Which companies have the highest EBITDA growth?

| Beauhurst

Category: Scaleups

EBITDA (or earnings before interest, tax, depreciation and amortisation) is an increasingly sought after field on a company’s financial statement. Essentially, it constitutes a quick tool for measuring a how profitable a company’s core operations are, before the impact of capital structures, tax plans and non-cash items, like depreciation. 

As such, the research team here at Beauhurst took a closer look at the some of the more remarkable EBITDA figures in the UK over the past 3 accounting periods.

Understandably, the biggest increases in this regard came from more established companies, as opposed to startups. To trawl through the 2017 figures for some of Britain’s startup big-hitters, Deliveroo lost £140m, Improbable lost £8m, whilst Monzo lost £7.9m. This is predictable for young startups – each company is gearing up for growth by burning through extensive supplies of venture capital.

beauhurst made.com deliveroo EBITDA

To illustrate what a similar arc might look like, Transferwise’s EBITDA losses grew from -£11m in 2015, to -£17m in 2016, before flipping dramatically to a £2m profit the following year. If the swing continues, Transferwise’s early backers will reap a healthy return over the coming years. (This looks likely – the company recently came in at No. 24 on the FT’s 2018 list for Europe’s 1000 fastest growing companies).

Looking at the period 2014 – 2017, we found 9 British companies that displayed extraordinary EBITDA growth of 800% or more: 

These companies were fairly evenly spread across the country, with a predictable cluster around Greater London. They also featured a broad range of sectors, from a bathroom supplier to a petrol station forecourt operator. Just two – Evolution Funding and Optal – are tech companies in a true sense. Tellingly, both are fintech.

Whilst you may not have heard of most of these companies, their combined turnover more than doubled from £880m in 2014 to £2.4b in 2017, and their combined headcount grew from 2865 to nearly 4000. Two of the companies – Optal, a payment processing provider and Lioncourt Homes, a residential property developer, featured on the same FT list as Transferwise (coming in at No. 44 and No. 413, respectively). Five were featured in The Sunday Times’ Profit Track 100, which lists Britain’s fastest-growing private companies by profit.

Interestingly, only three of the nine companies used funding to fuel this growth, either equity or debt.

Back from the brink

Of the nine companies, this period of sustained growth only constituted the first stage of profitability for two – the fintech companies Optal and Evolution Funding. For the others, it constituted a strong bounce back from a dramatic drop in their profits in the year 2014. Their resilience is promising for the British economy as a whole.

Finally, on the subject of EBIDTA, it is worth mentioning Greenergy. This company supplies 25% of Britain’s road fuel, and in 2017 they were ranked as Britain’s 2nd largest private company by sales (which exceeded £13b). Whilst not showing quite as dramatic growth in their EBITDA as the other companies, their pre-tax profits rose from £28m in 2014 to £101m in 2017, constituting a rise of 300%.