Findel underlying tax profit up 10pct

May 2007

LONDON (Thomson Financial) - Findel PLC, the home shopping and educational supplies business, has reported an expected 10 pct increase in full year underlying pretax profit and said it plans to announce the outcome of its long awaited strategic review at the end of the summer.

'The last six months have been extremely busy both corporately and operationally and have delayed a final decision on the future corporate structure of the group,' it said.

'However, we are now sufficiently advanced in dealing with the integration

of our acquisitions to be able to focus on this question and expect to conclude

the review by the end of this summer.'

Analysts think the review could lead to a demerger.

For the year to March 31 2007 the group made an underlying pretax profit of 56.0 mln stg. This compares with analyst forecasts of 54.9-56.0 mln stg and 50.7 mln stg in the prior year.

Full year sales rose 11 pct to 587 mln stg. Reported pretax profit fell to 17.5 mln stg from 35.1 mln stg.

The group said the home shopping division delivered on its strategy to develop a cash with order business to strengthen its core credit business.

Home shopping internet sales in the credit business are now over 30 pct and are forecast to be 50 pct of divisional sales in the current year.

The division also made several strategic acquisitions -- Letterbox, Kitbag.com, Confetti, I Want One of Those.com (IWOOT), Kleeneze and The Cotswold Company. An integration programme to maximise synergies from these acquisitions is underway.

The educational supplies division improved service and strengthened its customer offering in a difficult market, while the healthcare division successfully developed its systems, making it well placed to take advantage of current favourable market conditions. Both divisions also made an acquisition.

Findel said group sales for the first six weeks of its new financial year are 32 pct ahead of the same period last year, reflecting the acquisitions.

'This year has been a strategically important period for the group and the board is confident that we will continue to make further progress in the current year,' said chairman Keith Chapman.

A final dividend of 15.6 pence, up 10 pct, is proposed, making 19.8 pence for the year versus 18.0 pence, payable from underlying earnings per share of 50.17 pence, up 4 pct.

Shares in Findel closed Wednesday at 662 pence, valuing the business at 563 mln stg.

Richard Ratner, analyst at Seymour Pierce, is holding his current year underlying pretax profit forecast at 63.3 mln stg, reiterating his 'outperform' stance.