Begbies Regulatory News (BEG)

25 July 2022

Begbies Traynor Group plc

Acquisition

Begbies Traynor Group plc (the "group") today announces the acquisition of Axiom Consulting & Investments Limited and Ellayaan Limited and their subsidiary undertakings, which together trade as Mantra Capital ("Mantra"), a London-based property finance brokerage.

Highlights of the acquisition

· Initial consideration of £4.5m comprised of £4.0m in cash from the group's existing facilities and the issue of 352,361 new ordinary shares

· Potential earn out of up to an additional £13.5m (in a mix of cash and shares) subject to delivering material growth in profits over the four years post completion

· Mantra to join with MAF Finance Group (acquired May 2021) to form a national finance brokerage with complementary sector expertise

· In line with our strategy to increase the scale, quality and range of the group's services both organically and through value-accretive acquisitions

· Expected to be immediately earnings enhancing

About Mantra

Mantra is an FCA-regulated finance and insurance brokerage based in London. The team has significant expertise across both commercial and residential real estate lending, providing property investment and development finance, finance for trading businesses and residential mortgages. In addition, they provide insurance brokerage services to their commercial clients.

The team of 23 employees, including two directors, joining the group have extensive banking experience and will enhance our financial advisory services. The business has a strong relationship with a large panel of banks and specialist funders and raised finance in excess of £500m for its clients over the last year.

In its financial year ended 31 December 2021, Mantra (on a combined basis) achieved revenue of £4.2m and normalised pre-tax profits of £1.2m (when reported on the same basis as the group). It had net assets of £2.6m (including cash of £1.3m) as at 31 December 2021.

Reasons for and benefits of the acquisition

The group's strategy is to increase the scale and quality of its businesses both organically and through value-accretive acquisitions to both complement and diversify its range of service offerings.

In May 2021, we acquired the MAF Finance Group, a well-established finance brokerage, which has performed strongly in its first twelve months within the group. Finance broking complements the group's other advisory and transactional services, particularly debt advisory and restructuring, as well as the valuation and sale of assets.

Mantra together with MAF Finance Group will form BTG Funding Solutions, a finance brokerage with expertise across a wide range of sectors, including real estate, construction, engineering and manufacturing, haulage, healthcare, agriculture, renewables and vehicles. The combined team of 70 employees with an enhanced national coverage, generated annual fee income of c.£8m and arranged finance in excess of £800m for clients over the last twelve months.

The combined BTG Funding Solutions team will aim to continue its strong record of growth through the recruitment of experienced employees. It will market its services directly to the corporate community and also through the group's existing, extensive referral network of accountants and other professionals, in addition to supporting the group's client assignments.

The acquisition is expected to be immediately earnings enhancing and will be reported as a part of the business recovery and financial advisory division.

Principal terms of the acquisition

The acquisition is for a maximum potential consideration of £18.0m on a cash free and debt free basis with an agreed level of working capital. The consideration is structured as follows:

· Initial consideration of £4.5m (subject to any cash free/debt free and working capital adjustments), to be satisfied as £4m in cash financed through the group's existing facilities and through the issue of 352,361 new ordinary shares of 5 pence each in the group ("New Ordinary Shares").

· Maximum earn out of up to £13.5m (at least 67% is payable in cash with the balance in New Ordinary Shares at the discretion of the group) subject to delivering material growth in profits as detailed below:

o  £5.5m subject to average PBT of £2.0m in years 1 and 2

o  £8.0m subject to average PBT of £4.0m in years 3 and 4.

The initial cash consideration will be funded through the group's existing financial resources, which comprised net cash of £4.7m as at the year ended 30 April 2022 and significant committed bank facilities. The group has received FCA approval for the change of control.

Admission and total voting rights

Application has been made to the London Stock Exchange plc for the 352,361 New Ordinary Shares to be admitted to trading on AIM ("Admission"). Admission of the New Ordinary Shares, which will rank pari passu in all respects with the group's existing shares in issue, is expected to become effective on 28 July 2022.

Following Admission, the total number of shares in issue and total voting rights will be 154,141,110. The group does not hold any shares in treasury and, therefore, the above figure may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in the company.

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

"The acquisition of Mantra is in line with our growth strategy to complement and expand our services and regional coverage, whilst enabling us to form a national finance business serving a wide range of sectors.

"We believe access to finance will be critical as the economy addresses its current challenges. BTG Funding Solutions will be a major addition to the support and advice we can provide, whilst enhancing our long-term organic growth prospects."

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) No 596/2014.

The person responsible for arranging the release of this announcement on behalf of Begbies Traynor Group plc is Nick Taylor, its Group Finance Director.

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)

Adam James / Patrick Dolaghan

Shore Capital 020 7408 4090

(Joint Broker)

Malachy McEntyre / Mark Percy / Anita Ghanekar / James Thomas

MHP Communications 020 3128 8567

Reg Hoare / Katie Hunt / Pauline Guenot begbies@mhpc.com

Information on Begbies Traynor Group can be accessed via the Group's website atwww.begbies-traynorgroup.com/investor-relations