Revenues grow for Begbies Traynor
INSOLVENCY specialist Begbies Traynor managed to increase revenues by £200,000 in the six months to the end of October to £34.4m but pre-tax profits fell by £1m to £2.6m as fee pressures led to a tightening of margins.
Chairman Ric Traynor blamed a continuing downward trend in the number of insolvencies, stating that it led to lower than expected revenues from its core insolvency and restructuring division.
“If, as we expect, there is some pick up in new insolvency engagements through the remainder of the financial year this would result in a modest improvement in revenues in the second half in the core insolvency division, with the full financial benefit of this emerging in the financial year beginning 1 May 2011.”
The company, which has offices across Yorkshire, now splits its activities into four separate divisions. Alongside the core insolvency and restructuring service, there is a tax consulting arm, a fraud and forensic investigating division known as Global Risk Partners and its Red Flag Alert credit risk database.
Although insolvency revenues were lower than expected – dropping by £2.8m to £27m – revenues in the three other divisions grew strongly and Traynor argued that their improved performance should feed into its results for the second half of the year.
“Together with seasonally higher activity levels in the tax division and anticipated completion on a number of contingent fee engagements for both tax consultancy and corporate finance in the second half, this should contribute to a greater second-half weighting to group results.”
The company’s net debts increased to £20.3m, compared with £15.9m at its April 30 year end, but it has made a number of acquisitions since then. These include the purchase of Manchester-based insolvency practice Tomlinsons, Sheffield-based Hamiltons and the insolvency division of Stoke on Trent accountancy practice Walletts.
It has also spent £800,000 on restructuring costs and has continued to pump money into both its US joint venture partnership and its lossmaking venture in the Cayman Islands – both of which have suffered from a lower-than-expected number of US insolvencies.
Despite this, Traynor said the group was “well-positioned to take advantage of any increase in corporate insolvencies, following the gradual unwinding of government support measures and a change in creditor attitudes”.
The firm has maintained its interim dividend payment of 1.2p.
