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Flying Flowers Ld (FBDU)

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Thursday 17 August, 2000

Flying Flowers Ld

Interim Results

Flying Flowers Ld
17 August 2000


                     Flying Flowers Limited
 Interim Results for the 26 weeks ended 30 June 2000
                          
Flying Flowers Limited, the mail order and database
marketing company, today announces its interim
results for the 26 weeks ended 30 June 2000.

                     26 weeks   26 Weeks          Year
                     ended 30    ended 2          ended
                    June 2000  July 1999   31 December 1999
                   (£'000s)     £'000s)
Turnover              25,973    27,179        49,632
Profit before         2,270      2,818         5,101
exceptional           
items, loss  on 
sale of
subsidiaries and 
goodwill
amortisation (£'000s)
Adjusted earnings 
per share             6.50p       8.34p      15.43p
Dividend per share    2.45p       2.45p       7.35p

H I G H L I G H T S

* Company restructuring to release shareholder value
* Focus on core mail order expertise
* Investment in New Business Development:
  -   Testing of new mail order opportunities
  -   Successful launch of new
      guaranteed next day delivery service
  -   Exclusive contracts signed with
      Glasgow Rangers and Everton football clubs to
      provide memorabilia

Commenting on the announcement Robert Norbury, Chairman, said:

'Your Board recognises that since June 1998 shareholder value
has been significantly eroded. It has taken two years to
reorganise the Group's   structure,  effect  the  demerger,
dispose of injudicious  acquisitions and refocus  on  the
core  mail  order expertise that successfully launched and
developed Flying Flowers and Gardening Direct.

'The  £13 million capital expenditure programme  completed
last year,  the  focus  on the demerger and the lack of  new
business development  activity until this year means  that
the  operating profits  in  the  current year will bear a
significant  overhead increase but gain little of the benefit.

'Overheads in the Mail Order businesses in 2000 will be  £1.7
million greater than in 1997 with very little change to sales.
Clearly, the structure in 1997 was not suitable to sustain the
future growth of the business and now the challenge is for us
to expand the business and to take advantage of the new
capacity created.

'The increased overhead following this investment will result
in profits this year being lower than in previous years but
should ensure that growth, both in the existing brands and
from new business areas, will provide shareholders with
longer term consistent profit improvement.'

For further information, please contact: 

Flying Flowers Limited            c/o Grandfield
Robert Norbury

Grandfield                        020 7417 4170
Clare Abbot
Nick Astaire

Flying Flowers Limited
Chairman's Statement
Accompanying the Interim Report is a circular to  shareholders
explaining the detail of the demerger of Communitie.com  and
the change of name of Flying  Flowers Limited to Flying Brands
Limited.

The  operating results for the first half are disappointing
with profits  before tax, interest and goodwill at £2,454,000
(1999  £2,920,000).  The  fall  in profits is  fully
explained  in  the Operating Review.

Board Changes

I will remain Chairman of Flying Flowers, but the chairmanship
of the  new  demerged company, Communitie.com, will be taken
up  by Paul  Fraser.   Paul  Fraser will no longer act  as
Joint  Chief Executive  of Flying Flowers but will remain on
the Board  as  an Executive  Director providing his services
on a part time  basis. Tim  Dunningham will remain the Chief
Executive of Flying Flowers and will be a Non-Executive
Director of Communitie.com Limited.

Unfortunately Michael de Kare-Silver has decided not to
continue as  Non-Executive  Director of Flying Flowers Limited
after  the demerger  as  a  result  of  his  responsibilities
for  a  major international  retailer.  We are most grateful
to  him  for  his energy  and  integrity that he has brought
to the Board  and  his help in establishing the current
platform for change.

Dividend

For  the half year, the dividend will be maintained at 2.45p
per share.  As  you  will  read  in  the  accompanying
documents,  a substantial business development programme has
been put in place. By  the year-end, we will have a much
clearer view of the success of  this  initiative and the
appropriate level of final  dividend that should be
recommended.

The  interim dividend will be paid on Friday 20 October  2000
to shareholders on the register on Friday 22 September 2000.

The future of Flying Brands

Your Board recognises that since June 1998 shareholder value
has been  significantly eroded. It has taken two years to
reorganise the   Group's   structure,  effect  the  demerger,
dispose   of injudicious  acquisitions and refocus  on  the
core  mail  order expertise that successfully launched and
developed Flying Flowers and Gardening Direct.

The  £13  million  capital expenditure programme  completed
last year,  the  focus  on the demerger and the lack of  new
business development  activity until this year means  that
the  operating profits  in  the  current year will bear a
significant  overhead increase but gain little of the benefit.

Overheads  in the Flying Brands businesses in 2000 will  be
£1.7 million  greater than in 1997 with very little change  to
sales. Clearly,  the structure in 1997 was not suitable to
sustain  the future growth of the business and now the
challenge is for us  to expand  the  business and to take
advantage of the  new  capacity created.

The  increased overhead following this investment will result
in profits  this year being lower than in previous years but
should ensure  that  growth, both in the existing brands  and
from  new business  areas,  will provide  shareholders  with
longer  term consistent profit improvement.

Robert Norbury
Chairman
17 August 2000

Interim Report for the 26 weeks ended 30 June 2000
Operating Review
Operating Results for the period

                      2000           2000    1999          1999
                      Sales   Profit before  Sales    Profit before
                              tax interest          tax, interest
                              and goodwill          and goodwill
                        £'000      £'000     £'000        £'000
Volume Mail Order
Flying Flowers          5,264        409    5,835          726
Gardening Direct        9,728      1,824    9,747        1,951
Benham                  2,571        409    2,344          199
New Business 
  Development               -       (142)        -           -
                       _______    _______  _______     _______
                        17,563     2,500    17,926       2,876
                       _______    _______  _______     _______
Communitie.com
Stanley Gibbons         4,074       (183)    3,800        (83)
Collector Cafe              1       (170)        -           -
                       _______    _______  _______     _______
                        4,075      (353)     3,800        (83)
                       _______    _______  _______     _______
Other
Bellbourne              4,335         307   5,206          300
Blooms                      -           -     247        (173)
                       _______    _______  _______     _______
                        4,335        307     5,453         127
                       _______    _______  _______     _______
                       25,973      2,454   27,179        2,920
                       _______    _______  _______     _______

1999 profit before exceptional items in the Consolidated
Profit and Loss Account includes £205,000 of goodwill
amortisation (2000 - £nil) in operating expenses.

Volume Mail Order

Results
Flying  Flowers' recruitment advertising sales were  slightly
up year  on year but database sales were 7% lower. Gardening
Direct advertising  sales  were down as a result of reduced
expenditure and  lower  response rates, but database sales
grew  by  16%.  In total  over  175,000  new  Flying Flowers
and  Gardening  Direct customers were recruited.

Gross  margins for the two brands were 32% compared to  30%
last year. Margin performance benefited from improved buying
prices, a renegotiated  postal contract with Jersey Post, and
the  improved quality  of  our  own  grown  plug  plants.
Refund  and  product replacement costs were higher than
planned due to product quality on  arrival  with  the customer
being affected  by  a  number  of factors.  Management  is
focusing on these in  order  to  improve customer satisfaction
levels.

As  a  result  of  the  significant levels of capital
investment during  the  last  two  years  and  the  increase
in  management infrastructure  necessary  to move the business
forward,  Flying Flowers  and  Gardening Direct overheads
during  the  first  half increased by £505,000 compared to
1999.

Combined  Flying  Flowers and Gardening  Direct  profits  were
a disappointing £2,233,000 against £2,677,000 last year.

Benham sales, including Urch Harris, were up by 9.7% on last
year and profits by 105% at £409,000 against their depressed
levels in the previous year. The two businesses benefited from
economies of scale and strong database sales.

With the clearer focus encouraged by the forthcoming demerger
of Stanley  Gibbons, New Business Development (outlined below)
cost £142,000.

Therefore,  in total, the Volume Mail Order business  produced
a half year profit of £2,500,000 compared to £2,876,000 last
year a reduction of 13%.

New Business Development

A number of new mail order propositions are being tested.

Flying  Flowers successfully tested a guaranteed day of
delivery service  at twice the typical average selling price
in  February. This  new service is proving popular in
traditional mailings  and on  the  Internet,  where our
recently opened  web  site  already accounts  for  nearly  2%
of sales  with  only  test  levels  of promotion behind it.

In  response  to  customer research and the requirements  of
our internet  market we have updated Flying Flowers'  product
range, packaging  and pricing. This new brand offering was
launched  to our  database in late June. With our ongoing
commitment to  brand values,  we  intend  to stem the decline
in database  sales  seen since last winter and broaden the
appeal to drive future customer recruitment.

A  new  range  of  plug  plant offers  and  customer
recruitment methods, such as catalogue inserts and Direct
Response Television advertising  were tested by Gardening
Direct in the  spring  with good   results.  Tests  to  the
database  include  a  perennials catalogue, a garden hardware
catalogue and our first stand  alone bulbs catalogue. Our
Gardening Direct web site is now operational and initial
orders are encouraging.

Benham is now focusing on quality memorabilia associated with
the Queen  Mother's 100th birthday. Longer term a new range of
volume collectable  products  is being introduced targeted  at
slightly younger but affluent collectors, particularly those
interested in sport.  Exclusive contracts have already been
signed with Glasgow Rangers  and  Everton  Football clubs to
provide  stamped,  dated memorabilia for launch this autumn.

Meanwhile  our new computer system and call centre  allow  us
to target  customers  more cost effectively  with  new  and
special offers. Recent tests show that with certain products,
we are able to add at least £1 extra margin on 75% of
telephone orders.

Furthermore,  by  the end of the year we will have  upgraded
our systems  to  allow  for  direct order  entry  from  the
internet straight into our new order processing system. This
will help  us to  improve  our Customer Relationship
Management and  will  also reduce transaction costs. We have
the opportunity to convert  our three  million customers to on-
line trading and we  are  ensuring that the right
infrastructure is in place to support this.

The investment of £3 million in systems during the past two
years will  put  us in the position to offer other companies
our  fully transactional web infrastructure.

Communitie.com

As stated at the year end, it is intended to demerge this part
of the business to allow the management team to focus on e-
commerce, particularly  the  Internet.  This requires
material  levels  of investment  in  management and
infrastructure. The  new  team  is coming  together  under
Paul Fraser and former  Stanley  Gibbons Chief  Executive Tony
McQuillan, who oversaw the  company's  most profitable trading
years.

Results

Stanley  Gibbons sales improved year on year by 7%, helped  by
a more  tightly  controlled sales focus and early Internet
orders. The  loss  of  £183,000 (1999 loss £83,000) was
disappointing  as increased  costs associated with the
demerger eroded the  margin. Improved  controls  have  led to
a  positive  cash  flow  with  a reduction  of over £400,000
in working capital since 31  December 1999.  The Stanley
Gibbons business typically performs better  in the  latter
half  of  the  year and  the  management  expects  a
combination of sales growth and improved cost control to
enhance profitability.

Collector Cafe, the new Internet portal brand being launched
this year recorded a loss of £170,000. This reflects our
investment in this  new and exciting opportunity. Content is
critical  in  this market  and  despite a conservative
approach,  which  prioritises building robust foundations, the
site's intellectual property has significantly increased.
Partnerships, affiliate deals and  site links  are  being
vigorously pursued by the new management  team. Over  700
dealer links to the Collector Cafe portal have  already been
added this year.

Interim Report for the 26 weeks ended 30 June 2000
Consolidated Profit and Loss Account

           26 weeks to   26 weeks to   52 weeks to
               30 June        2 July   31 December
                  2000          1999          1999
            (unaudited)   (unaudited)    (audited)
               £'000          £'000          £'000
Turnover       25,973         27,179        49,632
Cost of Sales (16,822)       (17,445)     (31,390)
               _______        _______      _______
Gross Profit    9,151          9,734        18,242
Other operating
  Expenses     (6,697)        (7,019)     (13,244)
               _______        _______      _______
Profit before
exceptional items 2,454         2,715        4,998
Exceptional items     -            -       (8,009)
                _______       _______      _______
Operating
  profit/(loss)   2,454         2,715      (3,011)
Loss on sale
  of subsidiaries    -        (4,566)      (4,574)
Profit on sale
  of properties      -              -          85
Net interest
payable and
similar charges  (184)          (102)       (331)
               _______        _______     _______
Profit/(Loss)
on ordinary
activities       2,270        (1,953)     (7,831)
Taxation          (547)         (620)      (1,028)
                _______       _______      _______
Profit/(Loss)
for the
financial period  1,723       (2,573)     (8,859)
Dividends         (649)         (647)     (1,945)
                _______       _______     _______
Retained
profit/(loss)
for the period    1,074       (3,220)     (10,804)
                _______       _______     _______

Earnings per
ordinary share    6.50p         (9.75)p   (33.55)p
Loss on sale
 of subsidiaries     -           17.31p     17.01p
Exceptional items    -               -      30.33p
Goodwill             -            0.78p      1.64p
                _______        _______     _______
Adjusted
earnings per
ordinary share   6.50p           8.34p      15.43p
                _______        _______     _______
Dividends per
ordinary share   2.45p            2.45p     7.35p
                _______        _______     _______

Interim Report for the 26 weeks ended 30 June 2000
Consolidated Balance Sheet
                  30 June     2 July   31 December
                     2000      1999          1999
               (unaudited)(unaudited)    (audited)
                    £'000      £'000         £'000
Fixed Assets
Tangible assets     19,149    16,437        19,161
Goodwill                -      7,747             -
Other intangible
  Assets               304       340           347
Investments            934     1,149         1,181
                  _______   _______       _______
                    20,387    25,673        20,689
                  _______   _______       _______
Current Assets
Stocks              7,430     8,359          7,318
Debtors             5,617     5,708          5,543
                  _______   _______        _______
                   13,047    14,067         12,861
                  _______   _______        _______

Creditors: amounts
falling due within
one year
Bank overdraft     (3,679)   (2,327)          (977)
Bank loan          (1,200)   (2,200)        (2,200)
Other creditors    (8,031)   (7,728)        (9,433)
                  _______    _______       _______
                   (12,910) (12,255)       (12,610)
                  _______    _______        _______
Net Current Assets     137    1,812            251
                  _______    _______        _______

Total assets less
 current
 liabilities       20,524    27,485         20,940
                  _______   _______        _______

Creditors:
amounts falling
due after more
than one year
Bank loan          (1,700)   (2,800)       (2,300)
Other creditors    (1,627)     (968)       (2,515)
                   _______   _______       _______
                   (3,327)   (3,768)       (4,815)
                   _______   _______       _______
Net Assets         17,197    23,717        16,125
                   _______   _______       _______
Capital and reserves
Called-up share
  Capital             270       269           270
Share premium
Account            22,709    22,696        22,709
Revaluation
  Reserve             486       478           486
Capital reserve       (17)      (17)          (17)
Profit and loss
  Account           (6,251)      291        (7,323)
                   _______   _______        _______
Equity
shareholders'
 funds             17,197    23,717         16,125
                  _______   _______         _______

Interim Report for the 26 weeks ended 30 June 2000
Consolidated Cash Flow Statement
                  30 June     2 July     31 December
                    2000        1999            1999
              (unaudited)(unaudited)       (audited)
                   £'000      £'000           £'000
Operating activities
Net cash inflow
from operating
activities         2,753     2,665            7,358
                 _______   _______          _______
Returns on
investments and
servicing finance
Net interest paid   (110)      (95)          (247)
Interest element
of finance lease
payments             (74)       (7)           (84)
                  _______    _______      _______
                    (184)     (102)          (331)
                  _______    _______      _______
Taxation
Jersey tax paid     (865)   (1,011)        (1,010)
UK corporation
  tax paid             -       (70)          (208)
Dutch corporation
  tax paid           (22)      (16)           (98)
                  _______    _______       _______
                    (887)   (1,097)        (1,316)
                  _______    _______       _______

Capital expenditure and financial investment
Receipts from
sale of own
shares held
in ESOP                 -        76           166
Payments to
acquire tangible
and intangible
fixed assets       (1,216)    (4,180)      (5,822)
Receipts from
  sale of
  tangible
  fixed assets          7         56          382
Investment in
 Flower Farm
 Direct Inc             -          -         (122)
Repayment of
 loan by Flower
 Farm Direct Inc      247          -            -
                  _______     _______      _______
                     (962)     (4,048)     (5,396)
                  _______     _______      _______

Acquisition and disposals
Receipt of
 deferred
 consideration         -          112         101
Disposal of
 subsidiaries and
 businesses            -        1,729       1,736
                  _______     _______     _______
                       -        1,841       1,837
                  _______     _______     _______
Equity dividends
 Paid             (1,298)      (1,290)    (1,937)
                  _______     _______      _______

Cash
 (outflow)/inflow
 before financing    (578)      (2,031)       215
                  _______      _______     _______
Financing
Capital element
 of finance
 lease payments      (510)        (130)      (541)
Issue of ordinary
 share capital          -           26         41
New bank loan           -        1,000      1,000
Bank loan
 Repayments        (1,600)           -       (500)
Other loan
 Repayments           (14)         (28)       (28)
                  _______      _______     _______
Net cash
(outflow)/inflow
 from financing    (2,124)         868        (28)
                  _______      _______     _______
(Decrease)/increase
  in cash          (2,702)      (1,163)       187
                   _______     _______     _______

Copies  of this statement are being sent to shareholders.
Further copies are available on request from:
Mr D.C. Harbord, Flying Flowers Limited, Retreat Farm, St.
Lawrence, Jersey JE3 1GX.



                                                                                
                                                                                
        

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