Begbies Regulatory News (BEG)

7 Dec 2007 07:00

7 December 2007 Begbies Traynor Group plc Notice of Interim Results, Trading Update and Acquisition

Begbies Traynor Group plc ("BTG" or "the Group") (AIM: BEG), the specialist professional services organisation, today announces that its interim results for the six months ended 31 October 2007 will be released on Wednesday, 30 January 2008, issues a trading update and announces the acquisition of David Horner & Co, an insolvency practice based in Yorkshire, for an undisclosed sum.

Business insolvency

In the Group's core business insolvency marketplace, activity levels in the first half of the financial year were 5% lower than the same period in 2006. Although this is disappointing, it is considerably better than the market overall, as borne out by latest official statistics from the Government's Insolvency Service for the first nine months of 2007, which showed a 13% fall in voluntary insolvency numbers year on year. This has been one of the quietest periods for corporate insolvency for nearly 20 years, reflecting the ready availability of easy credit up until the autumn of this year.

However, we are beginning to see the first signs of an upswing in the numbers of instructions from UK businesses facing financial difficulties, which, if sustained, will lead to an improvement in our market in the New Year. We are, therefore, continuing to follow our growth plans. We have opened new insolvency offices in Bournemouth, Derby, Dundee, Jersey and Leicester and have also recently completed two acquisitions.

First, we recently reported the acquisition of, the insolvency activities of Bartfields, a Leeds based accounting practice. Secondly, last week, we acquired David Horner & Co Ltd, an insolvency practice with ten staff based in offices in York, Middlesbrough and Doncaster. These acquisitions enhance our insolvency offering and strengthen our presence in the Yorkshire and North East region and together are expected to add a total of over ‚£2m of revenues on an annualised basis.

We have built a national resource base of over 400 business insolvency professionals working from 38 offices around Britain and are very well placed to undertake the significant increase in work levels that a sustained upswing in instructions will provide. Consequently, we expect our core activity to deliver a stronger second half performance, although the combination of the soft first half market and the increased resource base has impacted first half profitability.

Consumer debt recovery

In the consumer debt market, external events have ratified our decision to curtail activity a year ago and we do not expect to grow in this marketplace. We continue to operate our existing business with the primary objective of working out current cases and expect it to be modestly profitable by the end of the financial year.

Other professional services

We continue to pursue our strategy of diversification into compatible professional services and, as well as tax consulting, which is performing well, we have invested in organic growth in corporate finance and start ups in commercial finance broking, CRM systems consulting and asset valuations, as well as augmenting our head office team and investing in our BGN international network. All our new service divisions are being closely monitored through their development phase.

Acquisitions

Our acquisition pipeline has continued to progress and impending changes to the capital taxes regime, recently announced, have given increased impetus to a number of our discussions with vendors.

We hope to complete a number of further acquisitions over the coming months, particularly in those areas, such as insolvency, tax and forensics, which we believe will remain resilient under more difficult economic conditions.

Summary

The effect of a quiet corporate insolvency market has resulted in broadly flat Group revenues in the first half when compared to the same period last year, despite an increased resource base. In addition, the investment in new offices, service lines and personnel across the Group, and our new headquarters in Manchester, has increased operating and finance costs in the first half compared to last year. This has resulted in significantly lower profitability for the first half when compared to the strong performance in the same period last year.

Despite an anticipated stronger second half, we cannot be confident that the profit shortfall from the first half will be recovered. Consequently, the board currently considers that the Group's operating profit for the full year to 30 April 2008 may be 20% below that reported for the prior year. We will update this view when we present the Interim Results at the end of January 2008.

Commenting, Ric Traynor, Executive Chairman, said:

"We are confident that the Group remains on track to achieve our medium term strategy of building a substantial and diversified specialist professional service group with strong counter cyclical revenues.

We have successfully built out our national resource base in recent years and are therefore very well placed to undertake a significant increase in work levels as the insolvency market picks up as we expect in 2008."

For further information, please contact: www.begbies-traynorgroup.com

Begbies Traynor Group plc 0161 837 1700 Ric Traynor, Executive Chairman John Gittins, Chief Financial Officer Shore Capital & Corporate Limited 020 7408 4090 Guy Peters Smithfield 020 7360 4900 Reg Hoare/Katie Hunt