Blackfriar: Yorkshire’s big firms proving a gold medal act to follow

Research out from corporate financial health monitoring specialists Company Watch showed contrasting financial fortunes for some of the UK’s larger mid-market firms.

But Yorkshire firms Cranswick, Drax, Fenner, KCom, Persimmon, Premier Farnell and SIG have all improved their financial health ratings in the past 12 months.

Provident Financial and International Personal Finance were not included as Company Watch doesn’t do ratings for financial services firms.

Company Watch looked at 182 non-financial public companies indexed in the FTSE 250, comparing their financial risk rating (H-Score) based on their latest full year accounts with ratings based on the previous full year.

The average H-Score improved slightly from 63 out of a maximum of 100 a year ago to 66 in their latest annual accounts.

Step forward North Yorkshire power station Drax, which saw its score leap from 76 to 96, a rise of 20.

Drax has an exciting time ahead of it as it switches from coal burning to biomass in a move that will allow it to drop the rather unsightly tag of Britain’s biggest polluter.

Leeds-based electronics distributor Premier Farnell also saw a steep improvement with a jump from 66 to 87.

Premier has performed well in a tough market helped by its ground breaking element 14 social networking website, which has been dubbed a Facebook for engineers.

Posh sausage maker Cranswick saw its score rise from 74 to 83.

The Hull-based company has overcome the gloomy summer weather by focusing on new products that do not involve the barbecue. It is also making great strides with its exports

Engineer Fenner’s score rose from 65 to 77.

The Hessle, East Yorkshire-based conveyor belting giant is currently on a spending spree having announced its third acquisition in a week.

Fenner refinanced a £100m banking line in May to continue its acquisitive growth plans.

Housebuilder Persimmon made a modest jump from 67 to 68.

The York-based company announced a strong start to 2012, with private sales in the first 15 weeks up 20 per cent on a year earlier.

Insulation and roofing giant SIG saw a rise from 56 to 64.

The Sheffield-based company has been hit recently by severe weather conditions in the UK and the volatility of the euro.

SIG said construction activity slowed in May and June and warned that uneven demand is likely to continue during the second half with disruption to construction schedules because of the London 2012 Olympics.

The only Yorkshire FTSE 250 constituent to produce figures below the average was telecoms group KCom, but it did show an increase from 27 to 32.

KCom recently told shareholders it continues to make good progress and it’s committed to increasing its dividend.

The Hull-based firm’s Kcom arm, which serves the likes of Asda and Morrisons, has grown its order book and is taking market share.

Nick Hood, head of external affairs at Company Watch, said: “It’s good to see that it’s been a gold medal Olympic year for the Yorkshire companies in the FTSE 250, all of whom have improved their financial health ratings in the past 12 months.

“Many of them operate in sectors such as construction and manufacturing, which have been particularly adversely impacted by Government austerity measures and the poor general state of the UK economy, so their performance has been all the more remarkable.”

He said that none of the Yorkshire companies are in the red zone warning area.

“This means that leading Yorkshire companies are well placed to weather the current economic storm and take advantage of the recovery when it does finally start.”

Out of the sample, 21 companies (12 per cent) had perfect H-Scores of 100 out of 100.

Some 22 were in the Company Watch warning area, with scores of 25 or below.

Over the past 14 years, a quarter of the companies which fall into the warning area go on to file for insolvency or undergo a financial restructuring.

The key drivers for the winners were rising profits or turnaround from past losses and improving debt profiles or cash positions.

For the losers, the reverse is the case: falling profitability or even losses, increasing debt burdens and deteriorating working capital resources.

At a time when the outlook is so gloomy and we hear it may be another eight years until we see a recovery, it’s heartening to hear that Yorkshire’s large PLCs are in good health.

Most have highly experienced management teams who look set to guide their companies through these choppy economic waters to calmer seas ahead.