Companies: VTS   

Accountancy group Vantis, which joined AIM in 2002 with a consolidation brief, has not made an acquisition for 15 months, choosing instead to concentrate on new business and recruitment given the current tough economic climate.

Led by smooth-talking chief executive Paul Jackson, Vantis is by no means slothful in its acquisitive hunt but has been thwarted by target companies either selling to rivals or demanding ambitious valuations. Another obstacle to corporate activity is the company's share price, which has halved over the past year or so, making it imprudent for Vantis to use paper as part of any deal.

However, as Jackson stresses, ‘we don’t need acquisitions to grow our business’, and the strongly cash-generative company has continued to expand organically. Sales increased 11% to £46.9m in the half to October, lifting pre-tax profits 10% to £7.7m, with Vantis generating £2m of cash from operations. The core accountancy, business recovery, corporate finance and tax consultancy operations – offering investors counter-cyclical strength – grew by 10% to 11% each, with market conditions causing shifts in business mix.

‘Recruitment is going to be a fundamental part of growth,’ assures Jackson, ‘if acquisitions continue to be slow over the next couple of years.’ An imminent appointment is to be made in the new position of marketing director, to raise the group’s profile and build its brand.

First backed by Growth Company Investor in 2004 at 111p, Vantis boasts good defensive qualities and the core business is proving resilient to wider conditions. Nevertheless, the shares have proved a recent disappointment and dissatisfied investors who failed to take profits at the top of the market might choose to reinvest elsewhere. Otherwise hold.

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