Begbies Regulatory News (BEG)

4 Jun 2009 07:00



Begbies Traynor Group plc

Trading Update

Begbies Traynor Group plc ("Begbies Traynor" or the "Group"), the specialist professional services organisation, today issues a trading update for its year ended 30 April 2009. The Group will announce its preliminary results for the year on 9 July 2009. 

Insolvency

Our core activity of business insolvency, which accounts for nearly 80% of Group revenues, has continued to show strong growth both in revenues and operating profits since the announcement of the Group`s first half results in January. The results from this division for the year as a whole are therefore expected to be very substantially ahead of last year, with a further improvement in margins. In addition, the Group has continued to expand its capability via recruitment, in order to further exploit the favourable market conditions for its insolvency services. 

Corporate Finance

As a result of the restructuring of this division announced in December of last year and the completion of a number of engagements during the second half, losses during the second half are expected to be significantly less than those reported in the first half. The Group has scaled back its corporate finance activities, given the continued difficult market conditions, and, as a result, the division will be in a position to deliver an improved financial performance as markets eventually recover.

Tax & Other 

Second half results from the Group`s tax consulting and other divisions are expected to be broadly similar to those achieved in the first half of the financial year, but below management expectations for these divisions. Whilst activity levels were higher, fee pressure and the impact of the tough business environment currently being experienced by our corporate and private clients is expected to dampen the usual seasonal uplift in tax services in the second half.

Continuing operations

Results from continuing operations for the year ended 30 April 2009 are expected to be significantly ahead of last year, driven by the strong trading of the Group`s insolvency division. Despite the challenging market conditions currently being experienced in the non insolvency divisions, results for the year are expected to reach  the lower end of current market expectations. 

Exceptional costs and discontinued activities

Exceptional costs of £0.3m were reported in the first half results in January and a further £0.5m of restructuring costs have been incurred in the second half, principally relating to headcount. Post tax losses from discontinued activities of £0.7m were also reported in the first half results and these are not expected to change materially for the full year.

Financing 

Operating cash inflows in the second half were significantly improved and the Group`s net debt, excluding asset related finance, stood at £13.2m, comfortably within the existing banking facilities of £25m. Total debt, including all sources of finance, is £17.7m. 

 Conclusion

The Board believes future growth prospects for its core counter-cyclical insolvency division, representing nearly 80% of Group activities, remain very positive. In addition, the Group expects its other activities to show an improved financial performance, particularly as the full impact of the restructuring of corporate finance takes effect. A further update will be provided at the time of the preliminary announcement in early July.      

Ric Traynor, Executive Chairman of Begbies Traynor Group said:

"We have had a strong year in our core business of insolvency and corporate recovery whilst our other divisions are making progress in consolidating and improving their performances.

"Prospects for insolvency and corporate recovery remain very strong given the indicators from our Red Flag Alert early warning system which imply an increased flow of work for several years to come."

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