Begbies Traynor is benefiting from a rise in business failures
- Begbies Traynor reported half-year sales growth of 13% to £65.9m
- Meanwhile, adjusted profits before nasties rose by £0.9m to £12.8m
- The number of business failures in England and Wales has increased
Begbies Traynor expects full-year results to be in line with forecasts after increased business failures boosted demand for its services.
The business restructuring specialist saw turnover increase by 13 per cent to £65.9m in the six months ending in October, while adjusted pre-tax profits grew by £0.9m to £12.8m.
Interest rate rises, subdued consumer spending and the absence of pandemic-era government support programs have forced more British companies into bankruptcy.
Business Bankruptcies: Rate hikes, subdued consumer spending and the lack of pandemic-era government support programs have forced more companies into bankruptcy
The number of business failures in England and Wales rose by around 17 per cent to 24,326 in the year to September, according to the Insolvency Service.
The revival was mainly caused by small companies going bankrupt, but there was also an upturn in the number of administrations involving larger companies.
In 2023, Begbies was appointed manager of brewers Love Lane Brewery and Alphabet Brewing, as well as Formula K International, the first British manufacturer to specialize in go-karts and small cars for the leisure sector.
Begbies expects the number of bankruptcies to continue to rise in the second half of the financial year, amid continued pressure on the UK economy.
As a result, the company is optimistic about delivering full-year results in line with expectations, with analysts expecting the Manchester-based company to make adjusted pre-tax profits of £21.9 million to £22.5 million.
Begbies told investors: 'We expect activity levels in our largest insolvency services business to continue to increase, in parallel with indicators of financial stress among businesses in Britain, due to the current interest rate and inflation environment.
“This gives the board confidence that the insolvency team will continue to deliver growth during the second half of the current year and beyond.”
Due to the increasing number of bankruptcies and recent acquisitions, the company expanded its workforce by 93 to 1,051 last year.
Begbies recently bought corporate debt specialists Jones Giles & Clay and surveyors Banks Long & Co.
Neil Shah, research director at Edison Group, said the company is “well positioned to benefit from this environment of inflation, high interest rates and general economic uncertainty.”
He added: 'The company clearly expects that these difficult conditions will continue for some time and therefore demand for its services will remain high.'
Founded in 1989, Begbies has worked on the boards of British football clubs including Wrexham FC, Port Vale and former Premier League clubs Wigan Athletic and Huddersfield.
Begbies Traynor Group shares were 2.9 per cent higher at 116.5p on Monday morning, but have fallen by around a fifth since the start of the year.