18 January 2012
Findel plc
Interim Management Statement
Findel plc, a market leader in the UK home shopping, education supplies and healthcare markets, today issues its Interim Management Statement covering the 15 week period from 1 October 2011 to 17 January 2012. This should be read in conjunction with the group's Interim Results announcement issued on 29 November 2011.
Group Performance
The Board is pleased with the group's overall sales performance during the period, with total sales since the half-year 4.5% ahead of the prior year, up from 2.9% in the 8 weeks to 25 November*. Year-to-date, group sales are 1.6% ahead of the prior year. The general trends for each of the group's business as set out in the Interim Results announcement have continued.
Express Gifts, our largest business, has continued to experience strong growth since the half-year with sales up 11.1% on prior year compared with 10.9% in the 8 weeks to 25 November*. Express Gifts has seen its strongest Christmas for four years. The strong customer response to our improved pricing approach has resulted in a 5.4% increase in active customer numbers over the last 12 months. We expect this growth in both sales and customer numbers to result in the delivery of increased total cash margin and a strong operating profit performance for the year. Bad debt indicators have remained stable since the half-year and the behavioural credit scoring system, part of our Full Potential plan, has recently been introduced on time and on budget. The benefits of this system are expected to start accruing from autumn 2012 once we have built sufficient data and information.
Trading at Kleeneze has also continued to respond positively to recent new sales initiatives and increased active ordering distributor numbers. Despite the difficult economic environment facing its customers, the level of annual sales decline has continued to narrow from 2.5% in the 8 week period to 25 November* to 1.2% in the 15 weeks since the half-year.
Sales at Kitbag since the half-year were 2.0% ahead of last year. However, this required significant levels of promotional activity, reflecting both the challenging economic and competitive environment and the relatively poorer situation of some sporting partners this season compared to last year. This promotional activity has materially suppressed the gross margin. As already reported, the new management team is vigorously addressing the issues holding back the profitability of this business. Contract renegotiations with certain partners are progressing and the pipeline of new potential contracts remains strong, with a number of new deals approaching closure in the near term. We continue to anticipate that Kitbag will report a significant operating loss in the second half of the year.
During what has been the normal quiet period for the Education Supplies division, we have seen the trends reported in the Interim Results continuing, with growth in both our schools supplies and international brands offset by weakness in the curricular brands.
Finally, our Healthcare division has continued to perform well. Sales for the period since the half-year are 12.1% ahead of 2010/11 albeit, as previously indicated, a portion of this growth was achieved at very low margins due to the structure of certain contracts. The response to the latest Primary Care catalogue has been particularly encouraging, and the pipeline for new contracts continues to be promising. In addition to the contract extensions previously announced, the business has recently been awarded another new ICES contract to start on 1 April 2012.
Overall, we are encouraged by the progress we are making in a number of areas, building on a strong performance from our largest business, Express Gifts, in a difficult economic and retail environment. We do not anticipate this environment becoming easier. We remain focussed on implementing our three year Full Potential plan.
The board continues to believe that, as stated at the time of our Interim Results, the group will deliver improved results in the second half versus the prior year, which in turn will be the start of a trend leading to improved shareholder returns over the medium term.
* 8 week period from the half-year to 25 November 2011, which was commented upon in the Interim Results announcement made on 29 November 2011
Enquiries
Findel plc
Roger Siddle / Tim Kowalski
0161 303 3465
Tulchan Communications LLP
Stephen Malthouse / Susanna Voyle / Lucy Legh
020 7353 4200
