All doom and no profits as at-risk technology sectors unveiled by EY
The Software and Computer Services sector has consistently issued the highest number of profit warnings in East Anglia, according to a report into the last 20 years of profit warnings in the region, released by EY.
In analysis spanning two decades, EY found the third consecutive profit warning to be a ‘bruising or even a knock-out blow’ for listed businesses in the region.
This phenomenon affected companies experiencing a major restructuring event, including an administration, distressed sale, CVA or debt restructure within a year of issuing three or more profit warnings.
EY has reported on listed company profit warnings since 1999, covering the impact of events such as the dot.com crash, 9/11 and the financial crisis. Over the last two decades, East Anglia saw a peak in the number of warnings issued in a year in 2001 (19) and low in 1999 (three).
Locally, the sectors that issued the highest number of profit warnings over the last two decades (1,Jan 1999 – 31,July 2019) were FTSE Software and Computer Services (40), FTSE Electronic & Electrical Equipment (34) and Household Goods & Home Construction (21).
However, in a slight shift, in the last 10 years (2009-2019), Electronic & Electrical Equipment (16) has claimed top spot, beating Software & Computer Services into second place (15) with third place taken by Technology Hardware & Equipment (13).
Stuart Wilkinson, office managing partner at EY in Cambridge said: “When EY started tracking UK profit warnings in 1999, just 13 per cent of households had internet access, the first smart phone was still a decade away and fax machines still had a prominent place in our offices.
“In the last two decades we’ve seen radical changes not only in technology, but also our economy and capital markets. In 2019 news travels fast, and capital also moves with increasing pace.
“Combined with a heightened level of uncertainty, this has significantly changed the speed of stakeholder response to profit warnings.”
Regionally, the number of PLCs issuing profit warnings in the last 20 years stands at 207, with a near even split between the two decades.