Yorkshire mid-market companies see £500m increase in profits

Yorkshire’s mid-market companies saw a £500m increase in profits last year, according to a new report.

The BDO Yorkshire Report 2018 revealed an 85% rise in earnings after tax at the region’s 200 mid-market businesses.

BDO LLP, the accountancy and business advisory firm, put this growth down to ‘operational effectiveness and commercial management.’

Mark Langford, partner at BDO Leeds, said: “Lean is the buzzword among our clients.”

The profit performance was good news for mid-market shareholders, contributing to a 25% increase in dividends to £600m over the period.

Furthermore, analysis of the top 250 companies, which includes the mid-market and the 50 largest firms, shows they comprise £7.2bn in cash reserves, an increase of 51% on the previous year.

Mr Langford added: “This is a sign of strength, but it is also a sign of uncertainty. There is lots of ‘dry powder’ money out there, in private equity funds, institutions and banks, waiting to be invested.

“We believe that uncertainty in the national and international landscape is delaying decisions in boardrooms.”

Business investment is seen as key for increasing productivity and ensuring long-term prosperity.

Mr Langford highlighted that the 15% fall in mergers and acquisitions activity over the last year is also another sign of the cautious outlook.

The volume of deals fell to 467 from 547, according to the report.

This figure was also reflected in the overall revenue figures, which remain flat at £107bn for the top-250 list.

Mr Langford commented: “Companies aren’t going for growth for the sake it. They have concentrated on operations instead. They are being as lean as possible. They are in a holding pattern.”

International trade, however, saw significant growth as overseas turnover increased by 18% to £10.5bn among the 250 companies. The weak pound has helped make British goods and services more competitive abroad.

It has also supported the Yorkshire 250 constituents with overseas operations when they exchange foreign currencies.

Manufacturing is the standout growth sector, helped again by the weak pound driving up increases in revenue and profit.

Retail was also robust with more sector winners than losers, which BDO attributed to a focus on value and brand.

The leisure sector also experienced growth, boosted in a large part by Hull City AFC’s year in the Premier League.

Households saw average salaries rise by approximately 5%.

Mr Langford said: “The Yorkshire Report 2018 shows the enduring strength and importance of the region’s mid-market in driving wealth and prosperity. They are creating value for shareholders and employing more than 150,000 people across Yorkshire and beyond.”

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