REG - Begbies Traynor - Half-year Results
13/12/2022 07:00
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RNS Number : 4428J Begbies Traynor Group PLC 13 December 2022
13 December 2022
Begbies Traynor Group plc
Half year results
for the six months ended 31 October 2022
"Strong first half performance and confidence in full year outlook"
Begbies Traynor Group plc (the 'company' or the 'group'), the business
recovery, financial advisory and property services consultancy, today
announces its half year results for the six months ended 31 October 2022.
Financial overview
2022 2021
£m £m
Revenue 58.5 52.3
Adjusted EBITDA* 11.9 11.1
Adjusted profit before tax* ** 9.0 8.0
Profit before tax 5.0 2.7
Adjusted diluted EPS* *** (p) 4.4 3.9
Diluted EPS (p) 2.3 (0.2)
Interim dividend (p) 1.2 1.1
Net (debt) cash (2.4) 1.2
Financial highlights
· Strong first half performance with double digit revenue and profit
growth in both divisions
o Building on consistent track record of growth in revenue and adjusted
earnings
· Growth in revenue of 12% and adjusted profit before tax of 13%
· Increase in interim dividend to 1.2p (2021: 1.1p), which builds on
the 10% compound annual growth in the dividend since 2017
· Strong balance sheet and significant levels of headroom within
committed bank facilities, ensures well placed to continue to invest in
successful organic and acquisitive growth strategy
o Net debt of £2.4m, after £7.4m of acquisition related payments in the
six months
Divisional highlights
· Business recovery and financial advisory performed well:
o Market-leading positions maintained (by volume of appointments)
§ 14% share of the overall market - ranked first nationally
§ 10% share of administration market - ranked second nationally
o Increased number and value of insolvency appointments including:
§ several higher profile administration appointments
§ pilot project for recovery of bounce back loans for major bank
o Advisory services, including Mantra Capital the finance brokerage acquired
July 2022, performed well benefitting from organic growth and acquisitions
· Property advisory and transactional services had a successful
period:
o Resilient income streams enabled strong performance in a challenging
economic environment
o Growth from organic initiatives and acquisitions
o Budworth Hardcastle (acquired June 2022) traded well in the period and in
line with expectations
Current trading and outlook
· Confident of delivering full year results in line with current
market expectations****
o Extending the group's strong financial track record of growth
o Business recovery - order book up 15% in last six months to £33.9m,
higher level of enquiries and increasing economic headwinds
o Financial advisory - encouraging pipeline of engagements
o Property advisory and transactional services - resilient income streams
and continuing flow of new instructions
· Q3 trading update will be issued in late February 2023
Commenting on the results, Ric Traynor, Executive Chairman of Begbies Traynor
Group, said:
"The group's strong performance builds on our consistent track record of
growth, with double digit increases in revenues and profits from both
divisions which we have continued to grow organically and through
acquisitions.
"We expect continued growth from business recovery and financial advisory,
given its increased order book, higher level of enquiries and increasing
economic headwinds. We are also confident in the prospects for property
advisory and transactional services, reflecting its resilient income streams,
continuing flow of new instructions and potential to continue developing its
mix of services.
"Overall, we remain confident of delivering upon expectations for the full
year.
"Our broad range of services, diversified client base, organic growth
initiatives and pipeline of acquisition opportunities, combined with
increasing counter-cyclical activity, will enable us to continue to build upon
our strong track record in the current year and beyond."
* The board uses adjusted performance measures to provide meaningful
information on the performance of the business. The items excluded from
adjusted PBT and EPS are those which arise due to acquisitions in accordance
with IFRS 3 and are not influenced by the day-to-day operations of the group.
Adjusted EBITDA excludes non-cash share-based payment and depreciation charges
from adjusted PBT.
** Profit before tax of £5.0m (2021: £2.7m) plus amortisation of intangible
assets arising on acquisitions of £3.2m (2021: £2.6m) plus transaction costs
of £0.8m (2021: £2.7m).
*** See reconciliation in note 5.
**** Current range of analyst forecasts for revenue of £117.7m-£121.4m and
adjusted PBT of £19.7m-£20.6m (as compiled by the group)
There will be a webcast and conference call for analysts today at 9:00am.
Please contact Pauline Guenot via begbies@mhpc.com (mailto:begbies@mhpc.com)
or on 020 3128 8657 if you would like to receive details.
Enquiries please contact:
Begbies Traynor Group plc
0161 837 1700
Ric Traynor - Executive Chairman
Nick Taylor - Group Finance Director
Canaccord Genuity Limited
020 7523 8350
(Nominated Adviser and Joint Broker)
Emma Gabriel / Patrick Dolaghan
Shore Capital
020 7408 4090
(Joint Broker)
Malachy McEntyre / Mark Percy / Anita Ghanekar / James Thomas
MHP
020
3128 8567
Reg Hoare / Katie Hunt / Charles Hirst / Pauline Guenot
begbies@mhpgroup.com
Notes to editors
Begbies Traynor Group plc is a leading business recovery, financial advisory
and property services consultancy, providing services nationally from a
comprehensive network of UK locations. The group has over 1,000 partners and
employees and our professional staff include licensed insolvency
practitioners, accountants, chartered surveyors and lawyers.
The group's services include:
· Corporate and personal insolvency - we handle the largest number of
corporate insolvency appointments in the UK, principally serving the
mid-market and smaller companies.
· Financial advisory - Debt advisory, due diligence and transactional
support, accelerated corporate finance, pensions advisory, business and
financial restructuring, forensic accounting and investigations, finance
broking.
· Corporate finance - buy and sell side support on corporate
transactions.
· Valuations - valuation of property, businesses, machinery and
business assets.
· Property consultancy, planning and management - building
consultancy, commercial property management, specialist insurance and vacant
property risk management, transport planning and design.
· Transactional services - sale of property, machinery and other
business assets through physical and online auctions; business sales agency;
commercial property agency.
Further information can be accessed via the group's website at
www.begbies-traynorgroup.com/investor-relations.
CHAIRMAN'S STATEMENT
INTRODUCTION - GOOD FIRST HALF PERFORMANCE
The group has performed well in the first six months of the financial year,
with double digit revenue and profit growth in both divisions, building on our
consistent track record of growth in revenue and adjusted earnings.
We have continued to grow our business recovery and financial advisory
division, both organically and through acquisitions.
The division's insolvency appointments increased in the period, including
several larger, mid-market insolvency and restructuring cases. This reflects
an increased number of administrations undertaken by the division as we
benefitted from our expanded London office and offshore practice. We advised
on the first SME court sanctioned restructuring plan (enabled by the Corporate
Insolvency and Governance Act 2020), following our previous use of this new
legislation on a mid-market restructuring in 2021. In addition, we commenced
an innovative pilot project with a major bank to assist in the recovery of
bounce back loans.
These appointments have ensured we maintained our market-leading positions (by
volume of appointments), being ranked first nationally for overall corporate
insolvency appointments and second in volume of administrations.
Our advisory services have delivered a solid performance in the period with
corporate finance deal completions in line with expectations. BTG Funding
Solutions, our finance brokerage, has performed in line with expectations. The
business comprises Mantra Capital (acquired July 2022) and MAF Finance Group
(acquired May 2021).
Our property services business had a successful period, with continuing growth
from organic initiatives and acquisitions. This reflects its resilient income
streams in the face of a challenging economic environment.
Following the strong financial performance of recent years and the successful
fund raising in 2021, we have a strong balance sheet and significant levels of
headroom within our committed bank facilities, which ensures we are well
placed to continue to invest in our successful growth strategy.
RESULTS
Group revenue in the half year ended 31 October 2022 increased by 12% to
£58.5m (2021: £52.3m). Adjusted* profit before tax** increased by 13% to
£9.0m (2021: £8.0m). Statutory profit before tax was £5.0m (2021: £2.7m),
reflecting an increase in non-cash amortisation costs from recent acquisitions
to £3.2m (2021: £2.6m) and lower transaction costs of £0.8m (2021: £2.7m).
Adjusted* diluted earnings per share*** increased by 13% to 4.4p (2021: 3.9p).
Diluted earnings per share was 2.3p (2021: loss of 0.2p).
Net debt as at 31 October 2022 was £2.4m (30 April 2022: cash of £4.7m, 31
October 2021: cash of £1.2m), after £7.4m of acquisition related payments in
the period (net of cash acquired).
* The board uses adjusted performance measures to provide meaningful
information on the performance of the business. The items excluded from
adjusted PBT and EPS are those which arise due to acquisitions in accordance
with IFRS 3 and are not influenced by the day-to-day operations of the group.
** Profit before tax of £5.0m (2021: £2.7m) plus amortisation of intangible
assets arising on acquisitions of £3.2m (2021: £2.6m) plus transaction costs
of £0.8m (2021: £2.7m).
*** See reconciliation in note 5.
DIVIDEND GROWTH CONTINUES
The board is pleased to declare a 9% increase in the interim dividend to 1.2p
(2021: 1.1p), which builds on the 10% compound annual growth in the dividend
since 2017 and reflects our confidence in sustaining our financial track
record and the group's financial position and prospects. We remain committed
to a long-term progressive dividend policy, which takes account of the group's
earnings growth, our investment plans and cash requirements, together with the
market outlook.
The interim dividend will be paid on 5 May 2023 to shareholders on the
register on 11 April 2023, with an
ex-dividend date of 6 April 2023.
OUTLOOK - CONFIDENT OF DELIVERING MARKET EXPECTATIONS
The group's financial performance in the first six months leaves the board
confident of delivering market expectations* for the full year, which will
extend our strong financial track record of growth.
We have seen an increase in activity levels in our largest service line of
business recovery in the period. The combination of our increased order book,
higher level of enquiries and increasing economic headwinds gives the board
confidence that the business recovery team will continue to deliver growth
through the second half of the current year and thereafter.
Our financial advisory teams have an encouraging pipeline of engagements
across all service lines which gives confidence in continued positive progress
in the second half.
Despite the challenging economic environment, the board remains confident in
the prospects for the property advisory and transactional services division,
reflecting its resilient income streams, continuing flow of new instructions
and potential to continue developing its mix of services. As a result, our
expectations for the full year remain unchanged.
Our broad range of services, diversified client base, organic growth
initiatives and pipeline of acquisition opportunities, combined with
increasing counter-cyclical activity, leaves us confident of continuing to
build upon our strong track record in the current year and beyond."
We will provide an update on third quarter trading in late February 2023.
* current range of analyst forecasts for revenue of £117.7m-£121.4m and
adjusted PBT of £19.7m-£20.6m (as compiled by the group)
Ric Traynor
Executive Chairman
13 December 2022
BUSINESS REVIEW
OPERATING REVIEW
Business recovery and financial advisory
Financial summary
Revenue in the period increased by 10% to £42.4m (2021: £38.7m), reflecting
organic growth (£2.6m) and acquisitions (£1.1m).
Segmental profits for the period increased by 10% to £10.7m (2021: £9.7m),
with operating margins of 25.2%
(2021: 25.1%).
Insolvency market
The number of corporate insolvencies in the 12 months ended 30 September 2022*
increased to 20,731, following the removal of the Government's Covid support
measures and are now 23% higher than in the comparable pre-pandemic period
(2019: 16,836, 2020: 13,781, 2021: 12,492).
This increase has largely been from increased numbers of liquidations (which
typically represent insolvencies of smaller companies). Although the number of
administrations (which typically involve larger and more complex instructions)
has begun to increase over the last year, they remain c.35% lower than
pre-pandemic levels.
*Source: The Insolvency Service quarterly statistics on the number of
corporate insolvencies in England and Wales on a seasonally adjusted basis for
the 12 months ended 30 September.
Operating review
Business recovery
We have maintained our market-leading positions (by volume of appointments)
where we are ranked first nationally for overall corporate appointments* with
a 14% share and second nationally in administrations with a 10% share. These
strong market positions reflect the benefits of investments we have made in
recent years, notably in expanding our London office and offshore practice.
Our market-leading position and national office network leaves the business
well-positioned to provide advice and assistance to UK SME and mid-market
corporates. During the period we were appointed as administrators of Worcester
Rugby Club, Avonside Group (the largest roofing contractor in the UK),
Silverbond Enterprises Limited (the former operator of the Park Lane Casino in
London) and Jehu Group (a long-standing South Wales construction business).
In addition, we have advised on the first SME court sanctioned restructuring
plan (enabled by the Corporate Insolvency and Governance Act 2020), of Houst
the short-term holiday lettings operator. This follows our previous use of
this new legislation on the mid-market Amicus finance restructuring in 2021.
We have increased both the number and value of insolvency appointments across
both liquidations and higher-value administrations compared to the prior
period. This has driven an increase in both organic revenue and our order
book, which increased by 15% in the last six months to £33.9m at 31 October
2022 (30 April 2022: £29.5m, 31 October 2021: £29.0m). This gives confidence
of continuing revenue growth in our largest service line.
During the period, we commenced an innovative pilot project with a major bank,
initially including over 100 cases to assist in the recovery of bounce back
loans. We are encouraged, based on initial signs, that this pilot project may
provide a means for banks and the Government to maximise recovery.
* CVLs, administrations and CVAs as disclosed in the London, Edinburgh and
Belfast Gazettes, Accountant in Bankruptcy and Companies House
Financial advisory
Our advisory services have performed well in the period, with contribution
from the Mantra Capital acquisition complemented by organic growth.
BTG Funding Solutions, our finance brokerage, has performed in line with
expectations. The business comprises Mantra Capital (acquired July 2022) and
MAF Finance Group (acquired May 2021). The combined team have expertise across
a wide range of sectors, and provide finance broking services covering
commercial and residential
real estate, healthcare and asset finance, together with insurance broking to
a broad range of sectors.
Finance broking complements the group's other advisory and transactional
services, particularly debt advisory and restructuring, as well as the
valuation and sale of assets. The Mantra Capital business has performed well
in the period and in line with our expectations. The integration of the team
with our wider advisory team is proceeding well.
Our Springboard Corporate Finance team had a successful six months across a
range of buy-side, sell-side and fundraising projects.
The advisory teams have a good pipeline of instructions giving confidence
about activity levels for the second half of the financial year.
Property advisory and transactional services
Financial summary
Revenue in the period increased by 18% to £16.1m (2021: £13.6m), reflecting
the first-time contribution from acquisitions (£1.8m) and organic growth
(£0.7m).
Segmental profits for the period increased by 17% to £2.8m (2021: £2.4m),
with operating margins broadly maintained at 17.4% (2021: 17.6%).
Operating review
Financial performance in the period reflects the resilient income streams in
the division, which has enabled the business to deliver a strong performance
in a challenging economic environment.
Our professional services team performed well in the period, providing real
estate valuation services to secured lenders, including in relation to
distressed loans. The team has grown significantly over the last year
following the integration of recent acquisitions and is operating as a
national practice. Instruction levels over the period from lenders were
robust.
Our consultancy services, which include building consultancy, commercial
property management, transport planning and highway design, specialist
insurance broking and vacant property risk management, have delivered strong
performances in the period. Our building consultancy services, including our
offering to the education sector, continue to provide a platform for both
organic and acquired growth.
Our transactional teams include commercial property agency, online property
auctions, business sales agency and plant and machinery sales (through online
auction, marketed sale or private tender). In spite of the economic headwinds,
transaction levels were robust in the period. These services are provided
across insolvency, defensive and pro-cyclical transactions.
In June 2022, we acquired the Eastern England based Budworth Hardcastle
chartered surveyors' practice. The team provide valuation, commercial property
agency and building consultancy services to a wide range of regional clients
and the acquisition has strengthened our existing offering and footprint in
the region. The integration of the business has been completed in line with
expectations.
FINANCE REVIEW
Financial summary
6 months to 31 Oct 2022 6 months to 31 Oct 2021 12 months to 30 Apr 2022
£m £m £m
Revenue 58.5 52.3 110.0
Adjusted EBITDA 11.9 11.1 24.0
Share-based payments (0.7) (0.7) (1.6)
Depreciation (1.7) (2.0) (3.8)
Operating profit (before transaction costs and amortisation) 9.5 8.4 18.6
Finance costs (0.5) (0.4) (0.8)
Adjusted profit before tax 9.0 8.0 17.8
Transaction costs (0.8) (2.7) (8.3)
Amortisation of intangible assets arising on acquisitions (3.2) (2.6) (5.5)
Profit before tax 5.0 2.7 4.0
Tax on profits on ordinary activities (1.3) (1.2) (2.7)
Deferred tax charge due to change in tax rate - (1.8) (1.8)
Statutory profit (loss) for the period 3.7 (0.3) (0.5)
Operating result (before transaction costs and amortisation)
Revenue in the period increased by £6.2m to £58.5m (2021: £52.3m), an
overall increase of 12% (6% acquired).
Adjusted EBITDA increased to £11.9m (2021: £11.1m) with non-cash costs
(share-based payments and depreciation) decreasing to £2.4m (2021: £2.7m),
as a result of reduced depreciation costs.
Operating performance by segment is detailed below:
Revenue (£m) Operating profit (£m)
2022 2021 growth 2022 2021 growth
Business recovery and financial advisory 42.4 38.7 10% 10.7 9.7 10%
Property advisory and transactional services 16.1 13.6 18% 2.8 2.4 17%
Shared and central costs - - - (4.0) (3.6) 10%
Total 58.5 52.3 12% 9.5 8.4 13%
Shared and central costs increased to £4.0m principally due to investment in
the group's IT and HR capability, but remained broadly unchanged as a
percentage of revenue at 6.8% (2021: 6.9%).
Operating margins were 16.2% (2021: 16.0%).
Adjusted profit before tax increased by 13% to £9.0m (2021: £8.0m) in the
period from the increased operating profit, with finance costs broadly in line
with the prior period.
Transaction costs
Transaction costs arise due to acquisitions in accordance with IFRS 3 and
include the following:
· Acquisition consideration where the vendors have obligations in the
sale and purchase agreement to provide post-acquisition services for a fixed
period (deemed remuneration in accordance with IFRS 3). This consideration is
charged to profit over the period of service;
· Gains on acquisitions, where the fair value of assets acquired
exceeds the consideration under IFRS 3; and
· Legal and professional fees incurred on acquisitions.
These costs (detailed in note 3) decreased to £0.8m (2021: £2.7m),
reflecting an increase in acquisition consideration from both current and
prior year acquisitions to £5.4m (2021: £4.7m), acquisition costs of £0.3m
(2021: £0.1m), partially offset by a gain on acquisition of £4.9m (2021:
£2.1m).
Tax
The overall tax charge for the period was £1.3m (2021: £3.0m) as detailed
below:
2022 2021
Profit before tax Tax Profit after tax Effective rate Profit before tax Tax Profit after tax Effective rate
£m £m £m £m £m £m
Adjusted 9.0 (1.9) 7.1 21% 8.0 (1.7) 6.3 21%
Transaction costs (0.8) - (0.8) - (2.7) - (2.7) -
Amortisation (3.2) 0.6 (2.6) 19% (2.6) 0.5 (2.1) 19%
Tax on ordinary activities 5.0 (1.3) 3.7 26% 2.7 (1.2) 1.5 43%
Deferred tax charge from change in rate - - - - - (1.8) (1.8) -
Statutory 5.0 (1.3) 3.7 26% 2.7 (3.0) (0.3) 107%
The adjusted tax rate of 21% is based on the expected rate for the full year.
The prior period deferred tax charge of £1.8m was a one-off non-cash charge,
resulting from an increase in deferred tax liabilities following the
legislation to increase the UK corporation tax rate to 25% being enacted
during the period.
Earnings per share
Adjusted diluted earnings per share* increased by 13% to 4.4p (2021: 3.9p).
Diluted earnings per share was 2.3p (2021: loss per share 0.2p).
* See reconciliation in note 5
Partners and employees
The average number of full-time equivalent (FTE) partners and employees
working in the group over the period increased due to both acquisitions and
organic investment.
2022 2021
Business recovery and financial advisory Property advisory and transactional services Shared and support teams Total Business recovery and financial advisory Property advisory and transactional services Shared and support teams Total
Partners 82 - - 82 85 - - 85
Staff 424 294 - 718 400 260 - 660
Fee earners 506 294 - 800 485 260 - 745
Support teams 64 10 84 158 64 10 76 150
Total 570 304 84 958 549 270 76 895
The ratio of our support teams to fee earning partners and employees is 5.1
(2021: 5.0).
Financing
The group has maintained a robust financial position with net debt of £2.4m
as at 31 October 2022 (30 April 2022: net cash £4.7m, 31 October 2021: net
cash £1.2m), having made £7.4m of acquisition and deferred consideration
payments in the period (net of cash acquired).
We have significant levels of headroom within our bank facilities which are
committed until August 2024 and comprise a £25m unsecured, committed
revolving credit facility and a £5m uncommitted acquisition facility. During
the period, all bank covenants were comfortably met.
Cash flow in the period is summarised as follows:
6 months to 31 Oct 2022 6 months to 12 months to 30 Apr 2022
£m 31 Oct 2021
Adjusted EBITDA 11.9 11.1 24.0
Working capital (4.8) (3.5) (1.3)
Cash from operating activities (before acquisition consideration payments*) 7.1 7.6 22.7
Accelerated tax payment (1.0) - -
Underlying tax payment (2.2) (1.7) (3.6)
Interest (0.4) (0.4) (0.8)
Capital expenditure (0.3) (0.4) (1.0)
Capital element of lease payments (1.4) (1.8) (3.2)
Free cash flow 1.8 3.3 14.1
Acquisition payments (net of cash acquired)** (7.4) (3.6) (8.6)
Net proceeds from share issues 0.2 - 0.5
Dividends (1.7) (1.5) (4.5)
Net cash (outflow) inflow (7.1) (1.8) 1.5
* acquisition consideration payments accounted for as deemed remuneration in
accordance with IFRS3
** acquisition consideration payments (defined above), acquisition costs and
deferred consideration payments net of cash acquired
Cash from operating activities (before acquisition consideration payments) was
£7.1m (2021: £7.6m) with increased EBITDA of £0.8m offset by increased
working capital absorption of £1.3m. The working capital increase of £4.8m
in the period reflected increased debtors of £3.4m and a seasonal phasing of
payments (including annual bonuses) of £1.4m.
Tax payments increased to £3.2m (2021: £1.7m), resulting from the previously
guided change in due dates for corporation tax payments, which resulted in an
accelerated payment of £1.0m, and an increase in the underlying payment to
£2.2m (2021: £1.7m).
Free cash flow in the period was £1.8m (2021: £3.3m).
Acquisition payments (net of cash acquired) in the period were £7.4m (2021:
£3.6m) comprising: the acquisitions of Mantra Capital (£4.7m) and Budworth
Hardcastle (£0.5m) (2021: MAF Finance Group £1.9m and Fernie Greaves
£0.3m), contingent payments in respect of prior year acquisitions of £1.9m
(2021: £1.3m) and acquisition costs £0.3m (2021: £0.1m).
Net assets
Net assets as at 31 October 2022 were £84.6m, compared to £84.5m as at 30
April 2022. The movement represents an increase of £7.1m from post-tax
adjusted earnings and £1.7m from the issue of new shares; offset by dividends
of £5.4m and the post-tax impact of acquisition-related transaction and
amortisation costs of £3.3m.
Ric Traynor
Nick Taylor
Executive chairman
Group finance director
13 December 2022
13 December 2022
Consolidated statement of comprehensive income
Six months ended Six months ended Year
ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Revenue 2 58,457 52,268 110,002
Direct costs (32,743) (30,196) (62,197)
Gross profit 25,714 22,072 47,805
Other operating income 142 99 155
Administrative expenses (20,363) (19,065) (43,076)
Operating profit before amortisation and transaction costs 2 9,473 8,441 18,594
Transaction costs 3 (828) (2,686) (8,224)
Amortisation of intangible assets arising on acquisitions (3,152) (2,649) (5,486)
Operating profit 5,493 3,106 4,884
Finance costs 4 (503) (413) (835)
Profit before tax 4,990 2,693 4,049
Tax on profits on ordinary activities (1,269) (1,207) (2,733)
Deferred tax charge due to change in tax rate - (1,817) (1,816)
Total tax charge (1,269) (3,024) (4,549)
Profit (loss) and total comprehensive income (loss) for the period 3,721 (331) (500)
Earnings per share
Basic 5 2.4p (0.2)p (0.3)p
Diluted 5 2.3p (0.2)p (0.3)p
All of the profit and comprehensive income for the period is attributable to
equity holders of the parent.
Consolidated statement of changes in equity
For the six months ended 31 October 2022 (unaudited) Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2022 7,671 29,787 27,172 304 19,591 84,525
Total comprehensive income for the period - - - - 3,721 3,721
Dividends - - - - (5,387) (5,387)
Shares issued as consideration for acquisitions 28 - 772 - - 800
Credit to equity for equity-settled share-based payments - - - - 744 744
Other share options 14 156 - - - 170
At 31 October 2022 7,713 29,943 27,944 304 18,669 84,573
For the six months ended 31 October 2021 (unaudited) Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2021 7,547 29,325 25,974 304 23,100 86,250
Total comprehensive income for the period - - - - (331) (331)
Dividends - - - - (4,553) (4,553)
Shares issued as consideration for acquisitions 42 - 958 - - 1,000
Credit to equity for equity-settled share-based payments - - - - 717 717
Other share options 21 10 - - - 31
At 31 October 2021 7,610 29,335 26,932 304 18,933 83,114
For the year ended 30 April 2022 (audited) Share capital Share premium Merger reserve Capital redemption reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 May 2021 7,547 29,325 25,974 304 23,100 86,250
Loss for the year - - - - (500) (500)
Dividends - - - - (4,553) (4,553)
Credit to equity for equity-settled share-based payments - - - - 1,544 1,544
Shares issued as consideration for acquisitions 52 - 1,198 - - 1,250
Other share options 72 462 - - - 534
At 30 April 2022 7,671 29,787 27,172 304 19,591 84,525
Consolidated balance sheet
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Non-current assets
Intangible assets 76,273 77,348 75,307
Property, plant and equipment 1,980 1,900 1,967
Right of use assets 5,400 6,131 5,492
Trade and other receivables 7 7,439 4,331 4,175
91,092 89,710 86,941
Current assets
Trade and other receivables 7 54,976 49,949 49,666
Cash and cash equivalents 7,551 7,171 9,685
62,527 57,120 59,351
Total assets 153,619 146,830 146,292
Current liabilities
Trade and other payables 8 (40,402) (38,093) (37,163)
Current tax liabilities (707) (2,109) (1,767)
Lease liabilities (1,009) (2,572) (1,747)
Provisions (1,249) (520) (1,474)
(43,367) (43,294) (42,151)
Net current assets 19,160 13,826 17,200
Non-current liabilities
Borrowings (10,000) (6,000) (5,000)
Lease liabilities (4,960) (4,583) (4,5 98)
Provisions (2,292) (2,521) (1,992)
Deferred tax (8,427) (7,318) (8,026)
(25,679) (20,422) (19,616)
Total liabilities (69,046) (63,716) (61,767)
Net assets 84,573 83,114 84,525
Equity
Share capital 7,713 7,610 7,671
Share premium 29,943 29,335 29,787
Merger reserve 27,944 26,932 27,172
Capital redemption reserve 304 304 304
Retained earnings 18,669 18,933 19,591
Equity attributable to owners of the company 84,573 83,114 84,525
Consolidated cash flow statement
Six months ended Six months ended Year ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Cash flows from operating activities
Cash generated by operations 9 (970) 4,193 14,450
Income taxes paid (3,216) (1,708) (3,621)
Interest paid on borrowings (274) (154) (328)
Interest paid on lease liabilities (199) (238) (460)
Net cash from operating activities (before acquisition consideration payments)
3,464 5,413 18,311
Acquisition consideration payments which are deemed remuneration under IFRS 3 (8,123) (3,320) (8,270)
Net cash from operating activities (4,659) 2,093 10,041
Investing activities
Purchase of intangible fixed assets (18) (43) (188)
Purchase of property, plant and equipment (309) (308) (876)
Proceeds on disposal of property, plant and equipment - - 40
Acquisition of businesses (327) (454) (465)
Deferred consideration payments - (50) (36)
Net cash acquired in acquisition of businesses 1,055 220 397
Net cash from investing activities 401 (635) (1,128)
Financing activities
Dividends paid (1,687) (1,509) (4,553)
Net proceeds on issue of shares 170 31 504
Repayment of obligations under leases (1,359) (1,795) (3,165)
Drawdown of loans 5,000 1,000 -
Net cash from financing activities 2,124 (2,273) (7,214)
Net (decrease) increase in cash and cash equivalents (2,134) (815) 1,699
Cash and cash equivalents at beginning of period 9,685 7,986 7,986
Cash and cash equivalents at end of period 7,551 7,171 9,685
1. Basis of preparation and accounting policies
(a) Basis of preparation
The half year condensed consolidated financial statements do not include all
of the information and disclosures required for full annual financial
statements and should be read in conjunction with the group's annual financial
statements as at 30 April 2022, which have been prepared in accordance with
IFRSs as adopted by the European Union.
This condensed consolidated half year financial information does not comprise
statutory accounts within the meaning of Section 435 of the Companies Act
2006. Statutory accounts for the year ended 30 April 2022 were approved by the
board of directors on
18 July 2022 and delivered to the Registrar of Companies. The report of the
auditor on those accounts was unqualified, did not include a reference to any
matters to which the auditor drew attention by way of emphasis without
qualifying their report and did not contain statements under section 498 (2)
or (3) of the Companies Act 2006.
The directors have reviewed the financial resources available to the group and
have concluded that the group is a going concern. This conclusion is based
upon, amongst other matters, a review of the group's financial projections for
a period of twelve months following the date of this announcement, together
with a review of the cash and committed borrowing facilities available to the
group. Accordingly, the going concern basis has been used in preparing these
half year condensed consolidated financial statements.
The condensed consolidated financial statements for the six months ended 31
October 2022 have not been audited nor subject to an interim review by the
auditors. IAS 34 'Interim financial reporting' is not applicable to these
half year condensed consolidated financial statements and has therefore not
been applied.
(b) Significant accounting policies
The accounting policies adopted in preparation of the half year condensed
consolidated financial statements are consistent with those followed in the
preparation of the group's annual financial statements for the year ended 30
April 2022.
2. Segmental analysis by class of business
Six months ended Six months ended Year ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revenue
Business recovery and financial advisory 42,350 38,653 81,383
Property advisory and transactional services 16,107 13,615 28,619
58,457 52,268 110,002
Operating profit before amortisation and transaction costs
Business recovery and financial advisory 10,652 9,693 21,002
Property advisory and transactional services 2,829 2,388 4,841
Shared and central costs (4,008) (3,640) (7,249)
9,473 8,441 18,594
3. Transaction costs
Six months ended Six months ended Year ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Acquisition consideration (deemed remuneration in accordance with IFRS 3) 5,425 4,692 9,983
Acquisition costs 327 109 215
Gain on acquisition (4,924) (2,115) (1,974)
828 2,686 8,224
4. Finance costs
Six months ended Six months ended Year ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Interest on bank loans 303 175 375
Finance charge on lease liabilities 161 207 385
Finance charge on dilapidations provisions 39 31 75
503 413 835
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Six months ended Six months ended Year ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Earnings
Profit (loss) for the period attributable to equity holders 3,721 (331) (500)
31 October 2022 (unaudited) 31 October 2021 30 April 2022 (audited)
(unaudited)
number number number
'000 '000 '000
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 155,962 154,423 154,556
per share
Effect of dilutive potential ordinary shares:
Share options 6,054 6,221 5,968
Weighted average number of ordinary shares for the purposes of diluted 162,016 160,644 160,524
earnings per share
Six months ended Six months ended Year ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
pence pence pence
Basic earnings per share 2.4 (0.2) (0.3)
Diluted earnings per share 2.3 (0.2) (0.3)
The following additional earnings per share figures are presented as the
directors believe they provide a better understanding of the trading position
of the group, as they exclude the accounting charges which arise due to
acquisitions in accordance with IFRS 3 and are not influenced by the
day-to-day operations of the group.
Six months ended Six months ended Year ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Earnings
Profit (loss) for the period attributable to equity holders 3,721 (331) (500)
Amortisation of intangible assets arising on acquisitions 3,152 2,649 5,486
Transaction costs 828 2,686 8,224
Tax effect of above items (615) (503) (1,059)
Impact of change in tax rate on deferred tax liabilities - 1,817 1,990
Adjusted earnings 7,086 6,318 14,141
Six months ended Six months ended Year ended
31 October 2022 31 October 2021 30 April 2022
(unaudited) (unaudited) (audited)
pence pence pence
Adjusted basic earnings per share 4.5 4.1 9.1
Adjusted diluted earnings per share 4.4 3.9 8.8
6. Dividends
The interim dividend of 1.2p (2021: 1.1p) per share (not recognised as a
liability at 31 October 2022) will be payable on 5 May 2023 to ordinary
shareholders on the register at 11 April 2023. The final dividend of 2.4p per
share as proposed in the 30 April 2022 financial statements and approved at
the group's AGM was paid on 3 November 2022 and was recognised as a liability
at 31 October 2022.
7. Trade and other receivables
31 October 2022 (unaudited) 31 October 2021 (unaudited) 30 April 2022 (audited)
£'000 £'000 £'000
Non current
Deemed remuneration 7,439 4,331 4,175
Current
Trade receivables 11,847 9,416 9,066
Unbilled income 35,735 32,879 35,208
Other debtors and prepayments 4,019 4,937 2,715
Deemed remuneration 3,375 2,717 2,677
54,976 49,949 49,666
8. Trade and other payables
31 October 2022 (unaudited) 31 October 2021 (unaudited) 30 April 2022 (audited)
£'000 £'000 £'000
Current
Trade payables 1,450 1,967 1,671
Accruals 8,698 6,997 9,733
Final dividend 3,700 3,044 -
Other taxes and social security 4,406 4,234 4,474
Deferred income 5,799 6,027 5,611
Other creditors 14,161 14,030 13,950
Deferred consideration 246 325 246
Deemed remuneration liabilities 1,942 1,469 1,478
40,402 38,093 37,163
9. Reconciliation to the cash flow statement
31 October 2022 (unaudited) 31 October 2021 (unaudited) 30 April 2022 (audited)
£'000 £'000 £'000
Profit (loss) for the period 3,721 (331) (500)
Adjustments for:
Tax 1,269 3,024 4,549
Finance costs 503 413 835
Amortisation of intangible assets 3,243 2,737 5,668
Depreciation of property, plant and equipment 536 532 1,038
Depreciation of right of use assets 1,096 1,346 2,645
Gain on acquisition (4,924) (2,115) (1,974)
Acquisition costs 327 109 215
Profit on disposal of property, plant and equipment - - (10)
Profit on disposal of right of use asset - - (81)
Share-based payment expense 745 717 1,574
Deemed remuneration obligations settled through equity 800 1,000 1,250
Increase in deemed remuneration receivable (3,962) (727) (531)
Increase in deemed remuneration liabilities 464 1,100 1,016
Operating cash flows before movements in working capital 3,818 7,805 15,694
Increase in receivables (3,428) (3,906) (3,916)
(Decrease) increase in payables (1,337) 274 2,296
(Decrease) increase in provisions (23) 20 376
Cash generated by operations (970) 4,193 14,450
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