Companies: VTS   

Despite being plagued by allegations it has illegally exploited tax concessions, accountancy and business consultancy firm Vantis recorded an outstanding performance in its historically weaker first half.

Comments originating in a Sunday newspaper alleged the firm was involved in setting up a tax scheme to exploit concessions on charitable donations. Passing the stories off as ‘inaccurate rubbish’, Vantis chief executive Paul Jackson strongly denies ‘any wrongdoing’.

He was also able to focus market attention to excellent figures for the six months to October. Profits before goodwill and exceptionals rose by 288% to £5.4m, and earnings sparked up 89% to 5.3p, from a 29% rise in sales to £42.7m. Of that sales growth 14% was organic, with the remainder coming from two acquisitions completed during the period – construction sector specialist Rouse & Co and Sharles Group.

Both have integrated well and are providing the cross-selling opportunities for which they were purchased. Jackson and his team look to buy ‘core practice’ accountancy companies, to whose clients Vantis can then sell its higher-margins consultancy services.

Worthy of note was the launch of MyDebtExit, which goes national this month. A re-branding and upgrading of an existing service offered by Vantis’ business recovery arm, management expects MyDebtExit to grab a good portion of the IVA market. The division already has an impressive 31 insolvency practitioners, putting it in a strong position in this fast-growing sub-sector.

Analyst Ben Archer at house broker Charles Stanley has lowered his full-year forecasts by 6% to £12.7m because of a ‘disappointing cash flow performance’ and marginally weaker performance from Vantis Tax. His 18.3p earnings forecast for the year places Vantis on a forward p/e of 13.2, which looks undemanding given the prospect of further astute acquisitions and a firmer push into the profitable IVA sector. The shares are worth buying.

Vantis	AIM	£39.04m	69.50p	1.00p
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