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.

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.

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:

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

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.

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