LONDON: One in five UK PR firms is in financial peril, with increasing debts and low margins, according to a study by financial analysts Plimsoll Publishing.
The study claims that more than 200 PR agencies are in the "danger zone in terms of financial ratings, which could lead to many being forced to close.
The research, produced according to the top 1,000 UK consultancies' mandatory filings to Companies House, rates agencies from "strong to "danger, based on their financial standing during the past four years.
It takes into account sales growth, trading stability, profitability, working capital, gearing (the ratio of debt to company value), and liquidity.
Nearly 400 companies were awarded a "strong rating, while 117 received a "good rating, 127 "mediocre, and 163 "caution."
The study, to be published next month, shows Harrison Cowley, Regester Larkin and City PR firms Cardew & Co. and Merlin Financial are among those with a "strong rating.
Plimsoll senior analyst David Pattison refused to name the firms he rated as being in danger.
"The PR industry has too many companies chasing too little market, said Pattison. "The companies (rated as danger) have been in decline for many years, with a combination of increasing debts and low margins."
The ratings are calculated annually according to Plimsoll's own model, which the company claims has a predictive power to assess commercial aptitude of every UK PR firm individually.