Companies: VTS   

Touching 280p at the start of 2007, accountancy group Vantis is now priced at just 107p, with sentiment towards the accountancy and professional services group poor. 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.

Under chief executive Paul Jackson, Vantis has by no means been slothful in its hunt for acquisitions – potential deals have been thwarted either by targets selling to rivals or by the over-ambitious prices demanded by vendors. Moreover, the shares have more than halved over the past year or so, making the use of paper as part of any deal imprudent on Vantis’s part. 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 by 11 per cent to £46.9 million in the half to October, lifting pre-tax profits ten per cent higher to £7.7 million, with Vantis generating £2 million of cash from operations. The core accountancy, business recovery, corporate finance and tax consultancy operations – offering investors exposure to counter-cyclical activities – grew by roughly ten per cent each, with market conditions causing shifts in the overall business mix. ‘Recruitment is going to be a fundamental part of growth, if acquisitions continue to be slow over the next couple of years,’ assures Jackson.

Originally backed here in 2004 at 111p, Vantis boasts good defensive qualities, and the core business is proving resilient to wider conditions. Nevertheless, the shares have been very poor recent performers and investors who failed to take profits at the top of the market might choose to reinvest elsewhere. Newcomers to Vantis should avoid the shares for the time being.