Shares in Begbies Traynor fell 16 per cent after the professional services and insolvency group issued its second profits warning in three months. It is not benefiting from a weak economy in the manner we had expected, so we no longer rate the shares a buy.
In a trading statement covering the three months to January, Begbies' bosses warned that a flat trend in insolvency work and disappointing demand for tax planning services would result in a second-half performance no better than the first.
Moreover, restructuring within insolvency, tax and support areas will result in exceptional costs of around £3m, although annualised cost savings will total £2m. In the tax division, the company blamed a tougher stance towards tax planning activities taken by HM Revenue & Customs, as well as poor demand for transactional tax services as a result of the weak economic recovery.
When: 23/09/10
Price: 64p
Performance to date: -23%
