Look at what's right under your nose
Who benefits from the death of businesses during the lock-down? Corporate undertakers, that’s who. Maybe I should describe them as corporate ‘upcyclers’ since they recycle temporarily unusable assets and free any viable parts of the businesses from the bonds tying them to the moribund bits.It is heart-breaking for staff and customers but unfortunately in every recession the rate of corporate insolvencies rises. And while Rishi Sunak’s extraordinary emergency measures will do a lot to bail out sound businesses, they will not persuade commercial banks to throw £billions of loans to companies that have negligible chances of repaying them.
Over just the last week, BrightHouse the UK’s largest rent-to-own firm, already weighed down by claims for compensation on mis-selling) fell into administration because its chances of survival had become negligible – as did leading restaurant chains Carluccio’s and Chiquito. They are joining many other household retail names there, such as Laura Ashley, Soak and Beales.
Even before the Covid-19 outbreak, trading at Begbies was relatively encouraging with growing revenue, up 15%, in a rising market (corporate insolvencies in 2019 were 7% up on 2018) and adjusted profit before tax for the first half of 2019/20 up by one-third to £4.0m (IFRS PBT more than trebled in H1 to £1.9m); adjusted EPS rose more than 20% from 2.1p to 2.6p. The latest update on Q3, released on 3rd March, stated that they expect to meet current expectations for the current year (adjusted PBT of £9.4m and EPS of 5.8p).
In the Financial Crisis of 2009/10 a significantly smaller Begbies Traynor (it has since made a series of synergistic acquisitions) made PBT of £10.4m and EPS of 7.8p. Today’s expanded group should easily beat that in the fall-out from the lockdown.
Begbies Traynor Group is a business recovery, financial advisory and property services consultancy. Co. provides these services through two operating segments: business recovery and financial advisory services, which provides transactional support, valuations and advisory services through its subsidiary, BTG Financial Consulting LLP; and property services, which delivering advisory, such as commercial property valuations, property receiverships, property management and accounting, and as well as transactional services that include property auctioneers, machinery and business asset auctioneers to owners and occupiers of commercial property, investors and financial institution.
Belvoir Lettings operates franchised network of residential lettings and estate agents. As of Dec. 31, 2016, Co. operated in both the lettings and sales markets and had 302 outlets in the U.K., across four brands. Co.'s brands are: Belvoir, a lettings franchise, which provides both sales and lettings services; Newton Fallowell, an estate agency; Goodchilds, a West Midlands-based lettings and estate agency; and Northwood, a lettings franchise with national coverage providing both sales and lettings.
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