ANNUAL REPORT AND ACCOUNTS 2024 A leading UK advisory firm with expertise in business recovery, advisory and corporate finance, valuations, asset sales and property consultancy. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 01 Strategic report IFC Our vision 01 Financial highlights 02 At a glance 04 Why invest? 05 Chairman’s statement 08 Business model 10 Strategy and objectives 11 Acquiring for growth 12 Our key performance indicators 13 Operating review 16 Finance review 20 Stakeholder engagement 21 Sustainability 26 Risk management and principal risks Corporate governance 29 Chairman’s introduction 30 Board of directors 32 Corporate governance statement 34 Audit committee report 36 Remuneration committee report 39 Directors’ report 40 Directors’ responsibilities statement Financial statements 41 Independent auditor’s report 46 Consolidated statement of comprehensive income 47 Consolidated statement of changes in equity 48 Consolidated balance sheet 49 Consolidated cash flow statement 50 Notes to the consolidated financial statements 78 Company balance sheet 79 Company statement of changes in equity 80 Notes to the company financial statements 84 Officers and professional advisors For more on who we are and what we do: ir.begbies-traynorgroup.com Financial highlights Contents 1 Adjusted EBITDA is operating profit before share-based payments, depreciation, amortisation and non-underlying items arising due to acquisitions under IFRS 2 Adjusted PBT is before non-underlying items arising due to acquisitions under IFRS. Adjusted EPS excludes these items and the related tax effect. The board believe that these adjusted performance measures provide more meaningful information on the operating performance of the business 3 See reconciliation in note 10 4 Net debt (cash) includes cash and cash equivalents and borrowings but excludes IFRS 16 lease liabilities REVENUE £136.7m +12% (2023: £121.8m) ADJUSTED EBITDA1 £28.5m +7% (2023: £26.6m) ADJUSTED PROFIT BEFORE TAX2 £22.0m +6% (2023: £20.7m) PROFIT BEFORE TAX £5.8m (2023: £6.0m) ADJUSTED DILUTED EPS3 9.9p -2% (2023: 10.1p) DILUTED EPS 0.9p (2023: 1.8p) PROPOSED TOTAL DIVIDEND 4.0p +5% (2023: 3.8p) NET DEBT4 £1.4m (2023: net cash £3.0m) Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 02 At a glance Who we are We are a leading UK advisory firm with expertise in business recovery, advisory and corporate finance, valuations, asset sales and property consultancy. We have over 1,250 colleagues operating from 45 locations across the UK, together with four offshore offices. Our multidisciplinary professional teams include insolvency practitioners, accountants, lawyers, funding professionals and chartered surveyors. Who we work with We have longstanding relationships with an extensive range of clients and professional firms. Our client base includes businesses and individuals, financial institutions, public sector bodies and the investment community. Where we operate We operate within local business communities from offices across the UK and selected offshore locations. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 03 What we do We provide advice and solutions to our clients to enhance, protect and realise the value of their businesses, assets and investments. Business recovery and advisory Property advisory Business recovery Advisory and corporate finance Valuations Asset sales Property consultancy Corporate and personal insolvency consultancy Debt advisory and finance broking Property Property auctions Building consultancy Business restructuring and turnaround Corporate finance Assets Plant and machinery auctions Transport planning Contentious insolvency Special situations M&A Businesses Commercial property agency Commercial property management Creditor services Financial advisory Loan security Business sales agency Insurance and protection Our brands Our activity mix Business recovery Advisory and corporate finance Asset sales Valuations Property consultancy Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 04 Why invest? 1 Strong track record of cash-generative, profitable growth with a well-established progressive dividend policy. 2 Strongly positioned for growth e Market-leading business recovery practice. e Strong growth in other advisory services in fragmented markets. e Diversified income streams provide growth opportunities across the economic cycle. 3 High levels of repeat business from an extensive, long-established client base and referral network. 4 Highly experienced board and leadership team. 5 Proven growth strategy of continued organic investment complemented by value-accretive acquisitions. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 05 Chairman’s statement Introduction I am pleased to report on another successful year of strong financial performance, which now represents a decade of profitable growth. This has been driven by our proven growth strategy of investing in organic development and earnings enhancing M&A, resulting in a diversified and resilient business. We have delivered value to shareholders across the cycle having tripled the size of the business with a six-fold increase in adjusted profit before tax since 2014. Business recovery had a further successful year, in which the practice continued to grow and we reported increased activity levels across all case sizes. It remains the group’s largest service line (c.60% of group revenue) and retains its leadership position in the UK market. We are ranked number one by overall volume of corporate appointments, second nationally for administrations, have added capacity to our team and are well placed to continue delivering growth. Advisory and corporate finance were impacted by reduced levels of M&A transactions across the market. However the team delivered a resilient performance over the year with activity levels supported by financing and restructuring engagements. Property advisory reported a record performance, with strong growth and enhanced margins, driven by both acquisitions and organic growth. This has been delivered across all its core disciplines of valuations, asset sales and consultancy. Since the creation of the division with the acquisition of Eddisons in December 2014, we have significantly increased its scale, service offering and geographic presence driving annual revenue from c.£12m at inception to a current run rate of £45m. Over this ten year trading period the business has demonstrated resilience through the cycle and reported strong growth and improving profitability. Across the group, we made good progress in the year as we continue to invest in our teams to support ongoing growth including investment in our talent development and wellbeing Ric Traynor Executive chairman REVENUE (£m) “A decade of profitable growth, in which we have tripled the size of the business with a six-fold increase in adjusted profit before tax.” ADJUSTED PROFIT BEFORE TAX (£m) CAGR1 +13% n Business recovery n Advisory n Property advisory support, our IT and programme management capability and adopting third party software applications to automate and improve processes. We completed four profitable acquisitions in the financial year, which contributed £5m to reported revenue (or over £9m revenue on a pro-forma basis), supported by our new and enhanced borrowing facilities which were agreed during the year. The business remains highly cash generative, with free cash flow of £12.4m, and ended the year with lower than expected net debt of £1.4m (2023: net cash of £3.0m), having paid acquisition consideration of £8.2m and funded £2.9m of employee benefit trust (‘EBT’) share purchases. This cash generation also enables us to propose a 5% increase in the total dividend for the year, representing our seventh consecutive year of dividend growth. Our cash generation, combined with our recently renewed and enlarged debt facility, provides us with the flexibility to execute our strategy to continue to grow our scale and range of services both organically and through acquisition. 4.9 5.6 7.0 9.2 11.5 17.8 20.7 22.0 3.6 4.5 25 20 15 10 5 0 CAGR1 +22% 2020 2020 2021 2021 2022 2022 2023 2023 2017 2017 49.8 2018 2018 52.6 2019 2019 60.0 70.5 83.8 110.0 121.8 136.7 2015 2015 45.4 2016 2016 50.1 2024 2024 150 120 90 60 30 0 1 Compound annual growth rate from 2015 to 2024 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 06 Chairman’s statement continued Results Group revenue in the year increased by 12% to £136.7m (2023: £121.8m), 6% of which was organic. Adjusted EBITDA1 increased by 7% to £28.5m (2023: £26.6m) with margins of 20.9% (2023: 21.8%), reflecting improved margins across both business recovery and property advisory, offset by subdued M&A transactions in corporate finance and investment to support ongoing growth. Adjusted profit before tax2 increased by 6% to £22.0m (2023: £20.7m). Statutory profit before tax was £5.8m (2023: £6.0m). Adjusted diluted earnings per share2 decreased to 9.9p (2023: 10.1p), following the increased UK corporation tax rate which impacted EPS by 0.7p per share. For comparison, on a constant tax rate EPS would have increased by 0.5p. Net debt3 on 30 April 2024 was £1.4m (2023 net cash: £3.0m), having paid acquisition consideration of £8.2m and funded £2.9m of EBT share purchases. Dividend The board is pleased to recommend (subject to shareholder approval at the company’s annual general meeting scheduled for 17 September 2024) a 5% increase in the total dividend for the year to 4.0p (2023: 3.8p), representing our seventh consecutive year of dividend growth. This comprises the interim dividend already paid of 1.3p (2023: 1.2p) and a proposed final dividend of 2.7p (2023: 2.6p). This reflects the board’s confidence in the group’s financial position and prospects, whilst retaining capacity for our continued organic and acquisitive growth strategy. We remain committed to our long-term progressive dividend policy, which takes account of the group’s earnings growth, our investment plans and cash requirements, together with the market outlook. The final dividend will be paid on 6 November 2024 to shareholders on the register on 11 October 2024, with an ex-dividend date of 10 October 2024. Strategy We have a proven growth strategy which we have executed successfully since 2014. We believe this strategy will continue to enhance shareholder value through the delivery of strong, sustainable financial performance, building on our progress in recent years. Organic growth will be targeted through: • retention and development of our existing partners and employees; • recruitment of new talent; • 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. Our acquisition strategy is to target earnings-accretive acquisitions in the following market segments: • existing service lines to enhance market share, expertise and geographical coverage; and • complementary professional services to continue the development of the group and its service offering. Overall, we believe there are attractive opportunities for the group to grow and consolidate in its chosen markets, which remain fragmented and offer attractive financial returns. People The continuing success of the group is reliant on the hard work and dedication of our colleagues. Since 2014, we have increased our number of colleagues from 440 to over 1,250, through successfully integrating acquisitions and recruiting high-quality professionals. This approach has enhanced our entrepreneurial culture and delivered material growth. This is evidenced by the quality of advice and service we consistently deliver to our clients and our high levels of colleague retention. I would like to thank all of our colleagues for their significant contribution to the group and at the same time welcome all those who have joined the group over the last twelve months. 1 Adjusted EBITDA is operating profit before share-based payments, depreciation, amortisation and non-underlying items arising due to acquisitions under IFRS 2 Adjusted PBT is before non-underlying items arising due to acquisitions under IFRS. Adjusted EPS excludes these items and the related tax effect. The board believe that these adjusted performance measures provide more meaningful information on the operating performance of the business 3 Net debt (cash) includes cash and cash equivalents and borrowings but excludes IFRS 16 lease liabilities Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 07 Sustainability The board is committed to developing the group in a sustainable way for the benefit of all our stakeholders. We aim to have a positive impact for our colleagues and the communities we serve; to operate with a culture of strong governance and responsible behaviour; and to minimise our impact on the environment. During the year under review, we have continued to develop the support we offer to colleagues with the introduction of a health and wellbeing support service which includes access to online GP consultations, mental health support and fitness and nutrition advice. We also enhanced our benefits package, to give colleagues more flexibility to select benefits relevant to them focused on health, wealth and other self-benefits to help strike the right work/life balance. We have continued to make good progress in other areas to reduce our overall environmental impact including the ongoing transition of our company car fleet to ultra-low emission vehicles, migrating energy supplies to renewable tariffs and making changes to our IT estate to reduce energy consumption. Further information on our sustainability policies and progress is detailed in the sustainability section of the report on page 21. Outlook We have started the new year confident of a further year of growth, in line with market expectations. Activity levels in all our service lines are encouraging with positive momentum across the group and we anticipate maintaining organic growth in the new financial year at similar levels. Our renewed and enlarged debt facility also provides flexibility to continue to grow the scale and range of services we offer. Insolvency activity across the UK remains at elevated levels, with sustained higher interest rates continuing to impact on corporate stress levels. With our extensive national coverage and reputation, we are well placed to provide the advice and support required by the business community. This elevated level of insolvency activity is expected to be maintained going into 2025 as the economy recovers, especially in sectors with working capital and other funding challenges in an economy moving from the recovery to growth phase. Our advisory and corporate finance teams are expected to improve performance over the course of the new financial year, driven by an encouraging pipeline of M&A instructions and an anticipated recovery in M&A activity later in the year. We anticipate continuing positive activity levels in debt advisory and funding, carrying good momentum over from the last year. Property advisory is also well placed to build on its recent strong track record across all core disciplines of valuations, asset sales and consultancy, with good prospects for further acquisitive and organic development to enhance its market position in a fragmented market. Overall, our broad range of services, diversified client base, organic growth initiatives and pipeline of acquisition opportunities, leaves us confident of continuing our track record of growth. We will provide an update on trading at the annual general meeting in September 2024. Ric Traynor Executive chairman 8 July 2024 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 08 Business model Our complementary advisory services Business recovery Our national team of insolvency practitioners and restructuring professionals advise clients in challenging situations. We aim to protect and realise value through both formal insolvency processes and business restructuring. We have a specialist team with expertise in contentious insolvency who conduct investigations, trace potential assets and where possible identify and bring claims to enhance returns for creditors. Our dedicated creditor services team act on behalf of their clients to maximise their debt recoveries. Advisory and corporate finance Our dedicated team of accountants and finance professionals provide business and funding advisory as well as corporate finance advice to our client base of financial institutions, investors and businesses. The corporate finance team act on M&A and fund raising engagements, together with accelerated M&A in special situations where clients are facing business critical issues. The debt advisory and finance broking team arrange finance for businesses and asset owners. In addition, our financial advisory team provide lender advisory, due diligence, pensions advisory and forensic services to our ever broadening range of clients. Valuations Our specialist team value property, businesses and assets for secured lending, corporate reporting and commercial transactions. Our clients include financial institutions, businesses, asset owners and insolvency practitioners. Asset sales We assist our clients in realising the value of their property, businesses or plant and machinery assets. We achieve best value for our clients through our extensive routes to market of online auctions, commercial property agency, business sales agency, marketed and tendered sales. Our client base includes investors, business owners, public sector bodies, commercial businesses and insolvency practitioners. Property consultancy Our team of chartered surveyors provide a range of consultancy services for both property owners and occupiers across private and public sector organisations. We have expertise in project management, building consultancy, transport planning and property management. We also advise our clients on protecting their business and assets through insurance and vacant property risk management. How we are remunerated Formal insolvency appointments Fees are typically based on hours worked, fixed fees or a percentage of asset realisations. The fee basis is approved by creditors and fees are paid from asset realisations. Other engagements Fees are charged on a project specific basis and will typically be determined by hours spent, a fixed fee or on a contingent success fee based on the transaction. Our multidisciplinary professional teams provide advice and transactional support to our clients across our specialisms of business recovery, advisory and corporate finance, valuations, asset sales and property consultancy. We operate within local business communities from offices across the UK and selected offshore locations. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 09 Our key strengths Our culture and values Our value for stakeholders 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 People Provide an environment in which our people: • are valued and enjoy working for the group • can develop their talents and fulfil their potential • share in corporate success Clients Optimise value for clients through providing: • high-quality service • competitive and cost-effective charging structure • innovative and entrepreneurial advice and solutions Shareholders Sustainable increase in shareholder value through: • growing earnings per share • paying dividends • delivering share price appreciation People • Highly experienced and qualified professionals • Detailed market knowledge • Entrepreneurial approach Clients and relationships • Diverse client base • Enduring relationships • Trusted brands and reputation Know-how • Creative, problem-solving expertise • Established business practices • Specialist services with barriers to entry Financial • Strong financial position • Resilient financial performance across the economic cycle • Strong operating margins Business recovery Advisory and corporate finance Asset sales Valuations Property consultancy Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 10 Strategy and objectives Organic growth strategy Organic growth will be targeted through: • retention and development of our existing partners and employees; • recruitment of new talent; • 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. Acquisition strategy Our acquisition strategy is to target earnings-accretive acquisitions in either: • existing service lines to enhance expertise or geographical coverage; and • complementary professional services businesses to continue the development of the group and its service offerings. Our strategy The board believes the execution of this strategy will enhance shareholder value through the delivery of strong and sustainable financial performance. Our vision To be recognised as leaders in our chosen professional services, giving outstanding advice and transactional support to our clients. Delivering value through growth. Our strategic objectives 1 Increase scale and quality Increase the scale and quality of our businesses both organically and by acquisition 2 Shareholder value Deliver sustainable profitable growth, enabling increased shareholder value 3 Effective capital structure Maintain our strong financial position, enabling the investment in and development of the group and our people 4 Strong corporate governance Continue to ensure high standards of corporate governance and responsibility Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 11 Acquiring for growth Key: Insolvency Advisory Property services Revenue growth Revenue by year of acquisition The group has a well-defined process for the identification, valuation, acquisition and integration of target businesses. Our acquisition process 150 120 90 60 30 0 Revenue (£m) 71 2020 Acquired 41 Organic 24 2024 136 25 20 15 10 5 0 Acquired revenue (£m) 21 2021 2022 6 2023 5 2024 9 The group maintains a pipeline of acquisition opportunities through both internally managed search exercises and responding to external sales processes. We target earnings- accretive acquisitions in either: • existing service lines to enhance expertise or geographical coverage; and • complementary professional services businesses to continue the development of the group and its service offerings. The group has a standard process for assessing the value of a target business. We typically require an appropriate ongoing commitment to the business from vendors. Opportunities that do not meet the pricing, valuation and commercial parameters are quickly rejected. The group has an established legal and financial due diligence process which combines in-house and external operational and commercial due diligence and integration planning. This enables the group to complete transactions in an effective, cost-efficient and timely manner. There is a clear post- acquisition integration strategy and plan to ensure shareholder value is delivered. The integration model is based on: • clear communication to key stakeholders; • integration of support services; • alignment of processes; and • brand alignment where appropriate. Target identification Valuation and pricing strategy Effective transaction process Integration and value delivery Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 12 Our key performance indicators The board uses the following KPIs to manage the performance of the business and progress against our strategic objectives. More information: Commentary on financial performance on these KPIs and other financial information is included in the finance review on pages 16 to 19. REVENUE (£m) £136.7m (2023: £121.8m) 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. ADJUSTED PROFIT BEFORE TAX (£m) £22.0m (2023: £20.7m) 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 DILUTED EPS (p) 9.9p (2023: 10.1p) The measure Adjusted diluted EPS is calculated by dividing adjusted profits by the weighted average diluted number of shares in issue. The target To deliver growth in EPS to increase shareholder value. NET CASH (DEBT) (£m) £(1.4)m (2023: net cash £3.0m) The measure Cash net of borrowings (excluding lease liabilities). 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. 136.7 121.8 110.0 83.8 70.5 20 21 22 23 24 22.0 20.7 17.8 11.5 9.2 20 21 22 23 24 9.9 10.1 8.8 6.7 5.7 20 21 22 23 24 (1.4) 3.0 4.7 3.0 (2.8) 20 21 22 23 24 Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 13 Operating review Financial summary Revenue increased by 7% (6% organic) to £96.4m (2023: £89.7m), reflecting increased levels of business recovery activity. Revenue from business recovery increased by 13% to £79.5m (2023: £70.6m) with advisory activities reducing to £16.9m (2023: £19.1m), reflecting a strong comparative period (which benefitted from a number of contingent fees) and a reduction in M&A advisory work. Operating costs increased by £5.7m to £71.1m (2023: £65.4m), principally due to an increased team size following recruitment combined with operating cost increases (principally salaries). Segmental profits1 increased by 5% to £25.5m (2023: £24.3m). Divisional operating margins reduced slightly overall to 26.5% (2023: 27.1%), with improved business recovery margins offset by lower margins from advisory (compared to the strong comparative noted above and due to a quieter M&A market). Insolvency market Corporate insolvencies2 nationally increased by 12% to 25,391 (2023: 22,633). This is due to both liquidations which, as reported in the prior two years, have exceeded pre-pandemic levels, together with administrations (typically larger cases), which are now approaching pre-pandemic levels but remain significantly below previous peaks. In this increasing market, we have maintained our market-leading positions (by volume of appointments), being ranked first nationally for overall corporate appointments and second nationally in administrations. The level of corporate distress remains at high levels. The most recent Begbies Traynor “Red Flag Alert” report published in April 2024, showed a 20% increase in companies in ‘critical’ financial distress, notably in the construction, real estate, financial services and support services sectors. In addition, Allianz Trade have forecast a further 10% increase in UK insolvencies in calendar year 2024 to end the year 43% above pre-pandemic levels3 and remaining at elevated levels in 2025. Business recovery and advisory REVENUE (£m) £96.4m (2023: £89.7m) SEGMENTAL PROFITS (£m) £25.5m (2023: £24.3m) 1 See note 4 2 Source: The Insolvency Service monthly statistics on the number of corporate insolvencies in England and Wales on a seasonally adjusted basis for 12 months to 30 April 3 Source: Allianz economic research 11 March 2024 21.0 81.4 22 96.4 89.7 23 81.4 22 24 25.5 24.3 23 24 Ric Traynor Executive chairman Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 14 Operating review continued Business recovery and advisory continued Operating review Business recovery Higher levels of insolvency activity in the year increased business recovery revenue by 13% (£8.9m) with improved margins. The insolvency order book (including both contingent and non-contingent fees) increased by 8% to £71.9m (2023: £66.7m), principally due to an increased number of contentious and investigation cases. The non-contingent element increased by 3% (£1.1m) to £36.3m (2023: £35.2m). Activity levels increased across all case sizes including the larger mid-market cases which generate 50% of our revenue. We have added capacity to the team through recruitment and acquisition. Our business recovery team has increased to 625 from 597, which includes the team of four who joined following the acquisition of Jones Giles & Clay in Cardiff. Notable insolvency cases worked on in the year included the ongoing administrations of Worcester Rugby Club and Paperchase and the receivership of the Britishvolt EV battery site in Northumberland, together with new administration appointments of Readie Construction, Breathe EV, Fortress Capital and Thought Fashion. There has been ongoing momentum with new administration appointments since the year end. We have successfully increased our income from internet-led direct marketing activities, bolstering our leadership of the liquidation market. We have also continued to identify opportunities to use technology and systems to improve operational processes and efficiency. Advisory Our dedicated team provide financial advisory and corporate finance advice. The debt advisory and finance broking team arrange finance for businesses and asset owners. In addition, our team provide lender advisory, due diligence, pensions advisory and forensic services. The corporate finance team act on M&A and fund raising engagements, together with accelerated M&A in special situations where clients are facing business critical issues. The team delivered a resilient and profitable performance in the year despite reduced revenue, with advice provided on refinancing and restructuring engagements mitigating the previously reported reduction in M&A transactions. We have continued to seek organic growth opportunities for our advisory services, which are well‑positioned to deliver growth in the new financial year. People The number of people employed in the division has increased to 732 on 30 April 2024 from 694 at the start of the financial year. 1 See note 4 REVENUE (£m) £40.3m (2023: £32.1m) SEGMENTAL PROFITS (£m) £7.6m (2023: £5.5m) 40.3 32.1 28.6 4.8 23 22 22 24 7.6 5.5 23 24 Property advisory Financial summary Revenue increased by 26% (7% organic) to a record £40.3m (2023: £32.1m), reflecting acquisitions (first-time contribution from current year and full year impact of prior year transactions) and organic growth (including additional consultancy fees of £0.5m, the timing of which benefitted revenue and margins in the year). Operating costs increased to £32.7m (2023: £26.7m), as a result of costs associated with acquired businesses and operating cost increases (principally salaries). However, these costs reduced as a percentage of revenue, which resulted in improved operating margins of 18.9% (2023: 17.1%). Segmental profits1 increased by 38% to £7.6m (2023: £5.5m). Property market Since the creation of the division in 2014, from the acquisition of a Yorkshire-based multidisciplinary property consultancy, we have successfully expanded both the geographical coverage and range of services to establish a well-regarded mid-tier national firm, retaining and operating under the Eddisons brand. We believe the property advisory market remains fragmented with significant opportunities for the group to continue to develop its market position and further increase its scale, service offering and geographic presence. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 15 Operating review Asset sales We assist our clients in realising the value of their property, businesses or plant and machinery assets. We have extensive routes to market of online auctions, commercial property and business sales agency, and marketed and tendered sales. Activity levels increased significantly in the year with revenue growth of over 30%, principally resulting from ongoing investment into the auction business. In December 2023 we acquired SDL Property Auctions, which followed the acquisition of Mark Jenkinson & Son in the prior financial year. We now have a leading national auction business with pro-forma income of c.£10m, selling property, plant and machinery with over 250 lots per month. The integration project is proceeding well with a targeted launch of the fully integrated Eddisons auctions business later in the new financial year. Our agency teams (selling commercial property and small businesses) reported a resilient performance in a challenging market, reflecting the strength of our local teams and sector focus on industrial and commercial property and trading businesses. In May 2023 we acquired Banks Long & Co, a general practice based in Lincoln, with a strong agency team. This has strengthened our regional presence across Eastern England and South Yorkshire. The team are now ranked as a top five agent in 2024 by volume (Source: Estates Gazette Commercial Property Top Agents in England website). Property consultancy Our team provide a range of consultancy services for both property owners and occupiers. We have expertise in project management, building consultancy, transport planning and commercial property management. We also advise our clients on protecting their assets through insurance and vacant property risk management. The team had another positive year, reporting revenue growth of over 20%. This included £0.5m of fees in relation to the completion of long-running engagements, the timing of which benefitted margins in the year. We have continued to develop our consultancy services, notably to our key clients in the education sector. We have broadened our expertise through the recruitment of a head of sustainability and decarbonisation to provide advice on carbon reduction and environmental best practice to our clients, which is an area where our clients increasingly require support and advice. The team also benefitted from the addition of the Banks Long building surveying team following its acquisition (as noted above). We have invested in our systems and processes, notably through the implementation of an MS Dynamics CRM solution, to ensure our underlying business processes are supporting and enabling continuing growth. In addition, we have upgraded our property management operating system. Valuations Our specialist team value property, businesses and assets for secured lending, corporate reporting and commercial transactions. We have continued to develop the business in the year through a combination of both acquisition and organic investment, delivering a 10% increase in revenue. In November 2023 we acquired Andrew Forbes, a specialist valuations practice in Bristol, which extended our valuations expertise into the South West region. The business has successfully integrated into our national team and we expect it will benefit from enhanced panel exposure as a part of our much larger enterprise which enjoys broader relationships. Organic activity levels were robust in the year reflecting the resilient nature of the business and our strong panel relationships with secured lenders. In February 2024 we signed a partnership deal with a leading proptech firm to implement a new platform to increase levels of automation in producing our valuation reports. We anticipate this will improve the quality of our reports and increase the level of efficiency for our professional teams. People The number of people employed in the division has increased to 442 on 30 April 2024 from 338 at the start of the financial year, principally reflecting the acquisitions. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 16 Finance review Financial summary 2024 £m 2023 £m Revenue 136.7 121.8 Adjusted EBITDA 28.5 26.6 Share-based payments (0.6) (1.3) Depreciation (4.0) (3.5) Operating profit (before non-underlying items) 23.9 21.8 Finance costs (1.9) (1.1) Adjusted profit before tax 22.0 20.7 Non-underlying items (16.2) (14.7) Profit before tax 5.8 6.0 Tax on profits on ordinary activities (4.3) (3.1) Profit for the year 1.5 2.9 Operating performance Revenue in the year increased by £14.9m to £136.7m (2023: £121.8m), an overall increase of 12% (6% organic plus 6% acquired1). Adjusted EBITDA increased to £28.5m (2023: £26.6m) with margins of 20.9% (2023: 21.8%). Non-cash costs (share-based payments and depreciation) decreased to £4.6m (2023: £4.8m). Operating performance by segment is detailed below: Revenue (£m) Operating profit (£m) 2024 2023 Growth 2024 2023 Growth Business recovery and advisory 96.4 89.7 7% 25.5 24.3 5% Property advisory 40.3 32.1 26% 7.6 5.5 38% Shared and central costs — — — (9.2) (8.0) 15% Total 136.7 121.8 12% 23.9 21.8 10% 1 Part year contribution from acquisitions in the year and full year contribution of prior year acquisitions Nick Taylor Group finance director Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 17 1 See reconciliation in note 10 Shared and central costs increased to £9.2m (2023: £8.0m) reflecting investment in our IT and HR capability, increasing slightly as a percentage of revenue at 6.7% (2023: 6.6%). Operating margins decreased slightly to 17.5% (2023: 17.9%), reflecting increased margins across both business recovery and property advisory offset by subdued M&A transactions in corporate finance and investment to support ongoing growth. We anticipate this level will be broadly maintained in the new financial year. Finance costs increased to £1.9m (2023: £1.1m) due to increased interest rates, new property leases resulting in a higher IFRS 16 finance charge and one off costs associated with the new debt facility. Adjusted profit before tax increased by 6% to £22.0m (2023: £20.7m). Non-underlying items The non-underlying items detailed below all arise due to acquisition accounting. Under IFRS, acquisition consideration which is contingent on the selling shareholders remaining with the group is charged to the statement of comprehensive income, rather than being capitalised within non-current assets. These contingent payments, agreed in the terms of the sale and purchase agreements, are designed to preserve the value of goodwill and customer relationships acquired in the business combinations. As a result of this treatment of consideration, negative goodwill arises on a number of acquisitions which is credited to income in the year of acquisition. 2024 £m 2023 £m Acquisition consideration (deemed remuneration in accordance with IFRS 3) 11.1 12.3 Negative goodwill (0.8) (4.3) Transaction costs 0.3 0.4 Amortisation of intangible assets recognised on acquisition accounting 5.6 6.3 16.2 14.7 Tax The overall tax charge for the year was £4.3m (2023: £3.1m) as detailed below: 2024 Profit before tax £m Tax £m Profit after tax £m Effective rate Adjusted 22.0 (5.7) 16.3 26% Non-underlying items: Amortisation (5.6) 1.4 (4.2) 25% Other non- underlying items (10.6) — (10.6) — Statutory 5.8 (4.3) 1.5 74% 2023 Profit before tax £m Tax £m Profit after tax £m Effective rate Adjusted 20.7 (4.3) 16.4 21% Non-underlying items: Amortisation (6.3) 1.2 (5.1) 20% Other non- underlying items (8.4) — (8.4) — Statutory 6.0 (3.1) 2.9 52% Following the increase in the UK corporation tax rate, the group’s adjusted tax rate increased to 26% (2023: 21%). The statutory tax rate reflects the tax treatment of non-underlying items as follows: • amortisation of acquired intangibles attracts a deferred tax credit at 25% (2023: 20%); and • other non-underlying items (acquisition consideration, negative goodwill and transaction costs) are non-deductible as they are capital in nature. Earnings per share Adjusted diluted earnings per share1 decreased to 9.9p (2023: 10.1p), following the increased UK corporation tax rate. In comparison, on a constant tax rate EPS would have been 10.6p (an increase of 5%). Diluted earnings per share was 0.9p (2023: 1.8p). Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 18 Finance review continued Growth in our team On 30 April 2024 the group had 1,250 colleagues (2023: 1,100), the increase being principally due to acquisitions. The average number of full-time equivalent (‘FTE’) colleagues working in the group during the year is detailed below. 2024 Business recovery and advisory Property advisory and transactional services Shared and support teams Total Fee earners 591 328 — 919 Support teams 63 25 67 155 Total 654 353 67 1,074 2023 Business recovery and advisory Property advisory and transactional services Shared and support teams Total Fee earners 550 279 — 829 Support teams 70 18 61 149 Total 620 297 61 978 The ratio of fee earning to support team colleagues is 5.9:1 (2023: 5.6:1). The comparative numbers have been represented to reflect current management structures. Acquisitions During the financial year, the group made the following acquisitions: • Banks Long & Co on 3 May 2023 for initial consideration of £1.5m (£1.125m cash and issue of 292,170 shares – cash free, debt free); potential earn out of £1.5m subject to growing the profitability of the business over the five year period post completion. Total cash flows arising on acquisition were £1.2m (£1.1m initial consideration, £1.2m paid in respect of the cash free debt free adjustment, less £1.1m cash acquired). • Andrew Forbes on 7 November 2023 for initial cash consideration of £0.5m (cash free, debt free); potential earn out of £0.5m, subject to maintaining profits in the three year period post completion. Total cash flows arising on acquisition were £0.3m (£0.5m initial consideration less £0.2m cash acquired). • SDL Auctions on 11 December 2023 for initial cash consideration of £2.5m (cash free, debt free); potential earn out of £0.75m payable in cash, subject to maintaining revenue in the 12 month period post completion. Total cash flows arising on acquisition were £2.0m (£2.5m initial consideration, less £0.3m cash acquired, less £0.2m repaid to the group in respect of the cash free debt free adjustment). In October 2023, we expanded our business recovery team in Cardiff through the acquisition of the four-strong team from Jones, Giles & Clay. We also acquired a portfolio of insolvency cases from a London insolvency practitioner. The cash outflow from acquisitions in the year was £8.2m (net of cash acquired), comprising current year acquisitions of £3.5m and prior year acquisitions of £4.7m. Liquidity The group remains in a strong financial position. At 30 April 2024, the group had net debt of £1.4m (2023: net cash of £3.0m), represented by cash balances of £5.6m (2023: £8.0m) net of drawn borrowing facilities of £7.0m (2023: £5.0m). All bank covenants were comfortably met during the year. During the year, we agreed new and enhanced borrowing facilities with HSBC which replaced the previous facility entered into in 2016 and was due to mature in August 2025. The key terms are: • £25m committed, unsecured revolving credit facility (unchanged); • an additional £10m accordion facility (increased from £5m), allowing further debt capacity to support the group’s growth strategy, subject to certain conditions; • overall facility costs broadly in line with the previous facility; and • initial three-year term until February 2027, with two one-year extension options, giving a potential maturity date of February 2029. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 19 1 Including deemed remuneration under IFRS 3 Cash flow Cash flow in the year is summarised as follows: 2024 £m 2023 £m Adjusted EBITDA 28.5 26.6 Working capital (4.0) (2.8) Cash generated by operations 24.5 23.8 Tax (6.7) (5.3) Interest (2.0) (1.1) Capital expenditure (1.5) (1.0) Capital element of lease payments (1.9) (2.3) Free cash flow 12.4 14.1 Net proceeds from share issues 0.5 0.2 Purchase of own shares (2.9) — Transaction costs (0.3) (0.4) Acquisition consideration payments (net of cash acquired)1 (8.2) (10.2) Dividends (5.9) (5.4) Decrease in net cash (4.4) (1.7) The group remains strongly cash-generative with cash from operating activities (before acquisition consideration payments) increasing to £24.5m (2023: £23.8m). Tax payments increased to £6.7m (2023: £5.3m) following the increase in UK corporation tax rates. Interest payments increased to £2.0m (2023: £1.1m) due to increased interest rates, higher IFRS 16 interest charges and initial arrangement fees on the new borrowing facilities. Capital expenditure in the year increased to £1.5m (2023: £1.0m) due to IT hardware purchases and new office fit outs. The capital element of lease payments decreased to £1.9m (2023: £2.3m). Free cash flow in the year was £12.4m (2023: £14.1m), a result of the increased tax, interest and capital expenditure payments. During the year, the group set up an employee benefit trust (‘EBT’) as a means of satisfying certain share option awards to employees. The EBT subsequently entered into a trading plan under which it has acquired £2.9m of ordinary shares, funded by a loan from the group. Net assets At 30 April 2024 net assets were £78.4m (2023: £84.3m). The movement in net assets reflects underlying total comprehensive income for the year of £16.3m and credits to equity for share-based payments and share issues of £1.4m offset by the post-tax impact of non-underlying costs of £14.8m, dividends paid of £5.9m and £2.9m in relation to shares acquired by the EBT. Going concern The group is in a strong financial position and has significant liquidity as detailed above. In carrying out their duties in respect of going concern, the directors have completed a review of the group’s financial forecasts for a period exceeding 12 months from the date of approving these financial statements. This review included sensitivity analysis and stress tests 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. As a result, 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, the financial information in these financial statements is prepared on the going concern basis. Ric Traynor Nick Taylor Executive chairman Group finance director 8 July 2024 8 July 2024 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 20 Stakeholder engagement Section 172 statement The following disclosure forms the directors’ statement required under section 414CZA of the Companies Act 2006 on how the directors have had regard to the matters set out in section 172 (1) (a) to (f) in performing their duties. The board recognises that engagement with its stakeholders is fundamental to the long-term success of the company and considers the views and interests of all key stakeholders in its decision-making. The principal decisions made by the board during the year are as follows: Acquisitions In line with our strategy detailed on page 10, we completed four acquisitions in the financial year. The board believe this strategy increases value for all stakeholders and is for the long-term benefit of the group. Sustainability The board has continued to develop its sustainability strategy in the year with key developments in the year as detailed on pages 21 to 25. Employee benefit trust (‘EBT’) During the year, the company set up an EBT as a means of satisfying certain share option awards to employees. The EBT subsequently entered into a trading plan under which it has acquired £2.9 million of ordinary shares. Bank refinancing In February 2024, the group agreed a new debt facility with HSBC. This replaced the group’s previous facility with HSBC which has entered into in 2016 and was due to mature in August 2025. This is a long-running relationship which commenced in 2010. The board believe that this facility provides the group with the flexibility required to enable continuing investment in the business (including acquisitions) and fund operational requirements. Our people Shareholders Clients Community Why we engage The business is dependent on the professional development, recruitment and retention of our highly experienced colleagues, who are responsible for delivering a high-quality service to our clients. The directors recognise that the quality, motivation and commitment of our people is fundamental to the group’s success. Why we engage Access to capital is of vital importance to the long-term success of our business. Through our engagement activities, we aim to obtain investor support for our strategic objectives and our execution of them. We believe that delivering value for our shareholders ensures that the business continues to be successful in the long term and continues to deliver value for all our stakeholders. Why we engage Our clients are key to the success of our business. We have long-standing relationships across the group with our clients and the wider professional community. We have an interest in building deep reciprocal relationships with our clients. Why we engage We believe that through our community engagement activities we can make a beneficial impact on the areas where our people live and work. We are conscious of the impact we have on the environment and are committed to making positive changes to minimise this where possible. How we engage We engage and interact with our teams both on a local office level and nationally as detailed on page 23. The senior management teams across all the group’s operations meet both formally and informally on a regular basis with the executive directors. How we engage The chairman and finance director have primary responsibility for investor relations (‘IR’) and lead a regular programme of engagement. This includes results announcements, which are also available on the group’s IR website. The IR programme maintains ongoing communication with shareholders and helps to ensure that the board is aware of shareholders’ views. The board also receives feedback from its brokers on investors’ perceptions of the company. The company makes announcements using the regulatory news service throughout the financial year on major developments. The AGM provides an opportunity for all shareholders to ask questions and to meet the directors. How we engage The group has a diverse client base across its service lines. Our client facing teams are in continuous contact with their client base and have responsibility for both understanding their expectations and managing the delivery of our service. How we engage Our sustainability commitment, as detailed on pages 21 to 25, aims to add value to the communities in which we operate, whilst minimising our impact on the environment. Key stakeholders Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 21 Sustainability Our commitment to a sustainable future The board is committed to developing the business in a sustainable way for the benefit of all our stakeholders. We strive to have a positive impact for our colleagues and the communities we serve; operate with a culture of strong governance and responsible behaviour; and minimise our impact on the environment. Our environmental social and governance (‘ESG’) goals We will work to deliver sustainability outcomes for the group that are relevant, achievable and verifiable, including: • compliance with ESG laws, regulations and reporting; • excellence in the management and empowerment of our colleagues – including diversity, equity and inclusion practices for our workforce; • a transition plan for the group to meet the UK’s target of achieving net zero carbon emissions by 2050; • a commitment to maintaining high standards of corporate governance; and • transparent disclosure of data that underpin our stated commitments. ESG developments We have made progress in the following areas in the period under review: • Introduced SmartHealth, a health and wellbeing service available free to all colleagues and their families. The service includes access to online GP consultations, a mental health support line, a telephone health check, together with fitness and nutrition advice. • Improved mental health and wellbeing support. Colleagues complete a survey which allows them to assess their wellbeing and receive a practical action plan, guidance and resources to empower them to start improving their own mental wellbeing at home and at work. • Enhanced our benefits offering to employees, which has brought consistency across the group and includes a central platform to manage benefits. The new offering gives colleagues more flexibility to select the benefits most relevant to them and offers a wider range of benefits including: • health benefits to support physical and mental health; • wealth benefits to protect finances; and • self benefits to strike the right work life balance. • Completed the migration of directly contracted energy supplies onto renewable tariffs. For offices where utility supplies are contracted by the landlord or managing agent, we are engaging with them to migrate these supplies to renewably sourced energy. • Continued transition of company car fleet to ultra-low emission vehicles (‘ULEV’): • 65% (2023: 36%) of fleet cars are now ULEV, and; • 35 cars ordered or supplied since the introduction of our salary sacrifice scheme which enables all employees to purchase a low emission vehicle in a tax efficient manner and encourages the transition of our employees to more environmentally friendly vehicles. • Continued migration of IT services away from on-premise hardware, towards cloud-hosted solutions, reducing our hardware footprint and energy usage as we migrate to other providers. • Completed our office-based printer and scanner refresh programme transitioning to modern devices which have lower energy consumption and more efficient use of consumables. Since the rollout, this has saved over 10,000 print jobs equivalent to over 40 trees. • Migrated our IT equipment disposal to a more sustainable provider offering recycling and reuse of old devices. This contributes to the circular economy, reducing demand for new devices and saving an average of 57kg of CO2e per device. • Created smart meeting spaces across our principal UK locations to support hybrid meetings to enable collaboration and reduce the need for business travel. ESG governance The board believes that strong ESG performance is a benefit to the group and its stakeholders. Our ESG goals help us to set targets, manage risks and opportunities, deliver progress and improvements, and increase transparency through our reporting. The group’s ESG committee is chaired by the group finance director and includes the company secretary and other senior stakeholders. The committee reports to the board with the purpose of: a) providing a focus on sustainability within the group; b) delivering the group’s sustainability strategy; c) highlighting ESG compliance issues, risks and opportunities; and d) contributing to the group’s evolution and transformation through ensuring that it remains aligned with the principles of sustainability. Managing ESG risks The board and the audit committee review the group’s principal risks on an ongoing basis. Four of our ten principal risks and uncertainties are relevant to ESG. We also continue to identify and assess emerging risks, including those relating to ESG and climate change detailed on page 25. Our ESG-related principal risks are: 1) recruitment and retention of high-calibre partners and employees; 2) business continuity; 3) legal and regulation; and 4) failure or interruption in IT systems. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 22 ESG action plan We will progress our sustainability strategy via a five-step process summarised as follows: 1) Strong ESG governance through the ESG Committee. 2) Enhance the group’s resilience. We will develop and maintain robust contingency plans to strengthen our response to a range of risk factors within the ESG landscape which could impact on the long-term viability of our business. 3) Monitor our ESG performance. We will identify the key ESG performance indicators that apply to the group and monitor our performance against these measures. 4) Rectify shortcomings and innovate. Based on the evidence gathered regarding our ESG performance, we will rectify any shortcomings through taking opportunities to improve and innovate through the insights we gain. 5) Disclose and communicate. We will disclose and communicate our ESG data to all our stakeholders openly and transparently and we will be clear about the measures we take to enhance our sustainability performance. Our sustainability agenda focuses on the three ESG pillars, each built on robust and ethical business practices. Social Social commitment We are committed to a culture which ensures that: • our people are valued and enjoy working for the group; • can develop their talents and fulfil their potential; and • share in corporate success. Our people strategy is aligned to the group’s vision and growth ambitions and aims to create the conditions for success through a focus on wellbeing, development, and performance. This is the blueprint for our growth. We are committed to creating an inclusive environment where everyone can thrive. This is evidenced by our overall colleague engagement score of 76%1 (compared to an external benchmark of 74%), and a retention rate of 87% (2023: 86%)2. To sustain growth we are committed to providing development opportunities for all and our development framework focuses on: • Attracting emerging talent. Offering engaging and supportive opportunities for work experience, apprentices, placement students and graduates to start and develop their careers. • Developing competence. Creating market-leading development pathways, enabling new to industry colleagues to build competence and accelerate their path to achieving professional qualifications, whilst supporting all colleagues with ongoing professional development. • Gaining professional qualifications. During the year, we have provided support to 121 colleagues to gain their professional qualifications in the following areas: • insolvency qualifications such as CPI and JIEB; • accountancy/finance qualifications such as AAT, ACA, ACCA, CIMA, CII, Payroll Technician and Tax Technician Certification; • surveyor qualifications such as Chartered Surveyor, Real Estate and APC; and • business related qualifications such as CIPD, Insights Accreditation, CIM and Business Administrator. Other key initiatives to support our continuing growth are detailed below: Inclusion, diversity and wellbeing Equal opportunities We are an equal opportunities employer, with a policy to recruit, promote, train and develop colleagues by reference to their skills, abilities and other attributes of value to their role in the business. As of 30 April 2024, the total workforce of 1,250, comprised 714 males and 536 females (2023: 1,110 comprised 623 males and 477 females). In common with other professional services firms, there are a greater proportion of male colleagues in qualified and executive roles. The gender mix at this level was 375 males and 115 females (2023: 362 males and 106 females). In accordance with the Equality Act 2010, Begbies Traynor Limited and Eddisons Commercial Limited, as employers with 250 or more UK employees publish their gender pay statistics. These are calculated in accordance with the published requirements and can be found on the Begbies Traynor Group and Eddisons websites. We also publish a Modern Slavery Act Statement and Human Trafficking Statement on these websites. In 2023 all colleagues were invited to complete an anonymous group wide ‘Inclusion Survey’. The results showed the diversity of our workforce from a perspective of social mobility, ethnicity, sexual orientation, general demographics and caring responsibilities and the results have informed our attraction and retention practices in addition to diversity and inclusion education. Building a diverse candidate pipeline is essential to our organic growth and we believe investing in early careers professionals is one way we can attract diverse talent to support our growth ambitions. We are raising awareness of the many ways we can support school leavers from work experience, placement opportunities, apprenticeships and graduates. In the past 12 months we have recruited 19 apprentices and hosted 37 work experience students, whilst developing relationships with schools, colleges, universities and training providers. 1 From our most recent engagement survey in November 2022 2 Calculated as annual leavers with more than one year service divided by average headcount over the year Sustainability continued Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 23 We build a positive working environment to increase job satisfaction and productivity amongst our teams. Flexible working is supported and adjustments are made for disabilities. People policies are reviewed at least annually and following the most recent review, the following key changes were made: • pay for maternity, adoption and paternity leave was enhanced above statutory requirements; • stress at work and menopause policies were introduced following the colleague inclusion survey; • an updated voluntary and charity work policy was launched giving all colleagues one paid day a year to volunteer or fundraise for a charity or community project; and • new hybrid working and sabbatical policies were introduced to reflect modern flexible work practices and colleague demand. Wellbeing Wellbeing is the bedrock of great organisational performance. Having the right people in the right roles with the right skills, who feel valued and listened to, positively impacts colleague wellbeing and consequently great business outcomes. A key enabler for this is ‘The Ongoing Conversation’, a regular one to one between a manager and a colleague where wellbeing, performance and development are discussed, enabling great performance through coaching. Fostering a thriving and inclusive workplace goes beyond professional development; it encompasses the physical, emotional, financial, and mental wellbeing of colleagues. We have invested in the wellbeing support we provide to our colleagues following our inclusion survey including the introduction of: • SmartHealth, a health and wellbeing service available free to all colleagues and their families. The service includes access to online GP consultations, a mental health support line, a telephone health check, together with fitness and nutrition advice. • Mental health and wellbeing support. Colleagues complete a survey which allows them to assess their wellbeing and receive a practical action plan, guidance and resources to empower them to start improving their own mental wellbeing at home and at work. Sharing success We believe it is important for colleagues to share in the success of the group and we continue to have share incentive schemes in place. These include all-employee save as you earn (‘SAYE’) schemes and share option schemes. In total 33% (2023: 35%) of colleagues currently participate in either SAYE or share option schemes. We have invested in the benefits offered to colleagues, which has brought consistency across the group and we now provide a central platform to manage benefits. The new offering gives colleagues more flexibility to select the benefits most relevant to them and offers a wider range of benefits including: • health benefits to support physical and mental health; • wealth benefits to protect finances; and • self benefits to strike the right work life balance. These enhanced benefits alongside a competitive salary, discretionary bonus, holiday buy, healthcare and share incentive schemes, ensures we are providing colleagues with a market competitive reward package. Our community Internal communications and engagement We have continued to invest in communications across the group including our internal communications hub. In addition our engagement includes: • regular team meetings; • face to face events, bringing targeted audiences together to collaborate. This year this has included an event for early careers students studying for their APC qualification and an academy event for future talent across the group; • internal updates from the executive chairman on major corporate events including financial results announcements and acquisitions; and • colleague feedback and working groups to drive action and incorporate the colleague voice around strategic priorities. Building and supporting communities Community is at the heart of everything we do. Our colleagues are active participants in our future as advocates for continuous improvement. We have four colleague networks which play a critical role in building relationships, providing education and awareness, creating development opportunities, and raising awareness of issues, challenges and initiatives. This year they have supported several initiatives including: • the introduction of a new volunteering policy and a national charity event; • a series of communications, raising awareness of different cultural events recognised across our workforce; • a green travel survey raising awareness of our travel behaviours and the promotion of green to work travel options available, including a car salary sacrifice scheme; and • a new wellbeing portal and flexible benefits offering. Our commitment to building and supporting communities extends wider than just colleagues. We take this beyond the office, and into the communities in which we operate. We understand the role our organisation plays within the wider community, and we take this responsibility seriously. We provide clients with advice and transactional support, often in challenging situations, throughout the economic cycle. Our advice in trying times helps viable businesses continue to trade profitably, in turn boosting local economies and safeguarding colleagues. Charity commitments Our nationwide network of offices operates in the heart of their local communities, and as a group we are committed to providing support through charity work and fundraising endeavours on both a local and national basis. In 2024 we organised our inaugural national charity event, which saw 37 colleagues from across the business take part in the national three peaks challenge. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 24 Governance Governance commitment The board is committed to maintaining high standards of corporate governance. We recognise that a positive culture, together with a robust approach to governance, is key to the success of the organisation. We have a clear approach to governance and risk management with a highly experienced leadership team, together with robust compliance and governance procedures. Many of the group’s service lines are regulated by externally governed codes of practice and ethical behaviour. This is reinforced by group policies in the following areas: Whistleblowing We are committed to maintaining high ethical standards and take any malpractice very seriously. All our employees should feel able to raise any matters of concern to their manager. If they are not able to do so, we have a whistleblowing policy in place which applies across the group. Anti-bribery and corruption We have a zero-tolerance approach to bribery and other forms of corruption and our policies are designed to ensure compliance with relevant laws wherever we do business. Modern slavery The Modern Slavery Act came into force in 2015. We have a zero-tolerance approach to modern slavery and believe that the risk of slavery or human trafficking in the recruitment and engagement of our employees is low. This is further enhanced by our approved supplier process to mandate this approach across suppliers. The group’s Modern Slavery and Human Trafficking Statement is available on the group’s website. Data protection and information security The group has policies in place to protect personal data held by the group, which meet the requirements of the Data Protection Act 2018 (incorporating GDPR). In addition, annual data protection compliance training is completed by our employees and partners. We have information security policies in place which are Cyber Essentials Plus accredited. There is an ongoing programme of online training for all employees, which highlights key areas of information security risk and raises awareness of this critical risk area. During the year, no data breaches arose from the group’s managed IT infrastructure, which would have required formal notification to the Information Commissioner’s Office. Non-financial and sustainability information statement This statement contains disclosures required under s414CB of the Companies Act 2006 and the Task Force on Climate-Related Financial Disclosures (‘TCFD’). Environmental commitment As a professional services business, we believe that the group has a low environmental impact when compared to many other industries. However, we are conscious of the impact we do have on the environment and are committed to making positive changes to minimise this where possible. We believe the measures required to limit the effects of climate change, including meeting the net zero carbon challenge, are fundamental to our long-term business interests and consistent with our vision and values. Governance The board has overall responsibility for ESG issues, including climate-related matters, and monitors the management of our climate-related risks and opportunities. The board delegates its overall authority in this area to the ESG committee which provides quarterly updates to the board. The audit committee reviews and approves our register of climate-related risks and opportunities and oversees our response, ensuring the board has full oversight. Climate-related risks and opportunities can present themselves in different ways, including policy and regulations, requirement for new or updated advice or services, operational disruption, and other external factors. Risks and opportunities identified by key business stakeholders and our operating businesses are assessed and monitored by the ESG committee, with significant items reported to the audit committee and the board. Strategy The group operates in an industry that is deemed low environmental effect and impact, and as such the board do not believe there are significant risks facing the group from climate change. We have defined the length of our terms to align with the wider business strategy. Our short term is one to three years, medium term is three to five years and long term is more than five years. As a low-carbon-intensive business, we consider the impact of the principal climate-related risks and opportunities on the group as not material. We believe the group to be resilient in relation to the climate-related risks identified in the table. Climate-related risks and opportunities The board is committed to identifying, addressing and managing the risks and opportunities arising from climate change. We have considered and reviewed the climate-related risks and opportunities across the business with key business stakeholders. This has enabled us to define a climate-specific risk register which is managed by the ESG committee and embedded within our overall risk management approach. The table below details the climate-related risks and opportunities we have identified to date, which have been classified as transition risks, physical risks and opportunities. Having considered these, the board believe that they are not likely to have a material impact on the group’s strategy. We will consider the potential impact of different climate scenarios in future years. Sustainability continued Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 25 Risk/opportunity Overview Transition risks Compliance Ensuring the group remains compliant with evolving legislation and disclosure requirements Investor sentiment ESG performance and disclosures are of increasing relevance and importance to the investment community Carbon tax Increased costs associated with carbon taxes on purchased goods and services Physical risks IT infrastructure Our IT infrastructure is critical to our business operations. This may be exposed to extreme weather events, which could result in business interruption from power failure, flood or loss of cooling Energy demand Potential increase in operating costs required to maintain business operations Extreme weather events Potential disruption to business operations Opportunities New service lines Developing solutions to assist clients in managing their obligations to decarbonise and where required advising on and arranging finance for any capital expenditure requirements Access to finance Ability to access both debt and equity funding through being able to demonstrate strong ESG credentials Metrics and targets We are committed to meeting the UK government’s target of achieving net zero carbon emissions by 2050. As a professional services business, our key metrics to measure progress are the group’s GHG emissions which are detailed below. The group has not yet set targets in relation to achievement of the net zero target. Greenhouse gas emissions (‘GHG’) statement Unit 2024 2023 GHG emissions Scope 1 Tonnes of CO2e 141 253 Scope 2 Tonnes of CO2e 193 189 Scope 3 Tonnes of CO2e 247 245 Total group emissions Tonnes of CO2e 581 687 Intensity measure Emissions by full-time equivalent member of staff Tonnes of CO2e/FTE 0.48 0.69 Emissions by group revenue Tonnes of CO2e/£m group revenue 4.27 5.68 Energy consumption Scope 1 kWh 619,000 1,098,000 Scope 2 kWh 934,000 913,000 Scope 3 kWh 1,019,000 1,011,000 Total kWh 2,572,000 3,022,000 Scope 1 are direct emissions from fuel consumption in either buildings or from company leased or owned vehicles. Scope 2 are indirect emissions from the purchase of electricity in our offices. Scope 3 are emissions from the use of personal or privately hired vehicles used for company business where employees are reimbursed based on claims for business mileage. Emissions which result from train travel, flights and taxi journeys are not included in the emissions table. The carbon dioxide equivalent (‘CO2e’) emissions data have been calculated using the emission factors from the UK Government’s GHG Conversion Factors for Company Reporting 2023 published on 7 June 2023. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 26 Risk management and principal risks Identifying and managing risk Identifying and managing risk is key to our business. It helps us to deliver long-term shareholder value and protect the business whilst delivering on our strategic objectives. The operations of the group and the implementation of our strategy involve a number of risks and uncertainties. The board encourages an appetite of measured risk-taking in the delivery of its objectives (see page 10), which is balanced by a process of risk identification, evaluation and management. Risk management governance structure Board of directors Responsibility for setting strategic objectives and risk appetite across the group Accountable for the effectiveness of the internal control and risk management processes The board delegates responsibility for risk management activities to the audit committee Audit committee Monitors the principal risks identified by our risk management process together with associated controls and mitigations Reviews output from the risk management committees Risk management committees IT security committee A sub-committee of the audit committee. Its primary responsibility is to oversee: • management of risks associated with data protection, security of information systems and networks (physical and non-physical); and • crisis management and incident response processes. The committee is chaired by a non‑executive director (Peter Wallqvist) and includes the group legal counsel, CIO and senior members of the group IT team. Operational risk committees Sub-committees of the respective operating boards which assess and mitigate risks on client engagements. Members include the legal counsel, compliance and experienced professionals independent of the relevant client engagements. Environmental, social and governance (‘ESG’) committee The committee reports to the board with the purpose of providing a focus on sustainability in the group and delivering the group’s sustainability strategy. It is chaired by the group finance director and includes the company secretary and other senior stakeholders. Divisional operating boards Divisional leadership teams with responsibility for two principal operating divisions: business recovery and advisory; and property advisory Responsible for implementing the group’s policies on risk management and internal control Responsible for the identification and evaluation of risks, notably in relation to client engagements Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 27 The directors have carried out a robust assessment of the material and emerging risks facing the group. Outlined on the following page are the current principal risks and uncertainties faced by the operations of the group and the implementation of its strategy. These are consistent with those disclosed in the prior year. The list is not exhaustive and other, as yet unidentified, factors may have an adverse effect. The group’s controls are designed to manage rather than eliminate risk and can only provide reasonable and not absolute assurance against material misstatement or loss. Risk Mitigating activities Change Recruitment and retention of high-calibre partners and employees The business is dependent upon the professional development, recruitment and retention of partners and employees. We continue to invest in the support we provide to our colleagues and in internal talent management as detailed in our sustainability statement. We aim to provide our colleagues with: • a competitive reward structure; • benefits including all-employee share schemes and salary sacrifice car schemes; • support to develop careers and gain professional qualifications; and • selective use of share-based and other long-term incentive awards to incentivise and retain key people. Unchanged Business continuity Significant non-IT events may impact on our service to clients and access to operating locations with a potential adverse effect on operational performance and reputation. We have business continuity plans in place across the business which include the ability to work from alternate operating locations. Unchanged 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 may be subject 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. Unchanged 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. 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 other sources of finance if required. Unchanged Marketplace The group’s markets are susceptible to macroeconomic movements, such as interest rates, GDP changes and indebtedness levels. The group’s service lines have differing exposure to the macroeconomic environment as detailed in the business model on pages 8 and 9, providing mitigation of this risk at a consolidated level. Unchanged 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. Unchanged Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 28 Risk Mitigating activities Change 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. Unchanged In the ordinary course of business, certain aspects of the group’s services are opinion based and may be subject to challenge. The group has robust processes in place including divisional risk committees and appropriate internal review processes. Where appropriate, the group may seek third-party professional corroboration. In addition, the group has appropriate insurance policies in place. Unchanged 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 continues to invest in both the IT team which supports the business and our hardware and software. In addition, we use specialist third party consultancies to provide support where 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. We have IT disaster recovery plans in place to cover residual risks which cannot be mitigated. These plans are tested annually and independently verified. We also maintain appropriate cyber response insurance. We are constantly reviewing our processes and resilience in this area due to the increasing threat landscape. Unchanged Acquisition risk The valuation, structuring and integration of acquisitions is critical to realising the benefits from the transactions. The group has well-established processes in place to evaluate, structure and subsequently complete appropriate acquisitions. We have a clear post-acquisition integration strategy and plan to ensure shareholder value is delivered. Post-acquisition management reporting keeps the board updated on progress against plan. Unchanged Approval The strategic report on pages 1 to 28 was approved by the board and signed on its behalf by: Ric Traynor Nick Taylor Executive chairman Group finance director 8 July 2024 8 July 2024 Risk management and principal risks continued Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 29 Chairman’s introduction 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. 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 and a measured approach to risk taking. We seek to be a trusted advisor to all 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 application of the QCA Code, including reports from the audit and remuneration committees. I believe that the framework provided by the QCA Code contributes to our ability to deliver long-term shareholder value and assists 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 ir.begbies-traynorgroup.com/corporate-governance. Ric Traynor Executive chairman 8 July 2024 Ric Traynor Executive chairman Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 30 Non-executive directors Board of directors Ric Traynor Executive chairman Nick Taylor Group finance director Mark Fry Head of insolvency and advisory Appointment date: May 2004 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. Appointment date: December 2010 Experience Nick was appointed to the board in 2010, having originally joined the group as financial controller in 2007. He is a chartered accountant with broad experience of M&A, financial reporting and operational management. He qualified with KPMG in Manchester and previously held senior finance roles in United Utilities PLC and Vertex Data Science Limited, the business process outsourcer. Appointment date: July 2011 Experience Mark was appointed to the board in 2011, having joined the group in 2005 following an acquisition and he led our London and South East region prior to his board appointment. He is the national head of our insolvency and advisory services, is an experienced insolvency practitioner and has been appointed on numerous complex and high-profile assignments. Mark is also a former President of the Insolvency Practitioners Association. John May Non-executive director Appointment date: October 2007 Experience John was appointed to the board in 2007 as a non-executive director. He was an executive director of Caledonia Investments plc from 2003–2011 prior to which he 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. John also has extensive non-executive experience having been a director of more than 40 listed and private companies operating both in the UK and globally. Executive directors C A R I Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 31 C Chair A Audit committee R Remuneration committee I Independent Mandy Donald Non-executive director Appointment date: February 2023 Experience Mandy was appointed to the board in February 2023 as a non-executive director. Mandy is a chartered accountant and experienced non-executive director. She joined EY in 1992 and spent 10 years working in professional roles in the firm. In 2002 she was appointed as EY’s UK Director of Finance and Operations and from 2007–2012 was the Global Director of Finance and Operations for EY’s transaction advisory services and EY assurance services. Since 2012, Mandy has held a number of non-executive director positions in the financial and professional services sectors including at Punter Southall Group, Liontrust Asset Management plc, JP Morgan Investment Trust plc and Gowling WLG LLP, as well as in the not for profit sector at the Institute of Cancer Research; these roles included acting as Chair of several audit and risk committees. Graham McInnes Non-executive director Appointment date: September 2004 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. Mark Stupples Non-executive director Appointment date: July 2017 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, and JLL as UK Chief Operating Officer until leaving the business in December 2016. During this time, Mark had responsibility for the operation of the business, working closely with Finance, HR, and IT, and was responsible for the UK sustainability strategy. Mark now runs his own consultancy focussing on business strategy and change. Mark is an experienced Trustee, chairing both the JLL Retirement Benefits Scheme and the JLL UK Foundation. In this latter role, the Foundation is focussed on social mobility in the real estate sector. This has strengthened Mark’s belief in the need for inclusion alongside diversity. Peter Wallqvist Non-executive director Appointment date: December 2019 Experience Peter was appointed to the board in December 2019 as a non-executive director. Peter has spent his career in information technology. In 2010, he co-founded and became Chief Executive Officer at the AI company RAVN Systems, which delivered digital transformation initiatives in the professional services industry. RAVN Systems was acquired by iManage, a leading vendor of document and email management systems for the legal and professional services industries in 2017. Following the acquisition, Peter served as VP of Strategy and Global Practice Director for iManage, until he left the business in October 2019. R I R I I I A A Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 32 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; • 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 group applies appropriate 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; anti-money laundering and economic crime; 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. These policies are regularly reviewed and updated to ensure continued compliance. 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. Operational management of the group’s respective divisions is delegated by the board to two principal operating boards (business recovery and advisory and property advisory) which comprise relevant members of the group’s executive and non-executive directors, together with senior partners and managers from the respective divisions. 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. The board is comprised of the executive chairman, two other executive directors and five 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 has a majority of non-executive directors and Graham McInnes, one of its non-executive directors, acts as the 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 five non-executive directors (‘NEDs’). The NEDs’ 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 Advisory 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 five NEDs act as independent directors and have no business or other relationship which could interfere materially with the exercise of their judgement. 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 their duties. The company secretary also acts as the link between the company and shareholders on matters of governance and investor relations. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 33 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 The most recent evaluation of board performance was conducted in April 2022, facilitated by the company secretary. During the year the group continued to make progress in the areas of shareholder and employee engagement, as well as ensuring the successful integration of the recent acquisitions to the group. 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. Attendance at board and committee meetings during the financial year is shown in the table below: Director Board meetings attended Meetings eligible to attend Audit committee meetings attended Meetings eligible to attend Remuneration committee meetings attended Meetings eligible to attend Ric Traynor 4 4 — 1 — 1 — 2 — 2 Nick Taylor 4 4 — 3 — 3 — — Mark Fry 3 4 — — — — John May 4 4 3 3 1 1 Graham McInnes 4 4 3 3 1 1 Mark Stupples 4 4 — — 1 1 Peter Wallqvist 4 4 — — — — Mandy Donald 4 4 3 3 — — 1 The executive chairman attended two audit committee meetings by invitation 2 The executive chairman attended one remuneration committee meeting by invitation 3 The group finance director attended three audit committee meetings by invitation Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 34 Audit committee report As chair of the audit committee (‘the committee’), I am pleased to present the committee’s report for the year ended 30 April 2024. The purpose of the report is to describe the work undertaken by the committee and explain how it discharged its responsibilities during the year. Members of the audit committee I am an independent non-executive director and have chaired the committee since 5 March 2024. Graham McInnes who has chaired the committee since 2018 has remained a member since resigning as chair. The other committee member during the year was John May. The group company secretary is at the disposal of the committee to advise and assist 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. Key actions during the year 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 the performance of the external auditor; • reviewing the group’s risk management process including the group’s key risks and mitigations; and • discussing the contents of the Financial Reporting Council (‘FRC’) review (detailed below) with the auditors and reviewing the proposed enhancements to the group’s financial reporting disclosures. FRC review The committee received a letter during the year from the FRC following a review of the April 2023 annual report and accounts, stating that following the review there were no questions or queries which the FRC wished to raise with the company. The letter did contain a number of suggestions for improved disclosure, which the committee has considered and where appropriate has taken the opportunity to enhance the disclosures within these financial statements. Mandy Donald Chair of the audit committee Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 35 Scope and limitations of the FRC review The review was based on the annual report and accounts and did not benefit from detailed knowledge of the business or an understanding of the underlying transactions entered into. It was, however, conducted by staff of the FRC who have an understanding of the relevant legal and accounting framework. It therefore provides no assurance that the annual report and accounts are correct in all material respects; the FRC’s role is not to verify the information provided to it but to consider compliance with reporting requirements. The letter was written on the basis that the FRC (which includes its officers, employees and agents) accepts no liability for reliance on it by the company or any third party, including but not limited to investors and shareholders. Role of the external auditor The committee monitors the relationship with the external auditor, Crowe, to ensure that auditor independence and objectivity are maintained. Crowe has been the company’s auditor since 2021, which followed a tender process. The committee will keep under review the need for a further external tender. Any instruction for Crowe to provide non-audit services to the group must be approved in advance by the committee. No fees were payable to Crowe for non-audit services during the year. Having reviewed the auditor’s independence and performance, the committee has concluded that these are effective and recommends that Crowe 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 reviewed the group’s processes for the review and testing of its internal control framework, considering the size and complexities of the group. It concluded that assurance on the adequacy and effectiveness of internal controls can be obtained through the group’s compliance and finance teams, supported where necessary by external, independent review. 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. The principal risks and uncertainties faced by the group, together with mitigating activities, are disclosed in the strategic report on pages 26 to 28. Mandy Donald Chair of the audit committee 8 July 2024 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 36 Remuneration committee report On behalf of the remuneration committee (‘the committee’), I am pleased to present this report, which sets out the remuneration policy and the remuneration paid to the directors for the year ended 30 April 2024. Members of the remuneration committee The remuneration committee has three members, each of whom is an independent, non-executive director. I am the chair of the committee and Graham McInnes and Mark Stupples are the other current members of the committee. The group company secretary is at the disposal of the committee to advise and assist 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 and are reviewed annually. Directors’ remuneration The remuneration arrangements for the three executive directors 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. Mark Fry’s remuneration reflects his role as the senior partner in the business recovery and advisory practice, in addition to his duties as an executive director. The executive bonus scheme pays a percentage of salary/fixed profit share based on company and personal performance with a maximum bonus payable of 100% of base salary. The bonus payable in the year is disclosed in the table of directors’ emoluments. None of the directors participate in the group’s defined contribution pension scheme. Long-term incentive plans The long-term incentive plans in place for Nick Taylor and Mark Fry seek to incentivise them to enhance shareholder value. Performance criteria for the full award of the performance share plan 2024 require total shareholder return equal or exceeding the median position of the FTSE AIM All Share Index over the four year period, and growth in adjusted earnings per share of 15% CAGR over the four year period. Non-executive directors Non-executive directors’ remuneration is determined by the board. Mark Stupples’ remuneration reflects his role as the non-executive chairman of the property advisory business, in addition to his non-executive duties for the group. John May Chair of the remuneration committee Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 37 Directors’ emoluments Name of director Directors’ fees and profit share/salary £ Bonus £ Benefits £ 2024 total £ Fixed pay £ Variable pay £ Executive Ric Traynor 376,864 272,222 31,033 680,119 407,897 272,222 Nick Taylor 255,000 202,220 7,279 464,499 262,279 202,220 Mark Fry 450,000 338,333 17,330 805,663 467,330 338,333 Non-executive John May 45,000 — — 45,000 45,000 — Graham McInnes 45,000 — 6,049 51,049 51,049 — Mark Stupples 77,250 — — 77,250 77,250 — Peter Wallqvist 45,000 — — 45,000 45,000 — Mandy Donald 45,000 — — 45,000 45,000 — Aggregate emoluments 1,339,114 812,775 61,691 2,213,580 1,400,805 812,775 Name of director Directors’ fees and profit share/salary £ Bonus £ Benefits £ 2023 total £ Fixed pay £ Variable pay £ Executive Ric Traynor 374,087 263,000 26,324 663,411 400,411 263,000 Nick Taylor 228,643 172,500 5,333 406,476 233,976 172,500 Mark Fry 450,000 326,000 14,046 790,046 464,046 326,000 Non-executive John May 44,167 — — 44,167 44,167 — Graham McInnes 44,167 — 5,122 49,289 49,289 — Mark Stupples 44,167 — — 44,167 44,167 — Peter Wallqvist 44,167 — — 44,167 44,167 — Mandy Donald1 11,250 — — 11,250 11,250 — Aggregate emoluments 1,240,648 761,500 50,825 2,052,973 1,291,473 761,500 1 Director’s fees from date of appointment on 1 February 2023 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 options held by directors who served during the year are as follows: Name of director Scheme Number at 1 May 2023 Granted in year Exercised in year Number at 30 April 2024 Exercise price (pence) First vesting date Mark Fry Share option scheme 2013 1,000,000 — (1,000,000) — 36.7 30 April 2016 Performance share plan 2020 250,000 — — 250,000 5.0 31 July 2023 Performance share plan 2024 — 450,000 — 450,000 5.0 31 July 2027 Nick Taylor Share option scheme 2017 142,472 — — 142,472 63.1 30 April 2020 Performance share plan 2020 250,000 — (250,000) — 5.0 31 July 2023 Performance share plan 2024 — 450,000 — 450,000 5.0 31 July 2027 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 38 Directors’ share options continued On 19 July 2023 Mark Fry exercised options over 600,000 shares with an exercise price of 36.7 pence. The market price at the date of exercise was 130 pence and therefore the gain on exercise of these options was £559,860. On 19 September 2023 Mark Fry exercised options over 400,000 shares with an exercise price of 36.7 pence. The market price at the date of exercise was 116.25 pence and therefore the gain on exercise of these options was £318.240. Mark Fry’s total gain on options in the year was £878,100. On 26 January 2024 Nick Taylor exercised options over 250,000 shares with an exercise price of 5 pence. The market price at the date of exercise was 113.5 pence and therefore the gain on exercise of these options was £271,250. The market price of the company’s shares at the end of the financial year was 109p and the range of market prices during the year was 103p to 140p. Details of share options granted by the company at 30 April 2024 are given in note 22. None of the terms and conditions of the share options were varied in the year. Directors’ interests The directors who held office at 30 April 2024 had the following interests in the shares of the group: 30 April 2024 30 April 2023 Name of director Description of shares number % number % Ric Traynor Ordinary shares 27,178,980 17.09 27,178,980 17.55 Nick Taylor Ordinary shares 380,821 0.24 261,786 0.17 Mark Fry Ordinary shares 1,007,220 0.63 661,610 0.43 John May Ordinary shares 453,593 0.29 383,514 0.25 Graham McInnes Ordinary shares 917,432 0.58 917,432 0.59 Mark Stupples Ordinary shares 30,727 0.02 30,727 0.02 Peter Wallqvist Ordinary shares 50,000 0.03 30,000 0.02 Mandy Donald Ordinary shares — — — — No changes took place in the interests of directors between 30 April 2024 and 8 July 2024. John May Chair of the remuneration committee 8 July 2024 Remuneration committee report continued Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 39 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 2024. 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. The stakeholder engagement section of the strategic report contains information in respect of the group’s key stakeholders and business relationships, including employees, clients, shareholders, and the community and environment. Directors The names and brief biographical details of the directors are shown on pages 30 and 31. Risks and uncertainties The principal business risks and uncertainties to which the company is exposed are detailed on pages 27 and 28 of the strategic report. Dividends The directors recommend a final dividend of 2.7p (2023: 2.6p per ordinary share) to be paid on 6 November 2024 to shareholders on the register on 11 October 2024. This, together with the interim dividend of 1.3p paid on 7 May 2024 (2023: 1.2p), makes a total dividend of 4.0p for the year (2023: 3.8p). Substantial shareholdings On 5 July 2024, 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 Close Brothers Asset Management 11,480,000 7.21 Amati Global Investors 9,715,155 6.10 OVMK Vermogensbeheer 7,221,310 4.53 Gresham House Asset Management 6,129,933 3.85 River Global Investors 6,000,000 3.77 Slater Investments 5,778,005 3.63 Other than the above holdings and those of the directors (see page 38), 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 20. Capital structure Details of the issued share capital, together with details of the movements in share capital during the year, are shown in note 21. 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. Greenhouse gas (‘GHG’) emissions report Details of the group’s GHG emissions for the year are detailed on page 25 of the strategic report. Employees 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. For details on employee engagement, refer to stakeholder engagement (page 20) and our sustainability statement (pages 21 to 25). 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 Crowe U.K. LLP be reappointed as auditor. Approved by the board of directors and signed on behalf of the board. John Humphrey Company secretary 8 July 2024 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 40 Directors’ responsibilities statement 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 UK-adopted International Accounting Standards 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 UK-adopted International Accounting Standards, 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. 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. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 41 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 2024 which comprise: • the Consolidated statement of comprehensive income for the year ended 30 April 2024; • the Consolidated and Parent Company statements of changes in equity for the year then ended; • the Consolidated and Parent Company balance sheets as at 30 April 2024; • the Consolidated cash flow statement for the year then ended; and • the notes to the financial statements, including a summary of accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted International Accounting Standards. 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 applicable in the UK 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 2024 and of the Group’s profit for the period then ended; • the Group financial statements have been properly prepared in accordance with UK adopted International Accounting Standards; • 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 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 In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and Company’s ability to continue to adopt the going concern basis of accounting included obtaining and reviewing management’s assessment of going concern, including sensitivity analysis. Our work in testing management’s assessment of going concern involved checking the mathematical accuracy of management’s cash flow forecasts, and that calculations were appropriately prepared, as well as gaining an understanding of management’s basis for the identification of events or conditions that may cast a significant doubt on the ability of the Group or company to continue as a going concern, and whether a material uncertainty related to going concern exists. We compared these cash flow forecasts to the covenant requirements of all loans in place at the year end, to determine whether there is any risk of these covenants being breached during the forecast period. Furthermore, we performed specific audit procedures around going concern, whereby: we obtained an understanding of the controls in place relating to preparation, internal review and ratification of management’s assessment; we compared actual financial results against prior year budgets to assess accuracy of management forecasts; we evaluated key judgements and assumptions used by management in forming their conclusions; we assessed the reasonableness of budgets and forecasts for successive financial years; and we evaluated the feasibility of management’s plans in respect of going concern as well as considered whether new facts or information have become available since management made their assessment. We also considered explicitly whether there was any evidence of management bias in the preparation of the going concern assessment. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s or company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Independent auditor’s report to the members of Begbies Traynor Group plc Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 42 Independent auditor’s report continued to the members of Begbies Traynor Group plc Overview of our audit approach Materiality In planning and performing our audit we applied the concept of materiality. An item is considered material if it could reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified. We use a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of the financial statements. Performance materiality is set based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific risk of each audit area having regard to the internal control environment. Where considered appropriate performance materiality may be reduced to a lower level, such as, for related party transactions and directors’ remuneration. Group materiality FY2024 £1,000,000 FY2023 £1,000,000 Group performance materiality FY2024 £700,000 FY2023 £700,000 Parent Company materiality FY2024 £750,000 FY2023 £750,000 Parent Company performance materiality FY2024 £520,000 FY2023 £520,000 Basis for Group materiality 5% of adjusted profit before tax. Basis for Parent Company materiality Based on net assets and restricted to 75% of Group materiality. 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 and are in line with the Directors’ KPIs. 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. 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 £50,000. We also agreed to report differences below these thresholds that, in our view, were warranted on qualitative grounds. 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. We assessed the risk of misstatement in the financial statements whether due to fraud or error and then deigned and performed audit procedures responsive to those risks. In particular, we considered the areas where the directors made subjective judgements, such as assumptions on significant accounting estimates. We tailored the scope of our audit to ensure that we obtained sufficient audit evidence to be able to form an opinion on the financial statements as a whole. We used the outputs of our risk assessment, our understanding of the Group and Parent Company, to consider qualitative factors to ensure that we obtained sufficient coverage across all financial statement line items. For the six significant components we identified, we performed a full scope audit of the complete financial information. For the remaining components, we performed analytical review procedures and other audit procedures on specific balances and transactions, due to their contribution towards specific financial statement line items or disclosures that we considered had the potential for the greatest impact to the group financial statements, either because of the magnitude of these or their risk profile. The audit team also tested the consolidation process and carried out analytical procedures to confirm that there were no significant risks of material misstatement of the aggregated information. 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. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 43 Overview of our audit approach continued 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) that we identified. These matters included 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. This is not a complete list of all risks identified by our audit. Key audit matter How the scope of our audit addressed the key audit matter Carrying value of goodwill Refer to note 2(d) (accounting policy), and note 11 (Intangible assets). The Group carries a value of slightly over £63 million for goodwill in the balance sheet at the year end. This is material to the group and the assessment of its recoverability performed by management involves the application of a number of judgements and estimates which therefore holds the potential for bias or error. In accordance with IAS 36, an annual impairment review of goodwill (see note 11) is required at each year end. The Group’s policy for the recognition, initial measurement and subsequent treatment of goodwill is set out in note 2 of these financial statements, with a summary of goodwill set out in Note 11. Management prepared impairment calculations based on the forecasts of the two cash‑generating units (‘CGUs’) to which the goodwill belongs (the Insolvency and Property CGUs). They also applied sensitivity analysis to the assumptions used in the calculations, as set out in Note 11. Management’s assessment found significant headroom and concluded no impairment was required. Due to the potential significance and subjectivity of the above judgements to the group this is deemed to be a key audit matter. We assessed the methodology applied by management to ensure consistency with prior year calculations. We challenged management on the methodology used to identify CGUs. We evaluated the allocation of goodwill to ensure that the brought forward goodwill was correctly allocated to the insolvency CGU and the goodwill which was acquired in the year was correctly allocated to the property CGU. We checked the assumptions used within the forecast figures for the relevant CGUs. We compared these to the actual results of the CGUs in the financial year ended 30 April 2024, investigating and challenging management on any unusual or significant movements expected going forward based on our understanding of the business. We also checked for consistency with the forecasts used in the going concern assessment. We assessed 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 recent trends and liquidation rates) as this drives the forecast future sales volumes for the insolvency practice, which is counter‑cyclical to the general economic environment in the UK. We engaged the use of our internal specialist to consider the appropriateness of management’s WACC estimate, and whether it was reasonable for use in this calculation. We concluded that although there was a difference between the specialist’s calculation for the insolvency CGU pre-tax WACC of 16.9% and management’s of 14.5%, this did not impact our conclusion, and we concurred with management’s assessment that there was no impairment. We tested the sensitivity calculations to the key assumptions to consider the headroom available. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 44 Independent auditor’s report continued to the members of Begbies Traynor Group plc Key audit matter How the scope of our audit addressed the key audit matter Revenue and unbilled income recognition Refer to note 2(k) and 2(q) (accounting policy), notes 3 and 4 (Revenue), and note 14 (Unbilled income). In line with the group’s policies noted above, there are a number of revenue streams each which contain different performance obligations. 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 using stage of completion calculations at year end through the manipulation of provisions for unrecoverable amounts. 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. We tested the operation of IT controls around timesheets and the feeds of data from timesheets into the general ledger. We tested the operating effectiveness of 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 quarter, 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 were tested through questionnaires being issued to the fee earners and then reviewing their responses and associated evidence, e.g. creditors’ resolutions, property valuations and balances held in bank accounts, against the year‑end position set out. This included questions on realisations and asset values held for the case. We reperformed the stage of completion calculations as at year end for a sample of cases and robustly challenged the judgements and estimates made by management in relation to the status of cases by looking at the costs to complete for each of the cases. We also challenged recoverability of the fees by looking at the value of assets held within each of the cases which supported the fee estimate. We also reviewed the unbilled revenue estimates made in the prior year in relation to their recovery for a sample of cases and assessed their accuracy based on actual outcomes. Where fees were contingent, we reviewed revenue recorded either pre or post year end and confirming the contingent event occurred in the corresponding period. 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. Other information The directors are responsible for the other information contained within the annual report. 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. 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 this gives rise to a material misstatement in the financial statements themselves. 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. Opinion on other matter prescribed by the Companies Act 2006 In our opinion based on the work undertaken in the course of our 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 directors’ report have been prepared in accordance with applicable legal requirements. Overview of our audit approach continued Key audit matters continued Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 45 Matters on which we are required to report by exception In light of the knowledge and understanding of the group and the parent company and their 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 where 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 the directors for the financial statements As explained more fully in the directors’ responsibilities statement set out on page 40, 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 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. Irregularities, including fraud, are instances of non‑compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We obtained an understanding of the legal and regulatory frameworks within which the Group and Parent Company operates, which we considered in this context were the Companies Act 2006, UK taxation legislation, AIM rules for Companies, anti-bribery and money laundering regulations, and UK insolvency law. We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management, particularly in relation to recognition of revenue. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, and sample testing on the posting of journals. We reviewed and challenged accounting estimates and assumptions used by management for the valuation of goodwill, intangible assets and unbilled revenue, in order to verify that the calculations and models were reasonable and free of biases. Additional information on the specific detailed testing performed on revenue and unbilled income recognition is given earlier in this report. Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non‑compliance and cannot be expected to detect non‑compliance with all laws and regulations. These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations. A further description of our responsibilities is available on the Financial Reporting Council’s website at: 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 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 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 company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Michael Jayson (Senior Statutory Auditor) for and on behalf of Crowe U.K. LLP Statutory Auditor Manchester 8 July 2024 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 46 2024 2023 Notes Underlying £’000 Non-underlying £’000 Total £’000 Underlying £’000 Non-underlying £’000 Total £’000 Revenue 3 136,728 — 136,728 121,825 — 121,825 Direct costs (77,840) — (77,840) (67,700) — (67,700) Gross profit 58,888 — 58,888 54,125 — 54,125 Other operating income 479 — 479 208 — 208 Administrative expenses 5 (35,452) (16,214) (51,666) (32,512) (14,666) (47,178) Operating profit 23,915 (16,214) 7,701 21,821 (14,666) 7,155 Finance costs 7 (1,936) — (1,936) (1,170) — (1,170) Profit before tax 21,979 (16,214) 5,765 20,651 (14,666) 5,985 Tax 8 (5,710) 1,397 (4,313) (4,310) 1,236 (3,074) Profit and total comprehensive income for the year 16,269 (14,817) 1,452 16,341 (13,430) 2,911 Earnings per share Basic 10 0.9p 1.9p Diluted 10 0.9p 1.8p The profit, comprehensive income and earnings per share is attributable to equity holders of the parent. Consolidated statement of comprehensive income for the year ended 30 April 2024 Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 47 Share capital £’000 Share premium £’000 Merger reserve £’000 Capital redemption reserve £’000 Own shares reserve £’000 Retained earnings £’000 Total equity £’000 At 1 May 2022 7,671 29,787 27,172 304 — 19,591 84,525 Total comprehensive income for the year — — — — — 2,911 2,911 Dividends — — — — — (5,387) (5,387) Credit to equity for equity‑settled share-based payments — — — — — 1,277 1,277 Shares issued as consideration for acquisitions 28 — 772 — — — 800 Shares issued for share-based payments 28 186 — — — — 214 At 30 April 2023 7,727 29,973 27,944 304 — 18,392 84,340 Total comprehensive income for the year — — — — — 1,452 1,452 Dividends — — — — — (5,944) (5,944) Credit to equity for equity-settled share-based payments — — — — — 566 566 Shares issued as consideration for acquisitions 15 — 360 — — — 375 Shares issued for share‑based payments 213 543 — — — (223) 533 Own shares acquired — — — — (2,901) — (2,901) At 30 April 2024 7,955 30,516 28,304 304 (2,901) 14,243 78,421 A description of the nature and purpose of each reserve is included within note 29. Consolidated statement of changes in equity for the year ended 30 April 2024 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 48 Notes 2024 £’000 2023 £’000 Non-current assets Intangible assets 11 72,401 73,386 Property, plant and equipment 12 2,244 1,993 Right of use assets 13 11,166 7,751 Trade and other receivables 14 2,825 5,200 88,636 88,330 Current assets Trade and other receivables 14 63,336 55,550 Current tax receivable 299 — Cash and cash equivalents 5,558 8,001 69,193 63,551 Total assets 157,829 151,881 Current liabilities Trade and other payables 15 (49,971) (42,644) Current tax liabilities — (1,110) Lease liabilities 16 (2,102) (1,554) Provisions 18 (923) (1,006) (52,996) (46,314) Net current assets 16,197 17,237 Non-current liabilities Borrowings 17 (7,000) (5,000) Lease liabilities 16 (9,552) (6,658) Provisions 18 (2,871) (2,139) Deferred tax 19 (6,989) (7,430) (26,412) (21,227) Total liabilities (79,408) (67,541) Net assets 78,421 84,340 Equity Share capital 21 7,955 7,727 Share premium 30,516 29,973 Merger reserve 28,304 27,944 Capital redemption reserve 304 304 Own shares reserve (2,901) — Retained earnings 14,243 18,392 Equity attributable to owners of the company 78,421 84,340 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 2024. They were signed on its behalf by: Ric Traynor Nick Taylor Executive chairman Group finance director Consolidated balance sheet at 30 April 2024 Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 49 Consolidated cash flow statement for the year ended 30 April 2024 Notes 2024 £’000 2023 £’000 Cash generated by operations 24 24,466 23,817 Income taxes paid (6,715) (5,328) Interest paid on borrowings (1,274) (668) Interest paid on lease liabilities (751) (408) Net cash from operating activities (before acquisition payments) 15,726 17,413 Transaction costs (321) (434) Acquisition consideration payments (which are deemed remuneration under IFRS 3) 23 (6,250) (10,599) Net cash from operating activities 9,155 6,380 Investing activities Purchase of intangible fixed assets 11 (21) (56) Purchase of property, plant and equipment 12 (1,432) (931) Proceeds on disposal of property, plant and equipment — 20 Acquisition consideration payments 23 (3,561) (700) Net cash acquired in acquisition of businesses 23 1,593 1,158 Net cash used in investing activities (3,421) (509) Financing activities Dividends paid 9 (5,944) (5,387) Proceeds on issue of shares 533 213 Purchase of own shares (2,901) — Capital element of lease payments (1,865) (2,381) Drawdown of loans 2,000 — Net cash used in financing activities (8,177) (7,555) Net decrease in cash and cash equivalents (2,443) (1,684) Cash and cash equivalents at beginning of year 8,001 9,685 Cash and cash equivalents at end of year 5,558 8,001 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 50 Notes to the consolidated financial statements for the year ended 30 April 2024 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. Material 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 UK adopted International Accounting Standards (‘IAS’). The financial statements have been prepared on the historical cost basis, except where modified by the revaluation of assets and liabilities to fair value when required by UK-adopted IAS. All accounting policies have been applied consistently throughout the current and preceding year. 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, the principal risks and uncertainties, its cash flows, liquidity position and borrowing facilities are described in the strategic report. Furthermore, notes 17 and 20 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. At the year end the group had cash balances of £5.6m (2023: £8.0m) together with undrawn, committed borrowing facilities of £18.0m (2023: £20.0m) providing significant liquidity entering the new financial year. 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 of two years from the year end. This review included sensitivity analysis and stress tests 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. As a result, 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 operating performance of the business and are the performance measures used by the board. All of 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. Accordingly, adjusted measures of operating profit, profit before tax and earnings per share exclude, where applicable, acquisition consideration (treated as deemed remuneration under IFRS 3), negative goodwill, transaction costs and amortisation of intangible assets arising on acquisitions and related tax effects on these items. These terms are not defined terms under UK-adopted International Accounting Standards 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. (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. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 51 2. Material accounting policies continued (c) Business combinations The acquisition of subsidiaries and businesses is accounted for using the acquisition method. The definition of a business combination is in accordance with IFRS 3, is applied by the group when considering classification of acquisitions. Measurement of consideration The consideration for each acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred to former owners 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. Acquisition consideration accounted for as deemed remuneration In accordance with the IFRS Interpretations Committee’s interpretation of paragraph B55 of IFRS 3, the cost of the business combination excludes consideration which is contingent on the selling shareholders remaining with the group. These amounts are accounted for as deemed remuneration, are charged to the consolidated statement of comprehensive income over the period of the service obligation and disclosed as acquisition consideration within non-underlying items. Payments paid in advance of the service obligation being delivered (prepaid deemed remuneration) are 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 (acquisition consideration) is recognised within trade and other payables. Acquisition consideration payments, which are deemed remuneration under this accounting policy, are disclosed within cash flows from operating activities within the cash flow statement. Fair value assessment 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 Goodwill arises where the cost of the business combination exceeds the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. This is recognised as an asset and is subject to impairment tests as noted in note 11. Negative goodwill arises where 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. This typically arises where there are post-acquisition service obligations in relation to the contractual consideration payments which result in these payments being excluded from consideration under IFRS 3. Negative goodwill is recognised immediately in the consolidated statement of comprehensive income within non-underlying items. Transaction costs Transaction costs are recognised in the consolidated statement of comprehensive income as incurred and separately disclosed within non-underlying items 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. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 52 Notes to the consolidated financial statements continued for the year ended 30 April 2024 2. Material accounting policies continued (d) Intangible assets continued 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 10%–33% of cost Intangible assets arising on acquisitions 10%–50% of fair value at acquisition (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 20%–33% of cost Motor vehicles 25% on a reducing balance basis Office equipment 15%–25% of cost Leasehold improvements 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. (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 (‘CGU’) 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 CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) 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 CGU) 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 CGU) 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 unbilled income and 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. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 53 2. Material accounting policies continued (g) Financial instruments continued Trade and other receivables (excluding unbilled income and deemed remuneration) continued Unbilled income is excluded from the ECL model as each individual contract is subject to management review for recoverability (as detailed in note 2(k)). Trade receivables are written off where there is no expectation of recovery. Other receivables are initially stated at their fair value and subsequently at amortised cost. Trade and other payables Trade and other payables are initially stated at their fair value and subsequently at amortised cost. 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) Professional indemnity insurance claims Insurance cover is maintained in respect of professional negligence claims. There is judgement in the recognition and quantification of the liability associated with claims and regulatory proceedings. Recognition is based on the assessed likelihood of an individual claim’s success. Where an outflow is both probable and can be estimated reliably, a liability is recognised for the best estimate of the gross liability with a separate asset recognised for any portion that the group will recover from its insurers. Where a payment is not probable or cannot be estimated reliably no liability is recognised. Gross liability is recognised in provisions and the related asset is recognised in other receivables. (j) Own shares held by employee share trusts The company is the sponsoring entity of and Employee Benefit Trust (‘EBT’) and, not withstanding the legal duties of the Trustees, the group considers that it has ‘de facto’ control of the EBT. The trust is accounted for as assets and liabilities of the company and included in the consolidated financial statements. The company’s equity instruments held by the EBT are accounted for as if they were the company’s own equity and are treated as treasury shares. No gain or loss is recognised in profit or loss or other comprehensive income on the purchase, sale or cancellation of the company’s own equity by the EBT. (k) Leases The group enters into lease agreements for the use of buildings, motor vehicles and office equipment. Leases are accounted for at inception by recognising a right of use asset, lease liability and dilapidations liability. The lease liability is measured at the present value of fixed payments under the lease. IFRS 16 requires payments to be discounted using the interest rate implicit in the lease. Where that rate cannot be readily determined, which is generally the case for the group’s leases, the lessee’s incremental borrowing rate is used, which in practice is the group’s incremental borrowing rate. This is the rate that the group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. The initial value of the right of use asset is the present value of the fixed payments under the lease, any initial direct costs and an estimate of dilapidation costs under the terms of the lease. Depreciation of the right of use asset is recognised in the income statement on a straight-line basis over the term of the lease. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Lease liabilities increase as a result of the finance cost charged to the income statement over the lease period, so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period, and the liabilities are reduced for lease payments made. Lease payments are allocated between principal and interest cost. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 54 Notes to the consolidated financial statements continued for the year ended 30 April 2024 2. Material accounting policies continued (k) Leases continued The group has taken advantage of the exemptions available under IFRS 16 not to apply the recognition and requirements of the standard to leases with a term of 12 months or less, or leases for which the underlying asset value is low. For these leases, a charge is 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 sometimes negotiates break clauses in its property leases, with the typical factor in deciding to negotiate a break clause being the length of the lease term. The carrying amounts of lease liabilities are not reduced by payments that would be avoided from exercising break clauses because, as at the point of lease inception, it was considered reasonably certain that the group would not exercise its right to exercise any break in the lease. (l) 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: • business recovery and advisory; • corporate finance services and finance broking; • commercial property management; • property consultancy including valuations; and • asset sales. Business recovery and advisory 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. 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 and finance broking 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. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 55 2. Material accounting policies continued (l) Revenue recognition continued Property consultancy (including valuations) The group provides a wide range of property consultancy 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. Asset sales The group is appointed to sell properties, businesses, machinery and other business assets for clients through auction, commercial property agency and business sales 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. (m) Borrowing costs Borrowing costs are recognised in profit or loss in the period in which they are incurred. (n) 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. (o) 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 22. 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. (p) 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. (q) 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; 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; or if at the time of the transaction, they do not give rise to equal taxable and deductible temporary differences. 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. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 56 Notes to the consolidated financial statements continued for the year ended 30 April 2024 2. Material accounting policies continued (r) Critical accounting judgements and 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 that have the most significant impact on the annual results under UK-adopted IAS are as set out below. Key source of estimation uncertainty 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 CGUs. This requires an estimate of the future cash flows expected to arise from the CGU and a suitable discount rate to calculate present value. Details of the assumptions made are provided in note 11. 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 books 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 asset 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, with a resultant impact on the goodwill or gain on acquisition recognised. Details in relation to current year acquisitions are in note 23. Unbilled income As detailed in note 2(k), in determining the amount of revenue to recognise in the period, management is required to form an estimate on each individual contract of the total expected fees and total anticipated costs. These estimates may change over time as the engagement completes. These estimates are formed over a large portfolio of contracts and are therefore unlikely to be individually material. Provisions and claims As detailed in notes 2(h) and 2(i), there is judgement in the recognition and quantification of potential liabilities recognised as provisions and claims. (s) Recently issued accounting pronouncements UK-adopted IAS At the date of authorisation of these financial statements, there are no amended standards and interpretations issued by the UK Endorsement Board that impact the group as they are either not relevant to the group’s activities or require accounting which is consistent with the group’s current accounting policies. New standards and interpretations not yet adopted Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 30 April 2024 reporting periods and have not been early adopted by the group. These standards, amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. The group has applied the following standards and amendments for the first time for its annual reporting period: • Non-current Liabilities with Covenants (Amendments to IAS 1). The impact of IFRS 18 ‘Presentation and Disclosure in Financial Statements’ (effective for periods beginning on or after 1 January 2027) will be assessed by the group to determine the impact on the consolidated statement of comprehensive income and the group’s adjusted performance measures. (t) Reclassification of prior year comparatives Following the FRC review of the April 2023 annual report and accounts, the following prior year financial information has been reclassified: • acquisition costs (previously reported within investing acquisition payments in the consolidated cash flow statement within investing activities, have now been reclassified as operating cash flows; and • the financial instrument liquidity risk disclosures in note 20 (financial instruments) included deferred income within trade payables. The disclosure has been reclassified to exclude deferred income. In addition, we have reclassified the prior year segmental reporting (note 4) to reflect current management structures. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 57 3. Revenue Revenue recognised in the year of £136.7m (2023: £121.8m) 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: 2024 £’000 2023 £’000 Contract assets Unbilled income 45,348 37,489 Contract liabilities Deferred income (7,403) (6,503) The movement in contract assets in the year comprises £0.01m increase from acquisitions in the year and £7.8m increase due to organic growth in the year. The movement in contract liabilities in the year comprises £0.9m increase arising from formal insolvency appointments. Revenue recognised in the year that was included in deferred income at the beginning of the year was £3.9m (2023: £3.3m). 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 at 30 April 2024 is £36.3m (2023: £35.2m). 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 board). The group is managed as two operating segments: business recovery and advisory, and property advisory. The performance of the group’s operating segments is assessed by the chief operating decision maker on the basis of revenue and operating profit (before non-underlying items), which is presented below. Revenue is presented by basis of recognition and by service line, in accordance with IFRS 15. The comparative numbers have been restated to reflect current management structures. Business recovery and advisory 2024 £’000 Property advisory 2024 £’000 Shared and central costs 2024 £’000 Consolidated 2024 £’000 Revenue Total revenue from rendering of professional services 96,384 40,361 — 136,745 Inter-segment revenue — (17) — (17) Revenue from external customers 96,384 40,344 — 136,728 Over time 85,115 3,546 — 88,661 At a point in time 11,269 36,798 — 48,067 Revenue from external customers by basis of recognition 96,384 40,344 — 136,728 Business recovery and advisory 85,115 — — 85,115 Corporate finance services and finance broking 11,269 — — 11,269 Commercial property management — 3,546 — 3,546 Property consultancy (including valuations) — 21,810 — 21,810 Asset sales — 14,988 — 14,988 Revenue from external customers by service line 96,384 40,344 — 136,728 Operating profit before non-underlying costs 25,510 7,633 (9,228) 23,915 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 58 Notes to the consolidated financial statements continued for the year ended 30 April 2024 4. Segmental analysis continued Business recovery and advisory 2024 £’000 Property advisory 2024 £’000 Unallocated corporate amounts 2024 £’000 Consolidated 2024 £’000 Balance sheet Assets 131,470 20,502 5,857 157,829 Liabilities (60,521) (11,887) (7,000) (79,408) Net assets 70,949 8,615 (1,143) 78,421 Unallocated amounts include current tax assets (liabilities), cash and borrowings. Business recovery and advisory 2023 £’000 Property advisory 2023 £’000 Shared and central costs 2023 £’000 Consolidated 2023 £’000 Revenue Total revenue from rendering of professional services 89,696 32,187 — 121,883 Inter-segment revenue — (58) — (58) Revenue from external customers 89,696 32,129 — 121,825 Over time 77,212 2,989 — 80,201 At a point in time 12,484 29,140 — 41,624 Revenue from external customers by basis of recognition 89,696 32,129 — 121,825 Business recovery and advisory 77,212 — — 77,212 Corporate finance services and finance broking 12,484 — — 12,484 Commercial property management — 2,989 — 2,989 Property consultancy (including valuations) — 18,003 — 18,003 Asset sales — 11,137 — 11,137 Revenue from external customers by service line 89,696 32,129 — 121,825 Operating profit before non-underlying costs 24,272 5,527 (7,978) 21,821 Business recovery and advisory 2023 £’000 Property advisory 2023 £’000 Unallocated corporate amounts 2023 £’000 Consolidated 2023 £’000 Balance sheet Assets 130,676 13,204 8,001 151,881 Liabilities (51,220) (10,210) (6,111) (67,541) Net assets 79,456 2,994 1,890 84,340 Geographical segments The group’s principal operations and markets are located in the UK. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 59 5. Profit for the year Profit for the year has been arrived at after charging (crediting): 2024 £’000 2023 £’000 Depreciation of property, plant and equipment (note 12) 1,149 1,114 Depreciation of right of use assets (note 13) 2,677 2,136 Software amortisation (note 11) 189 184 Loss (profit) on disposal of property, plant and equipment 44 (13) Loss on disposal of right of use assets — 42 Staff costs (note 6) 81,675 74,254 Short-term lease expense 601 846 Impairment of receivable balances (note 14) 638 524 Reversal of impairment losses recognised on trade receivables (note 14) (134) (41) Non-underlying items The non-underlying items detailed below all arise due to acquisition accounting. Under IFRS, consideration which is contingent on the selling shareholders remaining with the group is charged to the statement of comprehensive income, rather than being capitalised within non-current assets. These contingent payments, agreed in the terms of the sale and purchase agreements, are designed to preserve the value of goodwill and customer relationships acquired in the business combinations. As a result of this treatment of contingent consideration, negative goodwill arises on a number of acquisitions which is credited to income in the year of acquisition. 2024 £’000 2023 £’000 Acquisition consideration (deemed remuneration in accordance with IFRS 3) 11,133 12,304 Negative goodwill (note 23) (830) (4,298) Transaction costs 321 434 Amortisation of intangible assets arising on acquisition (note 11) 5,590 6,226 Total non-underlying costs 16,214 14,666 During the year, remuneration payable to the auditors for services obtained was: 2024 £’000 2023 £’000 Fees payable to the company’s auditor for the audit of the company’s annual accounts 34 30 Fees payable to the company’s auditor for other services to the group — the audit of the company’s subsidiaries pursuant to legislation 125 113 — audit related assurance services 7 6 Total audit fees 166 149 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 60 Notes to the consolidated financial statements continued for the year ended 30 April 2024 6. Employee costs The full-time equivalent (‘FTE’) number of partners and employees are disclosed within the finance review. The average total number of partners and employees (including executive directors) working within the group during each year was: 2024 number 2023 number Partners (members of the group’s operating LLPs) 90 81 Employees 1,109 991 1,199 1,072 2024 £’000 2023 £’000 Their aggregate remuneration comprised: Wages, salaries and partners’ compensation charged as an expense 70,935 63,977 Social security costs 5,866 5,398 Pension costs (note 27) 4,308 3,602 Share-based payments (note 22) 566 1,277 81,675 74,254 Directors’ remuneration 2024 £’000 2023 £’000 Short-term benefits 2,214 2,053 Share-based payments 35 177 2,249 2,230 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. Finance costs 2024 £’000 2023 £’000 Interest on borrowings 1,185 762 Finance charge on lease liabilities 680 343 Finance charge on dilapidation provisions 71 65 Total finance costs 1,936 1,170 Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 61 8. Tax 2024 £’000 2023 £’000 Current tax charge 5,158 4,447 Adjustments in respect of prior years (165) — Total current tax charge 4,993 4,447 Total deferred tax credit (note 19) (680) (1,373) Total income tax charge 4,313 3,074 Corporation tax is calculated at 25% (2023: 19.5%) of the estimated assessable profit for the year. The charge for the year can be reconciled to the profit per the consolidated statement of comprehensive income as follows: 2024 £’000 2023 £’000 Profit before tax 5,765 5,985 Notional tax charge at the UK corporation tax rate of 25% (2023: 19.5%) 1,441 1,167 Non-deductible impact of non-underlying items 2,656 1,624 Adjustments in respect of prior years (165) — Tax effect of expenses that are not deductible in determining taxable profit 381 283 Total tax charge reported in the consolidated statement of comprehensive income 4,313 3,074 9. Dividends 2024 £’000 2023 £’000 Amounts recognised as distributions to equity holders in the year Interim dividend for the year ended 30 April 2023 of 1.2p (2022: 1.1p) per share 1,854 1,687 Final dividend for the year ended 30 April 2023 of 2.6p (2022: 2.4p) per share 4,090 3,700 5,944 5,387 Amounts proposed as distributions to equity holders Interim dividend for the year ended 30 April 2024 of 1.3p (2023: 1.2p) per share 2,068 1,854 Final dividend for the year ended 30 April 2024 of 2.7p (2023: 2.6p) per share 4,295 4,090 6,363 5,944 The proposed final dividend is subject to approval by shareholders at the annual general meeting in September 2024. The interim dividend for 2024 was paid on 7 May 2024 and, accordingly, has not been included as a liability in these financial statements nor as a distribution to equity shareholders. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 62 Notes to the consolidated financial statements continued for the year ended 30 April 2024 10. Earnings per share The calculation of basic and diluted earnings per share is based on the following data: 2024 £’000 2023 £’000 Earnings Profit for the year attributable to equity holders 1,452 2,911 2024 number ’000 2023 number ’000 Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share 158,540 155,634 Effect of: Share options 5,334 6,423 Contingent shares — 233 Weighted average number of ordinary shares for the purposes of diluted earnings per share 163,874 162,290 The weighted average number of ordinary shares for the purposes of basic earnings per share includes options which have vested but are yet to be exercised. 2024 pence 2023 pence Basic earnings per share 0.9 1.9 Diluted earnings per share 0.9 1.8 The calculation of adjusted basic and diluted earnings per share is based on the following data: 2024 £’000 2023 £’000 Earnings Profit for the year attributable to equity holders 1,452 2,911 Non-underlying items 16,214 14,666 Tax effect of above items (1,397) (1,236) Adjusted earnings 16,269 16,341 2024 pence 2023 pence Adjusted basic earnings per share 10.3 10.5 Adjusted diluted earnings per share 9.9 10.1 Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 63 11. Intangible assets Goodwill £’000 Software £’000 Intangible assets arising on acquisitions £’000 Total £’000 Cost At 1 May 2022 60,208 2,620 41,889 104,717 Arising on acquisitions — 36 4,433 4,469 Additions — 20 — 20 At 30 April 2023 60,208 2,676 46,322 109,206 Arising on acquisitions 2,890 108 1,775 4,773 Additions — 21 — 21 At 30 April 2024 63,098 2,805 48,097 114,000 Amortisation and impairment At 1 May 2022 — 2,079 27,331 29,410 Amortisation during the year — 184 6,226 6,410 At 30 April 2023 — 2,263 33,557 35,820 Amortisation during the year — 189 5,590 5,779 At 30 April 2024 — 2,452 39,147 41,599 Carrying amount At 30 April 2024 63,098 353 8,950 72,401 At 30 April 2023 60,208 413 12,765 73,386 At 30 April 2022 60,208 541 14,558 75,307 The carrying value of intangible assets arising on acquisitions comprises brands of £2,330,000 (2023: £2,809,000), customer relationships of £6,314,000 (2023: £8,389,000), order books of £244,000 (2023: £1,474,000) and websites of £62,000 (2023: £93,000). 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. For the purposes of goodwill impairment testing the group allocates the goodwill to two CGUs: the insolvency CGU (within business recovery and advisory) and the property 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 five year period with a terminal value applied, including the latest one year forecast approved by the board. The one year forecast is prepared based on a combination of current market knowledge, numbers of new engagements and the pipeline of opportunities. The remaining years are based on anticipated growth rates. 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 A post-tax weighted average cost of capital has been calculated for each CGU, reflecting current market assessments of the time value of money for the period under review and the risks specific to each CGU. This has been used to determine the pre-tax discount rate for each CGU which contains goodwill as follows: insolvency of 14.5% and property of 12.9%. In the prior year, goodwill was only attributable to the insolvency CGU, with a discount rate of 12.9%. The terminal growth rates used in these forecasts is 3%. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 64 Notes to the consolidated financial statements continued for the year ended 30 April 2024 11. Intangible assets continued Revenue Revenue assumptions in the one year forecast are based on local management forecasts. Future year revenue levels are based on historic performance and anticipated growth. EBITDA margins Margins in the one year forecast for each CGU are derived from local management expectations based on recent performance and cost base. Margins over the extrapolation period are in line with expectations of future developments. Sensitivity to changes in assumptions With regard to the assessment of value in use for the group’s CGUs, 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. 12. Property, plant and equipment Leasehold improvements £’000 Office equipment £’000 Computers £’000 Motor vehicles £’000 Total £’000 Cost At 1 May 2022 4,492 1,661 6,002 89 12,244 Arising on acquisitions 75 38 103 — 216 Additions 174 138 619 — 931 Disposals — — — (20) (20) At 30 April 2023 4,741 1,837 6,724 69 13,371 Arising on acquisitions — 2 10 — 12 Additions 498 129 805 — 1,432 Disposals (74) — (108) — (182) At 30 April 2024 5,165 1,968 7,431 69 14,633 Depreciation and impairment At 1 May 2022 4,011 1,560 4,640 66 10,277 Charge for the year 175 63 863 13 1,114 Disposals — — — (13) (13) At 30 April 2023 4,186 1,623 5,503 66 11,378 Charge for the year 183 98 865 3 1,149 Disposals (74) — (64) — (138) At 30 April 2024 4,295 1,721 6,304 69 12,389 Carrying amount At 30 April 2024 870 247 1,127 — 2,244 At 30 April 2023 555 214 1,221 3 1,993 At 30 April 2022 481 101 1,362 23 1,967 Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 65 13. Right of use assets Property £’000 Motor vehicles £’000 Office equipment £’000 Total £’000 Cost At 1 May 2022 14,046 2,845 577 17,468 Arising on acquisitions 871 — — 871 Additions 3,076 490 — 3,566 Disposals (218) — — (218) At 30 April 2023 17,775 3,335 577 21,687 Arising on acquisitions 624 — — 624 Additions 3,841 912 715 5,468 At 30 April 2024 22,240 4,247 1,292 27,779 Depreciation and impairment At 1 May 2022 9,083 2,364 529 11,976 Charge for the year 1,680 408 48 2,136 Disposals (176) — — (176) At 30 April 2023 10,587 2,772 577 13,936 Charge for the year 2,125 374 178 2,677 At 30 April 2024 12,712 3,146 755 16,613 Carrying amount At 30 April 2024 9,528 1,101 537 11,166 At 30 April 2023 7,188 563 — 7,751 At 30 April 2022 4,963 481 48 5,492 14. Trade and other receivables 2024 £’000 2023 £’000 Non-current Acquisition consideration (prepaid deemed remuneration) 2,825 5,200 Current Trade receivables 16,183 14,564 Less: impairment provision (3,254) (2,912) Trade receivables — net 12,929 11,652 Unbilled income 45,348 37,489 Other debtors and prepayments 2,819 2,987 Acquisition consideration (prepaid deemed remuneration) 2,240 3,422 63,336 55,550 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 20 for disclosures on credit risk. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 66 Notes to the consolidated financial statements continued for the year ended 30 April 2024 14. Trade and other receivables continued 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: Days past due 30 April 2024 <30 days £’000 <60 days £’000 <90 days £’000 <180 days £’000 >180 days £’000 Total £’000 Expected loss rate 0.5% 2% 3% 7% 24% 4% Gross amount less specific loss provision 7,338 1,787 675 2,130 1,539 13,469 Expected credit loss provision 29 28 18 155 368 598 Days past due 30 April 2023 <30 days £’000 <60 days £’000 <90 days £’000 <180 days £’000 >180 days £’000 Total £’000 Expected loss rate 1% 2% 4% 10% 22% 4% Gross amount less specific loss provision 6,201 2,262 896 1,741 898 11,998 Expected credit loss provision 29 52 35 175 199 490 Movement in the impairment provision 2024 £’000 2023 £’000 Balance at beginning of the year 2,912 2,501 Amounts arising on acquisition 19 41 Amounts written off during the year (180) (113) Amounts recovered during the year (134) (41) Impairment charge in the year 637 524 Balance at end of the year 3,254 2,912 15. Trade and other payables 2024 £’000 2023 £’000 Current Trade payables 2,366 2,055 Accruals 12,105 10,454 Other taxes and social security 5,180 5,209 Deferred income 7,403 6,503 Other creditors 16,971 14,350 Acquisition consideration (including deemed remuneration accrual) 5,946 4,073 49,971 42,644 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 contingent consideration liability recognised above, there are further liabilities based on the sale and purchase agreements which are contingent on future financial and other performance conditions, as detailed below: 2024 £’000 2023 £’000 Recognised as a liability 5,946 4,073 Anticipated future liability based on current financial performance 13,137 16,916 Current estimates of anticipated future payments 19,083 20,989 The maximum potential payment (if all performance conditions are met) would be £36.4m (2023: £35.8m). Management consider the likelihood of full payment to be remote. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 67 16. Lease liabilities Property £’000 Motor vehicles £’000 Office equipment £’000 Total £’000 Cost At 1 May 2022 5,808 486 51 6,345 Finance charge 324 19 — 343 Additions — new leases 2,929 490 — 3,419 Arising on acquisitions 840 — — 840 Disposals (46) — — (46) Lease payments (2,211) (427) (51) (2,689) At 30 April 2023 7,644 568 — 8,212 Finance charge 618 36 26 680 Additions — new leases 3,048 912 716 4,676 Arising on acquisitions 624 — — 624 Lease payments (1,955) (391) (192) (2,538) At 30 April 2024 9,979 1,125 550 11,654 Current liabilities 1,328 224 550 2,102 Non-current liabilities 8,651 901 — 9,552 At 30 April 2024 9,979 1,125 550 11,654 At the balance sheet date, the group had outstanding commitments for short-term leases as follows: 2024 £’000 2023 £’000 Aggregate undiscounted commitments for short-term leases 80 73 17. Borrowings 2024 £’000 2023 £’000 Non-current Unsecured loans at amortised cost 7,000 5,000 The group’s principal banking facilities at 30 April 2024 are provided by HSBC and comprise an unsecured revolving credit facility (‘RCF’) of £25m and an accordion facility (subject to certain conditions) of £10m which were entered into on 23 February 2024. The principal features of these borrowings are summarised as follows: • RCF: £7.0m was drawn at 30 April 2024 (2023: £5.0m) – effective interest rate of 8.6% (2023: 6.7%); and • accordion facility unutilised at 30 April 2024 (2023: unutilised). The group’s banking facilities are for an initial three year term until 23 February 2027, with two one-year extension options, giving a potential maturity date of February 2029. All borrowings and cash balances are denominated in sterling. The directors consider that the carrying amount of the group’s borrowings approximates to their fair value. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 68 Notes to the consolidated financial statements continued for the year ended 30 April 2024 18. Provisions Disposal provisions £’000 Dilapidation provisions £’000 Onerous contract provisions £’000 Total £’000 At 1 May 2023 91 2,794 260 3,145 Interest expense — 71 — 71 Additions — 865 — 865 Arising on acquisition — 126 — 126 Utilised — (194) (219) (413) At 30 April 2024 91 3,662 41 3,794 Current liabilities 91 791 41 923 Non-current liabilities — 2,871 — 2,871 At 30 April 2024 91 3,662 41 3,794 Disposal provisions include liabilities arising from warranty and onerous contract obligations relating to discontinued businesses. The non-current elements of the provisions are all expected to be utilised in the periods up to 30 April 2034. 19. Deferred tax The following are the deferred tax (liabilities) assets recognised by the group and movements thereon during the current and prior year: Goodwill £’000 Intangibles £’000 Short-term timing differences £’000 Total £’000 At 1 May 2022 (6,292) (3,371) 1,637 (8,026) Credit to income — 1,213 160 1,373 Arising on acquisitions — (1,059) 282 (777) At 30 April 2023 (6,292) (3,217) 2,079 (7,430) Credit to income — 1,400 (720) 680 Arising on acquisitions — (421) 182 (239) At 30 April 2024 (6,292) (2,238) 1,541 (6,989) Deferred tax on goodwill relates to acquisitions prior to 2015, which under UK GAAP resulted in a tax-deductible amortisation charge in the acquiring subsidiary, but in the IFRS consolidated accounts was not subject to amortisation. 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: 2024 £’000 2023 £’000 Deferred tax liabilities (8,639) (9,511) Deferred tax assets 1,650 2,081 (6,989) (7,430) Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 69 20. Financial instruments Financial risk management objectives and policies The group’s principal financial instruments comprise: • cash balances and bank loans, the purpose of which is to raise finance for the group’s operations; together with • 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 2024 and net assets at that date would decrease by £36,000 (2023: £42,000). 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. For insolvency appointments, management are required to form judgement on each individual contract of the total expected fees and total anticipated costs. This is completed on a quarterly basis as a minimum. This assessment considers recoverability of unbilled revenue based on the underlying assets within the insolvency cases from which the fees will be drawn. Based upon this review, no further assessment of credit risk is required. On the group’s transactional activities, invoices are generally raised on completion of the transaction and typically settled from completion monies. 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 14) are not practically enforceable in all situations. The board does not believe that this is an indication of increased credit risk on these engagements. Unbilled revenue is recognised by the group when consideration for recognition of revenue have been met in line with accounting policy 2(k). 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 14. The group does not believe it is exposed to any material concentrations of credit risk. 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: At 30 April 2024 At 30 April 2023 Within 1 year £’000 Between 2–5 years £’000 After 5 years £’000 Total £’000 Within 1 year £’000 Between 2–5 years £’000 After 5 years £’000 Total £’000 Bank borrowings 556 8,018 — 8,574 328 5,436 — 5,764 Trade and other payables (excluding deferred income) 42,568 — — 42,568 36,141 — — 36,141 Lease liabilities 3,646 10,305 1,417 15,368 2,082 6,935 1,678 10,695 46,770 18,323 1,417 66,510 38,551 12,371 1,678 52,600 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 70 Notes to the consolidated financial statements continued for the year ended 30 April 2024 20. 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: 2024 £’000 2023 £’000 Shareholders’ funds 78,421 84,340 Bank borrowings 7,000 5,000 At 30 April 85,421 89,340 Categories of financial instruments The table below shows the classification of the group’s financial instruments: 2024 £’000 2023 £’000 Financial assets at amortised cost Trade receivables 12,283 11,652 Cash at bank 5,558 8,001 17,841 19,653 Financial liabilities at amortised cost Trade and other payables (excluding deferred income) (42,568) (36,141) Bank borrowings (7,000) (5,000) (49,568) (41,141) 21. Share capital 2024 thousand 2023 thousand 2024 £’000 2023 £’000 Allotted, called up and fully paid Ordinary shares of 5p At 1 May 154,512 153,402 7,727 7,671 Issue of shares for share-based payments 4,267 551 213 28 Shares issued as consideration for acquisitions 292 559 15 28 At 30 April 159,071 154,512 7,955 7,727 Ordinary shares carry no right to fixed income and each share carries the right to one vote at general meetings of the company. 22. Share-based payments The group operated three equity-settled share-based payment arrangements in the year: a market value share option scheme and a performance share plan (‘PSP’) for senior management, and an HMRC approved save as you earn (‘SAYE’) scheme for qualifying employees. The group recognised an expense relating to equity-settled share-based payment transactions of £566,000 (2023: £1,445,000), of which £44,000 (2023: £43,000) relates to the market value share option scheme, £407,000 (2023: £1,312,000) relates to the PSP and £115,000 (2023: £90,000) relates to the SAYE schemes. The group also operated a cash-settled share-based payment arrangement in the year. The group recognised an expense of £375,000 (2023: £345,000) in relation to the cash-settled share-based payment arrangement. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 71 22. Share-based payments continued Details of movements in share options during the current and prior year are as follows: 2024 2023 Number of share options thousand Weighted average exercise price pence Number of share options thousand Weighted average exercise price pence Outstanding at 1 May 9,805 33 10,316 37 Granted during the period 6,140 5 918 5 Forfeited during the period (539) 55 (269) 5 Lapsed during the period — — (182) 5 Exercised during the period (4,945) 24 (978) 59 Outstanding at 30 April 10,461 29 9,805 33 Exercisable at 30 April 1,903 21 1,500 46 The weighted average share price at the date of exercise for options exercised in the year was 121p. The table below shows details in relation to options outstanding at the period end: 2024 2023 Scheme Exercise price pence Number of share options thousand Contractual life remaining years Number of share options thousand Contractual life remaining years Share option scheme 2013 37 — — 1,000 0.5 Share option scheme 2017 63 283 3.5 500 4.5 Share option scheme 2019 88 1,500 5.5 1,500 6.5 PSP 2020 5 1,024 6.2 4,006 7.2 SAYE scheme 2020 72 206 0.2 1,356 1.2 PSP 2021 5 390 6.7 525 7.7 SAYE scheme 2022 110 918 2.2 918 3.2 PSP 2024 5 6,140 3.5 — — The fair value of the PSP granted in the year was calculated using the Black-Scholes option pricing model with the following assumptions: Grant date PSP 2024 Share price at grant date (p) 119 Exercise price (p) 5 Vesting period (years) 4 Time to expiry (years) 9 Expected volatility (%) 30 Risk free rate (%) 4 Expected dividend yield (%) 3 Fair value per option (p) 100 The expected volatility has been determined based on historical volatility of the group’s share price in line with the vesting period of the option. 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. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 72 Notes to the consolidated financial statements continued for the year ended 30 April 2024 23. Acquisitions The strategic report details the group’s strategy to target value-accretive acquisitions to enhance shareholder value. During the year the group completed the acquisitions below. Banks Long & Co On 3 May 2023 the group acquired the entire issued share capital of BLC No1 Limited, which traded as Banks Long & Co, a chartered surveying practice operating in Lincolnshire and Humberside. 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 — 537 537 Investments 481 (481) — Goodwill 222 (222) — Property, plant and equipment 46 (36) 10 Right of use asset — 133 133 Trade and other receivables 478 (64) 414 Cash and cash equivalents 1,475 — 1,475 Trade and other payables (327) — (327) Corporation tax (215) — (215) Lease liabilities — (133) (133) Provisions — (70) (70) Deferred tax (6) (88) (94) Total identifiable assets 2,154 (424) 1,730 Satisfied by: Acquisition consideration under IFRS 3 1,135 Negative goodwill 595 Acquisition consideration accounted for as deemed remuneration under IFRS 3: Initial consideration: Cash consideration 1,125 Equity instruments issued 375 1,500 Contingent consideration: Earn out 1,500 3,000 Cash flows arising on acquisition Acquisition consideration payments under IFRS 3 1,135 Acquisition consideration payments which are deemed remuneration 1,125 Less: cash and cash equivalents acquired (1,475) Settlement of pre-acquisition liabilities payments from opening cash 378 1,163 Fair value adjustments of £537,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible assets recorded can be found in note 11. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 73 23. Acquisitions continued Banks Long & Co continued As detailed above, elements of the 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 accounted for as deemed remuneration (see note 2(c)). Transaction costs of £51,000 have been charged to the statement of comprehensive income within non-underlying items. The acquisition contributed £2,495,000 of revenue and £400,000 to the group’s operating profit for the period between the date of acquisition and the balance sheet date. Andrew Forbes On 7 November 2023 the group acquired the entire issued share capital of Andrew Forbes Limited, a firm of chartered surveyors operating in the South West of England and South Wales. The provisional 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 — 291 291 Property, plant and equipment 26 (26) — Right of use asset — 113 113 Trade and other receivables 253 (1) 252 Cash and cash equivalents 311 — 311 Trade and other payables (392) (201) (593) Corporation tax (99) — (99) Lease liabilities — (113) (113) Provisions — (56) (56) Deferred tax — (2) (2) Total identifiable assets 99 5 104 Satisfied by: Acquisition consideration under IFRS 3 — Negative goodwill 104 Acquisition consideration accounted for as deemed remuneration under IFRS 3: Initial consideration: Cash consideration 500 Provisional cash free debt free adjustment 23 523 Contingent consideration: Earn out 500 1,023 Cash flows arising on acquisition Acquisition consideration payments which are deemed remuneration 523 Less: cash and cash equivalents acquired (311) Settlement of pre-acquisition liabilities payments from opening cash 92 304 Fair value adjustments of £291,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible assets recorded can be found in note 11. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 74 Notes to the consolidated financial statements continued for the year ended 30 April 2024 23. Acquisitions continued Andrew Forbes continued As detailed above, the 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 accounted for as deemed remuneration (see note 2(c)). Transaction costs of £34,000 have been charged to the statement of comprehensive income within non-underlying items. The acquisition contributed £750,000 of revenue and £100,000 to the group’s operating profit for the period between the date of acquisition and the balance sheet date. SDL Auctions On 11 December 2023 the group acquired the entire issued share capital of SDL Auctions Limited, which trades as SDL Property Auctions, a national property auctions business based in Nottingham. The provisional 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 — 611 611 Property, plant and equipment 49 (49) — Software intangibles 108 — 108 Right of use asset — 378 378 Trade and other receivables 177 (9) 168 Cash and cash equivalents 747 — 747 Trade and other payables (1,173) (250) (1,423) Corporation tax 3 — 3 Lease liabilities — (378) (378) Deferred tax — (76) (76) Total identifiable assets (89) 227 138 Satisfied by: Consideration under IFRS 3 Initial consideration: Cash consideration 2,500 Provisional cash free debt free adjustment (222) 2,278 Contingent consideration: Earn out 750 3,028 Goodwill 2,890 Cash flows arising on acquisition Acquisition consideration payments under IFRS 3 2,278 Less: cash and cash equivalents acquired (747) Settlement of pre-acquisition liabilities payments from opening cash 470 2,001 Fair value adjustments of £611,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible assets recorded can be found in note 11. Transaction costs of £63,000 have been charged to the statement of comprehensive income within non-underlying items. The acquisition contributed £1,747,000 of revenue and £272,000 to the group’s operating profit for the period between the date of acquisition and the balance sheet date. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 75 23. Acquisitions continued Other acquisitions In September 2023 the group acquired the trade and assets of a South Wales insolvency practice (Jones, Giles and Clay) for a maximum consideration of £0.2m. In addition, in March 2024, the group acquired the trade and assets of a London-based insolvency practitioner, for maximum consideration of £0.3m. The provisional 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 — 336 336 Trade and other receivables 183 (35) 148 Trade and other payables (63) (30) (93) Deferred tax — (67) (67) Total identifiable assets 120 204 324 Satisfied by: Consideration under IFRS 3 Initial cash consideration 10 Contingent consideration 183 193 Negative goodwill 131 Consideration accounted for as deemed remuneration under IFRS 3: Contingent consideration 200 200 Cash flows arising on acquisition Acquisition consideration payments 10 Fair value adjustments of £336,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible assets recorded can be found in note 11. Summary of cash flows arising from acquisitions 2024 £’000 2023 £’000 Acquisition consideration payments (which are deemed remuneration under IFRS 3) Initial payments 1,648 5,547 Contingent consideration payments 4,602 5,052 6,250 10,599 Acquisition consideration payments (which are investing activities under IFRS 3) Initial payments 3,423 375 Contingent consideration payments 138 325 3,561 700 Net cash and cash equivalents acquired and post acquisition payments from opening debt (1,593) (1,158) Total cash flows arising from acquisitions 8,218 10,141 If the acquisitions had been completed on the first day of the financial year, the group revenues for the period would have been £140.3m and group profit before tax would have been £6.3m. The amounts recognised above are provisional estimates. There have been no measurement periods adjustments to acquisitions from prior years. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 76 Notes to the consolidated financial statements continued for the year ended 30 April 2024 24. Reconciliation to the cash flow statement 2024 £’000 2023 £’000 Profit for the year 1,452 2,911 Adjustments for: Tax 4,313 3,074 Finance costs 1,936 1,170 Depreciation of property, plant & equipment 1,149 1,114 Depreciation of right of use assets 2,677 2,136 Software amortisation 189 184 Non-underlying operating costs 16,214 14,666 Loss (profit) on disposal of fixed assets 44 (13) Loss on disposal of right of use asset — 42 Share-based payment expense 566 1,277 Operating cash flows before movements in working capital 28,540 26,561 Increase in receivables (excluding deemed remuneration) (7,894) (4,656) Increase in payables (excluding deemed remuneration liabilities) 4,081 2,481 Decrease in provisions (261) (569) Cash generated by operations 24,466 23,817 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. 25. Reconciliation of movement in net cash Cash and cash equivalents £’000 Non-current borrowings £’000 Net cash £’000 At 1 May 2023 8,001 (5,000) 3,001 Cash flows (4,036) (2,000) (6,036) Net cash and cash equivalents acquired (note 23) 1,593 — 1,593 At 30 April 2024 5,558 (7,000) (1,442) 26. Contingent liabilities As disclosed in note 15, the group has contingent consideration payable in respect of acquisitions. The group is from time to time involved in legal actions that are incidental to its operations. Currently the group is not involved in any legal actions that would significantly affect the financial position or profitability of the group. 27. Pensions The group operates defined contribution pension schemes for all qualifying employees. The total cost charged to income of £4,308,000 (2023: £3,602,000) represents contributions payable to these schemes by the group. As at 30 April 2024, contributions of £446,000 (2023: £436,000) in respect of the current year, which were not yet due for payment, had not been paid over to the schemes. Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 77 28. 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: The group has a lease agreement with William Nelson Limited for its regional office in Leigh-on-Sea, Essex. Mark Fry has a one third ownership interest in William Nelson Limited. Rent and service charges paid on this property by entities within the group in the year totalled £52,000 (2023: £30,000). At 30 April 2024 £nil (2023: £nil) was payable in respect of this transaction. The group has an annual rolling contract with Red Flag A!ert LLP, an entity in which Ric Traynor has joint control, providing full access to the database and sole marketing rights for the publication of Red Flag quarterly statistics and was charged a fee of £150,000 for the year (2023: £150,000). In addition, there were incidental services provided by Red Flag during the year totalling £6,000 (2023: £9,600). At 30 April 2024 £25,500 was payable in respect of these transactions (2023: £13,000). Key management personnel The remuneration of the directors, who are the key management personnel of the group, is set out in the remuneration committee report on page 36. 29. 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. Own shares reserve Repurchase of shares for future distribution by the group’s employee benefit trust. Retained earnings Cumulative net gains and losses recognised in the consolidated statement of comprehensive income. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 78 Notes 2024 £’000 2023 £’000 Fixed assets Investment in subsidiaries 4 77,201 79,701 Current assets Cash and cash equivalents 93 — Trade and other receivables 5 37,363 40,348 Creditors: amounts falling due within one year Trade and other payables 6 (4,720) (2,741) Net current assets 32,736 37,607 Total assets less current liabilities 100,937 117,308 Creditors: amounts falling due after more than one year Trade and other payables 6 (12,331) (18,861) Net assets 97,606 98,447 Capital and reserves Called-up share capital 7 7,955 7,727 Share premium account 30,516 29,973 Merger reserve 28,304 27,944 Capital redemption reserve 304 304 Own shares reserve (2,901) — Profit and loss account 33,428 32,499 Shareholders’ funds 97,606 98,447 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 2024 of £6,530,000 (2023: £3,513,000). 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 2024. They were signed on its behalf by: Ric Traynor Nick Taylor Executive chairman Group finance director Company balance sheet at 30 April 2024 Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 79 Share capital £’000 Share premium £’000 Merger reserve £’000 Capital redemption reserve £’000 Own shares reserve £’000 Retained earnings £’000 Total equity £’000 At 1 May 2022 7,671 29,787 27,172 304 — 33,096 98,030 Profit for the year — — — — — 3,513 3,513 Dividends — — — — — (5,387) (5,387) Credit to equity for equity‑settled share‑based payments — — — — — 1,277 1,277 Shares issued as consideration for acquisitions 28 — 772 — — — 800 Shares issued for share‑based payments 28 186 — — — — 214 At 30 April 2023 7,727 29,973 27,944 304 — 32,499 98,447 Profit for the year — — — — — 6,530 6,530 Dividends — — — — — (5,944) (5,944) Credit to equity for equity‑settled share-based payments — — — — — 566 566 Shares issued as consideration for acquisitions 15 — 360 — — — 375 Shares issued for share‑based payments 213 543 — — — (223) 533 Own shares acquired — — — — (2,901) — (2,901) At 30 April 2024 7,955 30,516 28,304 304 (2,901) 33,428 97,606 Company statement of changes in equity for the year ended 30 April 2024 Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 80 1. Significant accounting policies Basis of accounting 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 company is considered to be pounds sterling because this is the currency of the primary economic environment in which the company operates. 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 is 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 22 of the consolidated financial statements. Own shares held by employee share trusts The company is the sponsoring entity of and employee benefit trust (‘EBT’) and, not withstanding the legal duties of the trustees, the company considers that it has ‘de facto’ control of the EBT. The trust is accounted for as assets and liabilities of the company and included in the consolidated financial statements. The company’s equity instruments held by the EBT are accounted for as if they were the company’s own equity and are treated as treasury shares. No gain or loss is recognised in profit or loss or other comprehensive income on the purchase, sale or cancellation of the company’s own equity by the EBT. 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 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. Auditor’s remuneration The auditor’s remuneration for audit and other services is disclosed in note 5 to the consolidated financial statements. 3. Staff costs The company has seven employees (2023: seven employees). 2024 £’000 2023 £’000 Their aggregate remuneration comprised: Salaries 960 927 Social security costs 179 135 Pension costs 17 15 1,156 1,077 Notes to the company financial statements for the year ended 30 April 2024 Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 81 4. Investment in subsidiaries £’000 Cost and net book value At 1 May 2023 79,701 Amendment to estimated consideration amounts (2,500) At 30 April 2024 77,201 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 Holding company England and Wales BTG Consulting Limited¹ Holding company England and Wales Begbies Traynor International Limited¹ Holding company England and Wales Begbies Traynor (Central) LLP Insolvency England and Wales Begbies Traynor (London) LLP Insolvency England and Wales Begbies Traynor (SY) LLP Insolvency England and Wales Springboard Corporate Finance LLP Corporate finance England and Wales BTG Corporate Finance LLP Corporate finance England and Wales BTG Advisory LLP Financial consulting England and Wales BTG Global Advisory Limited International network organisation England and Wales BTG Corporate Solutions Limited Insolvency England and Wales Midlands Asset Finance Limited Finance broking England and Wales Mantra Consultancy & Capital Limited Finance broking England and Wales Mantra Insurance Brokers Limited Insurance brokerage England and Wales MAF Property Limited¹ Dormant England and Wales Asset Finance Compared Limited Dormant England and Wales Mantra Capital Holdings Limited Dormant England and Wales David Rubin & Partners Limited¹ Insolvency England and Wales Begbies Traynor (Guernsey) Limited Insolvency Guernsey Begbies Traynor (Jersey) Limited Insolvency Jersey Begbies Traynor (Gibraltar) Limited Insolvency Gibraltar Begbies Traynor (B.V.I) Limited Insolvency British Virgin Islands CVR Global (Cyprus) Limited Insolvency Cyprus Begbies Traynor (Isle of Man) Limited Insolvency Isle of Man CV Business Rescue Limited Dormant England and Wales Business Credit Management (UK) Limited Dormant England and Wales Insolvency Advice Limited¹ Dormant England and Wales Begbies Traynor Legal Services LLP Dormant England and Wales BTG Tax LLP Dormant England and Wales Eddisons Commercial (Holdings) Limited¹ Property consultancy England and Wales Eddisons Commercial Limited Property consultancy England and Wales Eddisons Commercial (Property Management) Limited Property consultancy England and Wales Eddisons Insurance Services Limited Insurance brokerage England and Wales Pugh & Company Limited Auctioneers England and Wales Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 82 Notes to the company financial statements continued for the year ended 30 April 2024 4. Investment in subsidiaries continued Subsidiary undertaking Nature of business Country of incorporation Ernest Wilsons & Co Limited Property consultancy England and Wales Daniells Harrison Surveyors LLP Property consultancy England and Wales Budworth Hardcastle Limited Property consultancy England and Wales Ernest Wilson’s (West Yorkshire) Limited Dormant England and Wales Hargreaves Newberry Gyngell Limited Dormant England and Wales Eddisons Holdings Limited Dormant England and Wales BSMH Limited Dormant England and Wales BSMSR Limited Dormant England and Wales The London Silver Vaults and Chancery Lane Safe Deposit Company Limited Management company England and Wales Theauctionpeople.co Limited Dormant England and Wales BLC No1 Limited Holding company England and Wales Banks Long & Co Limited Property consultancy England and Wales Andrew Forbes Limited Property consultancy England and Wales SDL Auctions Limited Auctioneers England and Wales 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 Global Advisory Limited BTG Corporate Solutions Limited BTG Corporate Finance LLP Springboard Corporate Finance LLP MAF Property Limited Midlands Asset Finance Limited Ernest Wilsons & Co Limited Pugh & Company Limited Eddisons Holdings Limited David Rubin & Partners Limited Mantra Consultancy & Capital Limited Mantra Insurance Brokers Limited Daniells Harrison Surveyors LLP Budworth Hardcastle Limited Mantra Capital Holdings Limited Begbies Traynor (Gibraltar) Limited Begbies Traynor (Jersey) Limited Begbies Traynor (Guernsey) Limited BLC No1 Limited Banks Long & Co Limited Andrew Forbes Limited SDL Auctions Limited Strategic report Corporate governance Financial statements Annual report and accounts 2024 Begbies Traynor Group plc 83 5. Trade and other receivables 2024 £’000 2023 £’000 Amounts falling due within one year Amounts owed by group undertakings 37,292 40,314 Other debtors 71 34 37,363 40,348 6. Trade and other payables 2024 £’000 2023 £’000 Amounts falling due within one year Deferred consideration 4,720 2,741 Amounts falling due after more than one year Deferred consideration 12,331 18,861 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. 7. Share capital 2024 thousand 2023 thousand 2024 £’000 2023 £’000 Allotted, called up and fully paid Ordinary shares of 5p At 1 May 154,512 153,402 7,727 7,671 Issue of shares for share-based payments 4,267 551 214 28 Shares issued as consideration for acquisitions 292 559 14 28 At 30 April 159,071 154,512 7,955 7,727 Ordinary shares carry no right to fixed income and each share carries the right to one vote at general meetings of the company. The company has issued share options as set out in note 22 to the consolidated financial statements. Strategic report Corporate governance Financial statements Begbies Traynor Group plc Annual report and accounts 2024 84 Directors R W Traynor E N Taylor M R Fry R G McInnes J M May M Stupples P W Wallqvist M Donald Secretary J A Humphrey Company number 5120043 Registered office 340 Deansgate Manchester M3 4LY Bankers HSBC Bank plc Landmark St Peter’s Square 1 Oxford Street Manchester M1 4PB Auditor Crowe U.K. LLP Chartered accountants and statutory auditor Manchester, 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 60 Great Portland Street London W1W 7RT Nominated advisor and joint broker Canaccord Genuity Limited 88 Wood Street London EC2V 7QR Joint broker Shore Capital Stockbrokers Limited Cassini House 57 St James’s Street London SW1A 1LD Officers and professional advisors CBP025869 Begbies Traynor Group plc’s commitment to environmental issues is reflected in this annual report, which has been printed on Genyous, an FSC® certified material. This document was printed by L&S using its environmental print technology, which minimises the impact of printing on the environment, with 99% of dry waste diverted from landfill. The printer is a CarbonNeutral® company. Both the printer and the paper mill are registered to ISO 14001.