A new report shows that, for the second consecutive year, Northamptonshire’s 100 largest privately owned businesses are continuing to grow both turnover and profit by more than 10%.
Launched in 2013, the Northamptonshire Ltd study is conducted annually by financial and business advisers Grant Thornton to provide an in-depth financial analysis of the performance of the 100 largest companies which are both privately owned and managed within Northamptonshire.
A new report shows that, for the second consecutive year, Northamptonshire’s 100 largest privately owned businesses are continuing to grow both turnover and profit by more than 10%.
Launched in 2013, the Northamptonshire Ltd study is conducted annually by financial and business advisers Grant Thornton to provide an in-depth financial analysis of the performance of the 100 largest companies which are both privately owned and managed within Northamptonshire. The study was based on the latest company accounts available up to April 2014.
Kevin Gale, practice leader for Grant Thornton, comments: “The results last year showed a good performance by the Top 100 companies but to repeat the same level of growth for a second year is extremely impressive and highlights the continued pace at which the county is growing.
“The companies included in the study has evolved with 17 new entrants this year. This is due to an element of M&A activity which, in some cases, has propelled businesses into the top 100 listing but there has also been good organic growth.”
Key findings
The findings, unveiled to more than 100 Northamptonshire business leaders and professionals at a breakfast event hosted by Grant Thornton, showed that combined turnover of the 100 companies increased by a healthy 10% from £5.37bn to £5.9bn, well in excess of overall GDP growth.
Earnings before interest, tax, depreciation and amortisation (EBITDA) also grew by a similar amount to £461 million while employment amongst the 100 companies grew by 4.6% to 35,277 people.
The report also indicates that business borrowing is rising and interest payable rose significantly by 21.6% from £88 million to £104 million suggesting an increased access to debt and finance.
Presenting the findings, John Corbishley, director at Grant Thornton’s Northampton office, said: “This year’s Northamptonshire Limited results show that the positive trend has continued with some really impressive, stand-out results. The continuing growth of Northamptonshire’s largest 100 businesses highlights a robust, well-managed group of privately-owned businesses that are leading the way for the county.”
Sector analysis
The Northamptonshire Ltd report also analysed a breakdown of the financial data by sector. All nine sectors that make up the report grew turnover with the exception of Property & Construction. Significant double digit growth was demonstrated by Automotive & Motor Retail (10.7%), Food, Drink & Leisure (13.9%), Freight & Logistics (21.7%), Retail & Wholesale (18.5%), and Technology (11.2%) sectors.
Sector profitability presents a slightly more mixed picture with four of the sectors (Business Support Services, Industrial Manufacturing, Property & Construction and Technology) showing a fall in EBITDA. The strongest performers and powerhouses behind overall growth in profitability were Food, Drink & Leisure, Freight & Logistics and Healthcare.
To a certain extent each sector is influenced by the fortunes of individual companies where acquisitions or other investment appears to have played a major role. Only six of the top 100 companies were lossmaking.
Further analysis
The companies represented within Northamptonshire Ltd include 21 ‘large’ companies (turnover greater than £50m and more than 250 employees) and 79 SMEs with analysis of these two groups highlighted some interesting findings.
The 21 large companies account for 75% of Northamptonshire Ltd’s turnover and their turnover growth is nearly 50% higher than in SME’s. The difference in EBITDA is even more exaggerated as SME profitability has fallen slightly despite a 7.0% top line increase.
Mike Hughes, advisory director at Grant Thornton, adds: “These are really positive messages for the local business economy which are supported by overall development in the region and ambitious plans for the future in terms of infrastructure and investment.
“There are however, two potential notes of caution which are important to highlight. The first is the rise in average salaries – whilst turnover and profits have grown in excess of overall employment costs, the average remuneration increased 2.5% in the last 12 months (1.1% in 2013). Employers will always remain keen to retain and attract the right talent but if this rising trend continues it may have an impact on future profitability.
“The second is the underlying trend within the SME businesses in our report who’s growth may be being held back by lack of access to debt funding. Whilst borrowing is up overall, it appears that the majority of this new money has been secured by the larger companies. The SME’s are the lifeblood of the local business economy, therefore increased access to finance may be needed to allow them to deliver improved trading and invest for future growth.”
Opinion survey
A survey was conducted during the Northamptonshire Limited breakfast event on Wednesday 21 May and the findings highlighted that over 70% of the respondents anticipated greater than 10% revenue growth in the next 12 months, although 11% of those had no formal business plan in place. The greatest constraint to growth is availability of skilled staff with 52% stating this as their biggest issue followed by market competition (33%). 72% of the Northamptonshire Limited audience see that their biggest growth opportunity will come from an increase in share of the UK market with innovation/new technology coming in at 18%.
Finally, when asked how much they expect average wages to increase in the year ahead, 72% responded with 1-3%, which is in line with the rate of increase this year and 21% stated they think it will be higher (>3%).