Begbies Traynor
Ticker: BEG Exchange: AIM www.begbies-traynorgroup.com/

Begbies Traynor Group plc is an AIM-listed professional services consultancy delivering solutions for businesses, financial institutions and professional advisers in the areas of corporate recovery, restructuring and turnaround, corporate finance, forensic accounting, investigations and security risk.

The Group serves its clients via an extensive UK office network and through an international association of approved partner firms which enables it to draw together specialist teams from around the world to meet specific cross-jurisdictional challenges.

‘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).

note May 2021

 

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