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Findel PLC (STU)

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Tuesday 19 March, 2013

Findel PLC

Proposed Disposal and Share Consolidation

RNS Number : 2927A
Findel PLC
19 March 2013
 

 

 

19th March 2013

 

FINDEL PLC - PROPOSED DISPOSAL OF HEALTHCARE DIVISION, SHARE CONSOLIDATION AND TRADING SUMMARY

Disposal Overview

 

The Board of Findel plc ("Findel" or the "Group") is pleased to announce that it has today entered into a conditional agreement to dispose of its Healthcare division ("NRS") to LDC (the "Disposal").

 

The gross consideration payable upon Completion will be £24.0 million in cash, comprising a payment of £22.6 million to Findel and a payment of £1.4 million into an escrow account to satisfy the estimated value of NRS's debt to the Findel Group Pension Fund. The Disposal is subject to shareholder approval and is expected to be completed by 16 April 2013.

 

NRS is a leading operator of ICES Contracts for NHS trusts and local authorities. It also supplies a wide range of rehabilitation and primary care equipment to the public and private sectors via catalogue and the internet. NRS currently has approximately 500 full time equivalent employees. As at 28 September 2012, it had gross assets of £25.1 million and in the financial year ended 30 March 2012 generated £76.8 million of revenue and operating profit of £2.1 million. 

 

Due to the size of the Disposal relative to the Group, the Disposal is deemed a Class 1 transaction under the Listing Rules. The Disposal is therefore conditional upon the approval of Findel shareholders at a General Meeting and, accordingly, a circular containing further details of the Disposal and the General Meeting will be sent to shareholders shortly. 

 

Background to the Disposal

 

NRS operates in a growing market with both favourable demographics and an increasing outsourcing opportunity through the transfer of service provision from the public to the private sector. As a market leader, it is well positioned to capitalise on these growth opportunities. Other adjacent opportunities also exist for expansion. There are, however, few synergies between NRS and the rest of the Group and the pursuit of opportunities for NRS requires cash investment in new contracts, which typically generate lower margins in their early years and therefore take time to repay initial investment. In addition, the contract renewal profile of the business introduces an element of uncertainty into likely earnings growth.

 

Findel remains committed to the development and growth of the Group for the benefit of Shareholders and the Board believes that Findel's cash resources would be better employed in developing the remainder of the Group and that NRS' interests are best served under a new owner with full focus on supporting the working capital and capital expenditure required to capitalise on the market growth potential.

 

The Disposal will allow the Board to make further progress on its turnaround plans aimed at delivering continued performance improvement in its other businesses, and will also further strengthen the balance sheet by reducing overall indebtedness by £21.6 million (being the net Disposal proceeds after deduction of transaction costs of £1.0 million).

 

Commenting on the Disposal, David Sugden, Chairman of Findel, said: "NRS is a good business with a leading position and a range of growth opportunities, the pursuit of which is better undertaken under new ownership. We believe that the proposed disposal of NRS is in the best interests of the Group and its shareholders. The disposal will enable Findel to better focus on the turnaround plans for the remainder of the Group, and will also help to strengthen the balance sheet by reducing Group borrowings."

 



 

Share Consolidation

 

The Board has also resolved to seek Shareholder approval at the General Meeting for a Share Consolidation based on every 20 Existing Ordinary Shares being consolidated into 1 New Ordinary Share, with the fractional entitlements arising from the Share Consolidation being aggregated and sold in the market on behalf of the relevant Shareholders and donated to charity. Following the Share Consolidation, Shareholders will still hold the same proportion of the Company's ordinary share capital as before the Share Consolidation (save in respect of fractional entitlements). Other than a change in nominal value, the New Ordinary Shares will carry equivalent rights under the Articles of Association to the Existing Ordinary Shares.

 

Trading summary

 

Trading in each of the Group's businesses during the final quarter of the year up to 8 March 2013 has remained broadly in line with the trends described in our Interim Management Statement dated 23 January 2013.

 

Group sales for the year to date (49 weeks to 8 March 2013) are 8.3% ahead of the prior year, with sales in the second half to date 8.7% ahead of prior year. Overall, the Board remains encouraged by the positive progress being made against our turnaround plan. 

 

Express Gifts has achieved very strong sales growth in the year to date of 14.3%, though as flagged in January the strength of growth has eased in recent weeks as comparative periods become stronger. Customer response to the improvements in offer and margin investment made by the business continues to be encouraging; with (as indicated in January) an overall growth in customer numbers of 8% during the calendar year.  Bad debt indicators remain stable, and the new behavioural credit scoring system, which has now been rolled out across 80% of the customer base, is contributing enhanced management information that will enable a better assessment of the risks incurred in the provision of credit to our customers.

 

As noted in prior statements, trading within Kleeneze has been challenging during the year, with year-to-date sales 8.1% below prior year and active distributor numbers currently 10.2% below prior year.   The decline has now broadly stabilised and we have also recently restructured the business, including changes to the leadership and management team, which will reduce the cost base and help drive the business recovery going forwards.

 

Kitbag sales are ahead of prior year by 13.5% year-to-date with the business continuing to show consistent gross margin improvements against the previous year. Contract wins during the year include the NBA, NFL, French Open tennis, Olympique Marseilles FC, Tour de France, and extensions to its Formula 1, Chelsea FC and Real Madrid contracts.  The turnaround of the business progresses well.

 

Although the Education Supplies division is reporting an overall sales decline of 3.7% year to date, as previously announced that decline is due to the shorter duration in the year of the Sainsburys 'Active Kids' scheme (which will reverse next year) and lower international sales. Year to date the core UK school, curricular and specialist brands have grown sales by 2.4%, a strong turnaround from the 12.9% decline of the prior year. With enhanced catalogue design, production and pricing processes the business is well positioned for continuing and substantial improvement in 2014. 

 

The Healthcare division has continued to perform well, with sales growth year-to-date of 16.1% and success in winning the ICES contract for Norfolk, although failing to win two other major ICES contracts. 

 

Overall the Board continues to be very encouraged by the progress now being made by the Group on its multi-year turnaround plan and is confident that the Group is well positioned to improve shareholder returns over the medium term

 



 

 

 

For further information, please contact:

 

Findel plc                                                                                                                    0161 303 3465

Roger Siddle, Group Chief Executive

Tim Kowalski, Group Finance Director

 

Rothschild                                                                                                                    0161 827 3800

Bod Buckby, Director

 

Tulchan Communications                                                                                            020 7353 4200

Stephen Malthouse

Michelle Clarke

 

Notes to Editors

 

Information on NRS

 

NRS is a leading operator of outsourced ICES Contracts for NHS trusts and local authorities. NRS currently has 13 ICES Contracts in place with expiry dates through to 2016. This is a growing market with both an increasing demand for the equipment and a gradual transfer of contract provision from the public to the private sector. The business also supplies a wide range of rehabilitation and primary care equipment to the public and private sectors via catalogue and the internet.

 

NRS currently has approximately 500 full time equivalent employees. As at 28 September 2012, NRS had gross assets of £25.1 million and in the financial year ended 30 March 2012 generated £76.8 million of revenue, operating profit of £2.1m and a profit before tax of £3.6 million.

 

Information on LDC

 

LDC is a leading private equity company in the UK mid-market. LDC is part of the Lloyds Banking Group and is authorised and regulated by the Financial Services Authority.  It has completed over 400 investments and has ongoing interests in over 60 businesses in the UK. With a UK regional network and an Asian operation in Hong Kong, LDC invests between £2m and £100m in MBOs, IBOs and Development Capital transactions in a broad range of sectors including Construction & Property, Financial Services, Healthcare, Industrials, Retail & Consumer, TMT, Travel & Leisure and Support Services. Recent transactions include investments with Fever-Tree, ATG Access, Blue Rubicon, MAMA Group, Keoghs, Forest Holidays, Dale Power Solution, Metronet, Bifold Group, Airline Services Limited and TD Travel.

 

LDC has significant experience in executing UK buyouts from large companies and PLCs. Some examples include the management buy-outs of Dale Power from TT Electronics plc, Easynet from BSkyB plc and Cranswick Pet Products from Cranswick plc. For further information, call Martin Currie or Alastair Henry on 0161 235 0320 or visit www.ldc.co.uk

 

Information on Findel

 

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

 

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

 

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

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

·        Kitbag - a leading retailer of sports merchandise;

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

·        NRS, the Healthcare Division - one of the largest contract providers of Integrated Community Equipment Services (ICES) in the UK.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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