Near the edge, into freefall - and back in favour

May 14 2008 by Alistair Houghton, Liverpool Daily Post

Alistair Houghton meets COLIN GIBSON, chief executive of travel promotions business Landround

COLIN GIBSON knew he was taking on a tough job at travel promotions business Landround when the share price fell more than 60% on the day he was appointed chief executive.

By June, 2006, Landround had, in his own words, already “fallen out of favour” with the City, and so news that day the company was issuing a profit warning and reshaping its management team sent shares into freefall.

The Chester plc was close to the edge – but since then Gibson has led the business back towards profitability, with ana-lysts predicting it will be back in the black this financial year.

The key moment for Gibson was raising £1.6m from share-holders late 2006 to give the busi-ness a boost after reporting loss-es of over £2m for two years .

Landround has two main activ-ities – promotions, where it pro-vides offers such as free flights or holiday vouchers to its clients, and its rewards programme and Air Miles rival Buy and Fly.

Gibson has worked to promote the reward programme side of the business, which offers longer-term contracts and so greater long-term financial stability. It’s a strategy he says is winning the trust of the City after the years of uncertainty.

He said: “As a small company, not massively well-funded, we lost £2m a year for two years. We were getting reasonably close to the edge at that point.

“If funding wasn’t raised, there was considerable uncertainty about the future. Banks don’t want to get into a position where they’re taking a lot of equity risk.

“It’s for shareholders to step in and keep the business going, which thankfully they did. In terms of business strategy and relationships with the City, since I’ve come in it’s very much focus-ed on growing the rewards pro-gramme side of the business.

“The promotions side of the business tends to be one-off contracts with people looking to promote a product for a short period. They might run for two or three months and be finished.

“But, with the reward pro-grammes, some of the contracts are for five years. It’s the stuff the City likes rather than the feast or famine with the vouchers.”

Gibson, originally from Glas-gow, spent 10 years as an accoun-tant at KPMG in the city before becoming financial controller at Pringle knitwear owner Dawson International.

Next he moved to Berkshire-based IT company QA, where he spent eight years as finance director, before moving to the North West in 2006 to take the same role at Landround.

But, in June, 2006, Landround announced sales were plunging with senior members of its man-agement team, including chief executive David Lyne, leaving the business. Mr Gibson became chief executive, appointed a new management team and began the process he calls “clearing the stables” as he prepared the company for the future.

“The company fell out of favour with the Stock Market in a signi-ficant way around 2005 before I joined,” he said. “There was a big profits warning and a big restate-ment of accounting policies because there was a perception we were too aggressive in the way we were accounting for things and not taking a cautious enough view of how much it was going to cost us to provide the travel.”

For Gibson, Landround’s strength lay in its long-term relationships providing rewards programmes for firms such as Morgan Stanley and Citigroup.

By securing more of those contracts, it can cover operating expenses and be less dependent on its promotions business, which wins shorter-term con-tracts and has more fluctuating income levels.