Begbies Traynor cuts back as insolvencies fall

REGIONAL accountancy firm Begbies Traynor has cut 11% of its workforce over the past 12 months in response to fewer insolvency cases.

In the year to the end of April the group, which specialises in insolvency and restructuring, saw pre-tax profits more than halve to £2.4m (2012: £5.5m) on revenue of £51.1m, down 11% (2012: £57.7m).

The Manchester headquartered firm, which has offices in Leeds and Sheffield, said it had been hit by a 10% fall in corporate insolvencies, but insisted it had delivered a “solid” performance and was in good shape after cutting net debt by £10m and reducing overheads by £8m over the past two years.

The group, which has more than 30 offices, has slimmed down its structure in recent years, merging corporate finance into the insolvency business and selling the tax consulting arm. At the end of April it employed 501 staff, down from 563 a year ago with 50 being cut from insolvency.

Begbies now consists of the core insolvency and restructuring service, a fraud and forensic investigating division known as Global Risk Partners and its Red Flag Alert credit risk database.

The insolvency and restructuring division accounted for sales of £47.5m (2012: £53.1m) and profits dipped to £12.3m (2012: £13.7m). High profile cases during the period were Port Vale Football Club, London-based Pentagon Capital Management and United Carpets in Rotherham. Global Risk Partners made a £200,000 loss, below expectations, on revenue of £3.6m (2012: £4.6m).
 
Executive chairman Ric Traynor said: “Last year was a challenging period for our industry with the number of UK corporate insolvency appointments decreasing by 10% over the 12 months to 31 March 2013. In this environment we consider that we have delivered a solid financial performance for the year as a result of the ongoing management of our cost base, which has mitigated the impact of lower revenues.”

“Over the last two financial years we have reduced our cost base by £8m from £52m to £44m and have reduced net debt significantly from £27.3m as at 31 October 2011 to £17.2m as at the year end. Our new long-term debt facilities, together with the significant reduction in debt over the last 18 months, place the group in a strong financial position. This will enable us to consider making organic investments and selective acquisitions, whilst providing confidence in the underlying strength of the group, despite the challenging trading conditions.”

The board has recommended a final dividend of 1.6p, taking the total to 2.2p, the same as last year.