Sometimes it pays to stay private: A survey of Britain's 2,000 fastest-growing non-quoted companies shows that they are outstripping their stock market rivals

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The Independent Online
GILLETTE knew what it was doing when it bought Parker Pen.

Last week's purchase by the US toiletries and shaving products group of the pen manufacturer in a deal worth pounds 340m may turn out to have been an inspired move.

A survey published this week will reveal that Parker, which was subject to a management buyout for pounds 51m in 1985, is among the fastest-growing companies in Britain. The Brown Shipley Growth Companies Register, which ranks the country's private companies by rate of growth, not size, discloses that Parker's profits climbed from pounds 23m to pounds 29.5m last year.

That performance puts Parker second in the profits league (see table) behind Edrington, the Glasgow-based Scotch whisky storage company.

Better still - and what must have whetted Gillette's appetite - was the improvement in Parker's profit margin, up from 13.4 per cent to 16.3 per cent.

Edrington, though, left it standing. It made a pounds 30m surplus, thanks to a 32 per cent profit margin.

Roy Assersohn, who compiled the report, says the figures 'are in stark contrast to the difficulties of large public companies struggling to maintain dividends and the thousands of small start-up companies going bust every month'.

While big quoted companies hog the headlines, it is worth remembering just how few in number they really are. According to the Inland Revenue, more than 530,000 companies submit corporation tax returns, of which fewer than 3,000 are listed on the stock market.

Of the 530,000, fewer than 50,000 make taxable profits of more than pounds 75,000 - the cut- off for the register.

Mr Assersohn has trawled the latest filed accounts of 160,000 private companies to produce his list of the fastest growers. The report comes in two volumes, costing pounds 125 apiece, covering 1,000 companies each.

The unquoted stars in his two tomes highlight the drift from manufacturing to service industries. In the 1987 edition, the two sectors each accounted for 50 per cent of the companies listed. This year, says Mr Assersohn, 'distribution companies account for 60 per cent of the top performers, whose average profits amounted to pounds 668,000 with average growth of 111 per cent'.

Do not imagine, however, that traditional industry is dead and buried. Manufacturers are well represented among Britain's fastest-growing 2,000 companies. As a sector, they showed average profits of pounds 722,000 with an average growth of 145 per cent.

Anybody with money to spend and thinking of following Gillette's example could do worse than first consult Mr Assersohn's findings.

'Most of the companies in the register are the least known but the most successful in Britain,' Mr Assersohn says. He adds that their trading performance is 'a tribute to the quality of their managers and owners and the speed and flexibility of their responses to the recession. They are well run, extremely profitable and they cover a broad geographic and industrial spectrum'.

He points to Bowman's Chemists, the fastest-growing company in the list. Based in Carlisle, the family firm, which operates chemists' shops in the north of England, was founded 80 years ago. It grew to 14 shops before shrewdly selling 10 at the top of the market. Now, at the bottom of the cycle, it is adding stores again. Profits rose from pounds 22,000 to pounds 650,000 last year, a gain of 2,854 per cent.

Despite appearances to the contrary, all is not doom and gloom in the travel industry. A huge profits increase from pounds 14,000 to pounds 336,000 took Britannic Travel of Worcester Park, Surrey, to second spot in the list.

The register also produces further evidence of what has long been suspected, that if you want to make real money, keep your company private, well away from stock market vagaries and the prying eyes of questioning shareholders.

Topping the highest pay league of the fastest-growing 1,000 companies (see table) is Hurst Publishing. The brain- child of John Madejski, Hurst is the company that produces the Auto Trader series of car sales magazines. He owns 67 per cent of the company and along with his co-founder and other director, Paul Gibbons, shared almost pounds 6.5m last year.

Fourteen years ago, Mr Madejski left his job selling classified advertising space in the Reading Evening Post to start his own magazine, the Thames Valley Trader. He copied an idea he had seen in an American magazine that illustrated its car adverts with photos. The first issue of Thames Valley Trader, at 10p, offered just about everything: cars, bikes, boats, caravans.

'We went to hell and back to get it out,' he recalls. 'We worked all the hours God sent - it was pure sweat and tears.'

But the magazine sold well. He soon changed its name to Thames Valley Auto Trader to concentrate on cars. Eleven other regional Auto Trader magazines followed. Today the series sells 400,000 copies a week at an average of pounds 1 each, making it the biggest publication of its type in the world.

Mr Madejksi has now added the chairmanship of Reading Football Club and a majority stake in Goodhead Group to his portfolio. Unmarried, he is worth an estimated pounds 100m and lives in style in the rolling Berkshire countryside. He collects performance and luxury cars, keeping a rare Ferrari in a glass case at his home.

They may have lost Freddie Mercury, but the other members of Queen are still raking in the millions. The three remaining members of Queen - Brian May, John Deacon and Roger Taylor - who have their own company, Queen Productions, top the table of highest earners from Volume Two of Mr Assersohn's list, with average directors' emoluments of pounds 1.9m.

'Brown Shipley Growth Companies Register 1992'. Financial Publishing, 081-670-7194.

----------------------------------------------------------------- The profits picture ----------------------------------------------------------------- Company Year Pre-tax profit Sales Margin end (pounds 000s) (pounds 000s) (%) Edrington Holdings 12/90 29,979 94,329 31.8 12/89 24,207 76,552 31.6 Parker Pen 02/92 29,498 181,289 16.3 02/91 22,895 170,409 13.4 Weetabix 07/91 19,711 84,426 23.3 07/90 15,691 150,343 10.4 Bestway 06/91 14,024 419,262 3.3 06/90 9,852 377,716 2.6 IMO Precision Cntrls 04/91 12,788 37,179 34.4 03/90 8,354 37,327 22.4 Baxi Partnership 03/91 11,071 73,971 15.0 03/90 7,096 72,486 9.8 Summit Group 03/91 10,650 73,513 14.5 03/90 7,814 19,087 40.9 Devonport Mgmnt 03/91 10,243 269,560 3.8 03/90 8,526 279,810 2.2 Napier Brown 03/91 10,105 358,063 2.8 03/90 7,512 341,779 2.2 John Wood Group 12/90 9,510 120,838 7.9 12/89 6,058 91,235 6.6 -----------------------------------------------------------------

----------------------------------------------------------------- The bosses' rewards ----------------------------------------------------------------- Company Year Directors' Number of Average per end benefits directors director (pounds) (pounds) Hurst 03/91 6,489,000 2 3,244,500 03/90 5,332,000 2 2,666,000 Northern Upholstery 07/91 6,369,000 3 2,123,000 07/90 3,857,000 3 1,285,667 Andrew Brownsword 02/91 4,793,000 7 684,714 Collection 12/89 7,791,000 7 1,113,000 The Benfield Group 06/91 4,177,000 4 1,044,250 06/90 2,254,000 4 563,500 Morbaine Properties 12/91 2,340,000 4 585,000 12/90 963,000 4 240,750 Claremount Holdings 12/90 2,061,000 5 412,200 12/89 1,840,000 5 368,000 Executive Three 12/90 1,828,000 10 182,800 12/89 1,722,000 10 172,200 Viglen 03/91 1,727,000 5 345,400 03/90 708,000 5 141,600 Singer & James 12/90 1,357,000 5 271,400 12/89 1,058,000 5 211,600 Air Foyle 06/91 1,293,000 2 646,500 06/90 0 2 0 -----------------------------------------------------------------

(Photograph omitted)

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