Red Flag A!ert Statistics

30 Jan 2008 07:01

Begbies Traynor Group PLC30 January 2008 Wednesday, 30 January 2008 Begbies Traynor's Red Flag A!ert Statistics Signal Tough Times Ahead Begbies Traynor, the UK's leading business rescue, recovery and restructuringspecialist, today publishes its quarterly Red Flag A!ert statistics, whichmonitor adverse actions and other corporate distress signals (such as the issueof county court judgements and wind up petitions). These show that the number ofUK companies facing significant difficulties has increased substantially overthis time last year. The survey monitors the numbers of companies experiencing difficulties in twocategories: "Significant Problems" * and "Critical Problems" **. Of thosecompanies experiencing the more serious "Critical Problems", Red Flag's researchshows that approximately 15% will enter into a formal insolvency procedurewithin 12 months. All eight of mainland Britain's regions showed an increase in Critical Problems.Comparing quarterly averages of companies with Critical Problems, the regionexperiencing the greatest increase in 2007 was the West Midlands, up 43.1% on2006, while the smallest increase was in the North West, with 15.3%. The full list is as follows: Region % Increase in Critical Problems in 2007West Midlands 43.1South 32.6North East England 25.3Scotland 23.0South East England and East Anglia 22.0South West England and South Wales 18.0East Midlands 16.1North West and North Wales 15.3 The average increase of companies facing Critical Problems for all regionsduring 2007 was 23% up on 2006; this represents a total of 5,159 companiescompared with 4,201 in 2006. Companies showing minor distress indicators across all regions totalled 426,023in 2007 compared with 375,493 in 2006, an increase of 13%. This compares with afigure of 31% for the previous year, further evidence that the insolvency markethad stabilised during 2007, as indicated in last years Insolvency Outlook reportfrom Euler Hermes. Much of the increases in adverse actions occurred in the final quarter of 2007.This concurs with the Bank of England's Fourth Quarter 'Credit ConditionsSurvey'. The survey showed a deepening of the current 'Credit Crunch' withlenders reporting that credit availability had reduced significantly during Q4and that defaults by medium-sized PNFCs (Private Non-Financial Corporations) hadalso risen, in line with lenders expectations in Q3. Ric Traynor, Executive Chairman of Begbies Traynor Group, commented: "The combination of adverse economic conditions in the final quarter of 2007 hasclearly had a major impact on credit conditions, with a significant reduction incredit availability and an increase in defaults. This trend is expected tocontinue into this year and will undoubtedly lead to reduced lending, which inturn could push more companies into insolvency over the coming months." * Companies with "Significant Problems" are those with either a court action and/or average, poor, very poor insolvent or out date accounts.** Companies with "Critical Problems are those with CCJs totalling £5,000 ormore and/or Wind-Up Petition related actions Ends For further information, please contact: Begbies Traynor Group plc www.begbies-traynor.com --------------------------Ric Traynor, Executive Chairman 0161 837 1700 SmithfieldReg Hoare / Katie Hunt / Will Henderson 020 7360 4900 This information is provided by RNS The company news service from the London Stock Exchange