Frp Advisory Group Regulatory News (FRP)

1 Oct 2007 16:17

Debt Free Direct Group PLC01 October 2007 1 October 2007 DEBT FREE DIRECT GROUP PLC COMMENT ON IVA INDUSTRY Debt Free Direct Group (DFD), the leading debt advice and solutions company, ismaking the following announcement commenting on the IVA industry in response totoday's pre close update by Debtmatters Group plc and the subsequent andsignificant share price movements across the sector. As the market leader inproviding services to over-indebted customers, our views are as follows:- IVA's are of fundamental importance to the UK banking industry and Governmentpolicy and will remain so. This is particularly true during this current periodwhen levels of consumer indebtedness have hit record highs and with UK personaldebt standing at £1.3 trillion at August 2007. The provision of IVA's and otherservices to creditors and over-indebted consumers is already a sizeable marketand is set to grow for the foreseeable future. This has created a macro-economic climate which is strongly in our favour with agrowing number of potential cases to be dealt with. However, we have seen aperiod of transition during the first half of this year, from which we have notbeen immune, as the industry moves out of its adolescence and through a periodwhen key stakeholders, including ourselves, are demanding increasingprofessionalism and efficiency. However Debtmatters' concern that they "may nolonger be able to deliver IVA's profitably" is not one we share. To thecontrary, the current market shake-out will have its casualties, but will alsoprovide an opportunity for the market leaders in a consolidating industry thatwill continue to experience profitable growth. As a result of negotiations with creditors, IVA fees will increasingly becalculated on a "percentage of realisations" basis. This considerably favoursthe best operators in the industry, who have the highest levels of realisationsfor creditors. We believe that DFD has the highest level of realisations in theindustry as well as one of the lowest cost bases and will therefore continue towrite profitable IVA's, and also benefit relative to its competitors. We continue to be in dialogue with creditors regarding fee levels and theincreased access for debtors to the IVA process. We remain focused on achievinga mutually satisfactory outcome from these discussions over the next two months. DFD has by far the largest back-book of existing IVA's which now makes up asignificant part of its annual profits as well as providing locked-in futureprofits and strong cash flow benefits. DFD have previously announced that it is planning to update investors inNovember with the results of its strategic review. Our plans are focused onpressing home our advantage: •As a large scale and low cost provider by further lowering our costs of operation •With continued profitable growth as reducing competition has a positive impact on reducing IVA case acquisition costs •As a consolidator in the sector as the current weakness provides opportunities These plans are now well developed and actions are already being implemented. Enquiries: Debt Free Direct Group plc Andrew Redmond, CEO 0845 296 0100Paul Latham, Finance Director 0845 296 0200 Numis SecuritiesLee Aston 020 7776 1500 Financial DynamicsEd Gascoigne-Pees 020 7269 7132Nick Henderson 020 7269 7114 About Debt Free Direct Debt Free Direct helps individuals find the best solution to their debtproblems, based upon an analysis of their particular financial circumstances.Financial information on an individual is processed through a computer model(the Best Advice Model) developed by Debt Free Direct in order to recommend asolution suitable for that individual's particular financial circumstances. Thesolutions offered range from basic advice, such as simply destroying creditcards and curbing unnecessary expenditure, to the following solutions: •consolidation loan •re-mortgage •informal arrangement •individual voluntary arrangement (IVA) •bankruptcy Debt Free Direct is unique in the marketplace in that, unlike most of itscompetitors who sell specific products, Debt Free Direct looks to provide thebest advice to the consumer and recommend them the most appropriate service.Debt Free Direct is the UK's leading provider of IVAs. The recent acquisition of Clear Start, a private competitor in the IVA market,will support DFDs growth and has genuine synergies, bringing together DFDssuperior IVA operations and creditor realisations with Clear Start's low-costonline channel and strong creditor relations. Debt Free Direct is based in Chorley, Lancashire, and was admitted to AIM inDecember 2002. - Ends - This information is provided by RNS The company news service from the London Stock Exchange