Begbies Regulatory News (BEG)

17 September 2019

Begbies Traynor Group plc

(the "Company" or the "Group")

Statement re Press Comment

Response to Questions re Related Party Transactions

Begbies Traynor Group plc, the business recovery, financial advisory and property services consultancy, notes recent press comment and questions in relation to certain related party transactions; these transactions have previously been disclosed by the Group in accordance with relevant rules and regulations.

The comment and questions relate to commercial properties in Manchester and Preston used by the Group, which were previously owned or part owned by Ric Traynor, the Group's Executive Chairman. It should be noted that the Group no longer occupies any properties in which Ric Traynor has an interest.

The principal terms of the Manchester lease were disclosed in an RNS dated 27 July 2017, titled 'Related Party Transaction', the full text of which is reproduced below.

"Begbies Traynor Group plc (the "Group"), the business recovery, financial advisory and property consultancy, today announces it has completed a new lease of its Manchester office ("the Property"), which is part owned by Ric Traynor, the Group's Executive Chairman.

"The new lease is for a ten year term and incorporates a tenant's only break clause to terminate the lease at the end of the fifth year. The annualised cost of the Property over the ten year lease term (inclusive of market incentives) is £344,000.

"This lease replaces the Group's previous lease of the Property (as disclosed as a related party transaction in the relevant annual report and accounts). The new lease represents a significant financial reduction on the previous commitment of approximately £331,000 per annum. This reflects a smaller lettable area and a reduced cost per sq ft of £23.50 compared to £25.00 (exclusive of market incentives). In assessing the appropriateness of the new lease, the Group has also undertaken a thorough exercise of considering alternative property options in Manchester city centre.

"The new lease represents a related party transaction which, the independent directors consider, having consulted with its nominated advisor Canaccord Genuity Limited, that the terms of the transaction are fair and reasonable insofar as the shareholders are concerned.

"Although not strictly required under the AIM Rules, shareholder consent for the new lease will be sought at the Group's next annual general meeting in the Autumn."

The 2017 AGM duly approved the transaction.

A link to the RNS above can be found here:

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BEG/13310439.html 

The Group's policy is to occupy all its commercial premises on a lease basis rather than ownership.

If shareholders have any further questions in relation to these transactions or other matters relating to the Group, the board will be pleased to address them at the annual general meeting on Thursday 19 September 2019.

Further information is provided below with regards to the Manchester and Preston properties.

The payments disclosed in the Company's annual reports were, respectively, £720,000 pa in the financial years up to 30 April 2017, which reduced to £156,000 in year end 30 April 2018 and £13,000 in year end 30 April 2019. 

Manchester

The principal terms of the Manchester lease were disclosed in the above RNS as follows:

·; New lease of Manchester office signed in July 2017

·; Property part owned by Ric Traynor

·; 10 year term including a tenant's only break exercisable at year 5

·; Annualised cost of property of £344,000 - a reduction of approximately £331,000 on the previous lease due to a reduction in lettable area and a reduced cost per sq ft of £23.50 compared to £25.00 (exclusive of market incentives)

·; Group undertook a thorough exercise of considering alternative property options to assess if the lease was appropriate

This lease replaced a previous 10 year lease entered into in 2007 at an annual cost of £675,000 with a tenant's break at 5 years which was not exercised. These payments were included in the £720,000 of disclosed payments noted above.

The ownership of the property transferred in financial year end 30 April 2018 and Ric Traynor no longer has an interest in the property. The change in ownership had no impact on the Group and the commercial terms previously disclosed (detailed above) remain in place with the new property owner, which is an institutional landlord. The Group retains a tenant only break option in 2022 at which point there is an open market rent review.

Preston

The leases of two offices in Preston (one owned by Ric Traynor and one owned by his pension scheme) at an aggregate annual cost of £45,000, make up the balance of the £720,000 disclosed amount. These premises had been occupied by the Group since 1993 and 1995 respectively.

The original leases on these properties expired in 2014 and 2010 respectively and after those dates the Group's tenancies continued as periodic tenancies with the Group having the ability to terminate its occupation on three months notice. The Group vacated both of these properties during financial year end 30 April 2019 and now has a lease of a new office with a third-party landlord.

- ENDS -

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)

David Tyrrell / Sunil Duggal

Shore Capital 020 7408 4090

(Joint Broker)

Mark Percy / Anita Ghanekar

MHP Communications 020 3128 8572

Reg Hoare / Katie Hunt / Pete Lambie

Further information on Begbies Traynor Group can be accessed via the Group's website at www.begbies-traynorgroup.com