A strong second half partially offset a weak opening quarter for Jersey-based ‘dual channel’ retailer Flying Brands, which is debt free, throwing off cash and looking to increase its web presence.

For the year to 30 December, sales were flat at £36.3m (£35.8m), and pre-tax profits lower at £5.3m (£5.8m). However, the profits fall (mainly attributable to a first quarter trading blip at the Gardening Direct mail order bedding plants business) masked key actions by chief executive Mark Dugdale, and even after spending £5.3m on acquisitions and buying back over 1m shares, Flying Brands closed the year with £4.2m cash, enabling a 5% total dividend rise to 8.85p.

As well as making cash generative acquisitions – bird food and wildlife accessories company Garden Bird Supplies and nostalgic music business Silverminds Direct – Dugdale has turned core brands, particularly Flying Flowers, into viable internet businesses. Web revenues rose 21% to £3.5m last year, representing 11% of sales, and the information super highway is a key way of attracting customers with newspaper circulations in decline. 'We are struggling to attract new customers from traditional print media,' admits Dugdale.

Gardening Direct is being turned into a more rounded retailer offering more than just bedding plants (a process already started with the acquisition of Garden Bird Supplies), and acquisitions ensuring existing customers spend more and new customers ‘see our brands as destinations of choice’ remain on the menu.

For 2006, broker Seymour Pierce suggests pre-tax profits of £6.2m and a leap in earnings from 16.3p to 20.5p (based on a lower number of shares and a proposed change to Jersey corporate taxation that will help the group’s earnings), placing the shares on a forward multiple of 9.9 with a strong yield. Buy.