Insolvency data underpins our fair value

The latest UK Government insolvency statistics data makes sobering reading, and suggests that BEG, which handles more corporate appointments by volume than any other UK insolvency practitioner, will find its services in increasing demand over the next 18 months.

The data confirmed 2,114 registered company insolvencies in March 2022, more than double the figure a year earlier (March ‘21: 999) and 34% above its pre-pandemic equivalent (March ‘19: 1,582).  The majority (87%) comprised Creditors’ Voluntary Liquidations (CVLs), twice March ‘21 and 62% above March ‘19.

The latest data confirms that the underlying direction of travel is broadly as predicted. It reflects the gradual withdrawal of government measures designed to protect businesses against creditors during the pandemic, now exacerbated by rising inflation, staff shortages and falling retail sales.  There has been an increase in insolvencies across all appointment types.

The shares have drifted in a nervous stock-market - possibly insolvency numbers have taken longer to pick up than some had anticipated - but BEG remains lowly rated and well below our retained 165p/share fair value estimate.