REG - Begbies Traynor - Final Results
09/07/2024 07:00
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RNS Number : 5805V Begbies Traynor Group PLC 09 July 2024
9 July 2024
Begbies Traynor Group plc
Final results
for the year ended 30 April 2024
Strong financial performance - a decade of profitable 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 2024.
Financial highlights
2024 2023
£m £m
Revenue 136.7 121.8
Adjusted EBITDA(1) 28.5 26.6
Adjusted profit before tax(2) 22.0 20.7
Profit before tax 5.8 6.0
Adjusted diluted EPS(2) (p) 9.9 10.1
Diluted EPS (p) 0.9 1.8
Proposed total dividend (p) 4.0 3.8
Net (debt) cash(3) (1.4) 3.0
1 Adjusted EBITDA is operating profit before share based payments,
depreciation, amortisation and non-underlying items arising due to
acquisitions under IFRS.
2 Adjusted PBT is before non-underlying items arising due to
acquisitions under IFRS. Adjusted EPS excludes these items and the related tax
effect. The board believe that these adjusted performance measures provide
more meaningful information on the operating performance of the business.
3 Net debt (cash) includes cash and cash equivalents and borrowings
but excludes IFRS 16 lease liabilities.
Operational highlights - growth across both divisions
· Overall revenue growth of 12% (6% organic)
o Business recovery and advisory 7% growth (6% organic) - led by business
recovery up 13%
o Property advisory 26% growth (7% organic) - a record year for the division
· Completed four earnings accretive acquisitions in the financial
year, which contributed £5m to reported revenue
· Net debt lower than originally anticipated, having absorbed
acquisition consideration and funding of EBT share purchases totalling £11.1m
· Renewed and enlarged debt facility provides flexibility to
continue to grow scale and range of services
· Seventh consecutive year of dividend growth with a proposed 5%
increase in total dividend
Current trading and outlook - confident of a further year of growth, in line
with market expectations
· Encouraging activity levels in all service lines with positive
momentum:
o Business recovery activity is expected to be maintained at elevated levels
going into 2025
o Advisory and corporate finance expected to improve performance, with
anticipated recovery in M&A activity and continuing positive activity
levels within debt advisory and funding
o Property advisory has good momentum and prospects for further acquisitive
and organic development
· We will provide a further update on trading at the annual general
meeting in September 2024
Commenting on the results, Ric Traynor, Executive Chairman of Begbies Traynor
Group, said:
"I am pleased to report on another successful year of strong financial
performance, which now represents a decade of profitable growth. This has been
driven by our proven growth strategy of investing in organic development and
earnings enhancing M&A, resulting in a diversified and resilient business.
We have delivered value to shareholders across the cycle having tripled the
size of the business with a six-fold increase in profit since 2014.
"We have started the new year confident of a further year of growth, in line
with market expectations. Activity levels across our service lines are
encouraging with positive momentum across the group.
"Overall, our broad range of services, diversified client base, organic growth
initiatives and pipeline of acquisition opportunities, leaves us confident of
continuing our track record of growth."
A meeting for analysts will be held today at 9.45am for 10.00am at the offices
of Canaccord Genuity,
88 Wood Street, London, EC2V 7QR, which will also be available as a webcast.
Please contact begbies@mhpgroup.com (mailto:begbies@mhpgroup.com) or on
07595 461 231 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 / Harry Pardoe
Shore Capital
020 7408 4090
(Joint Broker)
Malachy McEntyre / Mark Percy / Anita Ghanekar / James Thomas
MHP
Group
07595 461 231
Reg Hoare / Katie Hunt / Charles
Hirst
begbies@mhpgroup.com
(mailto:begbies@mhpgroup.com)
Notes to editors
Begbies Traynor Group plc is a leading UK advisory firm with expertise in
business recovery, advisory and corporate finance, valuations, asset sales and
property consultancy.
We have over 900 fee earners operating from 45 locations across the UK,
together with four offshore offices. Our multidisciplinary professional teams
include insolvency practitioners, accountants, lawyers, funding professionals
and chartered surveyors.
· Business recovery
o Corporate and personal insolvency; business restructuring and turnaround;
contentious insolvency; creditor services
· Advisory and corporate finance
o Debt advisory and finance broking; corporate finance; special situations
M&A; financial advisory
· Valuations
o Property, business and asset valuations
· Asset sales
o Property, plant and machinery auctions; property and business sales agency
· Property consultancy
o Building consultancy; transport planning; commercial property management;
insurance and protection
Further information can be accessed via the group's website at
www.ir.begbies-traynorgroup.com (http://www.ir.begbies-traynorgroup.com) .
CHAIRMAN'S STATEMENT
INTRODUCTION
I am pleased to report on another successful year of strong financial
performance, which now represents a decade of profitable growth. This has been
driven by our proven growth strategy of investing in organic development and
earnings enhancing M&A, resulting in a diversified and resilient business.
We have delivered value to shareholders across the cycle having tripled the
size of the business with a six-fold increase in adjusted profit before tax
since 2014.
Business recovery had a further successful year, in which the practice
continued to grow and we reported increased activity levels across all case
sizes. It remains the group's largest service line (c.60% of group revenue)
and retains its leadership position in the UK market. We are ranked number one
by overall volume of corporate appointments, second nationally for
administrations, have added capacity to our team and are well placed to
continue delivering growth.
Advisory and corporate finance were impacted by reduced levels of M&A
transactions across the market. However the team delivered a resilient
performance over the year with activity levels supported by financing and
restructuring engagements.
Property advisory reported a record performance, with strong growth and
enhanced margins, driven by both acquisitions and organic growth. This has
been delivered across all its core disciplines of valuations, asset sales and
consultancy. Since the creation of the division with the acquisition of
Eddisons in December 2014, we have significantly increased its scale, service
offering and geographic presence driving annual revenue from c.£12m at
inception to a current run rate of £45m. Over this ten year trading period
the business has demonstrated resilience through the cycle and reported strong
growth and improving profitability.
Across the group, we made good progress in the year as we continue to invest
in our teams to support ongoing growth including investment in our talent
development and wellbeing support, our IT and programme management capability
and adopting third party software applications to automate and improve
processes.
We completed four profitable acquisitions in the financial year, which
contributed £5m to reported revenue (or over £9m revenue on a pro-forma
basis), supported by our new and enhanced borrowing facilities which were
agreed during the year.
The business remains highly cash generative, with free cash flow of £12.4m,
and ended the year with lower than expected net debt of £1.4m (2023: net cash
of £3.0m), having paid acquisition consideration of £8.2m and funded £2.9m
of EBT share purchases. This cash generation also enables us to propose a 5%
increase in the total dividend for the year, representing our seventh
consecutive year of dividend growth.
Our cash generation, combined with our recently renewed and enlarged debt
facility, provides us with the flexibility to execute our strategy to continue
to grow our scale and range of services both organically and through
acquisition.
RESULTS
Group revenue in the year increased by 12% to £136.7m (2023: £121.8m), 6% of
which was organic. Adjusted EBITDA(1) increased by 7% to £28.5m (2023:
£26.6m) with margins of 20.9% (2023: 21.8%), reflecting improved margins
across both business recovery and property advisory, offset by subdued M&A
transactions in corporate finance and investment to support ongoing growth.
Adjusted profit before tax(2) increased by 6% to £22.0m (2023: £20.7m).
Statutory profit before tax was £5.8m (2023: £6.0m).
Adjusted diluted earnings per share(2) decreased to 9.9p (2023: 10.1p),
following the increased UK corporation tax rate which impacted EPS by 0.7p per
share. For comparison, on a constant tax rate EPS would have increased by
0.5p.
Net debt(3) on 30 April 2024 was £1.4m (2023 net cash: £3.0m), having paid
acquisition consideration of £8.2m and funded £2.9m of EBT share purchases.
1 Adjusted EBITDA is operating profit before share based payments,
depreciation, amortisation and non-underlying items arising due to
acquisitions under IFRS.
2 Adjusted PBT is before non-underlying items arising due to
acquisitions under IFRS. Adjusted EPS excludes these items and the related tax
effect. The board believe that these adjusted performance measures provide
more meaningful information on the operating performance of the business.
3 Net debt (cash) includes cash and cash equivalents and borrowings
but excludes IFRS 16 lease liabilities.
DIVIDEND
The board is pleased to recommend (subject to shareholder approval at the
company's annual general meeting scheduled for 17 September 2024) a 5%
increase in the total dividend for the year to 4.0p (2023: 3.8p), representing
our seventh consecutive year of dividend growth. This comprises the interim
dividend already paid of 1.3p (2023: 1.2p) and a proposed final dividend of
2.7p (2023: 2.6p).
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 6 November 2024 to shareholders on the
register on 11 October 2024, with an
ex-dividend date of 10 October 2024.
STRATEGY
We have a proven growth strategy which we have executed successfully since
2014. We believe this 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 earnings-accretive acquisitions in the
following market segments:
· existing service lines to enhance market share, expertise and
geographical coverage; and
· complementary professional services to continue the development
of the group and its service offering.
Overall, we believe there are attractive opportunities for the group to grow
and consolidate in its chosen markets, which remain fragmented and offer
attractive financial returns.
PEOPLE
The continuing success of the group is reliant on the hard work and dedication
of our colleagues. Since 2014, we have increased our number of colleagues from
440 to over 1,250, through successfully integrating acquisitions and
recruiting high quality professionals. This approach has enhanced our
entrepreneurial culture and delivered material growth. This is evidenced by
the quality of advice and service we consistently deliver to our clients and
our high levels of colleague retention.
I would like to thank all of our colleagues for their significant contribution
to the group and at the same time welcome all those who have joined the group
over the last twelve months.
SUSTAINABILITY
The board is committed to developing the group in a sustainable way for the
benefit of all our stakeholders.
We aim to have a positive impact for our colleagues and the communities we
serve; to operate with a culture of strong governance and responsible
behaviour; and to minimise our impact on the environment.
During the year under review, we have continued to develop the support we
offer to colleagues with the introduction of a health and well-being support
service which includes access to online GP consultations, mental health
support and fitness and nutrition advice. We also enhanced our benefits
package, to give colleagues more flexibility to select benefits relevant to
them focused on health, wealth and other self-benefits to help strike the
right work / life balance.
We have continued to make good progress in other areas to reduce our overall
environmental impact including the ongoing transition of 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 group's annual report and accounts.
OUTLOOK
We have started the new year confident of a further year of growth, in line
with market expectations. Activity levels in all our service lines are
encouraging with positive momentum across the group and we anticipate
maintaining organic growth in the new financial year at similar levels. Our
renewed and enlarged debt facility also provides flexibility to continue to
grow the scale and range of services we offer.
Insolvency activity across the UK remains at elevated levels, with sustained
higher interest rates continuing to impact on corporate stress levels. With
our extensive national coverage and reputation, we are well-placed to provide
the advice and support required by the business community. This elevated level
of insolvency activity is expected to be maintained going into 2025 as the
economy recovers, especially in sectors with working capital and other funding
challenges in an economy moving from the recovery to growth phase.
Our advisory and corporate finance teams are expected to improve performance
over the course of the new financial year, driven by an encouraging pipeline
of M&A instructions and an anticipated recovery in M&A activity later
in the year. We anticipate continuing positive activity levels in debt
advisory and funding, carrying good momentum over from the last year.
Property advisory is also well-placed to build on its recent strong track
record across all core disciplines of valuations, asset sales and consultancy,
with good prospects for further acquisitive and organic development to enhance
its market position in a fragmented market.
Overall, our broad range of services, diversified client base, organic growth
initiatives and pipeline of acquisition opportunities, leaves us confident of
continuing our track record of growth. We will provide an update on trading at
the annual general meeting in September 2024.
Ric Traynor
Executive chairman
9 July 2024
BUSINESS REVIEW
OPERATING REVIEW
BUSINESS RECOVERY AND ADVISORY
Financial summary
Revenue increased by 7% (6% organic) to £96.4m (2023: £89.7m), reflecting
increased levels of business recovery activity. Revenue from business recovery
increased by 13% to £79.5m (2023: £70.6m) with advisory activities reducing
to £16.9m (2023: £19.1m), reflecting a strong comparative period (which
benefitted from a number of contingent fees) and a reduction in M&A
advisory work.
Operating costs increased by £5.7m to £71.1m (2023: £65.4m), principally
due to an increased team size following recruitment combined with operating
cost increases (principally salaries).
Segmental profits* increased by 5% to £25.5m (2023: £24.3m). Divisional
operating margins reduced slightly overall to 26.5% (2023: 27.1%), with
improved business recovery margins offset by lower margins from advisory
(compared to the strong comparative noted above and due to a quieter M&A
market).
* See note 2
Insolvency market
Corporate insolvencies* nationally increased by 12% to 25,391 (2023: 22,633).
This is due to both liquidations which, as reported in the prior two years,
have exceeded pre-pandemic levels, together with administrations (typically
larger cases), which are now approaching pre-pandemic levels but remain
significantly below previous peaks. In this increasing market, we have
maintained our market-leading positions (by volume of appointments), being
ranked first nationally for overall corporate appointments and second
nationally in administrations.
The level of corporate distress remains at high levels. The most recent
Begbies Traynor "Red Flag Alert" report published in April 2024, showed a 20%
increase in companies in 'critical' financial distress, notably in the
construction, real estate, financial services and support services sectors. In
addition, Allianz Trade have forecast a further 10% increase in UK
insolvencies in calendar year 2024 to end the year 43% above pre-pandemic
levels, and remaining at elevated levels in 2025.
* Source: The Insolvency Service monthly statistics on the number of corporate
insolvencies in England and Wales on a seasonally adjusted basis for 12 months
to 30 April
** Source: Allianz Trade economic research 11 March 2024
Operating review
Business recovery
Higher levels of insolvency activity in the year increased business recovery
revenue by 13% (£8.9m) with improved margins. The insolvency order book
(including both contingent and non-contingent fees) increased by 8% to £71.9m
(2023: £66.7m), principally due to an increased number of contentious and
investigation cases. The non-contingent element increased by 3% (£1.1m) to
£36.3m (2023: £35.2m).
Activity levels increased across all case sizes including the larger
mid-market cases which generate 50% of our revenue. We have added capacity to
the team through recruitment and acquisition. Our business recovery team has
increased to 625 from 597, which includes the team of four who joined
following the acquisition of Jones Giles & Clay in Cardiff.
Notable insolvency cases worked on in the year included the ongoing
administrations of Worcester Rugby Club and Paperchase and the receivership of
the Britishvolt EV battery site in Northumberland, together with new
administration appointments of Readie Construction, Breathe EV, Fortress
Capital and Thought Fashion. There has been ongoing momentum with new
administration appointments since the year end.
We have successfully increased our income from internet-led direct marketing
activities, bolstering our leadership of the liquidation market. We have also
continued to identify opportunities to use technology and systems to improve
operational processes and efficiency.
Advisory
Our dedicated team provide financial advisory and corporate finance advice.
The debt advisory and finance broking team arrange finance for businesses and
asset owners. In addition, our team provide lender advisory, due diligence,
pensions advisory and forensic services. The corporate finance team act on
M&A and fund raising engagements, together with accelerated M&A in
special situations where clients are facing business critical issues.
The team delivered a resilient and profitable performance in the year despite
reduced revenue, with advice provided on refinancing and restructuring
engagements mitigating the previously reported reduction in M&A
transactions. We have continued to seek organic growth opportunities for our
advisory services, which are well-positioned to deliver growth in the new
financial year.
People
The number of people employed in the division has increased to 732 on 30 April
2024 from 694 at the start of the financial year.
PROPERTY ADVISORY
Financial summary
Revenue increased by 26% (7% organic) to a record £40.3m (2023: £32.1m),
reflecting acquisitions (first-time contribution from current year and full
year impact of prior year transactions) and organic growth (including
additional consultancy fees of £0.5m, the timing of which benefitted revenue
and margins in the year).
Operating costs increased to £32.7m (2023: £26.7m), as a result of costs
associated with acquired businesses and operating cost increases (principally
salaries). However, these costs reduced as a percentage of revenue, which
resulted in improved operating margins of 18.9% (2023: 17.1%).
Segmental profits* increased by 38% to £7.6m (2023: £5.5m).
* See note 2
Property market
Since the creation of the division in 2014, from the acquisition of a
Yorkshire-based multi-disciplinary property consultancy, we have successfully
expanded both the geographical coverage and range of services to establish a
well-regarded mid-tier national firm, retaining and operating under the
Eddisons brand. We believe the property advisory market remains fragmented
with significant opportunities for the group to continue to develop its market
position and further increase its scale, service offering and geographic
presence.
Operating review
Asset sales
We assist our clients in realising the value of their property, businesses or
plant and machinery assets. We have extensive routes to market of on-line
auctions, commercial property and business sales agency, and marketed and
tendered sales.
Activity levels increased significantly in the year with revenue growth of
over 30%, principally resulting from ongoing investment into the auction
business. In December 2023 we acquired SDL Property Auctions, which followed
the acquisition of Mark Jenkinson & Son in the prior financial year.
We now have a leading national auction business with pro-forma income of
c.£10m, selling property, plant and machinery with over 250 lots per month.
The integration project is proceeding well with a targeted launch of the fully
integrated Eddisons auctions business later in the new financial year.
Our agency teams (selling commercial property and small businesses) reported a
resilient performance in a challenging market, reflecting the strength of our
local teams and sector focus on industrial and commercial property and trading
businesses.
In May 2023 we acquired Banks Long & Co, a general practice based in
Lincoln, with a strong agency team. This has strengthened our regional
presence across Eastern England and South Yorkshire.
The team are now ranked as a top five agent in 2024 by volume (Source: Estates
Gazette Commercial Property Top Agents in England website).
Property consultancy
Our team provide a range of consultancy services for both property owners and
occupiers. We have expertise in project management, building consultancy,
transport planning and commercial property management. We also advise our
clients on protecting their assets through insurance and vacant property risk
management.
The team had another positive year, reporting revenue growth of over 20%. This
included £0.5m of fees in relation to the completion of long-running
engagements, the timing of which benefitted margins in the year. We have
continued to develop our consultancy services, notably to our key clients in
the education sector. We have broadened our expertise through the
recruitment of a head of sustainability and decarbonisation to provide advice
on carbon reduction and environmental best practice to our clients, which is
an area where our clients increasingly require support and advice. The team
also benefitted from the addition of the Banks Long building surveying team
following its acquisition (as noted above).
We have invested in our systems and processes, notably through the
implementation of an MS Dynamics CRM solution, to ensure our underlying
business processes are supporting and enabling continuing growth. In addition,
we have upgraded our property management operating system.
Valuations
Our specialist team value property, businesses and assets for secured lending,
corporate reporting and commercial transactions. We have continued to develop
the business in the year through a combination of both acquisition and organic
investment, delivering a 10% increase in revenue.
In November 2023 we acquired Andrew Forbes, a specialist valuations practice
in Bristol, which extended our valuations expertise into the South West
region. The business has successfully integrated into our national team and we
expect it will benefit from enhanced panel exposure as a part of our much
larger enterprise which enjoys broader relationships.
Organic activity levels were robust in the year reflecting the resilient
nature of the business and our strong panel relationships with secured
lenders. In February 2024 we signed a partnership deal with a leading proptech
firm to implement a new platform to increase levels of automation in producing
our valuation reports. We anticipate this will improve the quality of our
reports and increase the level of efficiency for our professional teams.
People
The number of people employed in the division has increased to 442 on 30 April
2024 from 338 at the start of the financial year, principally reflecting the
acquisitions.
FINANCE REVIEW
Financial summary
2024 2023
£m £m
Revenue 136.7 121.8
Adjusted EBITDA 28.5 26.6
Share-based payments (0.6) (1.3)
Depreciation (4.0) (3.5)
Operating profit (before non-underlying items) 23.9 21.8
Finance costs (1.9) (1.1)
Adjusted profit before tax 22.0 20.7
Non-underlying items (16.2) (14.7)
Profit before tax 5.8 6.0
Tax on profits on ordinary activities (4.3) (3.1)
Profit for the year 1.5 2.9
Operating performance
Revenue in the year increased by £14.9m to £136.7m (2023: £121.8m), an
overall increase of 12% (6% organic plus 6% acquired*).
Adjusted EBITDA increased to £28.5m (2023: £26.6m) with margins of 20.9%
(2023: 21.8%). Non-cash costs (share-based payments and depreciation)
decreased to £4.6m (2023: £4.8m).
Operating performance by segment is detailed below:
Revenue (£m) Operating profit (£m)
growth
2024 2023 2024 2023 growth
Business recovery and financial advisory 96.4 89.7 7% 25.5 24.3 5%
Property advisory 40.3 32.1 26% 7.6 5.5 38%
Shared and central costs - - - (9.2) (8.0) 11%
Total 136.7 121.8 12% 23.9 21.8 10%
Shared and central costs increased to £9.2m (2023: £8.0m) reflecting
investment in our IT and HR capability, increasing slightly as a percentage of
revenue at 6.7% (2023: 6.6%).
Operating margins decreased slightly to 17.5% (2023: 17.9%), reflecting
increased margins across both business recovery and property advisory offset
by subdued M&A transactions in corporate finance and investment to support
ongoing growth. We anticipate this level will be broadly maintained in the new
financial year.
Finance costs increased to £1.9m (2023: £1.1m) due to increased interest
rates, new property leases resulting in a higher IFRS 16 finance charge and
one off costs associated with the new debt facility.
Adjusted profit before tax increased by 6% to £22.0m (2023: £20.7m).
* part year contribution from acquisitions in the year and full year
contribution of prior year acquisitions
Non-underlying items
The non-underlying items detailed below all arise due to acquisition
accounting.
Under IFRS, acquisition consideration which is contingent on the selling
shareholders remaining with the group is charged to the statement of
comprehensive income, rather than being capitalised within non-current assets.
These contingent payments, agreed in the terms of the sale and purchase
agreements, are designed to preserve the value of goodwill and customer
relationships acquired in the business combinations. As a result of this
treatment of consideration, negative goodwill arises on a number of
acquisitions which is credited to income in the year of acquisition.
2024 2023
£m £m
Acquisition consideration (deemed remuneration in accordance with IFRS 3) 11.1 12.3
Negative goodwill (0.8) (4.3)
Transaction costs 0.3 0.4
Amortisation of intangible assets recognised on acquisition accounting 5.6 6.3
16.2 14.7
Tax
The overall tax charge for the year was £4.3m (2023: £3.1m) as detailed
below:
2024 2023
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 22.0 (5.7) 16.3 26% 20.7 (4.3) 16.4 21%
Non-underlying items:
Amortisation (5.6) 1.4 (4.2) 25% (6.3) 1.2 (5.1) 20%
Other non-underlying items (10.6) - (10.6) - (8.4) - (8.4) -
Statutory 5.8 (4.3) 1.5 74% 6.0 (3.1) 2.9 52%
Following the increase in the UK corporation tax rate, the group's adjusted
tax rate increased to 26% (2023: 21%).
The statutory tax rate reflects the tax treatment of non-underlying items as
follows:
· Amortisation of acquired intangibles attracts a deferred tax
credit at 25% (2023: 20%);
· Other non-underlying items (acquisition consideration, negative
goodwill and transaction costs) are non-deductible as they are capital in
nature.
Earnings per share
Adjusted diluted earnings per share* decreased to 9.9p (2023: 10.1p),
following the increased UK corporation tax rate. In comparison, on a constant
tax rate EPS would have been 10.6p (an increase of 5%). Diluted earnings per
share was 0.9p (2023: 1.8p).
* See reconciliation in note 5
Growth in our team
On 30 April 2024 the group had 1,250 colleagues (2023: 1,100), 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.
2024 2023
Business recovery and financial advisory Property advisory Shared and support teams Total Business recovery and financial advisory Property advisory Shared and support teams Total
Fee earners 591 328 - 919 550 279 - 829
Support teams 63 25 67 155 70 18 61 149
Total 654 353 67 1,074 620 297 61 978
The ratio of fee earning to support team colleagues is 5.9:1 (2023: 5.6:1).
The comparative numbers have been represented to reflect current management
structures.
Acquisitions
During the financial year, the group made the following acquisitions:
· Banks Long & Co on 3 May 2023 for initial consideration of
£1.5m (£1.125m cash and issue of 292,170 shares - cash free, debt free);
potential earn out of £1.5m subject to growing the profitability of the
business over the five year period post completion. Total cash flows arising
on acquisition were £1.2m (£1.1m initial consideration, £1.2m paid in
respect of the cash free debt free adjustment, less £1.1m cash acquired).
· Andrew Forbes on 7 November 2023 for initial cash consideration
of £0.5m (cash free, debt free); potential earn out of £0.5m, subject to
maintaining profits in the three year period post completion. Total cash flows
arising on acquisition were £0.3m (£0.5m initial consideration less £0.2m
cash acquired).
· SDL Auctions on 11 December 2023 for initial cash consideration
of £2.5m (cash free, debt free); potential earn out of £0.75m payable in
cash, subject to maintaining revenue in the 12 month period post completion.
Total cash flows arising on acquisition were £2.0m (£2.5m initial
consideration, less £0.3m cash acquired, less £0.2m repaid to the group in
respect of the cash free debt free adjustment).
In October 2023, we expanded our business recovery team in Cardiff through the
acquisition of the four-strong team from Jones, Giles & Clay.
We also acquired a portfolio of insolvency cases from a London insolvency
practitioner.
The cash outflow from acquisitions in the year was £8.2m (net of cash
acquired), comprising current year acquisitions of £3.5m and prior year
acquisitions of £4.7m.
Liquidity
The group remains in a strong financial position. At 30 April 2024, the group
had net debt of £1.4m (2023: net cash of £3.0m), represented by cash
balances of £5.6m (2023: £8.0m) net of drawn borrowing facilities of £7.0m
(2023: £5.0m). All bank covenants were comfortably met during the year.
During the year, we agreed new and enhanced borrowing facilities with HSBC
which replaced the previous facility entered into in 2016 and was due to
mature in August 2025. The key terms are:
· £25m committed, unsecured revolving credit facility (unchanged).
· An additional £10m accordion facility (increased from £5m),
allowing further debt capacity to support the group's growth strategy, subject
to certain conditions.
· Overall facility costs broadly in line with the previous
facility.
· Initial three-year term until February 2027, with two one-year
extension options, giving a potential maturity date of February 2029.
Cash flow
Cash flow in the year is summarised as follows:
2024 2023
£m £m
Adjusted EBITDA 28.5 26.6
Working capital (4.0) (2.8)
Cash generated by operations 24.5 23.8
Tax (6.7) (5.3)
Interest (2.0) (1.1)
Capital expenditure (1.5) (1.0)
Capital element of lease payments (1.9) (2.3)
Free cash flow 12.4 14.1
Net proceeds from share issues 0.5 0.2
Purchase of own shares (2.9) -
Transaction costs (0.3) (0.4)
Acquisition consideration payments (net of cash acquired)* (8.2) (10.2)
Dividends (5.9) (5.4)
Decrease in net cash (4.4) (1.7)
* including deemed remuneration under IFRS 3
The group remains strongly cash-generative with cash from operating activities
(before acquisition consideration payments) increasing to £24.5m (2023:
£23.8m).
Tax payments increased to £6.7m (2023: £5.3m) following the increase in UK
corporation tax rates. Interest payments increased to £2.0m (2023: £1.1m)
due to increased interest rates, higher IFRS 16 interest charges and initial
arrangement fees on the new borrowing facilities. Capital expenditure in the
year increased to £1.5m (2023: £1.0m) due to IT hardware purchases and new
office fit outs. The capital element of lease payments decreased to £1.9m
(2023: £2.3m).
Free cash flow in the year was £12.4m (2023: £14.1m), a result of the
increased tax, interest and capital expenditure payments.
During the year, the group set up an employee benefit trust ('EBT') as a means
of satisfying certain share option awards to employees. The EBT subsequently
entered into a trading plan under which it has acquired £2.9m of ordinary
shares, funded by a loan from the group.
Net assets
At 30 April 2024 net assets were £78.4m (2023: £84.3m). The movement in net
assets reflects underlying total comprehensive income for the year of £16.3m
and credits to equity for share based payments and share issues of £1.4m
offset by the post-tax impact of non-underlying costs of £14.8m, dividends
paid of £5.9m and £2.9m in relation to shares acquired by the EBT.
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
9 July 2024
9 July 2024
Consolidated statement of comprehensive income
2024 2023
£'000 Note Non-underlying Total Non-underlying Total
Underlying Underlying
Continuing operations
Revenue 2 136,728 - 136,728 121,825 - 121,825
Direct costs (77,840) - (77,840) (67,700) - (67,700)
Gross profit 58,888 - 58,888 54,125 - 54,125
Other operating income 479 - 479 208 - 208
Administrative expenses (35,452) (16,214) (51,666) (32,512) (14,666) (47,178)
Operating profit 23,915 (16,214) 7,701 21,821 (14,666) 7,155
Finance costs 4 (1,936) - (1,936) (1,170) (1,170)
Profit before tax 21,979 (16,214) 5,765 20,651 (14,666) 5,985
Tax (5,710) 1,397 (4,313) (4,310) 1,236 (3,074)
Profit and total comprehensive income for the year 1,452 2,911
16,269 (14,817) 16,341 (13,430)
Earnings per share
Basic 5 0.9p 1.9p
Diluted 5 0.9p 1.8p
The profit, comprehensive income and earnings per share is attributable to
equity holders of the parent.
Consolidated statement of changes in equity
Capital redemption Own
Share Share Merger shares Retained Total
capital premium reserve reserve reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
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
Other share options 28 186 - - - - 214
At 30 April 2023 7,727 29,973 27,944 304 - 18,392 84,340
Profit for the year - - - - - 1,452 1,452
Dividends - - - - - (5,944) (5,944)
Credit to equity for equity-settled share-based payments - - - - 343 343
-
Shares issued as consideration for acquisitions 15 - 360 - - - 375
Own shares acquired - - - - (2,901) - (2,901)
Other share options 213 543 - - - - 756
At 30 April 2024 7,955 30,516 28,304 304 (2,901) 14,243 78,421
Consolidated balance sheet
2024 2023
Note £'000 £'000
Non-current assets
Intangible assets 72,401 73,386
Property, plant and equipment 2,244 1,993
Right of use assets 11,166 7,751
Trade and other receivables 7 2,825 5,200
88,636 88,330
Current assets
Trade and other receivables 7 63,336 55,550
Current tax receivable 299 -
Cash and cash equivalents 5,558 8,001
69,193 63,551
Total assets 157,829 151,881
Current liabilities
Trade and other payables 8 (49,971) (42,644)
Current tax liabilities - (1,110)
Lease liabilities (2,102) (1,554)
Provisions (923) (1,006)
(52,996) (46,314)
Net current assets 16,197 17,237
Non-current liabilities
Borrowings (7,000) (5,000)
Lease liabilities (9,552) (6,658)
Provisions (2,871) (2,139)
Deferred tax (6,989) (7,430)
(26,412) (21,227)
Total liabilities (79,408) (67,541)
Net assets 78,421 84,340
Equity
Share capital 7,955 7,727
Share premium 30,516 29,973
Merger reserve 28,304 27,944
Capital redemption reserve 304 304
Own shares reserve (2,901) -
Retained earnings 14,243 18,392
Equity attributable to owners of the company 78,421 84,340
Consolidated cash flow statement
Notes 2024 2023
£'000 £'000
Cash flows from operating activities
Cash generated by operations 9 24,466 23,817
Income taxes paid (6,715) (5,328)
Interest paid on borrowings (1,274) (668)
Interest paid on lease liabilities (751) (408)
Net cash from operating activities (before acquisition payments) 15,726 17,413
Transaction costs (321) (434)
Acquisition consideration payments (which are deemed remuneration under IFRS (6,250) (10,599)
3)
Net cash from operating activities 9,155 6,814
Investing activities
Purchase of intangible fixed assets (21) (56)
Purchase of property, plant and equipment (1,432) (931)
Proceeds on disposal of property, plant and equipment - 20
Acquisition consideration payments (3,561) (700)
Net cash acquired in acquisition of businesses 1,593 1,158
Net cash used in investing activities (3,421) (509)
Financing activities
Dividends paid 6 (5,944) (5,387)
Proceeds on issue of shares 533 213
Purchase of own shares (2,901) -
Capital element of lease payments (1,865) (2,381)
Drawdown of loans 2,000 -
Net cash used in financing activities (8,177) (7,555)
Net decrease in cash and cash equivalents (2,443) (1,684)
Cash and cash equivalents at beginning of year 8,001 9,685
Cash and cash equivalents at end of year 5,558 8,001
1. Basis of preparation and accounting policies
The results for the year ended 30 April 2024 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 2023.
The group's financial statements for the year ended 30 April 2024 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 2023 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 2024 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 2024 annual report will be available on the group's website:
www.ir.begbies-traynorgroup.com.
Going concern
In carrying out their duties in respect of going concern, the directors have
completed a review of the group's 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 believe 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.
All of the items excluded from adjusted results are those which arise due to
acquisitions under IFRS. They are not influenced by the day-to-day operations
of the group.
Accordingly, adjusted measures of operating profit, profit before tax and
earnings per share exclude, where applicable, acquisition consideration
(treated as deemed remuneration under IFRS 3), negative goodwill, transaction
costs and amortisation of intangible assets arising on acquisitions and the
related tax effects on these items. These terms are not defined terms under
UK-adopted International Accounting Standards 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.
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: business
recovery and advisory and property advisory.
Business recovery Property advisory Shared and central costs Consolidated
and advisory
2024 2024 2024 2024
£'000 £'000 £'000 £'000
Revenue
Total revenue from rendering of professional services 96,384 40,361 - 136,745
Inter-segment revenue - (17) - (17)
Revenue from external customers 96,384 40,344 - 136,728
Operating profit before non-underlying items 25,510 7,633 (9,228) 23,915
Business recovery and advisory Property advisory 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 non-underlying items 24,272 5,527 (7,978) 21,821
3. Non-underlying items
2024 2023
£'000 £'000
Acquisition consideration (deemed remuneration in accordance with IFRS 3) 11,133 12,304
Negative goodwill (830) (4,298)
Transaction costs 321 434
Amortisation of intangibles arising on acquisition accounting 5,590 6,226
16,214 14,666
4. Finance costs
2024 2023
£'000 £'000
Interest on borrowings 1,185 762
Finance charge on lease liabilities 680 343
Finance charge on dilapidation provisions 71 65
1,936 1,170
5. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
2024 2023
£'000 £'000
Earnings
Profit for the year attributable to equity holders 1,452 2,911
2024 2023
number number
'000 '000
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 158,540 155,634
per share
Effect of:
Share options 5,334 6,423
Contingent shares - 233
Weighted average number of ordinary shares for the purposes of diluted 163,874 162,290
earnings per share
The weighted average number of ordinary shares for the purposes of basic
earnings per share includes options which have vested but are yet to be
exercised.
2024 2023
pence pence
Basic and diluted earnings per share
Basic earnings per share 0.9 1.9
Diluted earnings per share 0.9 1.8
The calculation of adjusted basic and diluted earnings per share is based on
the following data:
2024 2023
£'000 £'000
Earnings
Profit for the year attributable to equity holders 1,452 2,911
Non-underlying items 16,214 14,666
Tax effect of above items (1,397) (1,236)
Adjusted earnings 16,269 16,341
2023 2023
pence pence
Adjusted basic earnings per share 10.3 10.5
Adjusted diluted earnings per share 9.9 10.1
6. Dividends
2024 2023
£'000 £'000
Amounts recognised as distributions to equity holders in the year
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 4,090 3,700
5,944 5,387
Amounts proposed as distributions to equity holders
Interim dividend for the year ended 30 April 2024 of 1.3p (2023: 1.2p) per 1,909 1,854
share
Final dividend for the year ended 30 April 2024 of 2.7p (2023: 2.6p) per share 4,136 4,090
6,045 5,944
The proposed final dividend is subject to approval by shareholders at the
annual general meeting in September 2024. The interim dividend for 2024 was
paid on 7 May 2024 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
2024 2023
£'000 £'000
Non-current
Prepaid deemed remuneration 2,825 5,200
Current
Trade receivables 12,929 11,652
Unbilled income 45,348 37,489
Other debtors and prepayments 2,819 2,987
Prepaid deemed remuneration 2,240 3,422
63,336 55,550
8. Trade and other payables
2024 2023
£'000 £'000
Current
Trade payables 2,366 2,055
Accruals 12,105 10,454
Other taxes and social security 5,180 5,209
Deferred income 7,403 6,503
Other creditors 16,971 14,350
Contingent consideration (including deemed remuneration accrual) 5,946 4,073
49,971 42,644
In addition to the contingent consideration liability recognised above, there
are future potential obligations based on the sale and purchase agreements
which are contingent on financial performance and other performance
conditions, as detailed below
2024 2023
£'000 £'000
Recognised as a liability 5,946 4,073
Anticipated future liability based on current financial performance 13,137 16,916
Current estimates of anticipated future payments 19,083 20,989
9. Reconciliation to the cash flow statement
2024 2023
£'000 £'000
Profit for the year 1,452 2,911
Adjustments for:
Tax 4,313 3,074
Finance costs 1,936 1,170
Depreciation of property, plant & equipment 1,149 1,114
Right of use asset depreciation 2,677 2,136
Software amortisation 189 184
Non-underlying operating costs 16,214 14,666
Loss (profit) on disposal of fixed assets 44 (13)
Loss on disposal of right of use assets - 42
Share-based payment expense 566 1,277
Operating cash flows before movements in working capital 28,540 26,561
Increase in receivables (excluding deemed remuneration prepaid) (7,894) (4,656)
Increase in payables (excluding deemed remuneration accrual) 4,081 2,481
Decrease in provisions (261) (569)
Cash generated by operations 24,466 23,817
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