REG - Begbies Traynor - Final Results for the year ended 30 April 2022
19/07/2022 07:00
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RNS Number : 8794S Begbies Traynor Group PLC 19 July 2022
19 July 2022
Begbies Traynor Group plc
Final results
for the year ended 30 April 2022
Strong performance with results comfortably ahead of original expectations
Begbies Traynor Group plc (the 'company' or the 'group'), the business
recovery, financial advisory and property services consultancy, today
announces its final results for the year ended 30 April 2022.
Financial highlights
2022 2021
£m £m
Revenue 110.0 83.8
Adjusted profit before tax* 17.8 11.5
Profit before tax 4.0 1.9
Adjusted basic EPS** (p) 9.1 6.9
Basic EPS*** (p) (0.3) 0.1
Proposed total dividend (p) 3.5 3.0
Net cash 4.7 3.0
* Profit before tax £4.0m (2021: £1.9m) plus transaction costs £8.3m (2021:
£6.5m) and amortisation of intangible assets arising on acquisitions £5.5m
(2021: £3.1m)
** See reconciliation in note 5
*** Basic loss per share in 2022 reflects a one-off non-cash deferred tax
charge
Operational highlights
· Successful year with financial performance comfortably ahead of
original market expectations due to acquisitions and improved trading
· Revenue growth of 31% (7% organic), reflecting the material
increase in our scale and service offerings
· Enhanced operating margins of 16.9% (2021: 14.8%), leading to
adjusted profit growth of 55%
· All areas of the group performed well:
o Business recovery: significant growth from acquisitions late in the
previous financial year and increase in organic activity
o Financial advisory: services broadened and enhanced following finance
broker acquisition
o Property advisory and transactional services: growth from expanding
valuation and consultancy services, acquisitions and recovery in activity
levels from lockdown impact
· Substantial free cash flow generation, ending year with net cash of
£4.7m (2021: £3.0m)
· Recommended 17% increase in the total dividend for the year to 3.5p
(2021: 3.0p), the fifth consecutive year of dividend growth
Current trading and outlook
· Started new financial year in strong position and confident of
delivering plans for further growth towards the top end of current market
expectations*
· Insolvency market (by volume) has returned to pre-pandemic activity
levels and is expected to increase further in the current year and beyond
· Development of group and our extensive areas of expertise, leaves
us well positioned to respond to the challenging economic backdrop
· We will provide a further update on trading at the annual general
meeting in September 2022
* current range of analysts' forecasts for year ended 30 April 2023 revenue of
£110.0m-£118.0m and adjusted PBT of £18.5m-£19.7m (as compiled by the
company)
Commenting on the results, Ric Traynor, Executive Chairman of Begbies Traynor
Group, said:
"We have reported a further successful year for the group, with financial
performance comfortably ahead of original market expectations due to
acquisitions and improved trading. The results reflect the material increase
in our scale and service offerings and a continuation of the strong financial
track record we have built over recent years, resulting from our organic and
acquisitive growth strategy.
"We have started our new financial year in a strong position and are confident
of delivering our plans for further growth. At this early stage of the year,
we anticipate results towards the top end of current market expectations. The
development of the group in recent years, and the extensive areas of expertise
that we have built up across our national office network, leaves us well
positioned to respond to the challenging economic backdrop.
"Our healthy balance sheet and cash generation underpin our capacity to make
further acquisitions and deliver organic growth initiatives, thereby
continuing our track record of growth. We will provide an update on trading at
the annual general meeting in September 2022."
There will be a webcast and conference call for analysts today at 9.00am.
Please contact Pauline Guenot via begbies@mhpc.com (mailto:begbies@mhpc.com)
or on 020 3128 8567 if you would like to receive details.
Enquiries please contact:
Begbies Traynor Group plc
0161 837 1700
Ric Traynor - Executive Chairman
Nick Taylor - Group Finance Director
Canaccord Genuity Limited
020 7523 8350
(Nominated Adviser and Joint Broker)
Adam James / Patrick Dolaghan
Shore Capital
020 7408 4090
(Joint Broker)
Malachy McEntyre / Mark Percy / Anita Ghanekar / James Thomas
MHP Communications
020 3128 8567
Reg Hoare / Katie Hunt / Pauline Guenot
begbies@mhpc.com (mailto:begbies@mhpc.com)
Notes to editors
Begbies Traynor Group plc is a leading business recovery, financial advisory
and property services consultancy, providing services nationally from a
comprehensive network of UK locations. The group has 1,000 employees and
partners and the professional team include licensed insolvency practitioners,
accountants, chartered surveyors and lawyers.
The group's services include:
· Corporate and personal insolvency - we handle the largest number of
corporate insolvency appointments in the UK, principally serving the
mid-market and smaller companies.
· Financial advisory - Debt advisory, due diligence and transactional
support, accelerated corporate finance, pensions advisory, business and
financial restructuring, forensic accounting and investigations, finance
broking.
· Corporate finance - buy and sell side support on corporate
transactions.
· Valuations - valuation of property, businesses, machinery and
business assets.
· Property consultancy, planning and management - Building
consultancy, lease advisory, commercial property management, specialist
insurance and vacant property risk management, transport planning and design.
· Transactional services - Sale of property, machinery and other
business assets through physical and online auctions, business sales agency
and commercial property agency.
Further information can be accessed via the group's website at
www.begbies-traynorgroup.com/investor-relations.
CHAIRMAN'S STATEMENT
INTRODUCTION
I am pleased to deliver my annual report to shareholders on a further
successful year for the group, with financial performance comfortably ahead of
original market expectations due to acquisitions and improved trading. The
results reflect the material increase in our scale and service offerings and a
continuation of the strong financial track record we have built over recent
years, resulting from our organic and acquisitive growth strategy.
Since 2018 we have increased revenue from £52m to £110m, operating margins
from 11.6% to 16.9%, adjusted profit before tax from £5.6m to £17.8m and
adjusted earnings per share from 4.0p to 9.1p, respectively, from a
combination of acquisitions and organic growth. Last year was no exception, as
all areas of the group have delivered strong growth. Over the same period, we
have also increased dividends by 10% CAGR and moved from net debt to net cash.
Our business recovery activities achieved significant growth, following on
from the acquisitions of CVR Global and David Rubin & Partners late in the
previous financial year. In addition, organic activity increased over the
course of the financial year as the Government's pandemic support measures
were gradually removed. UK insolvency numbers have now returned to
pre-pandemic levels and we have increased our market share (by volume).
Our advisory services have been broadened and enhanced following the
acquisition of the finance broker MAF Finance Group, at the start of the
financial year. The addition of finance broking complements our advisory and
transactional services, increasing the range of services and advice we can
provide to our clients.
Our property services division reported growth in revenue and operating
margins, resulting from recent acquisitions, our expanding valuation and
consulting services, and the recovery in activity levels compared to the
lockdown impacted comparative period. We are continuing to invest in and
develop this service line with two acquisitions completed in the financial
year, and one following the year end.
The group has continued to generate substantial free cash flow, ending the
year with a net cash balance of £4.7m (2021: £3.0m). This is after £8.2m of
acquisition and deferred consideration payments and paying dividends of
£4.6m. Our strong financial position enables us to propose a 17% increase in
the total dividend for the year, representing our fifth consecutive year of
dividend growth.
Overall, the group remains in a strong position at the start of our new
financial year. Our scale, capabilities and breadth of expertise provide us
with the ability to continue to assist our clients as they face the challenges
of the forthcoming year.
RESULTS
Group revenue in the year increased by 31% to £110.0m (2021: £83.8m), 7% of
which was organic. Adjusted* profit before tax** increased by 55% to £17.8m
(2021: £11.5m). Statutory profit before tax was £4.0m (2021: £1.9m).
Adjusted* basic earnings per share*** increased by 32% to 9.1p (2021: 6.9p).
Basic loss per share was 0.3p (2021: earnings of 0.1p), reflecting a one-off
non-cash deferred tax charge.
As at 30 April 2022 the group had net cash of £4.7m (2021: £3.0m).
* The board uses adjusted performance measures to provide meaningful
information on the operating performance of the business. The items excluded
from our adjusted results are those which arise due to acquisitions in
accordance with IFRS 3. They are not influenced by the day-to-day operations
of the group.
** Profit before tax £4.0m (2021: £1.9m) plus transaction costs £8.3m
(2021: £6.5m) and amortisation of intangible assets arising on acquisitions
£5.5m (2021: £3.1m)
*** See reconciliation in note 5
DIVIDEND
The board is pleased to recommend (subject to shareholder approval at the
company's annual general meeting scheduled for 22 September 2022) a 17%
increase in the total dividend for the year to 3.5p (2021: 3.0p), representing
our fifth consecutive year of dividend growth. This comprises the interim
dividend already paid of 1.1p (2021: 1.0p) and a proposed final dividend of
2.4p (2021: 2.0p).
This reflects the board's confidence in the group's financial position and
prospects, whilst retaining capacity for our continued organic and acquisitive
growth strategy. We remain committed to our long-term progressive dividend
policy, which takes account of the group's earnings growth, our investment
plans and cash requirements, together with the market outlook.
The final dividend will be paid on 3 November 2022 to shareholders on the
register on 7 October 2022, with an
ex-dividend date of 6 October 2022.
STRATEGY
We believe that the execution of our strategy will continue to enhance
shareholder value through the delivery of strong, sustainable financial
performance.
Organic growth will be targeted through:
· retention and development of our existing partners and employees;
· recruitment of new talent;
· enhanced cross-selling of our service lines and expertise to our
wider client base; and
· investment in technology and processes to enhance working practices
and improve the service to our clients.
Our acquisition strategy is to target value-accretive acquisitions in any of
the following market segments:
· insolvency to increase market share;
· property services to enhance expertise or geographical coverage;
and
· complementary professional services businesses to continue the
development of the group and its service offering.
PEOPLE
Our ongoing success is reliant on the quality of advice and service delivered
to our clients by our people. I would like to thank all of our colleagues for
their contribution over the course of the last financial year. Following the
successful acquisitions, we are pleased with the way our teams are working
together and our new colleagues have integrated into our culture. We have
continued to support hybrid working arrangements during the year, as working
patterns begin to normalise following the pandemic.
SUSTAINABILITY
The board is committed to developing the business in a sustainable way for the
benefit of all our stakeholders. We look to minimise our impact on the
environment; have a positive impact for our people and the communities we
serve; and operate with a culture of strong governance and responsible
behaviour.
During the year under review we have made progress in a number of areas
including the appointment of a new People Director to lead our human capital
initiatives and the appointment of external consultants to advise the board on
material areas of focus for sustainability. We also initiated a salary
sacrifice car scheme to enable employees to purchase a low emission vehicle in
a tax efficient manner and encourage the transition of our employees to more
environmentally friendly vehicles. Further information on our sustainability
policies and progress is detailed in the full annual report.
OUTLOOK
We have started our new financial year in a strong position and are confident
of delivering our plans for further growth. At this early stage of the year,
we anticipate results being towards the top end of current market
expectations, with cost inflation more than offset by revenue growth.
The development of the group in recent years, and the extensive areas of
expertise we have built across our national office network, leaves us well
positioned to respond to the challenging economic backdrop.
The insolvency market (by volume) has returned to pre-pandemic activity levels
and is expected to increase further in the current year and beyond. Although
to date this increase has been through liquidations (typically smaller
companies) rather than administrations (typically larger and more complex
instructions), we anticipate administrations will also increase to normal
levels over the course of the new financial year.
Our advisory team has an encouraging pipeline of organic growth and
acquisition opportunities, giving confidence of further development being
achieved in the new financial year.
In the property division, we anticipate further progress as we continue to
develop our broad range of services through organic growth and acquisitions,
having completed the purchase of Budworth Hardcastle in June 2022.
Our healthy balance sheet and cash generation underpin our capacity to
progress our pipeline of acquisitions and deliver organic growth initiatives,
thereby continuing our track record of growth. We will provide an update on
trading at the annual general meeting in September 2022.
Ric Traynor
Executive chairman
19 July 2022
BUSINESS REVIEW
OPERATING REVIEW
Business recovery and financial advisory
Financial summary
Revenue increased by 36% (5% organic) to £81.4m (2021: £59.7m), reflecting
the benefit from recent acquisitions combined with an increase in activity
levels.
Operating costs increased by £15.4m to £60.4m (2021: £45.0m), principally
from costs associated with acquired businesses. However, these costs reduced
as a percentage of revenue which resulted in improved operating margins of
25.8% (2021: 24.6%).
Segmental profits* increased by 43% to £21.0m (2021: £14.7m).
* See note 2
Business recovery
The results for the year reflect the significant increase in the scale of our
business recovery activities, which resulted from the acquisitions of CVR
Global and David Rubin & Partners late in the previous financial year. The
teams have integrated well into the group and delivered strong results over
the last twelve months.
Over the course of the financial year, the measures introduced by the
Government to protect companies during the pandemic were gradually removed. As
a result, UK insolvency numbers returned to pre-pandemic levels, having been
at historically low levels during most of the prior period, and we expect them
to increase further in the current year and beyond.
Corporate insolvencies* nationally increased by 50% to 16,648 (2021: 11,134),
with the increase to date being from liquidations (which are typically routine
insolvencies of smaller companies) rather than administrations (typically
larger and more complex instructions).
We have increased activity across all case sizes: the smaller, more routine
appointments through our extensive regional network and digital marketing
expertise; and the larger and more complex appointments, as anticipated,
following the successfully integrated acquisitions.
Begbies Traynor remains the market leader (by volume of appointments) with an
increased market share resulting from organic development of 14% (prior year
12% reflecting the additional market share of the acquired businesses).
Our order book of committed future insolvency revenue has increased to £29.5m
(2021: £28.3m), leaving the division well-placed to continue its track record
of growth in the new financial year.
* Source: The Insolvency Service quarterly statistics on the number of
corporate insolvencies (excluding compulsory liquidations) in England and
Wales on a seasonally adjusted basis.
Financial advisory
At the start of the financial year, we acquired the finance broker MAF Finance
Group ('MAF'). MAF supports its broad client base through arranging facilities
for investment in new asset purchases together with refinancing and
restructuring existing facilities. Finance broking complements the group's
other advisory and transactional services and deepens the group's existing
relationships with banks and other lenders.
The business traded well in its first year as part of the group and has grown
in line with its earn out targets. Total lending arranged for clients in the
financial year increased to £330m from £150m in the year prior to
acquisition. This growth has been delivered from developing its healthcare and
renewables financing expertise as well as continuing growth in asset and
property finance solutions.
Our Springboard corporate finance team had a successful year, providing buy
and sell-side advice and benefitting from an M&A market which continued to
be very active.
People
The number of people employed in the division has increased to 590 on 30 April
2022 from 555 at the start of the financial year, following the MAF
acquisition. We continue to consider further recruitment to build capacity for
long-term growth and to develop our service offering.
Property advisory and transactional services
Financial summary
Revenue increased by 19% (10% organic) to £28.6m (2021: £24.1m), reflecting
organic growth of key service lines, the recovery in activity levels compared
to the lockdown impacted comparative period and the first-time contribution
from acquisitions.
Operating costs increased to £23.8m (2021: £20.2m), principally due to costs
of acquired businesses.
Segmental profits* were £4.8m (2021: £3.9m), with operating margins having
increased to 16.8% (2021: 16.2%).
* See note 2
Operating review
The division was created through the acquisition of Eddisons in December 2014,
since when it has increased substantially in scale from annual revenue of
c.£13m at inception to a current annualised run rate in excess of £30m,
together with strong and growing profitability.
Our professional services team had a strong year providing real estate
valuation services to secured lenders. This reflects the benefit of investment
in the team in recent years, which has resulted in the business now operating
as a national practice providing services to the clearing banks together with
a broad range of specialist lenders. Revenue growth in the year came from an
increased number of instructions together with higher average fees, reflecting
our enhanced reputation and expertise.
The building consultancy team continued to grow its national offering to the
education sector and its broad range of corporate clients. The team now has a
national footprint and an excellent reputation, which provides strong
foundations for continuing growth.
As previously reported, we also experienced a sustained recovery in activity
levels in our business sales agency, commercial property agency, valuation and
auction businesses compared to the lockdown impacted comparative period.
Acquisitions
We completed two acquisitions during the year in line with our strategy to
enhance and broaden our service offerings and geographical coverage.
In January 2022, we acquired Daniells Harrison, a valuation and property
consultancy practice operating across the south coast of England, which
extended our coverage into a new geography. In addition, we expanded our
operations in South Yorkshire through the acquisition of the team from Fernie
Greaves Chartered Surveyors in October 2021, who joined our existing Sheffield
team.
People
The number of people employed in the division has increased to 326 on 30 April
2022 from 306 at the start of the financial year, following the above
acquisitions.
FINANCE REVIEW
Financial summary
2022 2021
£m £m
Revenue 110.0 83.8
Operating profit (before transaction costs and amortisation) 18.6 12.4
Finance costs (0.8) (0.9)
Adjusted profit before tax 17.8 11.5
Transaction costs (8.3) (6.5)
Amortisation of intangible assets arising on acquisitions (5.5) (3.1)
Profit before tax 4.0 1.9
Tax on profits on ordinary activities (2.7) (1.7)
Deferred tax charge due to change in tax rate (1.8) -
(Loss) profit for the year (0.5) 0.2
Operating result (before transaction costs and amortisation)
Revenue in the year increased by £26.2m to £110.0m (2021: £83.8m), an
overall increase of 31%, of which 7% was organic and 24% was acquired*.
Operating profit increased by 50% to £18.6m (2021: £12.4m).
Operating margins improved to 16.9% (2021: 14.8%), due to profit growth and
margin enhancement in both divisions. In addition, shared and central costs as
a percentage of group revenue reduced to 6.5% (2021: 7.4%), reflecting the
benefits of increased scale.
Adjusted profit before tax increased by 55% to £17.8m (2021: £11.5m).
* part year contribution from acquisitions in the year and full year
contribution of prior year acquisitions
Transaction costs
Transaction costs are non-operating items and arise due to acquisitions in
accordance with IFRS 3. They include the following:
· Deemed remuneration, which relates to acquisition consideration,
where the vendors have obligations in the sale and purchase agreement to
provide post-acquisition services for a fixed period. This consideration is
charged to profit over the period of service;
· Gains on acquisitions, where the fair value of assets acquired
exceeds the consideration (due to elements of consideration being accounted
for as deemed remuneration and charged to income as detailed above); and
· Legal and professional fees incurred on acquisitions.
These costs (detailed in note 3) increased to £8.3m (2021: £6.5m) in the
year. This reflects an increase in deemed remuneration charges from both
current and prior year acquisitions, partially offset by a gain on
acquisition.
Tax
The overall tax charge for the year was £4.5m (2021: £1.7m) as detailed
below:
2022 2021
Profit before tax Tax Profit after tax Effective rate Profit before tax Tax Profit after tax Effective rate
£m £m £m £m £m £m
Adjusted 17.8 (3.7) 14.1 20% 11.5 (2.3) 9.2 20%
Transaction costs (8.3) - (8.3) - (6.5) - (6.5) -
Amortisation (5.5) 1.0 (4.5) 19% (3.1) 0.6 (2.5) 19%
Statutory (before one-off charge) 4.0 (2.7) 1.3 68% 1.9 (1.7) 0.2 89%
Deferred tax charge from change in rate - (1.8) (1.8) - - - - -
Statutory 4.0 (4.5) (0.5) 113% 1.9 (1.7) 0.2 89%
The deferred tax charge from the change in rate of £1.8m is a one-off
non-cash charge, resulting from an increase in deferred tax liabilities
following the legislation to increase the UK corporation tax rate to 25% being
enacted during the year.
Earnings per share
Adjusted basic earnings per share* increased by 32% to 9.1p (2021: 6.9p).
Basic loss per share of 0.3p (2021: earnings per share of 0.1p), resulting
from the one-off non-cash deferred tax charge noted above.
* See reconciliation in note 5
Partners and employees
On 30 April 2022 the group had 1,000 partners and employees (2021: 940), the
increase being principally due to acquisitions.
The average number of full-time equivalent (FTE) partners and employees
working in the group during the year is detailed below.
2022 2021
Business recovery and financial advisory Property advisory and transactional services Shared and support teams Total Business recovery and financial advisory Property advisory and transactional services Shared and support teams Total
Partners 85 - - 85 70 - - 70
Employees 395 268 - 663 285 237 - 522
Fee earners 480 268 - 748 355 237 - 592
Support teams 68 7 77 152 45 5 68 118
Total 548 275 77 900 400 242 68 710
The ratio of our support teams to fee earning colleagues is 4.9 (2021: 5.0).
Acquisitions
During the financial year, the group made the following acquisitions:
· MAF Property Limited ('MAF') on 9 May 2021 for initial
consideration of £3.0m (£2.0m cash and £1.0m in shares - cash free, debt
free); potential earn out of up to £8.75m subject to delivering material
growth in profits over the four year period post-acquisition.
In its financial year ended 31 December 2020, MAF reported revenue of £3.1m
and normalised pre-tax profits of £0.3m when reported on the same basis as
the group.
· Daniells Harrison Surveyors LLP ('Daniells Harrison') on 9 January
2022 for initial consideration of £1.0m (£0.75m cash and £0.25m in shares -
cash free, debt free); contingent consideration of £1m subject to maintaining
financial performance; and a potential earn out of up to £1.25m subject to
meeting growth targets over the four year period post-acquisition.
In its financial year ended 31 March 2021, Daniells Harrison reported revenue
of £2.1m and normalised pre-tax profits of £0.4m when reported on the same
basis as the group.
In addition, in October 2021, we expanded our property services team in South
Yorkshire through the acquisition of the team from Fernie Greaves Chartered
Surveyors for consideration of £0.25m.
The net cash outflow from acquisitions was £8.2m, comprising current year
acquisitions of £2.9m and prior year acquisitions of £5.3m.
The value of net assets acquired exceeds the accounting value of consideration
(as a result of the elements of consideration being accounted for as deemed
remuneration) and consequently a gain of £2.0m has been recognised within
transaction costs in the year.
Liquidity
The group remains in a strong financial position. At 30 April 2022, the group
had net cash of £4.7m (2021: £3.0m), represented by cash balances of £9.7m
(2021: £8.0m) net of drawn borrowing facilities of £5.0m (2021: £5.0m). All
bank covenants were comfortably met during the year.
We have extended our borrowing facilities with HSBC which now mature in August
2024 and comprise a £25m unsecured, committed revolving credit facility (of
which £5m was drawn at 30 April 2022) and a £5m uncommitted acquisition
facility. We have significant levels of headroom in these facilities to fund
organic investment and acquisition opportunities.
Cash flow
The group remains strongly cash-generative and increased its free cash flow to
£14.0m (2021: £12.3m).
Cash flow in the year is summarised as follows:
2022 2021
£m £m
Net cash from operating activities (before deemed remuneration) 18.2 16.2
Capital expenditure (1.0) (1.2)
Capital element of lease payments (3.2) (2.7)
Free cash flow 14.0 12.3
Net proceeds from share issues 0.5 20.9
Acquisition and deferred consideration payments (8.2) (23.9)
Dividends (4.6) (3.6)
Increase in net cash 1.7 5.7
Net assets
At 30 April 2022 net assets were £84.5m (2021: £86.3m). The £1.8m reduction
in net assets reflects the post-tax impact of acquisition-related transaction
and amortisation costs of £12.8m and the one-off deferred tax charge of
£1.8m; which offset post-tax adjusted earnings of £14.1m net of dividends of
£4.6m; a £1.5m credit for equity-settled share-based payments; and £1.8m
from the issue of new shares to satisfy share options and acquisition
consideration.
Going concern
The group is in a strong financial position and has significant liquidity as
detailed above.
In carrying out their duties in respect of going concern, the directors have
completed a review of the group's financial forecasts for a period exceeding
12 months from the date of approving this statement. This review included
sensitivity analysis and stress tests 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.
As a result, 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, the financial information in this statement
is prepared on the going concern basis.
Ric Traynor
Nick Taylor
Executive chairman
Group finance director
19 July 2022
19 July 2022
Consolidated statement of comprehensive income
2022 2021
Note £'000 £'000
Revenue 2 110,002 83,831
Direct costs (62,167) (48,281)
Gross profit 47,835 35,550
Other operating income 155 179
Administrative expenses (43,106) (32,939)
Operating profit (before amortisation and transaction costs) 2 18,594 12,394
Transaction costs 3 (8,224) (6,546)
Amortisation of intangible assets arising on acquisitions (5,486) (3,058)
Operating profit 4,884 2,790
Finance costs 4 (835) (883)
Profit before tax 4,049 1,907
Tax (before one-off deferred tax charge) (2,732) (1,754)
Deferred tax charge due to change in tax rate (1,817) -
(Loss) profit and total comprehensive income for the year (500) 153
(Loss) earnings per share
Basic and diluted 5 (0.3)p 0.1p
The profit, comprehensive income and earnings per share is attributable to
equity holders of the parent.
Consolidated statement of changes in equity
Capital redemption
Share Share Merger Retained Total
capital premium reserve reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2020 6,386 29,459 23,927 304 5,495 65,571
Profit for the year - - - - 153 153
Dividends - - - - (3,579) (3,579)
Transfer from share premium account - (20,000) - - 20,000 -
Credit to equity for equity-settled share-based payments - - - - 1,031 1,031
Shares issued as consideration for acquisitions 95 - 1,905 - - 2,000
Shares issued as deferred consideration 8 - 142 - - 150
Placing shares issued 1,043 19,852 - - - 20,895
Shares issued for share-based payments 15 14 - - - 29
At 30 April 2021 7,547 29,325 25,974 304 23,100 86,250
Loss for the year - - - - (500) (500)
Dividends - - - - (4,553) (4,553)
Credit to equity for equity-settled share-based payments - - - - 1,544 1,544
Shares issued as consideration for acquisitions 52 - 1,198 - - 1,250
Shares issued for share-based payments 72 462 - - - 534
At 30 April 2022 7,671 29,787 27,172 304 19,591 84,525
Consolidated balance sheet
2022 Restated
2021
Note £'000 £'000
Non-current assets
Intangible assets 75,307 77,887
Property, plant and equipment 1,967 2,069
Right of use assets 5,492 7,502
Trade and other receivables 7 4,175 3,970
86,941 91,428
Current assets
Trade and other receivables 7 49,666 44,856
Cash and cash equivalents 9,685 7,986
59,351 52,842
Total assets 146,292 144,270
Current liabilities
Trade and other payables 8 (37,163) (32,884)
Current tax liabilities (1,767) (2,612)
Lease liabilities (1,747) (2,975)
Provisions (1,474) (566)
(42,151) (39,037)
Net current assets 17,200 13,805
Non-current liabilities
Borrowings (5,000) (5,000)
Lease liabilities (4,598) (5,846)
Provisions (1,992) (2,609)
Deferred tax (8,026) (5,528)
(19,616) (18,983)
Total liabilities (61,767) (58,020)
Net assets 84,525 86,250
Equity
Share capital 7,671 7,547
Share premium 29,787 29,325
Merger reserve 27,172 25,974
Capital redemption reserve 304 304
Retained earnings 19,591 23,100
Equity attributable to owners of the company 84,525 86,250
Consolidated cash flow statement
Notes 2022 2021
£'000 £'000
Cash flows from operating activities
Cash generated by operations 9 14,235 16,162
Income taxes paid (3,621) (2,273)
Interest paid on borrowings (328) (342)
Interest paid on lease liabilities (460) (506)
Net cash from operating activities (before deemed remuneration payments) 18,096 16,236
Deemed remuneration payments 10 (8,270) (3,195)
Net cash from operating activities 9,826 13,041
Investing activities
Purchase of intangible fixed assets (188) (307)
Purchase of property, plant and equipment (876) (997)
Proceeds on disposal of property, plant and equipment 40 -
Acquisition of businesses 10 (250) (22,033)
Deferred consideration payments 10 (36) (150)
Net cash acquired in acquisition of businesses 10 397 1,522
Net cash used in investing activities (913) (21,965)
Financing activities
Dividends paid 6 (4,553) (3,579)
Proceeds on issue of shares 504 20,923
Capital element of lease payments (3,165) (2,681)
Repayment of loans - (5,000)
Net cash used in financing activities (7,214) 9,663
Net increase in cash and cash equivalents 1,699 739
Cash and cash equivalents at beginning of year 7,986 7,247
Cash and cash equivalents at end of year 9,685 7,986
1. Basis of preparation and accounting policies
The results for the year ended 30 April 2022 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 2021.
The group's financial statements for the year ended 30 April 2022 have been
prepared in accordance with International Accounting Standards ('IAS') in
conformity with the requirements of the Companies Act 2006 and International
Financial Reporting Standards ('IFRSs') adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union. 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 2021 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 2022 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 2022 annual report will be available on the group's website:
www.begbies-traynorgroup.com/investor-relations.
Going concern
In carrying out their duties in respect of going concern, the directors have
completed a review of the group's financial forecasts for a period exceeding
12 months from the date of approving this statement. This review included
sensitivity analysis and stress tests 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.
As such, 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, the financial information in this statement
is prepared on the going concern basis.
Adjusted performance measures
Management believes that adjusted performance measures provide meaningful
information to the users of the accounts on the performance of the business
and are the performance measures used by the board. Accordingly, adjusted
measures of operating profit, profit before tax and earnings per share
exclude, where applicable, transaction costs, amortisation of intangible
assets arising on acquisitions and related tax effects on these items. These
terms are not defined terms under IFRS and may therefore not be comparable
with similarly titled profit measures reported by other companies. They are
not intended to be a substitute for, or superior to, GAAP measures.
The items excluded from adjusted results are those which arise due to
acquisitions and are charged to the consolidated statement of comprehensive
income in accordance with IFRS 3. They are not influenced by the
day-to-day operations of the group.
Restatement of prior year financial statements
Adjustment to provisional accounting estimates under IFRS 3
The provisional estimates made in relation to acquisitions completed in the
year ended 30 April 2021 were finalised during the year. In accordance with
the group's accounting policy for business combinations, provisional values
are adjusted retrospectively and comparative information is restated.
Adjustment to provisional estimates on CVR acquisition Adjustment to provisional estimates on DRP acquisition
£'000 £'000
As reported Restated
30 April 2021 30 April 2021
£'000 £'000
Non-current assets
Intangible assets 77,637 (529) 779 77,887
Property, plant and equipment 2,069 - - 2,069
Right of use assets 7,502 - - 7,502
Trade and other receivables 3,970 - - 3,970
91,178 (529) 779 91,428
Current assets
Trade and other receivables 45,425 (124) (445) 44,856
Cash and cash equivalents 7,986 - - 7,986
53,411 (124) (445) 52,842
Total assets 144,589 (653) 334 144,270
Current liabilities
Trade and other payables (33,273) 751 (362) (32,884)
Current tax liabilities (2,612) - - (2,612)
Lease liabilities (2,975) - - (2,975)
Provisions (566) - - (566)
(39,426) 751 (362) (39,037)
Net current assets 13,985 627 (807) 13,805
Non-current liabilities
Borrowings (5,000) - (5,000)
Lease liabilities (5,846) - (5,846)
Provisions (2,609) - (2,609)
Deferred tax (5,458) (98) 28 (5,528)
(18,913) (98) 28 (18,983)
Total liabilities (58,339) 653 (334) (58,020)
Net assets 86,250 - - 86,250
2. Segmental analysis
The group's operating segments are established on the basis of the components
of the group that are evaluated regularly by the chief operating decision
maker. The group is managed as two operating segments: business recovery and
financial advisory services, and property advisory and transactional services.
Business recovery and financial advisory services Property advisory and transactional services Shared and central costs Consolidated
2022 2022 2022 2022
£'000 £'000 £'000 £'000
Revenue
Total revenue from rendering of professional services 81,383 28,649 - 110,032
Inter-segment revenue - (30) - (30)
Revenue from external customers 81,383 28,619 - 110,002
Operating profit before amortisation and transaction costs 21,002 4,841 (7,249) 18,594
Business recovery and financial advisory services Property advisory and transactional services Shared and central costs Consolidated
2021 2021 2021 2021
£'000 £'000 £'000 £'000
Revenue
Total revenue from rendering of professional services 59,697 24,140 - 83,837
Inter-segment revenue - (6) - (6)
Revenue from external customers 59,697 24,134 - 83,831
Operating profit before amortisation and transaction costs 14,721 3,875 (6,202) 12,394
3. Transaction costs
2022 2021
£'000 £'000
Deemed remuneration 9,983 5,449
Acquisition costs 215 439
Gain on acquisition (1,974) (231)
Charge arising under Begbies Traynor (London) LLP put and call option - 889
8,224 6,546
4. Finance costs
2022 2021
£'000 £'000
Interest on borrowings 375 377
Finance charge on lease liabilities 385 441
Finance charge on dilapidation provisions 75 65
835 883
5. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
2022 2021
£'000 £'000
Earnings
(Loss) profit for the year attributable to equity holders (500) 153
2022 2021
number number
'000 '000
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 154,556 132,963
per share
Effect of:
Share options 5,968 4,421
Weighted average number of ordinary shares for the purposes of diluted 160,524 137,384
earnings per share
2022 2021
pence pence
Basic and diluted (loss) earnings per share (0.3) 0.1
The calculation of adjusted basic and diluted earnings per share is based on
the following data:
2022 2021
£'000 £'000
Earnings
(Loss) profit for the year attributable to equity holders (500) 153
Amortisation of intangible assets arising on acquisitions 5,486 3,058
Transaction costs 8,224 6,546
Tax effect of above items (1,059) (581)
Change in deferred tax rate relating to goodwill and intangible assets 1,990 -
Adjusted earnings 14,141 9,176
2022 2021
pence pence
Adjusted basic earnings per share 9.1 6.9
Adjusted diluted earnings per share 8.8 6.7
6. Dividends
2022 2021
£'000 £'000
Amounts recognised as distributions to equity holders in the year
Interim dividend for the year ended 30 April 2021 of 1.0p (2020: 0.9p) per 1,509 1,149
share
Final dividend for the year ended 30 April 2021 of 2.0p (2020: 1.9p) per share 3,044 2,430
4,553 3,579
Amounts proposed as distributions to equity holders
Interim dividend for the year ended 30 April 2022 of 1.1p (2021: 1.0p) per 1,687 1,509
share
Final dividend for the year ended 30 April 2022 of 2.4p (2021: 2.0p) per share 3,682 3,044
5,369 4,553
The proposed final dividend is subject to approval by shareholders at the
annual general meeting in September 2022. The interim dividend for 2022 was
paid on 6 May 2022 and, accordingly, has not been included as a liability in
these financial statements nor as a distribution to equity shareholders.
7. Trade and other receivables
2022 Restated
£'000 2021
£'000
Non-current
Deemed remuneration 4,175 3,970
Current
Trade receivables 9,066 8,215
Unbilled income 35,208 31,717
Other debtors and prepayments 2,715 2,573
Deemed remuneration 2,677 2,351
49,666 44,856
8. Trade and other payables
2022 Restated
£'000 2021
£'000
Current
Trade payables 1,671 1,387
Accruals 9,733 6,899
Other taxes and social security 4,474 4,385
Deferred income 5,611 5,520
Other creditors 13,950 13,948
Deferred consideration 338 375
Deemed remuneration liabilities 1,386 370
37,163 32,884
9. Reconciliation to the cash flow statement
2022 2021
£'000 £'000
(Loss) profit for the year (500) 153
Adjustments for:
Tax 4,549 1,754
Finance costs 835 883
Amortisation of intangible assets 5,668 3,180
Depreciation of property, plant and equipment 1,038 841
Depreciation of right of use assets 2,645 2,617
Impairment of right of use asset - 579
Reversal of impairment of right of use asset - (228)
Gain on acquisition (1,974) (231)
Profit on disposal of fixed assets (10) -
Profit on disposal of right of use assets (81) -
Share-based payment expense 1,574 1,031
Deemed remuneration obligations settled through equity 1,250 150
(Increase) decrease in deemed remuneration receivable (531) 2,759
Increase in deemed remuneration liability 1,016 236
Operating cash flows before movements in working capital 15,479 13,724
Increase in receivables (excluding deemed remuneration) (3,916) (2,683)
Increase in payables (excluding deemed remuneration) 2,296 5,400
Increase (decrease) in provisions 376 (279)
Cash generated by operations 14,235 16,162
10. Summary of cashflows arising from acquisitions
2022
£'000 2021
£'000
Investing acquisition payments
Cash consideration under IFRS3 250 11,030
Settlement of pre-acquisition borrowings - 11,003
Cash outflows on acquisition of businesses 250 22,033
Deferred consideration payments 36 150
286 22,183
Deemed remuneration payments
Initial payments 3,065 363
Deferred consideration payments 5,205 2,832
8,270 3,195
Net cash and cash equivalents acquired (397) (1,522)
Total cashflows arising from acquisitions 8,159 23,856
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