British business strength improved during last fiscal year
Nottingham , 18 April 2011 - The latest Business Insolvency Index from Experian®, the global information services company, has revealed that British businesses finished the last fiscal year stronger than they started it.
The average financial strength score [1], an indication of how likely a firm is to fail in the next 12 months, improved from 80.99 going into April 2010 to 81.58 by the end of March 2011. The biggest increase came from mid-sized companies, those with between 100 and 500 employees. The average score for this segment of the business population rose from 81.18 to 82.81.
During the last fiscal year, the average annual financial strength score was 81.14 – an improvement on FY09/10 when it was 80.83.
In terms of March 2011, the monthly insolvency rate [2] was 0.11 per cent - the same as that recorded in March 2010. Companies with 11-25 employees continued to have the highest insolvency rates, while the North East and Yorkshire also continued to record the highest rates of insolvency.
When looking at the fiscal year as a whole, the insolvency rate fell to 1 per cent from 1.20 per cent for FY09/10.
Max Firth, Managing Director of Experian pH, said: “While signs of improvement in the average financial strength score of British businesses are encouraging, Experian’s analysis does highlight food retailing; textiles & clothing, postal & telecommunications as industries with weaker financials.”
“Companies transitioning from being a small to a medium sized business are often amongst those most prone to failure, and our March data confirms this as companies with 51-100 employees continue to have the worst financial strength score. Those operating in the lending market, or financing clients and suppliers, must ensure they have an accurate and up-to-date picture of each business’s potential, risk profile and vulnerability to changing market conditions.”
Other key highlights include:
· The North East region saw the biggest increase in its insolvency rate – from 0.17 per cent in March 2010 to 0.22 per cent in March making it the worst performing region of the UK.
· The South East and South West had the lowest rate of insolvency with only 0.08 per cent of the business population failing in March 2011.
· Although businesses in Greater London saw the biggest increase in financial strength score from 79.76 in March 2010 to 80.65 this year, it remained the region with the lowest score.
· Businesses with 100-500 employees saw the highest annual increase in their insolvency rate, albeit marginal from 0.16 per cent to 0.18 per cent.
· Businesses with 11-25 employees had the highest rate of insolvencies in March with 0.26 per cent closely followed by companies with 26-50 employees at 0.23 per cent.
· Oil, Agriculture, Forestry and Fishing and Insurance were the top three performing industries with financial strength scores of 86.07, 85.34 and 84.26 respectively.
· Spirits, Wine and Tobacco and the Utilities sector were the only two insutries to see no companies fail in March 2011.
· Food retailers continue to be the worst performing sector with regards to financial strength with a score of 75.72.
Region |
Insolvencies Mar 11 |
Insolvencies Mar 10 |
% of business population failing Mar 11 |
% of business population failing Mar 10 |
Financial Strength Score Mar 11 |
Financial Strength Score Mar 10 |
Scotland |
110 |
94 |
0.10% |
0.08% |
81.52 |
80.95 |
North East |
87 |
67 |
0.22% |
0.17% |
81.67 |
81.10 |
North West |
214 |
255 |
0.11% |
0.14% |
80.90 |
80.41 |
Yorkshire |
176 |
171 |
0.15% |
0.15% |
81.40 |
81.08 |
Wales |
67 |
67 |
0.12% |
0.12% |
81.15 |
80.57 |
West Midlands |
199 |
203 |
0.13% |
0.13% |
80.71 |
79.87 |
East Midlands |
149 |
153 |
0.14% |
0.14% |
81.79 |
81.39 |
Eastern |
176 |
195 |
0.10% |
0.11% |
82.40 |
82.02 |
South West |
127 |
143 |
0.08% |
0.09% |
83.16 |
82.61 |
Greater London |
489 |
490 |
0.10% |
0.10% |
80.65 |
79.76 |
South East |
242 |
322 |
0.08% |
0.10% |
82.67 |
82.24 |
Grand Total |
2,036 |
2,160 |
0.11% |
0.11% |
81.58 |
80.99 |
Source: pH, an Experian company
Number of employees |
Insolvencies Mar 11 |
Insolvencies Mar 10 |
% of business population failing Mar 11 |
% of business population failing Mar 10 |
Financial Strength Score Mar 11 |
Financial Strength Score Mar 10 |
1-2 |
316 |
302 |
0.07% |
0.07% |
82.82 |
82.31 |
3-5 |
350 |
322 |
0.16% |
0.15% |
82.16 |
81.99 |
6-10 |
285 |
312 |
0.22% |
0.24% |
81.93 |
81.39 |
11-25 |
263 |
299 |
0.26% |
0.29% |
81.63 |
80.98 |
26-50 |
108 |
164 |
0.23% |
0.34% |
81.60 |
80.55 |
51-100 |
60 |
73 |
0.22% |
0.27% |
81.52 |
80.10 |
101-500 |
47 |
42 |
0.18% |
0.16% |
82.71 |
81.18 |
501+ |
8 |
14 |
0.09% |
0.15% |
84.87 |
84.12 |
Unspecified |
599 |
632 |
0.07% |
0.07% |
80.74 |
80.13 |
Grand Total |
2,036 |
2,160 |
0.11% |
0.11% |
81.58 |
80.99 |
Source: pH, an Experian company
Sector |
Insolvencies Mar 11 |
Insolvencies Mar 10 |
% of business population failing Mar 11 |
% of business population failing Mar 10 |
Financial Strength Score Mar 11 |
Financial Strength Score Mar 10 |
Extractive Industries |
3 |
1 |
0.21% |
0.07% |
82.86 |
82.70 |
Oil |
5 |
2 |
0.18% |
0.06% |
86.07 |
86.04 |
Building and Construction |
331 |
377 |
0.20% |
0.23% |
78.07 |
77.76 |
Building Materials |
6 |
8 |
0.16% |
0.21% |
80.33 |
79.49 |
Chemicals Industry |
1 |
7 |
0.04% |
0.25% |
81.94 |
81.35 |
Diversified Industrials |
48 |
40 |
0.23% |
0.18% |
78.33 |
78.09 |
Electricals |
15 |
19 |
0.17% |
0.22% |
79.57 |
79.31 |
Engineering |
78 |
75 |
0.20% |
0.20% |
79.69 |
79.19 |
Printing, Paper and Packaging |
3 |
3 |
0.09% |
0.12% |
78.99 |
78.13 |
Textiles and Clothing |
24 |
35 |
0.17% |
0.26% |
76.86 |
76.66 |
Breweries |
2 |
- |
0.43% |
0.00% |
79.50 |
79.92 |
Spirits, Wine and Tobacco |
- |
2 |
0.00% |
0.40% |
82.75 |
81.93 |
Food Manufacturing |
11 |
10 |
0.17% |
0.20% |
78.33 |
77.67 |
Pharmaceuticals |
1 |
1 |
0.08% |
0.11% |
82.23 |
81.27 |
Wholesaling |
104 |
122 |
0.17% |
0.19% |
80.20 |
79.73 |
Leisure and Hotels |
144 |
143 |
0.17% |
0.17% |
79.98 |
78.95 |
Media |
59 |
81 |
0.09% |
0.13% |
80.98 |
80.73 |
Food Retailing |
20 |
18 |
0.13% |
0.13% |
75.72 |
76.52 |
Non-Food Retailing |
146 |
114 |
0.18% |
0.14% |
79.13 |
78.91 |
Servicing/Repair |
11 |
15 |
0.15% |
0.17% |
82.84 |
82.17 |
Transport |
68 |
70 |
0.13% |
0.14% |
79.01 |
78.34 |
Utilities |
- |
1 |
0.00% |
0.05% |
79.72 |
80.11 |
Postal and Telecommunications |
16 |
18 |
0.20% |
0.21% |
76.96 |
76.25 |
Agriculture, Forestry and Fishing |
9 |
13 |
0.04% |
0.06% |
85.34 |
85.29 |
Banking and Financial Services |
66 |
67 |
0.13% |
0.13% |
84.22 |
84.47 |
Health and Household |
2 |
- |
0.24% |
0.00% |
78.89 |
79.45 |
Business Services |
454 |
488 |
0.09% |
0.09% |
82.27 |
81.40 |
Hiring and Leasing |
28 |
40 |
0.21% |
0.31% |
82.08 |
81.23 |
Property |
116 |
131 |
0.08% |
0.08% |
82.50 |
83.29 |
Other Services |
112 |
95 |
0.05% |
0.05% |
86.21 |
85.53 |
Plastics & Rubber |
11 |
17 |
0.17% |
0.30% |
78.35 |
77.91 |
Insurance |
10 |
12 |
0.09% |
0.10% |
84.26 |
84.55 |
IT |
70 |
64 |
0.07% |
0.06% |
83.85 |
83.40 |
Motor Traders |
48 |
54 |
0.14% |
0.16% |
80.48 |
79.87 |
Unspecified |
14 |
17 |
0.01% |
0.01% |
76.65 |
73.83 |
Grand total |
2,036 |
2,160 |
0.11% |
0.11% |
81.58 |
80.99 |
Source: pH, an Experian company
Natalie Hale
0115 992 2645/07971 709274
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.
1The 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.
2 The insolvency rate is calculated by comparing the number of businesses that failed with the total business population in Great Britain.