Rising Stars: where are they now?

At the start of 2005, Business XL honoured 50 ‘Rising Stars’ – growing companies that were leading the way in service excellence, product innovation and sales growth. We catch up with a selection of them one year on to discover whether they exceeded expectations or failed to deliver.

 

At the start of 2005, Business XL honoured 50 ‘Rising Stars’ – growing companies that were leading the way in service excellence, product innovation and sales growth. We catch up with a selection of them one year on to discover whether they exceeded expectations or failed to deliver.

At the start of 2005, Business XL honoured 50 ‘Rising Stars’ – growing companies that were leading the way in service excellence, product innovation and sales growth. We catch up with a selection of them one year on to discover whether they exceeded expectations or failed to deliver.

The saying goes that there are only two types of forecasts: lucky or wrong. In the case of Business XL’s predictions for companies to watch in 2005, we were very lucky – with a pinch of expertise thrown in of course! Many of the companies we tipped for great things have had a cracking year and only one bombed. Here’s a look back at some of the leaders and laggards.

A magnificent year for Skype

Including Skype in the Business XL Top 50 Rising Stars last year turned out to be a brilliant judgement call. December 2005 saw the Luxembourg-based internet communications company release a new version of its software that allows anyone with an internet connection to make free internet calls. The software is apparently ‘designed for greater ease of use, has integrated video calling, and enhanced features that allow people to stay in touch and express themselves online’. Skype also announced its collaboration with global headset and webcam partner Logitech, as well as partnerships with webcam manufacturer Creative, and with Weblog software company Six Apart. All of this, of course, followed the small matter of the company’s acquisition by internet behemoth eBay in October 2005, in a deal worth approximately US$2.6 billion in upfront cash, plus eBay stock.

‘Communications is at the heart of ecommerce and community,’ says Meg Whitman, CEO of eBay. ‘By combining the two leading e-commerce franchises, eBay and PayPal, with the leader in internet voice communications, we will create an extraordinarily powerful environment for business on the web.’

At the last glance, Skype had 54 million members in 225 countries and territories – not bad for a company that only launched in 2002. There’s no denying founders Niklas Zennström and Janus Friis have achieved great things and that looks likely to continue.

Deal Group in share price slide

Online marketing company Deal Group Media has had a challenging year, with CEO Adrian Moss trying to take the business from a small to a medium-sized concern in an increasingly competitive space. The business has capitalised on the growing online advertising market and new clients in the last year include MSN, Halifax and Sony Ericsson.

Turnover and pre-tax profits for the half-year to June 2005 increased to £10.2 million and £154,000 respectively, against £6.6 million and £45,000 for the previous year. However, delays to the roll-out of its new tracking software has led to some extra costs and the change of terms of a major contract has affected profit projections. Its share price has suffered as a result, taking a hit from a high of 25p per share early in the year to its current 4p. Analysts are now predicting pre-tax profits of £800,000 on £22.4 million for the year to December, rising to £2 million on a top line of £33.2 million for 2006.

Clever folk at Abcam

Life sciences company Abcam floated on AIM in November 2005, raising a cool £10 million. The company markets research-grade antibodies to academic and commercial users and has an online catalogue of more than 17,000 products. Cambridge houses its UK base, while its US office is in Cambridge, Massachusetts.

In the year ending 30 June 2005, Abcam reported sales of £12.1 million (2004 sales were £6.72 million) and pre-tax profits of £2.98 million (£1.45 million in 2004). The company expects sales in the current financial year, to 30 June 2006, to be no less than £18.5 million and intends to implement a progressive dividend policy. Abcam employs a total of 78 staff, 27 of whom have PhDs, and the company states its plan is ‘to become the world’s largest antibody resource’.

Daisy Foods gets some Air

It’s been a year of consolidation for organic baby food producer Daisy Foods, but that’s not to say it hasn’t been exciting. ‘We realised that the supermarkets are not as fast as us when it comes to decision-making, so we decided to stop being the hare and became a tortoise,’ explains Daisy Foods founder Gerrie Hawes. With that  in mind, the business began to aggressively explore new avenue streams and launched a book in the US, UK and Australia called Feed Me, and a range of mini-meals for babies of 12 months or older.

The business is also securing another round of funding and has taken on a celebrity investor. TV presenter Donna Air was interviewed in the Evening Standard about wanting to start her own baby food business and Hawes took the chance to call her and they met for coffee. She liked the business so much she decided to invest and become the face of the brand. One supermarket is now rolling out the food into all its outlets in 2006, so Daisy Foods production will be rising from 100,000 units to one million.

Intamac goes international

With turnover up 300 per cent, 2005 has been great for Intamac. It builds infrastructure to support internet-linked systems for the digital home, and founder Kevin Meagher says 2005 has been a ‘seminal’ year.

Growth has come internationally, with new contracts in Australia, New Zealand, the US and Holland. In fact, one of the problems Meagher has to grapple with is organising the company according to the different time zones it now works in. But he’s not complaining.

At the present rate, Meagher expects the next six months to see another 300 per cent increase in turnover, not through any great marketing initiative, he says, but by simply being in the right place at the right time with the right technology. Once one company takes it on, another follows, he says. One of his challenges, though, has been the pace at which the large corporates move – slowly. ‘It’s just taken us two years to close a deal with an Australian firm,’ he adds. ‘They have to review everything, pilot the technology, review the pilot, do due diligence and then, would you believe, it goes to tender. We have to tender for an idea we’ve given them! I’m just glad we got the deal.’

Green-Works doing heavy business

Green-Works measures its success in tonnage, new business partners and jobs created. Its business is disposing of corporate office furniture and ensuring it doesn’t end up in landfill sites. It dealt with 4,000 tonnes of waste in 2004, and in 2005 that rose to 11,000 tonnes. That’s fantastic news for managing director Colin Crooks and means 14 new jobs have been created at the company’s brand new Wembley warehouse alone. It is increasingly working with Government departments, such as the Department for Environment, Food and Rural Affairs, as well as companies such as Diageo and Marks & Spencer, to assist them in fulfilling their environmental targets.

In 2006, Green-Works plans to add more franchises to those established in 2005 in Scotland and Wolverhampton, and is looking to partner with even more large companies.

ASOS up in flames

Just a few weeks ago, ASOS founder and chief executive Nick Robertson was in bullish mood. Despite incurring significant costs and many operational inconveniences moving to a new warehouse in Hemel Hempstead, the online fashion retailer managed to lift interim sales almost 78 per cent to £8.3 million and keep losses reduced to a mere £120,000.

The full year results were expected to show the benefits of the new warehousing system and the group’s increasing ability to capture a significant chunk of the £5 billion that Britain’s 22 million net shoppers were expected to spend online this year.
However, the spectacular and disastrous fire at the Buncefiled Oil Depot on 11 December destroyed the group’s new warehouse, leaving it unable to trade during the crucial Christmas period.

Its shares have been suspended on the London Stock Exchange while it examines the damage, although the group has flagged up to all its supporters that, fortunately, it is
fully insured for both stock loss and business interruption.

The unexpected blow is a significant setback for the company and it is likely to be many months before this once high-flying group is able to recover.

Loch Fyne gets snapped up

It’s been a pivotal year for Loch Fyne Restaurants. The business has funded its expansion through a series of subscriptions under the Government’s tax-efficient Enterprise Investment Scheme. With the last of these schemes maturing in June, the company conducted a strategic review and decided now was the time to cash in the chips – and what chips! The business is to be taken over by Premium Casual Dining (PCD), having agreed with the directors of Loch Fyne that £10 per company share was about right for the progress that has been made.

The sale of the group, which operates 28 restaurants, means big windfalls for the senior management team and the 300-odd private investors. Just seven years after launching, the share price has risen from £2.50 to the £10 it is today. It’s quadruple portions all round!

Bizspace branches out with new fund

Turnover for Bizspace, the provider of flexible managed workspace for small and medium-sized businesses, is up 52 per cent to £6.95 million, compared to £4.56 million in 2004. The business has rattled through a series of acquisitions in the past year, the latest being two new business centres, owned by Montgomery Property Group – one in Gloucester, the other in Croydon. After the completion of this acquisition, Bizspace will own and operate 61 sites nationwide comprising around 3.84 million sq ft, subdivided into more than 2,650 individual units.

The company has also teamed up with Electra Partners to launch the UK’s first managed workspace fund, which is backed by £1 million from Bizspace, £15 million from Electra and the remainder from Barclays debt finance. This will allow the business to expand rapidly in the next few years and buy new property without having to go back to shareholders for more funds.

Pre-tax profits are up 37 per cent from £1.62 million in 2004 to £2.23 million currently, and the company retains a strong balance sheet, with total net assets of £55.5 million and core occupancy at 84.8 per cent.

Imprint still making a good impression

Imprint has developed two brands, WoodHamill and Imprint Search & Selection. WoodHamill provides executive search services for board level commerce and front office investment banking positions, generally with salaries above £120,000 per annum. Imprint Search & Selection focuses on the middle to senior managerial area, covering commerce posts as well as middle management and back office financial services positions, broadly in the £70,000 to £120,000 salary range. Together, WoodHamill and Imprint Search & Selection currently employ approximately 120 staff, including about 100 fee-earners.

The company completed its first acquisition in January 2005. ECHM Group provides finance recruitment, principally to the professional services and commerce and industry sectors, focusing on the £25,000 to £70,000 salary market range. A second acquisition was completed in April 2005, which was the purchase of Morgan McKinley. With a focus on the £25,000 to £80,000 salary market in investment banking, together with its significant temporary and contract business, Morgan McKinley provided a clear fit with Imprint’s other operations. The key strategy for future growth will be further investment and the company plans to increase the number of fee-earners to in excess of 300, and pursue other acquisitions.

Out of Cruise Control

This year turned out stormy for one of last year’s predicted ‘stars’. Essex-based call centre agency Cruise Control went spectacularly bust in October 2005 with the loss of 200 jobs.

Founder and managing director Paul Moore claimed a farfetched annual turnover increase of 1,500 per cent, and before the company sank, is quoted as saying: ‘From time to time, with the growth we have experienced, there will be some growing pains. We endeavour to resolve disputes as quickly as possible.’ Not quickly enough, it seems, for the cruiselines it serviced, most of which barred Cruise Control from selling their products due to delayed payments, including P&O Cruises, Thomson Cruises and Norwegian Cruise Line.

Before trade was suspended, the company reportedly racked up between £8 million and £10 million in debt, with up to £50 million in forward bookings. Reports were rife in the travel industry that Cruise Control overspent on marketing, as well as demanding payments from customers up to 12 weeks in advance of departures.

The last plan to be hatched was that Cruise Control would join forces with Ladbrokes to offer poker cruises with on-board tournaments. This was clearly one gamble too far.

 

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