Belfast Telegraph

Wednesday 17 September 2014

Company snapshot: Chain Reaction Cycles Ltd.

Cycle company is riding high

Chain Reaction Cycles is still a relatively new business that has successfully continued to expand. Based in Ballyclare, it has established a large business with a significant turnover based on e-business, using internet transactions.

The company also retails a range of cycles, cycle parts and accessories through retail outlets.

Business turnover has continued to increase sharply. In 2011, it had nearly doubled in the last three years and had reached more than five times the levels of 2007.

A large proportion of sales have been to other EU countries and, in addition, over 39% of sales went to customers outside the EU. The company reports that it currently sells in over 100 countries.

Operating profit margins fell slightly in 2011 to just over 7% of turnover, down from over 12% in 2010. The company relies on only modest levels of finance from borrowed funds, so pre-tax profits have held similar margins.

The business relies on a combination of adequate stock holdings and good access to supplies. Five years ago, stocks of goods were worth nearly a third of the annual value of turnover.

As the business has expanded, stocks have risen in value and in December 2011 were valued at £28m.

The company undertook a number of development initiatives, including improved warehouse management systems, and recruited to some key managerial posts.

Employment numbers continued to increase in line with turnover. In 2011 an average of 465 people were employed, compared to 365 a year earlier.

The balance sheet value of shareholders' funds, with the addition of post-tax profits (and after dividend payments) rose from £19.5m in December 2010 to £23.9m in December 2011, an increase of 22%.

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