Midlands administrations drop, despite ‘headwinds’

Chris Pole

The total number of companies in the Midlands entering into administration during the second quarter of 2018 fell sharply, according to new analysis from professional services firm KPMG.

A study by KPMG of notices in the London Gazette shows that a total of 39 companies in the Midlands went into administration between April and June 2018, compared with 56 in the previous quarter – a fall of 30%. A similar trend was experienced nationally, with 302 companies entering into administration in the period between April and June 2018, a decline of 13% compared with the previously quarter.

Chris Pole, restructuring partner at KPMG in the Midlands, said: “The drop in the number of administrations may come as a surprise to many who have followed the tribulations of certain well-known national high street brands. Nevertheless, when put in the context of year-on-year trends, the latest stats in the Midlands still represent relatively normal attrition rates. These figures reflect a relatively positive picture for most businesses. For the most part, adopting a long-term cautious approach appears to be paying off for the majority of firms.

“Nationally, we continue to see companies in the casual dining and retail spaces battle hard in the face of changing consumer attitudes towards spending, coupled with increased costs as a result of the living wage and business rates pressures. Whilst a number of chains have survived through the implementation of successful CVAs or via pre-pack administrations, inevitably there have been site closures and job losses across many parts of the country.

“Across the region, the much-publicised pressures on the construction and manufacturing sectors continue to impact businesses up and down the supply chain, and the greatest number of administration appointments experienced in the quarter has been in these sectors. However it must be remembered that it’s not all doom and gloom in the Midlands. Businesses operating in the region’s hotel sector are continuing to have a good year, with conference tourism giving stability to many hotels across the region.”

Pole advises that any businesses who are feeling the pressure start exploring turnaround strategies now. He said: “We are helping a lot of clients develop strategies that focus on sales and margin improvement, whilst preparing their businesses for the uncertainties surrounding the current economic and political environments.”

He concluded: “A variety of lenders, ranging from the mainstream banks to the asset-based lenders, remain committed to investing in the Midlands and liquidity is not considered an issue for the majority of these lenders. Efficiency is considered the key to unlocking profit and generating cash and we are currently conducting a number of strategic option reviews with our clients in the Midlands across a range of sectors, which target the streamlining of overhead costs, procurement practices and finance functions.”

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