What a difference a year makes!
In the past 12 months we have seen a referendum vote to leave the European Union, a change of Prime Minister, a challenge to the opposition leader, a new President of the US (arriving straight from his reality TV show!) and Leeds United making a meteoric rise up the championship table but excruciatingly fall out of the FA cup to a team from the Conference.
It is therefore with some trepidation that I once again comment on the results of the Yorkshire Post Top 100 SMEs survey and offer my thoughts on the year ahead. My over-riding comment last year was that I expected the companies in our region who had performed well in 2015 to continue to do so in 2016. Many companies had adjusted over the last few years to the new economic climate and there was a general sense of cautious optimism at the start of 2016.
The results of this year’s survey seem to bear this out. All of our regions and all of the sectors within those regions appear to have done better in 2016 than the previous year. Furthermore, our top SMEs in Yorkshire appear to be beating the national averages where growth in 2016 slowed to 2%. There is some commonality with the national picture in that significant growth has been driven by the service sector.
So a pleasing picture for our region as we enter a new year and further uncertain times. However, the British Chamber of Commerce, which represents many of our SME businesses, is predicting growth of just 1.1% in 2017. There appears to be increasing uncertainty weighing on investment expectations and financial confidence. We certainly hear this from some of our SME clients but we probably hear as many talking very positively about the year ahead. I do think it is fair to say that the lower value of Sterling and rising inflationary pressures are now impacting on latest financial performance. I do believe expectations on export business arising from the lower value of Sterling following Brexit, were overstated.
There are a lot of positives coming from the survey. Of course, there are changes in the make-up of the Top 100 companies year on year, and therefore a direct comparison between the years can only give a general indication of regional performance. The companies entering the list this year – of which there were over 40 – came into the list largely because of significant increases in reported profitability in 2016. The value of Sterling in 2015/16 allowed companies to import at lower than predicted prices. This benefit for importers will of course have reversed entirely in the last 7 months.
On the other hand, almost 50% of those companies no longer appearing in the list have been excluded because they are now part of larger groups – the transactional world of corporate finance has clearly been busy of late!
Included within the Top 100 group of SMEs this year (measured by profitability) are 41 manufacturing businesses, five retail businesses, 46 service businesses and eight wholesale businesses. Similar to the national position, the service sector showed good growth with a 36% increase in turnover and 60% growth in profits. The wholesale sector showed very flat results in terms of growth and employee numbers but still showed a credible increase in profitability.
Special mention to the Barnsley area of our region; nine of the companies in the list come from that part of our county, more than any other town/city, other than Leeds. The Barnsley area includes some great companies which performed extremely well, including Haywood & Padgett Limited, a family run baker producing over 4.5 million scones each week! Also special mention to another Barnsley company, Bartec Auto ID Ltd which is a world leader in the manufacture of vehicle tyre pressure monitoring tools and related products.
Well done to all companies making the Top 100 this year. Our region depends on the continued success of our SME businesses and they certainly didn’t let us down in 2016.