Begbies Traynor Group PLC Senior Management Update Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andy Edmond - Equity Development - Analyst : Great, very, very thorough. Thank you, gentlemen. And there are indeed a number of questions, a lot of which really relate to you acquisition strategy and the opportunities out there. So I might read through them all at the same time. And how committed are you to further acquisitions and how important are they to your ability to grow the business, particularly if insolvency numbers were to remain relatively subdued?

Question: Andy Edmond - Equity Development - Analyst : Okay, thank you for mentioning. In terms of the balance of the group, is it the case that the timing of these deals are opportunistic that I'm sure vendors waiting for the right time sell. You will perhaps be a follower business for many years before the opportunity comes along and for instance, you've been able to close this year to very large insolvency transactions. In terms of balancing the great, how would you like to see revenues split between the anti-cyclical and the growth business if you were looking three years ahead?

Question: Andy Edmond - Equity Development - Analyst : Okay, thank you. And let's talk a little bit about government policy and furlough and potentially finally ending? And what do you think is the market at the moment? Should you have market for insolvencies? Should that be rescinded and also have implications for the property market in that respect?

Question: Andy Edmond - Equity Development - Analyst : Thank you. And maybe a couple coming up for you now Nick, if you want to unmute yourself and get on the Group has consistently invested in this infrastructure, particularly in IT. Can you just update the status of that? How much work there is still to do and the benefits that you've accrued and how much that has been a factor in touching wood, what seems to be very successful integration in the many acquisitions you've done? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 10, 2021 / 9:00PM, BEG.L - Begbies Traynor Group PLC Senior Management Update Call

Question: Andy Edmond - Equity Development - Analyst : Okay, thank you. And again, Nick, can you talk a little bit about the cash implications, particularly for working capital for the cycle that is involved in insolvency when you get paid at the end of the process and if there was to be a surge and then insolvency work, how would that impact you short term cash position?

Question: Andy Edmond - Equity Development - Analyst : Okay, thank you. Another numbers question, the very popular in terms of consensus EPS forecasts, could you just clarify if they take account of dilution to come because a lot of the consideration you pay for your acquisitions is deferred or dependent on the analysis?

Question: Andy Edmond - Equity Development - Analyst : Okay. And perhaps a last financial question, adjusted earnings per share is a common form of measurement. Could you just outline what the adjustments are for and give a little more depth on on how you assess dividend payouts in terms of cover against or covered by earnings, particularly as forecasts in the next year or two are for considerable growth in earnings of the order, I believe, at 25%? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 10, 2021 / 9:00PM, BEG.L - Begbies Traynor Group PLC Senior Management Update Call Okay. The adjustments that we make are all in relation to acquisition accounting under IFRS. So anything that goes below the line or either the cost of acquisition. It's the amortization of intangibles that we take on the balance sheets and also well that same transaction costs. So this is if we pay an acquisition and we required the vendors to stay with the business for a period to make sure that the goodwill gets transferred, thus elements of consideration under IFRS also has to be charged to profits rather than treated as goodwill as it would have been a few years ago. So that's the principal actions. So the number that we have as an adjusted profits is very much the normal operating profit of the business that we see and we manage as a management team. In terms of dividend pay-outs over the course of last few years, as Ric said, we managed to grow the dividends by about 8% per year. We've done that whilst improving our dividend cover and the position that we're in at the moment is that we've got a lot of deferred payments that we need to make. And we've also got a lot of acquisition opportunities as Ric mentioned, so we're very confident that we'll maintain dividend growth around the level that we've done previously. And I think any increase in dividend ahead of that and will be dependent on what level of further investment we need you want to make into the group. And then definitely less time we make and margins on insolvency work. Again, we've been speculating about whether there could be an awful lot of that coming down the track, but do you see scope for an improvement of margins, but you are achieving relative to other large players in the insolvency space?

Question: Andy Edmond - Equity Development - Analyst : Okay, thanks very much. So I have a couple of strategic questions that suit finished that you might want to take Ric. We have a question given the range of services that you provide, is it conceivable at some stage that you might actually aspire to be a nonbanking lender to SMEs?

Question: Andy Edmond - Equity Development - Analyst : Okay. Nice. Nice and clear. And again, strategically big business reached a position of being the number one player in insolvency market by number of transactions, what do you think are your key differentiators that have enabled the group to reach that position? And where do you see competitive?

Question: Andy Edmond - Equity Development - Analyst : And then a final one, as a cash generative group, would you consider share buybacks as opposed to dividends for use of excess capital. I suspect you have plenty of uses or excess capital myself, but I'll let you answer that one Ric.