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9
Annual report and accounts 2019
Strategic report
Our vision
To be leaders in our chosen professional
services giving outstanding advice to clients on
establishing, protecting, enhancing and realising
the value of their assets and businesses
throughout the economic cycle.
For more on who we are and what we do:
www.begbies-traynorgroup.com
Strategic report / Corporate governance / Financial statements
Financial highlights
REVENUE
£60.1m (+15%)
(2018: £52.4m)
NET DEBT
£6.0m (-20%)
(2018: £7.5m)
ADJUSTED PROFIT BEFORE TAX1
PROFIT BEFORE TAX
£7.1m (+27%)
(2018: £5.6m)
£3.5m (+54%)
(2018: £2.3m)
ADJUSTED BASIC EPS 2
4.9p (+23%)
(2018: 4.0p)
PROPOSED TOTAL DIVIDEND
2.6p (+8%)
(2018: 2.4p)
Financial highlights
Strategic report
IFC Our vision
01
02 At a glance
04 Chairman’s statement
06 Business model
08 Our strategy
09 Our key performance indicators
10 Operating and finance review
13 Principal risks and uncertainties
Corporate governance statement
Corporate governance
14 Chairman’s introduction
15 Board of directors
16
18 Audit committee report
19 Remuneration committee report
21 Directors’ report
22 Directors’ responsibilities statement
BASIC EPS
2.2p (+69%)
(2018: 1.3p)
1
Profit before tax of £3.5 million (2018: £2.3 million) plus
amortisation of intangible assets arising on acquisitions
of £2.4 million (2018: £1.9 million) and transaction costs
of £1.2 million (2018: £1.4 million)
2 See reconciliation in note 9
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Financial statements
23
27
28
29 Consolidated balance sheet
30
31
62 Company balance sheet
63
64
68
Company statement of changes in equity
Notes to the company financial statements
Officers and professional advisors
Consolidated cash flow statement
Notes to the consolidated financial statements
Annual report and accounts 2019 Begbies Traynor Group plc
01
Strategic report
At a glance
Begbies Traynor Group plc
is a leading business recovery,
financial advisory and property
services consultancy.
30
Comprehensive
network
of locations
across the UK
Our businesses
650
staff and partners
Professional staff
include:
• licensed insolvency
practitioners
• accountants
• chartered surveyors
AIM listed
since 2004
02
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Our services
Corporate and personal insolvency
Corporate finance
We handle the largest number of corporate appointments
in the UK, principally serving the mid-market and
smaller companies.
Buy and sell side support on private company transactions.
Financial advisory
Valuations
Forensic accounting and investigations, debt advisory,
business and financial restructuring, due diligence and
transactional support.
Valuation of property, businesses, machinery and
business assets.
Auction and asset sales
Sale of property, machinery and other business assets
through physical and online auctions. Commercial property
agency focussed on northern and eastern England.
Property consultancy, planning
and management
Building consultancy, commercial property management,
specialist insurance and vacant property risk management,
transport planning and design.
Annual report and accounts 2019 Begbies Traynor Group plc
03
Strategic report
Chairman’s statement
“
I am pleased to report another year of strong
financial performance.”
Ric Traynor
Executive chairman
Introduction
I am pleased to report another year of strong financial performance,
in line with upgraded expectations1, 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 £1.9 million at our initial investment in
December 2014 to £3.8 million 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.
Results
Group revenue in the year increased by 15% to £60.1 million
(2018: £52.4 million), 9% of which was organic. Adjusted2 profit before
tax increased by 27% to £7.1 million (2018: £5.6 million). Statutory
profit before tax increased to £3.5 million (2018: £2.3 million).
Adjusted3 basic earnings per share increased by 23% to 4.9 pence
(2018: 4.0 pence). Basic earnings per share increased to 2.2 pence
(2018: 1.3 pence).
Net debt decreased to £6.0 million (2018: £7.5 million) with leverage
(calculated as net debt to EBITDA4) improving to 0.7 times
(2018: 1.1 times).
Dividend
The board is pleased to recommend (subject to shareholder
approval at the company’s annual general meeting) an increased
dividend for the year to 2.6 pence (2018: 2.4 pence), an increase of
8%. This comprises the interim dividend already paid of 0.8 pence
(2018: 0.7 pence) and a proposed final dividend of 1.8 pence
(2018: 1.7 pence).
04
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
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
Five year performance
REVENUE (£m)
45.4
50.1
49.7
52.4
60.1
£60.1m
(2018: £52.4m)
15
16
17
18
19
ADJUSTED PROFIT
7.1
• maintain our strong financial position enabling the investment
BEFORE TAX (p)
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.
7.1p
(2018: 5.6p)
4.5
4.9
5.6
3.6
15
16
17
18
19
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
8 July 2019
ADJUSTED BASIC EPS (p)
4.9p
(2018: 4.0p)
4.9
4.0
3.2
3.3
2.9
15
16
17
18
19
NET DEBT (£m)
£6.0m
(2018: £7.5m)
12.8
10.4
10.3
7.5
6.0
15
16
17
18
19
1
2
3
4
Expectations upgraded in the full year trading update on 7 May 2019
Profit before tax £3.5 million (2018: £2.3 million) plus transaction costs £1.2 million (2018: £1.4 million) and amortisation of intangible assets arising on acquisitions £2.4 million
(2018: £1.9 million)
See reconciliation in note 9
Profit before tax £3.5 million (2018: £2.3 million) plus interest £0.5 million (2018: £0.5 million), transaction costs £1.2 million (2018: £1.4 million), amortisation of intangible
assets arising on acquisitions £2.4 million (2018: £1.9 million), software amortisation £0.2 million (2018: £0.2 million), depreciation £0.6 million (2018: £0.5 million) and
share-based payments £0.1 million (2018: £0.3 million)
Annual report and accounts 2019 Begbies Traynor Group plc
05
Strategic report
Business model
Our aims
• Provide our clients with innovative and
entrepreneurial advice and solutions.
• Ensure that our people enjoy working for the group,
can develop their talents and fulfil their potential.
Our key strengths
Our activities
People
• Highly experienced and qualified
professionals
• Local knowledge
• Entrepreneurial approach
Clients and relationships
• Diverse client base
• Enduring relationships
Know how
• Creative, problem-solving expertise
• Established business practices
• Market knowledge
• Brand and reputation
Financial
• Strong financial position enabling investment
in and development of the group
A number of the group’s activities are influenced
by the general economic environment and are likely
to perform better in differing economic climates.
65+15+20+K
65%
20%
15%
06
Begbies Traynor Group plc Annual report and accounts 2019
Profile reflects current group structure including annualised impact
of recent acquisitions.
Our aims
Our activities
Strategic report / Corporate governance / Financial statements
• Increase shareholder value through increasing
the scale and quality of our operating businesses,
growing earnings per share and paying dividends.
Counter-cyclical activities
• Corporate and personal insolvency
• Business and financial restructuring
• Debt advisory
• Accelerated corporate finance
• Distressed asset valuations and sales
(property, machinery and other business assets)
• Specialist insurance and
vacant property risk management
Cyclical activities
• Corporate finance
• Commercial property agency
• Valuation of property, businesses, machinery
and business assets
• Transport planning and design
Uncorrelated activities
• Property auctions
• Machinery and other business asset sales
• Commercial property management
• Building consultancy
• Due diligence and transaction support
• Forensic accounting and investigations
Our culture and values
Values
• Trusted advisor to our clients
• Act with integrity
• Take pride in our advice and solutions
provided to clients
Governance
• Board oversight
• Highly experienced leadership team in
executive and senior management positions
Risk management
• Established business and risk
management processes
• Dedicated compliance functions
• Business diversification to reduce
exposure to one activity or changes
in the business cycle
Annual report and accounts 2019 Begbies Traynor Group plc
07
Strategic report
Our strategy
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
• recruitment of new talent;
• retention and development of our existing
partners and employees;
• enhanced cross-selling of our service lines
and expertise to our wider client base; and
• investment in technology and processes
to enhance working practices and improve
the service to our clients.
Acquisitive growth
• insolvency acquisitions to increase market share;
• property services acquisitions to enhance
expertise or geographical coverage; and
• complementary professional services
businesses to continue the development
of the group and its service offering.
Deliver sustainable profitable growth, enabling increased shareholder value.
Maintain our strong financial position, enabling the
investment in and development of the group and its people.
08
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Our key performance indicators
How we have performed
The board uses the following KPIs to manage the performance of the business:
REVENUE (£m)
£60.1m
(2018: £52.4m)
49.7
52.4
60.1
17
18
19
ADJUSTED PROFIT
BEFORE TAX (£m)
£7.1m
(2018: £5.6m)
7.1
5.6
4.9
17
18
19
The measure
Revenue generated from operating activities in the
financial year.
The target
To increase revenue by expanding the scale and quality
of our operating businesses both organically and through
strategic acquisitions.
The measure
Profit before tax generated by the business in the year,
adjusted to exclude items which arise due to acquisitions,
which are charged to the income statement under IFRS 3 and
are not influenced by the day-to-day operations of the group.
The target
To deliver sustainable growth in adjusted profit before tax.
ADJUSTED BASIC EPS (p)
4.9p
(2018: 4.0p)
4.9
4.0
3.3
17
18
19
NET DEBT (£m )
£6.0m
(2018: £7.5m)
10.3
7.5
6.0
17
18
19
The measure
Adjusted EPS is calculated by dividing adjusted profits by
the weighted average diluted number of shares in issue.
The measure
Borrowings net of cash balances.
The target
To deliver growth in EPS to increase shareholder value.
The target
To maintain a strong financial position with sufficient
capacity in our capital structure to enable continuing
investment in the business with the ability to act
swiftly when opportunities arise.
Annual report and accounts 2019 Begbies Traynor Group plc
09
Strategic report
Operating and finance review
Ric Traynor
Executive chairman
Nick Taylor
Group finance director
Business recovery and financial
advisory services
REVENUE (£m)
£43.3m
(2018: £38.3m)
SEGMENTAL
PROFITS (£m)
£8.7m
(2018: £7.6m)
Property services
REVENUE (£m)
£16.7m
(2018: £14.2m)
SEGMENTAL
PROFITS (£m)
£3.8m
(2018: £3.1m)
36.2
38.3
43.3
17
18
19
7.4
7.6
8.7
17
18
19
13.5
14.2
16.7
17
18
19
3.8
2.9
3.1
17
18
19
Business recovery and financial
advisory services
Revenue increased by 13.2% to £43.3 million (2018: £38.3 million),
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 £3.9 million to £34.6 million
(2018: £30.7 million) principally as a result of costs associated
with acquired businesses, organic investment and increased
people costs.
Segmental profits1 increased by 14.5% to £8.7 million
(2018: £7.6 million) with margins of 20.0% (2018: 19.8%).
Insolvency volumes nationally increased, with the underlying
number of corporate insolvencies2 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 £117 million.
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.
1 See note 4
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
10
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Property services
Revenue increased by 18.2% to £16.7 million (2018: £14.2 million),
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 £1.8 million to £12.9 million
(2018: £11.1 million) due to acquired businesses and organic
investment costs.
Segmental profits1 increased to £3.8 million (2018: £3.1 million)
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.
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.
1
See reconciliation in note 4
Financial summary
Revenue
Operating profit (before transaction
costs and amortisation)
Interest costs
Adjusted profit before tax
Transaction costs
Amortisation of intangible assets
arising on acquisitions
Profit before tax
Tax
Profit for the year
2019
£m
60.1
7.6
(0.5)
7.1
(1.2)
(2.4)
3.5
(1.1)
2.4
2018
£m
52.4
6.1
(0.5)
5.6
(1.4)
(1.9)
2.3
(0.9)
1.4
Operating result (before transaction costs
and amortisation)
Revenue in the year increased by £7.7 million to £60.1 million
(2018: £52.4 million), 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 £7.6 million (2018: £6.1 million).
Adjusted profit before tax increased by £1.5 million to £7.1 million
(2018: £5.6 million), 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 £1.1 million (2018: £0.9 million),
giving an effective rate of 31% (2018: 38%). This comprised a charge
on adjusted profit before tax of £1.6 million (2018: £1.3 million),
partially offset by a tax credit resulting from transaction costs
and amortisation of £0.5 million (2018: £0.4 million). The tax rate
on adjusted profits was 22%, in line with the prior year.
Annual report and accounts 2019 Begbies Traynor Group plc
11
Strategic report
Operating and finance review continued
Earnings per share
Adjusted basic earnings per share1 increased by 22.5% to
4.9 pence (2018: 4.0 pence). Basic earnings per share increased
to 2.2 pence (2018: 1.3 pence).
Acquisitions
During the year the group completed four acquisitions:
• Croft Transport Planning & Design on 31 January 2019 for initial
consideration of £1.5 million (£1.125 million in cash and the issue
of 640,150 new ordinary shares) with a maximum additional cash
payment of £2.5 million subject to financial performance in the
five year period following the acquisition.
• KRE (North East) on 13 February 2019 for initial consideration of
£0.45 million (in cash) with a maximum additional cash payment
of £0.15 million subject to financial performance in the one year
period following the acquisition.
• Dunion & Co on 1 March 2019 for initial consideration of £0.1 million
(in cash) with a maximum additional cash payment of £0.1 million
subject to financial performance in the two year period following
the acquisition.
• Barker Storey Matthews on 5 April 2019 for initial consideration
of £1.6 million (£1.067 million in cash and the issue of 844,290
new ordinary shares) with a maximum additional cash payment
of £1.4 million subject to financial performance in the three year
period following the acquisition.
The net cash outflow from acquisitions in the year was £1.2 million,
comprising the cash consideration of £2.7 million net of cash
acquired of £1.5 million.
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 £2.9 million has been
recognised within transaction costs in the year.
Financing
Net debt at the year end reduced to £6.0 million (2018: £7.5 million).
This reflected cash generated from operations in the year of
£7.3 million (2018: £7.5 million) partially offset by investment in
acquisitions (net of cash acquired), deferred consideration payments
and capital expenditure of £3.2 million (2018: £2.4 million) and
dividends paid of £2.6 million (2018: £2.4 million).
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 £25 million committed revolving credit facility and
a £5 million 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 EBITDA1) improved
to 0.7 times (2018: 1.1 times).
Net assets
At 30 April 2019 net assets were £59.7 million (2018: £59.1 million).
The movement in net assets reflects an increase of £2.9 million
from post-tax adjusted earnings of £5.5 million net of dividends
of £2.6 million; £2.2 million from the issue of new shares, principally
in relation to acquisitions; offset by a reduction of £1.4 million 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 £3.1 million.
1
Profit before tax £3.5 million (2018: £2.3 million) plus interest £0.5 million (2018: £0.5 million), transaction costs £1.2 million (2018: £1.4 million) and amortisation of intangible
assets arising on acquisitions £2.4 million (2018: £1.9 million), software amortisation £0.2 million (2018: £0.2 million), depreciation £0.6 million (2018: £0.5 million) and share-based
payments £0.1 million (2018: £0.3 million)
12
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Principal risks and uncertainties
The operations of the group and the implementation of the group’s strategy involve a number of risks and uncertainties, the principal
of which are described in the table below.
Controls to reduce risk are designed to manage rather than eliminate risk and can only provide reasonable and not absolute assurance
against material misstatement or loss.
Risk
Marketplace
Mitigating activities
The group’s markets are susceptible to macroeconomic movements,
such as interest rates, GDP changes and indebtedness levels.
The group operates in a highly competitive market and is reliant
on the flow of new assignments.
This risk is managed through a consistent effort in marketing and selling
activity and maintaining strong relationships with key work providers, including
financial institutions, investors and other professional intermediaries.
Operational gearing
The business is operationally geared with a high proportion of
salary and property costs, which cannot be immediately varied.
Consequently, the group’s profitability is liable to short-term
fluctuations dependent on activity levels.
This risk is managed through flexing our resource levels, where possible, to
align with current and anticipated levels of activity, together with the control
of other discretionary items of expenditure. A prudent level of spare capacity
is retained to facilitate peaks in activity.
Reliance on key personnel
The business is dependent upon the professional development,
recruitment and retention of high quality professional partners
and staff.
The group manages the risk of high staff turnover through attention
to human resource issues and the monitoring of remuneration levels
against the wider market, including long-term incentive arrangements.
Legal and regulation
The group operates in regulated markets. Failure to comply with,
or changes in, regulation or legislation may have an adverse
impact on the activities of the business.
To ensure compliance with relevant legislation in performing regulated
activities, the group has dedicated compliance functions which maintain
procedures and policies in line with current legislation.
In the ordinary course of business, certain aspects of the group’s
services are opinion based and may be subject to challenge.
Where appropriate, the group will seek third-party professional corroboration.
In addition, the group has appropriate professional indemnity insurance.
Liquidity risk
The group’s ability to generate cash from its insolvency appointments
is usually reliant on asset realisations. A deterioration in realisations
in the short term could reduce the group’s operating cash generation
and increase its financing requirements.
Failure or interruption in IT systems
A major failure in the group’s IT systems may result in either a loss
or corruption of data or an interruption in client service, which may
have a consequential impact on our reputation and profitability.
There is a risk that an attack on our IT systems by a malicious
individual or group may be successful and impact on the
availability of these systems.
The group monitors its risk of a shortage in funds through regular cash management
and forecasting and ensuring suitable headroom within its banking facilities.
The group’s objective is to maintain a balance between continuity of funding and
flexibility through the use of its committed banking facilities, together with bank
overdrafts and loans, finance leases and hire purchase contracts if required.
Specific off-site back-up and resilience requirements have been built into our
IT systems which have been set up, as far as reasonably practicable, to prevent
unauthorised access and mitigate the impact and likelihood of a major IT
failure or cyber attack. The group is Cyber Essentials Plus accredited.
The group has disaster recovery plans in place to cover residual risks which
cannot be mitigated.
The group is constantly reviewing its processes and resilience in this area
due to the increasing threat landscape.
Going concern
Disclosures are presented in note 2 to the financial statements around the basis on which the directors have continued to adopt the
going concern basis in preparing these financial statements.
Ric Traynor
Executive chairman
8 July 2019
Nick Taylor
Group finance director
8 July 2019
Annual report and accounts 2019 Begbies Traynor Group plc
13
Corporate governance
Chairman’s introduction
“
The board is committed to maintaining
high standards of governance.”
Ric Traynor
Executive chairman
The board is committed to maintaining high standards of
corporate governance. As chairman, it is my role to ensure that
these standards are promoted by the board and to ensure that the
group is managed in the best interests of shareholders and our
broader stakeholder group. During the year, we have formalised
our governance policies by adopting the QCA Corporate
Governance Code (‘the QCA Code’).
We recognise that a positive culture, together with a robust
approach to governance, is key to the success of the organisation.
As a professional services consultancy the group’s services are
regulated by externally governed codes of practice and ethical
behaviour. These regulatory professional standards are reinforced
by the board which sets the culture of the group in promoting
entrepreneurial growth against the background of sound
regulatory compliance and ethical standards.
We seek to be a trusted advisor to all of our clients, to act with
integrity at all times and to take pride in the advice and solutions
we provide.
We have a clear approach to governance and risk management
with a highly experienced leadership team in executive and senior
management positions together with robust compliance and
governance procedures. We are committed to a culture which
ensures that our people enjoy working for the group, can develop
their talents and fulfil their potential with us.
In the following sections we have provided details on our
approach to governance and the adoption of the QCA Code,
including reports from the audit and remuneration committees.
I believe that the adoption of the QCA Code will contribute to our
ability to deliver long-term shareholder value and assist the board in
managing the business for all of its stakeholders, whilst maintaining
a flexible, efficient and effective management framework within
an entrepreneurial environment.
Further detail on our compliance with the QCA Code can be
found on our website at www.begbies-traynorgroup.com/
investor-relations/company-information.
Ric Traynor
Executive chairman
14
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Board of directors
Ric Traynor (age 59)
Executive chairman
Nick Taylor (age 48)
Group finance director
Mark Fry (age 51)
Head of business recovery and advisory
Appointment date: May 2004
Appointment date: December 2010
Appointment date: July 2011
Experience
Ric has been an insolvency practitioner since
qualifying as a chartered accountant with
Arthur Andersen in 1984. He established
Traynor & Co. in 1989 which, following the
acquisition of Begbies London in 1997,
became Begbies Traynor.
Ric has focussed on the development of the
business, including the group’s successful
introduction to AIM in 2004, and on practice
management. He continues to lead the
business and remains a major shareholder.
Experience
Nick was appointed to the board as group
finance director in 2010, having joined the
group as financial controller in 2007. He is
a chartered accountant who qualified with
KPMG and previously held senior finance roles
in United Utilities PLC and Vertex Data Science
Limited, the business process outsourcer.
Experience
Mark was appointed to the board in 2011,
having joined the group in 2005 following an
acquisition. He led our London and South East
region prior to his board appointment and
plays a key role in developing the group’s
advisory practice.
Mark acts as an insolvency practitioner, has been
appointed on numerous complex and high-profile
assignments, and is a former president of the
Insolvency Practitioners Association.
John May (age 64)
Non-executive director
Graham McInnes (age 67)
Non-executive director
Mark Stupples (age 57)
Non-executive director
Appointment date: October 2007
Appointment date: September 2004
Appointment date: July 2017
Experience
John was appointed to the board in 2007
as a non-executive director. He is also the
independent chairman of the AFI Group.
John was an executive director of Caledonia
Investments plc and previously worked for
the Hambros Group for over 20 years,
where he was an executive director
of Hambros Bank and joint managing
director of Hambro Countrywide.
Experience
Graham was appointed to the board in 2004,
initially as group finance director and
subsequently as corporate development
director. In 2012, Graham became a non-
executive director. He has held a number of
senior finance positions including corporate
finance partner at Spicer and Oppenheim
(now part of Deloitte) and finance director of
Enterprise plc, in addition to developing his
own corporate finance boutique in the 1990s.
Graham is also a director of Newton
Technology Group plc, a group specialising
in the engineering technology sector.
Experience
Mark was appointed to the board in 2017
as a non-executive director. He 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. Mark now runs his
own consultancy business focussing on strategy
and change in professional services businesses,
and is the chairman of Jones Lang LaSalle
Pension Trustees Limited.
Annual report and accounts 2019 Begbies Traynor Group plc
15
Corporate governance
Corporate governance statement
Overview
The group has established specific committees and implemented
certain policies, to ensure that:
• it is led by an effective board which is collectively responsible for
creating and sustaining shareholder value through management
of the business;
Operational management of the group’s respective divisions
is delegated by the board to two principal operating boards
(business recovery and advisory services and property services)
which comprise relevant members of the group’s executive and
non-executive directors, together with senior partners and
managers from the respective divisions.
• the board and its committees have the appropriate balance of
skills, experience, independence, and knowledge of the group
to enable them to discharge their respective duties and
responsibilities effectively;
• the board have a formal and transparent arrangement
for considering how to apply the corporate reporting, risk
management and internal control principles and for maintaining
an appropriate relationship with the group’s auditor; and
• there is a dialogue with shareholders based on the mutual
understanding of objectives.
In addition, the group has adopted policies in relation to
anti-corruption and bribery; whistleblowing; health and safety;
IT, communications and systems; and social media, so that all
aspects of the group are run in a robust and responsible way.
Responsibilities of the board
The board is responsible for creating and sustaining shareholder
value through management of the business. It does this by:
• setting the strategy and direction of the company;
• maintaining appropriate controls to ensure the effective
operation of the company;
• approving revenue and capital budgets and plans;
• approving financial statements, material agreements and
non-recurring projects;
• determining the financial structure of the company including
treasury and dividend policy;
• overseeing control, audit and risk management; and
• setting and monitoring remuneration policies.
Specific responsibilities have been delegated to committees of the
board, being the audit and remuneration committees. The terms of
reference for these committees are available on the group’s website.
In the absence of a formal nominations committee the board is
responsible for ensuring that it retains an appropriate composition
and balance of skills and expertise together with considering
relevant succession.
Board members
It is important that the board contains the right mix of skills and
experience in order to deliver the strategy of the group. As such,
the board is comprised of the executive chairman, two other
executive directors and three non-executive directors.
Role of the executive chairman
Ric Traynor, who established the business and led the group’s
introduction to AIM, fulfils the role of executive chairman being
responsible for the workings and leadership of the board together
with managing the business with the support of the other
executive directors.
Whilst the QCA Code requires the chairman to have adequate
separation from the day-to-day business, the board believes the
current role is appropriate and in the best interests of the group.
In recognition of this non-compliance with the QCA Code the board
comprises an equal number of non-executive to executive directors,
to offer robust and independent challenge of all board decision making,
and has appointed Graham McInnes, one of its non-executive
directors, as a senior independent director.
Executive directors
The group has two executive directors, in addition to the executive
chairman, who are responsible for managing the delivery of the
business plans within the strategy set by the board.
Non-executive directors
The group has three non-executive directors (‘NEDs’). The NED’s
role is to provide oversight and scrutiny of the performance of the
executive directors, helping the business to develop, communicate
and execute its agreed strategy within the defined risk
management framework.
The NEDs are expected to attend all board meetings, any
committee meetings of which they are a member and the annual
general meeting. In addition, Mark Stupples is the non-executive
chairman of the property services operating board. NEDs are
expected to dedicate sufficient time to the group’s affairs to
enable them to fulfil their duties as directors.
The board considers that the three NEDs are independent of
management and have no business or other relationship which
could interfere materially with the exercise of their judgement.
16
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Company secretary
The company secretary provides advice and guidance to the extent
required by the board on the legal and regulatory environment
and assists the chairman in preparing for and running effective
board meetings, including the timely dissemination of appropriate
information. All directors have access to the company secretary
and all group records. Each director is authorised to take external
advice at the expense of the company in support of his duties. The
company secretary also acts as the link between the company and
shareholders on matters of governance and investor relations.
Election of directors
Each director serves on the board until the annual general meeting
following his or her election or appointment where the director
must stand for re-election. In accordance with the group’s articles
of association one third of the directors are re-elected on an annual
basis, with those directors who have been in office the longest
being subject to this requirement.
In addition, in accordance with the QCA Code, any independent
non-executive directors who have served for more than nine years
will stand for re-election at each AGM.
Board evaluation
An evaluation of board performance was conducted during
the year facilitated by the company secretary. This was the first
evaluation that we have completed following the adoption of the
QCA Code. The process involved the completion of a questionnaire
by each director focussed on the ten principles of the QCA Code.
The results were then discussed by the board collectively with areas
for development being agreed. These included developing and
aligning the group around a single key vision; prioritising investor
relations and shareholder and market feedback; and conducting
a review of the group’s current CSR initiatives. The evaluation also
considered the need for the board to allocate time to hold a strategy
review to assess the board’s long-term vision and strategy.
Board meetings
The full board meets formally on a quarterly basis and informally
where relevant throughout the year. Agendas for these meetings
formalise the matters reserved for decision by the board with
papers circulated in advance for consideration and comment.
Meetings are structured to allow for the open discussion and
debate of the key issues.
The board met six times during the year. Attendance at meetings
during the financial year is shown in the table below:
Director
Ric Traynor
Nick Taylor
Mark Fry
John May
Graham McInnes
Mark Stupples
Date on which this information was last reviewed: 8 July 2019.
Board
meetings
attended
Meetings
eligible to
attend
6
6
5
6
5
6
6
6
6
6
6
6
Annual report and accounts 2019 Begbies Traynor Group plc
17
Corporate governance
Audit committee report
Graham McInnes
Chairman of the
audit committee
On behalf of the board I am pleased to present the audit
committee report for the year ended 30 April 2019.
Members of the audit committee
The audit committee has two members, each of whom is
an independent, non-executive director. I am the chairman
of the committee and John May is the other current member of
the committee. The group company secretary is at the disposal
of the committee to advise and assist both of the members.
The executive chairman, the group finance director and a
representative of the group’s external auditor are permitted to
attend meetings of the committee by invitation only. The committee
meets at least three times a year, in accordance with its terms
of reference.
The committee’s terms of reference are available on the
group’s website. Its principal responsibilities are to review and
discuss governance, financial reporting and internal control and
risk management.
Duties
During the year the committee discharged its responsibilities by:
• approving the external auditor’s plan for the audit of the group’s
annual financial statements, including key audit matters,
key risks, confirmation of auditor independence and terms
of engagement and audit fees;
• reviewing the group’s draft annual report and accounts and the
external auditor’s detailed audit completion report including the
consideration of key audit matters and risks;
• reviewing the group’s half year and full year results announcements;
• reviewing a report by management relating to the adoption of
IFRS 9 ‘Financial Instruments’ and IFRS 15 ‘Revenue from Contracts
with Customers’ in this financial year. Following discussions with
management and the external auditor the committee approved
the adoption and disclosures of these revised accounting policies;
which followed a tender process. The committee will keep under
review the need for a further external tender. Any instruction
for BDO to provide non-audit services to the group must be
approved in advance by the committee. Fees payable to BDO
for non-audit services provided during the year were £34,400.
Having reviewed the auditor’s independence and performance,
the committee has concluded that these are effective and
recommends that BDO be reappointed at the next AGM.
Audit process
The auditor prepares an annual planning report for consideration
by the committee, which details areas of audit focus and anticipated
key audit risks, together with the anticipated level of materiality.
This is reviewed and approved by the committee. Following the
audit the auditor presented its findings to the committee. No
significant areas of concern were raised by the external auditor.
Internal audit
The committee has considered the need for an internal audit
function and concluded that management is currently able to
derive sufficient assurance on the adequacy and effectiveness
of internal controls without one at this time.
Internal controls and risk management
The systems of internal control and risk management are
the ultimate responsibility of the board, which sets and reviews
appropriate policies. The systems are designed to provide reasonable,
but not absolute, assurance against material misstatement or loss.
Managers are delegated the tasks of implementation and maintenance
of systems in accordance with those policies and the identification,
evaluation, management and reporting of risk and control issues.
Controls and processes are reviewed on a periodic basis by the
group’s finance and compliance teams with any issues and
recommendations reported to the audit committee.
Budgets are produced annually and key performance targets
within them are set by the board. Performance against those
budgets is regularly reviewed and variances are investigated and
acted upon by members of the board and both head office and
divisional managers. Reforecasting is undertaken when variances
are material and, if adverse, cannot be eliminated by such action.
The principal risks and uncertainties faced by the group, together with
mitigating activities, are disclosed in the strategic report on page 13.
Attendance at audit committee meetings
The committee met three times during the year and reports to the
board following each meeting. Attendance at meetings during the
financial year is shown in the table below:
• reviewing the performance of the external auditor; and
• reviewing the group’s risk management process including the
group’s key risks and mitigations.
Committee member
Graham McInnes
John May
Meetings
attended
3
3
Meetings
eligible to
attend
3
3
% of
meetings
attended
100
100
Role of the external auditor
The committee monitors the relationship with the external
auditor, BDO, to ensure that auditor independence and objectivity
are maintained. BDO has been the company’s auditor since 2017,
Graham McInnes
Chairman of the audit committee
8 July 2019
18
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Remuneration committee report
Directors’ remuneration
The remuneration arrangements for Ric Traynor and Nick Taylor
consist of a basic salary or directors’ fees and fixed profit share,
together with an annual bonus. In addition, they receive income
protection insurance, private medical insurance and the provision
of a company car or cash allowance. Nick Taylor also receives
death in service benefits.
The executive bonus scheme, which is applicable to Ric Traynor
and Nick Taylor, pays a percentage of salary/fixed profit share based
on maintaining or growing the group’s adjusted earnings per share
in the year, with a maximum bonus payable for growth of at least
20%. Full bonus payments were achieved in the year.
Mark Fry is an equity member of Begbies Traynor (London) LLP
(‘the LLP’), a subsidiary of the group in which the group has a
controlling interest. During the financial year, he received a fully
variable profit share, determined as a proportion of the profits
of the LLP which is in line with the comparative period. In addition
Mark Fry receives a fixed director’s fee and the provision
of a company car.
None of the directors participate in the group’s defined contribution
pension scheme.
Long-term incentive plans
The share-based incentive scheme which has been put in place
for some of the executive directors seeks to incentivise the relevant
executive directors to enhance shareholder value through growing
the group’s share price. Details of the group’s share-based incentive
schemes are set out on page 54 with a proportion of such awards
also being conditional on delivering sustained growth in earnings
and total shareholder return. No additional awards under this
scheme were made in the year.
Non-executive directors
Non-executive directors’ remuneration is determined by the board.
John May
Chairman of the
remuneration committee
Remuneration committee report
I am pleased to present this remuneration report, which sets out
the remuneration policy and the remuneration paid to the directors
for the year.
Members of the remuneration committee
The remuneration committee has two members, each of whom is
an independent, non-executive director. I am the chairman of the
committee and Graham McInnes is the other current member of
the committee. The group company secretary is at the disposal
of the committee to advise and assist both of the members.
The executive chairman is invited to attend meetings of the
committee for discussion on executive remuneration matters save
for those relating to himself. The committee meets at least once
a year, in accordance with its terms of reference.
The committee’s terms of reference are available on the
group’s website. Its principal responsibilities are to determine the
remuneration payable to the executive directors and approve any
management long-term incentive and share-based payment schemes.
Policy
The remuneration policy of the group is driven by our approach
to align the best interests of shareholders and management.
The committee looks to set remuneration for executive directors
at appropriate market levels, with reference to the roles and
responsibilities of those directors. Incentive arrangements which
provide appropriate reward and incentive are implemented and
measured against key performance criteria designed to promote
the best interests of shareholders.
Annual report and accounts 2019 Begbies Traynor Group plc
19
Corporate governance
Remuneration committee report continued
Directors’ emoluments
Name of director
Executive
Ric Traynor
Nick Taylor
Mark Fry
Non-executive
John May
Graham McInnes
Mark Stupples
Directors’
fees and profit
share/salary
£
Variable
profit share
£
Bonus
£
323,312
200,000
—
—
225,000
95,000
Benefits
in kind
£
26,683
1,183
2019
total
£
2018
total
£
574,995
296,183
15,000
958,920
40,000
40,000
40,000
—
—
—
—
—
—
—
30,000
1,003,920
—
—
—
40,000
40,000
40,000
573,737
296,072
684,979
40,000
40,000
32,290
Aggregate emoluments
658,312
958,920
320,000
57,866
1,995,098
1,667,078
Directors’ share options
Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the company
granted to or held by the directors. Details of share option awards for directors who served during the year are as follows:
Name of director
Number at
1 May 2018
Granted
in year
Exercised
in year
Expired
in year
Number at
30 April 2019
Mark Fry
1,000,000
Nick Taylor
125,000
250,000
500,000
—
—
—
—
—
— 1,000,000
(125,000)
—
—
—
—
—
—
250,000
500,000
Exercise
price
(pence)
36.7
36.7
51.0
Earliest
exercise date
Expiry
date
30 April 2016 25 October 2023
30 April 2016 25 October 2023
25 July 2017
25 July 2024
63.1 31 October 2020 31 October 2028
The market price of the company’s shares at the end of the financial year was 60 pence and the range of market prices during the year
was 58 pence to 75 pence.
Details of share options granted by the company at 30 April 2019 are given in note 19. None of the terms and conditions of the share
options were varied in the year. Gains on options exercised in the year were £44,763.
Directors’ interests
The directors who held office at 30 April 2019 had the following interests in the shares of the group:
Name of directors
Description of shares
number
%
number
30 April 2019
1 May 2018
Ric Traynor
Nick Taylor
Mark Fry
John May
Graham McInnes
Mark Stupples
Ordinary shares
27,178,980
23.77
27,178,980
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
117,540
127,466
276,574
917,432
30,727
0.10
0.11
0.24
0.80
0.03
80,798
127,466
276,574
917,432
—
%
24.68
0.07
0.12
0.25
0.83
—
No changes took place in the interests of directors between 30 April 2019 and 8 July 2019.
John May
Chairman of the remuneration committee
8 July 2019
20
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Directors’ report
The directors present their annual report on the affairs of the
group, together with the financial statements and auditor’s report
for the year ended 30 April 2019. The chairman’s statement,
strategic report, directors’ remuneration report and corporate
governance statement form part of the directors’ report and
are incorporated into it by cross-reference.
Directors
The names and brief biographical details of the directors are
shown on page 15.
Risks and uncertainties
The principal business risks and uncertainties to which the company
is exposed are detailed on page 13 of the strategic report.
Dividends
The directors recommend a final dividend of 1.8 pence (2018: 1.7 pence
per ordinary share) to be paid on 7 November 2019 to shareholders
on the register at 11 October 2019. This, together with the interim
dividend of 0.8 pence paid on 9 May 2019 (2018: 0.7 pence), makes
a total dividend of 2.6 pence for the year (2018: 2.4 pence).
Substantial shareholdings
On 1 July 2019, the company had been notified, in accordance
with sections 791 to 828 of the Companies Act 2006, of the following
interests in the ordinary share capital of the company:
Name of holder
Number
Percentage
held
Hof Hoorneman Bankiers
11,848,158
10.35
Fidelity International
OVMK Vermogensbeheer
9,077,452
6,984,326
Close Brothers Asset Management
5,912,296
Allianz Global Investors
Nordea Asset Management
4,074,940
3,574,547
7.93
6.10
5.16
3.56
3.13
Other than the above holdings and those of the directors
(see page 20), the board is not aware of any beneficial holdings
in excess of 3% of the issued share capital of the company.
Financial instruments
The financial risk management objectives and policies of the group
are shown in note 17.
Capital structure
Details of the issued share capital, together with details of the
movements in share capital during the year, are shown in note 18.
Political donations
The company made no political donations during the year.
Disabled employees
Applications for employment by disabled persons are always
fully considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled,
every effort is made to ensure that their employment with the
group continues and that appropriate training is arranged. It is
the policy of the group that the training, career development
and promotion of disabled persons should, as far as possible,
be identical to that of other employees.
Employee involvement
The directors recognise that the quality, motivation and
commitment of our staff is fundamental to the group’s success.
The policy of the group is to recruit, promote, train and develop
its people by reference to their skills, abilities and other attributes
of value to their role in the business. The group considers itself
to be an equal opportunities employer. Employee engagement
is encouraged through a variety of means including corporate
intranets, team meetings and regular dialogue with employees.
Employees are able to share in the group’s success through
membership of our Sharesave scheme. Sharesave is a
HMRC-approved save-as-you-earn share option scheme,
which allows participants to purchase shares out of the proceeds
of a linked savings contract at a price set at the time of the option
grant. Participants may elect to save up to £250 per month and
options may normally be exercised in the six months following
the maturity of the linked three year savings contract.
Social policies
The activities of the group have a minimal pollution impact on
the environment and its energy consumption is modest. Due
consideration to environmental issues is given where appointed
insolvency administrators take control of third-party businesses
in the course of their work.
Auditor
Each of the directors at the date of approval of this annual report
confirms that:
• so far as the director is aware, there is no relevant audit information
(as defined in the Companies Act 2006) of which the company’s
auditor is unaware; and
• the director has taken all the steps that he ought to have taken
as a director in order to make himself aware of any relevant audit
information and to establish that the company’s auditor is aware
of that information.
In accordance with section 489 of the Companies Act 2006, a
resolution will be proposed at the annual general meeting that
BDO LLP be reappointed as auditors.
Approved by the board of directors and signed on behalf
of the board
John Humphrey
Company secretary
8 July 2019
Annual report and accounts 2019 Begbies Traynor Group plc
21
Corporate governance
Directors’ responsibilities statement
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the company and enable them to ensure
that the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding
the assets of the company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the company’s website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the company’s website is the responsibility of the directors. The
directors’ responsibility also extends to the ongoing integrity of
the financial statements contained therein.
The directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have elected
to prepare the group financial statements in accordance with
International Financial Reporting Standards (‘IFRSs’) as adopted
by the European Union and the company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable
law). Under company law the directors must not approve the
financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the group and company and
of the profit or loss of the group for that period. The directors are
also required to prepare financial statements in accordance with
the rules of the London Stock Exchange for companies trading
securities on AIM.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• state whether they have been prepared in accordance with IFRSs as
adopted by the European Union, subject to any material departures
disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
22
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Independent auditor’s report
to the members of Begbies Traynor Group plc
Opinion
We have audited the financial statements of Begbies Traynor Group Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the
year ended 30 April 2019 which comprise the consolidated statement of comprehensive income, the consolidated statement of changes
in equity, the consolidated balance sheet, the consolidated cash flow statement, the Company balance sheet, the Company statement of
changes in equity and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been
applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 The Financial Reporting Standard in the United Kingdom and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30 April 2019
and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
• the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about
the Group’s or the Parent Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve
months from the date when the financial statements are authorised for issue.
Annual report and accounts 2019 Begbies Traynor Group plc
23
Financial statements
Independent auditor’s report continued
to the members of Begbies Traynor Group plc
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Carrying value of goodwill
How we addressed the Key Audit Matter in the audit
The Group’s goodwill measurement and valuation
policy is set out in note 2 of these financial statements,
with a summary of goodwill set out on page 46.
In accordance with IAS 36, an annual impairment
review of goodwill (see note 10) is required at each
year end.
The impairment assessment is performed by
management based on comparing the value in use
to the carrying value of goodwill. This calculation
involves a number of management judgements and
estimates, and as such holds the potential for bias
or error. Management’s assessment found
significant headroom and concluded no
impairment was required.
Furthermore, the £50.2m goodwill figure held in the
statement of financial position at the year end is
highly material and there is a risk that this value
may not be supported.
Revenue and unbilled
income recognition
The Group’s revenue recognition policy is set out
in note 2 of these financial statements.
In line with auditing standards, there is a
presumed significant risk of fraud in relation to
revenue recognition. We have considered the
application of the Group revenue recognition
policies and determined that the significant risk in
the period is that of the overstatement of unbilled
income recorded at year end through either the
manipulation of provisions for unrecoverable
amounts or cut-off of employee costs incurred
around year end, from which unbilled income
balances are calculated. As noted in the accounting
policies (note 2 {j}), judgements are formed over a
large portfolio of cases meaning individual judgements
are not material, however, as a result of the large
number of insolvency cases being handled by the
Group, the aggregate balance of unbilled income
is significant. As a result of the significant level of
estimation involved in the balance there is potential
for material misstatement and significant audit
work was performed in this area.
• Management prepared impairment calculations based on the forecasts of
the insolvency cash-generating unit (CGU), to which all the goodwill belongs.
We reviewed the methodology applied by management to ensure consistency
with prior year calculations.
• We reviewed the assumptions used within the forecast figures for the
insolvency CGU. We compared these to the actual results of this CGU in the
financial year ended 30 April 2019, investigating and challenging management
on any unusual or significant movements expected going forward.
• We reviewed the key assumptions made within the calculation. The key
assumptions are considered to be the weighted average cost of capital (WACC),
the growth rate applied to the calculations and the economic cycles assumed in
the model (based on historical trends) as this drives volumes forecast for the
Insolvency practice, which is counter-cyclical to the general economic
environment in the UK.
• We engaged the use of an internal auditor’s expert to consider the
appropriateness of managements WACC estimate, and whether it was
reasonable for use in this calculation.
• Management applied sensitivity analysis to those assumptions, see note 10.
We tested those sensitivity calculations and applied our own sensitivity analysis
to the key assumptions to consider the headroom available.
How we addressed the Key Audit Matter in the audit
• We tested a key control to ensure that there is sufficient challenge placed by
the group finance team on monthly unbilled income estimates and judgements,
including provisions. Group finance review and challenge that key estimates
and provisions against unbilled income are appropriately calculated, each
month, by individual insolvency practitioners and fee earners. We have
attended a sample of monthly finance review meetings and observed the level
of challenge and follow up of individual cases, which provides assurance over
the internal control in place.
• A sample of year end unbilled income balances was tested through
questionnaires being issued to the fee earners and then reviewing their responses
and associated evidence e.g. creditors resolutions, property valuations,
balances held in bank accounts, against the year end position set out.
• We re-performed the stage of completion calculations for a sample of cases
and robustly challenged the judgements and estimates made by management
in relation to the status of cases and ultimate recovery of fees.
• We performed cut-off testing around the year end to ensure revenue had been
recognised in the correct period.
• We also reviewed the stage of completion estimates made in the prior years for
a sample of cases and assessed their accuracy based on actual outcomes.
• We performed a high level review of the ageing of year end unbilled income,
to evaluate movements in ageing from the prior year and confirm the ageing
profile is in line with our understanding of the business.
24
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. For planning,
we consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that
any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Performance materiality has been set at 70% of materiality. This has been assessed on criteria such as historic adjustment levels, complexity
and the controls of the Group.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group materiality
£350,000 (2018: £275,000)
Group performance materiality
£245,000 (2018: £192,500)
Parent Company materiality
£260,000 (2018: £205,000)
Parent Company performance materiality
£182,000 (2018: £153,750)
Basis for Group materiality
5% of adjusted profit before tax
Rationale for the benchmark adopted
Begbies Traynor Group plc is AIM listed, with profit making intentions, and
significant investors external to the Group. Adjusted profit is considered
to be the key KPI for the Group and as such a profit based materiality
basis is considered appropriate. We adjusted for amortisation and
transaction costs as these costs do not specifically relate to any
underlying operating activities. The adjusted figure gives a more
appropriate basis in line with a benchmark used for business decision
making and used by the investor/shareholder community.
For each component in the Group audit we allocated a materiality lower than our overall Group materiality and used £260,000
(2018: £185,000) as a maximum component materiality with a restriction of 75% for performance materiality.
We agreed with the audit committee that we would report to the committee all individual audit differences identified during the course of
our audit in excess of £14,000 (2018: £13,750). We also agreed to report differences below these thresholds that, in our view, warranted
reporting on qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and
assessing the risks of material misstatement at the Group level.
For the five significant components we have identified, we performed a full scope audit of the complete financial information. For the
remaining components, we performed audit procedures on specific accounts within that component that we considered had the
potential for the greatest impact on the significant accounts in the financial statements, either because of the size of these accounts
or their risk profile.
Audits of the components were performed at a materiality level calculated by reference to a proportion of Group materiality appropriate
to the relative scale of the business concerned.
The group audit team conducted the audit of all components of the business and no component auditors were used during the audit process.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report,
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Annual report and accounts 2019 Begbies Traynor Group plc
25
Financial statements
Independent auditor’s report continued
to the members of Begbies Traynor Group plc
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Mark Langford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Leeds
8 July 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
26
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Consolidated statement of comprehensive income
for the year ended 30 April 2019
Revenue
Direct costs
Gross profit
Other operating income
Administrative expenses
Operating profit (before amortisation and transaction costs)
Transaction costs
Amortisation of intangible assets arising on acquisitions
Operating profit
Finance costs
Profit before tax
Tax
Profit and total comprehensive income for the year
Earnings per share
Basic
Diluted
Notes
3
5
10
7
9
9
2019
£’000
60,058
(34,276)
25,782
393
2018
£’000
52,441
(30,141)
22,300
400
(22,163)
(19,922)
7,553
(1,180)
(2,361)
4,012
(486)
3,526
(1,092)
2,434
6,059
(1,364)
(1,917)
2,778
(482)
2,296
(872)
1,424
2.2 pence
1.3 pence
2.1 pence
1.3 pence
The profit, comprehensive income and earnings per share is attributable to equity holders of the parent.
Annual report and accounts 2019 Begbies Traynor Group plc
27
Financial statements
Consolidated statement of changes in equity
for the year ended 30 April 2019
Capital
redemption
reserve
£’000
—
—
—
—
304
—
—
—
—
304
—
304
—
—
—
—
—
—
—
Retained
earnings
£’000
11,618
1,424
(2,356)
295
(226)
—
—
—
(455)
Total
equity
£’000
58,100
1,424
(2,356)
295
(226)
1,475
400
37
—
10,300
59,149
(1,448)
8,852
2,434
(2,649)
99
—
—
—
(437)
(1,448)
57,701
2,434
(2,649)
99
908
1,200
8
—
5,719
23,190
22,189
304
8,299
59,701
At 1 May 2017
Total comprehensive income for the year
Dividends
Credit to equity for equity-settled
share-based payments
Own shares acquired in the year
Shares issued as consideration for
acquisitions
Shares issued as deferred consideration
SIP shares issued
Other share options
At 30 April 2018
Adjustment for changes in accounting
policy (note 2)
Share
capital
£’000
5,640
—
—
—
(304)
101
33
3
35
Share
premium
£’000
22,335
—
—
—
—
—
—
34
420
Merger
reserve
£’000
18,507
—
—
—
—
1,374
367
—
—
5,508
22,789
20,248
—
—
—
At 1 May 2018
5,508
22,789
20,248
Total comprehensive income for the year
Dividends
Credit to equity for equity-settled
share-based payments
Shares issued as consideration for acquisitions
Shares issued as deferred consideration
SIP shares issued
Other share options
At 30 April 2019
—
—
—
74
93
1
43
—
—
—
—
—
7
394
—
—
—
834
1,107
—
—
A description of the nature and purpose of each reserve is included within note 27.
28
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Consolidated balance sheet
at 30 April 2019
Non-current assets
Intangible assets
Property, plant and equipment
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Net current assets
Non-current liabilities
Trade and other payables
Borrowings
Provisions
Deferred tax
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Capital redemption reserve
Retained earnings
Equity attributable to owners of the company
Notes
2019
£’000
2018
£’000
10
11
12
12
13
15
13
14
15
16
18
59,392
1,766
3,220
59,061
1,512
1,759
64,378
62,332
32,653
4,009
36,662
101,040
30,829
3,518
34,347
96,679
(22,664)
(17,268)
(1,976)
(588)
(1,548)
(783)
(25,228)
(19,599)
11,434
14,748
—
(10,000)
(763)
(5,348)
(1,093)
(11,000)
(414)
(5,424)
(16,111)
(17,931)
(41,339)
(37,530)
59,701
59,149
5,719
23,190
22,189
304
8,299
59,701
5,508
22,789
20,248
304
10,300
59,149
The financial statements of Begbies Traynor Group plc, registered number 5120043, were approved by the board of directors
and authorised for issue on 8 July 2019. They were signed on its behalf by:
Ric Traynor
Executive chairman
Nick Taylor
Group finance director
Annual report and accounts 2019 Begbies Traynor Group plc
29
Financial statements
Consolidated cash flow statement
for the year ended 30 April 2019
Cash flows from operating activities
Cash generated by operations
Income taxes paid
Interest paid
Net cash from operating activities
Investing activities
Purchase of intangible fixed assets
Purchase of property, plant and equipment
Deferred consideration payments
Acquisition of businesses (net of cash acquired)
Net cash used in investing activities
Financing activities
Dividends paid
Proceeds on issue of SIP scheme shares
Repayment of loans
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Notes
21
10
11
20
2019
£’000
9,178
(1,362)
(489)
7,327
(216)
(784)
(1,030)
(1,167)
(3,197)
2018
£’000
9,065
(980)
(558)
7,527
(77)
(394)
(1,132)
(803)
(2,406)
8
(2,649)
(2,356)
10
(1,000)
(3,639)
491
3,518
4,009
38
(6,000)
(8,318)
(3,197)
6,715
3,518
30
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Notes to the consolidated financial statements
for the year ended 30 April 2019
1. General information
Begbies Traynor Group plc is a company incorporated in England and Wales under the Companies Act 2006. The address of the registered
office is 340 Deansgate, Manchester M3 4LY.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in
which the group operates.
2. Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below.
(a) Basis of accounting
The financial statements have been prepared in accordance with applicable UK law and International Financial Reporting Standards
(‘IFRS’) as adopted by the European Union (‘EU’), including International Accounting Standards (‘IAS’) and Interpretations issued
by the IFRS Interpretations Committee.
The financial statements have been prepared on the historical cost basis and all accounting policies have been applied consistently
throughout the current and preceding year, apart from those affected by the implementation of IFRS 15 ‘Revenue from Contracts
with Customers’ and IFRS 9 ‘Financial Instruments’ as noted in (g) and (j) below. These impact the accounting policies for revenue
and trade receivables.
Going concern
The group’s business activities, together with factors likely to affect its future development, performance and position, are set out in the
chairman’s statement and strategic report. The financial position of the group, its cash flows, liquidity position and borrowing facilities
are described in the strategic report.
Furthermore, notes 14 and 17 to the financial statements include full details of the group’s borrowings, in addition to the group’s
objectives and policies for managing its capital, its financial risk management objectives and its exposures to credit, interest rate
and liquidity risk.
The group has principal committed banking facilities of £25 million, of which £6 million was utilised (£10 million drawn less £4 million
of cash balances) at 30 April 2019.
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 signing these financial statements. 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, they continue to adopt the going concern basis in preparing
the annual report and accounts.
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 IFRSs 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.
(b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of Begbies Traynor Group plc and entities controlled by
Begbies Traynor Group plc (its subsidiaries, which include limited liability partnerships). Control is achieved if all three of the following
are achieved: power over the investee, exposure to variable returns for the investee, and the ability of the investor to use its power
to affect those variable returns.
The results of subsidiaries are included in the consolidated statement of comprehensive income.
The results of entities acquired or disposed of during the year are included in the consolidated statement of comprehensive income
from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, the accounts of the subsidiaries are adjusted to conform to the group’s accounting policies. All intra-group transactions,
balances, income and expenses are eliminated on consolidation.
Annual report and accounts 2019 Begbies Traynor Group plc
31
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
2. Accounting policies continued
(c) Business combinations
The acquisition of subsidiaries and businesses is accounted for using the acquisition method. The consideration for each acquisition
is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the group in exchange for control of the acquiree.
Contingent consideration is initially measured at fair value at the date of the business combination. Any subsequent adjustment to this
fair value (such as meeting an earnings target), where the consideration is payable in cash, is recognised in the consolidated statement
of comprehensive income.
In accordance with the IFRS Interpretations Committee’s interpretation of paragraph B55 of IFRS 3, the cost of the business combination
excludes consideration which requires post-acquisition service obligations to be performed by the selling shareholders. These amounts
are accounted for as deemed remuneration and are charged to the consolidated statement of comprehensive income over the period
of the service obligation. Consideration paid in advance of the service obligation being delivered is recognised as an asset within trade
and other receivables. The balance is disclosed within current assets for service obligations in less than 12 months and in non-current
assets for service obligations after more than 12 months. In the event that the service obligations have been delivered in advance of
the payment being made, the resultant liability is recognised within trade and other payables.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. Where the fair value of the assets and liabilities at acquisition cannot be determined reliably in the
initial accounting, these values are considered to be provisional for a period of 12 months from the date of acquisition. If additional
information relating to the condition of these assets and liabilities at the acquisition date is obtained within this period, then the
provisional values are adjusted retrospectively. This includes the restatement of comparative information for prior periods.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business
combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.
If the group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost
of the business combination, the excess is recognised immediately in the consolidated statement of comprehensive income.
Acquisition costs are recognised in the consolidated statement of comprehensive income as incurred and separately disclosed
due to the nature of this expense.
(d) Intangible assets
Goodwill
Goodwill arising on consolidation is recognised as an asset.
Following initial recognition, goodwill is subject to impairment reviews, at least annually, and measured at cost less accumulated
impairment losses. Any impairment is recognised immediately in the consolidated statement of comprehensive income and is
not subsequently reversed.
On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the gain or loss on disposal.
Goodwill arising on acquisitions before the date of the group’s transition to IFRS has been retained at the previous UK GAAP amounts,
subject to being tested for impairment at that date and at least annually thereafter.
Other intangible assets
Other intangible assets are measured initially at cost and are amortised on a straight-line basis over their estimated useful lives.
The carrying amount is reduced by any provision for impairment where necessary.
On a business combination, as well as recording separable intangible assets already recognised in the balance sheet of the acquired
entity at their fair value, identifiable intangible assets that are separable or arise from contractual or other legal rights are also included
in the acquisition balance sheet at fair value.
Amortisation is charged within administrative expenses in the consolidated statement of comprehensive income so as to write off the
cost or valuation of assets over their estimated useful lives, on the following basis:
Software
Intangible assets arising on acquisitions
10%–33% of cost
10%–50% of fair value at acquisition
32
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
2. Accounting policies continued
(e) Property, plant and equipment
All assets are stated at historical cost less accumulated depreciation and accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, on the following basis:
Computers
Motor vehicles
Office equipment
Leasehold improvements
20%–33% of cost
25% on a reducing balance basis
15%–25% of cost
evenly over period of lease
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount
of the asset and is recognised within profit or loss for the period.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,
over the relevant lease term.
(f) Impairment of tangible and intangible assets
At each balance sheet date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there
is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent
from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately.
(g) Financial instruments
Financial assets and financial liabilities are recognised in the group’s balance sheet when the group becomes a party to the contractual
provisions of the instrument.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and on-demand deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Trade and other receivables (excluding deemed remuneration)
Trade receivables are initially recognised at their transaction price, and then subsequently stated at amortised cost less impairment
provision for estimated irrecoverable amounts.
The group applies the simplified approach to providing for expected credit losses (ECLs) under IFRS 9, which permits the use of the
lifetime expected loss provision for trade receivables. The group makes specific provisions for lifetime expected credit losses against
trade receivables where additional information is known regarding the recoverability of those balances. For the remaining trade
receivables balances, the group has established an ECL model using provision matrices for recognising ECLs on its trade receivables,
based on its historical credit loss experience over a two year period, adjusted (where appropriate) for forward-looking factors.
Trade receivables are written off where there is no expectation of recovery.
Other receivables are stated at their fair value.
Trade and other payables
Trade and other payables are initially stated at their fair value and subsequently at amortised cost.
Annual report and accounts 2019 Begbies Traynor Group plc
33
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
2. Accounting policies continued
(g) Financial instruments continued
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Equity instruments
Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are accounted for on an amortised cost basis to the consolidated
statement of comprehensive income using the effective interest method and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they arise.
(h) Provisions
Provisions are recognised when the group has a present legal or constructive obligation as a result of a past event, it is probable that
the group will be required to settle the obligation and the amount can be reliably estimated.
(i) Leases
Leases are classified according to the substance of the transaction. A lease that transfers substantially all the risks and rewards
of ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases.
The group as lessee
Operating lease rentals are charged to the consolidated statement of comprehensive income on a straight-line basis over the period
of the lease even where payments are not made on such a basis. Lease incentives are spread over the period of the lease.
The group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the varying amount of the leased asset and recognised on a straight-line
basis over the lease term.
(j) Revenue recognition
Revenue is recognised when control of a service or product provided by the group is transferred to the customer, in line with the group’s
performance obligations in the contract, and at an amount reflecting the consideration the group expects to receive in exchange for the
service or product.
There are no significant judgements required in determining the group’s performance obligations in its contracts as the significant
majority of contracts contain only one performance obligation.
The group recognises revenue from the following activities:
• insolvency and advisory services;
• corporate finance services;
• commercial property management;
• property consultancy services; and
• commercial property and other business asset disposals.
Insolvency and advisory services
For the group’s formal insolvency appointments and other advisory engagements, where remuneration is typically determined based on
hours worked by professional partners and staff, the group transfers control of its services over time and recognises revenue over time
if the group:
• provides services for which it has no alternative use or means of deriving value; and
• has an enforceable right to payment for its performance completed to date, and for formal insolvency appointments has approval
from creditors to draw fees which will be paid from asset realisations.
On certain contracts the group may not have enforceable rights to payment at the start of the contract and revenue will not be recognised
until these rights are in place. This may occur on insolvency appointments where the recovery of assets is subject to litigation or the
realisation of assets is uncertain.
34
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
2. Accounting policies continued
(j) Revenue recognition continued
Insolvency and advisory services continued
Progress on each assignment is measured using an input method based on costs incurred to date as a percentage of total anticipated costs.
In determining the amount of revenue and the related balance sheet items (such as trade receivables, unbilled income and deferred
income) to recognise in the period, management is required to form a judgement on each individual contract of the total expected
fees and total anticipated costs. These estimates and judgements may change over time as the engagement completes and this will
be recognised in the consolidated statement of comprehensive income in the period in which the revision becomes known. These
judgements are formed over a large portfolio of contracts and are therefore unlikely to be individually material.
Invoices on formal insolvency appointments are generally raised having achieved approval from creditors to draw fees. This is typically
settled on a timely basis from case funds. On advisory engagements, invoices are generally raised in line with contract terms.
Where revenue is recognised in advance of the invoice being raised (in line with the recognition criteria above) this is disclosed as unbilled
income within trade and other receivables. Where an invoice is raised in advance of the revenue being recognised, this is disclosed as
deferred income within trade and other payables.
Corporate finance services
Generally, revenue is recognised at a point in time on the date of completion of the transaction or when unconditional contracts have been
exchanged. Fees are typically a fixed percentage of the transaction value and are invoiced to the client (and typically payable) on completion.
Commercial property management
The group manages commercial properties for owners. The primary performance obligation relates to the ongoing management of
the property and revenue is recognised over time on a straight-line basis as the services are performed in line with the contract terms.
The majority of customers are invoiced quarterly in advance, with a deferred income balance recognised for services still to be delivered.
Property consultancy services
The group provides a wide range of professional property services including valuation, building consultancy, planning and insurance
broking. Revenue will typically be recognised at a point in time following satisfaction of the performance obligation(s) in the contract,
at which point the group is typically entitled to invoice the customer, and payment will be due.
Commercial property and other business asset disposals
The group is appointed to sell property, machinery and other business assets for clients through physical and online auctions and
its commercial property agency. Generally, revenue is recognised at a point in time on the date of completion of the asset sale or when
unconditional contracts for the sale have been exchanged. Fees are typically a fixed percentage of the transaction value and are invoiced
to the client (and typically payable) on completion.
Financing component
In line with IFRS 15, the group does not adjust the promised amount of consideration for the effects of a significant financing component
if the group expects, at contract inception, that the period between the group transferring its product or services to a customer and
when the customer pays will be one year or less.
(k) Borrowing costs
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
(l) Pensions and retirement benefits
The group operates a defined contribution scheme in the United Kingdom for all qualifying employees. The costs of the pension funding
borne by the group are charged to the consolidated statement of comprehensive income as an expense as they fall due.
(m) Share-based payments
Equity-settled share-based payments are measured at the fair value of the equity instruments at the grant date. The fair value excludes
the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based
transactions are set out in note 19.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting
period, based on the group’s estimate of equity instruments that will eventually vest. At each balance sheet date, the group revises its estimate
of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the
revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to equity reserves.
(n) Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when they
are paid to shareholders. In the case of final dividends, this is when approved by the shareholders at the AGM.
Annual report and accounts 2019 Begbies Traynor Group plc
35
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
2. Accounting policies continued
(o) Taxation
The tax expense represents the sum of current tax and deferred tax.
Current tax
Current tax is based on taxable profit for the period. Taxable profit differs from net profit as reported in the consolidated statement
of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited to the consolidated statement of comprehensive income except when it relates to items charged
or credited to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes by the same taxation authority and the group intends to settle its current tax assets
and liabilities on a net basis.
(p) Charge arising under Begbies Traynor London (LLP) put and call option
The anticipated liability to the group under this option (as detailed in note 26) is charged to the consolidated statement of comprehensive
income over the period of the contractual obligation, and included as a transaction cost within administrative expenses.
(q) Critical accounting judgements and other key sources of estimation uncertainty
In the process of applying the group’s accounting policies, the group is required to make certain estimates, judgements and assumptions that
it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented.
On an ongoing basis, the group evaluates its estimates using historical experience, consultation with experts and other methods
considered reasonable in the particular circumstances. Actual results may differ from the estimates, the effect of which is recognised
in the period in which the facts that give rise to the revision become known.
The group believes that the estimates and judgements in relation to goodwill have the most significant impact on the annual results
under IFRS as set out below.
Goodwill
The group records all assets and liabilities acquired in business combinations, including goodwill, at fair value. Goodwill is not amortised
but is subject, at a minimum, to annual tests for impairment. The initial goodwill recorded and subsequent impairment review require
management to make subjective judgements concerning the value in use of cash-generating units. This requires an estimate of the
future cash flows expected to arise from the cash-generating unit and a suitable discount rate to calculate present value. Details
of the assumptions made are provided in note 10.
(r) Other sources of estimation uncertainty
Intangible assets in a business combination
On the acquisition of a business the identifiable intangible assets may include brands, customer relationships, customer contracts, order
backlogs and websites. The fair value of these assets is determined by discounting estimated future net cash flows generated by the
asset where no active market for the assets exists. The use of different assumptions for the expectations of future cash flows and the
discount rate would change the valuation of the intangible assets, and the estimate of expected contingent consideration payable affects
the resulting gain on acquisition recognised. Details in relation to current year acquisitions are in note 20.
36
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
2. Accounting policies continued
(s) Recently issued accounting pronouncements
International Financial Reporting Standards
At the date of authorisation of these financial statements, the following relevant standards and interpretations were in issue but not yet
effective and have not been applied in these financial statements:
International Financial Reporting Standards (‘IFRSs’)
Definition of a business (Amendments to IFRS 3 ‘Business Combinations’)
Amendment to IAS 1 and IAS 8 – Definition of material
Effective date
(year end commencing on or after)
1 January 2020
1 January 2020
IFRS 16 ‘Leases’
IFRS 16 ‘Leases’ replaces IAS 17 ‘Leases’ and its related interpretations. IFRS 16 establishes new principles for the recognition, measurement,
presentation and disclosure of leases and is effective for the group from 1 May 2019.
Prior to this date, all of the group’s leases where the group is a lessee were operating leases. The group recognised a charge in the income
statement based on straight-line recognition of the lease payments payable on each lease, after adjustment for lease incentives received.
IFRS 16 requires lessees to recognise a lease liability in respect of the obligation to make lease payments and a right-of-use asset in respect
of the lessee’s right to the exclusive use and control of the asset. In the income statement, the operating lease charge as recognised under
the current rules will be replaced with a straight-line depreciation charge on the right-of-use asset and an interest cost on the lease liability.
Under IFRS 16, the lease payments will be charged directly against the lease liability.
The group intends to take advantage of the exemptions available under IFRS 16 not to apply the recognition and requirements of IFRS 16
to leases with a term of 12 months or less, or leases for which the underlying asset value is low. The recognition of these exempted leases will
therefore continue unchanged – a charge will be recognised in the income statement based on straight-line recognition of the lease
payments payable on each lease, after adjustment for lease incentives received.
The group has assessed the impact of the application of this standard, and expects to recognise lease liabilities of between £9 million and
£10 million and recognise right-of-use assets of between £8 million and £9 million.
The group expects there to be minimal impact on statutory and adjusted profit before tax as a result of adopting this new standard.
The group’s activities as a lessor are not material and hence the group does not expect any significant impact on the financial statements
with respect to sub-leasing activities.
(t) 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.
The accounting policy for revenue recognition under IFRS 15 is provided in note 2(j). This replaces the previous accounting policy
(applied in the comparative year) under IAS 18 of:
Revenue represents amounts recoverable from clients for professional services provided during the year, excluding value added tax.
The group recognises revenue when the amount can be reliably measured and it is probable economic benefits will flow.
Annual report and accounts 2019 Begbies Traynor Group plc
37
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
2. Accounting policies continued
(t) Adoption of new accounting standards continued
IFRS 15 ‘Revenue from Contracts with Customers’ continued
Services provided to clients, which at the balance sheet date have not been billed, are recognised as unbilled revenue.
Revenue recognised in this manner is based on an assessment of the fair value of the services provided at the balance sheet date
reflecting the stage of completion (determined by costs incurred to date as a percentage of the total anticipated costs) of each assignment.
These estimates and judgements may change over time as the case completes and this will be recognised in the consolidated statement
of comprehensive income in the period in which the revision becomes known. These judgements are formed over a large portfolio of
cases and are therefore unlikely to be individually material.
Unbilled revenue on individual client assignments is included as unbilled income within trade and other receivables. Where amounts are
billed in advance of the services being provided, these are included within deferred income within trade and other payables.
For contingent fee engagements, revenue is only recognised (over and above any agreed minimum fee) when, at the balance sheet date,
the outcome to the transaction can be estimated reliably.
IFRS 9 ‘Financial Instruments’
IFRS 9 ‘Financial Instruments’ replaces the provisions of IAS 39 that relate to the recognition, classification and measurement of financial
assets and financial liabilities. The introduction of IFRS 9 impacts the group’s accounting policy for trade receivables, where we have
moved to an expected loss method of providing for future impairment. This replaces the previous accounting policy (applied in the
comparative year) to initially recognise trade receivables at fair value, and then subsequently state at amortised cost less allowances
for estimated irrecoverable amounts. There was no reclassification adjustment upon transition to IFRS 9.
Opening adjustment to retained earnings
The adoption of these standards at 1 May 2018 reduced trade and other receivables by £1.8 million and increased deferred tax assets by
£0.4 million, giving a reduction in net assets of £1.4 million.
The tables below show the impact of adopting these new accounting policies in the year.
Consolidated statement of comprehensive income
As reported
30 April 2019
£’000
IFRS 15
adjustment
£’000
IFRS 9
adjustment
£’000
Revenue
Direct costs
Gross profit
Other operating income
Administrative expenses
Operating profit before amortisation
and transaction costs
Transaction costs
Amortisation
Operating profit
Finance costs
Profit before tax
Tax
Profit and total comprehensive income for the year
Earnings per share
Basic
Diluted
60,058
(34,276)
25,782
393
(22,163)
7,553
(1,180)
(2,361)
4,012
(486)
3,526
(1,092)
2,434
2.2 pence
2.1 pence
38
Begbies Traynor Group plc Annual report and accounts 2019
15
—
15
—
—
15
—
—
15
—
15
(3)
12
—
—
—
—
31
31
—
—
31
—
31
(6)
25
Balances
without
adoption
of new
standards
30 April 2019
£’000
60,073
(34,276)
25,797
393
Year ended
30 April 2018
£’000
52,441
(30,141)
22,300
400
(22,132)
(19,922)
7,599
(1,180)
(2,361)
4,058
(486)
3,572
(1,101)
2,471
6,059
(1,364)
(1,917)
2,778
(482)
2,296
(872)
1,424
2.2 pence
1.3 pence
2.1 pence
1.3 pence
Strategic report / Corporate governance / Financial statements
2. Accounting policies continued
(t) Adoption of new accounting standards continued
Opening adjustment to retained earnings continued
Consolidated balance sheet
Non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Net current assets
Non-current liabilities
Trade and other payables
Borrowings
Provisions
Deferred tax
Total liabilities
Net assets
As reported
30 April 2019
£’000
IFRS 15
adjustment
£’000
IFRS 9
adjustment
£’000
Balances
without
adoption
of new
standards
30 April 2019
£’000
30 April 2018
£’000
64,378
—
—
64,378
62,332
32,653
4,009
36,662
101,040
(22,664)
(1,976)
(588)
(25,228)
1,261
—
1,261
1,261
182
(3)
—
179
391
—
391
391
—
(6)
—
(6)
34,305
4,009
38,314
102,692
30,829
3,518
34,347
96,679
(22,482)
(17,268)
(1,985)
(588)
(1,548)
(783)
(25,055)
(19,599)
11,434
1,440
385
13,259
14,748
—
(10,000)
(763)
(5,348)
(16,111)
(41,339)
—
—
—
(271)
(271)
(92)
59,701
1,169
—
—
—
(67)
(67)
(73)
318
—
(10,000)
(763)
(5,686)
(1,093)
(11,000)
(414)
(5,424)
(16,449)
(17,931)
(41,504)
(37,530)
61,188
59,149
Annual report and accounts 2019 Begbies Traynor Group plc
39
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
3. Revenue
Revenue recognised in the year of £60,058,000 (2018: £52,441,000) was exclusively from contracts with customers recognised in
accordance with IFRS 15. An analysis of revenue by nature of activity and recognition method is detailed in note 4.
The contract balances recognised are:
Contract assets
Trade receivables
Unbilled income
Contract liabilities
Deferred income
2019
£’000
2018
£’000
6,485
21,310
27,795
5,658
21,719
27,377
(3,338)
(1,807)
The movement in contract assets in the year comprises: £1.8 million reduction upon adoption of IFRS 9 and IFRS 15 at 1 May 2018, £1.1 million
increase from acquisitions in the year and £1.1 million increase due to organic growth in the year.
Revenue recognised in the year that was included in deferred income at the beginning of the year was £1.1 million. The increase in deferred
income in the year relates to formal insolvency appointments.
For the group’s formal insolvency contracts, which are expected to be completed within three years, the aggregate amount of the overall
transaction price which has been allocated to performance obligations that are unsatisfied (or only partially satisfied) at 30 April 2019 is
£15.4 million.
For other contracts, the group has taken the practical expedients available under IFRS 15 not to disclose any amounts relating to contracts
which had an expected duration of one year or less.
4. 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.
In accordance with IFRS 15, the analysis of revenue by basis of recognition and by service line is presented for 2019 following adoption of
the new standard on 1 May 2018.
40
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
4. Segmental analysis continued
Segmental information about these businesses is presented below.
Continuing operations
Revenue
Total revenue from rendering of professional services
Inter-segment revenue
Revenue from external customers
Over time
At a point in time
Business
recovery and
financial
advisory
services
2019
£’000
Property
services
2019
£’000
Consolidated
2019
£’000
43,313
16,903
60,216
—
(158)
(158)
43,313
16,745
60,058
40,459
2,854
2,098
14,647
42,557
17,501
Revenue from external customers by basis of recognition
43,313
16,745
60,058
Insolvency and advisory services
Corporate finance
Commercial property management
Property consultancy services
Commercial property and other business asset disposals
40,459
2,854
—
—
—
—
—
2,098
8,921
5,726
40,459
2,854
2,098
8,921
5,726
Revenue from external customers by service line
43,313
16,745
60,058
Segmental result
Shared and central costs
Operating profit before amortisation and transaction costs
Transaction costs
Amortisation of intangible assets arising on acquisitions
8,658
3,765
12,423
(4,870)
7,553
(1,180)
(2,361)
4,012
(486)
3,526
(1,092)
2,434
97,031
4,009
101,040
83,440
13,591
(16,035)
(7,980)
(24,015)
(17,324)
(41,339)
59,701
Operating profit
Finance costs
Profit before tax
Tax
Profit for the financial year
Balance sheet
Assets
Segment assets
Unallocated corporate assets
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
Net assets
Unallocated amounts include current and deferred tax liabilities, cash and financial liabilities and other central assets and liabilities.
Annual report and accounts 2019 Begbies Traynor Group plc
41
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
4. Segmental analysis continued
Other information
Non-current assets additions from acquisitions
Capital and software additions
Depreciation and software amortisation
Revenue
Total revenue from rendering of professional services
Inter-segment revenue
External revenue
Segmental result
Shared and central costs
Operating profit before amortisation and transaction costs
Transaction costs
Amortisation of intangible assets arising on acquisitions
Operating profit
Finance costs
Profit before tax
Tax
Profit for the financial year
Balance sheet
Assets
Segment assets
Unallocated corporate assets
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
Net assets
42
Begbies Traynor Group plc Annual report and accounts 2019
Business
recovery and
financial
advisory
services
2019
£’000
Property
services
2019
£’000
Consolidated
2019
£’000
432
941
618
2,274
59
142
2,706
1,000
760
Business
recovery and
financial
advisory
services
2018
£’000
Property
services
2018
£’000
Consolidated
2018
£’000
38,273
14,288
52,561
—
(120)
(120)
38,273
14,168
52,441
7,563
3,132
85,928
7,233
(15,085)
(4,473)
10,695
(4,636)
6,059
(1,364)
(1,917)
2,778
(482)
2,296
(872)
1,424
93,161
3,518
96,679
(19,558)
(17,972)
(37,530)
59,149
Strategic report / Corporate governance / Financial statements
Business
recovery and
financial
advisory
services
2018
£’000
Property
services
2018
£’000
Consolidated
2018
£’000
2,276
412
545
444
59
125
2,720
471
670
4. Segmental analysis continued
Other information
Non-current assets additions from acquisitions
Capital and software additions
Depreciation and software amortisation
Geographical segments
The group’s principal operations and markets are located in the UK.
5. Profit for the year
Profit for the year has been arrived at after charging (crediting):
Depreciation of property, plant and equipment
Amortisation of intangible assets
Staff costs (note 6)
Operating lease rentals payable
Impairment of receivable balances (note 12)
Reversal of impairment losses recognised on trade receivables (note 12)
During the year, the group obtained the following services from the group’s auditor, at the costs detailed below:
Fees payable to the company’s auditor for the audit of the company’s annual accounts
Fees payable to the company’s auditor and its associates for other services to the group
– the audit of the company’s subsidiaries pursuant to legislation
Total audit fees
– other advisory services
Total non-audit fees
During the year, the group incurred transaction costs as detailed below:
Deemed remuneration
Acquisition costs
Gain on acquisition (note 20)
Charge arising under Begbies Traynor London (LLP) put and call option (note 26)
Total transaction costs
These transaction costs are all included within administrative expenses.
2019
£’000
563
2,558
34,673
2,754
276
(195)
2019
£’000
30
82
112
34
34
2019
£’000
2,806
154
(2,909)
1,129
1,180
2018
£’000
488
2,099
31,121
2,687
466
(247)
2018
£’000
30
74
104
8
8
2018
£’000
1,678
117
(1,189)
758
1,364
Annual report and accounts 2019 Begbies Traynor Group plc
43
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
6. Staff costs
The average monthly number of persons (including executive directors) working within the group was:
Partners and consultants
Fee earning staff
Support staff
Their aggregate remuneration comprised:
Wages, salaries and partners’ profit share
Social security costs
Pension costs (note 25)
Share-based payments
Directors’ remuneration
Short-term benefits
Share-based payments
2019
number
2018
number
55
397
155
607
2019
£’000
47
360
149
556
2018
£’000
30,917
27,493
2,257
1,400
99
2,130
1,203
295
34,673
31,121
2019
£’000
1,995
2
1,997
2018
£’000
1,667
2
1,669
Number
Number
The average number of directors who:
Had awards receivable in the form of shares under a long-term incentive scheme
2
2
No directors participated in the group’s defined contribution pension scheme during either year.
7. Tax
Current tax charge
Adjustment in respect of prior year
Total current tax charge
Deferred tax credit (note 16)
Adjustment in respect of prior year
Total deferred tax credit
Total income tax charge
Corporation tax is calculated at 19% (2018: 19%) of the estimated assessable profit for the year.
44
Begbies Traynor Group plc Annual report and accounts 2019
2019
£’000
1,303
—
2018
£’000
1,224
(4)
1,303
1,220
(211)
—
(211)
1,092
(244)
(104)
(348)
872
Strategic report / Corporate governance / Financial statements
7. Tax continued
The charge for the year can be reconciled to the profit per the consolidated statement of comprehensive income as follows:
Profit before tax
Notional tax charge at the UK corporation tax rate of 19% (2018: 19%)
Adjustments in respect of current income tax of prior years
Tax effect of expenses that are not deductible in determining taxable profit
Total tax expense reported in the consolidated statement of comprehensive income
8. Dividends
Amounts recognised as distributions to equity holders in the year
Interim dividend for the year ended 30 April 2018 of 0.7 pence (2017: 0.6 pence) per share
Final dividend for the year ended 30 April 2018 of 1.7 pence (2017: 1.6 pence) per share
Amounts proposed as distributions to equity holders
Interim dividend for the year ended 30 April 2019 of 0.8 pence (2018: 0.7 pence) per share
Final dividend for the year ended 30 April 2019 of 1.8 pence (2018: 1.7 pence) per share
2019
£’000
3,526
670
—
422
1,092
2019
£’000
771
1,878
2,649
914
2,058
2,972
2018
£’000
2,296
436
(108)
544
872
2018
£’000
640
1,716
2,356
771
1,872
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.
9. Earnings per share
The calculation of basic and diluted earnings per share is based on the following data:
Earnings
Profit for the year attributable to equity holders
2019
£’000
2018
£’000
2,434
1,424
2019
number
2018
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
Contingent shares as consideration for capital transactions
404,262
1,264,656
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
Basic earnings per share
Diluted earnings per share
2019
pence
2.2
2.1
2018
pence
1.3
1.3
Annual report and accounts 2019 Begbies Traynor Group plc
45
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
9. Earnings per share continued
The calculation of adjusted basic and diluted earnings per share is based on the following data:
2019
£’000
2,434
2,361
1,180
(449)
5,526
2019
pence
4.9
4.7
Intangible
assets
arising on
acquisitions
£’000
19,203
2,528
—
21,731
2,673
—
2018
£’000
1,424
1,917
1,364
(364)
4,341
2018
pence
4.0
3.8
Total
£’000
71,061
2,611
77
73,750
2,673
216
Goodwill
£’000
Software
£’000
50,129
1,729
84
—
—
77
50,213
1,806
—
—
—
216
50,213
2,022
24,404
76,639
—
—
—
—
—
1,185
182
1,367
197
11,405
1,917
13,322
2,361
12,590
2,099
14,689
2,558
1,564
15,683
17,247
50,213
50,213
50,129
458
439
544
8,721
8,409
7,798
59,392
59,061
58,471
Earnings
Profit for the year attributable to equity holders
Amortisation of intangible assets arising on acquisitions
Transaction costs
Tax effect of above items
Adjusted earnings
Adjusted basic earnings per share
Adjusted diluted earnings per share
10. Intangible assets
Cost
At 1 May 2017
Arising on acquisitions
Additions
At 30 April 2018
Arising on acquisitions
Additions
At 30 April 2019
Amortisation and impairment
At 1 May 2017
Amortisation during the year
At 30 April 2018
Amortisation during the year
At 30 April 2019
Carrying amount
At 30 April 2019
At 30 April 2018
At 30 April 2017
46
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
10. Intangible assets continued
The carrying value of intangible assets arising on acquisitions comprises brands of £2,852,000 (2018: £2,680,000), customer relationships
of £4,456,000 (2018: £3,832,000), order books of £1,197,000 (2018: £1,650,000) and websites of £216,000 (2018: £247,000). The remaining
useful economic lives of intangible assets arising on acquisition are between one and nine years.
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (‘CGUs’) that are expected to benefit
from that business combination. The carrying amount of goodwill has been allocated wholly to the insolvency CGU.
The group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
The recoverable amount of the CGU is based on a value in use calculation using cash flow projections over a 20 year period, including
the latest one year forecast approved by the board. A 20 year period has been used as the directors believe this is an appropriate period
to reflect insolvency numbers over an economic cycle.
The one year forecast is prepared considering local partners’ expectations based on market knowledge, numbers of new engagements
and the pipeline of opportunities. The remaining years are based on anticipated insolvency numbers over an economic cycle, together
with historical financial performance.
Key assumptions used in value in use calculation
The key assumptions for the value in use calculation are those regarding:
• pre-tax discount rate;
• revenue; and
• operating profit margins.
Pre-tax discount rate
The group’s post-tax weighted average cost of capital has been used to calculate a group pre-tax discount rate of 10% (2018: 10%),
which reflects current market assessments of the time value of money for the period under review and the risks specific to the group.
As the insolvency CGU comprises the majority of the group’s activities this has been used as the discount rate for the purpose of the
value in use calculation.
Revenue
Revenue assumptions in the one year forecast are derived from local partners’ expectations based on market knowledge, numbers
of new engagements and the pipeline of opportunities. Future year revenue levels are based on anticipated insolvency numbers over
an economic cycle. This anticipates an increase in insolvency appointments during recession followed by subsequent decreases.
The average number of insolvency appointments over the economic cycle is in line with historical levels.
Operating profit margins
Operating profit margins in the one year forecast are derived from local partners’ expectations based on the number of current
engagements and cost base. Margins over the extrapolation period are forecast based on past experiences and expectations
of future market developments.
Sensitivity to changes in assumptions
With regard to the assessment of value in use for the insolvency CGU, the directors believe that reasonably possible changes
in any of the above key assumptions would not cause the carrying value of the unit to exceed its recoverable amount.
Annual report and accounts 2019 Begbies Traynor Group plc
47
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
11. Property, plant and equipment
Leasehold
improvements
£’000
Office
equipment
£’000
Computers
£’000
Motor
vehicles
£’000
Cost
At 1 May 2017
Arising on acquisitions
Additions
Disposals
At 30 April 2018
Arising on acquisitions
Additions
At 30 April 2019
Depreciation and impairment
At 1 May 2017
Charge for the year
Disposals
At 30 April 2018
Charge for the year
At 30 April 2019
Carrying amount
At 30 April 2019
At 30 April 2018
At 30 April 2017
12. Trade and other receivables
Non-current
Deemed remuneration
Current
Trade receivables
Less: impairment provision
Trade receivables – net
Unbilled income
Other debtors and prepayments
Deemed remuneration
4,288
1,424
3,144
26
6
(219)
4,101
—
355
11
72
(1)
1,506
29
37
19
316
—
3,479
4
392
4,456
1,572
3,875
3,428
188
(219)
3,397
197
3,594
862
704
860
1,256
81
(1)
1,336
71
1,407
165
170
168
2,674
215
—
2,889
278
3,167
708
590
470
—
52
—
—
52
—
—
52
—
4
—
4
17
21
31
48
—
Total
£’000
8,856
108
394
(220)
9,138
33
784
9,955
7,358
488
(220)
7,626
563
8,189
1,766
1,512
1,498
2019
£’000
2018
£’000
3,220
1,759
7,823
(1,338)
6,485
21,310
2,379
2,479
6,740
(1,082)
5,658
21,719
2,153
1,299
32,653
30,829
The directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Trade receivables are non-interest bearing and are generally on 30 day terms. Refer to note 17 for disclosures on credit risk.
48
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
12. Trade and other receivables continued
The impairment provision comprises a specific loss allowance provision of £927,000 and an expected credit loss provision of £411,000.
The expected loss provision for trade receivables is calculated on the gross carrying amount of trade receivables less any specific loss
allowance, and is detailed as follows:
30 April 2019
Expected loss rate
Gross carrying amount
Expected credit loss provision
Days past due
<30 days
£’000
<60 days
£’000
<90 days
£’000
<180 days
£’000
>180 days
£’000
1%
3,841
39
2%
1,109
26
4%
444
19
10%
686
72
31%
816
255
Total
£’000
6%
6,896
411
The impairment provision previously recognised at 30 April 2018 under IAS 39 of £1,082,000 was increased by £359,000 to £1,441,000,
being the expected credit loss provision calculated in accordance with IFRS 9.
1 May 2018
Expected loss rate
Gross carrying amount
Expected credit loss provision
Days past due
<30 days
£’000
<60 days
£’000
<90 days
£’000
<180 days
£’000
>180 days
£’000
1%
3,277
26
3%
947
29
16%
268
16
10%
462
46
34%
704
242
Following adoption on 1 May 2018 impairment provision under IAS 39 was increased by £359,000 to reflect adoption of IFRS 9, an
increase from the £1,082,000 recognised at 1 May 2018 under IAS 39.
Movement in the impairment provision
Balance at beginning of the year
Adjustment for change in accounting policy (see note 2(t))
Amounts arising on acquisition
Amounts written off during the year
Amounts recovered during the year
Increase in allowance recognised in profit or loss
Balance at end of the year
Total
£’000
6%
5,658
359
2018
£’000
1,020
—
1,020
—
(157)
(247)
466
2019
£’000
1,082
359
1,441
20
(204)
(195)
276
1,338
1,082
In accordance with the transitional provision under IFRS 9, the comparative figures have not been restated. The following disclosures
relate to the FY18 comparatives:
2018
Neither past
due nor
impaired up
to 30 days
£’000
Past due but not impaired
1–3 months
£’000
>4 months
£’000
4,348
618
692
Total
£’000
5,658
Annual report and accounts 2019 Begbies Traynor Group plc
49
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
13. Trade and other payables
Current
Trade payables
Accruals
Other taxes and social security
Deferred income
Other creditors
Deemed remuneration liabilities
Non-current
Deemed remuneration liabilities
2019
£’000
953
7,125
3,308
3,338
4,830
3,110
2018
£’000
1,414
6,902
2,319
1,807
4,249
577
22,664
17,268
—
1,093
Trade creditors are non-interest bearing and are normally settled on terms agreed with suppliers.
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
In addition to the deemed remuneration liabilities recognised above of £3.1 million, there are further anticipated obligations based on
current forecasts of £3.3 million as a result of acquisitions where the service obligations of the selling shareholders have not yet been performed.
14. Borrowings
Non-current
Unsecured loans at amortised cost
2019
£’000
2018
£’000
10,000
11,000
The group’s principal banking facilities at 30 April 2019 comprise an unsecured, revolving credit facility (‘RCF’) of £25 million and an
uncommitted acquisition facility of £5 million which were entered into on 1 November 2016. The principal features of these borrowings
are summarised as follows:
• RCF of £25 million provided by HSBC, of which £10 million was drawn at 30 April 2019 (2018: £11 million). The effective interest rate
was 3.5%; together with
• uncommitted acquisition facility of £5 million provided by HSBC, which was undrawn at 30 April 2019 (2018: undrawn).
The group’s banking facilities mature on 31 August 2023.
All borrowings and cash balances are denominated in sterling. The directors consider that the fair values of the group’s financial
instruments approximate to their book value.
50
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
15. Provisions
At 1 May 2018
Charged
Arising on acquisition
Utilised
At 30 April 2019
Current liabilities
Non-current liabilities
At 30 April 2019
Disposal
provisions
£’000
Property exit
provisions
£’000
267
—
—
(7)
260
90
170
260
930
577
50
(466)
1,091
498
593
£’000
1,197
577
50
(473)
1,351
588
763
1,091
1,351
Disposal provisions include liabilities arising from warranty and onerous contract obligations relating to discontinued businesses.
Property exit provisions relate to anticipated dilapidation costs on property leases, together with onerous lease commitments where
the space is vacant, which is calculated as the difference between future expected costs of onerous leasehold property net of any
estimated income.
The non-current elements of the provisions are all expected to be utilised in the periods up to 30 April 2021.
16. Deferred tax
The following are the deferred tax (liabilities) assets recognised by the group and movements thereon during the current and prior year:
At 1 May 2017
(Charge) credit to income
Arising on acquisitions
Income statement effect of change in tax rate
At 30 April 2018
(Charge) credit to income
Arising on acquisitions
Arising from accounting policy change
At 30 April 2019
Tax
deductible
goodwill
£’000
Intangibles
£’000
Short-term
timing
differences
£’000
(4,181)
(1,232)
(82)
—
—
192
(469)
—
(4,263)
(1,509)
(27)
—
—
449
(475)
—
(4,290)
(1,535)
4
134
106
104
348
(211)
2
338
477
Total
£’000
(5,409)
244
(363)
104
(5,424)
211
(473)
338
(5,348)
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset)
for financial reporting purposes:
Deferred tax liabilities
Deferred tax assets
2019
£’000
2018
£’000
(5,899)
(5,844)
551
420
(5,348)
(5,424)
Annual report and accounts 2019 Begbies Traynor Group plc
51
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
17. Financial instruments
Financial risk management objectives and policies
The group’s principal financial instruments comprise cash balances and bank loans. The main purpose of these financial instruments
is to raise finance for the group’s operations. The group also has various other financial instruments, such as trade receivables and
trade payables, which arise directly from its operations.
It is, and has been throughout the period under review, the group’s policy that no trading in financial instruments shall be undertaken.
The main risks arising from the group’s financial instruments are interest rate risk, credit risk and liquidity risk. The board reviews
and agrees policies for managing each of these risks and they are summarised below.
Interest rate risk
The group’s external borrowings at the balance sheet date comprise loan facilities. All principal borrowings are on floating interest
rates. The group does not seek to fix interest rates on these borrowings as the board currently considers the exposure to interest
rate risk acceptable.
If interest rates had been 50 basis points higher and all other variables were held constant, the group’s profit for the year ended
30 April 2019 and net assets at that date would decrease by £37,000 (2018: £41,000). This is attributable to the group’s exposure
to movements in interest rate on its variable rate borrowings.
Credit risk
The nature of the group’s debtor balances, the time taken for payment by clients and the associated credit risk are dependent on the
type of engagement.
On formal insolvency appointments (which form the majority of the group’s activities), invoices are generally raised having achieved
approval from creditors to draw fees. This is typically settled on a timely basis from case funds. The credit risk on these engagements
is therefore considered to be extremely low.
On other engagements, the timescale to receive payment from the date of invoice is typically longer as the group’s standard 30 day
payment terms (referred to in note 12) are not practically enforceable in all situations. The board does not believe that this is an indication
of increased credit risk on these engagements.
Receivable balances are monitored on an ongoing basis with the result that the group’s exposure to bad debts is not significant.
Movements in the allowance for doubtful debts are disclosed in note 12. The group does not believe it is exposed to any material
concentrations of credit risk.
Unbilled revenue is recognised by the group only when all conditions for revenue recognition have been met in line with the group’s
accounting policy in note 2(j).
Liquidity risk
Liquidity risk is the risk that the group will encounter difficulty in meeting its obligations associated with its financial liabilities. The group’s
ability to generate cash from formal insolvency appointments is usually reliant on asset realisations. A deterioration in realisations in the
short term could reduce the group’s operating cash generation and increase its financing requirements. The group monitors its risks to
a shortage of funds through regular cash management and forecasting and ensuring suitable headroom within its banking facilities.
The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of its committed bank facilities,
and giving consideration to other available sources of finance such as bank overdrafts, finance leases and hire purchase contracts.
There is no material risk associated with foreign currency transactions or overseas subsidiaries.
The table below summarises the maturity profile of the group’s financial liabilities at 30 April based on contractual payments:
Bank borrowings
Trade payables
Deemed remuneration liabilities
At 30 April 2019
At 30 April 2018
Within
1 year
£’000
275
953
3,110
Between
2–5 years
£’000
10,905
—
—
4,338
10,905
After
5 years
£’000
—
—
—
—
Total
£’000
11,180
953
3,110
Within
1 year
£’000
Between
2–5 years
£’000
298
11,653
1,414
577
—
1,093
15,243
2,289
12,746
After
5 years
£’000
—
—
—
—
Total
£’000
11,951
1,414
1,670
15,035
52
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
17. Financial instruments continued
Capital management
The primary objective of the group’s capital management is to support its business and maximise shareholder value. The group manages
its capital structure and makes adjustments to it in light of changes in economic conditions and business requirements. To maintain or
adjust the capital structure, the group may raise additional or pay down debt finance, adjust the dividend payment to shareholders,
return capital to shareholders or issue new shares.
The table below presents quantitative data for the components the group manages as capital:
Shareholders’ funds
Bank borrowings
At 30 April
Categories of financial instruments
The table below shows the classification of the group’s financial instruments:
Financial assets at amortised cost
Trade receivables
Cash at bank
Financial liabilities at amortised cost
Trade payables
Bank borrowings
18. Share capital
Allotted, called up and fully paid
Ordinary shares of 5 pence
At 1 May
Staff SIP scheme
Issue of shares for share-based payments
Shares issued as consideration for acquisitions
Shares issued as deferred consideration
At 30 April
Allotted, called up and fully paid
Deferred shares of 1 pence
At 1 May
Cancellation of shares
At 30 April
Issued share capital
2019
£’000
59,701
10,000
69,701
2019
£’000
6,485
4,009
10,494
2018
£’000
59,149
11,000
70,149
2018
£’000
5,658
3,518
9,176
(953)
(10,000)
(1,414)
(11,000)
(10,953)
(12,414)
2019
thousand
2018
thousand
2019
£’000
2018
£’000
110,127
106,704
5,508
5,336
13
834
1,485
1,892
60
692
2,019
652
1
43
74
93
3
35
101
33
114,351
110,127
5,719
5,508
—
—
—
30,378
(30,378)
—
—
—
—
304
(304)
—
114,351
110,127
5,719
5,508
Ordinary shares carry no right to fixed income and each share carries the right to one vote at general meetings of the company.
Deferred shares have no rights to fixed income, dividends or voting rights at general meetings of the company. The shares are only
transferable with the consent of the company.
Annual report and accounts 2019 Begbies Traynor Group plc
53
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
19. Share-based payments
Share option scheme
The group operates a share option scheme which is settled in ordinary shares.
Additional share options were issued during the year. The exercise of the grants is subject to the following: 50% have no performance
conditions; 25% require an overall increase in adjusted earnings per share over a three year period of RPI plus 2.5%; and 25% require
average total shareholder return to exceed that of a comparator group over a three year period.
Directors’ remuneration information is provided on pages 19 and 20.
Employee Shareholder Status (ESS) shares
Certain employees held Employee Shareholder Status shares, which where converted into ordinary shares in Begbies Traynor Group plc
during the year.
Save-As-You-Earn Scheme
Employees are able to share in the group’s success through membership of our Sharesave scheme. Sharesave is a HMRC-approved
save-as-you-earn share option scheme, which allows participants to purchase shares out of the proceeds of a linked savings contract
at a price set at the time of the option grant. Participants may elect to save up to £250 per month and options may normally be
exercised in the six months following the maturity of the linked three year savings contract.
Share-based payments were valued using the Black-Scholes option pricing model with the following assumptions:
Grant date
Share price at grant date (pence)
Exercise price (pence)
Vesting period (years)
Time to expiry (years)
Expected volatility (%)
Risk free rate (%)
Expected dividend yield (%)
Fair value per option (pence)
Share option
scheme
25 October 2013
Share option
scheme
25 July 2014
ESS
17 October 2016
Share option
scheme
31 October 2017
Share option
scheme
25 April 2018
SAYE
scheme
20 November 2018
38
37
3
10
23
0.8
6.2
3.3
52
51
3
10
25
0.8
6.2
9.8
48
—
1–3
1–3
8
0.5
4.4
48
63
63
3
10
17
0.5
3.6
4.4
69
68
3
10
17
0.5
3.5
5.4
74
59
3
4
17
0.5
3.4
7.9
The expected volatility has been determined based on historical volatility of the group’s share price over the last three years. The risk free rate
is based on UK treasury issued bonds of a term consistent with the option life. The fair value is spread over the vesting period of the options.
Details of movements in shares under option during the year are as follows:
Outstanding at 1 May
Granted during the period
Forfeited during the period
Exercised during the period
Expired during the period
Outstanding at 30 April
Exercisable at 30 April
2019
2018
Number
of share
options
thousand
Weighted
average
exercise price
£
Number
of share
options
thousand
Weighted
average
exercise price
£
5,137
1,134
(122)
(965)
—
5,184
1,800
0.43
0.59
—
0.10
—
0.54
0.40
4,795
2,250
—
(1,608)
(300)
5,137
975
0.26
0.63
—
0.17
0.62
0.43
0.37
The group recognised an expense of £99,000 (2018: £295,000) in relation to equity-settled share-based payments.
The weighted average share price at the date of exercise for options exercised in the year was 58 pence.
The range of exercise prices for options outstanding at 30 April 2019 is between nil and 68 pence. The weighted average remaining
contractual life for share options outstanding is 5.5 years.
54
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
20. Acquisitions
Croft Transport Planning
On 31 January 2019 the group acquired the entire issued share capital of MMXI Limited trading as Croft Transport Planning & Design
(‘Croft’), a business providing highways, transport and traffic advice.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out below:
Book value
£’000
Fair value
adjustments
£’000
Fair value
£’000
Net assets acquired
Intangible assets
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Corporation tax
Deferred tax
Total identifiable assets
Satisfied by:
Cash
Equity instruments (640,150 ordinary shares in Begbies Traynor Group plc)
Initial consideration
Fair value of contingent consideration at acquisition
Payment re cash at completion subject to completion accounts adjustments
Final payment due following completion accounts adjustments
Less: amounts treated as deemed remuneration
Total consideration
Gain on acquisition
Cash outflows arising on acquisition
Cash consideration
Less: cash and cash equivalents acquired
—
4
650
1,592
(236)
(240)
(1)
1,769
1,029
—
(10)
—
(50)
—
(181)
788
1,029
4
640
1,592
(286)
(240)
(182)
2,557
1,125
375
1,500
1,172
1,000
181
(2,672)
1,181
(1,376)
2,125
(1,592)
533
Fair value adjustments of £1,029,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible
assets recorded can be found in note 10.
Under the terms of the acquisition, contingent consideration (payable in cash) of up to £2,500,000 will become payable subject to the
achievement of financial targets in the five year period directly following completion. The initial and contingent consideration payable
for this acquisition requires post-acquisition service obligations to be performed by the selling shareholders over a five year period.
These amounts are treated as deemed remuneration and charged to the consolidated statement of comprehensive income over the
period of the obligation.
Acquisition costs of £46,000 have been charged to the statement of comprehensive income as a transaction cost.
The acquisition contributed £446,000 of revenue and £98,000 to the group’s adjusted profit before tax for the period between the date
of acquisition and the balance sheet date.
Annual report and accounts 2019 Begbies Traynor Group plc
55
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
20. Acquisitions continued
Barker Storey Matthews
On 5 April 2019 the group acquired the entire issued share capital of BSMH Limited, which trades as Barker Storey Matthews (‘BSM’),
an independent firm of chartered surveyors.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out below:
Book value
£’000
Fair value
adjustments
£’000
Fair value
£’000
Net assets acquired
Intangible assets
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Provisions
Corporation tax
Deferred tax
Total identifiable assets
Satisfied by:
Cash
Equity instruments (844,290 ordinary shares in Begbies Traynor Group plc)
Initial consideration
Fair value of contingent consideration at acquisition
Payment re cash at completion subject to completion accounts adjustments
Final payment due following completion accounts adjustments
Less: amounts treated as deemed remuneration
Total consideration
Gain on acquisition
Cash outflows arising on acquisition
Cash consideration
Less: cash and cash equivalents acquired
—
77
435
1,401
(348)
(50)
(209)
(10)
1,296
1,214
(50)
(10)
—
(75)
—
—
(202)
877
1,214
27
425
1,401
(423)
(50)
(209)
(212)
2,173
1,067
533
1,600
926
778
228
(2,526)
1,006
1,167
1,845
(1,401)
444
Fair value adjustments of £1,214,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible
assets recorded can be found in note 10.
Under the terms of the acquisition, contingent consideration of up to £1,400,000 will become payable subject to the achievement of financial
targets in the five year period directly following completion. The initial and contingent consideration payable for this acquisition requires
post-acquisition service obligations to be performed by the selling shareholders over a five year period. These amounts are treated as
deemed remuneration and charged to the consolidated statement of comprehensive income over the period of the obligation.
Acquisition costs of £54,000 have been charged to the statement of comprehensive income as a transaction cost.
The acquisition contributed £375,000 of revenue and £15,000 to the group’s adjusted profit before tax for the period between the date
of acquisition and the balance sheet date.
56
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
20. Acquisitions continued
KRE (North East)
On 13 February 2019 the group acquired the entire issued share capital of KRE (North East) Limited, an insolvency practice based
in Newcastle.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out below:
Book value
£’000
Fair value
adjustments
£’000
Fair value
£’000
Net assets acquired
Intangible assets
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Corporation tax
Deferred tax
Total identifiable assets
Satisfied by:
Initial consideration (paid in cash)
Final payment due following completion accounts adjustments
Fair value of contingent consideration at acquisition
Less: amounts treated as deemed remuneration
Total consideration
Gain on acquisition
—
5
65
74
(22)
(44)
—
78
345
(5)
223
—
(194)
—
(62)
307
345
—
288
74
(216)
(44)
(62)
385
450
33
150
(600)
33
352
Fair value adjustments of £345,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible
assets recorded can be found in note 10.
Under the terms of the acquisition, contingent consideration of up to £150,000 will become payable subject to the achievement of financial
targets in the one year period directly following completion. The initial and contingent consideration payable for this acquisition requires
post-acquisition service obligations to be performed by the selling shareholder over a three year period. These amounts are treated as
deemed remuneration and charged to the consolidated statement of comprehensive income over the period of the obligation.
Acquisition costs of £34,000 have been charged to the statement of comprehensive income as a transaction cost.
The acquisition contributed £110,000 of revenue and £73,000 to the group’s adjusted profit before tax for the period between the date
of acquisition and the balance sheet date.
Annual report and accounts 2019 Begbies Traynor Group plc
57
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
20. Acquisitions continued
Dunion & Co
On 1 March 2019 the group acquired the entire issued share capital of Dunion & Co Limited, an insolvency practice based in Stoke-on-Trent.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out below:
Book value
£’000
Fair value
adjustments
£’000
Fair value
£’000
Net assets acquired
Intangible assets
Property, plant and equipment
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Corporation tax
Deferred tax
Total identifiable assets
Satisfied by:
Initial consideration (paid in cash)
Final payment due following completion accounts adjustments
Fair value of contingent consideration at acquisition
Less: amounts treated as deemed remuneration
Total consideration
Gain on acquisition
—
2
12
286
(7)
5
—
298
85
—
34
—
(96)
—
(16)
7
85
2
46
286
(103)
5
(16)
305
100
291
100
(200)
291
14
Fair value adjustments of £85,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible assets
recorded can be found in note 10.
Under the terms of the acquisition, contingent consideration of up to £100,000 will become payable subject to the achievement of
financial targets in the two year period directly following completion. The initial and contingent consideration payable for this acquisition
requires post-acquisition service obligations to be performed by the selling shareholder over a three year period. These amounts are
treated as deemed remuneration and charged to the consolidated statement of comprehensive income over the period of the obligation.
Acquisition costs of £11,000 have been charged to the statement of comprehensive income as a transaction cost.
The acquisition contributed £52,000 of revenue and £30,000 to the group’s adjusted profit before tax for the period between the date of
acquisition and the balance sheet date.
If the acquisitions had been completed on the first day of the financial year, the group revenues for the period would have been £64.7 million
and group profit before tax would have been £4.5 million.
The amounts recognised above are provisional estimates. There have been no material changes to prior year estimates.
58
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
20. Acquisitions continued
Reconciliation of cash outflows from acquisition of businesses
Cash consideration
Payments re cash at completion
Cash and cash equivalents acquired
Net cash and cash equivalents acquired
Net cash outflow from acquisition of businesses
21. Reconciliation to the cash flow statement
Profit for the year
Adjustments for:
Tax
Finance costs
Amortisation of intangible assets
Depreciation of property, plant and equipment
Deemed remuneration
Charge relating to the put and call option over Begbies Traynor (London) LLP
Gain on acquisition
Share-based payment expense
Operating cash flows before movements in working capital
Increase in receivables
Increase in payables
Increase (decrease) in provisions
Cash generated by operations
2019
£’000
(2,742)
(1,778)
3,353
1,575
(1,167)
2019
£’000
2,434
1,092
486
2,558
563
2,806
1,129
(2,909)
99
8,258
(827)
1,643
104
9,178
2018
£’000
(1,565)
(1,250)
2,012
762
(803)
2018
£’000
1,424
872
482
2,099
488
1,678
758
(1,189)
295
6,907
(458)
2,742
(126)
9,065
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank
and other short-term highly liquid investments with a maturity of three months or less.
22. Reconciliation of movement in net debt
At 1 May 2018
Cash flows
Repayment of non-current borrowings
Net cash and cash equivalents acquired (note 20)
At 30 April 2019
Cash and cash
equivalents
£’000
Non-current
borrowings
£’000
Net debt
£’000
3,518
(84)
(1,000)
1,575
(11,000)
(7,482)
—
1,000
—
(84)
—
1,575
4,009
(10,000)
(5,991)
Annual report and accounts 2019 Begbies Traynor Group plc
59
Financial statements
Notes to the consolidated financial statements continued
for the year ended 30 April 2019
23. Contingent liabilities
The group had no material contingent liabilities at 30 April 2019 or 30 April 2018.
24. Operating lease arrangements
The group as lessee
Minimum lease payments under operating leases recognised as an expense in the year
2019
£’000
2,754
2018
£’000
2,687
At the balance sheet date, the group had outstanding commitments for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
2019
£’000
2,102
4,720
36
6,858
2018
£’000
2,105
3,385
105
5,595
Operating lease payments principally represent rentals payable by the group for certain of its office properties, which have an average
duration of seven years, together with operating leases for motor vehicles.
The group as lessor
Rental income earned during the year was £133,000 (2018: £133,000). At the balance sheet date, the group had contracted with tenants
for the following future minimum lease payments:
Within one year
In the second to fifth years inclusive
2019
£’000
40
—
40
2018
£’000
161
40
201
Operating lease income represents rental income receivable by the group, which is committed for the next year.
25. Pensions
The group operates defined contribution pension schemes for all qualifying employees.
The total cost charged to income of £1,400,000 (2018: £1,203,000) represents contributions payable to these schemes by the group.
As at 30 April 2019, contributions of £149,000 (2018: £113,000) in respect of the current year, which were not yet due for payment,
had not been paid over to the schemes.
60
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
26. Related party transactions
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note.
Trading transactions
During the year the following transactions, all of which were on arm’s length terms and in the ordinary course of business, occurred
in which directors have an interest:
Various commercial properties used by members of the group during the year are owned or part owned by Ric Traynor or his personal
pension fund. Rent and service charges paid on those properties by entities within the group in the year totalled £13,458 (2018: £155,500).
At 30 April 2019 £nil (2018: £nil) was payable in respect of these transactions.
One commercial property used by members of the group during the year is part owned by Mark Fry. Rent and service charges paid
on this property by entities within the group in the year totalled £95,000 (2018: £85,000). At 30 April 2019 £nil (2018: £nil) was payable
in respect of this transaction. Mark Fry also part owns a company which provides archiving facilities to entities within the group. £24,000
(2018: £24,000) was paid by entities within the group for this service during the year. At 30 April 2019 £6,000 (2018: £6,000) was payable
in respect of this service.
Ric Traynor purchased the controlling interest in Red Flag A!ert LLP (‘Red Flag’) from the group on 10 April 2012, with the group retaining
a minority interest in the partnership. The group continues to provide a number of central support services to Red Flag for which £96,000
was payable by Red Flag during the year (2018: £96,000). The group has negotiated an agreement to retain full access to the database
and joint marketing rights for the publication of Red Flag A!ert quarterly statistics and was charged a fee of £150,000 for the year
(2018: £150,000). At 30 April 2019 £141,000 (2018: £201,000) was owed by Red Flag A!ert LLP.
Begbies Traynor (London) LLP option
There is a put and call option in place for the group to acquire Mark Fry’s interest in Begbies Traynor (London) LLP during a three month
period after 30 September 2019, for £4 million (determined as an agreed multiple of average profit over the three year period ended
30 April 2019). At the group’s discretion the payment can be made through a combination of cash and ordinary shares, subject to the
condition that at least £2 million of the total consideration must be cash.
The anticipated liability to the group under this option is accounted for in accordance with the group’s policy for business combinations
(note 2c) and charged to the consolidated statement of comprehensive income as a transaction cost as disclosed in note 5 to the financial
statements. The charge in the current financial year was £1.1 million (2018: £0.8 million) with a liability of £2.2 million recognised at
30 April 2019 within current deemed remuneration liabilities.
Key management personnel
The remuneration of the directors, who are the key management personnel of the group, is set out in the directors’ remuneration report
on page 20.
27. Reserves
The following describes the nature and purpose of each reserve within owners’ equity:
Share premium
Amount subscribed for share capital in excess of nominal value.
Merger reserve
Formation of the group in 2004, and premium for shares issued on acquisitions in accordance with
Companies Act requirements.
Capital redemption reserve
Repurchase of own share capital.
Translation reserve
Exchange differences arising on the retranslation of reserves of foreign subsidiaries.
Retained earnings
Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.
Annual report and accounts 2019 Begbies Traynor Group plc
61
Financial statements
Company balance sheet
at 30 April 2019
Fixed assets
Investment in subsidiaries
Current assets
Trade and other receivables
Creditors: amounts falling due within one year
Trade and other payables
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after more than one year
Trade and other payables
Net assets
Capital and reserves
Called-up share capital
Share premium account
Merger reserve
Capital redemption reserve
Profit and loss account
Shareholders’ funds
Notes
2019
£’000
2018
£’000
5
6
7
7
8
36,682
35,737
32,033
31,381
(49)
(1,413)
31,984
68,666
29,968
65,705
(500)
(500)
68,166
65,205
5,719
23,190
22,189
304
16,764
68,166
5,508
22,789
20,248
304
16,356
65,205
As permitted by section 408 of the Companies Act 2006, the company has elected not to present its own profit and loss account
for the year. Begbies Traynor Group plc reported a profit for the financial year ended 30 April 2019 of £3,110,000 (2018: £1,782,000).
The financial statements of Begbies Traynor Group plc, registered number 5120043, were approved by the board of directors and
authorised for issue on 8 July 2019. They were signed on its behalf by:
Ric Traynor
Executive chairman
Nick Taylor
Group finance director
62
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
Company statement of changes in equity
for the year ended 30 April 2019
At 1 May 2017
Profit for the year
Dividends
Credit to equity for equity-settled
share-based payments
Own shares acquired in the year
Shares issued as consideration acquisitions
Shares issued as deferred consideration
SIP shares issued
Other share options
At 30 April 2018
Profit for the year
Dividends
Credit to equity for equity-settled
share-based payments
Shares issued as consideration for acquisitions
Shares issued as deferred consideration
SIP shares issued
Other share options
At 30 April 2019
Share
capital
£’000
5,640
—
—
—
(304)
101
33
3
35
Share
premium
£’000
22,335
—
—
—
—
—
—
34
420
Merger
reserve
£’000
18,507
—
—
—
—
1,374
367
—
—
Capital
redemption
reserve
£’000
—
—
—
—
304
—
—
—
—
Retained
earnings
£’000
17,398
1,782
(2,356)
6
(226)
—
—
—
(248)
Total
equity
£’000
63,880
1,782
(2,356)
6
(226)
1,475
400
37
207
5,508
22,789
20,248
304
16,356
65,205
—
—
—
74
93
1
43
—
—
—
—
—
7
394
—
—
—
834
1,107
—
—
—
—
—
—
—
—
—
3,110
(2,649)
3,110
(2,649)
38
—
—
—
(91)
38
908
1,200
8
346
5,719
23,190
22,189
304
16,764
68,166
Annual report and accounts 2019 Begbies Traynor Group plc
63
Financial statements
Notes to the company financial statements
for the year ended 30 April 2019
1. Significant accounting policies
Basis of accounting
The separate financial statements of the company have been prepared under the historical cost convention and in accordance with
applicable United Kingdom law and accounting standards.
The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year.
Investments
Fixed asset investments in subsidiaries are shown at cost less provision for impairment. The carrying value of fixed asset investments
are reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.
Share-based payments
The fair value of services received in exchange for the grant of options is recognised as an expense over the vesting period in accordance
with FRS 102. Options are valued using the Black-Scholes option pricing model. Further details are provided in note 19 of the consolidated
financial statements.
Where shares are issued to employees of subsidiaries, this is treated as part of the cost of investment in that subsidiary.
Critical accounting judgements and key sources of uncertainty
In the process of applying the company’s accounting policies, the company is required to make certain estimates, judgements and assumptions
that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented.
On an ongoing basis, the company evaluates its estimates using historical experience, consultation with experts and other methods
considered reasonable in the particular circumstances. Actual results may differ from the estimates, the effect of which is recognised
in the period in which the facts that give rise to the revision become known.
The directors do not consider there to be any critical accounting judgements or key sources of uncertainty.
FRS 102 exemption
Begbies Traynor Group plc meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure
exemptions available to it in respect of its separate financial statements. Exemptions have been taken in these separate company financial
statements in relation to share-based payments, presentation of a cash flow statement and remuneration of key management personnel.
The company’s shareholders have been notified in writing about the intention to take advantage of the disclosure exemptions and
no objections have been received.
The company also intends to take advantage of these exemptions in the financial statements to be issued in the following year. Objections
may be served on the company by its shareholders.
2. Statement of compliance
The financial statements of Begbies Traynor Group plc have been prepared under the historical cost convention and in accordance
with United Kingdom Accounting Standards, including Financial Reporting Standard 102, and the Companies Act 2006.
The functional currency of the group is considered to be pounds sterling because this is the currency of the primary economic environment
in which the company operates.
3. Profit for the year
The auditor’s remuneration for audit and other services is disclosed in note 5 to the consolidated financial statements.
4. Staff costs
The company has five employees (2018: no employees).
Their aggregate remuneration comprised:
Salaries
Social security costs
Pension costs
64
Begbies Traynor Group plc Annual report and accounts 2019
2019
£’000
569
73
19
661
2018
£’000
—
—
—
—
Strategic report / Corporate governance / Financial statements
5. Investment in subsidiaries
Cost and net book value
At 1 May 2017
Additions
At 30 April 2018
Additions
At 30 April 2019
£’000
31,868
3,869
35,737
945
36,682
The additions in the year relate to an increase in investment in Eddisons Commercial Holdings Limited resulting from an increase in
the contingent consideration payable compared to previous estimates, and shares issued in relation to the conversion of ESS shares in
the year, which are treated as a capital contribution.
Details of subsidiary entities are set out below. These undertakings are included in the consolidated group financial statements and
are 100% controlled. Companies are listed under their registered office.
Subsidiary undertaking
Nature of business
Country of incorporation
340 Deansgate, Manchester M3 4LY
Begbies Traynor Limited1
BTG Consulting Limited1
Begbies Traynor International Limited1
Begbies Traynor (Central) LLP
Begbies Traynor (London) LLP
Begbies Traynor (SY) LLP
Springboard Corporate Finance LLP (formerly BTG Advisory (CF) LLP)
BTG Corporate Finance LLP
BTG Advisory (Investigations) Limited
BTG Advisory LLP
BTG Global Advisory Limited
BTG Corporate Solutions Limited
IK (North East) Limited (formerly KRE (North East) Limited)
Dunion & Co Limited
JSDNSW Limited (formerly Springboard Corporate Finance Limited)1
Insolvency Advice Limited1
Begbies Traynor Legal Services LLP
BTG Tax LLP
BTG Risk LLP
Toronto Square, Toronto Street, Leeds LS1 2HJ
Eddisons Commercial (Holdings) Limited1
Eddisons Commercial Limited
Eddisons Commercial (Property Management) Limited
Eddisons Insurance Services Limited
Eddisons Holdings Limited
MMXI Limited
BSMH Limited
BSMSR Limited
The London Silver Vaults and Chancery Lane Safe Deposit Company Limited
TBS&V Ltd
Pugh & Company Limited
Holding company
Holding company
Holding company
Business recovery
Business recovery
Business recovery
Corporate finance
Corporate finance
Investigation agency
Financial consulting
International network
organisation
Business recovery
Business recovery
Business recovery
Corporate finance
Dormant
Dormant
Dormant
Dormant
Property consultancy
Property consultancy
Property consultancy
Insurance brokerage
Holding company
Property consultancy
Property consultancy
Dormant
Management company
Property consultancy
Auctioneers
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Annual report and accounts 2019 Begbies Traynor Group plc
65
Financial statements
Notes to the company financial statements continued
for the year ended 30 April 2019
5. Investment in subsidiaries continued
Subsidiary undertaking
CJM Asset Management Limited
Taylors Business Surveyors and Valuers Limited
Theauctionpeople.co Limited
c/o S&P Consulting S.L, Urb. Calypso, C.C. Valdepinos,
1 y 3 A 29649 Mijas Costa, Malaga, Spain
Eddisons Spain S.L
c/o Schaffner & Orth, Kaiserhofstrasse 10, 60313 Frankfurt am Main, Deutschland
Eddisons Germany GmbH
Nature of business
Country of incorporation
Property consultancy
Dormant
Dormant
England and Wales
England and Wales
England and Wales
Facilities management
Spain
Facilities management
Germany
1
Interest is controlled by subsidiary undertakings, except where marked where shares are held directly by Begbies Traynor Group plc
All shareholdings relate to ordinary shares.
The directors of the company are of the opinion that the value of the investments in subsidiaries, as underpinned by their membership
benefits in the operating entities of the group, is not less than the cost of those investments.
The following subsidiary undertakings have claimed exemption from audit under section 479A of the Companies Act 2006:
Subsidiary undertaking
BTG Consulting Limited
BTG Corporate Solutions Limited
BTG Corporate Finance LLP
BTG Advisory (Investigations) Limited
Springboard Corporate Finance LLP (formerly BTG Advisory (CF) LLP)
6. Trade and other receivables
Amounts falling due within one year
Amounts owed by group undertakings
Other debtors
2019
£’000
2018
£’000
32,001
31,357
32
24
32,033
31,381
66
Begbies Traynor Group plc Annual report and accounts 2019
Strategic report / Corporate governance / Financial statements
7. Trade and other payables
Amounts falling due within one year
Other creditors
Amounts falling due after more than one year
Other creditors
2019
£’000
2018
£’000
49
1,413
500
500
The company has no financial instruments other than those shown as financial liabilities above, all of which are denominated in sterling.
The directors consider the fair values of the financial instruments approximate to their book values and that the main risk to the company
arising from financial instruments is interest rate risk, which is kept under review.
8. Share capital
Allotted, called up and fully paid
Ordinary shares of 5 pence
At 1 May
Staff SIP scheme
Issue of shares for share-based payments
Shares issued as consideration for acquisitions
Shares issued as deferred consideration
At 30 April
Allotted, called up and fully paid
Deferred shares of 1 pence
At 1 May
Cancellation of shares
At 30 April
Issued share capital
2019
thousand
2018
thousand
2019
£’000
2018
£’000
110,127
106,704
5,508
5,336
13
834
1,485
1,892
60
692
2,019
652
1
43
74
93
3
35
101
33
114,351
110,127
5,719
5,508
—
—
—
30,378
(30,378)
—
—
—
—
304
(304)
—
114,351
110,127
5,719
5,508
Ordinary shares carry no right to fixed income and each share carries the right to one vote at general meetings of the company.
A ordinary shares have no rights to fixed income, dividends or voting rights at general meetings of the company. The shares are only
transferable either pursuant to an offer required to be made by the City Code for the A ordinary shares or otherwise with prior written
consent of the company.
Deferred shares have no rights to fixed income, dividends or voting rights at general meetings of the company. The shares are only
transferable with the consent of the company.
The company has issued share options as set out in note 19 to the consolidated financial statements.
Annual report and accounts 2019 Begbies Traynor Group plc
67
Financial statements
Officers and professional advisors
Directors
R W Traynor
E N Taylor
M R Fry
R G McInnes
J M May
M Stupples
Secretary
J A Humphrey
Company number
5120043
Registered office
340 Deansgate
Manchester
M3 4LY
Bankers
HSBC Bank plc
4 Hardman Square
Spinningfields
Manchester
M3 3EB
Auditor
BDO LLP
Chartered accountants and statutory auditor
Leeds, United Kingdom
Registrar
Computershare Investor Services Plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Corporate and financial PR advisors
MHP Communications Limited
6 Agar Street
London
WC2N 4HN
Nominated advisor and joint broker
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Joint broker
Shore Capital Stockbrokers Limited
The Corn Exchange
Fenwick Street
Liverpool
L2 7RB
68
Begbies Traynor Group plc Annual report and accounts 2019
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Begbies Traynor Group plc