IT’S got to be a smoke and mirrors job, says the record- industry type sitting in Sanctuary’s reception.

He is chatting to a mate, waiting for an appointment, both of them shaking their heads over the announcement of another leap in sales and profits at the London music group. Many in the record business find Sanctuary’s unstoppable rise hard to fathom.

Well, I don’t know about mirrors but there’s certainly smoke. “He. He. He,” chuckles Andy Taylor, Sanctuary’s ebullient executive chairman, lighting up another cigar as I run the line past him. Puffing away behind a vast, shiny desk in his ground-floor office at Sanctuary’s base in a converted dairy, Taylor clearly revels in the way he and his business are confounding expectations.

For a start, he is certainly not what you expect from a trendy music biz boss. Big and bald, tufty at the side, sporting a black suit and tie, wide, gold-framed glasses, a Geordie accent and a phlegmy laugh, he looks like a jovial walrus off to take tea with the Queen.

“I always wear a suit,” he says between puffs. “The artists like it.” And he chortles again.

Then there is the Sanctuary game plan. Taylor, 54, an accountant turned entrepreneur, and his business partner Rod Smallwood, former manager of the pop group Cockney Rebel, have managed to buck the trend of declining music sales and build a formidable, independent group by doing things differently: signing older acts, avoiding fashion-driven pop, concentrating on artist services (managing artists, booking their live tours, producing merchandise).

They are clearly doing something right. Last week Sanctuary announced sales up 36% and profits up 12% in the half year to March 31. That follows a 28% leap in sales to £152m last year.

The company now represents artists as diverse as Morrissey, Beyoncé, Alison Moyet, Kelly Osbourne and Iron Maiden. At a time when big music groups like EMI are laying people off, Sanctuary — listed on the main market since 1998 — is beginning to look like a very interesting investment.

How have Taylor and Smallwood pulled it off? “The music industry is in turmoil,” says Taylor, “because pop music doesn’t work any more. People are not prepared to buy an album of 10 tracks where only three are of interest to them. Those acts have such short lives that, while you get short-term return, you are not building anything for the long term.”

So, instead, Sanctuary has focused on working with older artists who have built up a fan base with consistent live performances: initially, heavy-metal bands, then 1980s acts, then a range of performers — urban, reggae — as Taylor has bolted on new firms and partnerships.

He fronts the business, Smallwood oversees artist services. Recently the market appears to have moved their way. Mature consumers, who have more money than teenagers, want to buy music by older, established bands. The emphasis is suddenly back on good, live acts, not “short-term marketed pop”. More income is coming in from touring, merchandising and image rights.

And it is the “modular” manner in which Sanctuary has been built that has been the bedrock of its success, according to Taylor.

“The creative people are the most important people here, the ones who discover and develop the acts we work with. And what we do is bring in these people and let them work in little modules. We have up to 100 of these little groups, and we could easily end up with 200 or 300 of them.”