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UK mid-caps beat top 100 when it comes to profit

UK mid caps outperform top 100 companies

The U.K.'s mid-cap companies are making the most of the country's buoyant economic growth, outperforming the FTSE 100 when it comes to revenues and profits.

Companies on the FTSE 250, a mid-cap index, saw total revenues hit £71.8 billion ($120.5 billion) in the three months to the end of March, a rise 3.3 percent compared to the same period last year, outstripping the 1 percent increase among the FTSE 100 cohort, according to a report from The Share Centre, a broker and advice service.

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The U.K. has seen a strong economic recovery and growth passed its pre-crisis peak when it reported that its annual gross domestic product rose 0.8 percent in the second quarter. The International Monetary Fund (IMF) said Britain would be one of the fastest expanding economies this year, and mid-caps who have a large domestic exposure, have benefitted from this robust growth.

Strong pound

But a strong pound, which has seen an 8 percent rise against the dollar over the past year, has hurt companies' margins – particularly among the large-caps.

Adina Tovy | Lonely Plante Images | Getty Images

Retailers and electricity companies were among the strongest sectors in the survey, while beverage companies such as SAB Miller which has large exposure to other countries, have struggled with the strong pound.

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"What we have seen is the strong pound, together with the continued malaise in Europe, mean that margins have got squeezed, sales have only risen very very slightly and particularity the FTSE 100 has done badly," Gavin Oldham, executive chairman at The Share Centre, told CNBC in a TV interview.

"The strong pound really has had quite a marked effect and you can see that particularly by looking at the contrast between the FTSE 100 and the next raft of companies the 250, who have done very much better."

Vodafone distortion

Gross profits from the top 100 firms fell 1.2 percent year-on-year in the three months to the end of March, compared to a 5.1 percent jump for the mid-caps. Net profit for FTSE 100 firms, excluding Vodafone, saw a 22.2 percent rise hitting £18.2 billion, but the FTSE 250 businesses made £3.9 billion, up 32.8%.

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Vodafone was excluded from the FTSE 100 net profit calculation to give a fairer picture as the figures were distorted by the telecoms giant's disposal of Verizon, for which it banked a profit of £59.3 billion. Net profit for FTSE 100 firms surges to £80.5 billion with the inclusion of Vodafone's Verizon sale.

- By CNBC's Arjun Kharpal