Quarter of firms on brink of failure

Plimsoll's annual financial health check of the top 352 companies in the UK Burglar & Intruder Alarm Systems industry reveals that supply is currently outstripping demand. Alarmingly, 48 per cent of companies rated have now deteriorated in overall financial strength from last year's ratings and 44 companies are experiencing their second year with a 'Danger' rating. A total of 86 companies in the industry are rated in financial 'danger'.

David Pattison, Senior Analyst said: "The 'Danger' rating is given to companies whose financial performance is suffering. Their balance sheets are now straining under the heavy debts and this, combined with companies already losing money, could be a fatal mix."

A total of 18 of the UK Top 50 Burglar & Intruder Alarm Systems companies now have this rating. "It seems almost a quarter of the industry is making a loss," says Plimsoll. Average profit margins last year were 4 per cent. For those companies where debts have been accelerating, interest payments are becoming a considerable burden. A record number of companies made a loss.

  Ten of the UK Top 50 Burglar & Intruder Alarm Systems companies are currently loss making. Just over a third of companies failed to grow.

Average growth was 5.3 per cent last year with only 55 companies increasing sales at a rate greater than inflation.

Consolidation will be essential to the future of the market, said Pattison: "Some companies' debts are so high that even with five or ten years of generous profitability, they still would not be able to make a dent in their debts. That is why I see acquisitions as simply inevitable."

19 companies are named in the analysis as the companies tipped to prosper.

Plimsoll Portfolio Analysis: Burglar & Intruder Alarm Systems -3rd Edition 2003, £305. Tel 01642 626400 or visit www.plimsoll.co.uk Security Installer readers will receive a 5 per cent discount if mentioning this article upon ordering.