The Plimsoll Tracker – taking the pulse of UK Plc

The UK’s 200 leading companies continue to be a bellwether by which to measure the health, global reach, and economic outlook of the nation. Crises erupt and abate but UK Plc’s largest businesses persist, adapt and are a constant measure of economic stability.

With that in mind, leading business analysts Plimsoll have launched the Plimsoll Tracker. Each quarter, Plimsoll will track three key areas of performance, examining the latest financial data on the UK’s top 200 companies – performance, people, and pressure. The first will examine the number of roles added and fluctuations in pay and productivity. The second looks at financial stability and outlook. The final area examines debt position and the overall health of the top 200 companies.

This is the first quarterly bulletin from the Plimsoll Tracker to highlight the latest intelligence on these British commercial heavyweights. Here are the key findings:

 

The Plimsoll Tracker shows that decline among leading British companies has been a multi-year phenomenon and the social impact isn’t just corporate. The exchequer has seen a 10% fall in tax revenue from the top 200 companies in the latest trading period. This follows a 20% fall in pre-tax profit margins averaged across the group.

The pressure on profit margins isn’t helped by a 3% decline in revenue in the same period. Extremes in some markets, particularly the oil sector, as well as fluctuations in currency, have contributed to a rising debt burden and increased trade friction to drive both sales and margins lower.

As a result of the fall in both major benchmarks, dividends paid by the top 200 have plunged 10% in the latest year, adding further pressure on investors.

 

The Plimsoll Tracker shows the UK’s top 200 companies appear to need a rethink on how they manage people. There has been a more than 1% reduction in overall staff numbers, but salaries have remained static at around £38k per person employed. Productivity however has declined by 2% in the same period.

As a group, these companies appear to have shed some roles, paid more to their remaining employees but seen the productivity from a smaller workforce decline.

Collectively, the top 200 companies in the UK employ more than 6 million people and pay combined salaries running into billions of pounds. While a 1% reduction in overall staff is relatively small, that is almost 90,000 fewer roles at the UK’s largest companies. 

 

 

For more than 30 years, Plimsoll has been rating the financial health of companies of all shapes and sizes around the world. 9 out of 10 companies currently in administration were rated as “Danger” by Plimsoll up to two years prior to their demise. Size doesn’t protect a company from their ultimate demise, but it can elongate the process.

In the latest period, we have seen many of the UK’s leading companies increase their debts. There has been a greater increase in long term debt, up a massive 28%, as companies try to restructure and secure lower interest payments.

However, long term debt still incurs interest and with short term debt also up 15%, total interest payments have increased by a worrying 7%. The total debt for the top 200 companies has increased to almost £1 trillion, meaning interest payments are wiping £40 billion off the collective profit margins at the top of British industry.

As a result, the overall financial health of the UK’s leading companies is down 41%. More worrying, this trend has been growing for the past three years.

Summary

The 200 companies used as part of the Plimsoll Tracker cover almost all non-financial sectors of the economy from retail to agriculture. The latest quarterly updates show falling sales, falling profits, declining productivity and increasing debt.

Over the past three years, we have seen a gradual decline in financial stability. Without a solid turnaround plan, many of the UK’s leading companies could increasingly fall under foreign ownership as they become weakened but retain their prestige.

External, macro and microeconomic factors could weigh on many companies’ ability to trade or restructure their way back to a more solid financial footing.

About Plimsoll

Plimsoll produces 1600 individual studies on key markets in the UK economy. We specialise in assessing company performance, valuing companies, spotting undervalued acquisition targets, and looking for opportunities in new markets.

Operating since 1987, we are the UK’s leading provider of instant analysis and easy to understand business intelligence. If you are looking to perform better than your peers, looking for intelligence on acquisition opportunities, searching for growth markets or just want to make better business decisions, Plimsoll has a solution for you.

To find out more about how we can help you to understand more about your markets, please click here.