Overall UK business insolvency rate at lowest point since January 2010

Insolvency rate among medium-sized firms reaches lowest point since September 2007

Overall UK business insolvency rate at lowest point since January 2010

Nottingham, 21 June 2010 – During May, the rate[1] of business insolvencies fell to its lowest point since January 2010, according to the latest Insolvency Index from Experian®, the global information services company. Experian’s latest analysis also reveals an 18.0 per cent fall in the total number of business insolvencies during May compared to April, bringing the rate of insolvencies down to 0.08 per cent from 0.10 per cent in April.

It also marks an improvement compared to May 2009 when the rate was 0.10 per cent.

Last month’s performance was due to a vast month-on-month and year-on-year improvement among medium sized businesses with 51 to 100 employees. These businesses, which have suffered some of the highest levels of insolvencies in the last two years, saw the rate of insolvencies fall from 0.24 per cent in April 2010 and 0.23 per cent in May 2009, to 0.13 per cent in May 2010 – the lowest point since September 2007.

The average financial strength score[2] of all UK businesses was up year-on-year, from 79.98 during May 2009 to 80.70 in May 2010, but it was down slightly on the 80.76 recorded in April 2010. Although a small decline, this was the third consecutive month-on-month decline in average financial strength score of all UK businesses.

Rolf Hickmann, Managing Director of pH, an Experian company, said: The fall in the number of insolvencies is a good sign and shows that businesses are distinctly aware of the current environment and are taking vital steps to protect themselves from risks.

“Apart from the very largest businesses, companies of all sizes saw marked improvements in insolvency rates. However, the greatest improvement came from the medium-sized businesses, which, as we have commented in previous months, have been the hardest hit by the recession.

“However, the small deterioration in the overall financial strength score for UK businesses during May highlights the need for businesses to ensure they continue to exercise caution with regards to their risk exposure and those they choose to deal with.”

Other key highlights include:

  • The rate of insolvencies among businesses in the North East saw the biggest fall - down to 0.08 per cent from 0.13 per cent in April 2010 and from 0.15 per cent in May 2009.
  • All regions saw their financial strength score improve from May 2010 with Yorkshire seeing the biggest improvement (from 79.24 to 80.81).
  • However, looking at the April to May comparison, Scotland was the only region to see its financial strength score increase (from 80.57 to 80.63).
  • By far the biggest increase in insolvencies came from businesses with 501 or more employees - from 0.06 per cent in May 2009 and 0.12 per cent in April to 0.16 per cent in May 2010.
  • In terms of financial strength, although micro businesses (with 1 to 2 employees) saw the biggest year-on-year improvement (from 80.39 in may 2009 to 81.32), more recent activity reveals a small month-on-month deterioration in their score compared to April (81.95) – the biggest in comparison to other businesses.
  • Of the five biggest industries in the UK (business services, building/construction, property, IT and non-food retailing), building/construction saw the biggest April to May improvement (0.18 per cent to 0.14 per cent).
  • The property sector saw the biggest month-on-month deterioration in its score (from 82.73 in April to 82.46 in May 2010) and the second biggest year-on-year decline (from 84.05 in May 2009).

Region

Insolvencies May 10

Insolvencies May 09

% of business population failing May 10

% of business population failing May 09

Financial Strength

Score May 10

Financial Strength

Score May 09

Scotland

92

79

0.08%

0.07%

80.63

80.49

North East

33

59

0.08%

0.15%

80.84

79.86

North West

206

253

0.11%

0.13%

79.99

79.43

Yorkshire

124

169

0.11%

0.13%

80.81

79.24

Wales

48

53

0.08%

0.09%

80.28

79.66

West Midlands

129

189

0.08%

0.12%

79.56

78.93

East Midlands

75

122

0.07%

0.11%

81.10

80.19

Eastern

118

184

0.07%

0.11%

81.69

81.17

South West

105

129

0.07%

0.08%

82.40

81.76

Greater London

353

497

0.07%

0.10%

79.53

78.63

South East

208

289

0.07%

0.08%

81.98

81.43

Grand Total

1,491

2,023

0.08%

0.10%

80.70

79.98

Source: pH, an Experian company

Number of employees

Insolvencies May 10

Insolvencies May 09

% of business population failing May 10

% of business population failing May 09

Financial Strength

Score May 10

Financial Strength

Score May 09

1-2

227

257

0.05%

0.07%

81.92

80.39

3-5

256

318

0.12%

0.13%

81.71

82.09

6-10

200

284

0.15%

0.22%

81.20

81.18

11-25

195

275

0.19%

0.26%

80.78

81.06

26-50

92

123

0.19%

0.25%

80.57

80.80

51-100

36

63

0.13%

0.23%

80.18

80.27

101-500

37

41

0.14%

0.15%

81.32

81.39

501+

15

6

0.16%

0.06%

83.94

84.43

Unspecified

433

656

0.05%

0.06%

79.84

78.92

Grand Total

1,491

2,023

0.08%

0.10%

80.70

79.98

Source: pH, an Experian company

Sector

Insolvencies May 10

Insolvencies May 09

% of business population failing May 10

% of business population failing May 09

Financial Strength

Score May 10

Financial Strength

Score May 09

Extractive Industries

1

-

0.07%

0.00%

82.39

82.09

Oil

1

1

0.03%

0.03%

85.53

84.82

Building and Construction

230

281

0.14%

0.17%

77.35

77.29

Building Materials

7

7

0.19%

0.19%

79.30

79.96

Chemicals Industry

5

3

0.18%

0.10%

81.26

81.37

Diversified Industrials

37

37

0.17%

0.16%

77.61

78.17

Electricals

12

19

0.14%

0.21%

78.91

79.39

Engineering

49

80

0.12%

0.21%

79.06

79.61

Printing, Paper and Packaging

5

2

0.17%

0.08%

78.00

78.86

Textiles and Clothing

18

38

0.13%

0.27%

76.33

76.79

Breweries

-

-

0.00%

0.00%

79.18

80.34

Spirits, Wine and Tobacco

-

1

0.00%

0.20%

81.94

81.37

Food Manufacturing

12

10

0.20%

0.20%

77.57

78.36

Pharmaceuticals

1

-

0.08%

0.00%

81.36

82.14

Wholesaling

69

112

0.11%

0.17%

79.45

79.82

Leisure and Hotels

123

121

0.15%

0.14%

78.85

77.18

Media

49

61

0.08%

0.09%

80.40

80.02

Food Retailing

19

10

0.13%

0.07%

75.92

78.26

Non-Food Retailing

80

124

0.10%

0.15%

78.59

78.86

Servicing/Repair

7

17

0.09%

0.19%

81.97

80.81

Transport

53

67

0.10%

0.12%

78.13

76.21

Utilities

-

1

0.00%

0.05%

79.48

79.98

Postal and Telecommunications

7

15

0.08%

0.16%

75.87

75.35

Agriculture, Forestry and Fishing

7

9

0.03%

0.04%

84.88

84.30

Banking and Financial Services

50

63

0.10%

0.13%

83.99

84.36

Health and Household

-

2

0.00%

0.23%

78.91

79.73

Business Services

317

492

0.06%

0.08%

81.02

80.10

Hiring and Leasing

14

24

0.10%

0.18%

81.16

79.61

Property

104

157

0.07%

0.09%

82.46

84.05

Other Services

81

92

0.04%

0.05%

85.61

84.30

Plastics & Rubber

11

18

0.17%

0.31%

77.70

78.58

Insurance

14

9

0.12%

0.08%

83.99

84.88

IT

63

76

0.06%

0.07%

83.20

81.58

Motor Traders

24

43

0.07%

0.12%

79.71

79.31

Unspecified

21

31

0.02%

0.02%

74.19

69.71

Grand total

1,491

2,023

0.08%

0.10%

80.70

79.98

Source: pH, an Experian company

Contact:

Ms Serj Heera

PR Manager

0115 992 2773/07837 652169

serjeet.heera@uk.experian.com

About Experian

Experian is the leading global information services company, providing data and analytical tools to clients in more than 90 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended 31 March 2010 was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and São Paulo, Brazil.

For more information, visit http://www.experianplc.com.



[1] The insolvency rate is calculated by comparing the number of businesses that failed with the total business population in Great Britain.

[2] The financial strength score predicts the likelihood of a business failing in the next 12 months, with 100 being the least likely to default and 1 being the most likely.

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