Northern Ireland's locally owned businesses reported variable trading results in their most recent trading year. Media headlines were memorable for the unwelcome news from Wrightbus, Bombardier and Harland and Wolff. Those were the conspicuous concerns. However, hundreds of trading companies continued on with their business, with a wide spread of results.
As part of a comprehensive monitoring process of the performance of companies doing business from a Northern Ireland base, a review has been conducted of the profit performance of businesses filing trading results.
Smaller businesses not required to file trading accounts are excluded. Results for large and medium sized locally owned and registered trading companies have been collated.
Generally locally owned businesses might be described as family businesses or as bringing together a group of local shareholders.
These results are separate from those for businesses registered in Northern Ireland but with owners usually resident elsewhere, including a large number of businesses controlled from Great Britain or Ireland or as 'foreign direct investment'.
An analysis of the profitability of locally owned trading businesses, from over 350 companies, businesses registering the better or poorer levels of pre-tax profit have been identified.
One hundred businesses recording the highest levels of pre-tax profits were reviewed.
Each of these companies in the most recent trading year showed annual pre-tax profits of over £2m.
This result is comparable but slightly less buoyant than the experience a year ago when 100 local businesses registering the highest profit figures were compared.
The comparison of pre-tax profit figures (see table above) confirms that, recently, more businesses were enjoying better profit figures than a year ago although a simple 'up' or 'down' comparison says nothing about whether the level of profits is satisfactory.
It says little about the underlying viability of a business. The ratio of 57 reporting higher profits, compared to 43 reporting lower profits, is encouraging, but it would fall short of a claim to be a booming economy.
The spread of businesses across the main sectors of the economy is broadly consistent with the expected role of local businesses. The number of businesses in the construction related sector emphasises the surprisingly heavier reliance on domestic construction activity.
Amongst local manufacturing firms, the proportion reporting lower profits, at just over 60% of the qualifying firms, is consistent with the more general reporting in late 2018 and into 2019 that manufacturing output was less buoyant than in other sectors. The other sector where the numbers reporting lower profits is notable was the distributive trades.
Less obvious from the simple numbers of businesses showing higher or lower profits was that the manufacturing businesses recording lower profits were disproportionately found at the upper end of the spectrum of profit makers: in other words the previously more profitable had less successful results in their 2018-19 results than a year earlier.
If, instead of analysing only locally owned trading companies, the analysis had been extended to include all businesses registered in Northern Ireland whether locally or externally owned, the 100 local businesses analysed, at the same minimum profit cut-off, would have increased to 173.
The results for the externally owned businesses contrast with the locally owned. Of the externally owned businesses, 32% had reduced profits in the more recent year which compares with lower results for 43% of the local companies. These differences reflect a concern that locally owned companies faced a less encouraging environment than the bigger multi-nationals.
One other feature is cautionary. A year ago, 28 (of 350) locally owned companies in the sample were registering pre-tax losses. Unhappily, now, a year later, there are 34.
Andras House combines major property interests and a number of hotel and hospitality businesses located mainly in Belfast but with plans for a new hotel in Portrush. The parent company is Greystone Ltd (IOM), registered in the Isle of Man. The group is owned by Lord Rana and his family and is one of the largest providers of hotel accommodation in Northern Ireland.
A year ago, the group opened a new 178 bedroom hotel, Hampton by Hilton, in central Belfast. Recently, planning consent for an 87 bedroom hotel costing £6.6m has been received for a new hotel, in Portrush.
Existing plans will bring the total number of bedrooms provided by the company to 1,043. This includes six hotels operating under franchise arrangements in the greater Belfast region: the Crowne Plaza at Shaw’s Bridge, the city centre Holiday Inn (in Great Victoria Street), the Ibis Belfast (close to Queen’s University), the Ibis Belfast City Centre and the Cordia Apartments (Lisburn Road).
The group also owns the Riverside Hotel in the Isle of Man as well as some commercial offices, retail outlets and a number of car parking sites in the Belfast area.
Annual turnover figures continue to increase, year by year, but in the most recent year, operating and pre-tax profits fell significantly. In the year to April 2017 turnover increased by 10%. Operating profits in 2018-19 fell by 19% compared to 2017-18 and pre-tax profits were 26% lower.
In 2018-19 the balance sheet value shareholders’ funds increased to just under £60m. This was an increase of 7% in the year. As in 2017-18, the directors made no dividend payments. Post-tax profits were retained in the business. The balance sheet records that the business was financed by an increase in access to borrowed funds. Short and longer term borrowing amounted to nearly £35m: up nearly £6m on a year earlier.
Employment averaged 347 people in 2018-19, a large increase of 40% during this year.