StockMarketWire.com - Findel, the home shopping and education business, expects to report an interim pre-tax profit for the first time in six years.

Findel said sales in the period were broadly flat, reflecting a mixed sales performance across its businesses. But the group said it continues to make significant progress in reducing overall debt and core net debt.

A post-close trading statement says: "The largest business in our group, Express Gifts, has again had a strong first half, with sales 6% ahead of the prior year. The majority of growth continues to come from existing customers, which coupled with strong customer collections has led to a corresponding improvement in bad debt indicators.

"The business has again achieved a significant increase in profits and operating margin, which is a critical driver of the Group's overall performance. Customer numbers have grown by c.4% and the business is well placed ahead of the important Christmas trading period.

"Although the year-on-year sales decline has been arrested in September, our Education Supplies business remains affected (in our London heartland in particular) by previously flagged uncertainties within schools, especially around the readiness of schools for the new curriculum and changes to budgets and funding processes for schools. As a result, sales for the first half are 5% behind prior year. A range of corrective actions have already been taken and more will be taken in the second half to mitigate the profit impact this year should the anticipated market recovery be further delayed or fail to materialise.

Kitbag's performance continues to improve, with sales for the period 7% ahead of prior year and first half losses significantly reduced, with a substantial contribution to this better performance coming from renegotiated contracts. The remaining activities in the operational turnaround plan are progressing well. Kitbag also managed the successful onsite retail activities for the recent Ryder Cup.

"Following success in winning the McLaren F1 contract, the business development pipeline remains strong, with a wide range of opportunities being presented to the business. These include opportunities with sporting organisations and with broader branded organisations, covering online sales, physical retail and event retail management. Given the substantial improvement in the underlying operations and contract base together with the scale of international growth opportunities and associated investment decisions available, the Board has concluded it is now appropriate to commence a full strategic review of the options for the future development of Kitbag, including consideration of further investment or potential divestment.

"Kleeneze continues to under-perform, with sales for the period 24% below prior year although the high variability of costs mitigates the impact on profits. Whilst service levels have recovered and distributor numbers have stabilised, sales per distributor are yet to improve. A number of new options are being trialled and evaluated to improve performance."

Looking ahead, the group says it continues to make substantial progress, driven in particular by the strength of Express Gifts.

"Overall, though mindful of the important Christmas trading period ahead and the specific market challenges currently in front of our Education business, we maintain our expectations for overall Group performance and margin targets."

Results for the 26 weeks to 26 September are scheduled for 26 November.








At 8:26am: [LON:FDL] Findel PLC share price was -3p at 239p



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