Good things come in small packages
THE great and good of the City gathered at London’s Dorchester Hotel this week to celebrate the success of Britain’s leading small to midsized listed companies.
Despite a few high-profile shockers – the recent collapse of Monetise’s share price is just one example – the sector makes an important contribution to UK plc.
Not only are these companies more optimistic and resilient than their larger brethren, according to Michael Higgins, chairman of the Quoted Companies Alliance, but collectively they punch above their weight.
Small to mid- caps are larger than the powerful aerospace industry. They are also bigger than the car manufacturing sector. And they even dwarf Britain’s influential pharmaceuticals business. Yet they are given a far lower profile.
The presence of many investment houses l ooking f or the next big thing among the 350 dinner guests at Wednesday’s QCA dinner is a clear sign that London remains an attractive place for growth companies and for those who back them with the capital to expand.
Alexander Justham from the London Stock Exchange is adamant the City’s most important institution remains committed to ensuring small and mid- sized firms have access to equity capital, which is essential for their development.
He told guests that AIM-quoted firms added the equivalent of £25bn to UK GDP last year, along with 731,000 jobs.
They are Britain’s employment creators and are anticipating new hires will increase by 7pc in the next 12 months, while the average turnover is expected to rise by 17pc.
The QCA’s Higgins reckons those figures alone justify the use of the term ‘engines of growth’ for the sector his organisation represents. On the evidence of the ebullient mood at the Dorchester, this key part of Britain’s economy will continue to thrive.
Muck to brass
ONE small company which has attracted star fund manager Neil Woodford i s Propelair, which emerged from one man’s desire to reduce the amount of water used when flushing the lavatory. It’s a tale of true British ingenuity.
Garry Moore founded the business in 2001 and last year lured more than £2m from the Woodford Equity Income Fund.
During a hosepipe ban, Propelair’s chief executive, who came from an engineering background with BT, turned his mind to how to reduce the amount of water used in a typical lavatory cistern – where each flush uses up to nine litres of potable water.
The Propelair t echnology reduces water usage by 84pc and needs just 1.5 litres of water per flush, as well as reducing energy consumption. It works by using an air pump. The toilet lid is closed, forming a seal, and the air, along with a small amount of water, cleans the bowl.
Organisations t hat have adopted Propelair’s system include Royal Bank of Scotland, halving the bank’s water costs.
Propelair will soon look to overseas markets to sell its product either through direct exports or a local presence. It could be a much-needed British export success story when George Osborne’s March Of The Makers looks to have slowed to walking pace.
Arms dealers
THE world’s largest defence and security exhibition opens next week at London’s ExCel Centre at a time when the Government desperately needs to give fresh impetus to British exports.
This is a serious showcase for British-made equipment for military and security forces and is therefore regarded as controversial in some quarters, such as campaigners against the arms trade.
Inevitably protests will occur outside but the focus inside the exhibition halls will be on how to retake ground lost to rival manufacturers, including the French.
Lobby group ADS wants soldiers, sailors and airmen to help punt British equipment overseas. It’s certainly true to say that the backing of the Government for tanks, fighter jets and ships gives them an important cachet when companies such as BAE Systems are trying to sell them overseas. Which purchaser, after all, would have much confidence in a platform that a manufacturer’s own government has declined to buy?
Much lip service will also be given looking ahead to the potential ramifications of the upcoming Strategic Defence and Security Review, which will set military budgets for the next several years.
The 2010 version was an unmitigated disaster, leaving the UK without a maritime patrol aircraft or combat jets to equip the Royal Navy’s aircraft carriers. British industry – and her military – cannot afford another such failure.