Good morning everyone. Thank you for joining us. I'm Ric Traynor, Executive Chairman, and I'm joined by Nick Taylor, the Group Finance Director. This is our full year 2025 final results presentation. If we can move on to slide 2. For those of you who don't know us, we're a leading financial and real estate advisory firm using our expertise to enhance, protect, and realize the value of our clients' businesses, assets, and investments. That's value, protect, enhance, and realize. We have an expanding range of services under Eight Pillars of Activity as detailed on this slide. We have over 1,300 colleagues across an extensive office network across the U.K. and in selected overseas locations. Our broadening range of services leaves us well placed to grow the business across the cycle. Moving on to the next slide.
This is our 10th consecutive year of profitable growth with double-digit revenue and EBITDA increase. Revenue of EUR 153 million, which is a 12% increase, 10% organic, 2% acquired. Adjusted EBITDA up to EUR 31.7 million and adjusted profit before tax of EUR 23.5 million. We've seen an increase in our adjusted diluted EPS to 10.5p, and we've increased our dividend by 8% to 4.3p, which is our eighth successive year of dividend increase. We've increased that rate to 8% this year because of the confidence in the business moving forward and our positive cash flow. We also have net cash at the end of the period, reflecting strong enhanced cash generation during the year. Moving to the next slide, strong performance across both divisions with senior hires to accelerate longer-term growth. We've seen positive markets for developing and growing the group, both for insolvencies and advisory, where we've maintained our market-leading position.
Also, modest growth on the property side in terms of the marketplace, partly due to the budget, partly strong performance from both divisions. Higher- value cases driving growth in insolvency revenue, significant growth in financial advisory fee income, and growth across the core property activities of valuation and asset sales for us, principally auctions and consultancy. Continuing the growth and development of our team. An 8% increase in the team over the last 12 months. Senior hires across all service lines to accelerate longer-term growth. Good progress on learning and development support. We continue to develop our process improvement initiatives. Activity levels in all our service lines are encouraging with positive momentum across the group. I'll now pass on to Nick for the financial review.
Okay.
Move on to the next slide please.
Thank you, Ric.
Good morning. We'll start on slide 6 where we're reporting a strong financial performance, which marks 10 consecutive years of profitable growth. Just looking at that in a bit of detail, by our two operating segments, starting with Business Recovery and Financial Advisory. Business recovery revenues, this is the income from formal insolvency appointments, increased by 5%. That was all organic to EUR 83.7 million. That growth, which you'll see a little bit further on in the presentation, was driven by larger, higher- value cases. In addition to that revenue increase, we've seen our order book increase as well by 9% to EUR 78.6 million, which is a record level for the group. This growth in both revenue and order book is in the context of modest market decreases by volume over the course of the year, showing the strong performance by our team. Within Financial Advisory, revenue increased by 40%.
All of that was organic to EUR 23.6 million. A lot of activity in the year across restructuring, special situations, M&A, and financing projects. That mitigated the weak mainstream corporate finance market. Margins for the segment were 26.5%, which is in line with the prior year. The improved activity that we saw saw an increase in margin, but that was pulled back by the weak corporate finance market and the ongoing investment we've been making in senior hires. Within Property Advisory, revenue growth was 15%, 7% organic growth. The acquired growth was the full year impact of the acquisitions we completed in financial year 2024. Main areas of growth across the business were increased auction volumes. That was a combination of organic growth and the benefit from the prior year acquisition of the SDL Auctions business.
Within building consultancy, we've continued to grow organically, including investing in our sustainability and decarbonization consultancy. We expect to see some benefits of that investment coming through in the new financial year. Our valuations team grew with the benefit of a prior year acquisition. Margins in the year were down to 16.8% from 18.9% in the prior year. Two principal drivers: one, the prior year margins were supported by some enhanced consultancy fees, which gave about a 1% uplift to margin in the prior year. Together with the organic investment we've taken in the year which has brought margins down, Group services costs increased to EUR 10.3 million, but they remain flat as a percentage of revenue at 6.7% of revenue, giving us an operating profit of EUR 25.9 million and margins slightly down to 16.9%. Finance costs increased to EUR 2.4 million.
That's the result of higher debt levels following buybacks which we completed both in the current and prior year, and IFRS 16 charges, giving an increase in adjusted profit before tax of 7% to EUR 23.5 million. Our adjusted tax rate was 26%, which is in line with the prior year, and the diluted EPS growth of 6% reflects the increased share count following prior year share option awards. Moving to slide 7, which shows the reconciliation of our adjusted EBITDA to statutory profits. Adjusted EBITDA of EUR 31.7 million, share-based payment charges increased with the full year impact of prior year options, and depreciation increased to EUR 4.5 million, principally due to IFRS 16 property depreciation. The finance costs are EUR 2.4 million, given the adjusted pre- tax of EUR 23.5 million. Our non-underlying items are the acquisition accounting entries we make under IFRS 3.
The total impact of that reduced to a EUR 12 million charge from just over EUR 16 million in the prior year, and those numbers are continuing to reduce. At the right-hand side of the screen, you'll see that the acquisition consideration element, which went from EUR 11 million down to EUR 8.6 million, reduces to EUR 7.6 million in the new financial year, and amortization, which was EUR 5.6 million down to EUR 3.5 million, reduces to EUR 2.8 million in the new year. Moving to slide 8, we've seen a marked increase in free cash flow in the year, which is up to EUR 19.4 million from EUR 12.4 million in 2024. The principal driver of that is an improved working capital position. Our working capital absorption on that profit growth decreased to EUR 0.8 million from EUR 4 million in the prior year, and that's due to an improvement in working capital, a modest reduction in lockup to 4.1 months.
It was 4.2 at the end of the prior year, and we'd seen a slight increase. That's benefited the year-on-year performance. Tax payments of EUR 4.4 million benefited from the prior year. The 2024 payments included some 2025 prepaid amounts, so that benefited our 2025 cash flow, and within other payments of EUR 7.1 million. The largest increase is an increase in lease payments and IFRS 16, and that's following the completion of some rent- free periods, and the net impact of that is the free cash flow increase of 56% in the year. We completed a buyback of our shares, EUR 1.6 million, which was used to satisfy earn out obligations, and the acquisition payments in the year of EUR 9.4 million was principally prior year earn out of EUR 8.9 million, with EUR 0.5 million for two bolt- ons we completed in the year.
In.
Terms of future earn out liabilities. There's just over EUR 12 million remaining to be settled, which will be fully satisfied by December 2027. EUR 1.6 million of that, they have the option to settle in equity, and payments of EUR 6.5 million in the new financial year, and announced a share buyback this morning as well of up to EUR 1 million to partially settle that liability with dividend payments of EUR 6.3 million. We had a net cash inflow in the year of EUR 2.3 million compared to an outflow of EUR 4.4 million last year. We ended the year with a net cash position of EUR 0.9 million compared with a small opening net debt of EUR 1.4 million. We're in a robust financial position. We've got significant levels of headroom in our bank facilities. Just a reminder, that's a total facility of EUR 35 million.
That's a EUR 25 million RCF and EUR 10 million of accordion line, and that's committed until February 2028 with a 1-year extension option. On slide 9, some guidance for the new financial year where we expect to see revenue at the upper end and profits in line with market expectations. Market conditions across the group remain supportive. We're seeing encouraging activity levels and positive momentum across the board. We anticipate continuing revenue growth. A number of factors within that: we've increased the scale of the teams, we're continuing to recruit senior fee earners, so there's the benefit from people that joined us in this financial year as well as people who are scheduled to join us over the next few months.
We've got visibility of fees from current instructions, including that insolvency order book, which is at record levels and larger and higher- quality cases, and that's expected to lead to revenue being at the upper end of market expectations, which mitigates the increase in costs. That's both positive from the ongoing investment in the business together with inflation and the NI increase, which added EUR 1.5 million to our cost base, and profit to be in line with market expectations as we continue to invest for future growth. Our balance sheet is robust. The cash generation you saw the previous slide underpins our continuing investment both in organic growth and our M&A pipeline. We're confident in continuing our track record of growth in the new financial year and beyond. We'll do our next update at the AGM in September. Overall, very pleased to deliver another strong year of financial performance.
I'll now hand back to Ric.
Thank you, Nick. Moving on to market update, first, if we move on to slide 11, insolvencies remain high relative to historical levels. Activity levels are expected to be sustained by the current headwinds, continuing demand pressures, rising costs both pre- and post- budget, prospect of higher for longer interest rates. Obviously, geopolitical uncertainties around at the moment and, of course, the anticipated future tax rises resulting from the political fallout from last week's vote on welfare. However, despite those higher numbers, administrations remain 14% below the pre-pandemic level and the insolvency rate. That's the number of companies that go into a formal process as a percentage of the population of companies, is at a modest 0.5% compared with over 1% we'd expect in recessionary times.
Although numbers remain high compared to the pre-COVID period of ultra-low interest rates, they're at a modest insolvency rate and may represent a normalized level of activity. That sort of level of 23- 25 may be the new norm. Moving on to the next slide, just a quick look at the property market. Supported market transaction levels for property advisory, we saw an increase in activity of about 5% in the year, supported by a similar amount of lending increase. A lot of that focused on the budget. Lots of activity pre-budget to try and move properties in the anticipation of capital gains tax rises. Overall, there are headwinds for property advisory, and we would say that with the exception of auctions, which actually is a major part of our agency business, the market is slow. In terms of auctions, we're seeing auctions increase over time.
That middle graph you can see on the right there, which is actually increasing at a higher rate than the population of transactions generally, is auctions. That's where the major thrust of our agency practice is. Many of our activities are based on the stock of properties rather than transactions in a particular year. For example, consultancy, property management, insurance, and security means that we are relatively immune to major changes in property transactions during the period. We've seen growth, as we've said, across all of our various pillars of activity in property in terms of operating review. Moving to slide 14 please, for business recovery. Larger, higher- value cases are driving the growth. An enhanced reputation and increased advisory expertise is driving good growth momentum in larger and higher- value cases for both insolvency and advisory. A 13% growth in revenue from mid- market cases.
Despite the subdued administration numbers, market leading position maintained by volume. The team has increased by 8% to 665. We now have 100 IPs. That's the senior people who are qualified to take appointments. We've had external hires to boost the senior team. We have in- house recruitment team now which is focusing on recruiting more junior members to the team including apprentices. We've continued to progress our learning and development support to train and retain people and the two small tuck- in acquisitions that we did, Whitemoor and West Advisory, are integrated into local offices. We've continued to enhance our market leading digital presence that's focused on the volume market and the development of our offshore capability. We now operate from 5 offices advising on both local and multi-jurisdictional appointments and there's plans to expand that.
A good growth in the order book reflects wins in the year and gives confidence for the new financial year. Moving on to the next slide, Financial Advisory trebled in size since 2020 through organic growth and M&A, so trebled in size to EUR 23.6 million in the year we're reporting on. We've developed new service lines to enhance existing teams which complement the larger recovery engagement and provide new routes to market across the economic cycle. Service lines of funding solutions, deal advisory, restructuring, and financial advisory. The team now comprises 133 colleagues, a 12% increase in the year, and we're operating from London and key provincial cities working on U.K. and international assignments. Organic growth revenue 40% in the year driven by restructuring our national and international projects. Funding solutions focusing on real estate and asset finance assignments and special situations M&A.
Offsetting the weak corporate finance market, we continue to invest in future growth. Senior recruitment from mid- market competitors across forensics, restructuring, deal advisory, and debt advisory helping access wider markets and expand the client base and professional network. Moving on to slide 16, a look at property advisory. Building on our track record with strong revenue growth of 15% in the year to EUR 46 million in total. As I mentioned, strong growth in property auctions, that's a major thrust of our agency practice. We're now one of the largest national property auctions covering residential and commercial online auctions. Areas of recent investment have been through the acquisitions in 2023 of Mark Jenkinson in Sheffield and SDL Auctions in the Midlands. That's expanded our network across the north of England into the Midlands.
Growth in auction lots across the combined business is both from our expanding footprint and the expanding marketplace for auctions. We've also seen an increase in the average sales value and fee per case. We have a broad client base of councils, public sector partner agents, and property owners. In terms of valuations, increased valuations revenue followed the prior year acquisition of Andrew Forbes. Organic activity levels are robust, reflecting a stable market environment. We're continuing to build a wider geographical coverage in terms of building consultancy, which continues to develop investment in public sector sustainability and decarbonisation consultancy team. That's an organic investment initiative in the year, and it's already secured a significant order book of instructions for the new year. We've continued to grow the team across all service lines and are investing in technology and process improvements.
The team is now made up of 471, which is a 7% increase in the year. Moving on to the next slide, just a flavor of some of the notable cases that we've had during the period. The top one, Cascade, we reported at the half year. That was a case which brought in various different service lines. It started out as financial advisory with some property advisory input and turned into a formal insolvency. A business recovery exercise again, including the property division. The various other cases we list there include financial advisory. Looking at international work, for example, we acted for and continue to act for a global steel business in an advisory capacity and complex restructuring in both the U.K. and Singapore courts. That's a very significant assignment for us.
The next example is an offshore case that we're working on, which involves both our offshore locations and also working out of the London office, and that's a business recovery case. There's an example here also of asset finance which comes under financial advisory where we've arranged a EUR 45 million loan for a private equity-backed multi-site dental business to fund acquisitions moving forward. Also, we're partnering with all their staff in terms of their own personal mortgage needs. We also have an assignment which is ongoing for a very large U.K.-based business which will be an assignment running over multiple years, helping them with various internal issues. Lastly, an example of property advisory.
This is a case that we've won which involves anything from architectural design through to project management and forms part of our overall education sector offering, which now turns over more than EUR 4 million a year for us. That's a flavor of the sort of more interesting stuff we're doing across our various different service activities. Moving on to the next slide, in fact, slide 19 please. Making good progress on medium-term revenue targets of EUR 200 million in terms of organic growth. It's targeted through retention and development of existing employees, which is a major focus for us. We're making good progress with 90% retention for those who've been with us for more than a year. Recruitment of new talent.
We both have internal resources now to recruit junior people specifically, and also we partnered with bespoke headhunters in order to achieve the senior hires that we've been successful in achieving over last year and into this current year. Increased engagement size together with enhanced cross-selling is giving and enhancing our increased market presence and profile. An investment in technology and process to maximize margins and client service in terms of acquisition strategy in either existing or complementary service lines. We operate in fragmented markets, which gives us multiple targets at attractive valuations. We have a disciplined process for assessing acquisitions that's ensuring both a business and cultural fit. Clear post-acquisition integration strategy, which is vital for maximizing value. We now have a proven track record of value delivery. Moving on to the next slide.
Looking at our property division, we're well placed to build on the 10 years of growth in property advisory. This division was created through Eddisons acquisition in December 2014. We've made 14 subsequent bolt-on acquisitions, 8 specialists and 6 general practices. Bolt-on investment at EUR 27 million, acquiring a similar amount of turnover. Acquisition size is typically EUR 500,000-EUR 5 million. Reported double-digit cumulative average growth rate in revenue and profit since 2015 and a total capital investment including buying Eddisons initially of EUR 34 million. We've continued to execute our growth strategy. M&A opportunities are in line with our strategy to date. Typically EUR 1 million to EUR 5 million turnover businesses. Organic growth through recruitment of new talent, for example, the sustainability team that joined us in the last year. An investment in technology and process, choosing the best solutions for each of our service lines.
We can see the graph on the right, a 10-year cumulative average growth rate of revenue of 16% and in terms of profit 14%. Moving on to the next slide. Overall, 10 years of delivering profitable growth across the cycle, increasing turnover from just over EUR 50 million to EUR 153 million. That's a 13% average growth rate in terms of profit from 4.5% to 23.5%. That's a 20% growth rate and an 8% growth rate in dividends while maintaining sufficient cash in the business to invest in those acquisitions. Overall, for the period, we've seen a 10-year price cumulative average growth rate of 8% and a total shareholder return of 13%. Moving on to summary and outlook, slide 23 please. We're confident of continuing our track record of growth. We've continued to execute the strategy to grow the business during the year.
The main focus in the last year has been on organic growth. Of course, we expect positive momentum across the business in the current year. We have encouraging activity levels and increased order book, expanded professional team, and supportive market conditions. A proven strategy for growth across the cycle, making good progress towards medium-term revenue targets of EUR 200 million, driven by a combination of organic growth and acquisition pipeline. Overall, that's also giving us a diversified revenue stream, meaning that we're resilient across the economic cycle. If we move on to the last slide, the investment case, we'll leave that for you to ponder. If there are any questions, Nick and I will be delighted to answer them now.
Thank you. Please be reminded you can type and submit your questions via the Ask A Question button on your webcast page. We've had one question come through already, which is do you see the number of insolvencies continuing throughout the course of the year?
The short answer to that is yes. Because of the headwinds that we are seeing, which are, if anything, getting more significant, the activity levels to date and the momentum through the year, particularly with those May figures rising materially, we expect to see the number of insolvencies at least maintaining the current level for the rest of the year.
Thank you. We'll pause for a moment while questions come through. Please be reminded once more that you can type and submit your questions via the Ask A Question button on your webcast page. Once more, you can type and submit your questions via the Ask A Question button on your webcast page. We've had one question come through from Sam Dindol from Stifel, which is how is the M&A pipeline looking and what do we need to see for administrations to get back to pre-pandemic levels?
Let me answer that, Sam. In terms of the pipeline, the pipeline is beginning to build again after the hiccups last year with the budget, which put lots of things on hold. The emphasis is on the property business, which is not a surprise given the size of that marketplace and how fragmented it is. There's plenty of businesses there which are nearer to the EUR 5 million turnover than the EUR1 million, and that's where we're concentrating. We are always keen to add to our insolvency business with smaller boutique acquisitions. If we can find advisory businesses that fit in well with what we do, we'll be looking to bring them on board as well. Overall, a healthy pipeline is building again after the last 12 months, and we'd expect to see transactions happen in the current financial year.
In terms of administrations, it's surprising how resilient those mid-market businesses have been. Just reminding people, administrations tend to be the larger cases where the businesses are more substantial and often have more resource to allow them to deal with troubled times, to restructure if necessary. We would expect to see those numbers rise over the course of the next year or so, but modestly. We're not anticipating a significant increase in that mid-market over the course of next year, but we hope that we will continue to increase our share of that market. Hopefully that answers the question.
We've had a question from Justin Bates from Canaccord Genuity, which is, could you give some more detail on the increasing size of your mandates and what lies behind that?
That strategy we've had of moving into more mid- market work is behind that because it's typically larger cases. Those cases tend to go on for multiple years, and the margins often are better as well, simply because of the quality of the work and the size of the assignment. That's come from a mixture of a lot of hard work over time, gradually doing more of that work ourselves, training ourselves, training our people. It's got momentum in the last 2 years by increasingly recruiting senior people from our competitors who have that expertise and have that reputation for doing that sort of work. We'd anticipate more of that continuing. We're continuing with that recruitment drive of senior people.
We are enhancing our internal training, and of course, the more cases that we get of that size, the better training ground it is for our people to actually learn those skills. We're hoping for more of the same moving forward.
A question from Andy Edmond from Equity Development. As you've said, further tax rises are inevitable. Have you further scope to mitigate the impact?
That's definitely one to pass on to Nick. Thank you, Andy.
Oh yeah, thanks Andy. Thanks Ric, for passing it over. I guess it depends what they are, Andy. We've managed to mitigate it as we've grown the business in terms of those NI increases, although it's having a bit of a blip on margin for us next year. We'll have to see what the changes are that come through. The NI and the change in some of the rates that you start to pay at, in some ways disadvantaging us, bringing in more junior people is particularly unhelpful to us as it is to many companies, and we'll have to deal with whatever the government puts in front of us.
Thank you. A question from Portia Patel from Canaccord, which is what are realistic medium- term operating margins for the two divisions?
Again, Nick, I think that's one for you.
I think where we are at the moment within business recovery and advisory is a realistic position. I think, going forwards, there's a bit of investment cost.
At the moment.
Which is maybe pulling it down, but I think that high, mid- high 20% is a realistic position over the medium- term. Property, as you know, is structurally lower in terms of margin. There's some investments in there at the moment. I think being in the 17%- 18% range is a realistic target. Some of our service lines are higher than that, we go up to 25% for some of the higher- margin work. Dependent on mix, we could be touching 20% as we have done at certain times. I think that 16%, 17%, 18% is a reasonable band depending on where the activity is at that point of the cycle.
You have a question from Caroline Gulliver from Equity Development, which is you have a broad range of 8 Pillars of Services now that complement each other. Can you talk about how you get the network benefit of these and opportunities to cross sell services? Which areas do you see the most potential for further acquisitions in?
In terms of cross sell, obviously that's something which we're very keen on maximizing. It's often difficult as individuals with a particular expertise focus on their particular marketplace. We're increasingly getting cooperation across our different service lines, and the larger the case, the more likely it is that it's going to bring people together. For example, the Cascade case that I talked about briefly, that came in as an advisory case, had lots of property involved in that, so it involved a property division and then ultimately was a formal insolvency. That's bringing people together, and we'd anticipate getting more of that. Also, a lot of internal work is going on to educate people about our different activities so they can bear that in mind when they're talking to their particular client base and hopefully sell our different services as well as the one that they're expert in themselves.
In terms of growth of the various activities, we expect it across the board, particularly just given the size of the market, the property related service lines are likely to grow at a faster rate. We do see a lot of opportunity in advisory because advisory again covers many different areas, and that's something which we can gradually expand over time and get involved in more additional services that would come under that general advisory banner. In terms of insolvency, it's getting better quality insolvency, focusing on that volume still and getting a bigger share of the market. In terms of that market for insolvency services, as I said in the presentation, we anticipate that the new norm is insolvencies into the 20,000s per annum, and if we hit recessionary times then it will be significantly more than that. There's plenty of opportunity in insolvency to see growth over time.
Hopefully that answers the question.
Thank you. A question from James Fletcher from Berenberg, which is today's outlook revenue guidance. Implied growth of 3% to 6%, a slowdown versus organic growth of 10% in FY 2025. Can you give more color to that?
Again, I think, Nick, in terms of the numbers, I think it's worth you just comment on that. Obviously, we like to be cautious in terms of our outlook, but if there's anything more specific. Nick, do you want to comment on that?
Yeah, there's a bit more specific guidance at the very back of the pack when you get a chance to look at that. The guidance is for group revenue growth to be around 7%. Yeah, a bit ahead of the rate I think you're quoting in the question. At that level, as Ric said, we were being cautious. Our cost base has increased. Half of that increase is positive for us because it's bringing people in to grow the business. That revenue guidance of around 7% is assuming we get some contribution. If we hit the ground running, as you know, some of the people are doing already, we think there's upside to that. We'll have a better view of that as we go through the year.
Thank you. A question from Gavin Laidlaw from Stockwatch UK, which is how much more diversification can be done. Could you please give a cross- selling update please?
I think that question has been partially answered to date. In terms of how much more can be done, we hope over time it will be material, but we're not putting any numbers on that at the moment. I'm sorry, the second half of the question was what?
Could you give a cross- selling update, please?
Right, that's the cross- selling update.
Great. A question from Andy Edmond from Equity Development is you have been very successful in hiring senior fee earners. Why do you think that is the case, and do you think that 100 IPs is an adequate resource to cope with the growing volumes of insolvency and administration work?
I think we've been successful, Andy, because we've made a positive effort to recruit and now we're seen as a platform where people who have worked on mid-market cases can come and join us and still continue to win that work from their work sources. If you go back probably 5 years ago, it was much more difficult for us to do that because perhaps we weren't seen as major players in that mid-market, whereas now we are. That will allow us to continue to recruit and bring in senior people. In terms of the number of IPs, 100 is a good number. I suspect it's more than anybody else has, and there is the opportunity to leverage those IPs by building the team under them as more work comes in.
Those internal recruiters we've brought in are specifically looking at recruiting people at a more junior level at the bottom of that pyramid, which allows the insolvency practitioners to take on more work and delegate it to a larger team of people. Obviously, over time we'd like to see that number of 100 increase with the right people, but we think there's lots of capacity for growth within the existing team. Hopefully that answers the question.
Thank you. We have no further questions in queue. A final reminder, if you would like to ask a question, you can do so by clicking the Type Ask a Question button on your webcast page.