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Begbies Traynor Group Plc NEX:BEG.GB NEX Ordinary Share GB00B0305S97
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  0.50 0.6% 83.50 78.00 90.00 88.6782 83.00 83.00 47,206 16:30:05
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Begbies Traynor Group PLC Final results for the year ended 30 April 2019

09/07/2019 9:28am

UK Regulatory (RNS & others)


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RNS Number : 8579E

Begbies Traynor Group PLC

09 July 2019

9 July 2019

Begbies Traynor Group plc

Final results

for the year ended 30 April 2019

Begbies Traynor Group plc (the 'company' or the 'group'), the business recovery, financial advisory and property services consultancy, today announces its final results for the year ended 30 April 2019.

Financial highlights

 
                                2019   2018 
                                GBPm   GBPm 
-----------------------------  -----  ----- 
 Revenue                        60.1   52.4 
 Adjusted profit before tax*    7.1    5.6 
 Profit before tax              3.5    2.3 
-----------------------------  -----  ----- 
 Adjusted basic EPS** (p)       4.9    4.0 
 Basic EPS (p)                  2.2    1.3 
 Proposed total dividend 
  (p)                           2.6    2.4 
-----------------------------  -----  ----- 
 Net debt                       6.0    7.5 
-----------------------------  -----  ----- 
 

* Profit before tax of GBP3.5m (2018: GBP2.3m) plus amortisation of intangible assets arising on acquisitions of GBP2.4m (2018: GBP1.9m) and transaction costs of GBP1.2m (2018: GBP1.4m)

** See reconciliation in note 4

Operational highlights

-- Strong financial performance in line with upgraded expectations*, with revenue growth of 15% (9% organic) and an improved operating profit** margin of 12.6% (2018: 11.6%)

   --      All areas of the group performed well: 

o business recovery - growth from organic investment, acquisitions and an increase in insolvency numbers nationally;

o advisory - benefit of prior year acquisition of Springboard Corporate Finance; and

o property - continued to develop through focussed investment and acquisition

   --      Strong cash generation enabled reduction in net debt and leverage 

-- Proposed 8% increase in total dividend for the year, the second consecutive year of dividend growth

* Expectations upgraded in the full year trading update on 7 May 2019

** Operating profit before amortisation and transaction costs

Outlook

   --      Well placed to continue our track record of growth 
   --      Entered the new financial year with positive momentum 
   --      Update on trading at annual general meeting in September 2019 

Commenting on the results, Ric Traynor, Executive Chairman of Begbies Traynor Group, said:

"We have reported another year of strong financial performance, ahead of our original expectations, in which we have grown the business organically, completed four acquisitions and increased the dividend whilst reducing net debt. All areas of the group performed well, reflecting the benefits of recent organic investment, an increase in market activity and the good performance of recent acquisitions.

"Looking ahead, we are better positioned than ever with multiple sources of potential growth supported by a strong financial platform. There is currently uncertainty in the UK economy as a result of the Brexit process, but with a combination of our counter-cyclical activities together with our breadth of services, we are well placed to continue our track record of growth in the new financial year and beyond."

A meeting for analysts will be held today at 8.45am for 9.00am at the offices of MHP Communications, 6 Agar Street, London WC2N 4HN. Please contact Peter Lambie on 020 3128 8570 or via Begbies@mhpc.com if you would like to attend.

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 Advisor and Joint Broker)

David Tyrrell / Emma Gabriel

Shore Capital 020 7408 4090

(Joint Broker)

Mark Percy / Anita Ghanekar

MHP Communications 020 3128 8572

Reg Hoare / Katie Hunt / Pete Lambie

Information on Begbies Traynor Group can be accessed via the group's website at

www.begbies-traynorgroup.com

CHAIRMAN'S STATEMENT

INTRODUCTION

I am pleased to report another year of strong financial performance, in line with upgraded expectations*, in which we have grown the business organically, completed four acquisitions and increased the dividend whilst reducing net debt.

All areas of the group have performed well: business recovery, reflecting the benefits of recent organic investment and an increase in insolvency numbers nationally; advisory services, reflecting the prior year acquisition of Springboard Corporate Finance; and property services, which we have continued to develop through focussed investment and by acquisition.

The benefit of our strategy to increase the scale and quality of the group's businesses through both investment in organic growth and targeted acquisitions is reflected in our financial performance. We have delivered consecutive years of earnings growth since 2015, with compound growth in adjusted earnings per share of 14% over the last four years, enabling us to raise the dividend for the last two years.

The group now has an enhanced breadth of service lines with multiple sources of growth potential. Whilst we retain a counter-cyclical focus, which accounts for 65% of our income, our broad range of services positions the group well to grow across the economic cycle. Our principal activities, which fund our investment programme and enable the payment of dividends, generate strong operating margins and are highly cash generative.

Our insolvency practice continues to develop through targeted recruitment, focussed business development and acquisitions. The practice will also benefit from any cyclical growth in insolvency numbers nationally, reflecting its market leading position.

Our advisory team has grown through acquisition and recruitment in recent years and we continue to seek opportunities for further growth.

Our property services business has delivered consecutive years of growth since our initial acquisition of Eddisons in December 2014. Our strategy has been to strengthen and broaden both services and geographical coverage, which has resulted in profit growth in the division from GBP1.9m at our initial investment in December 2014 to GBP3.8m this year. The business is now focussed on three key areas: valuations; auctions and asset sales; and property consultancy, planning and management. In line with our strategy, we will continue to develop and invest in this business.

* Expectations upgraded in the full year trading update on 7 May 2019

RESULTS

Group revenue in the year increased by 15% to GBP60.1m (2018: GBP52.4m), 9% of which was organic. Adjusted* profit before tax increased by 27% to GBP7.1m (2018: GBP5.6m). Statutory profit before tax increased to GBP3.5m (2018: GBP2.3m).

Adjusted** basic earnings per share increased by 23% to 4.9p (2018: 4.0p). Basic earnings per share increased to 2.2p (2018: 1.3p).

Net debt decreased to GBP6.0m (2018: GBP7.5m) with leverage (calculated as net debt to EBITDA***) improving to 0.7 times (2018: 1.1 times).

* Profit before tax GBP3.5m (2018: GBP2.3m) plus transaction costs GBP1.2m (2018: GBP1.4m) and amortisation of intangible assets arising on acquisitions GBP2.4m (2018: GBP1.9m)

** See reconciliation in note 4

*** Profit before tax GBP3.5m (2018: GBP2.3m) plus interest GBP0.5m (2018: GBP0.5m), transaction costs GBP1.2m (2018: GBP1.4m) and amortisation of intangible assets arising on acquisitions GBP2.4m (2018: GBP1.9m), software amortisation GBP0.2m (2018: GBP0.2m), depreciation GBP0.6m (2018: GBP0.5m) and share-based payments GBP0.1m (2018: GBP0.3m)

DIVID

The board is pleased to recommend (subject to shareholder approval at the company's annual general meeting) an increased dividend for the year to 2.6p (2018: 2.4p), an increase of 8%. This comprises the interim dividend already paid of 0.8p (2018: 0.7p) and a proposed final dividend of 1.8p (2018: 1.7p).

This is the second consecutive year of dividend growth and reflects our confidence in sustaining our financial track record of earnings growth. The board remains committed to a long-term progressive dividend policy, which takes account of the market outlook, earnings growth and investment plans.

The final dividend will be paid on 7 November 2019 to shareholders on the register on 11 October 2019, with an ex-dividend date of 10 October 2019.

STRATEGY

Our strategy is to:

-- be a trusted advisor to all of our clients, delivering innovative and entrepreneurial advice and solutions;

-- increase the scale and quality of our businesses through both organic growth and acquisitions;

   --      deliver sustainable profitable growth, enabling increased shareholder value; and 

-- maintain our strong financial position enabling the investment in and development of the group and its people.

PEOPLE

The success of the group is reliant on the quality of advice and service delivered to our clients by our people. I would like to thank all of our colleagues for their contribution over the course of this year.

OUTLOOK

We are better positioned than ever with multiple sources of potential growth supported by a strong financial platform. We have a good pipeline of both organic and acquisition opportunities across all of our service lines.

There is currently uncertainty in the UK economy as a result of the Brexit process, but with a combination of our counter-cyclical activities together with our breadth of services, we are well placed to continue our track record of growth in the new financial year and beyond.

We have entered the new financial year with positive momentum and we are confident of delivering current market expectations. As usual, we will provide an update on trading at the time of the company's annual general meeting in September 2019.

Ric Traynor

Executive chairman

9 July 2019

BUSINESS REVIEW

OPERATING REVIEW

Business recovery and financial advisory services

Revenue increased by 13.2% to GBP43.3m (2018: GBP38.3m), reflecting the benefit of increased market activity levels; the continuing development of our advisory services, with the prior year acquisition of Springboard Corporate Finance; and the benefit of organic growth initiatives.

Operating costs increased by GBP3.9m to GBP34.6m (2018: GBP30.7m) principally as a result of costs associated with acquired businesses, organic investment and increased people costs.

Segmental profits* increased by 14.5% to GBP8.7m (2018: GBP7.6m) with margins of 20.0% (2018: 19.8%).

Insolvency volumes nationally increased, with the underlying number of corporate insolvencies** in calendar year 2018 growing by 10% to 16,106 (2017: 14,630). In this improving market, we have maintained our market share, continuing to take the largest number of corporate insolvency appointments in the UK.

We have strengthened our team through the recruitment of work-winning senior people and continued to develop our existing teams. We also completed the acquisition of two insolvency boutiques (KRE (North East) in Newcastle and Dunion & Co in Stoke-on-Trent) with seven partners and staff joining the group and integrating with our existing teams.

Our advisory activities increased in the year, benefiting from the full year impact of the acquisition of Springboard Corporate Finance. The team performed well in the year, advising on 15 completed transactions for a gross value of GBP117m.

The number of people employed in the division has increased to 364 as at 30 April 2019 from 351 at the start of the financial year.

* See note 2

**Source: The Insolvency Service quarterly statistics on the number of corporate insolvencies in England and Wales on a seasonally adjusted basis, excluding the one-off effect of 1,349 (2017: 2,686) bulk insolvencies as identified by The Insolvency Service

Property services

Revenue increased by 18.2% to GBP16.7m (2018: GBP14.2m), with strong financial performance across the division reflecting the benefit of both current and prior year acquisitions, organic growth initiatives and the completion of several property insolvencies. Operating costs increased by GBP1.8m to GBP12.9m (2018: GBP11.1m) due to acquired businesses and organic investment costs.

Segmental profits* increased to GBP3.8m (2018: GBP3.1m) with margins increasing to 22.5% (2018: 22.1%).

During the year we completed several long-running property insolvencies, which enhanced margin in the year. We have continued to invest in our property valuation team, through the recruitment of experienced surveyors, which has improved our geographical coverage and positions the business well for future years.

Our asset disposal teams performed well. Property auction levels were broadly in line with the prior year. We continue to complete the majority of our sales through in-room auctions but have during the year introduced an online platform. Machinery and business asset activity levels increased following our prior year acquisition of the CJM Asset Management business, which has integrated well with our existing team.

The building consulting team had a very successful year, increasing our instructions from the education sector which has been a key area of development. We have increased the size of our team through recruitment and it is well positioned to continue to grow.

The division completed two acquisitions in the year, which have increased both our expertise and geographical coverage.

In January 2019, we completed the acquisition of Croft Transport Planning & Design ("Croft"), with the ten employees and management joining our Manchester office. Croft provides highways, transport and traffic planning advice on commercial, residential and mixed use schemes to a corporate client base, which includes developers, house builders and land owners. This expands the consultancy services we can offer to real estate developers and corporate clients.

In April 2019, we acquired Barker Storey Matthews ("BSM"), an independent firm of chartered surveyors with offices in Cambridge, Huntingdon, Peterborough and Bury St Edmunds, with 38 employees joining Eddisons. The core services offered are commercial property agency, property management, building consultancy, professional services (including valuations) and planning services, consistent with our core service offerings. BSM was ranked the overall winner for Eastern England in the EG Deals Competition 2018 for commercial property agents. The addition of the BSM team expands our geographical coverage.

The number of people employed in the division has increased to 245 as at 30 April 2019 from 182 at the start of the financial year.

* See note 2

Partners and employees

As at 30 April 2019, the group employed a total of 650 partners and staff (2018: 576); this comprises 486 fee earners and 164 support staff.

FINANCE REVIEW

Financial summary

 
                                              2019   2018 
                                              GBPm   GBPm 
 
Revenue                                       60.1   52.4 
-------------------------------------------  -----  ----- 
Operating profit (before transaction costs 
 and amortisation)                             7.6    6.1 
Interest costs                               (0.5)  (0.5) 
-------------------------------------------  -----  ----- 
Adjusted profit before tax                     7.1    5.6 
Transaction costs                            (1.2)  (1.4) 
Amortisation of intangible assets arising 
 on acquisitions                             (2.4)  (1.9) 
-------------------------------------------  -----  ----- 
Profit before tax                              3.5    2.3 
Tax                                          (1.1)  (0.9) 
-------------------------------------------  -----  ----- 
Profit for the year                            2.4    1.4 
-------------------------------------------  -----  ----- 
 

Operating result (before transaction costs and amortisation)

Revenue in the year increased by GBP7.7m to GBP60.1m (2018: GBP52.4m), an overall increase of 14.5% in the year, of which 8.6% was organic and 5.9% was acquired.

Operating margins increased in the year to 12.6% (2018: 11.6%), due to increased segmental margins in both divisions and the benefit of operating leverage as the business has grown. Operating profit increased by 24.7% to GBP7.6m (2018: GBP6.1m).

Adjusted profit before tax increased by GBP1.5m to GBP7.1m (2018: GBP5.6m), an increase of 26.7% in the year as a result of the increased operating profits with interest costs in line with the prior year.

IFRS 15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments' have been implemented with effect from 1 May 2018. The adoption of these standards had a minimal impact on reported revenue, profit and earnings per share in the current year. We have applied these standards using the retrospective application method, giving an opening adjustment to retained earnings rather than a restatement of prior periods. This is detailed further in note 1.

Tax

The overall tax charge for the year was GBP1.1m (2018: GBP0.9m), giving an effective rate of 31% (2018: 38%). This comprised a charge on adjusted profit before tax of GBP1.6m (2018: GBP1.3m), partially offset by a tax credit resulting from transaction costs and amortisation of GBP0.5m (2018: GBP0.4m). The tax rate on adjusted profits was 22%, in line with the prior year.

Earnings per share

Adjusted basic earnings per share* increased by 22.5% to 4.9p (2018: 4.0p). Basic earnings per share increased to 2.2p (2018: 1.3p).

* See reconciliation in note 4

Acquisitions

During the year the group completed four acquisitions:

-- Croft Transport Planning & Design on 31 January 2019 for initial consideration of GBP1.5m (GBP1.125m in cash and the issue of 640,150 new ordinary shares) with a maximum additional cash payment of GBP2.5m subject to financial performance in the five year period following the acquisition.

-- KRE (North East) on 13 February 2019 for initial consideration of GBP0.45m (in cash) with a maximum additional cash payment of GBP0.15m subject to financial performance in the one year period following the acquisition.

-- Dunion & Co on 1 March 2019 for initial consideration of GBP0.1m (in cash) with a maximum additional cash payment of GBP0.1m subject to financial performance in the two year period following the acquisition.

-- Barker Storey Matthews on 5 April 2019 for initial consideration of GBP1.6m (GBP1.067m in cash and the issue of 844,290 new ordinary shares) with a maximum additional cash payment of GBP1.4m subject to financial performance in the three year period following the acquisition.

The net cash outflow from acquisitions in the year was GBP1.2m, comprising the cash consideration of GBP2.7m net of cash acquired of GBP1.5m.

The acquired businesses have performed in line with expectations in the post-acquisition period and the integration with our existing businesses is progressing well.

A proportion of the consideration payable for these acquisitions requires post-acquisition service obligations to be performed by the selling shareholders. These amounts are accounted for as deemed remuneration and charged to the consolidated statement of comprehensive income over the period of the service obligation. The value of net assets acquired exceeds the accounting value of consideration and consequently a gain of GBP2.9m has been recognised within transaction costs in the year.

Financing

Net debt at the year end reduced to GBP6.0m (2018: GBP7.5m). This reflected cash generated from operations in the year of GBP7.3m (2018: GBP7.5m) partially offset by investment in acquisitions (net of cash acquired), deferred consideration payments and capital expenditure of GBP3.2m (2018: GBP2.4m) and dividends paid of GBP2.6m (2018: GBP2.4m).

During the year, we agreed an extension to our banking facilities with HSBC, which now provides the group with a committed facility until 2023. These facilities are unsecured, mature on 31 August 2023 and comprise a GBP25m committed revolving credit facility and a GBP5m uncommitted acquisition facility.

During the year, all bank covenants were comfortably met and the group remains in a strong financial position. As a result of the reduced levels of debt together with increased profits, our leverage (calculated as net debt to EBITDA*) improved to 0.7 times (2018: 1.1 times).

* Profit before tax GBP3.5m (2018: GBP2.3m) plus interest GBP0.5m (2018: GBP0.5m), transaction costs GBP1.2m (2018: GBP1.4m) and amortisation of intangible assets arising on acquisitions GBP2.4m (2018: GBP1.9m), software amortisation GBP0.2m (2018: GBP0.2m), depreciation GBP0.6m (2018: GBP0.5m) and share-based payments GBP0.1m (2018: GBP0.3m)

Net assets

At 30 April 2019 net assets were GBP59.7m (2018: GBP59.1m). The movement in net assets reflects an increase of GBP2.9m, from post-tax adjusted earnings of GBP5.5m net of dividends of GBP2.6m; GBP2.2m from the issue of new shares, principally in relation to acquisitions; offset by a reduction of GBP1.4m from the adoption of IFRS 15 and IFRS 9 at 1 May 2018 (see note 1) and the post-tax impact of acquisition-related transaction and amortisation costs of GBP3.1m.

Going concern

The directors have reviewed the financial resources available to the group and have concluded that the group will be able to operate within the level of its borrowing facilities and have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. This conclusion is based, amongst other matters, on the group's existing borrowing facilities and a review of financial forecasts for a period exceeding 12 months from the date of this announcement. Accordingly, the financial information in this announcement is prepared on the going concern basis.

   Ric Traynor                                                                          Nick Taylor 
   Executive chairman                                                          Group finance director 
   9 July 2019                                                                           9 July 2019 

Consolidated statement of comprehensive income

 
                                                                          2019       2018 
                                                               Note    GBP'000    GBP'000 
-------------------------------------------------------------  ----  ---------  --------- 
 
Revenue                                                           2     60,058     52,441 
Direct costs                                                          (34,276)   (30,141) 
-------------------------------------------------------------  ----  ---------  --------- 
Gross profit                                                            25,782     22,300 
Other operating income                                                     393        400 
Administrative expenses                                               (22,163)   (19,922) 
-------------------------------------------------------------  ----  ---------  --------- 
Operating profit (before amortisation and transaction costs)      2      7,553      6,059 
Transaction costs                                                 3    (1,180)    (1,364) 
Amortisation of intangible assets arising on acquisitions              (2,361)    (1,917) 
-------------------------------------------------------------  ----  ---------  --------- 
Operating profit                                                         4,012      2,778 
Finance costs                                                            (486)      (482) 
-------------------------------------------------------------  ----  ---------  --------- 
Profit before tax                                                        3,526      2,296 
Tax                                                                    (1,092)      (872) 
-------------------------------------------------------------  ----  ---------  --------- 
Profit and total comprehensive income for the year                       2,434      1,424 
-------------------------------------------------------------  ----  ---------  --------- 
Earnings per share 
Basic                                                             4  2.2 pence  1.3 pence 
-------------------------------------------------------------  ----  ---------  --------- 
Diluted                                                           4  2.1 pence  1.3 pence 
-------------------------------------------------------------  ----  ---------  --------- 
 

The profit, comprehensive income and earnings per share is attributable to equity holders of the parent.

Consolidated statement of changes in equity

 
                                                       Share    Share   Merger  Capital redemption   Retained    Total 
                                                     capital  premium  reserve             reserve   earnings   equity 
                                                     GBP'000  GBP'000  GBP'000             GBP'000    GBP'000  GBP'000 
---------------------------------------------------  -------  -------  -------  ------------------  ---------  ------- 
At 1 May 2017                                          5,640   22,335   18,507                   -     11,618   58,100 
Profit for the year                                                                                     1,424    1,424 
Dividends                                                  -        -        -                   -    (2,356)  (2,356) 
Credit to equity for equity-settled share-based 
 payments                                                  -        -        -                   -        295      295 
Own shares acquired in the year                        (304)                                   304      (226)    (226) 
Shares issued as consideration for acquisitions          101        -    1,374                   -          -    1,475 
Shares issued as deferred consideration                   33        -      367                   -          -      400 
SIP shares issued                                          3       34        -                   -          -       37 
Other share options                                       35      420        -                          (455)        - 
---------------------------------------------------  -------  -------  -------  ------------------  ---------  ------- 
At 30 April 2018                                       5,508   22,789   20,248                 304     10,300   59,149 
Adjustment for changes in accounting policy                -        -        -                   -    (1,448)  (1,448) 
---------------------------------------------------  -------  -------  -------  ------------------  ---------  ------- 
Balance at 30 April 2018 after adjustments                                                              8,852   57,701 
Profit for the year                                        -        -        -                   -      2,434    2,434 
Dividends                                                  -        -        -                   -    (2,649)  (2,649) 
Credit to equity for equity-settled share-based 
 payments                                                  -        -        -                   -         99       99 
Shares issued as consideration for acquisitions           74        -      834                   -          -      908 
Shares issued as deferred consideration                   93        -    1,107                   -          -    1,200 
SIP shares issued                                          1        7        -                   -          -        8 
Other share options                                       43      394        -                          (437)        - 
---------------------------------------------------  -------  -------  -------  ------------------  ---------  ------- 
At 30 April 2019                                       5,719   23,190   22,189                 304      8,299   59,701 
---------------------------------------------------  -------  -------  -------  ------------------  ---------  ------- 
 

Consolidated balance sheet

 
                                                         2019      2018 
                                               Note   GBP'000   GBP'000 
---------------------------------------------  ----  --------  -------- 
Non-current assets 
Intangible assets                                      59,392    59,061 
Property, plant and equipment                           1,766     1,512 
Trade and other receivables                       6     3,220     1,759 
---------------------------------------------  ----  --------  -------- 
                                                       64,378    62,332 
---------------------------------------------  ----  --------  -------- 
Current assets 
Trade and other receivables                       6    32,653    30,829 
Cash and cash equivalents                               4,009     3,518 
---------------------------------------------  ----  --------  -------- 
                                                       36,662    34,347 
---------------------------------------------  ----  --------  -------- 
Total assets                                          101,040    96,679 
---------------------------------------------  ----  --------  -------- 
Current liabilities 
Trade and other payables                          7  (22,664)  (17,268) 
Current tax liabilities                               (1,976)   (1,548) 
Provisions                                              (588)     (783) 
---------------------------------------------  ----  --------  -------- 
                                                     (25,228)  (19,599) 
---------------------------------------------  ----  --------  -------- 
Net current assets                                     11,434    14,748 
---------------------------------------------  ----  --------  -------- 
Non-current liabilities 
Trade and other payables                          7         -   (1,093) 
Borrowings                                           (10,000)  (11,000) 
Provisions                                              (763)     (414) 
Deferred tax                                          (5,348)   (5,424) 
---------------------------------------------  ----  --------  -------- 
                                                     (16,111)  (17,931) 
---------------------------------------------  ----  --------  -------- 
Total liabilities                                    (41,339)  (37,530) 
---------------------------------------------  ----  --------  -------- 
Net assets                                             59,701    59,149 
---------------------------------------------  ----  --------  -------- 
Equity 
Share capital                                           5,719     5,508 
Share premium                                          23,190    22,789 
Merger reserve                                         22,189    20,248 
Capital redemption reserve                                304       304 
Retained earnings                                       8,299    10,300 
---------------------------------------------  ----  --------  -------- 
Equity attributable to owners of the company           59,701    59,149 
---------------------------------------------  ----  --------  -------- 
 

Consolidated cash flow statement

 
                                                           2019     2018 
                                                        GBP'000  GBP'000 
-----------------------------------------------------   -------  ------- 
Cash flows from operating activities 
Cash generated by operations                              9,178    9,065 
Income taxes paid                                       (1,362)    (980) 
Interest paid                                             (489)    (558) 
------------------------------------------------------  -------  ------- 
Net cash from operating activities                        7,327    7,527 
------------------------------------------------------  -------  ------- 
Investing activities 
Purchase of intangible fixed assets                       (216)     (77) 
Purchase of property, plant and equipment                 (784)    (394) 
Deferred consideration payments                         (1,030)  (1,132) 
Acquisition of businesses (net of cash acquired)        (1,167)    (803) 
------------------------------------------------------  -------  ------- 
Net cash used in investing activities                   (3,197)  (2,406) 
------------------------------------------------------  -------  ------- 
Financing activities 
Dividends paid                                          (2,649)  (2,356) 
Proceeds on issue of SIP scheme shares                       10       38 
Repayment of loans                                      (1,000)  (6,000) 
------------------------------------------------------  -------  ------- 
Net cash used in financing activities                   (3,639)  (8,318) 
------------------------------------------------------  -------  ------- 
Net increase (decrease) in cash and cash equivalents        491  (3,197) 
Cash and cash equivalents at beginning of year            3,518    6,715 
------------------------------------------------------  -------  ------- 
Cash and cash equivalents at end of year                  4,009    3,518 
------------------------------------------------------  -------  ------- 
 
   1.     Basis of preparation and accounting policies 

The results for the year ended 30 April 2019 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 2018, apart from those affected by the implementation of IFRS 15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments' as noted below. These impact the accounting policies for revenue and trade receivables.

The group's financial statements for the year ended 30 April 2019 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the EU. 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 2018 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 2019 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 2018 annual report will be available on the group's website: www.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 current financial position and cash flow forecasts for a period exceeding 12 months from the date of this announcement. This review included sensitivity analysis 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.

After making enquiries, 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, this financial information is prepared on the going concern basis.

Adjusted performance measures

Management believes that adjusted performance measures provide meaningful information to the users of the accounts on the performance of the business and are the performance measures used by the board. Accordingly, adjusted measures of operating profit, profit before tax and earnings per share exclude, where applicable, transaction costs, amortisation of intangible assets arising on acquisitions and related tax effects on these items. These terms are not defined terms under IFRS and may therefore not be comparable with similarly titled profit measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.

The items excluded from adjusted results are those which arise due to acquisitions and are charged to the consolidated statement of comprehensive income in accordance with IFRS 3. They are not influenced by the day-to-day operations of the group.

Adoption of new accounting standards

The following standards became effective in the financial year commencing 1 May 2018 and have been applied using the retrospective application method; giving an opening adjustment to retained earnings rather than a restatement of prior periods. The comparative information is not restated, and is therefore presented in line with the accounting standard applicable in the comparative year.

IFRS 15 'Revenue from Contracts with Customers'

IFRS 15 introduces a new model for revenue recognition, which is based upon the transfer of control rather than the transfer of risks and rewards under IAS 18 'Revenue'. On the majority of the group's engagement types the point at which revenue is recognised has not changed, as the point of transfer of control under IFRS 15 (which determines revenue recognition) is the same as the point of transfer of risks and rewards (which determines revenue recognition under IAS 18).

However, on two of the group's engagement types, the adoption of IFRS 15 has resulted in a change in revenue recognition as either:

-- IFRS 15 requires the group to have enforceable rights to payment to meet recognition criteria for revenue having satisfied a performance obligation. On a number of contracts the group may not have enforceable rights to payment at the early stage of the contract and revenue will not be recognised until these rights are in place; or

-- IFRS 15 requires certain contracts to be combined, where they are entered into at or near the same time, with the same customer and negotiated with a single commercial objective or a single performance obligation.

   1.     Basis of preparation and accounting policies (continued) 

IFRS 9 'Financial Instruments'

The introduction of IFRS 9 impacts the group's accounting policy for trade receivables through the recognition of an expected loss provision for future impairment of receivables.

Opening adjustment to retained earnings

The adoption of these standards at 1 May 2018 reduced trade and other receivables by GBP1.8m and increased deferred tax assets by GBP0.4m, giving a reduction in net assets of GBP1.4m.

The tables below show the impact of adopting these new accounting policies in the year.

 
 Consolidated statement of comprehensive                                                         Balances 
  income                                                                                          without 
                                                                                                 adoption 
                                              As reported                                          of new         Year 
                                                 30 April              IFRS             IFRS    standards        ended 
                                                     2019     15 adjustment     9 adjustment     30 April     30 April 
                                                                                                     2019         2018 
                                                  GBP'000           GBP'000          GBP'000      GBP'000      GBP'000 
 Revenue                                           60,058                15                -       60,073       52,441 
 Direct costs                                    (34,276)                 -                -     (34,276)     (30,141) 
-----------------------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Gross profit                                      25,782                15                -       25,797       22,300 
 Other operating income                               393                 -                -          393          400 
 Administrative expenses                         (22,163)                                 31     (22,132)     (19,922) 
-----------------------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Operating profit before amortisation 
  and transaction costs                             7,553                15               31        7,599        6,059 
 Transaction costs                                (1,180)                 -                -      (1,180)      (1,364) 
 Amortisation                                     (2,361)                 -                -      (2,361)      (1,917) 
-----------------------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Operating profit                                   4,012                15               31        4,058        2,778 
 Finance costs                                      (486)                 -                -        (486)        (482) 
-----------------------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Profit before tax                                  3,526                15               31        3,572        2,296 
 Tax                                              (1,092)               (3)              (6)      (1,101)        (872) 
 Profit and total comprehensive income 
  for the period                                    2,434                12               25        2,471        1,424 
-----------------------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Earnings per share 
-----------------------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Basic                                               2.2p                                            2.2p         1.3p 
-----------------------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Diluted                                             2.1p                                            2.1p         1.3p 
-----------------------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 
 
 Consolidated balance sheet                                                          Balances 
                                                                                      without 
                                                                                     adoption 
                                  As reported                                          of new 
                                     30 April              IFRS             IFRS    standards     30 April 
                                         2019     15 adjustment     9 adjustment     30 April         2018 
                                                                                         2019 
                                      GBP'000           GBP'000          GBP'000      GBP'000      GBP'000 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Non-current assets                    64,378                 -                -       64,378       62,332 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Current assets 
 Trade and other receivables           32,653             1,261              391       34,305       30,829 
 Cash and cash equivalents              4,009                 -                -        4,009        3,518 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
                                       36,662             1,261              391       38,314       34,347 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Total assets                         101,040             1,261              391      102,692       96,679 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Current liabilities 
 Trade and other payables            (22,664)               182                -     (22,482)     (17,268) 
 Current tax liabilities              (1,976)               (3)              (6)      (1,985)      (1,548) 
 Provisions                             (588)                 -                -        (588)        (783) 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
                                     (25,228)               179              (6)     (25,055)     (19,599) 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Net current assets                    11,434             1,440              385       13,259       14,748 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Non-current liabilities 
 Trade and other payables                   -                 -                -            -      (1,093) 
 Borrowings                          (10,000)                 -                -     (10,000)     (11,000) 
 Provisions                             (763)                 -                -        (763)        (414) 
 Deferred tax                         (5,348)             (271)             (67)      (5,686)      (5,424) 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
                                     (16,111)             (271)             (67)     (16,449)     (17,931) 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Total liabilities                   (41,339)              (92)             (73)     (41,504)     (37,530) 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 Net assets                            59,701             1,169              318       61,188       59,149 
-----------------------------  --------------  ----------------  ---------------  -----------  ----------- 
 
   2.     Segmental analysis 

The group's operating segments are established on the basis of the components of the group that are evaluated regularly by the chief operating decision maker. The group is managed as two operating segments: business recovery and financial advisory services, and property services.

 
                                                       Business    Property   Consolidated 
                                                       recovery    services 
                                                  and financial 
                                                       advisory 
                                                       services 
                                                           2019        2019           2019 
                                                        GBP'000     GBP'000        GBP'000 
----------------------------------------------  ---------------  ----------  ------------- 
 Revenue 
 Total revenue from rendering of professional 
  services                                               43,313      16,903         60,216 
 Inter-segment revenue                                        -       (158)          (158) 
----------------------------------------------  ---------------  ----------  ------------- 
 Revenue from external customers                         43,313      16,745         60,058 
----------------------------------------------  ---------------  ----------  ------------- 
 Segmental result                                         8,658       3,765         12,423 
 Shared and central costs                                                          (4,870) 
----------------------------------------------  ---------------  ----------  ------------- 
 Operating profit before amortisation and 
  transaction costs                                                                  7,553 
----------------------------------------------  ---------------  ----------  ------------- 
 
 
                                                       Business    Property   Consolidated 
                                                       recovery    services 
                                                  and financial 
                                                       advisory 
                                                       services 
                                                           2018        2018           2018 
                                                        GBP'000     GBP'000        GBP'000 
----------------------------------------------  ---------------  ----------  ------------- 
 Revenue 
 Total revenue from rendering of professional 
  services                                               38,273      14,288         52,561 
 Inter-segment revenue                                        -       (120)          (120) 
----------------------------------------------  ---------------  ----------  ------------- 
 Revenue from external customers                         38,273      14,168         52,441 
----------------------------------------------  ---------------  ----------  ------------- 
 Segmental result                                         7,563       3,132         10,695 
 Shared and central costs                                                          (4,636) 
----------------------------------------------  ---------------  ----------  ------------- 
 Operating profit before amortisation and 
  transaction costs                                                                  6,059 
----------------------------------------------  ---------------  ----------  ------------- 
 
   3.     Transaction costs 
 
                                                                2019      2018 
                                                             GBP'000   GBP'000 
----------------------------------------------------------  --------  -------- 
Deemed remuneration                                            2,806     1,678 
Acquisition costs                                                154       117 
Gain on acquisition                                          (2,909)   (1,189) 
Charge arising under Begbies Traynor (London) LLP put and 
 call option                                                   1,129       758 
                                                               1,180     1,364 
----------------------------------------------------------  --------  -------- 
 
   4.     Earnings per share 

The calculation of basic and diluted earnings per share is based on the following data:

 
                                                         2019      2018 
                                                      GBP'000   GBP'000 
---------------------------------------------------  --------  -------- 
Earnings 
Profit for the year attributable to equity holders      2,434     1,424 
---------------------------------------------------  --------  -------- 
 
 
                                                                     2019         2018 
                                                                   number       number 
------------------------------------------------------------  -----------  ----------- 
Number of shares 
Weighted average number of ordinary shares for the purposes 
 of basic earnings per share                                  112,547,759  108,998,901 
Effect of: 
Share options                                                     404,262    1,264,656 
Contingent shares as consideration for capital transactions     3,476,190    3,196,612 
------------------------------------------------------------  -----------  ----------- 
Weighted average number of ordinary shares for the purposes 
 of diluted earnings per share                                116,428,211  113,460,169 
------------------------------------------------------------  -----------  ----------- 
 
   4.     Earnings per share (continued) 
 
                                         2019    2018 
                                        pence   pence 
-------------------------------------  ------  ------ 
Basic and diluted earnings per share 
Basic earnings per share                  2.2     1.3 
Diluted earnings per share                2.1     1.3 
-------------------------------------  ------  ------ 
 

The calculation of adjusted basic and diluted earnings per share is based on the following data:

 
                                                                2019      2018 
                                                             GBP'000   GBP'000 
----------------------------------------------------------  --------  -------- 
Earnings 
Profit for the year attributable to equity holders             2,434     1,424 
Amortisation of intangible assets arising on acquisitions      2,361     1,917 
Transaction costs                                              1,180     1,364 
Tax effect of above items                                      (449)     (364) 
Adjusted earnings                                              5,526     4,341 
----------------------------------------------------------  --------  -------- 
 
 
                                        2019    2018 
                                       pence   pence 
------------------------------------  ------  ------ 
Adjusted basic earnings per share        4.9     4.0 
------------------------------------  ------  ------ 
Adjusted diluted earnings per share      4.7     3.8 
------------------------------------  ------  ------ 
 
   5.     Dividends 
 
                                                                     2019      2018 
                                                                  GBP'000   GBP'000 
---------------------------------------------------------------  --------  -------- 
Amounts recognised as distributions to equity holders in the 
 year 
Interim dividend for the year ended 30 April 2018 of 0.7p 
 (2017: 0.6p) per share                                               771       640 
Final dividend for the year ended 30 April 2018 of 1.7p (2017: 
 1.6p) per share                                                    1,878     1,716 
---------------------------------------------------------------  --------  -------- 
                                                                    2,649     2,356 
---------------------------------------------------------------  --------  -------- 
Amounts proposed as distributions to equity holders 
Interim dividend for the year ended 30 April 2019 of 0.8p 
 (2018: 0.7p) per share                                               914       771 
Final dividend for the year ended 30 April 2019 of 1.8p (2018: 
 1.7p) per share                                                    2,058     1,872 
---------------------------------------------------------------  --------  -------- 
                                                                    2,972     2,643 
---------------------------------------------------------------  --------  -------- 
 

The proposed final dividend is subject to approval by shareholders at the annual general meeting in September 2019. The interim dividend for 2019 was not paid until 9 May 2019 and, accordingly, has not been included as a liability in these financial statements nor as a distribution to equity shareholders.

   6.     Trade and other receivables 
 
                                    2019      2018 
                                 GBP'000   GBP'000 
------------------------------  --------  -------- 
Non-current 
Deemed remuneration                3,220     1,759 
------------------------------  --------  -------- 
Current 
Trade receivables                  7,823     6,740 
Less: impairment provision       (1,338)   (1,082) 
------------------------------  --------  -------- 
Trade receivables - net            6,485     5,658 
Unbilled income                   21,310    21,719 
Other debtors and prepayments      2,379     2,153 
Deemed remuneration                2,479     1,299 
------------------------------  --------  -------- 
                                  32,653    30,829 
------------------------------  --------  -------- 
 
   7.     Trade and other payables 
 
                                      2019      2018 
                                   GBP'000   GBP'000 
--------------------------------  --------  -------- 
Current 
Trade payables                         953     1,414 
Accruals                             7,125     6,902 
Other taxes and social security      3,308     2,319 
Deferred income                      3,338     1,807 
Other creditors                      4,830     4,249 
Deemed remuneration liabilities      3,110       577 
--------------------------------  --------  -------- 
                                    22,664    17,268 
--------------------------------  --------  -------- 
Non-current 
Deemed remuneration liabilities          -     1,093 
--------------------------------  --------  -------- 
 
   8.     Reconciliation to the cash flow statement 
 
                                                                      2019      2018 
                                                                   GBP'000   GBP'000 
----------------------------------------------------------------  --------  -------- 
Profit for the year                                                  2,434     1,424 
Adjustments for: 
Tax                                                                  1,092       872 
Finance costs                                                          486       482 
Amortisation of intangible assets                                    2,558     2,099 
Depreciation of property, plant and equipment                          563       488 
Deemed remuneration                                                  2,806    1, 678 
Charge relating to the put and call option over Begbies Traynor 
 (London) LLP                                                        1,129       758 
Gain on acquisition                                                (2,909)   (1,189) 
Share-based payment expense                                             99       295 
----------------------------------------------------------------  --------  -------- 
Operating cash flows before movements in working capital             8,258     6,907 
Increase in receivables                                              (827)     (458) 
Increase in payables                                                 1,643     2,742 
Increase (decrease) in provisions                                      104     (126) 
----------------------------------------------------------------  --------  -------- 
Cash generated by operations                                         9,178     9,065 
----------------------------------------------------------------  --------  -------- 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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