4th Aug 2006 13:30
Debt Free Direct Group PLC04 August 2006 4 August 2006 DEBT FREE DIRECT GROUP PLC TRADING UPDATE FOLLOWING AGM The board of Debt Free Direct, the leading debt advice and solutions company, ispleased to announce that all the resolutions proposed at its Annual GeneralMeeting on 4 August 2006 were passed. Trading update It is clear from our analysis of the market that IVA providers have yet todeliver anywhere near the number of IVAs that are required by over-indebtedconsumers in the UK. As a result of improved conversions and new advertising creatives, we havesignificantly increased our ability to generate IVA leads. Our lead generationcapability is very strong and continues to grow, and our key challenge has beento focus on the speed with which we can build capacity to deliver best adviceand IVAs to those consumers. Historically the business has always been constrained in its ability to grow,notwithstanding the fact that our run-rate has grown eight-fold over the lastthree years. Improvements in our business processes, training and systems have dramaticallyreduced our lead times in recruiting new staff and bringing them to fullproductivity. As a consequence, we are confident that our ability to growskilled employee numbers will become a rapidly diminishing constraint on thebusiness in future months. Once we have moved into new operating facilities in October this year (since ouroriginal announcement in April 2006 we have subsequently increased the spaceavailable to us by a further 26 per cent), the final constraint to our futuregrowth for the foreseeable future will have been removed. We are confident that we are now in a position to comfortably exceed the marketexpectations with regard to our future IVA run-rate. Looking ahead The above demonstrates the significant progress we have made in the last sixmonths. Looking ahead, we are investigating the potential of further expandingour existing (creditor funded) debt management and re-mortgage businesses. In the year ended 30 April 2006 our existing advertising activity generated inexcess of 18,000 (exclusively creditor funded) debt management referrals.However, we believe that such leads provide us with the opportunity topotentially diversify our income streams and further enhance profitability. Similarly, in the year ended 30 April 2006 we generated (approximately) 3,500re-mortgage leads from which we derived income and profits of approximately £1million. We would expect this income stream to grow organically in thisfinancial year under current arrangements, but we are now looking at how wemight otherwise maximise the value of this business. In planning to build upon the above businesses, we are well placed to enhanceour market position as a consumer champion, whilst maximising our income fromthose leads where an IVA would not represent best advice to the consumer. We will update the market further as we have substantive news in either of theseareas. Andrew Redmond, CEO, commented "Whilst growth in recent years has been strong, we have always been frustratedby those factors which have constrained us. We believe that we have nowaddressed those restraining factors and we now have the opportunity todemonstrate our true growth potential. I am confident that we are now in aposition to comfortably exceed the market expectations with regard to our futureIVA run-rate. Our focus looking forward is to enhance our lead utilisation andthereby increase profitability." Enquiries: Debt Free Direct Group plcAndrew Redmond, Chief Executive Officer 01257 240599Paul Latham, Finance Director 01257 240529 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 ExchangeRelated Shares:
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