Independent Top 100 Business': Maxwell escapee triumphs

Sticker company is the fastest grower

A COMPANY that escaped the clutches of the late Robert Maxwell to become Britain's leading publisher of children's sticker books is this year's fastest-growing privately owned business.

Merlin Publishing International, which achieved annual sales growth of 104.4 per cent over the five years to 1994, has been identified by the fifth annual Independent 100 listing compiled by the Independent on Sunday in collaboration with Price Waterhouse, the accountants. It ranks companies by their rise in turnover over five years. The Middle Market 50 Award, now in its third year and designed to mark the achievement of companies that expand from a base of at least £5m sales in the first year of the period, is headed by the computer systems company, Morse Group.

Merlin publishes albums, and stickers to place in them, for children aged between two and 14. The idea is that the children buy the albums and then collect the stickers, swapping doubles for ones they do not have. Peter Warsop, the managing director, attributed the success of the company, which last year had sales of more than £20m, to its people and dedication to sales and marketing. "We've realised our people are important, and we put a great deal of effort into each project," he said.

Merlin was founded five years

ago, when two senior executives from the Italian publisher Panini broke away from the Maxwell organisation, which had recently bought the company. They joined with Mr Warsop, who had worked on distributing Panini products at WH Smith for several years, and set about building a British company with plans to move on to the world stage.

"We wanted to be the largest UK company [in our field] by the end of three years," said Mr Warsop. "In fact, we did it within two years."

Despite early attentions from Mr Maxwell's company, designed to halt the newcomer's rise, Merlin now accounts for 80 per cent of the UK market and is making serious inroads in Belgium, the Netherlands, Luxembourg, Italy, France, Spain and the United States. It trades in 30 countries.

Mr Warsop says the sticker concept - similar to cigarette cards of old - is so popular that an Easter tour of sports centres at big cities by many of the company's employees attracted crowds of 20,000 youngsters. The events, which included swapping children's duplicate stickers free of charge, was a sign that the company went to a lot of trouble "not just for the licensor, but the collector," he added.

This is not just altruism. Mr Warsop regards it as good business sense.

Pointing out that most of the senior managers had been in the business for 20 years, he said: "We want to be doing the same job in another 20 years. We take a very long view of the trade. Some of the companies take a shorter view."

With its Panini roots, the company, based in Milton Keynes, is probably best known for football albums and stickers. But Mr Warsop says that it will publish anything that appeals to the children who buy its wares. It is involved in a number of film and television tie-ins.

As part of continuous attempts to improve the quality of production and the value to the youngsters, the albums are filled with ever more information. It is a policy that appears to be paying off.

In key markets, such as Britain and Germany, about a dozen sticker collections are launched each year and as many as 80 million packets can be sold in each territory.

Sales in the financial year just ended were up to about £35m and profits almost doubled to about £3.8m.

This year, sales are 90 per cent ahead of the same period last year, with profits in line.

In the face of this growth, Mr Warsop and his colleagues are concerned to keep control of the development of the company. Although confident in the experience and ability of the top managers, they have started putting in place a strong second tier.

In addition, Stephen Willcox, another former colleague of Mr Warsop from WH Smith, has joined the board as finance director to bring in international expertise.

Nor are the executives afraid to cede equity in the interests of building long-term relationships. Very early on Gieves Group, the company that owns the Savile Row tailor Gieves & Hawkes, took a 7 per cent interest in the company through its printing and book distribution business.

More recently, they raised cash for themselves - the company itself is self-financing - by selling 40 per cent of the company to Patricia Kluge, the socialite and ex-wife of John Kluge, the US media millionaire who last week sold his Mar Lodge Estate in the Scottish Highlands.