Companies: VTS   

Accountancy group Vantis has continued to grow its business, despite its shares having suffered in the market malaise, and is sanguine about prospects due to its defensive business mix.

Oft-admired for their capacity to benefit from growing as well as slowing markets, accountancy firms’ advisory, tax and business recovery operations are all able to profit in troubled economic times, counter-balancing cyclical falls in corporate finance. Sales grew by 7.5% to £94.3m in the year to April, with Vantis garnering 20% of its revenues from business recovery and 67% from business advisory and tax activities.

On the downside, consultancy revenue declined by 14% and the corporate finance operation saw a number of deals postponed in uncertain conditions. Nevertheless, the group maintained an operating margin of 15.8% and lifted profits on continuing operations before tax and exceptionals by 8% to £14.9m.

The dividend was snipped however, from 5p to 3p, although the board missed out as much as anyone as they received 50% of the payout through their controlling ownership of the shares. As Jackson elucidates: ‘We felt it was a total waste of time as this may be a trough period and [with the share price halved from last year] the yield is still higher.’

While concentrating on organic growth, Vantis completed a small acquisition in March and sees further prospects emerging. ‘We’re seeing strong recruitment opportunities, some from the Big Four, and the acquisition pipeline is getting stronger – valuations are becoming more realistic.’

Trading at well below ten times historic earnings, the shares, originally backed here at 111p but down from a 280p high early last year, look undervalued, given the group’s resilience. Buy.

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