Begbies Traynor (LON:BEG)
Share price: 47.4p (-1.3%)

No. shares: 106.2m
Market cap: £50.3m


Half-Year Report (six months ended 31 October 2016)

584fc087531dbBEG_20161213.PNGThe market is slightly underwhelmed with interim results from this insolvency practitioner, results which the statement describes as "solid".

Over the past twelve months, Begbies has been diversifying into property services. The insolvency market was taking too long to start moving again, and so the company decided to move into a related service where it hoped there would be synergies (property auctions often taken place during an insolvency process, for example).

The Exec Chairman anticipates that 30% of revenue and profit will arise from the property services division, in the current financial year.

Outlook:

"For the year as a whole, we anticipate growth in earnings, in line with expectations, with the benefits of our investment in property services complementing our market-leading, profitable and cash generative insolvency business. We will continue to look for opportunities to develop and enhance the group, both organically and through selective acquisitions.

Dividend: interim dividend maintained at 0.6p.

The dividend payout has been flat since 2012, but the company would like to return to a progressive policy when possible:

The board remains committed to a long-term progressive dividend policy, and to increase dividends when more confident of both the market outlook and potential for sustained earnings growth..

Macro ConditionsThe company is not predicting any improvement (i.e. for everyone else, a deterioration) in economic conditions. In terms of the total number of corporate insolvencies, it says "the market appears to have stabilised at this lower level", and "there are no expectations of an increase in insolvency levels".

No. of employees is reduced to 328 from 355, keeping the cost base under control.

Net Debt:

The company has a £30 million facility with HSBC. Net borrowings are £12.2 million, with total balance sheet borrowings of £17 million offset by £4.8 million of cash.

My opinion:

Overall, it looks like more of what we've come to expect from Begbies - a flattish result and a stable dividend.

While I've generally had a positive outlook on this company, which has been stable around the current share price for two and a half years, I am increasingly reluctant when it comes to investing in professional services…

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