TIDMBEG
RNS Number : 0799U
Begbies Traynor Group PLC
10 July 2018
10 July 2018
Begbies Traynor Group plc
Final results
for the year ended 30 April 2018
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 2018.
Financial highlights*
2018 2017
GBPm GBPm
------------------------------ ----- -----
Revenue 52.4 49.7
Adjusted profit before tax** 5.6 4.9
Profit before tax 2.3 0.6
------------------------------ ----- -----
Adjusted basic EPS*** (p) 4.0 3.3
Basic EPS (p) 1.3 0.2
Proposed total dividend
(p) 2.4 2.2
------------------------------ ----- -----
Net debt 7.5 10.3
------------------------------ ----- -----
*All figures stated from continuing operations
** Profit before tax from continuing operations of GBP2.3m
(2017: GBP0.6m) plus amortisation of intangible assets arising on
acquisitions of GBP1.9m (2017: GBP2.5m) plus transaction costs of
GBP1.4m (2017: GBP1.6m) and refinancing costs of GBPnil (2017:
GBP0.2m)
*** See reconciliation in note 6
Operational highlights
-- Business recovery and financial advisory:
o Increase in revenue and profit whilst investing in our team
for future growth
o Developed advisory services through the acquisition of
Springboard Corporate Finance and the launch of BTG Advisory
-- Property services:
o Solid performance in the year with growth in both revenue and
profit
o Continuing to invest in the business through recruitment and
acquisition of CJM Asset Management
-- Strong cash generation reduced net debt to its lowest level since 2007
-- Proposed 9% increase in total dividend for the year, the first increase since 2011
Commenting on the results, Ric Traynor, Executive Chairman of
Begbies Traynor Group, said:
"It is pleasing to report a further year of progress in
developing the group, during which we have continued to deliver
earnings growth, reflecting the benefit of the strategic
investments we have made in recent years. We have also proposed our
first increase in the group's annual dividend since 2011 and at the
same time have reported our lowest net debt since 2007.
"We anticipate continuing our track record of earnings growth in
the new financial year, with the benefit of a full year
contribution from our recent acquisitions together with growth from
our ongoing investments. Overall, we remain in a strong position to
invest in further opportunities given our financial resources, in
line with our strategy to grow both organically and through
selective acquisitions."
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)
Sunil Duggal / Andrew Buchanan / Margarita Mitropoulou
Shore Capital 020 7408 4090
(Joint Broker)
Mark Percy / Anita Ghanekar
MHP Communications 020 3128 8100
Reg Hoare / Katie Hunt / Giles Robinson
Information on Begbies Traynor Group can be accessed via the
group's website at
www.begbies-traynorgroup.com
CHAIRMAN'S STATEMENT
INTRODUCTION
It is pleasing to report a further year of progress in
developing the group, during which we have continued to deliver
earnings growth, reflecting the benefit of the strategic
investments we have made in recent years.
Market levels of activity in insolvency were broadly in line
with the prior year, with the UK economy continuing to operate in
the low interest rate environment we have been operating in since
2009. Against this background, our business recovery and financial
advisory business grew its revenue and profit. We also increased
our market share, further strengthening our position as the largest
UK corporate appointment taker by volume. We have continued to
invest in this business through recruitment of senior, work-winning
partners and staff.
We have made further progress in developing our advisory
services in the year through organic and acquisitive means. We
launched BTG Advisory in the year to bring together our
restructuring, financial advisory, corporate finance, forensic and
investigation teams, which are complementary to our core business
recovery practice and have good growth potential.
In line with this, in March 2018 we acquired Springboard
Corporate Finance. Springboard is a highly regarded mid-market
corporate finance business operating from offices in Birmingham,
London and Nottingham. We will look to continue to invest and
develop our advisory services in the new financial year.
Our property services business also delivered a solid
performance with growth in both revenue and profit. We have
continued to invest in the division through both the recruitment of
senior fee earners and the acquisition of CJM Asset Management.
The group remains strongly cash generative, which has enabled us
to fund GBP1.9m of acquisition and deferred consideration payments
whilst continuing to reduce the group's net debt to GBP7.5m at 30
April 2018 (2017: GBP10.3m).
The group's financial performance and strong cash generation,
combined with our confidence in sustaining our recent earnings
growth, has led the board to recommend a 9% increase in the
dividend for the year to 2.4p from 2.2p. Following the increase in
the dividend paid at the interim stage, this is the first annual
dividend increase since 2011.
RESULTS
Group revenue from continuing operations in the year ended 30
April 2018 was GBP52.4m (2017: GBP49.7m). Adjusted profit before
tax* increased to GBP5.6m (2017: GBP4.9m), benefiting from improved
contribution from both business segments and lower interest costs.
Profit before tax was GBP2.3m (2017: GBP0.6m). Statutory profit for
the year was GBP1.4m (2017: loss of GBP0.3m, including loss from
discontinued operations of GBP0.5m).
Adjusted basic earnings per share** were 4.0p (2017: 3.3p).
Basic and fully diluted earnings per share from continuing
operations were 1.3p (2017: 0.2p).
Net debt was GBP7.5m at 30 April 2018 (2017: GBP10.3m), after
making acquisition and deferred consideration payments in the year
of GBP1.9m. This is the lowest year end net debt reported by the
group since 2007. Gearing*** stood at 13% (2017: 18%) and the group
retains significant headroom in its committed banking facilities.
Interest cover**** was 12.6 times (2017: 7.2 times).
* Profit before tax from continuing operations of GBP2.3m (2017:
GBP0.6m) plus amortisation of intangible assets arising on
acquisitions of GBP1.9m (2017: GBP2.5m) plus transaction costs of
GBP1.4m (2017: GBP1.6m) and refinancing costs of GBPnil (2017:
GBP0.2m)
** See reconciliation in note 6
*** Calculated as net debt divided by net assets
**** Calculated as operating profit before amortisation and
transaction costs divided by interest costs
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 2.4p (2017: 2.2p), an increase of 9%. This
comprises the interim dividend already paid of 0.7p (2017: 0.6p)
and a proposed final dividend of 1.7p (2017: 1.6p).
The board remains committed to a long-term progressive dividend
policy, taking account of both the market outlook and earnings
growth.
The final dividend will be paid on 8 November 2018 to
shareholders on the register on 12 October 2018, with an
ex-dividend date of 11 October 2018.
PEOPLE
I would like to thank all of our partners and staff for their
valued contribution to the business during the course of this year.
Our success remains reliant on quality advice and service being
delivered to our clients by our people.
BOARD APPOINTMENT
Mark Stupples was appointed to the board as a non-executive
director in July 2017. Mark has significant property services
experience as a result of his senior roles in major firms,
including King Sturge as UK managing partner, when he negotiated
the sale of the business to JLL. Following the acquisition, Mark
was appointed as JLL's UK chief operating officer until leaving the
business in December 2016. During this time, he completed a number
of UK acquisitions.
The board now comprises three executive and three non-executive
directors.
OUTLOOK
The market for our counter-cyclical activities remains stable
and we continue to focus on delivering future growth by investing
in the business.
We anticipate continuing our track record of earnings growth in
the new financial year. With the benefit of a full year
contribution from the Springboard and CJM acquisitions together
with anticipated revenue growth from our ongoing organic
investments, our expectations remain unchanged.
Any further growth in earnings in the new financial year could
be generated from a faster return on the investments we have made
or an overall improvement in our counter-cyclical market
conditions.
Overall, we remain in a strong position to invest in further
opportunities given our financial resources, in line with our
strategy to grow both organically and through selective
acquisitions.
As usual, we expect to provide a further update on current
trading at the time of the company's annual general meeting in
September 2018.
Ric Traynor
Executive chairman
10 July 2018
STRATEGIC REPORT
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
through two complementary operating divisions.
Business recovery and financial advisory services
Begbies Traynor is the UK's leading independent business
recovery practice, handling the largest number of corporate
appointments, principally serving the mid-market and smaller
companies.
BTG Advisory provides transactional support, valuations and
advisory services.
We provide these services to businesses, professional advisors,
other stakeholders, investors and financial institutions.
Property services
Eddisons is a national firm of chartered surveyors, delivering
advisory and transactional services to owners and occupiers of
commercial property, investors and financial institutions. The
division includes Pugh & Co, the largest regional firm of
commercial property auctioneers by number of lots.
STRATEGY
Our strategy is to be recognised as a leading UK professional
services consultancy, delivering business recovery, financial
advisory and property advisory services.
We continue to deliver this through developing our expertise
in:
-- Business restructuring and insolvency;
-- Valuation and advisory services;
-- Transactional support; and
-- Commercial property services
to our client base of UK businesses; financial institutions and
the investment community; commercial property owners and occupiers;
individuals and professional advisors.
We operate on a national basis throughout the UK, with a
partner-led service in the local business community. We also have
the added capability of providing expertise in key global
jurisdictions through our international alliance under the BTG
Global Advisory network of associated firms.
We will enhance our expertise through ongoing investment in the
group, both organically and through selective acquisitions.
OPERATING REVIEW
Business recovery and financial advisory
Insolvency market
The Insolvency Service issues quarterly statistics on the number
of corporate insolvencies in England and Wales. The underlying
number of corporate insolvencies* in calendar year 2017 was broadly
unchanged at 14,608 (2016: 14,716).
Excluding the effect of bulk insolvencies, the underlying number
of corporate insolvencies rose in the first calendar quarter of
2018 to 3,987, a 13.0% increase on the previous quarter and a 0.6%
increase on the same quarter in 2017. Although this is the highest
level of corporate insolvencies since the first quarter of calendar
year 2014, any sustained increase is likely to be as a result of
either a marked change in interest rates or a change in the
economic environment.
*Source: The Insolvency Service quarterly statistics on a
seasonally adjusted basis, excluding the one-off effect of 2,682
(2017: 1,704) bulk insolvencies as identified by the Insolvency
Service.
Financial performance
In the benign corporate environment noted above, we have
invested in our team, which has increased our market share in our
core business recovery practice, whilst also developing our
advisory capabilities, principally through acquisition.
As a result of these initiatives, together with success fees
received on the completion of contingent insolvency cases, revenue
in the year increased to GBP38.3m (2017: GBP36.2m). Operating costs
increased to GBP30.7m (2017: GBP28.9m), due to the investment noted
above and increased people costs, giving an increase in segmental
profits* to GBP7.6m (2017: GBP7.4m). As a result of the investment
in the year, our operating margins decreased slightly to 19.8%
(2017: 20.3%), which we anticipate will recover in future years as
we generate a return on the investments we have made.
The investment in the business recovery team has involved the
recruitment of experienced, market-facing insolvency staff,
together with enhancing our business development capabilities. As a
result of these initiatives, in spite of the overall number of
appointments being broadly unchanged, we have increased our market
share and remain the leading corporate appointment taker in the UK
by volume. We have also undertaken some larger contingent fee work
during the year.
We have continued to develop our advisory services in the year
and launched BTG Advisory, which brings together our restructuring,
financial advisory, corporate finance, forensic and investigation
teams to operate as one national team.
In March 2018 we acquired Springboard Corporate Finance, a
highly-regarded mid-market corporate finance team, which is
complementary to our other advisory services. Springboard operates
from offices in Birmingham, London and Nottingham and its team of
13 employees and management joined the group on acquisition. The
practice has strong relationships with owner-managers, management
teams and private equity firms, acting across a broad range of buy
and sell side private company transactions.
Springboard's management team will be responsible for the
ongoing management and development of the group's corporate finance
services, and we believe that the integration of the Springboard
team with our existing advisory offerings provides a strong
platform for further growth. We will look to continue to invest and
develop our advisory services in the new financial year.
The number of people employed in the division has increased to
351 as at 30 April 2018 from 337 at the start of the financial
year. We have continued to develop our team and are pleased to have
promoted four fee earners to partner during the year. We retain the
capacity to deliver growth in revenue and profits from our existing
team in the event of an increase in activity levels.
* See note 2
Property services
Revenue increased to GBP14.2m (2017: GBP13.5m) with an increase
in segmental profits* to GBP3.1m (2017: GBP2.9m). Operating margins
increased to 22.1% (2017: 21.6%).
We have continued to develop the division during the year
through organic investment and acquisition. We have invested in our
property valuation team through the recruitment of experienced
surveyors and enhanced our building consultancy offering to the
education sector, where we have achieved increased levels of
instructions over the last 12 months.
Our machinery and business asset disposal team has performed
well, working alongside Begbies Traynor teams on a number of
insolvency engagements, and was also strengthened through our
acquisition of CJM Asset Management in February 2018. CJM
specialise in the sale of industrial plant and machinery assets
through its online platform, physical auction centre and private
treaty sales. The 11-strong team, including management, have been
integrated with the existing Eddisons machinery and business asset
disposal team.
We also recruited a new team in Liverpool, providing valuation
and agency services operating from the group's existing office.
These growth areas have offset a reduction in commercial
property auction levels, as a result of a quieter commercial
auction environment, together with lower levels of property
insolvency activity following the completion of several
long-running appointments.
The number of people employed in the division has increased to
182 as at 30 April 2018 from 170 at the start of the financial
year.
* See note 2
Partners and employees
As at 30 April 2018, the group employed a total of 576 partners
and staff (2017: 545); this comprises 427 fee earners and 149
support staff.
FINANCE REVIEW
Financial summary
2018 2017
GBP'000 GBP'000
Revenue from continuing operations 52,441 49,685
----------------------------------------------- ------- -------
Operating profit (before transaction costs
and amortisation) 6,059 5,627
Interest costs (482) (776)
----------------------------------------------- ------- -------
Adjusted profit before tax 5,577 4,851
Refinancing costs - (225)
Transaction costs (1,364) (1,545)
Amortisation of intangible assets arising
on acquisitions (1,917) (2,439)
----------------------------------------------- ------- -------
Profit before tax 2,296 642
Tax (872) (429)
----------------------------------------------- ------- -------
Profit for the year from continuing operations 1,424 213
----------------------------------------------- ------- -------
Revenue
Revenue increased by 6% to GBP52.4m (2017: GBP49.7m) in the year
as result of our investments and organic growth initiatives.
Business recovery and financial advisory activities contributed
GBP2.1m of this increase and property services revenue increased by
GBP0.7m.
Acquisitions in the year contributed GBP0.6m of revenue.
Operating profit (before transaction costs and amortisation)
Operating profit (before transaction costs and amortisation)
increased to GBP6.1m (2017: GBP5.6m) with operating margins of
11.6% (2017: 11.3%).
Interest costs
Interest costs reduced to GBP0.5m (2017: GBP0.8m), as a result
of the group's reduced borrowing costs following the refinancing in
the previous year.
Refinancing costs
One-off costs incurred in connection with the refinancing of the
group's banking facilities in the prior year were GBP0.2m.
Transaction costs
Transaction costs in the year of GBP1.4m (2017: GBP1.5m)
comprise:
-- acquisition costs of GBP0.1m (2017: GBP0.1m);
-- deemed remuneration charges of GBP1.7m (2017: GBP1.4m);
-- a charge relating to the put and call option over Begbies
Traynor (London) LLP of GBP0.8m (2017: GBP0.3m); offset by
-- gain on acquisitions of GBP1.2m (2017: GBP0.3m).
Amortisation of intangible assets arising on acquisitions
Amortisation costs decreased to GBP1.9m (2017: GBP2.4m).
Tax
The overall tax charge for the year from continuing operations
was GBP0.9m (2017: GBP0.4m), comprising a tax charge on adjusted
profit before tax of GBP1.3m (2017: GBP1.3m), partially offset by a
tax credit resulting from amortisation, refinancing and transaction
costs of GBP0.4m (2017: GBP0.9m).
The adjusted tax rate reduced to 22% (2017: 27%) as a result of
increased accounting profits with a lower level of non
tax-deductible costs, a 1% reduction in the UK corporation tax rate
and an adjustment in relation to prior year provisions.
The statutory tax rate reduced to 38% (2017: 67%) due to the
lower adjusted tax rate, as noted above, together with an
adjustment to deferred tax balances in the prior year relating to
future enacted changes in UK tax rates.
Earnings per share ('EPS')
Adjusted basic earnings per share* were 4.0p (2017: 3.3p). Basic
and fully diluted earnings per share were 1.3p (2017: 0.2p).
* See reconciliation in note 6
Acquisitions
Springboard Corporate Finance
On 6 March 2018, the group acquired the entire issued share
capital of Springboard Corporate Finance Limited ("Springboard")
for an initial net consideration of GBP2.75m (on a cash free, debt
free basis), satisfied by GBP1.375m in cash and through the issue
of 1,884,568 new ordinary shares of 5 pence each in the group.
Under the terms of the acquisition, additional contingent
consideration of up to GBP0.5m will become payable subject to the
achievement of financial targets in the five-year period directly
following completion. The contingent consideration is calculated
according to an agreed formula and is payable in cash.
A proportion of the consideration payable for this acquisition
requires post-acquisition service obligations to be performed by
the selling shareholders. These amounts are treated as deemed
remuneration and charged to the consolidated statement of
comprehensive income over the period of the obligation.
Gross potential consideration of GBP4.5m comprises the GBP2.75m
initial net consideration, GBP0.5m contingent consideration and
GBP1.28m cash payment in relation to cash at completion and working
capital adjustments.
As a result of this accounting treatment, the value of net
assets acquired (GBP2.8m) exceeds the accounting value of the
consideration (GBP2.0m) and consequently a gain of GBP0.8m has been
recognised within transaction costs in the year.
Overall, the business has performed in line with expectations in
the post-acquisition period and the integration with our advisory
team is progressing well.
CJM Asset Management
On 5 February 2018 the group acquired the entire issued share
capital of Fyrebrand Limited which traded as CJM Asset Management
("CJM") for an initial net consideration of GBP0.25m (on a cash
free, debt free basis), satisfied by GBP0.15m in cash and through
the issue of 134,462 new ordinary shares of 5 pence each in the
group.
Under the terms of the acquisition, additional contingent
consideration of up to GBP0.25m will become payable subject to the
achievement of financial targets for the consolidated machinery and
business asset disposal business (representing the pre-existing
Eddisons business merged with CJM) in the three-year period
directly following completion. Any additional consideration is
calculated according to an agreed formula and is payable in
cash.
The consideration payable for this acquisition requires
post-acquisition service obligations to be performed by the selling
shareholders. These amounts are treated as deemed remuneration and
charged to the consolidated statement of comprehensive income over
the period of the obligation.
As a result of this accounting treatment, the value of net
assets acquired (GBP0.3m) exceeds the accounting value of the
consideration (GBPnil) and consequently a gain of GBP0.3m has been
recognised within transaction costs in the year.
The business has performed in line with expectations in the
post-acquisition period and the team has been integrated with our
existing business asset disposal team.
Other
On 5 October 2017 we acquired a portfolio of insolvency cases
from the liquidators of Invocas Financial Limited for a total
consideration of GBP40,000.
Cash flows
Cash generated by operations (before interest and tax payments)
in the year was GBP9.1m (2017: GBP8.0m). Tax payments in the year
were GBP1.0m (2017: GBP1.5m). Interest payments were GBP0.6m (2017:
GBP0.9m).
Cash outflows from investing activities were GBP2.4m (2017:
GBP3.2m). Capital expenditure was GBP0.5m (2017: GBP0.3m). Deferred
payments relating to prior year acquisitions were GBP1.1m (2017:
GBP1.1m). Acquisition payments (net of cash acquired of GBP2.0m)
were GBP0.8m (2017: GBP1.8m).
Financing cash outflows were GBP8.3m (2017: GBP3.3m). During the
year we reduced the level of drawn debt under our banking
facilities by GBP6.0m (2017: GBP1.0m). Dividend payments were
GBP2.4m (2017: GBP2.3m).
Financing
The group's borrowing facilities are unsecured, mature on 31
August 2021 and comprise a GBP25m committed revolving credit
facility and a GBP5m uncommitted acquisition facility.
Net borrowings reduced to GBP7.5m at 30 April 2018 (2017:
GBP10.3m), with gearing* of 13% (2017: 18%) and significant
headroom within the committed banking facilities. During the year,
all bank covenants were comfortably met and the group remains in a
strong financial position. Interest cover** was 12.6 times (2017:
7.2 times).
* Calculated as net debt divided by net assets
** Calculated as operating profit before amortisation and
transaction costs divided by interest costs
Net assets
At 30 April 2018 net assets were GBP59.1m (2017: GBP58.1m).
Non-current assets increased to GBP62.3m (2017: GBP60.0m), due
to intangible assets recognised on acquisitions and capital
expenditure in the year, together with deemed remuneration relating
to periods in excess of one year of GBP1.8m (2017: GBPnil) arising
from acquisitions in the year.
Trade and other receivables were GBP30.8m (2017: GBP29.8m). This
balance comprises trade debtors of GBP5.7m (2017: GBP5.4m),
unbilled income of GBP21.7m (2017: GBP20.8m), other debtors and
prepayments of GBP2.1m (2017: GBP2.9m), and deemed remuneration of
GBP1.3m (2017: GBP0.7m).
Net borrowings reduced to GBP7.5m (2017: GBP10.3m).
Trade and other payables were GBP18.4m (2017: GBP13.9m). The
balance comprises trade creditors of GBP1.4m (2017: GBP1.2m),
accruals of GBP6.9m (2017: GBP4.5m), tax and social security
creditors of GBP2.3m (2017: GBP2.4m), deferred income of GBP1.8m
(2017: GBP2.0m), other creditors of GBP4.3m (2017: GBP3.1m), and
deemed remuneration liabilities of GBP1.7m (2017: GBP0.7m) of which
GBP0.6m (2017: GBP0.4m) is payable within one year.
Current tax liabilities were GBP1.5m (2017: GBP0.8m). Net
deferred tax liabilities were GBP5.4m (2017: GBP5.4m).
Provisions for property costs and post-disposal obligations
total GBP1.2m (2017: GBP1.2m) of which GBP0.8m is payable within
one year.
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
10 July 2018 10 July 2018
Consolidated statement of comprehensive income
2018 2017
GBP'000 GBP'000
----------------------------------------------------------- --------- -----------
Continuing operations
Revenue 52,441 49,685
Direct costs (30,141) (28,130)
------------------------------------------------------------ --------- -----------
Gross profit 22,300 21,555
Other operating income 400 397
Administrative expenses (19,922) (20,309)
------------------------------------------------------------ --------- -----------
Operating profit before amortisation and transaction costs 6,059 5,627
Transaction costs (1,364) (1,545)
Amortisation of intangible assets arising on acquisitions (1,917) (2,439)
------------------------------------------------------------ --------- -----------
Operating profit 2,778 1,643
Finance costs (482) (1,001)
------------------------------------------------------------ --------- -----------
Profit before tax 2,296 642
Tax (872) (429)
------------------------------------------------------------ --------- -----------
Profit for the year from continuing operations 1,424 213
------------------------------------------------------------ --------- -----------
Discontinued operations
Loss from the year from discontinued operations - (476)
------------------------------------------------------------ --------- -----------
Profit (loss) for the year 1,424 (263)
------------------------------------------------------------ --------- -----------
Other comprehensive income
Exchange differences on translation of foreign operations - 2
------------------------------------------------------------ --------- -----------
Total comprehensive income (loss) for the year 1,424 (261)
------------------------------------------------------------ --------- -----------
Earnings (loss) per share
From continuing operations
Basic and diluted 1.3 pence 0.2 pence
------------------------------------------------------------ --------- -----------
From continuing and discontinued operations
Basic and diluted 1.3 pence (0.2) pence
------------------------------------------------------------ --------- -----------
The profit and comprehensive income for both years is
attributable to equity holders of the parent.
Consolidated statement of changes in equity
Share Share Merger Capital redemption Translation Retained Total
capital premium reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------- ------- ------- ------------------ ------------ --------- -------
At 1 May 2016 as previously reported 5,611 23,042 17,584 - (2) 13,995 60,230
Restatement - (923) 923 - - -
------------------------------------- ------- ------- ------- ------------------ ------------ --------- -------
At 1 May 2016 restated 5,611 22,119 18,507 (2) 13,995 60,230
------------------------------------- ------- ------- ------- ------------------ ------------ --------- -------
Loss for the year - - - - - (263) (263)
Other comprehensive income:
Exchange differences on translation
of foreign operations - - - - 2 - 2
------------------------------------- ------- ------- ------- ------------------ ------------ --------- -------
Total comprehensive loss for the year - - - - 2 (263) (261)
Dividends - - - - - (2,335) (2,335)
Credit to equity for equity-settled
share-based payments - - - - - 431 431
Shares issued 29 216 - - - (210) 35
------------------------------------- ------- ------- ------- ------------------ ------------ --------- -------
At 30 April 2017 restated 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 period (304) - - 304 - (226) (226)
Shares issued 172 454 1,741 -- - (455) 1,912
------------------------------------- ------- ------- ------- ------------------ ------------ --------- -------
At 30 April 2018 5,508 22,789 20,248 304 - 10,300 59,149
------------------------------------- ------- ------- ------- ------------------ ------------ --------- -------
Consolidated balance sheet
2018 2017
GBP'000 GBP'000
--------------------------------------------- -------- --------
Non-current assets
Intangible assets 59,061 58,471
Property, plant and equipment 1,512 1,498
Trade and other receivables 1,759 -
---------------------------------------------- -------- --------
62,332 59,969
--------------------------------------------- -------- --------
Current assets
Trade and other receivables 30,829 29,761
Cash and cash equivalents 3,518 6,715
---------------------------------------------- -------- --------
34,347 36,476
--------------------------------------------- -------- --------
Total assets 96,679 96,445
---------------------------------------------- -------- --------
Current liabilities
Trade and other payables (17,268) (13,585)
Current tax liabilities (1,548) (843)
Provisions (783) (755)
---------------------------------------------- -------- --------
(19,599) (15,183)
--------------------------------------------- -------- --------
Net current assets 14,748 21,293
---------------------------------------------- -------- --------
Non-current liabilities
Trade and other payables (1,093) (335)
Borrowings (11,000) (17,000)
Provisions (414) (418)
Deferred tax (5,424) (5,409)
---------------------------------------------- -------- --------
(17,931) (23,162)
--------------------------------------------- -------- --------
Total liabilities (37,530) (38,345)
---------------------------------------------- -------- --------
Net assets 59,149 58,100
---------------------------------------------- -------- --------
Equity
Share capital 5,508 5,640
Share premium 22,789 22,335
Merger reserve 20,248 18,507
Capital redemption reserve 304 -
Retained earnings 10,300 11,618
---------------------------------------------- -------- --------
Equity attributable to owners of the company 59,149 58,100
---------------------------------------------- -------- --------
Consolidated cash flow statement
2018 2017
GBP'000 GBP'000
----------------------------------------------- ------- -------
Cash flows from operating activities
Cash generated by operations 9,065 7,974
Income taxes paid (980) (1,462)
Interest paid (558) (919)
------------------------------------------------ ------- -------
Net cash from operating activities 7,527 5,593
------------------------------------------------ ------- -------
Investing activities
Purchase of property, plant and equipment (394) (289)
Purchase of intangible fixed assets (77) (8)
Deferred consideration payments (1,132) (1,144)
Acquisition of businesses (803) (1,773)
------------------------------------------------ ------- -------
Net cash from investing activities (2,406) (3,214)
------------------------------------------------ ------- -------
Financing activities
Dividends paid (2,356) (2,335)
Proceeds on issue of shares 38 37
Repayment of loans (6,000) (1,000)
------------------------------------------------ ------- -------
Net cash from financing activities (8,318) (3,298)
------------------------------------------------ ------- -------
Net decrease in cash and cash equivalents (3,197) (919)
Cash and cash equivalents at beginning of year 6,715 7,634
------------------------------------------------ ------- -------
Cash and cash equivalents at end of year 3,518 6,715
------------------------------------------------ ------- -------
1. Basis of preparation and accounting policies
The results for the year ended 30 April 2018 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 2017.
The group's financial statements for the year ended 30 April
2018 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 2017 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 2018 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, refinancing costs and related tax effects on these
items.
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 or are one-off in
nature. They are not influenced by the day to day operations of the
group.
Reserves restatement
During the year the group reclassified the premium on shares
issued as consideration for acquisitions from share premium to
merger reserve. At 1 May 2016 the opening reserves adjustment
between share premium and merger reserve was GBP923,000.
There is no impact on net assets, adjusted profit before tax,
adjusted EPS or reported cashflows.
2. Segmental analysis by class of business
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
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)
---------------------------------------------- --------------- ---------- -------------
External revenue 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
---------------------------------------------- --------------- ---------- -------------
Business Property Consolidated
recovery services
and financial
advisory
services
2017 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------------- ---------- -------------
Revenue
Total revenue from rendering of professional
services 36,231 13,524 49,755
Inter-segment revenue - (70) (70)
---------------------------------------------- --------------- ---------- -------------
External revenue 36,231 13,454 49,685
---------------------------------------------- --------------- ---------- -------------
Segmental result 7,353 2,900 10,253
Shared and central costs (4,626)
---------------------------------------------- --------------- ---------- -------------
Operating profit before amortisation and
transaction costs 5,627
---------------------------------------------- --------------- ---------- -------------
3. Discontinued operations
In the year ended 30 April 2015 the group discontinued its
global risk partners division. In the prior year, a post-tax
impairment charge of GBP476k was recognised in the year against
deferred consideration receivable.
2017
GBP'000
------------------------------------------------- --------
Administrative expenses (594)
-------------------------------------------------- --------
Loss before tax (594)
Tax 118
-------------------------------------------------- --------
Loss for the period from discontinued operations (476)
-------------------------------------------------- --------
4. Finance costs
2018 2017
Continuing GBP'000 GBP'000
------------------------------------------------------------ ------- -------
Interest on loans 482 760
Unwinding of discount on deferred consideration liabilities - 16
------------------------------------------------------------ ------- -------
Interest costs 482 776
Refinancing costs - 225
Total finance costs 482 1,001
------------------------------------------------------------ ------- -------
5. Transaction costs
2018 2017
Continuing GBP'000 GBP'000
---------------------------------------------------------------- -------- --------
Deemed remuneration 1,678 1,420
Acquisition costs 117 141
Gain on acquisition (1,189) (351)
Charge relating to the put and call option over Begbies Traynor
(London) LLP 758 335
1,364 1,545
---------------------------------------------------------------- -------- --------
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2018 2017
GBP'000 GBP'000
----------------------------------------------------------------- -------- --------
Earnings
----------------------------------------------------------------- -------- --------
Profit for the year from continuing operations attributable
to equity holders 1,424 213
Loss from discontinued operations attributable to equity holders - (476)
----------------------------------------------------------------- -------- --------
Profit (loss) for the year attributable to equity holders 1,424 (263)
----------------------------------------------------------------- -------- --------
2018 2017
number number
------------------------------------------------------------ ----------- -----------
Number of shares
Weighted average number of ordinary shares for the purposes
of basic earnings per share 108,998,901 107,246,497
Effect of dilutive potential ordinary shares:
Share options 1,264,656 1,688,849
Contingent shares as consideration for capital transactions 3,196,612 1,642,313
------------------------------------------------------------ ----------- -----------
Weighted average number of ordinary shares for the purposes
of diluted earnings per share 113,460,169 110,577,659
------------------------------------------------------------ ----------- -----------
2018 2017
pence pence
------------------------------------------------- ------ ------
Basic and diluted earnings (loss) per share from
------------------------------------------------- ------ ------
Continuing operations 1.3 0.2
Discontinued operations - (0.4)
------------------------------------------------- ------ ------
Total 1.3 (0.2)
------------------------------------------------- ------ ------
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:
2018 2017
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
Earnings from continuing operations
Profit for the year attributable to equity holders 1,424 213
Amortisation of intangible assets arising on acquisitions 1,917 2,439
Transaction costs 1,364 1,545
Refinancing costs - 225
Tax effect of above items (364) (875)
Adjusted earnings 4,341 3,547
---------------------------------------------------------- -------- --------
2018 2017
pence pence
--------------------------------------------------------------- ------ ------
Adjusted basic earnings per share from continuing operations 4.0 3.3
--------------------------------------------------------------- ------ ------
Adjusted diluted earnings per share from continuing operations 3.8 3.2
--------------------------------------------------------------- ------ ------
7. Dividends
2018 2017
GBP'000 GBP'000
--------------------------------------------------------------- -------- --------
Amounts recognised as distributions to equity holders in the
year
Interim dividend for the year ended 30 April 2017 of 0.6p
(2016: 0.6p) per share 640 637
Final dividend for the year ended 30 April 2017 of 1.6p (2016:
1.6p) per share 1,716 1,698
--------------------------------------------------------------- -------- --------
2,356 2,335
--------------------------------------------------------------- -------- --------
Amounts proposed as distributions to equity holders
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 1,872 1,707
--------------------------------------------------------------- -------- --------
2,643 2,347
--------------------------------------------------------------- -------- --------
The proposed final dividend is subject to approval by
shareholders at the annual general meeting in September 2018. The
interim dividend for 2018 was not paid until 10 May 2018 and,
accordingly, has not been included as a liability in these
financial statements nor as a distribution to equity
shareholders.
8. Reconciliation to the cash flow statement
2018 2017
GBP'000 GBP'000
---------------------------------------------------------------- -------- --------
Profit (loss) for the year 1,424 (263)
Adjustments for:
Tax 872 311
Finance costs 482 1,001
Amortisation of intangible assets 2,099 2,613
Depreciation of property, plant and equipment 488 769
Deemed remuneration 1, 678 1,420
Charge relating to the put and call option over Begbies Traynor
(London) LLP 758 335
Gain on acquisition (1,189) (351)
Loss on disposal of property, plant & equipment - 13
Loss on disposal of discontinued operations - 594
Share-based payment expense 295 431
---------------------------------------------------------------- -------- --------
Operating cash flows before movements in working capital 6,907 6,873
(Increase) decrease in receivables (458) 3,179
Increase (decrease) in payables 2,742 (1,529)
Decrease in provisions (126) (549)
---------------------------------------------------------------- -------- --------
Cash generated by operations 9,065 7,974
---------------------------------------------------------------- -------- --------
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
FR UGUWUMUPRGMB
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