Last checked at 26 Oct 2010 07:00
26 October 2010
Flying Brands Limited
Interim Management Statement and Announcement of new Joint Venture
Flying Brands Limited announces its Interim Management Statement as required by the FSA's Disclosure and Transparency rules. The financial commentary covers the three months to 1 October 2010. The Group's financial year ends 31 December 2010.
We are also pleased to announce the acquisition of 50% of Dealtastic Holdings Limited, a company set up to exploit opportunities in Web retailing and promotional activities.
Trading
For the ongoing business as a whole, sales for the period were £5.6m, compared to £5.0m the same period last year. Web sales accounted for 41.2% of total sales, almost double last year's percentage of 21.2%
Sales in the Garden Division for the quarter were £3.1m (2009: £3.1m). We continued to experience difficult trading conditions in our core bedding plants business but our garden birdseed business performed ahead of expectations and ahead of last year. Overall like for like sales in this division were down 4%. The recently acquired Garden Centre Online performed in line with expectations. Web sales in this division increased from £0.65m in 2009 to £1.06m this year representing 34% of total sales (2009: 21%). On a like for like basis we increased Web sales from £0.65m to £0.92m.
Our Gifts Division's sales were £2.0m compared with £1.4m in the equivalent period last year. This was slightly behind expectations largely as a result of a longer-than-anticipated period of disruption to the operations of Flowers Direct following our purchase of that business out of administration. There were also some short-term property and computer system costs that were higher than anticipated. These issues are all now being addressed and we are confident that they will not have a material impact on the business in its first full year under our ownership in 2011.
However, largely as a result of these factors we now expect that Flowers Direct will make a small loss in the current financial year. We had previously anticipated that it would make a small profit.
Despite this short-term setback we are pleased with the overall performance of our enlarged Gifts Division. Drake Algar is trading well and sales at Flying Flowers were in line with expectations at £1.10m (2009: £1.38m). This is the last quarter in which year-on-year comparisons for Flying Flowers will be affected by the loss of low value consignment relief.
Our Web sales in the Gifts Division increased from £0.36m in 2009 to £1.19m this quarter representing 59.4% of total sales (2009: 25.9%). In Flying Flowers we increased like-for-like web sales from £0.36m to £0.41m, which represented 37.5% of total sales (2009: 25.9%).
Revenue for Listen2 was £0.44m (2009: £0.50m) and the performance of this division was in line with our expectations.
Outlook
Trading conditions in the gardening sector have been tough throughout this year and this has impacted the performance of Gardening Direct. Profits for that particular brand will be below expectations. We have strengthened our marketing department over the last few months and we will be adopting the same marketing structure in Gardening Direct as has been successfully introduced in other parts of the Group. We will also be revitalising the marketing of Gardening Direct in good time for next year's Spring selling season.
The improvements we have made in Flying Flowers and in Garden Bird Supplies should go a long way to making up for the under-performance of Gardening Direct. We are anticipating a much-improved performance in the Gifts Division over the crucial Christmas period.
Going forward, our recent acquisitions and in particular the strengthening of our Gifts Division should mean that overall group performance is less dependent on the performance of Gardening Direct.
Acquisition of 50% of Dealtastic Holdings Limited ("Dealtastic")
Flying Brands has acquired 50% of Dealtastic, a company set up to exploit opportunities in Web retailing and promotional activities.
The chief executive of Dealtastic will be Jonathan Ruff, a Jersey-based web entrepreneur with a track record of building successful web businesses. Mr Ruff together with related parties will own the remaining 50% of the joint venture company and Flying Brands has paid to them £0.15m in consideration of their entering into the joint venture.
Each of the shareholders in Dealtastic will provide a working capital loan of £0.85m to the company.
The first two businesses to be launched by Dealtastic are dealtastic.co.uk and promomachine.co.uk. Dealtastic.co.uk is a website offering new deals every day on a wide range of products. Promomachine.co.uk is an innovative promotional search engine. Both websites will be fully operational in time for the peak Christmas selling season and will be supported by extensive marketing campaigns.
Dealtastic owns 50% of each of dealtastic.co.uk and promomachine.co.uk. The other 50% is in each case owned by related parties of Mr Ruff. It is the intention that Dealtastic will own 100% of all future businesses launched by it, with a 'right of first look" at all future web marketing and ecommerce projects of Mr. Ruff.
Dealtastic will have access to the latest web development and digital marketing services provided by Click Marketing, a company controlled by Mr. Ruff. These services will be provided at cost and, as part of the overall terms of the joint venture, other Flying Brands group companies will also have access to such services at cost.
Commenting on this acquisition, Stephen Cook, chief executive of Flying Brands said, "This investment is part of our continuing efforts to put the Web at the heart of our business. It gives us access to the most up-to-date web marketing techniques not only in these new businesses but also for our existing businesses."
For further information, please contact:
Flying Brands Limited 01245 228 300
Stephen Cook, Chief Executive
Anthony Gee, Finance Director
Smithfield Consultants 020 7360 4900
John Kiely
Notes to editors
Jersey based Flying Brands Limited (LSE: FBDU) is a multi brand and multi channel home shopping specialist. Founded in 1981, it was admitted to the Official List of the London Stock Exchange in 1993. The Group operates the following divisions:
·; Gifts (Flying Flowers, Flowers Direct and Drake Algar making the company one of the UK'sleading florists)
·; Garden (Gardening Direct, one of the UK's largest mail order bedding plants and gardening products operations; Garden Bird Supplies, a leading provider of food and accessories for birds and other wildlife; Garden Centre Online an internet retailer of garden hardware products)
·; Entertainment (Listen2, a mail order audio books, nostalgic music, DVD and video home shopping retailer)
More information can be found at: www.flyingbrands.com
Cautionary statement
This report contains forward-looking statements. These have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report. The Directors can give no assurance that these expectations will prove to have been correct. Due to inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actual results may differ materially from those expressed or implied by these forward looking statements. The Directors undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.