Mayborn dines out on high chairs

ONE OF the more remarkable rags-to-riches stories of the 1990s is Mayborn Group, a relatively small company with leading market shares in fabric dyes and infants' accessories. Despite rising 12-fold in price since early 1991 to 233p, the shares are still below their 1987 peak. But prospects look excellent.

The group's two main activities are experiencing healthy growth. A new factory for infants' accessories is coming on stream in China, partly to service Far Eastern markets, and Panmure Gordon, the company's stockbroker, is expected to upgrade its full-year profit forecast from pounds 5.2m to pounds 5.5m in the light of better-than-expected interim figures. These prospects are not fully reflected in a sub-market price-earnings ratio of 12.5 times forecast earnings. Nor do they do justice to the good chance of an earnings- enhancing acquisition being completed before Christmas.

The problems that drove the share price down so dramatically in the late 1980s and early 1990s stemmed mainly from a ill-judged acquisition in the US. The difficulties were compounded by the need to send UK executives across the Atlantic to sort out the mess. Eventually, the US operation was shut down. Distracted at a time when the UK economy was also under pressure, the group was briefly forced into losses, after exceptional items, and borrowings rose to around 100 per cent of shareholders' funds just when banks were nervous about maintaining facilities to heavily borrowed businesses.

Another acquisition of a florists' sundries business also turned sour. The chairman, Michael Samuel, said the company did the deal because independent research suggested years of strong growth lay ahead. In the event, supermarkets and high street rivals, such as Marks & Spencer, took an ever-growing share of the floral market. Mayborn has pruned the supply network, which should restore it to break-even in the current year, but a sale of the business is the most likely outcome.

In time-honoured fashion, Mayborn has rescued its fortunes by concentrating on its two core businesses. The Samuel family own, in total, over 60 per cent of the shares, based on their ownership of the fabric-dyeing business, Dylon. In a world of fast-moving high street fashions, fabric- dyeing is neither a large nor a booming market. But Mayborn has a market share in the UK that Mr Samuel admits approaches a monopoly. Growing export success has also given it perhaps 40 per cent of the European market, and made it probably the largest single player worldwide.

Mayborn is also using Dylon's brand awareness and distribution network to build up a household goods operation selling aerosol sprays in a wide range of niche markets, such as curtain-cleaning. A further boost was given to this operation in March, with the pounds 300,000 acquisition from administrators of Big D, a branded household goods business with sales between pounds l.5m and pounds 2m. Mayborn is looking for an immediate earnings contribution.

Infant accessories are Mayborn's main business. Bottles, teats, rattles, bowls, beakers, cutlery, teethers and the like are sold either as private label or under the Tommee Tippee brand name. The goods sell on quality and design rather than price and have a significant share of the UK market. Again, there is a fast-growing export business.

Given the static UK and European birth rates this might look like another mature market, but Mr Samuel points out that older mothers and rising standards mean that spend per baby is climbing by perhaps 10 per cent a year. Further impetus is coming from new product development targeting infants' toys and items for the slightly older nursery market.

Last but not least is a strategy of enhancing margins and growing sales via the new factory in China. The factory should be making a small profit by the second half of next year, and in time will become a big contributor with sales developing in the vast Chinese and Far Eastern markets, where well-designed Western products in corporating higher safety standards are much sought-after.

In the shorter term, the most likely development to kick-start the shares higher would be a sizeable earnings-enhancing deal. In the meantime, buyers of the shares can be reassured that the rating is modest - it could fall to 10 or 11 on likely 1996 profits even without a deal - and that the core businesses are going well.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent