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Annual Report and Accounts 2015 - Begbies Traynor
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Begbies Traynor Group plc
Begbies Traynor Group is a leading UK business
recovery and property services consultancy.
Our aim is to add value and optimise ?nancial
outcomes for our clients and business stakeholders.
More about us can be found on pages 3–6
the number of UK-based banks
who provided us with insolvency and
restructuring appointments during the year
25
staff and partners at 30 April 2015
549
the number of UK locations
from which we operate
40
we remain the UK’s leading independent
business recovery practice, handling the
largest number of corporate appointments
No.1
Begbies Traynor Group plc Annual Report and Accounts 2015 01
Strategic report
Highlights of the year
Highlights
U Completed a £5.3 million placing of 13.1 million new ordinary
shares to fund the Eddisons acquisition
U Net debt reduced to £12.8 million (2014: £14.5 million), after
acquisition payments
Operational overview
Insolvency:
U Results re?ect a 14% reduction in the number of UK corporate
insolvencies in the year to 31 March 2015
U Retained market-leading position
U Streamlined our cost base and of?ce network, resulting
in exceptional costs
U Cost management has partially mitigated reduced revenue,
delivering solid operating margins
U Acquired and fully integrated Ian Franses Associates and
Broadbents Business Recovery Services which are trading
pro?tably, in line with our expectations
U Invested in our London of?ce during the year, with the team
moving to new of?ces in Canary Wharf
U Launched BTG Global Advisory, our new international alliance
of independent insolvency, restructuring and ?nancial advisory
?rms operating in key global jurisdictions
Property consultancy:
U Acquired Eddisons, a national ?rm of chartered surveyors
with a specialism in the valuation and disposal of property
and business assets, on 17 December 2014
U First ?ve months of trading in line with our expectations
U Integration proceeding well with all key personnel retained
and operating synergies being realised in line with our plans
Financial highlights
1
2015
£m
2014
£m
Revenue 45.4 44.1
Adjusted pro?t before tax
2
3.6 5.4
(Loss) pro?t before tax (0.7) 4.3
Adjusted basic EPS
3
(p) 2.9 4.7
Basic EPS (p) (0.6) 3.7
Proposed total dividend (p) 2.2 2.2
1
All ?gures stated from continuing operations following closure of loss-making
global risk partners division
2
Loss before tax from continuing operations of £0.7 million (2014: pro?t £4.3 million)
plus amortisation of intangible assets arising on acquisitions of £1.4 million
(2014: £0.3 million) plus exceptional and acquisition-related items of £2.9 million
(2014: £0.8 million)
3
See reconciliation in note 11
Contents
Strategic report
01 Highlights of the year
02 Chairman’s statement
03 Where we operate
04 Who we are
06 Our strategy and Key performance
indicators (KPIs)
07 Operating review
08 Finance review
10 Principal risks and uncertainties
Corporate governance
11 Board of directors
12 Directors’ report
13 Directors’ responsibilities statement
14 Directors’ remuneration report
16 Corporate governance statement
Financial statements
17 Independent auditor’s report
18 Consolidated statement
of comprehensive income
19 Consolidated statement
of changes in equity
20 Consolidated balance sheet
21 Consolidated cash ?ow statement
22 Notes to the consolidated
?nancial statements
45 Independent auditor’s report
46 Company balance sheet
47 Notes to the company
?nancial statements
Shareholder information
52 Of?cers and professional advisors
For more on who we
are and what we do:
www.begbies-traynorgroup.com
Begbies Traynor Group plc Annual Report and Accounts 2015 02
Strategic report
Introduction
The year under review was one of signi?cant
change for the group. We completed the
strategic acquisition of the Eddisons property
consultancy in December 2014, as well as two
bolt-on insolvency acquisitions. In addition we
restructured our insolvency division in response
to lower levels of market activity, incurring
exceptional costs, together with discontinuing
the loss-making global risk partners division.
The group is now focussed on two
complementary operating divisions: Begbies
Traynor, the insolvency, restructuring and
investigations consultancy; and Eddisons, the
property valuation and property management
consultancy. We are positioned to take
advantage of the cyclicality of the insolvency
market, where we have maintained our
market-leading position by number of
appointments, and to develop our property
services consultancy. These complementary
service lines should give the group a more
balanced business across the economic cycle.
It was another challenging year for the
insolvency industry with national volumes
at their lowest level since 2007, impacting
our insolvency caseload. There has also
been a change in the means of generating
SME insolvency cases in recent years with
the increasing use of internet-based rather
than traditional marketing techniques.
We invested in this area initially through
the acquisition of Cooper Williamson in
October 2013 and have continued to invest
in these marketing initiatives. These factors
have impacted on the business and as a
result we have streamlined our cost base
and of?ce network in the year. Unfortunately
this resulted in exceptional costs being
charged; however, further bene?ts from
these cost reductions will be realised in
the new ?nancial year and beyond. In spite
of the challenging market, the insolvency
business continues to trade pro?tably with
solid operating margins and generates
strong operating cash ?ows.
The integration of Eddisons is proceeding
in line with our plans and the ?rst ?ve months
of post-acquisition trading were in line with
our expectations. The group will bene?t from
a full 12 month contribution from the business
in the new ?nancial year.
The combination of current year restructuring
costs and losses from our discontinued
business resulted in a statutory loss for
the year as a whole. However, following the
actions completed over the last 12 months,
together with the acquisition of Eddisons,
the group is well placed to return to pro?t
in future years.
Our continued focus on cash management
has resulted in a reduction in net debt to
£12.8 million (2014: £14.5 million), after
acquisition payments, which has enabled
the board to recommend a maintained
dividend for the year. We thank shareholders
and employees for their continued support
and patience in what is a transitional period
for the group.
Results
Group revenue from continuing operations in
the year ended 30 April 2015 was £45.4 million
(2014: £44.1 million). Adjusted pro?t before
tax
1
was £3.6 million (2014: £5.4 million).
Exceptional and acquisition-related items
(detailed in the ?nance review) totalled
£2.9 million (2014: £0.8 million). Loss before
tax was £0.7 million (2014: pro?t before tax
£4.3 million). Statutory loss for the year
was £1.6 million (2014: pro?t £3.0 million)
after loss from discontinued operations.
Earnings per share from continuing
operations
2
, adjusted for the net of tax
impact of amortisation of intangible assets
arising on acquisition, exceptional and
acquisition-related items were 2.9 pence
(2014: 4.7 pence). Basic and fully diluted
loss per share from continuing operations
were 0.6 pence (2014: earnings per share
3.7 pence).
Net debt after acquisition payments reduced
by £1.7 million to £12.8 million at 30 April 2015
(2014: £14.5 million). Gearing reduced to 21%
(2014: 24%) and the group retains signi?cant
headroom in its committed banking facilities.
Interest cover
3
was 4.4 times (2014: 5.9 times).
Net assets per share were 58 pence
(2014: 65 pence).
1
Loss before tax from continuing operations
of £0.7 million (2014: pro?t £4.3 million) plus
amortisation of intangible assets arising on
acquisitions of £1.4 million (2014: £0.3 million)
plus exceptional and acquisition-related items
of £2.9 million (2014: £0.8 million)
2
See reconciliation in note 11
3
Before exceptional and acquisition-related items
and amortisation of intangible assets arising
on acquisitions
Dividend
The board remains committed to a long-term
progressive dividend policy, which re?ects the
potential for earnings growth. Having considered
the results for the year, the level of retained
earnings and the group’s ?nancial position,
together with the outlook for the new ?nancial
year and the investment requirements of the
business, the board has recommended
the total dividend be maintained at 2.2 pence
(2014: 2.2 pence). This comprises the
interim dividend already paid of 0.6 pence
(2014: 0.6 pence) and a ?nal dividend of
1.6 pence (2014: 1.6 pence).
The ?nal dividend will be paid on
6 November 2015 to shareholders
on the register on 9 October 2015, with
an ex-dividend date of 8 October 2015.
People
We are reliant on the expertise, professionalism
and commitment of our people and I thank
all of them for their contribution during another
challenging year for our industry.
Outlook
Financial performance in our insolvency
division is directly related to the cyclicality
of the national insolvency market. The market
as a whole remains dif?cult to predict although
activity levels have stabilised over the last
four quarters to 31 March 2015. However,
there are no indications of a change in the
benign ?nancing environment in the UK and
we therefore remain cautious about activity
levels in this division in the near term.
The restructuring of the division completed
in the last ?nancial year will result in a reduced
cost base for the new ?nancial year and
we remain con?dent of the division’s
long-term performance.
The new ?nancial year will bene?t from
a full year contribution from the Eddisons
acquisition, which is expected to enhance
our ?nancial performance, delivering a
stable level of pro?tability in line with its
post-acquisition trading and maintain
positive cash generation.
The combination of the reduced cost
base in the insolvency division, the removal
of losses from the discontinued business
and the full year impact of the Eddisons
acquisition leaves the group well placed
in the new ?nancial year and beyond.
We will continue to look for opportunities
to develop and enhance the business, both
organically and through selective acquisitions.
An update on current trading will be
provided at the time of the company’s
annual general meeting in September 2015.
Ric Traynor
Executive chairman
14 July 2015
Chairman’s statement
Begbies Traynor Group plc Annual Report and Accounts 2015 03
Strategic report
Where we operate
We provide our services via a
comprehensive network spanning
the whole of the UK, with of?ces
in the following locations:
Market
The number of corporate insolvencies (source: The Insolvency Service) for the year to 31 March 2015 (the period which most closely
matches the group’s ?nancial year) totalled 16,380 (2014: 18,994), representing a 14% year-on-year reduction. The number of corporate
insolvencies in the ?rst calendar quarter of 2015 was 4,014, which is the lowest level of quarterly appointments since the fourth calendar
quarter of 2007, albeit these numbers have stabilised at this level over the last 12 months.
3
40
21 23 7
15
20
33
26
36
31
22
5
24
13
39
27
28
14
4
10
35
25
8
29
38
12
9
2
32
34
30
6
11
37
18
1
16
17
19
Begbies Traynor Group plc Annual Report and Accounts 2015 04
Strategic report
Who we are
Begbies
Begbies Traynor is the UK’s leading independent business recovery practice handling the largest number
of corporate appointments, principally serving the mid-market and smaller companies.
We provide a range of specialist professional services primarily to businesses, their professional advisors
and the major banks covering insolvency, restructuring and risk management activities.
Restructuring and ?nancial consulting
Consulting services to businesses, professional advisors and ?nancial institutions on debt re?nancing, business valuations,
corporate ?nance and business reviews, together with conduct of ?nancial investigations and due diligence
Services offered
Begbies Traynor Group plc is a business recovery and
property services consultancy, providing services nationally
from a comprehensive network of UK locations through
two operating divisions: Begbies Traynor and Eddisons.
Our services
Corporate insolvency
Procedures aim to either rescue the business (where feasible)
or realise the value of assets and distribute any available funds
to creditors
Insolvency procedures
Administration
Liquidation
Receiverships
Creditors’ voluntary arrangements
Personal insolvency
Provide advice to debtors and creditors on all aspects
of personal insolvency
Insolvency procedures
Bankruptcy and individual voluntary arrangements
(England and Wales)
Trust deeds and sequestrations (Scotland)
Begbies Traynor
U Business reviews
U Lender and creditor negotiation
U Corporate ?nance
U Valuation
U Debt advisory
U Forensic investigations
U Investigation due diligence
Begbies Traynor Group plc Annual Report and Accounts 2015 05
Eddisons
Eddisons is a national ?rm of chartered surveyors, offering a wide range of specialist services to banks,
insolvency practitioners, and owners and occupiers of commercial property.
The services offered are valuation and sale of property, machinery and business assets, including ?xed
charge property receiverships; insolvency insurance brokerage; property and facilities management; and
building consultancy services.
Specialist insurance and vacant
property services
Specialist insurance brokerage and risk management solutions
U Specialist property insurance
U Open cover insurance for insolvency practitioners
U Compliance with vacant property insurance requirements
U Risk management solutions
Building consultancy
Advice to owners and occupiers of commercial property
U Lease advisory
U Dilapidations advice
U Rating reviews
Asset valuation and disposal
Valuation and disposal of property and other business assets
U Property valuation
U Property auctions
U Agency services
U Property receiverships
U Machinery and business asset valuation and disposals
Property and facilities management
Services to owners and occupiers of commercial properties
U Property and asset management
U Rent review and lease advisory
U Helpdesk support
U Service charge collection and management
Eddisons
Begbies Traynor Group plc Annual Report and Accounts 2015 06
Strategic report
Our strategy
Key performance indicators (KPIs)
To enhance our market-leading business recovery practice,
ensuring the business is well placed to bene?t from
opportunities in its counter-cyclical marketplace, together
with developing our property services consultancy.
The Board uses the following KPIs to manage the performance of the business:
44.1
45.4
Revenue (£m)
2014 2015
6.5
4.7
EBITA (£m)
2014 2015
4.7
2.9
2014 2015
Adjusted EPS (p)
14.5
12.8
2014 2015
Net debt (£m)
Developments in the year
In December 2014 we completed the strategic acquisition of Eddisons, a national ?rm of chartered surveyors. Eddisons brings expertise
in the valuation and disposal of property and business assets, which is intrinsic to our insolvency division. The acquisition enables the
group to utilise Eddisons’ expertise on its existing caseload rather than subcontractors, together with marketing our enhanced
competencies and service offerings to the combined client base, including banks and other ?nancial institutions.
We have also continued to invest in our insolvency division through two acquisitions in the year: Ian Franses Associates on 13 June 2014,
based in Paddington, and Yorkshire-based Broadbents Business Recovery Services on 31 March 2015. Both businesses have been fully
integrated into our operations and are trading pro?tably in line with our expectations. We also invested in our London of?ce during the
year, with the team moving to new of?ces in Canary Wharf. Subsequent to the year end we launched BTG Global Advisory, our new
international alliance of independent insolvency, restructuring and ?nancial advisory ?rms operating in key global jurisdictions.
Begbies Traynor Group plc Annual Report and Accounts 2015 07
Strategic report
Operating review
Insolvency and restructuring
Begbies Traynor is the UK’s leading
independent business recovery practice,
providing a partner-led service to
stakeholders in troubled businesses.
Segmental pro?ts
1
in the year decreased
to £8.5 million (2014: £10.9 million),
as a result of a reduction in revenue
to £40.9 million (2014: £44.1 million).
The reduced level of market activity led
to lower insolvency appointments for the
group, which combined with the ongoing
pressure on fee rates, caused the reduced
revenue levels in the year. There has also
been a change in the means of generating
SME insolvency cases in recent years with
the increasing use of internet-based rather
than traditional marketing techniques.
We invested in this area initially through
the acquisition of Cooper Williamson
in October 2013 and have continued
to invest in these marketing initiatives.
These factors have impacted on the business
and as a result we have streamlined our cost
base and of?ce network in the year. The
number of people employed in the division
has decreased to 354 as at 30 April 2015
from 391 at the start of the ?nancial year,
having integrated 17 from acquired
businesses over the year. Segmental costs
were £32.4 million (2014: £33.2 million),
an increase of £0.8 million from acquisitions
offset by in-year reductions of £1.6 million.
As a result of actions completed this year
the cost base will reduce by an additional
£1.5 million in the new ?nancial year.
Exceptional costs relating to the restructuring
were £2.6 million. Operating margins were
20.8% (2014: 24.6%).
We remain the market leader in UK
mid-market insolvency and we believe
that the combination of our full national
coverage, strong relationships with all major
UK banks and excellent referral networks
from other professional services organisations
leaves the business well-placed to take
full advantage of this cyclical market.
We will continue to develop this division
through a combination of senior recruitment,
selective acquisitions and staff development,
with the intention of progressively increasing
our market share. Further development
over the medium term could come from
winning higher value, more complex
instructions from existing clients and
prospects, by demonstrating our
capabilities and credentials.
Property consultancy
Eddisons is a national ?rm of chartered
surveyors, providing its services to banks,
insolvency practitioners, and owners and
occupiers of commercial property.
The business was acquired on 17 December
2014 and generated segmental revenues
1
of £4.5 million and pro?ts of £0.7 million
for the post-acquisition period, in line
with our expectations.
The integration of the business into
the group is proceeding well with all key
personnel being retained. The Eddisons
team is being appointed on a number of
the group’s insolvency cases. In addition,
operating synergies, through shared
property and other overhead costs,
are being realised in line with our plans.
The number of people employed in
the division was 134 on 30 April 2015.
We will develop this division through a
combination of senior recruitment and
selective acquisitions with the intention
of developing its service offering and
geographical coverage.
Partners and employees
As at 30 April 2015, the group employed
a total of 549 partners and staff (2014: 438),
an increase of 25% compared with a year ago;
this comprises 384 fee earners and 165
support staff. This includes 165 employees
who joined the group following acquisitions
in the year.
We continue to invest in training and
developing our people and we are pleased
to have promoted four fee earners to partner,
three subsequent to the year end.
1
See note 4
Begbies Traynor Group plc Annual Report and Accounts 2015 08
Strategic report
Revenue
Trading performance was affected by
the challenging trading conditions in the
year. Revenue increased to £45.4 million
(2014: £44.1 million) as a result of revenue
from in-year acquisitions of £5.6 million,
which was partially offset by reduced revenue
of £4.3 million in the insolvency division,
following the reduction in national
insolvency appointments.
EBITA (pre-exceptional items)
Operating costs increased to £40.7 million
(2014: £37.6 million). The impact of the
Eddisons acquisition in the current year was
£4.0 million. Costs reduced by £1.7 million
as a result of restructuring the cost base
in response to the drop in market volumes,
partially offset by £0.8 million of costs
from acquired businesses.
EBITA (pre-exceptional items) reduced
to £4.7 million (2014: £6.5 million) with
margins of 10.3% (2014: 14.8%).
Finance costs
Finance costs totalled £1.1 million
(2014: £1.1 million).
Amortisation
Amortisation costs increased to £1.4 million
(2014: £0.3 million) due to the amortisation of
intangible assets arising on in-year acquisitions.
Exceptional and acquisition-related
items
Exceptional and acquisition-related items
in the year of £2.9 million (2014: £0.8 million
associated with the relocation of the group’s
London of?ces) comprise:
U restructuring costs of £2.6 million,
comprising £1.5 million case closure
provision, £0.9 million redundancy costs
and £0.2 million onerous lease costs,
of which £0.3 million is included within
provisions at 30 April 2015. This has
reduced the group’s operating cost base
realising cost savings of £1.7 million in the
last ?nancial year with further committed
reductions to be realised in the new
?nancial year of £1.5 million;
U business integration costs following
the Eddisons acquisition of £0.5 million,
of which £0.5 million is included within
provisions at 30 April 2015; and
U acquisition-related credit of £0.2 million
comprising: acquisition costs £0.5 million
and deemed remuneration charges
of £0.4 million, offset by a gain on
acquisition of £1.1 million.
Tax
The tax charge for the year (prior to credit
resulting from exceptional costs) was
£0.6 million (2014: £1.0 million) representing
an effective tax rate of 26% (2014: 20%,
which re?ects a reduction in deferred
tax liabilities due to the reduction in the
corporation tax rate to 20%). The tax
credit resulting from exceptional and
acquisition-related items was £0.7 million
(2014: £0.1 million). Tax credit for the year
of £0.1 million (2014: charge £0.9 million).
Earnings per share (‘EPS’)
EPS
1
, adjusted for the net of tax impact
of the amortisation of intangible assets
arising on acquisitions, exceptional and
net acquisition-related items, were
2.9 pence (2014: 4.7 pence).
Basic and diluted loss per share were 0.6
pence (2014: earnings per share 3.7 pence).
1
See reconciliation in note 11
Acquisitions
The group completed three acquisitions
during the ?nancial year as follows:
Ian Franses
On 13 June 2014, the group completed
the acquisition of the trade and assets
of Ian Franses Associates Limited,
a London-based insolvency practice.
The maximum acquisition consideration
of £2.0 million is as follows: initial
consideration of £0.6 million in cash,
together with contingent consideration
based on ?nancial performance over the
three years from completion of £1.4 million,
payable in cash.
Eddisons
On 17 December 2014, the group completed
the acquisition of the entire issued share capital
of Eddisons Commercial (Holdings) Limited,
a national ?rm of chartered surveyors.
The maximum acquisition consideration
of £8.5 million (net of £1.25 million cash
payment in relation to the level of working
capital at completion) is as follows: initial
consideration of £5.0 million in cash funded
by a vendor placing, together with contingent
consideration based on ?nancial performance
as follows: £1.5 million cash payable on
account over four years, with historic
payments subject to claw back in the
event of subsequent underperformance;
£1.5 million cash or equity bullet payable
after four years, based on cumulative
performance over the four years; and
£0.5 million cash or equity payable
between ?ve and eight years.
Finance review
2015 2014
£m £m
Revenue from continuing operations 45.4 44.1
EBITA (pre-exceptional items) 4.7 6.5
Finance costs (1.1) (1.1)
Adjusted pro?t before tax 3.6 5.4
Exceptional and acquisition-related items (2.9) (0.8)
Amortisation of intangible assets arising on acquisitions (1.4) (0.3)
(Loss) pro?t before tax (0.7) 4.3
Tax 0.1 (0.9)
(Loss) pro?t for the year from continuing operations (0.6) 3.4
Begbies Traynor Group plc Annual Report and Accounts 2015 09
Broadbents
On 31 March 2015, the group completed
the acquisition of the trade and assets of
Broadbents Business Recovery Services
Limited, a Yorkshire-based insolvency practice.
The maximum acquisition consideration of
£0.55 million is as follows: initial consideration
of £0.2 million in cash, together with contingent
consideration based on ?nancial performance
over the two years from completion of
£0.35 million, payable in cash.
Accounting treatment
The maximum consideration payable for
these acquisitions includes amounts which
require post-acquisition service obligations
to be performed by the selling shareholders.
In accordance with the IFRS Interpretation
Committee’s interpretation of paragraph
B55 of IFRS 3, regarding such payments,
these amounts are treated as deemed
remuneration and will be charged to the
consolidated statement of comprehensive
income over the period of the obligation. The
charge in the year for deemed remuneration
was £0.4 million. As a result of this accounting
guidance, the value of net assets acquired
(£7.6 million) exceeds the accounting value
of the consideration (£6.5 million) and
consequently a gain of £1.1 million has
been recognised as an exceptional item
in the year. Acquisition costs of £0.5 million
have been charged to the statement of
comprehensive income as an exceptional cost.
Share placing
On 17 December 2014, the group completed
a share placing of 13,094,982 new ordinary
shares at a price of 40.5 pence per share to
raise £5.3 million (before costs) in connection
with the Eddisons acquisition: £5.0 million
via a vendor placing to satisfy the initial
consideration; and £0.3 million via a
cash placing for transaction costs.
Cash fows
Cash generated by operations (before
interest and tax payments) in the year
was £6.0 million (2014: £7.4 million). Tax
payments in the year were £1.3 million
(2014: £1.0 million). Interest payments
were £1.0 million (2014: £0.9 million).
Cash out?ows from investing activities
were £5.2 million (2014: £0.9 million).
Capital expenditure was £1.3 million (2014:
£0.4 million), principally relating to our new
London of?ce. Deferred payments relating
to prior year acquisitions were £0.2 million
(2014: £0.1 million). Acquisition payments
were £3.7 million (2014: £0.5 million),
net of cash acquired of £3.3 million.
Financing cash in?ows were £3.1 million
(2014: out?ow of £2.0 million). The share
placing in the year in connection with the
Eddisons acquisition raised £5.0 million net
of costs, with proceeds from other share
issues of £0.1 million (2014: £0.1 million).
Dividend payments were £2.0 million
(2014: £2.0 million). During the prior year
there was a repayment of asset ?nance
obligations of £0.1 million.
Financing
Net borrowings reduced by £1.7 million
to £12.8 million at 30 April 2015 (2014:
£14.5 million), with a reduction in gearing to
21% (2014: 24%) and signi?cant headroom
within the committed banking facilities
of £30 million. During the year, all bank
covenants were comfortably met and the
group remains in a strong ?nancial position.
The group’s principal unsecured, committed
facilities of £30 million provide the group
with medium and long-term ?nancing with
maturity dates from 2017 to 2021.
Net assets
At 30 April 2015 net assets were £61.0 million
(2014: £59.4 million), equivalent to net assets
per share of 58 pence (2014: 65 pence).
Non-current assets increased to £60.3 million
(2014: £53.3 million) due to intangible assets
recognised on acquisitions and capital
expenditure in the year.
Trade and other receivables decreased
to £34.9 million (2014: £36.6 million), principally
due to an organic reduction in working capital
of £4.2 million partially offset by an increase
from acquisitions of £2.5 million.
Net borrowings reduced to £12.8 million
(2014: £14.5 million).
Trade and other payables increased
to £12.8 million (2014: £8.2 million) principally
due to acquisitions. The balance includes
trade creditors and accruals of £8.6 million
(2014: £5.9 million), tax and social security
creditors of £2.1 million (2014: £1.7 million)
and deferred consideration liabilities of
£2.1 million (2014: £0.6 million) of which
£0.7 million (2014: £0.3 million) is payable
within one year.
Provisions for property costs, restructuring
costs and post-disposal obligations total
£2.3 million (2014: £2.1 million), of which
£1.6 million is payable within one year.
Current tax receivables were £0.1 million
(2014: liabilities of £0.7 million). Deferred tax
liabilities were £6.4 million (2014: £5.0 million).
Discontinued operations
During the year the global risk partners
segment was discontinued. In accordance with
IFRS 5, the results of these activities have been
separately disclosed and the comparative
results re-presented on this basis.
During the year the discontinued
activities generated revenue of £0.5 million
(2014: £1.7 million) and a post-tax loss
of £1.0 million (2014: £0.4 million),
including a loss on disposal of £0.6 million.
At the period end the group had deferred
contingent consideration receivable of
£0.6 million.
Going concern
The directors have reviewed the ?nancial
resources available to the group and have
concluded that the group will be able to
operate within the level of its borrowing
facilities and have a reasonable expectation
that the group has adequate resources to
continue in operational existence for the
foreseeable future. This conclusion is based,
amongst other matters, on the group’s existing
borrowing facilities and a review of ?nancial
forecasts for a period exceeding 12 months
from the date of this announcement.
Accordingly, the ?nancial information in this
announcement is prepared on the going
concern basis.
Begbies Traynor Group plc Annual Report and Accounts 2015 10
Strategic report
The operations of the group and the implementation of the group’s strategy involve a number of risks and
uncertainties, the principal of which are described in the table below. Controls to reduce risk are designed
to manage rather than eliminate risk and can only provide reasonable and not absolute assurance against
material misstatement or loss.
Risk Mitigating activities
Marketplace
The group’s markets are susceptible to macroeconomic movements,
such as interest rates, GDP changes and indebtedness levels.
The group operates in a highly competitive market and is reliant
on the ?ow 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 banks and other ?nancial and
professional intermediaries.
Operational gearing
The business is operationally geared with a high proportion of
salary and property costs, which cannot be immediately varied.
Consequently, the group’s pro?tability is liable to short-term
?uctuations dependent on activity levels.
This risk is managed through ?exing our resource levels, where possible,
to align with current and anticipated levels of activity, together with the
control of other discretionary items of expenditure. A prudent level of
spare capacity is retained to facilitate peaks in activity.
Reliance on key personnel
The business is dependent upon the professional development,
recruitment and retention of high quality professional partners
and staff.
The group manages the risk of high staff turnover through attention
to human resource issues and the monitoring of remuneration levels
against the wider market, including long-term incentive arrangements.
Legal and regulation
The group operates in regulated markets. Failure to comply with,
or changes in, regulation or legislation may have an adverse
impact on the activities of the business.
To ensure compliance with relevant legislation in performing regulated
activities, the group has a dedicated compliance function which
maintains procedures and policies in line with current legislation.
In the ordinary course of business, certain aspects of the group’s
services are opinion-based and may be subject to challenge.
Where appropriate, the group will seek third-party professional
corroboration. In addition, the group has appropriate professional
indemnity insurance.
Liquidity risk
The group’s ability to generate cash from its engagements 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 ?nancing 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 ?exibility through the use of its committed banking
facilities, together with bank overdrafts and loans, ?nance leases
and hire purchase contracts.
Going concern
Given the guidance issued by the Financial Reporting Council (‘FRC’), disclosures are presented in note 2 to the ?nancial statements
around the basis on which the directors have continued to adopt the going concern basis in preparing these ?nancial statements.
Ric Traynor Nick Taylor
Executive chairman Group fnance director
14 July 2015
Principal risks and uncertainties
Begbies Traynor Group plc Annual Report and Accounts 2015 11
Corporate governance
Ric Traynor (age 55)
Executive chairman
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.
Mark Fry (age 47)
Head of insolvency and restructuring
Mark was appointed to the board in 2011
as head of insolvency and restructuring,
having joined the group in 2005 following
an acquisition. He led our London and
South East region prior to his board
appointment and played a key role in
developing the group’s advisory practice.
Mark acts as an insolvency practitioner,
has been appointed in numerous complex
and high-pro?le assignments and is
a former president of the Insolvency
Practitioners Association.
John May (age 60)
Non-executive director
John was appointed to the board in 2007
as a non-executive director. He is also the
independent chairman of the AFI Group.
John was an executive director of Caledonia
Investments plc and previously worked
for the Hambros Group for over 20 years,
where he was an executive director
of Hambros Bank and joint managing
director of Hambro Countrywide.
Nick Taylor (age 44)
Group fnance director
Nick was appointed as group ?nance
director in 2010, having joined the group
as ?nancial controller in 2007. He is a
chartered accountant who quali?ed with
KPMG and previously held senior ?nance
roles in United Utilities PLC and Vertex
Data Science Limited, the business
process outsourcer.
Graham McInnes (age 63)
Non-executive director
Graham was appointed to the board in
2004, initially as group ?nance director and
subsequently as corporate development
director. In 2012, Graham became a
non-executive director. He has held a number
of senior ?nance positions including corporate
?nance partner at Spicer and Oppenheim
(now part of Deloitte) and ?nance director of
Enterprise plc, in addition to developing his
own corporate ?nance boutique in the 1990s.
Board of directors
Begbies Traynor Group plc Annual Report and Accounts 2015 12
Corporate governance
The directors present their Annual Report
on the affairs of the group, together with
the ?nancial statements and auditor’s
report for the year ended 30 April 2015.
The chairman’s statement, directors’
remuneration report and corporate
governance statement form part of the
directors’ report and are incorporated
into it by cross reference.
Directors
The names and brief biographical details
of the directors are shown on page 11.
Dividends
The directors recommend a ?nal dividend
of 1.6 pence (2014: 1.6 pence) per ordinary
share to be paid on 6 November 2015
to shareholders on the register at
9 October 2015. This, together with the
interim dividend of 0.6 pence paid on
8 May 2015 (2014: 0.6 pence), makes
a total of 2.2 pence for the year
(2014: 2.2 pence).
Substantial shareholdings
On 3 July 2015, the company had been
noti?ed, in accordance with sections 791
to 828 of the Companies Act 2006, of the
following interests in the ordinary share
capital of the company.
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.
Social policies and
employee involvement
The policy of the group is to recruit,
promote, train and develop its people
by reference to their skills, abilities and
other attributes of value to their role in the
business. The group considers itself to be
an equal opportunities employer. Employee
engagement is encouraged through a
variety of means including a corporate
intranet, team meetings and regular
dialogue with employees.
The activities of the group have a minimal
pollution impact on the environment and
its energy consumption is modest. Due
consideration to environmental issues
is given where appointed insolvency
administrators take control of third-party
businesses in the course of their work.
Political contributions
No political donations were made during
the year (2014: £nil).
Auditor
Each of the directors at the date of approval
of this Annual Report con?rms that:
U so far as the director is aware, there is
no relevant audit information of which
the company’s auditor is unaware; and
U 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.
This con?rmation is given and
should be interpreted in accordance
with the provisions of section 418
of the Companies Act 2006.
Deloitte LLP have expressed their
willingness to continue in of?ce as auditor
and a resolution to reappoint Deloitte LLP
will be proposed at the forthcoming
Annual General Meeting.
Approved by the board of directors
and signed on behalf of the board
John Humphrey
Company secretary
14 July 2015
Directors’ report
Name of holder Number
Percentage
held
Hof Hoorneman Bankiers 11,910,000 11.38
Fidelity Worldwide Investment 9,526,252 9.10
Allianz Global Investors 7,537,510 7.20
Theodoor Gilissen 6,417,608 6.13
Heronbridge Investment Management 3,718,066 3.55
Other than the above holdings and those of directors (see page 15), the board is not aware
of any bene?cial holdings in excess of 3% of the issued capital of the company.
Begbies Traynor Group plc Annual Report and Accounts 2015 13
Corporate governance
The directors are responsible for
preparing the Annual Report and the
?nancial statements in accordance
with applicable law and regulations.
Company law requires the directors
to prepare ?nancial statements for each
?nancial year. Under that law the directors
are required to prepare the group ?nancial
statements in accordance with International
Financial Reporting Standards (‘IFRSs’)
as adopted by the European Union and
Article 4 of the IAS Regulation and have
elected to prepare the parent company
?nancial 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 accounts unless they
are satis?ed that they give a true and fair
view of the state of affairs of the company
and of the pro?t or loss of the company
for that period.
In preparing the parent company ?nancial
statements, the directors are required to:
U select suitable accounting policies and
then apply them consistently;
U make judgements and accounting
estimates that are reasonable and prudent;
U state whether applicable UK
Accounting Standards have been
followed, subject to any material
departures disclosed and explained
in the ?nancial statements; and
U prepare the ?nancial statements on
the going concern basis unless it is
inappropriate to presume that the
company will continue in business.
In preparing the group ?nancial
statements, International Accounting
Standard 1 requires that directors:
U properly select and apply
accounting policies;
U present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information;
U provide additional disclosures
when compliance with the speci?c
requirements in IFRSs are insuf?cient to
enable users to understand the impact
of particular transactions, other events
and conditions on the entity’s ?nancial
position and ?nancial performance; and
U make an assessment of the company’s
ability to continue as a going concern.
The directors are responsible for
keeping adequate accounting records
that are suf?cient to show and explain
the company’s transactions and disclose
with reasonable accuracy at any time
the ?nancial position of the company and
enable them to ensure that the ?nancial
statements comply with 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.
The directors are responsible for the
maintenance and integrity of the corporate
and ?nancial information included on the
company’s website. Legislation in the
United Kingdom governing the preparation
and dissemination of ?nancial statements may
differ from legislation in other jurisdictions.
Responsibility statement
We con?rm that to the best of our knowledge:
U the ?nancial statements, prepared in
accordance with the relevant ?nancial
reporting framework, give a true and
fair view of the assets, liabilities, ?nancial
position and pro?t or loss of the company
and the undertakings included in the
consolidation taken as a whole;
U the strategic report includes a fair review
of the development and performance
of the business and the position of the
company and the undertakings included
in the consolidation taken as a whole,
together with a description of the
principal risks and uncertainties that
they face; and
U the Annual Report and ?nancial
statements, taken as a whole, are fair,
balanced and understandable and
provide the information necessary for
shareholders to assess the company’s
performance, business model
and strategy.
By order of the board
Ric Traynor Nick Taylor
Executive chairman Group fnance director
14 July 2015
Directors’ responsibilities statement
Begbies Traynor Group plc Annual Report and Accounts 2015 14
Corporate governance
The company is not obliged to prepare a directors’ remuneration report and the information below does not constitute a ‘directors’
remuneration report’ within the meaning of the Companies Act 2006.
The remuneration committee
The remuneration committee comprises John May, a non-executive director, and the executive chairman. The committee determines the
pro?t shares, remuneration, bonuses and consultancy charges payable to the executive directors. The committee meets annually to settle
the executive directors base remuneration for the ensuing year, together with any bonus entitlement.
Directors’ remuneration
The normal remuneration arrangements for executive directors consist of basic salary and pensions contributions or directors’ fees
and pro?t share, together with an annual bonus. In addition, directors receive income protection insurance, private medical insurance
and death in service bene?ts.
The executive bonus scheme pays a multiple of salary/pro?t share based on earnings per share performance.
Some of the executive directors participate in the group’s share option and growth share plan, detailed on page 15. Details of pension
contributions paid by the company in respect of directors are included in note 7.
Directors’ emoluments
Fees/
basic salary/ Bene?ts 2015 2014
pro?t share in kind total total
Name of director £ £ £ £
Executive
Ric Traynor 225,000 35,701 260,701 294,211
Nick Taylor 186,438 10,222 196,660 167,769
Mark Fry 425,000 70,339 495,339 600,803
Non-executive
John May 25,000 — 25,000 25,000
Graham McInnes 25,000 — 25,000 25,000
Aggregate emoluments 886,438 116,262 1,002,700 1,112,783
Directors’ remuneration report
Begbies Traynor Group plc Annual Report and Accounts 2015 15
Directors’ interests
The directors who held of?ce at 30 April 2015 had the following interests in the shares of the group:
30 April 2015 1 May 2014
Name of director Description of shares Benefcial % Bene?cial %
Ric Traynor Ordinary shares 27,178,980 26.00 26,561,697 29.10
Nick Taylor Ordinary shares 5,000 0.01 5,000 0.01
Mark Fry Ordinary shares 143,890 0.14 143,890 0.16
Graham McInnes Ordinary shares 917,432 0.88 855,704 0.94
John May Ordinary shares 276,574 0.26 202,500 0.22
No changes took place in the interests of directors between 30 April 2015 and 14 July 2015.
Directors’ share options and growth share plan
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 and growth share plan awards for directors who served during the year are as follows:
Name of director Scheme
Number at
1 May 2014
Granted
in year
Forfeited/
lapsed in year
Number at
30 April 2015
Exercise
price
(pence) Earliest exercise date Expiry date
Mark Fry Growth shares 1,923,077 — (1,923,077) — 68.0 1 July 2014 1 July 2014
Growth shares 2,388,546 — — 2,388,546 48.0 31 October 2016 31 October 2016
Share options 1,000,000 — — 1,000,000 36.7 30 April 2016 25 October 2023
Nick Taylor Share options 50,000 — — 50,000 61.8 15 July 2013 15 July 2017
Share options 500,000 — — 500,000 36.7 30 April 2016 25 October 2023
Share options — 250,000 — 250,000 51.0 25 July 2017 25 July 2024
The market price of the company’s shares at the end of the ?nancial year was 47.75 pence and the range of market prices during the
year was 42.5 pence to 54.3 pence.
Details of share options granted by the company at 30 April 2015 are given in note 21. None of the terms and conditions of the share
options were varied in the year.
Begbies Traynor Group plc Annual Report and Accounts 2015 16
Corporate governance
Corporate governance statement
The board is committed to high standards of
corporate governance and, although as an
AIM listed company Begbies Traynor Group plc
is not bound by the UK Corporate Governance
Code that was issued in 2012 by the Financial
Reporting Council (‘the Code’), the directors
adopt these rules in the manner they believe
appropriate to the company’s status. Detailed
below are the key components of the group’s
corporate governance policies and procedures.
The board
The full board meets formally and informally
throughout the year and the executive
directors attend regular operational board
meetings. The agendas for these meetings
formalise the matters reserved for decision
by the board of the company. The board
directs and controls the group and risk
management issues. The board is responsible
for strategy, performance and stewardship
of the group’s resources.
The board consists of the executive chairman,
group ?nance director, one executive director
and two non-executive directors. All directors
have access to the company secretary and
all group records. Each director is authorised
to take external advice at the expense of the
company in support of his duties.
Committees of the board
The board has two committees, each of which
has written terms of reference. The minutes
of the committees are circulated to and
reviewed by the board.
The audit committee
The audit committee is chaired by
John May, a non-executive director, and
meets periodically in accordance with its
terms of reference. The executive chairman,
group ?nance director and a representative
of the external auditor will normally attend
meetings. The committee meets at least
twice a year to discuss governance,
?nancial reporting and internal control
and risk management.
The remuneration committee
The remuneration committee, which is chaired
by John May, a non-executive director,
and attended by the executive chairman,
is responsible for all elements of the
remuneration of the executive directors.
The committee performs its functions in
accordance with its terms of reference.
Additional information is included in the directors’
remuneration report on pages 14 and 15.
Investor communications
Meetings with institutional shareholders and
independent analysts take place throughout
the year and all shareholders are free
to contact any member of the board at
any time. Shareholders have a formal
opportunity to question the board at the
Annual General Meeting of the company,
at the conclusion of which all board members
are available for informal discussion.
Internal control and
risk management
The systems of internal control and risk
management are the responsibility of the
board, which sets and reviews appropriate
policies. Managers are delegated the
tasks of implementation and maintenance
of systems in accordance with those
policies and the identi?cation, evaluation,
management and reporting of risk and
control issues.
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 of?ce and regional
managers. Reforecasting is undertaken
when variances are material and, if adverse,
cannot be eliminated by such action.
The above systems and procedures can
only provide reasonable assurance; they
cannot eliminate the potential of material
misstatement or loss, nor the risk of the
group falling short of its strategic objectives
and targets.
Begbies Traynor Group plc Annual Report and Accounts 2015 17
Financial statements
We have audited the group ?nancial statements of Begbies Traynor Group plc for the year ended 30 April 2015, which comprise the
consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet,
the consolidated cash ?ow statement and the related notes 1 to 27. The ?nancial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union.
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.
Respective responsibilities of directors and auditor
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the group
?nancial statements and for being satis?ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the
group ?nancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the fnancial statements
An audit involves obtaining evidence about the amounts and disclosures in the ?nancial statements suf?cient to give reasonable
assurance that the ?nancial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied and
adequately disclosed; the reasonableness of signi?cant accounting estimates made by the directors; and the overall presentation of
the ?nancial statements. In addition, we read all the ?nancial and non-?nancial information in the Annual Report to identify material
inconsistencies with the audited ?nancial statements and to identify any information that is apparently materially incorrect based on,
or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on fnancial statements
In our opinion the group ?nancial statements:
U give a true and fair view of the state of the group’s affairs as at 30 April 2015 and of its loss for the year then ended;
U have been properly prepared in accordance with IFRSs as adopted by the European Union; and
U have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and the directors’ report for the ?nancial year for which the ?nancial statements
are prepared is consistent with the group ?nancial statements.
Matters on which we are required to report by exception
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:
U certain disclosures of directors’ remuneration speci?ed by law are not made; or
U we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the parent company ?nancial statements of Begbies Traynor Group plc for the year ended 30 April 2015.
Rachel Argyle (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Manchester, United Kingdom
14 July 2015
Independent auditor’s report
to the members of Begbies Traynor Group plc
Begbies Traynor Group plc Annual Report and Accounts 2015 18
Financial statements
Consolidated statement of comprehensive income
for the year ended 30 April 2015
2015 2014
Notes £’000 £’000
Continuing operations
Revenue 3 45,360 44,089
Direct costs (25,044) (23,782)
Gross proft 20,316 20,307
Other operating income 3 173 156
Administrative expenses (15,826) (13,945)
Earnings before interest, tax and amortisation prior to exceptional and acquisition-related items 4,663 6,518
Exceptional and acquisition-related items 6 (2,918) (806)
Earnings before interest, tax and amortisation 1,745 5,712
Amortisation of intangible assets arising on acquisitions (1,413) (353)
Finance costs 8 (1,055) (1,108)
(Loss) proft before tax (723) 4,251
Tax 9 122 (869)
(Loss) proft for the year from continuing operations (601) 3,382
Discontinued operations
Loss from the year from discontinued operations 5 (979) (357)
(Loss) proft for the year (1,580) 3,025
Other comprehensive income
Exchange differences on translation of foreign operations (5) —
Total comprehensive (loss) income for the year (1,585) 3,025
(Loss) earnings per share
From continuing operations
Basic and diluted 11 (0.6) pence 3.7 pence
From continuing and discontinued operations
Basic and diluted 11 (1.6) pence 3.3 pence
The (loss) pro?t and comprehensive (loss) income for both years is attributable to equity holders of the parent.
The statement of comprehensive income for the year ended 30 April 2014 has been represented to re?ect the classi?cation of the
global risk partners business as discontinued operations in accordance with IFRS 5.
Begbies Traynor Group plc Annual Report and Accounts 2015 19
Financial statements
Consolidated statement of changes in equity
for the year ended 30 April 2015
Share Share Merger Translation Retained Total
capital premium reserve reserve earnings equity
£’000 £’000 £’000 £’000 £’000 £’000
At 1 May 2013 4,663 17,581 17,584 — 17,867 57,695
Total comprehensive income for the year — — — — 3,025 3,025
Dividends — — — — (2,002) (2,002)
Credit to equity for equity-settled share-based payments — — — — 33 33
Shares issued 213 439 — — — 652
At 30 April 2014 4,876 18,020 17,584 — 18,923 59,403
Loss for the year — — — — (1,580) (1,580)
Other comprehensive income:
Exchange differences on translation of foreign operations — — — (5) — (5)
Total comprehensive loss for the year — — — (5) (1,580) (1,585)
Dividends — — — — (2,012) (2,012)
Credit to equity for equity-settled share-based payments — — — — 61 61
Shares issued 660 4,453 — — — 5,113
At 30 April 2015 5,536 22,473 17,584 (5) 15,392 60,980
The merger reserve arose on the formation of the group in 2004.
Begbies Traynor Group plc Annual Report and Accounts 2015 20
Financial statements
Consolidated balance sheet
at 30 April 2015
2015 2014
Notes £’000 £’000
Non-current assets
Intangible assets 12 57,765 51,559
Property, plant and equipment 13 2,512 1,708
60,277 53,267
Current assets
Trade and other receivables 14 34,861 36,630
Current tax receivable 53 —
Cash and cash equivalents 9,209 7,541
44,123 44,171
Total assets 104,400 97,438
Current liabilities
Trade and other payables 15 (11,369) (7,849)
Current tax liabilities — (651)
Borrowings 16 — (26)
Provisions 17 (1,625) (1,465)
(12,994) (9,991)
Net current assets 31,129 34,180
Non-current liabilities
Trade and other payables 15 (1,391) (355)
Borrowings 16 (22,000) (22,000)
Provisions 17 (666) (678)
Deferred tax 18 (6,369) (5,011)
(30,426) (28,044)
Total liabilities (43,420) (38,035)
Net assets 60,980 59,403
Equity
Share capital 20 5,536 4,876
Share premium 22,473 18,020
Merger reserve 17,584 17,584
Translation reserve (5) —
Retained earnings 15,392 18,923
Equity attributable to owners of the company 60,980 59,403
The ?nancial statements of Begbies Traynor Group plc, registered number 5120043, were approved by the board of directors
and authorised for issue on 14 July 2015. They were signed on its behalf by:
Ric Traynor Nick Taylor
Executive chairman Group fnance director
Begbies Traynor Group plc Annual Report and Accounts 2015 21
Financial statements
Consolidated cash ?ow statement
for the year ended 30 April 2015
2015 2014
Notes £’000 £’000
Cash fows from operating activities
Cash generated by operations 23 6,011 7,377
Income taxes paid (1,254) (1,006)
Interest paid (981) (866)
Net cash from operating activities 3,776 5,505
Investing activities
Purchase of property, plant and equipment (1,230) (360)
Purchase of intangible ?xed assets (58) (4)
Deferred consideration payments in the year (177) (101)
Acquisition of businesses (3,718) (450)
Net cash from investing activities (5,183) (915)
Financing activities
Dividends paid (2,012) (2,002)
Proceeds on issue of shares 5,113 92
Repayment of loans (26) (101)
Net cash from fnancing activities 3,075 (2,011)
Net increase in cash and cash equivalents 1,668 2,579
Cash and cash equivalents at beginning of year 7,541 4,962
Cash and cash equivalents at end of year 9,209 7,541
Begbies Traynor Group plc Annual Report and Accounts 2015 22
Financial statements
Notes to the consolidated ?nancial statements
for the year ended 30 April 2015
1. General information
Begbies Traynor Group plc is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the
registered of?ce is 340 Deansgate, Manchester M3 4LY.
These ?nancial statements are presented in pounds sterling because that is the currency of the primary economic environment in
which the group operates.
2. Accounting policies
The principal accounting policies adopted in the preparation of these ?nancial statements are set out below.
(a) Basis of accounting
The ?nancial statements have been prepared in accordance with applicable UK law and International Financial Reporting Standards
(‘IFRSs’) as adopted by the European Union (‘EU’), including International Accounting Standards (‘IAS’) and Interpretations issued by
the International Financial Reporting Interpretations Committee (‘IFRIC’).
The ?nancial statements have been prepared on the historical cost basis and 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 ?nancial position of the group, its cash ?ows, liquidity position and borrowing facilities are
described in the strategic report.
Furthermore, notes 16 and 19 to the ?nancial statements include full details of the group’s borrowings in addition to the group’s objectives
and policies for managing its capital, its ?nancial risk management objectives and its exposures to credit, interest rate and liquidity risk.
The group has principal banking facilities of £30 million, of which £13.5 million was utilised (£22.0 million drawn less £8.5 million of cash
balances available for general use by the group’s entities) at 30 April 2015.
In carrying out their duties in respect of going concern, the directors have completed a review of the group’s current ?nancial position
and cash ?ow forecasts for a period exceeding 12 months from the date of signing these ?nancial statements. This review included
sensitivity analysis to determine the potential impact on the group of reasonably possible downside scenarios. Under all modelled
scenarios, the group’s banking facilities were suf?cient and all associated covenant measures were forecast to be met.
After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to
continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing
the Annual Report and Accounts.
Earnings before interest, tax and amortisation (‘EBITA’)
EBITA includes the results from operating activities of the group, including software amortisation costs, but stated before ?nance costs,
taxation and amortisation of intangible assets arising on acquisitions.
Exceptional and acquisition-related items
The group presents certain items separately as ‘exceptional’. These are items which in management’s judgement should be disclosed
separately by virtue of their size and or nature.
(b) Basis of consolidation
The consolidated ?nancial statements incorporate the ?nancial statements of Begbies Traynor Group plc and entities controlled by Begbies Traynor
Group plc (its subsidiaries, which include limited liability partnerships). Control is achieved where Begbies Traynor Group plc (‘the company’) has the
power to govern the ?nancial and operating policies of an investee entity so as to obtain bene?ts from its activities. 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.
(c) Changes in accounting policies
The accounting policies adopted are consistent with those of the previous ?nancial year.
Begbies Traynor Group plc Annual Report and Accounts 2015 23
2. Accounting policies continued
(d) Business combinations
The acquisition of subsidiaries and businesses is accounted for using the acquisition method. The consideration for each acquisition
is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the group in exchange for control of the acquiree. In accordance with the IFRS Interpretation Committee’s interpretation
of paragraph B55 of IFRS 3, the cost of the business combination excludes consideration which requires post-acquisition service obligations
to be performed by the selling shareholders. These amounts are accounted for as deemed remuneration and will be charged to the
consolidated statement of comprehensive income over the period of the obligation.
Identi?able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. Where the fair value of the assets and liabilities at acquisition cannot be determined reliably in the initial
accounting, these values are considered to be provisional for a period of 12 months from the date of acquisition. If additional information
relating to the condition of these assets and liabilities at the acquisition date is obtained within this period, then the provisional values are
adjusted retrospectively. This includes the restatement of comparative information for prior periods.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business
combination over the group’s interest in the net fair value of the identi?able assets, liabilities and contingent liabilities recognised. If the
group’s interest in the net fair value of the acquiree’s identi?able assets, liabilities and contingent liabilities exceeds the cost of the
business combination, the excess is recognised immediately in the consolidated statement of comprehensive income.
Adjustments to contingent consideration for acquisitions made before 1 May 2010 (from which date IFRS 3 (revised) has been
adopted) are recorded against goodwill. Adjustments to contingent consideration for acquisitions made after 1 May 2010 are recorded
in the consolidated statement of comprehensive income. Acquisition-related costs are recognised in the consolidated statement of
comprehensive income as incurred.
(e) Intangible assets
Goodwill
Goodwill arising on consolidation is recognised as an asset.
Following initial recognition, goodwill is subject to impairment reviews, at least annually, and measured at cost less accumulated
impairment losses. Any impairment is recognised immediately in the consolidated statement of comprehensive income and is not
subsequently reversed.
On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the gain or loss on disposal.
Goodwill arising on acquisitions before the date of the group’s transition to IFRS has been retained at the previous UK GAAP amounts,
subject to being tested for impairment at that date and at least annually thereafter.
Other intangible assets
Other intangible assets are measured initially at cost and are amortised on a straight-line basis over their estimated useful lives.
The carrying amount is reduced by any provision for impairment where necessary.
On a business combination, as well as recording separable intangible assets already recognised in the balance sheet of the acquired
entity at their fair value, identi?able 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 so as to write off the cost or valuation of assets over their estimated useful lives, on the following basis:
Software on strategic systems 10% of cost
Intangible assets arising on acquisitions 20%–50% of fair value at acquisition
(f) 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
Of?ce 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 pro?t or loss for the period.
Begbies Traynor Group plc Annual Report and Accounts 2015 24
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
2. Accounting policies continued
(f) Property, plant and equipment continued
Assets held under ?nance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,
over the relevant lease term.
Assets in the course of construction are not depreciated.
(g) Impairment of tangible and intangible assets excluding goodwill
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 ?ows that are independent
from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
?ows are discounted to their present value using a pre-tax discount rate that re?ects current market assessments of the time value and
the risks speci?c to the asset for which the estimates of future cash ?ows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately.
(h) Financial instruments
Financial assets and ?nancial 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 demand deposits and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insigni?cant risk of changes in value.
Trade receivables
Trade receivables are stated at amortised cost less allowances for estimated irrecoverable amounts.
Trade payables
Trade payables are stated at their amortised cost.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classi?ed 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.
(i) 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.
(j) Leases
Leases are classi?ed according to the substance of the transaction. A lease that transfers substantially all the risks and rewards of
ownership to the lessee is classi?ed as a ?nance lease. All other leases are classi?ed as operating leases.
Begbies Traynor Group plc Annual Report and Accounts 2015 25
2. Accounting policies continued
(j) Leases continued
Finance leases
Finance leases are capitalised in the consolidated balance sheet at their fair value or, if lower, at the present value of the minimum lease
payments, each determined at the inception of the lease. The corresponding liability is shown as a ?nance lease obligation to the lessor.
Leasing repayments comprise both a capital and a ?nance element. The ?nance element is written off to the consolidated statement of
comprehensive income so as to produce an approximately constant periodic rate of charge on the outstanding obligation. Such assets
are depreciated over the shorter of their estimated useful lives or the period of the lease.
Operating leases
Operating lease rentals are charged to the consolidated statement of comprehensive income on a straight-line basis over the period
of the lease even where payments are not made on such a basis. Lease incentives are spread over the period of the lease.
(k) Revenue recognition
Revenue represents amounts recoverable from clients for professional services provided during the year, excluding value added tax.
The group recognises revenue when the amount can be reliably measured and it is probable economic bene?ts will ?ow.
Services provided to clients, which at the balance sheet date have not been billed, are recognised as unbilled revenue.
Revenue recognised in this manner is based on an assessment of the fair value of the services provided at the balance sheet date
re?ecting the stage of completion (determined by costs incurred to date as a percentage of the total anticipated costs) of each assignment.
These estimates and judgements may change over time as the case completes and this will be recognised in the consolidated statement
of comprehensive income in the period in which the revision becomes known. These judgements are formed over a large portfolio of
cases and are therefore unlikely to be individually material.
Unbilled revenue on individual client assignments is included as unbilled income within trade and other receivables.
For contingent fee engagements, revenue is only recognised (over and above any agreed minimum fee) when it is virtually certain at
the balance sheet date of a successful outcome to the engagement.
(l) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale. Other borrowing costs are recognised in pro?t or loss in the period in which
they are incurred.
(m) Pensions and retirement benefts
The group operates a de?ned contribution scheme in the United Kingdom for certain 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.
Share-based payments
Equity-settled share-based payments to employees and others providing similar services 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 21.
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 pro?t or loss such that the cumulative expense re?ects the
revised estimate, with a corresponding adjustment to equity reserves.
(o) Taxation
The tax expense represents the sum of current tax and deferred tax.
Current taxation
Current tax is based on taxable pro?t for the period. Taxable pro?t differs from net pro?t 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 taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the ?nancial statements and the corresponding tax bases used in the computation of taxable pro?t, 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 pro?ts will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the tax pro?t nor the accounting pro?t.
Begbies Traynor Group plc Annual Report and Accounts 2015 26
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
2. Accounting policies continued
(o) Taxation continued
Deferred taxation continued
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 suf?cient taxable pro?ts 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 in the consolidated statement of comprehensive income except when it relates to items charged
or credited to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes by the same taxation authority and the group intends to settle its current tax assets
and liabilities on a net basis.
(p) Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the group’s accounting policies, the group is required to make certain estimates, judgements and assumptions
that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets
and liabilities at the date of the ?nancial statements and the reported amounts of revenue and expenses during the periods presented.
On an ongoing basis, the group evaluates its estimates using historical experience, consultation with experts and other methods
considered reasonable in the particular circumstances. Actual results may differ from the estimates, the effect of which is recognised
in the period in which the facts that give rise to the revision become known.
The group believes that the estimates and judgements in relation to goodwill have the most signi?cant impact on the annual results
under IFRS as set out below.
Goodwill
The group records all assets and liabilities acquired in purchase acquisitions, 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 requires
management to make subjective judgements concerning the value in use of cash-generating units. This requires an estimate of the
future cash ?ows expected to arise from the cash-generating unit and a suitable discount rate to calculate present value. Details of
the assumptions made are provided in note 12.
(q) Recently issued accounting pronouncements
International Financial Reporting Standards
At the date of authorisation of these ?nancial statements, the following relevant standards and interpretations were in issue but not yet
effective and have not been applied in these ?nancial statements.
International Accounting Standards Effective date
(IAS/IFRSs) (year end commencing on or after)
Amendments to IAS 16 and IAS 38 ‘Clari?cation of Acceptable
Methods of Depreciation and Amortisation’ 1 January 2016
IFRS 15 ‘Revenue from Contracts with Customers’ 1 January 2017
IFRS 9 ‘Financial Instruments’ 1 January 2018
Beyond the information above, it is not practical to provide a reasonable estimate of the effect of these standards until a detailed review
has been completed.
3. Revenue
An analysis of the group’s revenue is as follows:
2015 2014
£’000 £’000
Continuing operations
Rendering of professional services 45,360 44,089
Other income 173 156
45,533 44,245
Discontinued operations
Rendering of professional services 524 1,661
46,057 45,906
Begbies Traynor Group plc Annual Report and Accounts 2015 27
4. Business segments
The continuing group is managed as two operating segments: insolvency and restructuring, and property. The global risk partners division
is classi?ed as discontinued.
Segmental information about these businesses is presented below.
Insolvency
and
restructuring Property Consolidated
2015 2015 2015
£’000 £’000 £’000
Revenue
Total revenue from rendering of professional services 40,859 4,556 45,415
Inter-segment revenue — (55) (55)
External revenue 40,859 4,501 45,360
Segmental result 8,518 744 9,262
Shared and central costs (4,599)
EBITA 4,663
Exceptional and acquisition-related costs (2,918)
Amortisation of intangible assets arising on acquisitions (1,413)
Finance costs (1,055)
Loss before tax (723)
Tax 122
Loss for the year from continuing operations (601)
Loss for the year from discontinued operations (979)
Total loss for the ?nancial year (1,580)
Balance sheet
Assets
Segment assets 84,553 9,672 94,225
Unallocated corporate assets 9,497
Consolidated total assets 103,722
Liabilities
Segment liabilities (9,654) (4,975) (14,629)
Unallocated corporate liabilities (28,404)
Consolidated total liabilities (43,033)
Net assets – continuing operations 60,689
Net assets – discontinued operations 291
Total 60,980
Unallocated amounts include current and deferred tax liabilities, cash and ?nancial liabilities and other central assets and liabilities.
Insolvency
and
restructuring Property Discontinued Consolidated
2015 2015 2015 2015
£’000 £’000 £’000 £’000
Other information
Capital additions 1,093 193 2 1,288
Depreciation and amortisation 1,812 603 30 2,445
Begbies Traynor Group plc Annual Report and Accounts 2015 28
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
4. Business segments continued
As a result of the global risk partners division being disclosed as discontinued in this reporting period, the group was reported as one
operating segment for the period ended 30 April 2014.
Insolvency
and
restructuring Property Consolidated
2014 2014 2014
£’000 £’000 £’000
Revenue
Total revenue from rendering of professional services 44,089 — 44,089
Inter-segment revenue — — —
External revenue 44,089 — 44,089
Segmental result 10,862 — 10,862
Shared and central costs (4,344)
EBITA 6,518
Exceptional and acquisition-related costs (806)
Amortisation of intangible assets arising on acquisitions (353)
Finance costs (1,108)
Pro?t before tax 4,251
Tax (869)
Pro?t for the year from continuing operations 3,382
Loss for the year from discontinued operations (357)
Total pro?t for the ?nancial year 3,025
Balance sheet
Assets
Segment assets 86,794
Unallocated corporate assets 9,142
Consolidated total assets 95,936
Liabilities
Segment liabilities (8,556)
Unallocated corporate liabilities (29,219)
Consolidated total liabilities (37,775)
Net assets – continuing operations 58,161
Net assets – discontinued operations 1,242
Total 59,403
Geographical segments
The group’s principal operations and markets are located in the UK.
Begbies Traynor Group plc Annual Report and Accounts 2015 29
5. Discontinued operations
The results of the discontinued global risk partners division, which have been included in the consolidated statement of comprehensive
income, were as follows:
2015 2014
£’000 £’000
Revenue 524 1,661
Direct costs (399) (1,201)
Gross proft 125 460
Administrative expenses (750) (916)
Loss on disposal (570) —
Loss before tax (1,195) (456)
Tax 216 99
Loss for the period from discontinued operations (979) (357)
A loss on disposal of £570,000 arose on the disposal of the business, being the difference between the contingent consideration
receivable of £622,000 and the carrying amount of net assets of £813,000, together with disposal provisions of £379,000.
6. (Loss) proft for the year
(Loss) pro?t for the year has been arrived at after charging (crediting):
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000
Net foreign exchange loss (gain) 3 17 (3) — — 17
Depreciation of property, plant and equipment 831 700 30 117 861 817
Amortisation of intangible assets 1,581 518 3 7 1,584 525
Loss on disposal of property, plant and equipment 25 — — — 25 —
Staff costs (see note 7) 24,933 24,415 314 1,144 25,247 25,559
Operating lease rentals payable 2,693 2,772 119 162 2,812 2,934
Impairment of receivable balances (see note 14) 188 297 3 55 191 352
Reversal of impairment losses recognised on trade receivables
(see note 14) (17) (25) — (1) (17) (26)
During the year, the group obtained the following services from the group’s auditor, at the costs detailed below:
2015 2014
£’000 £’000
Fees payable to the company’s auditor for the audit of the company’s annual accounts 30 30
Fees payable to the company’s auditor and its associates for other services to the group
– the audit of the company’s subsidiaries pursuant to legislation 48 47
Total audit fees 78 77
– other taxation advisory services — 1
– other advisory services 85 10
Total non-audit fees 85 11
Begbies Traynor Group plc Annual Report and Accounts 2015 30
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
6. (Loss) proft for the year continued
During the year, the group incurred exceptional and acquisition-related items as detailed below:
Continuing
2015 2014
£’000 £’000
Restructuring costs (£1.5 million case closure provision, £0.9 million redundancy costs, £0.2 million onerous lease costs) 2,569 —
Business integration costs following the Eddisons acquisition 532 —
Acquisition costs (see note 22) 522 124
Adjustment to contingent consideration — (149)
Gain on acquisition (see note 22) (1,135) —
Deemed remuneration 430 —
Property costs associated with relocation of London of?ces — 831
2,918 806
The exceptional costs are analysed as follows:
Continuing
2015 2014
£’000 £’000
Direct costs 2,338 —
Administrative expenses 580 806
2,918 806
7. Staff costs
The average monthly number of persons (including executive directors) working within the group was:
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
number number number number number number
Partners and consultants 64 67 2 4 66 71
Fee earning staff 290 282 5 10 295 292
Support staff 126 101 1 2 127 103
480 450 8 16 488 466
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000
Their aggregate remuneration comprised:
Wages, salaries and partners’ pro?t share 22,426 22,296 281 1,047 22,707 23,343
Social security costs 1,591 1,351 24 65 1,615 1,416
Other pension costs (note 26) 916 768 9 32 925 800
24,933 24,415 314 1,144 25,247 25,559
Begbies Traynor Group plc Annual Report and Accounts 2015 31
7. Staff costs continued
Directors’ remuneration
2015 2014
£’000 £’000
Short-term bene?ts 962 1,090
Post-employment bene?ts 41 23
Share-based payments 25 24
1,028 1,137
Number Number
The average number of directors who:
Are members of a de?ned contribution pension scheme 1 1
Had awards receivable in the form of shares under a long-term incentive scheme 2 2
Pension contributions paid by the company in respect of such directors were as follows:
2015 2014
£’000 £’000
Nick Taylor 41 23
The highest paid director in the year was Mark Fry and his total remuneration for the period was £495,339 (2014: £600,803). No contributions
(2014: £nil) were made into a company pension scheme on his behalf.
8. Finance costs
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank overdrafts and loans 1,033 1,098 — — 1,033 1,098
Unwinding of discount on deferred consideration liabilities 22 10 — — 22 10
Total fnance costs 1,055 1,108 — — 1,055 1,108
9. Tax
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000
Current tax charge (credit) 174 1,261 (216) (99) (42) 1,162
Deferred tax credit (note 18) (296) (392) — — (296) (392)
(122) 869 (216) (99) (338) 770
Corporation tax is calculated at 20.9% (2014: 23.0%) of the estimated assessable pro?t for the year.
The charge for the year can be reconciled to the pro?t per the consolidated statement of comprehensive income as follows:
2015 2014
£’000 £’000
(Loss) pro?t before tax (1,918) 3,795
Notional tax (credit) charge at the UK corporation tax rate of 20.9% (2014: 23.0%) (401) 873
Adjustments in respect of current income tax of prior years (160) (144)
Tax effect of expenses that are not deductible in determining taxable pro?t 223 728
Impact of change in rate — (684)
Deferred tax at 20% — (3)
Total tax expense reported in the consolidated statement of comprehensive income (338) 770
Begbies Traynor Group plc Annual Report and Accounts 2015 32
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
10. Dividends
2015 2014
£’000 £’000
Amounts recognised as distributions to equity holders in the year
Interim dividend for the year ended 30 April 2014 of 0.6 pence (2013: 0.6 pence) per share 549 541
Final dividend for the year ended 30 April 2014 of 1.6 pence (2013: 1.6 pence) per share 1,463 1,461
2,012 2,002
Amounts proposed as distributions to equity holders
Interim dividend for the year ended 30 April 2015 of 0.6 pence (2014: 0.6 pence) per share 628 549
Final dividend for the year ended 30 April 2015 of 1.6 pence (2014: 1.6 pence) per share 1,674 1,463
2,302 2,012
The proposed ?nal dividend is subject to approval by shareholders at the annual general meeting. The interim dividend for 2015 was not paid until
8 May 2015 and, accordingly, neither has been included as a liability in these ?nancial statements nor as a distribution to equity shareholders.
11. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
2015 2014
£’000 £’000
Earnings
(Loss) pro?t for the year from continuing operations attributable to equity holders (601) 3,382
Loss from discontinued operations attributable to equity holders (979) (357)
(Loss) proft for the year attributable to equity holders (1,580) 3,025
2015 2014
number number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share 96,288,512 90,877,950
Effect of dilutive potential ordinary shares:
Share options 880,265 139,953
Weighted average number of ordinary shares for the purposes of diluted earnings per share 97,168,777 91,017,903
2015 2014
pence pence
Basic (loss) earnings per share from
Continuing operations (0.6) 3.7
Discontinued operations (1.0) (0.4)
Total (1.6) 3.3
Begbies Traynor Group plc Annual Report and Accounts 2015 33
11. Earnings per share continued
The following additional earnings per share ?gures are presented as the directors believe they provide a better understanding of the
trading position of the group:
2015 2014
£’000 £’000
Earnings from continuing operations
(Loss) pro?t for the year attributable to equity holders (601) 3,382
Amortisation of intangible assets arising on acquisitions 1,413 353
Unwinding of discount on deferred consideration liabilities 22 10
Exceptional and acquisition-related items 2,918 806
Tax effect of above items (975) (267)
Adjusted earnings 2,777 4,284
2015 2014
pence pence
Adjusted basic and diluted earnings per share 2.9 4.7
12. Intangible assets
Intangible
assets
arising on
Goodwill Software acquisitions Total
£’000 £’000 £’000 £’000
Cost
At 1 May 2013 49,130 1,714 4,485 55,329
Additions — 4 1,625 1,629
Adjustments to deferred consideration 19 — — 19
At 30 April 2014 49,149 1,718 6,110 56,977
Arising on acquisition — — 7,775 7,775
Additions — 58 — 58
Disposals associated with discontinued business — (68) — (68)
At 30 April 2015 49,149 1,708 13,885 64,742
Amortisation and impairment
At 1 May 2013 — 520 4,373 4,893
Amortisation during the year — 172 353 525
At 30 April 2014 — 692 4,726 5,418
Amortisation during the year — 171 1,413 1,584
Disposals associated with discontinued business — (25) — (25)
At 30 April 2015 — 838 6,139 6,977
Carrying amount
At 30 April 2015 49,149 870 7,746 57,765
At 30 April 2014 49,149 1,026 1,384 51,559
The carrying value of intangible assets arising on acquisitions comprise customer relationships of £3,800,000 (2014: £586,000), customer
contracts of £2,279,000 (2014: £235,000), order backlog of £1,230,000 (2014: £nil) and websites of £437,000 (2014: £563,000).
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (‘CGUs’) that are expected to bene?t
from that business combination. The carrying amount of goodwill has been allocated wholly to the insolvency CGU.
Begbies Traynor Group plc Annual Report and Accounts 2015 34
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
12. Intangible assets continued
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 ?ow projections based on the latest one year
forecast approved by the board, extrapolated for 19 further years. No terminal value is applied.
The one year forecast is prepared considering local partners’ expectations based on market knowledge, numbers of new engagements
and the pipeline of opportunities. The extrapolation is based on the board’s expectations considering market expectations and historical
?nancial performance.
Key assumptions used in value in use calculation
The key assumptions for the value in use calculations are those regarding:
U pre-tax discount rate;
U revenue growth rates; and
U EBITA margins.
Discount rate
The group’s post-tax weighted average cost of capital, derived from Bloomberg data, has been used to calculate a group pre-tax discount
rate of 13% (2014: 13%), which re?ects current market assessments of the time value of money for the period under review and the risks
speci?c to the group. As the insolvency CGU comprises the signi?cant majority of the group’s activities this has been used as the discount
rate for the purpose of the value in use calculation.
Revenue growth rates
Revenue assumptions in the one year forecast are derived from local partners’ expectations based on market knowledge, numbers of
new engagements and the pipeline of opportunities. Growth rates of up to 4% per annum have been applied to the extrapolation period,
re?ecting past experience of UK insolvency numbers over an economic cycle and future expected market trends. This growth rate does
not exceed the directors’ assessment of the long-term growth rate for the UK insolvency market.
EBITA margins
EBITA margins in the one year forecast are derived from local partners’ expectations based on the number of current engagements and
cost base. Margins are forecast to remain at budgeted levels over the extrapolation period, based on past experiences and expectations
of future market developments.
Sensitivity to changes in assumptions
With regard to the assessment of value in use for the insolvency CGU, the directors believe that reasonably possible changes in any of
the above key assumptions would not cause the carrying value of the unit to exceed its recoverable amount.
Cooper Williamson Limited
The provisional estimates in relation to the acquisition of the trade and assets of Cooper Williamson Limited have been ?nalised. A change
in the assessment of the fair value of net assets acquired has resulted in an adjustment of £0.3 million to reduce goodwill and increase
other receivables, which has been re?ected in these ?nancial statements.
Begbies Traynor Group plc Annual Report and Accounts 2015 35
13. Property, plant and equipment
Leasehold Of?ce Motor
improvements equipment Computers vehicles Total
£’000 £’000 £’000 £’000 £’000
Cost
At 1 May 2013 4,499 1,088 2,283 14 7,884
Additions 109 25 226 — 360
At 30 April 2014 4,608 1,113 2,509 14 8,244
Arising on acquisition — 303 192 — 495
Additions 820 117 293 — 1,230
Disposals — (23) (2) — (25)
Disposals associated with discontinued business — (1) (78) — (79)
At 30 April 2015 5,428 1,509 2,914 14 9,865
Depreciation and impairment
At 1 May 2013 2,857 915 1,935 12 5,719
Charge for the year 496 66 255 — 817
At 30 April 2014 3,353 981 2,190 12 6,536
Charge for the year 490 115 255 1 861
Disposals associated with discontinued business — — (44) — (44)
At 30 April 2015 3,843 1,096 2,401 13 7,353
Carrying amount
At 30 April 2015 1,585 413 513 1 2,512
At 30 April 2014 1,255 132 319 2 1,708
14. Trade and other receivables
2015 2014
£’000 £’000
Trade receivables 4,802 4,134
Unbilled income 24,326 29,596
Other debtors and prepayments 3,597 2,562
Deemed remuneration 2,136 338
34,861 36,630
Trade receivables do not carry interest and are stated net of allowances for doubtful receivables of £615,000 (2014: £483,000).
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 days’ terms. Refer to note 19 for disclosures on credit risk.
Begbies Traynor Group plc Annual Report and Accounts 2015 36
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
14. Trade and other receivables continued
As at 30 April, the analysis of trade receivables that were past due but not impaired is as follows:
Neither past
due nor
Past due but not impaired
impaired up More than
Total to 30 days 1–3 months 4 months
£’000 £’000 £’000 £’000
2015 4,802 2,900 686 1,216
2014 4,134 2,096 712 1,326
Movement in the allowance for doubtful debts
2015 2014
£’000 £’000
Balance at beginning of the year 483 188
Amounts arising on acquisition 97 —
Amounts written off during the year (139) (31)
Amounts recovered during the year (17) (26)
Increase in allowance recognised in pro?t or loss 191 352
Balance at end of the year 615 483
15. Trade and other payables
2015 2014
£’000 £’000
Current
Trade payables 1,956 1,082
Other taxes and social security 2,128 1,735
Accruals 6,587 4,771
Deferred consideration 698 261
11,369 7,849
Non-current
Deferred consideration 1,391 355
Trade creditors are non-interest bearing and are normally settled on terms agreed with suppliers.
The directors consider that the carrying amount of trade payables approximates to their fair value.
16. Borrowings
2015 2014
£’000 £’000
Unsecured borrowing at amortised cost
Bank loans 22,000 22,026
Total borrowings 22,000 22,026
Amount due for settlement within 12 months — 26
Amount due for settlement after 12 months 22,000 22,000
Begbies Traynor Group plc Annual Report and Accounts 2015 37
16. Borrowings continued
The group’s principal borrowings at 30 April 2015 comprise unsecured, revolving credit facilities (‘RCFs’) totalling £20 million
(2014: £20 million) and a term loan of £10 million (2014: £10 million) which were entered into on 26 April 2013. The principal features
of these borrowings are summarised as follows:
U RCF of £10 million provided by HSBC, of which £6 million was drawn at 30 April 2015 (2014: £6 million). The facility has a 4.25 year
term. The effective interest rate was 4.3%;
U RCF of £10 million provided by Santander, of which £6 million was drawn at 30 April 2015 (2014: £6 million). The facility has
a 4.25 year term. The effective interest rate was 4.3%; and
U term loan of £10 million provided by M&G UK Companies Financing Fund 2, of which £10 million was drawn at 30 April 2015
(2014: £10 million). The facility has a £5 million maturity in April 2020 and £5 million maturity in April 2021. The effective interest
rate was 5.3%.
In the prior year the group had additional unsecured bank loans of £26,000, repayable within one year. Interest on the loan was ?xed at 6.27%.
All borrowings are denominated in sterling. Of the total cash balance of £9,209,000 (2014: £7,541,000), £8,356,000 is denominated in
sterling (2014: £7,524,000), £95,000 in US dollars (2014: £17,000) and £758,000 (2014: £nil) in other currencies. The directors consider
that the fair values of the group’s ?nancial instruments approximate to their book value.
At the balance sheet date, £758,000 of the cash balances were not available for general use by the group’s entities. These balances
relate to pre-funding of disbursement costs in relation to a speci?c engagement and use of these balances is contractually restricted
to this engagement.
17. Provisions
Property
Disposal exit
Restructuring provisions provisions Total
£’000 £’000 £’000 £’000
At 1 May 2013 1,772 1,215 — 2,987
Charged for the year — — 831 831
Utilised (1,434) (241) — (1,675)
At 30 April 2014 338 974 831 2,143
Charged for the year 1,032 379 574 1,985
Utilised (1,079) (217) (541) (1,837)
At 30 April 2015 291 1,136 864 2,291
Current liabilities 185 576 864 1,625
Non-current liabilities 106 560 — 666
At 30 April 2015 291 1,136 864 2,291
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 period up to 30 April 2017.
Begbies Traynor Group plc Annual Report and Accounts 2015 38
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
18. Deferred tax
The following are the deferred tax assets (liabilities) recognised by the group and movements thereon during the current and prior year:
Tax Short-term
deductible timing
goodwill Intangibles differences Total
£’000 £’000 £’000 £’000
At 1 May 2013 (5,259) — 181 (5,078)
Charge to income (27) — (265) (292)
Arising on acquisitions (325) — — (325)
Consolidated statement of comprehensive income effect of change in tax rate 686 — (2) 684
At 30 April 2014 (4,925) — (86) (5,011)
(Charge) credit to income (116) 345 67 296
Acquired — — (59) (59)
Arising on acquisitions 515 (2,110) — (1,595)
At 30 April 2015 (4,526) (1,765) (78) (6,369)
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset)
for ?nancial reporting purposes:
2015 2014
£’000 £’000
Deferred tax liabilities (6,856) (5,024)
Deferred tax assets 487 13
(6,369) (5,011)
19. Financial instruments
Financial risk management objectives and policies
The group’s principal ?nancial instruments comprise cash balances and bank loans. The main purpose of these ?nancial instruments
is to raise ?nance for the group’s operations. The group also has various other ?nancial instruments, such as trade receivables and trade
payables, which arise directly from its operations.
It is, and has been throughout the period under review, the group’s policy that no trading in ?nancial instruments shall be undertaken.
The main risks arising from the group’s ?nancial 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 ?oating interest rates.
The group does not seek to ?x 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 pro?t for the year ended
30 April 2015 and net assets at that date would decrease by £71,000 (2014: £77,000). This is attributable to the group’s exposure
to movements in interest rate on its variable rate borrowings.
Credit risk
The nature of the group’s debtor balances, the time taken for payment by clients and the associated credit risk are dependent on
the type of engagement.
On formal insolvency appointments (which form the majority of the group’s activities), invoices are generally raised having achieved
approval at a creditors’ meeting to draw fees. This is typically settled on a timely basis from case funds. The credit risk on these
engagements is therefore considered to be extremely low.
On other engagements, the timescale to receive payment from the date of invoice is typically longer as the group’s standard 30 day
payment terms (referred to in note 14) are not practically enforceable in all situations. The board do not believe that this is an indication
of increased credit risk on these engagements.
Receivable balances are monitored on an ongoing basis with the result that the group’s exposure to bad debts is not signi?cant.
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.
Begbies Traynor Group plc Annual Report and Accounts 2015 39
19. Financial instruments continued
Credit risk continued
Unbilled revenue is recognised by the group only when all conditions for revenue recognition have been met in line with the group’s
accounting policy in note 2(k).
Liquidity risk
Liquidity risk is the risk that the group will encounter dif?culty in meeting its obligations associated with its ?nancial 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 ?nancing 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 ?exibility through the use of our committed bank facilities,
and giving consideration to other available sources of ?nance such as bank overdrafts, ?nance leases and hire purchase contracts.
There is no material risk associated with foreign currency transactions or overseas subsidiaries.
The table below summarises the maturity pro?le of the group’s ?nancial liabilities at 30 April 2015 based on contractual payments.
At 30 April 2015 At 30 April 2014
Within Between After Within Between After
1 year 2–5 years 5 years Total 1 year 2–5 years 5 years Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Bank borrowings 1,057 19,811 5,263 26,131 1,071 15,304 10,771 27,146
Trade and other payables 11,369 1,391 — 12,760 7,849 355 — 8,204
12,426 21,202 5,263 38,891 8,920 15,659 10,771 35,350
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 ?nance, 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:
2015 2014
£’000 £’000
Shareholders’ funds 60,980 59,403
Bank borrowings 22,000 22,026
At 30 April 82,980 81,429
Categories of fnancial instruments
The table below shows the classi?cation of the group’s ?nancial instruments:
2015 2014
£’000 £’000
Financial assets
Trade receivables 4,802 4,134
Cash at bank 9,209 7,541
14,011 11,675
Financial liabilities
Trade payables (12,760) (8,204)
Bank loans (22,000) (22,026)
(34,760) (30,230)
Begbies Traynor Group plc Annual Report and Accounts 2015 40
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
20. Share capital
2015 2014 2015 2014
thousand thousand £’000 £’000
Allotted, called up and fully paid
Ordinary shares of 5 pence
At 1 May 91,422 90,135 4,572 4,508
Staff SIP scheme 111 145 5 7
Consideration for acquisition 13,095 1,142 655 57
At 30 April 104,628 91,422 5,232 4,572
Allotted, called up but not fully paid
A ordinary shares of 3 pence
At 1 May 6,882 3,313 206 99
Issue of shares — 4,959 — 149
Conversion of shares (1,973) (1,390) (59) (42)
At 30 April 4,909 6,882 147 206
Allotted, called up and fully paid
Deferred shares of 1 pence
At 1 May 9,731 5,561 98 56
Conversion of shares 5,921 4,170 59 42
At 30 April 15,652 9,731 157 98
Issued share capital 125,189 108,035 5,536 4,876
Ordinary shares carry no right to ?xed income and each share carries the right to one vote at general meetings of the company.
A ordinary shares have no rights to ?xed income, dividends or voting rights at general meetings of the company. The shares are only
transferable either pursuant to an offer required to be made by the City Code for the A ordinary shares or otherwise with prior written
consent of the company.
Deferred shares have no rights to ?xed income, dividends or voting rights at general meetings of the company. The shares are only
transferable with the consent of the company.
During the year, 50,676 A ordinary shares from the 31 October 2013 growth share plan were converted into deferred shares.
The growth share plan granted on 1 July 2011 matured during the year, and the 1,923,077 A ordinary shares converted into
deferred shares.
21. Share-based payments
Share option scheme
The group operates a share option scheme which is settled in ordinary shares.
Additional share options were issued during the year. The exercise of the grants is subject to the following: 50% no performance
conditions; 25% requires an overall increase in adjusted earnings per share over a three-year period of RPI plus 2.5%; 25% requires
average total shareholder return to exceed that of a comparator group over a three-year period. Directors’ remuneration information
is provided on pages 14 and 15.
Growth share plan
The group has operated growth share schemes for partners over the previous ?ve years. Under the schemes, partners purchase
A ordinary shares, which may be converted into ordinary shares of the company at a date three years from the date of allotment,
subject to ordinary share price performance compared to a pre-determined rate.
Begbies Traynor Group plc Annual Report and Accounts 2015 41
21. Share-based payments continued
Growth share plan continued
Options for both of the above schemes were valued using the Black-Scholes option pricing model with the following assumptions:
Share option scheme Growth share plan
15 July 25 October 25 July 1 July 31 October
Grant date 2010 2013 2014 2011 2013
Share price at grant date (pence) 62 38 52 45 38
Exercise price (pence) 62 37 51 68 48
Number of participants 3 13 2 1 44
Number of shares under option outstanding 300,000 2,800,000 375,000 nil 4,908,814
Vesting period (years) 3 3 3 3 3
Time to expiry (years) 7 10 10 3 3
Expected volatility (%) 20 23 25 20 23
Risk free rate (%) 1.2 0.8 0.8 1.4 0.8
Expected dividend yield (%) 2.5 6.2 6.2 2.5 6.2
Fair value per option (pence) 7.0 3.3 9.8 0.8 1.2
The expected volatility has been determined based on historical volatility over the last two years. The risk free rate is based on
UK treasury issued bonds of a term consistent with the option life. The fair value is spread over the vesting period of the options.
No options were exercised during the ?nancial year.
The group recognised an expense of £61,000 (2014: £33,000) related to equity-settled share-based payments.
22. Acquisitions
Insolvency acquisitions
During the year, the group acquired the trade and assets of two insolvency practices:
U 1 June 2014 – Ian Franses Associates Limited, a London-based insolvency practice; and
U 1 April 2015 – Broadbents Business Recovery Services Limited, a Yorkshire-based insolvency practice.
The amounts recognised in respect of the identi?able assets acquired and liabilities assumed are set out below:
Fair value
Book value adjustments Fair value
£’000 £’000 £’000
Net assets acquired
Intangible assets — 1,473 1,473
Trade and other receivables 474 (237) 237
Trade and other payables (171) (86) (257)
Deferred tax — (234) (234)
Total identi?able assets 303 916 1,219
Satisfed by:
Cash 800
Contingent consideration 270
Less: amounts treated as deemed remuneration (870)
Total consideration 200
Gain on acquisition 1,019
Fair value adjustments of £1,473,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible
assets recorded can be found in note 12.
Begbies Traynor Group plc Annual Report and Accounts 2015 42
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
22. Acquisitions continued
Insolvency acquisitions continued
The contingent consideration arrangements require the group to pay the vendors additional consideration based upon performance
targets being met in the ?rst three years following acquisition. The fair value of contingent consideration was determined by forecasting
expected ?nancial performance in the earn-out period. The potential undiscounted amount of all future payments the group could be
required to make under the contingent consideration arrangement is up to £1.75 million.
No contingent liabilities have been assumed.
Acquisition costs of £81,000 have been charged to the statement of comprehensive income as an exceptional cost.
The acquisitions contributed £1,169,000 of revenue and £357,000 to the group’s pro?t before tax for the period between the date of
acquisition and the balance sheet date. If the acquisitions had been completed on the ?rst day of the ?nancial year, the group revenues
for the period would have been £46.0 million and group loss before tax would have been £0.6 million.
The amounts recognised above are provisional estimates.
Eddisons Commercial (Holdings) Limited
On 17 December 2014 the group acquired the entire issued share capital of Eddisons Commercial (Holdings) Limited, a property
services consultancy.
The amounts recognised in respect of the identi?able assets acquired and liabilities assumed are set out below:
Fair value
Book value adjustments Fair value
£’000 £’000 £’000
Net assets acquired
Intangible assets — 6,302 6,302
Goodwill 2,263 (2,263) —
Property plant and equipment 528 (33) 495
Trade and other receivables 2,976 (402) 2,574
Cash and cash equivalents 3,338 — 3,338
Trade and other payables (4,508) (184) (4,692)
Contingent liabilities — (225) (225)
Deferred tax (59) (1,361) (1,420)
Total identi?able assets 4,538 1,834 6,372
Satisfed by:
Cash (£5 million via an equity placing) 6,256
Contingent consideration 1,346
Less: amounts treated as deemed remuneration (1,346)
Total consideration 6,256
Gain on acquisition 116
Cash outfows arising on acquisition
Cash consideration 6,256
Less: cash and cash equivalents acquired (3,338)
2,918
Fair value adjustments of £6,302,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible
assets recorded can be found in note 12.
Begbies Traynor Group plc Annual Report and Accounts 2015 43
22. Acquisitions continued
Eddisons Commercial (Holdings) Limited continued
The contingent consideration arrangements require the group to pay the vendors additional consideration based upon performance
targets being met in the ?rst three years following acquisition. The fair value of contingent consideration was determined by forecasting
expected ?nancial performance in the earn-out period. The potential undiscounted amount of all future payments the group could be
required to make under the contingent consideration arrangement is up to £3.5 million.
Acquisition costs of £441,000 have been charged to the statement of comprehensive income as an exceptional cost.
The acquisition contributed £4,501,000 of revenue and £511,000 to the group’s pro?t before tax for the period between the date of
acquisition and the balance sheet date. If the acquisitions had been completed on the ?rst day of the ?nancial year, the group revenues
for the period would have been £53.4 million and group pro?t before tax would have been £0.2 million.
The amounts recognised above are provisional estimates.
23. Reconciliation to the cash fow statement
2015 2014
£’000 £’000
Proft for the year (1,580) 3,025
Adjustments for:
Tax (338) 770
Finance costs 1,055 1,108
Amortisation of intangible assets 1,584 525
Depreciation of property, plant and equipment 861 817
Non-cash exceptional costs 1,494 —
Deemed remuneration 430 —
Gain on acquisition (1,135) —
Loss on disposal of property, plant and equipment 25 —
Loss on disposal of discontinued operations 570 —
Share-based payment expense 61 33
Operating cash ?ows before movements in working capital 3,027 6,278
Decrease in receivables 4,682 4,024
Decrease in payables (1,846) (2,081)
Increase (decrease) in provisions 148 (844)
Cash generated by operations 6,011 7,377
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.
24. Contingent liabilities
The group had no material contingent liabilities at 30 April 2015 or 30 April 2014.
Begbies Traynor Group plc Annual Report and Accounts 2015 44
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
25. Operating lease arrangements
2015 2014
£’000 £’000
Minimum lease payments under operating leases recognised as an expense in the year 2,812 2,934
At the balance sheet date, the group had outstanding commitments for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
2015 2014
£’000 £’000
Within one year 2,805 2,528
In the second to ?fth years inclusive 4,372 3,012
After ?ve years 645 —
7,822 5,540
Operating lease payments principally represent rentals payable by the group for certain of its of?ce properties, which have an average
duration of six years, together with operating leases for motor vehicles.
26. Pensions
The group operates de?ned contribution pension schemes for all qualifying employees.
The total cost charged to income of £925,000 (2014: £800,000) represents contributions payable to these schemes by the group at rates
speci?ed in the rules of the plans. As at 30 April 2015, contributions of £107,000 (2014: £78,000) due in respect of the current year had
not been paid over to the schemes.
27. 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.
During the year the following transactions, all of which were on arm’s length terms and in the ordinary course of business, occurred in
which directors have an interest:
Various commercial properties used by members of the group during the year are owned or part owned by Ric Traynor or his personal
pension fund. Rent and service charges paid on those properties by entities within the group in the year totalled £720,000 (2014: £720,000).
At 30 April 2015 £nil (2014: £nil) was payable in respect of these transactions.
One commercial property used by members of the group during the year is part owned by Mark Fry. Rent and service charges
paid on this property by entities within the group in the year totalled £85,000 (2014: £85,000). At 30 April 2015 £nil (2014: £nil) was
payable in respect of this transaction. Mark Fry also part owns a company which provides archiving facilities to entities within the group.
£24,000 (2014: £23,000) was paid by entities within the group for this service during the year. At 30 April 2015 £6,000 (2014: £6,000)
was payable in respect of this service.
Ric Traynor purchased the controlling interest in Red Flag A!ert LLP (‘Red Flag’) from the group on 10 April 2012, with the group
retaining a minority interest in the partnership. The group has agreed to continue to provide IT, HR, marketing, administrative and
accounting services to Red Flag for which £96,000 was payable by Red Flag during the year (2014: £110,000). The group has
negotiated an agreement to retain full access to the database and joint marketing rights for the publication of Red Flag Alert quarterly
statistics and was charged a fee of £150,000 for the year (2014: £150,000). Rent of £24,000 was paid to the group by Red Flag
during the year (2014: £30,000). At 30 April 2015 £4,000 (2014: £56,000) was owed by Red Flag A!ert LLP.
Begbies Traynor Group plc Annual Report and Accounts 2015 45
Financial statements
Independent auditor’s report
to the members of Begbies Traynor Group plc
We have audited the ?nancial statements of Begbies Traynor Group plc for the year ended 30 April 2015, which comprise the company
balance sheet and the related notes 1 to 9. The ?nancial reporting framework that has been applied in their preparation is applicable law
and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
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.
Respective responsibilities of directors and auditor
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the ?nancial
statements and for being satis?ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the company
?nancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the fnancial statements
An audit involves obtaining evidence about the amounts and disclosures in the ?nancial statements suf?cient to give reasonable
assurance that the ?nancial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the parent company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of signi?cant accounting estimates made by the directors; and the overall
presentation of the ?nancial statements. In addition, we read all the ?nancial and non-?nancial information in the annual report to identify
material inconsistencies with the audited ?nancial statements and to identify any information that is apparently materially incorrect based
on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on fnancial statements
In our opinion the company ?nancial statements:
U give a true and fair view of the state of the company’s affairs as at 30 April 2015;
U have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
U have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and directors’ report for the ?nancial year for which the ?nancial statements
are prepared is consistent with the ?nancial statements.
Matters on which we are required to report by exception
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:
U adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not
visited by us; or
U the ?nancial statements are not in agreement with the accounting records and returns; or
U certain disclosures of directors’ remuneration speci?ed by law are not made; or
U we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the consolidated ?nancial statements of Begbies Traynor Group plc for the year ended 30 April 2015.
Rachel Argyle (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Manchester, United Kingdom
14 July 2015
Begbies Traynor Group plc Annual Report and Accounts 2015 46
Financial statements
Company balance sheet
at 30 April 2015
2015 2014
Notes £’000 £’000
Fixed assets
Investment in subsidiaries 3 31,431 23,675
Current assets
Debtors 4 35,461 32,259
Creditors: amounts falling due within one year
Other creditors and accruals 5 (449) (88)
Borrowings 6 — (26)
(449) (114)
Net current assets 35,012 32,145
Total assets less current liabilities 66,443 55,820
Creditors: amounts falling due after more than one year
Other creditors and accruals 5 (1,125) —
Net assets 65,318 55,820
Capital and reserves
Called-up share capital 7 5,536 4,876
Share premium account 8 22,473 18,020
Merger reserve 8 17,584 17,584
Pro?t and loss account 8 19,725 15,340
Shareholders’ funds 9 65,318 55,820
The ?nancial statements of Begbies Traynor Group plc, registered number 5120043, were approved by the board of directors
and authorised for issue on 14 July 2015. They were signed on its behalf by:
Ric Traynor Nick Taylor
Executive chairman Group fnance director
Begbies Traynor Group plc Annual Report and Accounts 2015 47
Financial statements
Notes to the company ?nancial statements
for the year ended 30 April 2015
1. Signifcant accounting policies
Basis of accounting
The separate ?nancial statements of the company have been prepared under the historical cost convention and in accordance with
applicable United Kingdom law and accounting standards.
The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year.
Investments
Fixed asset investments in subsidiaries are shown at cost less provision for impairment. The carrying value of ?xed asset investment
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 20. Options are valued using the Black-Scholes option pricing model. Further details are provided in note 21 of the consolidated
?nancial statements.
2. Proft for the year
As permitted by section 408 of the Companies Act 2006, the company has elected not to present its own pro?t and loss account for
the year. Begbies Traynor Group plc reported a pro?t for the ?nancial year ended 30 April 2015 of £6,336,000 (2014: £127,000).
The company has no employees (2014: no employees).
The auditor’s remuneration for audit and other services is disclosed in note 6 to the consolidated ?nancial statements.
3. Investment in subsidiaries
£’000
Cost
At 1 May 2014 29,810
Additions 7,756
At 30 April 2015 37,566
Provision for impairment
At 1 May 2014 and 30 April 2015 6,135
Net book value
At 30 April 2015 31,431
At 30 April 2014 23,675
Begbies Traynor Group plc Annual Report and Accounts 2015 48
Financial statements
Notes to the company ?nancial statements continued
for the year ended 30 April 2015
3. Investment in subsidiaries continued
Details of subsidiary entities are set out below. These undertakings are included in the consolidated group ?nancial statements
and are 100% owned.
Subsidiary undertaking Nature of business Country of incorporation
Begbies Traynor Limited* Holding company England and Wales
BTG Consulting Limited* Holding company England and Wales
Begbies Traynor International Limited* Holding company England and Wales
Begbies Traynor (Central) LLP Insolvency and restructuring England and Wales
BTG Corporate Finance LLP Corporate ?nance England and Wales
Begbies Traynor (Investigations) Limited Investigation agency England and Wales
BTG Financial Consulting LLP Financial consulting England and Wales
BTG Risk LLP Risk consultancy England and Wales
BTG Global Advisory Limited International network organisation England and Wales
Eddisons Commercial (Holdings) Limited* 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
Eddisons Holdings Limited Holding company England and Wales
Eddisons Trustee Company Limited Employee trust England and Wales
The London Silver Vaults and Chancery Lane Safe Deposit
Company Limited Management company England and Wales
Eddisons Commercial Ireland Limited Property consultancy Ireland
Eddisons France Sarl Facilities management France
Eddisons Spain S.L Facilities management Spain
Eddisons Switzerland Sarl Facilities management Switzerland
Eddisons Commercial Israel Limited Facilities management Israel
Eddisons Jordan LLC Facilities management Jordan
Eddisons Germany GmbH Facilities management Germany
Eddisons Italy S.R.L Facilities management Italy
Eddisons Norway AS Facilities management Norway
Eddisons Hungary Kft Facilities management Hungary
Eddisons Egypt Facilities management Egypt
Insolvency Advice Limited* Dormant England and Wales
W3 Debt Solutions LLP Dormant England and Wales
W3 Home Loans Limited Dormant England and Wales
Marplace (No 625) (an unlisted company) Dormant England and Wales
Begbies Traynor (East) Limited Dormant England and Wales
Marplace (No 622) Limited Dormant England and Wales
Begbies Traynor (North) Limited Dormant England and Wales
Begbies Traynor (Central) Limited Dormant England and Wales
Begbies Accountants Limited Dormant England and Wales
David Horner & Co Limited Dormant England and Wales
Hamiltons Insolvency Practitioners Limited Dormant England and Wales
BTG Forensic Technology LLP Dormant England and Wales
Marplace (No 620) Limited Dormant England and Wales
Begbies Traynor (South West) LLP Dormant England and Wales
Begbies Traynor Legal Services LLP Dormant England and Wales
Begbies Traynor (Scotland) LLP Dormant Scotland
Begbies Traynor (Isle of Man) Limited Dormant Isle of Man
Begbies Traynor Group plc Annual Report and Accounts 2015 49
3. Investment in subsidiaries continued
Subsidiary undertaking Nature of business Country of incorporation
BTG Tax LLP Dormant England and Wales
Begbies Traynor (Channel Islands) Limited Dormant Jersey
Eddisons Commercial (Middle East) Limited Dormant England and Wales
Eddisons East Point Limited Dormant Ireland
Philip Davies & Sons (Group) Limited Dormant England and Wales
Philip Davies & Sons Limited Dormant England and Wales
* 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
bene?ts in the operating entities of the group, is not less than the cost of those investments.
4. Debtors
2015 2014
£’000 £’000
Amounts falling due within one year
Amounts owed by group undertakings 35,223 32,010
Other debtors 238 249
35,461 32,259
5. Other creditors and accruals
2015 2014
£’000 £’000
Amounts falling due within one year
Other creditors 449 88
Amounts falling due after more than one year
Other creditors 1,125 —
6. Borrowings
2015 2014
Due within Due after Due within Due after
one year one year one year one year
£’000 £’000 £’000 £’000
Bank loans — — 26 —
In the prior year the company had unsecured bank borrowings of £26,000, repayable within one year. Interest on the loan was ?xed at 6.27%.
The company has no ?nancial instruments other than those shown as ?nancial liabilities above, all of which are denominated in sterling.
The directors consider the fair value of the ?nancial instruments approximate to their book values and that the main risk to the company arising
from ?nancial instruments is interest rate risk, which is kept under review.
Begbies Traynor Group plc Annual Report and Accounts 2015 50
Financial statements
Notes to the company ?nancial statements continued
for the year ended 30 April 2015
7. Share capital
2015 2014 2015 2014
thousand thousand £’000 £’000
Allotted, called up and fully paid
Ordinary shares of 5 pence
At 1 May 91,422 90,135 4,572 4,508
Staff SIP scheme 111 145 5 7
Consideration for acquisition 13,095 1,142 655 57
At 30 April 104,628 91,422 5,232 4,572
Allotted, called up but not fully paid
A ordinary shares of 3 pence
At 1 May 6,882 3,313 206 99
Issue of shares — 4,959 — 149
Conversion of shares (1,973) (1,390) (59) (42)
At 30 April 4,909 6,882 147 206
Allotted, called up and fully paid
Deferred shares of 1 pence
At 1 May 9,731 5,561 98 56
Conversion of shares 5,921 4,170 59 42
At 30 April 15,652 9,731 157 98
Issued share capital 125,189 108,035 5,536 4,876
Ordinary shares carry no right to ?xed income and each share carries the right to one vote at general meetings of the company.
A ordinary shares have no rights to ?xed income, dividends or voting rights at general meetings of the company. The shares are only
transferable either pursuant to an offer required to be made by the city code for the A ordinary shares or otherwise with prior written
consent of the company.
Deferred shares have no rights to ?xed income, dividends or voting rights at general meetings of the company. The shares are only
transferable with the consent of the company.
During the year, 50,676 A ordinary shares from 31 October 2013 growth share plan were converted into deferred shares.
The growth share plan granted on 1 July 2011 matured during the year, and the 1,923,077 A ordinary shares converted into deferred shares.
The company has issued share options as set out in note 21 to the consolidated ?nancial statements.
Begbies Traynor Group plc Annual Report and Accounts 2015 51
8. Reserves
Share Pro?t
premium Merger and loss
account reserve account
£’000 £’000 £’000
At 1 May 2014 18,020 17,584 15,340
Pro?t for the year — — 6,336
Shares issued 4,453 — —
Dividends — — (2,012)
Credit to equity for equity-settled share-based payments — — 61
At 30 April 2015 22,473 17,584 19,725
The merger reserve arose on the formation of the group in 2004.
9. Reconciliation of movements in equity shareholders’ funds
2015 2014
£’000 £’000
At 1 May 55,820 57,010
Proceeds of share issues, net of costs:
– nominal share capital 660 213
– share premium account 4,453 439
Pro?t for the year 6,336 127
Dividends (2,012) (2,002)
Credit to equity for equity-settled share-based payment 61 33
At 30 April 65,318 55,820
Begbies Traynor Group plc Annual Report and Accounts 2015 52
Of?cers and professional advisors
Shareholder information
Directors
R W Traynor
E N Taylor
M R Fry
R G McInnes
J M May
Secretary
J A Humphrey
Company number
5120043
Registered offce
340 Deansgate
Manchester
M3 4LY
Bankers
HSBC Bank plc
4 Hardman Square
Spinning?elds
Manchester
M3 3EB
Santander UK plc
Manchester Corporate Business Centre
298 Deansgate
Manchester
M3 4HH
M&G UK Companies Financing Fund II LP
Laurence Pountney Hill
London
EC4R 0HH
Solicitors
Brabners LLP
55 King Street
Manchester
M2 4LQ
Auditor
Deloitte 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 fnancial PR advisors
MHP Communications Limited
6 Agar Street
London
WC2N 4HN
Nominated advisor and joint broker
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Joint broker
Shore Capital Stockbrokers Limited
The Corn Exchange
Fenwick Street
Liverpool
L2 7RB
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Annual Report and Accounts 2015 - Begbies Traynor
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Begbies Traynor Group plc
Begbies Traynor Group is a leading UK business
recovery and property services consultancy.
Our aim is to add value and optimise ?nancial
outcomes for our clients and business stakeholders.
More about us can be found on pages 3–6
the number of UK-based banks
who provided us with insolvency and
restructuring appointments during the year
25
staff and partners at 30 April 2015
549
the number of UK locations
from which we operate
40
we remain the UK’s leading independent
business recovery practice, handling the
largest number of corporate appointments
No.1
Begbies Traynor Group plc Annual Report and Accounts 2015 01
Strategic report
Highlights of the year
Highlights
U Completed a £5.3 million placing of 13.1 million new ordinary
shares to fund the Eddisons acquisition
U Net debt reduced to £12.8 million (2014: £14.5 million), after
acquisition payments
Operational overview
Insolvency:
U Results re?ect a 14% reduction in the number of UK corporate
insolvencies in the year to 31 March 2015
U Retained market-leading position
U Streamlined our cost base and of?ce network, resulting
in exceptional costs
U Cost management has partially mitigated reduced revenue,
delivering solid operating margins
U Acquired and fully integrated Ian Franses Associates and
Broadbents Business Recovery Services which are trading
pro?tably, in line with our expectations
U Invested in our London of?ce during the year, with the team
moving to new of?ces in Canary Wharf
U Launched BTG Global Advisory, our new international alliance
of independent insolvency, restructuring and ?nancial advisory
?rms operating in key global jurisdictions
Property consultancy:
U Acquired Eddisons, a national ?rm of chartered surveyors
with a specialism in the valuation and disposal of property
and business assets, on 17 December 2014
U First ?ve months of trading in line with our expectations
U Integration proceeding well with all key personnel retained
and operating synergies being realised in line with our plans
Financial highlights
1
2015
£m
2014
£m
Revenue 45.4 44.1
Adjusted pro?t before tax
2
3.6 5.4
(Loss) pro?t before tax (0.7) 4.3
Adjusted basic EPS
3
(p) 2.9 4.7
Basic EPS (p) (0.6) 3.7
Proposed total dividend (p) 2.2 2.2
1
All ?gures stated from continuing operations following closure of loss-making
global risk partners division
2
Loss before tax from continuing operations of £0.7 million (2014: pro?t £4.3 million)
plus amortisation of intangible assets arising on acquisitions of £1.4 million
(2014: £0.3 million) plus exceptional and acquisition-related items of £2.9 million
(2014: £0.8 million)
3
See reconciliation in note 11
Contents
Strategic report
01 Highlights of the year
02 Chairman’s statement
03 Where we operate
04 Who we are
06 Our strategy and Key performance
indicators (KPIs)
07 Operating review
08 Finance review
10 Principal risks and uncertainties
Corporate governance
11 Board of directors
12 Directors’ report
13 Directors’ responsibilities statement
14 Directors’ remuneration report
16 Corporate governance statement
Financial statements
17 Independent auditor’s report
18 Consolidated statement
of comprehensive income
19 Consolidated statement
of changes in equity
20 Consolidated balance sheet
21 Consolidated cash ?ow statement
22 Notes to the consolidated
?nancial statements
45 Independent auditor’s report
46 Company balance sheet
47 Notes to the company
?nancial statements
Shareholder information
52 Of?cers and professional advisors
For more on who we
are and what we do:
www.begbies-traynorgroup.com
Begbies Traynor Group plc Annual Report and Accounts 2015 02
Strategic report
Introduction
The year under review was one of signi?cant
change for the group. We completed the
strategic acquisition of the Eddisons property
consultancy in December 2014, as well as two
bolt-on insolvency acquisitions. In addition we
restructured our insolvency division in response
to lower levels of market activity, incurring
exceptional costs, together with discontinuing
the loss-making global risk partners division.
The group is now focussed on two
complementary operating divisions: Begbies
Traynor, the insolvency, restructuring and
investigations consultancy; and Eddisons, the
property valuation and property management
consultancy. We are positioned to take
advantage of the cyclicality of the insolvency
market, where we have maintained our
market-leading position by number of
appointments, and to develop our property
services consultancy. These complementary
service lines should give the group a more
balanced business across the economic cycle.
It was another challenging year for the
insolvency industry with national volumes
at their lowest level since 2007, impacting
our insolvency caseload. There has also
been a change in the means of generating
SME insolvency cases in recent years with
the increasing use of internet-based rather
than traditional marketing techniques.
We invested in this area initially through
the acquisition of Cooper Williamson in
October 2013 and have continued to invest
in these marketing initiatives. These factors
have impacted on the business and as a
result we have streamlined our cost base
and of?ce network in the year. Unfortunately
this resulted in exceptional costs being
charged; however, further bene?ts from
these cost reductions will be realised in
the new ?nancial year and beyond. In spite
of the challenging market, the insolvency
business continues to trade pro?tably with
solid operating margins and generates
strong operating cash ?ows.
The integration of Eddisons is proceeding
in line with our plans and the ?rst ?ve months
of post-acquisition trading were in line with
our expectations. The group will bene?t from
a full 12 month contribution from the business
in the new ?nancial year.
The combination of current year restructuring
costs and losses from our discontinued
business resulted in a statutory loss for
the year as a whole. However, following the
actions completed over the last 12 months,
together with the acquisition of Eddisons,
the group is well placed to return to pro?t
in future years.
Our continued focus on cash management
has resulted in a reduction in net debt to
£12.8 million (2014: £14.5 million), after
acquisition payments, which has enabled
the board to recommend a maintained
dividend for the year. We thank shareholders
and employees for their continued support
and patience in what is a transitional period
for the group.
Results
Group revenue from continuing operations in
the year ended 30 April 2015 was £45.4 million
(2014: £44.1 million). Adjusted pro?t before
tax
1
was £3.6 million (2014: £5.4 million).
Exceptional and acquisition-related items
(detailed in the ?nance review) totalled
£2.9 million (2014: £0.8 million). Loss before
tax was £0.7 million (2014: pro?t before tax
£4.3 million). Statutory loss for the year
was £1.6 million (2014: pro?t £3.0 million)
after loss from discontinued operations.
Earnings per share from continuing
operations
2
, adjusted for the net of tax
impact of amortisation of intangible assets
arising on acquisition, exceptional and
acquisition-related items were 2.9 pence
(2014: 4.7 pence). Basic and fully diluted
loss per share from continuing operations
were 0.6 pence (2014: earnings per share
3.7 pence).
Net debt after acquisition payments reduced
by £1.7 million to £12.8 million at 30 April 2015
(2014: £14.5 million). Gearing reduced to 21%
(2014: 24%) and the group retains signi?cant
headroom in its committed banking facilities.
Interest cover
3
was 4.4 times (2014: 5.9 times).
Net assets per share were 58 pence
(2014: 65 pence).
1
Loss before tax from continuing operations
of £0.7 million (2014: pro?t £4.3 million) plus
amortisation of intangible assets arising on
acquisitions of £1.4 million (2014: £0.3 million)
plus exceptional and acquisition-related items
of £2.9 million (2014: £0.8 million)
2
See reconciliation in note 11
3
Before exceptional and acquisition-related items
and amortisation of intangible assets arising
on acquisitions
Dividend
The board remains committed to a long-term
progressive dividend policy, which re?ects the
potential for earnings growth. Having considered
the results for the year, the level of retained
earnings and the group’s ?nancial position,
together with the outlook for the new ?nancial
year and the investment requirements of the
business, the board has recommended
the total dividend be maintained at 2.2 pence
(2014: 2.2 pence). This comprises the
interim dividend already paid of 0.6 pence
(2014: 0.6 pence) and a ?nal dividend of
1.6 pence (2014: 1.6 pence).
The ?nal dividend will be paid on
6 November 2015 to shareholders
on the register on 9 October 2015, with
an ex-dividend date of 8 October 2015.
People
We are reliant on the expertise, professionalism
and commitment of our people and I thank
all of them for their contribution during another
challenging year for our industry.
Outlook
Financial performance in our insolvency
division is directly related to the cyclicality
of the national insolvency market. The market
as a whole remains dif?cult to predict although
activity levels have stabilised over the last
four quarters to 31 March 2015. However,
there are no indications of a change in the
benign ?nancing environment in the UK and
we therefore remain cautious about activity
levels in this division in the near term.
The restructuring of the division completed
in the last ?nancial year will result in a reduced
cost base for the new ?nancial year and
we remain con?dent of the division’s
long-term performance.
The new ?nancial year will bene?t from
a full year contribution from the Eddisons
acquisition, which is expected to enhance
our ?nancial performance, delivering a
stable level of pro?tability in line with its
post-acquisition trading and maintain
positive cash generation.
The combination of the reduced cost
base in the insolvency division, the removal
of losses from the discontinued business
and the full year impact of the Eddisons
acquisition leaves the group well placed
in the new ?nancial year and beyond.
We will continue to look for opportunities
to develop and enhance the business, both
organically and through selective acquisitions.
An update on current trading will be
provided at the time of the company’s
annual general meeting in September 2015.
Ric Traynor
Executive chairman
14 July 2015
Chairman’s statement
Begbies Traynor Group plc Annual Report and Accounts 2015 03
Strategic report
Where we operate
We provide our services via a
comprehensive network spanning
the whole of the UK, with of?ces
in the following locations:
Market
The number of corporate insolvencies (source: The Insolvency Service) for the year to 31 March 2015 (the period which most closely
matches the group’s ?nancial year) totalled 16,380 (2014: 18,994), representing a 14% year-on-year reduction. The number of corporate
insolvencies in the ?rst calendar quarter of 2015 was 4,014, which is the lowest level of quarterly appointments since the fourth calendar
quarter of 2007, albeit these numbers have stabilised at this level over the last 12 months.
3
40
21 23 7
15
20
33
26
36
31
22
5
24
13
39
27
28
14
4
10
35
25
8
29
38
12
9
2
32
34
30
6
11
37
18
1
16
17
19
Begbies Traynor Group plc Annual Report and Accounts 2015 04
Strategic report
Who we are
Begbies
Begbies Traynor is the UK’s leading independent business recovery practice handling the largest number
of corporate appointments, principally serving the mid-market and smaller companies.
We provide a range of specialist professional services primarily to businesses, their professional advisors
and the major banks covering insolvency, restructuring and risk management activities.
Restructuring and ?nancial consulting
Consulting services to businesses, professional advisors and ?nancial institutions on debt re?nancing, business valuations,
corporate ?nance and business reviews, together with conduct of ?nancial investigations and due diligence
Services offered
Begbies Traynor Group plc is a business recovery and
property services consultancy, providing services nationally
from a comprehensive network of UK locations through
two operating divisions: Begbies Traynor and Eddisons.
Our services
Corporate insolvency
Procedures aim to either rescue the business (where feasible)
or realise the value of assets and distribute any available funds
to creditors
Insolvency procedures
Administration
Liquidation
Receiverships
Creditors’ voluntary arrangements
Personal insolvency
Provide advice to debtors and creditors on all aspects
of personal insolvency
Insolvency procedures
Bankruptcy and individual voluntary arrangements
(England and Wales)
Trust deeds and sequestrations (Scotland)
Begbies Traynor
U Business reviews
U Lender and creditor negotiation
U Corporate ?nance
U Valuation
U Debt advisory
U Forensic investigations
U Investigation due diligence
Begbies Traynor Group plc Annual Report and Accounts 2015 05
Eddisons
Eddisons is a national ?rm of chartered surveyors, offering a wide range of specialist services to banks,
insolvency practitioners, and owners and occupiers of commercial property.
The services offered are valuation and sale of property, machinery and business assets, including ?xed
charge property receiverships; insolvency insurance brokerage; property and facilities management; and
building consultancy services.
Specialist insurance and vacant
property services
Specialist insurance brokerage and risk management solutions
U Specialist property insurance
U Open cover insurance for insolvency practitioners
U Compliance with vacant property insurance requirements
U Risk management solutions
Building consultancy
Advice to owners and occupiers of commercial property
U Lease advisory
U Dilapidations advice
U Rating reviews
Asset valuation and disposal
Valuation and disposal of property and other business assets
U Property valuation
U Property auctions
U Agency services
U Property receiverships
U Machinery and business asset valuation and disposals
Property and facilities management
Services to owners and occupiers of commercial properties
U Property and asset management
U Rent review and lease advisory
U Helpdesk support
U Service charge collection and management
Eddisons
Begbies Traynor Group plc Annual Report and Accounts 2015 06
Strategic report
Our strategy
Key performance indicators (KPIs)
To enhance our market-leading business recovery practice,
ensuring the business is well placed to bene?t from
opportunities in its counter-cyclical marketplace, together
with developing our property services consultancy.
The Board uses the following KPIs to manage the performance of the business:
44.1
45.4
Revenue (£m)
2014 2015
6.5
4.7
EBITA (£m)
2014 2015
4.7
2.9
2014 2015
Adjusted EPS (p)
14.5
12.8
2014 2015
Net debt (£m)
Developments in the year
In December 2014 we completed the strategic acquisition of Eddisons, a national ?rm of chartered surveyors. Eddisons brings expertise
in the valuation and disposal of property and business assets, which is intrinsic to our insolvency division. The acquisition enables the
group to utilise Eddisons’ expertise on its existing caseload rather than subcontractors, together with marketing our enhanced
competencies and service offerings to the combined client base, including banks and other ?nancial institutions.
We have also continued to invest in our insolvency division through two acquisitions in the year: Ian Franses Associates on 13 June 2014,
based in Paddington, and Yorkshire-based Broadbents Business Recovery Services on 31 March 2015. Both businesses have been fully
integrated into our operations and are trading pro?tably in line with our expectations. We also invested in our London of?ce during the
year, with the team moving to new of?ces in Canary Wharf. Subsequent to the year end we launched BTG Global Advisory, our new
international alliance of independent insolvency, restructuring and ?nancial advisory ?rms operating in key global jurisdictions.
Begbies Traynor Group plc Annual Report and Accounts 2015 07
Strategic report
Operating review
Insolvency and restructuring
Begbies Traynor is the UK’s leading
independent business recovery practice,
providing a partner-led service to
stakeholders in troubled businesses.
Segmental pro?ts
1
in the year decreased
to £8.5 million (2014: £10.9 million),
as a result of a reduction in revenue
to £40.9 million (2014: £44.1 million).
The reduced level of market activity led
to lower insolvency appointments for the
group, which combined with the ongoing
pressure on fee rates, caused the reduced
revenue levels in the year. There has also
been a change in the means of generating
SME insolvency cases in recent years with
the increasing use of internet-based rather
than traditional marketing techniques.
We invested in this area initially through
the acquisition of Cooper Williamson
in October 2013 and have continued
to invest in these marketing initiatives.
These factors have impacted on the business
and as a result we have streamlined our cost
base and of?ce network in the year. The
number of people employed in the division
has decreased to 354 as at 30 April 2015
from 391 at the start of the ?nancial year,
having integrated 17 from acquired
businesses over the year. Segmental costs
were £32.4 million (2014: £33.2 million),
an increase of £0.8 million from acquisitions
offset by in-year reductions of £1.6 million.
As a result of actions completed this year
the cost base will reduce by an additional
£1.5 million in the new ?nancial year.
Exceptional costs relating to the restructuring
were £2.6 million. Operating margins were
20.8% (2014: 24.6%).
We remain the market leader in UK
mid-market insolvency and we believe
that the combination of our full national
coverage, strong relationships with all major
UK banks and excellent referral networks
from other professional services organisations
leaves the business well-placed to take
full advantage of this cyclical market.
We will continue to develop this division
through a combination of senior recruitment,
selective acquisitions and staff development,
with the intention of progressively increasing
our market share. Further development
over the medium term could come from
winning higher value, more complex
instructions from existing clients and
prospects, by demonstrating our
capabilities and credentials.
Property consultancy
Eddisons is a national ?rm of chartered
surveyors, providing its services to banks,
insolvency practitioners, and owners and
occupiers of commercial property.
The business was acquired on 17 December
2014 and generated segmental revenues
1
of £4.5 million and pro?ts of £0.7 million
for the post-acquisition period, in line
with our expectations.
The integration of the business into
the group is proceeding well with all key
personnel being retained. The Eddisons
team is being appointed on a number of
the group’s insolvency cases. In addition,
operating synergies, through shared
property and other overhead costs,
are being realised in line with our plans.
The number of people employed in
the division was 134 on 30 April 2015.
We will develop this division through a
combination of senior recruitment and
selective acquisitions with the intention
of developing its service offering and
geographical coverage.
Partners and employees
As at 30 April 2015, the group employed
a total of 549 partners and staff (2014: 438),
an increase of 25% compared with a year ago;
this comprises 384 fee earners and 165
support staff. This includes 165 employees
who joined the group following acquisitions
in the year.
We continue to invest in training and
developing our people and we are pleased
to have promoted four fee earners to partner,
three subsequent to the year end.
1
See note 4
Begbies Traynor Group plc Annual Report and Accounts 2015 08
Strategic report
Revenue
Trading performance was affected by
the challenging trading conditions in the
year. Revenue increased to £45.4 million
(2014: £44.1 million) as a result of revenue
from in-year acquisitions of £5.6 million,
which was partially offset by reduced revenue
of £4.3 million in the insolvency division,
following the reduction in national
insolvency appointments.
EBITA (pre-exceptional items)
Operating costs increased to £40.7 million
(2014: £37.6 million). The impact of the
Eddisons acquisition in the current year was
£4.0 million. Costs reduced by £1.7 million
as a result of restructuring the cost base
in response to the drop in market volumes,
partially offset by £0.8 million of costs
from acquired businesses.
EBITA (pre-exceptional items) reduced
to £4.7 million (2014: £6.5 million) with
margins of 10.3% (2014: 14.8%).
Finance costs
Finance costs totalled £1.1 million
(2014: £1.1 million).
Amortisation
Amortisation costs increased to £1.4 million
(2014: £0.3 million) due to the amortisation of
intangible assets arising on in-year acquisitions.
Exceptional and acquisition-related
items
Exceptional and acquisition-related items
in the year of £2.9 million (2014: £0.8 million
associated with the relocation of the group’s
London of?ces) comprise:
U restructuring costs of £2.6 million,
comprising £1.5 million case closure
provision, £0.9 million redundancy costs
and £0.2 million onerous lease costs,
of which £0.3 million is included within
provisions at 30 April 2015. This has
reduced the group’s operating cost base
realising cost savings of £1.7 million in the
last ?nancial year with further committed
reductions to be realised in the new
?nancial year of £1.5 million;
U business integration costs following
the Eddisons acquisition of £0.5 million,
of which £0.5 million is included within
provisions at 30 April 2015; and
U acquisition-related credit of £0.2 million
comprising: acquisition costs £0.5 million
and deemed remuneration charges
of £0.4 million, offset by a gain on
acquisition of £1.1 million.
Tax
The tax charge for the year (prior to credit
resulting from exceptional costs) was
£0.6 million (2014: £1.0 million) representing
an effective tax rate of 26% (2014: 20%,
which re?ects a reduction in deferred
tax liabilities due to the reduction in the
corporation tax rate to 20%). The tax
credit resulting from exceptional and
acquisition-related items was £0.7 million
(2014: £0.1 million). Tax credit for the year
of £0.1 million (2014: charge £0.9 million).
Earnings per share (‘EPS’)
EPS
1
, adjusted for the net of tax impact
of the amortisation of intangible assets
arising on acquisitions, exceptional and
net acquisition-related items, were
2.9 pence (2014: 4.7 pence).
Basic and diluted loss per share were 0.6
pence (2014: earnings per share 3.7 pence).
1
See reconciliation in note 11
Acquisitions
The group completed three acquisitions
during the ?nancial year as follows:
Ian Franses
On 13 June 2014, the group completed
the acquisition of the trade and assets
of Ian Franses Associates Limited,
a London-based insolvency practice.
The maximum acquisition consideration
of £2.0 million is as follows: initial
consideration of £0.6 million in cash,
together with contingent consideration
based on ?nancial performance over the
three years from completion of £1.4 million,
payable in cash.
Eddisons
On 17 December 2014, the group completed
the acquisition of the entire issued share capital
of Eddisons Commercial (Holdings) Limited,
a national ?rm of chartered surveyors.
The maximum acquisition consideration
of £8.5 million (net of £1.25 million cash
payment in relation to the level of working
capital at completion) is as follows: initial
consideration of £5.0 million in cash funded
by a vendor placing, together with contingent
consideration based on ?nancial performance
as follows: £1.5 million cash payable on
account over four years, with historic
payments subject to claw back in the
event of subsequent underperformance;
£1.5 million cash or equity bullet payable
after four years, based on cumulative
performance over the four years; and
£0.5 million cash or equity payable
between ?ve and eight years.
Finance review
2015 2014
£m £m
Revenue from continuing operations 45.4 44.1
EBITA (pre-exceptional items) 4.7 6.5
Finance costs (1.1) (1.1)
Adjusted pro?t before tax 3.6 5.4
Exceptional and acquisition-related items (2.9) (0.8)
Amortisation of intangible assets arising on acquisitions (1.4) (0.3)
(Loss) pro?t before tax (0.7) 4.3
Tax 0.1 (0.9)
(Loss) pro?t for the year from continuing operations (0.6) 3.4
Begbies Traynor Group plc Annual Report and Accounts 2015 09
Broadbents
On 31 March 2015, the group completed
the acquisition of the trade and assets of
Broadbents Business Recovery Services
Limited, a Yorkshire-based insolvency practice.
The maximum acquisition consideration of
£0.55 million is as follows: initial consideration
of £0.2 million in cash, together with contingent
consideration based on ?nancial performance
over the two years from completion of
£0.35 million, payable in cash.
Accounting treatment
The maximum consideration payable for
these acquisitions includes amounts which
require post-acquisition service obligations
to be performed by the selling shareholders.
In accordance with the IFRS Interpretation
Committee’s interpretation of paragraph
B55 of IFRS 3, regarding such payments,
these amounts are treated as deemed
remuneration and will be charged to the
consolidated statement of comprehensive
income over the period of the obligation. The
charge in the year for deemed remuneration
was £0.4 million. As a result of this accounting
guidance, the value of net assets acquired
(£7.6 million) exceeds the accounting value
of the consideration (£6.5 million) and
consequently a gain of £1.1 million has
been recognised as an exceptional item
in the year. Acquisition costs of £0.5 million
have been charged to the statement of
comprehensive income as an exceptional cost.
Share placing
On 17 December 2014, the group completed
a share placing of 13,094,982 new ordinary
shares at a price of 40.5 pence per share to
raise £5.3 million (before costs) in connection
with the Eddisons acquisition: £5.0 million
via a vendor placing to satisfy the initial
consideration; and £0.3 million via a
cash placing for transaction costs.
Cash fows
Cash generated by operations (before
interest and tax payments) in the year
was £6.0 million (2014: £7.4 million). Tax
payments in the year were £1.3 million
(2014: £1.0 million). Interest payments
were £1.0 million (2014: £0.9 million).
Cash out?ows from investing activities
were £5.2 million (2014: £0.9 million).
Capital expenditure was £1.3 million (2014:
£0.4 million), principally relating to our new
London of?ce. Deferred payments relating
to prior year acquisitions were £0.2 million
(2014: £0.1 million). Acquisition payments
were £3.7 million (2014: £0.5 million),
net of cash acquired of £3.3 million.
Financing cash in?ows were £3.1 million
(2014: out?ow of £2.0 million). The share
placing in the year in connection with the
Eddisons acquisition raised £5.0 million net
of costs, with proceeds from other share
issues of £0.1 million (2014: £0.1 million).
Dividend payments were £2.0 million
(2014: £2.0 million). During the prior year
there was a repayment of asset ?nance
obligations of £0.1 million.
Financing
Net borrowings reduced by £1.7 million
to £12.8 million at 30 April 2015 (2014:
£14.5 million), with a reduction in gearing to
21% (2014: 24%) and signi?cant headroom
within the committed banking facilities
of £30 million. During the year, all bank
covenants were comfortably met and the
group remains in a strong ?nancial position.
The group’s principal unsecured, committed
facilities of £30 million provide the group
with medium and long-term ?nancing with
maturity dates from 2017 to 2021.
Net assets
At 30 April 2015 net assets were £61.0 million
(2014: £59.4 million), equivalent to net assets
per share of 58 pence (2014: 65 pence).
Non-current assets increased to £60.3 million
(2014: £53.3 million) due to intangible assets
recognised on acquisitions and capital
expenditure in the year.
Trade and other receivables decreased
to £34.9 million (2014: £36.6 million), principally
due to an organic reduction in working capital
of £4.2 million partially offset by an increase
from acquisitions of £2.5 million.
Net borrowings reduced to £12.8 million
(2014: £14.5 million).
Trade and other payables increased
to £12.8 million (2014: £8.2 million) principally
due to acquisitions. The balance includes
trade creditors and accruals of £8.6 million
(2014: £5.9 million), tax and social security
creditors of £2.1 million (2014: £1.7 million)
and deferred consideration liabilities of
£2.1 million (2014: £0.6 million) of which
£0.7 million (2014: £0.3 million) is payable
within one year.
Provisions for property costs, restructuring
costs and post-disposal obligations total
£2.3 million (2014: £2.1 million), of which
£1.6 million is payable within one year.
Current tax receivables were £0.1 million
(2014: liabilities of £0.7 million). Deferred tax
liabilities were £6.4 million (2014: £5.0 million).
Discontinued operations
During the year the global risk partners
segment was discontinued. In accordance with
IFRS 5, the results of these activities have been
separately disclosed and the comparative
results re-presented on this basis.
During the year the discontinued
activities generated revenue of £0.5 million
(2014: £1.7 million) and a post-tax loss
of £1.0 million (2014: £0.4 million),
including a loss on disposal of £0.6 million.
At the period end the group had deferred
contingent consideration receivable of
£0.6 million.
Going concern
The directors have reviewed the ?nancial
resources available to the group and have
concluded that the group will be able to
operate within the level of its borrowing
facilities and have a reasonable expectation
that the group has adequate resources to
continue in operational existence for the
foreseeable future. This conclusion is based,
amongst other matters, on the group’s existing
borrowing facilities and a review of ?nancial
forecasts for a period exceeding 12 months
from the date of this announcement.
Accordingly, the ?nancial information in this
announcement is prepared on the going
concern basis.
Begbies Traynor Group plc Annual Report and Accounts 2015 10
Strategic report
The operations of the group and the implementation of the group’s strategy involve a number of risks and
uncertainties, the principal of which are described in the table below. Controls to reduce risk are designed
to manage rather than eliminate risk and can only provide reasonable and not absolute assurance against
material misstatement or loss.
Risk Mitigating activities
Marketplace
The group’s markets are susceptible to macroeconomic movements,
such as interest rates, GDP changes and indebtedness levels.
The group operates in a highly competitive market and is reliant
on the ?ow 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 banks and other ?nancial and
professional intermediaries.
Operational gearing
The business is operationally geared with a high proportion of
salary and property costs, which cannot be immediately varied.
Consequently, the group’s pro?tability is liable to short-term
?uctuations dependent on activity levels.
This risk is managed through ?exing our resource levels, where possible,
to align with current and anticipated levels of activity, together with the
control of other discretionary items of expenditure. A prudent level of
spare capacity is retained to facilitate peaks in activity.
Reliance on key personnel
The business is dependent upon the professional development,
recruitment and retention of high quality professional partners
and staff.
The group manages the risk of high staff turnover through attention
to human resource issues and the monitoring of remuneration levels
against the wider market, including long-term incentive arrangements.
Legal and regulation
The group operates in regulated markets. Failure to comply with,
or changes in, regulation or legislation may have an adverse
impact on the activities of the business.
To ensure compliance with relevant legislation in performing regulated
activities, the group has a dedicated compliance function which
maintains procedures and policies in line with current legislation.
In the ordinary course of business, certain aspects of the group’s
services are opinion-based and may be subject to challenge.
Where appropriate, the group will seek third-party professional
corroboration. In addition, the group has appropriate professional
indemnity insurance.
Liquidity risk
The group’s ability to generate cash from its engagements 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 ?nancing 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 ?exibility through the use of its committed banking
facilities, together with bank overdrafts and loans, ?nance leases
and hire purchase contracts.
Going concern
Given the guidance issued by the Financial Reporting Council (‘FRC’), disclosures are presented in note 2 to the ?nancial statements
around the basis on which the directors have continued to adopt the going concern basis in preparing these ?nancial statements.
Ric Traynor Nick Taylor
Executive chairman Group fnance director
14 July 2015
Principal risks and uncertainties
Begbies Traynor Group plc Annual Report and Accounts 2015 11
Corporate governance
Ric Traynor (age 55)
Executive chairman
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.
Mark Fry (age 47)
Head of insolvency and restructuring
Mark was appointed to the board in 2011
as head of insolvency and restructuring,
having joined the group in 2005 following
an acquisition. He led our London and
South East region prior to his board
appointment and played a key role in
developing the group’s advisory practice.
Mark acts as an insolvency practitioner,
has been appointed in numerous complex
and high-pro?le assignments and is
a former president of the Insolvency
Practitioners Association.
John May (age 60)
Non-executive director
John was appointed to the board in 2007
as a non-executive director. He is also the
independent chairman of the AFI Group.
John was an executive director of Caledonia
Investments plc and previously worked
for the Hambros Group for over 20 years,
where he was an executive director
of Hambros Bank and joint managing
director of Hambro Countrywide.
Nick Taylor (age 44)
Group fnance director
Nick was appointed as group ?nance
director in 2010, having joined the group
as ?nancial controller in 2007. He is a
chartered accountant who quali?ed with
KPMG and previously held senior ?nance
roles in United Utilities PLC and Vertex
Data Science Limited, the business
process outsourcer.
Graham McInnes (age 63)
Non-executive director
Graham was appointed to the board in
2004, initially as group ?nance director and
subsequently as corporate development
director. In 2012, Graham became a
non-executive director. He has held a number
of senior ?nance positions including corporate
?nance partner at Spicer and Oppenheim
(now part of Deloitte) and ?nance director of
Enterprise plc, in addition to developing his
own corporate ?nance boutique in the 1990s.
Board of directors
Begbies Traynor Group plc Annual Report and Accounts 2015 12
Corporate governance
The directors present their Annual Report
on the affairs of the group, together with
the ?nancial statements and auditor’s
report for the year ended 30 April 2015.
The chairman’s statement, directors’
remuneration report and corporate
governance statement form part of the
directors’ report and are incorporated
into it by cross reference.
Directors
The names and brief biographical details
of the directors are shown on page 11.
Dividends
The directors recommend a ?nal dividend
of 1.6 pence (2014: 1.6 pence) per ordinary
share to be paid on 6 November 2015
to shareholders on the register at
9 October 2015. This, together with the
interim dividend of 0.6 pence paid on
8 May 2015 (2014: 0.6 pence), makes
a total of 2.2 pence for the year
(2014: 2.2 pence).
Substantial shareholdings
On 3 July 2015, the company had been
noti?ed, in accordance with sections 791
to 828 of the Companies Act 2006, of the
following interests in the ordinary share
capital of the company.
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.
Social policies and
employee involvement
The policy of the group is to recruit,
promote, train and develop its people
by reference to their skills, abilities and
other attributes of value to their role in the
business. The group considers itself to be
an equal opportunities employer. Employee
engagement is encouraged through a
variety of means including a corporate
intranet, team meetings and regular
dialogue with employees.
The activities of the group have a minimal
pollution impact on the environment and
its energy consumption is modest. Due
consideration to environmental issues
is given where appointed insolvency
administrators take control of third-party
businesses in the course of their work.
Political contributions
No political donations were made during
the year (2014: £nil).
Auditor
Each of the directors at the date of approval
of this Annual Report con?rms that:
U so far as the director is aware, there is
no relevant audit information of which
the company’s auditor is unaware; and
U 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.
This con?rmation is given and
should be interpreted in accordance
with the provisions of section 418
of the Companies Act 2006.
Deloitte LLP have expressed their
willingness to continue in of?ce as auditor
and a resolution to reappoint Deloitte LLP
will be proposed at the forthcoming
Annual General Meeting.
Approved by the board of directors
and signed on behalf of the board
John Humphrey
Company secretary
14 July 2015
Directors’ report
Name of holder Number
Percentage
held
Hof Hoorneman Bankiers 11,910,000 11.38
Fidelity Worldwide Investment 9,526,252 9.10
Allianz Global Investors 7,537,510 7.20
Theodoor Gilissen 6,417,608 6.13
Heronbridge Investment Management 3,718,066 3.55
Other than the above holdings and those of directors (see page 15), the board is not aware
of any bene?cial holdings in excess of 3% of the issued capital of the company.
Begbies Traynor Group plc Annual Report and Accounts 2015 13
Corporate governance
The directors are responsible for
preparing the Annual Report and the
?nancial statements in accordance
with applicable law and regulations.
Company law requires the directors
to prepare ?nancial statements for each
?nancial year. Under that law the directors
are required to prepare the group ?nancial
statements in accordance with International
Financial Reporting Standards (‘IFRSs’)
as adopted by the European Union and
Article 4 of the IAS Regulation and have
elected to prepare the parent company
?nancial 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 accounts unless they
are satis?ed that they give a true and fair
view of the state of affairs of the company
and of the pro?t or loss of the company
for that period.
In preparing the parent company ?nancial
statements, the directors are required to:
U select suitable accounting policies and
then apply them consistently;
U make judgements and accounting
estimates that are reasonable and prudent;
U state whether applicable UK
Accounting Standards have been
followed, subject to any material
departures disclosed and explained
in the ?nancial statements; and
U prepare the ?nancial statements on
the going concern basis unless it is
inappropriate to presume that the
company will continue in business.
In preparing the group ?nancial
statements, International Accounting
Standard 1 requires that directors:
U properly select and apply
accounting policies;
U present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information;
U provide additional disclosures
when compliance with the speci?c
requirements in IFRSs are insuf?cient to
enable users to understand the impact
of particular transactions, other events
and conditions on the entity’s ?nancial
position and ?nancial performance; and
U make an assessment of the company’s
ability to continue as a going concern.
The directors are responsible for
keeping adequate accounting records
that are suf?cient to show and explain
the company’s transactions and disclose
with reasonable accuracy at any time
the ?nancial position of the company and
enable them to ensure that the ?nancial
statements comply with 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.
The directors are responsible for the
maintenance and integrity of the corporate
and ?nancial information included on the
company’s website. Legislation in the
United Kingdom governing the preparation
and dissemination of ?nancial statements may
differ from legislation in other jurisdictions.
Responsibility statement
We con?rm that to the best of our knowledge:
U the ?nancial statements, prepared in
accordance with the relevant ?nancial
reporting framework, give a true and
fair view of the assets, liabilities, ?nancial
position and pro?t or loss of the company
and the undertakings included in the
consolidation taken as a whole;
U the strategic report includes a fair review
of the development and performance
of the business and the position of the
company and the undertakings included
in the consolidation taken as a whole,
together with a description of the
principal risks and uncertainties that
they face; and
U the Annual Report and ?nancial
statements, taken as a whole, are fair,
balanced and understandable and
provide the information necessary for
shareholders to assess the company’s
performance, business model
and strategy.
By order of the board
Ric Traynor Nick Taylor
Executive chairman Group fnance director
14 July 2015
Directors’ responsibilities statement
Begbies Traynor Group plc Annual Report and Accounts 2015 14
Corporate governance
The company is not obliged to prepare a directors’ remuneration report and the information below does not constitute a ‘directors’
remuneration report’ within the meaning of the Companies Act 2006.
The remuneration committee
The remuneration committee comprises John May, a non-executive director, and the executive chairman. The committee determines the
pro?t shares, remuneration, bonuses and consultancy charges payable to the executive directors. The committee meets annually to settle
the executive directors base remuneration for the ensuing year, together with any bonus entitlement.
Directors’ remuneration
The normal remuneration arrangements for executive directors consist of basic salary and pensions contributions or directors’ fees
and pro?t share, together with an annual bonus. In addition, directors receive income protection insurance, private medical insurance
and death in service bene?ts.
The executive bonus scheme pays a multiple of salary/pro?t share based on earnings per share performance.
Some of the executive directors participate in the group’s share option and growth share plan, detailed on page 15. Details of pension
contributions paid by the company in respect of directors are included in note 7.
Directors’ emoluments
Fees/
basic salary/ Bene?ts 2015 2014
pro?t share in kind total total
Name of director £ £ £ £
Executive
Ric Traynor 225,000 35,701 260,701 294,211
Nick Taylor 186,438 10,222 196,660 167,769
Mark Fry 425,000 70,339 495,339 600,803
Non-executive
John May 25,000 — 25,000 25,000
Graham McInnes 25,000 — 25,000 25,000
Aggregate emoluments 886,438 116,262 1,002,700 1,112,783
Directors’ remuneration report
Begbies Traynor Group plc Annual Report and Accounts 2015 15
Directors’ interests
The directors who held of?ce at 30 April 2015 had the following interests in the shares of the group:
30 April 2015 1 May 2014
Name of director Description of shares Benefcial % Bene?cial %
Ric Traynor Ordinary shares 27,178,980 26.00 26,561,697 29.10
Nick Taylor Ordinary shares 5,000 0.01 5,000 0.01
Mark Fry Ordinary shares 143,890 0.14 143,890 0.16
Graham McInnes Ordinary shares 917,432 0.88 855,704 0.94
John May Ordinary shares 276,574 0.26 202,500 0.22
No changes took place in the interests of directors between 30 April 2015 and 14 July 2015.
Directors’ share options and growth share plan
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 and growth share plan awards for directors who served during the year are as follows:
Name of director Scheme
Number at
1 May 2014
Granted
in year
Forfeited/
lapsed in year
Number at
30 April 2015
Exercise
price
(pence) Earliest exercise date Expiry date
Mark Fry Growth shares 1,923,077 — (1,923,077) — 68.0 1 July 2014 1 July 2014
Growth shares 2,388,546 — — 2,388,546 48.0 31 October 2016 31 October 2016
Share options 1,000,000 — — 1,000,000 36.7 30 April 2016 25 October 2023
Nick Taylor Share options 50,000 — — 50,000 61.8 15 July 2013 15 July 2017
Share options 500,000 — — 500,000 36.7 30 April 2016 25 October 2023
Share options — 250,000 — 250,000 51.0 25 July 2017 25 July 2024
The market price of the company’s shares at the end of the ?nancial year was 47.75 pence and the range of market prices during the
year was 42.5 pence to 54.3 pence.
Details of share options granted by the company at 30 April 2015 are given in note 21. None of the terms and conditions of the share
options were varied in the year.
Begbies Traynor Group plc Annual Report and Accounts 2015 16
Corporate governance
Corporate governance statement
The board is committed to high standards of
corporate governance and, although as an
AIM listed company Begbies Traynor Group plc
is not bound by the UK Corporate Governance
Code that was issued in 2012 by the Financial
Reporting Council (‘the Code’), the directors
adopt these rules in the manner they believe
appropriate to the company’s status. Detailed
below are the key components of the group’s
corporate governance policies and procedures.
The board
The full board meets formally and informally
throughout the year and the executive
directors attend regular operational board
meetings. The agendas for these meetings
formalise the matters reserved for decision
by the board of the company. The board
directs and controls the group and risk
management issues. The board is responsible
for strategy, performance and stewardship
of the group’s resources.
The board consists of the executive chairman,
group ?nance director, one executive director
and two non-executive directors. All directors
have access to the company secretary and
all group records. Each director is authorised
to take external advice at the expense of the
company in support of his duties.
Committees of the board
The board has two committees, each of which
has written terms of reference. The minutes
of the committees are circulated to and
reviewed by the board.
The audit committee
The audit committee is chaired by
John May, a non-executive director, and
meets periodically in accordance with its
terms of reference. The executive chairman,
group ?nance director and a representative
of the external auditor will normally attend
meetings. The committee meets at least
twice a year to discuss governance,
?nancial reporting and internal control
and risk management.
The remuneration committee
The remuneration committee, which is chaired
by John May, a non-executive director,
and attended by the executive chairman,
is responsible for all elements of the
remuneration of the executive directors.
The committee performs its functions in
accordance with its terms of reference.
Additional information is included in the directors’
remuneration report on pages 14 and 15.
Investor communications
Meetings with institutional shareholders and
independent analysts take place throughout
the year and all shareholders are free
to contact any member of the board at
any time. Shareholders have a formal
opportunity to question the board at the
Annual General Meeting of the company,
at the conclusion of which all board members
are available for informal discussion.
Internal control and
risk management
The systems of internal control and risk
management are the responsibility of the
board, which sets and reviews appropriate
policies. Managers are delegated the
tasks of implementation and maintenance
of systems in accordance with those
policies and the identi?cation, evaluation,
management and reporting of risk and
control issues.
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 of?ce and regional
managers. Reforecasting is undertaken
when variances are material and, if adverse,
cannot be eliminated by such action.
The above systems and procedures can
only provide reasonable assurance; they
cannot eliminate the potential of material
misstatement or loss, nor the risk of the
group falling short of its strategic objectives
and targets.
Begbies Traynor Group plc Annual Report and Accounts 2015 17
Financial statements
We have audited the group ?nancial statements of Begbies Traynor Group plc for the year ended 30 April 2015, which comprise the
consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet,
the consolidated cash ?ow statement and the related notes 1 to 27. The ?nancial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union.
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.
Respective responsibilities of directors and auditor
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the group
?nancial statements and for being satis?ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the
group ?nancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the fnancial statements
An audit involves obtaining evidence about the amounts and disclosures in the ?nancial statements suf?cient to give reasonable
assurance that the ?nancial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied and
adequately disclosed; the reasonableness of signi?cant accounting estimates made by the directors; and the overall presentation of
the ?nancial statements. In addition, we read all the ?nancial and non-?nancial information in the Annual Report to identify material
inconsistencies with the audited ?nancial statements and to identify any information that is apparently materially incorrect based on,
or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on fnancial statements
In our opinion the group ?nancial statements:
U give a true and fair view of the state of the group’s affairs as at 30 April 2015 and of its loss for the year then ended;
U have been properly prepared in accordance with IFRSs as adopted by the European Union; and
U have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and the directors’ report for the ?nancial year for which the ?nancial statements
are prepared is consistent with the group ?nancial statements.
Matters on which we are required to report by exception
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:
U certain disclosures of directors’ remuneration speci?ed by law are not made; or
U we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the parent company ?nancial statements of Begbies Traynor Group plc for the year ended 30 April 2015.
Rachel Argyle (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Manchester, United Kingdom
14 July 2015
Independent auditor’s report
to the members of Begbies Traynor Group plc
Begbies Traynor Group plc Annual Report and Accounts 2015 18
Financial statements
Consolidated statement of comprehensive income
for the year ended 30 April 2015
2015 2014
Notes £’000 £’000
Continuing operations
Revenue 3 45,360 44,089
Direct costs (25,044) (23,782)
Gross proft 20,316 20,307
Other operating income 3 173 156
Administrative expenses (15,826) (13,945)
Earnings before interest, tax and amortisation prior to exceptional and acquisition-related items 4,663 6,518
Exceptional and acquisition-related items 6 (2,918) (806)
Earnings before interest, tax and amortisation 1,745 5,712
Amortisation of intangible assets arising on acquisitions (1,413) (353)
Finance costs 8 (1,055) (1,108)
(Loss) proft before tax (723) 4,251
Tax 9 122 (869)
(Loss) proft for the year from continuing operations (601) 3,382
Discontinued operations
Loss from the year from discontinued operations 5 (979) (357)
(Loss) proft for the year (1,580) 3,025
Other comprehensive income
Exchange differences on translation of foreign operations (5) —
Total comprehensive (loss) income for the year (1,585) 3,025
(Loss) earnings per share
From continuing operations
Basic and diluted 11 (0.6) pence 3.7 pence
From continuing and discontinued operations
Basic and diluted 11 (1.6) pence 3.3 pence
The (loss) pro?t and comprehensive (loss) income for both years is attributable to equity holders of the parent.
The statement of comprehensive income for the year ended 30 April 2014 has been represented to re?ect the classi?cation of the
global risk partners business as discontinued operations in accordance with IFRS 5.
Begbies Traynor Group plc Annual Report and Accounts 2015 19
Financial statements
Consolidated statement of changes in equity
for the year ended 30 April 2015
Share Share Merger Translation Retained Total
capital premium reserve reserve earnings equity
£’000 £’000 £’000 £’000 £’000 £’000
At 1 May 2013 4,663 17,581 17,584 — 17,867 57,695
Total comprehensive income for the year — — — — 3,025 3,025
Dividends — — — — (2,002) (2,002)
Credit to equity for equity-settled share-based payments — — — — 33 33
Shares issued 213 439 — — — 652
At 30 April 2014 4,876 18,020 17,584 — 18,923 59,403
Loss for the year — — — — (1,580) (1,580)
Other comprehensive income:
Exchange differences on translation of foreign operations — — — (5) — (5)
Total comprehensive loss for the year — — — (5) (1,580) (1,585)
Dividends — — — — (2,012) (2,012)
Credit to equity for equity-settled share-based payments — — — — 61 61
Shares issued 660 4,453 — — — 5,113
At 30 April 2015 5,536 22,473 17,584 (5) 15,392 60,980
The merger reserve arose on the formation of the group in 2004.
Begbies Traynor Group plc Annual Report and Accounts 2015 20
Financial statements
Consolidated balance sheet
at 30 April 2015
2015 2014
Notes £’000 £’000
Non-current assets
Intangible assets 12 57,765 51,559
Property, plant and equipment 13 2,512 1,708
60,277 53,267
Current assets
Trade and other receivables 14 34,861 36,630
Current tax receivable 53 —
Cash and cash equivalents 9,209 7,541
44,123 44,171
Total assets 104,400 97,438
Current liabilities
Trade and other payables 15 (11,369) (7,849)
Current tax liabilities — (651)
Borrowings 16 — (26)
Provisions 17 (1,625) (1,465)
(12,994) (9,991)
Net current assets 31,129 34,180
Non-current liabilities
Trade and other payables 15 (1,391) (355)
Borrowings 16 (22,000) (22,000)
Provisions 17 (666) (678)
Deferred tax 18 (6,369) (5,011)
(30,426) (28,044)
Total liabilities (43,420) (38,035)
Net assets 60,980 59,403
Equity
Share capital 20 5,536 4,876
Share premium 22,473 18,020
Merger reserve 17,584 17,584
Translation reserve (5) —
Retained earnings 15,392 18,923
Equity attributable to owners of the company 60,980 59,403
The ?nancial statements of Begbies Traynor Group plc, registered number 5120043, were approved by the board of directors
and authorised for issue on 14 July 2015. They were signed on its behalf by:
Ric Traynor Nick Taylor
Executive chairman Group fnance director
Begbies Traynor Group plc Annual Report and Accounts 2015 21
Financial statements
Consolidated cash ?ow statement
for the year ended 30 April 2015
2015 2014
Notes £’000 £’000
Cash fows from operating activities
Cash generated by operations 23 6,011 7,377
Income taxes paid (1,254) (1,006)
Interest paid (981) (866)
Net cash from operating activities 3,776 5,505
Investing activities
Purchase of property, plant and equipment (1,230) (360)
Purchase of intangible ?xed assets (58) (4)
Deferred consideration payments in the year (177) (101)
Acquisition of businesses (3,718) (450)
Net cash from investing activities (5,183) (915)
Financing activities
Dividends paid (2,012) (2,002)
Proceeds on issue of shares 5,113 92
Repayment of loans (26) (101)
Net cash from fnancing activities 3,075 (2,011)
Net increase in cash and cash equivalents 1,668 2,579
Cash and cash equivalents at beginning of year 7,541 4,962
Cash and cash equivalents at end of year 9,209 7,541
Begbies Traynor Group plc Annual Report and Accounts 2015 22
Financial statements
Notes to the consolidated ?nancial statements
for the year ended 30 April 2015
1. General information
Begbies Traynor Group plc is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the
registered of?ce is 340 Deansgate, Manchester M3 4LY.
These ?nancial statements are presented in pounds sterling because that is the currency of the primary economic environment in
which the group operates.
2. Accounting policies
The principal accounting policies adopted in the preparation of these ?nancial statements are set out below.
(a) Basis of accounting
The ?nancial statements have been prepared in accordance with applicable UK law and International Financial Reporting Standards
(‘IFRSs’) as adopted by the European Union (‘EU’), including International Accounting Standards (‘IAS’) and Interpretations issued by
the International Financial Reporting Interpretations Committee (‘IFRIC’).
The ?nancial statements have been prepared on the historical cost basis and 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 ?nancial position of the group, its cash ?ows, liquidity position and borrowing facilities are
described in the strategic report.
Furthermore, notes 16 and 19 to the ?nancial statements include full details of the group’s borrowings in addition to the group’s objectives
and policies for managing its capital, its ?nancial risk management objectives and its exposures to credit, interest rate and liquidity risk.
The group has principal banking facilities of £30 million, of which £13.5 million was utilised (£22.0 million drawn less £8.5 million of cash
balances available for general use by the group’s entities) at 30 April 2015.
In carrying out their duties in respect of going concern, the directors have completed a review of the group’s current ?nancial position
and cash ?ow forecasts for a period exceeding 12 months from the date of signing these ?nancial statements. This review included
sensitivity analysis to determine the potential impact on the group of reasonably possible downside scenarios. Under all modelled
scenarios, the group’s banking facilities were suf?cient and all associated covenant measures were forecast to be met.
After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to
continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing
the Annual Report and Accounts.
Earnings before interest, tax and amortisation (‘EBITA’)
EBITA includes the results from operating activities of the group, including software amortisation costs, but stated before ?nance costs,
taxation and amortisation of intangible assets arising on acquisitions.
Exceptional and acquisition-related items
The group presents certain items separately as ‘exceptional’. These are items which in management’s judgement should be disclosed
separately by virtue of their size and or nature.
(b) Basis of consolidation
The consolidated ?nancial statements incorporate the ?nancial statements of Begbies Traynor Group plc and entities controlled by Begbies Traynor
Group plc (its subsidiaries, which include limited liability partnerships). Control is achieved where Begbies Traynor Group plc (‘the company’) has the
power to govern the ?nancial and operating policies of an investee entity so as to obtain bene?ts from its activities. 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.
(c) Changes in accounting policies
The accounting policies adopted are consistent with those of the previous ?nancial year.
Begbies Traynor Group plc Annual Report and Accounts 2015 23
2. Accounting policies continued
(d) Business combinations
The acquisition of subsidiaries and businesses is accounted for using the acquisition method. The consideration for each acquisition
is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity
instruments issued by the group in exchange for control of the acquiree. In accordance with the IFRS Interpretation Committee’s interpretation
of paragraph B55 of IFRS 3, the cost of the business combination excludes consideration which requires post-acquisition service obligations
to be performed by the selling shareholders. These amounts are accounted for as deemed remuneration and will be charged to the
consolidated statement of comprehensive income over the period of the obligation.
Identi?able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. Where the fair value of the assets and liabilities at acquisition cannot be determined reliably in the initial
accounting, these values are considered to be provisional for a period of 12 months from the date of acquisition. If additional information
relating to the condition of these assets and liabilities at the acquisition date is obtained within this period, then the provisional values are
adjusted retrospectively. This includes the restatement of comparative information for prior periods.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business
combination over the group’s interest in the net fair value of the identi?able assets, liabilities and contingent liabilities recognised. If the
group’s interest in the net fair value of the acquiree’s identi?able assets, liabilities and contingent liabilities exceeds the cost of the
business combination, the excess is recognised immediately in the consolidated statement of comprehensive income.
Adjustments to contingent consideration for acquisitions made before 1 May 2010 (from which date IFRS 3 (revised) has been
adopted) are recorded against goodwill. Adjustments to contingent consideration for acquisitions made after 1 May 2010 are recorded
in the consolidated statement of comprehensive income. Acquisition-related costs are recognised in the consolidated statement of
comprehensive income as incurred.
(e) Intangible assets
Goodwill
Goodwill arising on consolidation is recognised as an asset.
Following initial recognition, goodwill is subject to impairment reviews, at least annually, and measured at cost less accumulated
impairment losses. Any impairment is recognised immediately in the consolidated statement of comprehensive income and is not
subsequently reversed.
On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the gain or loss on disposal.
Goodwill arising on acquisitions before the date of the group’s transition to IFRS has been retained at the previous UK GAAP amounts,
subject to being tested for impairment at that date and at least annually thereafter.
Other intangible assets
Other intangible assets are measured initially at cost and are amortised on a straight-line basis over their estimated useful lives.
The carrying amount is reduced by any provision for impairment where necessary.
On a business combination, as well as recording separable intangible assets already recognised in the balance sheet of the acquired
entity at their fair value, identi?able 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 so as to write off the cost or valuation of assets over their estimated useful lives, on the following basis:
Software on strategic systems 10% of cost
Intangible assets arising on acquisitions 20%–50% of fair value at acquisition
(f) 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
Of?ce 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 pro?t or loss for the period.
Begbies Traynor Group plc Annual Report and Accounts 2015 24
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
2. Accounting policies continued
(f) Property, plant and equipment continued
Assets held under ?nance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,
over the relevant lease term.
Assets in the course of construction are not depreciated.
(g) Impairment of tangible and intangible assets excluding goodwill
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 ?ows that are independent
from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
?ows are discounted to their present value using a pre-tax discount rate that re?ects current market assessments of the time value and
the risks speci?c to the asset for which the estimates of future cash ?ows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised as income immediately.
(h) Financial instruments
Financial assets and ?nancial 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 demand deposits and other short-term highly liquid investments that are readily
convertible to a known amount of cash and are subject to an insigni?cant risk of changes in value.
Trade receivables
Trade receivables are stated at amortised cost less allowances for estimated irrecoverable amounts.
Trade payables
Trade payables are stated at their amortised cost.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classi?ed 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.
(i) 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.
(j) Leases
Leases are classi?ed according to the substance of the transaction. A lease that transfers substantially all the risks and rewards of
ownership to the lessee is classi?ed as a ?nance lease. All other leases are classi?ed as operating leases.
Begbies Traynor Group plc Annual Report and Accounts 2015 25
2. Accounting policies continued
(j) Leases continued
Finance leases
Finance leases are capitalised in the consolidated balance sheet at their fair value or, if lower, at the present value of the minimum lease
payments, each determined at the inception of the lease. The corresponding liability is shown as a ?nance lease obligation to the lessor.
Leasing repayments comprise both a capital and a ?nance element. The ?nance element is written off to the consolidated statement of
comprehensive income so as to produce an approximately constant periodic rate of charge on the outstanding obligation. Such assets
are depreciated over the shorter of their estimated useful lives or the period of the lease.
Operating leases
Operating lease rentals are charged to the consolidated statement of comprehensive income on a straight-line basis over the period
of the lease even where payments are not made on such a basis. Lease incentives are spread over the period of the lease.
(k) Revenue recognition
Revenue represents amounts recoverable from clients for professional services provided during the year, excluding value added tax.
The group recognises revenue when the amount can be reliably measured and it is probable economic bene?ts will ?ow.
Services provided to clients, which at the balance sheet date have not been billed, are recognised as unbilled revenue.
Revenue recognised in this manner is based on an assessment of the fair value of the services provided at the balance sheet date
re?ecting the stage of completion (determined by costs incurred to date as a percentage of the total anticipated costs) of each assignment.
These estimates and judgements may change over time as the case completes and this will be recognised in the consolidated statement
of comprehensive income in the period in which the revision becomes known. These judgements are formed over a large portfolio of
cases and are therefore unlikely to be individually material.
Unbilled revenue on individual client assignments is included as unbilled income within trade and other receivables.
For contingent fee engagements, revenue is only recognised (over and above any agreed minimum fee) when it is virtually certain at
the balance sheet date of a successful outcome to the engagement.
(l) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale. Other borrowing costs are recognised in pro?t or loss in the period in which
they are incurred.
(m) Pensions and retirement benefts
The group operates a de?ned contribution scheme in the United Kingdom for certain 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.
Share-based paymentsEquity-settled share-based payments to employees and others providing similar services 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 21.
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 pro?t or loss such that the cumulative expense re?ects the
revised estimate, with a corresponding adjustment to equity reserves.
(o) Taxation
The tax expense represents the sum of current tax and deferred tax.
Current taxation
Current tax is based on taxable pro?t for the period. Taxable pro?t differs from net pro?t 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 taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the ?nancial statements and the corresponding tax bases used in the computation of taxable pro?t, 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 pro?ts will be available against which deductible temporary differences can be
utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a transaction that affects neither the tax pro?t nor the accounting pro?t.
Begbies Traynor Group plc Annual Report and Accounts 2015 26
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
2. Accounting policies continued
(o) Taxation continued
Deferred taxation continued
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 suf?cient taxable pro?ts 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 in the consolidated statement of comprehensive income except when it relates to items charged
or credited to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes by the same taxation authority and the group intends to settle its current tax assets
and liabilities on a net basis.
(p) Critical accounting judgements and key sources of estimation uncertainty
In the process of applying the group’s accounting policies, the group is required to make certain estimates, judgements and assumptions
that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets
and liabilities at the date of the ?nancial statements and the reported amounts of revenue and expenses during the periods presented.
On an ongoing basis, the group evaluates its estimates using historical experience, consultation with experts and other methods
considered reasonable in the particular circumstances. Actual results may differ from the estimates, the effect of which is recognised
in the period in which the facts that give rise to the revision become known.
The group believes that the estimates and judgements in relation to goodwill have the most signi?cant impact on the annual results
under IFRS as set out below.
Goodwill
The group records all assets and liabilities acquired in purchase acquisitions, 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 requires
management to make subjective judgements concerning the value in use of cash-generating units. This requires an estimate of the
future cash ?ows expected to arise from the cash-generating unit and a suitable discount rate to calculate present value. Details of
the assumptions made are provided in note 12.
(q) Recently issued accounting pronouncements
International Financial Reporting Standards
At the date of authorisation of these ?nancial statements, the following relevant standards and interpretations were in issue but not yet
effective and have not been applied in these ?nancial statements.
International Accounting Standards Effective date
(IAS/IFRSs) (year end commencing on or after)
Amendments to IAS 16 and IAS 38 ‘Clari?cation of Acceptable
Methods of Depreciation and Amortisation’ 1 January 2016
IFRS 15 ‘Revenue from Contracts with Customers’ 1 January 2017
IFRS 9 ‘Financial Instruments’ 1 January 2018
Beyond the information above, it is not practical to provide a reasonable estimate of the effect of these standards until a detailed review
has been completed.
3. Revenue
An analysis of the group’s revenue is as follows:
2015 2014
£’000 £’000
Continuing operations
Rendering of professional services 45,360 44,089
Other income 173 156
45,533 44,245
Discontinued operations
Rendering of professional services 524 1,661
46,057 45,906
Begbies Traynor Group plc Annual Report and Accounts 2015 27
4. Business segments
The continuing group is managed as two operating segments: insolvency and restructuring, and property. The global risk partners division
is classi?ed as discontinued.
Segmental information about these businesses is presented below.
Insolvency
and
restructuring Property Consolidated
2015 2015 2015
£’000 £’000 £’000
Revenue
Total revenue from rendering of professional services 40,859 4,556 45,415
Inter-segment revenue — (55) (55)
External revenue 40,859 4,501 45,360
Segmental result 8,518 744 9,262
Shared and central costs (4,599)
EBITA 4,663
Exceptional and acquisition-related costs (2,918)
Amortisation of intangible assets arising on acquisitions (1,413)
Finance costs (1,055)
Loss before tax (723)
Tax 122
Loss for the year from continuing operations (601)
Loss for the year from discontinued operations (979)
Total loss for the ?nancial year (1,580)
Balance sheet
Assets
Segment assets 84,553 9,672 94,225
Unallocated corporate assets 9,497
Consolidated total assets 103,722
Liabilities
Segment liabilities (9,654) (4,975) (14,629)
Unallocated corporate liabilities (28,404)
Consolidated total liabilities (43,033)
Net assets – continuing operations 60,689
Net assets – discontinued operations 291
Total 60,980
Unallocated amounts include current and deferred tax liabilities, cash and ?nancial liabilities and other central assets and liabilities.
Insolvency
and
restructuring Property Discontinued Consolidated
2015 2015 2015 2015
£’000 £’000 £’000 £’000
Other information
Capital additions 1,093 193 2 1,288
Depreciation and amortisation 1,812 603 30 2,445
Begbies Traynor Group plc Annual Report and Accounts 2015 28
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
4. Business segments continued
As a result of the global risk partners division being disclosed as discontinued in this reporting period, the group was reported as one
operating segment for the period ended 30 April 2014.
Insolvency
and
restructuring Property Consolidated
2014 2014 2014
£’000 £’000 £’000
Revenue
Total revenue from rendering of professional services 44,089 — 44,089
Inter-segment revenue — — —
External revenue 44,089 — 44,089
Segmental result 10,862 — 10,862
Shared and central costs (4,344)
EBITA 6,518
Exceptional and acquisition-related costs (806)
Amortisation of intangible assets arising on acquisitions (353)
Finance costs (1,108)
Pro?t before tax 4,251
Tax (869)
Pro?t for the year from continuing operations 3,382
Loss for the year from discontinued operations (357)
Total pro?t for the ?nancial year 3,025
Balance sheet
Assets
Segment assets 86,794
Unallocated corporate assets 9,142
Consolidated total assets 95,936
Liabilities
Segment liabilities (8,556)
Unallocated corporate liabilities (29,219)
Consolidated total liabilities (37,775)
Net assets – continuing operations 58,161
Net assets – discontinued operations 1,242
Total 59,403
Geographical segments
The group’s principal operations and markets are located in the UK.
Begbies Traynor Group plc Annual Report and Accounts 2015 29
5. Discontinued operations
The results of the discontinued global risk partners division, which have been included in the consolidated statement of comprehensive
income, were as follows:
2015 2014
£’000 £’000
Revenue 524 1,661
Direct costs (399) (1,201)
Gross proft 125 460
Administrative expenses (750) (916)
Loss on disposal (570) —
Loss before tax (1,195) (456)
Tax 216 99
Loss for the period from discontinued operations (979) (357)
A loss on disposal of £570,000 arose on the disposal of the business, being the difference between the contingent consideration
receivable of £622,000 and the carrying amount of net assets of £813,000, together with disposal provisions of £379,000.
6. (Loss) proft for the year
(Loss) pro?t for the year has been arrived at after charging (crediting):
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000
Net foreign exchange loss (gain) 3 17 (3) — — 17
Depreciation of property, plant and equipment 831 700 30 117 861 817
Amortisation of intangible assets 1,581 518 3 7 1,584 525
Loss on disposal of property, plant and equipment 25 — — — 25 —
Staff costs (see note 7) 24,933 24,415 314 1,144 25,247 25,559
Operating lease rentals payable 2,693 2,772 119 162 2,812 2,934
Impairment of receivable balances (see note 14) 188 297 3 55 191 352
Reversal of impairment losses recognised on trade receivables
(see note 14) (17) (25) — (1) (17) (26)
During the year, the group obtained the following services from the group’s auditor, at the costs detailed below:
2015 2014
£’000 £’000
Fees payable to the company’s auditor for the audit of the company’s annual accounts 30 30
Fees payable to the company’s auditor and its associates for other services to the group
– the audit of the company’s subsidiaries pursuant to legislation 48 47
Total audit fees 78 77
– other taxation advisory services — 1
– other advisory services 85 10
Total non-audit fees 85 11
Begbies Traynor Group plc Annual Report and Accounts 2015 30
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
6. (Loss) proft for the year continued
During the year, the group incurred exceptional and acquisition-related items as detailed below:
Continuing
2015 2014
£’000 £’000
Restructuring costs (£1.5 million case closure provision, £0.9 million redundancy costs, £0.2 million onerous lease costs) 2,569 —
Business integration costs following the Eddisons acquisition 532 —
Acquisition costs (see note 22) 522 124
Adjustment to contingent consideration — (149)
Gain on acquisition (see note 22) (1,135) —
Deemed remuneration 430 —
Property costs associated with relocation of London of?ces — 831
2,918 806
The exceptional costs are analysed as follows:
Continuing
2015 2014
£’000 £’000
Direct costs 2,338 —
Administrative expenses 580 806
2,918 806
7. Staff costs
The average monthly number of persons (including executive directors) working within the group was:
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
number number number number number number
Partners and consultants 64 67 2 4 66 71
Fee earning staff 290 282 5 10 295 292
Support staff 126 101 1 2 127 103
480 450 8 16 488 466
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000
Their aggregate remuneration comprised:
Wages, salaries and partners’ pro?t share 22,426 22,296 281 1,047 22,707 23,343
Social security costs 1,591 1,351 24 65 1,615 1,416
Other pension costs (note 26) 916 768 9 32 925 800
24,933 24,415 314 1,144 25,247 25,559
Begbies Traynor Group plc Annual Report and Accounts 2015 31
7. Staff costs continued
Directors’ remuneration
2015 2014
£’000 £’000
Short-term bene?ts 962 1,090
Post-employment bene?ts 41 23
Share-based payments 25 24
1,028 1,137
Number Number
The average number of directors who:
Are members of a de?ned contribution pension scheme 1 1
Had awards receivable in the form of shares under a long-term incentive scheme 2 2
Pension contributions paid by the company in respect of such directors were as follows:
2015 2014
£’000 £’000
Nick Taylor 41 23
The highest paid director in the year was Mark Fry and his total remuneration for the period was £495,339 (2014: £600,803). No contributions
(2014: £nil) were made into a company pension scheme on his behalf.
8. Finance costs
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000
Interest on bank overdrafts and loans 1,033 1,098 — — 1,033 1,098
Unwinding of discount on deferred consideration liabilities 22 10 — — 22 10
Total fnance costs 1,055 1,108 — — 1,055 1,108
9. Tax
Continuing Discontinued Total
2015 2014 2015 2014 2015 2014
£’000 £’000 £’000 £’000 £’000 £’000
Current tax charge (credit) 174 1,261 (216) (99) (42) 1,162
Deferred tax credit (note 18) (296) (392) — — (296) (392)
(122) 869 (216) (99) (338) 770
Corporation tax is calculated at 20.9% (2014: 23.0%) of the estimated assessable pro?t for the year.
The charge for the year can be reconciled to the pro?t per the consolidated statement of comprehensive income as follows:
2015 2014
£’000 £’000
(Loss) pro?t before tax (1,918) 3,795
Notional tax (credit) charge at the UK corporation tax rate of 20.9% (2014: 23.0%) (401) 873
Adjustments in respect of current income tax of prior years (160) (144)
Tax effect of expenses that are not deductible in determining taxable pro?t 223 728
Impact of change in rate — (684)
Deferred tax at 20% — (3)
Total tax expense reported in the consolidated statement of comprehensive income (338) 770
Begbies Traynor Group plc Annual Report and Accounts 2015 32
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
10. Dividends
2015 2014
£’000 £’000
Amounts recognised as distributions to equity holders in the year
Interim dividend for the year ended 30 April 2014 of 0.6 pence (2013: 0.6 pence) per share 549 541
Final dividend for the year ended 30 April 2014 of 1.6 pence (2013: 1.6 pence) per share 1,463 1,461
2,012 2,002
Amounts proposed as distributions to equity holders
Interim dividend for the year ended 30 April 2015 of 0.6 pence (2014: 0.6 pence) per share 628 549
Final dividend for the year ended 30 April 2015 of 1.6 pence (2014: 1.6 pence) per share 1,674 1,463
2,302 2,012
The proposed ?nal dividend is subject to approval by shareholders at the annual general meeting. The interim dividend for 2015 was not paid until
8 May 2015 and, accordingly, neither has been included as a liability in these ?nancial statements nor as a distribution to equity shareholders.
11. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
2015 2014
£’000 £’000
Earnings
(Loss) pro?t for the year from continuing operations attributable to equity holders (601) 3,382
Loss from discontinued operations attributable to equity holders (979) (357)
(Loss) proft for the year attributable to equity holders (1,580) 3,025
2015 2014
number number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share 96,288,512 90,877,950
Effect of dilutive potential ordinary shares:
Share options 880,265 139,953
Weighted average number of ordinary shares for the purposes of diluted earnings per share 97,168,777 91,017,903
2015 2014
pence pence
Basic (loss) earnings per share from
Continuing operations (0.6) 3.7
Discontinued operations (1.0) (0.4)
Total (1.6) 3.3
Begbies Traynor Group plc Annual Report and Accounts 2015 33
11. Earnings per share continued
The following additional earnings per share ?gures are presented as the directors believe they provide a better understanding of the
trading position of the group:
2015 2014
£’000 £’000
Earnings from continuing operations
(Loss) pro?t for the year attributable to equity holders (601) 3,382
Amortisation of intangible assets arising on acquisitions 1,413 353
Unwinding of discount on deferred consideration liabilities 22 10
Exceptional and acquisition-related items 2,918 806
Tax effect of above items (975) (267)
Adjusted earnings 2,777 4,284
2015 2014
pence pence
Adjusted basic and diluted earnings per share 2.9 4.7
12. Intangible assets
Intangible
assets
arising on
Goodwill Software acquisitions Total
£’000 £’000 £’000 £’000
Cost
At 1 May 2013 49,130 1,714 4,485 55,329
Additions — 4 1,625 1,629
Adjustments to deferred consideration 19 — — 19
At 30 April 2014 49,149 1,718 6,110 56,977
Arising on acquisition — — 7,775 7,775
Additions — 58 — 58
Disposals associated with discontinued business — (68) — (68)
At 30 April 2015 49,149 1,708 13,885 64,742
Amortisation and impairment
At 1 May 2013 — 520 4,373 4,893
Amortisation during the year — 172 353 525
At 30 April 2014 — 692 4,726 5,418
Amortisation during the year — 171 1,413 1,584
Disposals associated with discontinued business — (25) — (25)
At 30 April 2015 — 838 6,139 6,977
Carrying amount
At 30 April 2015 49,149 870 7,746 57,765
At 30 April 2014 49,149 1,026 1,384 51,559
The carrying value of intangible assets arising on acquisitions comprise customer relationships of £3,800,000 (2014: £586,000), customer
contracts of £2,279,000 (2014: £235,000), order backlog of £1,230,000 (2014: £nil) and websites of £437,000 (2014: £563,000).
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (‘CGUs’) that are expected to bene?t
from that business combination. The carrying amount of goodwill has been allocated wholly to the insolvency CGU.
Begbies Traynor Group plc Annual Report and Accounts 2015 34
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
12. Intangible assets continued
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 ?ow projections based on the latest one year
forecast approved by the board, extrapolated for 19 further years. No terminal value is applied.
The one year forecast is prepared considering local partners’ expectations based on market knowledge, numbers of new engagements
and the pipeline of opportunities. The extrapolation is based on the board’s expectations considering market expectations and historical
?nancial performance.
Key assumptions used in value in use calculation
The key assumptions for the value in use calculations are those regarding:
U pre-tax discount rate;
U revenue growth rates; and
U EBITA margins.
Discount rate
The group’s post-tax weighted average cost of capital, derived from Bloomberg data, has been used to calculate a group pre-tax discount
rate of 13% (2014: 13%), which re?ects current market assessments of the time value of money for the period under review and the risks
speci?c to the group. As the insolvency CGU comprises the signi?cant majority of the group’s activities this has been used as the discount
rate for the purpose of the value in use calculation.
Revenue growth rates
Revenue assumptions in the one year forecast are derived from local partners’ expectations based on market knowledge, numbers of
new engagements and the pipeline of opportunities. Growth rates of up to 4% per annum have been applied to the extrapolation period,
re?ecting past experience of UK insolvency numbers over an economic cycle and future expected market trends. This growth rate does
not exceed the directors’ assessment of the long-term growth rate for the UK insolvency market.
EBITA margins
EBITA margins in the one year forecast are derived from local partners’ expectations based on the number of current engagements and
cost base. Margins are forecast to remain at budgeted levels over the extrapolation period, based on past experiences and expectations
of future market developments.
Sensitivity to changes in assumptions
With regard to the assessment of value in use for the insolvency CGU, the directors believe that reasonably possible changes in any of
the above key assumptions would not cause the carrying value of the unit to exceed its recoverable amount.
Cooper Williamson Limited
The provisional estimates in relation to the acquisition of the trade and assets of Cooper Williamson Limited have been ?nalised. A change
in the assessment of the fair value of net assets acquired has resulted in an adjustment of £0.3 million to reduce goodwill and increase
other receivables, which has been re?ected in these ?nancial statements.
Begbies Traynor Group plc Annual Report and Accounts 2015 35
13. Property, plant and equipment
Leasehold Of?ce Motor
improvements equipment Computers vehicles Total
£’000 £’000 £’000 £’000 £’000
Cost
At 1 May 2013 4,499 1,088 2,283 14 7,884
Additions 109 25 226 — 360
At 30 April 2014 4,608 1,113 2,509 14 8,244
Arising on acquisition — 303 192 — 495
Additions 820 117 293 — 1,230
Disposals — (23) (2) — (25)
Disposals associated with discontinued business — (1) (78) — (79)
At 30 April 2015 5,428 1,509 2,914 14 9,865
Depreciation and impairment
At 1 May 2013 2,857 915 1,935 12 5,719
Charge for the year 496 66 255 — 817
At 30 April 2014 3,353 981 2,190 12 6,536
Charge for the year 490 115 255 1 861
Disposals associated with discontinued business — — (44) — (44)
At 30 April 2015 3,843 1,096 2,401 13 7,353
Carrying amount
At 30 April 2015 1,585 413 513 1 2,512
At 30 April 2014 1,255 132 319 2 1,708
14. Trade and other receivables
2015 2014
£’000 £’000
Trade receivables 4,802 4,134
Unbilled income 24,326 29,596
Other debtors and prepayments 3,597 2,562
Deemed remuneration 2,136 338
34,861 36,630
Trade receivables do not carry interest and are stated net of allowances for doubtful receivables of £615,000 (2014: £483,000).
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 days’ terms. Refer to note 19 for disclosures on credit risk.
Begbies Traynor Group plc Annual Report and Accounts 2015 36
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
14. Trade and other receivables continued
As at 30 April, the analysis of trade receivables that were past due but not impaired is as follows:
Neither past
due nor
Past due but not impaired
impaired up More than
Total to 30 days 1–3 months 4 months
£’000 £’000 £’000 £’000
2015 4,802 2,900 686 1,216
2014 4,134 2,096 712 1,326
Movement in the allowance for doubtful debts
2015 2014
£’000 £’000
Balance at beginning of the year 483 188
Amounts arising on acquisition 97 —
Amounts written off during the year (139) (31)
Amounts recovered during the year (17) (26)
Increase in allowance recognised in pro?t or loss 191 352
Balance at end of the year 615 483
15. Trade and other payables
2015 2014
£’000 £’000
Current
Trade payables 1,956 1,082
Other taxes and social security 2,128 1,735
Accruals 6,587 4,771
Deferred consideration 698 261
11,369 7,849
Non-current
Deferred consideration 1,391 355
Trade creditors are non-interest bearing and are normally settled on terms agreed with suppliers.
The directors consider that the carrying amount of trade payables approximates to their fair value.
16. Borrowings
2015 2014
£’000 £’000
Unsecured borrowing at amortised cost
Bank loans 22,000 22,026
Total borrowings 22,000 22,026
Amount due for settlement within 12 months — 26
Amount due for settlement after 12 months 22,000 22,000
Begbies Traynor Group plc Annual Report and Accounts 2015 37
16. Borrowings continued
The group’s principal borrowings at 30 April 2015 comprise unsecured, revolving credit facilities (‘RCFs’) totalling £20 million
(2014: £20 million) and a term loan of £10 million (2014: £10 million) which were entered into on 26 April 2013. The principal features
of these borrowings are summarised as follows:
U RCF of £10 million provided by HSBC, of which £6 million was drawn at 30 April 2015 (2014: £6 million). The facility has a 4.25 year
term. The effective interest rate was 4.3%;
U RCF of £10 million provided by Santander, of which £6 million was drawn at 30 April 2015 (2014: £6 million). The facility has
a 4.25 year term. The effective interest rate was 4.3%; and
U term loan of £10 million provided by M&G UK Companies Financing Fund 2, of which £10 million was drawn at 30 April 2015
(2014: £10 million). The facility has a £5 million maturity in April 2020 and £5 million maturity in April 2021. The effective interest
rate was 5.3%.
In the prior year the group had additional unsecured bank loans of £26,000, repayable within one year. Interest on the loan was ?xed at 6.27%.
All borrowings are denominated in sterling. Of the total cash balance of £9,209,000 (2014: £7,541,000), £8,356,000 is denominated in
sterling (2014: £7,524,000), £95,000 in US dollars (2014: £17,000) and £758,000 (2014: £nil) in other currencies. The directors consider
that the fair values of the group’s ?nancial instruments approximate to their book value.
At the balance sheet date, £758,000 of the cash balances were not available for general use by the group’s entities. These balances
relate to pre-funding of disbursement costs in relation to a speci?c engagement and use of these balances is contractually restricted
to this engagement.
17. Provisions
Property
Disposal exit
Restructuring provisions provisions Total
£’000 £’000 £’000 £’000
At 1 May 2013 1,772 1,215 — 2,987
Charged for the year — — 831 831
Utilised (1,434) (241) — (1,675)
At 30 April 2014 338 974 831 2,143
Charged for the year 1,032 379 574 1,985
Utilised (1,079) (217) (541) (1,837)
At 30 April 2015 291 1,136 864 2,291
Current liabilities 185 576 864 1,625
Non-current liabilities 106 560 — 666
At 30 April 2015 291 1,136 864 2,291
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 period up to 30 April 2017.
Begbies Traynor Group plc Annual Report and Accounts 2015 38
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
18. Deferred tax
The following are the deferred tax assets (liabilities) recognised by the group and movements thereon during the current and prior year:
Tax Short-term
deductible timing
goodwill Intangibles differences Total
£’000 £’000 £’000 £’000
At 1 May 2013 (5,259) — 181 (5,078)
Charge to income (27) — (265) (292)
Arising on acquisitions (325) — — (325)
Consolidated statement of comprehensive income effect of change in tax rate 686 — (2) 684
At 30 April 2014 (4,925) — (86) (5,011)
(Charge) credit to income (116) 345 67 296
Acquired — — (59) (59)
Arising on acquisitions 515 (2,110) — (1,595)
At 30 April 2015 (4,526) (1,765) (78) (6,369)
Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset)
for ?nancial reporting purposes:
2015 2014
£’000 £’000
Deferred tax liabilities (6,856) (5,024)
Deferred tax assets 487 13
(6,369) (5,011)
19. Financial instruments
Financial risk management objectives and policies
The group’s principal ?nancial instruments comprise cash balances and bank loans. The main purpose of these ?nancial instruments
is to raise ?nance for the group’s operations. The group also has various other ?nancial instruments, such as trade receivables and trade
payables, which arise directly from its operations.
It is, and has been throughout the period under review, the group’s policy that no trading in ?nancial instruments shall be undertaken.
The main risks arising from the group’s ?nancial 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 ?oating interest rates.
The group does not seek to ?x 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 pro?t for the year ended
30 April 2015 and net assets at that date would decrease by £71,000 (2014: £77,000). This is attributable to the group’s exposure
to movements in interest rate on its variable rate borrowings.
Credit risk
The nature of the group’s debtor balances, the time taken for payment by clients and the associated credit risk are dependent on
the type of engagement.
On formal insolvency appointments (which form the majority of the group’s activities), invoices are generally raised having achieved
approval at a creditors’ meeting to draw fees. This is typically settled on a timely basis from case funds. The credit risk on these
engagements is therefore considered to be extremely low.
On other engagements, the timescale to receive payment from the date of invoice is typically longer as the group’s standard 30 day
payment terms (referred to in note 14) are not practically enforceable in all situations. The board do not believe that this is an indication
of increased credit risk on these engagements.
Receivable balances are monitored on an ongoing basis with the result that the group’s exposure to bad debts is not signi?cant.
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.
Begbies Traynor Group plc Annual Report and Accounts 2015 39
19. Financial instruments continued
Credit risk continued
Unbilled revenue is recognised by the group only when all conditions for revenue recognition have been met in line with the group’s
accounting policy in note 2(k).
Liquidity risk
Liquidity risk is the risk that the group will encounter dif?culty in meeting its obligations associated with its ?nancial 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 ?nancing 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 ?exibility through the use of our committed bank facilities,
and giving consideration to other available sources of ?nance such as bank overdrafts, ?nance leases and hire purchase contracts.
There is no material risk associated with foreign currency transactions or overseas subsidiaries.
The table below summarises the maturity pro?le of the group’s ?nancial liabilities at 30 April 2015 based on contractual payments.
At 30 April 2015 At 30 April 2014
Within Between After Within Between After
1 year 2–5 years 5 years Total 1 year 2–5 years 5 years Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Bank borrowings 1,057 19,811 5,263 26,131 1,071 15,304 10,771 27,146
Trade and other payables 11,369 1,391 — 12,760 7,849 355 — 8,204
12,426 21,202 5,263 38,891 8,920 15,659 10,771 35,350
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 ?nance, 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:
2015 2014
£’000 £’000
Shareholders’ funds 60,980 59,403
Bank borrowings 22,000 22,026
At 30 April 82,980 81,429
Categories of fnancial instruments
The table below shows the classi?cation of the group’s ?nancial instruments:
2015 2014
£’000 £’000
Financial assets
Trade receivables 4,802 4,134
Cash at bank 9,209 7,541
14,011 11,675
Financial liabilities
Trade payables (12,760) (8,204)
Bank loans (22,000) (22,026)
(34,760) (30,230)
Begbies Traynor Group plc Annual Report and Accounts 2015 40
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
20. Share capital
2015 2014 2015 2014
thousand thousand £’000 £’000
Allotted, called up and fully paid
Ordinary shares of 5 pence
At 1 May 91,422 90,135 4,572 4,508
Staff SIP scheme 111 145 5 7
Consideration for acquisition 13,095 1,142 655 57
At 30 April 104,628 91,422 5,232 4,572
Allotted, called up but not fully paid
A ordinary shares of 3 pence
At 1 May 6,882 3,313 206 99
Issue of shares — 4,959 — 149
Conversion of shares (1,973) (1,390) (59) (42)
At 30 April 4,909 6,882 147 206
Allotted, called up and fully paid
Deferred shares of 1 pence
At 1 May 9,731 5,561 98 56
Conversion of shares 5,921 4,170 59 42
At 30 April 15,652 9,731 157 98
Issued share capital 125,189 108,035 5,536 4,876
Ordinary shares carry no right to ?xed income and each share carries the right to one vote at general meetings of the company.
A ordinary shares have no rights to ?xed income, dividends or voting rights at general meetings of the company. The shares are only
transferable either pursuant to an offer required to be made by the City Code for the A ordinary shares or otherwise with prior written
consent of the company.
Deferred shares have no rights to ?xed income, dividends or voting rights at general meetings of the company. The shares are only
transferable with the consent of the company.
During the year, 50,676 A ordinary shares from the 31 October 2013 growth share plan were converted into deferred shares.
The growth share plan granted on 1 July 2011 matured during the year, and the 1,923,077 A ordinary shares converted into
deferred shares.
21. Share-based payments
Share option scheme
The group operates a share option scheme which is settled in ordinary shares.
Additional share options were issued during the year. The exercise of the grants is subject to the following: 50% no performance
conditions; 25% requires an overall increase in adjusted earnings per share over a three-year period of RPI plus 2.5%; 25% requires
average total shareholder return to exceed that of a comparator group over a three-year period. Directors’ remuneration information
is provided on pages 14 and 15.
Growth share plan
The group has operated growth share schemes for partners over the previous ?ve years. Under the schemes, partners purchase
A ordinary shares, which may be converted into ordinary shares of the company at a date three years from the date of allotment,
subject to ordinary share price performance compared to a pre-determined rate.
Begbies Traynor Group plc Annual Report and Accounts 2015 41
21. Share-based payments continued
Growth share plan continued
Options for both of the above schemes were valued using the Black-Scholes option pricing model with the following assumptions:
Share option scheme Growth share plan
15 July 25 October 25 July 1 July 31 October
Grant date 2010 2013 2014 2011 2013
Share price at grant date (pence) 62 38 52 45 38
Exercise price (pence) 62 37 51 68 48
Number of participants 3 13 2 1 44
Number of shares under option outstanding 300,000 2,800,000 375,000 nil 4,908,814
Vesting period (years) 3 3 3 3 3
Time to expiry (years) 7 10 10 3 3
Expected volatility (%) 20 23 25 20 23
Risk free rate (%) 1.2 0.8 0.8 1.4 0.8
Expected dividend yield (%) 2.5 6.2 6.2 2.5 6.2
Fair value per option (pence) 7.0 3.3 9.8 0.8 1.2
The expected volatility has been determined based on historical volatility over the last two years. The risk free rate is based on
UK treasury issued bonds of a term consistent with the option life. The fair value is spread over the vesting period of the options.
No options were exercised during the ?nancial year.
The group recognised an expense of £61,000 (2014: £33,000) related to equity-settled share-based payments.
22. Acquisitions
Insolvency acquisitions
During the year, the group acquired the trade and assets of two insolvency practices:
U 1 June 2014 – Ian Franses Associates Limited, a London-based insolvency practice; and
U 1 April 2015 – Broadbents Business Recovery Services Limited, a Yorkshire-based insolvency practice.
The amounts recognised in respect of the identi?able assets acquired and liabilities assumed are set out below:
Fair value
Book value adjustments Fair value
£’000 £’000 £’000
Net assets acquired
Intangible assets — 1,473 1,473
Trade and other receivables 474 (237) 237
Trade and other payables (171) (86) (257)
Deferred tax — (234) (234)
Total identi?able assets 303 916 1,219
Satisfed by:
Cash 800
Contingent consideration 270
Less: amounts treated as deemed remuneration (870)
Total consideration 200
Gain on acquisition 1,019
Fair value adjustments of £1,473,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible
assets recorded can be found in note 12.
Begbies Traynor Group plc Annual Report and Accounts 2015 42
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
22. Acquisitions continued
Insolvency acquisitions continued
The contingent consideration arrangements require the group to pay the vendors additional consideration based upon performance
targets being met in the ?rst three years following acquisition. The fair value of contingent consideration was determined by forecasting
expected ?nancial performance in the earn-out period. The potential undiscounted amount of all future payments the group could be
required to make under the contingent consideration arrangement is up to £1.75 million.
No contingent liabilities have been assumed.
Acquisition costs of £81,000 have been charged to the statement of comprehensive income as an exceptional cost.
The acquisitions contributed £1,169,000 of revenue and £357,000 to the group’s pro?t before tax for the period between the date of
acquisition and the balance sheet date. If the acquisitions had been completed on the ?rst day of the ?nancial year, the group revenues
for the period would have been £46.0 million and group loss before tax would have been £0.6 million.
The amounts recognised above are provisional estimates.
Eddisons Commercial (Holdings) Limited
On 17 December 2014 the group acquired the entire issued share capital of Eddisons Commercial (Holdings) Limited, a property
services consultancy.
The amounts recognised in respect of the identi?able assets acquired and liabilities assumed are set out below:
Fair value
Book value adjustments Fair value
£’000 £’000 £’000
Net assets acquired
Intangible assets — 6,302 6,302
Goodwill 2,263 (2,263) —
Property plant and equipment 528 (33) 495
Trade and other receivables 2,976 (402) 2,574
Cash and cash equivalents 3,338 — 3,338
Trade and other payables (4,508) (184) (4,692)
Contingent liabilities — (225) (225)
Deferred tax (59) (1,361) (1,420)
Total identi?able assets 4,538 1,834 6,372
Satisfed by:
Cash (£5 million via an equity placing) 6,256
Contingent consideration 1,346
Less: amounts treated as deemed remuneration (1,346)
Total consideration 6,256
Gain on acquisition 116
Cash outfows arising on acquisition
Cash consideration 6,256
Less: cash and cash equivalents acquired (3,338)
2,918
Fair value adjustments of £6,302,000 relating to the separate recognition of intangible assets have been recorded. Details of intangible
assets recorded can be found in note 12.
Begbies Traynor Group plc Annual Report and Accounts 2015 43
22. Acquisitions continued
Eddisons Commercial (Holdings) Limited continued
The contingent consideration arrangements require the group to pay the vendors additional consideration based upon performance
targets being met in the ?rst three years following acquisition. The fair value of contingent consideration was determined by forecasting
expected ?nancial performance in the earn-out period. The potential undiscounted amount of all future payments the group could be
required to make under the contingent consideration arrangement is up to £3.5 million.
Acquisition costs of £441,000 have been charged to the statement of comprehensive income as an exceptional cost.
The acquisition contributed £4,501,000 of revenue and £511,000 to the group’s pro?t before tax for the period between the date of
acquisition and the balance sheet date. If the acquisitions had been completed on the ?rst day of the ?nancial year, the group revenues
for the period would have been £53.4 million and group pro?t before tax would have been £0.2 million.
The amounts recognised above are provisional estimates.
23. Reconciliation to the cash fow statement
2015 2014
£’000 £’000
Proft for the year (1,580) 3,025
Adjustments for:
Tax (338) 770
Finance costs 1,055 1,108
Amortisation of intangible assets 1,584 525
Depreciation of property, plant and equipment 861 817
Non-cash exceptional costs 1,494 —
Deemed remuneration 430 —
Gain on acquisition (1,135) —
Loss on disposal of property, plant and equipment 25 —
Loss on disposal of discontinued operations 570 —
Share-based payment expense 61 33
Operating cash ?ows before movements in working capital 3,027 6,278
Decrease in receivables 4,682 4,024
Decrease in payables (1,846) (2,081)
Increase (decrease) in provisions 148 (844)
Cash generated by operations 6,011 7,377
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.
24. Contingent liabilities
The group had no material contingent liabilities at 30 April 2015 or 30 April 2014.
Begbies Traynor Group plc Annual Report and Accounts 2015 44
Financial statements
Notes to the consolidated ?nancial statements continued
for the year ended 30 April 2015
25. Operating lease arrangements
2015 2014
£’000 £’000
Minimum lease payments under operating leases recognised as an expense in the year 2,812 2,934
At the balance sheet date, the group had outstanding commitments for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
2015 2014
£’000 £’000
Within one year 2,805 2,528
In the second to ?fth years inclusive 4,372 3,012
After ?ve years 645 —
7,822 5,540
Operating lease payments principally represent rentals payable by the group for certain of its of?ce properties, which have an average
duration of six years, together with operating leases for motor vehicles.
26. Pensions
The group operates de?ned contribution pension schemes for all qualifying employees.
The total cost charged to income of £925,000 (2014: £800,000) represents contributions payable to these schemes by the group at rates
speci?ed in the rules of the plans. As at 30 April 2015, contributions of £107,000 (2014: £78,000) due in respect of the current year had
not been paid over to the schemes.
27. 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.
During the year the following transactions, all of which were on arm’s length terms and in the ordinary course of business, occurred in
which directors have an interest:
Various commercial properties used by members of the group during the year are owned or part owned by Ric Traynor or his personal
pension fund. Rent and service charges paid on those properties by entities within the group in the year totalled £720,000 (2014: £720,000).
At 30 April 2015 £nil (2014: £nil) was payable in respect of these transactions.
One commercial property used by members of the group during the year is part owned by Mark Fry. Rent and service charges
paid on this property by entities within the group in the year totalled £85,000 (2014: £85,000). At 30 April 2015 £nil (2014: £nil) was
payable in respect of this transaction. Mark Fry also part owns a company which provides archiving facilities to entities within the group.
£24,000 (2014: £23,000) was paid by entities within the group for this service during the year. At 30 April 2015 £6,000 (2014: £6,000)
was payable in respect of this service.
Ric Traynor purchased the controlling interest in Red Flag A!ert LLP (‘Red Flag’) from the group on 10 April 2012, with the group
retaining a minority interest in the partnership. The group has agreed to continue to provide IT, HR, marketing, administrative and
accounting services to Red Flag for which £96,000 was payable by Red Flag during the year (2014: £110,000). The group has
negotiated an agreement to retain full access to the database and joint marketing rights for the publication of Red Flag Alert quarterly
statistics and was charged a fee of £150,000 for the year (2014: £150,000). Rent of £24,000 was paid to the group by Red Flag
during the year (2014: £30,000). At 30 April 2015 £4,000 (2014: £56,000) was owed by Red Flag A!ert LLP.
Begbies Traynor Group plc Annual Report and Accounts 2015 45
Financial statements
Independent auditor’s report
to the members of Begbies Traynor Group plc
We have audited the ?nancial statements of Begbies Traynor Group plc for the year ended 30 April 2015, which comprise the company
balance sheet and the related notes 1 to 9. The ?nancial reporting framework that has been applied in their preparation is applicable law
and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
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.
Respective responsibilities of directors and auditor
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the ?nancial
statements and for being satis?ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the company
?nancial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the fnancial statements
An audit involves obtaining evidence about the amounts and disclosures in the ?nancial statements suf?cient to give reasonable
assurance that the ?nancial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the parent company’s circumstances and have been consistently
applied and adequately disclosed; the reasonableness of signi?cant accounting estimates made by the directors; and the overall
presentation of the ?nancial statements. In addition, we read all the ?nancial and non-?nancial information in the annual report to identify
material inconsistencies with the audited ?nancial statements and to identify any information that is apparently materially incorrect based
on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on fnancial statements
In our opinion the company ?nancial statements:
U give a true and fair view of the state of the company’s affairs as at 30 April 2015;
U have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
U have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and directors’ report for the ?nancial year for which the ?nancial statements
are prepared is consistent with the ?nancial statements.
Matters on which we are required to report by exception
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:
U adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not
visited by us; or
U the ?nancial statements are not in agreement with the accounting records and returns; or
U certain disclosures of directors’ remuneration speci?ed by law are not made; or
U we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the consolidated ?nancial statements of Begbies Traynor Group plc for the year ended 30 April 2015.
Rachel Argyle (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Manchester, United Kingdom
14 July 2015
Begbies Traynor Group plc Annual Report and Accounts 2015 46
Financial statements
Company balance sheet
at 30 April 2015
2015 2014
Notes £’000 £’000
Fixed assets
Investment in subsidiaries 3 31,431 23,675
Current assets
Debtors 4 35,461 32,259
Creditors: amounts falling due within one year
Other creditors and accruals 5 (449) (88)
Borrowings 6 — (26)
(449) (114)
Net current assets 35,012 32,145
Total assets less current liabilities 66,443 55,820
Creditors: amounts falling due after more than one year
Other creditors and accruals 5 (1,125) —
Net assets 65,318 55,820
Capital and reserves
Called-up share capital 7 5,536 4,876
Share premium account 8 22,473 18,020
Merger reserve 8 17,584 17,584
Pro?t and loss account 8 19,725 15,340
Shareholders’ funds 9 65,318 55,820
The ?nancial statements of Begbies Traynor Group plc, registered number 5120043, were approved by the board of directors
and authorised for issue on 14 July 2015. They were signed on its behalf by:
Ric Traynor Nick Taylor
Executive chairman Group fnance director
Begbies Traynor Group plc Annual Report and Accounts 2015 47
Financial statements
Notes to the company ?nancial statements
for the year ended 30 April 2015
1. Signifcant accounting policies
Basis of accounting
The separate ?nancial statements of the company have been prepared under the historical cost convention and in accordance with
applicable United Kingdom law and accounting standards.
The principal accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding year.
Investments
Fixed asset investments in subsidiaries are shown at cost less provision for impairment. The carrying value of ?xed asset investment
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 20. Options are valued using the Black-Scholes option pricing model. Further details are provided in note 21 of the consolidated
?nancial statements.
2. Proft for the year
As permitted by section 408 of the Companies Act 2006, the company has elected not to present its own pro?t and loss account for
the year. Begbies Traynor Group plc reported a pro?t for the ?nancial year ended 30 April 2015 of £6,336,000 (2014: £127,000).
The company has no employees (2014: no employees).
The auditor’s remuneration for audit and other services is disclosed in note 6 to the consolidated ?nancial statements.
3. Investment in subsidiaries
£’000
Cost
At 1 May 2014 29,810
Additions 7,756
At 30 April 2015 37,566
Provision for impairment
At 1 May 2014 and 30 April 2015 6,135
Net book value
At 30 April 2015 31,431
At 30 April 2014 23,675
Begbies Traynor Group plc Annual Report and Accounts 2015 48
Financial statements
Notes to the company ?nancial statements continued
for the year ended 30 April 2015
3. Investment in subsidiaries continued
Details of subsidiary entities are set out below. These undertakings are included in the consolidated group ?nancial statements
and are 100% owned.
Subsidiary undertaking Nature of business Country of incorporation
Begbies Traynor Limited* Holding company England and Wales
BTG Consulting Limited* Holding company England and Wales
Begbies Traynor International Limited* Holding company England and Wales
Begbies Traynor (Central) LLP Insolvency and restructuring England and Wales
BTG Corporate Finance LLP Corporate ?nance England and Wales
Begbies Traynor (Investigations) Limited Investigation agency England and Wales
BTG Financial Consulting LLP Financial consulting England and Wales
BTG Risk LLP Risk consultancy England and Wales
BTG Global Advisory Limited International network organisation England and Wales
Eddisons Commercial (Holdings) Limited* 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
Eddisons Holdings Limited Holding company England and Wales
Eddisons Trustee Company Limited Employee trust England and Wales
The London Silver Vaults and Chancery Lane Safe Deposit
Company Limited Management company England and Wales
Eddisons Commercial Ireland Limited Property consultancy Ireland
Eddisons France Sarl Facilities management France
Eddisons Spain S.L Facilities management Spain
Eddisons Switzerland Sarl Facilities management Switzerland
Eddisons Commercial Israel Limited Facilities management Israel
Eddisons Jordan LLC Facilities management Jordan
Eddisons Germany GmbH Facilities management Germany
Eddisons Italy S.R.L Facilities management Italy
Eddisons Norway AS Facilities management Norway
Eddisons Hungary Kft Facilities management Hungary
Eddisons Egypt Facilities management Egypt
Insolvency Advice Limited* Dormant England and Wales
W3 Debt Solutions LLP Dormant England and Wales
W3 Home Loans Limited Dormant England and Wales
Marplace (No 625) (an unlisted company) Dormant England and Wales
Begbies Traynor (East) Limited Dormant England and Wales
Marplace (No 622) Limited Dormant England and Wales
Begbies Traynor (North) Limited Dormant England and Wales
Begbies Traynor (Central) Limited Dormant England and Wales
Begbies Accountants Limited Dormant England and Wales
David Horner & Co Limited Dormant England and Wales
Hamiltons Insolvency Practitioners Limited Dormant England and Wales
BTG Forensic Technology LLP Dormant England and Wales
Marplace (No 620) Limited Dormant England and Wales
Begbies Traynor (South West) LLP Dormant England and Wales
Begbies Traynor Legal Services LLP Dormant England and Wales
Begbies Traynor (Scotland) LLP Dormant Scotland
Begbies Traynor (Isle of Man) Limited Dormant Isle of Man
Begbies Traynor Group plc Annual Report and Accounts 2015 49
3. Investment in subsidiaries continued
Subsidiary undertaking Nature of business Country of incorporation
BTG Tax LLP Dormant England and Wales
Begbies Traynor (Channel Islands) Limited Dormant Jersey
Eddisons Commercial (Middle East) Limited Dormant England and Wales
Eddisons East Point Limited Dormant Ireland
Philip Davies & Sons (Group) Limited Dormant England and Wales
Philip Davies & Sons Limited Dormant England and Wales
* 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
bene?ts in the operating entities of the group, is not less than the cost of those investments.
4. Debtors
2015 2014
£’000 £’000
Amounts falling due within one year
Amounts owed by group undertakings 35,223 32,010
Other debtors 238 249
35,461 32,259
5. Other creditors and accruals
2015 2014
£’000 £’000
Amounts falling due within one year
Other creditors 449 88
Amounts falling due after more than one year
Other creditors 1,125 —
6. Borrowings
2015 2014
Due within Due after Due within Due after
one year one year one year one year
£’000 £’000 £’000 £’000
Bank loans — — 26 —
In the prior year the company had unsecured bank borrowings of £26,000, repayable within one year. Interest on the loan was ?xed at 6.27%.
The company has no ?nancial instruments other than those shown as ?nancial liabilities above, all of which are denominated in sterling.
The directors consider the fair value of the ?nancial instruments approximate to their book values and that the main risk to the company arising
from ?nancial instruments is interest rate risk, which is kept under review.
Begbies Traynor Group plc Annual Report and Accounts 2015 50
Financial statements
Notes to the company ?nancial statements continued
for the year ended 30 April 2015
7. Share capital
2015 2014 2015 2014
thousand thousand £’000 £’000
Allotted, called up and fully paid
Ordinary shares of 5 pence
At 1 May 91,422 90,135 4,572 4,508
Staff SIP scheme 111 145 5 7
Consideration for acquisition 13,095 1,142 655 57
At 30 April 104,628 91,422 5,232 4,572
Allotted, called up but not fully paid
A ordinary shares of 3 pence
At 1 May 6,882 3,313 206 99
Issue of shares — 4,959 — 149
Conversion of shares (1,973) (1,390) (59) (42)
At 30 April 4,909 6,882 147 206
Allotted, called up and fully paid
Deferred shares of 1 pence
At 1 May 9,731 5,561 98 56
Conversion of shares 5,921 4,170 59 42
At 30 April 15,652 9,731 157 98
Issued share capital 125,189 108,035 5,536 4,876
Ordinary shares carry no right to ?xed income and each share carries the right to one vote at general meetings of the company.
A ordinary shares have no rights to ?xed income, dividends or voting rights at general meetings of the company. The shares are only
transferable either pursuant to an offer required to be made by the city code for the A ordinary shares or otherwise with prior written
consent of the company.
Deferred shares have no rights to ?xed income, dividends or voting rights at general meetings of the company. The shares are only
transferable with the consent of the company.
During the year, 50,676 A ordinary shares from 31 October 2013 growth share plan were converted into deferred shares.
The growth share plan granted on 1 July 2011 matured during the year, and the 1,923,077 A ordinary shares converted into deferred shares.
The company has issued share options as set out in note 21 to the consolidated ?nancial statements.
Begbies Traynor Group plc Annual Report and Accounts 2015 51
8. Reserves
Share Pro?t
premium Merger and loss
account reserve account
£’000 £’000 £’000
At 1 May 2014 18,020 17,584 15,340
Pro?t for the year — — 6,336
Shares issued 4,453 — —
Dividends — — (2,012)
Credit to equity for equity-settled share-based payments — — 61
At 30 April 2015 22,473 17,584 19,725
The merger reserve arose on the formation of the group in 2004.
9. Reconciliation of movements in equity shareholders’ funds
2015 2014
£’000 £’000
At 1 May 55,820 57,010
Proceeds of share issues, net of costs:
– nominal share capital 660 213
– share premium account 4,453 439
Pro?t for the year 6,336 127
Dividends (2,012) (2,002)
Credit to equity for equity-settled share-based payment 61 33
At 30 April 65,318 55,820
Begbies Traynor Group plc Annual Report and Accounts 2015 52
Of?cers and professional advisors
Shareholder information
Directors
R W Traynor
E N Taylor
M R Fry
R G McInnes
J M May
Secretary
J A Humphrey
Company number
5120043
Registered offce
340 Deansgate
Manchester
M3 4LY
Bankers
HSBC Bank plc
4 Hardman Square
Spinning?elds
Manchester
M3 3EB
Santander UK plc
Manchester Corporate Business Centre
298 Deansgate
Manchester
M3 4HH
M&G UK Companies Financing Fund II LP
Laurence Pountney Hill
London
EC4R 0HH
Solicitors
Brabners LLP
55 King Street
Manchester
M2 4LQ
Auditor
Deloitte 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 fnancial PR advisors
MHP Communications Limited
6 Agar Street
London
WC2N 4HN
Nominated advisor and joint broker
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Joint broker
Shore Capital Stockbrokers Limited
The Corn Exchange
Fenwick Street
Liverpool
L2 7RB
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doc_462359592.pdf