Half Yearly Report

27 November 2013

Findel plc ("Findel" or "the Group")

ON TRACK FOR STRONG FULL-YEAR PROFIT GROWTH

Interim Results for the 26 weeks ended 27 September 2013

Findel, the UK Home Shopping and Education business, today announces its Interim Results for the 26 week period ended 27 September 2013.

Financial Summary

* before exceptional items

** bank net debt excluding the securitisation facility

† restated for changes to IAS19 "Employee Benefits (Revised 2011)" - see Note 2

Highlights

· Excellent progress in the first half:

o Revenue grew by 5.2%, representing the 4th consecutive six-month period of year on year growth

o Loss before tax* reduced to (£0.4m) from (£6.0m)

· Express Gifts, the Group's largest business (accounting for c. 50% of revenues) again delivered a strong performance

o Express Gifts sales up 10.7%, operating profits* up £3.8m leading to an H1 operating profit as the division maintained its attractively priced core offer whilst deepening range and selection

o Education sales up 8.2%, operating profits* up £3.6m as the benefits of a much improved customer proposition begin to come through

o Kleeneze sales decline slowed following management actions

o A challenging period for Kitbag

· Overall net debt £15.4m lower following receipt of net proceeds from sale of healthcare division partially offset by growth of EGL receivables. Balance sheet gearing (net debt to net assets) reduced from 2.8x to 2.2x

· 80bp improvement in rolling 12 month Group operating margin* from 4.6% to 5.4%, on track to meet medium-term operating margin targets

· Continuing progress since period end; 8 weeks to 22 November has seen sales 3.4% above prior year for the Group, with Express Gifts and Education showing continued growth

Roger Siddle, Group Chief Executive, commented:

"We are very encouraged by these results and the sustained progress against our turnaround plans. In particular, Express Gifts has started the Christmas period strongly and is well positioned to take advantage of the busy period ahead. Education Supplies continues to strengthen with a significant improvement over prior year.

These interim results represent the fourth consecutive half-year period of year-on-year revenue growth since launching our turnaround plan three years ago. Express Gifts and Education, some 75% of Group revenues combined, are seeing improved momentum whilst Kitbag and Kleeneze still need to show progress. We see further potential in all Group companies and as a management team we are very focused on ensuring these businesses fulfil their potential in the coming years.

Overall, we are delivering the turnaround and deleveraging the business, remaining on track to hit our 7-9% operating margin targets in 2014/15."

* before exceptional items

Enquiries

Findel plc 0161 303 3465

Roger Siddle, Group Chief Executive

Tim Kowalski, Group Finance Director

Tulchan Communications 020 7353 4200

Stephen Malthouse

Susanna Voyle

Michelle Clarke

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;

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

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

· Kitbag - a leading retailer of sports merchandise.

INTERIM MANAGEMENT REPORT

Delivering and deleveraging

The Group is now into the third year of its turnaround plan following the successful refinancing in March 2011. We are making excellent progress with a substantial improvement in key financial measures.

Group sales for the half year increased by 5.2% to £243.6m (2012: £231.7m). Trading seasonality within the Group, notably for Express Gifts, means that the majority of the Group's profits are earned in the second half of the year. Nonetheless, the Group returned to operating profitability in the first half after being loss-making in the equivalent periods in the previous two years.

The loss before tax reduced to £0.4m (2012: £6.0m). Core net debt has reduced by £21.2m to £131.7m (2012: £152.9m). Total net debt has reduced by £15.4m to £236.7m (2012: £252.1m). Net assets increased from £90.0m to £105.6m. The Group's gearing (net debt to net assets) at the half-year reduced significantly from 2.8x to 2.2x. This is a very pleasing performance.

The completion of the sale of the Healthcare division at the start of the financial year for gross consideration of £24m has allowed management to focus upon the remaining businesses. Our largest business, Express Gifts, maintained its strong trajectory with sales growth of 10.7% and a move from an operating loss in the first half last year to an operating profit* of £3.3m (2012: operating loss of £0.5m). Customer numbers grew at 8.4%, with customer retention also improving by some 150bp. Bad debt indicators remain stable, and the annualised bad debt charge for the business reduced to around 11.0% of revenue (March 2013: 11.4%). The focus on improved buying and sourcing continues, and the business is working ever closer with our Overseas Sourcing operation. This planned shift in focus for our Far East sourcing team has resulted in external sales for that operation falling during the period by c.41% - excluding this, total Group sales in our main businesses were 6% ahead of prior year. Our Education Supplies division also demonstrated that its turnaround is now well underway, with sales growth of 8.2% and a significant improvement in operating profit* performance to £3.6m (2012: £-m breakeven). This turnaround has taken place across all areas of its operations, with its school brands growing at 5.8%, classroom and specialist brands growing at 2.3% and international sales growing at 20.9%. Although Kleeneze's sales were behind prior year, the rate of decline has broadly stabilised and is much reduced, at (3.5%). Profit performance has been supported by decisions taken earlier in the year to reduce its cost base and make greater use of Express Gifts' infrastructure and back-office processes. Kitbag has disappointed in the period. Although it has maintained progress in winning new contracts, now adding the non-German sales of Borussia Dortmund to its portfolio, it has faced a challenging period. The business has seen a considerable reduction in demand from the fans of some major partners where on-pitch performance has not matched prior years, which combined with the absence of the European Championships and the Olympics has contributed to sales falling 6.3% versus the equivalent period in prior year and a significant adverse profit movement to a loss* of £2.9m (2012: loss of £0.7m). Remedial actions have been taken on both sales and costs which are anticipated to improve second half performance.

Measured on a rolling annualised basis, the Group operating margin* has improved from 4.6% at March 2013 to 5.4% at September 2013. There remains more potential for improved performance in all our businesses. Since the half-year, Group sales have continued to show growth, 3.4% ahead of the equivalent prior-year period.

Group Financial Results

The nature of the businesses within the Findel Group mean that profits have shown, and will continue to show, a significant seasonal bias with the majority of profit being earned in the second half.

i) Group revenue of £243.7m from continuing operations, 5.2% ahead of the first half of 2012/13

ii) Group operating profit* of £4.5m from continuing operations, in the first half of 2012/13 versus prior year loss. Loss before tax* reduced to (£0.4m) from (£6.0m)

* before exceptional items

The performance of each of the primary divisions is discussed in more detail below.

Divisional Performance Review

i) Express Gifts; continuing strong performance

Express Gifts continues to deliver a strong performance despite a difficult retail environment. H1 sales grew by 10.7% over the equivalent period in the prior year. Our strategy has been to maintain an attractively priced core offer whilst deepening our range and selection, and we have seen the benefit of this, with 84% of additional sales generated by existing customers and retention increased by 150bp. Growth in the customer base has been strong, at 8.4%, though this rate of growth will slow over the full year as the peak customer recruitment period is ahead of the important Christmas trading period. Bad debt indicators remain stable or improving. Our new behavioural credit scoring system is now fully operational. Bad debt charges as a whole have reduced this period with the annualised charge being around 11.0% of revenue (March 2013: 11.4%).

Despite the seasonality of the business and investment to build the customer base the business has achieved an operating profit* in the first half of £3.3m, compared to an operating loss* of £0.5m in 2012. The business is now in its peak trading period with trading in the 8 weeks since the period end up by 7.3% versus prior year, and would be 8.4% ahead including pre-ordered new games consoles which will be available to customers in early December.

The business maintains a continued focus on improved buying and merchandising, and is working ever closer with our Far East direct sourcing office (Findel Asia Sourcing Limited - FASL) to access a broader range of goods at better prices. Over the last two years, the proportion of Express Gifts purchases made through our own operation has increased significantly, with further growth anticipated to come in the coming year. In response to this demand for its services FASL has now opened a Shanghai office and restructured its Indian operation which we anticipate will lead to further benefit.

Our large scale systems replacement project is nearing the final stages of implementation, and although there have been some adjustments in prioritisation since the commencement of this three year exercise, the project remains on time and on budget.

We continue to be encouraged by the performance of Express Gifts. The investments we have made in new systems and in new buying processes will provide a platform for further improvements in our proposition as they come on stream next year. We are confident about the potential for the business.

ii) Education Supplies; turnaround well underway

Our Education Supplies business is now seeing the benefits of the efforts that have been made to achieve a significant operational turnaround. First-half sales grew by 8.2% versus the prior year and operating profits* grew by £3.6m. After a number of years of decline this performance is a very encouraging indicator that the business is now well on the road to recovery.

The turnaround has taken place across all of the categories offered. Our schools focussed brands have continued their growth trajectory. The much improved customer proposition together with new business wins have led to first half sales in these brands increasing by 5.8%. Our classroom focussed and specialist brands have grown at 2.3%. In prior years these brands have experienced very significant decline. To rectify this we have again focussed on improving the overall product, price and service proposition and it is gratifying to see the early success of these efforts. Our International export business, which shrank last year as the business discontinued unprofitable distributor relationships, has performed strongly with growth of 20.9%, including an important contract with a major international schools chain. Our sales supporting the Sainsbury's Active Kids programme have grown by 57% as the scheme returned to a more normal structure after being impacted by the Paralympics last year. We were also very pleased to see the business rewarded for its approach by winning a number of national and regional awards recently.

Trading for the 8 weeks since the half year is 3.2% ahead of the equivalent period in the prior year. Buying patterns appear to have been affected by the relatively slow release from Local Education Authorities of purchasing budgets for academies and by primary schools being more cautious with budgets ahead of the new curriculum in 2014. Overall we continue to see strong potential in the business, maintaining and growing its position in the market and taking advantage of the expected growth in pupil numbers over the medium term.

iii) Kleeneze; performance stabilising

After a prior year of significant decline in sales and profits, Kleeneze's sales decline has reduced to 3.5% over the same period last year (2012 full year decline of 8.4%) and largely stabilised, whilst profit levels have been broadly maintained versus the same period of prior year. This follows a set of remedial actions:

- A change in management team at the turn of the year

- An associated reduction in overhead costs

- Increased coordination with Express Gifts, particularly around achieving greater synergies in buying and the sharing of overheads

- A redesigned proposition, including product range, product pricing, and catalogue design and structure

The revised proposition includes products and ranges at price points not previously offered by Kleeneze together with an increased level of promotional and pricing activity on core lines. The new propositions have been well received by distributors, and both average order frequency and average order value has risen. Although we have seen an improvement in many aspects of the business, distributor numbers have continued to fall and this is an area of attention for the management team. Trading in the 8 weeks since the period end is 4.1% behind the prior year.

Although our efforts to return Kleeneze to growth after its many years of decline are yet to bear fruit, the business remains profitable and cash generative and is thus a contributing member of the Group. Despite the sales decline, the actions already taken within the business should underpin the full year profit performance.

iv) Kitbag; a difficult period

Although the business continued to make progress on a number of its turnaround initiatives, overall performance for the period was disappointing. The business successfully launched 21 foreign language websites for various of its partners whilst increasing the range of payment mechanisms available. These efforts bore fruit, with new sites generating significantly higher sales in their markets. The business also maintained its record as partner of choice for major sporting organisations, winning a contract with Borussia Dortmund to manage online sales outside Germany. Progress was also made on legacy contract renegotiation, with one successful renegotiation which will have a material impact on Kitbag profitability in 2014/15. However, these efforts have been more than counterbalanced by a difficult market. Notwithstanding the known challenge of a harder comparative year, which included the European Football Championships and the Olympics the business has also seen a significant fall-off in demand from fans of some of its major partners, reflecting a relative lack of on-pitch success. In a small number of cases, traffic to a partner club's site and onwards to the club store has fallen significantly, which has naturally had a major impact on the business. Sales for the period are down 6.3% on the prior year. This sales shortfall, coupled with reduced margins and the fixed nature of minimum royalty payments which are spread evenly over the year, led to a material increase in operating losses* for the first half (2013: £2.9m, 2012: £0.7m). Trading for the period since the half year remains depressed, with sales in the 8 weeks since the period end running 11.0% behind the equivalent period in the prior year, although underlying sales are 8.6% behind prior year reflecting the presence of the Ryder Cup in this period last year. Margins however have improved on prior year in this period.

Management is taking a range of actions to improve performance, both on sales and costs. Whilst the turnaround of the business has clearly slowed and this financial year's performance of Kitbag will fall short of our original expectations, the combination of these actions, renegotiated contracts, a strong new business pipeline, and the inclusion of the World Cup and the Ryder Cup next year (where Kitbag will also manage onsite retail) is expected to lead to an improved performance next year.

Exceptional items

The Financial Conduct Authority recently published a thematic review for medium sized businesses on improvements required to the PPI complaints handling processes. In consideration of this, Express Gifts has concluded it is prudent to increase its provisions for potential future redress by £2.0m. Other exceptional operating costs totalling £0.5m were recognised in the first half of the year representing £0.8m of restructuring costs less a recovery of £0.3m in relation to provisions made previously for loss-making Kitbag contracts. Exceptional finance costs of £0.1m relating to the 2011 refinancing were incurred, with a further £0.2m of costs arising in connection with the disposal of the discontinued Healthcare division. Total exceptional items in the period were therefore £2.8m (2012: £5.9m).

Taxation

The Group recognised income tax credits in the first half totalling £0.8m, based on the estimated effective tax rate for the full year of 20%. This was offset by a charge of £0.3m resulting from a reduction in the rate of tax applicable to the Group's deferred tax asset from 23% to 20% following legislative changes. Consequently, the net credit for the period was £0.5m (2012: credit of £2.0m).

Balance sheet and funding

The improvement in the Group's performance over the last year has been an important factor in improving trading terms with suppliers. This combined with a tight control over inventory levels, and the net proceeds from the sale of the Healthcare division earlier in the year has more than offset the increase in credit receivables resulting from the strong sales growth at Express Gifts. Total bank debt for the group at the end of September 2013 was £236.7m, £15.4m lower than September 2012 with core bank debt £21.2m lower at £131.7m (2012: £152.9m).

Net interest charges* in the first half of 2013/14 were £4.9m, £0.6m lower than the prior year due to the lower average borrowings following the sale of the Healthcare division. These costs have been restated to take account of the changes to IAS19, discussed in Note 2.

The Group's pension deficit reduced from £19.7m at the year end to £11.4m at the end of September 2013, primarily due to higher bond yields. Net assets stood at £105.6m, compared to £90.0m at the end of September 2012 due to the lower pension deficit and the improved profitability of the group over the last year.

Outlook

We are very encouraged by the progress that we have made in the first half of the year and the clear evidence of the success of our turnaround in our two largest businesses.

Trading to date in the second half remains encouraging, with Express Gifts on track for an excellent Christmas period. We remain on course to hit our 7-9% operating margin targets in 2014/15.

Condensed Consolidated Income Statement

26 week period ended 27 September 2013

Condensed Consolidated Income Statement

26 week period ended 28 September 2012 (Restated - note 2)

Condensed Consolidated Income Statement

52 week period ended 29 March 2013 (Restated - note 2)

Condensed Consolidated Statement of Comprehensive Income

26 week period ended 27 September 2013

Condensed Consolidated Balance Sheet

At 27 September 2013

Condensed Consolidated Cash Flow Statement

26 week period ended 27 September 2013

Condensed Consolidated Statement of Changes in Equity

26 week period ended 27 September 2013

Notes to the Condensed Consolidated Financial Statements

1. General Information

The condensed consolidated financial statements have been approved by the board on 26 November 2013.

Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union ("EU") and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. As required by the latter, the interim financial statements have been prepared applying the accounting policies and presentation that were applied in the company's published consolidated financial statements for the 52 weeks ended 29 March 2013. They do not include all the information required for full annual financial statements, and should be read in conjunction with the group's consolidated financial statements as at and for the 52 weeks ended 29 March 2013.

The financial information for the period ended 29 March 2013 is not the company's statutory accounts for that financial year. Those accounts which were prepared under IFRS as adopted by the EU ("adopted IFRS") have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors draw attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under sections 498(2) or (3) of the Companies Act 2006.

Going concern basis

In determining whether the group's financial statements for the period ended 27 September 2013 can be prepared on a going concern basis, the directors considered all factors likely to affect its future development, performance and its financial position, including cash flows, liquidity position and borrowing facilities and the risks and uncertainties relating to its business activities in the current challenging economic climate. The financial position of the group, its cash flows, liquidity position and borrowing facilities and the key risks and uncertainties are set out in further detail in the Finance Director's Review on pages 16 to 19 of the company's published consolidated financial statements for the 52 weeks ended 29 March 2013.

The directors have reviewed the trading and cash flow forecasts as part of their going concern assessment, including reasonable downside sensitivities which take into account the uncertainties in the current operating environment including amongst other matters demand for the group's products, its available financing facilities, and movements in interest rates. Although at certain times the level of headroom reduces to a level which is less than the directors would regard as desirable in the long term, the directors believe it to be sufficient and have identified controllable mitigating actions that could be implemented if required.

Taking into account the above uncertainties and circumstances, the directors formed a judgement that there is a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future.

Accordingly, they continue to adopt the going concern basis in preparing the group's financial statements for the period ended 27 September 2013.

Risks and uncertainties

The principal risks and uncertainties which could impact the group's long-term performance remain those detailed on pages 16 to 19 of the group's 2013 Annual Report and Accounts, a copy of which is available on the group's website, www.findel.co.uk. No new risks have been identified. These risks remain valid as regards their potential to impact the group during the second half of the current financial year. The group has a comprehensive system of risk management installed within all parts of its business to mitigate these risks as far as is possible.

Seasonality

Sales within the Express Gifts operating segment are more heavily weighted towards the second half of the financial year, with approximately 55%-60% of annual sales occurring during that period.

2. Accounting Policies

As required by the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority, this condensed set of financial statements has been prepared applying the same accounting policies and computation methods that were applied in the preparation of the Company's published consolidated financial statements for the year ended 29 March 2013, other than those noted below. There have been several new and amended International Financial Reporting Standards which became effective for accounting periods starting on or after 1 January 2013, the effects of which are noted below:

Presentational and financial effect:

· IAS19 'Employee Benefits (Revised 2011)' (see below)

Presentational impact only:

· IAS1 'Presentation of Financial Statements'

· IAS34 'Interim Financial Reporting'

There were a number of other standards which came into effect but will have no impact on the group.

Restatement in respect of IAS19 'Employee Benefits (Revised 2011)'

The condensed balance sheets as at 28 September 2012 and 29 March 2013 have been restated on adoption of IAS19 'Employee Benefits' (revised 2011). IAS19 as revised includes a number of amendments to the accounting for defined benefit plans, but the principal impact on the group is that the return on plan assets recognised in the income statement is now calculated in a manner consistent with the interest charge on the liabilities, i.e. with reference to the discount rate applied to the liabilities. Prior to the revision, the expected return on assets was recognised through the income statement.

The retrospective impacts on the group's comparative figures for the 52 week period ended 29 March 2013 and the 26 week period ended 28 September 2012 were decreases in the net financing credits of £1,016,000 and £488,000 respectively and associated reductions in the tax charge of £244,000 and £116,000 respectively. The equivalent credits and associated taxation impacts to these income statement charges have been recognised in other comprehensive income, and consequently there was no overall net balance sheet effect. The principal impact of the other amendments to IAS19 for the group relates to the new disclosure requirements, which will not affect the group's reporting until the March 2014 year-end.

Restatement in respect of discontinued operation

The group's comparative results for the 26 week period ended 28 September 2012 have been restated to reflect the presentation of the results of the group's former healthcare business (Nottingham Rehab Limited) as a discontinued operation as defined by IFRS 5, "Non-current assets held for sale and discontinued operations". Results from the discontinued operation have been separated out in the consolidated income statement to enhance the comparability of the ongoing business and the assets and liabilities have been classified as held for sale. This treatment is consistent with that adopted in the consolidated financial statements for the 52 week period ended 29 March 2013 and is in compliance with the requirements of IAS 34 "Interim Reporting".

Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing the interim financial statements, the significant judgements made by management in applying the group's accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 29 March 2013.

3. Trading costs

* relates to the period from 30 March 2013 to 19 April 2013 when the healthcare division was controlled by the group.

4. Segmental analysis

Operating segments

For management purposes, prior to the disposal of the healthcare division, the group was organised into six operating segments: Express Gifts, Kleeneze, Kitbag, Education Supplies, Healthcare and Overseas Sourcing.

Segment information about these operating segments is presented below.

26 weeks 27 September 2013

Revenue

26 weeks 27 September 2013

Loss after tax

26 weeks 28 September 2012

Revenue

26 weeks 28 September 2012

Profit/(loss) after tax

52 weeks 29 March 2013

Revenue

52 weeks 29 March 2013

Profit after tax

5. Exceptional items

The following is an analysis of the exceptional items arising during the period.

Restructuring costs in the current period of £762,000 (26 weeks ended 28 September 2012: £1,036,000; 52 weeks ended 29 March 2013: £3,975,000 - including £163,000 related to discontinued operation), relate to further management changes, redundancies and costs associated with remedying legacy poor systems and controls.

A credit of £250,000 has been recorded in relation to contracts which were assessed as loss making at 29 March 2013 (26 weeks ended 28 September 2012: £nil; 52 weeks ended 29 March 2013: £1,311,000 - cost). The credit arose as a result of the renegotiation of the contracts in question, which has reduced the level of the expected loss.

A further £2,000,000 of costs were provided in relation to PPI redress during the period (26 weeks ended 28 September 2012: £4,799,000; 52 weeks ended 29 March 2013: £4,800,000).

The group incurred exceptional finance costs of £68,000 (26 weeks ended 28 September 2012: £87,000; 52 weeks ended 29 March 2013: £283,000) in the period in respect of fees and other costs associated with amendments to its credit facilities in March 2011.

Profit on sale of subsidiary relates to the sale of the group's healthcare division (Nottingham Rehab Limited), which was completed on 19 April 2013. Pension settlement cost relates the buyout of members of the Findel Education section of the Findel Group Pension Fund that were employed by NRS, which took place as a result of the sale of the business.

6. Taxation

Income tax for the 26 week period ended 27 September 2013 is based on an estimated effective tax rate for the full year of 20.0% (26 week period ended 28 September 2012: 20.0%), giving rise to a tax credit in the period of £733,000. This tax credit has been reduced by a charge of £259,000, brought about as a result of the brought forward deferred tax asset now being calculated at the UK applicable corporation tax rate of 20% (26 week period ended 28 September 2012: 23%). The group has also recorded a credit of £56,000 in relation to deferred tax on the group's defined benefit pension scheme.

7. (Loss)/earnings per share

Earnings per share figures for both the period ended 28 September 2012 and 29 March 2013 have been restated to reflect the effects of the twenty for one share consolidation which took place on 9 April 2013 and the adoption of IAS19 'Employee Benefits' (revised 2011).

Earnings per share figures for the period ended 28 September 2012 have been restated to reflect the presentation of the results of the group's former healthcare business (Nottingham Rehab Limited) as a discontinued operation as defined by IFRS 5, "Non-current assets held for sale and discontinued operations".

*Adjusted to remove the impact of exceptional items.

*Adjusted to remove the impact of exceptional items.

*Adjusted to remove the impact of exceptional items.

The diluted earnings per share for the 26 week period ended 27 September 2013 and for the 26 week period ended 28 September 2012 is unchanged from the basic earnings per share as the inclusion of dilutive ordinary shares would reduce the loss per share and is therefore not dilutive in accordance with IAS 33 'Earnings per Share'

No diluted earnings per share figures were disclosed for the 52 week period ended 29 March 2013 as there were no potentially dilutive options.

8. Discontinued operation

The group completed the disposal of its healthcare division through the sale of Nottingham Rehab Limited ("NRS") on 19 April 2013.

The final consideration payable upon completion, and following the completion of the valuation of the Findel Group Pension Fund was £24,000,000, comprising a cash payment of £22,671,000 to Findel Plc and a payment of £1,329,000 paid into an escrow account to satisfy the value of NRS' debt to the Findel Group Pension Fund.

A profit on disposal of £303,000 has been recognised in the consolidated income statement within exceptional items (from discontinued operation), being the consideration received in excess of the net assets of the business sold.

The results of NRS for the period from 30 March 2013 to 19 April 2013 have been presented as a discontinued operation as defined by IFRS 5, "Non-current assets held for sale and discontinued operations".

Responsibility Statement

We confirm that to the best of our knowledge:

(a) the condensed consolidated financial statements have been prepared in accordance with IAS 34

Interim Financial Reporting asadopted by the European Union;

(b) the interim Chairman's statement and condensed consolidated financial statements include a fair review of the information required by: