Mixed fortunes for Begbies Traynor

INCREASED insolvencies resulting from the recession have resulted in a 69% hike in profits for corporate rescue group Begbies Traynor.

But the group has also warned that it will fail to hit market expectations for the full year as a result of the government’s raft of financial measures to prop up ailing businesses.

Begbies – which has offices in Leeds, Halifax and Doncaster – believes that this growth in its insolvency work will continue in 2010 but at a rate which is ‘below current consensus market expectations’.

Its interim results for the six months to the end of October 2009 have seen its profits before tax increase from £3.6m from £2.1m last time.

Over the same period its revenue increased to £34.2m from £28.3m on the back of its insolvency work and financial investigations.

But the recession impacted on revenues from Begbies Traynor’s tax division, which recorded in a segmented loss of £1.1m compared to a profit of £200,000 in 2008.

Ric Traynor, executive chairman of Begbies Traynor Group , said: “The group has delivered double digit organic growth in both revenues and profits in the first half, due to the excellent performance of our core insolvency and recovery business.

“The board expects the group performance for the year as a whole to be comfortably ahead of last year, with our insolvency activities remaining at historically high levels.

“However, with our Red Flag Alert and other statistics demonstrating the impact of the continuing temporary economic support measures on the economy, the level of potential growth in insolvency for the year is now not expected to offset fully the weaker than anticipated performance of the tax practice.

“Accordingly, the board anticipates results for the year as a whole will be slightly below current consensus market expectations.

“Beyond the current financial year, we expect the group to make considerable further progress as a result of anticipated rises in the level of insolvencies in the second half of the calendar year 2010, consistent with patterns experienced over the last three recessions.”

The company’s board has also approved an increase to the interim dividend of 9% to 1.2p per share which is up from 1.1p last time.

Over the past year, Begbies has opened offices in Birmingham, Cambridge and the Cayman Islands.