Rising insolvencies to help Begbies Traynor

The economic slowdown was good news for Begbies Traynor in the second half of the financial year as demand for the insolvency adviser's services surged.

Pre-tax profit from continuing operations for the year ended 30 April fell to £5.7m from £8.5m as the core insolvency business suffered from a lack of business and shrinking margins. But the business rescue and asset recovery company said thingswere looking up as the economy worsened and that it expected strong growth over the nexttwo years with companies setto struggle.

After a first half of no growth, revenues rose 11 per cent in the second half of the year.

High-profile assignments included Silverjet, the business-class airline brought down in April by rising fuel costs, and Carlyle Capital Corp, which imploded in March after the value of its mortgage-backed security investments plunged.

Ric Traynor, executive chairman of Begbies Traynor, saidthe year was "extraordinary" for the insolvency service, whichaccounts for about 75 per cent of group revenues, as themarket swung from boom to near-bust.

"Following one of the quietest periods for corporate insolvency in nearly 20 years, reflecting the ready availability of easy credit, the advent of the credit crunch through the autumn of 2007 resulted in a significant change in activity levels," Mr Traynor said. "We start the new financial year with an enhanced insolvency platform, a replenished insolvency caseload and market indicators which continue to predict stronger demand in this, our counter-cyclical core business. We therefore look forward to a sustained period of improved new work flow and insolvency returns."

The Manchester-based company's shares fell 5 per cent to 160.5p yesterday, but have risen 59 per cent this year.