BUSINESS ‘CRITICAL’ LIST SHORTENS AS OIL AND GAS DISTRESS PEAKS

VARIATIONS: SCOTTISH PRIVATE SECTOR DOING BETTER THAN THE WIDER UK

More than 15,000 Scottish businesses were flagged as being in distress in the first quarter of 2017.

However, Begbies Traynor’s latest Red Flag report found improvements in the oil and gas, manufacturing and hospitality sectors and the number of Scottish firms facing critical issues, defined as having decrees totalling more than £5,000 and facing wind up petitions, actually fell in the period.

A total of 48 companies were on the critical list in the first months of the year, down from 67 last year.

The Scottish construction sector, hit hard during the last downturn, was stable, while there was improvement in the pharma, professional services and automotive sectors.

By contrast, there was a significant upturn in flags from logistics and wholesaling and overall the number of companies in distress reached 15,086, 5% higher on the quarter and 6% up on the year previous.

“Anytime we show positive trends and out-perform UK averages we have to welcome the news, but we are careful to make sure we put the trends into perspective, and there needs to be a balanced view here with awareness that the less serious signs of significant distress are still rising,” Ken Pattullo, head of Begbies Traynor in Scotland.

“The falls could also be partially attributed to the high levels of distress we saw in Aberdeenshire as the oil and gas sector has seen such hard times over recent years.

“It would appear that we could have seen the peak of distress in that sector, which is obviously welcome.

“Sectors with the biggest year-on-year rises in ‘significant’ instances of distress, the early warning signs of problems, included transportation and logistics by 46%, media that saw rises of 30% and wholesaling climbed by 32%.”

Improvements in the oil and gas sector may be partly responsible for a fall in distress reports.