Begbies signals insolvency boom to continue

By Andrew Oxlade
Updated: 08:49 EDT, 4 June 2009

Insolvency specialist Begbies Traynor has continued to thrive in the downturn. The company predicted increased workloads 'for several years to come'.

Profits from gloom: Ric Traynor of Begbies Traynor

The insolvency division - which accounts for nearly 80% of group revenues - was expected to post full-year results 'very substantially ahead of last year'.

In a trading update for the year to April 30, Begbies said it had continued to expand this division to 'further exploit the favourable market conditions'. But its corporate finance arm continues to face 'difficult market conditions'.

Ric Traynor, executive chairman, 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.'

Begbies emerged last year as one of the few winners from the credit crunch. Our Midas column recommended the stock in March 2008, when the shares were 115p. By October, they had risen to 167p and we said investors should sell at least half their holding.

The shares have since declined. Today they were up 1p at 108p.

Last year, revenues were £48m, up from £42m in 2007. Profits fell £2m to £8m.

Analysts expect the company to report a pre-tax profit between £9.56m and £10.6m, and revenue between £58.9m and £64.2m for the year, according to Reuters Estimates. Results are due on 9 July.

Begbies has been hired to advise on the collapse of several high-profile businesses, notably Silverjet, the airline that stopped flying just over a year ago: see Begbies' recent insolvency cases.