- Insolvencies top pre-pandemic levels
- Firm gaining market share
- Revenue and earnings ahead of forecasts
Business recovery and financial advisory firm Begbies Traynor (BEG:AIM) revealed its results for the year to the end of April would beat estimates as UK corporate insolvencies exceeded pre-pandemic levels.
The firm’s Red Flag Report for the fourth quarter of 2022 described a ‘toxic combination of risks’ afflicting UK businesses, with smaller companies especially at risk due to repayments on Covid loans, higher energy costs and falling demand.
MARKET SHARE GAINS
The company said it expected revenue for the year just ended to have risen by 11% to £122 million and adjusted pre-tax profit to have risen by 16% to £20.7 million, both comfortably ahead of consensus forecasts.
The main business recovery and advisory business generated 10% revenue growth, of which 6% was underlying, thanks to a big increase in higher-value cases which reflects its growing reputation in the UK mid-market.
The group now has a market-leading 13% share in insolvency and is second in the administration market with an 11% share.
The property advisory and sales business, which suffered badly during the pandemic, posted 12% growth in revenues largely due to bolt-on acquisitions.
‘We performed strongly in the financial year, with results ahead of market expectations, aided by our increased scale and enhanced reputation in mid-market insolvency’, commented executive chairman Ric Traynor.
He added: ‘We have started the new year confident in our outlook for further growth. Our insolvency team will benefit from their recent insolvency appointments, together with anticipated further growth in the insolvency market. We continue to identify growth opportunities for our advisory and property teams.’
EARNINGS UPSIDE
Analyst Vivek Raja at Shore Capital noted the current year had ‘started strongly and the outlook is confident with the company anticipating further growth in insolvency given the challenging conditions UK businesses continue to face’.
While leaving his profit forecasts for the current financial year unchanged for now, Raja acknowledged there were likely to be ‘upside risks’ to earnings.
Similarly, analysts at Equity Development left their forecasts unchanged but said ‘the outlook for further growth is certainly confident’ which underpins their 175p per share price target.
Begbies shares eased 1.5p or 1.1% to 130p in a generally featureless market.
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