Debt Free Direct delighted followers with another record set of figures for the year to April. Pre-tax profits at the company, which advises debt-laden individuals on the best way to recover from financial difficulties, soared 177 per cent north to £5.1m, sending earnings per share racing 145% ahead to 9.4p.

According to finance director Paul Latham, this frenetic growth was struck on the back of the burgeoning demand for Individual Voluntary Arrangements (IVAs), as well as out-performance by DFD itself, which now commands 20% of the UK IVA market. ‘We managed to reduce our average cost per IVA from £1,252 to £807 and we are enjoying better media buying deals as well as improved conversion rates,’ he added.

Followers of the sector have been impressed by growth in the IVA market, which has proved a lucrative space for other quoted players and shows no sign of slowing down just yet. In light of this, Numis Securities’ has upgraded its forecasts for DFD yet again, shifting its 2008 profit forecast from £13.7m to £15.2m.

This year, expect a leap in profits to £9.6m from £28.2m sales, placing DFD on a forward multiple of 25. Although the shares have had a terrific run from 250p in 2006, there is undoubted growth to come, with Latham warning of a ‘ever growing number of people with a debt problem’. He adds – ‘we think there’s between one and two million irreversibly over indebted people in the UK who represent accidents waiting to happen’.

A likely rate rise twinned with inflationary pressures could present such individuals with a double whammy effect, with mortgage payments on the up and the cost of living likely to increase. We are buyers, even after a great run from the 66p at which Growth Company Investor originally recommended the shares and a lofty forward multiple. The 2008 rating is a more palatable at 16 times.