Growth rate slows as firms rise to underlying challenges

Oct 11, 2018

Now in its sixth year, the Buckinghamshire Limited study, conducted by financial and business advisers Grant Thornton, analyses the performance of the 100 largest, privately owned companies in the county to provide a recognised benchmark of the overall health of the local economy.

Signs of a slowdown are starting to emerge as a result of wider economic and political uncertainty. But the 2018 report findings, unveiled to local businesses at a breakfast event hosted by Grant Thornton, revealed that combined turnover of the top 100 companies increased by 3% from £6.65 billion to £6.84 billion.

Profits (measured by earnings before interest, tax, depreciation and amortisation) grew by 12.3% from £502 million to £564 million. However performance across the top 100 was more patchy than in previous years – some businesses are thriving while others face more challenging conditions.

Employment in the county is also on the up with the combined workforce increasing 3.9% to 42,200 people. This was accompanied by a boost in wages with average salaries increasing 4.4% to £29,231, partly driven by changes to the minimum wage.

  • Pictured: Grant Thornton director Mike Hughes.

Presenting the findings to around 100 businesspeople at Stadium MK, Grant Thornton director Mike Hughes said: “Buckinghamshire businesses have posted another strong set of results as they continue the positive growth we have seen during the previous five years, despite wider uncertainty over our future relationship with the EU and the fall in the value of sterling.

“However, the county isn’t completely immune to the current turbulence facing the UK with underlying challenges starting to come to the forefront. While it appears these are more a sign of a broader slowdown in growth rather than a wholesale reversal of fortunes, firms should not rest on their laurels and should start to look at ways of capitalising on the new opportunities this wider change may bring.”

The 2018 study also revealed that turnover growth was broadly consistent across companies of different sizes. The county’s largest businesses (turnover greater than £50 million) saw a 2.4% increase with SMEs performing slightly better with a 4.4% rise.

While profit growth for larger businesses amounted to 13.3%, if the exceptional performances of two large companies in the top 100 are excluded, this falls to just 2%, Mr Hughes said. In contrast, the 10% increase in profits for SMEs shows they have had a particularly strong year which bodes well for the future financial health of the county.

Both large and small businesses have also invested significantly in fixed assets which suggests they remain optimistic about their longer term prospects.

The Buckinghamshire Limited report also analyses the performance of the top 100 companies by sector. Six out of nine sectors grew turnover and only five out of ten grew EBITDA, highlighting the inconsistent picture across the board.

Grant Thornton director Giles Mullins, who co-authored the report, said: “The mixed performance seen across different sectors is perhaps not surprising with Brexit and the fall in the value of the pound inevitability impacting some businesses more than others.

“However, what is clear from the standout individual performances is that opportunities still exist to grow turnover, profitability and shareholder value.

“Buckinghamshire is also set for significant investment in its future as it sits at the centre of Oxford – MK – Cambridge Arc which is a focal point for government growth policy. Combined with investment in a new University based in Milton Keynes and a bid for an Institute of Technology at Bletchley, there is a clear thread of developing a future fit workforce which will be central to the success of the county.”

The breakfast briefing also heard from guest speaker Martin Tugwell, programme director of England’s Economic Heartland, on the Oxford – MK – Cambridge corridor plans. 

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