DEBT Debtmatters

RNS Number:8038E
Debtmatters Group PLC
01 October 2007



1 October 2007



                        Debtmatters Group Plc ("the Company")

                    Pre close period update & strategic review


The Board of Debtmatters provides the following update for the six months to 30
September 2007.

On 9 July 2007 the Company announced that it had raised #3.0m, including an
investment of #0.8m by the management to support investment in building a debt
management business and provide more working capital for the rest of the Group.
This was to provide a third product line to compliment the Group's existing IVA
and secured loan brokerage businesses.


Debt management division

Since its launch in July 2007 the debt management division has performed well.
The initial team of 15 has been increased to 28 by redeployment of staff from
the IVA division. Volumes of enquiries and the conversion rate to debt
management plans are in line with the Boards' expectations and the division, at
this early stage, has made a pleasing start and further progress is anticipated
during the second half.


Loanmakers

The loan broking subsidiary, acquired in June 2006, continues to perform well
and is growing in line with expectations.  Relationships with lenders remain
strong and further steady growth is anticipated.  New sources of referrals are
being developed and the business is well placed to progress in the second half
of the financial year.


IVA division

In contrast, the continued uncertainty surrounding the IVA markets has been well
documented.  IVA case acquisition costs have risen sharply in the face of rising
competition, and IVA conversion rates have worsened due to hardening creditor
attitudes which have impacted on margins.

During the period, discussions hosted by the British Bankers Association and the
Insolvency Service have continued.  However, the process did not provide any
firm conclusions on the issue of fees charged by insolvency practitioners and
this has led to well publicised concerns over the future of the industry.  These
concerns have precipitated the continued share price weakness in the sector from
which Debtmatters has not been immune.

During September we started to see certain creditors seeking to modify IVA
proposals such that on Debtmatters' cases, average nominee and supervisory fees
would be reduced. The impact of these additional changes on the IVA business
could be significant. Should these fee modifications become the norm then we
may no longer be able to deliver IVAs profitably.  Consequently, for the moment
the Board has decided to suspend all direct advertising on TV, radio and through
the press.  In addition, the IVA division, which has built a significant
infrastructure over the last two years since flotation, will be scaled back,
with staff being redeployed into other areas of the business as appropriate.


Outlook for the year

Although we are encouraged by the performance of Loanmakers and the early
performance of the debt management division, the IVA sector remains difficult.
The ultimate outcome for the year remains dependent on the ongoing developments
within the IVA sector which at the time remain uncertain.

The business has approximately 9,000 live IVA cases to process over the coming
years and this will provide a platform from which we can undertake any
restructuring of the Group.


Strategic Review

In light of the potential impact of these fee modifications on our core IVA
business and given the continued disappointing share price, the Board has
determined to undertake a full strategic review of the business and in this
regard has appointed Charles Stanley Securities to act as its financial adviser.
This strategic review will consider a full range of options both in relation
to the IVA business itself and the wider Group.  This review may or may not lead
to the Company seeking an offer for the Company.  However, there can be no
certainty that this process will lead to an offer being made for the Company or
as to the terms of any such offer.

It is anticipated that we will update shareholders further at the time of the
ompany's interim results.

In accordance with Rule 2.10 of the City Code, as at the close of business on 28
September 2007, the Company had 27,243,105 ordinary shares of 10 pence each in
issue. The International Securities Identification Number (ISIN) for these
shares is GB00B09HB648.


Further information:
Debtmatters Group plc                           Charles Stanley Securities
                                                Financial & Nominated Adviser

Ges Ratcliffe, Chief Executive                  Rick Thompson / Freddy Crossley
Tel: 01204 678 200                              Tel: 020 7149 6000



Charles Stanley Securities, which is regulated in the United Kingdom by The
Financial Services Authority, is acting exclusively for the Company in
connection with the matters referred to in this announcement and is not
providing advice to any other person on such matters. Accordingly, Charles
Stanley Securities will not be responsible to anyone other than the Company for
providing the protections afforded to customers of Charles Stanley Securities,
or for providing advice in relation to the matters referred to in this
announcement.


DEALING DISCLOSURE REQUIREMENTS

Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,
"interested" (directly or indirectly) in one per cent. or more of any class of
"relevant securities" of the Company, all "dealings" in any "relevant
securities" of the Company (including by means of an option in respect of, or a
derivative referenced to, any such "relevant securities") must be publicly
disclosed by no later than 3.30 p.m. (London time) on the London business day
following the date of the relevant transaction. This requirement will continue
until the date on which any offer (if made) becomes, or is declared,
unconditional as to acceptances, lapses or is otherwise withdrawn or the date on
which the "offer period" otherwise ends. If two or more persons act together
pursuant to an agreement or understanding, whether formal or informal, to
acquire an "interest" in "relevant securities" of the Company, they will be
deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the City Code, all "dealings" in "relevant
securities" of the Company by an offeror or the Company, or any of their
respective "associates", must be disclosed by no later than 12.00 noon (London
time) on the London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies whose "relevant securities"
and "dealings" should be disclosed, and the number of securities in issue, can
be found on the Panel's website at www.thetakeoverpanel.org.uk.

"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the City Code, which can also be found
on the Panel's website at www.thetakeoverpanel.org.uk.  If you are in any doubt
as to whether or not you are required to disclose a dealing under Rule 8, you
should consult the Panel.

If you are in any doubt as to the application of Rule 8 to you, please contact
an independent financial adviser authorised under the Financial Services and
Markets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk or
contact the Panel on telephone number +44 (0) 20 7638 0129; fax number +44 (0)
20 7236 7013.




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