TIDMBEG
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
GBPm GBPm
----------------------------- ------ -----
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 GBP4.0m (2021: GBP1.9m) plus transaction
costs GBP8.3m (2021: GBP6.5m) and amortisation of intangible assets
arising on acquisitions GBP5.5m (2021: GBP3.1m)
** 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 GBP4.7m (2021: GBP3.0m)
-- 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 GBP110.0m-GBP118.0m and adjusted PBT of
GBP18.5m-GBP19.7m (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 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
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 GBP52m to GBP110m,
operating margins from 11.6% to 16.9%, adjusted profit before tax
from GBP5.6m to GBP17.8m 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 GBP4.7m (2021: GBP3.0m).
This is after GBP8.2m of acquisition and deferred consideration
payments and paying dividends of GBP4.6m. 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 GBP110.0m (2021:
GBP83.8m), 7% of which was organic. Adjusted* profit before tax**
increased by 55% to GBP17.8m (2021: GBP11.5m). Statutory profit
before tax was GBP4.0m (2021: GBP1.9m).
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 GBP4.7m (2021:
GBP3.0m).
* 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 GBP4.0m (2021: GBP1.9m) plus transaction
costs GBP8.3m (2021: GBP6.5m) and amortisation of intangible assets
arising on acquisitions GBP5.5m (2021: GBP3.1m)
*** See reconciliation in note 5
DIVID
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 GBP81.4m (2021:
GBP59.7m), reflecting the benefit from recent acquisitions combined
with an increase in activity levels.
Operating costs increased by GBP15.4m to GBP60.4m (2021:
GBP45.0m), 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 GBP21.0m (2021:
GBP14.7m).
* 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 GBP29.5m (2021: GBP28.3m), 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 GBP330m
from GBP150m 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 GBP28.6m (2021:
GBP24.1m), 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 GBP23.8m (2021: GBP20.2m),
principally due to costs of acquired businesses.
Segmental profits* were GBP4.8m (2021: GBP3.9m), 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.GBP13m at inception to a current
annualised run rate in excess of GBP30m, 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
GBPm GBPm
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 GBP26.2m to GBP110.0m (2021:
GBP83.8m), an overall increase of 31%, of which 7% was organic and
24% was acquired*. Operating profit increased by 50% to GBP18.6m
(2021: GBP12.4m).
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 GBP17.8m (2021:
GBP11.5m).
* 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 GBP8.3m (2021:
GBP6.5m) 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 GBP4.5m (2021: GBP1.7m)
as detailed below:
2022 2021
Profit Tax Profit Effective Profit Tax Profit Effective
before after rate before after rate
tax tax tax tax
GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------ ------- ---------- -------- ------ ------- ----------
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 GBP1.8m 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 Property Shared Total Business Property Shared Total
recovery advisory and recovery advisory and
and financial and support and and support
advisory transactional teams financial transactional teams
services advisory services
------------- --------------- ---------------- --------- ------ ----------- ----------------- --------- ------
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 GBP3.0m (GBP2.0m cash and GBP1.0m in shares - cash
free, debt free); potential earn out of up to GBP8.75m 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 GBP3.1m and normalised pre-tax profits of GBP0.3m when
reported on the same basis as the group.
-- Daniells Harrison Surveyors LLP ('Daniells Harrison') on 9
January 2022 for initial consideration of GBP1.0m (GBP0.75m cash
and GBP0.25m in shares - cash free, debt free); contingent
consideration of GBP1m subject to maintaining financial
performance; and a potential earn out of up to GBP1.25m 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 GBP2.1m and normalised pre-tax profits of
GBP0.4m 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
GBP0.25m.
The net cash outflow from acquisitions was GBP8.2m, comprising
current year acquisitions of GBP2.9m and prior year acquisitions of
GBP5.3m.
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
GBP2.0m 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 GBP4.7m (2021: GBP3.0m),
represented by cash balances of GBP9.7m (2021: GBP8.0m) net of
drawn borrowing facilities of GBP5.0m (2021: GBP5.0m). 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 GBP25m unsecured, committed
revolving credit facility (of which GBP5m was drawn at 30 April
2022) and a GBP5m 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 GBP14.0m (2021: GBP12.3m).
Cash flow in the year is summarised as follows:
2022 2021
GBPm GBPm
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 GBP84.5m (2021: GBP86.3m). The
GBP1.8m reduction in net assets reflects the post-tax impact of
acquisition-related transaction and amortisation costs of GBP12.8m
and the one-off deferred tax charge of GBP1.8m; which offset
post-tax adjusted earnings of GBP14.1m net of dividends of GBP4.6m;
a GBP1.5m credit for equity-settled share-based payments; and
GBP1.8m 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 GBP'000 GBP'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) (2,7 32 ) ( 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
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 GBP'000 GBP'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
2022 2021
Notes GBP'000 GBP'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 Adjustment to provisional
estimates on CVR estimates on DRP
As reported acquisition acquisition Restated
30 April 2021 GBP'000 GBP'000 30 April 2021
GBP'000 GBP'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 Property Shared Consolidated
recovery advisory and central
and financial and transactional costs
advisory services
services
2022 2022 2022 2022
GBP'000 GBP'000 GBP'000 GBP'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 Property Shared Consolidated
recovery advisory and central
and financial and transactional costs
advisory services
services
2021 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Earnings
(Loss) profit for the year attributable to equity holders (500) 153
---------------------------------------------------------- -------- --------
2022 2021
number number
'000 '0 00
--------------------------------------------------- ------- -------
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 154,556 132,963
Effect of:
Share options 5,968 4,421
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 160,524 137,384
--------------------------------------------------- ------- -------
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
GBP'000 GBP'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
GBP'000 GBP'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 share 1,509 1,149
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 share 1,687 1,509
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
Restated
2022 2021
GBP'000 GBP'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
Restated
2022 2021
GBP'000 GBP'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
GBP'000 GBP'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 2021
GBP'000 GBP'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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END
FR UWSNRURUBAAR
(END) Dow Jones Newswires
July 19, 2022 02:00 ET (06:00 GMT)
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