Essex businesses well placed for future growth with confidence rising, says report

Essex businesses have put in another solid performance over the last 12 months, driven by a particularly buoyant Property & Construction sector, with a significant rise in employment underlining increased confidence levels across the county, according to a new report published today.

Now in its fourth year, the Essex Limited study, conducted by financial and business advisers Grant Thornton and law firm Birkett Long, provides an in-depth financial analysis of the county’s 100 largest companies which are both owned and managed within Essex.

The findings of the 2014 report, unveiled to more than 140 Essex business leaders at a breakfast event hosted by Grant Thornton and Birkett Long, showed that although combined turnover for Essex Limited’s 100 constituent members remained broadly flat at £7.0bn, operating profits grew by a substantial 43.8% to £228m.

Property & Construction, the largest sector by turnover, led the way with sales growth of 13.6% to £1,992m and an impressive 192% increase in operating profits to £103m. Services also notched up a substantial 72% rise in profits to £49.2m.

The ten largest businesses by turnover, dominated by six companies in the Property & Construction sector, contributed 28% of Essex Limited’s total sales and 33% of operating profit.

Total employment levels also increased by 5.1% to 47,278 employees with the increase of 2,280 people broadly split between Property & Construction and Healthcare. Despite the increased levels of employment average wages remained virtually static at £23,504. This compares to an average salary for the county as a whole of £24,973 - higher due to the large proportion of people who commute and work in London and so receive higher salaries. 

The Essex Limited study was based on the latest company accounts available and so relates mainly to a period when the UK had emerged from a sustained recession and GDP was back in positive territory.

Encouragingly, debt levels and gearing, a measure of the extent to which a company is funded by debt, have improved significantly over the last year with total debt down 18% to £1.3bn and gearing moving from 102% to a much healthier 84%.

Speaking at the results event, James Brown of Grant Thornton said: “Essex Limited, which represents the county’s mid-sized businesses, has emerged from one of the toughest and longest periods of economic downturn ever more experienced, stronger and resilient. In particular, it is welcome to see a sizeable reduction in debt which has reduced gearing to a more sensible level, with companies now better positioned to self-fund their future growth.

“Performance across the county’s sectors has varied but the major reversal in fortunes of the Property & Construction sector as against recent years, taking advantage of increased opportunities in London, has been a strong driving force. Companies from other sectors connected to Property & Construction have also generally done well.”

Head of Corporate and Commercial at Birkett Long, added: “With an improving UK economy and increased opportunities abroad hopefully following for the county’s exporters, the prospects for Essex Limited are positive, especially considering the resourceful and determined nature of the 100 businesses represented in the report.”

The Essex Limited report also analysed a breakdown of the financial data by sector. Although total sales remained broadly static, five of the seven sectors grew turnover with Motor Retail coming in behind Property & Construction with an 11.4% growth in sales. Manufacturing, Healthcare and Transport made more modest gains of 6.0%, 7.7% and 0.3% respectively, while Retail & Wholesale turnover declined 7.4% and Services fell 17.4%, although the drop in the services sector was partly due certain companies dropping out of the survey this year.

With the exception of Healthcare, all sectors increased operating profits. Following the strong performance of Property & Construction and a surprisingly good result for the continuing companies within the Services sector, Motor Retail, Retail & Wholesale and Manufacturing grew profits by 17.7%, 15.9% and 7.9% respectively, while Transport gained just 0.5%. Healthcare dipped 6.0% to £43.8m.

Delegates at the Essex Limited breakfast event held at Stock Brook Country Club near Billericay, also heard from guest speaker David Wernick, chief executive of Essex based Wernick Group which manufactures and hires modular buildings, who shared his business insights and views on trading in the county.