Financial Report 2021

Financial Report

2021

*** Revenue £108.9m up 94% *** EBIT £5.2m up 224% *** Earnings Per Share 3.2 pence up 30% *** Board proposes dividend ***

MBH Our World: Little Steps - Big Results

The stop-start recovery from the Covid-19 pandemic set the backdrop for all MBH Group companies in 2021, overlaid by supply interruptions and skills shortages globally. Despite this, the Group delivered a resilient business performance as it adapted to new ways of working, providing innovative solutions, products and services to an ever-discerning global client base. 


The MBH Corporation Leadership Team and Principals of all Group companies keep their fingers on the pulse to stay ahead of changes that influence their environments. The insights that we regularly obtain from Group companies keeps us one step ahead of the competition and provides us with essential information that often act as guiding lights as we navigate the complexities of operating in a rapidly changing world.


Over the past few years, Group companies have seen their teams starting to work in different ways. But one team members’ ideal split of office/facility and remote working will not suit another. How that blend of working happens requires considerable flexibility across the business and on a case-by-case basis. Group companies will continue to adapt and change in this area.


As we progress through 2022, the diversity of the Group companies in MBH will be a real strength and as well as an opportunity, as different sectors pick up again at different speeds. With Group companies in the areas of construction, engineering, transport and leisure, education, social care and property amongst others, we are well positioned to benefit from growth in the new world that we live in.


"Profitable every year since listing, I am pleased to report that we will once again go to shareholders seeking approval to continue our run of issuing dividends."


Callum Laing | CEO MBH Corporation Plc


CEO Statement 2021

Callum Laing

Chief Executive Officer

Looking through my previous annual reports it is interesting to see how different years have allowed us to highlight different areas of our business model, especially in relation to shareholder value. In the first year I commented on the organic growth that companies typically see, just from joining the Group and being able to leverage our balance sheet to win bigger contracts (19% organic growth in 2019). Over the last two years organic growth for most companies in the Group has been limited due to the pandemic, but we have been able to demonstrate strong growth through our EPS accretive acquisitions.  After Accretive Acquisitions and Organic Growth our third driver of shareholder value is Synergies. Having spent a few days with all Group Principals in the UK’s Lake District in April, I am expecting to see the results of even more synergies over the coming years. Whilst Zoom technology has played an integral role over the past couple of years, it is a poor substitute for getting everyone in a room together and seeing how we can all leverage off each other's strengths.

A 94% increase in revenue and a 224% increase in EBIT is an extremely positive outcome for 2021 and hopefully further confirmation to our loyal shareholders that small business owners, given autonomy and the right incentives, are willing to go above and beyond even in some of the most hostile business environments to continue building and delivering.


Removing Parenta from the Group negatively impacted our profitability due to a one off non cash accounting write down of goodwill. It is an unfortunate consequence of a still depressed share price rather than anything more material.  The EBIT figure of £5.2m for the remaining Group companies is the true reflection of the baseline moving forward.  Certain sectors like Education and Leisure have performed incredibly well, but for the majority of our companies, whilst 2021 was an improvement on 2020, it has not been close to a ‘return to normality’ with Omicron significantly slowing things down in the final quarter of last year.  The early promise of 2022 is that we could finally see the majority of the businesses in our Group returning to the results as good as, or better, than prior to Covid.  Certainly the sentiment of the team is very enthusiastic and client demand across the board appears to have bounced back strongly.

Profitable every year since listing, I am pleased to report that we will once again go to shareholders seeking approval to continue our run of issuing dividends. As always the question of capital allocation is one that the Board explores rigorously. Whilst share buybacks are certainly an option that are regularly discussed and often requested by external shareholders, it is felt that at the current time, maintaining our consistency in dividends is starting to produce the right results, attract the right kind of investors and also continuing to provide a return to our Principals negating the need for them to divest shares that they would rather retain for the long term.


Looking inward


For those stakeholders seeking to understand more of how our business model works ‘behind the scenes’, I thought it might be of use to share the expectations that we set out to Principals when they join. We obviously have our values; Trust, Collaboration & Velocity, that permeate every element of what we do (you can find more on this in my initial Chairman's Letter). However, all Principals also sign up to our expectations of them too. Expansion, Enterprise and Accountability.

Expansion


At its core is that this is the beginning of a journey… not the end. We have no interest in companies that are looking to ‘exit’ through MBH. We provide a platform that will allow expansion of the business, the team and the Principals themselves. Their businesses have the opportunity to expand through winning bigger contracts, completing their own acquisitions and leveraging sister companies to move into new geographies. The teams in the businesses are able to join cross functional forums within MBH to meet and learn from their peers whether that be on the topics of Finance, ESG, Marketing, Operations or other areas. A level of career development that might be standard within big companies but that is normally out of reach for small companies and their teams. Of course with every company that joins, those opportunities increase exponentially.


Finally our Principals are encouraged to expand themselves. There is a steep learning curve when making the jump from small private entity into the realms of a PLC, but there is plenty of support and resources for those who wish to grow and develop their leadership capacities. This could be through running some of the internal groups and events or ultimately serving on the Board and stepping into the CEO position. Over time we intend to add more seats to the Board to allow Principals with strong leadership credentials to contribute more whilst gaining that PLC experience. 


Enterprise


Enterprise is at the heart of entrepreneurship and we define it as finding commercially viable solutions to problems. Something that all business owners in our Group have been doing successfully for decades. Whilst we obviously expect them to carry that on in their own businesses, the big distinction when they join is that MBH is also now ‘their own business’ and consequently our expectation is that every Principal that joins is responsible for commercially viable solutions to problems. Fortunately with a rapidly growing Group like MBH, there are no shortages of opportunities for Principals to identify, and then take ownership, of areas that they can contribute their skills to improve. Thinking in terms of solutions instead of just problems is second nature to business owners. Fortunately, every Principal who joins us typically adds 20-30 years of entrepreneurial problem solving skills to our team.

Accountability


Perhaps not surprisingly accountability is a key expectation we have of all Principals who join. No one who has had any level of success in life has done so without accountability. Obviously there is accountability to the financial performance of their company and accountability to their fellow Principals and our other stakeholders. But perhaps more importantly there is also that accountability to themselves and even to their future selves. Are they making the most of this opportunity? Bringing a company into MBH gives them an ‘unfair advantage’ over their competitors, but are they taking full advantage of that to win the bigger contracts, to explore doing their own acquisitions, to develop the staff in their teams or to position themselves as leaders within the organisation? 


In another organisation, HR could be very busy indeed trying to quantify these qualities and provide 360 degree appraisals every year. Those who know us will know that this is not our way. Our expectations are clear and so is our level of trust. With strong values and expectations in place and with 25+ ambassadors who embody what we believe in, we are creating an enviable culture that attracts the best and repels those who are not willing to step up to play on a bigger stage.


2021 was a welcome return to some level of normality in some industries and some countries, but the stop start nature of it made it hard to build momentum. Despite the challenges the companies have performed admirably and are already hard at work to make 2022 our best year yet.


If you are new to MBH then I would firstly encourage you to read

the philosophy behind MBH from our initial listing.



Non-Executive Chairman Statement 2021

Welcome from Stan Patey, Non-Executive Chairman, MBH Corporation

Non-Executive Chairman

This is my first full-year results update as Non-Executive Chairman for the MBH Corporation and I am honoured to write this message, albeit during incredibly challenging times globally.

As we slowly started to emerge from the global pandemic and the health crisis and economic disruption that came with it, we have now been confronted with a new and concerning conflict in Eastern Europe – a situation which my fellow MBH Board and myself hope is resolved effectively and quickly. Our thoughts are with those effected.


Looking back, the MBH Group companies and their teams can be proud of the effectiveness with which they navigated the health crisis, and I would like to commend the commitment that all have shown throughout this challenging period in supporting their clients and audiences, as well as each other. As companies and individuals adapted to a new reality and new ways of working, it was the flexibility and adaptability of our teams which really shone through. 


During this last financial year, MBH was able to maintain its strategic focus of attracting more global organisations to join the Group and during the period we welcomed companies from various countries and continued to strengthen our expanding vertical business lines.


Early 2022 saw our Group businesses working on important plans for their future. Plans that include new ways of working and changes to how work is delivered. During challenging times, new opportunities often arise and being flexible and quick to act has allowed many of our Group business to increase their revenues and overall profitability.


As we begin our next strategic cycle, we are aware of the challenges ahead, but as a leader in our sector we see tremendous opportunities as we build on the achievements from the previous cycle to accelerate the Group’s growth. Looking ahead, we remain focused on delivering strong financial performance and attractive returns for all MBH shareholders, while at the same time having the opportunity to create social value and supporting individuals and communities in need.


I would like to reiterate my personal thanks to all MBH Principals and their teams globally for their hard work and dedication through this unprecedented period and to thank all stakeholders for their continued trust and support.

Financial Summary & CFO Statement 2021

Victor Tan

Chief Financial Officer

A Message from the CFO


The key financial metrics increased significantly as the MBH Corporation and the world in general

emerge from the challenging global pandemic period.


The key financial highlights for the 2021 financial year are as follows:

The results have been presented to reflect the underlying results of the Group which excludes the one off expense impact of £3m from the exit of Parenta from the Group. It was pleasing to see that the foundations laid in 2020 have proven to be fruitful and the principals in the Group remained steadfast and determined in delivering results for our shareholders.


The Group delivered an increase in both revenue and EBIT in all operating segments in 2021:

Balance Sheet and Cashflow


The Group closed out the year with a net asset position increase of 5% from 2020. The Group’s cash position remained healthy and in 2021 generated £5.1m in cashflow from the Group’s operating activities. Cash generation will continue to be a focus for the Group in 2022 as we strive to increase our cash position on the back of the continued post pandemic recovery momentum.

Summary


We are both pleased and proud of the results that the Group was able to deliver in 2021. We are very focused and determined on maintaining this momentum and look forward to delivering further returns for our shareholders in 2022. Lastly we thank our customers, shareholders and key advisors for their continued support of MBH.



"Small business owners, given autonomy and the right incentives, are willing to go above and beyond."


Callum Laing | CEO MBH Corporation Plc


MBH Board 2021

The MBH Board meets approximately every six weeks, normally over Zoom, but we did enjoy the opportunity of spending the day together in April of this year - a first for this particular board.

 

As has been noted previously, we have agreed to add two more executive directors to the board this year, adding two Principals who we feel can contribute and gain from being in that position. These roles will likely rotate every couple of years and we will probably add another 2 seats in 2023 allowing us to further expand our leadership experience within the Group as well as benefiting further from the excellent experience we have. Additionally we have committed to having a Board apprenticeship from a minority background. Our last in this area was so successful that we promoted her to a full non-Exec role - Thank you Lisa Maynard-Atem! We are also in discussions to add a youth apprenticeship.

 

Whilst joining the Board is great experience it certainly is not for everyone and comes with considerable responsibility and several restrictions [including not being able to sell any stock whilst serving on the Board]. This decision was made as we only want to attract individuals who can make decisions that are in the best long term interests of all shareholders and so would not be tempted to put their own interests first. As far as we are aware we are the only PLC that implements this and I hope it gives reassurance to our external shareholders.

 

The Board currently consists of:

In 2021 we welcomed Margaret Manning OBE to our board however Margaret realised that her current interests and focus lay elsewhere - and we parted on good terms with Margaret remaining a big supporter of MBH.


Global Footprint 2021

MBH Organisational Structure 2021

Timeline 2021

"As the small business environment begins to pivot back towards growth, it is clear that 2022 will be an exciting year ahead."


Callum Laing | CEO MBH Corporation Plc

Meet the Principals 2021

Click to learn about how the Principals reflect on joining MBH.

Environmental, Social & Governance 2021

MBH Corporation’s ESG Summary


During 2021, we continued to build on our ESG journey and the 5 step plan we established where we align ourselves with the United Nations Sustainable Development Goals [UNSDG’s] and focus on impact specifically aligned to:


Global Goal 8 - Decent Work and Economic Growth

Global Goal 10 - Reduced Inequalities

Global Goal 13 - Climate Action


At the same time our subsidiary companies also adopt UNSDG’s that are applicable to their own businesses and stakeholders.


Whilst our annual report shares information against SECR scope 1 & 2 requirements, in June this year MBH will be producing an annual sustainability report for investors and other stakeholders. This will provide a more detailed insight into ESG targets, progress and the activities taking place within the Group to ensure that we are having a positive impact on people and the planet. This report will also contain more detail against our scope 3 data, whilst this is an optional disclosure MBH believes it is important not to ignore our responsibilities in this area linking to our values, for example in supply chain management. 


Due to the acquisition model of MBH, ESG can be a challenging subject as often we do not know what type of industry or geography a business will come from. However, ESG is a fundamental part of our due diligence process which assists us in understanding a company's position in relation to this before they become part of the Group and where we need to work with them when they are on-board. In saying this, our experience to date has been that some of the wonderful characteristics of small and medium sized business is that often they have started from a sense of purpose…entrepreneurs with a desire to solve a problem and who care deeply about their people, communities and customers and often not realising the wider impact of the work they see as their natural course of business.


Our work in the Group has continued to develop during 2021 with our ESG Committee being a driving force behind sharing objectives, good ESG practices and learnings. We have developed a comprehensive toolkit for companies to assist in embedding ESG into their businesses as well as developing more people across the organisation to become ESG ambassadors within the Group.


Some examples of success stories from MBH this year have been maintaining our 5 star support the goals status, our Board Apprentice Programme and our Female Leadership Programme amongst many other amazing success stories from within the Group companies. Together as a collective having a really positive impact. We also achieved over 300,000 positive impacts in developing nations and this year we aim to achieve over 1,000,000.


Although ESG can be over-complicated, in MBH we like to keep it straightforward - simply doing the right things in the right way and the key focus being about the end impact. The eventual impact is the most important part of the ESG journey.


To find out more about our approach to ESG, visit the
ESG section on the MBH website.


The ESG Sustainability Report will be available in June 2022.

“Bringing entrepreneurial minds together for people,

our planet and prosperity”

Examples of MBH’s ESG Achievements in 2021 to date:


To find out more about our approach to ESG, visit the ESG section on the MBH website.



"We achieved 5-star Support the Goals status, demonstrating our public commitment to the UNSDG’s.


The 5th star is in recognition for the work we do in raising awareness with our supply chain and bringing them on our ESG journey."


Victoria Sylvester | Executive Director MBH Corporation Plc

The Future

"Noticeably of course, the most like minded and long term investors we meet are ones that have been referred from our existing shareholders.


Thanks again to those of you who take the time and effort to share our story with your peers. We do appreciate it and will make every effort to prove your conviction right!"


Callum Laing | CEO MBH Corporation Plc

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