Insolvency Index: transportation businesses see fewer company failures in mixed data

By Tim Wood and Henry Kirby | 27 February 2014

Information and communication companies are suffering a rising number of insolvencies, according to analysis by Exaro.

By contrast, transportation and storage companies are seeing falls across all types of insolvency. The latest figures from the Exaro Insolvency Index mark the varying fortunes for different sectors as the economy recovers unevenly.

The Exaro Insolvency Index shows a slight upturn in company failures across the UK economy, after many months of an improving picture.

There was an increase in the number of companies that filed one or more insolvency notices in January compared with the same month a year before, rising 2.7 per cent from 2,226 to 2,286. There was a 1.3 per cent increase in the quarter to January, year on year, up from 6,481 to 6,567.

This is reflected in increases in three out of four insolvency types in January on the same month last year.

The number of companies that entered administration or receivership rose slightly from 182 in January 2013 to 186 last month, and winding-up petitions fell by eight per cent from 671 to 617.

However, orders or resolutions to wind up were up by 11.5 per cent from 1,353 to 1,509, while appointments of liquidators rose from 1,278 to 1,460 – up by just over 14 per cent.

The quarter to January shows a decrease of three per cent in the number of companies that entered administration or receivership compared with the same period a year earlier. There was also a fall in winding-up petitions. However, there were rises in orders or resolutions to wind up and appointments of liquidators.

The numbers are shown in the top two graphs to the right, which can be clicked to enlarge.

The turmoil facing information and communication companies as shown in the Exaro Insolvency Index was also highlighted by Sony’s announcement earlier this month that it would stop making personal computers, and concentrate instead on tablets and smart-phones.

Ranjit Atwal, devices analyst at Gartner, a research and advisory company for the information-technology sector told Exaro that the PC market is shrinking, and smaller hardware manufacturers are suffering.

He said: “The PC market is dominated by five big companies – Lenovo of China, HP and Dell, and Taiwan’s Acer and Asus. Together they ship 60 per cent of the PCs that are sold globally a year. Apple has just over five per cent of the market.

“That leaves about a third of the market for the smaller players – and far less of the profits.

“Scale is everything in this market. If you do not have economies of scale, then the underlying costs of reaching the market are too great to be profitable.”

The number of information and communication companies that entered administration or receivership rose by more than half in the quarter to January on the same period in the previous year, rising from 21 to 32.

Winding-up petitions fell by eight per cent from 75 to 69. However, orders or resolutions to wind up were up by nearly 19 per cent from 331 to 393, and appointments of liquidators rose from 322 to 388 – an increase of 20.5 per cent.

The changes are shown in the third graph to the right. Many of the failed companies in the sector are consultancies or specialists in designing bespoke software.

Last month saw rises in all categories of insolvencies on January 2013, with the exception of winding-up petitions, which fell from 33 to 30. Administrations or receiverships rose from four to nine, orders or resolutions to wind up from 90 to 100, and appointments of liquidators rose from 91 to 99.

The fourth graph shows the falls across all insolvency categories for transportation and storage companies in the quarter to January compared with the same period a year before. The sector enjoyed even sharper falls in insolvencies last month in comparison with January 2013.

The Exaro Insolvency Index is based on insolvency notices as published in the London, Belfast and Edinburgh Gazettes, combined with information from Companies House. Of the insolvencies, a small proportion is not ascribed to a specific sector in the source data.

Northern Ireland’s rising insolvencies levels have eased, according to the latest figures.

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