UK Business News

There has been a sharp increase in the number of companies going into liquidation according to government figures released today.

An increase of 11.6% on the first quarter, saw almost 3,500 companies go into liquidation between April and June, a 15% rise from the same period a year ago.

The number of insolvencies remains less than half of the figure reached during the recession of the early nineties, but a rise in the number of companies going into administration suggests that there is more pain to come.

Over 1500 companies were put into administration in the first half of this year, an increase of 42% on the same period last year.

“Unfortunately, this feels like just the beginning,” Nick Wood, Recovery and Reorganisation Partner with Grant Thornton, “The negative sentiment expressed in a huge range of economic indicators is now feeding through to the real economy, with businesses that a year ago had been able to paper over the cracks now being fully exposed.”

“Expect private equity to begin rescuing businesses with strong fundamentals but short term cash flow difficulties - as long as the price is right. Well managed businesses with strong cash flows can certainly survive, and even prosper in the current climate. Cash is king in these turbulent times.”

One sector that appears to have escaped the wrath of the credit crunch, is the funeral business, with some up beat news from one of Britain’s biggest, Dignity, who have boosted profits by 17% in the first half of the year.

Dignity carried out 36,400 funerals in the first half of the year, an increase of 1700 on this time last year. The average price for their services rose 6% on last year at £1,973.

Profits have been boosted by the “Pay now, die later” option for funeral plans, with over 200,000 of Dignity’s customers having paid for their services ‘in advance’, and still currently enjoying life.

This is an area that has grown over recent years as costs for ’sending off’ a loved one have soared and many of us do not wish to burden those left behind with having to arrange and pay for the funeral services.

Irish based airline Ryanair have warned shareholders that the business may make it’s first loss since 1989, as it aims to cut fares in the face of high fuel costs and looming recession.

Ryanair chief executive Michael O’Leary has made it quite clear that he intends to increase the company’s market share by reducing fares at a time when competitors are struggling to hold their own.

The low cost carrier has an advantage over many rivals by having a considerable cash cushion of around £1.74bn, and can afford to slash profits in an effort to further build the business in these unpredictable times.

Ryanair shares took a knock of 25% on issue of the warning over profits, which are expected to show an 85% decrease in first quarter net profit. Experts believe that the airline is well placed to tough out the downturn and many consider the company to have the strongest business model and balance sheet to withstand and benefit from the times of crisis.

The Energy Institute (EI) have announced the recipient of the 72^nd Melchett Award, is Andrew Warren FEI, Director, of the Association for the Conservation of Energy (ACE). Mr Warren was presented with his award by Dr Joanne Wade FEI, EI Honorary Secretary, at an evening reception in London.

Andrew Warren has been Director of the Association for the Conservation of Energy since its foundation in 1981. He was a former Special Advisor to House of Commons Select Committee on the Environment and is Chair of the British Energy Efficiency Federation, and the Sustainable Energy Partnership. The Melchett Award is one of the EI’s most prestigious prizes and is presented to an individual for an outstanding contribution whether in research, administration, construction or other professional activity, involving the scientific preparation or use of fuel and energy.

The worlds largest mobile phone company, Vodafone, has launched a campaign to buy back £1billion of it’s shares following an adverse reaction in the stock market yesterday, to the companies warning that profits would be at the bottom end of forecasts.

The warning to shareholders saw Vodafone prices crash by 14% to 129p. The Vodafone board reacted quickly by announcing the share buyback scheme, “with immediate effect”.

“This action reflects the board’s belief that the share price significantly undervalues Vodafone,” it said.

The warning on profits was prompted by falling sales in the Spanish market in particular, but the UK market also shows serious signs of weakening.