Member Article

New anaysis reveals 52% sales increase across North West’s private enterprises

A detailed analysis of the North West’s leading private businesses has revealed they contributed £10.5 billion to the regional economy over the last three years, a 52% increase since 2010.

The figures, contained in North West Ltd, a new report from business advisors Grant Thornton LLP, highlight the sustained high performance of the region’s private businesses in the post-recessionary era. Profits were up by 65% from £241 million to £398 million over the period.

The data is drawn from the top 100 North West ­ businesses, as defined by turnover growth over three consecutive years. The vast majority of these (76) are private businesses, but the results include sales and profits from13 PLCs.

“We looked to see sustained growth as opposed to encouraging blips,” said Carl Williams, managing partner of Grant Thornton in the North West. “The picture that emerges from the top 100 suggests a group of lean and agile businesses getting strategy and delivery right.

“These are firms that understand their markets, with decision makers who have adapted well to changing circumstances. Typically, the big calls are focused on issues such as investment in operations, product and process innovation, customer behaviours, acquisitions as well as success in new domestic and overseas markets.”

The high flyers include Fircroft, a global recruitment firm focused on the oil and gas industry. From a base in Warrington a team led by managing director Johnathan Johnson has driven growth by expanding its international network to cover 45 countries, including a substantial presence in Iraq. Fircroft is closing in on the milestone of £1 billion sales.

Product innovation, meanwhile has seen Capenhurst-based EA Technology more than doubled its turnover and profits in the last five years, on the back of investment in its product range. Other stellar performers highlighted included retailer The Fragrance Shop and Billington, the Liverpool-headquartered group which has manufacturing businesses in the food and agriculture sectors.

The Grant Thornton study reveals the value of the leading North West businesses has increased significantly. Overall the net asset position improved by 72% from £408 million in 2010 to £701 million in 2012. The figures demonstrate that the improved trading performance has been retained in the businesses, increasing the strength of the balance sheet, as opposed to paid out in dividends.

Gearing (or total borrowings over equity) fell from 269% in 2010 to 176% in 2012 reflecting the overall improvement in financial performance that has translated into cash/assets. The combination of utilising profits to fund growth and paying down existing debt has had a substantial impact on reducing gearing levels

“The reality that the middle market in the UK is actually an economic powerhouse is reflected in the stunning performance of the businesses featured in North West Ltd,” said Carl Williams.

“Many businesses have shown innovation through a mix of product development and the penetration of new markets to increase competitive advantage and to offer greater diversity. Whilst a number of companies featured in our study have been supported by additional bank borrowings, overall gearing levels have fallen significantly.

“On the whole, businesses have financed growth through retained profits and shareholder investment. In addition it is clear that a robust strategy and a disciplined approach to managing costs and maintaining margins has been evident in sustaining the growth in profits and cash generation.”

This was posted in Bdaily's Members' News section by Simon Malia .