No Pain, No Gain: These numbers don't add up to a winning ticket

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Three times since the millennium dawned it has flattered only to deceive. The shares graphically illustrate its in-and-out display. In 2001 they touched 400p; then dived to around 50p; last year the price brushed 440p only to sink near to 200p. This year the shares have been 350p; they are now 227p.

In June I lunched with the company. It was a bullish occasion. The chief executive, David Lyne, was exceedingly cheerful about prospects. Landround's stockbroker, Evolution (another accident-prone organisation) added to the air of well-being. It thought the shares, then 303p, should be about 400p. With interim profits more than doubling to top £1m, analyst Adrian Kearsey confidently suggested the year's figures could be around £2.4m.

They will not. As if to underline its volatility Landround has stumbled again and felt obliged to produce another profit warning. This time round it has been hit by a bad debt. Last year it was the uneven cost of a voucher promotion which distorted profits. In 2001 the unexpected expense of developing its "buy and fly" scheme - a rival to Air Miles - created the problem.

I suppose, to some extent, Landround has been unfortunate. But then a successful company creates its own luck. Anyway, three disasters in four years is rather too much of a coincidence for shareholders to tolerate. The latest horror story involves a company that has gone bust. It owed Landround more than £1m. The chances of recovering the cash are described as "slim" so there will be a nasty hole in the year's figures.

Even without the bad debt provision they may not meet Kearsey's expectations as the company has admitted that results to the end of July were running below budget. Yet back in June Landround certainly had an encouraging story to tell. "Buy and fly" was going well. The group had entered the Spanish market, forging a deal with the big Banco Santander group, and was contemplating expansion into other European lands.

Amid the joy I must confess to nursing one or two doubts. The indifferent record was one influence. Another was the experience of a member of my family who attempted to take advantage of one of Landround's seductive offers.

I believe that when evaluating a share it is unwise to ignore any information even if it comes from "research" which cannot be regarded as being in-depth.

Some of my family are avid bingo players. And Landround, it transpired, had arranged a deal for Gala bingo members to enjoy a free two- or four-night break at a Pontin's holiday camp. But inquiries were unproductive. The dates required were unavailable, presumably already fully booked, although variously priced upgrades could, it appeared, still be obtained. And, to add insult to injury, bookings could not even be taken for next year - until next month.

Running such freebie offers is fraught with difficulties. Elsewhere in the industry some acute problems have been created. However, I should have thought offers which fail to deliver are self-defeating for all the companies involved. Certainly the customer cannot be impressed.

So what is the future for Landround? Following the latest debacle the company is conducting a review of its business. A couple of years ago the then chairman, Michael Crompton, told me the group might need a powerful partner. He forecast Landround would be taken over by a bigger group. His prediction could soon be fulfilled although the terms may not be attractive.

My Home International, the portfolio's newest recruit, may be about to hit the takeover trail although Landround would not be on its radar screen. For one thing the promotions group is in the wrong industry. My Home offers a household cleaning service. It is looking to increase its range of services and hinted, when raising £500,000, that it has takeovers on its agenda.

The Ofex-traded company provided a shot-in-the-arm for the fringe share market which has been largely ignored by City fund managers. It seems that most of the £500,000 was subscribed by City institutions, taking up shares at 12.5p. They clearly recognise My Home's potential. The shares have slipped from the 15.5p I paid last month but I am not worried. They have had a good run and it is not surprising that some of the group's early supporters have locked in some of their profits.

It seems that the company is trading well. Thirty franchises are now in place and it is continuing to expand.

cash@independent.co.uk

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