Chic Paints


4.1. Chic Paints Ltd is a large, shareholder run company that manufactures specialist paints – such as those used on boats, cars and industrial machinery. It is a limited company, formerly part of Ashstead PLC, but was the subject of a management buyout ( MBO) from its previous owners six years ago by five of its directors. Greg Pearce, Dave Whistler, Ruth Jones, Ahmed Khan and Susan Mather are the current directors and all have shareholdings in the company.
  4.2. The objective aim of CPL is to establish themselves as one of the most expertly formulated, manufacturer of paints and allied products. Their aim is to sell their products on an international level to only big companies and not to the general public.
  4.3.   CPL was previously a manufacturer of everything and the managers decided to change its business model into a special niche product, paints . Now its main business is to work with special companies involved in the manufacture or repairers such as boats, cars and industrial machinery. Therefore, the company has no significant competitors such as in general paint products and the gross profit margin is a lot higher up to 30%.
4.4.   CPL has around 80 regular customers, and this repeat business accounts for around 80% of the company's turnover. The remaining 20% of turnover comes from one-off orders which the company secures
4.5.   Six years on, the company has steadily reduced its turnover from £200 million to £120 million but has improved its gross profit margin from around 12% at the time of the management buyout to around 30% today. Net assets over the same period have, however, increased from £20 million to over £25 million, the workforce has been reduced from around 500 to around 350 employees.
4.6. The organisation adopts a hierarchal structure as shown by the Organisation Chart which is included as Appendix 2 to this report. This type of organisational structure is typical for a large company, where accounting systems are...