New Menace to the UK Economy - Zombie Companies

NEWCASTLE, England, July 8, 2010 - There are 77,828 companies in the UK economy that are classed as "Zombie"
businesses. These companies, have seen their performance deteriorate to such
as extent that they now exist merely to pay off their debts and survive.

David Pattison, chief analysts at Plimsoll, explains, "Every corner of
the UK economy is blighted by Zombie companies. They are posting growing
losses and, despite the freeze in the credit markets, increasing their debts.
A Zombie company typically has debts of 51% of their turnover - they merely
exist to service their out of control liabilities. Many are also using their
suppliers to finance their growing losses, by taking an average of 149 days
to pay their bills"

Pattison also explains other major problems these Zombies are facing,
"They are falling behind the rest in their respective markets. They are
extremely unproductive and their cost base is just too high. As a result,
investment plans have been mothballed meaning their aging assets are further
restricting their ability to remain competitive".

So can these Zombies be saved? Pattison is clear that not all will
survive and those that do have a lot of pain ahead, "The first thing they
need to do is sort out their immediate finances. They have to convince their
banks and suppliers to keep supporting them or not pull the plug. If they can
pull that off then the hard work really starts. They urgently need to stem
their losses and control costs. The longer it takes them to address these
issues, the harder and less likely it is they will ever fix them".

However, Pattison points to some attractive takeover targets hidden among
the Zombies, "Canny investors are seeing an opportunity to pick up a bargain.
Some of these companies, stuck in a zombie state because of their balance
sheet, have lots of potential for new owners to turn it around. Across the
whole of the UK economy we have flagged 40,614 such companies".

And for those unable to attract new buyers Pattison says, "Most have
simply had their day and a combination of aging assets, rising losses and
increasing debts mean they are unlikely to attract a suitor before the
receivers are called. They will be forced back into negotiations with their
lenders to buy more time but their future doesn't look good".

Plimsoll is a global market analysis provider producing specific reports
on over 1,500 different markets in the UK economy. We specialise in
benchmarking reports, acquisition prospecting and company valuations. We also
produce market reports for industries based in France, Japan, Spain and
Italy. Visit www.plimsoll.co.uk for more information.

          Look out for Plimsoll updates on LinkedIn and Twitter- coming
                                    soon!

    Christopher Evans
    Plimsoll Publishing Ltd
    Scotswood House
    Teesdale South
    Stockton
    TS17 6SB
    Tel: +44-(0)1642-626400
    Fax: +44-(0)1642-626410
    Email: c.evans@plimsoll.co.uk

Web: www.plimsoll.co.uk

Christopher Evans, Plimsoll Publishing Ltd, Scotswood House, Teesdale South, Stockton, TS17 6SB, Tel: +44-(0)1642-626400, Fax: +44-(0)1642-626410, Email: c.evans at plimsoll.co.uk