RNS Number:8274X
Landround Plc
06 June 2007
LANDROUND PLC: FINAL RESULTS
FOR YEAR ENDED 31 JANUARY 2007
Landround plc, the AIM-listed promotions and loyalty rewards company, announces
its results for the year ended 31 January 2007.
* Growth in reward programme business in three existing territories
* Successful buy and fly! launch in Sweden
* Turnover of #9.7million (2005/2006 -16 months: #14.4million)
* Adjusted operating loss of #1.6 million (2005/2006 - 16 months: #2.1
million)
* Loss before taxation of #2.1 million (2005/2006 - 16 months: #2.2
million)
* Net cash at 31 January 2007 of #0.7 million (31 January 2006 - net
borrowings of #0.5 million)
* Dividend: no final dividend payable (2006: nil)
Financial Highlights
2007 2006* 2004
#'000 #'000 #'000
__________________________________________________________________
Revenue 9,730 14,381 11,311
Adjusted operating (loss)/profit + (1,644) (2,057) 763
(Loss)/earnings per share (31.0)p (29.6)p 3.3p
Dividend per share 0.0p 3.5p 10.5p
Cash outflow before financing (401) (1,323) (1,817)
Net cash / (borrowings) 725 (456) 875
__________________________________________________________________
* 16 month period
+ before exceptional items and goodwill amortisation
Landround's Chairman, David Owen, said "The year has been one of change and all
too gradual improvement. While the results are disappointing, Landround now has
a clear sense of direction and an executive team and Board equipped for
recovery.
I believe that Landround has now completed its restructuring and has moved from
transition to a stable environment in which the executive team, assisted by
committed non-executives, is able to build an income flow which will, in due
course, deliver the returns our shareholders deserve."
-ends-
For further information please contact:
David Owen, Chairman, Landround plc Tel: 01594 516096
Mob: 07976 723276
Colin Gibson, Chief Executive, Landround plc Tel: 01244 220150
Peter Shea, Daniel Stewart & Company plc Tel: 020 7776 6550
Paul Quade, City Road Communications Tel: 020 7248 8010
Mob: 07947 186694
CHAIRMAN'S STATEMENT
This year has been one of change and all too gradual improvement. While the
results for the financial year ended 31 January 2007 are disappointing,
Landround now has a clear sense of direction and an executive team and Board
equipped for recovery.
Turnover was #9.7 million for the year compared to #14.4 million in the previous
16 month period, while losses before taxation, exceptional charges, interest and
goodwill amortisation amounted to #1.6 million compared to a loss of #2.1
million in the 16 months ended 31 January 2006.
The loss per share was 31.0 pence (2006: loss per share of 29.6 pence). There
will be no dividend for the period.
While this is the second year in which I have had to report poor results, my
initial remit was to change the manner in which the Company was run and to bring
Landround to a position where it could achieve profitable, sustainable income
leading to earnings per share, cash balances and clear trading visibility. While
this must be still a work in progress, progress has been made and the Company
now has the ability to deliver on those expectations.
Last year I spoke of a fundamental rethink of our approach to the market and the
Company entering into a period of transition. Though all businesses are
constantly changing, I believe that Landround has now completed its
restructuring and that the Company has moved from transition to a stable
environment in which the executive team, assisted by committed non-executives,
is able to build an income flow which will, in due course, deliver the returns
that our shareholders deserve.
This development process necessitated further personnel changes and David Lyne,
Chief Executive Officer for over four years, decided to move into a consultancy
role with Landround. He was replaced by Colin Gibson, who joined us, originally
as Finance Director, at the end of January 2006. I would like to place on record
my thanks to David for his period of office and also for the assistance he has
given to Landround in his service as a consultant.
Colin has proved an eminently capable Chief Executive and it has been a pleasure
to work with him in undertaking the necessary turn round tasks in the past
sixteen months. He was succeeded as Finance Director by Tony Pope. Tony has
brought discipline to the finance role and his analytical abilities have proved
and continue to prove invaluable to Landround.
Management and Staff
As I presaged in last year's report, John Moxon retired from the Board at the
AGM. I thank him for his wise counsel. We have continued to benefit from the
energy and experience of Alan Williamson as a non-executive and, as part of the
fund-raising in December 2006, he was joined by Bill Brown, a Partner at
Bluehone, our largest shareholder. Bill has brought added financial and
commercial acumen and rigour to the Board and I am grateful for his advice.
During a difficult year, Landround's staff have demonstrated excellent
dedication and enthusiasm for the task of reshaping the business and have given
great support to the new management team. I thank them for this. The task is not
yet complete and we will need more of the same in 2007/8.
Prospects
The fund-raising brought much needed new funds to Landround and it was
heartening to raise more than originally sought and to see new shareholders
joining our register.
The market in which we operate has become, over the last few years, increasingly
competitive with travel now one of many motivational tools utilised by our
corporate clients. Additionally, competitors have entered the promotions field
with lower overhead bases and less commitment to a quality redemption service.
Therefore, we are gradually moving to a broader-based loyalty offering both in
the U.K. and overseas. This process will not be the work of one year but is
essential to counter the macro-economic risks affecting the Company.
The Chief Executive's Business Review (attached) contains a full review of
trading for the year passed. In summary, I believe that we are now seeing the
first fruits of the intense labour that has been expended by the team at
Landround. This year will be tough but the right team is in place and I have
confidence in their ability to deliver.
David Owen
Chairman
CHIEF EXECUTIVE'S BUSINESS REVIEW
1. General
The first seven months of the year, as previously reported, was a period during
which a significant restructuring of the business and its management team was
completed.
The balance of the year proved to be very difficult in the promotions side of
the business, with a settled UK sales team not being established until December
and poor sales results continuing until January.
Although the reward programme side of the business continued to make good
progress in a medium term, strategic sense, it did not produce anything like the
short term revenue needed to stem the poor trading results in promotions and the
overall result was a continuing period of losses.
2. Reward programmes
The buy & fly! reward programme is now well established in four European
countries - Spain, the UK, Ireland and Sweden. Separate credit card partners
have launched cards enabling reward point collection in Ireland and Sweden in
the last six months and this side of the business now has a truly international
focus.
Banesto, our Spanish partner, showed strong backing for the Compra y Vuela
programme during the year in terms of marketing activities, and there are now in
excess of 100,000 collectors registered. Although we have signed up two much
smaller partners, it is taking some time to expand the network of collection
opportunities.
The UK remains a very competitive market for travel-based loyalty plans in the
consumer market, with a number of major competitor products which have
significant financial backing and strong brands. Our buy and fly! programme is
based on the Morgan Stanley buy and fly! credit card.
The excellent value which our programme offers to the consumer was endorsed
during the year in comparison articles in both the Sunday Times and Which?
magazine, and also in the comparison website Uswitch. These endorsements
together with increased marketing efforts boosted the registered cardholder base
for the Morgan Stanley card significantly in the early months of 2007.
The buy and fly! programme in Ireland has shown excellent progress recently with
a number of new issuing partners coming on board in different sectors, including
the launch of a credit card with MBNA early in 2007. We aim to capitalise on the
momentum being achieved with an increased number of planned marketing activities
taking place in association with our partners.
Resurs bank in Sweden re-launched their "Supreme card" with the buy and fly!
programme in the last few months of the financial year and progress to date has
been extremely good in terms of cardholder numbers and a strong growth pattern
has been achieved, supported by focused marketing activities.
Since the year end, the signing of an "umbrella" agreement with a major
international credit card issuer is expected to lead to the roll out of a travel
reward programme under their brand in a large number of countries across Europe,
the Middle East and Africa over the coming two to three years (the first country
has already launched its programme). The selection of Landround as their partner
to implement this multi-territory programme after a rigorous proposal process is
perhaps the single most significant endorsement of our rewards business to date.
Over a period of a few years, as increasing numbers of their country-based
operations take up the programme, we hope it will produce a very significant and
expanding base of recurring quality income to add to that already developing
under the buy and fly! brand.
3. Promotions
Our promotions business has not experienced a good year. In the UK and Ireland
there have been fewer opportunities for large individual promotions and the flow
of smaller promotions has been patchy, not aided by a complete change in the
sales function during the year - first through restructuring and subsequently
through resignations and replacements.
Most of these disruptions should now be behind us, and significant effort is
going into increasing activity levels in telesales and in targeting agency and
larger corporate discussions.
Since the year end, we have been re-examining our product portfolio and have
been successful in introducing both fixed fee offerings (outside of travel) and
also the UK's first "green" - i.e. carbon neutral - flights promotion with North
Face. These are both areas in which we see significant potential in 2007/8.
The launch of our promotions business in Spain, on the back of redemption items
sourced for the Compra y Vuela reward programme, has prospered with a good
presence in the agency market having been established. Although the number of
deals won to date is relatively small, some of these have been of a significant
size. We expect that 2007/8 will see reasonable growth after this good start.
4. Travel Offers
The Travel Offers business has continued to contribute profit, albeit at a
slightly lower level than in prior years. The absence from direct sales of a
single large contract which boosted the prior year's results was one factor, but
average responses to adverts placed in its main mail order business were also
down. A number of management changes and relocation to Chester took place during
the year, thus reducing running costs.
Plans for the current year include bringing fulfilment in-house to further
reduce costs, improving the transparency of the product through the website, and
experimentation with some new sales channels.
5. Looking forward
This has been a very difficult year for the business and recent levels of losses
are neither acceptable nor sustainable in the medium term. Inconsistent
promotions sales and their impact on the short term levels of profit and cash
flow are now the major challenge.
The strength of the rewards operation as it builds up gradually in existing
contracts - and as new contracts are added - supports the management team's
belief that this is a valuable business moving towards consistent profitability.
The significant umbrella contract signed post year end strengthens that
conviction and should certainly bring that consistent profitability much closer.
The confidence of our major shareholders and our bank in the long term success
of our business model has been and remains essential. The new management team
now have a firm grip on the measurement, reporting and control of the business.
Improved success in promotions sales is a key focus for short term profitability
and cash flow, but our continuing success in growing the reward programmes
business internationally will ultimately deliver the success for which our
shareholders and other stakeholders have already waited too long.
Colin Gibson
Chief Executive
Landround plc: Group Profit and Loss Account
For year ended 31 January 2007
16 months
ended
31 January
2007 2006
#'000 #'000
_____________________________________________________________________________
Turnover 9,730 14,381
Cost of sales (6,839) (10,438)
_____________________________________________________________________________
2,891 3,943
Operating expenses
Administrative expenses (4,535) (6,000)
_____________________________________________________________________________
(1,644) (2,057)
Amortisation of goodwill (108) (145)
_____________________________________________________________________________
Group operating loss (1,752) (2,202)
Reorganisation costs (250) -
Net interest payable (69) (35)
_____________________________________________________________________________
Loss on ordinary activities before taxation (2,071) (2,237)
Taxation (75) 543
Loss on ordinary activities after taxation (2,146) (1,694)
_____________________________________________________________________________
Loss per share (basic and diluted) (31.0p) (29.6p)
_____________________________________________________________________________
Balance Sheets as at 31 January 2007
Group Group Company Company
2007 2006 2007 2006
(restated)
#'000 #'000 #'000 #'000
_______________________________________________________________________________
Fixed assets
Intangible assets 1,372 1,480 - -
Tangible assets 449 620 - -
Investments - - 230 230
_______________________________________________________________________________
1,821 2,100 230 230
Current assets
Stock 68 90 - -
Debtors - due within one year 1,067 2,462 4,801 4,769
Debtors - due after more than one year 496 437 - -
Cash at bank and in hand 725 617 1,575 1
_______________________________________________________________________________
2,356 3,606 6,376 4,770
Creditors - falling due within one year
___________________________________________
Borrowings | - (1,073) - - |
Other creditors | (1,525) (1,802) (15) (3) |
| (1,525) (2,875) (15) (3) |
|___________________________________________|
Net current assets 831 731 6,361 4,767
_______________________________________________________________________________
Total assets less current liabilities 2,652 2,831 6,591 4,997
Provisions for liabilities and charges (1,530) (1,168) - -
_______________________________________________________________________________
Net Assets 1,122 1,663 6,591 4,997
_______________________________________________________________________________
Capital and reserves
Called up equity share capital 701 286 701 286
Share based payment reserve 23 - 23 -
Share premium account 4,055 2,888 4,055 2,888
Capital redemption reserve 10 10 10 10
Profit and loss account (3,667) (1,521) 1,802 1,813
_______________________________________________________________________________
Equity shareholders' funds 1,122 1,663 6,591 4,997
_______________________________________________________________________________
Group Cash Flow Statement
16 months
ended
31 January
2007 2006
#'000 #'000
_____________________________________________________________________________
Cashflow from operating activities (591) (67)
Returns on investments and servicing of finance (65) (35)
Taxation 285 (303)
Capital expenditure and financial investment (30) (260)
Equity dividends paid - (658)
_____________________________________________________________________________
Net cash outflow before financing (401) (1,323)
Financing 1,570 (3)
_____________________________________________________________________________
Increase/(decrease) in cash 1,169 (1,326)
_____________________________________________________________________________
Reconciliation of operating loss to net cash flow from operating activities
16 months
ended
31 January
2007 2006
#'000 #'000
_____________________________________________________________________________
Operating loss (1,752) (2,202)
Exceptional Items (250) -
Depreciation 201 257
Decrease in stocks 22 13
Decrease in debtors 973 863
(Decrease) / increase in creditors (278) 208
Increase in provisions 362 649
Charge for share-based payments 23 -
Amortisation of goodwill 108 145
_____________________________________________________________________________
Net cash flow from operating activities (591) (67)
_____________________________________________________________________________
Reconciliation of net cash flow to movement in net funds / (debt)
16 months
ended
31 January
2007 2006
#'000 #'000
_____________________________________________________________________________
Increase/(decrease) in cash in the period 1,169 (1,326)
Cash outflow from decrease in hire purchase financing 12 3
_____________________________________________________________________________
Change in net funds arising from cash flows 1,181 (1,323)
Currency translation - (8)
_____________________________________________________________________________
Movement in period 1,181 (1,331)
Net (debt)/funds at start of period (456) 875
_____________________________________________________________________________
Net funds/(debt) at end of period 725 (456)
_____________________________________________________________________________
Notes
1. The above financial information for the period 31 January 2007 has been
extracted from audited financial statements and does not constitute
statutory accounts within the meaning of section 240 of the Companies Act
1985. Statutory accounts for the year ended 31 January 2007 will be
delivered to the Registrar of Companies.
2. The auditors have issued an unqualified audit report on the statutory
accounts for the year ended 31 January 2007. The audit report did not
include any reference to any matters which the auditors drew attention
to by way of emphasis, without qualifying their report.
3. The preliminary results announcement has been prepared using the
accounting policies set out in the Company's statutory accounts for
the period ended 31 January 2006, with the exception of the
reclassification of the redemption provision noted below.
4. Historically the accrual for the potential future liabilities for
unredeemed reward programme points and vouchers has been included
within other creditors (part of Creditors - amounts falling due within
one year). The directors now consider it more appropriate to classify
this within Provisions for liabilities and charges, and therefore the
prior year comparatives have been adjusted to reflect this. The impact
has been to increase net current assets and total assets less current
liabilities by the amount of the provision.
5. Turnover represents the net total of goods sold during the financial
year excluding VAT.
6. Exceptional items of #250,000 were incurred in the year, relating to
redundancy costs following a fundamental shift in sales strategy. This
led to the redundancies of 20 employees in June 2006 representing the
majority of the UK sales force and a quarter of the total group workforce.
7. The directors do not recommend the payment of a final dividend.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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