News release

 

Contact:
Serj Heera
PR Manager, Business Information and Automotive
+44 (0) 115 992 2773 Tel
serjeet.heera@uk.experian.com Email

 

Business failures at lowest rate since September 2008, according to Experian

 

Nottingham, UK, 21 September 2009 - The UK business failure rate, which has been seeing an upward trend since 2007, fell to its lowest level in August since September 2008.

 

The figures were revealed today by Experian®, the global information services company, as it launched its new monthly Insolvency and Distress Index, the most comprehensive real-time view on the extent of UK business failures.

 

The index revealed that 0.09 per cent of UK businesses failed during August this year, a slight increase on the 0.08 per cent recorded in August 2008.  However, it was significantly lower than the 0.11 per cent recorded in July, and the lowest rate so far this year.

 

The total number of business insolvencies during August 2009 increased by 11.3 per cent, compared to August 2008.  However, in comparison to July, the total number of insolvencies fell by 23 per cent, and with a total of 1,796 insolvencies in August, this too is the lowest number of monthly failures so far in 2009.

 

Experian’s data also reveals a slight improvement in the financial solidity of the UK business population, as measured by its average distress score.  The distress score - which predicts the likelihood of a business failing in the near future, with 100 being the least likely to default and 1 being the most likely - had been on a slow downward trend since March 2008 when it stood at 82.24.

 

Yet Experian’s Insolvency and Distress Index reveals that the financial distress levels of businesses decreased recently, as the score improved from 80.61 in July to 80.79 in August  2009.  This is the best average score the UK business world has seen in the last 12 months.

 

Rolf Hickman, Managing Director of pH, an Experian company, said: “This latest data is encouraging.  However, it is also important to remember that although the total number of insolvencies is close to the total number in the last recession, the insolvency rate is no where near as high.  The underlying business population has also been growing at an increasing pace, so this needs to be taken into account in order to gain a realistic picture of insolvencies in the UK and the extent of any impact on the UK economy rather than simply looking at raw insolvency statistics. 

 

“Although it is too early to tell whether this is an indication of a more positive outlook, one thing is for sure: businesses are distinctly aware of the current environment and the need to be cautious in any business dealings.  We have seen a significant increase in businesses monitoring the health of suppliers, customers and partners, as well as themselves, in order to ensure they do not suffer from the impact of another business becoming insolvent.”

 

Other key findings were:

  • The North East region saw the highest rate of business failures during August 2009.  It was also the area to see the highest increase in the number of insolvencies during August this year compared to August 2008 (up 92.7 per cent).
  • Very small businesses (five employees or less) proved to be the most resilient during August with low insolvency rates (0.05 per cent for businesses with up to two employees and 0.12 per cent for businesses with between two and five employees).  Those small businesses that survived also saw a higher than average improvement in their financial stability (81.32 for businesses with up to two employees and 82.58 for businesses with between two and five employees).
  • Postal and telecommunications businesses are seeing the highest levels of financial distress, compared to businesses in other sectors.  This sector had the worst distress score during August (76.29) and the second highest insolvency rate (0.26 per cent).

 

Region

Insolvencies Aug 09

% change from Aug 08

% of business population failing Aug 09

% of business population failing Aug 08

Distress Score Aug 09

Distress Score Aug 08

Scotland

               76

5.6

0.07

0.07

     80.76

     81.12

North East

               79

92.7

0.20

0.11

     80.72

     80.57

North West

             221

-1.8

0.11

0.12

     80.16

     80.17

Yorkshire

             169

35.2

0.14

0.10

     80.81

     80.48

Wales

               41

-31.7

0.07

0.11

     80.28

     80.16

West Midlands

             168

7.0

0.11

0.10

     79.77

     79.70

East Midlands

             119

16.7

0.11

0.10

     81.09

     80.85

Eastern

             168

20.0

0.10

0.09

     81.89

     81.78

South West

             120

30.4

0.08

0.06

     82.23

     82.38

Greater London

             379

2.7

0.08

0.08

     79.58

     79.48

South East

             243

7.5

0.07

0.06

     82.14

     81.85

Unspecified

13

-

-

-

-

-

Grand Total

          1,796

11.3

0.09

0.08

     80.79

     80.69

Source: pH, an Experian company

 

Number of employees

Insolvencies Aug 09

% change from Aug 08

% of business population failing Aug 09

% of business population failing Aug 08

Distress Score Aug 09

Distress Score Aug 08

1-2

             214

33.8

0.05

0.04

     81.32

     79.90

3-5

             298

6.8

0.12

0.11

     82.58

     81.50

6-10

             274

24.5

0.21

0.16

     81.61

     82.00

11-25

             221

-2.2

0.21

0.21

     81.34

     81.16

26-50

             115

16.2

0.23

0.19

     81.02

     80.99

51-100

               56

47.4

0.20

0.13

     80.38

     80.64

101-500

               40

14.3

0.15

0.13

     81.50

     80.07

501+

                 8

700.0

0.08

0.01

     84.50

     81.18

Unspecified

570

2.5

0.06

0.06

     79.92

     84.87

Grand Total

         1,796

11.3

0.09

0.08

     80.79

     80.69

Source: pH, an Experian company

 

Sector

Insolvencies Aug 09

% change from Aug 08

Insolvency rate Aug 09

Insolvency rate Aug 08

Distress Score Aug 09

Distress Score Aug 08

Extractive Industries

                 7

-

0.43

0.00

     82.40

     82.25

Oil

                 8

300.0

0.24

0.06

     85.59

     85.15

Building and Construction

             266

2.3

0.16

0.16

     78.05

     78.40

Building Materials

                 8

300.0

0.21

0.05

     80.19

     80.20

Chemicals Industry

                 2

-33.3

0.07

0.10

     82.11

     81.19

Diversified Industrials

               36

9.1

0.15

0.14

     78.63

     78.33

Electricals

               17

54.5

0.19

0.12

     79.92

     79.39

Engineering

               61

0.0

0.15

0.15

     80.04

     79.43

Printing, Paper and Packaging

                 6

100.0

0.23

0.11

     79.42

     78.42

Textiles and Clothing

               32

45.5

0.22

0.15

     77.39

     76.61

Breweries

                 -  

-100.0

0.00

0.20

     80.86

     80.22

Spirits, Wine and Tobacco

                 -  

-

0.00

0.00

     81.99

     82.24

Food Manufacturing

                 4

-50.0

0.08

0.15

     78.72

     78.28

Pharmaceuticals

                 1

-75.0

0.11

0.43

     82.26

     82.24

Wholesaling

               96

15.7

0.14

0.12

     80.33

     79.85

Leisure and Hotels

             122

1.7

0.14

0.14

     78.10

     77.75

Media

               61

0.0

0.09

0.09

     80.64

     80.10

Food Retailing

               14

75.0

0.10

0.06

     78.58

     78.85

Non-Food Retailing

             106

5.0

0.12

0.12

     79.47

     79.13

Servicing/Repair

                 7

-41.7

0.08

0.14

     81.62

     81.26

Transport

               59

-13.2

0.11

0.12

     77.67

     77.98

Utilities

                 1

0.0

0.05

0.06

     80.61

     80.47

Postal and Telecommunications

               24

20.0

0.26

0.22

     76.29

     75.63

Agriculture, Forestry and Fishing

               14

40.0

0.06

0.05

     84.86

     84.62

Banking and Financial Services

               41

-2.4

0.08

0.08

     84.99

     84.69

Health and Household

                 2

0.0

0.23

0.22

     80.59

     78.95

Business Services

             404

23.5

0.07

0.06

     80.81

     80.72

Hiring and Leasing

               19

35.7

0.14

0.10

     80.42

     80.01

Property

             152

22.6

0.08

0.07

     84.32

     85.30

Other Services

               77

-3.8

0.04

0.05

     85.00

     84.71

Plastics & Rubber

               14

7.7

0.24

0.22

     78.95

     78.50

Insurance

                 8

33.3

0.07

0.05

     85.36

     85.07

IT

              59

-4.8

0.05

0.06

     82.61

     80.98

Motor Traders

               31

-18.4

0.09

0.11

     79.71

     79.58

Others

               37

208.3

0.02

0.01

     72.14

     72.64

Grand total

          1,796

11.3

0.09

0.08

     80.79

     80.69

Source: pH, an Experian company

 

ENDS

 

For further press information please contact:

SERJ HEERA, PR Manager, Experian, Riverleen House, Electric Avenue, Nottingham, NG80 1RH.  Tel: 0115 992 2773. Mobile: 07837 652169. Email: serjeet.heera@uk.experian.com

 

Experian’s Data 

The Insolvency and Distress Index is compiled by pH, an Experian company, on a monthly basis.  Insolvency data is derived from analysis of adverse notices received from Companies House that indicate that companies have little or no chance of recovering to a normal status in the future.  These notices comprise voluntary liquidations, compulsory liquidations, administration orders, receiverships and voluntary arrangements.

 

The Insolvency Rate

The insolvency rate is necessary in order to establish a truer picture of the extent and impact of business failures on the UK economy.  This is done by calculating in percentage terms the number of business failures in the quarter by the number of businesses currently operating in the UK.   Since the underlying business population is growing all the time, this measure of insolvencies provides a more realistic picture of insolvencies in the UK.

 

The Distress Index

In addition to insolvency information, the Distress Index uses a company level measure of the financial solidity of the UK business population, the pH Megascore.  The Megascore is a default probability model, which takes into account balance sheet and P&L factors to determine the likelihood of business failure due to financial distress. 

 

 

 

 

 

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