Begbies Traynor is emerging from a tough period of restructuring that prompted a string of profits warnings last year. And while provisions relating to discontinued operations resulted in a group net loss after tax of £5.7m, profits from continuing operations after tax edged ahead to £3.96m. But with the insolvency business still flat, the shares are unlikely to move much.
Disposals during the year included the tax advisory business and the loss-making Red Flag credit risk database operation, leaving the core insolvency and advisory business that serves small- and medium-sized companies. Despite lower turnover, operating profit there rose slightly to £13.7m, reflecting a restructured cost base that helped to lift operating margins from 25.3 per cent to 25.8 per cent. However, management warned that further margin improvement from here on will be tough as the weak economic climate will continue to put downward pressure on asset valuations relating to the group's insolvency operations, as well as lengthening the time taken to complete transactions. And while the weak economy would normally accelerate insolvency numbers, very low interest rates have helped many struggling companies to avoid insolvency.
Canaccord Genuity expects adjusted pre-tax profit for 2013 of £8.2m and EPS of 6.3p (from £7.3m and 6p in 2012).
| BEGBIES TRAYNOR (BEG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 30p | MARKET VALUE: | £27m | |
| TOUCH: | 29-32p | 12-MONTH HIGH: | 46p | LOW: 18p |
| DIVIDEND YIELD: | 7.3% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 65p* | NET DEBT: | 34% | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 48.1 | 5.68 | 4.70 | 2.50 |
| 2009 | 62.1 | 7.25 | 5.40 | 2.80 |
| 2010 | 62.8 | 10.2 | 7.50 | 3.10 |
| 2011 | 60.6 | 5.75 | 4.30 | 2.20 |
| 2012 | 57.7 | 5.45 | 4.40 | 2.20 |
| % change | -5 | -5 | +2 | - |
Ex-div: 10 Oct Payment: 7 Nov *Includes intangible assets of £51m, or 57p a share | ||||
