Trading update. Divi should be safe12 Mar 2012 07:23
third quarter ended 31 January 2012.
Group performance
Group profit from continuing operations (stated before amortisation and exceptional items) for the nine months ended 31 January 2012 has been in line with that achieved in the prior year comparative period. The outcome for the year will be dependent on performance in the final quarter, historically a busy trading period.
Continuing operations
The core insolvency and restructuring division has reported improved profits and margins for the first nine months of the financial year, reflecting the benefit of cost savings implemented in prior periods. Activity levels in the UK insolvency market remain subdued, due in part to the continuation of the benign financing environment of low interest rates, whilst the realisation of assets remains constrained.
In light of the trading environment, we continue to focus on our cost base. Headcount in insolvency has reduced from 501 at the last year end (30 April 2011) to 470 as at 31 January 2012, a reduction of 6.2%. Ongoing efficiency initiatives will incur exceptional costs in the second half of the current financial year with the benefit to be realised in future periods.
As stated in our half year results announcement in December 2011, the Global Risk Partners division has not yet replaced a number of large and profitable engagements, which were completed at the start of the financial year. The sales pipeline remains strong although any new engagements are not now expected to materially benefit the current financial year. We have continued to invest in the division through senior recruitment in the UK forensic business, the cost of which will have a short-term impact on profitability. Overall, the division is expected to generate a small loss in the second half of the financial year.
Discontinued operations
Since the half year results, we completed the disposal of the Channel Islands Insolvency and Restructuring business. We continue to make progress with the divestment of the Red Flag business and expect to complete a transaction by the end of the current financial year.
Net debt
The Board currently expects net debt at the end of the current financial year to be at a similar level to that at 31 October 2011, comfortably within the Group's banking facilities.
Commenting, Ric Traynor, Executive Chairman of Begbies Traynor Group, said:
"Our core insolvency business has maintained its market leading position and continues to benefit from cost savings, resulting in improved profits and margins. The Group outcome for the financial year as a whole will be dependent on the important final quarter's trading.
"Having made good progress with our disposal programme, we remain highly focussed on maximising the performance of the core businesses."
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