Begbies Traynor's board have been busy restructuring the group to concentrate on its core operation of providing insolvency-related services and advice primarily to small- and medium-sized companies. And, in doing so, it has disposed of its tax advisory business for £2.9m and is currently trying to sell its loss-making Red Flag credit risk database operation and the offshore insolvency division. This resulted in after-tax writedown and exceptional costs of £4.5m.
In the six months to October, revenue from insolvency and restructuring work was broadly flat at £26.8m, although a lower cost base helped to boost profits here by 6 per cent to £7.2m, while operating margins edged up from 25.6 per cent to 26.9 per cent. UK insolvency numbers stabilised in 2011, but management warned that further margin improvement will be hard to come by because economic weakness continues to bear down on the value of asset realisations, while transaction times have tended to grow.
Begbies Traynor also rebased the dividend payout to adopt market practice of paying a greater proportion as a final dividend, resulting in the interim dividend being halved.
Collins Stewart is forecasting full-year adjusted pre-tax profits of £8m and EPS of 6p (£7.5m and 5.8p in 2011).
| BEGBIES TRAYNOR (BEG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 26p | MARKET VALUE: | £23.3m | |
| TOUCH: | 25-27p | 12-MONTH HIGH: | 68p | LOW: 17p |
| DIVIDEND YIELD: | 6.2% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 67p* | NET DEBT: | 46% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 29.8 | 3.07 | 2.3 | 1.2 |
| 2011 | 29.4 | 3.35 | 2.5 | 0.6 |
| % change | -1 | +9 | +9 | -50 |
Ex-div: 4 Apr Payment: 8 May *Includes intangible assets of £51m, or 57p a share | ||||
