By Daniel Hunter
Yorkshire’s top 150 companies have continued their post-recession revival having increased revenues and profits for the first time since 2009, according to the Yorkshire Report 2012, released today (Monday) by accountancy and business advisory firm BDO LLP in Leeds.
The top 150 saw net profits almost double to £2.25bn from £1.25bn last year, and £0.3bn the year previous. Group revenue was up by five per cent to £83.8bn.
“This has been a solid year of financial progress for the top 150, which will be welcomed by businesses across the region," Ian Beaumont, partner and head of BDO in Leeds, said.
"Companies now seem to be on much firmer footing and the challenge is now to create a springboard for further growth.”
The Yorkshire Report 2012, now in its sixth year, compiles the latest published accounts from Yorkshire’s largest top 150 businesses based on revenue, creating a barometer of economic health for the region.
Of the 150 companies analysed, 117 made a profit — another positive uplift from the 105 last year. The retail sector was the largest contributor to both revenue and profits. Food retailers Morrisons and Asda/Walmart, which account for 44 per cent of the Group revenue, saw revenues rise 7 per cent and 4 per cent respectively.
Newcomers to the list include Siemens VAI Metals Technologies, which moved to Sheffield from Dorset in 2010, and metal processors ABS Industrial Resources. Having increased turnover by 63 per cent following its restructure in 2009, Bradford-based BorgWarner has also entered the top 150.
Yorkshire’s business leaders have taken the opportunity to continue to stabilise bank debt in the last 12 months, with a net debt of £12.8bn now held by the top 150 (excluding financial institutions) - slightly down on last year’s £13bn.
Banking profits and paying down debt reduced Group gearing, a term to describe the level of a company’s net debt compared with its equity capital, which fell from 62 per cent to 55 per cent (excluding financial institutions).
The more stable economic and fiscal environment has also started to be reflected in recruitment, with the top 150’s workforce increasing to 469,000 from 460,000 last year.
But BDO’s Ian Beaumont says that cautious optimism still prevails with some of the largest companies in the region.
“The business landscape has been rocked by the recession but Yorkshire businesses have proved resilient and innovative," he said.
"They have worked extremely hard over the last few years to drive down costs and push profits up, and a cautious approach to debt and gearing ratios is to be expected.
“However, we have witnessed a significant drop in business spending. Investment in property, plant and machinery has fallen by 20 per cent to £2.4bn, which raises concerns about future growth potential. Without increased investment, businesses may struggle to compete on the international stage or take advantage of growth opportunities.”
The BDO report finds that West Yorkshire is home to more than half of the largest companies in the region, followed by South Yorkshire (21 per cent), North Yorkshire (14 per cent) and East Yorkshire (11 per cent).
Leeds is the most represented city with 21 per cent of companies. Sheffield represents 12 per cent and Bradford ten per cent, whilst Doncaster is the most popular town being home to seven of the top 150, including DFS, LA Fitness and construction company Lakeside 1.
Looking further away from home and the region performed well in terms of exports, with the value of goods exported to the EU rising by more than a third to £4.4bn, compared to £3.3bn last year. But the total level of revenues generated outside domestic markets only represents 11 per cent of the top 150’s revenue, and the report showed no evidence of increasing exports to key emerging markets including Asia, proving that businesses need to be doing more to exploit high growth BRIC economies and opportunities.
“The gap is widening between businesses that can adapt and react to new markets and opportunities and those that continue to chase their traditional base and fight over static revenues," Ian Beaumont, partner and head of BDO in Leeds, commented.
"Overall, however, this year’s Yorkshire Report reveals that a hat-trick of increased profits, more balanced debt levels and an eye on future growth is an encouraging score for the future of the region.”
In BDO’s Yorkshire Report 2012, Paul Fullerton, ex-Bank of England Agent for Yorkshire and the Humber, gives further insight into what he describes as a region ‘bouncing back’. Liz Richard’s, group finance director at Callcredit Group, provides the finance director’s view on the top 150’s performance and prospects.
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