Smaller Companies: A performance that is well worth copying

A HISTORY of unsavoury sales practices has left the photocopier industry in the doghouse. Users feel they have been mucked about by unfair contracts, with expensive get-out clauses, hidden in a sea of small print. The companies themselves admit that customers' gripes are often justified.

The City is little happier, with shares in quoted companies, such as Eurocopy and Southern Business Group, periodically hammered by fair trading inquiries and a drip-feed of bad press. The Office of Fair Trading is due to pronounce on unfair practices later this year. It is rumoured to be weighed down by the size of the task and unlikely to have anything to say before 1994.

Hardly an auspicious background for one of the stock market's most stunning performances so far this year. Shares in Danka have more than quadrupled in value since November, from a low of about 200p to 900p last Friday, at which level they were split into four units worth 225p each to help marketability.

But then Danka is unlike the rest of the industry. For a start it is an American company, which has a London quote only because Mark Vaughan-Lee, its chairman, spotted a neat tax dodge in the mid-Eighties - marrying profitable US companies with the attractive tax losses of UK shells.

Dan Doyle, Danka's ebullient chief executive, says the industry just does not have the same image in the US. The long contracts that have been the bane of UK office managers do not exist there. One-year contracts are standard and dealers maintain a healthy arms-length distance from leasing companies.

That and an attention to service have encouraged explosive growth. Turnover grew almost 15-fold between 1984 and 1992. Profits in the year to March jumped 63 per cent to pounds 17.5m. A performance-related bonus scheme for Mr Doyle was becoming so potentially expensive that he was persuaded to sell the liability back to the company.

Mr Doyle sees plenty of growth left in the US. The company is strong in its south-eastern heartland but there are plenty of gaps to fill. Its share of the fragmented market is still tiny.

Last month Danka took its first step into the UK market with the pounds 9m acquisition of Saint, a Hull company making profits of about pounds 750,000, following a long search for a UK company that shared Danka's 'clean' approach and could be used as a base for UK expansion.

Like its US parent, Saint, now renamed Danka UK, has seen dramatic growth over the past six years, with compound earnings growth of 35 per cent. Like Danka, it makes most of its money from high-margin service sales and it sells one-year renewable contracts, which keep customers happy.

For the year to next March NatWest Markets, the house broker, has pencilled in profits of pounds 26m for the enlarged group. It expects further growth to pounds 31m the following year. That puts the shares on a prospective p/e of 20 falling to 17, which sounds demanding but compares with earnings growth of 20 per cent to March 1995.

The shares, which arguably no longer belong in this column, are still good value.

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before