"Billington Holdings Plc is a UK based group of companies providing structural steel and safety solution services to the UK market. Structural Steel comprises Billington Structures, the award-winning and nationally recognised steelwork contractor. Easi-Edge is a leading provider of Safety Solutions to the construction industry." (billington-holdings.plc.uk)
I bought Billington (LON:BILN) back in November at 85 pence but haven't got round to analysing in writing yet, so I thought I'd nail this one before moving on to my recent turnaround purchases. I liked this company because of its strong balance sheet, low price to book and price to earnings ratios, but in this review I'll look at it from a defensive Ben Graham view, with some Buffett-like projections thrown in.
Starting with the company as at now:
Is the company of substantial size? Large companies can be more consistent in their results and more robust in the face of hardship, but not always. Billington is an AIM listed micro-cap (~£12M), so it is not large in any sense.
Do they have low levels of debt? Yes, they have net cash.
Are they currently generating a profit, free cash and a dividend? Profit, free cash and dividends are all good signs of a healthy company. For Billington the answer is yes, no and no. Free cash does seem to be a slight problem with Billington, with three in eleven years having no free cash and in fact negative cash flows in total. This may be a consequence of heavy capital expenditure requirements.
Looking back into the company's past:
Have earnings per share, turnover, book value and the dividend all increased in the last decade? Increasing earnings, at least in line with inflation over the long term, is a minimum requirement for a Ben Graham defensive company. For Billington it seems that the answer is sadly no. EPS has been quite volatile with positive and negative results, but no clear upward trend. Turnover is down by about 50%, book value per share is slightly lower and dividends have only been paid in seven of eleven years with the most recent one cut drastically.
Have profits, dividends and free cash been positive for at least nine of the last ten years? Again no; dividends, free cash and earnings have all been negative in multiple years.
Is the return on equity consistently…
