REG - Begbies Traynor - Final Results
11/07/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230711:nRSK5631Fa&default-theme=true
RNS Number : 5631F Begbies Traynor Group PLC 11 July 2023
11 July 2023
Begbies Traynor Group plc
Final results
for the year ended 30 April 2023
Results ahead of original market expectations; building on strong track record
of growth
Begbies Traynor Group plc (the 'company' or the 'group'), the professional
services consultancy, today announces its final results for the year ended 30
April 2023.
Financial highlights
2023 2022
£m £m
Revenue 121.8 110.0
Adjusted EBITDA(1) 26.6 23.9
Adjusted profit before tax(1,2) 20.7 17.8
Profit before tax 6.0 4.0
Adjusted basic EPS(1,3) (p) 10.5 9.1
Basic EPS(4) (p) 1.9 (0.3)
Proposed total dividend (p) 3.8 3.5
Net cash 3.0 4.7
Operational highlights
· Further successful year of continued growth with results ahead of
original market expectations
· Revenue growth of 11% (6% organic, 5% acquired) reflected
continued execution of our strategy to grow the business, delivering strong,
sustainable financial performance
· Enhanced operating margins of 17.9% (2022: 16.9%), reflected the
continuing increase in our scale and service offerings
· Double-digit revenue and profit growth across both operating
divisions derived from:
o increased insolvency appointments and enhanced reputation for mid-market
insolvencies
o contribution from acquisitions in finance broking and property advisory
o organic growth from property service lines, reflecting the resilient
nature of our services in a challenging marketplace
· Substantial free cash flow generation of £14.1m; ended year with
net cash of £3.0m (2022: £4.7m), having made £10.6m of acquisition and
deferred consideration payments and paid dividends of £5.4m
· Recommended 9% increase in the total dividend for the year to
3.8p (2022: 3.5p), the sixth consecutive year of dividend growth, reflecting
the board's confidence in the group's financial position and prospects
Current trading and outlook
· Started new financial year in strong position and confident of a
further year of growth in line with market expectations(5)
· Strong order book of insolvency revenue (up 19% in the year),
driven by continued increase in insolvency market volumes
· Well placed to further increase exposure to larger, more complex
insolvency appointments with our 11% share of the administration market
ranking us second largest nationally by volume (increase from fourth over the
last five years)
· Well positioned in current macro-economic environment
o 80% of income from counter-cyclical and defensive activities and a diverse
mix of services
· Will provide a further update on trading at the annual general
meeting in September 2023
1 The board uses adjusted performance measures to provide meaningful
information on the performance of the business. The items excluded from
adjusted PBT and EPS are those which arise due to acquisitions in accordance
with IFRS 3 and are not influenced by the day-to-day operations of the group.
Adjusted EBITDA excludes non-cash share-based payment and depreciation charges
from adjusted PBT.
2 Profit before tax £6.0m (2022: £4.0m) plus transaction costs
£8.4m (2022: £8.3m) and amortisation of intangible assets arising on
acquisitions £6.3m (2022: £5.5m)
3 See reconciliation in note 5
4 Basic loss per share in 2022 reflects a one-off non-cash deferred
tax charge
5 Current range of analysts' forecasts (as compiled by the company)
for year ended 30 April 2024: revenue of £127.5m-£131.4m and adjusted PBT of
£21.9m-£22.7m
Commenting on the results, Ric Traynor, Executive Chairman of Begbies Traynor
Group, said:
"We have reported another successful year of continued growth, with reported
results ahead of original market expectations and increased our dividend by
9%.
"We have a proven growth strategy which, over the five year period between
2019 and 2023, has doubled revenue and tripled adjusted profit before tax,
from a combination of organic growth and acquisitions. This growth has been
delivered across insolvency and our full range of advisory and transactional
services.
"We have started our new financial year confident in our outlook. The
increased scale of the group with complementary professional services and an
enhanced client base provides a strong platform for us to continue delivering
growth. With 80% of income generated from counter-cyclical and defensive
activities, we are well-positioned in the current challenging economic
environment.
"Our strong balance sheet and cash generation underpin our capacity to deliver
organic growth initiatives and progress our pipeline of acquisitions, thereby
continuing our track record of growth."
A meeting for analysts will be held today at 8.45am for 9.00am at the offices
of Shore Capital, Cassini House, 57 St James's Street, London SW1A 1LD, which
will also be available as a webcast. Please contact Pauline Guenot
via begbies@mhpgroup.com (mailto:begbies@mhpgroup.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)
Emma Gabriel / Patrick Dolaghan
Shore Capital
020 7408 4090
(Joint Broker)
Malachy McEntyre / Mark Percy / Anita Ghanekar / James Thomas
MHP
Group
020 3128 8567
Reg Hoare / Katie Hunt / Charles Hirst / Pauline
Guenot
begbies@mhpgroup.com
(mailto:begbies@mhpgroup.com)
Notes to editors
Begbies Traynor Group plc is a leading professional services consultancy,
providing services from a comprehensive network of UK and off-shore
locations. Our professional team include licensed insolvency practitioners,
accountants, chartered surveyors, bankers and lawyers. We provide the
following services to our client base of corporates, financial institutions,
the investment community and the professional community:
· Insolvency
o Corporate and personal insolvency
· Financial advisory
o Business and financial restructuring; debt advisory; forensic accounting
and investigations
· Transactional support
o Corporate finance; business sales agency; property agency; auctions
· Funding
o Commercial finance broking; residential mortgage broking
· Valuations
o Commercial property, business and asset valuations
· Projects and development support
o Building consultancy; transport planning
· Asset management and insurance
o Commercial property management; insurance broking; vacant property risk
management
Further information can be accessed via the group's website at
www.ir.begbies-traynorgroup.com.
CHAIRMAN'S STATEMENT
INTRODUCTION
I am pleased to report on another successful year of continued growth for the
group, in which we have continued to execute our strategy to grow the
business, delivering strong, sustainable financial performance, and reported
results for the year ahead of original market expectations. This performance
was delivered through our broadening range of services to an increasingly
diverse range of clients.
We have a proven growth strategy which, over the five year period between 2019
and 2023, has doubled revenue from £60m to £122m and tripled adjusted profit
before tax from £7m to £21m, from a combination of organic growth and
acquisitions. This growth has been delivered across insolvency and our full
range of advisory and transactional services.
Revenue from formal insolvency appointments has increased to £71m from £35m
in 2019 and we have continued to make good progress in the year. We have
experienced a significant increase in higher value insolvency appointments
over the last twelve months, benefitting from our enhanced reputation in
mid-market insolvencies.
We have maintained our market-leading position (by volume of appointments)
with a 13% share of the overall market, ranked first nationally. An area of
strategic focus has been to increase our exposure to larger and more complex
insolvency appointments. We have been successful in doing so and our current
11% share of the administration market has seen our national ranking increase
to second place from fourth over the last five years.
Our advisory and transactional services, which are delivered within both of
our operating divisions (insolvency and property), increased revenue to £51m
from £25m in 2019. From a standing start in 2014, these services, which span
counter-cyclical, defensive and pro-cyclical activities, now represent c.40%
of our group revenue. Our services now include financial advisory;
transactional support (acquisition and disposal); funding; valuations;
projects and development; and asset management and insurance. This expanded
service offering has increased the depth of advice and expertise we can
provide to our clients and broadened and developed our referral network of
corporates, fellow professionals and institutions, benefitting the whole
group.
Overall, the group remains well-positioned in the current macro-economic
environment, with a diverse mix of services and 80% of income generated from
counter-cyclical and defensive activities.
In July 2022, we acquired Mantra Capital, a London-based property finance
brokerage, to enhance the scale of our funding business which we commenced
with the MAF Finance Group acquisition in May 2021. This service line and
contact base is highly complementary to both our insolvency and advisory
offerings.
In addition, we acquired two chartered surveyors' practices (Budworth
Hardcastle in June 2022 and Mark Jenkinson & Co in March 2023), which have
strengthened our teams in Eastern England and South Yorkshire respectively.
Following the year end, in May 2023, we acquired Banks, Long & Co, another
firm of chartered surveyors, further strengthening our regional presence
across Eastern England.
The group continues to be highly cash generative, with free cash flow of
£14.1m, and ended the year with a net cash balance of £3.0m (2022: £4.7m),
having made £10.6m of acquisition and deferred consideration payments and
paid dividends of £5.4m in the year. This cash generation enables us to
propose a 9% increase in the total dividend for the year, representing our
sixth consecutive year of dividend growth.
Our strong financial position leaves us well placed to continue to invest in
the business, both organically and through acquisitions, to further build our
scale and range of complementary services.
RESULTS
Group revenue in the year increased by 11% to £121.8m (2022: £110.0m), 6% of
which was organic. Adjusted profit before tax(1,2) increased by 16% to £20.7m
(2022: £17.8m). Statutory profit before tax was £6.0m (2022: £4.0m).
Adjusted basic earnings per share(1,3) increased by 15% to 10.5p (2022:
9.1p). Basic earnings per share was 1.9p (2022: loss per share of 0.3p,
reflecting a one-off non-cash deferred tax charge).
Net cash on 30 April 2023 was £3.0m (2022: £4.7m).
1 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.
2 Profit before tax £6.0m (2022: £4.0m) plus transaction costs
£8.4m (2022: £8.3m) and amortisation of intangible assets arising on
acquisitions £6.3m (2022: £5.5m)
3 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 19 September 2023) a 9%
increase in the total dividend for the year to 3.8p (2022: 3.5p), representing
our sixth consecutive year of dividend growth. This comprises the interim
dividend already paid of 1.2p (2022: 1.1p) and a proposed final dividend of
2.6p (2022: 2.4p).
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 2023 to shareholders on the
register on 6 October 2023, with an
ex-dividend date of 5 October 2023.
STRATEGY
We believe that the execution of our growth strategy will continue to enhance
shareholder value through the delivery of strong, sustainable financial
performance, building on our progress in recent years.
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;
· advisory and transactional services to enhance expertise or
geographical coverage; and
· complementary professional services businesses to continue the
development of the group and its service offering.
PEOPLE
The continuing success of the group is reliant on the hard work and dedication
of our colleagues and the quality of advice and service they deliver to our
clients. I would like to thank all of our colleagues for their contribution
over the course of the last financial year. We have completed a number of
acquisitions in recent years, and we are pleased with the way our teams are
working together and our new colleagues have integrated into our culture.
BOARD
In February 2023, we appointed Mandy Donald to the board as a non-executive
director and member of the audit committee, as part of our plans to manage the
development, succession and diversity of the board. Mandy brings valuable and
relevant experience from her executive and non-executive roles and broadens
the board's existing skills and expertise. In the new financial year, Mandy
will succeed Graham McInnes as chair of the audit committee.
SUSTAINABILITY
The board is committed to developing the business in a sustainable way for the
benefit of all our stakeholders.
We look to have a positive impact for our colleagues and the communities we
serve; operate with a culture of strong governance and responsible behaviour;
and minimise our impact on the environment.
During the year under review, we have made progress in a number of areas,
notably through investing in our human resources expertise to enhance our
people management. In addition, we have made progress in transitioning our
company car fleet to ultra-low emission vehicles, migrating energy supplies to
renewable tariffs and making changes to our IT estate to reduce energy
consumption.
Further information on our sustainability policies and progress is detailed in
the full annual report.
OUTLOOK
We have started the new year confident of a further year of growth, in line
with market expectations.
The increased scale of the group with complementary professional services and
an enhanced client base provides a strong platform for us to continue
delivering our strategy of organic and acquired growth. We remain
well-positioned in the current macro-economic environment, with a diverse mix
of services and 80% of income generated from counter-cyclical and defensive
activities.
Our insolvency team will benefit from their recent insolvency appointments and
increased order book, together with anticipated further growth in the
insolvency market. We continue to identify growth opportunities for our
advisory and transactional teams, having completed a further acquisition of a
firm of chartered surveyors in May 2023.
Our strong balance sheet and cash generation underpin our capacity to deliver
organic growth initiatives and progress our pipeline of acquisitions, thereby
continuing our track record of growth. We will provide an update on trading at
the annual general meeting in September 2023.
Ric Traynor
Executive chairman
11 July 2023
BUSINESS REVIEW
OPERATING REVIEW
Insolvency and advisory
Financial summary
Revenue increased by 10% (6% organic) to £89.7m (2022: £81.4m), reflecting
an increase in activity levels combined with acquisitions. Revenue from formal
insolvency appointments increased to £70.6m (2022: £66.7m) with advisory
activities generating £19.1m (2022: £14.7m). This is a record level of
revenues generated by advisory activities, representing 20% of divisional
revenues in the year.
Operating costs increased by £5.3m to £65.7m (2022: £60.4m), as a result of
inflationary cost increases (principally salaries) and costs associated with
acquired businesses. However, these costs reduced as a percentage of revenue
which resulted in improved operating margins of 26.8% (2022: 25.8%).
Segmental profits* increased by 14% to £24.0m (2022: £21.0m).
* See note 2
Insolvency market
Corporate insolvencies* nationally increased to 22,983 (2022: 16,575). This is
due to both liquidations which, as previously reported, have exceeded
pre-pandemic levels, together with increased administrations (typically larger
cases) which remain below historic levels but are now higher than the
post-pandemic lows of calendar 2021.
The challenges for UK businesses are expected to continue to support growth in
the insolvency market.
* Source: The Insolvency Service quarterly statistics on the number of
corporate insolvencies in England and Wales on a seasonally adjusted basis for
12 months to 31 March
Operating review
Insolvency
We have maintained our market-leading positions (by volume of appointments)
where we are ranked first nationally for overall corporate appointments* with
a 13% share and second nationally in administrations with an 11% share. These
strong market positions reflect the benefits of investments we have made in
recent years, notably in expanding our London office and offshore practice.
Higher levels of insolvency appointments in the year increased both corporate
insolvency revenue by 10% (£5.7m) and the insolvency order book** by 19%
(£5.7m). The order book** at 30 April 2023 was £35.2m (2022: £29.5m, 2021:
£28.3m). Prior year performance was enhanced by exceptional levels of
personal insolvency activity, which generated an additional £1.8m revenue in
that year. Personal insolvency revenue normalised to £5.5m in the year to 30
April 2023.
Our market-leading position and national office network ensures the business
is well-positioned to provide advice and assistance to UK SME and mid-market
corporates. During the year we were appointed as administrators of Worcester
Rugby Club, Avonside Group (largest roofing contractor in the UK), Silverbond
Enterprises Limited (former operator of the Park Lane Casino in London), Cox
& Cox (on-line furniture retailer) and Paperchase (national retailer).
During the year, we commenced a pilot project with a major bank, including
over 100 cases, to assist in the recovery of bounce back loans. We are
encouraged, based on recoveries to date, that this pilot project may provide a
means for banks and the Government to maximise recovery.
* CVLs, administrations and CVAs as disclosed in the London, Edinburgh and
Belfast Gazettes, Accountant in Bankruptcy and Companies House
** order book of committed future insolvency revenue (excluding contingent fee
income)
Advisory
Our advisory teams provide restructuring, debt advisory, corporate finance,
forensic accounting and funding advice for clients.
During the year, we advised on the first SME court sanctioned restructuring
plan (enabled by the Corporate Insolvency and Governance Act 2020) of Houst,
the short-term holiday lettings operator. This follows our previous use of
this new legislation on the mid-market Amicus finance restructuring in 2021.
We continued to invest in developing our new funding service line through the
acquisition of Mantra in July 2022, which followed the acquisition of MAF
Finance Group in May 2021. Mantra is an FCA-regulated finance and insurance
brokerage based in London. The team has significant expertise across both
commercial and residential real estate lending, providing property investment
and development finance, finance for trading businesses and residential
mortgages. In addition, they provide insurance brokerage services to their
commercial clients. The business has performed well in the year and in line
with our expectations.
This business complements the MAF team, who specialise in providing access to
finance through arranging facilities for investment in new asset purchases
(including equipment, vehicles and property) together with both 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.
People
The number of people employed in the division has increased to 664 on 30 April
2023 from 590 at the start of the financial year, principally reflecting the
acquisition of Mantra.
Property advisory and transactional services
Financial summary
Revenue increased by 12% (3% organic) to £32.1m (2022: £28.6m), reflecting
acquisitions (first-time contribution from current year and full year impact
of prior year transactions) and organic growth of key service lines,
reflecting the resilient nature of our services in a challenging marketplace.
Operating costs increased to £26.4m (2022: £23.8m), as a result of costs
associated with acquired businesses and inflationary cost increases
(principally salaries). However, these costs reduced as a percentage of
revenue which resulted in improved operating margins of 18.0% (2022: 16.8%).
Segmental profits* increased by 19% to £5.7m (2022: £4.8m).
* See note 2
Operating review
Valuations
Our team value commercial property, businesses and assets for secured lending,
commercial transactions or corporate reporting.
Our activities increased over the year, benefitting from the full year impact
of the acquisition of Daniells Harrison in the prior year, which extended our
valuation team to the south coast, increasing our national coverage. Organic
activity levels were maintained in the year, with the short-term market
disruption following the mini-budget being recovered over the remainder of the
year as activity levels normalised in spite of further interest rate rises.
Transactions
Our transactional teams had a good year overall, with our mix of activities
and clients proving resilient against economic headwinds.
Auction activity increased in the year, resulting from increased
insolvency-related plant and machinery sales, offset by reduced property
auction income (particularly in the first half of the year). We made progress
in developing our property auction offering through the acquisition of a team
from Mark Jenkinson & Co, a Sheffield auctioneer. This complements our
current team and increases our geographic coverage. The teams have now
integrated and are operating on a common auction platform. In addition, there
are encouraging signs of increased activity levels. A strong auction platform
is a benefit to the group in the current economic cycle of higher interest
rates, which will typically result in an increased proportion of property
sales being conducted through auction.
Agency income increased in the year from a combination of acquisitions and
organic growth. Although some transactions were delayed in autumn 2022, as the
market reacted to the UK mini-budget, we saw a recovery in completed
transactions in the second half of the financial year. Our client mix
(typically SMEs and independent landlords) and property size (typical capital
value up to £2.5m) provides a level of mitigation against some of the market
volatility that impacts properties with higher capital values. Corporate
lettings were robust, providing a resilient income stream to complement the
more cyclical sales cycle. The team increased in the year following the
acquisition of Budworth Hardcastle, who have merged with our existing,
market-leading Eastern England agency team. Following the year end, the
Eastern England team were further bolstered by the acquisition of Banks Long
& Co, a firm of chartered surveyors employing 38 staff in Lincoln and
operating throughout Lincolnshire and Humberside.
Business sales transaction levels were robust in the year having absorbed the
market impact of higher interest rates.
Projects and development
Our building and projects team offer a comprehensive range of consultancy
services, including project management, building surveying and specialist
advice. We operate across a range of sectors and act for landlords, tenants,
investors and developers. We have specialists in the education sector working
for public sector clients, with an increasing focus on sustainability.
We have continued to develop the business in the year, including the
integration of the Budworth Hardcastle team which has enhanced our Eastern
England offering. We also made good progress in expanding our public sector
practice in the education sector and other areas.
Our transport planning and highway design team work with developers to deliver
successful transport planning solutions. Our activity levels were in line with
the prior year as the team continued to advise and be appointed on new
development schemes in the year.
Asset management and insurance
We manage commercial properties for investors, corporate occupiers and
property companies across the UK with an asset base of shopping centres,
industrial portfolios and commercial offices.
During the year, we integrated the Budworth Hardcastle property management
team, which increased the number of properties under management. The team
benefits from long-standing client relationships with organic income broadly
in line with the prior year.
Income from insurance and vacant property risk management activities increased
from the prior year, reflecting the increase in insolvency activity levels in
the group and third party clients.
People
The number of people employed in the division has increased to 345 on 30 April
2023 from 326 at the start of the financial year, principally reflecting the
acquisitions.
FINANCE REVIEW
Financial summary
2023 2022
£m £m
Revenue 121.8 110.0
Adjusted EBITDA 26.6 23.9
Share-based payments (1.3) (1.6)
Depreciation (3.5) (3.8)
Operating profit (before transaction costs and amortisation) 21.8 18.6
Finance costs (1.1) (0.8)
Adjusted profit before tax 20.7 17.8
Transaction costs (8.4) (8.3)
Amortisation of intangible assets arising on acquisitions (6.3) (5.5)
Profit before tax 6.0 4.0
Tax on profits on ordinary activities (3.1) (2.7)
Deferred tax charge due to change in tax rate - (1.8)
Profit (loss) for the year 2.9 (0.5)
Operating result (before transaction costs and amortisation)
Revenue in the year increased by £11.8m to £121.8m (2022: £110.0m), an
overall increase of 11% (5% acquired*).
Adjusted EBITDA increased to £26.6m (2022: £23.9m) with non-cash costs
(share-based payments and depreciation) decreasing to £4.8m (2022: £5.4m).
Operating performance by segment is detailed below:
Revenue (£m) Operating profit (£m)
2023 2022 growth 2023 2022 growth
Insolvency and advisory 89.7 81.4 10% 24.0 21.0 14%
Property advisory and transactional services 32.1 28.6 12% 5.7 4.8 19%
Shared and central costs - - - (7.9) (7.2) 10%
Total 121.8 110.0 11% 21.8 18.6 17%
Operating margins improved to 17.9% (2022: 16.9%), with improvement in both
divisions. Shared and central costs increased to £7.9m (2022: £7.2m)
reflecting investment in our IT and HR capability, but were unchanged as a
percentage of revenue at 6.5% (2022: 6.5%).
Adjusted profit before tax increased by 16% to £20.7m (2022: £17.8m).
* 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:
· Acquisition consideration where the vendors have obligations in
the sale and purchase agreement to provide post-acquisition services for a
fixed period (deemed remuneration in accordance with IFRS 3). 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) were £8.4m (2022: £8.3m) in the year. This
reflects an increase in acquisition consideration from both current and prior
year acquisitions, partially offset by a gain on acquisition.
Tax
The overall tax charge for the year was £3.1m (2022: £4.5m) as detailed
below:
2023 2022
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 20.7 (4.3) 16.4 21% 17.8 (3.7) 14.1 20%
Transaction costs (8.4) - (8.4) - (8.3) - (8.3) -
Amortisation (6.3) 1.2 (5.1) 19.5% (5.5) 1.0 (4.5) 19%
Statutory (before one-off charge) 6.0 (3.1) 2.9 52% 4.0 (2.7) 1.3 68%
Deferred tax charge from change in rate - - - - - (1.8) (1.8) -
Statutory 6.0 (3.1) 2.9 52% 4.0 (4.5) (0.5) 113%
The prior period deferred tax charge of £1.8m was 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 period.
Earnings per share
Adjusted basic earnings per share* increased by 15% to 10.5p (2022: 9.1p).
Basic earnings per share was 1.9p (2022: loss per share of 0.3p, reflecting a
one-off non-cash deferred tax charge).
* See reconciliation in note 5
Growth in our team
On 30 April 2023 the group had 1,100 colleagues (2022: 1,000), the increase
being principally due to acquisitions.
The average number of full-time equivalent (FTE) colleagues working in the
group during the year is detailed below.
2023 2022
Insolvency and advisory Property advisory and transactional services Shared and support teams Total Insolvency and advisory Property advisory and transactional services Shared and support teams Total
Fee earners 533 295 - 828 480 268 - 748
Support teams 53 10 87 150 68 7 77 152
Total 586 305 87 978 548 275 77 900
The ratio of fee earning to support team colleagues is 5.4:1 (2022: 4.9:1).
Acquisitions
During the financial year, the group made the following acquisitions:
· Budworth Hardcastle on 25 June 2022 for initial consideration of
£0.9m (£0.6m cash and issue of 206,937 shares - cash free, debt free);
potential earn out of up to £1.5m subject to meeting financial growth targets
over the five-year period post-acquisition.
In its financial year ended 31 August 2021, Budworth Hardcastle reported
revenue of £1.8m and normalised pre-tax profits of £0.4m when reported on
the same basis as the group.
· Mantra Capital on 22 July 2022 for initial consideration of
£4.5m (£4.0m cash and issue of 352,361 shares - cash free, debt free);
maximum earn out of £13.5m subject to delivering material growth in profits
over the four year period post-acquisition.
In its financial year ended 31 December 2021, Mantra reported revenue of
£4.2m and normalised pre-tax profits of £1.2m when reported on the same
basis as the group.
In addition, in March 2023, we expanded our property services team in South
Yorkshire through the acquisition of a team from Mark Jenkinson & Co for
consideration of £0.4m. Following the year end, we acquired Banks Long &
Co, a firm of chartered surveyors in May 2023.
The cash outflow from acquisitions in the year was £10.6m (net of cash
acquired), comprising current year acquisitions of £5.2m and prior year
acquisitions of £5.4m.
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 £4.6m has been recognised within
transaction costs in the year.
Liquidity
The group remains in a strong financial position. At 30 April 2023, the group
had net cash of £3.0m (2022: £4.7m), represented by cash balances of £8.0m
(2022: £9.7m) net of drawn borrowing facilities of £5.0m (2022: £5.0m). All
bank covenants were comfortably met during the year.
We have extended our borrowing facilities with HSBC which now mature in August
2025 and comprise a £25m unsecured, committed revolving credit facility (of
which £5m was drawn at 30 April 2023) 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 generated free cash flow of
£14.1m (2022: £14.0m).
Cash flow in the year is summarised as follows:
2023 2022
£m £m
Adjusted EBITDA 26.6 23.9
Working capital (2.2) (1.6)
Cash from operating activities (before acquisition consideration payments*) 24.4 22.3
Provisions (0.6) 0.4
Accelerated tax payments (1.0) -
Underlying tax payment (4.3) (3.6)
Interest (1.1) (0.8)
Capital expenditure (1.0) (1.0)
Capital element of lease payments (2.3) (3.2)
Free cash flow 14.1 14.0
Net proceeds from share issues 0.2 0.5
Acquisition payments (net of cash acquired)** (10.6) (8.2)
Dividends (5.4) (4.6)
(Decrease) increase in net cash (1.7) 1.7
* acquisition consideration payments accounted for as deemed remuneration in
accordance with IFRS3
** acquisition consideration payments (defined above), acquisition costs and
deferred consideration payments net of cash acquired
Cash from operating activities (before acquisition consideration payments) was
£24.4m (2022: £22.3m) with increased EBITDA of £2.7m partially offset by
increased working capital absorption of £0.6m.
Tax payments increased to £5.3m (2022: £3.6m), resulting from the previously
guided change in due dates for corporation tax payments, which resulted in an
accelerated payment of £1.0m, and an increase in the underlying payment to
£4.3m (2022: £3.6m).
Acquisition payments (net of cash acquired) in the year were £10.6m (2022:
£8.4m) comprising: the acquisitions of Mantra Capital (£3.9m), Budworth
Hardcastle (£0.5m) and Mark Jenkinson (£0.4m) (2022: MAF Finance Group
(£1.8m), Daniells Harrison (£0.8m) and Fernie Greaves (£0.3m)), contingent
payments in respect of prior year acquisitions of £5.4m (2022: £5.3m) and
acquisition costs £0.4m (2022: £0.2m).
Net assets
At 30 April 2023 net assets were £84.3m (2022: £84.5m). The £0.2m reduction
in in net assets reflects the post-tax impact of acquisition-related
transaction and amortisation costs of £13.4m, offset by post-tax adjusted
earnings of £16.3m net of dividends of £5.4m; a £1.3m credit for
equity-settled share-based payments; and £1.0m 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
11 July
2023
11 July 2023
Consolidated statement of comprehensive income
2023 2022
Note £'000 £'000
Revenue 2 121,825 110,002
Direct costs (67,700) (62,167)
Gross profit 54,125 47,835
Other operating income 208 155
Administrative expenses (47,178) (43,106)
Operating profit (before amortisation and transaction costs) 2 21,821 18,594
Transaction costs 3 (8,440) (8,224)
Amortisation of intangible assets arising on acquisitions (6,226) (5,486)
Operating profit 7,155 4,884
Finance costs 4 (1,170) (835)
Profit before tax 5,985 4,049
Tax (before one-off deferred tax charge) (3,074) (2,732)
Deferred tax charge due to change in tax rate - (1,817)
Profit (loss) and total comprehensive income for the year 2,911 (500)
Earnings (loss) per share
Basic 1.9p (0.3)p
Diluted 5 1.8p (0.3)p
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 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
Profit for the year - - - - 2,911 2,911
Dividends - - - - (5,387) (5,387)
Credit to equity for equity-settled share-based payments - - - - 1,277 1,277
Shares issued as consideration for acquisitions 28 - 772 - - 800
Shares issued for share-based payments 28 186 - - - 214
At 30 April 2023 7,727 29,973 27,944 304 18,392 84,340
Consolidated balance sheet
2023 2022
Note £'000 £'000
Non-current assets
Intangible assets 73,386 75,307
Property, plant and equipment 1,993 1,967
Right of use assets 7,751 5,492
Trade and other receivables 7 5,200 4,175
88,330 86,941
Current assets
Trade and other receivables 7 55,550 49,666
Cash and cash equivalents 8,001 9,685
63,551 59,351
Total assets 151,881 146,292
Current liabilities
Trade and other payables 8 (42,644) (37,163)
Current tax liabilities (1,110) (1,767)
Lease liabilities (1,554) (1,747)
Provisions (1,006) (1,474)
(46,314) (42,151)
Net current assets 17,237 17,200
Non-current liabilities
Borrowings (5,000) (5,000)
Lease liabilities (6,658) (4,598)
Provisions (2,139) (1,992)
Deferred tax (7,430) (8,026)
(21,227) (19,616)
Total liabilities (67,541) (61,767)
Net assets 84,340 84,525
Equity
Share capital 7,727 7,671
Share premium 29,973 29,787
Merger reserve 27,944 27,172
Capital redemption reserve 304 304
Retained earnings 18,392 19,591
Equity attributable to owners of the company 84,340 84,525
Consolidated cash flow statement
Notes 2023 2022
£'000 £'000
Cash flows from operating activities
Cash generated by operations 9 13,218 14,235
Income taxes paid (5,328) (3,621)
Interest paid on borrowings (668) (328)
Interest paid on lease liabilities (408) (460)
Net cash from operating activities (before acquisition consideration payments) 17,413 18,096
Acquisition consideration payments which are deemed remuneration under IFRS 3 10 (10,599) (8,270)
Net cash from operating activities 6,814 9,826
Investing activities
Purchase of intangible fixed assets (56) (188)
Purchase of property, plant and equipment (931) (876)
Proceeds on disposal of property, plant and equipment 20 40
Acquisition of businesses 10 (809) (250)
Deferred consideration payments 10 (325) (36)
Net cash acquired in acquisition of businesses 10 1,158 397
Net cash used in investing activities (943) (913)
Financing activities
Dividends paid 6 (5,387) (4,553)
Proceeds on issue of shares 213 504
Capital element of lease payments (2,381) (3,165)
Net cash used in financing activities (7,555) (7,214)
Net increase in cash and cash equivalents (1,684) 1,699
Cash and cash equivalents at beginning of year 9,685 7,986
Cash and cash equivalents at end of year 8,001 9,685
1. Basis of preparation and accounting policies
The results for the year ended 30 April 2023 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 2022.
The group's financial statements for the year ended 30 April 2023 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 2022 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 2023 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 2023 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.
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 board). The group is managed as two operating segments: insolvency
and advisory services, and property advisory and transactional services.
Insolvency and advisory services Property advisory and transactional services Shared and central costs Consolidated
2023 2023 2023 2023
£'000 £'000 £'000 £'000
Revenue
Total revenue from rendering of professional services 89,696 32,187 - 121,883
Inter-segment revenue - (58) - (58)
Revenue from external customers 89,696 32,129 - 121,825
Operating profit before amortisation and transaction costs 23,999 5,692 (7,870) 21,821
Insolvency and 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
3. Transaction costs
2023 2022
£'000 £'000
Acquisition consideration (deemed remuneration in accordance with IFRS 3) 12,304 9,983
Acquisition costs 434 215
Gain on acquisition (4,298) (1,974)
8,440 8,224
4. Finance costs
2023 2022
£'000 £'000
Interest on borrowings 762 375
Finance charge on lease liabilities 343 385
Finance charge on dilapidation provisions 65 75
1,170 835
5. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
2023 2022
£'000 £'000
Earnings
Profit (loss) for the year attributable to equity holders 2,911 (500)
2023 2022
number number
'000 '000
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 155,634 154,556
per share
Effect of:
Share options 6,423 5,968
Contingent shares 233 -
Weighted average number of ordinary shares for the purposes of diluted 162,290 160,524
earnings per share
2023 2022
pence pence
Basic and diluted earnings (loss) per share
Basic earnings per share 1.9 (0.3)
Diluted earnings per share 1.8 (0.3)
The calculation of adjusted basic and diluted earnings per share is based on
the following data:
2023 2022
£'000 £'000
Earnings
Profit (loss) for the year attributable to equity holders 2,911 (500)
Amortisation of intangible assets arising on acquisitions 6,226 5,486
Transaction costs 8,440 8,224
Tax effect of above items (1,236) (1,059)
Change in deferred tax rate relating to goodwill and intangible assets - 1,990
Adjusted earnings 16,341 14,141
2023 2022
pence pence
Adjusted basic earnings per share 10.5 9.1
Adjusted diluted earnings per share 10.1 8.8
6. Dividends
2023 2022
£'000 £'000
Amounts recognised as distributions to equity holders in the year
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 3,700 3,044
5,387 4,553
Amounts proposed as distributions to equity holders
Interim dividend for the year ended 30 April 2023 of 1.2p (2022: 1.1p) per 1,854 1,687
share
Final dividend for the year ended 30 April 2023 of 2.6p (2022: 2.4p) per share 4,017 3,700
5,871 5,387
The proposed final dividend is subject to approval by shareholders at the
annual general meeting in September 2023. The interim dividend for 2023 was
paid on 5 May 2023 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
2023 2022
£'000 £'000
Non-current
Deemed remuneration 5,200 4,175
Current
Trade receivables 11,652 9,066
Unbilled income 37,489 35,208
Other debtors and prepayments 2,987 2,715
Deemed remuneration 3,422 2,677
55,550 49,666
8. Trade and other payables
2023 2022
£'000 £'000
Current
Trade payables 2,055 1,671
Accruals 10,454 9,733
Other taxes and social security 5,209 4,474
Deferred income 6,503 5,611
Other creditors 14,350 13,950
Deferred consideration 13 338
Deemed remuneration liabilities 4,060 1,386
42,644 37,163
9. Reconciliation to the cash flow statement
2023 2022
£'000 £'000
Profit (loss) for the year 2,911 (500)
Adjustments for:
Tax 3,074 4,549
Finance costs 1,170 835
Amortisation of intangible assets 6,410 5,668
Depreciation of property, plant and equipment 1,114 1,038
Depreciation of right of use assets 2,136 2,645
Gain on acquisition (4,298) (1,974)
Acquisition costs 434 -
Profit on disposal of fixed assets (13) (10)
Loss (profit ) on disposal of right of use assets 42 (81)
Share-based payment expense 1,277 1,574
Deemed remuneration obligations settled through equity 800 1,250
Increase in deemed remuneration receivable (1,769) (531)
Increase in deemed remuneration liability 2,675 1,016
Operating cash flows before movements in working capital 15,963 15,479
Increase in receivables (excluding deemed remuneration) (4,656) (3,916)
Increase in payables (excluding deemed remuneration) 2,480 2,296
(Decrease) increase in provisions (569) 376
Cash generated by operations 13,218 14,235
10. Summary of cashflows arising from acquisitions
2023
£'000 2022
£'000
Deemed remuneration payments
Initial payments 5,476 3,065
Deferred consideration payments 5,123 5,205
10,599 8,270
Investing acquisition payments
Cash consideration under IFRS3 375 250
Acquisition costs 434 -
809 250
Deferred consideration payments 325 36
1,134 286
Net cash and cash equivalents acquired (1,158) (397)
Total cashflows arising from acquisitions 10,575 8,159
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR GPURPMUPWGMURecent news on Begbies Traynor
See all newsREG - Begbies Traynor Grp - Total Voting Rights
AnnouncementREG - Begbies Traynor Grp - Block Listing Six Monthly Return
AnnouncementRCS - Begbies Traynor Grp - Latest Red Flag Alert Report for Q1 2025
AnnouncementREG - Begbies Traynor Grp - Total Voting Rights
AnnouncementREG - Begbies Traynor - Third Quarter Trading Update
Announcement