Begbies Traynor

Counter-cyclical insolvency specialist Begbies Traynor achieved strong sales and profits growth in the year to April and reports buoyant demand for its services.

Sales from continuing business at ‘Begbies’, a leading business rescue, recovery and restructuring expert, increased almost 30% to £62.1m last year, driven by significant growth in its core insolvency administration business, accounting for 80% of group revenue. Continuing pre-tax profits pushed 28% higher to £7.2m, and with earnings advancing from 4.7p to 5.4p, Begbies’ board upped the final dividend by 13% to 1.7p, taking the annual total 12% higher to 2.8p.

During a year in which the company expanded its insolvency business organically and through acquisitions, its practitioners were appointed on nearly 1,800 corporate cases, up 38% year-on-year. Furthermore, executive chairman Ric Traynor expects to see ‘our counter-cyclical workflow continue to grow this year and into the medium term’, due to ‘the extent of business distress’, as well as rising volumes of formal insolvencies and the company’s expanded capacity. Tellingly, insolvency activity levels in the current year are running ‘significantly ahead’ of last year.

However, it hasn’t all been plain sailing for Begbies of late, since its non-insolvency activities, mainly tax and corporate finance, have been hit by the downturn. Revenues reduced from £4.8m to £2.3m within the credit crunch-hit corporate finance arm last year, resulting in a £1.1m loss, although results picked up in the second half, due in part to restructuring.

Overall, with demand for its core services still strong, Begbies’ shares, first recommended by Growth Company Investor at 69.5p in 2005 and dramatically down from their 199.5p 52-week peak, are worth buying or holding for recovery.