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
election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'