A 10 per cent fall in insolvency cases in the first three quarters of the year has made it tough going for Begbies Traynor (BEG) - the UK's leading independent recovery practice. On that basis, the fairly modest 3 per cent fall in reported half-year pre-tax profit is something of an achievement - a lower tax charge explains the sharp hike in reported EPS.
With the level of insolvency work unlikely to accelerate until creditors adopt a less benign attitude, and interest rates start moving higher, management concentrated on reducing the cost base to reflect the lower workload. Accordingly, £2.9m of savings were found in the first period - beating the group's £2m target. Begbies also moved to widen its product offering with the acquisition of insolvency boutique Cooper Williamson, which will add routine insolvency work to the group's existing Manchester office, but will also bring an internet presence - offering advice to smaller companies. Moreover, the group's BTG Financial Consulting division continued to attract new business, predominantly from bigger companies seeking advice on financial issues but not yet facing insolvency.
Broker Canaccord Genuity expects full-year adjusted pre-tax profit of £5.1m, giving adjusted EPS of 4.4p (from £6.7m/5.3p in 2013).
| BEGBIES TRAYNOR (BEG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 38p | MARKET VALUE: | £34.7m | |
| TOUCH: | 38-39p | 12-MONTH HIGH: | 42p | LOW: 29p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 63p* | NET DEBT: | 31% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 26.1 | 2.02 | 1.50 | 0.60 |
| 2013 | 22.3 | 1.95 | 1.70 | 0.60 |
| % change | -15 | -3 | +13 | - |
Ex-div: 9 Apr Payment: 9 May *Includes intangible assets of £52m or 57p a share | ||||
