Smaller companies spotlight

EACH week, former Fleet Street City Editor

Landround prepares for take-off

BUMS on seats, if you‘ll excuse the vulgar expression, is what drives the travel industry. Airlines, tour operators and ferry companies, operate with spare capacity on every trip, bar a few at peak weekends at the height of the season or around Christmas.

Even giving capacity away can be profitable, as freebee customers buy drinks, refreshments and other goods, and even line up future trips at full prices.

Marry that concept with companies doing their best to build up a customer base for a modest fee, and you have Landround, the only travel promotions company quoted on the Stock Market – AIM to be precise.

Landround is a broker. It takes the spare capacity from travel organisers and sells it at a knock-down price to those who use it to offer to customers and staff as an incentive.

For instance, McDonald‘s recently wanted to attract more customers into its UK restaurants and asked Landround to organise it. The result was a £10 Thomson Holiday voucher given away with every Happy Meal purchased – so, a week of Happy Meals for two, and there was £140 off a Thomson Holiday.

It must have boosted the sales of Happy Meals because some £115m worth of vouchers were given away in the four-week promotion. In fact, it was so successful that Landround chairman, Michael Crompton, admits that talks are on for another, similar campaign in the near future.

Landround picks up just a few pence on every voucher sold, but it does have a sideline – offering travel insurance, car hire arrangements and accommodation to customers redeeming the vouchers.

McDonald‘s is not the only high profile, High Street name on the client list. There are more than 1,000 including Adidas, Alliance & Leicester, Asda, Barclays, BP Duckhams, British Gas, Currys, Hotpoint, HSBC, Nestle, Royal Doulton, Volvo, and Whitbread.

Bmi British Midland has even cut out the third party having launched, in conjunction with Landround, a free flight promotion scheme, where voucher holders receive a free return flight to Paris, Brussels or Amsterdam.

In May 2000, the company launched 'buy and fly,' a travel reward scheme operating in a similar market to (breathe it gently) Air Miles. In this case collectors can amass 'points' from various outlets to build up a value – for instance, 390 points gets a free return trip to Amsterdam, Brussels or Paris from London – 2,500 for New York and back.

Already 16 airlines, including Air France, American Airlines, bmi British Midland, Cathay Pacific, KLM UK, Singapore Airlines and Virgin Express, have signed up as partners. Thomson Holidays, P&O, Irish Ferries, Virgin Holidays and the Orient Express are also partners.

With travel perceived as the number one incentive for the Brits, who take some 56m holidays a year and spend £24bn on them, Landround appears to be on a winner. Indeed, it has been profitable since the eighth week it started 10 years ago.

But times have not always been easy. September 11 hit travel hard and Landround was already paying the price of its management focusing on the launch of 'buy and fly' to the detriment of the traditional voucher business. The foot and mouth epidemic also hit companies offering free UK hotel accommodation.

Michael Crompton has been doing the rounds this week telling analysts that those times are behind them and the good times they are a-coming. Brokers Beeson Gregory and W.H. Ireland seem to agree, both have issued recent 'buy' notes at 150p-155p, and so too has SQC Research.

The shares peaked at 392p but are currently trading at under 120p taking into account the state of the market at present and last year‘s depressing sharp drop in profits to just £56,000.

However, potential investors should note that W.H. Ireland is going for £560,000 this year, which ends in September, and for £970,000 in the following year. Providing there is no repeat of September 11 they could be right. An interim dividend of 1p a share has already been paid this year and, an added sweetener is that anybody holding 500 shares has the following privileges:

Any number of vouchers for free travel as a foot passenger on all P&O Portsmouth or SeaFrance French routes from the UK and on all Irish Ferries routes to Ireland for the shareholder and four additional passengers.

One voucher a year for £100 off any holiday featured in an ABTA tour operator‘s brochure.

One voucher a year for a cruise to Spain or Norway.

One privilege hotel pass and directory a year – free hotel accommodation.

Councils on screen

HAVING been in the process of selling a house for the past four months, I am all in favour of anybody who gets local councils working more efficiently. Andrew Fraser, chief executive of i-documentsystems, is in the process of doing just that.

The group‘s Image-Gen software is now being used by 40 local authority clients, which should rise to 50 by the year-end. The group targets local authority planning departments, which tend to open doors to other sectors. But getting all planning information up on screen is a success in itself.

One solicitor in my chain moved offices and lost his client‘s planning application documents. It took more than two weeks to get a replacement.

Mr Fraser‘s intention is to get in through planning, then move into housing, social services and education with his electronic solutions. The group will be helped by Tony Blair‘s directive that all appropriate local government services should be electronically available by 2005.

So far there are no profits for i-documentsystems, but Mr Fraser says the group is on track to achieve its stated aim of profitability for the financial year ending October 2003.

Motoring along

IT'S a tough job, but somebody‘s got to do it – lending money to people who want to buy cars. Equally as tough, however, is finding investors willing to part with cash to fund those who lend money to those who want to buy cars.

Britannia Finance Holdings is offering up to 5m shares at 10p each to raise £500,000 at which stage the company is seeking an Ofex quote and will have a market cap of £1,670,000.

The group is run by Mark Burgess, 29, Lisa Burgess, 30, and Jarrod Bradley, 31, and chaired by Geoffrey Melamet, 43, all of whom have spent the majority of their careers in motor finance of one kind or another.

In the past three years, pre-tax profits have risen from £67,631 to £179,063, always at around a tenth of turnover, and the directors believe there is a niche market for their efforts.

With some of the biggest names in their fields pulling their new issues in the wake of market trends, one can only admire the youthful enthusiasm of the team who are truly showing the Britannia spirit.

Some you may have missed

A PLEASANT surprise for shareholders in Precoat International, the pre-coated steel group, which is selling its Canadian subsidiary, CSI, to Color Steel Holdings, for £6.2m and then plans to return up to £5.9m to shareholders through a tender offer.

The offer affects some 43% of the company‘s ordinary share capital at a fixed price of 95p a share, which is a premium of 35% to the closing share price on July 8, before the announcement was made.

In the year to end April, pre-tax profits were £100,000 against £1.6m in the previous year. Chairman Ian Williams says the past year continued to reflect difficult trading conditions in the UK, particularly at Europressings.

In the first two months of the current year, trading in the UK and Canada is in line with expectations. The directors do not believe the disposal will have any detrimental impact on the performance of the UK business and trading prospects for the continuing group remain challenging.

MAELOR, the AIM-listed specialist healthcare products company, has been granted a product licence by the UK Medicines Control Agency for Volplex, its blood replacement product used for the treatment of the loss of blood, typically caused by surgery or trauma.

Cambridge Laboratories, which develops and markets specialist pharmaceutical products to hospitals and consultants, will distribute Volplex in the UK.

BULLION Resources, which came to AIM on June 10, has commission the Drylands Plant and has bought seven complete mills and two incomplete mills, together with the entire steel construction housing for a total of £175,000. As a result, the company now has all the mills necessary for its planned mining operations plus two complete spare mills.

MICHAEL Abrahams, chairman of Minorplanet Systems, the vehicle management information operator, is confident for the future. Sales were up 234% to £31.1m in the third quarter of the current financial year, which ended in May. In the first nine months sales were 248% higher at £89.5m, and still they grow, with the board confirming that 'sales in the fourth quarter will surpass those in the third quarter by some considerable margin'.

It now only needs sales to be turned into profits. The group reports losses of £2m for the first nine months against a loss of £1.8m in the corresponding period a year ago.

DESPITE a difficult period for technology companies worldwide, Alphameric (the information technology solutions provider to the retail sector) has a strong order book, a healthy balance sheet and has met its financial targets for the first half of the financial year, says chairman Rodney Holstein. He is confident the group will produce results for this year 'materially better than those achieved last year'.

And he is off to a good start. In the first half, sales were up 11% to £27.4m and pre-tax profits were £3.3m against £500,000 in the first half a year ago.

Some to watch out for

DEMONSTRATIONS are due to begin later this year of Pursuit Dynamics‘ unique steam-powered replacement for the marine outboard motor, and the shares are a 'buy' at 26p each, says Numis Securities, which is initiating coverage in the company. While at least matching the traditional two-stroke powered motor, this replacement will deliver such benefits as no moving parts below the water, low noise, low pollution and high ingestion tolerance (whatever that is).

Analyst Julian Tolley says the shares 'should recover as the news flow improves over the year'.

CATTLE breeder Genus has just sold its headquarters to Focus DIY for £3.45m, a £1m profit on the book value. The inflow will take net debt down towards £12m and the move of most of the 130 staff to three divisions, leaving just five for head office, is likely to improve efficiency and productivity. Luke Ahern at broker Seymour Pierce remains bullish and says 'buy'.

A (SMALL) bouquet for Blooms of Bressingham which has reported like-for-like sales up 12% for the first five months to end June, against 47% to April and 20% to end May. The major season for garden centres having been clobbered by bad weather, there is now little chance of any major recovery, so the shares are a 'hold' for both Stephen Thomas of Teather & Greenwood, and Rhys Williams of Seymour Pierce.