THE East Midlands is home to many major UK companies – among them Boots, Experian and Rolls-Royce. Now, major research has uncovered the top 200 fastest-growing companies in the East Midlands.
The work, carried out by accountants Grant Thornton and the CBI, has studied the levels of profits made by companies over the previous three years of their accounts.
While the period was one during which business lived with a great deal of uncertainty, dark clouds hovering from the Eurozone and a lack of business confidence, the findings tell a different story.
The results show there are significant numbers of businesses based in the East Midlands that are delivering exceptional sustained growth across a broad range of sectors but with a strong emphasis on manufacturing and services.
According to Grant Thornton partner Phil Sayers and CBI regional director Lucy Haynes, companies have had to work hard for this growth and have not achieved it by standing still, "whether this has been a relentless focus on cost control or, for the majority, a combination of this coupled with some soul-searching and a sales driven strategy".
Mr Sayers continued: "Many companies have focussed on their existing strengths, reducing non-core activities, while others have proactively sought new markets, whether at home or abroad, where they can apply their specialist skills to earn good margins and generate profitable growth.
"What is common among all of those companies is a sense of resilience, adaptability and innovation.
"All of this positions the East Midlands in a positive way for contributing to the national economy and playing our part in driving business growth and national prosperity."
The survey is a detailed analysis of the financial performance of the top 200 fastest-growing companies, providing a snapshot of the health of the East Midlands economy.
Two Nottingham businesses, manufacturer of electrical products SMS Electronics, of Beeston, and gearings and transmissions specialists Romax Technology, in University Boulevard, feature in the top ten with profit growth of 122% a year and 103% a year respectively
The research focuses on those companies managed from the East Midlands which have also delivered sustained profits before tax and exceptional items, ranking them based on their profit growth over a three-year period.
Mr Sayers said: "It is impressive enough that there are 200 companies in the East Midlands which have delivered sustained profit growth over the past three years of challenging economic conditions but when you consider that the top ten companies in our survey all achieved a compound annual rate of growth of over 100%, this is remarkable and demonstrates the strength of our regional economy."
In the three-year period looked at by Grant Thornton, the typical East Midlands top 200 companies increased profits at a rate of 43.8% a year to nearly £2.25m.
Ten companies increased their profits by more than 100% a year, including the top company, 99p Stores, which had annual growth of more than 250%.
Grant Thornton and the CBI report that many companies have made changes as a result of the economic cycle in order to maintain margin and grow profits. Many achieved growth through a combination of increased sales and an improvement in margins. The increase in margins is a combination of careful cost management, better asset management and a focus on greater value-added activities.
"Some companies have held their nerve and invested in a greater sales capability in a bid to gain market share," said Mr Sayers. "Others have improved efficiencies in their business through identifying areas where assets were being under-utilised and/or withdrawing from less profitable markets."
There are more than 160 small and medium-sized business in the list, which supports the CBI's view that SMEs will be the key to a sustainable economic recovery. These businesses have employed an extra 1,400 people and accounted for an increase in profits over £120m to £200m.
"These companies have provided both jobs and wealth in their local communities," said Ms Haynes.
The other businesses range from listed plcs to large owner-managed groups and the seven largest employ more than 24,000 between them.
The top 200 employ 48,700 between them and have created 3,800 net new jobs over the past three years, increasing their workforce at about 3% a year.
The average salary for employees has risen by nearly 10 per cent from £17,960 to £19,690. But the research also discovered that the average director's pay, excluding pension contribution, actually fell by 17.7% from £128,000 to £105,000.
Two sectors dominate the league table – manufacturing, with 67 companies, and services, with 50. Nevertheless, research points to a good spread of sectors in the league table.
The regional diversity is reflected in the industries, ranging from cake-makers to engineering consultants.
The research shows that a quarter of the companies have paid off at least half their debt over the three-year period, while a further 17% have more than doubled their debt level.
It also shows that all the companies achieved a rate of growth of at least 13% for the past three years. A typical margin for a top 200 East Midlands company rose from 5.7% to 10.1%.
Ms Haynes said: "It is clear the list is not simply about start-up businesses. On the contrary, it is comprised mostly of established small and medium-sized businesses that are considered by the CBI and others to be the real drivers of economic growth and the means by which the country will lift itself and return to more buoyant economic times."
Not all companies grew their turnover. For 16%, it actually fell. And a number of other delivered broadly flat results.
An analysis of the top 200 shows that nearly two out of five companies disclose export turnover and this has, on average, grown at about the same rate as overall turnover.
The biggest export sector is manufacturing and about three out five of the manufacturing companies in the league table declared some level of export turnover.
Of those manufacturing companies that did disclose exports, on average, they are generating 74% of their overall sales from the export market, up from 54% in the opening period.