FT Adviser has today reported that a fifth of the top 1000 IFA firms are growing at more than 10 per cent a year and posting healthy profits but nine firms could be on the brink of going bust, according to the latest Plimsoll report.
David Pattison, senior analyst and author of the new Plimsoll Analysis, said 207 of the top 1000 companies in the market were growing at more than 10 per cent a year and making healthy profits.
However, according to Mr Pattison while many of these companies are breaking new ground and leading a sustainable recovery in the market, there are 84 other companies whose headline grabbing sales growth masks something much more sinister.
He said: “It makes a nice change to have some positive news to report. 207 growing, increasingly profitable companies have either tapped into a new, fast growing revenue streams or are just the best performers in the old ones.
“Anyone struggling to make the most of the recovery should look at these companies and ask themselves ‘what do these guys sell, make or do differently to me?’”
However, Mr Pattison warned there were 84 companies achieving this eye catching sales growth but their profitability told a very different story,
He said: “Essentially there are two types of growth in the market – good versus bad. 84 companies have achieved over the 10 per cent sales growth but in doing so have seen their profit margin collapse. They are simply overtrading.
“The accolades of growth are all well and good but the bills need paying too. More worrying, nine of these companies have been loss making for two years – even with double digit sales growth I doubt they will make it to a third.”
On the subject of companies getting it wrong at both ends of the scale, Mr Pattison said while the market continues to recover and the 207 top performers show the way, there were 176 companies facing a very bleak future indeed.
He said: “Losing sales, profits and probably most of their remaining options, these companies have been rated as Danger in our report. Time is running out and only a takeover or a rapid turnaround is likely to redeem their situation.”
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