Findel shows "resilience" but no profit yet

FINDEL Group chief executive Roger Siddle said the company had shown “remarkable resilience” during a difficult 12 months which saw the distressed sale of a number of business units and a £75m rights issue to shore up its balance sheet.

The company, which moved its headquarters from Burley-in-Wharfedale in West Yorkshire to the headquarters of its education mail order business at Hyde in Tameside last year, witnessed a 2.6% drop in sales to £532.6m in the year to April 1.

Pre-tax profits before exceptionals and write-downs from discontinued businesses also dropped by 40% to just £7m, but the burden of such costs weighed much lighter – its overall pre-tax loss was £1.4m, compared with £74.8m a year ago.

Siddle said the the business had been through a long period of financial uncertainty, but argued that its management team had been reinvigorated and its five core businesses  were now “firmly focused on the future”.

“The restructured balance sheet gives us the stability we need to deliver on the Full Potential plans we outlined,” he said.

“It is early days, but we are confident we now have in place the right platform to deliver a much improved operational and financial performance and hence rebuild shareholder value.”

Following the rights issue, the company’s net debt reduced to £227.8m (2010: £309.6m). Chairman David Sugden said that although this meant its debt/equity gearing of 2.0x was still relatively high, Findel’s funding position has been “transformed…providing sufficient funding headroom to allow the new executive management team to focus fully on executing the turnaround strategy and restoring value in the businesses.”

Sugden blamed weak consumer confidence, cash constraints and uncertainty over public sector budgets for its lower sales, but said that a tighter control of costs meant that its five remaining businesses – Education supplies, Express Gifts, Kleeneze, Kitbag and Healthcare – all remained profitable during the year.

He also said £10m of the proceeds of the refinancing had been used to ease pressures in its supply chain and £35m has been earmarked to “rectify several years of underinvestment”.

He added that the current financial year had started well, with trading in line with investments, but he reiterated the company’s previous indication that the turnaround of the business would take three years to complete.

“However, I am pleased to report that progress to date is fully in line with our expectations,” said Sugden.