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2009 sees businesses' financial health improve in the UK, according to Experian's Insolvency Index

2009 Sees Businesses’ Financial Health Improve in the UK, According to Experian’s Insolvency Index

Nottingham, 19 January 2010 — The financial health of businesses in the UK saw a significant improvement in 2009, while the annual rate of business insolvencies[1] increased at a slower rate compared to 2008, according to the latest Insolvency Index from Experian^®, the global information services company.

The average financial strength score[2] for businesses in Great Britain improved steadily throughout 2009 – rising from 79.46 in January 2009 to 81.37 in December 2009. According to Experian, this has been helped by an overall improvement in the time it takes businesses to pay their suppliers.

Despite peaking in the year in the first half of 2009, the sharp fall in business failures during the second half of the year helped alleviate the final number of insolvencies in 2009. Total insolvencies increased by only 12.0 per cent during 2009, compared to the 29.3 per cent increase during 2008, bringing the annual insolvency rate for 2009 to 1.25 per cent.

In addition, during December the rate of business insolvencies was 0.11 per cent, lower than the 0.12 per cent recorded in the same month the previous year (December 2008).

Rolf Hickmann, Managing Director of pH, an Experian company, said: “In 2009 businesses in Great Britain managed to climb back to a better place financially.

“Last year, it became clear that the businesses most successful at avoiding insolvency were the very smallest and the very largest ones. The highest insolvency rates in 2009 were among mid range businesses.

“Many more businesses are taking steps to protect themselves from the risks of not getting paid, the impact on them if a key supplier or customer goes bust and indeed the risk of insolvency within their own businesses. With this in mind, businesses need to not only proceed with caution when it comes to both new and existing business clients, but also ensure that their own house in order, so that they themselves are appealing prospects for business.”

Key highlights for 2009, included:

North East saw the highest levels of insolvencies throughout the year.
Scotland maintained the lowest rate of insolvencies in 2009.
Although businesses in Greater London struggled most in terms of financial stability, with the lowest financial strength score throughout the year, it was the region to see the biggest improvement. Businesses saw their financial strength score rise from 77.85 in January to 80.25 in December.
Businesses in South West maintained the highest financial strength score during each month of 2009.
The smallest of businesses – those with 1 to 2 employees (0.75 per cent) – had the lowest annual rate of insolvencies, followed by the largest businesses – those with 501 or more employees (1.64 per cent).
Businesses in the plastics and rubber sector had the highest annual insolvencies rate in 2009 (3.26 per cent).
Health and house businesses saw the biggest improvement their annual insolvency rate – from 3.14 per cent in 2008 to 1.38 per cent in 2009.

Region	Insolvencies Dec 09	% change from Dec 08	% of business population failing Dec 09	% of business population failing Dec 08	Financial Strength Score Dec 09	Financial Strength Score Dec 08
Scotland	82	18.8	0.07%	0.06%	81.31	80.40
North East	74	-14.0	0.19%	0.22%	81.43	79.46
North West	228	-13.3	0.12%	0.14%	80.63	79.01
Yorkshire	160	-31.6	0.14%	0.18%	81.48	79.27
Wales	56	-17.6	0.10%	0.12%	80.91	79.19
West Midlands	203	-0.5	0.13%	0.13%	80.28	78.64
East Midlands	137	-11.0	0.13%	0.14%	81.81	79.81
Eastern	162	-21.7	0.09%	0.12%	82.41	80.79
South West	144	-5.9	0.09%	0.10%	82.87	81.49
Greater London	546	-0.7	0.11%	0.11%	80.25	78.01
South East	298	-21.2	0.09%	0.10%	82.63	80.93
Grand Total	2,090	-11.7	0.11%	0.12%	81.37	79.57

Source: pH, an Experian company

Number of employees	Insolvencies Dec 09	% change from Dec 08	% of business population failing Dec 09	% of business population failing Dec 08	Financial Strength Score Dec 09	Financial Strength Score Dec 08
1-2	281	2.2	0.07%	0.07%	82.63	80.52
3-5	356	-10.6	0.16%	0.16%	82.22	81.50
6-10	302	-5.3	0.23%	0.24%	81.56	80.73
11-25	292	-3.3	0.29%	0.29%	81.19	80.75
26-50	105	-29.5	0.22%	0.30%	80.66	80.40
51-100	70	-10.3	0.26%	0.28%	80.20	79.92
101-500	35	-53.9	0.13%	0.28%	81.27	81.14
501+	15	-53.1	0.16%	0.34%	84.38	84.65
Unspecified	634	-14.0	0.07%	0.07%	80.66	78.32
Grand Total	2,090	-11.7	0.11%	0.12%	81.37	79.57

Source: pH, an Experian company

Sector	Insolvencies Dec 09	% change from Dec 08	% of business population failing Dec 09	% of business population failing Dec 08	Financial Strength Score Dec 09	Financial Strength Score Dec 08
Extractive Industries	1	-66.7	0.07%	0.20%	82.93	81.98
Oil	2	-33.3	0.06%	0.09%	86.52	84.61
Building and Construction	325	-0.9	0.20%	0.21%	78.27	77.45
Building Materials	5	-44.4	0.13%	0.24%	79.82	79.55
Chemicals Industry	5	-28.6	0.18%	0.24%	81.54	80.99
Diversified Industrials	44	-35.3	0.20%	0.30%	78.45	77.77
Electricals	16	23.1	0.18%	0.14%	79.67	78.97
Engineering	75	-6.3	0.20%	0.21%	79.56	79.00
Printing, Paper and Packaging	5	0.0	0.20%	0.19%	78.43	78.25
Textiles and Clothing	28	-28.2	0.21%	0.27%	77.09	75.96
Breweries	1	0.0	0.21%	0.21%	80.35	79.88
Spirits, Wine and Tobacco	-	#DIV/0!	0.00%	0.00%	82.39	81.69
Food Manufacturing	15	50.0	0.30%	0.20%	78.05	77.54
Pharmaceuticals	1	-75.0	0.11%	0.45%	81.51	81.94
Wholesaling	83	-30.8	0.13%	0.18%	80.10	79.25
Leisure and Hotels	140	-4.1	0.17%	0.17%	79.25	76.55
Media	77	-1.3	0.12%	0.12%	81.09	79.28
Food Retailing	11	0.0	0.08%	0.08%	77.21	77.61
Non-Food Retailing	100	-37.5	0.12%	0.19%	79.34	78.16
Servicing/Repair	11	0.0	0.12%	0.12%	82.46	80.40
Transport	83	-13.5	0.17%	0.17%	78.65	76.96
Utilities	1	-75.0	0.05%	0.22%	80.74	79.76
Postal and Telecommunications	14	-22.2	0.16%	0.19%	76.58	74.45
Agriculture, Forestry and Fishing	6	-53.8	0.03%	0.06%	85.55	83.96
Banking and Financial Services	94	-21.0	0.19%	0.24%	84.79	84.36
Health and Household	-	-100.0	0.00%	0.45%	79.75	78.66
Business Services	491	-3.9	0.09%	0.09%	81.82	79.52
Hiring and Leasing	38	72.7	0.29%	0.16%	81.47	79.03
Property	144	-18.6	0.08%	0.10%	83.63	84.79
Other Services	88	-9.3	0.05%	0.06%	85.81	83.87
Plastics & Rubber	17	0.0	0.30%	0.29%	78.24	78.06
Insurance	11	-8.3	0.09%	0.10%	84.89	84.94
IT	79	-15.1	0.07%	0.09%	83.83	80.10
Motor Traders	53	0.0	0.15%	0.15%	80.12	78.78
Unspecified	26	-23.5	0.02%	0.02%	74.12	68.59
Grand total	2,090	-11.7	0.11%	0.12%	81.37	79.57

Source: pH, an Experian company

Contact:

Ms Serj Heera

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.

For more information, visit http://www.experian.co.uk.

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.