Begbies Regulatory News (BEG)

4 Jul 2005 07:00

Begbies Traynor Group PLC04 July 2005 RNS Release 4 July 2005 Begbies Traynor Group plc Preliminary results for the year ended 30 April 2005 Begbies Traynor Group plc, a specialist provider of business recovery andinsolvency services, announces preliminary results for the year ended 30 April2005. Financial and business highlights: •Profit before tax and amortisation of £4.3 million (full year) •Normalised annualised earnings per share of 5.0p •Maiden dividend of 0.5p per share proposed •Activity up 16% year on year •Value of new case work won up 25% year on year •Operating cash flow £2.9m (seven months to April 2005) •Gearing at 39% at year end Ric Traynor, Executive Chairman, said: "All members of the board of Begbies Traynor Group join me in believing that theplatform created, business developments since 30 April 2005 and the continuedsupport of our teams across the country stand the Group in very good stead forthe current year and beyond. "Market intelligence suggests that the demand for our core business insolvencyskills may be set to increase and, if that translates into increased activity,we stand ready and able to meet that demand. In the area of personal insolvencyservices, a demand increase appears even more established and we plan to respondaccordingly." Enquiries, please contact: Ric Traynor Neil Boom/Rosemary AcfieldExecutive Chairman Gresham PR Ltd.Begbies Traynor Group plc 020 7404 90000161 839 0900 Chairman's Review The last twelve months has been the most active and exciting period in thehistory of Begbies Traynor since the business was founded in 1989. My firstthought, in writing this review of that period, is to thank the partners andstaff of the Group for their help and support through the year and for theircontribution to the delivery of a maiden set of Group results to 30 April 2005at the higher end of our expectations. Commercial Development Over the past year, we have progressed our strategy of growth in our corecorporate insolvency activities and the development of closely related servicesto the business community. We have also noted the strong market growth in demandfor domestic personal insolvency services and have begun to undertake work inthis area. This work requires a different operating model from business relatedrecovery work and we are developing a strategy to appropriately respond to themarket demand. In February, we welcomed Andrew Segal and his team into our South East regionoperation, as part of the continuing development of our presence in thisimportant region of the country; the opening, in late 2004, of our new flagshipLondon office in Cornhill was another key step in that development. At the beginning of May 2005, we also welcomed the corporate finance team of MCFinto the Group. As well as bringing its existing £1.5m per annum activity baseand strong reputation to bear, the MCF team will spearhead our expansion of thiscomplementary business service into the major commercial cities in which wealready operate. We augmented our forensic capabilities in the year through the recruitment offour experienced specialists and, at the beginning of June 2005 by theacquisition of FDB, which specialises in investigative and tracing assignments. These acquisitions have had negligible impact on the results to 30 April 2005;indeed the last two are post balance sheet events. However, we expect all ofthese developments to significantly enhance our activity and market penetrationin the current financial year. Whilst progressing our overall expansion, we have not neglected our core market.We have continued to recruit experienced partners and professional staff whoshare our ambition and vision and to encourage staff learning and professionalqualification. The key measure of our organic development is the initiallyestimated value of new cases won and we are pleased that this value hasincreased by 25% on the previous year. During the year, we have built on our experience and specialist knowledge in thelicensed and hospitality trade and insurance industry related work; with ourmarket penetration increasing in both of these sectors. We have continued to develop our operations in business restructuring outsideformal insolvency, which is a service increasingly in demand, and to forge ourinternational professional links to generate and support cross-border work. Inevitably, given the major changes undertaken, we have parted company with asmall number of partners whose style is not compatible with the direction anddemands of the Group. I thank them for their past efforts and wish them well forthe future. Financial Development The organisation of the Group under BTG and its flotation was a time consumingexercise but has played a key part in helping us to raise the profile of BegbiesTraynor in the marketplace, attract highly regarded partners and staff andenhance our ability to grow by acquisition. I believe that the solid structuralplatform we have created will continue to promote the growth of the Group. That platform has also provided access to the development funding that the Grouprequires. As well as the £5m of new equity secured last October, we have, whenappropriate, the opportunity to seek further equity funding from the investmentmarket, which should also have the benefit of increasing liquidity in BTGshares, assisting market price stability. Results to 30 April 2005 The financial statements formally cover trading for only the seven month periodsince the flotation of BTG, but we have included pro forma information for thewhole year, which has been fully audited, in order to give a more meaningfulinsight into the Group's results. The following comments relate to the resultsfor the year to April 2005. Activity has risen by 16% to £25.7m, as measured by the selling value of allwork done and compared to the same measurement for the year to April 2004adjusted from the information published in the Accountant's Report in ourprospectus dated 28 September 2004. Both sets of financial statements adopt thenew accounting standard on income recognition; in that unbilled work done isincluded at realisable value where we have approval for non-contingent feeincome. I believe that the new standard improves the accuracy of measurement ofactivity, but we will not lose sight of the need to invoice for our work toallow value to be translated into cash. Profit before tax and goodwill amortisation for the year was £4.3m; a margin of17% after interest and all of the costs associated with our AIM listed status.We adopt an aggressive amortisation policy in respect of goodwill onacquisitions, but have decided not to amortise the goodwill arising out of theconsolidation of the Group and its flotation. After allowing for amortisation, pre acquisition profits and tax provisions,earnings were £1.3m. A dividend of 0.5 pence per share, representingapproximately one quarter of those earnings, will be proposed to shareholders atthe Annual General Meeting in September. I hope to meet some of the newshareholders who have joined us since flotation on that occasion. Prospects All members of the board of Begbies Traynor Group join me in believing that theplatform created, business developments since 30 April 2005 and the continuedsupport of our teams across the country stand the Group in very good stead forthe current year and beyond. Market intelligence suggests that the demand for our core business insolvencyskills may be set to increase and, if that translates into increased activity,we stand ready and able to meet that demand. In the area of personal insolvencyservices, a demand increase appears even more established and we plan to respondaccordingly. Ric TraynorExecutive Chairman1 July 2005 Begbies Traynor Group plc Consolidated Profit and Loss Account 5m period to 7m period to Year to 30 Sept 2004 30 April 2005 30 April 2005 £'000s £'000s £'000s Turnover 9,275 15,430 24,705Movement in work in progress 184 345 529Direct costs (4,682) (7,281) (11,963)Administrative expenses (3,396) (5,259) (8,655)Other operating income 46 110 156 ---------- ---------- ---------- Earnings before interest,tax and amortisation 1,427 3,345 4,772Amortisation of goodwill (858) (1,162) (2,020) ---------- ---------- ---------- Operating profit fromcontinuing operations 569 2,183 2,752Interest payable and similar charges (227) (254) (481)Pre-acquisition profits (342) - (342) ---------- ---------- ---------- Profit on ordinary activitiesbefore taxation - 1,929 1,929Tax on profits on ordinary activities - (618) (618) ---------- ---------- ---------- Profit on ordinary activitiesafter taxation - 1,311 1,311Proposed dividend - (330) (330) ---------- ---------- ---------- Retained earnings afterproposed dividend - 981 981 ========== ========== ========== Basic earnings per share(pence) 2.0p The statutory consolidated profit and loss account for the Group is that shownabove for the 7 month period to 30 April 2005, during which the Group traded,and relates to acquired activities. Consolidated profit and loss accounts forthe 5 month period to 30 September 2004 and the full year to 30 April 2005 areincluded as pro-forma information. No gains or losses were recognised in the year, other than those included in theprofit and loss account. As permitted under s230 of CA 1985, no separate profit and loss account ispresented for the Company. The profit after tax of the Company is £345,000. Fully diluted earnings per share are not materially different from basicearnings per share. Begbies Traynor Group plc Balance Sheets At 30 April 2005 Group Company £'000s £'000s Fixed AssetsIntangible assets 27,835 1,878Investments in subsidiary undertakings - 18,667Tangible assets 2,526 - -------- --------- 30,361 20,545 -------- --------- Current assetsWork in progress 2,036 -Debtors 9,527 4,999Cash at bank and in hand 131 - -------- --------- 11,694 4,999Creditors falling due within one year (10,501) (330) -------- --------- Net Current Assets 1,193 4,669 -------- --------- Total assets less current liabilities 31,554 25,214Creditors falling due after more than one year (5,374) - -------- --------- Net Assets 26,180 25,214 ======== ========= Capital and reservesCalled up share capital 3,271 3,271Other reserves 21,928 21,928Profit and loss account 981 15 -------- --------- Equity shareholders' funds 26,180 25,214 ======== ========= Begbies Traynor Group plc Consolidated Cash Flow Statements 5m period to 7m period to Year to 30 Sept 2004 30 April 2005 30 April 2005 £'000s £'000s £'000s Statement of adjustment fromoperating profit to net cash flowfrom operating activitiesTotal operating profit 569 2,183 2,752Depreciation of tangible fixed assets 309 553 862Amortisation of goodwill 858 1,162 2,020Loss on sale of fixed assets (11) 40 29 EBITDA 1,725 3,938 5,663(Increase) in work in progress (184) (345) (529)(Increase) in debtors (1,458) (954) (2,412)(Decrease)/increase in creditors (1,259) 275 (984) ---------- ---------- ---------- Net cash inflow fromoperating activities (1,176) 2,914 1,738 Returns on Investment andServicing of financingNet finance charges paid (232) (244) (476)Corporation tax paid - (241) (241)Capital expenditure and financial investmentCapital expenditure payments (786) (837) (1,623)Proceeds of asset disposals 471 287 758Acquisitions (1,512) (2,424) (3,936) ---------- ---------- ---------- Cash outflow before financing (3,235) (545) (3,780) FinancingNet proceeds from shareissues for cash - 5,032 5,032Asset finance capital payments (147) (240) (387) ---------- ---------- ---------- Movement in net cash (3,382) 4,247 865 ========== ========== ========== Reconciliation to movement in net debtAsset finance capital repaid 147 240 387 ---------- ---------- ---------- Change in net funds resultingfrom cash flows (3,235) 4,487 1,252Asset finance capital raised (510) (326) (836) ---------- ---------- ---------- Movement in net funds (3,745) 4,161 416Opening net debt (5,439) (9,184) (5,439) ---------- ---------- ----------Movement in net funds (9,184) (5,023) (5,023) ========== ========== ========== Begbies Traynor Group plc Analysis of changes in net debt Cash at bank Asset Amounts Net and in hand finance drawn on debt bank facility £'000s £'000s £'000s £'000s As at 1 May 2004 70 (352) (5,157) (5,439) Cash flow movements (8) 147 (3,374) (3,235) Non cash changes - (510) - (510) ---------- ------- ----------- -------- Net debt at 30 September 2004 62 (715) (8,531) (9,184) Cash flow movements 69 240 4,178 4,487 Non cash changes - (326) - (326) ---------- ------- ----------- -------- Net debt at 30 April 2005 131 (801) (4,353) (5,023) ========== ======= =========== ======== The statutory consolidated cash flow statements for the Group are those shownabove for the 7 month period to 30 April 2005, during which the Group traded.Consolidated cash flow statements for the 5 month period of trading to 30 September 2004 and the full year to 30 April 2005 are included as pro-formainformation. Begbies Traynor Group plc Note 1. Basis of Accounting and Preparation BTG acquired the trading entities in the Group as from 1 October 2004.Businesses acquired after 1 October 2004 are consolidated from the date of theiracquisition, using the acquisition method of accounting. The financial statements have been prepared under the historical cost conventionand in accordance with applicable accounting standards. As permitted by theCompanies Act 1985, no profit and loss account is published in respect of BTGitself. Profit shares accruing to partners in subsidiary entities are shown in theconsolidated profit and loss account as direct or indirect operating costs asappropriate; including the effective ongoing remuneration of the formercontrolling equity partners. Note 2. Earnings Per Share Basic earnings per share are calculated by dividing the Group profits aftertaxation of £1.3m by the number of ordinary shares issued pursuant to theflotation of the Company on 1 October 2004 (65,424,580), which equates to thenumber of shares in issue at the date of these financial statements and to theaverage number of shares in issue for the period from 1 October 2004 to 30 April2005. The resultant earnings per share of 2.0 pence are for the seven monthperiod ended 30 April 2005. Basic earnings per share for the year ended 30 April 2005 were 2.6 pence, basedon profits, including the pre-acquisition profit (net of notional corporationtax at 30%), after tax for the year and a weighted average number of sharesnotionally in issue of 59,692,271. Adjusted earnings per share, reflecting earnings after tax for the whole yearand adding back the net of tax cost of goodwill amortisation, were 5.0 pence forthe twelve months ended 30 April 2005. The Company has an obligation to issue a further 666,672 shares for value to bereceived by the Group of £256,000. The effect of this dilution on earnings pershare is negligible. Note 3. Statutory Accounts The financial information set out above does not constitute the Group'sstatutory information for the seven months ended 30 April 2005, but is derivedfrom those accounts. Statutory accounts for this period will be delivered to theRegistrar of Companies following the Company's annual general meeting. Theauditors have reported on these accounts, their reports were unqualified and didnot contain statements under the Companies Act 1985, s237(2) or (3). This information is provided by RNS The company news service from the London Stock Exchange