the financial statements In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph: - 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 2013 and of the Group’s loss for the year then ended; - the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the

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

Generally Accepted Accounting Practice; and - the financial statements have been prepared in accordance with the requirements of the Companies Act

2006.

Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CLEARDEBT GROUP PLC

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Matters on which we are required to report by exception In respect solely of the limitation on our work relating to revenues, described above:

- we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and

- we were unable to determine whether adequate accounting records had been kept.

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:

- 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.

Michael D Wasinski (Senior Statutory Auditor) For and on behalf of UHY HACKER YOUNG MANCHESTER LLP Chartered Accountants and Statutory Auditor 19 November 2013

St James Building 79 Oxford Street Manchester M1 6HT

ClearDebt Group plc CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2013

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2013 2012 Notes £ £ Revenue 3 8,702,254 9,203,453 Cost of sales (5,173,088) (4,525,379) _________ _________

Gross profit 3,529,166 4,678,074 Administrative expenses (2,094,723) (1,854,384) Share based payment 16 (50,318) (85,723) _________ _________

Profit before interest, tax, depreciation and amortisation 1,384,125 2,737,967 Depreciation 10 (187,257) (147,490) Amortisation 9 (727,216) (1,199,481) Gain on bargain purchase 17 3,000 27,089

_________ _________

Profit from operations 3 & 4 472,652 1,418,085 Finance costs 5 (686,755) (585,611) Finance income 7,429 2,284 _________ _________

(Loss)/profit before taxation (206,674) 834,758 Taxation 7 39,514 (243,501) _________ _________

(Loss)/profit after taxation and total comprehensive income for year (167,160) 591,257 _________ _________

Amount attributable to: Owners of the parent (167,160) 591,257 _________ _________ (Loss)/earnings per ordinary share - basic (pence) 8 (0.05p) 0.19p (Loss)/earnings per ordinary share - diluted (pence) 8 n/a 0.19p _________ _________

ClearDebt Group plc CONSOLIDATED STATEMENT OF FINANCIAL POSITION As At 30 June 2013 Company Number 02441375

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2013 2012 Notes £ £ Assets Non-current assets Intangible assets 9 5,449,036 5,626,779 Property, plant and equipment 10 468,078 375,593 Deferred taxation 14 38,071 72,034 __________ _________ 5,955,185 6,074,406 Current assets Trade and other receivables 11 2,957,540 3,428,878 Cash and cash equivalents 88,075 462,459 __________ _________ 3,045,615 3,891,337 __________ _________ Total assets 9,000,800 9,965,743 __________ _________ Equity and liabilities Equity Issued capital 15 6,166,812 6,166,812 Share premium 279,948 279,948 Share based compensation 339,353 289,035 Other reserves - 96,495 Retained losses (1,075,393) (1,004,728) __________ _________ Total equity attributable to the owners of the parent 5,710,720 5,827,562 __________ _________ Current liabilities Trade and other payables 12 1,011,204 912,166 Corporation tax payable 12 187,929 263,970 Current financial liabilities 12 2,038,646 2,597,306 __________ _________ 3,237,779 3,773,442 Non-current liabilities Financial liabilities 13 - 315,000 Deferred taxation 14 52,301 49,739 __________ _________ Total liabilities 3,290,080 4,138,181 __________ _________ Total equity and liabilities 9,000,800 9,965,743 __________ _________ The financial statements were approved by the Board of Directors and authorised for issue on 19 November 2013 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 2013

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Issued Share Share Share Based Other Retained Total Capital Premium Compensation Reserves Losses Equity £ £ £ £ £ £ Balance as at 30 June 2011 6,166,812 279,948 203,312 96,495 (1,595,985) 5,150,582 Share based compensation - - 85,723 - - 85,723 Total comprehensive income - - - - 591,257 591,257 for the year ________ ________ ________ _______ ________ ________ Balance as at 30 June 2012 6,166,812 279,948 289,035 96,495 (1,004,728) 5,827,562 Share based compensation - - 50,318 - - 50,318 Transfer to retained reserves - - - (96,495) 96,495 - Total comprehensive loss - - - - (167,160) (167,160) for the year ________ ________ ________ _______ _________ ________ Balance as at 30 June 2013 6,166,812 279,948 339,353 - (1,075,393) 5,710,720 ________ ________ ________ _______ _________ ________ 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. Other reserves This reserve is the result of the Company’s issue of secured convertible loan notes in April 2010 in accordance with IAS 32 – Financial Instruments: Presentation and has now been transferred to retained reserves following the redemption of the loan notes in April 2013. Retained losses The retained losses reflect losses incurred to date.

ClearDebt Group plc CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2013

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Notes 2013 2012 £ £ Cash flow from continuing operating activities (Loss)/profit before taxation (206,674) 834,758 Depreciation of property, plant and equipment 187,257 147,490 Amortisation of intangible assets 727,216 1,199,481 Gain on bargain purchase (3,000) (27,089) Loss/(profit) on disposal of fixed assets 16,462 (1,739) Share based payment 50,318 85,723 Decrease/(increase) in trade and other receivables 419,465 (1,246,980) Finance costs 686,755 585,611 Finance income (7,429) (2,284) Increase in trade and other payables 102,409 213,973 _________ _________ Cash generated by operations 1,972,779 1,788,944 Corporation tax paid - (91,995) Interest on loans (206,916) (291,614) _________ _________ Net cash generated by operating activities 1,765,863 1,405,335 Investing activities Acquisition of business and assets 17 (410,000) (267,080) Acquisition of intangibles (147,911) (46,370) Acquisition of property, plant and equipment (284,765) (270,085) Finance income 7,429 2,284 Sale of property, plant and equipment - 1,739 _________ _________ Net cash used in investing activities (835,247) (579,512) Financing activities Repayment of existing loans (2,930,000) (700,000) Proceeds from new loans advanced 1,625,000 - _________ _________ Cash used by financing activities (1,305,000) (700,000) (Decrease)/increase in cash and cash equivalents (374,384) 125,823 Opening cash and cash equivalents 462,459 336,636 _________ _________ Closing cash and cash equivalents 88,075 462,459 _________ _________

ClearDebt Group plc NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2013

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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, interpretations and amendments have been adopted by the Company since 1 July 2012 with no significant impact on its results or financial position: IFRS 10 “Consolidated Financial Statements” IAS 1 Presentation of items of Other Comprehensive Income effective July 2012 IAS 12 Amendment “Deferred Tax: Recovery of Underlying Assets” IAS 27 “Separate Financial Statements” (revised 2011) IAS 32 Amendments from annual improvements effective May 2012 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 2013 or later periods, but which have not been adopted by the Company: IFRS 7 Amendment related to transition to IFRS is effective from 1 January 2015 IFRS 7 “Disclosures Offsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7” IFRS 9 “Financial Instruments” is effective from 1 January 2015. IFRS 11 “Joint Arrangements” IFRS 12 “Disclosures of Interest in Other Entities” IFRS 13 “Fair Value Measurement” IAS 28 “Associate and Joint Venture” (revised) The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group 2. Significant Accounting Policies Basis of Preparation The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations as endorsed by the European Union (IFRS) and the requirements of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared on the historic cost basis. The principal accounting policies adopted are set out below. Going concern As part of 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 2016 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 in respect of loans provided has been taken into consideration and in addition to the forecasts the Board has produced sensitivities to these forecasts to test the Group’s ability to trade as a going concern for at least the following 12 months. In addition, D E M Mond has provided the Board with an undertaking of support in the event that the Group should require additional finance. The Board believes that the use of the going concern basis of accounting is appropriate based upon a review of these forecasts and the finance available to the Group.


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2. Significant Accounting Policies (continued) Critical Accounting Estimates and Judgements The preparation of the financial information in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The principal balances that have been estimated relate to:- - estimates of the fair value of intangible assets acquired (see note 17)

- estimates as to the recoverability of goodwill. The Group is required to review, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate present value - actual outcomes may vary. The carrying amount of goodwill at the balance sheet date was £4,402,280 and no impairment loss was identified during the period

- estimates relating to provisions required for uncollectable debtor balances ( see note 11)

Basis of Consolidation Where the company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the company and its subsidiaries (“the Group”) as if they formed a single entity. Inter-company transactions are therefore eliminated in full. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. Business Combinations The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained. Goodwill represents the excess of the cost of a business combination over the interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair values of assets given, liabilities assumed and equity instruments issued. Goodwill Goodwill arising on acquisition of subsidiaries or business is recognised as a separate asset on the statement of financial position after the recognition at fair value of any other intangible assets identified at the time of acquisition. Goodwill is capitalised as an intangible asset. Where the fair value of identifiable assets, liabilities and contingent liabilities exceeds the fair value of consideration paid, the excess is credited in full to the Group income statement on the acquisition date. The Group carries out annual impairment tests for goodwill. Impairment losses in respect of goodwill are recognised immediately in the income statement and are not reversed.


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2. Significant Accounting Policies (continued) Impairment At each reporting date, the Group reviews the carrying amounts of its intangibles and property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent of other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount, in which case the impairment loss is treated as expenses in the consolidated income statement. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately. Other Intangible Assets Internal and externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives. The amortisation expense is shown separately on the face of the Consolidated Income Statement. The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:- Software and other development costs - 4 years straight line Intangible assets - Debt management back books - 12-18 months straight line Intangible assets - Insolvency back books - 3-4 years straight line Expenditure arising from the Group’s development costs and software development is recognised only if all of the following conditions are met:

- an asset is created that can be identified; - it is probable that the asset created will generate future economic benefits; - the development cost of the asset can be measured reliably; - the Group has the intention to complete the asset and the ability and intention to use or sell it; - sufficient resources are available to complete the development and to either sell or use the asset.

Where the criteria have not been achieved, software development expenditure is recognised as an expense in the period in which it is incurred. Segmental Reporting Management determines its operating segments by identifying components:

a) that engage in business activities that earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group),

b) whose operating results are regularly reviewed by the entity’s chief operating decision maker, the board of directors of ClearDebt Group plc, to make decisions about resources to be allocated to the segment, and

c) for which discrete financial information is available.


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2. Significant Accounting Policies (continued) 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’s) Fees are earned for arranging and administering IVA’s on behalf of individuals experiencing debt problems. Generally, revenue is accrued based upon the stage of completion of specific 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’s) Fees earned in respect of PTD’s are recognised when received. Debt Management Services Fees are receivable for the management of debts on behalf of 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 and Payment Protection Mis-selling Claims Income The Group also receives commission income from the referral of loans and other products as well as fees in respect of non IVA claims for mis-sold payment protection products. Commissions are recorded as they are received. Royalty Income Revenue from royalty income is accrued in accordance with contractual agreements in place. Revenue is calculated as a proportion of the revenue invoiced by that third party. Prepayment Card Services The Group receives a revenue share from the issue and usage charges in respect of the ClearCash prepaid MasterCard. Income and charges are recognised in the period in which they were incurred by the card user. Property, Plant and Equipment All property, plant and equipment are initially recorded at cost. Depreciation is provided at rates calculated to write off the cost less residual value of each asset over its expected useful life, as follows: Leasehold improvements - 25% straight line Fixtures and fittings - 25% straight line Residual value and estimated remaining lives are reviewed annually. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event 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 at a pre-tax rate that reflects current market assessments of the time value of money.


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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. Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations. Leasing Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Financial Instruments Financial assets and financial liabilities are recognised in the statement of financial position when the Group has become a party to the contractual provisions of the instrument. Trade and other receivables Trade receivables are classified as loans and other receivables in accordance with IAS 39, measured on initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the consolidated income statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less and are classified as other loans and receivables in accordance with IAS 39. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of amounts as defined above. Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into. An instrument will be classified as a financial liability when there is a contractual obligation to deliver cash or another financial asset to another enterprise. Trade and other payables Trade payables are initially recognised at fair value and subsequently at amortised cost using the effective interest method. They are classified as “Other liabilities” in accordance with IAS 39.


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2. Significant Accounting Policies (continued) Borrowings Interest-bearing bank loans and overdrafts are classified as “other liabilities” in accordance with IAS 39. They are initially recorded at their fair value, net of any transaction costs associated with borrowings. Borrowings are subsequently stated at amortised cost. Finance charges, including premiums payable on settlement or redemption, are expensed to the income statement over the term of the instrument using an effective rate of interest and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. 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 secured convertible loan notes. Taxation The tax expense represents the sum of the current tax expense and deferred tax expense. Taxable profits differ from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or deductible. The Group’s liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements are the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.


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3. Segmental Information The Group’s total income, profit before taxation and net assets were all derived from its principal activities being the provision of IVA’s and other financial advice and appropriate solutions to individuals experiencing personal debt problems. All the Group’s activities were undertaken wholly in the United Kingdom. Year ended 30 June 2013 Debt Total Debt Total Insolvency Management 2013 Insolvency Management 2012 £ £ £ £ £ £ Revenue 4,698,865 4,003,389 8,702,254 6,291,276 2,912,177 9,203,453 Cost of sales (1,555,865) (3,617,223) (5,173,088) (2,796,908) (1,728,471) (4,525,379) _________ _________ _________ _________ _________ _________ Gross Profit 3,143,000 386,166 3,529,166 3,494,368 1,183,706 4,678,074 Administrative expenses (1,520,067) (574,656) (2,094,723) (1,174,368) (680,016) (1,854,384) Share based payment (33,072) (17,246) (50,318) (47,310) (38,413) (85,723) ________ _________ _________ _________ _________ _________ Profit before interest, tax depreciation and amortisation 1,589,861 (205,736) 1,384,125 2,272,690 465,277 2,737,967 Depreciation (155,883) (31,374) (187,257) (106,183) (41,307) (147,490) Amortisation (658,919) (68,297) (727,216) (1,031,677) (167,804) (1,199,481) Gain on bargain purchase - 3,000 3,000 27,089 - 27,089 ________ _________ _________ _________ _________ _________ Profit from operations 775,059 (302,407) 472,652 1,161,919 256,166 1,418,085 Finance costs (549,404) (137,351) (686,755) (468,489) (117,122) (585,611) Finance income 7,429 - 7,429 2,284 - 2,284 _________ _________ _________ _________ _________ _________ Profit before taxation 233,084 (439,758) (206,674) 695,714 139,044 834,758 Taxation (29,131) 68,645 39,514 (178,059) (65,442) (243,501) _________ _________ _________ _________ _________ _________ Profit after tax 203,953 (371,113) (167,160) 517,655 73,602 591,257 _________ _________ _________ _________ _________ _________


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3. Segmental Information (continued) Net operating assets are reconciled to equity funds as follows: 2013 2012 £ £ Gross assets Insolvency 6,854,797 8,195,737 Debt management 2,146,003 1,770,006 _________ _________ 9,000,800 9,965,743 _________ _________ Gross liabilities Insolvency 2,450,104 3,242,955 Debt management 839,976 895,226 _________ _________ 3,290,080 4,138,181 _________ _________ Capital expenditure to acquire property, plant and equipment Insolvency 259,892 240,240 Debt management 24,873 29,845 _________ _________ 284,765 270,085 _________ _________ Capital expenditure to acquire intangible assets Insolvency 113,712 349,569 Debt management 447,199 - _________ _________ 560,911 349,569 _________ _________ Depreciation of property, plant and equipment Insolvency 155,883 106,183 Debt management 31,374 41,307 _________ _________ 187,257 147,490 _________ _________ Amortisation of intangible assets Insolvency 655,919 1,031,677 Debt management 71,297 167,804 _________ _________ 727,216 1,199,481 _________ _________


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4. Profit from Operations 2013 2012 £ £ Profit from operations is stated after charging: Depreciation of owned assets 187,257 147,490 Amortisation 727,216 1,199,481 Loss on disposal of fixed assets (16,462) (1,739) Share based payment 50,318 85,723 Operating lease rentals – buildings 130,081 113,998 Operating lease rentals – other 45,659 29,432 _______ _______ Amounts payable to the auditors and their associates in respect of both audit and non-audit services: 2013 2012 £ % £ % Audit services - Statutory audit of parent and consolidated accounts 15,000 34% 11,600 29% Other services Fees payable to the company’s auditor and its associates for other services: - Audit of subsidiaries pursuant to legislation 27,500 62% 24,400 62% - Tax compliance services - 0% 2,500 6% - Other services 2,000 4% 950 3%

_______ _______

44,500 39,450 _______ ______ 5. Finance Costs 2013 2012 £ £ Interest payable on loans 226,952 61,614

Interest payable on secured convertible loan notes 182,109 230,000

Interest payable on redemption of secured convertible loan notes 277,694 293,997 ________ ________ 686,755 585,611 ________ ________


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6. Employees Number of Employees The average monthly numbers of employees (including the Directors) during the period was: 2013 2012 Number Number Directors 6 6 Sales and marketing 45 42 Management and administration 33 28 IVA and PTD processing team 34 27 DMP processing team 33 34 ________ ________ 151 137 ________ ________ Employment costs 2013 2012 £ £ Wages and salaries 3,966,249 3,348,146 Social security costs 367,068 277,439 Pension costs 10,242 13,039 ________ ________ 4,343,559 3,638,624 ________ ________ For the year ended 30 June 2013, staff costs of £3,878,875 (2012: £3,351,271) have been included in cost of sales and £454,442 (2012: £287,353) in administration expenses. Directors’ Emoluments 2013 2012 £ £ Directors’ fees 37,500 30,000 Directors’ emoluments 455,089 270,962 ________ ________ 492,589 300,962 Social security costs 55,816 30,085 ________ ________ Key management compensation – short term benefits 548,405 331,047 ________ ________ Key management consist of the statutory directors of the Group. The share based payment with regard to key management amounted to £17,630 (2012: £23,130). 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 13 and 14. The remuneration of the highest paid director was £175,000 (2012: £125,000)


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7. Taxation 2013 2012 £ £ Analysis of current year Current tax UK corporation tax (receivable)/payable (51,872) 264,637 Over provision from prior years (24,167) (667) ________ ________ Total corporation tax (76,039) 263,970 Deferred tax Deferred tax charge taken to income 36,525 (20,469) ________ ________ Tax on profit for the year (39,514) 243,501 ________ ________ Factors affecting charge for year 2013 2012 £ £ (Loss)/profit before taxation (206,674) 834,758 ________ ________ (Loss)/profit multiplied by standard rate of corporation tax in the UK of 23.75% (2012: 25.5%) (49,086) 214,950 Effects of: Expenses not deductible 10,642 6,169 Adjustment due to change of tax rate 2,648 (5,618) Over provision from prior year (24,167) - Other adjustments 20,449 28,000 ________ ________ Current tax (repayment)/expense for year (39,514) 243,501 ________ ________


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8. Earnings per Ordinary Share 2013 2012 £ £ (Loss)/profit for the financial year (167,160) 591,257 __________ __________ 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 __________ __________ (Loss)/earnings per share Basic (0.05)p 0.19p Diluted n/a 0.19p __________ __________ The calculation of the basic loss per ordinary share of 0.05p (2012: earnings 0.19p) each has been based on the profit for the relevant financial year and on 308,340,567 shares (2012: 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. Where the Group reports a loss for the current period, then in accordance with IAS 33, the share options are not considered dilutive. Details of such instruments which could potentially dilute basic earnings per share in the future are included in note 15. 9. Intangible Assets Other Software Intangibles - Development Goodwill back books costs Total £ £ £ £ Cost – 2013 At 1 July 2012 4,402,280 4,444,482 213,730 9,060,492 Arising on acquisition of back books - 447,199 - 447,199 Additions - - 113,712 113,712 Disposals - - (94,040) (94,040) _________ _________ _________ _________

At 30 June 2013 4,402,280 4,891,681 233,402 9,527,363 _________ _________ _________ _________ Amortisation – 2013 At 1 July 2012 - 3,344,906 88,807 3,433,713 Charge for year - 644,148 83,068 727,216 Disposals - - (82,602) (82,602) _________ _________ _________ _________

At 30 June 2013 - 3,989,054 89,273 4,078,327 _________ _________ _________ _________ Net book value At 30 June 2013 4,402,280 902,627 144,129 5,449,036 _________ _________ _________ _________


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9. Intangible Assets (continued) Other Software Intangibles - Development Goodwill back books costs Total £ £ £ £ Cost – 2012 At 1 July 2011 4,457,892 4,141,283 295,663 8,894,838 Arising on acquisition of back books - 303,199 - 303,199 Additions - - 46,370 46,370 Disposals (55,612) - (128,303) (183,915) _________ _________ _________ _________

At 30 June 2012 4,402,280 4,444,482 213,730 9,060,492 _________ _________ _________ _________ Amortisation – 2012 At 1 July 2011 55,612 2,211,458 151,077 2,418,147 Charge for year - 1,133,448 66,033 1,199,481 Disposals (55,612) - (128,303) (183,915) _________ _________ _________ _________ At 30 June 2012 - 3,344,906 88,807 3,433,713 _________ _________ _________ _________ Net book value At 30 June 2012 4,402,280 1,099,576 124,923 5,626,779 _________ _________ _________ _________ Back books comprise the entitlement to future income arising from client contracts acquired from third parties. Impairment reviews The total carrying value of £4,402,280 relating to goodwill is reviewed annually for impairment. This comprises £2,880,986 relating to the insolvency business and £1,521,294 relating to the debt management business. In September 2013 the majority of the debt management plans within the debt management business were sold to a third party for cash which significantly exceeded the carrying value of the goodwill relating to the debt management business and on this basis it is fully recoverable. Goodwill arising on ClearDebt acquisition (insolvency business) – critical accounting estimates and judgements in relation to the impairment review on the insolvency business For the purposes of the impairment review the recoverable amount has been calculated as the value in use based on discounted future cash flow projections for a three year period based on budgets for 3 years and thereafter at rates in perpetuity assuming no growth from year 3 onwards. Assumptions are based on recent experience and estimates of how economic conditions may affect levels of activity in the business taking into account management’s strategy for growth. The budgets assume growth in the number of new IVA’s consistent with current run rates to date and static numbers in the years thereafter. Nominee fees per case are expected to remain at current levels together with average supervisory fees, with IVA’s lasting a maximum of 5 years. Expenses excluding amortisation are expected to remain constant throughout. The appropriate discount factor used in the calculations is 14.4%. The Group’s cost of capital could increase to 57.5% or insolvency income fall short of projections by 14% without a matching fall in expenses before the carrying value of this part of goodwill would exceed the value in use.


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10. Property, Plant and Equipment Fixtures Leasehold and fittings improvements Total £ £ £ Cost – 2013 At 1 July 2012 594,152 49,848 644,000 Additions 283,199 1,566 284,765 Disposals (76,097) (41,345) (117,442) ________ ________ ________ At 30 June 2013 801,254 10,069 811,323 ________ ________ ________ Depreciation – 2013 At 1 July 2012 227,193 41,214 268,407 Charge for the year 181,565 5,692 187,257 Disposals (72,246) (40,173) (112,419) ________ ________ ________ At 30 June 2013 336,512 6,733 343,245 ________ ________ ________ Net book value At 30 June 2013 464,742 3,336 468,078 ________ ________ ________ Cost – 2012 At July At 1 July 2011 622,972 49,848 672,820 Additions 270,085 - 270,085 Disposals (298,905) - (298,905) ________ ________ ________ At 30 June 2012 594,152 49,848 644,000 ________ ________ ________ Depreciation – 2012 At 1 July 2011 386,227 33,595 419,822 Charge for the year 139,871 7,619 147,490 Disposals (298,905) - (298,905) ________ ________ ________ At 30 June 2012 227,193 41,214 268,407 ________ ________ ________ Net book value At 30 June 2012 366,959 8,634 375,593 ________ ________ ________


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11. Trade and other receivables 2012 2012 £ £ Trade receivables 2,397,505 2,669,662 Prepayments 392,267 655,594 Other receivables 167,768 103,622 ________ ________ 2,957,540 3,428,878 ________ ________ Trade receivables are all due in less than one year and represent monies due in respect of consultancy income together with IVA nominee and supervisors’ fees. The trade receivables figure is shown net of provisions in respect of IVA failures amounting to £671,796 (2012: £396,280). 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: 2013 2012 £ £ At the beginning of the year 396,280 189,799 Charge for the year 385,515 213,215 Utilised during the year (109,999) (6,734) ________ ________ At end of year 671,796 396,280 ________ ________

The directors consider that the carrying value of trade and other receivables approximates to their fair value. 12. Current Liabilities 2013 2012 £ £ Trade and other payables: Trade payables 399,670 224,903 Accruals 425,325 391,213 Other payables 186,209 296,050 ________ ________ 1,011,204 912,166 ________ ________ The directors consider that the carrying value of trade and other payables approximates to their fair value. Corporation tax payable 187,929 263,970 ________ ________ Current financial liabilities Current financial liabilities - (note 13) 2,038,646 2,597,306 ________ ________


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13. Financial Liabilities Loans outstanding at the reporting date were as follows:- 2013 2012 £ £ Secured convertible loan notes - 2,597,306 Loans - current 2,038,646 - Loans – non-current - 315,000 ________ ________ 2,038,646 2,912,306 ________ ________ On 16 April 2013 the £2,300,000 of 10% Secured Convertible Loan Notes issued by CDG (Guernsey) Limited a wholly owned subsidiary of ClearDebt Group plc, were redeemed. Holders of the secured convertible loan notes elected to be repaid in cash on the redemption date plus accrued interest and a 25% redemption premium on the par value of the secured convertible loan notes. No holders elected to convert any of the secured convertible loan notes into ordinary shares of ClearDebt Group plc. D E M Mond was interested in £500,000 of the secured convertible loan notes (2012: £500,000) which were redeemed at par plus the redemption premium of £125,000 on his holding on 16 April 2013. On 1 April 2013 ClearDebt Group plc entered into a loan agreement with D E M Mond to advance £850,000 to enable the Group to repay the secured convertible loan note holders in full. In addition a further sum of £625,000 was advanced once D E M Mond’s secured convertible loan notes were redeemed. Interest is payable at 10% per annum on the principal with a 25% premium on redemption. This borrowing and other loans are unsecured. At 30 June 2013 loans outstanding included £1,888,646 due to D E M Mond (2012: £315,000 plus £500,000 of secured convertible loan notes). A further loan of £150,000 is due to a third party and is unsecured. This earns interest at 10% per annum.


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14. Deferred Taxation 2013 2012 £ £ Temporary differences (37,401) (39,352) Losses 23,171 61,647 ________ ________ At 30 June (14,230) 22,295 ________ ________

Analysed as follows: 2013 2012 £ £ Deferred tax asset 38,071 72,034 Deferred tax liability (52,301) (49,739) ________ ________ At 30 June (14,230) 22,295 ________ ________ Movement in the period 2013 2012 £ £ At 1 July 22,295 11,524 Deferred tax charge taken to the income statement (36,525) 20,469 Arising on acquisition of intangible assets - (9,698) ________ ________ At 30 June (14,230) 22,295 ________ ________ 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. It is the directors’ opinion that the remaining losses carried in the balance sheet will be recoverable over this time period. Unrecognised deferred tax 2013 2012 £ £ Losses 186,879 200,773 ________ ________ At 30 June 186,879 200,773 ________ ________ Provision for liabilities and charges – deferred taxation During the year the Group purchased back books of DMP’s from certain companies (see note 17). Following the estimation of the fair values of the assets purchased the Group provided £nil (2012: £9,698) in respect of deferred taxation in relation to the acquisitions. During the year £11,717 (2012: £9,488) 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.


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15. Share Capital 2013 2012 £ £ Authorised share capital: Ordinary share capital 750,000,000 (2012: 750,000,000) 3,750,000 3,750,000 Ordinary shares of 0.5 pence each Deferred ordinary share capital 750,000,000 (2012: 750,000,000) 11,250,000 11,250,000 Deferred shares of 1.5p each _________ _________ 15,000,000 15,000,000 _________ ________ Allotted, called up and fully paid: Ordinary share capital 308,340,567 (2012: 308,340,567) 1,541,703 1,541,703 Ordinary shares of 0.5 pence each Deferred ordinary share capital 308,340,567 (2012: 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 no rights to vote at general meetings or any rights to receive dividends. The Deferred Ordinary Shares are not capable of transfer at any time without the prior written consent of the Directors and have the right to repayment of the paid up capital only on any winding up or return of capital. It is the intention of the Board to seek Court approval to cancel the Deferred Ordinary Shares and the Share Premium Account in due course. The Company has granted equity settled share options to selected directors and employees under an EMI scheme. The exercise price is the market value of the shares at the date of grant. The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant then they are forfeited. At 30 June 2013 there were 15,125,000 (2012: 16,625,000) share options outstanding over the Company’s ordinary shares at a weighted average exercise price of 1.88p per share.


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15. Share Capital (continued) Details of the share options issued during the year and outstanding at 30 June 2013 are as follows:-

2013 2012 Weighted Weighted Number of average exercise Number of average exercise Options price in (p) options price in (p) Outstanding at beginning of year 16,625,000 1.98 11,312,500 1.98 Granted during year - - 6,575,000 1.75 Forfeited during year (1,500,000) 1.90 (1,262,500) 1.96 __________ _____ __________ _____ Outstanding at the end of the year 15,125,000 1.88 16,625,000 1.89 __________ _____ __________ _____ Exercisable at 30 June 8,000,000 2.00 - - __________ _____ __________ _____ These share options are normally exercisable between 7 October 2012 and 31 October 2021 providing the employee has been in continuous service for 3 years following the granting of the options. The options outstanding at 30 June 2013 had a weighted average exercise price of 1.88p and a weighted average remaining contractual life of 7 years and 2 months. 16. 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. 2013 2012 £ £ Charged to consolidated income statement 50,318 85,723 ______ ______


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17. Acquisition In April 2013 Abacus (Financial Consultants) Limited (“Abacus”) acquired a back book of DMP clients. The assets acquired were intangible assets represented by the future income due from the book of DMP cases. At the date of acquisition the fair values of the assets purchased comprised the following:

Fair Value £

Other intangible assets- DMP 413,000 Gain on bargain purchase (3,000)

410,000 Settled by: £ Cash consideration 410,000 The intangible DMP assets acquired are being amortised over 18 months which, in the directors’ opinion, is the useful economic life of the assets. Included in the results for the year are revenues of £158,144 and a pre-tax profit of £76,477 excluding the gain on purchase of a bargain asset of £3,000.The gain on purchase of bargain assets represents the excess of the directors assessment of the fair value of the assets acquired over the acquisition price. 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.

18. 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 were recharged at cost for Google advertising, travelling, book-keeping, accountancy and utility charges to the value of £163,840 in the year (2012: £52,699). ClearDebt and Abacus have also re-charged Hodgsons at cost £48,513 (2012: £67,472) for certain expenditure including rent, rates and other outlays borne by ClearDebt in the year. The Group made no payments on behalf of Hodgsons during the year. As at 30 June 2013 Group had net amounts due to Hodgsons of £63,949 (2012: due to Hodgsons £29,038). No interest is charged on the outstanding amounts. D E M Mond made further loans to the Group in the year of £1,475,000 (2012:£nil) and received a partial repayment of £55,000 (2012: £700,000). As at 30 June 2013 the loan balance was £1,888,646 (2012: £315,000). The loan is repayable by 31 December 2013 or earlier at the Group’s discretion. Since the year end, the bulk of this loan was repaid (in September) following the sale of the majority of the debt management book of the Abacus business to a third party. Interest at a fixed rates of 10% per annum of £24,806 (2012: £60,984) was paid by the Group to D E M Mond in the year in respect of interest on his loans.


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19. Financial instruments It is not the Group’s policy to enter into financial derivatives. The nature of the Group’s operating activities exposes it to credit risk. The Group finances its operations from cash resources and short term loans. At present the financial risks arising from the Group’s financing arrangements are considered to be minimal but the Board will continue to review its existing policies on an on-going basis. Interest rate risk The Group’s objective is to minimise its exposure to the effects of fluctuations in interest rates whilst balancing this against the need to minimise borrowing costs. To manage exposure to interest rate risk the Group has taken all borrowings on a fixed interest rate of 10%. The only assets that attract an interest rate risk are cash and cash equivalents. Liquidity risk It is the Group’s policy to manage liquidity in order to achieve continuity of funding. This is managed by detailed projections and monitoring of expenditure with significant items of expenditure requiring approval of senior management. Foreign currency risk The Group has no overseas assets or liabilities. Interest rate risk profile of financial assets All the financial assets of the Group were floating rate or non-interest bearing assets. Floating rate financial assets comprise cash deposits on call and interest was received at rates between 1.15% and 1.25%. At 30 June 2013 interest bearing financial assets of the Group totalled £nil (2012: £270,618). Credit risk and reliance on a single customer The Group’s objective is to minimise credit risk as far as possible whilst maximising returns on financial assets. The financial assets of the Group are placed on money markets with the Group’s bankers and other banks. As such the Group is exposed to counter party risks with respect to deposits placed with its bankers. Financial institutions in which deposits are made are selected based on their credit rating as well as the returns offered. There is an inherent risk of default in trade receivables. The Group minimises its risk by ensuring that IVA’s are only entered into appropriately to minimise the risk of failure of the IVA. The risk of default will generally only arise if an IVA fails in the first 6 months. Details of exposure of the trade receivables are shown at note 11. The Group presently derives turnover of £1,113,056 (2012: £1,578,710) from one customer and the loss of this customer would have a material effect on the performance of the Group in the future. Capital The Group defines capital as equity and long term debt. The Group’s objective for managing capital is to balance the risk and reward to shareholders by ensuring an appropriate level of gearing. There are no restrictions on the makeup of the Group’s capital. Interest rate risk profile of financial liabilities The financial liabilities of the Group are all non-interest bearing other than the loans which attract a fixed rate of interest as described in note 13.


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19. Financial instruments (continued) Maturity of financial liabilities The maturity profile of the Group’s loans as at 30 June 2013 was as follows: 2013 2012 £ £ Payable within one year 2,253,375 3,090,657 Payable between one and two years - 339,806 _________ _________ All other financial liabilities are due within one year. Currency exposures The Group has no foreign currency assets or liabilities. Fair values of financial assets and financial liabilities The fair values, based upon the market value or discounted cash flows of the financial instruments detailed above was not materially different from their book values. 20. Operating Lease Commitments The future minimum lease payments under operating leases that have initial or remaining terms in excess of one year at 30 June 2013 were as follows: 2013 2012 £ £ Payable within one year 208,678 157,299 Payable between one and five years 135,249 416,917 ________ ________ 343,927 574,216 ________ _________ The operating leases represent leases on the office premises used by the Group at its Timperley and Staveley (Chesterfield) sites as well as office equipment and motor vehicles. These leases are due to expire between February 2014 and May 2017. 21. Post Balance sheet events In September 2013 Abacus sold the majority of its debt management book of approximately 5,000 clients to a third party for cash. The sale is expected to realise a profit on disposal of approximately £900,000 after rationalisation and other sale costs together with goodwill impairment provisions in respect of the Abacus business. The company continues to add new debt management plans to its client base and may look in the future to dispose of a further tranche of client plans.

ClearDebt Group plc COMPANY BALANCE SHEET As at 30 June 2013 Company number 02441375

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2013 2012 Notes £ £ Fixed Assets Intangible assets 2 - 6,806 Tangible assets 3 334 3,037 Investments 4 4,797,380 4,764,692 _________ _________ 4,797,714 4,774,535 Current Assets Debtors: amounts falling due within one year 5 3,330 82,644 Debtors: amounts falling due after one year 6 1,688,174 1,567,333 Cash at bank 379 285,653 _________ _________ 1,691,883 1,935,630 Creditors: amounts falling due within one year 7 (2,153,065) (65,856) _________ _________ Net current (liabilities)/assets (461,182) 1,869,774 _________ _________ Total assets less current liabilities 4,336,532 6,644,309 Creditors: amounts falling due after one year 8 (531,445) (3,008,801) _________ _________ Net Assets 3,805,087 3,635,508 _________ _________ 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 11 339,353 289,035 Profit and loss account 11 (2,981,026) (3,100,287) _________ _________ Equity Shareholders’ Funds 3,805,087 3,635,508 _________ _________ The financial statements were approved by the Board of Directors and authorised for issue on 19 November 2013 and are signed on its behalf by: D E M Mond Director


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1. Significant Accounting Policies Basis of Accounting The financial statements have been prepared on a going concern basis, under the historical cost convention and in accordance with the Companies Act 2006 and the applicable accounting standards in the United Kingdom. Deferred Taxation Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are the differences between the Company taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax arrangements in periods different from those in which they are recognised in the financial statements. Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax is calculated at the rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Deferred tax is measured on a non-discounted basis. Cash Flow Statement The Company has taken advantage of the exemption permitted by FRS1 not to present a cash flow statement. Investments Fixed asset investments are stated at cost except where in the opinion of the directors, there has been permanent diminution in the value of the investments, in which case an appropriate adjustment is made. Share-Based Compensation Equity-settled share based payments are measured at the fair value of services received in exchange for the grant of options or warrants. The fair value determined is recognised as an expense if it relates to trading activities or in the share premium account if it relates to the issue of equity instruments. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options or warrants granted, excluding the impact of any non-market vesting conditions (for example, profitability and growth targets). Non-market vesting conditions are included in the assumptions about the number of options or warrants that are expected to become exercisable. At each balance sheet date, the company revises its estimates of the number of options or warrants that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement, and a corresponding adjustment to reserves over the remaining vesting period. The proceeds received net of any attributable transaction costs are credited to share capital (nominal value) and share premium when the options or warrants are exercised. Non vesting conditions which are not satisfied during the vesting period are treated as cancellations and any remaining expense is accelerated in the period of failure. Share based payments associated with share options granted to employees of subsidiaries of the parent company are treated as an expense of the subsidiary company to be settled by equity of the parent company. The share based payment expense increases the value of the parent company’s investment in the subsidiaries and is credited to the Share based payment reserve. Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations. Share based payments associated with share options granted to employees of subsidiaries of the parent company are treated as an expense of the subsidiary company to be settled by equity of the parent company. The share based payment expense increases the value of the parent company’s investment in the subsidiaries and is credited to the Share based payment reserve.


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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 - Software development costs - 3 years straight line Loss attributable to the Members of the Parent Company

The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its own profit and loss account for these financial statements. The profit dealt within the accounts of the parent company was £119,261 (2012: loss £714,790). 2. Intangible assets Other intangibles £ Cost – 2013 At 1 July 2012 and 30 June 2013 35,000 _______ Amortisation – 2013 At 1 July 2012 28,194 Charge for the year 6,806 _______ At 30 June 2013 35,000 _______ Net book value At 30 June 2013 - _______ Net book value At 30 June 2012 6,806 _______


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3. Tangible assets Fixtures and fittings £ Cost – 2013 At 1 July 2012 11,721 Additions - _______ At 30 June 2013 11,721 _______ Depreciation – 2013 At 1 July 2012 8,684 Charge for the year 2,703 _______ At 30 June 2013 11,387 _______ Net book value At 30 June 2013 334 _______ Net book value At 30 June 2012 3,037 _______ 4. Fixed Asset Investments Shares in Subsidiary undertakings £ Cost As at 1 July 2012 4,764,692 Investment in subsidiaries - share based payments 32,688

________

As at 30 June 2013 4,797,380 ________

Shares in subsidiary undertakings are stated at cost. The company owns directly the following principal subsidiaries which are all incorporated in the United Kingdom and included in the consolidated accounts: Profit/ Reserves Class of (loss) for 30 June Company Activity Shares Holding period 2013 £ £ ClearDebt Limited IVA Services Ordinary 100% 79,096 2,162,913 ClearCash Limited Pre-Paid Card Ordinary 100% (92,041) (223,202) Abacus (Financial Consultants) Limited Debt Management Ordinary 100% (236,762) 238,836 The Debt Advice Portal Limited Dormant Ordinary 100% - - Clear Finance Solutions Limited Dormant Ordinary 100% - - Reclaim Assistance Limited Dormant Ordinary 100% - - CDG (Guernsey) Limited Investments Ordinary 100% - 96,496 Clearly Money Limited Dormant Ordinary 100% - -


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5. Debtors: amounts falling due within one year 2013 2012 £ £

Prepayments and accrued income 3,330 82,644 ________ ________

6. Debtors: amounts falling due after one year

2013 2012 £ £

Amounts owed by Group undertakings 1,664,937 1,499,917 Deferred tax asset 23,237 67,416 ________ ________ 1,688,174 1,567,333

________ ________

The deferred tax asset relates to tax losses available to offset against future taxable profits. Detailed forecasts have been prepared for the next 5 years and at present these forecasts show that not all of these will not be fully utilised. Total deferred tax losses amount to £210,049 of which £23,171 has been recognised at the balance sheet date as an asset after provisions. 7. Creditors: amounts falling due within one year

2013 2012 £ £

Loan 2,038,646 - Trade creditors 15,231 25,000 Accruals 99,188 40,856 ________ ________ 2,153,065 65,856 ________ ________ 8. Creditors: amounts falling due after one year

2013 2012 £ £

Amounts owed to Group undertakings 531,445 2,693,801 Loan - 315,000 ________ ________ 531,445 3,008,801 ________ ________ D E M Mond made further loans to the Group in the year of £1,475,000 (2012:£nil) and received a partial repayment of £55,000 (2012: £700,000). As at 30 June 2013 the loan balance due to him was £1,888,646 (2012: £315,000). The loan is repayable by 31 December 2013 or earlier at the Group’s discretion. Interest is payable at 10% per annum on the principal with a 25% premium on redemption. This borrowing and other loans are unsecured. Since the year end the bulk of his loan has been repaid (in September 2013) following the sale of the majority of the debt management plans of the Abacus business to a third party. An unsecured loan of £150,000 was also advanced by a third party at an interest rate fixed at 10% per annum. Interest at a fixed rate of 10% per annum of £24,806 (2012: £60,984) was paid by the Group to D E M Mond in the year in respect of interest on his loans and on the loan due to the third party.


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9. Share capital 2013 2012 £ £

Authorised share capital: Ordinary share capital 750,000,000 (2012: 750,000,000) 3,750,000 3,750,000 Ordinary shares of 0.5 pence each Deferred ordinary share capital 750,000,000 (2012: 750,000,000) 11,250,000 11,250,000 Deferred shares of 1.5p each _________ _________ 15,000,000 15,000,000 _________ ________ Company Allotted, called up and fully paid: Ordinary share capital 308,340,567 (2012: 308,340,567) 1,541,703 1,541,703 Ordinary shares of 0.5 pence each Deferred ordinary share capital 308,340,567 (2012: 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 no rights to vote at general meetings or any rights to receive dividends. The Deferred Ordinary Shares are not capable of transfer at any time without the prior written consent of the Directors and have the right to repayment of the paid up capital only on any winding up or return of capital. It is the intention of the Board to seek Court approval to cancel the Deferred Ordinary Shares and the Share Premium Account in due course. The Company has granted equity settled share options to selected directors and employees under an EMI scheme. The exercise price is the market value of the shares at the date of grant. The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant then they are forfeited. At 30 June 2013 there were 15,125,000 (2012: 16,625,000) share options outstanding over the Company’s ordinary shares at a weighted average exercise price of 1.88p per share.


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9. Share capital (continued) Details of the share options issued during the year and outstanding at 30 June 2013 are as follows:-

2013 2012 Weighted Weighted Number of average exercise Number of average exercise Options price in (p) options price in (p) Outstanding at beginning of year 16,625,000 1.98 11,312,500 1.98 Granted during year - - 6,575,000 1.75 Forfeited during year (1,500,000) 1.90 (1,262,500) 1.96 __________ _____ __________ _____ Outstanding at the end of the year 15,125,000 1.88 16,625,000 1.89 __________ _____ __________ _____ Exercisable at 30 June 8,000,000 2.00 - - __________ _____ __________ _____ These share options are normally exercisable between 7 October 2012 and 31 October 2021 providing the employee has been in continuous service for 3 years following the granting of the options. The options outstanding at 30 June 2013 had a weighted average exercise price of 1.88p and a weighted average remaining contractual life of 7 years and 2 months. 10. Related party transactions D E M Mond is a partner in Hodgsons, Chartered Accountants, by whom ClearDebt Group plc (“Group”) were recharged at cost for certain expenses including Google advertising, travelling, book-keeping, accountancy and utility charges. At 30 June 2013 £40,186 was owed to Hodgsons (2012: £49,788). The highest balance in the year was £49,788 and the lowest balance £40,186. The directors have taken advantage of the exemption under FRS 8 from disclosing transactions with other wholly owned group companies. 11. Equity reserves Share based Share Profit and compensation premium loss account £ £ £ Company at 1 July 2012 289,035 279,948 (3,100,287) Share based compensation 50,318 - - Profit for the year - - 119,261 ________ ________ _________ At 30 June 2013 339,353 279,948 (2,981,026) ________ ________ _________


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12. Operating Lease Commitments The future minimum lease payments under operating leases that have initial or remaining terms in excess of one year at 30 June 2013 were as follows: 2013 2012 £ £ Payable within one year 2,142 157,299 Payable between one and five years 386,258 416,917 ________ ________ 388,400 574,216 ________ _________ The operating leases assets above reflect those for which the company has contracted for in its own right. The majority of the leased assets are used by its subsidiary companies and are also included in their accounts to reflect the fact that the charges for the leases are paid for by these companies and expensed through their financial statements. These leases are due to expire between February 2014 and May 2017.

ClearDebt Group plc SHAREHOLDER INFORMATION

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Trading Record 2013 2012 2011 2010 2009 £ £ £ £ £ Revenue 8,702,254 9,203,453 7,776,362 6,633,995 3,386,935 (Loss)/profit for the financial period (167,160) 591,257 71,036 342,235 407,062 Cash generated by operations 1,972,779 1,788,944 1,045,707 1,466,180 380,807

Documents

ClearDebt Group plc - Britdaq · Independent Auditor’s report to the members of ClearDebt Group plc 15-16 . ... statement of financial position 18 . Consolidated statement of changes