City round-up: Begbies Traynor; OTAQ

Manchester-based business rescue and recovery specialist, Begbies Traynor Group, said it is confident of delivering market expectations for the full year in a six month trading update today, but warned the Chancellor’s National Insurance hike will cost it £1.25m and it is “reviewing operations”.

In an update covering the six months to October 31, the group said it has achieved a strong year-on-year performance.

Revenue and adjusted profit before tax increased by c.16%, with a good balance of organic and acquired growth.

Free cash flow increased by c.eight per cent, while net debt, at 31 October 2024, was £3.8m, which reflects acquisition earn out payments of £4.1m, share buybacks of £0.8m and dividends of £2m. At 30 April 2024 net debt was £1.4m, and on 31 October 2023 the group had net cash of £1.1m.

The group launched a £1.5m share buyback programme to settle deferred consideration obligations, which completed on 7 November 2024.

It said it is confident of delivering market expectations for the full year to 30 April 2025, which would extend its 10-year financial track record of profitably growing the business.

The current range of analyst forecasts for adjusted PBT is £23m-£24.3m, as compiled by the group.

The business recovery division reported organic growth driven by increased team size and positive levels of new instructions, reflecting continued favourable market conditions.

In advisory, it reported strong organic growth driven by advisory, special situations M&A and financing engagements.

The property advisory division saw strong asset sales growth driven by property auction volumes (organic and acquired), in consultancy there was continuing organic growth in building consultancy instructions together with ongoing investment in growing the team, and in valuations, robust activity levels reflecting supportive market volumes.

Today’s update said the increase in employer National Insurance rates announced by the Government in its Budget on 30 October 2024 will impact the business from April 2025.

It said: “We estimate the combination of lowering the earnings threshold at which employers start paying National Insurance contributions, together with the increase in rate, will in aggregate increase our employment costs by c.£1.25m per annum. We are reviewing options to mitigate the impact where possible.

Guidance for the current year to 30 April 2025 remains unchanged.”

The group will report its half year results for the six months ended 31 October 2024 on Tuesday, 10 December 2024.

Ric Traynor, executive chairman of Begbies Traynor Group, said: “We have made a very good start to the year with double digit growth in revenue and profits driven by positive momentum across the group.

“This gives us confidence that we will deliver market expectations for the year as a whole.

“Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates are likely to extend the period of elevated insolvency levels, increasing the need for advice and support from our insolvency and business recovery professionals.”

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Lancaster-based marine technology group, OTAQ, is continuing to trim its boardroom as a result of cost-cutting measures.

Last month Harald Rotsch stepped down from the board, but said he will continue to act as Chief Technology Officer in a non-board capacity, while Sarah Stoten resigned her position as Non-Executive Director.

They voluntarily resigned in recognition of the cost-cutting measures already implemented by the company, measures which they view appropriate to extend to all levels.

Today, OTAQ announced that Giles Clifford has resigned his position as Non-Executive Director with immediate effect.

His resignation represents a further cost reduction measure, on top of those that have already been implemented by the company over recent weeks.

Phil Newby, Chief Executive, said: “I would like to thank Giles for his significant contributions to OTAQ during his time on the board and wish him well in his future endeavours.”

In September OTAQ revealed that its interim revenues had declined and pre-tax losses increased in its unaudited results for the six months to June 30, 2024.

Sales of £1.510m were compared with £1.801m a year ago, and a pre-tax loss of £884,000 was more than the £773,000 loss in 2023.

Post-reporting period, the firm achieved a successful fundraise of £1.79m of Convertible Loan Notes, with an additional £1m broker option available until 31/12/24.

It also repaid, in full, the £0.8m outstanding Cbils loan.