REG - Begbies Traynor - Half year results
14/12/2021 07:00
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RNS Number : 5083V Begbies Traynor Group PLC 14 December 2021
14 December 2021
Begbies Traynor Group plc
Half year results
for the six months ended 31 October 2021
"Strong first half performance and confidence in full year outlook"
Begbies Traynor Group plc (the 'company' or the 'group'), the business
recovery, financial advisory and property services consultancy, today
announces its half year results for the six months ended 31 October 2021.
Financial overview
2021 2020
£m £m
Revenue 52.3 37.5
Adjusted profit before tax* ** 8.0 5.0
Profit before tax 2.7 0.5
Adjusted basic EPS* *** (p) 4.1 3.1
Basic EPS (p) (0.2) (0.3)
Interim dividend (p) 1.1 1.0
Net cash 1.2 0.7
Highlights
· Strong financial performance, reflects benefit and integration of
recent acquisitions
o Maintains track record of growth in revenue and adjusted earnings
· Revenue growth of 39% with increased operating margins to 16.0%
(2020: 14.4%)
· Strong adjusted profit before tax growth of 60%; statutory profit
before tax reflects increased non-cash amortisation costs, and transaction
costs, from recent acquisitions
· Significant growth in segmental revenue and profits
o Business recovery and financial advisory reported material growth: recent
acquisitions in line with expectations; organic activity reflected suppressed
market, as expected; advisory and transactional teams performed well
o Property advisory and transactional services: performance improved from
lockdown impacted prior period
· Continued to expand the scale and capabilities of the group
o Acquired MAF Finance Group (finance brokerage) in May 2021, which
complements existing advisory and transactional services
o Acquired the team from Fernie Greaves Chartered Surveyors in October 2021,
who joined our existing Eddisons Sheffield office
· 10% increase in the interim dividend, building on the increases
of the previous four years
· Strong balance sheet and significant levels of headroom within
our committed bank facilities enable continued investment in organic and
acquisition opportunities
Current trading and outlook
· Results for the full year expected to be in line with current
market expectations****, which will represent a year of significant growth
o As previously guided, we expect a second half weighting as a result of an
anticipated increase in market insolvency levels over the remainder of the
financial year
· Q3 trading update will be issued in early March 2022
Commenting on the results, Ric Traynor, Executive Chairman of Begbies Traynor
Group, said:
"I am pleased to report a strong financial performance in the period, which is
testament to the benefit and integration of our recent acquisitions and
maintains our track record of growth in revenue and adjusted earnings. This
strong performance, and an anticipated increase in national insolvency numbers
following the removal of the Government's pandemic support measures, leaves us
confident of delivering market expectations**** for the full year.
"We have a strong platform for growth, and we continue to progress a pipeline
of acquisition opportunities, which together with organic growth initiatives
across the group, will enable us to build upon our track record and we remain
confident in our outlook for the current year and beyond."
* The board uses adjusted performance measures to provide meaningful
information on the 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 of £2.7m (2020: £0.5m) plus amortisation of intangible
assets arising on acquisitions of £2.6m (2020: £1.5m) plus transaction costs
of £2.7m (2020: £3.1m).
*** See reconciliation in note 5.
**** Current range of analyst forecasts for adjusted PBT of £17.0m-£18.5m
(as compiled by the group)
There will be a webcast and conference call for analysts today at 9:00am.
Please contact Florence Mayo via begbies@mhpc.com (mailto:begbies@mhpc.com) or
on 020 3128 8572 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 8572
Reg Hoare / Katie Hunt / Florence
Mayo
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 990 staff and partners
and the professional staff 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, 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;
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 report a strong financial performance in the first six months
of our financial year, which is testament to the benefit and integration of
our recent acquisitions and maintains our track record of growth in revenue
and adjusted earnings.
The Government's financial support measures, which have been in place since
the start of the pandemic, have progressively been withdrawn over the period,
with the final measures scheduled to end in March 2022. As a result,
insolvency numbers have increased over the last six months and have now
returned to pre-pandemic levels*. The increases to date have principally been
from increased liquidations (which are typically insolvencies of smaller
companies). Although administrations (which are typically larger and more
complex instructions) have increased in recent months from the record low
levels, they remain much lower than pre-pandemic levels.
Both of our operating divisions have delivered a strong performance in the six
months, with significant growth in segmental revenue and profits.
The business recovery and financial advisory division has reported material
growth in the period. The prior year acquisitions have performed in line with
expectations and have been integrated as planned. Organic activity levels have
reflected the suppressed market dynamics in the six months as expected. Our
corporate finance team had a successful six months of deal completions and has
a strong pipeline of transactions for the second half of our financial year.
The MAF Finance Group acquisition (completed in May 2021) has delivered
results in line with expectations, with synergy and cross selling
opportunities being identified as the business has been integrated into the
group.
The property advisory and transactional services division performed well and
achieved year on year growth in revenue and profit (inclusive of acquisitions)
from an improved trading performance compared to the lockdown impacted
comparative period.
We have a strong balance sheet and significant levels of headroom within our
committed bank facilities, which ensures we are well placed to continue to
invest in our successful growth strategy.
* Insolvency Service - monthly insolvency statistics October 2021 published 16
November 2021
RESULTS
Group revenue in the half year ended 31 October 2021 increased by 39% to
£52.3m (2020: £37.5m). Operating margins increased in the period to 16.0%
(2020: 14.4%), resulting in a 60% increase in adjusted* profit before tax** to
£8.0m (2020: £5.0m). Statutory profit before tax was £2.7m (2020: £0.5m),
reflecting an increase in non-cash amortisation costs from recent acquisitions
to £2.6m (2020: £1.5m) and transaction costs of £2.7m (2020: £3.1m).
Adjusted* basic earnings per share*** increased by 32% to 4.1p (2020: 3.1p).
Statutory results for the period reflect a one-off non-cash deferred tax
charge of £1.8m, following the legislation to increase the UK corporation tax
rate to 25% being enacted, giving a loss after tax of £0.3m (2020: loss
£0.3m). Basic loss per share was 0.2p (2020: 0.3p).
Net cash as at 31 October 2021 was £1.2m (30 April 2021: £3.0m, 31 October
2020: £0.7m), after £3.5m of acquisition and deferred consideration payments
in the period.
* The board uses adjusted performance measures to provide meaningful
information on the 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 of £2.7m (2020: £0.5m) plus amortisation of intangible
assets arising on acquisitions of £2.6m (2020: £1.5m) plus transaction costs
of £2.7m (2020: £3.1m).
*** See reconciliation in note 5.
DIVIDEND
The board is pleased to declare a 10% increase in the interim dividend to 1.1p
(2020: 1.0p), which builds on the increases over the previous four years and
reflects our confidence in sustaining our financial track record and the
group's financial position and prospects. We remain committed to a 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 interim dividend will be paid on 6 May 2022 to shareholders on the
register on 8 April 2022, with an ex-dividend date of 7 April 2022.
OUTLOOK
The group's strong financial performance in the first six months leaves the
board confident of delivering market expectations* for the full year, which
will represent a year of significant growth.
As stated above, national insolvency numbers have increased over the period,
as the Government's pandemic support measures have been removed. As previously
guided, we expect our results will have a second half weighting, as we
anticipate insolvency activity will continue to increase over the remainder of
our financial year (to 30 April 2022).
Following our recent acquisitions and organic development of the group, our
broad range of complementary services provide a strong platform for growth. We
continue to progress a pipeline of acquisition opportunities, which together
with organic growth initiatives across the group, will enable us to build upon
our track record and we remain confident in our outlook for the current year
and beyond.
We will provide an update on third quarter trading in early March 2022.
* current range of analyst forecasts for adjusted PBT of £17.0m-£18.5m (as
compiled by the group)
Ric Traynor
Executive chairman
14 December 2021
BUSINESS REVIEW
OPERATING REVIEW
Business recovery and financial advisory
Financial summary
Revenue in the period increased by 48% to £38.7m (2020: £26.1m), principally
from the first-time contribution from acquisitions (£13.2m), partially offset
by lower organic revenues (£0.6m), which reflects the market dynamics in the
period of an increased volume of lower value cases.
Segmental profits for the period increased by 47% to £9.7m (2020: £6.6m),
with operating margins broadly maintained at 25.1%. Operating costs increased
by 48% to £28.9m (2020: £19.5m), due to the addition of the operating costs
of the acquired businesses.
Operating review
The strong financial performance in the period reflects the benefit and
integration of the acquisitions in the division completed since January 2021.
The CVR (January 2021) and DRP (March 2021) acquisitions have significantly
increased the scale of our insolvency business, notably in the key London
marketplace. The integration of both businesses was completed on target with
local teams being merged into common locations. Both acquisitions have
performed well and in line with expectations.
The MAF Finance Group, which was acquired in May 2021, is a finance brokerage
supporting its clients through arranging facilities for investment in new
asset purchases together with refinancing existing facilities. Finance broking
complements our advisory and transactional services and will deepen our
relationship with banks and other lenders. Results for the first six months
post acquisition are in line with expectations and synergy and cross selling
opportunities have been identified as the business has been integrated into
the group.
On an organic basis, the results reflect the market challenges we have
experienced since the start of the pandemic, where Government financial
support measures have materially impacted market volumes. Although insolvency
volumes over the six-month period have increased, this has largely been in
liquidations of smaller companies. The business has performed well against
these market headwinds and increased its market share by volume over the
period to 14% from 10% last year, benefitting from both organic and acquired
growth, across both liquidations and administrations.
The insolvency order book increased to £29.0m as at 31 October 2021 (30 April
2021: £28.3m, 31 October 2020 £20.9m), reflecting the benefit of
acquisitions and our continued market share gains, and giving confidence on
future revenue levels.
Our corporate finance team had a successful six months of deal completions and
has a strong pipeline of transactions for the second half of our financial
year.
Insolvency market
As we have previously reported, the Government's support measures had a
significant impact on insolvency volumes over the course of the pandemic, from
both financial support and temporary changes in legislation. The number of
corporate insolvencies in the 12 months ended 30 September 2021* decreased by
10% to 12,456 (2020: 13,767), or 26% compared to the pre-pandemic position of
16,826 in the 12 months ended 30 September 2019.
Over the course of the last six months the majority of the support has been
removed, with the final measures scheduled to end in March 2022. This has
resulted in an increase in insolvencies to 3,765 in Q3 of calendar 2021 from a
low point of 2,374 in Q1 of calendar 2021.
This increase has largely been from increased numbers of liquidations (which
typically represent insolvencies of smaller companies), where the volume of
appointments has recently returned to pre-pandemic levels. Although the number
of administrations (which typically involve larger and more complex
instructions) has increased in recent months, they are currently much lower
than pre-pandemic levels. We have increased our share (by volume) of both
market segments in the 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.
Property advisory and transactional services
Financial summary
Revenue in the period increased by 19% to £13.6m (2020: £11.4m), reflecting
the recovery in activity levels compared to the lockdown impacted comparative
period (£1.6m) and the first-time contribution from acquisitions (£0.6m).
Segmental profits for the period increased by 50% to £2.4m (2020: £1.6m),
with operating margins improving to 17.6% (2020: 14.0%). Operating costs
increased to £11.2m (2020: £9.7m), which reflects the normalisation of the
cost base (following short-term cost reductions in place during the
comparative period) and acquisitions.
Operating review
The period saw the maintained recovery of the service lines which had been
adversely impacted by lockdown in the comparative period. Other service lines
continued to deliver financial performance in line with expectations. We have
continued to invest in the recruitment of fee earners, in both our
transactional and advisory services, to strengthen our client offer in key
areas. This has broadened our client base which is further enhanced by
increased opportunities from public sector frameworks.
The HNG acquisition (completed February 2021) has enhanced our property
management, agency and lease advisory services. The team has now been fully
integrated into the division, having merged with the original Eddisons team in
London. Its contribution is likely to be second half weighted reflecting a
number of current projects.
In October 2021, we expanded our operations in South Yorkshire through the
acquisition of the team from Fernie Greaves Chartered Surveyors who have
joined our existing Sheffield team. This acquisition has broadened our reach
across South Yorkshire and the East Midlands.
We continue to seek opportunities to invest in the division through senior
recruitment, in addition to seeking further acquisitions.
FINANCE REVIEW
Financial summary
2021 2020
£m £m
Revenue 52.3 37.5
Operating profit (before transaction costs and amortisation) 8.4 5.4
Finance costs (0.4) (0.4)
Adjusted profit before tax 8.0 5.0
Transaction costs (2.7) (3.1)
Amortisation of intangible assets arising on acquisitions (2.6) (1.5)
Profit before tax 2.7 0.5
Tax on profits on ordinary activities (1.2) (0.8)
Deferred tax charge due to change in tax rate (1.8) -
Statutory loss for the period (0.3) (0.3)
Operating result (before transaction costs and amortisation)
Revenue in the period increased by £14.8m to £52.3m (2020: £37.5m), an
overall increase of 39% (36% acquired).
Revenue (£m) Profit (£m)
2021 2020 growth 2021 2020 growth
Business recovery and financial advisory 38.7 26.1 48% 9.7 6.6 47%
Property advisory and transactional services 13.6 11.4 19% 2.4 1.6 50%
Shared and central costs - - - (3.6) (2.7) 33%
Total 52.3 37.5 39% 8.4 5.4 53%
Operating margins increased in the period to 16.0% (2020: 14.4%), reflecting
the recovery in margins in property and transactional services (as noted in
the operating review), together with shared and central costs reducing as a
percentage of group revenue to 6.9% (2020: 7.2%).
Adjusted profit before tax increased by 60% to £8.0m (2020: £5.0m) in the
period from the increased operating profit, with finance costs in line with
the prior period.
Tax
The overall tax charge for the period was £3.0m (2020: £0.8m) as detailed
below:
2021 2020
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 8.0 (1.7) 6.3 21% 5.1 (1.1) 4.0 21%
Transaction costs (2.7) - (2.7) - (3.1) - (3.1) -
Amortisation (2.6) 0.5 (2.1) 19% (1.5) 0.3 (1.2) 19%
Tax on ordinary activities 2.7 (1.2) 1.5 43% 0.5 (0.8) (0.3) 160%
Deferred tax charge from change in rate - (1.8) (1.8) - - - - -
Statutory 2.7 (3.0) (0.3) 107% 0.5 (0.8) (0.3) 172%
The adjusted tax rate of 21% is based on the expected rate for the full year.
The deferred tax charge 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 period.
Earnings per share
Adjusted basic earnings per share* increased by 32% to 4.1p (2020: 3.1p).
Statutory results for the period, reflect the one-off non-cash deferred tax
charge noted above and non-cash transaction costs and amortisation, giving a
basic loss per share of 0.2p (2020: loss per share 0.3p).
* See reconciliation in note 5
Partners and employees
The average number of full-time equivalent (FTE) partners and staff working in
the group increased due to both acquisitions and organic investment.
2021 2020
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 63 - - 63
Staff 400 260 - 660 254 230 - 484
Fee earners 485 260 - 745 317 230 - 547
Support teams 64 10 76 150 39 5 65 109
Total 549 270 76 895 356 235 65 656
The ratio of our support teams to fee earning partners and staff is maintained
at 5.0 (2020: 5.0).
Financing
The group has maintained its strong financial position with net cash of £1.2m
as at 31 October 2021 (30 April 2021: £3.0m, 31 October 2020: £0.7m), after
£3.5m of acquisition and deferred consideration payments in the period. We
have significant levels of headroom within our bank facilities which are
committed until August 2023 and comprise a £25m unsecured, committed
revolving credit facility and a £5m uncommitted acquisition facility. During
the period, all bank covenants were comfortably met.
Free cash flow in the period reduced to £3.1m (2020: £6.0m). Net cash from
operating activities in the period was £4.9m (2020: £7.5m) reflecting
increased adjusted pre-tax profits of £3.0m offset by increased tax payments
(£0.6m) and working capital (£2.6m). Furthermore, prior year cash flow
benefitted from £2.7m of deferred VAT payments (which were settled in the
second half of the year).
Cash flow in the period is summarised as follows:
2021 2020
£m £m
Net cash from operating activities (before deemed remuneration) 5.4 7.5
Capital expenditure (0.4) (0.3)
Capital element of lease payments (1.8) (1.2)
Free cash flow 3.2 6.0
Acquisition payments (2.2) (0.4)
Deferred consideration payments (1.3) (1.1)
Dividends (1.5) (1.1)
Net cash (outflow) inflow (1.8) 3.4
Net assets
Net assets as at 31 October 2021 were £83.1m, compared to £86.3m as at 30
April 2021. The movement represents an increase of £6.3m from post-tax
adjusted earnings and £1.7m from the issue of new shares; offset by dividends
of £4.6m, the post-tax impact of acquisition-related transaction and
amortisation costs of £4.8m and a one-off
non-cash deferred tax charge of £1.8m as noted above.
Ric
Traynor
Nick Taylor
Executive
chairman
Group finance director
14 December
2021
14 December 2021
Consolidated statement of comprehensive income
Six months ended Six months ended Year
ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Revenue 2 52,268 37,493 83,831
Direct costs (30,196) (21,876) (48,281)
Gross profit 22,072 15,617 35,550
Other operating income 99 114 179
Administrative expenses (19,065) (14,841) (32,939)
Operating profit before amortisation and transaction costs 2 8,441 5,468 12,394
Transaction costs 3 (2,686) (3,099) (6,546)
Amortisation of intangible assets arising on acquisitions (2,649) (1,479) (3,058)
Operating profit 3,106 890 2,790
Finance costs 4 (413) (439) (883)
Profit before tax 2,693 451 1,907
Tax on profits on ordinary activities (1,207) (775) (1,754)
Deferred tax charge due to change in tax rate (1,817) - -
Total tax charge (3,024) (775) (1,754)
(Loss) profit and total comprehensive (loss) income for the period (331) (324) 153
Earnings per share
Basic 5 (0.2)p (0.3)p 0.1p
Diluted 5 (0.2)p (0.2)p 0.1p
All of the profit and comprehensive income for the period is attributable to
equity holders of the parent.
Consolidated statement of changes in equity
For the six months ended 31 October 2021 (unaudited) Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2021 7,547 29,325 25,974 304 23,100 86,250
Total comprehensive income for the period - - - - (331) (331)
Dividends - - - - (4,553) (4,553)
Shares issued as consideration for acquisitions 42 - 958 - - 1,000
Credit to equity for equity-settled share-based payments - - - - 717 717
Other share options 21 10 - - - 31
At 31 October 2021 7,610 29,335 26,932 304 18,933 83,114
For the six months ended 31 October 2020 (unaudited) Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2020 6,386 29,459 23,927 304 5,495 65,571
Total comprehensive income for the period - - - - (324) (324)
Dividends - - - - (3,579) (3,579)
Transfer from share premium account - (20,000) - - 20,000 -
Credit to equity for equity-settled share-based payments - - - - 287 287
Other share options 1 - - - (1) -
At 31 October 2020 6,387 9,459 23,927 304 21,878 61,955
For the year ended 30 April 2021 (audited) Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2020 6,386 29,459 23,927 304 5,495 65,571
Total comprehensive income for the period - - - - 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
Other share options 15 14 - - - 29
At 30 April 2021 7,547 29,325 25,974 304 23,100 86,250
Consolidated balance sheet
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Non-current assets
Intangible assets 77,348 58,289 77,637
Property, plant and equipment 1,900 1,715 2,069
Right of use assets 6,131 6,624 7,502
Trade and other receivables 7 4,331 4,016 3,970
89,710 70,644 91,178
Current assets
Trade and other receivables 7 49,949 37,742 45,425
Cash and cash equivalents 7,171 7,672 7,986
57,120 45,414 53,411
Total assets 146,830 116,058 144,589
Current liabilities
Trade and other payables 8 (38,093) (29,258) (33,273)
Current tax liabilities (2,109) (1,558) (2,612)
Lease liabilities (2,572) (2,224) (2,975)
Provisions (520) (1,079) (566)
(43,294) (34,119) (39,426)
Net current assets 13,826 11,295 13,985
Non-current liabilities
Borrowings (6,000) (7,000) (5,000)
Lease liabilities (4,583) (5,661) (5,846)
Provisions (2,521) (1,594) (2,609)
Deferred tax (7,318) (5,729) (5,458)
(20,422) (19,984) (18,913)
Total liabilities (63,716) (54,103) (58,339)
Net assets 83,114 61,955 86,250
Equity
Share capital 7,610 6,387 7,547
Share premium 29,335 9,459 29,325
Merger reserve 26,932 23,927 25,974
Capital redemption reserve 304 304 304
Retained earnings 18,933 21,878 23,100
Equity attributable to owners of the company 83,114 61,955 86,250
Consolidated cash flow statement
Six months ended Six months ended Year ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Cash flows from operating activities
Cash generated by operations 9 4,084 8,108 16,162
Income taxes paid (1,708) (1,127) (2,273)
Interest paid on borrowings (154) (184) (342)
Interest paid on lease liabilities (238) (248) (506)
Net cash from operating activities (before deemed remuneration payments)
5,304 7,453 16,236
Deemed remuneration payments (3,320) (904) (3,195)
Net cash from operating activities 1,984 6,549 13,041
Investing activities
Purchase of intangible fixed assets (43) (27) (307)
Purchase of property, plant and equipment (308) (282) (997)
Acquisition of businesses (345) (350) (22,033)
Deferred consideration payments (50) (150) (150)
Net cash acquired in acquisition of businesses 220 - 1,522
Net cash from investing activities (526) (809) (21,965)
Financing activities
Dividends paid (1,509) (1,149) (3,579)
Net proceeds on issue of shares 31 - 20,923
Repayment of obligations under leases (1,795) (1,166) (2,681)
Drawdown (repayment) of loans 1,000 (3,000) (5,000)
Net cash from financing activities (2,273) (5,315) 9,663
Net (decrease) increase in cash and cash equivalents (815) 425 739
Cash and cash equivalents at beginning of period 7,986 7,247 7,247
Cash and cash equivalents at end of period 7,171 7,672 7,986
1. Basis of preparation and accounting policies
(a) Basis of preparation
The half year condensed consolidated financial statements do not include all
of the information and disclosures required for full annual financial
statements and should be read in conjunction with the group's annual financial
statements as at 30 April 2021, which have been prepared in accordance with
IFRSs as adopted by the European Union.
This condensed consolidated half year financial information does not comprise
statutory accounts within the meaning of Section 435 of the Companies Act
2006. Statutory accounts for the year ended 30 April 2021 were approved by the
board of directors on
19 July 2021 and delivered to the Registrar of Companies. The report of the
auditor on those accounts was unqualified, did not include a reference to any
matters to which the auditor 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.
The directors have reviewed the financial resources available to the group and
have concluded that the group is a going concern. This conclusion is based
upon, amongst other matters, a review of the group's financial projections for
a period of twelve months following the date of this announcement, together
with a review of the cash and committed borrowing facilities available to the
group. Accordingly, the going concern basis has been used in preparing these
half year condensed consolidated financial statements.
The condensed consolidated financial statements for the six months ended 31
October 2021 have not been audited nor subject to an interim review by the
auditors. IAS 34 'Interim financial reporting' is not applicable to these
half year condensed consolidated financial statements and has therefore not
been applied.
(b) Significant accounting policies
The accounting policies adopted in preparation of the half year condensed
consolidated financial statements are consistent with those followed in the
preparation of the group's annual financial statements for the year ended 30
April 2021.
2. Segmental analysis by class of business
Six months ended Six months ended Year ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revenue
Business recovery and financial advisory 38,653 26,146 59,697
Property advisory and transactional services 13,615 11,347 24,134
52,268 37,493 83,831
Operating profit before amortisation and transaction costs
Business recovery and financial advisory 9,693 6,571 14,721
Property advisory and transactional services 2,388 1,554 3,875
Shared and central costs (3,640) (2,657) (6,202)
8,441 5,468 12,394
3. Transaction costs
Six months ended Six months ended Year ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Deemed remuneration 4,692 2,614 5,449
Acquisition costs 109 41 439
Gain on acquisition (2,115) (1) (231)
Charge relating to the put and call option over Begbies Traynor (London) LLP - 445 889
2,686 3,099 6,546
4. Finance costs
Six months ended Six months ended Year ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Interest on bank loans 175 191 377
Finance charge on lease liabilities 207 217 441
Finance charge on dilapidations provisions 31 31 65
413 439 883
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Six months ended Six months ended Year ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Earnings
Profit for the period attributable to equity holders (331) (324) 153
31 October 2021 (unaudited) 31 October 2020 (unaudited) 30 April 2021 (audited)
number number number
'000 '000 '000
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 154,423 129,374 132,963
per share
Effect of dilutive potential ordinary shares:
Share options 6,221 4,438 4,421
Contingent shares - 158 -
Weighted average number of ordinary shares for the purposes of diluted 160,644 133,970 137,384
earnings per share
Six months ended Six months ended Year ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
pence pence pence
Basic earnings per share (0.2) (0.3) 0.1
Diluted earnings per share (0.2) (0.2) 0.1
The following additional earnings per share figures are presented as the
directors believe they provide a better understanding of the trading position
of the group, as they exclude the accounting charges which arise due to
acquisitions in accordance with IFRS 3 and are not influenced by the
day-to-day operations of the group.
Six months ended Six months ended Year ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Earnings
Profit for the period attributable to equity holders (331) (324) 153
Amortisation of intangible assets arising on acquisitions 2,649 1,479 3,058
Transaction costs 2,686 3,099 6,546
Tax effect of above items (503) (282) (581)
Impact of change in tax rate on deferred tax liabilities 1,817 - -
Adjusted earnings 6,318 3,972 9,176
Six months ended Six months ended Year ended
31 October 2021 31 October 2020 30 April 2021
(unaudited) (unaudited) (audited)
pence pence pence
Adjusted basic earnings per share 4.1 3.1 6.9
Adjusted diluted earnings per share 3.9 3.0 6.7
6. Dividends
The interim dividend of 1.1p (2020: 1.0p) per share (not recognised as a
liability at 31 October 2021) will be payable on 6 May 2022 to ordinary
shareholders on the register at 8 April 2022. The final dividend of 2.0p per
share as proposed in the 30 April 2021 financial statements and approved at
the group's AGM was paid on 4 November 2021 and was recognised as a liability
at 31 October 2021.
7. Trade and other receivables
31 October 2021 (unaudited) 31 October 2020 (unaudited) 30 April 2021 (audited)
£'000 £'000 £'000
Non current
Deemed remuneration 4,331 4,016 3,970
Current
Trade receivables 9,416 6,457 8,069
Unbilled income 32,879 24,783 32,432
Other debtors and prepayments 4,937 3,051 2,573
Deemed remuneration 2,717 3,451 2,351
49,949 37,742 45,425
8. Trade and other payables
31 October 2021 (unaudited) 31 October 2020 (unaudited) 30 April 2021 (audited)
£'000 £'000 £'000
Current
Trade payables 1,967 931 1,387
Accruals 6,997 5,766 6,899
Final dividend 3,044 2,430 -
Other taxes and social security 4,234 5,981 4,385
Deferred income 6,027 4,250 5,520
Other creditors 14,030 9,098 14,337
Deferred consideration 325 125 375
Deemed remuneration liabilities 1,469 677 370
38,093 29,258 33,273
We have reclassified £1,827,000 at 31 October 2020 and £4,511,000 at 30
April 2021 from accruals to other creditors which are liabilities in respect
of members of the group's LLPs.
9. Reconciliation to the cash flow statement
31 October 2021 (unaudited) 31 October 2020 (unaudited) 30 April 2021 (audited)
£'000 £'000 £'000
(Loss) profit for the period (331) (324) 153
Adjustments for:
Tax 3,024 775 1,754
Finance costs 413 439 883
Amortisation of intangible assets 2,737 1,540 3,180
Depreciation of property, plant and equipment 532 366 841
Depreciation of right of use assets 1,346 1,079 2,617
Impairment of right of use asset - - 579
Reversal of impairment of right of use asset - - (228)
Gain on acquisition (2,115) (1) (231)
Share-based payment expense 717 287 1,031
Deemed remuneration obligations settled through equity 1,000 - 150
(Decrease) increase in deemed remuneration receivable (727) 1,613 2,759
Increase in deemed remuneration liabilities 1,100 543 236
Operating cash flows before movements in working capital 7,696 6,317 13,724
Increase in receivables (3,906) (1,944) (2,683)
Increase in payables 274 3,880 5,400
Increase (decrease) in provisions 20 (145) (279)
Cash generated by operations 4,084 8,108 16,162
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