Begbies Regulatory News (BEG)

7 July 2011

Begbies Traynor Group plc

Final results

for the year ended 30 April 2011

Begbies Traynor Group plc, the specialist professional services consultancy, today announces its final results for the year ended 30 April 2011.

Financial highlights (continuing operations)

·; Revenue of £61.5m (2010: £62.8m)

·; EBITA* (pre-exceptional items and acquisition-related costs) of £8.5m (2010: £11.8m)

·; Adjusted profit before tax** of £7.6m (2010: £11.3m)

·; Profit before tax was £5.2m (2010: £10.2m)

·; Operating cash flows of £6.3m (2010: £5.2m)

·; Earnings per share:

- adjusted basic and diluted EPS*** from continuing operations was 5.8p (2010: 8.5p)

- basic and fully diluted EPS from continuing operations of 3.7p (2010: 7.5p)

·; Final dividend proposed of 1.0p (2010: 1.9p), making a total dividend for the year of 2.2p (2010: 3.1p)

·; Net debt of £22.5m (2010: £20.2m), stated after £4.4m of acquisition and deferred consideration payments, comfortably within the banking facilities

·; Net assets per share of 73p (2010: 75p)

* Earnings before interest, tax and amortisation of intangible assets arising on acquisitions

** Profit before tax from continuing operations of £5.2m (2010: £10.2m) plus amortisation of £0.2m (2010: £0.3m) plus finance charge arising from the discounting of deferred consideration of £0.1m (2010: £0.1m) plus exceptional items and acquisition-related costs of £2.1m (2010: £0.7m)

*** See reconciliation in note 7

Operational highlights (continuing operations)

Focus on profitable, cash-generative and strongly-positioned operations

·; Strategic review conclusions:

- focus on UK insolvency and pre-insolvency, restructuring and corporate finance; together with developing complementary global risk partners business

- divestment of the tax and red flag businesses

·; Insolvency and restructuring:

- activity levels constrained by decline in the rate of UK insolvencies

- capacity and market leading position retained

·; Global risk partners:

- strong organic growth in revenue, margin and profit

- benefited from recruitment, increase in engagement values and margins and discontinuing loss-making activities in prior years

Current trading (continuing operations)

·; Activity levels across the continuing business at the start of the new financial year are broadly in line with the prior year and our expectations

Commenting on the results, Ric Traynor, Executive Chairman of Begbies Traynor Group, said:

"Following a strategic review, the group has decided to focus on its core skills relating to UK insolvency and pre-insolvency, restructuring and corporate finance; together with developing its complementary global risk partners business, and decided to divest the tax and red flag businesses.

"The level of corporate insolvencies, having fallen during calendar year 2010, has stabilised in the first two quarters of 2011. We have adjusted our cost base whilst retaining our capacity to take advantage of any upturn in the insolvency market. Overall, with our continuing activities now focused on the profitable, cash-generative and strong core businesses, we look forward to returning the group to profitable growth."

A meeting for analysts will be held today at 9.30am at the offices of MHP Communications, 60 Great Portland Street, London, W1W 7RT. Please contact Giles Robinson on 020 3128 8788 if you would like to attend.

Enquiries please contact:

Begbies Traynor Group plc 0161 837 1700

Ric Traynor - Executive Chairman

Nick Taylor - Group Finance Director

Collins Stewart Europe Limited 020 7523 8350

(Nominated Adviser and Joint Broker)

Mark Dickenson / Bruce Garrow

Shore Capital 020 7408 4090

(Joint Broker)

Andrew Raca

MHP Communications 020 3128 8100

Reg Hoare / Katie Hunt

Information on Begbies Traynor Group can be accessed via the Group's website at www.begbies-traynorgroup.com.

Chairman's statement

INTRODUCTION

The past twelve months have been a very challenging period for the group, with national insolvency numbers in the UK decreasing over the year. This reduced our levels of profitability which, together with the under-performance of the tax division and continuing investment in the 'Red Flag Alert' business, resulted in a disappointing performance for the year.

The core insolvency division, however, remains in a strong position: it is market leader in UK SME insolvencies; it has an excellent reputation; it has relationships with all of the major banks who are a key source of work; and it has extensive national coverage across the UK through 38 offices and 511 insolvency staff.

The group's global risk partners business has also developed well during the year with strong organic growth in revenue and profit.

These two divisions are both profitable and cash-generative businesses which, even in a challenging year, have reported double digit operating margins. This gives the group a robust core of operations and a base on which the business can grow.

STRATEGIC REVIEW

The board has recently undertaken a review of the group's strategy and operations, considering future growth potential with the intention of simplifying and focusing its business model. The result of the review is that the group has decided to focus on its core skills relating to UK insolvency and pre-insolvency, restructuring and corporate finance; together with developing its complementary global risk partners business. 

We believe that shareholders' interests are best served by focusing on businesses which are capable of delivering the highest returns over the economic cycle. With an established reputation and leading market position, the group's core division is well placed to benefit from the opportunities presented by the growth of the UK insolvency market over time; driven by the underlying increase in the number of trading entities, both in the UK and internationally, as the economy grows.

The global risk partners business benefits from synergies with our core business and is capable of delivering growth and profitability given its specialist offering in a fragmented market place, within the UK and overseas.

This strategy will enable the group to devote its full energy, time and resources on further developing these businesses.

In line with this strategy, the board has decided to divest the tax and red flag businesses. We believe that both businesses have good growth potential but require continuing investment to enhance their market position and increase scale. This investment is best delivered by specialists in their respective markets.

In accordance with IFRS 5, these trading divisions are presented as discontinued operations in these financial statements. The divestment process is ongoing and we intend to complete it in the current financial year. The proceeds of any successful divestments will be reinvested in the core business. Further announcements will be made as appropriate.

DIVIDEND

The board remains committed to its long-term progressive dividend policy, which takes account of the underlying growth in earnings, whilst acknowledging the requirement for continuing investment and short-term fluctuations in profit.

In light of results for the year and the requirements of the business, the board has recommended a reduction in the total dividend to 2.2p (2010: 3.1p), comprising the interim dividend already paid of 1.2p and a final dividend of 1.0p.

The final dividend will be paid on 7 November 2011 to shareholders on the register on 7 October 2011, with an ex-dividend date of 5 October 2011.

RESULTS

Group revenue from continuing operations in the year ended 30 April 2011 was £61.5m (2010: £62.8m), with earnings before interest, tax and amortisation (pre-exceptional items and acquisition-related costs) of £8.5m (2010: £11.8m). Adjusted profit before tax* was £7.6m (2010: £11.3m). Profit before tax was £5.2m (2010: £10.2m). Earnings per share from continuing operations**, adjusted for the net of tax impact of amortisation, exceptional items, acquisition-related costs and the finance charge arising from the discounting of deferred consideration liabilities, was 5.8p (2010: 8.5p). Basic and fully diluted EPS from continuing operations were 3.7p (2010: 7.5p). Exceptional items and acquisition-related costs relating to continuing operations were £2.1m (2010: £0.7m). 

Net borrowings at 30 April 2011, comprising principal net debt plus asset related financing, were £22.5m (2010: £20.2m), giving gearing of 34% (2010: 30%). This increase in net debt is after £4.4m of acquisition and deferred consideration payments in the year. Interest cover (pre-exceptional costs) was 8.2 times (2010: 18.5 times).

* Profit before tax from continuing operations of £5.2m (2010: £10.2m) plus amortisation of £0.2m (2010: £0.3m) plus finance charge arising from the discounting of deferred consideration of £0.1m (2010: £0.1m) plus exceptional items and acquisition-related costs of £2.1m (2010: £0.7m)

** See reconciliation in note 7

PEOPLE

We are reliant on the expertise, professionalism and commitment of our people and I thank all of them for their contribution in a difficult year. 

As at 30 April 2011, the group's continuing operations employed a total of 608 people, which includes 465 direct fee earners (an increase of 3% compared with a year ago), of whom 75 are partners, and 143 staff in support functions. This includes 29 new employees and partners from acquisitions completed in the year. We continue to invest in training and developing our people and are pleased to have promoted six fee earners to partner subsequent to the year end.

The tax and red flag businesses include 50 direct fee earners, of whom 12 are partners and 27 staff in support functions.

BOARD CHANGES

I am very pleased to announce that Mark Fry has joined the board as head of insolvency and restructuring. Mark joined the group in 2005, following our acquisition of his insolvency practice. He has since been the regional managing partner for London and the South East, successfully developing a restructuring and banking practice. I am delighted that Mark has agreed to take on this new role and I look forward to his contribution as we focus on developing and growing our core business.

Nick Taylor was appointed to the board as group finance director on 21 December 2010, having been acting finance director since August 2010 following the resignation of John Gittins, who was formerly the group's chief financial officer. Nick joined the group in November 2007 as group financial controller.

OPERATIONAL REVIEW - CONTINUING OPERATIONS

Insolvency and restructuring

Begbies Traynor is the UK's leading independent business rescue, recovery, restructuring and personal insolvency organisation, providing a partner-led service to stakeholders in troubled businesses. This division includes the activities of BTG Corporate Finance, who are advisors and capital transaction project managers, providing professional strategic advice, including pre-insolvency services, whilst also managing and supporting capital transactions.

Insolvency revenues decreased in the year to £54.8m (2010: £59.2m), with a corresponding reduction in segmental profit to £13.0m (2010: £17.4m). Operating margins were 23.8% (2010: 29.4%).

The division has been impacted over the year by declining levels of corporate insolvencies in the UK. This is contrary to our original expectation of an increasing market, which was the economic trend following previous recessions. We believe this change was caused by the unprecedented level of monetary support provided to the UK economy, particularly demonstrated by UK base rates remaining at 0.5% since May 2009. This has enabled many financially distressed businesses to survive to date, that in previous recessions would almost certainly have gone into an insolvency process.

We have reacted to the market conditions by restructuring elements of the divisional cost base and consolidating some small satellite offices into larger regional premises. However, we have ensured that we retain the capacity to take advantage of any upturn in our core market by keeping skills and experience within the business, which may constrain margin improvements in the short-term.

We have continued to develop the business over the year and completed three acquisitions: Tomlinsons, a two partner Manchester-based practice; Hamiltons, a two partner practice in Sheffield giving the group its first office in South Yorkshire; and the insolvency division of Walletts, a general accountancy practice in Stoke. All of these businesses have performed in line with our expectations since being acquired.

We remain the market leader in UK mid-market insolvency and believe that the combination of our full national coverage, strong relationships with all major UK banks and excellent referral networks from other professional services organisations leaves the division well placed to take full advantage of its market.

High profile and larger insolvency, restructuring and corporate finance engagements in the year have included: the administration of Realtime Worlds, the Scottish video-games company; the administration of Goldtrail, a holiday operator; and advising M3 Capital Partners on its acquisition of Swayfields Extra MSA Holdings' UK motorway service station operations.

The number of people employed in insolvency has increased to 511 on 30 April 2011 from 496 at the start of the year. This includes 29 new employees and partners from the above acquisitions partially offset by targeted reductions across the division.

Global risk partners

Global risk partners is a full service provider of specialist, integrated risk consulting and forensic investigation services, which help identify, resolve, mitigate or avoid complex commercial or personal challenges globally. Its services include forensic technology and accountancy; risk and security consultancy; and corporate intelligence and investigations.

Revenues in this segment increased to £6.7m (2010: £3.6m) generating a profit of £1.4m (2010: £nil). Operating margins were 20.4% (2010: 0%).

The improvement in performance principally arises from: increased market penetration achieved as our senior people become more established; the continued recruitment of experienced professionals; an increase in engagement values and margins; and discontinuing loss-making debt collection activities in the prior year.

Corporate investigations activity has expanded its horizons to lead into complex transnational appointments, which has improved both the quality and consistency of engagements, being retained by FTSE 100 and Fortune 500 clients.

Security risk consulting service lines are also fully established as industry leading, especially in support of insurance syndicates in the Lloyds of London marketplace dealing with energy, marine and specialty risk events.

The forensic accountancy service line is gaining a reputation for international arbitration work and all areas have been enhanced by the successful establishment of our forensic technology practice.

The number of people employed in global risk partners increased to 34 on 30 April 2011 from 26 at the start of the year.

Exceptional costs

As a result of the trading performance in the year we have restructured the cost base of the continuing operations as referred to above. This resulted in exceptional costs of £2.0m. These costs include £1.3m of cash payments, of which £0.4m was outstanding at 30 April 2011.

DISCONTINUED OPERATIONS

Following the recent strategic review referred to above, we are currently seeking to divest the tax and red flag divisions and have appointed Clearwater Corporate Finance and BTG Corporate Finance to advise on these respectively.

We believe that both businesses have good growth potential, but require continuing investment to enhance their market position and increase scale, which would be better delivered by specialists in their respective markets. The directors intend to maintain an ongoing relationship with the red flag business following divestment, for the benefit of the continuing operations and existing users of the service.

Tax

The tax division provides specialist tax, fiscal structuring and tax investigations consultancy. Revenue in the division increased to £7.0m (2010: £6.3m), resulting in a segmental EBITA (pre- exceptional and acquisition-related costs) of £0.1m (2010: loss of £0.2m).

In spite of the improved financial performance in the year, profitability was constrained due to a reduced demand for tax planning services, primarily due to a tougher stance towards tax planning activities adopted by the Government and HMRC, and a continued low demand for transactional tax services due to the weak economic recovery.

Exceptional costs of £3.4m were incurred, resulting from restructuring costs of £1.2m to reduce the operating cost base, a provision against the carrying value of unbilled income of £1.1m and impairment of goodwill of £1.1m. These costs include £0.6m of cash costs, of which £0.4m was outstanding at 30 April 2011. It is anticipated that the restructured cost base is appropriate for the current levels of market demand. The carrying value of the division at 30 April 2011 was £7.0m.

The division employed 61 people at 30 April 2011, reduced from 70 at 30 April 2010.

Red Flag Alert

Red Flag Alert (www.redflagalert.com) is a subscription-based credit risk database with over six million records on businesses in the UK, from sole traders through to limited and quoted companies. It enables subscribers to target, assess and monitor the financial performance of customers, suppliers and competitors.

The system was formally launched as a fully supported web-based subscription service to third parties in December 2009 and had 187 multiple user subscribers as at 30 April 2011 (an increase from 40 as at 30 April 2010). As at 1 July 2011 there were 257 multiple user subscribers.

Revenue in the period was £0.2m (2010: £nil) reflecting the progressive increase in subscribers over the year. Losses of £0.7m (2010: loss of £0.6m) reflected the continuing investment. The carrying value of the division at 30 April 2011 was £nil.

The division employed 16 people at 30 April 2011, an increase from 10 at 30 April 2010.

INSOLVENCY MARKET

Trends in government insolvency data reflect a declining number of corporate insolvencies in the UK over the course of the last financial year.

Insolvency statistics

Government insolvency statistics for the twelve months ended 31 March 2011 showed a 13% decrease in the number of UK corporate insolvencies compared to the same period in the prior year. The group's view is that this decrease is due to the ongoing high level of monetary support, principally low interest rates, combined with lenient attitudes by creditors.

The insolvency statistics for the first quarter of calendar year 2011 indicated that the market had stabilised with a 1% increase on the comparable quarter of 2010. However, there are currently no signs of a material increase in volumes, in spite of the many indicators of financial stress. Our expectations are that this trend will be repeated in the second quarter of the calendar year.

Red Flag Alert

'Begbies Traynor Red Flag Alert' statistics, which we publish quarterly, monitor adverse actions and other corporate distress signals, such as the issue of county court judgments and winding-up petitions, which are early warning signs of potential insolvency activity.

Our most recent survey, published in April 2011, revealed that the number of UK companies experiencing critical or significant problems in the first calendar quarter of 2011 has increased by 15% over the same period in 2010. We believe that this demonstrates the underlying financial stress in the UK. However, whilst record low interest rates and other support factors remain in place, it is uncertain when this stress will materially increase the level of insolvencies.

Our next survey will be published later in July.

FINANCIAL REPORTING CALENDAR

The board has reviewed its current financial reporting calendar and has decided that the following quarterly schedule is more appropriate for the group, whilst also being more closely aligned to best practice (in line with the reporting calendar of companies listed on the main market):

AGM and Q1 trading update 28 September 2011

Half year results December 2011

Q3 trading update March 2012

Final results July 2012

OUTLOOK

The level of corporate insolvencies, having fallen during calendar year 2010, has stabilised in the first two quarters of 2011. We have adjusted our cost base, whilst retaining our capacity to take advantage of any upturn in the insolvency market. The global risk partners division has good organic growth potential to further develop after the encouraging performance last year. We will continue to invest in both of these businesses to enhance their market positions and take advantage of growth opportunities.

Activity levels across the continuing business at the start of the new financial year are broadly in line with the prior year and our expectations. This, together with the full year benefit of the cost saving initiatives undertaken in the year, should result in some incremental improvement in margins over the course of the year.

An update on current trading and the divestment process will be provided at the time of the company's annual general meeting on 28 September 2011.

Overall, with our continuing activities now focused on the profitable, cash-generative and strong core businesses, we look forward to returning the group to profitable growth.

Ric Traynor

Executive chairman

7 July 2011

Financial review

FINANCIAL HIGHLIGHTS

The group's revenue from continuing operations in the year was £61.5m (2010: £62.8m). A reduction in insolvency revenue of £4.4m or 7% was only partially offset by organic growth in global risk partners of £3.1m or 88%. Revenue from continuing operations in the year included £2.5m from acquisitions.

EBITA (pre-exceptional and acquisition-related costs) decreased to £8.5m (2010: £11.8m), a decrease of £3.3m. Margins decreased to 13.8% from 18.8% due principally to reduced activity levels within the insolvency division.

During the year, the group incurred exceptional restructuring costs of £2.0m (2010: £0.7m) to rationalise the cost base, which includes £0.7m of non-cash asset write downs. Costs of £0.1m (2010: £nil) associated with acquisitions were incurred in the year and have been expensed in the income statement in accordance with IFRS 3 (revised).

Amortisation of intangible assets arising on acquisitions reduced to £0.2m (2010: £0.3m).

Finance costs increased to £1.0m (2010: £0.6m), due to higher charges relating to the group's banking facilities (entered into on 29 April 2010) and increased borrowings compared to the comparative period.

Adjusted profit before tax was £7.6m (2010: £11.3m). Profit before tax was £5.2m (2010: £10.2m). The reconciliation between these profit measures is as follows:

The tax charge arising on pre-exceptional profits was £2.3m (2010: £3.6m). This represents an effective rate of 32% (2010: 34%), the reduction resulting from a change in tax rate from 28% to 26% applied to the group's deferred tax liabilities. The tax charge for the year from continuing operations was £1.9m (2010: £3.5m), which represents an effective rate of 36% (2010: 34%).

Profit for the year from continuing operations was £3.3m (2010: £6.7m).

DISCONTINUED OPERATIONS

As the board has resolved to dispose of the group's tax and red flag divisions, IFRS 5 'Non‑Current Assets Held for Sale and Discontinued Operations' requires the financial results for these activities to be disclosed as discontinued operations in the income statement and the carrying value of the net assets to be written down to the fair value of the assets less costs to sell. This has resulted in a non-cash charge to profit which has been disclosed within exceptional costs.

Discontinued operations generated a post-tax loss for the year (before exceptional and acquisition related costs) of £0.5m (2010: £1.0m). The post-tax cost of exceptional and acquisition-related costs was £2.6m (2010: £0.1m), resulting in a post-tax loss of £3.1m (2010: £1.1m).

EARNINGS PER SHARE ('EPS')

EPS from continuing operations*, adjusted for the net of tax impact of the amortisation of intangible assets arising on acquisitions, exceptional and acquisition-related costs and the finance charge arising from the discounting of deferred consideration liabilities, was 5.8p (2010: 8.5p). Basic and fully diluted EPS from continuing operations was 3.7p (2010: 7.5p).

* See reconciliation in note 7

CASH FLOWS

Net cash flows from operating activities increased by £1.1m in the year to £6.3m (2010: £5.2m). The lower level of operating profit was offset by a lower level of working capital absorption in the year of £6.7m. Tax payments totalled £1.7m, an increase of £0.7m resulting from the settlement of prior year tax liabilities. Interest payments increased to £0.9m (2010: £0.5m), reflecting the increased finance costs.

Investing cash flows increased to £7.0m (2010: £5.6m) due to acquisitions of £1.8m (2010: £nil). Deferred payments relating to prior year acquisitions totalled £2.6m (2010: £2.9m) and net capital investment was broadly unchanged at £2.5m (2010: £2.7m). 

Financing cash flows of £1.9m (2010: £3.2m) are due to a net drawdown on the group's principal bank facilities of £4.0m (2010: £5.8m) and proceeds on share issues of £0.1m (2010: £0.2m). Cash outflows include dividend payments of £1.7m (2010: £2.6m) and a net repayment of other finance of £0.6m (2010: £0.2m).

FINANCING

At 30 April 2011, the group had utilised £18.7m (2010: £15.9m) of its principal bank facilities, giving significant headroom within the total facilities of £35m. During the year all bank covenants were met. In spite of the disappointing financial performance in the year, the group's financial position remains robust.

The group continues to use other sources of finance as appropriate, including hire purchase contracts and other asset-related bank loans. At 30 April 2011, the group had asset-related finance of £3.8m (2010: £4.4m).

Net borrowings at 30 April 2011 were £22.5m (2010: £20.2m) of which £22.3m related to continuing operations and £0.2m to discontinued operations, giving gearing of 34% (2010: 30%). Interest cover for continuing operations (pre-exceptional costs) was 8.2 times (2010: 18.5 times). 

NET ASSETS

At 30 April 2011 net assets were £65.9m (2010: £67.2m), equivalent to net assets per share of 73p (2010: 75 p).

Non-current assets decreased to £58.2m (2010: £60.4m) due to the transfer of £4.8m to current assets classified as held for sale, partially offset by increases due to in-year acquisitions.

Current assets increased to £57.2m (2010: £49.9m), principally due to the transfer to assets classified as held for sale as described above. The remaining increase comprised a higher cash balance of £1.2m and a £1.3m increase in working capital.

Borrowings increased to £26.8m (2010: £23.4m), of which £26.6m related to continuing operations and £0.2m to discontinued operations, after £4.4m of acquisition and deferred consideration payments in the year.

Other liabilities increased to £22.8m (2010: £19.7m) due to provisions relating to exceptional costs of £0.9m (payable within one year) and increased working capital liabilities. Other liabilities include £3.5m of deferred consideration payments, of which £2.5m is payable within one year.

GOING CONCERN

The directors have reviewed the financial resources available to the group and have concluded that the group will be able to operate within the level of its borrowing facilities and have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. This conclusion is based, amongst other matters, on the group's existing borrowing facilities and a review of financial forecasts for a period exceeding twelve months from the date of this announcement. Accordingly, the financial information in this announcement is prepared on the going concern basis.

Nick Taylor

Group finance director

7 July 2011

Consolidated income statement

for the year ended 30 April 2011

The income statement for the year ended 30 April 2010 has been represented to reflect the classification of the tax and red flag businesses as discontinued operations in accordance with IFRS 5.

Consolidated statement of comprehensive income

for the year ended 30 April 2011

Consolidated statement of changes in equity

for the year ended 30 April 2011

The merger reserve arose on the formation of the group in 2004.

Consolidated balance sheet

at 30 April 2011

Consolidated cash flow statement

for the year ended 30 April 2011

SELECTED EXPLANATORY NOTES

1. Basis of preparation

The results for the year ended 30 April 2011 have been prepared on the basis of accounting policies consistent with those set out in the annual report to shareholders of Begbies Traynor Group plc for the year ended 30 April 2010, except for the adoption of the new standards and interpretations as of 1 May 2010, noted below:

IFRS 3 (revised) 'Business Combinations' has been adopted. The standard requires acquisition-related costs (which would previously have been included in the cost of a business combination) to be charged to administrative expenses as incurred, and any changes to the cost of an acquisition, including contingent consideration, resulting from events after the date of acquisition, to be recognised in the income statement. Previously, such changes resulted in an adjustment to goodwill. The revised standard is effective for group business combinations after 1 May 2010.

Segmental Disclosures - from 1 May 2010, the group is managed as four operating segments: insolvency and restructuring, tax, global risk partners and red flag alert. IFRS 8 'Operating Segments' requires segmental disclosures to be reported on a management basis and in a manner consistent with internal financial reporting to the board. Consequently at the half year the group reported its segmental disclosures as four operating segments. Since the half year, the tax and red flag segments have been classified as discontinued. The prior year segmental information has been restated on this basis.

The group's financial statements for the year ended 30 April 2011 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the EU. Whilst the financial information included in this announcement has been prepared in accordance with IFRS, this announcement itself does not contain sufficient information to comply with IFRS.

This financial information does not include all of the information and disclosures required for full annual financial statements and does not comprise statutory accounts within the meaning of section 435 of the Companies Act 2006.

The comparative figures for the year ended 30 April 2010 do not comprise the group's statutory accounts for that financial year. Those accounts have been reported upon by the group's auditors and delivered to the registrar of companies. The report of the auditors was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

Statutory accounts for Begbies Traynor Group plc for 2011 will be delivered to the Registrar of Companies following the company's annual general meeting. The auditors have reported on these accounts; their report is unqualified and does not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under either section 498 (2) or (3) of the Companies Act 2006. The 2011 annual report will be available on the group's website: www.begbies-traynorgroup.com.

Going concern

The directors have reviewed the financial resources available to the group and have concluded that the group will be able to operate within the level of its borrowing facilities and have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. This conclusion is based, amongst other matters, on the group's existing borrowing facilities and a review of financial forecasts for a period exceeding twelve months from the date of this announcement. Accordingly, this financial information is prepared on the going concern basis.

2. Segmental analysis by class of business

From 1 May 2010, the group has been managed as four operating segments: insolvency and restructuring, global risk partners, tax and red flag alert. IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the board. As a result, at the half year, the group reported its activities as four segments. Since the half year, the tax and red flag segments have been classified as discontinued. The prior year information has been restated.

Selected segmental information about these businesses is presented below. The results of tax and red flag, which are considered to be separate segments, are presented as discontinued operations, as shown in note 6. 

EBITA represents earnings before interest, tax, amortisation of intangible assets arising on acquisitions, exceptional and acquisition-related costs.

3. Finance costs

4. Exceptional and acquisition-related costs

5. Tax

6. Discontinued operations

Following the strategic review, the board has decided to dispose of the tax and red flag businesses. These businesses are being actively marketed for sale and the board intends to complete these transactions within one year.

These two businesses meet the definition of a disposal group in accordance with IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations' as at 30 April 2011 and are, therefore, classified as held for sale and as discontinued operations.

In accordance with IFRS 5, an adjustment to fair value less costs to sell has been recognised. The adjustment to carrying value of £1.1m was allocated against goodwill.

The results of the discontinued operations which have been included in the consolidated income statement were as follows:

7. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

The following additional earnings per share figures are presented as the directors believe they provide a better understanding of the trading position of the group.

8. Dividends

The proposed final dividend is subject to approval by shareholders at the annual general meeting. The interim dividend for 2011 was not paid until 6 May 2011 and accordingly neither has been included as a liability in these financial statements nor as a distribution to equity shareholders.

9. Reconciliation to the cash flow statement

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.