Helped by the introduction of the Stock Exchange's new order book - Royalblue has more or less cornered the market in providing the systems which banks use to handle the orders - and the introduction of the IT index, its shares hit a new high of 375p earlier this month. The headline figures of Royalblue's maiden results - profits before tax and flotation costs rose 50 per cent on a 77 per cent jump in turnover - more than justified the market's confidence Yet the shares gave up 27.5p to close at 342.5p. In the current heady climate, it seems that Royalblue's comment that the rate of growth would be "somewhat lower" in the coming year was enough to convince some shareholders it was time to lock in some profits. This may seem strange. Investors who have stayed away so far should consider turning to flower power.. ROYALBLUE found out about the fickleness of the City yesterday. One of last year's most successful flotations, the software group has gone from strength to strength since joining the stock market at 170p in June.
It has already formed a similar joint venture in the US which will sell cut flowers via the internet as well as through newspaper adverts.Flying Flowers is forecast to produce current year pre-tax profits of pounds 7.7m, putting the shares on a prospective p/e ratio of 19. Now is has dug up another lucrative enterprise by setting up a mail-order gardening business. This helped propel the Jersey-based company to produce a 59 per cent increase in pre-tax profits to pounds 6.25m for the year to January 2, and saw its dividend more than double to 7.35p.Gardening Direct, which sells bedding plants by phone and mail, saw sales increase by 150 per cent. Walter Goldsmith, chairman of Flying Flowers, said the increase would have been even higher if the capacity had been there.It will be Flying Flowers is developing a 16 acre site near Chelmsford. This will house amongst other things, 100 telephonists, needed to handle up to 20,000 calls a day.Flying Flowers is a remarkable story but how can it retain such strong growth in the longer term? The answer lies in the group's ability to make sensible acquisitions and seek out new markets overseas.Yesterday Flying Flowers teamed up with the largest flower grower in Hong Kong to have a go at the Japanese market. But with the share price so low already it is worth waiting to see if it can produce a rabbit out of the hat when it announces the results of its review in May.SG Securities has downgraded profit forecasts from pounds 125m to around pounds 118m for the year to March, putting the shares on a prospective p/e ratio of just 8 Hold.. FLYING FLOWERS' share price has certainly lived up to the group's name.
Since it floated in 1993, the shares have soared from 65p to close at 499.5p, up another 8p yesterday. The group has proved it can do the simple things, like delivering a dozen carnations to mum on Mother's Day, very well and very profitably. And the group has been slower than Granada to start using direct sales techniques. It will be a long hard grind for Thorn to get UK sales moving in the right direction again. The best solution is to join forces with Granada, but that could pose insurmountable competition issues.Thorn would also be well advised to sell its US business, where the group has been guilty of poor management and allowing competitors to steal market share.Thorn's prospects hardly look promising.
