AGM Statement

18 July 2014

Findel plc (the "Group")

AGM Trading Statement and Interim Management Statement

At the Annual General Meeting to be held at 11.00am today David Sugden, Chairman, will make the following Interim Management Statement which covers the 15 week period from 31 March 2014 to 17 July 2014.

Group Performance

During the seasonally quietest trading period the Group has delivered a substantial improvement in bottom line performance despite lower sales, as a result of improved margins and cost savings. Our largest business, Express Gifts, has performed well with sales ahead of last year by 6.2%. Sales at our other businesses have been more varied, which coupled with some timing effects and changing trends has resulted in total Group sales being slightly lower (2.2%) than the same period last year. We continue to anticipate another year of substantial progress and our profit and margin expectations for the year remain unchanged.

Express Gifts continues its strong performance trajectory with sales growth of 6.2% versus the prior year period (with overall demand, accounting for orders taken but not yet fulfilled, up c.8%). Very strong response levels continue to be seen for the business's value and discount proposition which is closely targeted to its core customer segment. The majority of this growth has again come from existing customers, which continues to lead to improving bad debt indicators. Margins have been maintained, and thus underlying profits have continued to increase significantly. 

Our Education business has maintained its overall profit performance versus prior year. Sales during April were significantly below prior year with the later Easter holidays meaning a re-phased new catalogue launch at the end of the month, some 3 - 4 weeks behind prior year. As previously highlighted uncertainties around the scale of school budgets and the delayed release of these budgets to schools in many areas has also driven a change in buying behaviour. Our research with schools indicates a continuing trend towards spreading purchases beyond the traditional July peak into the summer and autumn term. These combined effects have led to sales during the period to be 5.5% below the prior year, with the early part of the period being the significant driver of the shortfall. The sales trajectory has been improving strongly in recent weeks, and the business's improved ability to adjust its cost base should offer flexibility to manage any further demand fluctuations.

Whilst early in the year, we are encouraged that Kitbag's performance is ahead of our expectations, boosted by improved operational management together with the World Cup and partner on-pitch success. The business recently won the right to operate the McLaren F1 retail and wholesale business from January 2015 with the official online store launching this autumn, and is now piloting Kitbag.com on Tmall.com, the Chinese B2C platform. Margins are significantly ahead of prior year and the 8.6% decline in sales is entirely a timing issue reflecting the planned delay of a number of important Premier League partner kit launches until after the World Cup. Adjusting for this effect would mean the business is in growth.

Our smallest business, Kleeneze, remains challenged. As indicated in our results announcement on 4 June 2014, the business has been impacted by unexpected surges in demand and consequential stock shortages for a range of new or promoted products in a major catalogue, resulting in the business failing to meet that demand and damaging distributor confidence. As a result sales during the period fell by 23% but the impact on Group profits was naturally muted. These stock issues have been addressed and action plans are in place to improve overall profit performance.

Outlook

The Group has seen strong year-on-year profit growth from the continued strong performance of Express Gifts and the improved control of margins and costs. Although changing trends and timing effects have impacted sales in this relatively quiet period we anticipate that these will recover leaving our overall expectations for profit and margin for the full year unchanged.

Enquiries

Findel plc Roger Siddle / Tim Kowalski0161 303 3465

Tulchan Communications LLPStephen Malthouse / Will Smith020 7353 4200

Notes to Editors

The Findel Group contains market leading businesses in the UK home shopping and education supplies markets. It is primarily a retailer and distributor, handling and supplying specialist products manufactured by third parties.

The Group's activities are focused in four main operating segments, together with a small overseas sourcing operation:

· Express Gifts - one of the largest direct mail order businesses in the UK;

· Findel Education - one of the largest independent suppliers of resources and equipment (excluding information technology and publishing) to schools in the UK and overseas;

· Kleeneze - a leading network marketing company in the UK and the Republic of Ireland; and

· Kitbag - a leading retailer of sports merchandise.

The range of analyst forecasts as at 17 July 2014 seen by the Group for profit before tax for FY15 is £28.5m-30.0m (FY14 actual: £22.0m).