Over half of insolvency-risked companies made gov support claim

More than half of the UK’s listed companies which are most at risk of insolvency made at least one claim for government support in December, according to EY’s latest analysis of profit warnings.

Furthermore, a third of said companies made a claim for two or more government support measures at this time.

From March 2020 to March 2021, some 63 of the country’s listed companies issued at least their third profit warning within a 12-month period, which is almost double the 2019 total of 32.

Up to one in five of these companies is statistically likely to go into administration within a year of the third warning.

Alan Hudson, EY-Parthenon UK&I Turnaround and Restructuring’s strategy leader, said: “The extent to which some of the UK’s largest firms have had to claim government support through the pandemic is evidence of the challenging environment in which many businesses have found themselves. 

“Firms’ dedication to securing their future and continuing to provide for their customers, clients and employees is clear but, as government support comes to an end, many firms could be tested to their ultimate limit.”

He added: “Even stronger firms could face issues, and so supply chain resilience has never been more important. Disruption to even the smallest supplier could create significant challenges that ripple through the economy.

“The transition away from Government support measures won’t be straight forward, and could require a wholesale shake-up of firms’ strategies, recapitalisation models and operations if they are to avoid hitting a financial cliff edge.”