There were no major surprises in today’s full year trading update from insolvency and business recovery firm Begbies Traynor (BEG:AIM), as the headline figures were telegraphed to the market back in May.
Revenues were £70.5 million for the year to 30 April, an increase of 17% of which 5% was due to organic growth and 12% came from acquisitions. Adjusted pre-tax profits were up 31% to £9.2 million, exactly in line with earlier guidance, while adjusted earnings per share (EPS) were up 19% to 5.7p.
The firm lifted the dividend by 8% to 2.8p per share, pleasing investors who marked the stock up 1.7% to 98.7p in early trading.
LIMITED IMPACT
The Covid-19 crisis had a minor impact on the group during the final quarter, trimming revenues by £1 million and profits by £0.6 million.
The business recovery and financial advisory business continued to win and progress new cases as usual, and while lockdown put the brakes on commercial property activity and the sale of some businesses, most of the property advisory and deal teams were able to continue working.
Business recovery and financial advisory have seen an increase in work this quarter, although the firm expects the current year results to be weighted towards the second half as the government removes its support measures and more companies begin to struggle.
Similarly, while property advisory and transaction volumes have picked up since April, insolvency-focused areas are likely to see more work in the second half.
BETTER SHAPE
Cash flow generation improved over the course of the year, and with the funds raised from the share placing in July last year the firm’s net debt was almost nil at the end of April.
‘We have a strong balance sheet with a substantial reduction in leverage in the year and significant headroom in our committed bank facilities, providing resources for organic and acquisitive investment’, said chairman Rick Traynor.
Analyst Rachel May at Shore Capital left her earnings forecasts unchanged but kept her Buy rating on the stock, highlighting the cheap rating and the relatively attractive yield.
‘The balance sheet is in great shape (leverage
