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World League Table Of 'Super-Growth' Companies

14 March 2006

World League Table Of 'Super-Growth' Companies:

- New Zealand Slips Back
- Us Keeps Top Slot
- India, Hong Kong Catching Up Fast

New Zealand has slipped back in the world league when it comes to the proportion of "super growth" companies among its medium-sized businesses, but it remains in the middle of the pack.

For the second consecutive year the US tops the Grant Thornton Super Growth Index, for the country with the highest proportion of "super growth" companies (39 per cent). Despite scoring the highest ranking, however, the proportion of super growth companies in the US actually fell by nine percentage points.

The booming economies of India and Hong Kong surged ahead to take joint second place, each on 34 per cent. With more than a third of companies achieving super growth status, both countries were within reach of challenging the US for the top slot on the index.

Other strong performances included that of Sweden (31 per cent), which climbed back up the index to fourth position after being 10th equal, alongside New Zealand, in 2005.

In contrast, New Zealand, which edged down from 13 per cent in 2005 to 12 per cent in 2006, now sits just below the halfway mark in 15th place among the 28 countries measured.

Sweden's resurgence was a reflection of a recovery in domestic spending and increased business investment.

The Super Growth Index 2006, now in its third year, is a unique research project which forms part of the Grant Thornton International Business Owners Survey (IBOS) which surveys more than 7,000 business owners worldwide in 30 countries.

A 'super growth' company is one which has grown considerably more than the average measured against key indicators including turnover and employment. This year the survey established that super growth companies are 23 per cent more likely to export than ordinary companies. Also, super growth companies were far less constrained by the ability to finance expansion of their business. For example, cost of finance was an issue for 50 per cent more ordinary companies than super growth companies; as was shortage of working capital (47 per cent); and shortage of long term finance (58 per cent).

Said Peter Sherwin, Grant Thornton New Zealand chairman: "We are not talking about a lot of difference in the New Zealand position, but it has to be disappointing that the percentage of super growth companies did not improve in the latest index.

"New Zealand is hardly among the most vibrant nations when it comes to showing the capability that super growth businesses need to have. Although the economy is slower now, it has not been bad over the past four years and the percentage of New Zealand companies termed super growth should probably now be somewhere between 20 per cent and 30 per cent; instead it is about half that.

"I said last year that the coming 12 months would provide a litmus test, particularly with lower business confidence, as super growth companies generally are optimistic about turnover, profitability and employment. Unfortunately business confidence seems to have been a factor.

"If we are not careful, this perception of gloom will drag our businesses further down and bring down with it the number of super growth companies. New Zealand can't afford to have that sort of scenario."

Super growth companies are very positive about prospects for their business. A balance of thirty six* per cent predict increasing the selling price of their goods and services compared to twenty nine per cent of companies in general. Super growth companies are also a third more positive about increasing the level of exports this year (32 per cent compared to 20 per cent) and are looking to make greater investments in their businesses (37 per cent compared to 28 per cent investing in new buildings; 51 per cent compared to 43 per cent investing in new plant and machinery).

Mainland China was included in the Index for the first time this year ? and came in 14th position, with 14 per cent of its companies classified as super growth. It will be hard for Mainland China to achieve greater super growth status until more companies experience rapid expansion both in terms of turnover and employment. Mainland China joined Germany (15 per cent) and Japan (15 per cent) in mid-table.

The sharpest fall in the rankings was seen in Greece, down from 9th to 21st position as the proportion of super growth companies fell from 15 to 8 per cent, partly in response to the end of the Olympic Games spending windfall.

Italy, Russia and Turkey jointly shared the bottom position in the Super Growth Index. Italy's rank appears to reflect the sustained malaise affecting the economy with weak consumer demand, falling investment and shrinking industrial output. Italy's ranking has fallen in each of the past three years of the Index.

ENDS

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