Begbies Regulatory News (BEG)

12 December 2023

Begbies Traynor Group plc

Acquisition

Expansion of Eddisons property auctions team

Begbies Traynor Group plc (the "group"), the professional services consultancy, today announces that it has completed the acquisition of SDL Auctions Limited, which trades as SDL Property Auctions ("SDL"). SDL will integrate with Eddisons, the group's property advisory and transactional services division.

SDL is a national firm of property auctioneers, headquartered in Nottingham and employing 46 staff who will all join the group following the acquisition. The acquisition will broaden Eddisons geographical coverage across the Midlands and augment its expertise and scale in auctions nationally.

In its financial year ended 31 March 2023, SDL generated revenue from continuing operations of £4.5m and normalised pre-tax profits from continuing operations of £0.5m (when reported on the same basis as the group). Trading is projected to remain at this level in the current financial year. SDL had net assets of £0.2m (including £0.5m net cash) at 31 March 2023.

Reasons for and benefits of the acquisition

The group's overall strategy is to increase the scale and quality of its businesses, both organically and through value-accretive acquisitions, thereby delivering strong, sustainable financial performance.

Our strategy in property services is to enhance and broaden our service offerings and geographical coverage. Since the creation of the division through the acquisition of Eddisons in December 2014, the group has built a strong track record of acquisitions that have met these criteria. This strategy has increased the scale of the division to a current run rate in excess of £40m, demonstrating resilience of earnings in a challenging economic environment, strong growth and profitability whilst enhancing the group's earnings.

The acquisition is in line with this strategy, enhancing our auctions service offering. Together with the acquisition of Mark Jenkinson & Son (the Sheffield property auctioneer) in March 2023, the transaction significantly increases our national coverage and reinforces our expertise and reputation for the sale by auction of commercial and residential property, as well as plant and machinery.

The combined team will be one of the largest property auctioneers by volume nationally.

Principal terms of the acquisition

The acquisition consideration is structured as follows, based on current levels of financial performance and on a cash free, debt free basis:

· Initial cash consideration of £2.5m;

· Earn out of up to £0.75m, payable in cash, subject to maintaining revenue in the 12 month period post completion.

This gives a maximum consideration of £3.25m (on a cash free debt free basis).

The consideration will be met from the group's existing financial resources, with significant headroom available for further acquisitions and investment.

Anthony Spencer, Managing Director of Eddisons, commented:

"I am very pleased to welcome the SDL team to Eddisons. The acquisition significantly increases the scale of our auction business and I look forward to working with the team in the future. This is the fourth acquisition for Eddisons in 2023 and we continue to seek further opportunities for expansion across the UK."

Ric Traynor, Executive Chairman of Begbies Traynor Group plc, commented:

"The acquisition of SDL Property Auctions is in line with our strategy to develop our property advisory and transactional services division, by increasing both its scale and market position, as well as the scope of its service offering and geographical coverage. Our combined team will be one of the largest property auctioneers by volume nationally.

"SDL has an excellent reputation, and we are looking forward to working with the team."

Enquiries please contact:

Begbies Traynor Group plc 0161 837 1700

Ric Traynor - Executive Chairman

Nick Taylor - Group Finance Director

Canaccord Genuity Limited 020 7523 8350

(Nominated Adviser and Joint Broker)

Emma Gabriel / Harry Pardoe

Shore Capital (Joint Broker) 020 7408 4090

Malachy McEntyre / Mark Percy / Anita Ghanekar / James Thomas

MHP 020 3128 8567

Reg Hoare / Katie Hunt begbies@mhpgroup.com 

Information on Begbies Traynor Group can be accessed via the group's website atwww.ir.begbies-traynorgroup.com