Despite a 26 per cent increase in interim profits to £2.9 million, mail order business Flying Brands is considering 'all opportunities to increase shareholder value'. Elliott Davis reports.

The Flying Brands (FBDU) board's decision reflects the fact that while fully listed Flying Brands' Gardening Direct division is performing strongly – it generated a £3.5 million profit on £11.2 million of turnover during the period – other aspects of the business continue to falter.

According to chief executive Tony Dunningham, the Benham collectables business 'is the problem'. Profits at Benham slumped from £409,000 to £184,000 during the period and Dunningham now concludes that 'I can't see that we'll be able to recover the downturn before the end of the second half'.

In relation to the strategic review, Dunningham confides that while the group has yet to rule anything specifically in or out, he hopes that 'some people may come to us with ideas'. He also hopes to have a clear idea of the direction the company is heading in 'by the end of October'.

Another major concern for the business has been the volume of sales through flower delivery business Flying Flowers, which Dunningham and chairman Robert Norbury feel has been stunted by 'continued problems with the postal service in the UK'. Norbury blames a deterioration in this service for a 'quality of product on arrival that has been below our targets' and moves are now afoot to trial a 24-hour delivery service, which would package and courier flowers from Jersey.

During the six month period, Flying Brands' order processing and marketing facilities in Kelvedon and Jersey cost the group £1.9 million, a figure Norbury describes as being 'too high for a business of our size'. To address this problem Dunningham notes that the group has to 'either put more volume through the sites or reduce costs' – it is hoped that the courier delivery service will do the former.

Despite reducing his full year profit forecasts from £4.5 million to £4.1 million, Richard Ratner from broker Seymour Pierce remained fairly upbeat, commenting that 'with the company effectively up for grabs and perhaps a likely take-out price of 150p, the shares remain a speculative buy'.

Investors seemed to agree as the shares nudged down 1.2 per cent to 122.5p on the day.