Analyse: Understanding the Summary Box

Turnover and Employees

The summary statistic for turnover and employees represents the sum of all companies within the selected filers. However, this quickly leads to complications and often requires some thought as to whether the summary statistic is representative of the data.

When no filters are applied to the data, we estimate the total turnover of the UK to be around 50-70 trillion and total employment to be around 50-60 million. We know these figures do not represent the UK economy (total turnover is just over 2 trillion and total employment is around 30 million).

These figures are inflated for a number of reasons including: Group entities, multinational organisations and the summary statistics not breaking down turnover and employees by location (if applied).

Group Entities: Using Tesco as an example

Our figures are greatly exaggerated by multiple entities per company. On Explore, if we sort all companies by Employees: High to Low, TESCO PLC (00445790) and TESCO STORES LIMITED (00519500) are 2 companies which are the same entity but are within the top 10 companies sorted by employees. A human can easily understand these two entities are the same, Tesco. As of the time of writing, Tesco PLC employs around 354,000 people and Tesco Stores Limited employs around 260,000 people.

Without manual research, we do not know whether Tesco employs a sum of the two companies (614,000) or whether Tesco Stores employees are counted within Tesco PLC. This means it’s hard for us to programmatically/logically solve this issue. It’s unlikely Tesco employs over 600,000 people but we only know this through common knowledge thus we can likely deduce Tesco Stores employees are counted within Tesco PLC. This may not be true for all companies within a given group structure.

Exploring Tesco’s financial statement still does not provide us with a clear answer. In Tesco’s latest financial statement, they present their employment statistics in a simple table:

There are several ways to interpret this table to provide us with the answer to the question: How many employees does Tesco have?

Option 1: Tesco employs 354,744 people.

Caveat: This includes employees from Central Europe and ROI. For our analysis, we may just want to know Tesco’s employees in the UK.

Option 2: Tesco employs 326,218 people as this is the average number of employees in the UK & ROI.

Caveat: We are missing employees from Central Europe (these still contribute to Tesco’s turnover). We are also missing employees who work for Tesco Bank.

Option 3: Tesco employs 329,809 people. These are the employees in the UK & ROI and Tesco Bank.

Caveat: We are missing employees from Central Europe (these still contribute to Tesco’s turnover).

Option 4: Tesco employs 204,974 people. These are FTE.

Caveat: Part time employees contribute to Tesco’s turnover.

There are several more options available but it becomes clear financial statements from large companies are difficult to interpret and often require some thought.

Multinational Organisations

Multinational organisations, by their nature, derive income from many parts of the world. A multinational company’s UK tax return will be on the income it receives in the UK. There’s the challenge: it’s hard to know exactly what proportion of their business comes from the UK. It is also unclear whether financial statements submitted to Companies House (our source of company financials) include turnover/employees from foreign countries. We rely on open data (Companies House) to better understand the UK economy. Only HMRC have access to data which will lead towards a clearer picture of a company’s financials.

We have data on all UK-registered companies. That means we have data on every company that has filed accounts in the UK. What we don’t know is how much of their activity can actually be attributed to the UK, and how much can be attributed to the rest of the world.

This is a challenge because it can lead to some very large numbers. For example, the likes of energy companies like BP and Shell have a large workforce and turnover across the world. Including BP and Shell in one of our RTICs can result in very large summary values for the sector.

That’s why we encourage a review of our lists, to ensure you’re including companies that are appropriate to the question you’re answering. Sometimes that will mean including the large multinationals, sometimes it will mean removing them. This all depends on the question you’re answering.

Accounts are submitted on a per company basis. Accountants may choose to include worldwide financials (as the company is Headquartered in the UK) or they may choose to separate them. Currently, we do not know without manual research.

Locations: Using Roke Manor Research as an example

Our employee data is sourced from accounts submitted to Companies House. Accounts are submitted on a per company basis and do not include a breakdown of employees at specific trading locations. Within analyse, we split employees equally across locations. Although this isn’t a perfect methodology, this leads to improved location analysis (we are looking into more accurate method’s for managing this data).

As previously stated, we do not know how much turnover/employees can be attributed to each location for a given company. ROKE MANOR RESEARCH LIMITED (00267550) trades from multiple locations. According to their latest financial statement, they employ 609 people. We split these employees across their locations. This can be seen in the visualisation below.

The summary box does not apply a location filter to the statistics therefore if a location filter is selected, we would not recommend reporting on these values. Using the data in the figure below is more appropriate.

Location Data (Accuracy):

Our location data is as granular as postcodes and we use postcodes to display results for aggregated areas such as Local Authorities. Our postcode data comes from multiple sources:

  • Companies House (Registered address)
  • CreditSafe (Sourced from a third party)
  • Company Websites.

Companies House is the least likely to contain any errors although it does rely on companies keeping their own registered address up to date. It is currently not feasible for us to determine the operational status of a company at their registered address.

CreditSafe use an external provider for trading addresses.

We extract postcodes from when we scrape each company’s website. We focus on specific pages within a given website with location information.

Between CreditSafe and web scraping there is an increased degree of error. Our website matching is not perfect thus leads to error. For where we have a correct website matched (95% of the time), postcode data is >98% accurate.