Outdoor health favours Maiden

A revitalised industry and a creative buyout team mean Maiden is set fair for flotation.

Maiden Outdoor’s results last week (MW May 26) prove that the combination of an economic upturn and a new attitude to the industry can make outdoor a highly successful medium.

Maiden increased pre-tax profits by 88 per cent from 2.3m in 1993 to 4.3m in 1994. Turnover increased by 22 per cent to 29.4m, compared to industry growth of 15 per cent last year.

The buyout team bought the company from family ownership in spring 1993 and immediately changed the direction of the company. Until Avenir’s purchase of Mills & Allen in 1989 and the Maiden buyout, UK outdoor had been seen very much as a property industry.

That fixed-cost property business suffered from cyclical upturns and downturns in the economy, making long-term growth and planning difficult.

More O’Ferrall managed to be a publicly-quoted company in those circumstances by restricting itself to the highest quality poster sites and the innovative Adshel medium.

Maiden’s new team brought in a marketing-led strategy intended to create premium products and services with added value. The idea was to purge the medium of its commodity nature and allow it to ride out cyclical downturns more successfully.

It has also followed a strategy of marketing the medium generically – with initiatives such as the free Scallywags bubblebath campaign to attract new advertisers. Last year, 12 per cent of its packages were sold to advertisers using the medium for the first time.

This led to better prices for its sites last year and, crucially, higher occupancy levels.

The management team em-phasises that flotation plans are an indicator of its long-term investment in the medium, but it is impossible to predict the company’s future market capitalisation or the precise date of the flotation.

Maiden’s planned flotation will have received a boost – at least for the moment – from the interest the City is taking in More O’Ferrall.

Since the company’s annual general meeting in late April, its share price has shot up from about 360p to 440p – putting it more than 27 per cent up on its year low of 344p.

Chairman Russell Gore-Andrews maintains the share price rise is due to the company’s growth – 1994 turnover was up nine per cent to 73.8m and profits were up 23 per cent to 9.5m – combined with a small number of tradable shares.

“There is quite a narrow market in our shares,” he says. “So if people want to buy in then the price will rise substantially.” He denies that any takeover bid is imminent.

About 70 per cent of More O’Ferrall stock is held by institutional shareholders, including 3i and Framlington, which have traditionally supported MO’F’s management. The City believes a buyout would be near-impossible to engineer without a very substantial war-chest.

Whatever the date of Maiden’s planned flotation, the City seems likely to be ready and waiting for another poster company.