Britain's Most Admired Companies: The high-wire act at Tesco

Another double for the dominant supermarket chain and its surefooted leader as they scoop the top awards again in our Britain's Most Admired survey. The skill with which Sir Terry Leahy and his team have stormed the market both overseas and online is phonomenal. But there are flaws that could cause an almighty tumble.

Last Updated: 31 Aug 2010

The Cheshunt Mob has done it yet again and 2006 is Tesco's year. The UK's mighty grocer has walked off with both accolades in MT's Most Admired Company Awards, presented in association with Mercer Human Resource Consulting: for Most Admired Company itself and, in Sir Terry Leahy, Most Admired Leader. Tesco has now taken those dual honours three times in four years, which is a record.

Leahy consistently performs an amazing high-wire act. The whole country is sitting below him, watching as he climbs his angled steel tightrope ever higher. There are many who expect to see him stumble, some who actively wish him to fall. But, like a latter-day Blondin, he just keeps on placing one soft-soled shoe in front of the other, gripping his balancing pole and heading for the stratosphere. Next year is his 10th anniversary as CEO and Leahy is still only 50.

This sure-footedness is extraordinary. Turnover and profits just keep going up and up. Tesco's half-year results, announced in October, showed profits up by 12.5% to £1.15 billion, with a huge boost coming from international sales. From the Czech Republic to Taiwan, its sales abroad are growing at three times the rate they are in the UK. At online arm, profits were up an amazing 43.1% and one fifth of UK sales are now non-food.

However, as MT has pointed out before, there are factors that may cause a wobble. We have been concerned for several years that in the Community & environmental responsibility category Tesco does not pass muster. According to its peers, Tesco is far from the greenest or most responsible of grocers.

This year, Tesco has fallen below halfway in this CSR category - it comes a pretty dismal 136th out of the 239 companies. Despite its stellar performer on the global stage, Tesco is regarded as below the mean in terms of UK corporate citizenship, beneath the average performer in the British business firmament. This is not good enough. There are dark rumours that those who give Tesco advice in the CSR area find their entreaties falling on deaf ears.

The heat is now really being turned up on the supermarkets in this contentious area. The Stern Report on climate change drew further attention to the adverse effects of 'food miles' and the sector is under further attack over excessive packaging. But if one talks to campaigning NGOs in the area of sustainability, they speak glowingly of, for example, Marks & Spencer's and Waitrose's efforts to do the right thing, but they despair of their conversations with Tesco.

This year, there is another small but perhaps growing worry for Leahy. In the vital Quality of goods & services category, Tesco falls to 33rd place overall, down from 10th last year. What is most significant is that Tesco is beaten by both M&S and J Sainsbury in this category. This must be a risk as the company becomes ever broader in the range of goods and services it offers - everything from mobile phones to pesto sauce, insurance and washing-machines.

There is also next year's long-awaited push into the US, which has proved a graveyard for so many ambitious UK retailers. 'What Tesco has achieved is hugely impressive,' says Professor Mike Brown of Nottingham Business School, the creator of and brains behind the Most Admired survey. 'It's unprecedented in the 15-year history of the survey.

'The fact remains that one has to look for chinks in its armour - we've spotted them early in fallers from grace before - and there are issues to which Tesco should probably pay close attention. Nevertheless, these caveats aside, Tesco remains an immensely powerful organisation and is probably the country's best-managed company.'

The other big story this year is the rise of the quietly excellent Johnson Matthey, second in the overall poll. Founded way back in 1817 as an assayer of gold, the organisation is an example of a British company at the top of its game. In its Chemicals sector it swept the board, coming first in every single quality category. These days, it dominates the market for automotive catalytic converters. In addition, it is an expert in the area of fuel cell technology. When somebody finally cracks that nut and we can all cast aside the oil-sucking internal combustion engine, there is a mountain of money to be made and Johnson Matthey will be in there.

Carphone Warehouse is another big climber - up 45 places to number 5. It also achieved the distinction of coming first in every single quality category among General retailers.

It has been quite a year for Carphone Warehouse, with as many downs and negative headlines as ups. But its peers clearly see it building for the future. In some senses a victim of its own success, with demand for its TalkTalk service outstripping its ability to cope, Carphone Warehouse has laid down the foundations for making itself a mega-player in the international telecommunications arena.

GlaxoSmithKline has fought its way back into the top 10, climbing 61 places to number 4. And Balfour Beatty, not so long ago a whipping boy for the shortcomings of rail privatisation, is winning orders and acclaim worldwide. It rises 14 places to number 6.

Then there is also Michael Spencer's Icap, the inter-broker dealer, which has shot up 93 places into the top 10 at number 6. Spencer has even been suggested as a potential bidder for London Stock Exchange. That takeover would have been a real turn-up for the books.

But the most celebrated story of 2006 has to be the revival of Marks & Spencer and the placing of its CEO Stuart Rose second in the Most Admired Leader poll. We profile Rose on page 38 of this month's issue. M&S is unquestionably on a joyous roll at the moment. From being the butt of jokes and finding itself so weak that it wound up in the sights of the predatory Philip Green, it has returned to the collective heart of the British shopper as the nation's favourite store. Who thought it could ever go glam again, and aren't its white boxer shorts in packs of three a serious bargain? Rose loves every minute of it.

Life does not, sadly, smell of roses for every company in Most Admired. Down at the bottom end, times are tough for the stragglers. British Energy gets the wooden spoon this year, amid headlines that it is 'cracking up' - which is a serious problem if your main raw material is uranium.

The company had boiler tube cracking at Hunterston B and Hinkley Point B reactors, not to mention leaks in the piping of the cooling system at Hartlepool. Its share price took a fearful battering. Still, with nuclear energy back on the agenda as a key part of our departing prime minister's solution to global warming, the only way if you're at rock bottom is up (assuming, of course, the French don't get all the contracts for the new ones).

Also among the bottom feeders is the hapless MFI, which was ignominiously sold for £1 to a private equity consortium in late summer. ('That was 99p more than most of its furniture is worth,' according to one wit.) The agony is over as MFI is now delisted and therefore ineligible for Most Admired next year.

Not so for Rentokil Initial, which came last in every quality category except one in the Support services sector - the exception being a second place in Community & environmental responsibility. (This is alarming news for those in the CSR lobby who claim a direct correlation between being a good corporate citizen and the bottom line.)

Also in the flock of lame ducks is Northern Foods, which continues to suffer - last in every measure in the Food producers sector except CSR and Capacity to innovate, in which it trailed in seventh and eighth respectively out of 10. Clearly, Goodfella's pizzas and Fox's biscuits just don't get the nation's juices flowing like they used to.

Mind you, it didn't do as badly as iSoft, which came in at Number 235. One of the main contractors behind the NHS's ill-fated IT revamp, iSoft has taken a reputational drubbing this year. The whole £2 billion modernisation of patient records has come close to unravelling. iSoft is now under investigation by regulators for accounting irregularities.

Among the wreckage there is a glimmer of hope, though. iSoft came top in its Software and Computer sector for its Quality of goods & services. Unfortunately, it came last for Quality of management, Financial soundness, Value as a long term investment, Community & environmental responsibility and Use of corporate assets. This is quite an achievement, which suggests it is a high-IQ techie lion led by donkeys. Now, where have we heard that before?

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1 1 Tesco 69.80
2 11 Johnson Matthey 69.35
3 2 BP 69.33
4 65 GlaxoSmithKline 69.17
5 50 Carphone Warehouse 69.08
6 20 Balfour Beatty 67.50
7 97 Icap 67.40
8 31 Rolls-Royce 67.24
9 3 Cadbury Schweppes 67.21
10 13 Man Group 67.20
11 59 AstraZeneca 67.00
12 - Berkeley Group 66.22
=13 6 Serco Group 66.00
=13 21 Rotork 66.00
15 66 Land Securities 65.47
16 4 Unilever 65.44
17 124 Marks & Spencer 65.21
18 56 J Sainsbury 64.86
19 7 Diageo 64.74
20 114 Close Brothers 64.25
21 10 HBOS 63.71
=22 8 Vodafone 63.64
=22 16 IMI 63.64
24 17 BHP Billiton 63.42
25 - McCarthy & Stone 63.06
26 25 HSBC 63.05
27 18 Wolseley 63.00
28 51 Aviva 62.86
29 14 BG Group 62.76
30 - Kier Group 62.57
31 92 InterContinental Hotels 62.56
32 86 BAE Systems 62.40
33 - Domino Printing 62.33
34 63 3i 62.00
35 12 Carnival 61.86
36 - ARM Holdings 61.67
37 157 Virgin Mobile 61.54
38 85 BT Group 61.50
39 34 Royal Dutch Shell 61.48
40 58 BAA 61.05
=41 19 Royal Bank of Scotland 61.00
=41 5 BSkyB 61.00
43 9 Mitchells & Butlers 60.92
44 90 Hammerson 60.86
45 35 WPP Group 60.83
46 109 Morgan Sindall 60.75
47 30 Rio Tinto 60.67
48 48 British Airways 60.64
49 43 Tate & Lyle 60.63
50 38 Next 60.50
51 53 British Land Co 60.42
52 40 Marshalls 60.40
53 22 Capita Group 60.33
54 45 Persimmon 60.27
55 27 Halma 60.03
56 74 Carillion 59.92
57 33 Weir Group 59.90
58 137 Victrex 59.88
59 54 First Choice 59.78
60 29 Greene King 59.75
61 93 Boots* 59.64
62 47 Barratt Developments 59.62
=63 99 Schroders 59.50
=63 60 Wilson Bowden 59.50
65 57 GUS 59.28
66 - easyJet 59.21
67 163 Scottish & Southern Energy 59.20
68 - Redrow 59.18
69 84 De Vere* 59.17
70 41 Legal & General Group 59.00
71 - Spirax Sarco Engineering 58.83
72 32 Pilkington* 58.77
73 138 Brixton 58.67
74 131 Investec 58.60
75 - Bellway 58.44
76 70 Northern Rock 58.20
77 55 George Wimpey 58.10
=78 120 SIG 58.00
=78 62 Reckitt Benckiser 58.00
=80 150 ICI 57.80
=80 119 Alliance UniChem 57.80
=82 89 Scottish & Newcastle 57.60
=82 - Bovis Homes 57.60
84 52 Taylor Woodrow 57.57
85 77 Smith & Nephew 57.42
86 46 BOC* 57.38
87 42 Cobham 57.31
88 76 Associated British Foods 57.19
89 75 Barclays 56.99
90 49 Bunzl 56.97
91 94 Friends Provident 56.80
92 - Resolution 56.67
93 23 Tomkins 56.56
94 - Galliford Try 56.50
95 162 Premier Foods 56.44
96 141 Stagecoach 56.30
97 83 Quintain Estates 56.10
98 87 Smiths Group 56.02
99 100 Liberty International 56.00
100 142 Pearson 55.93
101 81 Reed Elsevier 55.58
102 113 FKI 55.53
103 193 Whatman 55.40
=104 159 Rexam 55.36
=104 - ROK Property Solutions* 55.36
106 155 Provident Financial 55.20
107 151 Cattles 55.00
108 15 Burberry Group 54.95
109 - DSG International 54.89
110 28 SABMiller 54.88
111 128 Prudential 54.75
112 79 National Grid* 54.67
113 190 Royal & Sun Alliance 54.50
114 158 National Express 54.40
115 71 GKN 54.38
116 37 Enterprise Inns 54.37
117 107 Hays 54.32
118 108 Morgan Crucible 54.25
119 122 Reuters 54.14
120 - Costain Group 54.08
121 - Northgate Information 53.92
122 181 Associated British Ports 53.75
=123 136 Old Mutual 53.67
=123 98 Yell Group 53.67
125 110 Restaurant Group 53.61
126 152 Cairn Energy 53.60
127 173 Robert Wiseman 53.57
128 111 Meggitt 53.35
129 129 Xstrata 53.33
130 - RHM 53.31
131 130 Lloyds TSB 53.24
132 101 Standard Chartered 53.21
133 - Charter 53.13
=134 143 Croda International 53.00
=134 112 VT Group 53.00
=134 - Center Parcs* 53.00
137 69 Emap 52.92
138 - QinetiQ Group 52.91
139 - Monsoon 52.78
140 95 JD Wetherspoon 52.76
141 118 Admiral 52.74
142 144 Brambles Industries 52.48
143 148 Great Portland Estates 52.39
=144 102 Whitbread 52.33
=144 - Laird Group 52.33
146 132 Anglo American 52.25
=147 133 Shire 52.00
=147 - Psion Teklogix 52.00
149 24 Punch Taverns 51.94
150 116 BSS 51.75
=151 - Hikma Pharmaceuticals 51.67
=151 165 Arriva 51.67
153 - Keller Group 51.43
154 - Premier Farnell 51.40
155 73 St James's Place Capital* 51.25
156 44 Wolverhampton & Dudley 51.23
157 - Low & Bonar 51.00
158 96 Kingfisher 50.82
159 187 Signet 50.68
160 154 Halfords 50.64
161 153 International Power 50.61
162 186 Cookson 50.57
=163 199 Telecom plus 50.50
=163 - Spectrics 50.50
=165 167 Electrocomponents 50.40
=165 - Anvescap 50.40
167 - Informa 50.29
168 - Henry Boot 50.14
169 195 FirstGroup 50.00
170 180 Yule Catto 49.83
=171 170 Corus 49.75
=171 - Spirent 49.75
=173 121 Hanson 49.71
=173 149 Arla Foods UK 49.71
175 178 Slough Estates 49.67
176 203 WH Smith* 49.45
177 61 Amec 49.44
178 174 Kesa Electricals 49.39
179 - Sage Group 49.33
180 88 Travis Perkins 49.17
=181 211 Elementis 49.00
=181 188 Chemring Group 49.00
=181 - Go-Ahead Group 49.00
184 - BRIT Insurance 48.97
=185 161 HolidayBreak 48.83
=185 - Computacenter 48.83
187 1 1 SCi Entertainment Group 48.42
188 127 BBA 48.25
189 146 Dairy Crest 48.21
190 - First Technology* 48.00
191 - TT electronics 47.75
192 - Autonomy 47.58
193 91 Daily Mail & General Trust 47.50
194 115 United Utilities 47.47
195 213 WM Morrison 47.21
196 156 HMV 47.10
197 194 Matalan 46.67
198 139 Kelda 46.13
199 - Eircom* 46.00
200 - Group 4 Securicor 45.96
201 - Dimension Data 45.79
202 175 ITV 45.64
203 184 Umeco 45.50
204 164 Alliance & Leicester 45.31
205 202 SSL International 45.29
206 171 Compass 45.24
=207 - Regents Inns 45.20
=207 201 London Merchant Securities 45.20
209 207 Vedanta Resources 45.08
210 - Seven Trent 44.92
211 - Invensys 44.75
212 185 Bradford & Bingley 44.72
213 - Kazakhmys 44.67
214 - Vanco 44.30
215 169 Scottish Power 44.22
216 - Countrywide 43.63
217 - MyTravel 43.57
218 - LogicaCMG 43.54
219 198 Thus Group 43.50
220 176 SkyePharma 43.33
221 205 Millennium & Copthorne 43.29
=222 218 COLT Telecom 43.20
=222 208 F&C Asset Management 43.20
224 196 Dyson Group 42.75
225 64 Centrica 42.53
226 200 Kingston Communications 42.33
227 - Xansa 42.17
228 209 Woolworths 41.90
229 - Drax 41.83
230 189 Northern Foods 41.75
231 - MJ Gleeson Group 40.64
232 211 Delta 40.50
233 - Misys 39.42
234 214 Rentokil Initial 39.37
235 - iSOFT 38.33
236 - Porvair 38.25
237 210 Cable & Wireless 38.17
238 206 MFI Furniture 36.86
239 220 British Energy 36.13

*Merged, acquired or name changed


In conjunction with Nottingham Business School, MT asked Britain's 10 largest public companies in 24 sectors (nine in the case of banking) to evaluate their peers. Participants rated their nine sector rivals on a scale of 0 to 10 (0 = poor, 5 = average and 10 = excellent). Performance was rated against nine criteria. Analysts at leading City investment firms were also polled. On the basis of these scores, three rankings were arrived at: all 239 companies (above); top five overall on each criteria (tables p29); and league tables in each category (pp31, 32, 35). Respondents were also asked to name the leader they most admired. Research conducted by Professor D Michael Brown of NBS and Stuart Laverick.



Pharma giant GSK is in fine fettle, negotiating flak from animal rights activists and advancing 61 places to fourth Most Admired overall - proof that fear of bird flu is a boon to those who make the vaccines. It caps a fine year by joint-winning the Quality of goods and services award. Garnier became chief exec when Smith-Kline Beecham merged with Glaxo Wellcome in 2001.


Dunstone's outfit marches from 50th to fifth Most Admired overall, sharing the Capacity to innovate award and coming second in Quality of marketing. Carphone Warehouse launched its free broadband service in April and demand was so high the company struggled to cope. Despite the resulting £4.6m loss, Dunstone's peers clearly don't see him losing his magic touch.


In his two years as boss, Carson has led the world-leading maker of automotive catalytic converters to great things. Joint winner of the Quality of goods and services award, it topped its sector and was second overall. Founded in 1817 as a gold assayer, it is still based in Hatton Garden, London.


With roots in the BBC Microcomputer, ARM is the most successful survivor of the early '80s British computing start-ups. It designs and makes the compact high-performance RISC processors used in just about every modern gadget from mobile phones to MP3 players. In a market dominated by giants like Intel and Motorola, ARM lives on its wits and is thus a deserving joint winner in the innovation category. East was made CEO in 2001.


The Most Admired Company two years ago has now slipped to ninth overall. A year blighted by an overblown salmonella scare in which it is most unlikely anyone became ill is probably one Cadbury would probably rather forget. Yet Stitzer's outfit is still admired above all others for its Quality of marketing, and it came within a whisker of taking the prize for attracting and retaining talent as well.


Clare has just taken over the hot seat at Barratt, following the retirement of long-standing boss David Pretty. With UK house prices showing no signs of deflation, Barratt is having a good run. Its finance staff know their onions too: the firm won this year's Use of corporate assets award.


Most fittingly for a company whose name is synonymous with the very highest standards of workmanship, Rolls-Royce is this year's joint winner of the Quality of goods & services award. Despite the delays to the Airbus superjumbo, many of which will have its Trent 900 engines, numerous orders for other Rolls-powered aircraft - plus the prospect of a revival in the nuclear industry - have made 2006 a great year for the company, and for boss Sir John Rose.


Verwayen has one of the toughest jobs on the corporate block. BT is a high-profile easy target for whingeing and protest - not unlike the old British Rail. In addition, Telecoms is always a low-scoring sector in Most Admired and BT comes third behind Vodafone and Virgin Mobile. But it has always striven to be a good corporate citizen and its efforts have yielded the award for Community & environmental responsibility.


The year yet again belongs to Tesco and Leahy as they do the double - Most Admired Company and Most Admired leader, respectively - for the third time in four years. Tesco also wins the awards for Quality of management, Financial soundness and Value as a long-term investment. For Community and environmental responsibility, however, it has fallen below the overall Most Admired mean.


An impressive year for Virgin Mobile, which takes the award for Ability to attract, develop & retain top talent, as well as climbing to third place in its sector rankings. It has been a busy year for the telecoms division, bought by NTL/Telewest for £962m (effectively a reverse takeover). Alan Gow, Virgin Mobile's former FD, took over as MD in July, having joined the business in 1999.


Company performances were judged against nine criteria. Here are the
highest-scoring contenders in each category ...


1 Tesco 8.6
2 Icap 8.4
3 BP 8.3
4 Man 8.2
5 Balfour Beatty 8.16


1 Tesco 9.0
2 Vodafone 8.8
3 HSBC 8.7
=4 BP 8.5
=4 Johnson Matthey 8.5


1 Virgin Mobile 8.7
2 Cadbury Schweppes 8.29
3 Johnson Matthey 8.25
4 Tesco 8.2
5 Unilever 8.1


=1 GlaxoSmithKline 8.3
=1 Johnson Matthey 8.3
=1 Rolls-Royce 8.3
4 BT Group 8.2
5 AstraZeneca 8.0


1 Tesco 8.3
2 GlaxoSmithKline 8.0
3 BP 7.9
4 Serco Group 7.8
5 Icap 7.8


1 Barratt Developm'ts 8.1
2 Rotork 7.62
=3 Persimmon 7.60
=3 Tesco 7.60
=5 Berkeley Group 7.55
=5 BP 7.55


1 Cadbury Schweppes 8.4
2 Carphone Warehouse 8.2
3 British Airways 8.14
4 Virgin Mobile 8.12
=5 Diageo 8.0
=5 Man Group 8.0


1 BT Group 8.0
=2 AstraZeneca 7.5
=2 GlaxoSmithKline 7.5
=2 BHP Billiton 7.5
5 Serco Group 7.4


=1 ARM Holdings 8.3
=1 Carphone Warehouse 8.3
3 Johnson Matthey 8.0
4 Quintain Estates 7.78
5 QinetiQ Group 7.77


The 24 industrial sector league tables form the nuts and bolts of Britain's Most Admired survey, revealing with stark simplicity the level of respect in which each contender is held by its main market competitors. Our reports summarise how the rivalries were played out in the uncertainties of 2006


1 HBOS 63.7
2 HSBC 63.1
3 Royal Bank of Scotland 61.0
4 Northern Rock 58.2
5 Barclays 57.0

In another winning performance, Halifax Bank of Scotland - now led by Andy Hornby, Europe's youngest bank boss at 39 - beat bigger rivals to head its sector for the second year running, despite the Farepak furore. Scoring well for Quality of management and Capacity to innovate, it pipped high-street giant HSBC, despite the larger firm's £6.7bn half-year pre-tax profit. HSBC's success in emerging markets helped this record-breaking performance. RBS, third, also had a good 2006, with pre-tax profits up 23% to £4.5bn for the half-year to 30 June. CEO Fred Goodwin's stateside expansion continues apace. Northern Rock may be the minnow, but the Newcastle-based lender can take on all comers in the vital mortgage market.


1 Berkeley Group 66.2
2 McCarthy & Stone 63.1
3 Persimmon 60.3
4 Barratt Developments 59.6
5 Wilson Bowden 59.5

Barnardo's boy Tony Pidgley's Berkeley Group topped this new sector, with profits of £165m and a 24% return on capital invested. Following last year's £250m disposal of Crosby, Berkeley is focusing on urban brownfield development in the south-east. The only fly in its ointment is a fifth place for Community & environmental responsibility. McCarthy & Stone, the retirement-home specialist, is thriving, thanks to the power of the grey pound. Persimmon, the UK's largest housebuilder, sold 13,000 homes at an average price of £188,000 in the first half of '06. Barratt's new CEO Mark Clare, formerly of British Gas, will be hoping to better this year's profits, static at just over £390m. At fifth, Wilson Bowden's interim profits fell slightly to £85.5m.


1 Wolseley 63.0
2 Marshalls 60.4
3 Pilkington* 58.8
4 SIG 58.0
5 BSS 51.8

Wolseley, the world's leading plumbing and heating gear supplier, romped home this year three points clear of the field. Double-digit growth made it a City darling in a sector not renowned for them. Recent activities include European expansion, with the £1.35bn purchase of Danish rival DT. CEO Chip Hornsby expects to spend £400m on acquisitions this year and is issuing 60m new shares to cut debt and finance growth. Yorkshire-based stone and concrete products business Marshalls made a respectable £38m profit on sales of £360m. A BMAC swansong this year for glassmaker Pilkington, now owned by Nippon Sheet Glass, is offset by two top five debuts: roofing/insulation specialist SIG and pipeline/ventilation outfit BSS Group.


1 Domino Printing 62.3
2 ARM Holdings 61.7
3 Morgan Crucible 54.3
4 Laird Group 52.3
5 Psion Teklogix 52.0

Cambridge-based inkjet specialist Domino Printing made an impressive BMAC debut this year. The company - producing hi-tech equipment for printing barcodes, best-before dates and product-tracing data - made a £14m profit on sales of £100m in '06. Second in sector (and just down the road from Domino) is the UK's most successful (only?) microchip manufacturer, ARM Holdings. Chances are your mobile phone, MP3 and PDA all run on ARM chips. Morgan Crucible, supplier of ceramic and carbon components to the aerospace and telecoms sectors, is completing a large restructuring effort and is seen by many as a juicy M&A target. Psion Teklogix returned to form in fifth place, thanks to the success of its b2b mobile computing business.


1 Johnson Matthey 69.4
2 Victrex 59.9
3 ICI 57.8
4 BOC* 57.4
5 Croda International 53.0

A storming performance from Johnson Matthey to head this sector, plus a remarkable second place overall. The firm (founded in 1817 as a gold assayer) is now the world's leading manufacturer of car catalytic converters and a key player in the development of environmentally friendly fuel cells. Pre-tax profits for '06 rose 28% to £213.8m. Runner-up Victrex offers just one product: a high-performance plastic called Peek, popular in a variety of industries. ICI is two places up on last year, but a shadow of its former self. Industrial gases group BOC was sold to German forklift maker Linde for £8.2bn in September. Yorkshire firm Croda made £49.2m profit in '05 from surfactants and lipids for the cosmetics and dietary supplements markets.


1 Rolls-Royce 67.2
2 BAE Systems 62.4
3 Cobham 57.3
4 Smiths Group 56.0
5 GKN 54.4

A vintage line-up, topped for the third year running by Rolls-Royce. Strong performances from its aero engine and marine engineering divisions helped R-R to a 22% rise in half-year profits, to £324m. Second is BAE Systems, which continued a strategic shift to the US with the sale of its stake in Airbus parent EADS. Will it go for a full US listing soon? Aerospace group Cobham, founded by aviation pioneer Sir Alan, has orders worth £1.7bn on its books and has been touted as a takeover target in the City. Smiths Group's security arm is booming as demand for its radiation detectors and security-screening equipment rises. The travails of the US car industry knocked GKN's automotive components arm, but its aerospace business continues to do well.


1 Balfour Beatty 67.5
2 Kier Group 62.6
3 Morgan Sindall 60.8
4 Carillion 59.9
5 Galliford Try 56.5

Balfour Beatty used to languish well down the Most Admired league tables, beset by the very public travails of its rail maintenance arm. But it has had a dramatic reversal of fortune, acknowledged with top slot in its sector and a 14-place leap up the main ranking to sixth overall. In October, it added the £363m contract to extend the East London line to a bulging order book - shared with Carillion (in fourth place). Bedfordshire-based Kier Group builds everything from houses and malls to PFI-funded public amenities; it made profits of £59m in '06. Third-placed Morgan Sindall, whose businesses include Lovell, the UK's leading provider of affordable housing, was ranked first for Capacity to innovate. Infrastructure specialist Galliford Try was fifth.


1 Rotork 66.0
2 IMI 63.6
3 Halma 60.0
4 Weir Group 59.9
5 Spirax Sarco Engineering 58.8

Supplier of gearboxes, valves, sluices and actuators to the oil and water industries, Bath-based Rotork notably gave James Dyson his first job. The oil-price boom helped it to a 26% rise in revenues and a £23m profit in the first half of the year. Birmingham's finest, IMI, is a conglomerate producing everything from power-generation gear to air-conditioning systems and vending machines. Halma, the world's biggest producer of lift-door safety sensors, should continue to do well as demand for its water supply management and anti-leak systems rises. Weir Group's new FD Keith Cochrane will be hoping to better the firm's 44% first-half rise in operating profits. Steam systems specialist Spirax Sarco came in fifth, with interim profits of £28.2m.


1 Cadbury Schweppes 67.2
2 Unilever 65.4
3 Tate & Lyle 60.6
4 Associated British Foods 57.2
5 Premier Foods 56.4

A bumpy year for sector leader Cadbury Schweppes. For a business that usually scores high on quality and CSR, July's salmonella alert at its Herefordshire factory was a shock that resulted in the recall of a million chocolate bars and cost the firm £20m. But chewing-gum is a star performer, and global leader Wrigley's is now in Cadbury CEO Todd Stitzer's sights. Unilever always scores well in Most Admired, despite its struggle to effect central control of its disparate businesses. But its rivals respect its latent strengths. A new chairman is to be named. By divesting non-core assets, Tate & Lyle is turning into a 'highly renewable ingredients' group featuring star performing sweetener Splenda. Less sugar, but still out of the strong comes forth sweetness.


1 BSkyB 61.0
2 WPP Group 60.8
3 Pearson 55.9
4 Reed Elsevier 55.6
5 Reuters 54.1

BSkyB outstripped its rivals in its Capacity to innovate, with CEO James Murdoch unveiling a long list of ventures, including the launch of a high-definition TV service and a broadband offering. Its video-on-demand services are set to launch next year. There is evidence too that Murdoch Snr is listening to his son. Many were surprised that Rupert is backing James' commitment to make BSkyB a carbon-neutral company. Advertising giant WPP has blamed a difficult UK market for slower growth, though its biggest market, North America, continues to grow steadily - but not as fast as Latin America or China. Pearson enters the top five in third place, following a confident financial performance, including the return to profit of the FT Group.


1 GlaxoSmithKline 69.2
2 AstraZeneca 67.0
3 Reckitt Benckiser 58.0
4 Alliance UniChem 57.8
5 Smith & Nephew 57.4

GlaxoSmithKline took pole position, pushing AstraZeneca down to second. Together, these pharma giants stand head-and-shoulders above their rivals. GSK climbed a tremendous 61 places to register fourth in the overall ranking, coming joint first for Quality of goods & services. It's set for a strong winter too - Switzerland became the first country to stockpile GSK's experimental bird flu vaccine for humans. Add to this its £303m acquisition of US consumer healthcare group CNS and the imminent production of its promising new cervical cancer drug Cervarix. AstraZeneca, meanwhile, suffered setbacks with failed developmental medicines, although new CEO David Brennan has made boosting the company's drug pipeline a priority.


1 BP 69.3
2 BHP Billiton 63.4
3 BG Group 62.8
4 Royal Dutch Shell 61.5
5 Rio Tinto 60.7

Overall, BP slips one to become Britain's third most admired company, yet it still tops its own sector. The oil group has had its fair share of failures over the past year, despite the booming oil price - including its biggest-ever pipeline leak, at Prudhoe Bay in Alaska. The group admitted making 'serious mistakes over the last 18 months', and even CEO Lord Browne conceded that the past two years have not been good. BHP Billiton climbs one sector place this year but drops overall, falling out of the top 20. The world's biggest mining group recently reported a 64% annual rise in profits after a year of strong prices. Third-placed BG Group achieved a 53% rise in pre-tax profit for its first nine months, thanks to improved gas output - and those higher prices again.


1 InterContinental Hotels 62.6
2 Carnival 61.9
3 First Choice 59.8
4 De Vere* 59.2
5 Center Parcs* 53.0

Turbulent times for the travel industry - high fuel prices, terror scares and a hot summer at home - yet InterContinental Hotels rode them well. The world's largest hotel company extended its reach in China and Japan and remains bullish. Carnival's shares are the worst-performing of the FTSE-100 this year - blamed on those fuel prices again. Then there was the fire on its Star Princess liner in March, which claimed one life and left Carnival with a bill for $33m. But its peers praise it for Financial soundness, Long-term investment value and Quality of marketing. Tour operator First Choice closed some European operations, but £153m of acquisitions and a successful long-haul focus meant it weathered 2006 in good shape.


1 Land Securities 65.5
2 Hammerson 60.9
3 British Land Co 60.4
4 Brixton 58.7
5 Quintain Estates 56.1

Land Securities, Britain's largest listed property company, rose a clear eight points on last year to take pole position - confirmation perhaps that the restructuring begun two years ago is paying off. There's more good news to come - its conversion to a real-estate investment trust at the start of 2007, which will bring tax savings to shareholders of around £75m a year. Hammerson performed well too, climbing from fifth to second. It beat expectations of its first-half results, reporting a profit rise of 56%. Third-placed British Land dropped two places. It's the end of an era for the property group, which waves goodbye to veteran chairman Sir John Ritblat (replaced by the Stock Exchange's Chris Gibson-Smith) and quits its Regent's Park HQ.


1 Aviva 62.9
2 Legal & General Group 59.0
3 Friends Provident 56.8
4 Resolution 56.7
5 Prudential 54.8

It has been a good year for the sector, stimulated as it was by changes to the UK pension rules in April. This, combined with strong overseas growth that included the £2bn acquisition of American assurer AmerUs, helped Aviva regain first place in its sector. Aviva's solid financial performance was rewarded with 10th place in the overall ranking for Financial soundness. The only major glitch during the past year was its failed £17bn bid for Prudential. Second-placed Legal & General performed less strongly. Despite global new business growing by a third, the company has not chosen to follow the strategy of its larger peers of buying into emerging markets. It prefers to focus on the UK. Resolution, formed in 2005, enters in fourth place.


1 Diageo 64.7
2 Mitchells & Butlers 60.9
3 Greene King 59.8
4 Scottish & Newcastle 57.6
5 SABMiller 54.9

Diageo, number one in its sector and 19th most admired company overall, also achieved joint fifth for Quality of marketing. In September, the group reported an 11% hike in profits - driven largely by sales of Smirnoff and Johnnie Walker - despite the unusual drop in Guinness consumption in Ireland. Sales for the year rose from £8.97bn to £9.7bn, with a 13% growth in international business. Mitchells & Butlers' big news for 2006 was its £497m purchase of 239 Beefeater and Brewers Fayre outlets, and the rejection of a bid from property mogul Robert Tchenguiz. Greene King found the effects of the Scottish smoking ban not as bad as expected, and reaped the benefits of a World Cup summer. July results showed profits up 25% at £119.6m.


1 Tesco 69.8
2 Marks & Spencer 65.2
3 J Sainsbury 64.9
4 Next 60.5
5 Boots* 59.6

Tesco is top again, and boss Terry Leahy is Most Admired Leader, to boot. But there are signs that the competition is fighting back. The behemoth is set to make record profits of £2.5bn for '06 by virtue of rising non-food sales and big overseas expansion. But what a year for M&S! The high street giant leapt from 124th place overall to 17th, coming sixth for Quality of goods & services (Tesco managed only a poor 33rd in this key attribute). Half-year profits for the resurgent chain jumped 32% to £405.1m, helped by an ad campaign featuring Twiggy and the dapper Bryan Ferry. J Sainsbury, too, is well on the road to recovery. The supermarket chain posted half-year pre-tax profits of £194m, discounting one-off costs - up from £87m a year ago.


1 Serco Group 66.0
2 Capita Group 60.3
3 Bunzl 57.0
4 Rexam 55.4
5 Hays 54.3

It was a reprise for Serco, which took the sector spoils again, although it slipped from sixth to 13th overall. Successes include clinching a seven-year deal to run and maintain London's Docklands Light Railway, and heading the race for the MoD's Future Provision of Marine Services contract, worth £1bn. Capita is in fine fettle, despite the loss of founder/CEO Rod Aldridge, who stepped down after flak over a personal loan to Labour. It's on the shortlist for 21 bids, worth a total of £2.8bn, and should be kept busy by Gordon Brown's drive to cut public-sector costs. Bunzl is averaging a £150m-a-year spend on acquisitions. This year's included Canadian packaging distribution firm Morgan Scott and US safety equipment supplier United American Sales.


1 Carphone Warehouse 69.1
2 GUS 59.3
3 DSG International 54.9
4 Kingfisher 50.8
5 Halfords 50.6

Carphone Warehouse stayed ahead in its sector, and leapt from 50th to fifth overall. Its free broadband service cost £70 to launch, but that may be eased by its £370m purchase of Time Warner's AOL UK - making it the UK's third-biggest broadband provider. CEO Charles Dunstone can now concentrate on his phone retail chain, which was rocked by the loss of Vodafone handset sales to Phones4U. GUS demerged Home Retail Group (owner of Argos and Homebase) and Experian, its credit-checking wing. Argos sales were buoyed by the World Cup, helping the group to a £3.7bn valuation; Experian's market value is £5.7bn. A year of overseas expansion for DSG (formerly Dixons), made up for sluggish performances at Currys and PC World.


1 Vodafone 63.6
=2 Virgin Mobile 61.5
=2 BT Group 61.5
4 Telecom plus 50.5
5 Eircom 46.0

Vodafone, the world's biggest mobile operator, retained top spot in a year that CEO Arun Sarin may prefer to forget (memories of boardroom infighting, shareholder revolt and an unfortunate £28bn asset overvaluation). Still, growth in developing markets helped it to a pre-tax profit of £4.8bn, one-off costs notwithstanding. It was second overall, behind Tesco, for Financial soundness. Virgin Mobile was bought by NTL in July for £962m and then got involved in the tussle with BSkyB over the future of the troubled ITV. It rose from fourth to equal second, scooping the gong for Talent management. BT is doing rather well and always tries to be a good corporate citizen, witness its top marks in Corporate and environmental responsibility.


1 Northgate Informat'n Slns 53.9
2 Sage Group 49.3
3 Computacenter 48.8
4 SCi Entertainment Group 48.4
5 Autonomy 47.6

Northgate Information Solutions claimed the sector title against the odds - its HQ was destroyed in December's Buncefield oil depot explosion. The company was the focus of private-equity bid rumours for much of the year, but talks faltered. Sage was busy overseas, easing its reliance on small domestic businesses. The accounting software firm made several moves into North America, atoning for April's failed £334m bid for Nordic software group Visma. Forecasted sales for the year to end-September were £927m. Computacenter was back on track after a tough 2005. With clients like HP cutting commission and hardware manufacturers selling products direct a la Dell, the PC supplier refocused on large-scale company IT services.


1 BAA 61.1
2 British Airways 60.6
3 easyJet 59.2
4 Stagecoach 56.3
5 National Express 54.4

A fine BMAC swansong for BAA - now sold for £10bn to Spain's Ferrovial. It pipped reigning champ British Airways. BAA's jewel, the £4.3bn Heathrow Terminal 5 project, is 80% complete, on schedule, on budget and an example of how to run ambitious construction projects. BA itself was buffeted by rising fuel costs, a £2.1bn deficit in its pension fund, the loss-making BA Connect subsidiary, an OFT investigation into fixing fuel surcharges, and August's bomb plot. Subsequent security measures cost BA £100m. Still, in the half-year to 30 September, profits rose 1.6% to £371m. Budget rival easyJet came out of the tumultuous summer with a 56% rise in annual profits, helped by passenger numbers up 11.5% and new routes.


1 Icap 67.4
2 Man Group 67.2
3 Close Brothers 64.3
4 3i 62.0
5 Schroders 59.5

Icap knocked Man Group off the top spot, and the £3.3bn firm was rated the sixth Most Admired overall. It has been a meteoric rise: the inter-dealer broker came 97th in 2005. City eyes will be watching to see whether the rumoured merger with the London Stock Exchange will materialise. Man's first-half sales reached a record $10.6bn, an impressive rise from $3.7bn last year. Iconic CEO Stanley Fink looks set to exit on a high in April. Meanwhile, Close Brothers achieved record profits of £157.3m. The investment bank sold Minova, a UK-based chemicals group, in October, making £240m, a whopping 17 times its initial investment. Its asset management, corporate finance and banking wings all beat previous records this year.


1 Scottish & Southern Energy 59.2
2 National Grid 54.7
3 International Power 50.6
4 United Utilities 47.5
5 Kelda 46.1

At least someone can be pleased about soaring fuel prices. Scottish & Southern Energy kept its promise not to palm price hikes off on consumers in '06; customer ranks have subsequently swollen to seven million. The downside: the pledge may cost the company £1.2bn by next April. National Grid continues its US expansion, buying gas distributor KeySpan for $7.3bn (£3.8bn), one of the largest US acquisitions ever by a UK firm. Power station owner International Power saw pre-tax profit for the half-year to end-June rise from £192m to £350m. The Ultilities crown was claimed last year by Centrica, but the owner of British Gas - which has lost customers in droves over its escalating rates - hobbled home in eighth place this time.


1. Sir Terry, Leahy Tesco - 24.3%
2. Stuart Rose, Marks & Spencer - 15.0%
3. Sir John Browne, BP - 14.1%


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