Growth Business meets the personalities behind 10 AIM companies currently doing the business.
Entrepreneur: Mike McGoun
Route to success: Responding rapidly to changing market conditions
‘Instead of asking clients to spend lots of money on expensive new software systems we helped them get as much from their existing infrastructure as possible’
Legal sector-focused IT business Tikit has won many admirers during its four-year tenure on AIM, robustly growing both profits and revenues in an often-difficult period for companies of its type.
While many IT and software consultancies struggled in 2001 and 2002, Tikit continued to make progress – a fact chairman Mike McGoun attributes to the decisiveness of his management team.
‘Our only bad year in relative terms was 2002,’ recalls McGoun, whose initial involvement with the company was as a business angel to seven of his former employees who first formed the venture. ‘But we took rapid action, cut costs by ten per cent and changed our focus.’
This change in emphasis appears to have been particularly significant. ‘Instead of asking clients to spend lots of money on expensive new software systems we worked as consultants, trying to help them get as much from their existing infrastructure as possible,’ says McGoun. ‘Then when conditions improved [and customers began spending once more] they naturally turned to us.’
Having now established itself as the leading provider of software and services to the UK’s top 100 law firms, McGoun and his team are looking to gradually branch out internationally and into the accounting sector.
Entrepreneur: Rob Loosemore
Route to success: Achieving growth in a profitable but stagnant business
‘Fundamentally, the business was always a very strong asset… the challenge for us was to find a way of growing it’
Electronic point-of-sale software supplier Torex Retail enjoyed one of the most spectacular AIM debuts of 2004, its shares surging 70 per cent in just 12 months – a performance that owes much to the insight and experience of executive chairman Rob Loosemore.
Between 1996 and 2000 Loosemore filled various senior management positions at erstwhile parent company Torex (a provider of software and IT services to the healthcare and retail sectors) and though he eventually left to pursue other interests, he retained a keen interest in the group.
When Torex merged with fellow healthcare IT group iSoft in late 2003 he reasoned that ‘it was obvious retail was going to be non-core’ and put together an accelerated IPO package, with the backing of various institutions.
To Loosemore the next step was clear. ‘Fundamentally, the business was always a very strong asset. It has a strong customer base, solid recurring revenue streams and a strong, established management team. But there was no investment in growth and the challenge was to find a way of changing this.’
Significant investment in sales and marketing was therefore Loosemore’s priority and, having seen pre-tax profits more than double to £7.5 million in the year to December, his strategy already appears to be paying significant dividends.
Entrepreneur: Tony Rafferty
Route to success: Having conviction in an idea first trialled at university
‘We stick to what we say. Everything we do now as a business was outlined in our prospectus four and half years ago’
Whilst studying electronic engineering at Sheffield University, Tony Rafferty became ‘side-tracked’ into student politics, principally arranging gigs for fellow students. Rafferty’s degree suffered as a result and, having failed his course, he tried his hand at nightclub promotion – running events and designing and ordering swathes of promotional flyers.
It was around this time that he first forged the concept for Printing.com. ‘I was on the bus when it first dawned on me that it would be far cheaper to produce a load of leaflets together,’ Rafferty reminisces. ‘I borrowed £3,000 from my dad and set up the limited company in 1992.’
Progress has been steady ever since, with the company opening the first of a series of printing shops in 1998 [the idea being to send every job to a central print hub], floating on OFEX in 2000 and graduating to AIM last August.
‘We’re quite flattered to be described as steady,’ Rafferty now claims. ‘We focused first on our stores and everything we do today as a business was outlined in our prospectus four and half years ago.’
Now generating annual profits of around £1 million from roughly £10 million of turnover and operating burgeoning high-street, online and franchising businesses, the easygoing Rafferty feels vindicated in his decision to keep faith with the original plan. After all, he managed to pay his dad back long ago.
Entrepreneur: Peter Lawrence
Route to success: Introduced cat litter to the UK market
‘If you’d told me I’d be developing drugs for farm animals 30 years ago, I’d have laughed in your face’
Peter Lawrence’s eponymous chemicals business has undergone many transformations in the last 30 years – gradually evolving from synthetic lubricant and absorbent materials distributor into pet product supplier, prior to assuming its current guise of animal health specialist.
Perhaps the most refreshing aspect of Lawrence’s success is its chairman’s acknowledgement that there has never been a master plan guiding his every move. Instead, Lawrence explains, ‘we got into all kinds of things with a chemical or engineering aspect over the years.’ The company even holds the rather unusual claim to fame of having introduced cat litter to the UK market.
Over time, Lawrence’s interests have steadily migrated towards the animal health sector. Various pet-focused businesses have been bought and subsequently sold for a significant profit.
As a result the company now specialises in two farm-animal-related fields: namely, drug development and food additive production, even though Lawrence himself concedes: ‘If you’d told me I’d be developing drugs for farm animals 30 years ago, I’d have laughed in your face.’
With at least one ‘blockbuster’ drug currently up for regulatory approval, Lawrence’s market valuation has soared close to £100 million in recent years – not bad for a venture that was ‘either the second or third company to float on AIM.’
Entrepreneur: Andrew Newland
Route to success: Helping others commercialise their intellectual property
‘There is lots of intellectual property and finance out there, but little to bring the two together’
Andrew Newland is a man with a plan. Whilst studying engineering at Cambridge he realised that most technology businesses are actually run by either financiers or sales experts, not technology specialists. After retraining as a chartered accountant, he set about trying to bridge the gap between aloof, commercially naive technologists and professional managers.
Newland’s venture, Angle, aims to take innovative technologies and transform them into ‘businesses people would like to invest in. Our rationale is that there is lots of intellectual property out there and lots of finance too. But there is little to bring the two together,’ he states.
So far, the 25-year plan Newland formulated when he established the business in 1994 appears to be working.
Initially set up as a consultancy and subsequently as a more hands-on commercialisation specialist, Angle generated a £2.3 million profit last year and is poised to make a further realisation soon when portfolio company Provexis reverses onto AIM.
With the £9 million Angle itself raised on flotation 12 months ago, meanwhile, Newland hopes to establish up to ten more businesses. Each will look to advance a specific technology, with Angle seeking an exit between two and five years later.
Inter Link Foods
Entrepreneur: Alwin Thompson
Route to success: Negotiating exclusive licensing deals with brands such as Disney
‘We want to become the second-largest cake supplier in the UK’
In an industry as fragmented as the food market, much of Inter Link’s success can be attributed to Alwin Thompson’s vision of growth via consolidation. In as many years, the company acquired 11 cake-manufacturing businesses. Turnover is projected to reach £98 million for the year to April, with pre-tax profits rising 24 per cent to £6.2 million.
Thompson is a veteran of the baking industry, first as sales and marketing director at Northumbrian Fine Foods before setting up Country Fitness Foods. He was a founding shareholder of Inter Link in 1994 – after a fellow golfer asked for help with his troubled bakery. Serving as chief executive until last September, Thompson became chairman in order to focus on the company’s strategic development.
‘We have stated our objective of becoming the largest private label cake supplier in the UK and second-largest cake supplier in the UK,’ says Thompson – a feat it should accomplish by 2006.
Not only does the company produce high volume lines but it has also captured lucrative licensing deals, including the exclusive right to create small cakes in the UK for brands such as Disney.
It is now setting its sights on Europe, having recently snapped up Poland-based cake and cookie manufacturer Cukiernia Mistrza Jana.
Entrepreneur: Graham Wilson
Route to success: Re-inventing an established industry
‘It certainly helped that I had done this before and made money’
Think of caravan parks and they may not conjure up images of glamour, but in the eyes of Parkdean’s chairman Graham Wilson, it’s a pleasant – and profitable – vision.
Wilson has long been involved in Parkdean, creating the original Parkdean Leisure after leading a management buy-out of Beazer’s holiday division in 1989. He floated the company in 1993 before selling it to leisure conglomerate Vardon Leisure in 1995. Wilson stayed with the business until it was snapped up by Rank in 1998. In 1999, with Parkdean’s current chief executive John Waterworth, he founded Parkdean Holidays, with the aim of building up a chain of caravan holiday parks. He hasn’t looked back since.
Parkdean Holidays floated in May 2002. ‘It certainly helped that I had done this before and made money,’ states Wilson. The company operates 20 parks in the UK and is always on the lookout for new acquisitions.
‘The business is regarded as predictable, but adding value by offering surf classes and ski slopes, coupled with the constant upgrade of our sites, continually lends appeal to our holiday offering. Our repeat business is over 50 per cent.’ But Wilson is not satisfied with being involved in just one business. He is also chairman of another AIM success story; display marketing business Premier Direct, and non-executive director of AIM newcomer Goals Soccer Centres.
The Real Good Food Company
Entrepreneur: Pieter Totte
Route to success: Sticking to a tried and tested formula
‘My extensive experience of managing companies and flotations is an inspiration to younger management’
Pieter Totte has been instrumental in helping many companies join AIM. He has assisted cake and bread manufacturer Finsbury Food, confectioner Glisten, corporate intermediary Jelf and sugar merchant Napier Brown Foods.
He is also chairman of premium ice cream producer Hill Station and diversified food supplier The Real Good Food Company. Now 54, the Dutchman moved to the UK in 1982 and was involved in various businesses in the commercial engineering and manufacturing sectors, including manufacturer Wharfedale.
‘Young management in growing businesses find it hard to go to the market. I think my extensive experience of managing companies, especially in manufacturing, in the public sector and dealing with issues including raising finance, is useful to them,’ claims Totte.
He is focusing most of his energy in The Real Good Food Company, which comprises three baked goods businesses and a profitable whitefish products maker. Further acquisitions are imminent and Totte will be applying a buy and build strategy.
But he does have time for other ventures, including a Barramundi fish farm, and is adamant that he will not confine himself to the food sector.
Entrepreneur: Mark Blandford
Route to success: Recognising the potential of the internet for the gaming industry
‘I hadn’t envisaged the value of cross-selling. I was not convinced we could be worth almost £1 billion’
Sportingbet has become a colossus in the gaming world; so much so it is now the world’s largest online betting group – and unlike so many internet ventures, the company is actually making money.
The group was neither the first online betting business or the first to offer tax-free offshore betting, but as the brainchild of Mark Blandford, the company was in good hands.
According to Blandford, his first involvement in the gaming industry was at school where he was nearly expelled for running a book on the FA Cup. By the 1980s, he had built up a chain of betting shops, Blandford Betting, which he later sold, before setting up another one, which was snapped up by Totes.
By 1998, Blandford had already recognised the potential of the internet for the gaming industry and established Sportingbet, listing on AIM in 2001. It claims to be the first company to provide a complete online entertainment centre, offering betting, casino and poker products as well as virtual games.
‘When I first dreamt up the concept, I thought that if we executed the business correctly there was massive potential,’ recalls Blandford, ‘but to be honest I hadn’t envisaged the value of cross-selling. I was not convinced we could be worth almost £1 billion.’
Entrepreneur: Neale Graham
Route to success: Building a strong management team and motivated staff
‘We’ve been very commercial in all our operations and never get too emotional about the business’
Neale Graham is a veteran of the telecommunications world. Together with Barry Sharples, he has made his mark on the industry, from the days of deregulation to the emergence of mobile and convergent communications. Graham and Sharples were the first independent wholesalers of telecoms hardware and have since set up telecoms facilitator 2ergo.
Previously, they had a history of building up private businesses and then selling them. 2ergo is their first publicly quoted business and enables clients to communicate information in diverse formats such as internet and short- or multimedia-messaging. Profits have streamed in steadily from inception and this year should reach £2 million on turnover of just under £17 million.
‘We’ve been very commercial in all our operations and never get too emotional. Extracting value for shareholders is our goal,’ believes Graham.
He believes much of the company’s success is due to the people involved. So confident is he of his team, he claims they could run any business and says that even his position is up for grabs – if an individual can prove competent enough. And as for going public again with future businesses, Graham says: ‘We are certainly attracted to public companies. We have no qualms about floating again.’