It has warned that the lack of companies going under is affecting its business badly. But this has not stopped it buying Manchester-based corporate recovery business Cooper Williamson.
At the Begbies agm yesterday, executive chairman Ric Traynor said, “The first four months of our financial year, over the summer, is historically our quietest trading period. Market conditions have continued to be subdued as evidenced by the government insolvency statistics; these showed a 13% decline in corporate insolvency appointments for the first half of calendar year 2013 compared to the same period last year, from 11,192 to 9,719.”
He added that there was continuing downward pressure on fee rates and the value of cases which had led to a reduction in year on year revenue to date. The firm reported revenues down 12% to £51m in the year to April 2103 and pre-tax profits of £2.4m, almost half of the £5.5m it made in 2012.
Begbies had focused on cutting costs and realised the year on year cost reductions of £2m announced in July, Traynor said. This had partially mitigated the reduction in revenue.
Net debt was in line with expectations and debtors and work in progress broadly unchanged from the year-end.
As for the coming year, Traynor said that he did not expect much to change. “However, the financial outturn is, as in prior years, heavily dependent on trading in our traditionally busier months of the year and on insolvency market conditions, which show no sign of improving.”
The acquisition of Coopers Williamson, which was announced this morning, is part of Begbies strategy to consolidate its position as the UK’s leading independent insolvency practice.
CW has successfully developed its own business rescue website, which has been a significant driver of new cases. However, as a small local practice (CW’s revenue was £1.7m and pre-tax profits were £400,000 in the year to end May), it has been unable to accept cases outside the region. The move will enable the firm to take advantage of Begbies’ greater – and national – resources.
Begbies is paying £900,000 for CW which comprises £450,000 in cash and 1.1m new ordinary shares. The deal also includes deferred consideration of up to £1.141m depending on financial performance over the next three years.