Begbies Traynor [ Insolvency Specialist ] Issues Profits Warning As Fewer Firms Go Bust

[Ash4781]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8184923/Begbies-Traynor-issues-profits-warning-as-fewer-firms-go-bust.html

The insolvency specialist on Monday issued a profits warning after more companies than it hoped for managed to keep trading ? rather than go to the wall. It was not quite what Ric Traynor, executive chairman, foresaw in July, when he was quoted as saying: "The undertaker is polishing off the hearse again. Someone's got to bury the bodies." On Monday he admitted: "There's been a milder economic winter than everyone predicted and therefore less corporate deaths."

As it turned out, first-half insolvency revenues fell 9pc at Begbies, which has previously handled the last rites at business airline Silverjet and been administrator to Goldtrail and Southampton FC. That is broadly in line with Government statistics, which, despite high-profile casualties such as Pontins and the Balls Brothers wine bar chain, show a 7pc third-quarter decline in company insolvencies versus the second quarter. Year on year the drop is 18pc. Coupled with higher banking costs, Begbies said it expected first-half profits before tax and one-offs to be about £700,000 lower than last year's £4.3m. It is also taking a £800,000 exceptional charge, judging that some anticipated revenue is now less likely to arrive. The shares fell 4.25 to 63.5p.

Mr Traynor said that companies were surviving today thanks to "low interest rates", government support initiatives and the banks being "much more helpful than they used to be" when a company got into trouble. He was still hopeful, however, of better news to come. "Once the public sector cuts start to impact, we'd expect the insolvency numbers to rise," he said.

From a while back but the forecast seems to have been off. The quotes seem to suggest that they underestimated the support measures and attitude of the banks . Quite interesting if the banks are still behaving in the same way. IMO this helps equity. It's early so my thinking is not clear but if they are going reduce the risk for the equity holders then presumably this causes problems in bonds / for the bondholders?

[Alastair]

Interesting: if the profits warning is heeded then Begbies Traynor could become an attractive buy; given that interest rates will rise sooner or later.

[Revolving Credit]

thanks for that Ash,was looking to pick these up a few years ago but the price got too high.Looks like a good time to acquire some.

I see it as only a matter of time before these guys get really busy.price now where it was 5 years ago....

in a related way the government's own Insolvency Servive has shed all of its agency staff (in the hundreds) over the last few months and is now looking for about 450 vol redundancy losses before the end of March 2011. There just aren't the levels of bankruptcies and liquidations as anticipated (yet..)