‘Comfortably ahead of market expectations’

We have upgraded our FY21e forecasts in line with the year-end trading update, which confirmed an outcome expected to be comfortably ahead of market expectations. The key driver was a strong Q4 performance by both operating divisions: FY21 revenues are now expected to come in at c £83.7m (FY20: £70.5m) and adjusted PBT at c £11.5m (2020: £9.2m), which reflects continued overall margin enhancement. Positive operating cash flow will see BEG end FY21 with £3.0m of net cash (end FY20: £2.8m net debt), also well ahead of expectations.

Business recovery and financial advisory saw c 20% revenue growth and margin improvement. The underlying (organic) revenue run rate from insolvency activities was maintained despite suppressed market activity levels, and corporate finance completions underpinned a strong H2 performance by advisory. Recent acquisitions CVR Global (January 2021) and David Rubin & Partners (March 2021) are performing well.

Property advisory and transactional services saw c 15% revenue growth, profit broadly maintained despite significant Q1 impact of first lockdown. Activity and transaction levels recovered to pre-lockdown norms in Q4, with no adverse impact from second or third lockdowns.

This update further underpins our fair value for Begbies at 165p / share, equivalent to an 18.3x FY22e PER and a 1.9% prospective yield (2.8x covered by adjusted earnings).