First Day Dealings on AIM

Debt Free Direct Group PLC
13 December 2002







 Debt Free Direct Group plc (the 'Company' or 'DFD plc') announces admission of
      its Ordinary Shares to trading on the Alternative Investment Market

                                   Key Points

  • Debt Free Direct's shares began trading on AIM today
  • The Company successfully raised £373,570 gross by way of a placing
  • A total number of 933,927 ordinary shares were placed at the Placing Price
    of 40p per share
  • Market capitalisation is £9 million
  • The Company provides debt solutions via a unique Best Advice Model to
    consumers with debt problems
  • Debt Free Direct was originally founded by Lathams, Chartered Accountants
    in 1997 but was later sold to a number of Lathams' partners. DFD plc
    therefore was not part of Tenon's acquisition of Lathams in May 2001.
  • UK market for debt solutions providers is rapidly expanding
      • Outstanding credit card balances stood at £40 billion in December 2001*
      • Unsecured consumer debt has doubled between 1994 and 2001*
      • Credit card circulation has more than doubled since 1994 from
        27.7million to 55 million in 2001*
      • 25% of households reported financial problems in the last year*


        *Above points extracted from 'Over-indebtedness in Britain' A report to
         the Department of Trade and Industry. Elaine Kempson, Personal Finance
                            Research Centre, September 2002.


  • The Directors have considerable experience of the financial services
    industry and include Grenville Folwell, ex deputy CEO of Halifax plc, as
    Non-executive Chairman
  • WH Ireland Limited is Nominated Adviser and Broker

Andrew Redmond, Chief Executive of the Company commented:-

'Debt Free Direct Group plc offers an efficient and structured approach to
identifying the best solutions for individuals with debt problems. We have
invested in systems and staff to create a strong business, which combined with
the opportunities that an AIM listing provides, leaves the Company ideally
placed to capture significant market share.'

Press enquiries
Debt Free Direct Group plc    Andrew Redmond, Chief Executive   T: 01257 518000
Debt Free Direct Group plc    John Reynard, Finance Director    T: 01257 518000
W. H. Ireland Limited         Ruth Gifford / Simon Johnson      T: 0121 616 2101
Biddicks                      Shane Dolan                       T: 0207 4481000



Introduction

Debt Free Direct plc was incorporated on 26 April 2002 to acquire the entire
issued ordinary share capital of Debt Free Direct Limited (Debt Free Direct) and
DFD Investments Limited (DFD). The principal aim of Debt Free Direct is to help
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. Income for Debt Free Direct is
primarily generated through agreed fees charged to individuals for the solutions
provided.

The Executive Directors, having developed Debt Free Direct from private
resources since formation, now wish to raise funds for the Group in part to
increase marketing and advertising in order to attract additional customers but
also to provide working capital and to reduce the aggregate amount of Directors'
loans to the Group by £350,000 (less the amount, if any, by which the Placing is
undersubscribed). The funds available to the Group after completion of the
Acquisition and Placing will be approximately £450,500 net of expenses.

Proposed Transaction

DFD has not traded and, as at Admission, will have cash assets of approximately
£226,430. The Company has agreed, conditional on Admission, to acquire the
entire issued ordinary share capital of DFD in consideration for the issue of
2,335,066 new fully paid Ordinary Shares.

History and Background

Debt Free Direct was originally established in 1997 by the professional
accounting partnership of Lathams, based in Chorley Lancashire. Their aim was to
provide the widest possible range of solutions to the burgeoning number of
individuals with debt problems. As professional accountants they were aware of a
broad range of solutions available to such individuals, ranging from informal
arrangements with creditors, to more sophisticated solutions such as debt
consolidation, remortgage arrangements, IVAs and other advice. This enables Debt
Free Direct to provide the most appropriate advice to customers within an
industry, which has developed in the UK over the last five to six years.

In February 2000, DFD (Realisations) Limited was incorporated to coordinate
advertisements for the Business. However, this arrangement ceased on 1 May 2002
since when Debt Free Direct has coordinated its own advertisements. On 15
February 2002 the Business was sold by the partners of Lathams to Debt Free
Direct.

Under the terms of a share exchange agreement dated 2 December 2002, the Company
agreed to acquire the entire issued ordinary share capital of Debt Free Direct.
Further details of the arrangements described above are detailed in the
prospectus.

The Market and Competition

Debt Free Direct operates in a rapidly expanding marketplace that is served by a
range of solution providers. Each of these solution providers market their
particular solution to consumers who, through mismanagement or misfortune, have
become overexposed to debt. Whilst these companies offer a number of very
different solutions, it is often difficult from their advertisements to
distinguish exactly what solution a particular company is offering.





Debt Free Direct's competitors include:-

  • Banks and other financial institutions offering consolidation loans,
    re-mortgages and additional advances
  • Debt management companies
  • Insolvency practitioners

Debt Free Direct also competes with the not for profit advisory organisations,
such as the Citizens Advice Bureau and the Consumer Credit Counselling Service,
who promote self-help plans and debt management. Debt Free Direct is different
from most of the other companies operating in this market because it does not
just offer one solution but a complete range of solutions from loans and
mortgages to self-help and debt management programmes through to formal
insolvency procedures.

Increasing numbers of individuals living in the UK are encountering debt
problems. Whilst Citizens Advice Bureaux offer free and independent advisory
services to individuals with debt and other problems, the Directors do not
believe that the advice given always meets the particular requirements of each
individual. Many individuals, therefore, turn to debt management companies to
help deal with their debt problems.

The Directors believe that the main concerns raised about debt management
companies in general are that:

(a) the charges levied by some companies are high;

(b) existing companies in the market do not necessarily recommend the best
solution to an individual's debt problems; and

(c) in many cases there is a lack of full advice provided to individuals.

Debt Free Direct, therefore, provides a professional service, analysing an
individual's particular financial circumstances so as to be able to recommend
the most appropriate solution to that individual's debt problems.



The Business

Debt Free Direct attracts clients primarily by advertising through a number of
media channels including press, radio, television (satellite and terrestrial),
billboard and directories. Individuals respond to the advertisements by calling
a free telephone number and the advisory team collects personal and financial
details which are then immediately processed through the Best Advice Model. The
resulting recommendation is then provided directly to the individual over the
telephone. The solutions offered range from basic advice, such as simply
destroying credit cards and curbing unnecessary expenditure, to the following
solutions:

  • informal arrangement;
  • consolidation loan (usually unsecured); and
  • re-mortgage;
  • IVA;
  • bankruptcy.



(a) Informal Arrangement

Under an informal arrangement, an individual's creditors generally agree to
extend the repayment periods for his/her debts. However, it is not legally
binding and all debts must ultimately be fully repaid. Debt Free Direct offers
two ways of resolving debt problems through an informal arrangement with either:

(i) a self-help pack which contains all the necessary paperwork, including a
personalised income and expenditure account, a full analysis of all the monthly
payments that need to be made to each creditor and letters to creditors to
explain the individual's situation. The self-help pack is provided to
individuals free of charge and generates goodwill and customer referral.

(ii) a managed informal arrangement whereby Debt Free Direct refers the
individual to Payplan Limited (''Payplan''), an unconnected company which
manages the informal arrangement on behalf of the individual. The service
offered by Payplan is free to the individual. Payplan receives its fee from the
individual's creditors whilst Debt Free Direct receives a fixed fee per case
from Payplan; or



(b) Consolidation Loan

This is a new loan taken out to repay all the individual's existing unsecured
debts. Many individuals who contact Debt Free Direct have already tried to
obtain such a loan. However, if this is a potential solution, Debt Free Direct
recommends possible lenders to the individual and usually receives a percentage
of any associated commission.

(c) Re-mortgage

This can be a suitable solution for homeowners with equity in their property.
Where this is the appropriate solution, Debt Free Direct refers individuals to
professional firms of independent financial advisers and usually receives a
percentage of any relevant commission.

(d) IVA

A legal agreement between an individual and their creditors, which involves
structured and affordable monthly payments being made over an agreed period
(normally five years). On successful conclusion creditors agree to write off any
debt that remains outstanding after the agreed period.

(e) Bankruptcy

If an individual is made bankrupt, a trustee is appointed to manage his/her
financial affairs and to sell a sufficient amount of that individual's property
in order to repay his/her debts. Although bankruptcy can be the only feasible
solution in certain circumstances, it is one that most individuals wish to
avoid. If bankruptcy is the recommended solution, Debt Free Direct provides the
individual with a leaflet detailing the course of action the individual should
follow but no fee is charged.

Reasons for the Acquisition, Placing and Admission

The net proceeds of the Placing and the cash assets of DFD upon Admission, which
together aggregate approximately £450,500, will be used in part to provide
additional capital for advertising and marketing the Business and also to
provide working capital for the resulting anticipated growth of the Business.
The Directors believe that the associated benefits of Placing and Admission
include:

Corporate Profile

The performance of the Group should benefit from the status of being a public
company with its shares admitted to trading on AIM.

Access to Capital Markets

The Group may need to raise further funds in the future to develop its business
or to finance any cash element of the consideration for any acquisition. In the
opinion of the Directors, the cost of capital for a publicly traded company
should be lower and capital should be more freely available than for an
equivalent company which is privately owned.

Acquisition consideration

Many vendors prefer to take publicly traded shares, in whole or in part, as
consideration rather than shares which are not publicly traded.

Management appeal

As a public company, it should be easier for the Company to attract suitable
management to assist in the development of the Group.

Directors and Senior Management

Directors

The Board comprises five Directors. Brief biographies of each of the Directors
are set out below:

Grenville John Folwell CPFA and FCT (aged 59) Non-Executive Chairman

Gren Folwell was Deputy Chief Executive of Halifax plc from 1996 to 1999, having
joined the board as Group Finance Director in 1989. During his time on the board
of Halifax plc he played a central role in the merger and subsequent integration
of the Halifax and Leeds Permanent Building Societies. He played a key role in
the £18 billion flotation of Halifax plc, and negotiated on a number of
acquisitions, including the successful £750 million hostile takeover of
Birmingham Midshires Building Society. Mr Folwell's other current non-executive
directorships include the Public Private Partnerships Programme Limited,
Institute of Public Finance Limited and a number of Halifax plc subsidiaries. In
1995 Gren was president of the Chartered Institute of Public Finance and
Accountancy.

Andrew Redmond FCA and JIEB (aged 40), Chief Executive Officer

Andrew Redmond qualified as an accountant at PricewaterhouseCoopers and worked
in its corporate recovery and corporate finance departments until 1994 when he
joined Lathams, Chartered Accountants, as a partner and subsequently headed the
corporate recovery department. Following the acquisition of Lathams by Tenon
Group plc in 2001, he was appointed as Tenon's regional chairman for the
Northern Region.

John Anthony Reynard FCA (aged 43) Finance Director

John Reynard graduated with a degree in law and qualified as a chartered
accountant. He specialised in forensic accounting and joined Lathams, Chartered
Accountants in 1995 as a partner. Following the acquisition of Lathams by Tenon
Group plc in 2001, he was appointed managing director of Tenon Group Plc's
forensic service line in the UK.



Paul Alan Latham FCA (aged 44) Executive Director

Paul Latham qualified as a chartered accountant with Crossley & Davis which
subsequently became Latham Crossley & Davis and later became Lathams, Chartered
Accountants where he became a partner in 1986. Following the acquisition of
Lathams by Tenon Group plc in 2001, Mr Latham became national head of Tenon
Group plc's business consultancy service where he currently specialises in
strategic business planning for the owner-managed business/mid corporate sector.

Ian William Currie ACA (aged 41) Non-Executive Director

Ian Currie has a BA (Hons) degree in Economics from Manchester University and is
a qualified Chartered Accountant. Mr Currie has had a wide experience of
corporate activity including flotations, capital raisings and mergers and
acquisitions. Prior to forming the Manchester office of Altium Capital Ltd. in
1996, Ian Currie was Head of Corporate Finance in the North of England for Peel
Hunt & Co. Ltd.

The Executive Directors' consultancy services are provided through Tenon
Limited. It is intended that, within six months from Admission, a Chief
Executive Officer will be engaged on a full time basis.

Senior Management

In addition to the Executive Directors, the two key members of the management
team of Debt Free Direct are Gill Wrigley and Georgina Earle.

Gill Wrigley is the Insolvency Practitioner within Debt Free Direct and manager
responsible for the IVA team. She qualified as an ACA at PricewaterhouseCoopers
in 1993 and obtained her practicing certificate and insolvency licence in
January 2002. She joined Debt Free Direct in June 2001.

Georgina Earle is manager responsible for the advice team. She began her career
with Airtours plc and has worked in the call centre industry for twelve years.
In October 1999, she joined Sharp Electronics (U.K.) Ltd. and established and
managed their first direct sales unit before joining CSC, a global outsourcing
corporation in January 2000. She joined Debt Free Direct as project manager in
July 2001.

Current Trading and Prospects

The Company has only recently been formed and the Group has not published any
consolidated financial information. The Directors view the prospects of the
Group with confidence and, based on predicted enquiry levels from potential
clients, the Directors believe that revenue will continue to increase in the
foreseeable future without a proportional change in the Business' cost base
other than marketing and advertising. The Directors believe this is a growing
sector of the financial services market.

                                      END




                      This information is provided by RNS
            The company news service from the London Stock Exchange