Unaudited Final Results for the Year Ended 31 January 2008
LANDROUND PLC
�
("Landround" or "the Company")
�
�FINAL UNAUDITED RESULTS
FOR YEAR ENDED 31 JANUARY 2008
�
Landround plc, the AIM-listed reward programmes and promotions group,
announces its unaudited results for the year ended 31 January 2008.
*�Overall revenue increased by 25% to �6.6million (2006/2007:
�5.3million)
*�Loss from operations (before exceptional items) reduced by 77% to
�0.4million (2006/2007: �1.6million)
*�Gross margin increased by 9% from 55% to 60%
*�Operating expenses reduced by 5%
*�Cashflow of �0.4million generated in the year (2006/2007:outflow
of �0.4million)
*�Net cash at 31 January 2008 of �1.1million (31 January 2007:
�0.7million)
*�Revenue growth of 22% in existing buy & fly! reward programmes
*�Revenue growth of 9% in promotions division
*�Three new reward programme contracts signed during the year
*�Two existing reward programmes renewed / extended
*�Two further new reward programme contracts signed since the year
end
�
Financial Highlights
� 2008 2007
�'000 �'000
Revenue 6,568 5,273
Loss from operations �* (377) (1,644)
Loss before taxation (1,677) (1,963)
Loss per share (12.3)p (29.3)p
Cash inflow / (outflow) before financing�������� 390 (401)
Net cash 1,116 725
*���������� before exceptional items
�
Landround's Chairman, David Owen, said "One year on and I am pleased
to report an improvement to both our financial and operational
performance. Though we continue to report a loss, exacerbated by
non-recurring exceptional items, progress has been made and we have
achieved external forecasts. It is particularly pleasing to report on
the cash generated during the course of the year and our position at
the end thereof."
�
�
For further information please contact:
�
David Owen, Chairman Mobile: 07976 723276
Landround plc���
� � �
Colin Gibson, Chief Executive Landround plc�� Telephone: 01244 220150
� � �
Simon Leathers, Telephone: 020 7776
Daniel Stewart & Company plc 6550
�
Paul Quade, Telephone: 020 7248
City Road Communications�������������������� Mobile: 8010
07947 186694
� � �
Chairman's Statement
�
One year on and I am pleased to report an improvement to both our
financial and operational performance. Though we continue to report a
loss, exacerbated by non-recurring exceptional items, progress has
been made and we have achieved external forecasts. It is particularly
pleasing to report on the cash generated during the course of the
year and our position at the end thereof.
�
Our management team has knitted well after the changes of last year.
I have been able to step back from my previous hands-on involvement
and allow Colin Gibson, your Chief Executive, and Tony Pope and
Franco�Sessini, your two executive plc directors, to focus on
developing our business model in line with the strategic objectives
set down by your Board.
�
Turnover was �6.6 million for the year compared to �5.3 million in
the previous period, while losses before taxation, exceptional
charges and interest amounted to �0.4 million compared to a loss of
�1.6 million in the year ended 31 January 2007.� The loss per share
was 12.3 pence (2007: loss per share of 29.3 pence).� There will be
no dividend for the period.
�
Your Company has continued to develop its range of promotional
offerings during the past year and our move into Fixed Fee activity
through the acquisition of Fixed Fee Plus Limited has added an area
of the market to which we had little access in the past. Your
executives have continued to recruit new members to this team, as
foreseen in my last report. While we seek always to raise the
standard of our people in all areas, we are satisfied with the core
competence now available to us.
�
In the provision of long-term loyalty reward programmes, we have
added to our European contracts with contract wins with Citigroup,
though our contract period with Banesto Group has come to an end. We
have substantially strengthened our international resources and have
expectations of an improved performance.
�
In the UK, we await developments arising from the takeover by
Barclays of the Goldfish selection of cards, including the former
Morgan Stanley buy & fly! card. Ireland continues to yield benefits
for your Company with our relationship with Tesco of particular
value.
�
Travel Offers Limited, our consumer-facing hotel programme, operates
in a changing market and we have kept this division under review
throughout the year and continue to do so.
�
I am glad to be able to reiterate my comments of last year regarding
your executive team. Colin Gibson has matured considerably as a Chief
Executive and has shown an excellent grasp of our business model and
its marketing. Tony Pope, your Finance Director, has built a strong
team around him and provides laudable financial discipline and
negotiating skills. Franco Sessini continues to contribute at the
highest level and it has been pleasing to note the bond that has
developed within this triumvirate.
�
My non-executive colleagues, Alan Williamson and Bill Brown, have
supplied wisdom and good counsel for which I thank them.
�
Management and staff
It is a pleasure to pay tribute to our people, who have endured some
difficult times with great fortitude. I thank each and every one.
�
Prospects
We steer our ship through rough seas with financial events far beyond
our control. However, we continue to work hard and transact business.
I remain confident of your Company's ability to deliver on the
promise so long awaited.
�
We remain fully aware of our status as a micro cap stock and I would
assure shareholders that your Board considers opportunities to
increase shareholder value.
�
Shareholder travel privileges
�
Our package of shareholder travel privileges continues to be popular
with our private shareholders and the intention is to extend the
current package.
�
David G Owen, Chairman
�
Business Review
�
General
�
2007/8 has been a year of solid if not spectacular progress for
Landround.� The management team feel that the turnaround of the
business is now well on track and while the result before exceptional
charges remains negative, losses are well down on the prior period
and lower in the second half than in the first half.
�
There are also a number of factors not yet reflected in the financial
results that support increased optimism for 2008/9. In particular,
the opening up of new business streams and significant strengthening
and broadening of the sales management function bode well as does the
impact on commercial decisions of continually improving management
information and control.
�
We have a greater breadth of resources across the business with an
ability to deliver a wider range of reward and promotion solutions to
clients in more territories than ever before.� This is starting to
show itself in an increasing range of higher value opportunities
although there is still much potential not yet realised.
�
Reward Programmes
�
Overall reward programme revenues were 38% higher than the prior year
total due mainly to strong performances in Sweden, the UK and from
the new business, White Label Rewards.
�
buy & fly!
�
The buy & fly! reward programme is established in four European
countries - Spain, Sweden, the UK and Ireland.�
�
In Spain, the Compra y Vuela programme performed steadily at a high
level during the year.� However, since the year end the initial three
year term of the contract with our partner Banesto has expired and
the bank have elected to pursue a different customer reward strategy
rather than renew the programme.� Our local team is now exploring the
possibilities of relaunching the programme with another partner.
�
Although this change was somewhat unexpected, it results in part from
a determination on our part to ensure that any renewal of the
contract was on commercial terms that were better balanced in our
favour.� Based on three years' experience and the management
information now available to us, we do not expect the loss of this
programme to have any significant impact on our profitability.
�
Resurs bank in Sweden relaunched their "Supreme Card" with the buy &
fly! programme in the last few months of 2006/7 and, supported by
focused marketing activities, the programme grew strongly during
2007/8.� In the third quarter, based on this success, we renegotiated
and extended the original contract and the bank issued a new "Supreme
Card Woman" which also carries the buy & fly! reward programme.� A
comprehensive catalogue of rewards including flights, cruises,
apartments and leisure rewards has been developed for the programme.
�
In the UK, our buy & fly! card reward programme with Goldfish saw
good growth in the first eight months of the year based on a very
generous initial incentive being offered to new cardholders.� When
this offer was modified in the autumn, the growth in new cardholders
fell away as potential customers pursued other offers.� Although the
programme has a solid core of engaged customers, it is unlikely that
many new initiatives will be taken in marketing the programme until
the second half of 2008/9 following the acquisition of Goldfish by
Barclays.
�
In Ireland, where the buy & fly! programme is a true multi-partner
programme, Tesco Ireland remains at its core and the number of Tesco
registered members collecting points and the number of points sold
has remained fairly constant.� We are addressing plans in the current
year to improve the level of customer engagement further as a basis
for a potential expansion of the programme later in the year.� There
have been a number of changes in the other Irish partners in the
programme during the year and since the year end and the recruitment
of new partners is an area of particular focus in 2008/9.
�
No new country buy & fly! programmes were launched in the year.�
Eastern European countries where credit card use is increasing and
travel rewards are at more of a premium probably represent the
largest future opportunity for this business but, despite a number of
promising prospects, none of these have yet crystallised in the form
of contracts.
�
White Label Rewards Limited
�
This new subsidiary of the group was set up to focus on a different
reward programme offering to the market - those single partner
programmes where the client wants to run the programme under their
own brand and control all aspects of the programme marketing rather
than seek to gain the advantages of a multi-partner approach under
the buy & fly! brand.� Typically such programmes focus on flight
rewards and compete directly with frequent flyer co-branded cards.
�
White Label Rewards Limited has now been selected as Citigroup's
partner in five countries across Europe, Middle East and Africa
regions.� In three of these countries - Portugal, Belgium and Sweden,
programmes have already been launched. Contracts have been signed for
another two countries with launches expected in the near future.�
With even reasonable levels of success, we expect the contribution to
the Landround group's revenue and profitability to grow steadily from
these contracts over the coming years.
�
Promotions
�
Promotions revenue in 2007/8 finished the year slightly ahead of the
�1.5 million of revenue achieved in 2006/7 and this represented a
disappointing result, particularly for our "traditional" travel
promotions business in the UK, Ireland and Spain, where revenues were
well down on the prior year and on expectations.
�
Sales staff and management changes have been made in all three
territories which we are hopeful will deliver improved results in
2008/9 despite difficult economic conditions in these markets.�
�
In the UK market, the year did however see improved revenue with the
agency sector, a sales channel where our results had not been good
for some time.� This included a significant holiday prize promotion
for a leading ice-cream brand which has been repeated in 2008/9.
�
The launch of a new business line in non-travel based fixed fee
promotions was also a feature of the year.� Although only one deal of
this type was achieved (during the launch preparation stage), it was
a significant one with a major drinks manufacturer.� We are finding
that having this additional service in our portfolio opens many new
doors for us with customers and agencies and in some cases prevents
doors being closed with those who have decided that they want a
promotion which is not based on travel or leisure.� There is however
a long way to go in exploiting the full potential that we see.
�
Promotions sold to other international customers and in some cases to
existing credit card reward partners for the promotion of their other
card programmes made a significant contribution to promotions revenue
in the year based on a small number of higher value deals.
�
Travel Offers
�
The Travel Offers business appears to us increasingly to be at a
crossroads.� Average responses to adverts placed in its core mail
order business are on a generally downward trend.� Management changes
and the bringing in house of certain functions reduced running costs
during the year but we believe that the business needs to find new
sales channels if it is to succeed.�
�
A number of changes have already been made to the website but the
implementation of a significantly improved web marketing plan is seen
as the principle immediate challenge, alongside a recognised need to
demonstrate more clearly the value in the core product.
�
Looking forward
�
Progress in 2007/8 has been slower than we would like but the
recovery of the business from the position it was in two years ago
was never going to be instant.� In overall terms, we are broadly on
track against revenue and profit expectations set with our bank and
with shareholders in the December 2006 fundraising and ahead in terms
of cash generation.
�
We have signed some important new reward contracts and have made
significant progress in terms of realigning the overheads, management
and products of the business with market demands.
�
Our aim of being a more broadly based international rewards and
promotions business with a strong base of recurring income from blue
chip customers thus ensuring consistent profitability is appreciably
closer.� We expect to move much closer to that goal during 2008/9.
�
Colin Gibson, Chief Executive
�
Consolidated Income Statement
for the year ended 31 January 2008
� 2008 2007
� �'000� �'000 �'000 �'000
Revenue � 6,568 � 5,273
Cost of sales � (2,659) � (2,382)
Gross profit 3,909 � 2,891
Administrative expenses: � � � �
������������ - operating expenses (4,286) � (4,535) �
������������ - exceptional items (see (1,280) � (250) �
note 3)
� � (5,566) � (4,785)
Loss from operations � (1,657) � (1,894)
Analysed as: � � � �
Loss from operations before � (377) � (1,644)
exceptional items
Exceptional items � (1,280) � (250)
Loss from operations � (1,657) � (1,894)
Net finance expense � (20) � (69)
Loss before taxation � (1,677) � (1,963)
Income tax expense � (42) � (60)
Loss for the year attributable to (1,719) � (2,023)
equity holders of the parent
� � � � �
Loss per share (basic and diluted) � (12.3p) � (29.3p)
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Consolidated Balance Sheet as at 31 January 2008
� 2008 2007
�'000 �'000
� �
Non current assets � �
Goodwill 362 1,480
Property, plant and equipment 276 449
Deferred tax asset 571 613
� 1,209 2,542
Current assets � �
Inventories 46 68
Trade and other receivables 773 1,017
Cash and cash equivalents 1,255 725
Current tax asset - 45
� 2,074 1,855
� � �
Total assets 3,283 4,397
� � �
Current liabilities � �
Financial liabilities (139) -
Trade and other payables (1,099) (1,525)
Provisions (1,539) (950)
� (2,777) (2,475)
Non current liabilities � �
�
Provisions (857) (580)
� (857) (580)
� � �
Total liabilities (3,634) (3,055)
� � �
Net (liabilities) / assets (351) 1,342
� � �
Equity � �
Share capital 701 701
Share based payment reserve 48 23
Share premium 4,055 4,055
Capital redemption reserve 10 10
Translation reserve 1 -
Retained earnings (5,166) (3,447)
Equity attributable to the equity holders of the (351) 1,342
parent
�
�
Consolidated Cashflow Statement
�for the year ended 31 January 2008
�
� 2008 2007
�'000 �'000
� �
�
Cash generated from operations 389 (591)
Income taxes received 45 285
Interest paid (37) (76)
Net cash from operating activities 397 (382)
� � �
Investing activities � �
Interest received 17 11
Purchases of property plant and equipment (12) (30)
Acquisition of subsidiaries (92) -
Cash acquired with subsidiaries 80 -
Net cash from investing activities (7) (19)
� � �
Financing activities � �
Finance lease payments - (12)
Proceeds from issue of shares (net of expenses) - 1,582
Net cash from financing activities - 1,570
� � �
Net increase� in cash and cash equivalents 390 1,169
Cash and cash equivalents at the beginning of the period 725 (444)
Effects of exchange rate changes 1 -
Cash and cash equivalents at the end of the period 1,116 725
�
�
Reconciliation of loss from operations to cash generated from
operations
�
� 2008 2007
�'000 �'000
� �
Loss before taxation (1,677) (1,963)
Depreciation 185 201
Goodwill impairment 1,130 -
Decrease in inventories 22 22
Decrease in receivables 244 973
Decrease in payables (426) (278)
Increase in provisions 866 362
Share based payments 25 23
Finance income (17) (11)
Finance costs 37 80
Cash generated from operations 389 (591)
�
�
�
Notes
�1.�The above financial information for the year ended 31 January
2008 does not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985. The financial information
for the year ended 31 January 2007 is extracted from the
Statutory Accounts prepared under UK GAAP and filed with the
Registrar of Companies, as amended to comply with the provisions
for first time adoption under International Financial Reporting
Standards (IFRS).
�2.�The preliminary results announcement has been prepared using
accounting policies adopted for the first time by the group in
accordance with IFRS and International Financial Reporting
Interpretation Committee (IFRIC) interpretations adopted by the
European Union (EU) and with those parts of the Companies Act
1985 applicable to companies reporting under IFRS.
�3.�Exceptional items of �1,280,000 comprise a write down of goodwill
(�1,130,000) and a litigation settlement (�150,000).The goodwill
write down represents the impairment value resulting from a
significant re-evaluation of forward cashflows associated with
the group's non-core subsidiary, Travel Offers Limited. The
litigation settlement, which is now concluded, represents
additional costs in excess of previous provisions in respect of a
dispute with a former sales consultant. There is no further
ongoing litigation within the group. Prior year exceptional items
of �250,000 related to restructuring costs, primarily redundancy
expenses.
�4.�The directors do not recommend the payment of a final dividend.
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