Administrations boost Begbies’ growth

BEGBIES Traynor Group today told the City that its annual results for the year to April would be “significantly” ahead of last year, after strong performance in its core insolvency business.

But it tempered the good news by saying that challenging market conditions in the corporate finance and tax divsions would mean that the figures would come in at the “lower end of current market expectations”.

The listed Manchester company, which has operations nationwide, said its insolvency practice, which accounts for almost 80% of total group revenues, had continued to see strong growth in revenues and operating profits since the half year results in January.

It has recently handles the administration of Lancashire textile company JH Birtwistle, while Paul Stanley, a partner in the Manchester office, has been appointed as liquidator to investigate the demise of Yorkshire property developer KW Linfoot.

In the trading statement Begbies said: “The results from this division (insolvency)  for the year as a whole are therefore expected to be very substantially ahead of last year, with a further improvement in margins.”

The company said it had continued to recruit new insolvency practitioners so to “further exploit the favourable market conditions”.

There was further good news as it said losses in the corporate finance division would be “significantly” less than those reported in the first half.

“The group has scaled back its corporate finance activities, given the continued difficult market conditions, and, as a result, the division will be in a position to deliver an improved financial performance as markets eventually recover,” the statement said.

In January half year figures showed a 31% hike in pre-exceptional profits to £3.3m. Losses in the corporate finance division were £1m.

The trading statement today said the second half results in the small tax practice woule be similar to the first half, but still below management hopes.  

“Whilst activity levels were higher, fee pressure and the impact of the tough business environment currently being experienced by our corporate and private clients is expected to dampen the usual seasonal uplift in tax services in the second half.”

The company said £500,000 in restructuring costs had been incurred in the second half, mainly due to headcount reduction in corporate finance.

Ric Traynor, executive chairman of Begbies Traynor said: “We have had a strong year in our core business of insolvency and corporate recovery whilst our other divisions are making progress in consolidating and improving their performances.

“Prospects for insolvency and corporate recovery remain very strong given the indicators from our Red Flag Alert early warning system which imply an increased flow of work for several years to come.”

Shares rose 1p to 108p on the news.