Frp Advisory Group Regulatory News (FRP)

6 Mar 2007 10:15

Debt Free Direct Group PLC06 March 2007 6 March 2007 DEBT FREE DIRECT GROUP PLC TRADING UPDATE Debt Free Direct Group (DFD), the leading debt advice and solutions company,today provides a trading update. In our recent trading update, dated 26 January 2007, we highlighted ourexpectation that the final quarter of FY07 would be challenging, which mightmake achieving market expectations difficult. We are now in a position toquantify the impact on profits in FY07 of increased advertising costs and lowercall volumes, together with creditor concerns. Our confidence in achieving market expectations for FY08 remains unchanged. Advertising performance The deterioration in advertising performance continued in February 2007. It isnot yet clear whether this was a result of: - increased competitor advertising, or - lower consumer confidence in the IVA solution arising from the tone of pressreporting generated by ongoing creditor concerns With regard to competitor advertising, we have been encouraged by theAdvertising Standards Authority response to the highlighting of misleading anduntruthful IVA adverts. As a consequence, in the longer term we anticipate thatthe IVA advertising market will not remain as competitive as it is currently. New lead generation source Notwithstanding the above, as part of its continuing strategy to reduceacquisition costs, DFD has entered into a 2 year agreement with an establishedmoney advice organisation for the exclusive generation of leads. Those leadswill cover the complete range of debt solutions (including IVAs, DMPs, TrustDeeds, mortgages and loans). This business is currently generating significantnumbers of leads per month (around 10% of DFD's existing volumes) andanticipates further growth over the period of the agreement. Whilst thisarrangement will have little impact on the current financial year, it willbenefit future periods significantly. New IVA case generation We now anticipate new case numbers for March and April being around 600 new IVAcases per month (counting joint cases = 1). Overall DFD Group Debt Free Direct has made significant progress in FY07. Market expectations forFY07 were originally at £8 million (adjusted PBT) and were subsequently upgradedtwice, with the consensus moving to adjusted PBT of £11 million. Since our trading update in January 2007, the consensus has been revised.However, we believe that the outcome for FY07 will be approximately 10-15% belowthe current market consensus range (£9.7 million to £10.3 million adjusted PBT). Looking ahead, whilst we may be impacted by higher advertising costs (and lowerresponse rates), the beneficial impact of the new lead source and the increasein our non IVA revenue per call mean that advertising cost per IVA can increasesignificantly without impacting overall profitability. As a consequence, ourconfidence in achieving market expectations for FY08 remains unchanged. Enquiries: Debt Free Direct Group plcAndrew Redmond, Chief Executive Officer 0845 296 0100Paul Latham, Finance Director 0845 296 0200 Numis SecuritiesIain McDonald 020 7776 1500Lee Aston Financial DynamicsEd Gascoigne-Pees 020 7269 7132Nick Henderson 020 7269 7114 Notes 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 recommends them the most appropriate service. Debt Free Direct is based in Chorley, Lancashire, and was admitted to AIM inDecember 2002. This information is provided by RNS The company news service from the London Stock Exchange