Fragile Australian firms

More and more firms listed on Australia's stock exchange faced "serious financial uncertainty" last year, an audit by the Certified Practising Accountants (CPA) showed Wednesday.

CPA Chief Executive Alex Malley said findings that nearly a third of firms were at risk - more than during the global financial crisis - were extraordinary and a "sobering reminder of the fragility of the Australian economy and the challenges many businesses face."

The report was based on an audit of about 98 percent of companies listed on the Australian Securities Exchange (ASX) from 2005 to last year.

The worst still ahead?

"We've been talking about the potential impacts of the slowdown in China, the strength of the Australian dollar and the effects of the tapering mining boom on the economy for some time," Malley said in a statement.

"Now this report shows these economic factors are being felt across the market and are putting almost a third of ASX-listed companies at risk of financial catastrophe.

Going-concern warnings rose particularly in the energy and mining sectors, the report noted, where 40 percent of firms judged to be at risk. A going concern is a business able to operate for the foreseeable future. Also appearing fragile were companies in health care and utility sectors, while financial institutions were "notably strong" and reported the lowest level of warnings.

hg/cjc (AFP, CPA)