Grant Thornton Essex Limited report reveals year of growth for county’s leading firms
- Credit: Archant
Leading businesses in Essex have achieved a combined 4.2% increase in turnover in the past year, accompanied by a substantial rise in profits and employment, a newly-published report reveals.
The annual Essex Limited study, compiled by financial and business advisers Grant Thornton and Essex law firm Birkett Long. provides an in-depth financial analysis of the 100 largest companies which are both owned and managed within Essex.
This year’s findings, unveiled to more than 100 Essex business leaders at a breakfast event hosted by Grant Thornton and Birkett Long at the Stock Brook Country Club near Billericay, showed that total turnover for Essex Limited’s constituent members grew by 4.2% to £8.5bn.
Operating profit increased by an impressive 21.2% to £417m and profit before tax rose by 14.8% to £364m.
Property & Construction, the largest sector by turnover and operating profit, remained the standout performer, with the fastest sales growth of 10.1%, to £2.91bn, and the largest rise in operating profit, up 53.4% to £195m.
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Six of the seven sectors grew turnover with Automotive coming in behind Property & Construction to deliver a robust 9.7% increase. Only the Services sector saw turnover levels fall, reporting a marginal 0.2% decrease.
Five of the seven sectors grew operating profit with Automotive following Property & Construction’s lead to deliver a 41.4% increase. Healthcare and Manufacturing both saw operating profit fall by 21.8% and 27.6% respectively.
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Employment levels for the 100 companies rose by 5.2% to 50,051 employees, an increase of 3,142 jobs. Healthcare remained the largest employer with 29.9% of total staff, while Transport saw the biggest increase in employee numbers, up 11.8%
The average salary of those employed by Essex Limited’s 100 companies fell by 3% to £25,764, below the national average of £28,028, skewed by relatively low wages in the Healthcare and Retail & Wholesale sectors and by significant changes in the composition of companies making up the Services sector.
Property & Construction remained the highest paid sector with an annual average wage of £40,077, although this was 1.4% down on the previous year. The biggest increase in average salary was delivered by Retail & Wholesale, up 4.6% to £18,747.
Debt levels increased slightly by 1.4% while gearing, a measure of the extent to which a company is funded by debt, reduced from 68% to 62%, continuing the downward trend seen over recent years, although at a slower pace than previously.
The Essex Limited 2016 study was based on the latest company accounts available and so relates mainly to a period before the UK’s historic vote to leave the European Union.
Paul Dearsley of Grant Thornton’s Chelmsford office said: “Following the flat turnover reported in Essex Limited 2014, it was questionable whether the strong growth seen by Essex Limited 2015 was sustainable.
“These results show the resounding answer is ‘yes’, with a similar increase in turnover and impressive growth in operating profits of more than one fifth – a huge improvement on the 1.4% rate seen in 2015.
“Confidence appears steady, underlined by a healthy level of gearing, a marginal rise in asset investment and a strong increase in employment,” he added.
“The surprise headline has been the unexpected fall in average wages, particularly given the minimum wage increase and the continued battle to recruit talent. Perhaps we should expect an increase in pay to be reported in our 2017 Essex Limited report.”
The Essex Limited report also includes a “Growth 50” index, looking at the 50 highest growth companies outside the top 100 list by turnover.
This showed the average rate of turnover growth for the 50 identified companies fell to 14.8%, from 35.4% the previous year, demonstrating that Essex’s smaller growing companies have found it harder to achieve high turnover growth. However, total turnover levels were still £121m higher than for the same companies last year, at £937m.
The picture for operating profits was much stronger with the combined total for the Growth 50 companies up 2.7% to £68.7m. Meanwhile, average salaries for the 50 constituent members were 7.4% higher than the top 100 at £27,689.
Stephen Avila, associate solicitor at Birkett Long, said: “Of course much uncertainty remains in our economy following the Brexit vote – which Essex decisively chose to back.
“The impact will take time to flow through with many companies’ 2016 financial year end statements little affected. It is likely we will have to wait until the Essex Limited 2018 report to see what impact the first post-Brexit year has had.”
The Essex Limited launch event also saw an expert panel, including Paul Nelson of Barclays Corporate Banking, Nigel Pye, professor of business and management at the University of Essex, John Stubbings of the Woodland Group and Steve Haslam of TLC Inns (which owns the Grand Central restaurant chain), share their business insights and take questions from delegates.