Top companies ‘stockpile £10.4bn’

Companies’ “war chests” have increased by 22 per cent on last year’s figures, with cash reserves now at their highest level since records began in 2007.

According to BDO, this provides a “sure fire signal” that merger and acquisition activity could flourish over the next few years.

According to BDO’s research, Yorkshire’s biggest businesses have boosted growth prospects by increasing investment by a further £500m, taking total investment expenditure to almost £3.5bn in the reporting period.

The analysis comes from the BDO Yorkshire Report 2014 which compiles the latest published accounts from Yorkshire’s largest 150 businesses based on revenue. It analyses trends and acts as a barometer of health for the region.

The report found that the top 150 saw revenues increase to £90.7bn, from £88.7bn last year and £83.8bn the year before that. Operating profits increased by five per cent to £4.56bn and a more focused effort on overseas markets saw international sales grow by £1.7bn, up 7.7 per cent to more than £12bn.

Terry Jones, the partner and head of BDO in Yorkshire, said: “There is an overwhelming feeling of confidence across the region and the figures in this year’s report confirm that growth is firmly back on the agenda.

“Having built up cash reserves during the last few years, the challenge now is for management teams – many of which may not have the experience in dealing with a ‘positive’ cash crisis – to have the confidence and expertise to choose where to invest.”

Yorkshire’s manufacturing heartland is proving particularly resilient, according to BDO. The number of manufacturers in the top 150 rose to 34, from 31 last year, generating more than £10bn in revenue, which is £1bn more than last year.

The retail sector was the largest contributor to both revenues and profits, due to food retailers Asda and Morrisons continuing to dominate, and accounting for 45 per cent of the £90.7bn turnover. However, other retailers had another difficult year with revenue falling by £1bn to £3.4bn.

But the retail sector has its winners too. This year, Huddersfield-based children’s retailer Mamas & Papas has entered the top 150 for the first time,with turnover hitting almost £150m, according to the most recent filed accounts.

Other newcomers to the list include bus operator First West Yorkshire, clothing manufacturer John Cotton Group, Bradford-based AIT Travel and Weber-Stephen Products, the importer and wholesaler of barbecues.

According to the BDO Yorkshire Report 2014, the make up of Yorkshire’s plc is changing, with some traditional companies being overtaken by fast growing, innovative new entries. More than a third of companies (54) are owned by overseas parents, representing another year-on-year increase.

Despite good growth among the group, employee levels fell by 1.8 per cent with the top 150 now employing 470,000 people – a trend driven mainly by the new companies in the list employing fewer but more skilled people, as opposed to further restructuring exercises. The BDO report finds that West Yorkshire accounts for more than half of the 150 entries, followed by South Yorkshire (21 per cent), East Yorkshire (14 per cent) and North Yorkshire (13 per cent). Leeds is the most represented city with 32 of the region’s biggest businesses headquartered there (up from 28 last year), following by Sheffield (19), Bradford (16) and Hull (13).

Mr Jones added: “The results in this year’s report have set a mood for growth.”