Britain’s return to economic growth was bad news for Begbies Traynor as the corporate recovery specialist cut jobs last year in response to the lowest level of corporate insolvencies since the start of the financial crisis.
Pretax profit for the year ended 30 April, excluding £2.9m of exceptional items and costs related to acquisitions, fell by a third to £5.4m from a year earlier. On a statutory basis, the group swung to a £700,000 loss from a profit of £4.3m.
Total revenue increased to £45.4m from £44.1m because of acquisitions but revenue at the group’s main insolvency business fell 7.3% to £41m.
Begbies Traynor said its results reflected a 14% fall in the number of UK corporate insolvencies in the year to the end of March.
Ric Traynor, the company’s executive chairman, said: “It was another challenging year for the insolvency industry with national volumes at their lowest level since 2007, impacting our insolvency caseload.”
Begbies Traynor advises banks, accountants, law firms and businesses on insolvency and other financial problems at troubled companies. The company said it had to reduce its own employee numbers and office network during the year to cope with reduced levels of business.
The core insolvency division employed 354 people at the end of the year, down from 391 at the start of the year. Excluding staff taken on through acquisitions, the business shed 54 staff, or 14% of its workforce, during the year. Group headcount, excluding workers taken on through acquisitions, fell to 384 from 438 a year earlier.
Official figures showed in April that company insolvencies in England and Wales for the first quarter of this year were at their lowest since the last quarter of 2007. The result continued a trend that started in early 2014 as economic growth and low interest rates helped keep companies afloat.
Traynor said: “The market as a whole remains difficult to predict although activity levels have stabilised over the last four quarters to 31 March 2015. However, there are no indications of a change in the benign financing environment in the UK and we therefore remain cautious about activity levels in this [insolvency] division in the near term.”
Begbies Traynor shares fell 1.1% to 41.5p in early trading.
