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Prove your worth

As soon as others joined the fledgling accountancy consolidator market begun by Tenon, it was inevitable that the success of the firms would be relative - and measured in no small part by share price performance.

It’s not looking good.

Tenon itself has had a torrid 12 months. Its share price was worth 79p last February – by Monday night it had fallen to just 19p. Yes, the markets at large haven’t performed well and yes, accountancy-related shares themselves (as measured by the Accountancy Age/ADVFN index) have performed even worse, but a 76% plunge is still remarkable.

And it looks even worse when you compare Tenon with its rivals – Numerica (number 16 in the Accountancy Age Top 50) and, to a lesser extent, Vantis (number 24).

Numerica’s shares were trading at 99.5p on Monday, with Vantis at 89.5p.

Vantis has enjoyed a high of 95.5p since launching on AIM in May, a 6% fall. Numerica has scaled the dizzy heights of 122.5p and so is 19% off its top price over the last year.

Neither of those performances will please investors, management or member firms but then again, neither company has a performance problem on the same scale as that of Tenon.

It’s worth pointing out that trading has been low in all three stocks.

Small volumes mean that relatively small trades can have a disproportionate effect on a share price. Numerica hasn’t seen much activity since August.

Tenon has seen little activity since around the time of its November trading update. And despite a modest flurry in January, Vantis shares just haven’t seen much activity.

Tenon’s final accounts are due in March. We’ll know more then. But there was a clue to its problems in its trading statement last November – the last investor announcement by the company. ‘Economic conditions have proved difficult for certain parts of the professional services sector,’ acknowledged the company, number nine in the our Top 50. ‘We continue to see a significantly reduced level of activity in certain of our higher margin areas of business.’

Numerica and Vantis won’t be crowing. Each of these firms is in some way reliant on the success of the others if a viable market is to be created.

The case for the accountancy consolidators – at least as far as investors are concerned at least – remains unproven.

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