Launch of new Growth Companies Barometer

UK nurtures SME growth bucking wider economic conditions

London, 15 May 2012 - Despite continued turmoil in the stock markets, the worst recession in 60 years and a faltering Eurozone, there are currently 4000 mid sized SMEs demonstrating high levels of growth across the UK, according to Experian research commissioned by Business Growth Fund (BGF).

These “high growth” companies - all with turnovers of between £2.5m and £100m - have each expanded by at least 33 per cent in the last three years and demonstrate the underlying resilience of UK entrepreneurism.  The BGF “Growth Companies Barometer” identifies a total of 25,533 UK companies with turnovers of £2.5m - £100m.  Of these, 16% are categorised as high growth. 

The highest proportion of these high growth companies is located in London and the South East.  However the BGF Barometer highlights that fast growing companies can be found in a diverse range of industries and across all regions of the UK.

Stephen Welton, CEO of BGF, commented on the data:

“This data highlights that despite challenging market conditions, there is a steady base of UK SMEs and fast growing UK companies that continue to thrive across the UK and that operate in diverse industry sectors.  It demonstrates the resilience of the group and the underlying quality of UK entrepreneurship.  This is good news for the overall UK economy as these companies play a significant role in job creation and innovation and are a critical part of the economic recovery.

“As growth capital investors in high growth companies, we are encouraged by the fact that there is a clear addressable market.  However we are also mindful that there is room for improvement.  The question for us is how to expand the number of high growth companies and help those that are already demonstrating that level of growth move further, faster?

“The last two years have seen in the region of 70 investments of growth capital made into UK companies of this nature.  Clearly there is scope for much more and we would certainly hope to make about 25 investments this year, and 30-40 investments per year in the longer term. 

“In commissioning this data our aim is to create a new and additional measure of economic performance of mid-sized SMEs.  Our hope is that over time it may even become aspirational for business owners and entrepreneurs as a way for them to measure and benchmark their own performance.  We will wait with interest to see how the data changes over the coming months and years.”

Key findings of the BGF Growth Companies Barometer include:

• Since 2000, the population of UK companies with a turnover of between £2.5m and £100m has consistently been around 23,000-25,000.


• This population is skewed to London and the South East with 8626 and 4332 companies respectively residing in this region.  Wales and the North East of England show the lowest number of companies with this level of turnover.


• Since 2000, there has been a gradual shift in the sectors that these companies operate in, moving away from Manufacturing towards Business Services.  The highest proportion of companies in the BGF Barometer come from the Business Services sector 5794, followed by Manufacturing 4982 and Retail 2891.


• Of this population, 4110 UK companies have demonstrated high growth, which equates to an aggregate growth of at least 33 per cent in the last three years.  This is 16% of the overall sample of SMEs. In line with economic conditions, this number has decreased from 6660 three years ago.


• Of the high growth companies identified, those with turnovers of between £2.5m - £10m performed most strongly.  52% of the high growth segment (2155 companies) had turnovers of less than £10m.

Table 1:

 

There is a spread of high growth companies across the UK.  The highest level is in London where 1504 companies are based, 37% of the high growth segment. 

Outside London and the South East, it is East Anglia that accommodates the highest proportion of high growth companies.

Table 2:

 

Business services companies are best represented among the high growth segment, with 1021 companies making up 25% of the group. 19% of the high growth segment  (786 companies) is represented by Manufacturing, and Retail occupies 11% with 452 high growth companies identified.

Table 3:

 

Ends

Contacts:

Corinna Osborne, Equity Dynamics - 07825 326 440
corinna@equitydynamics.co.uk

Emily Weston, Equity Dynamics – 07825 326 442
emily@equitydynamics.co.uk

Methodology

This research was undertaken by Experian, the global information services company, in March 2012.

• The population of firms with £2.5M-£100M turnover is taken for each base year (“year x”) from 2000 to 2007 … so the data covers all accounts reported for 2000 to 2010
• Foreign companies and those filing consolidated accounts (in any year x-2 to x+3) are excluded
• Companies with unknown turnover figures in year x+3 are also excluded
• Companies considered to be “high growth” are those with >33% increase in turnover x to x+3, and whose turnover has increased year on year for a minimum of 2 out of the 3 years
• The population is further broken down into several variables, namely: 
• Turnover Size (in year x) 
• Employment Size (in year x)
• Industry Sector 
• Age of company (as of year x) 
• Region 
   

About Business Growth Fund:

Business Growth Fund has been established to help Britain’s fast growing smaller and medium sized businesses.  Growth potential is the key criteria. BGF will invest between £2m and £10m per business in return for a minimum 10 per cent equity stake and a seat on the board for a BGF director. BGF will provide long-term equity investment for those growing companies that today do not have access to this source of capital.  As such BGF hopes to be a catalyst for growth among smaller UK companies.

BGF is an independent company with capital of up to £2.5 billion, backed by five of the UK’s main banking groups - Barclays, HSBC, Lloyds, RBS, and Standard Chartered.  BGF is managed completely autonomously with an independent management team.

BGF is one of a range of initiatives designed to forge a new relationship between the banking sector and UK businesses, and BGF works in close collaboration with the British Bankers’ Association as well as other key business organisations across the UK.

www.businessgrowthfund.co.uk