• Log in
• Register free
• Subscribe
• Help
• Tour & Trial IC Advantage

• Share Tips
• Trading
• Companies
• Markets Data
• Columnists
  • Bear Bull
  • Chris Dillow
  • No Free Lunch
  • Simon Thompson
  • The Trader
  • Your Opinion
• Funds Data
• Covered Warrants
• Research Tools
• Investment guides
• Q and A
• Blog
• Video

Subscribe today

Celebrate our 150th anniversary with fantastic savings on a joint magazine and IC Advantage subscription.

Subscribe today and save £150

A close shave with the King

Created:

30 June 2009

Written by:

Alistair Blair

Will King is a man on a mission. Also known as King of Shaves, Mr King's mission is to take the crown of another monarch, King Gillette - which really was the name of the founder of the Gillette razor company. Well, maybe not. When Gillette was bought by Procter & Gamble a few years ago, the price was $60bn (£36bn), and not much of that was represented by its Duracell batteries division. It would probably not be a very smart move to take on Gillette and plan to win. Nonetheless, Gillette's margins are astronomic and you can see the appeal of winning even a sliver of the global shaving market.

Mr King started off in business with a shaving oil in 1993. This slightly odd-looking product was sold in a 5ml bottle, about one fiftieth the size of a tube of, say, Gillette shaving foam. Nonetheless, it was a quality product (I have tried it) and seems to have gained a useful toehold in the market. It was followed up with a steady rollout of new grooming products. The range now covers women's shaving, "young skin" and eye cream, each backed by a fabulous selection of superlatives.

Last year it was time to move from shaving software into shaving hardware. The "Azor" was "the first British designed, engineered and manufactured razor in over 100 years". It boasted "Hybrid Synergy" and "internationally patented TST technology". Together with three "Endurium" blades, it retailed for under a fiver.

In 2007, Will King's company, KMI (which is not quoted), reported sales of £14m and profits of £900,000. Last year, fortified by an acquisition, sales rose to £22m. However, investment in the launch of the Azor took its toll, and profits slipped to £109,000. As of December 2008, shareholders' funds were £1.3m and net debt was £3.7m.

Taking on the leviathan...

Mr King is keenly aware that, for over 100 years, Gillette has fought off (or occasionally bought off) virtually every rival razor manufacturer. Indeed, but for anti-monopoly legislation, it would have no rivals. And he is equally aware that his pockets aren't deep enough to snip a bit of Gillette's market share.

Hence the launch last week of the "Shaving Bond". This has been marketed in the national press with all the panache hitherto applied to shaving oils and razors. If you'd like to back Mr King, just head for www.shave.com, and you'll find the application form is only four clicks away. He's trying to raise £5m, but the issue will go ahead even if it only raises £500,000. The bond pays 6 per cent and is repayable after three years.

The documentation is rather rudimentary. Despite being dubbed a "bond", which to most people denotes an element of safety, the proposition plainly states that the funds raised will be applied "solely for marketing the King of Shaves brand" and, in the small print, observes that this is unsecured debt and there is no certainty that the company will be able to repay the bonds.

...with a peashooter

But applicants are offered no financial information whatsoever about the King of Shaves Company Limited, which has been demerged from KMI, and is the entity raising the money. Perhaps that is because the King of Shaves Company has a paid up share capital of just £1, and made a loss of £865,000 on its first eight months of trading. You'd have to be a heroic devotee of the King of Shaves to think that lending this company £5m was a good investment: investors are being invited to put up a big chunk of risk capital needed to take on Gillette for a measly 6 per cent a year.

And not just in the UK. The King of Shaves brand is also being promoted in Australia, the US and Japan. I don't know how much Gillette spends promoting itself in these countries, but it would be a thought-provoking figure.

I was astonished to find an issue of this nature promoted in the national press with such sparse backing documentation. Mr King is surely entitled to offer the reported 1m users of his brand a chance to invest in his company, at whatever rate he sees fit and they are prepared to accept. But to do so without providing even the most basic information about the company's finances is a corner that in my view, he should not be allowed to cut.