BTG Consulting plc (BTA.F) Earnings Call Transcript & Summary

Right. Let's -- so welcome to our audience. A few bits of admin first before the company talks. I'm sure you're very familiar with the Zoom process. After Ric and Nick have given their formal presentation, they will be dealing with questions and answers. Please just submit any questions that you have via the Q&A button, and I'm sure we'll get around to dealing with them. The slide deck that the gentlemen are talking to is already up on the Begbies Traynor Investor Relations page on their website, so you don't need to be taking pictures of each slide as it comes up. And this webinar is also being recorded. That will appear on the Begbies side and, of course, be redistributed by Equity Development. So you will all get a chance to listen to it again, if you so wish to do. So we are delighted to welcome back after a very successful 12 months since we last had the gentlemen presenting. The Executive Chairman of Begbies Traynor, which is Ric Traynor; and the Group Finance Director, which is Nick Taylor, and they have plenty to talk about. So can I now pass over to you, Ric?

Well, thank you, Andy, and thank you, everybody, for joining us today. We have a presentation that we will go through, but we'll start on Page 1 with a bit of background for those of you who don't know us in terms of what we do in all of our service lines. We are a leading professional services consultancy with multiple service lines across 2 divisions. The first division, the 3 boxes across the top of the screen is the Insolvency and Advisory division, which turns over about GBP 80 million and includes our Corporate Finance and Personal Insolvency business. In addition to that, our Financial Advisory business, which includes a number of additional services which have been added to in the year with our Finance Brokering business, the acquisition of MAF Finance brokerage in May of last year. And announced this week, the addition of Mantra, which is a similar business based in the south of England. Our second division, Property Services, with a turnover of approximately GBP 30 million, includes valuation work of property, business machinery and business assets. Transaction service, which involves selling those assets various parts throughout the cycle in terms of acting for insolvency practitioners and also acting for corporate clients. And we have a very active Property Consultancy Planning and Management business. Our business model is to be in the local -- excuse me, Andy, thank you. Our business model is to be in the local community. So as you can see with the map in the left-hand corner, we have multiple offices around the country which service that local business community and network with the local professionals and corporate businesses in those particular areas. We now have over 1,000 partners and staff following our recent acquisitions. And over the last 4 years, we've enjoyed cumulative average growth rate in EPS of 23%. Our senior people are professional staff, and they're either licensed insolvency practitioners and/or accountants, chartered surveyors on the property side, and we have a number of lawyers working in the business as well. Moving on to Slide 2. We feel we're very well placed at the moment given the corporate headwinds, which the economy is providing at the moment. We have a countercyclical focus with 70% of our activities across the Insolvency and Advisory and some of the property business being focused on the downside of the economic cycle. The 20% of our cyclical activities include the ability for some of our staff to reposition themselves into other areas should their area of activity become less active. And we have 10% of our activities, which are uncorrelated with the economic cycle, and therefore, we believe are resilient over the course of the next 2 years when we're likely to see something of a downturn. And as you can see there, there are just some examples of the brand names that we use. Most of our business trades as Begbies Traynor or BTG Advisory and as Eddisons on the property side, but we do have some additional brands that we use in a niche area which clearly have an element of goodwill attached to them and have come through acquisitions recently. Moving on to the next slide. Looking at the full results for the year, I'll pass over to Nick who will go through the numbers.

Great. Thank you, Ric. Good morning, everybody. Start off looking at the highlights. These are our full year results to the end of April where we reported a strong performance, which was ahead of the market's original expectations for the year. And this represents, say, further successful, and I'm pleased to say a record year for the group. These results reflect a material increase in our scale and service offerings. Revenue growing by 31%, 7% of which was organic to GBP 110 million. And adjusted profits up by 55% to GBP 17.8 million from GBP 11.5 million in the year before. This has come from the organic and acquisitive growth strategy we've been following for a number of years. All areas have contributed to this growth. That's Insolvency, Advisory and Property Services. And we've seen a further improvement in our operating margins, which are now 16.9%, having been 14.8% in the previous year. We've continued to generate substantial free cash flow. That's enabled us to recommend a 17% increase in the dividend for the year. So the full dividend of 3.5p for this financial year, and that represents the fifth consecutive year of dividend growth for the group. And we feel we are in a strong position as we start our new financial year. Looking at performance by our 2 operating divisions, I'm pleased to say we had growth across both of those divisions in the year. Within Business Recovery and Financial Advisory, revenue increased by 36%, a significant increase in the scale of our activities following acquisitions. Two insolvency acquisitions late in the comparative period financial '21, and the finance brokerage that joined us at the start of the year we're reporting here. On the back of that growth, margins increased to 25.8% and a profit increase of 43% to GBP 21 million. We also saw an increase in organic activity as the government's pandemic support measures were removed over the course of the year, and the 16,648 by volume of appointments over the 12 months was back to pre-pandemic levels. And our Corporate Finance team had a further successful year in what was an active M&A market. But in Property Advisory and Transactional services, revenue growth was split between acquired and organic growth. On the organic front, we continue to develop 2 key service lines. Professional Services, where we provide real estate valuations for a broad range of lenders. 25 different lenders, we worked for over the course of the last year. That includes the main high street clearing banks and also a range of specialists and niche lenders. And our Building Consultancy team, who do a lot of work through the public sector. We saw a recovery in activity levels at start of financial year '21, so at the start of the comparative period. It was held back by some of the restrictions of the lockdown. We've not had any issues in the current year. So the first time contribution from acquisitions. We remain in a strong financial position. We have significant liquidity within our facilities. Our free cash flow increased over the year to GBP 14 million, which has funded acquisition payments of GBP 8.2 million. That comprises current year deals of GBP 2.9 million and earnouts of GBP 5.3 million. It's also funded dividends of GBP 4.6 million in the year, giving an increase in net cash of GBP 1.7 million. And we ended the year with net cash of GBP 4.7 billion. And we have significant liquidity within our facilities, and those facilities are at GBP 30 million from HSBC to GBP 25 million committed line and GBP 5 million top-up. We've seen a material increase in the scale of the group and its service offerings from acquisitions over the last 18 months. Within business recovery, there are 2 significant transactions, 2 GBP 10 million turnover practices, CVR and DRP that came in, in January and March of 2021, respectively. They significantly increased the scale of our insolvency business, as we've shown in the financial results we're reporting this year. And that's notably in the key London marketplace, increasing the group's access to some of the higher value insolvency work. The integration of those acquisitions was completed on target, and the local teams have now been merged and are working in common offices. Within Financial Advisory, we added a new service line at the start of the financial year we're reporting. That's Finance Broking through the acquisition of the MAF Finance Group, which joined us in May. And this week, we announced the acquisition of Mantra Capital. Finance Broking as a service is highly complementary to our existing services. That's both restructuring and debt advisory to corporates, but also looking at funding assets that we might be selling through Eddisons. These 2 businesses together will form BTG funding solutions. Our broad sector experience, we support real estate, construction haulage. We're growing our health care team and expanding into renewables. And the combination of these 2 businesses gives us national coverage. And they generated annual fee income of around GBP 8 million, and the raised finance, an GBP 800 million over the course of the last 12 months. And there are further attractive acquisition opportunities. It's a very fragmented market and good opportunities for organic growth through recruiting experienced people and marketing their combined services to the combined client base of these businesses and also the group's contact base. Now in the Property Services, the acquisitions we've completed have enhanced our national coverage in London, in Sheffield across the east of England that was boosting existing offices for Eddisons. And we've got our first South Coast operations through the acquisition of Daniells Harrison in January this calendar year. And in total, we've acquired about GBP 34 million of revenue on a run rate basis and GBP 9 million in profit since January 2021. On our outlook, we started the new year in a strong position. We're confident of delivering plans for further growth and building on our track records. We guided towards the top end of original market expectations. A number of analysts nudged their numbers up on the back of that guidance, and we're seeing further upgrades this week following the acquisition of Mantra. Mantra increased earnings by about 3% to 4% based on most analyst views. We anticipate cost inflation will be more offset by revenue growth. Our business recovery team is well placed to continue its track record of growth. Our order book, these cases where we are appointed, has increased from where we were 12 months ago. And we expect to see increased market activity over the next 12 months. Within Advisory, there's an encouraging pipeline of organic growth, and we'll clearly see the benefit come through the Mantra acquisition. And we expect further expansion within our Property Services division, both organically and through the benefit of acquisitions. The combination of our healthy balance sheet and cash generation underpins our capacity to progress our pipeline of acquisitions and continue our acquisition strategy to deliver organic growth initiatives, and all whilst funding our dividends and deferred consideration payments. And we'll do our next update to shareholders at the AGM, which is in September. I'll now let Ric go through the operating and strategic review.

Thank you, Nick. If we look at the insolvency markets, we will see that the final government support measures were removed in March of this year, so coinciding roughly with the year-end we're just reporting on. Some of those measures fell away in the autumn of last year, and we've started to see the impact of that. So insolvency numbers are now back to the sort of level we saw in 2019 pre-pandemic of in excess of 16,000, having fallen to just over 11,000 for the year to the end of March 2020. That increase in numbers is very much focused on the smaller end of cases at the moment, so what our liquidations as opposed to administrations, which tend to be the larger cases of larger businesses with larger values. We anticipate seeing administrations increase in due course. But given the more sizable impact of these cases, it is often some time and some lag between the impact starting to happen for smaller businesses and seeing it happening in the mid-market. So we anticipate that given the headwinds facing businesses at the moment, some of which are listed here, the end of the support measures, as I've just mentioned, creditor pressure increasing. The courts are now open, so creditors can go and get to counter court judgments and other actions against companies like winding up orders. We're seeing inflation and supply chain issues, significant increase in corporate debt and working capital funding pressures. All of those things mean that we anticipate insolvencies continue to rise, both for the smaller cases, as we've already seen, but also for those mid-market cases, which tend to be Administrations. Moving on to the next slide. This just gives an indication of the marketplace and what competition we face. So overall, if we look at the numbers for last year on a calendar basis, we had a 14% market share at just over 2,000 companies. In terms of the other national specialists below us, we're about 1,500 in total. The big 4 are significantly smaller number, but of course, they concentrate on the very large international cases. The important thing to look at here is the local boutiques were appointed on just over 11,000 cases. So that indicates that it's still a very fragmented marketplace down at the bottom end, the smaller work, so there is an opportunity to continue to consolidate that marketplace. And that's one of the things we'll be looking to do as we move forward over the next few years as indeed we've done in the past by acquiring insolvency boutiques to various sizes, rebranding them as Begbies Traynor, and they form part of our ongoing offering. Moving on to the next slide. In terms of our own business recovery department over the last year, we've seen a significant increase in scale of the division with those 2 acquisitions we did in early '21. We see an increase in smaller cases that come from our regional network and our digital marketing expertise, and that's obviously been impacted and helped recently by the increase in markets back from that low in 2020. And when we see more larger complex appointments. Despite the suppressed marketplace, we're seeing those because the recent acquisitions we did have strengthened our London presence significantly, and that tends to be where the larger cases come from. Those larger cases are also larger margins, higher margins. So as we progress and we see that market come back, we don't anticipate to see some margin benefits accruing from that. Looking at our market share and how it's increased over time. Over the last 2 years, we've gone from 10% to 14%, approximately half of that has come from organic growth and the other half has come from the acquisitions we've made. And in terms of our order book, it's virtually GBP 30 million at the period end in terms of confirmed cases already won. That excludes contingent fees on cases where there are speculative assets and excludes the pipeline of activities that increasingly we're beginning to see. Moving on to the next slide. Our Property Services division, there are multiple opportunities for growth. As you can see from the chart on the right, there are many sources of work, and we have many service lines, so we're not dependent on any particular source of service line. The things we expect to be particularly strong over the coming years are our insolvency presence on the back of the insolvency market, where we're doing valuation and asset sales for both our own insolvency practitioners, but our competition as well. That's the plant machinery, valuation and other disposal work. On the property side, we do receiverships. We auction distressed properties, and our agency business get to involve working with the insolvency practitioners and banks to sell distressed assets. We have a specialist insurance broker that organizes insurance for insolvent company assets, which is a very specialist niche area, and we have a vacant property risk management service. In terms of the public sector, we anticipate seeing further growth in our educational expertise, which has been growing over the last 4 years. And there are further opportunities to target organic growth through our position in terms of relationships with both local authorities, national agencies to win work. For example, we've recently won an NHS contract to give them lease advisory services, and that runs for 3 years. Our relationship with banks and financial institutions is strong. We're on all of their panels for both new lending and both to assist them where they have existing lending, which has become distressed, and they need our assistance to value and often to sell those properties for them. Our recent acquisitions provide a platform for ongoing growth. Having moved into new geographies, we are able to add our specialist services to those services already provided by the acquired business. And we're also able to use those new businesses as a means of attracting additional local talent from our competition and new acquisitions in those particular areas to add to the business we bought. And at the moment, we have multiple acquisition opportunities in what is a very fragmented marketplace down at the bottom end. Moving on to next slide. In terms of strategy, a mixture of organic and acquired growth. It's continuing the same strategy we've had for a number of years. Up until the last year, which is skewed slightly by the major acquisitions we did, we've seen a mix of organic growth and acquired growth of about 50-50 over the prior 5 years. The opportunity for organic growth is retention and development of our existing partners and employees and recruitment of new talent. And in this regard, we've recently added to our HR team and brought in specialists to help us ensure that we keep our people happy and onboard, and we are able to recruit new people on a cost-effective basis. In terms of enhancing cross-selling of our service lines and expertise to a wider client base, we've recently acquired a new sales director who's come in specifically to look at how we sell our services across our existing network to new providers and how we look at selling all of our service lines rather than specifically insolvency or property. And in terms of investment in technology and process, we've recently recruited a new Head of IT, who not only is assisting with ensuring that our systems are secure and operative on a day-to-day basis, but also we look at how we can use IT to improve the way that we do work and work, therefore, more efficiently and -- on a more cost-effective basis. And in terms of acquisitions, we're looking at value-accretive acquisitions in any of the segments we now operate in, so Insolvency Property and Professional Services generally. Both professional services we currently are involved with, but also new additions. For example, the finance brokerage we've brought in the last year. Moving on to the next slide. We can see our recent growth here from just over GBP 50 million in FY '18 to the current year of GBP 110 million. GBP 37 million of that has come from acquired growth and just over GBP 20 million from organic growth. And on the right, we can see the acquired revenue of GBP 37 million. That is -- involved 6 property acquisitions, 5 insolvency and 2 advisory acquisitions. And we now have a very well-defined process for identifying, valuing, acquiring and very importantly, integrating those businesses into our own. And we have a healthy balance sheet and positive cash generation to underpin this capacity for making more acquisitions. Moving on to the next slide. Again, looking at that strong financial track record over the course of the last 5 years, we can see significant revenue growth; adjusted profit before tax effectively tripling; an increase in our operating margin, which we are very pleased with, and there's capacity for that to improve. Adjusted earnings per share has increased from 4p to 9.1p. We've seen our dividends increase by over 45% over that period while still maintaining that capacity to invest in acquisitions. And we've seen our net cash position go from a net deficit of GBP 7.5 million to nearly GBP 5 million with the cash on the balance sheet at the period end. And moving on to the next and final slide before questions. So in summary, we're in a strong position and confident of delivering further growth. There's been a material increase in the scale of the group and the service offerings, which is a result of organic and acquisitive growth. We feel we're well placed with countercyclical focus. We have a strong financial track record. We're confident of delivering plans for further growth towards the top end of market expectations. We have a progressive dividend policy, which has seen a 5-year growth of 10% per annum on average. A healthy balance sheet and cash generation, which underpins the capacity for further acquisitions and organic growth. We have our organic growth opportunities across the group, a good pipeline of acquisition opportunities, and we're well positioned to respond to the challenges of the current economic backdrop with that 70% countercyclical focus. So hopefully, that's giving you some insights on the business. And if there are any questions, we'd be delighted to answer them.

Great gentlemen, that was very, very thorough. Thank you. [Operator Instructions] So diving straight in. A couple on insolvency, perhaps understandably at the moment. You mentioned that the drivers for larger cases to become more frequent, Ric. Could you say what you think is the most important catalyst for that growth in the number of cases to happen in coming months? And could you elaborate a little bit more of the importance of London and the Southeast in terms of weighting to these larger corporations?

Yes. So in terms of the headwinds, it's all the ones which were mentioned in the presentation. But particularly, we're seeing issues with demand for -- on the consumer-based businesses. We're seeing issues with supply chain and inflation impacting the ability of businesses to provide goods and to provide them a price, which their customer base is able to afford. And also materially, we're finding that they're having issues with raising additional finance to fund working capital requirements in what's a very difficult market, with rising interest rates and lenders being very concerned about economic prospects. And in terms of the importance of London, those significant cases either are in the Southeast because simply, the number of businesses which are based in that area and the average size of those businesses or the Southeast is very influenced. And London is very influential in deciding on who deals with those particular cases because as far as banks are concerned, often the decision on larger cases as to how they are dealt with and who deals with them is made in London. So the connections and networks and capacity in London is extremely important, and that's something that we've effectively tripled with the acquisitions that we've made in early '21.

Okay. And following on from that theme, you have a very -- you have the largest market share by virtue, being very strong in smaller cases. Is there a strategic objective to shift the balance between larger and smaller insolvency case, because as you've mentioned, there are higher margins available in the larger insolvencies?

Well, what we'd like to do is to win market share in both areas. So we are committed to the volume end of the market. And it is profitable for us, and there is the opportunity to use technology to make it even more profitable. But equally, as you say, the bigger cases tend to be not only bigger fees but higher margins, and we think there is the capacity for us to improve our market share there as well. So it's not one or the other, it's both.

Okay. And then we'll stick with insolvency for a little bit longer. There have been some new measures mentioned in the press for further government support for businesses in trouble. Could you elaborate a little bit more on the implications for your work? And here's a hard one. Would you anticipate a change of whoever the new Prime Minister may be, perhaps more motor friendly and other measures to return on a comparable level to last year in lockdowns?

Yes. Well, in terms of continued support measures, our new support measures, there's a focus on lending to the SME marketplace. I mean the larger companies as well. It isn't as generous as what we've seen in the past. It can't be as generous. It involves personal guarantees from directors, which is a big concern particularly for smaller businesses. So we anticipate the margin, that sort of thing may well help, but we don't think it's going to have a significant impact on the numbers of insolvencies. I think there are too many businesses, which are in a position where they're not able to borrow on a normal commercial basis, and that's one of the prerequisites of the government scheme. So what the government is recognizing is that if a business is not able to survive in any event, if it was a business which wasn't going to survive in '19 and -- in 2019. And clearly the pandemic came along and it was able to take advantage of the support measures in place there. But if it is inherently an unsound business, then it needs to be dealt with in due course. And there's a limit, obviously, given the amount of support that the government put in place during the pandemic. There's a limit of what it can afford to do now in terms of trying to save more businesses, which inherently will not survive in the medium term in any event. Material change, irrespective of who is in #10, I doubt we'll see a material difference.

Very clear. A number of questions on acquisitions, maybe one for you first, Nick. It appears that some of the recent deals that you've been able to achieve slightly less expensive on a price-to-earnings basis on some of the transactions you've made. Is that a fair comment? And does it reflect on the marketplace or indeed the attractions of being part of the Begbies Group?

I think the headline multiples probably haven't changed much, Andy, over the last few years. I think we're still somewhere in the 5x to maybe 7x to 8x post-tax multiple, the higher end for the larger businesses. I think the ones which look like they're very attractively priced, they're probably the ones with the large earnout and stretch targets within. And the Mantra acquisition is one which probably springs to mind with that where there's a large element of stretch, and we're clearly delighted if we're paying that out and the business has grown to that level. And if we do enter that position, it's so on a very attractive multiple.

And the overall scale of the group has obviously been grown by both organic and M&A. Can you talk a little bit about if there -- you're now seeing tangible benefits from that scale in terms of cost and capital intensity relative to the revenues?

Well, I think we can see that starting to come through in this year's numbers. So the increase in margin that we've seen within the recovery and advisory segments, a large element of that is because of the acquisitions. Some of the synergies starting to come through. There's more to go there next year to see the busier marketplace that Ric was talking about in terms of larger insolvencies. That London team will be a beneficiary of that, and we'll see margins improve on the back of it. And we've also seen central costs, so a lot of the sort of the administrative fixed costs of the group in finance, HR, IT, et cetera, but being decreasing as a percentage of revenue as you've seen that scale come through. So I think those sorts of benefits, we have seen them in recent years, and we expect to see that moving forward as well.

Okay. And you mentioned the synergies within the group. We do have a question on cross-selling. And what your hopes and expectations are of realizing more of that, and therefore, the benefits of other group?

Well, I think that cross-selling is the holy grail of professional services. It's something which, in theory, we should all do more of, but in practice, it's difficult to achieve. And that's often because of busy professionals are good at selling their own services and then concentrated on doing the work once they've sold it. And that's why we brought in some outside expertise to help us. So we've got somebody who is dedicated, and we'll build up a team who are dedicated to ensuring that our network of work referrers are aware of our greater breadth of services and start to take advantage of those. So we think there's a good opportunity to increase the cross-selling that we're already doing. In terms of the KPIs for that, there isn't anything that we've yet put together because it's a new initiative to show how that's working. But that's something that we intend to do, so both we can see internally. And then when shareholders ask the question how it's progressing, we have some meaningful KPIs which can show that we are making progress.

Very good. And again, returning to acquisitions. You have an admirable record of making accretive acquisitions, and the latest example is another good case in point. Accretive acquisitions increased earnings, bring down the rating, it's all good for shareholders. And so the question we've received is how confident are you on doing more of the large scale transactions now you're a GBP 200 million plus market cap? So more deals of the Mantra size in the current financial year.

Well, we're hopeful of achieving that. We've got a good pipeline of opportunities. Less so on the insolvency side where the 2 sizable acquisitions we did in early '21, probably the last 2 sizable independent insolvency practices available. So the additions there will be more of the small abilities, which we're delighted to take onboard as and when. But individually, they don't move the needle as they are typically GBP 1 million to GBP 2 million turnover businesses. On the property side, there's much more scope for sizable acquisitions because of the overall size of the market and the structure of the market, there are many businesses that are independently owned, which are material in size. So we'd expect to see activity there, both including some smaller boutiques but also some more sizable businesses over the course of this year and next. On the advisory side, again, there's a mix of services that we can look at which would give the opportunity for more sizable acquisitions like Mantra. So we think the significant acquisitions will be on the property and advisory side. The focus on insolvency very much over the course of the next few years will be on organic growth. We'll be really taking advantage of what we see as a busy marketplace and taking advantage of that sizable London office we've now created and making sure that wins market share.

Great. And organic growth, we have a couple of questions on recruitment. Firstly on IT, you mentioned that you've brought onboard a new head of that department. The question is, is that natural evolution? Or does it herald any change in some of your offerings?

Well, the latter is natural evolution. It's a bigger business that requires more control, requires a bigger team, requires people who have experience of operating in a bigger environment, but also very much forward-looking as well. As I've said, looking at our existing services and how we can do those more effectively using IT that's available or a hybrid available. And we develop internally to make sure that we were able to do those flows of work, particularly the volume side of the business. Those flows of work more efficiently, and therefore, improve margins.

And then in terms of recruiting senior people, which does seem to be ongoing, can you say if that is a difficult market for you at the moment? Or indeed, what is attracting some of these senior people to come to Begbies Traynor?

It is difficult. It's a tight market, and the number of specialist is limited. On the insolvency side, we have been actively recruiting over the last year, and that's partly because we have the capacity, particularly given the lower numbers in -- during the pandemic, low number of insolvencies, we have the capacity there for doing more work. And our senior team, we have a substantial senior team who have the capacity for doing comfortably an extra 20% with their teams, and they're doing it at the moment. And that's where we see the growth in insolvency coming from using that existing resource. We'd be delighted to attract new people into the business if we can, and particularly senior people who have a following and bring market share with them. So we're always looking for those people, but they are relatively few and far between. And it is unlikely over the next year or two, we will be recruiting a significant number of them. Having said that, we've also got some very good quality people in the business who are not quite at the top of the pyramid yet in terms of being active insolvency practitioners but are qualified and are gaining experience. So we think, naturally, we'll be able to increase the number of senior people that we have got by growing them in the team and, again, partly our increase in HR expertise to make sure that people have that right career path and they're comfortable with us and stay with us.

Great. And then perhaps the final question. The balance between dividends and acquisition opportunities, and I'm sure you have a large number of shareholders who all have different views on this. But the question is, given the attractive outlook and pipeline for deals, is it necessary to be paying out dividends at the moment given that you're in such a strong growth phase?

Yes. Well, it's a very sensible question. As you say, we have shareholders with different views on this. I think we're treading a fine but comfortable line between those different views. We have many shareholders who like a dividend. We've always paid a dividend. We think it's important, and that's something that goes with a Begbies Traynor share. But equally, we want to ensure that we can make those acquisitions and we're not restricted in terms of cash from doing so. But we are very cash generative. We have got significant facility which, in recent times, we haven't been using but is available to assist with those acquisitions and working capital requirements, et cetera. So we think maintaining the dividend at the moment is about 2.6x covered. We think that is a sensible middle road to take at the moment. And Nick, would you like to add anything to that? But I think that feels like this year and next, given the pipeline and the marketplace we're looking at feels like a sensible place to be.

I think when you look at the group's free cash flow, as you've seen this year, the free cash flow covered the earnout payments we had. It covered the dividends. And actually in this year, it covered the acquisition payments made as well. So we feel pretty comfortable with the scale that the group is now at, the level of free cash that we generate, and the borrowing facilities we've got will fund through our major acquisition plans.

Yes. Well, there's a large audience to keep happy, but on balance, I think the performance of the share price in recent months suggests you're doing a very good job in finding that balance. So I think that concludes all the questions that we've had. I'd like to thank our audience for participating and remind them that this slide deck that Ric and Nick have been using is available on the Begbies' website. And of course, in terms of looking forward, forecasts are available in regular notes on the Equity Development website, where I believe our analyst has a 175p fair value for the business at the moment. I'm sure there will be a chance to readdress that on future deals, which we wish you the best of luck in executing. And thank you both very much for your time again and a very clear presentation.

Good. Can I thank you, Andy, for hosting us? And thank you, everybody, for joining us, and we look forward to updating you with the trading statement in September.

Thank you.

Thank you.