Frp Advisory Group Regulatory News (FRP)

3 May 2007 07:01

Debt Free Direct Group PLC03 May 2007 3 May 2007 DEBT FREE DIRECT GROUP PLC TRADING UPDATE Debt Free Direct Group (DFD), a leading debt advice and solutions company, todayreleases a trading update ahead of its preliminary results announcement, whichwill be made during the week commencing 25 June 2007. In overview Anticipated results for the financial year ended 30 April 2007 will be in linewith market consensus of £8.5 million adjusted PBT. IVA business As previously stated in our trading updates of 26 January and 6 March, the last6 months have seen a very challenging trading period in the IVA market. Thedifficulties we have faced have been well documented and most notably include: - increased competitor advertising, with a consequent deterioration in our advertising performance - creditor pressures, which have resulted in an increased incidence of case rejection and case adjournments, with a consequent slow down in the growth in run-rate of new IVAs. However, there are many reasons to be encouraged with regard to our position inthe IVA market as we enter a new financial year. - We believe that peaceful and sustainable working relationships with creditors will develop over the coming months. The difference between the genuine debt advisors and the less ethical sales orientated companies is already becoming increasingly apparent to creditors and we remain confident that the ethical advisors will prosper. - We are encouraged by the Advertising Standards Authority response to the highlighting of misleading and untruthful IVA adverts. As a consequence, now that the more outrageous and untruthful claims of other advertisers have been banned, we anticipate that the IVA advertising market will not remain as competitive as it has been in recent months. - As the largest and longest established IVA provider in the market (we have almost 10,000 live cases), we believe that we are the most able to withstand any future industry changes, particularly with regard to fee structures. Our bank of existing supervisory cases (which will not be impacted by any such changes) will provide a cushion, both in terms of cash generation and highly visible future income and profits. - In overview, we are very confident that we are in a very strong position, and will certainly be less impacted by the changing face of the industry than some of our weaker competition. DFD Australia Progress in Australia continues to meet and in places exceed our expectations.We are very happy with our ability to generate and convert leads. We continue towork hard on building creditor acceptance, particularly as the Australianregulatory landscape will be changing over the coming months. We anticipate, inline with previous updates, that the business will become profitable in FY09. DFD Mortgages Our organically developed mortgage and loan business continues to makeencouraging progress and case conversions achieved are better than thoseachieved from the previous referral based model. We anticipate that revenue from DFD Mortgages will grow to in excess of £4.5million in FY08 (compared to £2.1 million in FY07 and £1 million in FY06). Debt Management Plans This new income stream (introduced in January 2007) has been in line with ourearly expectations. We anticipate that revenue from Debt Management Plans willgrow to £0.9 million in FY08, from effectively a standing start. Overall DFD Group Debt Free Direct has made significant progress in FY07. Market expectations forthe financial year were originally at £8 million and, whilst expectations havefluctuated significantly throughout the year, the final outcome will exceedinitial market expectations. We believe that profitability in FY08 will be broadly in line with currentmarket expectations, albeit that the dynamics of the separate business areashave changed over recent months. IVA advertising costs will exceed previouslyanticipated levels and growing IVA run-rates will be consequently more expensive(but still very profitable). However, the impact of those increased costs willbe offset by the positive impact of DFD Mortgages and the new Debt ManagementPlan income stream going forward. Andrew Redmond, Chief Executive Officer, commented: "We are delighted that Debt Free Direct continues its rapid growth. Turnover hasgrown in FY07 by 72% (compared to FY06), with adjusted PBT growing byapproximately 65%. This has been achieved despite the recent trading conditions,which have been well documented. We are convinced that we are in prime position to continue to strengthen ourhold on the IVA market, whether by organic growth or otherwise." 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 always seeks (unlike many of its competitors who sell specificproducts) to provide the best advice to the consumer and recommend them the mostappropriate solution. 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