Well from what Ive heard and seen over the last two years its seems everybody has gone barmy borrowing as much money as possible. It seems the days when people used to save for a rainy day are far gone and the buzzword is now 'have you got a credit card'.
Nearlly everday I get a leaflet or letter through my door asking me if I want to borrow such and such for a new car or a house extension etc.
Leading Banks say we have never been a bigger country of borrowers, they estimate borrowing has gone up between 14% and 17% on an anualised basis this year alone, bang on all the existing debt outstanding and we could have OVERLOAD. And this will be further compounded with interest rate rises which I feel sure we will see later this year and going into next year.

Step forward Debt Free Direct, the provide a service that allows people to to get their finances back on track while still repaying their creditors far more than if the debts were passed to personal factoring and debt management companies.

Heres a summary of what services the company provide.....


Debt Free Direct helps individuals find the best solution to their debt
problems, 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 a
solution suitable for that individual's particular financial circumstances. The
solutions offered range from basic advice, such as simply destroying credit
cards and curbing unnecessary expenditure, to the following solutions:

* consolidation loan
* re-mortgage
* informal arrangement
* individual voluntary arrangement (IVA)
* bankruptcy

Debt Free Direct has a distinct position in the marketplace in that unlike most
of its competitors who sell specific products, Debt Free Direct looks to provide
the best advice to the consumer and recommends to them the most appropriate
service.

Debt Free Direct is based in Chorley, Lancashire and was admitted to AIM in
December, 2002.

The company have a strict sifting proceedure through the Best Advise Model and only about 33% of applicants get through therefore eliminating risk to the company.

Profit and Loss summary below


CONSOLIDATED PROFIT AND LOSS ACCOUNT

PERIOD FROM 26 APRIL 2002 TO 30 APRIL 2003


Period from
26 Apr 02 to
30 Apr 03


TURNOVER 1,058,248
Cost of sales (738,877)
_________
GROSS PROFIT 319,371
Administrative expenses
Goodwill amortisation (126,641)
Other administrative expenses (288,041)
_______
(414,682)
_________

(95,311)
OPERATING LOSS

Interest receivable 963
Interest payable and similar charges (80,443)
_________

LOSS ON ORDINARY ACTIVITIES BEFORE AND AFTER
TAXATION (174,791)

Tax on loss on ordinary activities 59,941
_________

LOSS FOR THE FINANCIAL PERIOD (114,850)
=========
Loss per share - basic and diluted (1.28p)

The balance sheet looks sound for a company in its infancy and its business model.


CONSOLIDATED BALANCE SHEET

AS AT 30 APRIL 2003

FIXED ASSETS


Intangible assets 2,791,424
Tangible assets 211,349
_________

3,002,773
CURRENT ASSETS
Debtors 1,254,124
Cash at bank 81,249
_________
1,335,373

CREDITORS: Amounts falling due within one
year (1,672,471)
_________
NET CURRENT LIABILITIES (337,098)
_________

TOTAL ASSETS LESS CURRENT LIABILITIES 2,665,675

CREDITORS: Amounts falling due after more than
one year (168,392)

PROVISION FOR LIABILTIES AND CHARGES (1,987,98)
_________

509,296
=========


CAPITAL AND RESERVES
Called-up equity share capital 225,000
Share premium account 399,146
Profit and loss account (114,850)
_________

SHAREHOLDERS' FUNDS 509,296
=========

In a business model like this you are going to get a big percentage of Intangibles.


The Business Plan Going Forward.

The model is based upon continuing to take a share of the existing market and
all our budgets and forecasts have been made upon that assumption. However
there is the potential for accelerated growth if the market, or our share of it,
increases. We believe that we are living through a period of quite exceptional
levels of:-

• high employment;
• low inflation;
• low interest rates; and
• rising house prices.

The above have dynamically combined and resulted in ever increasing record
levels of secured and unsecured debt. This is increasingly being used to fund
expenditure in excess of income. Essentially, too many people are living beyond
their means and are funding the gap with secured and unsecured debt.

At this time most people can afford the repayments on increased debt because the
interest they pay, notably on their mortgage, has been falling.

However the economic factors outlined above will not last indefinitely. We
believe that the time will arrive when interest rates will rise and this will
impact on the existing delicate economic balance prompting a vicious circle
resulting in ever increasing numbers of over-indebted people requiring our help.

We are confident that we are well placed to help them and that our business will
continue to grow even more rapidly in the years ahead.

Our purpose

Briefly our purpose is to:-

• provide the best advice to every over-indebted person who calls us;
and
• be the leading provider of advice and appropriate financial solutions
to over-indebted consumers with particular focus on the 'quality
sector'.

The 'quality sector'

Essentially these are generally responsible, mature people who through
unforeseen life events have become unable to pay their bills on time. This is a
situation that they do not like and they are 'the unfortunates' in what is often
perceived as an irresponsible market.

These are people, who having been pointed in the right direction will stick to
the most appropriate solution found for them and will become good customers for
us.

Building shareholder value

To continue to build shareholder value we will:

• target the appropriate market sector;
• provide the appropriate advice to a high technical and ethical
standard;
• provide appropriate empathy to their difficulties; and
• use the law and the regulatory framework which is appropriate for
their benefit.

In other words, shareholder value will be derived by doing what is right and
appropriate for all of our customers in every circumstance.

Debt Free Direct is different

We offer free, impartial, best advice to every caller........without exception.

Best advice is systematically delivered through a sophisticated computer advice
model. This has been independently recognised as an industry leader.

Furthermore, in a largely unregulated market our business operations are highly
regulated; something which we welcome. We provide advice in all financial areas
to include the most formal, legal insolvency processes and we employ highly
qualified Licensed Insolvency Practitioners whose advice and working practices
are monitored and regulated by the appropriate authorities,

We believe that this is a market which is ripe for increased regulation in the
future and we will positively welcome that when it happens.

We are encouraged to see that others share our view as highlighted by the OFT
guidelines issued to debt management companies and the recently announced
investigation into consolidation loans. Any increased regulations resulting
from these or any other government initiatives can only strengthen our position
in the marketplace.

We will particularly benefit as others struggle to embrace the cultural change
required from higher regulatory standards imposed upon them.

A Redmond
Chief Executive Officer

And finally the company have recently placed 3.85 million of new shares ahead of costs to partly fund a TV Campaign going up towards the xmas spending spree on Satelite and Terrestial TV. 1.5 million will go on advertising and to increase its Call Centre Capacity.

I rate the shares a long term Investment but there could be some interesting times ahead.

Please DYOR.

GF.

Buy, say "Investors Chronicle" 2/012/05

Hindsight is a wonderful thing! My last post looks pretty silly now, have to admit! sp 251.50p as I write

sd

stockdog: my canine friend. Unusual that you called this wrong - proves you're not perfect in logic terms, though. Are you back in? Have been looking closely at DFD and DEBT in light of Shares enthusiasm. Decided that DEBT is the better buy given that they are growing more rapidly from a smaller, because later, base. market appears to be growing at annual rate of 100%. DFD is keeping pace with that at just under 20% of market whilst DEBT may be +50% against the market. Suggest the race is on as to which reaches 5 first. That is reasonable target given growth rates. Have opened thread on DEBT and would appreciate your comments.

Eric

Eric - DFD is a perfect Jim Slater model as it happens - what a fool for not reading his book until after I'd sold. All goes to show, if it ain't broke don't sell it (err . . . or something). No I never got back in and have to much regret to do so now (again aw rong decision possibly).

Agree DEBT would look interesting at its current level - can they enter the market against DFD successfully? Mind you the marlket is growing rapidly all the time and we haven 't seen anything like the worst of it yet in terms of bankruptcies etc. I haven't run my ruler over them, but the chart looks very promising. Might take a look.

Looked at CLEA also, but visibility of earnings versus cost base does not make sense yet - will keep an eye on it. The chart with 20/40dma superimposed looks like an early design of where to hang the bunting on a steamer!

Am now concentrating my efforts on Jim Slater paradigm growth companies, which at least has the advantage of giving me a way of limiting my interests. For example looked at RHPSG tip IMR, which is terrific, except it is loaded with debt and porpped up by friends who are also providing a lot of the business. Also CEO ran Tiphook which I seem to remember was meteoric in the 80's before going belly up. Another one for the watch list for when the results show better gearing and some proof of profitability pudding.

Still fully invested in DGT, of course and way over invested in SEO which mercifully seems to have turned a bit of a corner today - we'll see.

Nice to chat.
sd

Thanks sd. Very interesting to compare DFD, DEBT and CLEA. DFD is now very well-established, have a proven business model and growing consistently with the amrket. DEBT is a year or more behind DFD but gaining market share. CLEA is a veery early stage punt but could have terrific potential. Very roughly: 20:10:1 cap. Have gone for DEBT on the basis that there is still more action on the sp to catch up with DFD. Clearly, this sector is bang up Slater's street and likely to remain so for quite some time. A market doubling each year is bound to attract newcomers but DFD are very well established and DEBT becoming so. I like CLEA's internet based model but this might be easiest to replicate and I wonder whether the quality of business (and its unit value) is as good. From the sector selection standpoint this appears a no-brainer: for sheep rather than dogs?

Eric

we'll have a race!! I've got 80000 CLEA so hope I'll win on %. look at EPY and BTX Eric they're winners too I think.

moneyplus: I recall you were the leading filly is the ASOS challenge! Actually, I am not betting DEBT against CLEA, only DFD and that's primarily because DFD is the more mature company. Easier to grow more quickly from a smaller base although not sure DFD growth has ever been as dramatic as that of DEBT. But if I switch the argument to CLEA then the boot is on the other foot. My first reading is that a CLEA breakthrough may not be certain, although not sure why not; on the other hand, or foot, that breakthrough could be much more dramatic as it is on the market at an earlier stage. May have a nibble!

Eric

Personal debt in the UK rises by 1 million every four minutes.
(quote from Invocas.com website)

Results to be announced next Tuesday.
Could be one of the better performing stocks over a traditionally quiet period for the market.

;o)

Debt free is also expanding to Australia.

a total overreaction in this sector due to one of the smaller players CLEA having a 'system failure',that has disrupted its smooth progress. Debt Matters have even gone to press stating that they have no reason for their share price being depressed and they have had their best month yet in September. Hoped for a positive tick up today after all the press comment on rising bankrupcy rates over the weekend - hey ho see what tm brings - any news due from ACG SOON????

I chose today as a good day to top up at somewhat less than my original investment.

Story's still the same, PEG, margin, ROCE, macro-econimoc environment - all lovely. Why would we want a share to rise in price while we are still buying it. I want it to be good and fat in more than 10 years time.

Would like rather more than Mr Prideaux's modest holding amongst the directors, but in these days of giveaway share options (which I assume they all have without having checked??) what can you do?

Chart closing above its previous low and the RNS confirming no known reason for the fall gives me confidence enough that we have hit bottom and should now work our way back to new highs by whenever. This has a 2 year growth story - who cares exactly when it matures.

sd

ACG results on 31st March - should hopefully be good - should see a turnaround in this sector - just shows how much hype in values though

AM

Well, I got that wrong. THought m=by midday I'd had a lucky escape, but not liking the look of further falls during the day. Some good buys towards close. Who knows why or where it will stop.

Augustman - hoping for some comfort a little sooner than end March 2007!! Thanks all the same.

Sugar!!!!!!!!!!!!.....meant 31st October sd .......plus dets.co.uk just announced results to be on 24th.....smaller player but hopefully steady.....see dfd reported that it expects record levels of IVA'S in coming months.....a turn we hope!!!!

DFD has been going downhill because there has been a surprise drop in IVAs, as mentioned in the Investors Chronicles this week. Recent headline news on record bankruptcy has not helped DFD.

DFD has said the drop represents a week's worth of business lost whilst moving to bigger offices to accommodate more business for the future - no evidence that volume of IVA's have reduced in the market as a whole (other than, if DFD isn't there to do them, there may be an actual reduction in that restricted period). Journo's needing bad news to sell their rags IMHO.

The drop across the sector is worrying, admittedly, but I cannot see the fundamentals saying enything but increasing profits as we continue witht he interest rate cycle - predicted to keep rising by 0.25% every c. 3 months over the course of next year.

Sector has had a pullback, but recent comments from managements have all been positive... good results, controlled growth, all very cash generative.

- wouldnt be surprised to see some consolidation here as 1) main players look to increase capacity; and 2) outside (private equity?) buyers see the potential for growth and cash returns.

- DFD now into new premises - should allow growth to reaccelerate; but better play in sector in my view is DEBT - same growth, but on HALF the earnings multiple for next year.

Matt - I was in DFD early (sold far too early) and am now in DEBT, since I agree of the top 4 (DFD, DEBT, DETS, ACG) they have the best overall rating/security IMHO.

We just have to wait patiently for this spate of bad market sentiment to pass. They can't argue with the numbers much, for long, eventually!