TIDMBEG
RNS Number : 4428J
Begbies Traynor Group PLC
13 December 2022
13 December 2022
Begbies Traynor Group plc
Half year results
for the six months ended 31 October 2022
"Strong first half performance and confidence in full year
outlook"
Begbies Traynor Group plc (the 'company' or the 'group'), the
business recovery, financial advisory and property services
consultancy, today announces its half year results for the six
months ended 31 October 2022.
Financial overview
2022 2021
GBPm GBPm
----------------------------- ------ ------
Revenue 58.5 52.3
Adjusted EBITDA* 11.9 11.1
Adjusted profit before tax*
** 9.0 8.0
Profit before tax 5.0 2.7
----------------------------- ------ ------
Adjusted diluted EPS* ***
(p) 4.4 3.9
Diluted EPS (p) 2.3 (0.2)
Interim dividend (p) 1.2 1.1
----------------------------- ------ ------
Net (debt) cash (2.4) 1.2
----------------------------- ------ ------
Financial highlights
-- Strong first half performance with double digit revenue and profit growth in both divisions
o Building on consistent track record of growth in revenue and
adjusted earnings
-- Growth in revenue of 12% and adjusted profit before tax of 13%
-- Increase in interim dividend to 1.2p (2021: 1.1p), which
builds on the 10% compound annual growth in the dividend since
2017
-- Strong balance sheet and significant levels of headroom
within committed bank facilities, ensures well placed to continue
to invest in successful organic and acquisitive growth strategy
o Net debt of GBP2.4m, after GBP7.4m of acquisition related
payments in the six months
Divisional highlights
-- Business recovery and financial advisory performed well:
o Market-leading positions maintained (by volume of
appointments)
-- 14% share of the overall market - ranked first nationally
-- 10% share of administration market - ranked second
nationally
o Increased number and value of insolvency appointments
including:
-- several higher profile administration appointments
-- pilot project for recovery of bounce back loans for major
bank
o Advisory services, including Mantra Capital the finance
brokerage acquired July 2022, performed well benefitting from
organic growth and acquisitions
-- Property advisory and transactional services had a successful period:
o Resilient income streams enabled strong performance in a
challenging economic environment
o Growth from organic initiatives and acquisitions
o Budworth Hardcastle (acquired June 2022) traded well in the
period and in line with expectations
Current trading and outlook
-- Confident of delivering full year results in line with current market expectations****
o Extending the group's strong financial track record of
growth
o Business recovery - order book up 15% in last six months to
GBP33.9m, higher level of enquiries and increasing economic
headwinds
o Financial advisory - encouraging pipeline of engagements
o Property advisory and transactional services - resilient
income streams and continuing flow of new instructions
-- Q3 trading update will be issued in late February 2023
Commenting on the results, Ric Traynor, Executive Chairman of
Begbies Traynor Group, said:
"The group's strong performance builds on our consistent track
record of growth, with double digit increases in revenues and
profits from both divisions which we have continued to grow
organically and through acquisitions.
"We expect continued growth from business recovery and financial
advisory, given its increased order book, higher level of enquiries
and increasing economic headwinds. We are also confident in the
prospects for property advisory and transactional services,
reflecting its resilient income streams, continuing flow of new
instructions and potential to continue developing its mix of
services.
"Overall, w e remain confident of delivering upon expectations
for the full year.
"Our broad range of services, diversified client base, organic
growth initiatives and pipeline of acquisition opportunities,
combined with increasing counter-cyclical activity, will enable us
to continue to build upon our strong track record in the current
year and beyond."
* The board uses adjusted performance measures to provide
meaningful information on the performance of the business. The
items excluded from adjusted PBT and EPS are those which arise due
to acquisitions in accordance with IFRS 3 and are not influenced by
the day-to-day operations of the group. Adjusted EBITDA excludes
non-cash share-based payment and depreciation charges from adjusted
PBT.
** Profit before tax of GBP5.0m (2021: GBP2.7m) plus
amortisation of intangible assets arising on acquisitions of
GBP3.2m (2021: GBP2.6m) plus transaction costs of GBP0.8m (2021:
GBP2.7m).
*** See reconciliation in note 5.
**** Current range of analyst forecasts for revenue of
GBP117.7m-GBP121.4m and adjusted PBT of GBP19.7m-GBP20.6m (as
compiled by the group)
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 8657 if you would like to receive details.
Enquiries please contact:
Begbies Traynor Group plc
0161 837 1700
Ric Traynor - Executive Chairman
Nick Taylor - Group Finance Director
Canaccord Genuity Limited
020 7523 8350
(Nominated Adviser and Joint Broker)
Emma Gabriel / Patrick Dolaghan
Shore Capital
020 7408 4090
(Joint Broker)
Malachy McEntyre / Mark Percy / Anita Ghanekar / James
Thomas
MHP
020 3128 8567
Reg Hoare / Katie Hunt / Charles Hirst / Pauline Guenot
begbies@mhpgroup.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 over 1,000 partners and employees and our
professional staff include licensed insolvency practitioners,
accountants, chartered surveyors and lawyers.
The group's services include:
-- Corporate and personal insolvency - we handle the largest
number of corporate insolvency appointments in the UK, principally
serving the mid-market and smaller companies.
-- Financial advisory - Debt advisory, due diligence and
transactional support, accelerated corporate finance, pensions
advisory, business and financial restructuring, forensic accounting
and investigations, finance broking.
-- Corporate finance - buy and sell side support on corporate transactions.
-- Valuations - valuation of property, businesses, machinery and business assets.
-- Property consultancy, planning and management - building
consultancy, commercial property management, specialist insurance
and vacant property risk management, transport planning and
design.
-- Transactional services - sale of property, machinery and
other business assets through physical and online auctions;
business sales agency; commercial property agency.
Further information can be accessed via the group's website at
www.begbies-traynorgroup.com/investor-relations.
CHAIRMAN'S STATEMENT
INTRODUCTION - GOOD FIRST HALF PERFORMANCE
The group has performed well in the first six months of the
financial year, with double digit revenue and profit growth in both
divisions, building on our consistent track record of growth in
revenue and adjusted earnings.
We have continued to grow our business recovery and financial
advisory division, both organically and through acquisitions.
The division's insolvency appointments increased in the period,
including several larger, mid-market insolvency and restructuring
cases. This reflects an increased number of administrations
undertaken by the division as we benefitted from our expanded
London office and offshore practice. We advised on the first SME
court sanctioned restructuring plan (enabled by the Corporate
Insolvency and Governance Act 2020), following our previous use of
this new legislation on a mid-market restructuring in 2021. In
addition, we commenced an innovative pilot project with a major
bank to assist in the recovery of bounce back loans.
These appointments have ensured we maintained our market-leading
positions (by volume of appointments), being ranked first
nationally for overall corporate insolvency appointments and second
in volume of administrations.
Our advisory services have delivered a solid performance in the
period with corporate finance deal completions in line with
expectations. BTG Funding Solutions, our finance brokerage, has
performed in line with expectations. The business comprises Mantra
Capital (acquired July 2022) and MAF Finance Group (acquired May
2021).
Our property services business had a successful period, with
continuing growth from organic initiatives and acquisitions. This
reflects its resilient income streams in the face of a challenging
economic environment.
Following the strong financial performance of recent years and
the successful fund raising in 2021, we have a strong balance sheet
and significant levels of headroom within our committed bank
facilities, which ensures we are well placed to continue to invest
in our successful growth strategy.
RESULTS
Group revenue in the half year ended 31 October 2022 increased
by 12% to GBP58.5m (2021: GBP52.3m). Adjusted* profit before tax**
increased by 13% to GBP9.0m (2021: GBP8.0m). Statutory profit
before tax was GBP5.0m (2021: GBP2.7m), reflecting an increase in
non-cash amortisation costs from recent acquisitions to GBP3.2m
(2021: GBP2.6m) and lower transaction costs of GBP0.8m (2021:
GBP2.7m).
Adjusted* diluted earnings per share*** increased by 13% to 4.4p
(2021: 3.9p). Diluted earnings per share was 2.3p (2021: loss of
0.2p).
Net debt as at 31 October 2022 was GBP2.4m (30 April 2022: cash
of GBP4.7m, 31 October 2021: cash of GBP1.2m), after GBP7.4m of
acquisition related payments in the period (net of cash
acquired).
* The board uses adjusted performance measures to provide
meaningful information on the performance of the business. The
items excluded from adjusted PBT and EPS are those which arise due
to acquisitions in accordance with IFRS 3 and are not influenced by
the day-to-day operations of the group.
** Profit before tax of GBP5.0m (2021: GBP2.7m) plus
amortisation of intangible assets arising on acquisitions of
GBP3.2m (2021: GBP2.6m) plus transaction costs of GBP0.8m (2021:
GBP2.7m).
*** See reconciliation in note 5.
DIVID GROWTH CONTINUES
The board is pleased to declare a 9% increase in the interim
dividend to 1.2p (2021: 1.1p), which builds on the 10% compound
annual growth in the dividend since 2017 and reflects our
confidence in sustaining our financial track record and the group's
financial position and prospects. We remain committed to a
long-term progressive dividend policy, which takes account of the
group's earnings growth, our investment plans and cash
requirements, together with the market outlook.
The interim dividend will be paid on 5 May 2023 to shareholders
on the register on 11 April 2023, with an
ex-dividend date of 6 April 2023.
OUTLOOK - CONFIDENT OF DELIVERING MARKET EXPECTATIONS
The group's financial performance in the first six months leaves
the board confident of delivering market expectations* for the full
year, which will extend our strong financial track record of
growth.
We have seen an increase in activity levels in our largest
service line of business recovery in the period. The combination of
our increased order book, higher level of enquiries and increasing
economic headwinds gives the board confidence that the business
recovery team will continue to deliver growth through the second
half of the current year and thereafter.
Our financial advisory teams have an encouraging pipeline of
engagements across all service lines which gives confidence in
continued positive progress in the second half.
Despite the challenging economic environment, the board remains
confident in the prospects for the property advisory and
transactional services division, reflecting its resilient income
streams, continuing flow of new instructions and potential to
continue developing its mix of services. As a result, our
expectations for the full year remain unchanged.
Our broad range of services, diversified client base, organic
growth initiatives and pipeline of acquisition opportunities,
combined with increasing counter-cyclical activity, leaves us
confident of continuing to build upon our strong track record in
the current year and beyond."
We will provide an update on third quarter trading in late
February 2023.
* current range of analyst forecasts for revenue of
GBP117.7m-GBP121.4m and adjusted PBT of GBP19.7m-GBP20.6m (as
compiled by the group)
Ric Traynor
Executive Chairman
13 December 2022
BUSINESS REVIEW
OPERATING REVIEW
Business recovery and financial advisory
Financial summary
Revenue in the period increased by 10% to GBP42.4m (2021:
GBP38.7m), reflecting organic growth (GBP2.6m) and acquisitions
(GBP1.1m).
Segmental profits for the period increased by 10% to GBP10.7m
(2021: GBP9.7m), with operating margins of 25.2%
(2021: 25.1%).
Insolvency market
The number of corporate insolvencies in the 12 months ended 30
September 2022* increased to 20,731, following the removal of the
Government's Covid support measures and are now 23% higher than in
the comparable pre-pandemic period (2019: 16,836, 2020: 13,781,
2021: 12,492).
This increase has largely been from increased numbers of
liquidations (which typically represent insolvencies of smaller
companies). Although the number of administrations (which typically
involve larger and more complex instructions) has begun to increase
over the last year, they remain c.35% lower than pre-pandemic
levels.
*Source: The Insolvency Service quarterly statistics on the
number of corporate insolvencies in England and Wales on a
seasonally adjusted basis for the 12 months ended 30 September.
Operating review
Business recovery
We have maintained our market-leading positions (by volume of
appointments) where we are ranked first nationally for overall
corporate appointments* with a 14% share and second nationally in
administrations with a 10% share. These strong market positions
reflect the benefits of investments we have made in recent years,
notably in expanding our London office and offshore practice.
Our market-leading position and national office network leaves
the business well-positioned to provide advice and assistance to UK
SME and mid-market corporates. During the period we were appointed
as administrators of Worcester Rugby Club, Avonside Group (the
largest roofing contractor in the UK), Silverbond Enterprises
Limited (the former operator of the Park Lane Casino in London) and
Jehu Group (a long-standing South Wales construction business).
In addition, we have advised on the first SME court sanctioned
restructuring plan (enabled by the Corporate Insolvency and
Governance Act 2020), of Houst the short-term holiday lettings
operator. This follows our previous use of this new legislation on
the mid-market Amicus finance restructuring in 2021.
We have increased both the number and value of insolvency
appointments across both liquidations and higher-value
administrations compared to the prior period. This has driven an
increase in both organic revenue and our order book, which
increased by 15% in the last six months to GBP33.9m at 31 October
2022 (30 April 2022: GBP29.5m, 31 October 2021: GBP29.0m). This
gives confidence of continuing revenue growth in our largest
service line.
During the period, we commenced an innovative pilot project with
a major bank, initially including over 100 cases to assist in the
recovery of bounce back loans. We are encouraged, based on initial
signs, that this pilot project may provide a means for banks and
the Government to maximise recovery.
* CVLs, administrations and CVAs as disclosed in the London,
Edinburgh and Belfast Gazettes, Accountant in Bankruptcy and
Companies House
Financial advisory
Our advisory services have performed well in the period, with
contribution from the Mantra Capital acquisition complemented by
organic growth.
BTG Funding Solutions, our finance brokerage, has performed in
line with expectations. The business comprises Mantra Capital
(acquired July 2022) and MAF Finance Group (acquired May 2021). The
combined team have expertise across a wide range of sectors, and
provide finance broking services covering commercial and
residential
real estate, healthcare and asset finance, together with
insurance broking to a broad range of sectors.
Finance broking complements the group's other advisory and
transactional services, particularly debt advisory and
restructuring, as well as the valuation and sale of assets. The
Mantra Capital business has performed well in the period and in
line with our expectations. The integration of the team with our
wider advisory team is proceeding well.
Our Springboard Corporate Finance team had a successful six
months across a range of buy-side, sell-side and fundraising
projects.
The advisory teams have a good pipeline of instructions giving
confidence about activity levels for the second half of the
financial year.
Property advisory and transactional services
Financial summary
Revenue in the period increased by 18% to GBP16.1m (2021:
GBP13.6m), reflecting the first-time contribution from acquisitions
(GBP1.8m) and organic growth (GBP0.7m).
Segmental profits for the period increased by 17% to GBP2.8m
(2021: GBP2.4m), with operating margins broadly maintained at 17.4%
(2021: 17.6%).
Operating review
Financial performance in the period reflects the resilient
income streams in the division, which has enabled the business to
deliver a strong performance in a challenging economic
environment.
Our professional services team performed well in the period,
providing real estate valuation services to secured lenders,
including in relation to distressed loans. The team has grown
significantly over the last year following the integration of
recent acquisitions and is operating as a national practice.
Instruction levels over the period from lenders were robust.
Our consultancy services, which include building consultancy,
commercial property management, transport planning and highway
design, specialist insurance broking and vacant property risk
management, have delivered strong performances in the period. Our
building consultancy services, including our offering to the
education sector, continue to provide a platform for both organic
and acquired growth.
Our transactional teams include commercial property agency,
online property auctions, business sales agency and plant and
machinery sales (through online auction, marketed sale or private
tender). In spite of the economic headwinds, transaction levels
were robust in the period. These services are provided across
insolvency, defensive and pro-cyclical transactions.
In June 2022, we acquired the Eastern England based Budworth
Hardcastle chartered surveyors' practice. The team provide
valuation, commercial property agency and building consultancy
services to a wide range of regional clients and the acquisition
has strengthened our existing offering and footprint in the region.
The integration of the business has been completed in line with
expectations.
FINANCE REVIEW
Financial summary
6 months 6 months 12 months
to 31 Oct to 31 Oct to 30 Apr
2022 2021 2022
GBPm GBPm GBPm
Revenue 58.5 52.3 110.0
------------------------------------------ ---------- ---------- ----------
Adjusted EBITDA 11.9 11.1 24.0
Share-based payments (0.7) (0.7) (1.6)
Depreciation (1.7) (2.0) (3.8)
------------------------------------------ ---------- ---------- ----------
Operating profit (before transaction
costs and amortisation) 9.5 8.4 18.6
Finance costs (0.5) (0.4) (0.8)
------------------------------------------ ---------- ---------- ----------
Adjusted profit before tax 9.0 8.0 17.8
Transaction costs (0.8) (2.7) (8.3)
Amortisation of intangible assets arising
on acquisitions (3.2) (2.6) (5.5)
------------------------------------------ ---------- ---------- ----------
Profit before tax 5.0 2.7 4.0
Tax on profits on ordinary activities (1.3) (1.2) (2.7)
Deferred tax charge due to change in
tax rate - (1.8) (1.8)
------------------------------------------ ---------- ---------- ----------
Statutory profit (loss) for the period 3.7 (0.3) (0.5)
------------------------------------------ ---------- ---------- ----------
Operating result (before transaction costs and amortisation)
Revenue in the period increased by GBP6.2m to GBP58.5m (2021:
GBP52.3m), an overall increase of 12% (6% acquired).
Adjusted EBITDA increased to GBP11.9m (2021: GBP11.1m) with
non-cash costs (share-based payments and depreciation) decreasing
to GBP2.4m (2021: GBP2.7m), as a result of reduced depreciation
costs.
Operating performance by segment is detailed below:
Revenue (GBPm) Operating profit
(GBPm)
2022 2021 growth 2022 2021 growth
------------------------------------- ----- ----- -------- ------ ------ -------
Business recovery and financial
advisory 42.4 38.7 10% 10.7 9.7 10%
Property advisory and transactional
services 16.1 13.6 18% 2.8 2.4 17%
Shared and central costs - - - (4.0) (3.6) 10%
------------------------------------- ----- ----- -------- ------ ------ -------
Total 58.5 52.3 12% 9.5 8.4 13%
------------------------------------- ----- ----- -------- ------ ------ -------
Shared and central costs increased to GBP4.0m principally due to
investment in the group's IT and HR capability, but remained
broadly unchanged as a percentage of revenue at 6.8% (2021:
6.9%).
Operating margins were 16.2% (2021: 16.0%).
Adjusted profit before tax increased by 13% to GBP9.0m (2021:
GBP8.0m) in the period from the increased operating profit, with
finance costs broadly in line with the prior period.
Transaction costs
Transaction costs arise due to acquisitions in accordance with
IFRS 3 and include the following:
-- Acquisition consideration where the vendors have obligations
in the sale and purchase agreement to provide post-acquisition
services for a fixed period (deemed remuneration in accordance with
IFRS 3). This consideration is charged to profit over the period of
service;
-- Gains on acquisitions, where the fair value of assets
acquired exceeds the consideration under IFRS 3; and
-- Legal and professional fees incurred on acquisitions.
These costs (detailed in note 3) decreased to GBP0.8m (2021:
GBP2.7m), reflecting an increase in acquisition consideration from
both current and prior year acquisitions to GBP5.4m (2021:
GBP4.7m), acquisition costs of GBP0.3m (2021: GBP0.1m), partially
offset by a gain on acquisition of GBP4.9m (2021: GBP2.1m).
Tax
The overall tax charge for the period was GBP1.3m (2021:
GBP3.0m) 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 9.0 (1.9) 7.1 21% 8.0 (1.7) 6.3 21%
Transaction
costs (0.8) - (0.8) - (2.7) - (2.7) -
Amortisation (3.2) 0.6 (2.6) 19% (2.6) 0.5 (2.1) 19%
----------------- -------- ------ ------- ---------- -------- ------ ------- ----------
Tax on ordinary
activities 5.0 (1.3) 3.7 26% 2.7 (1.2) 1.5 43%
Deferred
tax charge
from change
in rate - - - - - (1.8) (1.8) -
Statutory 5.0 (1.3) 3.7 26% 2.7 (3.0) (0.3) 107%
----------------- -------- ------ ------- ---------- -------- ------ ------- ----------
The adjusted tax rate of 21% is based on the expected rate for
the full year.
The prior period deferred tax charge of GBP1.8m was a one-off
non-cash charge, resulting from an increase in deferred tax
liabilities following the legislation to increase the UK
corporation tax rate to 25% being enacted during the period.
Earnings per share
Adjusted diluted earnings per share* increased by 13% to 4.4p
(2021: 3.9p). Diluted earnings per share was 2.3p (2021: loss per
share 0.2p).
* See reconciliation in note 5
Partners and employees
The average number of full-time equivalent (FTE) partners and
employees working in the group over the period increased due to
both acquisitions and organic investment.
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 82 - - 82 85 - - 85
Staff 424 294 - 718 400 260 - 660
------------- --------------- ---------------- --------- ------ ----------- ----------------- --------- ------
Fee earners 506 294 - 800 485 260 - 745
Support
teams 64 10 84 158 64 10 76 150
------------- --------------- ---------------- --------- ------ ----------- ----------------- --------- ------
Total 570 304 84 958 549 270 76 895
------------- --------------- ---------------- --------- ------ ----------- ----------------- --------- ------
The ratio of our support teams to fee earning partners and
employees is 5.1 (2021: 5.0).
Financing
The group has maintained a robust financial position with net
debt of GBP2.4m as at 31 October 2022 (30 April 2022: net cash
GBP4.7m, 31 October 2021: net cash GBP1.2m), having made GBP7.4m of
acquisition and deferred consideration payments in the period (net
of cash acquired).
We have significant levels of headroom within our bank
facilities which are committed until August 2024 and comprise a
GBP25m unsecured, committed revolving credit facility and a GBP5m
uncommitted acquisition facility. During the period, all bank
covenants were comfortably met.
Cash flow in the period is summarised as follows:
6 months 6 months 12 months
GBPm to 31 Oct to to 30 Apr
2022 31 Oct 2021 2022
Adjusted EBITDA 11.9 11.1 24.0
Working capital (4.8) (3.5) (1.3)
Cash from operating activities (before
acquisition consideration payments*) 7.1 7.6 22.7
Accelerated tax payment (1.0) - -
Underlying tax payment (2.2) (1.7) (3.6)
Interest (0.4) (0.4) (0.8)
Capital expenditure (0.3) (0.4) (1.0)
Capital element of lease payments (1.4) (1.8) (3.2)
--------------------------------------- ---------- ------------ ----------
Free cash flow 1.8 3.3 14.1
Acquisition payments (net of cash
acquired)** (7.4) (3.6) (8.6)
Net proceeds from share issues 0.2 - 0.5
Dividends (1.7) (1.5) (4.5)
Net cash (outflow) inflow (7.1) (1.8) 1.5
--------------------------------------- ---------- ------------ ----------
* acquisition consideration payments accounted for as deemed
remuneration in accordance with IFRS3
** acquisition consideration payments (defined above),
acquisition costs and deferred consideration payments net of cash
acquired
Cash from operating activities (before acquisition consideration
payments) was GBP7.1m (2021: GBP7.6m) with increased EBITDA of
GBP0.8m offset by increased working capital absorption of GBP1.3m.
The working capital increase of GBP4.8m in the period reflected
increased debtors of GBP3.4m and a seasonal phasing of payments
(including annual bonuses) of GBP1.4m.
Tax payments increased to GBP3.2m (2021: GBP1.7m), resulting
from the previously guided change in due dates for corporation tax
payments, which resulted in an accelerated payment of GBP1.0m, and
an increase in the underlying payment to GBP2.2m (2021:
GBP1.7m).
Free cash flow in the period was GBP1.8m (2021: GBP3.3m).
Acquisition payments (net of cash acquired) in the period were
GBP7.4m (2021: GBP3.6m) comprising: the acquisitions of Mantra
Capital (GBP4.7m) and Budworth Hardcastle (GBP0.5m) (2021: MAF
Finance Group GBP1.9m and Fernie Greaves GBP0.3m), contingent
payments in respect of prior year acquisitions of GBP1.9m (2021:
GBP1.3m) and acquisition costs GBP0.3m (2021: GBP0.1m).
Net assets
Net assets as at 31 October 2022 were GBP84.6m, compared to
GBP84.5m as at 30 April 2022. The movement represents an increase
of GBP7.1m from post-tax adjusted earnings and GBP1.7m from the
issue of new shares; offset by dividends of GBP5.4m and the
post-tax impact of acquisition-related transaction and amortisation
costs of GBP3.3m.
Ric Traynor Nick Taylor
Executive chairman Group finance director
13 December 2022 13 December 2022
Consolidated statement of comprehensive
income
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
--------------------------------------- ----- ------------ ------------ ----------
Revenue 2 58,457 52,268 110,002
Direct costs (32,743) (30,196) (62,197)
--------------------------------------- ----- ------------ ------------ ----------
Gross profit 25,714 22,072 47,805
Other operating income 142 99 155
Administrative expenses (20,363) (19,065) (43,076)
--------------------------------------- ----- ------------ ------------ ----------
Operating profit before amortisation
and transaction costs 2 9,473 8,441 18,594
Transaction costs 3 (828) (2,686) (8,224)
Amortisation of intangible assets
arising on acquisitions (3,152) (2,649) (5,486)
--------------------------------------- ----- ------------ ------------ ----------
Operating profit 5,493 3,106 4,884
Finance costs 4 (503) (413) (835)
Profit before tax 4,990 2,693 4,049
--------------------------------------- ----- ------------ ------------ ----------
Tax on profits on ordinary activities (1,269) (1,207) (2,733)
Deferred tax charge due to change
in tax rate - (1,817) (1,816)
--------------------------------------- ----- ------------ ------------ ----------
Total tax charge (1,269) (3,024) (4,549)
--------------------------------------- ----- ------------ ------------ ----------
Profit (loss) and total comprehensive
income (loss) for the period 3,721 (331) (500)
--------------------------------------- ----- ------------ ------------ ----------
Earnings per share
Basic 5 2.4p (0.2)p (0.3)p
Diluted 5 2.3p (0.2)p (0.3)p
--------------------------------------- ----- ------------ ------------ ----------
All of the profit and comprehensive income for the period is
attributable to equity holders of the parent.
Consolidated statement of changes in equity
For the six months ended 31 October Share Share Merger Capital Retained Total
2022 (unaudited) capital premium reserve redemption earnings equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- --------- ------------ ---------- --------
At 1 May 2022 7,671 29,787 27,172 304 19,591 84,525
Total comprehensive income for
the period - - - - 3,721 3,721
Dividends - - - - (5,387) (5,387)
Shares issued as consideration
for acquisitions 28 - 772 - - 800
Credit to equity for equity-settled
share-based payments - - - - 744 744
Other share options 14 156 - - - 170
------------------------------------- --------- --------- --------- ------------ ---------- --------
At 31 October 2022 7,713 29,943 27,944 304 18,669 84,573
------------------------------------- --------- --------- --------- ------------ ---------- --------
For the six months ended 31 October Share Share Merger Capital Retained Total
2021 (unaudited) capital premium reserve redemption earnings equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- --------- ------------ ---------- --------
At 1 May 2021 7,547 29,325 25,974 304 23,100 86,250
Total comprehensive income for
the period - - - - (331) (331)
Dividends - - - - (4,553) (4,553)
Shares issued as consideration
for acquisitions 42 - 958 - - 1,000
Credit to equity for equity-settled
share-based payments - - - - 717 717
Other share options 21 10 - - - 31
At 31 October 2021 7,610 29,335 26,932 304 18,933 83,114
------------------------------------- --------- --------- --------- ------------ ---------- --------
For the year ended 30 April 2022 Share Share Merger Capital Retained Total
(audited) capital premium reserve redemption earnings equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- --------- --------- --------- ------------ ---------- --------
At 1 May 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
Other share options 72 462 - - - 534
------------------------------------- --------- --------- --------- ------------ ---------- --------
At 30 April 2022 7,671 29,787 27,172 304 19,591 84,525
------------------------------------- --------- --------- --------- ------------ ---------- --------
Consolidated balance sheet
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- -------------- ------------- -----------
Non-current assets
Intangible assets 76,273 77,348 75,307
Property, plant and equipment 1,980 1,900 1,967
Right of use assets 5,400 6,131 5,492
Trade and other receivables 7 7,439 4,331 4,175
------------------------------- ----- -------------- ------------- -----------
91,092 89,710 86,941
------------------------------- ----- -------------- ------------- -----------
Current assets
Trade and other receivables 7 54,976 49,949 49,666
Cash and cash equivalents 7,551 7,171 9,685
62,527 57,120 59,351
------------------------------- ----- -------------- ------------- -----------
Total assets 153,619 146,830 146,292
------------------------------- ----- -------------- ------------- -----------
Current liabilities
Trade and other payables 8 (40,402) (38,093) (37,163)
Current tax liabilities (707) (2,109) (1,767)
Lease liabilities (1,009) (2,572) (1,747)
Provisions (1,249) (520) (1,474)
(43,367) (43,294) (42,151)
------------------------------- ----- -------------- ------------- -----------
Net current assets 19,160 13,826 17,200
------------------------------- ----- -------------- ------------- -----------
Non-current liabilities
Borrowings (10,000) (6,000) (5,000)
Lease liabilities (4,960) (4,583) (4,5 98)
Provisions (2,292) (2,521) (1,992)
Deferred tax (8,427) (7,318) (8,026)
------------------------------- ----- -------------- ------------- -----------
(25,679) (20,422) (19,616)
------------------------------- ----- -------------- ------------- -----------
Total liabilities (69,046) (63,716) (61,767)
------------------------------- ----- -------------- ------------- -----------
Net assets 84,573 83,114 84,525
------------------------------- ----- -------------- ------------- -----------
Equity
Share capital 7,713 7,610 7,671
Share premium 29,943 29,335 29,787
Merger reserve 27,944 26,932 27,172
Capital redemption reserve 304 304 304
Retained earnings 18,669 18,933 19,591
------------------------------- ----- -------------- ------------- -----------
Equity attributable to owners
of the company 84,573 83,114 84,525
------------------------------- ----- -------------- ------------- -----------
Consolidated cash flow statement
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
-------------------------------------- ----- -------------- ------------- -----------
Cash flows from operating activities
Cash generated by operations 9 (970) 4,193 14,450
Income taxes paid (3,216) (1,708) (3,621)
Interest paid on borrowings (274) (154) (328)
Interest paid on lease liabilities (199) (238) (460)
-------------------------------------- ----- -------------- ------------- -----------
Net cash from operating activities
(before acquisition consideration
payments) 3,464 5,413 18,311
Acquisition consideration payments
which are deemed remuneration
under IFRS 3 (8,123) (3,320) (8,270)
-------------------------------------- ----- -------------- ------------- -----------
Net cash from operating activities (4,659) 2,093 10,041
-------------------------------------- ----- -------------- ------------- -----------
Investing activities
Purchase of intangible fixed
assets (18) (43) (188)
Purchase of property, plant and
equipment (309) (308) (876)
Proceeds on disposal of property,
plant and equipment - - 40
Acquisition of businesses (327) (454) (465)
Deferred consideration payments - (50) (36)
Net cash acquired in acquisition
of businesses 1,055 220 397
-------------------------------------- ----- -------------- ------------- -----------
Net cash from investing activities 401 (635) (1,128)
-------------------------------------- ----- -------------- ------------- -----------
Financing activities
Dividends paid (1,687) (1,509) (4,553)
Net proceeds on issue of shares 170 31 504
Repayment of obligations under
leases (1,359) (1,795) (3,165)
Drawdown of loans 5,000 1,000 -
Net cash from financing activities 2,124 (2,273) (7,214)
-------------------------------------- ----- -------------- ------------- -----------
Net (decrease) increase in cash
and cash equivalents (2,134) (815) 1,699
Cash and cash equivalents at
beginning of period 9,685 7,986 7,986
-------------------------------------- ----- -------------- ------------- -----------
Cash and cash equivalents at
end of period 7,551 7,171 9,685
-------------------------------------- ----- -------------- ------------- -----------
1. Basis of preparation and accounting policies
(a) Basis of preparation
The half year condensed consolidated financial statements do not
include all of the information and disclosures required for full
annual financial statements and should be read in conjunction with
the group's annual financial statements as at 30 April 2022, which
have been prepared in accordance with IFRSs as adopted by the
European Union.
This condensed consolidated half year financial information does
not comprise statutory accounts within the meaning of Section 435
of the Companies Act 2006. Statutory accounts for the year ended 30
April 2022 were approved by the board of directors on
18 July 2022 and delivered to the Registrar of Companies. The
report of the auditor on those accounts was unqualified, did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
did not contain statements under section 498 (2) or (3) of the
Companies Act 2006.
The directors have reviewed the financial resources available to
the group and have concluded that the group is a going concern.
This conclusion is based upon, amongst other matters, a review of
the group's financial projections for a period of twelve months
following the date of this announcement, together with a review of
the cash and committed borrowing facilities available to the group.
Accordingly, the going concern basis has been used in preparing
these half year condensed consolidated financial statements.
The condensed consolidated financial statements for the six
months ended 31 October 2022 have not been audited nor subject to
an interim review by the auditors. IAS 34 'Interim financial
reporting' is not applicable to these half year condensed
consolidated financial statements and has therefore not been
applied.
(b) Significant accounting policies
The accounting policies adopted in preparation of the half year
condensed consolidated financial statements are consistent with
those followed in the preparation of the group's annual financial
statements for the year ended 30 April 2022.
2. Segmental analysis by class of business
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------ -------------- ------------- -----------
Revenue
Business recovery and financial advisory 42,350 38,653 81,383
Property advisory and transactional
services 16,107 13,615 28,619
------------------------------------------ -------------- ------------- -----------
58,457 52,268 110,002
------------------------------------------ -------------- ------------- -----------
Operating profit before amortisation
and transaction costs
Business recovery and financial advisory 10,652 9,693 21,002
Property advisory and transactional
services 2,829 2,388 4,841
Shared and central costs (4,008) (3,640) (7,249)
------------------------------------------ -------------- ------------- -----------
9,473 8,441 18,594
------------------------------------------ -------------- ------------- -----------
3. Transaction costs
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------------ -------------- ------------- -----------
Acquisition consideration (deemed remuneration
in accordance with IFRS 3) 5,425 4,692 9,983
Acquisition costs 327 109 215
Gain on acquisition (4,924) (2,115) (1,974)
828 2,686 8,224
------------------------------------------------ -------------- ------------- -----------
4. Finance costs
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
-------------------------------------------- -------------- ------------- -----------
Interest on bank loans 303 175 375
Finance charge on lease liabilities 161 207 385
Finance charge on dilapidations provisions 39 31 75
-------------------------------------------- -------------- ------------- -----------
503 413 835
-------------------------------------------- -------------- ------------- -----------
5. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- ------------- -----------
Earnings
Profit (loss) for the period attributable
to equity holders 3,721 (331) (500)
------------------------------------------- -------------- ------------- -----------
31 October 31 October 30 April
2022 (unaudited) 2021 2022 (audited)
(unaudited)
number number number
'000 '000 '000
-------------------------------------------- ------------------ ------------- ----------------
Number of shares
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 155,962 154,423 154,556
Effect of dilutive potential ordinary
shares:
Share options 6,054 6,221 5,968
Weighted average number of ordinary shares
for the purposes of diluted earnings
per share 162,016 160,644 160,524
-------------------------------------------- ------------------ ------------- ----------------
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
pence pence pence
---------------------------- -------------- ------------- -----------
Basic earnings per share 2.4 (0.2) (0.3)
Diluted earnings per share 2.3 (0.2) (0.3)
---------------------------- -------------- ------------- -----------
The following additional earnings per share figures are
presented as the directors believe they provide a better
understanding of the trading position of the group, as they exclude
the accounting charges which arise due to acquisitions in
accordance with IFRS 3 and are not influenced by the day-to-day
operations of the group.
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- -------------- ------------- -----------
Earnings
Profit (loss) for the period attributable
to equity holders 3,721 (331) (500)
Amortisation of intangible assets arising
on acquisitions 3,152 2,649 5,486
Transaction costs 828 2,686 8,224
Tax effect of above items (615) (503) (1,059)
Impact of change in tax rate on deferred
tax liabilities - 1,817 1,990
Adjusted earnings 7,086 6,318 14,141
------------------------------------------- -------------- ------------- -----------
Six months Six months Year ended
ended ended
31 October 31 October 30 April
2022 2021 2022
(unaudited) (unaudited) (audited)
pence pence pence
------------------------------------- -------------- ------------- -----------
Adjusted basic earnings per share 4.5 4.1 9.1
Adjusted diluted earnings per share 4.4 3.9 8.8
------------------------------------- -------------- ------------- -----------
6. Dividends
The interim dividend of 1.2p (2021: 1.1p) per share (not
recognised as a liability at 31 October 2022) will be payable on 5
May 2023 to ordinary shareholders on the register at 11 April 2023.
The final dividend of 2.4p per share as proposed in the 30 April
2022 financial statements and approved at the group's AGM was paid
on 3 November 2022 and was recognised as a liability at 31 October
2022.
7. Trade and other receivables
31 October 31 October 30 April
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
------------------------------- ------------------ ------------------ ----------------
Non current
Deemed remuneration 7,439 4,331 4,175
------------------------------- ------------------ ------------------ ----------------
Current
Trade receivables 11,847 9,416 9,066
Unbilled income 35,735 32,879 35,208
Other debtors and prepayments 4,019 4,937 2,715
Deemed remuneration 3,375 2,717 2,677
------------------------------- ------------------ ------------------ ----------------
54,976 49,949 49,666
------------------------------- ------------------ ------------------ ----------------
8. Trade and other payables
31 October 31 October 30 April
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
--------------------------------- ------------------ ------------------ ----------------
Current
Trade payables 1,450 1,967 1,671
Accruals 8,698 6,997 9,733
Final dividend 3,700 3,044 -
Other taxes and social security 4,406 4,234 4,474
Deferred income 5,799 6,027 5,611
Other creditors 14,161 14,030 13,950
Deferred consideration 246 325 246
Deemed remuneration liabilities 1,942 1,469 1,478
--------------------------------- ------------------ ------------------ ----------------
40,402 38,093 37,163
--------------------------------- ------------------ ------------------ ----------------
9. Reconciliation to the cash flow statement
31 October 31 October 30 April
2022 (unaudited) 2021 (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------------- ------------------ ------------------ ----------------
Profit (loss) for the period 3,721 (331) (500)
Adjustments for:
Tax 1,269 3,024 4,549
Finance costs 503 413 835
Amortisation of intangible assets 3,243 2,737 5,668
Depreciation of property, plant and equipment 536 532 1,038
Depreciation of right of use assets 1,096 1,346 2,645
Gain on acquisition (4,924) (2,115) (1,974)
Acquisition costs 327 109 215
Profit on disposal of property, plant and
equipment - - (10)
Profit on disposal of right of use asset - - (81)
Share-based payment expense 745 717 1,574
Deemed remuneration obligations settled through
equity 800 1,000 1,250
Increase in deemed remuneration receivable (3,962) (727) (531)
Increase in deemed remuneration liabilities 464 1,100 1,016
Operating cash flows before movements in
working capital 3,818 7,805 15,694
Increase in receivables (3,428) (3,906) (3,916)
(Decrease) increase in payables (1,337) 274 2,296
(Decrease) increase in provisions (23) 20 376
Cash generated by operations (970) 4,193 14,450
------------------------------------------------- ------------------ ------------------ ----------------
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END
IR FFEFWEEESEEE
(END) Dow Jones Newswires
December 13, 2022 02:00 ET (07:00 GMT)
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