It could be perceived as depressing for a company's success to rely on the difficulties of others, but a functioning insolvency process is crucial to the corporate ecosystem. And it's worth noting that insolvency practitioner Begbies Traynor (BEG) decided to expand into property services in 2014. That expansion helped the group to keep adjusted pre-tax profit level at £2.5m in the first half of the current financial year, while revenue from the original insolvency business dropped by a tenth.
At the end of a politically turbulent year, the good times for UK plc could be running out, but it is not yet showing in the data. In the year to 30 September, insolvency levels fell by just 4 per cent, "significantly less than the decline in the prior period", according to chief executive Ric Traynor, who is hopeful that trading here will pick up in the 2017 calendar year.
Elsewhere, there are good signs. The property services division has been enhanced in the reported period by two recent acquisitions. Here, revenue increased 16 per cent to £7.1m and, after stripping out acquisition-related costs, adjusted cash profit nearly were up two-thirds at £2m.
Broker Shore Capital has left EPS forecasts for the year to April 2017 unchanged at 3.34p (FY2016: 3.19p), but has upgraded expectations for the following two years to reflect the decreased borrowing costs as a result of the group's new debt facility. This £30m facility also provides scope for further acquisitions.
BEGBIES TRAYNOR (BEG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 48p | MARKET VALUE: | £51m | |
| TOUCH: | 46-49p | 12-MONTH HIGH: | 54p | LOW: 39p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 480 | |
| NET ASSET VALUE: | 54p* | NET DEBT: | 21% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 25.5 | 0.6 | 0.4 | 0.60 |
| 2016 | 24.5 | 0.5 | 0.2 | 0.60 |
| % change | -4 | -23 | -50 | - |
Ex-div: 6 Apr Payment: 5 May *Includes intangible assets of £59.5m, or 56p a share | ||||
