Final Results

Begbies Traynor Group PLC 04 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 and insolvency services, announces preliminary results for the year ended 30 April 2005. 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 the platform created, business developments since 30 April 2005 and the continued support of our teams across the country stand the Group in very good stead for the current year and beyond. 'Market intelligence suggests that the demand for our core business insolvency skills 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 insolvency services, a demand increase appears even more established and we plan to respond accordingly.' Enquiries, please contact: Ric Traynor Neil Boom/Rosemary Acfield Executive Chairman Gresham PR Ltd. Begbies Traynor Group plc 020 7404 9000 0161 839 0900 Chairman's Review The last twelve months has been the most active and exciting period in the history of Begbies Traynor since the business was founded in 1989. My first thought, in writing this review of that period, is to thank the partners and staff of the Group for their help and support through the year and for their contribution to the delivery of a maiden set of Group results to 30 April 2005 at the higher end of our expectations. Commercial Development Over the past year, we have progressed our strategy of growth in our core corporate insolvency activities and the development of closely related services to the business community. We have also noted the strong market growth in demand for domestic personal insolvency services and have begun to undertake work in this area. This work requires a different operating model from business related recovery work and we are developing a strategy to appropriately respond to the market demand. In February, we welcomed Andrew Segal and his team into our South East region operation, as part of the continuing development of our presence in this important region of the country; the opening, in late 2004, of our new flagship London office in Cornhill was another key step in that development. At the beginning of May 2005, we also welcomed the corporate finance team of MCF into the Group. As well as bringing its existing £1.5m per annum activity base and strong reputation to bear, the MCF team will spearhead our expansion of this complementary business service into the major commercial cities in which we already operate. We augmented our forensic capabilities in the year through the recruitment of four experienced specialists and, at the beginning of June 2005 by the acquisition 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 of these developments to significantly enhance our activity and market penetration in 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 who share our ambition and vision and to encourage staff learning and professional qualification. The key measure of our organic development is the initially estimated value of new cases won and we are pleased that this value has increased by 25% on the previous year. During the year, we have built on our experience and specialist knowledge in the licensed and hospitality trade and insurance industry related work; with our market penetration increasing in both of these sectors. We have continued to develop our operations in business restructuring outside formal insolvency, which is a service increasingly in demand, and to forge our international professional links to generate and support cross-border work. Inevitably, given the major changes undertaken, we have parted company with a small number of partners whose style is not compatible with the direction and demands of the Group. I thank them for their past efforts and wish them well for the future. Financial Development The organisation of the Group under BTG and its flotation was a time consuming exercise but has played a key part in helping us to raise the profile of Begbies Traynor in the marketplace, attract highly regarded partners and staff and enhance our ability to grow by acquisition. I believe that the solid structural platform we have created will continue to promote the growth of the Group. That platform has also provided access to the development funding that the Group requires. As well as the £5m of new equity secured last October, we have, when appropriate, the opportunity to seek further equity funding from the investment market, which should also have the benefit of increasing liquidity in BTG shares, assisting market price stability. Results to 30 April 2005 The financial statements formally cover trading for only the seven month period since the flotation of BTG, but we have included pro forma information for the whole year, which has been fully audited, in order to give a more meaningful insight into the Group's results. The following comments relate to the results for the year to April 2005. Activity has risen by 16% to £25.7m, as measured by the selling value of all work done and compared to the same measurement for the year to April 2004 adjusted from the information published in the Accountant's Report in our prospectus dated 28 September 2004. Both sets of financial statements adopt the new accounting standard on income recognition; in that unbilled work done is included at realisable value where we have approval for non-contingent fee income. I believe that the new standard improves the accuracy of measurement of activity, but we will not lose sight of the need to invoice for our work to allow value to be translated into cash. Profit before tax and goodwill amortisation for the year was £4.3m; a margin of 17% after interest and all of the costs associated with our AIM listed status. We adopt an aggressive amortisation policy in respect of goodwill on acquisitions, but have decided not to amortise the goodwill arising out of the consolidation 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, representing approximately one quarter of those earnings, will be proposed to shareholders at the Annual General Meeting in September. I hope to meet some of the new shareholders who have joined us since flotation on that occasion. Prospects All members of the board of Begbies Traynor Group join me in believing that the platform created, business developments since 30 April 2005 and the continued support of our teams across the country stand the Group in very good stead for the current year and beyond. Market intelligence suggests that the demand for our core business insolvency skills 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 insolvency services, a demand increase appears even more established and we plan to respond accordingly. Ric Traynor Executive Chairman 1 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 24,705 Movement in work in progress 184 345 529 Direct 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 4,772 Amortisation of goodwill (858) (1,162) (2,020) ---------- ---------- ---------- Operating profit from continuing operations 569 2,183 2,752 Interest payable and similar charges (227) (254) (481) Pre-acquisition profits (342) - (342) ---------- ---------- ---------- Profit on ordinary activities before taxation - 1,929 1,929 Tax on profits on ordinary activities - (618) (618) ---------- ---------- ---------- Profit on ordinary activities after taxation - 1,311 1,311 Proposed dividend - (330) (330) ---------- ---------- ---------- Retained earnings after proposed dividend - 981 981 ========== ========== ========== Basic earnings per share(pence) 2.0p The statutory consolidated profit and loss account for the Group is that shown above for the 7 month period to 30 April 2005, during which the Group traded, and relates to acquired activities. Consolidated profit and loss accounts for the 5 month period to 30 September 2004 and the full year to 30 April 2005 are included as pro-forma information. No gains or losses were recognised in the year, other than those included in the profit and loss account. As permitted under s230 of CA 1985, no separate profit and loss account is presented for the Company. The profit after tax of the Company is £345,000. Fully diluted earnings per share are not materially different from basic earnings per share. Begbies Traynor Group plc Balance Sheets At 30 April 2005 Group Company £'000s £'000s Fixed Assets Intangible assets 27,835 1,878 Investments in subsidiary undertakings - 18,667 Tangible assets 2,526 - -------- --------- 30,361 20,545 -------- --------- Current assets Work in progress 2,036 - Debtors 9,527 4,999 Cash at bank and in hand 131 - -------- --------- 11,694 4,999 Creditors falling due within one year (10,501) (330) -------- --------- Net Current Assets 1,193 4,669 -------- --------- Total assets less current liabilities 31,554 25,214 Creditors falling due after more than one year (5,374) - -------- --------- Net Assets 26,180 25,214 ======== ========= Capital and reserves Called up share capital 3,271 3,271 Other reserves 21,928 21,928 Profit 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 from operating profit to net cash flow from operating activities Total operating profit 569 2,183 2,752 Depreciation of tangible fixed assets 309 553 862 Amortisation of goodwill 858 1,162 2,020 Loss 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 from operating activities (1,176) 2,914 1,738 Returns on Investment and Servicing of financing Net finance charges paid (232) (244) (476) Corporation tax paid - (241) (241) Capital expenditure and financial investment Capital expenditure payments (786) (837) (1,623) Proceeds of asset disposals 471 287 758 Acquisitions (1,512) (2,424) (3,936) ---------- ---------- ---------- Cash outflow before financing (3,235) (545) (3,780) Financing Net proceeds from share issues for cash - 5,032 5,032 Asset finance capital payments (147) (240) (387) ---------- ---------- ---------- Movement in net cash (3,382) 4,247 865 ========== ========== ========== Reconciliation to movement in net debt Asset finance capital repaid 147 240 387 ---------- ---------- ---------- Change in net funds resulting from cash flows (3,235) 4,487 1,252 Asset finance capital raised (510) (326) (836) ---------- ---------- ---------- Movement in net funds (3,745) 4,161 416 Opening 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 shown above 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-forma information. 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 their acquisition, using the acquisition method of accounting. The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. As permitted by the Companies Act 1985, no profit and loss account is published in respect of BTG itself. Profit shares accruing to partners in subsidiary entities are shown in the consolidated profit and loss account as direct or indirect operating costs as appropriate; including the effective ongoing remuneration of the former controlling equity partners. Note 2. Earnings Per Share Basic earnings per share are calculated by dividing the Group profits after taxation of £1.3m by the number of ordinary shares issued pursuant to the flotation of the Company on 1 October 2004 (65,424,580), which equates to the number of shares in issue at the date of these financial statements and to the average number of shares in issue for the period from 1 October 2004 to 30 April 2005. The resultant earnings per share of 2.0 pence are for the seven month period ended 30 April 2005. Basic earnings per share for the year ended 30 April 2005 were 2.6 pence, based on profits, including the pre-acquisition profit (net of notional corporation tax at 30%), after tax for the year and a weighted average number of shares notionally in issue of 59,692,271. Adjusted earnings per share, reflecting earnings after tax for the whole year and adding back the net of tax cost of goodwill amortisation, were 5.0 pence for the twelve months ended 30 April 2005. The Company has an obligation to issue a further 666,672 shares for value to be received by the Group of £256,000. The effect of this dilution on earnings per share is negligible. Note 3. Statutory Accounts The financial information set out above does not constitute the Group's statutory information for the seven months ended 30 April 2005, but is derived from those accounts. Statutory accounts for this period will be delivered to the Registrar of Companies following the Company's annual general meeting. The auditors have reported on these accounts, their reports were unqualified and did not 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

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