Trading Statement

Debt Free Direct Group PLC
26 January 2007


26 January 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 light of today's announcement by Accuma and the negative market sentiment
that has followed, we have brought forward our trading update that had been
planned in relation to the third quarter trading period.

Over the last quarter, we have been challenged by two external factors; creditor
posturing and increased advertising from our competitors. Both areas are
discussed in more detail below.

The combined impact of these two factors will make it challenging to fully
achieve market expectations for the FY 2007. We do, however, believe that market
expectations for FY2008 are entirely realistic.


Increased competitor advertising

Our advertising performance in the first half of the financial year was in line
with our forecasts and in line with the prior year performance. November and
December showed signs of reduced response rates and January has been more
obviously weaker than expected. An analysis of our share of voice on key media
indicates that a dramatic increase in competitor advertising is responsible for
this erosion. Our reaction to this erosion has been to increase our advertising
spend so as to maintain our desired volumes, albeit at a higher cost of
acquisition. Our FY2008 forecasts already assume a significantly higher cost of
acquisition than FY2007 and, whilst this may now have to be revised upwards, the
impact is expected to be more than offset by other income sources (previously
announced) secured since those forecasts were made.

Given the lead time in placing effective increased advertising, it will not be
possible to place sufficient advertising to maintain the forecast call volumes
in February. It is therefore likely that our IVA volumes in February and March
may be lower than are required to fully achieve market expectations. We are,
however, continuing to work towards doing just that.


Creditor posturing

It is clear that creditor comment in recent months has impacted on confidence in
the valuation of IVA stocks. It is difficult to measure whether this has led to
any loss in consumer confidence, as some commentators have predicted. Whilst we
are not strong supporters of that view, it is apparent that changing creditor
criteria for acceptance of an IVA (whether justifiable or not) is having an
impact on case conversion (i.e. they are now failed early in the DFD process,
rather than letting them fail at Meeting of Creditors, because of particular
creditor preferences).

An increased incidence of case failure and, more particularly, case
adjournments, have led to a slow down in the growth in run-rate of new IVAs.
Notwithstanding this (based on calls taken in January), we anticipate reaching
record levels in February/March and exiting the year at IVA levels previously
indicated.

We believe that 'peace will break out' with creditors over coming months and
that the difference between the 'good', the 'bad' and the 'ugly' debt advisers
will become more apparent and that the 'good' will prosper.


DFD Australia

Progress in Australia continues to exceed our expectations. Lead generation and
conversion of cases is running ahead of previous expectations. We continue to
work hard on building creditor acceptance, however, overall our case pass rate
is in line with expectations. We continue to anticipate, in line with previous
updates, that the business will become profitable in FY09.


DFD Mortgages

Progress has been very encouraging to date. Early indications are that case
conversions will be better than those achieved from the previous referral based
model.

We anticipate that revenue from DFD Mortgages will represent 10% of DFD Group
revenue in FY08 (compared to 6% in FY06 and 7% in FY07).


Debt Management Plans

It is very early days to comment, given the inception of our new income stream
on 10 January 2007. We anticipate that revenue from Debt Management Plans will
represent 2% of DFD Group revenue (with no incremental cost) in FY08 from a
standing start.


Overall DFD Group

Debt Free Direct has made significant progress in FY2007. Market expectations
for the financial year were originally at £8m and were significantly upgraded to
£9.5m as we entered into the financial period. Expectations were again upgraded
in September 2006, when the consensus moved to £11m; a figure that management
have been very comfortable with until recent external events have impacted on
performance.

It is clear that the final quarter of FY07 will be challenging. The increased
advertising costs and loss of call flow, together with growing creditor
posturing in recent months, may make achieving market expectations difficult.

However, we expect that our run-rates in FY08 will be in line with those
previously anticipated. Advertising cost may, however, exceed previously
anticipated levels. These two factors, together with the anticipated impact from
DFD Mortgages and the new debt management plan income stream, leads us to
believe that profitability in FY08 will be comfortably in line with current
market expectations.


Enquiries:


Debt Free Direct Group plc
Andrew Redmond, Chief Executive Officer 0845 296 0100
Paul Latham, Finance Director 0845 296 0200

Numis Securities
Iain McDonald 020 7776 1500
Lee Aston

Financial Dynamics
Ed Gascoigne-Pees 020 7269 7132
Nick Henderson 020 7269 7114



Notes

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

Unlike most of its competitors who sell specific products, Debt Free Direct
looks to provide the best advice to the consumer and recommends them the most
appropriate service.

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





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