Consolidation
Ahead as Security Firms Hit the Danger List
Latest findings from industry analyst Plimsoll Publishing Ltd confirm
that zero growth, sliding profits and escalating debts have pushed a third
of the UK Security industry to the brink of failure.
Plimsoll has produced a financial health check for each of the top 939
companies in the UK security industry. It reveals that consolidation is
essential as supply is outstripping demand. All companies are having a
difficult trade off between protecting margins and appeasing price sensitive
customers.
Plimsoll has rated each of the UK’s largest Security companies into
one of five financial ratings based on their overall financial performance.
Ratings have been given as Strong, Good, Mediocre, Caution and Danger.
Rating
No. of firms
Definition
Strong
472
The best performing in the market
Good
86
Improving overall financial performance
Mediocre
90
In transition, a make or break year
Caution
127
A weakening financial position
Danger
164
Need to change in order to survive
David Pattison, senior analyst on the project, comments 'A great deal
has been written on the general slow down in the UK, but until now no
one has measured the impact on the security market and crucially who is
most exposed.'
Of most concern are the 164 firms who have been rated as Danger.
These firms are being hit the hardest. The numbers are stark - profit
margins falling to only -4% of sales, and the majority of companies in
this classification are making a loss. Most are taking on debt at an alarming
rate simply to cover costs.
David Pattison continues: 'I think these figures just prove the point
that we have all been aware of that a period of consolidation is long
overdue. Bit by bit the weaker players will be removed from the market.'
A period of consolidation will obviously have consequences, aside from
the obvious job losses. The report suggests that up to 228 companies might
need to shed jobs. For some businesses as many as 30% of the payroll may
have to go if the company is to survive.
'These companies (those rated danger) must put immediate plans in place
to start to trade their way out of their problems. Cutting costs, jobs
and even turning unprofitable work away- stringent measures must be put
in place before it’s too late. Currently the owners are sitting on
an ‘unsellable’ asset and are woefully exposed to acquirers
who are ready to snap them up for next to nothing.'
Those companies rated as ‘strong’ and ‘good’ offer
some room for optimism. Benefiting from stronger business models and tighter
financial management these companies are ideally placed to benefit from
the fall-out in the market.
This special edition of the Plimsoll Analysis exposes all the names, details
and financial performance of the UK’s leading Security firms. It
also includes a future snapshot on each company demonstrating how each
might survive this period of consolidation. It names those companies that
are set up gain the most and those that need to retreat or sell up.
Copies of the analysis can be obtained for £350, by calling Clair
Sherwood on 01642 626400 or emailing c.sherwood@plimsoll.co.uk
