Begbies Traynor Share Discussion Threads

[paulypilot] 04/11/2011 01:33

I disagree bonio. Tenon's Bal Sheet is far more highly geared, once you strip out worthless intangibles. Begbies debt just finances its debtor book, which is fine.

[bonio10000] 23/10/2011 09:41

?

Far worse than Tenon. Higher debt considering profits and a business reliant on one sector that even their own "Red Flag Report" says is improving in the biggest market, i.e. London and South East.

[paulypilot] 22/10/2011 22:56

From following the Level 2 every day, it looks to me like the big seller has finally finished now. Hopefully this means that the amazing value will pull the share price back up again. This is now one of my biggest long positions, and am not even going to think about selling at less than 60p/share. It's far better value than RSM Tenon, because Bal Sheet much better, and similarly ultra-low PER.

[qs9] 22/10/2011 13:03

Looks very promising, unusual 10% rise on Friday all of a sudden, perhaps something in the "offing"? If results keep moving in the right direction, then a retrace to the 50s IMO is possible.

[britgoneabroad2] 20/10/2011 11:35

Is the bleeding over ?

[spaceparallax] 20/10/2011 09:40

A good share price revival of late

[hieronymous1] 04/10/2011 23:00

Still yesterday here in the UK!

Probably.

This cretinous idea of an SME bank floated by Osborne at the Tory Party Conference has not helped our company. The idea will not amount to anything for two main reasons. One, the politicians will never get involved in state lending for risky businesses which are the ones that need the money. You can hear the howls about "another ground nuts scheme" and "no more lamed ducks" already. Two, the SMEs are not in the main asking for loans because they have no confidence in the economy. They can see that public investment is being slashed and public sector jobs are being slashed. Would you risk expanding your business in such a climate? A high proportion of firms have either government or the soon to be unemployed as customers.

It will just take a while for reality to sink in.

[hieronymous1] 30/9/2011 15:20

Plenty of business when the mass sackings kick in. I have puts on FTSE as well as this holding. We are in for a new 1930s style Great Slump.

[wjccghcc] 30/9/2011 12:37

PP, I didn't say the industry was in terminal decline (though I think the margins are only going one way - at least in the short-term). I said the market may be worried that the company is. They are a people business where the share price is at a 7 yr low and the balance sheet not brilliant. If you were a highly qualified/highly trained IP professional, don't you think you'd be tempted to jump ship and take your contacts with you?

[paulypilot] 30/9/2011 12:27

Insolvency Practitioners as a dying industry? You must be crazy! There are enormous barriers to entry (more or less a closed-shop due to incredibly hard exams, and requirement for a qualified IP to carry out insolvency procedures).

There is some talk of revising Administration procedures, to reduce the incidence of Pre-Pack admins, but that's pretty much the only potentially negative thing I can find about this sector.

The fact remains that there's a huge backlog of zombie companies out there that are on life support and will, in time, go bust. Therefore it can only surely be a matter of time before IPs have a deluge of work. In the meantime BEG have just confirmed that they are trading inline. The share price movement makes no sense at all, other than confirming to me that there is a forced seller in the market possibly?

[wjccghcc] 30/9/2011 12:22

I'm not that surprised. Rightly or wrongly, I think the market is worried this is in terminal decline. IP is a people business with declining margins. If BEG is financially weaker then it's easy for their larger and stronger competitors to hire the talent by offering better terms.

IMHO the dividend ought to be cut quite significantly to help get them on a better footing.

[spaceparallax] 30/9/2011 11:37

I'm surprised to see the share price dropping after what seemed okay results. The only issue I had with them was RT's continued talk of acquisition, with which I strongly disagree - preferring instead to see consolidation and boosting of the share price

[paulypilot] 28/9/2011 10:55

WJCCGHCC - fair point about Vantis, it's not something I'd looked at before, but just having a look at their last set of figures, their Bal Sheet was much, much weaker than BEG's, indeed Vantis had NEGATIVE net tangible assets of £15m, and then ran into serious problems with a major job, Stanford Intl. Also their IP business was the smaller of two divisions. But it's a useful reminder that things can go wrong, even with firms of accountants!

[wjccghcc] 28/9/2011 10:17

Fair enough, though I'm not sure Vantis shareholders would see things the same way.

[paulypilot] 28/9/2011 09:59

WJCCGHCC - thanks for the reply. I suppose it depends how you look at debt. My view is that it depends on the type of business. With insolvency practitioners, in the normal course of business they have a lot of debtors (because they run up months of fee income without being able to bill any of it). The creditor meeting then happens, and the fees go through on the nod, and then they get paid.

Since the Bank is usually the main creditor, then the fees pretty much always get paid. The Banks extend credit lines to insolvency practitioners on this basis, knowing that it's essentially risk-free lending (that's why BEG only pays 3.5% interest on its Bank debt, and it's unsecured).

Therefore, for me, as long as I've accounted for the interest cost, then I disregard the debt, as it will permanently revolve & should not ever be repaid, or need to be repaid.

I probably wouldn't take that view with any other type of business, but having worked in this sector I know how IPs work.

[wjccghcc] 28/9/2011 09:17

pauly, no I'm not specifically concerned about debt which seems stable, but more its impact on valuation. While the PE is low at around 4, the FCF/EV at around 8.5 is nothing special for a company with essentially no growth. If they could convert some of that working capital into cash then it would be a lot more attractive.

[paulypilot] 28/9/2011 09:05

Interesting that the relentless seller of recent weeks seems to either be having a day/week off, or has maybe decided that he's selling his shares far too cheap!

Makes you wonder if it's a forced seller or a clumsy Institutional seller (they just clear out of positions below a certain mkt cap & don't seem to care what price they get - easy when it's other people's money you're investing I suppose).

[qs9] 28/9/2011 07:57

Looks OK to me, now does IMO look oversold. Get rid of tax/red flag for any consideration will also be +ve iMO

[paulypilot] 28/9/2011 07:46

WJCCGHCC - Are you concerned about net debt? I'm not, given that they were well within the facilities at last set of figures, and with facilities having several years left to run, and being profitable, that net debt should gradually decline anyway. Would have been nice, but there's no indication of any problems, so very reassuring I thought. Amazing even, given that the share price has been in freefall. Must be a clumsy Institution or a forced seller instead? I'll have some more today, if price stays low.

[wjccghcc] 28/9/2011 07:37

Shame they don't mention the net debt figure though.

[paulypilot] 27/9/2011 22:03

I don't think it particularly matters if short term business is down, because we all know that many companies and individuals are being kept afloat artificially by near-zero interest rates & late payment schemes by HMRC. That generally just defers the day of reckoning, and means the taxpayer eventually suffers a greater bad debt when they do eventually go bust.

For companies like BEG it means that there is a big pipeline of work backed up which will be rich pickings for them for several years to come. Also, BEG can (and do) flex their staffing levels according to the amount of business coming in. Costs completely scaleable, and by far the largest cost is of course people. As they state in their last results, they've already down-sized the cost base, but have taken a view to retain key skills during this downturn, for the eventual upturn that will inevitably happen.

The debt situation is absolutely fine - amazingly, it's actually UNSECURED bank debt, in the 2nd year of a 4 year term. So no problems there. Insolvency practitioners are thick as thieves with the Banks, since they provide most of their work!

So the statement tomorrow morning will probably say that business is currently slow, but that the longer term prospects are good. It's all factored into the share price anyway.

[pillow] 27/9/2011 00:17

Can`t see this surviving now, such a sad industry that has to finally face the raw reality that all vultures eventually crash and burn, this is no exception.