BTG profits hit but expects to benefit from troubles ahead
PROFESSIONAL services firm Begbies Traynor Group (BTG) has seen its half-year profits fall by more than 50% after what it says was one of the quietest periods for corporate insolvencies in nearly 20 years.
However the group feels the tightening of the credit markets since last autumn will justify the investment it has made in its insolvency operation which has included two acquisitions in Yorkshire.
And it released statistics today that show that the number of UK companies facing significant difficulties has increased substantially since a year ago.
The firm's Red Flag A!ert research showed that there has been an increase of 25.3% in firms in the North East of England – which includes Yorkshire – having “critical problems”.
The group said that much of the increases in problems among UK firms came in the final three months of 2007 as the so-called “credit crunch” tightened.
BTG chairman Ric Traynor said: “The combination of adverse economic conditions in the final quarter of 2007 has clearly had a major impact on credit conditions, with a significant reduction in credit availability and an increase in defaults. This trend is expected to continue into this year and will undoubtedly lead to reduced lending, which in turn could push more companies into insolvency over the coming months.”
He added: “If the current increase in business insolvencies continues, we expect to significantly improve profitability over the medium term, justifying our decision not to cut back resources through the quiet period of last year. The group will also reap the benefits of our continued investment in acquisitions in this area.”
Late last year the AIM-listed firm bought David Horner & Co, the insolvency practice based in York, Doncaster and Middlesbrough as well as adding the insolvency and corporate recovery arm of Leeds-based accountants Bartfields, headed by former Leeds United chairman Gerald Krasner.
Today it made another acquisition, the Birmingham and London tax practice Shaw Tax which will help boost its tax consultancy fee income to £5m.
The Manchester-based group, which is listed on the Alternative Investment Market, has 38 offices stretching from Scotland to the South West of England and has 400 staff.
In the six months to October 31 BTG saw pre-tax profits fall to £1.645m from £3.48m on turnover which was flat at £21.9 compared to £21.5m for the same period in 2006.
The group has maintained the interim dividend at 1p. Adjusted earnings per share fell from 3.2p to 1.7p.
It also owns the BTG McInnes Corporate Finance operation in Leeds and Manchester.
