BEGBIES TRAYNOR GROUP PLC

Earnings Release • Jul 3, 2013

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RNS Number : 4587I

Begbies Traynor Group PLC

03 July 2013

3 July 2013

Begbies Traynor Group plc

Final results

for the year ended 30 April 2013

Begbies Traynor Group plc (the 'company' or the 'group'), the UK's leading independent business recovery practice, today announces its final results for the year ended 30 April 2013.

Financial highlights

·      Revenue* of £51.1m (2012: £57.7m)

·      EBITA** (pre-exceptional items and acquisition-related costs) of £7.7m (2012: £8.5m)

·      Adjusted profit before tax*** of £6.7m (2012: £7.4m)

·      Profit before tax* of £2.4m (2012: £5.5m)

·      Statutory profit for the year of £1.4m (2012: loss of £5.7m including loss from discontinued operations and impairment charges)

·      Earnings per share:

o  adjusted basic and diluted EPS**** from continuing operations of 5.3p (2012: 6.0p)

o  basic and fully diluted EPS from continuing operations of 1.6p (2012: 4.4p)

o  basic and fully diluted EPS from continuing and discontinued operations of 1.6p (2012: loss of 6.4p)

·      Proposed final dividend maintained at 1.6p (2012: 1.6p), making a total dividend for the year of 2.2p (2012: 2.2p)

·      Net debt of £17.2m (2012: £20.1m), reduced from £27.3m at 31 October 11 and giving significant headroom within the banking facilities

·      Net assets per share of 64p (2012: 65p)

* From continuing operations

** Earnings before interest, tax and amortisation of intangible assets arising on acquisitions (from continuing operations)

*** Profit before tax from continuing operations of £2.4m (2012: £5.5m) plus amortisation of intangible assets arising on acquisitions of £0.4m (2012: £0.4m) plus finance charge arising from the discounting of deferred consideration of £nil (2012: £0.1m) plus exceptional items and acquisition-related costs of £3.9m (2012: £1.4m)

**** See reconciliation in note 7

Operational highlights

·      Market share maintained despite declining market with the group handling the largest number of corporate insolvency appointments in the UK

·      Operating margins maintained at 15% - cost base reduced by £8m over last two years

·      Completed refinancing of debt facilities, providing the group with long-term £30m funding line and £5m overdraft

·      Launched BTG Financial Consulting, incorporating the group's restructuring services-led practice and already completed several higher value, complex restructuring cases

·      Notable insolvency cases in the period included Port Vale FC, Pentagon Capital Management and United Carpets;

post period-end we were appointed as administrators of Rett Retail Ltd, owner of the Ark fashion retail chain

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

"Last year was a challenging period for our industry with the number of UK corporate insolvency appointments decreasing by 10% over the twelve months to 31 March 2013. In this environment we consider that we have delivered a solid financial performance for the year as a result of the ongoing management of our cost base, which has mitigated the impact of lower revenues."

"Over the last two financial years we have reduced our cost base by £8m from £52m to £44m and have reduced net debt significantly from £27.3m as at 31 October 2011 to £17.2m as at the year end."

"Our new long-term debt facilities, together with the significant reduction in debt over the last 18 months, place the group in a strong financial position. This will enable us to consider making organic investments and selective acquisitions, whilst providing confidence in the underlying strength of the group, despite the challenging trading conditions."

"We will provide an update on current trading at the time of the company's annual general meeting in October 2013."

A meeting for analysts will be held today at 9.15am for 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.

For enquiries please contact:

Begbies Traynor Group plc                                                              Ric Traynor - Executive Chairman Nick Taylor - Group Finance Director	0161 837 1700
Canaccord Genuity Limited                                                             (Nominated Adviser and Joint Broker) Bruce Garrow/ Adam Miller	020 7523 8350
Shore Capital                                                                                       (Joint Broker) Pascal Keane	020 7408 4090
MHP Communications                                                                      Reg Hoare / Katie Hunt / Giles Robinson	020 3128 8100

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

Chairman's statement

INTRODUCTION

Last year was a challenging period for our industry with the number of UK corporate insolvency appointments decreasing by 10% over the twelve months to 31 March 2013. In this environment we consider that we have delivered a solid financial performance for the year as a result of the ongoing management of our cost base, which has mitigated the impact of lower revenues. We have maintained our operating margins at 15% and reduced our net debt to £17.2m at 30 April 2013 (2012: £20.1m), with gearing reduced to 30% (2012: 34%).

Over the last two financial years we have reduced our cost base by £8m from £52m to £44m and have reduced net debt significantly from £27.3m as at 31 October 2011 to £17.2m as at the year end.

We remain the UK's leading independent business recovery practice, handling the largest number of corporate insolvency appointments in the country, and have maintained our leading market share.

We completed a refinancing of our debt facilities in April 2013, which has provided the group with a committed £30m funding line, with maturity dates from July 2017 to April 2021, together with a £5m overdraft facility. We have significant headroom in this facility.

These new debt facilities, together with the significant reduction in debt over the last 18 months, place the group in a strong financial position. This will enable us to consider making organic investments and selective acquisitions, whilst providing confidence in the underlying strength of the group, despite the challenging trading conditions.

RESULTS

Group revenue from continuing operations in the year ended 30 April 2013 was £51.1m (2012: £57.7m), with earnings before interest, tax and amortisation (pre-exceptional items and acquisition-related costs) of £7.7m (2012: £8.5m). Adjusted profit before tax* was £6.7m (2012: £7.4m).  Profit before tax was £2.4m (2012: £5.5m). Exceptional items and acquisition-related costs relating to continuing operations were £3.9m (2012: £1.4m). The exceptional costs form a part of the group's cost management programme, which has reduced the cost base by £8m since 2011, with a further £2m of savings to be realised in the new financial year. Statutory profit for the year was £1.4m (2012: loss £5.7m after loss from discontinued operations and associated impairment charges).

The results on a sequential basis, which show a broadly stable level of EBITA despite falling revenues, over the last 18 months are as follows:

	Six months ended 31 October 2011	Six months ended 30 April 2012	Six months ended 31 October 2012	Six months ended 30 April 2013
	£m	£m	£m	£m
Revenue	29.4	28.3	26.1	25.0
EBITA	4.6	3.9	3.7	4.0
Adjusted profit before tax*	4.1	3.3	3.2	3.5
Profit before tax	3.4	2.1	2.0	0.4

Unaudited. Cumulative 12 months ending 30 April audited. 

Earnings per share from continuing operations**, adjusted for the net of tax impact of amortisation of intangible assets arising on acquisition, exceptional and acquisition-related costs and the finance charge arising from the discounting of deferred consideration liabilities, was 5.3p (2012: 6.0p). Basic and fully diluted EPS from continuing operations were 1.6p (2012: 4.4p).

Net debt at 30 April 2013 was £17.2m (2012: £20.1m), giving gearing of 30% (2012: 34%) and headroom of £17.9m in the group's principal banking facilities. Interest cover*** was 7.8 times (2012: 7.2 times). Net assets per share were 64p (2012: 65p).

* Profit before tax from continuing operations of £2.4m (2012: £5.5m) plus amortisation of intangible assets arising on acquisitions of £0.4m (2012: £0.4m) plus finance charge arising from the discounting of deferred consideration of £nil (2012: £0.1m) plus exceptional items and acquisition-related costs of £3.9m (2012: £1.4m)

** See reconciliation in note 7

*** Before exceptional costs and amortisation of intangible assets arising on acquisitions

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.

Having considered the results for the year, the outlook for the new financial year and the ongoing requirements of the business, the board has recommended the total dividend be maintained at 2.2p (2012: 2.2p), comprising the interim dividend already paid of 0.6p (2012: 0.6p) and a final dividend of 1.6p (2012: 1.6p).

The final dividend will be paid on 7 November 2013 to shareholders on the register on 11 October 2013, with an ex-dividend date of 9 October 2013.

STRATEGY

We aim to enhance our position, through organic investment and selective acquisitions, as the UK's leading independent insolvency practice, ensuring our core division is well-placed to benefit from the opportunities presented by long-term growth in the UK insolvency market, together with developing complementary service offerings.

PEOPLE

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

As at 30 April 2013, the group's continuing operations employed a total of 501 people (2012: 563), a decrease of 11% compared with a year ago, which includes 392 direct fee earners, of whom 71 are partners, and 109 support staff.  We continue to invest in training and developing our people, three of our fee earners passed the JIEB (Joint Insolvency Examination Board) exams in November 2012, and we are pleased to have promoted two fee earners to partner during the year.

OPERATIONAL REVIEW - CONTINUING OPERATIONS

Insolvency and restructuring

Begbies Traynor is the UK's leading independent business rescue, recovery, restructuring and insolvency organisation, providing a partner-led service to stakeholders in troubled businesses.

Segmental profits in the year decreased to £12.3m (2012: £13.7m), on revenues which decreased to £47.5m (2012: £53.1m). Operating margins remained broadly unchanged at 25.9% (2012: 25.8%).

The UK insolvency market remains challenging with a 10% decrease in the number of UK corporate insolvencies in the twelve months ended 31 March 2013 compared to the same period in the prior year. Activity levels remain lower than expected at this stage of the economic cycle, with base rates of 0.5% (since May 2009) continuing to provide a very benign financing environment for otherwise weak companies that in previous recessions would almost certainly have gone into an insolvency process. 

As the UK insolvency business with the largest market share, any volatility in national insolvency numbers has a direct impact on our operational volumes. In this environment, with constrained activity levels, we have continued to keep our cost base under close review to ensure it is aligned to current and projected activity levels. The number of people employed in the division has decreased to 415 as at 30 April 2013 from 466 at the start of the financial year.

The division has continued to generate good operating margins as a result of the efficiency measures, in spite of the reduced revenues and consequent reduction in overall profit.

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 business well-placed to take full advantage of its market. Our strong market position was borne out by our appointment to a number of high profile insolvency cases during the year, including the successful sale of Port Vale Football Club from administration as a going concern, the administration of Pentagon Capital Management, and the pre-pack administration of United Carpets (Northern) Limited, a 73-store chain of carpet superstores. Following the period-end, we were appointed as administrators of Rett Retail Ltd, owner of the Ark fashion retail chain, and on 28 June 2013 we announced that JD Sports had acquired the business out of administration, securing the jobs for 160 of Ark's 200 employees.

During the year, as part of the ongoing development of our advisory services, we launched BTG Financial Consulting, which incorporates the group's restructuring services-led practice. The team draws on the existing specialist expertise within the group, offering a comprehensive range of multi-discipline services. Utilising the extensive capabilities of its domestic teams as well as the specialist firms around the international network, the team advises UK and international clients facing strategic, financial and commercial challenges and has already completed several higher value, complex restructuring cases.

We will continue to develop our core business through a combination of senior recruitment, selective acquisitions and staff development, with the intention of progressively increasing our market share. Further development will come from winning higher value, more complex instructions from existing clients and prospects by demonstrating our growing capabilities and credentials.

Global Risk Partners

Global risk partners is a specialist risk consulting and forensic investigation consultancy. Its services include forensic technology and accountancy; risk and security consultancy; and corporate intelligence and investigations.

This segment generated a loss of £0.2m in the year (2012: £nil) on revenues which decreased to £3.6m (2012: £4.6m).

Having generated a profit of £0.2m in the first six months of the year, a number of anticipated sales opportunities failed to convert in the second half year, which resulted in reduced revenue levels and a loss for the year as a whole, below our expectations. 

The number of people employed in global risk partners was 30 on 30 April 2013, down from 34 the year before.

INSOLVENCY MARKET

Government insolvency statistics for the twelve months ended 31 March 2013 showed a 10% decrease in the number of UK corporate insolvencies compared to the same period in the prior year. This contrasts with a 5% increase in the preceding year.  The statistics for the first quarter of calendar year 2013 represented an 18% reduction on the comparable quarter of 2012 and was the fourth consecutive quarter of decreases in corporate insolvencies.

The 'Begbies Traynor Red Flag Alert' quarterly report, which monitors early warning signs of potential insolvency activity, revealed that the number of UK companies experiencing critical problems in the first calendar quarter of 2013 had decreased by 34% from the same period in 2012, albeit with an increase of 8% from the preceding quarter.

Corporate insolvency rates (expressed as a percentage of active corporate entities) remain at historically low levels, especially when contrasted with previous recessions. The board's view is that this is due to the on-going high level of monetary support, principally low interest rates, combined with lenient attitudes by creditors towards financially stressed companies.

The board continues to plan for suppressed market conditions to continue in the new financial year.

OUTLOOK

As the UK insolvency business with the largest market share, any change in national insolvency numbers, which are difficult to predict in the current climate, has a direct impact on our operational volumes. In the near term, we do not anticipate an improvement in the market conditions as described above.

We enter the new financial year with further committed cost reductions of £2m, which will enable us to maintain our operating margins in the event of a modest reduction in revenue. Importantly, however, the group does retain the capacity and expertise to handle an increase in activity levels should they arise, which would result in improved profit and margins due to the inherent operational gearing in the business.

Our new debt facilities, together with the significant reduction in debt, place the group in a strong financial position. This will enable us to consider making organic investments and selective acquisitions, whilst providing confidence in the underlying strength of the group, despite the challenging trading conditions. 

An update on current trading will be provided at the time of the company's annual general meeting in October 2013.

Ric Traynor

Executive chairman

3 July 2013

Financial review

FINANCIAL HIGHLIGHTS - CONTINUING OPERATIONS

The group's revenue from continuing operations in the year was £51.1m (2012: £57.7m), with insolvency revenue having decreased by £5.6m or 10.5% and global risk partners revenue having decreased by £1.0m or 22.7%.

EBITA (pre-exceptional and acquisition-related costs) decreased to £7.7m (2012: £8.5m). Margins remained unchanged at 15% principally due to cost savings from the restructuring of the group's cost base.

The table below summarises financial performance on a sequential basis for the last two years:

	Six months ended 31 October 2011 £m	Six months ended 30 April 2012 £m	Six months ended 31 October 2012 £m	Six months ended 30 April 2013 £m
Revenue	29.4	28.3	26.1	25.0
Costs (net of other operating income)	(24.8)	(24.4)	(22.4)	(21.0)
EBITA	4.6	3.9	3.7	4.0
Margin	15.7%	13.7%	14.0%	16.0%

Unaudited. Cumulative 12 months ending 30 April audited. 

During the year, the group incurred exceptional costs of £3.9m (2012: £1.4m), with restructuring costs accounting for £3.8m and advice relating to the recent debt refinancing accounting for £0.1m. The restructuring costs, which have been incurred to reduce the cost base to an appropriate level for the reduced activity levels in the wider market, relate to staff reductions (£2.1m), onerous property leases (£0.3m) and non-cash asset write downs (£1.4m).

The group's cost base has reduced markedly from £52m in 2011 to £44m in 2013 and is anticipated to reduce by a further £2m in the new financial year as a result of these efficiency measures.

Amortisation of intangible assets arising on acquisitions was £0.4m (2012: £0.4m).

Finance costs decreased to £1.0m (2012: £1.2m) due to the reduced levels of net debt over the year.

Adjusted profit before tax was £6.7m (2012: £7.4m). Profit before tax was £2.4m (2012: £5.5m). The reconciliation between these profit measures is as follows:

	2013	2012
	£m	£m
Adjusted profit before tax from continuing operations	6.7	7.4
Less:
Amortisation of intangible assets arising on acquisitions	(0.4)	(0.4)
Finance charges arising on discounting of deferred consideration	-	(0.1)
Exceptional costs	(3.9)	(1.4)
Profit before tax from continuing operations	2.4	5.5

The tax charge arising on pre-exceptional profits was £1.9m (2012: £1.8m). This represents an effective rate of 29% (2012: 27%). The group's tax rate is higher than the prevailing UK tax rate of 24% as a result of expenses incurred by the group that are not deductible in determining taxable profit. The tax charge for the year from continuing operations was £1.0m (2012: £1.5m), which represents an effective rate of 41% (2012: 27%).

Profit for the year from continuing operations was £1.4m (2012: £4.0m).

EARNINGS PER SHARE ('EPS')

EPS from continuing operations*, adjusted for the net of tax impact of 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 5.3p (2012: 6.0p). Basic and fully diluted EPS from continuing operations was 1.6p (2012: 4.4p).

* See reconciliation in note 7

FINANCING

The group is in a strong financial position, having entered into new banking facilities totalling £35m on 26 April 2013. The new facilities, which are unsecured, comprise:

·       £10m committed revolving credit facility, with a July 2017 maturity date, from HSBC;

·       £10m committed revolving credit facility, with a July 2017 maturity date, from Santander UK;

·       £10m term facility with M&G UK Companies Financing Fund 2, with £5m maturing in April 2020 and £5m maturing in April 2021; and a

·       £5m overdraft facility from HSBC.

These new facilities provide the group with an attractive blend of medium and long-term financing at competitive rates and will enable the group to consider organic investment and acquisition opportunities.

They replace the group's previous £35m debt facilities, in place during the year, which were due to mature in 2014. All bank covenants in relation to these facilities were met during the year.

The arrangement costs associated with this refinancing, including legal fees, amount to approximately £0.5m of which £0.1m was charged as an exceptional item in the year.  The remainder will be recognised over the expected life of the facilities in accordance with IFRS.  The effective financing cost of these new facilities is expected to be around 5.6% (previous facility: 4.6%), reflecting current market rates.

Net borrowings at 30 April 2013 were £17.2m (2012: £20.1m), with a reduction in gearing to 30% (2012: 34%). Interest cover* was a very comfortable 7.8 times (2012: 7.2 times).

At 30 April 2013, the group had utilised £17.1m (2012: £19.7m) of its principal bank facilities, giving significant headroom within the total facilities of £35m. The group continues to use other sources of finance as appropriate. At 30 April 2013, the group had asset-related finance of £0.1m (2012: £0.4m).

* Before exceptional costs and amortisation of intangible assets arising on acquisitions

CASH FLOWS

Cash generated by operations (before interest and tax payments) in the year increased to £7.8m (2012: £3.9m), principally due to an improved working capital position. This cash flow is stated after £1.7m (2012: £0.8m) of restructuring payments and £1.4m (2012: £2.5m) of payments relating to discontinued operations (utilisation of disposal provisions and operating losses in the prior year).

Tax payments in the year were £0.4m (2012: £0.8m). Interest payments were £1.5m (2012: £0.7m), including £0.4m of arrangement fees in respect of the new bank facilities.

Cash flows from investing activities were £1.0m (2012: inflow of £1.9m). Capital expenditure was £0.4m (2012: £1.2m) and deferred payments relating to prior year acquisitions were £0.6m (2012: deferred payments of £2.8m and in-year acquisition payments of £0.4m). Prior year cash flows included £3.8m of proceeds from the disposal of property, plant and equipment, principally due to the sale and leaseback of the group's company car fleet, and the disposal of businesses (after transaction costs) generated cash of £2.5m.

Financing cash flows were £4.1m (2012: £4.3m). During the year there was a repayment of asset finance obligations of £0.2m (2012: net repayment of £3.4m principally due to the sale and leaseback of the group's company car fleet) and a repayment on the group's principal bank facilities of £2.0m (2012: drawdown of £1.0m). Dividend payments were £2.0m (2012: £2.0m).

NET ASSETS

At 30 April 2013 net assets were £57.7m (2012: £58.5m), equivalent to net assets per share of 64p (2012: 65p).

Non-current assets decreased to £52.6m (2012: £53.6m) due to low levels of capital investment in the year and depreciation costs.

Current assets (excluding assets held for sale) decreased to £45.2m (2012: £48.1m), principally due to a reduction in working capital of £3.6m. Assets held for sale were £nil (2012: £0.2m).

Gross borrowings reduced to £22.1m (2012: £24.4m).

Trade and other payables, which reduced to £9.4m (2012: £10.4m), includes trade creditors and accruals of £7.1m (2012: £7.6m), deferred consideration liabilities of £0.3m (2012: £0.9m) and tax and social security creditors of £2.0m (2012: £1.9m). Provisions for restructuring costs and post-disposal obligations total £3.0m (2012: £3.5m) of which £2.2m (2012: £2.0m) is payable within one year. Current tax liabilities were £0.5m (2012: £nil). Deferred tax liabilities are £5.1m (2012: £5.0m).

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

3 July 2013

Consolidated income statement for the year ended 30 April 2013
			2013				2012
		Before				Before
		exceptional		Exceptional		exceptional		Exceptional
		and		items and		and		items and
		acquisition-		acquisition-		acquisition-		acquisition-
		related costs		related costs	Total	related costs		related costs	Total
		£'000		£'000	£'000	£'000		£'000	£'000
Continuing operations
Revenue		51,092		-	51,092	57,737		-	57,737
Direct costs		(27,966)		(3,320)	(31,286)	(30,572)		(1,033)	(31,605)
Gross profit		23,126		(3,320)	19,806	27,165		(1,033)	26,132
Other operating income		343		-	343	-		-	-
Administrative expenses		(15,815)		(578)	(16,393)	(18,658)		(414)	(19,072)
Earnings before interest, tax and amortisation		7,654		(3,898)	3,756	8,507		(1,447)	7,060
Amortisation of intangible assets arising on acquisitions		(364)		-	(364)	(419)		-	(419)
Finance costs		(977)		-	(977)	(1,187)		-	(1,187)
Profit before tax		6,313		(3,898)	2,415	6,901		(1,447)	5,454
Tax		(1,854)		857	(997)	(1,839)		345	(1,494)
Profit for the year from continuing operations		4,459		(3,041)	1,418	5,062		(1,102)	3,960
Discontinued operations
Loss for the year from discontinued operations		-		-	-	(2,528)		(7,149)	(9,677)
Profit (loss) for the year		4,459		(3,041)	1,418	2,534		(8,251)	(5,717)
Earnings (loss) per share
From continuing operations
Basic and diluted					1.6p				4.4p
From continuing and discontinued operations
Basic and diluted					1.6p				(6.4)p

Consolidated statement of comprehensive income for the year ended 30 April 2013
	2013	2012
	£'000	£'000
Profit (loss) for the year	1,418	(5,717)
Other comprehensive income
Exchange differences on translation of foreign operations	-	(5)
Total comprehensive income for the year	1,418	(5,722)

Consolidated statement of changes in equity for the year ended 30 April 2013
	Share	Share	Merger	Translation	Retained	Total
	capital	premium	reserve	reserve	earnings	equity
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 May 2011	4,579	17,443	17,584	(57)	26,312	65,861
Loss for the year	-	-	-	-	(5,717)	(5,717)
Other comprehensive income:
Exchange differences on translation of foreign operations	-	-	-	(5)	-	(5)
Total comprehensive income for the year	-	-	-	(5)	(5,717)	(5,722)
Dividends	-	-	-	-	(1,973)	(1,973)
Exchange differences recognised in income statement on disposals	-	-	-	29	-	29
Credit to equity for equity-settled share-based payments	-	-	-	-	118	118
Shares issued	72	81	-	-	-	153
At 30 April 2012	4,651	17,524	17,584	(33)	18,740	58,466
Profit for the year	-	-	-	-	1,418	1,418
Total comprehensive income for the year	-	-	-	-	1,418	1,418
Dividends	-	-	-	-	(1,980)	(1,980)
Exchange differences recognised in income statement on disposals	-	-	-	33	-	33
Credit to equity for equity-settled share-based payments	-	-	-	-	99	99
Modification to share-based payments	-	-	-	-	(410)	(410)
Shares issued	12	57	-	-	-	69
At 30 April 2013	4,663	17,581	17,584	-	17,867	57,695

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

Consolidated balance sheet at 30 April 2013		2013	2012
		£'000	£'000
Non-current assets
Intangible assets		50,436	50,942
Property, plant and equipment		2,165	2,677
		52,601	53,619
Current assets
Trade and other receivables		40,233	43,755
Current tax receivable		-	12
Cash and cash equivalents		4,962	4,302
Assets classified as held for sale		-	198
		45,195	48,267
Total assets		97,796	101,886
Current liabilities
Trade and other payables		(9,413)	(10,271)
Current tax liabilities		(496)	-
Borrowings		(109)	(212)
Provisions		(2,157)	(1,986)
Liabilities directly associated with assets classified as held for sale		-	(145)
		(12,175)	(12,614)
Net current assets		33,020	35,653
Non-current liabilities
Trade and other payables		-	(94)
Borrowings		(22,018)	(24,145)
Provisions		(830)	(1,542)
Deferred tax		(5,078)	(5,025)
		(27,926)	(30,806)
Total liabilities		(40,101)	(43,420)
Net assets		57,695	58,466
Equity
Share capital		4,663	4,651
Share premium		17,581	17,524
Merger reserve		17,584	17,584
Translation reserve		-	(33)
Retained earnings		17,867	18,740
Equity attributable to owners of the company		57,695	58,466

Consolidated cash flow statement for the year ended 30 April 2013
		2013	2012
		£'000	£'000
Cash flows from operating activities
Cash generated by operations		7,793	3,851
Income taxes paid		(436)	(778)
Interest paid		(1,545)	(719)
Net cash flows from operating activities		5,812	2,354
Investing activities
Proceeds on disposal of property, plant and equipment		40	3,771
Purchase of property, plant and equipment		(386)	(1,145)
Purchase of intangible fixed assets		(28)	(47)
Proceeds on disposal of businesses		30	2,466
Deferred consideration payments in the year		(667)	(2,792)
Acquisition of businesses		-	(380)
Net cash from investing activities		(1,011)	1,873
Financing activities
Dividends paid		(1,980)	(1,973)
Hire purchase finance received		-	315
Repayments of hire purchase finance obligations		(98)	(3,496)
Proceeds on issue of shares		69	153
Repayment of loans		(132)	(258)
(Repayment) drawdown of bank facility		(2,000)	1,000
Net cash from financing activities		(4,141)	(4,259)
Net increase (decrease) in cash and cash equivalents		660	(32)
Cash and cash equivalents at beginning of year		4,302	4,334
Cash and cash equivalents at end of year		4,962	4,302

1.     Basis of preparation

The results for the year ended 30 April 2013 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 2012.

The group's financial statements for the year ended 30 April 2013 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 2012 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 2013 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 2013 annual report will be available on the group's website: www.begbies-traynorgroup.com.

Going concern

In carrying out their duties in respect of going concern, the directors have completed a review of the group's current financial position and cash flow forecasts for a period exceeding twelve months from the date of this announcement. This review included sensitivity analysis to determine the potential impact on the group of reasonably possible downside scenarios. Under all modelled scenarios, the group's banking facilities were sufficient and all associated covenant measures were forecast to be met.

After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, this financial information is prepared on the going concern basis.

2.     Segmental analysis by class of business

The continuing group is managed as two operating segments: insolvency and restructuring and global risk partners. The tax, red flag and insolvency offshore businesses were classified as discontinued operations in the comparative period.

Selected segmental information about the continuing group is presented below:

	Insolvency and	Global risk
	restructuring	partners	Consolidated
	2013	2013	2013
	£'000	£'000	£'000
Revenue (from continuing operations)
Total revenue from rendering of professional services	47,522	3,720	51,242
Inter-segment revenue	-	(150)	(150)
External revenue	47,522	3,570	51,092
Segmental result (from continuing operations)	12,302	(212)	12,090
Shared and central costs			(4,436)
EBITA (from continuing operations)			7,654

	Insolvency and	Global risk
	restructuring	partners	Consolidated
	2012	2012	2012
	£'000	£'000	£'000
Revenue (from continuing operations)
Total revenue from rendering of professional services	53,117	4,813	57,930
Inter-segment revenue	-	(193)	(193)
External revenue	53,117	4,620	57,737
Segmental result (from continuing operations)	13,700	5	13,705
Shared and central costs			(5,198)
EBITA (from continuing operations)			8,507

3.     Finance costs

		Continuing			Discontinued				Total
	2013		2012	2013		2012	2013			2012
	£'000		£'000	£'000		£'000	£'000			£'000
Interest on bank overdrafts and loans	961		1,067	-		5	961			1,072
Finance charges on hire purchase contracts	2		72	-		5	2			77
Total interest expense	963		1,139	-		10	963			1,149
Unwinding of discount on deferred consideration liabilities		14	48	-		-	14			48
Total finance costs	977		1,187	-		10	977			1,197

4.     Exceptional and acquisition-related costs

During the year, the group incurred exceptional and other acquisition-related costs as detailed below:

		Continuing			Discontinued				Total
	2013		2012	2013		2012	2013			2012
	£'000		£'000	£'000		£'000	£'000			£'000
Restructuring costs	3,753		1,437	-		-	3,753			1,437
Refinancing costs	145		-	-		-	145			-
Impairment of goodwill	-		-	-		4,437	-			4,437
Loss on disposal of businesses	-		-	-		3,391	-			3,391
Impairment of assets	-		-	-		366	-			366
Acquisition-related costs	-		10	-		-	-			10
	3,898		1,447	-		8,194	3,898			9,641

5.     Tax

		Continuing			Discontinued					Total
	2013		2012	2013		2012		2013				2012
	£'000		£'000	£'000		£'000		£'000				£'000
Current tax charge (credit)	944		1,517	-		(1,484)	944				33
Deferred tax charge (credit)	53		(23)	-		261	53				238
	997		1,494	-		(1,223)	997				271

6.     Discontinued operations

On 15 October 2012 the group disposed of its Kenyan operations (disclosed within insolvency offshore), which were classified as held for sale in the balance sheet at 30 April 2012. Proceeds of £30,000 were received during the year. In the comparative period the group disposed of its tax, Red Flag Alert and Channel Islands insolvency operations.

These businesses were presented as discontinued operations as follows:

		2012
		£'000
Revenue		3,824
Direct costs		(3,419)
Gross profit		405
Administrative expenses		(3,101)
EBITA		(2,696)
Finance costs		(10)
Exceptional and acquisition-related costs		(4,803)
Loss before tax		(7,509)
Tax		178
Loss after tax		(7,331)
Loss on disposal		(3,391)
Tax on loss on disposal		1,045
Net loss attributable to discontinued operations		(9,677)

7.     Earnings (loss) per share

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

	2013	2012
	£'000	£'000
Earnings
Profit for the year from continuing operations attributable to equity holders	1,418	3,960
Loss for the year from discontinued operations attributable to equity holders	-	(9,677)
Profit (loss) for the year attributable to equity holders	1,418	(5,717)

	2013	2012
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share	90,040,153	89,788,660

	2013	2012
	pence	pence
Basic and diluted earnings (loss) per share from:
Continuing operations	1.6	4.4
Discontinued operations	-	(10.8)
Total	1.6	(6.4)

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:

	2013	2012
	£'000	£'000
Earnings
Profit for the year from continuing operations attributable to equity holders	1,418	3,960
Amortisation of intangible assets arising on acquisitions	364	419
Unwinding of discount on deferred consideration liabilities	14	48
Exceptional and acquisition-related costs	3,898	1,447
Tax effect of above items	(944)	(446)
Adjusted earnings	4,750	5,428

	2013	2012
	pence	pence
Adjusted basic and diluted earnings per share from continuing operations	5.3	6.0

8.     Dividends

	2013	2012
	£'000	£'000
Amounts recognised as distributions to equity holders in the year
Interim dividend for the year ended 30 April 2012 of 0.6 pence (2011: 1.2 pence) per share	540	1,076
Final dividend for the year ended 30 April 2012 of 1.6 pence (2011: 1.0 pence) per share	1,440	897
	1,980	1,973
Amounts proposed as distributions to equity holders
Interim dividend for the year ended 30 April 2013 of 0.6 pence (2012: 0.6 pence) per share	540	540
Proposed final dividend for the year ended 30 April 2013 of 1.6 pence (2012: 1.6 pence) per share	1,440	1,440
	1,980	1,980

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting. The interim dividend for 2013 was not paid until 9 May 2013 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

	2013	2012
	£'000	£'000
Profit (loss) for the year	1,418	(5,717)
Adjustments for:
Tax	997	271
Finance costs	977	1,197
Amortisation of intangible assets	534	588
Depreciation of property, plant and equipment	861	1,745
Exceptional cost relating to impairment of assets	-	366
Non-cash exceptional costs	1,384	141
Loss on disposal of businesses	-	680
Profit on disposal of property, plant and equipment	(5)	(21)
Impairment of goodwill	-	4,437
Share-based payment expense	99	118
Operating cash flows before movements in working capital	6,265	3,805
Decrease (increase) in receivables	2,489	(101)
Decrease in payables	(420)	(2,345)
(Decrease) increase in provisions	(541)	2,492
Cash generated by operations	7,793	3,851

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.

This information is provided by RNS

The company news service from the London Stock Exchange

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