FINDEL plc

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THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE
YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action you should take, you are
recommended to seek immediately your own financial advice from your stockbroker, bank manager, solicitor,
accountant or other independent financial adviser, duly authorised under the Financial Services and Markets Act
2000 (‘‘FSMA’’) if you are resident in the United Kingdom or, if not, by another appropriately authorised
independent financial adviser.
This document comprises (a) a circular prepared for the purposes of the General Meeting convened pursuant to
the General Meeting Notice contained in Part XII (Notice of General Meeting) of this document, and (b) a
prospectus relating to Findel and the Rights Issue which has been prepared in accordance with the Prospectus
Rules of the Financial Services Authority (‘‘FSA’’) made under section 73A of FSMA. This document has been
approved by the FSA in accordance with section 85 of FSMA and made available to the public in accordance
with Rule 3.2.1 of the Prospectus Rules by the same being made available at www.findel.co.uk. This document
can also be obtained on request from the Company’s Receiving Agent, Equiniti Limited at Aspect House,
Spencer Road, Lancing, West Sussex BN99 6DA, provided that it will not be sent or made available to persons
in any Restricted Jurisdiction.
Subject to the restrictions set out below, if you sell or have sold or otherwise transferred all of your Existing
Ordinary Shares (other than ex-rights) held in certificated form before the Ex-Rights Date, you should send this
document, together with any Provisional Allotment Letter, if and when received, as soon as possible to the
purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was
effected for delivery to the purchaser or the transferee. This document and any Provisional Allotment Letter
should not, however, be distributed, forwarded to or transmitted in or into any jurisdiction where to do so
would constitute a violation of local securities laws or regulations, including but not limited to (subject to certain
exemptions) the Restricted Jurisdictions. If you have sold or transferred part of your holding of Existing
Ordinary Shares (other than ex-rights) held in certificated form before the Ex-Rights Date, please refer to the
instructions regarding split applications set out in Part III (Terms and Conditions) of this document and in the
Provisional Allotment Letter. If your registered holding of Existing Ordinary Shares (other than ex-rights) which
were sold or transferred was held in uncertificated form and the Existing Ordinary Shares were sold or
transferred before the Ex-Rights Date, a claim transaction will be automatically generated by Euroclear which,
on settlement, will transfer the appropriate number of Nil Paid Rights to the purchaser or transferee.
The distribution of this document and/or the Provisional Allotment Letter and/or the transfer of the Nil Paid Rights,
Fully Paid Rights, New Ordinary Shares and/or Placing Shares, into jurisdictions other than the United Kingdom
may be restricted by law and therefore persons into whose possession this document or any accompanying documents
comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these
restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction.




                                                        FINDEL plc
                    (incorporated and registered in England and Wales under the Companies Act 1948 with registered no. 549034)

                            Proposed 5 for 2 Rights Issue of 1,223,605,440 New Ordinary Shares
                                           at 6.54 pence per New Ordinary Share
                                                           - and -
                      Proposed Placing of 5,803,048 Placing Shares at 8.53 pence per Placing Share
                                                                  - and -
                                                        Notice of General Meeting
                  Greenhill & Co. International LLP            J.P. Morgan Cazenove              Evolution Securities Limited
                  Financial Adviser and Joint Sponsor       Joint Sponsor, Joint Broker                  Joint Broker
                                                                  and Bookrunner

Your attention is drawn to the letter from the Chairman of the Company which is set out in Part I (Letter from the
Chairman of Findel) of this document. You should read the whole of this document. In particular, your attention is
drawn to the section of this document entitled ‘‘Risk Factors’’ which contains a discussion of certain factors, risks
and uncertainties that should be taken into account when considering what action to take in relation to the Rights
Issue or considering whether to purchase Nil Paid Rights, Fully Paid Rights, New Ordinary Shares or Placing
Shares.
The Existing Ordinary Shares are listed on the premium listing segment of the Official List and have been
admitted to trading on the London Stock Exchange’s main market for listed securities. Application will be made
to the FSA and to the London Stock Exchange respectively for admission of all of the New Ordinary Shares (nil
and fully paid) and the Placing Shares (i) to the premium listing segment of the Official List; and (ii) to the
London Stock Exchange’s main market for listed securities. It is expected that Admission of the New Ordinary
Shares will become effective and that dealings in the New Ordinary Shares (nil paid) will commence on the
London Stock Exchange at 8.00 a.m. (UK time) on 1 March 2011. It is expected that Placing Admission will
become effective and that dealings in the Placing Shares will commence on the London Stock Exchange at 8.00
a.m. (UK time) on 1 March 2011.
No application has been, or is currently intended to be, made for the Convertible Shares to be admitted to
listing or dealt with on any stock exchange.
The latest time and date for acceptance                and payment in full for the New Ordinary Shares by holders of Nil Paid
Rights is expected to be 11.00 a.m. on                 15 March 2011. The procedure for acceptance and payment is set out in
Part III (Terms and Conditions) of this                document and, for Qualifying Non-CREST Shareholders only, also in the
Provisional Allotment Letter. Qualifying               CREST Shareholders should refer to paragraph 5 of Part III (Terms and
Conditions) of this document.
The General Meeting Notice convening the General Meeting of the Company, to be held at the offices of
Clifford Chance LLP, 10 Upper Bank Street, London E14 5JJ at 11.00 a.m. on 28 February 2011, is set out in
Part XII (Notice of General Meeting) of this document. Shareholders will find enclosed with this document a
Form of Proxy for use at the General Meeting. Shareholders are requested to complete and return the Form of
Proxy whether or not they intend to be present at the General Meeting. To be valid, Forms of Proxy should be
completed and signed in accordance with the instructions printed thereon and returned by post or by hand so as
to reach the Registrars, Equiniti Limited, at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA as
soon as possible and, in any event, by no later than 11.00 a.m. on 26 February 2011. The completion and return
of a Form of Proxy will not preclude a Shareholder from attending and voting at the General Meeting.
Subject to the passing of Resolutions 1 to 4 (inclusive), it is expected that Qualifying Non-CREST Shareholders
will be sent a Provisional Allotment Letter on 28 February 2011 and the Qualifying CREST Shareholders will
receive a credit to their appropriate stock accounts in CREST in respect of Nil Paid Rights to which they are
entitled on 1 March 2011. Nil Paid Rights so credited are expected to be enabled for settlement by Euroclear as
soon as practicable after Admission.
Greenhill & Co International LLP, J.P. Morgan Securities Ltd (which conducts its investment banking business
in the UK under the name J.P. Morgan Cazenove (‘‘J.P. Morgan Cazenove’’) and Evolution Securities Limited
are acting for Findel and no one else in connection with the Rights Issue and/or the Placing and will not regard
any other person (whether a recipient of this document or not) as their client in relation to the Rights Issue and/
or the Placing and will not be responsible to anyone other than Findel for providing the protections afforded to
their respective clients or for providing advice in relation to the Rights Issue, the Placing or any transaction or
arrangement referred to in this document.
Apart from the responsibilities and liabilities, if any, which may be imposed on Greenhill & Co. International
LLP, J.P. Morgan Cazenove and Evolution Securities Limited by the FSMA or the regulatory regime established
thereunder or under the regulatory regime of any other jurisdiction where exclusion of liability under the relevant
regulatory regime would be illegal, void or unenforceable, none of Greenhill & Co. International LLP, J.P.
Morgan Cazenove and Evolution Securities Limited accept any responsibility whatsoever for the contents of this
document or for any statement made or purported to be made by any of them, or on behalf of them, in
connection with the Company, the Rights Issue, the New Ordinary Shares, the Placing or the Placing Shares.
Greenhill & Co. International LLP, J.P. Morgan Cazenove and Evolution Securities Limited accordingly disclaim
all and any liability whether arising in tort, contract or otherwise (save as referred to above) which they might
otherwise have in respect of such document or any such statement.
J.P. Morgan Cazenove may, in accordance with applicable legal and regulatory provisions and subject to the
Underwriting Agreement, engage in transactions in relation to Nil Paid Rights, Fully Paid Rights, the New
Ordinary Shares, or related instruments for its own account for the purpose of hedging its underwriting exposure
or otherwise. Except as required by applicable law or regulation, J.P. Morgan Cazenove does not propose to
make any public disclosure in relation to such transactions.

Notice to US Investors
The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Provisional Allotment Letters and the
Placing Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the
‘‘Securities Act’’) or under any securities laws of any state or other jurisdiction of the United States and
accordingly may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or
indirectly, within the United States except pursuant to registration under the Securities Act or an applicable
exemption from the registration requirements of the Securities Act and in compliance with any applicable
securities laws of any state or other jurisdiction of the United States. There will be no public offer of Nil Paid
Rights, Fully Paid Rights, New Ordinary Shares or Placing Shares in the United States.

NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENCE HAS BEEN FILED UNDER CHAPTER 421 B OF THE NEW HAMPSHIRE REVISED
STATUTES (‘‘RSA 421 B’’) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE OF NEW
HAMPSHIRE, THAT ANY DOCUMENT FILED UNDER RSA 421 B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR
EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE
SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON
THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY
PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE TO
ANY   PROSPECTIVE    PURCHASER,    CUSTOMER  OR   CLIENT  ANY   REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.




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                                                             WHERE TO FIND HELP

Part II (Some Questions and Answers on the Rights Issue and the Placing) of this document answers some of the
questions most often asked by shareholders about rights issues. If you have further questions, please telephone
the Shareholder Helpline on the numbers set out below. This helpline is available from 8.30 a.m. to 5.30 p.m.
(UK time) Monday to Friday (except UK public holidays) and will remain open until 22 March 2011.

                                                                Shareholder Helpline
                                                         0871 384 2912 (from inside the UK)
                                                                         or
                                                       +44 121 415 0175 (from outside the UK)

Calls to the Shareholder Helpline from inside the UK are charged at 8 pence per minute (including VAT) from a
BT landline; other network providers’ charges may vary. Calls to the Shareholder Helpline from outside the UK
are charged at applicable international rates. Different charges may apply to calls made from mobile telephones
and calls may be recorded and monitored randomly for security and training purposes.
Please note that, for legal reasons, the Shareholder Helpline will only be able to provide information contained in
this document and information relating to the Company’s register of members and will be unable to give advice
on the merits of the Rights Issue or to provide financial, legal, tax or investment advice.




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                               CONTENTS

                                                               Page
SUMMARY INFORMATION                                               5
RISK FACTORS                                                     11
EXPECTED TIMETABLE OF PRINCIPAL EVENTS                           23
RIGHTS ISSUE AND PLACING STATISTICS                              24
DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS     25
FORWARD-LOOKING STATEMENTS                                       27
PRESENTATION OF FINANCIAL AND OTHER INFORMATION                  28
IMPORTANT INFORMATION                                            30
PART I      LETTER FROM THE CHAIRMAN OF FINDEL                   33
PART II     SOME QUESTIONS AND ANSWERS ON THE RIGHTS ISSUE
            AND THE PLACING                                      47
PART III    TERMS AND CONDITIONS                                 56
PART IV     INFORMATION ON THE GROUP                             77
PART V      HISTORICAL FINANCIAL INFORMATION ON THE GROUP        88
PART VI     OPERATING AND FINANCIAL REVIEW                      168
PART VII    UNAUDITED PRO FORMA FINANCIAL INFORMATION           197
PART VIII   INFORMATION RELATING TO THE TAM CONCERT PARTY
            AND OTHER INFORMATION REQUIRED FOR THE PURPOSES
            OF THE RULE 9 WAIVER                                202
PART IX     TAXATION                                            206
PART X      ADDITIONAL INFORMATION                              210
PART XI     DEFINITIONS                                         250
PART XII    NOTICE OF GENERAL MEETING                           257




                                      4
                                                                                  SUMMARY INFORMATION
The following summary information does not purport to be complete and should be read as an
introduction to the more detailed information appearing elsewhere in this document. Any decision by a
prospective investor to invest in New Ordinary Shares should be based on consideration of the document
as a whole and not solely on this summary.
Where a claim relating to the information contained in this document is brought before a court in a
member state of the European Economic Area, the claimant may, under the national legislation of that
member state where the claim is brought, be required to bear the costs of translating this document
before legal proceedings are initiated. Civil liability attaches to those persons who are responsible for this
summary, including any translation of this summary, but only if this summary is misleading, inaccurate
or inconsistent when read together with the other parts of this document.

1.    INTRODUCTION
Findel proposes to raise approximately £80.5 million (approximately £75.5 million net of expenses), of
which approximately £80 million will be raised from the Rights Issue and the remainder from the
Placing. The Group is currently heavily indebted and the purpose of the Rights Issue is to strengthen
the Group’s financial position as part of a restructuring of its balance sheet. The Placing is being
undertaken to allow certain Board members (including the Chief Executive) to demonstrate their
continuing support for the Company by participating in this capital raising.
The 5 for 2 Rights Issue of 1,223,605,440 New Ordinary Shares is being made at an Issue Price of
6.54 pence per New Ordinary Share. Placees will subscribe for Placing Shares at a Placing Price of
8.53 pence per Placing Share. The Placing comprises in aggregate 5,803,048 Placing Shares.
The Rights Issue and the Placing are conditional upon, inter alia, certain Resolutions being passed at
the General Meeting of the Company to be held on 28 February 2011 at 11.00 a.m. at the offices of
Clifford Chance LLP, 10 Upper Bank Street, London E14 5JJ.
The Directors believe that the Rights Issue and the Placing are in Shareholders’ best interests and
that it is important that Shareholders vote in favour of the Resolutions.

2.    INFORMATION ON THE GROUP
The Findel Group contains market leading businesses in the home shopping, education supplies and
healthcare markets. It is primarily a distributor, handling and supplying specialist products
manufactured by third parties. The Group’s activities are focussed in five operating segments:
*                                                      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
*                                                      the Healthcare Division – one of the largest contract providers of Integrated Community
                                                       Equipment Services (ICES) in the UK.

3.   CURRENT TRADING AND PROSPECTS
The Group today announced its interim management statement covering the period from 1 October
2010 to today. Specific numerical references in the statement relate to the 17 week period ended 28
January 2011 unless otherwise referenced.
Overall sales for the Group on a continuing basis were slightly behind the equivalent period in the
prior financial year, with adverse weather conditions impacting a number of businesses in the Group.
In the short term the Group’s business continues to face a number of challenges, both in maintaining
supply chain effectiveness given current financial constraints and the more general external economic
environment. However, the proposed financial restructuring announced today will provide the Group
with the secure funding base and capital availability required to implement the Group’s Full Potential
Review programme and should give confidence to all stakeholders. The Board believes that successful
delivery of this programme will produce substantial benefits for all stakeholders in the longer-term.

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4.   BACKGROUND TO AND REASONS FOR THE RIGHTS ISSUE AND THE PLACING AND
     USE OF PROCEEDS
Findel has faced considerable challenges in recent years and its business has suffered from reduced
profitability, in light of which the Board has taken a number of corrective actions commencing with,
and contained in, a Full Potential Review of the Group’s businesses and operations over the last nine
months.
In parallel with this, the Board has been examining ways to reduce debt and to establish a stable
financial platform for successful delivery of the Group’s operational turnaround. Accordingly, the
Board has today announced a Rights Issue and Placing to raise gross proceeds of approximately
£80.5 million (approximately £75.5 million net of expenses) which, together with the New Lending
Facilities, will restructure the Group’s balance sheet. £40 million of the net proceeds from the Rights
Issue will be used to pre-pay indebtedness and cancel availability under the Existing Revolving Credit
Facilities, with the remainder of the net proceeds of the Rights Issue and the proceeds of the Placing
retained by the Group, initially to reduce indebtedness and subsequently to fund the initiatives
identified by the FPR. The Rights Issue is open to Qualifying Shareholders; the Placing is to enable
certain members of the Board (including the Company’s Chief Executive) to invest in the Company.

5.    NEW LENDING FACILITIES
The Group has entered into conditional agreements for the provision of the New Lending Facilities
which will only become effective if the Rights Issue becomes effective. In such circumstances, the
terms of the Existing Lending Facilities will be amended and extended for five years, £40 million of
the proceeds of the Rights Issue will be used to pre-pay indebtedness and cancel availability under
the Existing Revolving Credit Facilities and £40 million of indebtedness will be released in
consideration of the allotment and issue to the Lenders of 166,878,704 unlisted Convertible Shares.
Any Convertible Shares issued will, if the Company’s volume weighted average Ordinary Share price
rises above 23.97 pence for a period of one month between the 2nd and 10th anniversary of the date
on which the Convertible Shares are issued or in the event that an Offer is made for the Company,
become convertible into Ordinary Shares at the option of the holders of the Convertible Shares. If
the Rights Issue, the Placing and the New Lending Facilities become effective, Group net debt will
reduce by approximately £110.5 million.
The Board believes that the New Revolving Credit Facilities offer significantly greater operational
flexibility in terms of covenants and availability than the Group’s Existing Revolving Credit Facilities.

6.    PRINCIPAL TERMS AND CONDITIONS OF THE RIGHTS ISSUE AND THE PLACING
The Rights Issue is being made to all Qualifying Shareholders on the register of members of the
Company at the close of business on 24 February 2011. Pursuant to the Rights Issue, the Company
is proposing to offer 1,223,605,440 New Ordinary Shares by way of rights to Qualifying Shareholders
at the Issue Price of 6.54 pence per New Ordinary Share payable in full on acceptance by no later
than 15 March 2011. The Rights Issue is expected to raise approximately £80 million (approximately
£75 million net of expenses). The Issue Price represents a discount of approximately 23.3 per cent. to
the theoretical ex-rights price based on the Closing Price of 13.50 pence per Ordinary Share on 10
February 2011, being the last Business Day before announcement of the Rights Issue and the Placing.
The Rights Issue will be made on the basis of:
                                                                      5 New Ordinary Shares for every 2 Existing Ordinary Shares
TAM and Schroder have each irrevocably undertaken (on and subject to the terms of their respective
Irrevocable Undertakings) to take up rights under the Rights Issue and subscribe for the TAM Shares
and Schroder Shares respectively.
Save in respect of the TAM Shares and the Schroder Shares, the Rights Issue is fully underwritten by
the Underwriter pursuant to the Underwriting Agreement. The Rights Issue is conditional, inter alia,
upon:
(i)                                                    the passing, without amendment, of Resolutions 1 to 4 (inclusive) at the General Meeting;
(ii)                                                   the Underwriting Agreement having become unconditional in all respects (save for the condition
                                                       relating to Admission) and not having been terminated in accordance with its terms; and
(iii) Admission becoming effective by no later than 8.00 a.m. on 1 March 2011 (or such later time
      and date as the Company and the Joint Sponsors may agree, not being later than 14 March
      2011).

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The Company intends to raise approximately £0.5 million by way of the Placing, through the issue of
5,803,048 Placing Shares to the Placees, at a Placing Price of 8.53 pence per Placing Share. The
Placing is being undertaken to facilitate investment in the Company by certain members of the Board.
The Placing Price has been set at the theoretical ex-rights price based on the Closing Price of 13.50
pence per Ordinary Share on 10 February 2011. This price is the theoretical price of the Ordinary
Shares taking into account the impact of the Rights Issue. This will represent a discount of 36.8 per
cent. to the Closing Price on 10 February 2011. Given the size of the discount of the Placing Price, in
accordance with the Listing Rules, Shareholders are being asked to approve the Placing at the
General Meeting.
Each subscription for Placing Shares pursuant to the Placing is conditional, inter alia, upon:
(i)    the passing, without amendment, of Resolutions 1 to 6 (inclusive) at the General Meeting;
(ii)   the Underwriting Agreement and the relevant Placing Letter having become unconditional in all
       respects (save for the conditions relating to Admission and Placing Admission) and not having
       been terminated in accordance with their terms; and
(iii) Placing Admission and Admission becoming effective by no later than 8.00 a.m. on 4 April
      2011.
The New Ordinary Shares and the Placing Shares will, when issued and fully paid, rank equally in all
respects with the Existing Ordinary Shares, including the right to receive all dividends and other
distributions made, paid or declared after the date of issue of the New Ordinary Shares and the
Placing Shares and otherwise pari passu with the Existing Ordinary Shares. For the avoidance of
doubt, the Placees will not be entitled to participate in the Rights Issue in respect of their Placing
Shares.

7.   IMPORTANCE OF VOTE
Resolutions 1 to 4 (inclusive) must be passed by Shareholders at the General Meeting in order for the
Rights Issue to proceed and Resolutions 1 to 6 (inclusive) must be passed by Shareholders at the General
Meeting in order for the Placing to proceed.
If, for any reason, Resolutions 1 to 4 (inclusive) are not passed or any other conditions of the Rights
Issue (as described in paragraph 6 above) are not fulfilled, the Rights Issue will not proceed and the New
Lending Facilities will not become available to the Group. In this event, the Group’s debt financing will
continue to be provided under the Existing Lending Facilities and, as such, the Group will continue to be
heavily indebted and subject to the financial covenants and restrictions in its operational flexibility under
the Existing Lending Facilities. The Existing Lending Facilities will mature in January 2012 and if the
New Lending Facilities do not become available, certain waivers granted in anticipation of
implementation thereof will cease to be effective. The consequences of the absence of the waivers will be
that the Group will have reduced availability in funding and be subject to restrictions in its operational
flexibility, and the cost to the Group of its debt finance facilities will be increased.
Findel would need to renegotiate the terms of the Existing Lending Facilities prior to their maturity in
order to secure the availability of credit facilities beyond January 2012 so as to give the Directors
confidence that they will be able to prepare accounts in respect of the financial year ending 1 April 2011
(which are expected to be published in early June 2011) on a going concern basis. Whilst the Board
believes that the Group may be able to renegotiate or refinance the Existing Lending Facilities, there can
be no certainty that the Group would be able to do this and in any event, the Directors believe that any
amendment to or refinancing of the Existing Lending Facilities would be significantly more expensive
and/or result in the imposition of significantly more restrictive covenants on the Group than would apply
under the New Lending Facilities. If the Group is unable to renegotiate or refinance the Existing
Lending Facilities prior to their maturity, there is a material risk that the Group would face insolvency
or be placed into administration at the maturity of the Existing Lending Facilities in January 2012.
The Directors believe that the Rights Issue is in Shareholders’ best interests and that it is important that
Shareholders vote in favour of the Resolutions.




                                                     7
8.   SELECTED FINANCIAL INFORMATION
The tables below set out the Group’s summary historical financial information for the 07/08, 08/09
and 09/10 Financial Years and the 2009 and 2010 Interim Periods. The data has been extracted
without material adjustment from the information contained in Part V (Historical Financial
Information on the Group).
                                                                                                                    As of, and for the period ended
                                                                                                                  02 April      03 April     31 March
                                                                                                                     2010           2009          2008
                                                                                                                (£million)    (£million)    (£million)

Key income statement data
Revenue from continuing operations*                                                                                 547.0             572.1         585.2
Operating profit from continuing operations*                                                                          32.6              47.3          61.4
Profit before tax from continuing operations*                                                                         11.6              24.2          39.0
Profit/(loss) before tax                                                                                             (76.1)            (57.4)         19.8
Key balance sheet data
Total assets                                                                                                         490.7          534.8           630.7
Total liabilities                                                                                                   (457.1)        (502.5)         (536.7)
Net assets                                                                                                            33.6           32.3            94.0
Net debt                                                                                                            (309.6)        (376.1)         (386.7)
*                                                      before exceptional items and terminated operations

                                                                                                                 As of, and for the     As of, and for the
                                                                                                                  26 weeks ended         26 weeks ended
                                                                                                                  1 October 2010         3 October 2009
                                                                                                                      (unaudited)            (unaudited)
                                                                                                                        (£million)             (£million)

Key income statement data
Revenue from continuing operations*                                                                                           255.8                 260.0
Operating profit from continuing operations*                                                                                     6.2                   3.3
Loss before tax from continuing operations*                                                                                    (3.7)                 (7.2)
Loss before tax                                                                                                               (15.5)                (22.7)
Key balance sheet data
Total assets                                                                                                                   479.2                623.1
Total liabilities                                                                                                             (461.2)              (532.4)
Net assets                                                                                                                      18.0                 90.7
Net debt                                                                                                                      (336.8)              (354.5)
* before exceptional items and terminated operations


9.    DIVIDENDS AND DIVIDEND POLICY
The Board believes that the cash generated by the Group should be used to pay down debt and
invest in the initiatives identified by the FPR. Accordingly, the Board does not expect to pay a
dividend in the foreseeable future.
Subject to the above, the restrictions on dividend payments included within the Proposed Articles and
the Existing Revolving Credit Facilities and the prohibition on dividend payments contained in the
New Revolving Credit Facilities, the Board aims to resume dividend payments when possible and
appropriate.

10. RISK FACTORS
Shareholders should consider carefully the following key risks.

Risks relating to the Group
Funding risks
*    If Resolutions 1 to 4 (inclusive) are not passed or any other condition of the Rights Issue is not
     fulfilled, the Rights Issue will not proceed and the New Lending Facilities will not become
     available to the Group.

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*                                                      Any failure of the Group to meet its debt obligations or comply with the terms of its credit
                                                       facilities could have a material adverse effect on its business, results of operations and financial
                                                       condition.
Risks relating to the Full Potential Review
*    Failure of, or disruption to, the Group’s key processes during the planned improvements
     identified by the FPR could affect the Group’s day-to-day operations.
*                                                      The cost of the investments identified by the FPR, the time to implement relevant improvements
                                                       and the benefits anticipated may ultimately be different from current forecasts.
*                                                      The Group may not be able to implement the operational improvements identified by the FPR
                                                       as effectively as envisaged by the current plans or may not be able to recruit appropriate
                                                       additional staff required to implement the operational improvements, such that planned benefits
                                                       are not achieved.
Market and operational risks
*   Interruptions in the availability of flow of stock from third party product suppliers could have a
    material adverse effect on the Group’s business, results of operations and financial condition.
*                                                      The Group is dependent on key individuals.
*                                                      The Group may fail to keep up with advances in internet technology.
*                                                      Failure of, or disruption to, the Group’s information technology systems could affect the
                                                       Group’s day-to-day operations.
*                                                      The Group is dependent on third parties for outsourcing functions.
*                                                      Loss of, or disruption to, the Group’s distribution centres and administrative sites could have a
                                                       material adverse effect on the Group’s business and operations.
*                                                      The Group may remain liable in relation to properties it has sub-leased or for which leases have
                                                       been assigned.
*                                                      The business of Express Gifts is seasonal and is more heavily weighted towards the second half
                                                       of the financial year.
*                                                      Express Gifts would be adversely affected if it ceased to be authorised by the FSA or it lost or
                                                       failed to renew its Consumer Credit Act licence.
*                                                      Express Gifts may receive a material number of claims from customers in connection with the
                                                       historical sale of Payment Protection Insurance.
*                                                      Deficiencies in Express Gifts’ credit scoring may increase its exposure to bad debts and reduce
                                                       funding headroom.
*                                                      Tailormade Design Limited may be unable to meet its repayment obligations under the loan
                                                       made to it by the Company.
*                                                      The performance of Kleeneze is highly dependent on a network of independent distributors.
*                                                      Kitbag may lose key contracts, fail to secure new contracts as planned, or may see lower than
                                                       planned sales due to the performance of its sporting partners.
*                                                      Any reduction in government spending on education may adversely impact the performance of
                                                       the Education Supplies Division.
*                                                      The Education Supplies Division is exposed to seasonality of demand.
*                                                      The Education Supplies Division could be adversely affected if a local authority were to
                                                       withdraw ‘‘Approved Supplier’’ status.
*                                                      The Education Supplies Division places significant reliance on the reputation of its brands.
*                                                      The Healthcare Division may fail to renew existing contracts or win new contracts.
*                                                      Any downward movement in government spending on healthcare may adversely impact the
                                                       performance of the Healthcare Division.
*                                                      An end user fatality, or a significant failure to provide the contracted products or services, may
                                                       have a material adverse effect on the reputation of the Healthcare Division.
*                                                      The Group’s operations may be adversely affected by legal, regulatory and other developments
                                                       in countries in which it operates.

                                                                                                     9
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*                                                      Failure to protect customers’ confidential information could significantly impact the Group’s
                                                       reputation and expose the Group to litigation.
*                                                      Deteriorating markets could result in the impairment of goodwill, intangible assets and property,
                                                       plant and equipment, which may adversely affect the Group’s financial position.
Financial risks
*    The Group may be negatively affected by the impact of the economic downturn on consumer
     spending or the ability of its customers to service their debts.
*                                                      Continued and prolonged withdrawal of credit insurance traditionally provided to the Group’s
                                                       suppliers could have a material adverse effect on the Group’s business, results of operations and
                                                       financial condition.
*                                                      The Group may be adversely affected by differences between anticipated and actual tax
                                                       liabilities (whether as a result of a change in law or otherwise) and by disputes with tax
                                                       authorities over tax payments.
*                                                      The Group is exposed to currency fluctuations and hedging risks.
*                                                      The Group is exposed to interest rate movements and hedging risks.
*                                                      The Group’s business may be affected by the default of third parties in respect of monies owing
                                                       by them to the Group.
*                                                      The Group has funding risks relating to its UK defined benefit pension schemes.

Risks related to the Existing Ordinary Shares, the New Ordinary Shares, the Placing Shares, the Rights Issue
and the Placing
*    The Company’s share price may fluctuate.
*                                                      An active trading market in the Nil Paid Rights may not develop.
*                                                      The Company’s ability to pay dividends will depend on a sustained recovery in its operational
                                                       and financial performance, the availability of distributable reserves, restrictions in the Proposed
                                                       Articles and, owing to restrictions in the Group’s New Revolving Credit Facilities on the
                                                       payment of dividends, the Group’s ability to refinance or repay its debt facilities in the future.
*                                                      Shareholders who do not acquire New Ordinary Shares in the Rights Issue will experience
                                                       dilution in their ownership of the Company; further, the Placing and any future conversion of
                                                       Convertible Shares generally will give rise to dilution for Shareholders.
*                                                      The TAM Concert Party may be able to exercise a considerable degree of influence over certain
                                                       aspects of the Group’s business following the Rights Issue and the Placing.
*                                                      An investor in the Company whose principal currency is not sterling is exposed to foreign
                                                       currency risk.
*                                                      The ability of Overseas Shareholders to bring actions or enforce judgements against the
                                                       Company or the Directors may be limited.
*                                                      Shareholders from outside the United Kingdom may not be able to acquire New Ordinary
                                                       Shares in the Rights Issue or pursuant to any future issue of shares.
*                                                      Future issues or sales of Ordinary Shares could adversely affect the Company’s share price.




                                                                                                    10
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                                                       RISK FACTORS
Before investing in New Ordinary Shares, Shareholders and prospective investors should carefully
consider the following risks, together with all other information contained in this document. The
following risks address the existing and future material risks to the Group’s business. Additional risks
and uncertainties not presently known or currently deemed immaterial may also have a material adverse
effect on the Group’s business, results of operations, financial condition or prospects. All of these risks
could result in the Group’s results of operations, financial condition or prospects being adversely affected.
In such a case, the market price of New Ordinary Shares, the Placing Shares, Nil Paid Rights and/or
Fully Paid Rights may decline and Shareholders may lose all or part of their investment. Shareholders
and prospective investors should consider carefully whether an investment (or further investment) in
Findel is suitable for them in light of the information set out in this document and the financial resources
available to them.

Risks relating to the Group
Funding risks
If Resolutions 1 to 4 (inclusive) are not passed or any other condition of the Rights Issue is not fulfilled, the
Rights Issue will not proceed and the New Lending Facilities will not become available to the Group
If Resolutions 1 to 4 (inclusive) are not passed or any of the other conditions of the Rights Issue (as
described in paragraph 2 of Part III (Terms and Conditions) of this document) are not fulfilled, the
Rights Issue will not proceed and the New Lending Facilities will not become available to the Group.
In this event, the Group’s debt financing will continue to be provided under the Existing Lending
Facilities and, as such, the Group will continue to be heavily indebted and subject to the financial
covenants and restrictions in its operational flexibility under the Existing Lending Facilities. The
Existing Lending Facilities will mature in January 2012 and if the New Lending Facilities do not
become available, certain waivers granted in anticipation of the implementation thereof will cease to
be effective. The consequences of the absence of the waivers will be that the Group will have reduced
availability in funding and be subject to restrictions in its operational flexibility, and the cost to the
Group of its debt finance facilities will be increased. Findel would need to renegotiate the terms of
the Existing Lending Facilities prior to their maturity in order to secure the availability of credit
facilities beyond January 2012 so as to give the Directors confidence that they will be able to prepare
accounts in respect of the financial year ending 1 April 2011 (which are expected to be published in
early June 2011) on a going concern basis. Whilst the Board believes that the Group may be able to
renegotiate or refinance the Existing Lending Facilities, there can be no certainty that the Group
would be able to do this and in any event, the Directors believe that any amendment to or
refinancing of the Existing Lending Facilities would be significantly more expensive and/or result in
the imposition of significantly more restrictive covenants on the Group than would apply under the
New Lending Facilities. If the Group is unable to renegotiate or refinance the Existing Lending
Facilities prior to their maturity, there is a material risk that the Group would face insolvency or be
placed into administration at the maturity of the Existing Lending Facilities in January 2012.

Any failure of the Group to meet its debt obligations or comply with the terms of its credit facilities could have
a material adverse effect on its business, results of operations and financial condition
The Group relies on external funding sources to finance a portion of its operations and growth. If the
Rights Issue is successful, the Group’s external funding sources will be the New Lending Facilities. If
the Group fails to comply with its covenants or fails to pay any of its debt obligations, this may
result in an acceleration of debt repayment obligations, an inability to refinance its debt and a
reduction of its creditworthiness, which could increase the Group’s costs of funding, harm its ability
to incur additional indebtedness on acceptable terms, affect its relationship with suppliers and in turn
have a material adverse effect on the Group’s business, results of operations and financial condition.

Risks relating to the Full Potential Review
Failure of, or disruption to, the Group’s key processes during the planned improvements identified in the FPR
could affect the Group’s day-to-day operations
Implementation of the Full Potential Review’s findings will involve a significant level of operational
change to each of the Group’s businesses. This is expected to include changes to some of the key
processes, particularly within Express Gifts where its information technology systems will see major
upgrades over the next three years. Notwithstanding that these changes will be managed carefully,
there may be disruption to the Group’s operations as a direct result of the change programme, which

                                                            11
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could adversely affect the Group’s day-to-day operations and in turn have a material adverse effect
on the Group’s business, results of operations and financial condition.

The cost of the investments identified by the FPR, the time to implement relevant improvements and the
benefits anticipated may ultimately be different from current forecasts
There can be no certainty that the estimate of approximately £35 million to implement the
operational improvements identified by the Full Potential Review will be correct, nor that the
estimate of three to four years to achieve the outcomes anticipated will be sufficient. Any material
increase in the cost of implementing the improvements and investments identified by the Full
Potential Review or the timeframe for achieving the planned outcomes could have a material adverse
effect on the Group’s business, results of operations and financial condition.

The Group may not be able to implement the operational improvements identified by the FPR as effectively as
envisaged by the current plans or may not be able to recruit appropriate additional staff required to implement
the operational improvements, such that the planned benefits are not achieved
Any failure by the Group to execute the operational changes arising from the Full Potential Review,
including the recruitment and retention of suitably skilled individuals, may lead to the planned
benefits being lower than anticipated. This could have a material adverse effect on the Group’s
business, results of operations and financial condition.

Market and operational risks
Interruptions in the availability or flow of stock from third party product suppliers could have a material
adverse effect on the Group’s business, results of operations and financial condition
The Group purchases products from a wide variety of domestic and international third party product
suppliers and recognises the importance of maintaining good relationships with these suppliers. Many
of the relationships between the Group and its suppliers are not based on long-term supply contracts
and, in some instances, are not set out in written agreement. As a consequence, such relationships
may be varied or terminated with little or no notice. Furthermore, the current difficult economic
conditions may cause suppliers themselves to cease trading and, while no individual supplier is
material to the Group as a whole, maintaining these relationships and sources of supply is important
to the Group’s operational and financial performance. The Group’s operations may be adversely
affected by the interruption or restriction of the supply of stock or the termination of any key
product supply agreement. Any breakdown or change in the relationships of the Group with product
suppliers may materially and adversely affect the Group’s business, results of operations and financial
condition.

The Group is dependent on key individuals
Various aspects of the Group’s business depend on the service and skills of Findel’s key individuals,
in particular, its Executive Directors and Senior Executives. Findel has entered into employment
contracts and taken other steps to encourage the retention of these individuals, and to identify and
retain additional personnel, but there can be no assurance that Findel will be able to retain key
individuals and its business, results of operations and financial condition could be materially and
adversely affected if certain key individuals either cease to be employed by the Group or their services
cease to be available to the Group.

The Group may fail to keep up with advances in internet technology
The Group has seen significant growth in the proportion of its sales in the Home Shopping Division
which are derived from the internet, and these now represent approximately 40 per cent. of the total
sales of the Home Shopping Division. Failure by the Group to maintain and develop its websites and
internet presence in line with internet technology advances may have a material adverse effect on the
Group’s business, results of operations and financial condition.

Failure of, or disruption to, the Group’s information technology systems could affect the Group’s day-to-day
operations
The Group relies heavily on its information technology systems to record and process transactions
and manage its operations as well as to enable its customers to purchase products on-line and over
the phone. These systems provide information regarding most aspects of financial and operational
performance, including sales and stock information and, given the number of transactions that are
completed and the importance of the efficient management of stock, it is vital to maintain continuous

                                                       12
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operation of the computer hardware and software systems. Notwithstanding efforts to prevent an
information technology failure or disruption, the Group’s systems may be vulnerable to damage or
interruption from fire, telecommunications failures, floods, physical or electronic break-ins, computer
viruses, power outages and other malfunctions or disruptions. There can be no certainty that the
Group’s recovery and contingency plans would be effective or sufficient in the event that they need to
be activated. Significant failure of or disruption to information technology systems could adversely
impact the Group’s day-to-day operations and in turn have a material adverse effect on the Group’s
business, results of operations and financial condition.

The Group is dependent on third parties for outsourcing functions
The Group depends on third party carriers for the delivery of both its catalogues and its products to
its customers. The Group has also outsourced the production of its annual Education Supplies
Division catalogues and part of its order call handling in the Home Shopping Division. These services
may cease to be provided, for example, due to a contract period expiring or a contract being
terminated, and there can be no guarantee that the chosen suppliers will be able to provide the
functions for which they have contracted. Although the Group may replace suppliers or decide to
perform the relevant functions itself, it cannot ensure that such substitution can be accomplished in a
timely fashion or without significant cost or disruption to its operations. Any failure of the
counterparties to deliver the contracted services could have a material adverse effect on the
performance of these divisions and the results of operations and financial condition of the Group as a
whole.

Loss of, or disruption to, the Group’s distribution centres and administrative sites could have a material
adverse effect on the Group’s business and operations
The Group operates from a number of distribution centres and administrative sites. The ability of the
Group to sell and distribute merchandise to its customers is reliant on the Group’s operational
infrastructure, particularly the efficient functioning of the Group’s distribution centres and distribution
network. Failure or unavailability of such infrastructure (caused, for example, by fire, structural
damage, natural disaster, industrial action or terrorist activity) could result in disruptions to the
Group’s ability to deliver products to customers. Although the Group has established disaster
recovery procedures designed to minimise the impact of any such disruption, there can be no
assurance that these procedures will be adequate or effective. Although the Group maintains
insurance to cover material exposures, there can be no assurance that its insurance coverage will be
sufficient, or that its insurance proceeds will be paid on a timely basis to the Group if any
distribution centre or administrative site is unavailable for any period of time. As a result, any loss of
or disruption to any of the Group’s distribution centres or administrative sites may have a material
adverse effect on its business, results of operations and financial condition.

The Group may remain liable in relation to properties it has sub-leased or for which leases have been assigned
The Group has sub-leased, or assigned to third parties the leases of, a number of properties that it
no longer wanted to occupy and it may enter into sub-lease or assignment arrangements with third
parties in the future. The Group may remain directly or contingently liable for the performance of
related leasehold and other obligations under its lease arrangements in respect of such properties,
including the payment of rent, which could crystallise in the event of insolvency or other default by
the sub-lessees or assignees of those properties. In the event that any of such sub-lessees or assignees
fail to meet their obligations under the subleases or assigned leases, the Group may become
responsible for such obligations, which could have a material adverse effect on the results of
operations and financial condition of the Group.

The business of Express Gifts is seasonal and is more heavily weighted towards the second half of the financial
year
Express Gifts’ business is seasonal, with over 45 per cent. of its annual product sales occurring
between September and November. Marketing costs such as catalogues and customer recruitment are
expensed as incurred, with the majority of such costs being spent in the first half of the financial
year. Further, a greater percentage of customers default on their debts predominantly in the final
quarter of the financial year, when payment for products purchased over the Christmas and New
Year period becomes due.
As a result of this seasonality, results during any interim financial period cannot be used as an
accurate indicator of Express Gifts’ annual results. Any factors negatively affecting Express Gifts in

                                                       13
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the Christmas season or during other peak sales or costs periods, including unfavourable economic
conditions, may have a disproportionately adverse effect on its financial performance or results of
operations for the entire year which may in turn materially and adversely affect the Group’s business,
results of operations and financial condition.

Express Gifts would be adversely affected if it ceased to be authorised by the FSA or it lost or failed to renew
its Consumer Credit Act licence
A core part of the Express Gifts consumer proposition is its ability to offer consumer credit and
financial products, including extended warranties. It is authorised and regulated by the FSA and is
licensed under the Consumer Credit Act to carry out the business of consumer credit, consumer hire,
credit brokerage, debt adjusting/counselling and debt collection. The licence is for five years and will
be due for renewal in January 2013. The Board has no reason to believe that the licence will not be
renewed at that date. However, if it were to cease to be authorised by the FSA or to lose its licence
or the licence was not to be renewed, Express Gifts would not be able to continue to offer consumer
credit and financial products. This would require a fundamental change in the Express Gifts business
model and consumer proposition and there can be no certainty of the success or profitability of these
changes for the Group. Further, a failure by Express Gifts to comply with the Insurance Code of
Business sourcebook published by the FSA or with the Consumer Credit Act could lead to either a
mis-selling claim against Express Gifts or to the credit agreements entered by Express Gifts becoming
unenforceable. Each of these could have a material adverse impact on the financial performance of
Express Gifts, which may in turn materially and adversely affect the Group’s business, results of
operations and financial condition.

Express Gifts may receive a material number of claims from customers in connection with the historical sale of
Payment Protection Insurance (‘‘PPI’’)
Express Gifts is regulated by the FSA as an insurance intermediary and, as such, is permitted to sell
insurance products, including PPI. It ceased selling this product in August 2008 and, to date, has
received a low number of complaints as a proportion of its total PPI sales. With the publication of
its final policy statement in August 2010, the FSA has imposed significant changes with respect to the
handling of PPI mis-selling complaints. The British Bankers’ Association has subsequently filed an
application for a judicial review of the policy statement, which is currently being considered.
Depending upon the outcome of that review, it is possible that Express Gifts may receive a greater
number of new claims from customers, which could materially and adversely affect the Group’s
business, results of operations and financial condition.

Deficiencies in Express Gifts’ credit scoring may increase its exposure to bad debts and reduce funding
headroom
Express Gifts uses bespoke credit evaluation scorecards both in relation to the assessment of new
applicants and when extending additional credit to existing customers to evaluate and allocate credit
limits to individuals. The design of these scorecards requires management to make judgements about
the relative creditworthiness of each category of customer.
Express Gifts is also able to obtain funding from the Existing Securitisation Facility for certain of its
credit receiveables that meet the requisite eligibility criteria, primarily relating to the quality of the
repayment performance.
The Board considers that Express Gifts has a good track record in managing its exposure to bad
debts but this may not continue for internal or external reasons. Any consistently incorrect assessment
of creditworthiness across a broad range of customers could increase Express Gifts’ exposure to bad
debts, which could materially reduce profitability and cash generation. This could also reduce the
level of funding available under the Existing Securitisation Facility or, if the New Lending Facilities
are made available, the New Securitisation Facility, which would, in turn, materially reduce the level
of headroom available to the Group under its other funding facilities.

Tailormade Design Limited may be unable to meet its repayment obligations under the loan made to it by the
Company
The Company has entered into an agreement with Tailormade Design Limited (‘‘Tailormade’’)
pursuant to which Tailormade is required to make regular repayments to the Company in respect of
a loan made to it by the Company until 1 April 2014 (see paragraph 18(d) of Part X (Additional
Information) of this document for further details). Whilst the Company receives regular information to
allow it to monitor the financial condition of Tailormade and currently has no reason to believe that

                                                       14
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repayments will not be received on time, there can be no guarantee that this will continue. If
repayments are consistently not received on time for a sustained period, this may have a material
adverse effect on the Group’s business, results of operations and financial condition.

The performance of Kleeneze is highly dependent on a network of independent distributors
Sales in Kleeneze are made by a network of independent distributors, and primary responsibility for
the recruitment of new distributors and management of existing distributors falls with that network
rather than the Company. Any significant deterioration in the performance of the network could have
an adverse effect on Kleeneze’s business, results of operations and financial condition.

Kitbag may lose key contracts, fail to secure new contracts as planned, or may see lower than planned sales due
to the performance of its sporting partners
Kitbag’s sales of branded merchandise, such as replica shirts, are linked to the sporting success of its
business partners. For example, the relegation of a business partner such as a Premier League football
club to a lower division may have a significant impact on future sales of related merchandise, which
could materially and adversely affect Kitbag’s business, results of operations and financial condition.

Any reduction in government spending on education may adversely impact the performance of the Education
Supplies Division
The Education Supplies Division is influenced by UK government spending on education. The
Emergency Budget announcement in June 2010 indicated cutbacks in the overall level of government
spending which are expected to have effect from 2011. Whilst the UK government’s subsequent
Spending Review announced in October 2010 indicated that the schools budget will be protected from
cutbacks, the overall education budget will be reduced. Any significant reduction in government
spending on education may adversely impact the performance of the Education Supplies Division and
may in turn have a material adverse effect on the Group’s business, results of operations and
financial condition.

The Education Supplies Division is exposed to seasonality of demand
Historically, the Education Supplies Division has been exposed to seasonal demand for certain core
categories such as exercise books and furniture. The normal ‘‘Back-to-School’’ periods account for
much of the Education Supplies Division’s annual sales and profits and any depressed trading in
those critical trading months may have a material adverse impact on the sales and profit generated by
the Group, which may in turn have a material adverse effect on the Group’s business, results of
operations and financial condition.

The Education Supplies Division could be adversely affected if a local authority were to withdraw ‘‘Approved
Supplier’’ status
Certain of the Group’s sales in the Education Supplies Division are dependent on being designated an
‘‘Approved Supplier’’ by individual local authorities. The Group’s ability to achieve and retain
‘‘Approved Supplier’’ status depends on the Group’s ability to source and provide products which are
required by schools and other educational establishments. Whilst ‘‘Approved Supplier’’ status does
not guarantee any volume of sales in any particular local authority area, loss of such status may
result in a reduction in the volume of sales to schools and other educational establishments within the
relevant local authority area. This could have a material adverse effect on the Group’s business,
results of operations and financial condition.

The Education Supplies Division places significant reliance on the reputation of its brands
For a significant proportion of its sales, the Education Supplies Division depends on several key
brands which may suffer an impairment of reputation due to: complaints and litigation from
consumers, employees or other third parties, alleged product, injury, health, environmental, safety or
operational concerns, nuisances, negligence, or failure to comply with applicable laws and regulations.
These claims, even if successfully disposed of without direct adverse financial impact, could have a
material adverse effect on the Group’s business, results of operations and financial condition.

The Healthcare Division may fail to renew existing contracts or win new contracts
The Healthcare Division, operated through NRS, is dependent for substantially all of its revenues
upon a small number of contracts. The Healthcare Division is a market leader within the industry,
and is therefore well placed to renew its current contracts, however there can be no guarantee that
each of the contracts will be successfully renewed when the current contract terms expire.

                                                       15
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Many of the Healthcare Division’s contracts are Integrated Community Equipment Services (ICES)
contracts entered into with primary care trusts and local authorities. The UK government
announcement in July 2010 indicated that primary care trusts would be phased out from early 2013.
It is not yet known how this will affect existing contracts currently in place with primary care trusts
and any new contracts after 2013 will be made with individual general practitioners or their surgeries
and there can be no guarantee that the Healthcare Division will successfully bid for any such new
contracts put out to tender. This could have a material adverse effect on the business, results of
operations and financial condition of the Healthcare Division.

Any downward movement in government spending on healthcare may adversely impact the performance of the
Healthcare Division
The Healthcare Division is influenced by UK government spending on healthcare. The Emergency
Budget announcement in June 2010 indicated significant levels of cutbacks in the overall level of
government spending to be expected with effect from April 2011. Whilst the Spending Review
announcement in October 2010 confirmed that spending overall on the NHS will be protected, any
future downward movement in government spending on healthcare generally, or on ICES in
particular, may materially and adversely impact the business, results of operations and financial
condition of the Healthcare Division.

An end user fatality or a significant failure to provide the contracted products or services may have a material
adverse effect on the reputation of the Healthcare Division
The products and services supplied by the Healthcare Division are used by vulnerable groups in
society. A fatality occasioned to an end user as a result of the failure of a product or service
provided by the division, or a significant failure to provide the contracted products or services may
have a material adverse impact on the reputation of the Healthcare Division. Because the Healthcare
Division is highly dependent on a small number of large contracts, such reputational damage may
materially and adversely impact the business, results of operations and financial condition of the
Healthcare Division.

The Group’s operations may be adversely affected by legal, regulatory and other developments in countries in
which it operates
The Group is subject to a range of legal and regulatory requirements originating from the UK, the
other countries in which it operates and the European Union, particularly in areas of consumer
protection, product, safety, competition, provision of credit, selling of financial services and extended
warranties, copyright royalties, reviews, health and safety, taxation, environment, labour and
employment practices (including pensions). Compliance with these laws and regulations may result in
significant costs and payments for the Group and changes in such laws and regulations or the policies
regarding enforcement may have an adverse impact on the Group in terms of costs, changes to
business practices or restrictions on activities. In addition, legal, regulatory and other developments
affecting the countries in which the Company operates may have a material adverse effect on the
Group’s business, results of operations and financial condition.
A significant proportion of the Group’s revenues is derived from the provision of extended credit and
associated financial services to customers in its Express Gifts business. The provision of credit is
subject to the Consumer Credit Act and other legislation and regulation. The Consumer Credit (EU
Directive) Regulations 2010 (the ‘‘Consumer Credit Regulations’’) will come into force between
February and April 2011. The Consumer Credit Regulations impose significant new requirements on
lenders including in relation to advertising and pre-contract information, content and layout of credit
agreements, assessment of customers’ ability to meet repayments, and changes to credit limits. The
Consumer Credit Regulations and other changes in legislation, regulation or FSA policy (for example
restrictions on interest rates or account fees or the selling of associated insurance products) may have
a material adverse effect on the Group’s business, results of operations and financial condition.

Failure to protect customers’ confidential information could significantly impact the Group’s reputation and
expose the Group to litigation
The Group must comply with restrictions on the use of customer data and ensure that confidential
information (including financial and personal data) is transmitted in a secure manner over networks.
Despite controls to ensure the confidentiality, availability and integrity of customer data, the Group
may breach restrictions or may be subject to attacks from computer programs that attempt to
penetrate the network security and misappropriate confidential information. Due to advances in these

                                                       16
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programs, computing capabilities and other capabilities, there is no guarantee that the Group’s
security measures will be sufficient to prevent breaches. Any such breach or compromise of security
could adversely impact the Group’s reputation with current and potential customers, lead to litigation
or fines, and, as a result, have a material adverse effect on its business, results of operations and
financial condition.


Deteriorating markets could result in the impairment of goodwill, intangible assets and property, plant and
equipment, which may adversely affect the Group’s financial position
Under IFRS, goodwill is not amortised but is subject to annual impairment tests or more frequent
tests if there are indications of impairment. Other intangible assets and property, plant and equipment
are amortised but are assessed on an ongoing basis to determine whether there are indications of
impairment. As part of non-underlying items, the Company recorded impairment charges in the 08/09
Financial Year and in the 09/10 Financial Year for these classes of assets. These impairment charges
mostly resulted from deteriorating market conditions such that the carrying value of assets could no
longer be supported by the present value of expected cash flows from their continuing use. To the
extent that there is a renewed economic downturn, the economies in which the Group operates do
not recover or the Group’s businesses underperform against expectations, the Company may need to
record additional impairment charges relating to its businesses, which would be recorded within non-
underlying items, and such charges, whilst not directly affecting the cash flows of the Group, could
have a material adverse effect on the Group’s financial condition.


Financial risks

The Group may be negatively affected by the impact of the economic downturn on consumer spending or the
ability of its customers to service their debts
The Group’s operating and financial performance is influenced by the economic conditions in the
countries in which it operates. The economic environment impacts on consumer spending on general
merchandise in many ways. Consumer confidence is an important influence on spending on general
merchandise which is largely discretionary. Unemployment levels, interest rates, consumer debt levels,
availability of credit, cost of goods, fuel and energy prices, taxation and many other factors influence
consumer confidence and consumer spending decisions. The severe economic downturn has affected
the global economy since 2007. A renewed deterioration in the global economy (and the UK economy
in particular) or a general reduction in consumer confidence and spending, could result in a decrease
in demand for the products and services offered by the Group with a consequent loss of sales and
increase in debt arrears for the Group, the financial failure of one or more of its key customers or
suppliers, asset impairments and lower profitability and cash flows. These factors have, in the past
few years, adversely impacted the Group’s sales, earnings and financial condition. Whilst the Group
has taken steps to alleviate the impact of these conditions on its business, there can be no guarantee
that these will be effective, and to the extent that there is a renewed economic downturn or the
improvement in the economic climate takes place over an extended period of time, the Group’s
business, results of operations and financial condition may be materially and adversely affected.


Continued or prolonged withdrawal of credit insurance traditionally provided to the Group’s suppliers could
have a material adverse effect on the Group’s business, results of operations and financial condition
The Group’s business is dependent on the sale of goods and products supplied to it by third parties.
Third party suppliers in the general merchandise market have traditionally taken out credit insurance
to protect these receivables against the risk of bad debt, insolvency or protracted default of their
buyers, including the Group. However, as a result of the economic downturn, many credit insurers
have reduced or withdrawn the availability of credit insurance in general. As a consequence, since
September 2008 the Group has seen a gradual withdrawal of credit insurance in respect of suppliers
to the Group, and in May 2009 the remaining amount of all cover in respect of suppliers to the
Group was withdrawn.

If suppliers are unwilling or unable to take credit risks themselves or find alternative credit sources,
they may choose to take actions, including limiting the sale of, or refusing to sell, products to the
Group or seeking to change their terms of supply, which could have a material adverse effect on the
Group’s business, results of operations and financial condition.

                                                       17
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The Group may be adversely affected by differences between anticipated and actual tax liabilities (whether as
a result of a change in law or otherwise) and by disputes with tax authorities over tax payments
Judgement is required in determining the appropriate provision for transactions where the ultimate
tax determination is uncertain. In such circumstances, the Group recognises liabilities for anticipating
taxes due based upon information available and its estimate of the anticipated liabilities. The final
outcome of such matters may differ from the amounts initially recorded and any differences will
impact the income tax and deferred tax provisions in the period to which such determination is made
and could have a material adverse effect on the Group’s business, results of operations and overall
financial condition. In addition, from time to time, the Group may be involved in discussions or
disputes with tax authorities regarding the Group’s tax liabilities, which may lead to a revision of tax
liability, and therefore impact on the Group’s financial position.
Tax legislation, the published guidance and its interpretation is subject to change. Any such change
may materially and adversely affect the Group’s business, results of operations and financial
condition.

The Group is exposed to currency fluctuations and hedging risks
A significant proportion of the products sold through the businesses in the Home Shopping Division
and the Education Supplies Division are procured through the Group’s Far East buying office. The
currency of purchase for these goods is principally the US dollar, with a proportion being in Hong
Kong dollars. The Group has a practice of hedging these foreign currency denominated transactions
by entering into forward exchange purchase contracts. While this policy has in the past mitigated this
risk, there can be no assurance that such hedging arrangements will be effective or that all of the
Group’s currency exposure will be fully hedged. Any significant losses on the Group’s hedging
positions could have a material adverse effect on the Group’s business, results of operations and
financial condition.

The Group is exposed to interest rate movements and hedging risks
The Group has borrowings that are subject to variable interest rates, and is therefore exposed to
movements in interest rates. Although the Group uses interest rate based hedging instruments to
manage interest rate exposures on a proportion of its borrowings, following the proposed refinancing
there can be no assurance that such hedging arrangements will be effective or that all of the Group’s
interest rate exposure will be hedged. Movements in interest rates could have a material adverse effect
on any borrowing exposure which could adversely affect the Group’s business, results of operations
and financial condition.

The Group’s business may be affected by the default of third parties in respect of monies owing by them to the
Group
Whilst the majority of amounts owed to the Group comprise small balances spread across a large
number of accounts, there will from time to time be more significant amounts owed by a small
number of third parties, for example, in respect of overseas tenders and contract work in the
Education Supplies Division. If any of these third parties were to default in respect of amounts
payable to the Group, the Group’s business, results of operations and financial condition may be
materially and adversely affected.

The Group has funding risks relating to its UK defined benefit pension schemes
The Group operates UK defined benefit schemes (see paragraph 11 of Part X (Additional Information)
of this document) (each a ‘‘Scheme’’ and together, the ‘‘Schemes’’). The Group also contributes to its
own section of the Prudential Platinum Pension (‘‘PPP’’), a multi-employer defined benefit pension
scheme which is operated by an external administrator and independent trustee.
The Schemes’ funding levels fluctuate over time because they are dependent on the relative value of
Scheme assets (including Scheme investments, returns derived from such investments, and
contributions paid in by the Group and Scheme members) and Scheme liabilities, which are the
benefits the Schemes are obliged to pay either now or in the future and which may increase or
decrease due to changes in life expectancy, inflation and scheme experience. Over the short term, the
difference between the value of these assets and liabilities may vary significantly, potentially resulting
in increased deficits being recognised on the Group’s balance sheet, particularly in the current volatile
financial market environment. Any material increase to the Schemes’ deficits could lead to requests
for additional contributions from the trustees of the Schemes.

                                                       18
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As at 2 April 2010, the aggregate IAS19 accounting deficit in the Schemes (excluding the PPP)
amounted to £23.5 million. In the 09/10 Financial Year, the amount of the Group’s contributions to
the Schemes (excluding the PPP) was £3.9 million. The annual contributions paid to the PPP by the
Group in 2010 were approximately £168,000.
A full actuarial valuation is carried out for each Scheme every three years in order to establish its
funding level. The Group has now finalised new funding plans for the two largest Schemes that
accounted for £21.3 million of the overall IAS 19 deficit and £3.7 million of contributions in the 09/
10 Financial Year and has agreed with the trustees of these Schemes that the 09/10 Financial Year
level of annual contributions will be maintained until April 2014.
The new funding plans for the third Scheme are due to be completed by 5 August 2011 and the
Board does not believe that this review will result in materially increased contributions in the short
term, compared to the contributions in the 09/10 Financial Year of £0.2 million. Contributions
payable by the Group to the fourth Scheme and the PPP are not due to be renegotiated until 2012
and so will remain at the current level until then.
Any requirement to contribute additional funds into the Schemes substantially beyond the currently
agreed contribution levels could have a material adverse effect on the Group’s overall financial
position. In addition, actions by the UK Pensions Regulator or the trustees of the Schemes (who can
call an early valuation of the Schemes in order to review contribution levels), or any material
revisions to the existing pension legislation could result in additional funding obligations which could
have a material adverse effect on the Group’s business, results of operations and financial condition.

Risks relating to the Existing Ordinary Shares, the New Ordinary Shares, the Placing Shares, the Rights Issue
and the Placing
The Company’s share price may fluctuate
Shareholders and prospective investors should be aware that the value of an investment in the
Ordinary Shares may go down as well as up. The market price of the New Ordinary Shares
(including Nil Paid Rights and the Fully Paid Rights), the Placing Shares and/or the Existing
Ordinary Shares could be subject to fluctuations due to a change in sentiment in the market
regarding the New Ordinary Shares (including Nil Paid Rights and the Fully Paid Rights), the
Placing Shares and/or the Existing Ordinary Shares. Such risks depend on the market’s perception of
the likelihood of completion of the Rights Issue and the Placing as well as the market’s response to
various facts and events including any regulatory changes affecting the Group’s operations, variations
in the Group’s anticipated or actual operating results, business developments concerning the Group or
its competitors, the operating and share price performance of other companies in the industries and
markets in which the Group operates, speculation about the Group’s business in the press, media or
investment community, changes in conditions affecting the economy generally, and other factors
unrelated to the operating results of the Group. Stock markets have, from time to time, experienced
significant price and volume fluctuations that have affected market prices for securities and which
may be unrelated to Group’s performance or prospects. Furthermore, the Group’s operating results
and prospects from time to time may be below the expectation of market analysts and investors. Any
of these events could result in a decline in the market price of the New Ordinary Shares (including
Nil Paid Rights and the Fully Paid Rights), the Placing Shares and/or the Existing Ordinary Shares.

An active trading market in the Nil Paid Rights may not develop
An active trading market in the Nil Paid Rights may not develop on the London Stock Exchange
during the trading period. In addition, because the trading price of the Nil Paid Rights depends on
the trading price of the Existing Ordinary Shares, the Nil Paid Rights price may be volatile and
subject to the same risks as noted elsewhere in this document. This may impact investors’ ability to
sell Nil Paid Rights should they wish to do so.

The Company’s ability to resume paying dividends in the future will depend on a sustained recovery in its
operational and financial performance, the availability of distributable reserves, restrictions in the Proposed
Articles and, owing to the restrictions in the Group’s New Revolving Credit Facilities on the payment of
dividends, the Group’s ability to refinance or repay its debt facilities in the future
In light of prevailing economic conditions, Findel did not pay a final dividend for 09/10 Financial
Year or an interim dividend for 2010 Interim Period. The Company is keeping under review the
payment of dividends in the future but there can be no assurance as to when dividends will be paid
or as to the amount of any dividends paid.

                                                       19
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As a matter of English law, a company can only pay dividends to the extent that it has distributable
reserves and cash available for this purpose. As a holding company, the Company’s ability to pay
dividends in the future is affected by a number of factors, principally its ability to receive funds for
such purposes, directly or indirectly, from its operating subsidiaries in a manner which creates
distributable reserves for the Company. The Company’s ability to pay dividends to Shareholders is
therefore a function of its existing Group distributable reserves, future Group profitability and the
ability to distribute or dividend profits from its operating subsidiaries up from the Group structure to
the Company. At the current time, the Group does not have distributable reserves available to pay a
dividend.
The ability of the Group’s subsidiaries to pay dividends and the Company’s ability to receive
distributions from its investments in other entities is subject to applicable local laws and other
restrictions, including applicable tax laws and restrictive covenants in some of the Group’s debt
facilities. These laws and restrictions could limit the payment of dividends and distributions to the
Company by its subsidiaries, which could in turn restrict the Company’s ability to fund other
operations or to pay a dividend to holders of the Existing Ordinary Shares, the New Ordinary Shares
or the Placing Shares.
The Proposed Articles contain restrictions on the payment of dividends and other distributions
requiring the consent of 85 per cent. of the holders of Convertible Shares by nominal value for any
distribution in respect of any particular accounting reference period of the Company, of an amount,
in aggregate, in excess of 50 per cent. of the net income of the Group in respect of such accounting
reference period. In addition, the Group’s Existing Revolving Credit Facilities contain restrictions on
the payment by the Company of dividends which require that certain leverage ratios be met before
any dividend payments can be made. If the New Revolving Credit Facilities are implemented, the
Company will be unable to pay any dividends whilst such facilities are in place and will therefore be
required to refinance or fully repay (and cancel all commitments under) such debt facilities before
being able to pay dividends in the future.
For more information on the Group’s dividend policy, see paragraph 10 of Part I (Letter from the
Chairman of Findel).

Shareholders who do not acquire New Ordinary Shares in the Rights Issue will experience dilution in their
ownership of the Company; further, the Placing and any future conversion of Convertible Shares generally will
give rise to dilution for Shareholders
If Shareholders do not take up the offer of New Ordinary Shares under the Rights Issue, their
proportionate ownership and voting interests in the Company will be reduced and the percentage that
their shares will represent of the total share capital of the Company will be reduced accordingly.
Even if a Shareholder elects to sell his unexercised Nil Paid Rights, or such Nil Paid Rights are sold
on his behalf, the consideration he receives may not be sufficient to compensate him fully for the
dilution of his percentage ownership of the Company’s share capital that may be caused as a result of
the Rights Issue. Excluded Shareholders will, in any event, not be able to participate in the Rights
Issue. In addition, the effect of the Placing will be to reduce the proportionate ownership and voting
interest in the Company of Shareholders generally as the Placing is not being carried out on a pre-
emptive basis.
Under the Proposed Articles of Association, any Convertible Shares to be issued to the Lenders will,
if the Company’s volume weighted average Ordinary Share price rises above 23.97 pence for a period
of one month during the period starting on the 2nd and ending on the 10th anniversary of the date on
which the Convertible Shares are issued or if an Offer is made for the Company, become convertible
into Ordinary Shares. Any conversion of Convertible Shares into Ordinary Shares would also dilute
the proportionate ownership and voting interest in the Company of Shareholders generally.

The TAM Concert Party may be able to exercise a considerable degree of influence over certain aspects of the
Group’s business following the Rights Issue and the Placing
Immediately after the Rights Issue and the Placing, the TAM Concert Party could in aggregate hold
an economic interest of up to 42.1 per cent. of the enlarged issued share capital of the Company
(depending on the level of valid acceptances for the New Ordinary Shares by other Qualifying
Shareholders). Whilst the Company and the TAM Concert Party both place great importance on the
independence of the Company and have agreed that this will be a key principle of the relationship
following Admission and Placing Admission, by virtue of the level of its shareholding following

                                                       20
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completion of the Rights Issue and the Placing, the TAM Concert Party will be able to influence
certain matters requiring approval of Shareholders by way of special resolution.

An investor in the Company whose principal currency is not sterling is exposed to foreign currency risk
The New Ordinary Shares and the Placing Shares are, and any dividends to be paid in respect of
them will be, denominated in pounds sterling. An investment in New Ordinary Shares or Placing
Shares by an investor whose principal currency is not sterling exposes the investor to foreign currency
rate risk. Any depreciation of sterling in relation to such foreign currency will reduce the value of the
investment in the New Ordinary Shares and the Placing Shares or any dividends in foreign currency
terms, and any appreciation of sterling will increase the value in foreign currency terms.

The ability of Overseas Shareholders to bring action or enforce judgements against the Company or Directors
may be limited
The ability of an Overseas Shareholder to bring an action against the Company may be limited under
English law. The Company is a public limited company incorporated under the laws of England and
Wales. The rights of holders of Ordinary Shares are governed by English law and by the Articles.
These rights differ from the rights of shareholders in typical US corporations and some other non-
UK corporations. In particular, English law significantly limits the circumstances under which
shareholders of English companies may bring derivative actions. Under English law generally, only
the Company can be the proper claimant in proceedings in respect of wrongful acts committed
against it. In addition, it may be difficult for an Overseas Shareholder to prevail in a claim against
the Company under, or to enforce liabilities predicated upon, non-UK securities laws including US
federal securities laws.
An Overseas Shareholder may not be able to enforce a judgement against some or all of the
Directors and executive officers. A majority of the Directors and executive officers of the Company
reside in the United Kingdom. Consequently, it may not be possible for an Overseas Shareholder to
effect service of process upon the Directors and executive officers within the Overseas Shareholder’s
country of residence or to enforce against the Directors and executive officers judgements of courts of
the Overseas Shareholder’s country of residence based on civil liabilities under that country’s securities
laws. There can be no assurance that an Overseas Shareholder will be able to enforce any judgements
in civil and commercial matters or any judgements under the securities laws of countries other than
the United Kingdom against the Directors or executive officers who are residents of the United
Kingdom or of countries other than those in which judgement is made. In addition, English or other
courts may not impose civil liability on the Directors or executive officers in any original action based
solely on the foreign securities laws brought against the Company or the Directors in a court of
competent jurisdiction in England or other countries.

Shareholders from outside the United Kingdom may not be able to acquire New Ordinary Shares in the Rights
Issue or pursuant to any future issue of shares
In the case of an allotment of Ordinary Shares for cash, holders of Existing Ordinary Shares are
generally entitled to pre-emption rights to subscribe for such shares, unless Shareholders waive such
rights by a special resolution at a general meeting. Securities laws of certain other jurisdictions may
restrict the Company’s ability to allow participation by Shareholders in the Rights Issue or
subsequent share issues. US Shareholders are customarily excluded from exercising any such pre-
emption rights they may have, unless a registration statement under the Securities Act is effective with
respect to those rights, or an exemption from the registration requirements thereunder is available.
The Rights Issue will not be registered under the Securities Act. Securities laws of certain other
jurisdictions may restrict the Company’s ability to allow participation by Shareholders in such
jurisdictions. Shareholders who have a registered address in or who are resident in, or who are
citizens of, countries other than the United Kingdom should consult their professional advisers as to
whether they require any governmental or other consents or need to observe any formalities to enable
them to take up their Nil Paid Rights or to acquire Fully Paid Rights or New Ordinary Shares.

Future issues or sales of Ordinary Shares could adversely affect the Company’s share price
The Company may issue additional shares in the future, which may adversely affect the market price
of the outstanding Ordinary Shares. The Company has no current plans for a subsequent offering of
its shares or of rights or invitations to subscribe for shares (other than the Rights Issue, the Placing
and the issue of Convertible Shares to the Lenders (which may be converted into Ordinary Shares if
the condition to conversion is satisfied or in the event of an Offer for the Company)) for the 12

                                                       21
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month period following the date of this document. Significant sales of shares by major Shareholders
or the public perception that an offering may occur could also have an adverse effect on the market
price of the Company’s outstanding Ordinary Shares.




                                                       22
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                                                       EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Event                                                                                                                  2011
Record Date for entitlement under the Rights Issue for                                     close of business on 24 February
Qualifying Shareholders
Latest time and date for receipt of Forms of Proxy for the                                         11.00 a.m. on 26 February
General Meeting
General Meeting                                                                                    11.00 a.m. on 28 February
Despatch of Provisional Allotment Letters (to Qualifying Non-                                                    on 28 February
CREST Shareholders only)(a)
Placing Admission                                                                                        8.00 a.m. on 1 March
Dealings in Placing Shares, fully paid, commence on the London                                           8.00 a.m. on 1 March
Stock Exchange
Admission of New Ordinary Shares, nil paid                                                               8.00 a.m. on 1 March
Dealings in Nil Paid Rights commence on the London Stock                                                 8.00 a.m. on 1 March
Exchange
Existing Ordinary Shares marked ‘‘ex-rights’’ by the London                                              8.00 a.m. on 1 March
Stock Exchange
Nil Paid Rights credited to stock accounts in CREST                                  as soon as practicable after 8.00 a.m.
(Qualifying CREST Shareholders only)(a)                                                                        on 1 March
Nil Paid Rights and Fully Paid Rights enabled in CREST                                                   8.00 a.m. on 1 March
Recommended latest time for requesting withdrawal of Nil Paid                                            4.30 p.m. on 9 March
Rights and Fully Paid Rights from CREST (i.e. if your Nil Paid
Rights and Fully Paid Rights are in CREST and you wish to
convert them to certificated form)
Recommended latest time for depositing renounced Provisional                                           3.00 p.m. on 10 March
Allotment Letters, nil or fully paid, into CREST or for
dematerialising Nil Paid Rights or Fully Paid Rights into a
CREST stock account (i.e. if your Nil Paid Rights and Fully
Paid Rights are represented by a Provisional Allotment Letter
and you wish to convert them to uncertificated form)
Latest time and date for splitting Provisional Allotment Letters,                                      3.00 p.m. on 11 March
nil or fully paid
Latest time and date for acceptance, payment in full and                                               11.00 a.m. on 15 March
registration of renunciation of Provisional Allotment Letters
Results of Rights Issue to be announced                                                                 8.00 a.m. on 16 March
Dealings in New Ordinary Shares, fully paid, commence on the                                            8.00 a.m. on 16 March
London Stock Exchange
New Ordinary Shares and Placing Shares credited to CREST                                                8.00 a.m. on 16 March
stock accounts
Despatch of definitive share certificates for the New Ordinary                                                        by 22 March
Shares and Placing Shares in certificated form
Despatch of sale of rights cheques                                                                                  by 22 March
(a) Subject to certain restrictions relating to certain Shareholders with registered address outside the UK. See Part III (Terms and
    Conditions) of this document.
Notes:
1. The times and dates set out in the expected timetable of principal events above and mentioned throughout this document may be
    adjusted by the Company in consultation with the Joint Sponsors in which event details of the new times and dates will be notified
    to the UK Listing Authority, the London Stock Exchange and, where appropriate, Qualifying Shareholders.
2. References to times in this document are to London times unless otherwise stated.
3. If you have any queries on the procedure for acceptance and payment, you should contact the Shareholder Helpline.




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                                                       RIGHTS ISSUE AND PLACING STATISTICS

Price per New Ordinary Share                                                                       6.54 pence
Placing Price                                                                                      8.53 pence
Basis of Rights Issue                                                                              5 New Ordinary
                                                                                                   Share(s) for every 2
                                                                                                   Existing Ordinary
                                                                                                   Shares
Number of Existing Ordinary Shares in issue at the date of this document                           489,442,176
Number of New Ordinary Shares to be issued by the Company under the Rights                         1,223,605,440
Issue(a)
Number of Placing Shares to be issued by the Company under the Placing                             5,803,048
Number of Ordinary Shares in issue immediately following completion of the                         1,718,850,664
Rights Issue and the Placing
Number of New Ordinary Shares as a percentage of enlarged issued ordinary                          71.2%
share capital of the Company immediately following completion of the Rights
Issue and the Placing
Number of Placing Shares as a percentage of enlarged issued ordinary share                         0.3%
capital of the Company immediately following completion of the Rights Issue
and the Placing
Number of New Ordinary Shares and Placing Shares as a percentage of                                71.5%
enlarged issued ordinary share capital of the Company immediately following
completion of the Rights Issue and the Placing
Estimated maximum net proceeds of the Rights Issue and the Placing receivable                      £75,518,796
by the Company after expenses
Estimated expenses of the Rights Issue and Placing (excluding VAT)                                 £5,000,000
(a) On the assumption that no further new Ordinary Shares are issued as a result of the exercise of any options under Findel’s
    Employee Share Plans between publication of this document and the closing of the Rights Issue and the Placing and that the
    Existing Ordinary Shares held in treasury by the Company do not rank for the Rights Issue.




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DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

Directors                                              David Arnold Sugden                 Chairman
                                                       Roger William John Siddle           Chief Executive
                                                       Timothy John Kowalski               Finance Director
                                                       Philip Binns Maudsley               Executive Director
                                                       Michael Leslie Hawker               Non-Executive Director
                                                       Stuart Sinclair McKay               Non-Executive Director
                                                       Laurel Claire Powers-Freeling       Non-Executive Director
                                                       Eric Frank Tracey                   Non-Executive Director
                                                       all of
                                                       2 Gregory Street
                                                       Hyde
                                                       Cheshire
                                                       SK14 4TH
Company Secretary                                      Ivan Bolton
Registered Office and telephone number                  2 Gregory Street
                                                       Hyde
                                                       Cheshire
                                                       SK14 4TH
                                                       Tel: +44 (0)161 3033465
                                                       Fax: +44 (0)161 3672139
Financial Adviser and Joint Sponsor                    Greenhill & Co. International LLP
                                                       Lansdowne House
                                                       57 Berkeley Square
                                                       London
                                                       W1J 6ER
Joint Sponsor, Joint Broker and                        J.P. Morgan Cazenove
Bookrunner                                             10 Aldermanbury
                                                       London
                                                       EC2V 7RF
Underwriter                                            J.P. Morgan Securities Ltd.
                                                       125 London Wall
                                                       London
                                                       EC2Y 5AJ
Joint Broker                                           Evolution Securities Limited
                                                       100 Wood Street
                                                       London
                                                       EC2V 7AN
Legal Advisers to the Company as to                    Clifford Chance LLP
English and US law                                     10 Upper Bank Street
                                                       London
                                                       E14 5JJ
Legal Advisers to the Joint Sponsors as                Hogan Lovells International LLP
to English law                                         Atlantic House
                                                       Holburn Viaduct
                                                       London
                                                       EC1A 2FG
Auditors to the Company                                KPMG Audit plc
                                                       St James’ Square
                                                       Manchester
                                                       M2 6DS



                                                                25
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Reporting Accountants                                  Deloitte LLP
                                                       2 Hardman Street
                                                       Manchester
                                                       M60 2AT

                                                       KPMG Audit plc
                                                       St James’ Square
                                                       Manchester
                                                       M2 6DS
Registrars & Receiving Agent                           Equiniti Limited
                                                       Aspect House
                                                       Spencer Road
                                                       Lancing
                                                       West Sussex
                                                       BN99 6DA




                                                                26
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                                                       FORWARD-LOOKING STATEMENTS
Some of the statements under Summary Information, Risk Factors, Part I (Letter from the Chairman
of Findel), Part IV (Information on the Group), Part VI (Operating and Financial Review) and
elsewhere in this document include forward looking statements which reflect the Group’s or, as
appropriate, the Directors’ current views with respect to financial performance, business strategy,
plans and objectives of management for future operations (including development plans relating to the
Group’s products and services). These statements include forward-looking statements both with
respect to the Group and the sectors and industries in which the Group operates. Statements which
include the words ‘‘expects’’, ‘‘intends’’, ‘‘plans’’, ‘‘believes’’, ‘‘projects’’, ‘‘anticipates’’, ‘‘will’’,
‘‘targets’’, ‘‘aims’’, ‘‘may’’, ‘‘would’’, ‘‘could’’, ‘‘continue’’ and similar statements of a future or
forward looking nature identify forward looking statements for the purposes of any securities laws.
All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there
are or will be important factors that could cause the Group’s actual results to differ materially from
those indicated in these statements. These factors include but are not limited to those described in the
part of this document entitled ‘‘Risk Factors’’, which should be read in conjunction with the other
cautionary statements that are included in this document. Any forward-looking statements in this
document reflect the Group’s or, as appropriate, the Directors’ current views with respect to future
events and are subject to these and other risks and uncertainties relating to the Group’s business,
results of operations and growth strategy. For the avoidance of doubt, nothing in this paragraph
qualifies the working capital statement set out in paragraph 15 of Part X (Additional Information).
These forward-looking statements speak only as of the date of this document. Subject to any
obligations under the Prospectus Rules, the Disclosure and Transparency Rules and the Listing Rules
or as otherwise required by applicable law and regulations, the Company undertakes no obligation to
publicly update or review any forward-looking statement, whether as a result of new information,
future developments or otherwise. All subsequent written and oral forward-looking statements
attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their
entirety by this paragraph. Prospective investors should specifically consider the factors identified in
this document which could cause actual results to differ before making an investment decision.




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                                                       PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Financial Data
Unless otherwise specified herein or the context requires, the financial information in this document
has been prepared in accordance with IFRS, and therefore complies with Article 4 of the EU IAS
Regulation and those parts of the 2006 Act applicable to companies reporting under IFRS. The
Group’s financial statements are also consistent with the International Financial Reporting Standards
as issued by the International Accounting Standards Board.
Certain figures contained in this document, including financial information, have been subject to
rounding adjustments. Accordingly, in certain instances, the sum of the numbers in a column or a
row in tables contained in this document may not conform exactly to the total figure given for that
column or row.
The financial information included in this document is not intended to comply with SEC reporting
requirements. Compliance with such requirements would require the notification or exclusion of
certain financial measures and the presentation of certain other information not included herein.

Restatement of historical financial information
In 2010, a number of accounting entries within the Group’s Education Supplies Division which
appeared not to be properly substantiated came to light following management changes. A detailed
review by the new management and external consultants resulted in a number of adjustments being
made in preparing the financial statements for 09/10 Financial Year. The adjustments included the
restatement of the comparatives for the 08/09 Financial Year and the balance sheet as at 31 March
2008.
A number of the accounting irregularities impacted the 07/08 Financial Year, an accounting period
which has not previously been re-presented since the discovery of the irregularities. In order to
provide historical financial information which is true and fair, the financial statements for the 07/08
Financial Year have been restated and included in this document. In addition, the financial statements
for the 07/08 Financial Year have been restated following improvements in the financial systems
allowing a more accurate cut-off and pricing of inventory to be performed in the Express Gifts
division. Adjustments to the 08/09 Financial Year and the balance sheet as at 31 March 2008 were
made in respect of these improvements in preparing the financial statements for the 09/10 Financial
Year. The financial impact of the restatements on the financial statements for the 07/08 Financial
Year is discussed in Part VI (Operating and Financial Review) of this document.
There have been no changes in accounting policy since the 09/10 Financial Year. However the
application of the policies has changed in respect of the presentation of certain items as reported in
the unaudited consolidated financial information for the 2010 Interim Period. In order to present all
financial information on a comparable basis, the Board has restated the historical financial
information for the 09/10, 08/09 and 07/08 Financial Years to be presented on a consistent basis with
the unaudited consolidated financial information for the 2010 Interim Period. The presentation
changes impact the income statement and the segmental information. The restatements have had no
impact on the net assets or profit after tax for the 09/10, 08/09 and 07/08 Financial Years. For
further information on the presentation of financial information, see Part VI (Operating and Financial
Review) of this document.
Deloitte LLP, as auditors of the Group for the 07/08, 08/09 and 09/10 Financial Years, has provided
an accountant’s report on, the financial statements for the 07/08, 08/09 and 09/10 Financial Years.
The Group’s current auditors, KPMG Audit plc, who replaced Deloitte LLP on 23 November 2010,
has provided an accountant’s review report on the consolidated financial information of the Group
for the 2010 Interim Period and the 2009 Interim Period.

Market, Economic and Industry Data
Market, economic and industry data used throughout this document is derived from various industry
and other independent sources. Where third party information has been used in this document the
source of such information has been identified. Where market, economic and industry data is derived
from industry and other independent sources, the publications in which they are contained generally
state that the information they contain has been obtained from sources believed to be reliable, but
that the accuracy and completeness of such information is not guaranteed.

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Currency Presentation
Unless otherwise indicated, all references in this document to ‘‘pounds sterling’’, ‘‘£’’, ‘‘pence’’ or ‘‘p’’
are to the lawful currency of the UK, all references to ‘‘$’’, ‘‘US$’’ or ‘‘US dollars’’ are to the lawful
currency of the US, all references to ‘‘c’’ or ‘‘Euros’’ are to the currency introduced at the start of
the third stage of European economic and monetary union pursuant to the Treaty establishing the
European Community, as amended.

References to Defined Terms
Certain terms used in this document, including certain capitalised terms and certain technical and
other terms, are defined in Part XI (Definitions).




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                                                       IMPORTANT INFORMATION
Notice in connection with the Restricted Jurisdictions
Subject to certain exemptions, this document does not constitute an offer to sell or the solicitation of
an offer to acquire Nil Paid Rights, Fully Paid Rights, the New Ordinary Shares or the Placing
Shares to any person with a registered address, or who is located in, the Restricted Jurisdictions or
any other jurisdiction in which such an offer or solicitation is unlawful. The Nil Paid Rights, the
Fully Paid Rights, New Ordinary Shares, the Placing Shares and the Provisional Allotment Letters
have not been and will not be registered under the Securities Act or under the relevant laws of any
state, province or territory of the Restricted Jurisdictions and may not be offered, sold, taken up,
exercised, resold, renounced, transferred or delivered, directly or indirectly, within the Restricted
Jurisdictions except pursuant to an applicable exemption. Overseas Shareholders and any person
(including, without limitation, stockbrokers, banks or other agents) who has a contractual or other
legal obligation to forward this document or any Provisional Allotment Letter, if and when received,
into a jurisdiction other than the United Kingdom should read the section entitled ‘‘Overseas
Shareholders’’ at paragraph 8 of Part III (Terms and Conditions) of this document.

Notice to US investors
The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Placing Shares and the
Provisional Allotment Letters have not been and will not be registered under the Securities Act or
under any securities laws of any state or other jurisdiction of the United States and accordingly may
not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or
indirectly, within the United States except pursuant to registration under the Securities Act or an
applicable exemption from the registration requirements of the Securities Act and in compliance with
any applicable securities laws of any state or other jurisdiction of the United States. There will be no
public offer of Nil Paid Rights, Fully Paid Rights New Ordinary Shares or Placing Shares in the
United States.
The New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights offered outside the United
States are being offered in reliance on Regulation S under the Securities Act. Prospective investors are
hereby notified that sellers of the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares
may be relying on the exemption from the registration provisions under Section 5 of the Securities
Act provided by Rule 144A thereunder.
None of the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional
Allotment Letters have been approved or disapproved by the SEC, any state securities commission or
any other US regulatory authority, nor have any of the foregoing authorities passed upon or
endorsed the merits of the offering of the Nil Paid Rights, Fully Paid Rights or New Ordinary Shares
or the accuracy, completeness or adequacy of this document or of the Provisional Allotment Letter.
Any representation to the contrary is a criminal offence in the United States.
In addition, until 40 days after the commencement of the Rights Issue, an offer, sale or transfer of
the New Ordinary Shares, the Nil Paid Rights, the Fully Paid Rights or the Provisional Allotment
Letters within the United States by a dealer (whether or not participating in the Rights Issue) may
violate the registration requirements of the Securities Act if such offer or sale is made otherwise than
in accordance with Rule 144A.
Neither this document nor the Provisional Allotment Letter constitutes, or will constitute, or forms
part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or
subscribe for, New Ordinary Shares, Nil Paid Rights, Fully Paid Rights and/or Placing Shares to any
Shareholder with a registered address in, or who is resident in or located in, the United States. If you
are in the United States, you may not exercise your Nil Paid Rights or Fully Paid Rights and/or
acquire any New Ordinary Shares offered hereby.

Notice to all investors
Your attention is drawn to the sections of this document entitled Forward Looking Statements,
Presentation of Financial and Other Information and Important Information.
 Any reproduction or distribution of the document, in whole or in part, and any disclosure of its
 contents or use of any information contained in this document for any purpose other than
 considering an investment in the Nil Paid Rights, Fully Paid Rights or New Ordinary Shares is
 prohibited. By accepting delivery of this document, each offeree of the Nil Paid Rights, Fully Paid
 Rights or New Ordinary Shares agrees to the foregoing.

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No person has been authorised to give any information or make any representations other than those
contained in this document and, if given or made, such information or representations must not be
relied on as having been authorised by the Company, the Joint Sponsors or by the Joint Brokers.
Without prejudice to any obligation of the Company to publish a supplementary prospectus pursuant
to section 87G of FSMA and paragraph 3.4 of the Prospectus Rules, neither the delivery of this
document nor any subscription or purchase of shares made pursuant to this document shall, under
any circumstances, create any implication that there has been no change in the affairs of the Group
since, or that the information contained herein is correct at any time subsequent to, the date of this
document.
None of the Company, the Joint Sponsors, the Joint Brokers or any of their respective representatives
is making any representation to any offeree, purchaser or acquirer of Nil Paid Rights, Fully Paid
Rights or the New Ordinary Shares regarding the legality of an investment in the New Ordinary
Shares by such offeree, purchaser or acquirer under the laws applicable to such offeree, purchaser or
acquirer.
Investors and prospective investors also acknowledge that: (i) they have not relied on any of the Joint
Sponsors, the Joint Brokers or any person affiliated with them in connection with any investigation of
the accuracy of any information contained in this document or their investment decision; (ii) they
have relied only on the information contained in this document; and (iii) no person has been
authorised to give any information or to make any representation concerning the Company or its
subsidiaries or the Nil Paid Rights, Fully Paid Rights or New Ordinary Shares (other than as
contained in this document) and, if given or made, any such other information or representation
should not be relied upon as having been authorised by the Company, the Joint Sponsors or the
Joint Brokers.
The contents of this document are not to be construed as legal, financial, business or tax advice.
Each prospective investor should consult his, her or its own legal adviser, financial adviser or tax
adviser for legal, financial or tax advice.
No statement in this document is intended as a profit forecast and no statement in this document
should be interpreted to mean that the earnings per Ordinary Share for the current or future years
would necessarily match or exceed the historical published earnings per Ordinary Share.
The contents of neither the Group’s website (or any other website) nor the content of any website
accessible from the hyperlinks on the Company’s website is incorporated in, or forms part of this
document.

Notice in connection with Member States of the European Economic Area
In relation to each member state of the European Economic Area which has implemented the
Prospectus Directive (each, a ‘‘relevant member state’’) (except for the United Kingdom), with effect
from and including the date on which the Prospectus Directive was implemented in that relevant
member state (the ‘‘relevant implementation date’’) no New Ordinary Shares, Nil Paid Rights, Fully
Paid Rights or Placing Shares have been offered or will be offered pursuant to the Rights Issue or
the Placing to the public in that relevant member state prior to the publication of a prospectus in
relation to the New Ordinary Shares, Nil Paid Rights, Fully Paid Rights and Placing Shares which
has been approved by the competent authority in that relevant member state or, where appropriate,
approved in another relevant member state and notified to the competent authority in the relevant
member state, all in accordance with the Prospectus Directive, except that with effect from and
including the relevant implementation date, offers of New Ordinary Shares, Nil Paid Rights, Fully
Paid Rights or Placing Shares may be made to the public in that relevant member state at any time:
(a)                                                    to legal entities which are authorised or regulated to operate in the financial markets or, if not
                                                       so authorised or regulated, whose corporate purpose is solely to invest in securities;
(b)                                                    to any legal entity which has two or more of (i) an average of at least 250 employees during the
                                                       last financial year; (ii) a total balance sheet of more than c43 million; and (iii) an annual
                                                       turnover of more than c50 million, as shown in its last annual or consolidated accounts; or
(c)                                                    in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that
                                                       no such offer of New Ordinary Shares, Nil Paid Rights, Fully Paid Rights or Placing Shares
                                                       shall result in a requirement for the publication by the Company or the Underwriter of a
                                                       prospectus pursuant to Article 3 of the Prospectus Directive.
For this purpose, the expression ‘‘an offer of any New Ordinary Shares, Nil Paid Rights, Fully Paid
Rights or Placing Shares to the public’’ in relation to any New Ordinary Shares, Nil Paid Rights,

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Fully Paid Rights and Placing Shares in any relevant member state means the communication in any
form and by any means of sufficient information on the terms of the Rights Issue and the Placing
and any New Ordinary Shares, Nil Paid Rights, Fully Paid Rights and Placing Shares to be offered
so as to enable an investor to decide to acquire any New Ordinary Shares, Nil Paid Rights, Fully
Paid Rights or Placing Shares, as the same may be varied in that relevant member state by any
measure implementing the Prospectus Directive in that relevant member state.




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                                                                                               PART I

                                                                      LETTER FROM THE CHAIRMAN OF FINDEL

                                                                                          FINDEL PLC
                                                            (incorporated and registered in England and Wales with registered number 549034)

                                                                                                                                      Registered office:
                                                                                                                                      2 Gregory Street
                                                                                                                                                  Hyde
                                                                                                                                              Cheshire
                                                                                                                                            SK14 4TH

                                                                                                                                     11 February 2011
Dear Shareholder

                                                                                   Proposed Rights Issue and Placing
1.    Introduction
We announced today that the Company proposes to raise approximately £80.5 million (approximately
£75.5 million net of expenses) through a Rights Issue of 1,223,605,440 New Ordinary Shares and a
Placing of 5,803,048 Placing Shares as part of a restructuring of its balance sheet which also includes
entering into the New Lending Facilities, conditional on the Rights Issue becoming effective.
The purpose of this document is to:
*                                                      explain the background to, reasons for and terms of the Rights Issue and the Placing;
*                                                      provide Qualifying Shareholders with the information about the Company and its business to
                                                       enable Qualifying Shareholders to decide whether or not to participate in the Rights Issue; and
*                                                      explain why the Board considers the Resolutions to be proposed at the General Meeting are in
                                                       the best interests of the Company and the Shareholders as a whole.
The Group remains highly indebted and this continues to be a material hindrance to the Group’s
operations and an obstacle to the delivery of returns to Shareholders. Without the completion of the
Rights Issue and entry into the New Lending Facilities, this extreme level of financial risk will remain
and there can be no certainty of the continued support of financing banks or the availability of
adequate debt facilities beyond the expiry of the Existing Lending Facilities in January 2012.
The Placing, which is conditional, inter alia, on the Rights Issue becoming effective, is being carried
out in addition to the Rights Issue in order to allow David Sugden, Roger Siddle, Laurel Powers-
Freeling and Eric Tracey to show their continuing support for the Company by participating in this
capital raising. In the case of David Sugden, Roger Siddle and Laurel Powers-Freeling this is because
they are not currently Shareholders and are therefore not entitled to participate in the Rights Issue.
In the case of Eric Tracey, the Placing allows him to invest in the Company in excess of his pro rata
entitlement under the Rights Issue. Consistent with this, the Placing Price has been set at the
theoretical ex-rights price based on the Closing Price of 13.50 pence per Ordinary Share on
10 February 2011 (being the last Business Day before announcement of the Rights Issue and the
Placing) which is the theoretical price of the Ordinary Shares taking into account the impact of the
Rights Issue.
The Rights Issue is conditional on Resolutions 1 to 4 (inclusive) being passed and the Placing is
conditional on Resolutions 1 to 6 (inclusive) being passed, in each case at a General Meeting of the
Company to be convened on 28 February 2011 at 11.00 a.m. at the offices of Clifford Chance LLP,
10 Upper Bank Street, London E14 5JJ. The Rights Issue is not conditional on the Placing taking
place.
The reason for each of these Resolutions is as follows:
*                                                      Resolutions 1 and 2 are required to grant the Directors authority to allot the New Ordinary
                                                       Shares, the Placing Shares and the Convertible Shares (and any Ordinary Shares into which the
                                                       Convertible Shares may be converted in accordance with their terms) on a non pre-emptive basis
                                                       pursuant to the arrangements described in this document. This authority will expire on the
                                                       conclusion of the next annual general meeting of the Company;

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*                                                      Resolution 3 is required to approve a waiver of Rule 9 of the Code which has been granted by
                                                       the Panel to allow the TAM Concert Party to participate in the Rights Issue without being
                                                       required to make a general offer to all other Shareholders to acquire their Ordinary Shares;
*                                                      Resolution 4 provides for the adoption of new Articles of Association which contain the rights
                                                       and restrictions attaching to the Convertible Shares. This is necessary to allow the Convertible
                                                       Shares to be allotted and issued to the Lenders in connection with the release of a portion of
                                                       the Group’s existing indebtedness under the Existing Revolving Credit Facilities and the New
                                                       Lending Facilities being made available to the Group;
*                                                      Resolution 5 is required pursuant to the Listing Rules to approve the Placing, and, in
                                                       particular, the discount at which the Placing Shares are being issued; and
*                                                      Resolution 6 relates to the placing of Placing Shares with David Sugden, Roger Siddle, Laurel
                                                       Powers-Freeling and Eric Tracey. This Resolution is required pursuant to the Listing Rules since
                                                       these individuals, being Directors, are related parties of the Company within the meaning of the
                                                       Listing Rules.
The Directors are also proposing that Resolutions 7 and 8 be approved at the General Meeting.
These Resolutions, which provide for the amendment of the rules of the Findel Performance Share
Plan and the authority for the Directors to grant a special incentive award to Roger Siddle, are not
conditional on any of the other Resolutions being passed.
The Board considers that each of the Resolutions is in the best interests of the Company and the
Shareholders as a whole and unanimously (insofar as the Directors were permitted to be involved in the
Board’s consideration thereof) recommends that all Shareholders (to the extent they are so entitled) vote
in favour of the Resolutions.

2.    Information on the Group
The Findel Group contains market leading businesses in the home shopping, education supplies and
healthcare markets. It is primarily a distributor, handling and supplying specialist products
manufactured by third parties. The Group’s activities are focussed in five operating segments:
*                                                      Express Gifts is one of the largest direct mail order businesses in the UK, offering online and
                                                       via catalogue a broad range of home and leisure items, clothing, toys and gifts supported by a
                                                       flexible credit offer;
*                                                      Kleeneze is a leading network marketing company, specialising in supplying a wide range of
                                                       household and health & beauty products to customers through a network of independent
                                                       distributors across the UK and the Republic of Ireland;
*                                                      Kitbag is a leading retailer of sports leisurewear and official football kits both through its own
                                                       online operation, kitbag.com, as well as a number of partnership relationships with football
                                                       clubs and other sports organisations whereby Kitbag manages a range of retail, online and/or
                                                       mail order channels;
*                                                      the Education Supplies Division is one of the largest independent suppliers of resources and
                                                       equipment (excluding information technology and publishing) to schools and educational
                                                       establishments in the UK; and
*                                                      the Healthcare Division is a leading operator of outsourced Integrated Community Equipment
                                                       Services (ICES) contracts for NHS trusts and local authorities, and also supplies a wide range
                                                       of rehabilitation and care equipment to the public and private sectors via catalogue and the
                                                       internet.
The Express Gifts, Kleeneze and Kitbag operations are collectively referred to as the Home Shopping
Division in this document.
More detailed information on the Group’s businesses and operations is included in Part IV
(Information on the Group) of this document.

3.   Background to and reasons for the Rights Issue and the Placing and use of proceeds
Background to the Rights Issue and the Placing
As announced at the time of the Group’s interim results on 30 November 2010, the Board has been
undertaking a wide range of actions to improve performance and profitability and to secure the
Group’s longer term success. Findel has faced considerable challenges in recent years and its business
has suffered from reduced profitability. This has stemmed from a combination of the effects of the

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Group’s previous acquisition-led strategy, difficult trading conditions, the effect of introducing more
prudent accounting policies in 2009 and accounting irregularities in the Education Supplies Division.
The previous acquisition-led strategy has resulted in the Group having a high level of financial debt
and being poorly positioned to weather tougher trading conditions and the impact of the issues in the
Education Supplies Division. Furthermore, the Group’s high level of indebtedness and the restrictive
terms of the Existing Lending Facilities have further reduced operational flexibility and financial
stability, which has adversely impacted the operational and financial performance of the Group’s
businesses. The Rights Issue and the Placing announced today are being undertaken as part of a
restructuring of the Group’s balance sheet and are intended to provide the Group with a secure
financial platform upon which to stabilise the operations of the Group’s businesses and deliver
improved value to Shareholders.

Previous net debt reduction initiatives
The Board has taken a series of measures with the objective of reducing the Group’s net debt and
leverage in recent years. In 2008, the Group commenced a cash generation programme including
tighter working capital management, disposals of non-core assets and operational improvements. This
was followed in July 2009 by an equity raising of £81 million, the net proceeds of which were used to
pay down debt. At the same time, the Group entered into modified credit agreements providing
committed facilities that would fluctuate in line with the Group’s seasonal forecast cash generation
programme.
In March 2010, the Board announced that it had discovered unsubstantiated accounting entries in the
Group’s Education Supplies Division, which had resulted in profitability within the division being
overstated. The Board engaged KPMG LLP to perform a forensic financial review of all material
businesses within the Group, which confirmed that these issues did not extend to the Group’s other
divisions. Following this review, and as a consequence of the change of management and an overall
review of the Company’s external advisers, KPMG Audit plc was appointed auditors to the Company
on 23 November 2010 and Deloitte LLP resigned as auditors on 23 November 2010, having been
auditors for the 07/08, 08/09 and 09/10 Financial Years. For the avoidance of doubt, Deloitte LLP
was neither aware nor involved in the accounting entries in the Education Supplies Division that were
subsequently identified as irregularities.
As a result of the accounting irregularities in the Group’s Education Supplies Division, certain
representations and warranties made in connection with the bank facilities entered into at the time of
the refinancing in July 2009 were found to be untrue. In addition, certain other provisions contained
in these facilities were breached. As a result of the breach of the banking covenants at 2 April 2010,
the Lenders became capable of triggering certain default rights under the facility agreements with the
Company in effect at that time. Whilst these rights were temporarily waived by the Lenders, the
Company was nevertheless required to classify its bank debt as falling due within one year in its 2010
Annual Report. In July 2010, in the light of this, the underlying performance issues in the Education
Supplies Division and an inability to obtain trade credit insurance, the Group entered into the
Existing Lending Facilities. These facilities expire in January 2012 and, whilst the Board considers
these to be adequate for the Group’s current needs, do not provide a secure and flexible medium-term
financing platform. In addition, there can be no certainty at this stage of the covenants, cost, or size
of new or amended debt facilities that may be available to the Company at that time.

Actions taken by the Board
In the light of the series of events highlighted above, the Board has undertaken a number of
corrective actions. These have included:
*                                                      initiating significant management and cultural changes at both the Group and divisional levels,
                                                       including the appointment of a new Chairman, Chief Executive and Finance Director;
*                                                      strengthening the finance function and improving internal controls, risk management and
                                                       internal audit processes;
*                                                      disposing of a number of non-core and loss-making operations; and
*                                                      undertaking a Group-wide Full Potential Review.

Full Potential Review
The Full Potential Review has included a bottom-up review of the strategy and operations of each of
the Group’s businesses. Following this process the Board believes that, with the right focus,

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management and investment, each of the Group’s businesses is capable of contributing to significantly
improved performance.
Clear plans have been developed for each business to improve its performance and were set out in
the interim results announcement on 30 November 2010. More details on the specific conclusions
regarding each of the Group’s businesses are included in Part IV (Information on the Group) of this
document, but the core plans centre around:
*                                                      a ‘Back to Basics’ approach focussing on enhancing operations;
*                                                      investment in systems and processes (especially in Express Gifts and the Education Supplies
                                                       Division);
*                                                      leveraging of the benefits of scale in sourcing; and
*                                                      implementation of a cultural change through the empowerment of divisional management.
It is estimated that implementation of these operational improvements will require approximately £35
million of new funding, which is not currently available under the Group’s Existing Lending
Facilities.
Proposed Rights Issue, Placing and use of proceeds
As highlighted in the Group’s full year results announcement on 20 July 2010, and alongside the
development of the Full Potential Review, the Board has been examining ways to reduce debt and
put in place a strong platform to fund and allow successful delivery of the operational improvements
identified by the Full Potential Review.
Against this background, Findel has today announced the Rights Issue and the Placing to raise gross
proceeds of approximately £80.5 million (approximately £75.5 million net of expenses). Of the net
proceeds, £40 million will be used to pre-pay indebtedness and cancel availability under the Existing
Revolving Credit Facilities. The remaining balance of the proceeds will be retained by the Group
initially to reduce indebtedness and subsequently to fund the initiatives identified by the Full Potential
Review. In particular, this will include investments in systems and processes in Express Gifts and the
Education Supplies Division, and investments in working capital in Express Gifts and Kitbag. Further
details of such initiatives are set out in Part IV (Information on the Group) of this document. In
addition, a further £40 million of indebtedness will be released in consideration of the allotment and
issue of 166,878,704 Convertible Shares to the Lenders.
Taking into account the £75.5 million of net proceeds from the Rights Issue and the Placing, the £40
million of indebtedness being released in consideration of the allotment and issue of Convertible
Shares and the costs associated with the wider restructuring of the Group’s credit facilities (outlined
below) of approximately £5 million, Group net indebtedness will thereby be reduced by approximately
£110.5 million as a result of the Rights Issue and the Placing.

4.   New Lending Facilities
The Group entered into conditional agreements for the provision of the New Lending Facilities on 11
February 2011, which will be implemented by way of amendment and restatement of the Existing
Lending Facilities and which comprise five year commitments for:
*                                                      the £196.8 million New Revolving Credit Facilities; and
*                                                      the £105 million New Securitisation Facility.
The New Lending Facilities will only become available to the Group if Resolutions 1 to 4 (inclusive)
are passed and the other conditions to the Rights Issue are satisfied such that the Rights Issue
becomes effective. In such circumstances, the Existing Lending Facilities will be amended and £40
million of the proceeds of the Rights Issue will be used to pre-pay indebtedness and cancel
availability under the Existing Revolving Credit Facilities. In addition, a further £40 million of
indebtedness is being released (and corresponding commitments of the Lenders cancelled) in
consideration of the allotment and issue of 166,878,704 Convertible Shares to the Lenders. If the New
Lending Facilities do not become effective, the Existing Lending Facilities, which expire in January
2012, will remain in place.
The key commercial terms of the New Lending Facilities, following the completion of the Rights
Issue, are as follows:
*                                                      Term: the New Lending Facilities expire on the fifth anniversary of the date which the New
                                                       Lending Facilities become effective.

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*                                                      Pricing:
                                                       *    £196.8 million New Revolving Credit Facilities: the applicable margin is 3 per cent.; and
                                                       *    £105 million New Securitisation Facility: amounts drawn under the New Securitisation
                                                            Facility carry interest at rates variable with the discount rate for commercial paper.
The material terms of the New Securitisation Facility are the same as the Existing Securitisation
Facility save in respect of amendments to the term (as set out above) to make it coterminous with
the New Revolving Credit Facilities.
The Board believes that the entry by the Company into the New Lending Facilities is in the best
interests of the Company and its Shareholders, and that they will deliver:
*                                                      a stable platform to realise the operational turnaround and fund the growth initiatives identified
                                                       by the Full Potential Review;
*                                                      a more acceptable leverage position;
*                                                      a reduced cost of financing and enhanced operational flexibility; and
*                                                      a stronger capital base to provide additional comfort to the Group’s trade suppliers and their
                                                       credit insurers with regard to the Group’s financial position.
Conditional on the New Lending Facilities becoming effective, the Lenders will, in consideration of a
release of £40 million of existing indebtedness under the Existing Revolving Credit Facilities, be
allotted and issued 166,878,704 new, unlisted Convertible Shares on the date on which the New
Lending Facilities become effective. The Convertible Shares will be freely transferable and, until such
time as the right to conversion into Ordinary Shares shall have arisen, will have the following
principal rights and be subject to the following principal restrictions:
(i)                                                    the holders of Convertible Shares will be entitled to attend but will not be entitled to vote at
                                                       general meetings of the Company, save in respect of any resolution directly or indirectly
                                                       modifying or varying any of the special rights, privileges or restrictions attached to the
                                                       Convertible Shares. Without prejudice to the special class rights attached to the Convertible
                                                       Shares, the Convertible Shares will not be entitled to vote on any issues requiring shareholder
                                                       approval pursuant to the Listing Rules;
(ii)                                                   the rights attaching to the Convertible Shares may only be varied or abrogated with the consent
                                                       (either in writing or by way of a resolution passed at a separate meeting) of the holders of 85
                                                       per cent. by nominal value of the Convertible Shares then in issue;
(iii) the consent of 85 per cent. of the holders of Convertible Shares as a class will be required
      before the Company may in respect of any accounting reference period of the Company,
      declare, make or pay any dividend or other distribution, in aggregate, in excess of 50 per cent.
      of the Group’s net income (being the Group’s consolidated profit after tax and minority
      interests and after making adjustments for any exceptional items) in respect of such accounting
      reference period;
(iv) subject to 50 per cent. of the net income of the Group in aggregate having already been
     received by way of dividend or other distribution by Shareholders in respect of a particular
     accounting reference period, the holders of Convertible Shares shall have the right to receive
     their pro rata share of any further interim or final dividend related to that accounting reference
     period as if the Convertible Shares had been converted at the then prevailing conversion ratio.
     The holders of Convertible Shares shall have no other rights to dividends or distributions of the
     Company;
(v)                                                    the holders of Convertible Shares will not be entitled to participate on a return of capital or
                                                       assets, other than in respect of a voluntary winding-up of the Company, in which case the
                                                       holders of Convertible Shares may elect to be treated as if they had been converted into
                                                       Ordinary Shares at the then prevailing conversion ratio; and
(vi) the consent of 85 per cent. of the holders of the Convertible Shares as a class will be required
     before the Company may: (a) vary or modify the rights attached to the Ordinary Shares or
     create a new class of shares that ranks ahead of the Ordinary Shares; (b) convert the Company
     from a public company to a private company (other than where control of the Company is
     acquired by a person or persons as a result of a takeover); (c) issue any loan stock or debt

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                                                       instruments or otherwise borrow unless on arms’ length terms and, if such borrowing is from a
                                                       holder of more than 5 per cent. of the issued ordinary share capital of the Company, unless
                                                       such holder is on an agreed list of lenders.
The Convertible Shares may be converted into Ordinary Shares at the option of the holders of the
Convertible Shares in the event that: (i) the Company’s volume weighted average Ordinary Share
price rises above 23.97 pence for a period of one month during the period starting on the 2nd and
ending on the 10th anniversary of the date on which the Convertible Shares are issued; or (ii) an
Offer is made for the Company (regardless of the share performance of the Company). The Company
will seek an application for the listing of any new Ordinary Shares that are created as a result of
conversion.
The number of Ordinary Shares into which each Convertible Share will convert will initially be set at
one. However, this ‘‘conversion ratio’’ will be adjusted in certain specified circumstances, as set out in
the Proposed Articles.
If the Convertible Shares have not been converted by the 10th anniversary of their issue, the
Convertible Shares will automatically convert into non-voting deferred shares. Such deferred shares
will not carry any rights to vote at or attend general meetings of the Company or to participate in
the profits of the Company. The Company will have the right to buy back such deferred shares for a
nominal amount at any time.
The Convertible Shares will be allotted and issued only to the Lenders and no application has been
made, or is currently intended to be made, for the Convertible Shares to be admitted to listing or
dealt with on any stock exchange.
The terms of the Existing Lending Facilities that currently apply and the New Lending Facilities that
will apply if the Rights Issue becomes effective are described in detail in paragraph 18 of Part X
(Additional Information) of this document.

5.    Principal terms and conditions of the Rights Issue
The Rights Issue is being made to Qualifying Shareholders on the register of members of the
Company at the close of business on 24 February 2011. Pursuant to the Rights Issue, the Company
is proposing to offer up to 1,223,605,440 New Ordinary Shares by way of rights to Qualifying
Shareholders at the Issue Price of 6.54 pence per New Ordinary Share payable in full on acceptance
by no later than 15 March 2011. The Rights Issue is expected to raise approximately £80 million
(approximately £75 million net of expenses). The Issue Price represents a discount of approximately
23.3 per cent. to the theoretical ex-rights price based on the Closing Price of 13.50 pence per Existing
Ordinary Share on 10 February 2011, being the last Business Day before announcement of the Rights
Issue and the Placing. The Rights Issue will be made on the basis of:

                                                                      5 New Ordinary Shares for every 2 Existing Ordinary Shares

registered in the name of each Qualifying Shareholder at the close of business on the Record Date
and so in proportion for any other number of Existing Ordinary Shares then registered in the name
of such Qualifying Shareholder.
Qualifying Shareholders with fewer than 2 Existing Ordinary Shares will not be entitled to any New
Ordinary Shares. Entitlements to New Ordinary Shares will be rounded down to the nearest whole
number and fractions of New Ordinary Shares will not be allotted to Qualifying Shareholders but will
be aggregated and, if possible, sold in the market as soon as practicable after the commencement of
trading in the New Ordinary Shares. The net proceeds of such sales (after deduction of expenses) will
be aggregated and will ultimately accrue for the benefit of the Company. Holdings of Ordinary
Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of
calculating entitlements under the Rights Issue.
TAM and Schroder have each irrevocably undertaken, on and subject to the terms of their respective
Irrevocable Undertakings, to take up rights under the Rights Issue and subscribe for the TAM Shares
and Schroder Shares respectively. Further details of these undertakings are contained in
paragraph 14.3 of Part X (Additional Information) of this document.
Save in respect of the TAM Shares and the Schroder Shares, the Rights Issue is fully underwritten by
the Underwriter pursuant to the Underwriting Agreement. The Rights Issue is conditional, inter alia,
upon:

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(i)                                                    the passing, without amendment, of Resolutions 1 to 4 (inclusive) at the General Meeting;
(ii)                                                   the Underwriting Agreement having become unconditional in all respects (save for the condition
                                                       relating to Admission) and not having been terminated in accordance with its terms; and
(iii) Admission becoming effective by not later than 8.00 a.m. on 1 March 2011 (or such later time
      and date as the Company and the Joint Sponsors may agree, not being later than 14 March
      2011).
The New Ordinary Shares will, when issued and fully paid, rank equally in all respects with the
Existing Ordinary Shares, including the right to receive all dividends and other distributions made,
paid or declared after the date of issue of the New Ordinary Shares and otherwise pari passu with the
Existing Ordinary Shares.
Applications will be made to the UK Listing Authority and to the London Stock Exchange for the
New Ordinary Shares to be admitted to the premium listing segment of the Official List and to
trading on the London Stock Exchange’s main market for listed securities respectively. It is expected
that Admission will become effective on 1 March 2011 and that dealings in New Ordinary Shares will
commence, nil paid, at 8.00 a.m. on that date.
The latest time and date for acceptance and payment in full under the Rights Issue is expected to be
11.00 a.m. on 15 March 2011.
The offer of Nil Paid Rights, Fully Paid Rights and New Ordinary Shares to persons resident in, or
who are citizens of, or who have a registered address in a country other than the United Kingdom
may be affected by the laws of the relevant jurisdiction. Overseas Shareholders should refer to
paragraph 8 of Part III (Terms and Conditions) of this document for further information on their
ability to participate in the Rights Issue.

6.   Principal terms and conditions of the Placing
The Company intends to raise approximately £0.5 million by way of the Placing, through the issue of
5,803,048 new Ordinary Shares to Placees, at a Placing Price of 8.53 pence per Placing Share.
The Placing Price has been set at the theoretical ex-rights price based on the Closing Price of 13.50
pence per Ordinary Share on 10 February 2011, being the last Business Day before announcement of
the Rights Issue and the Placing. This price is the theoretical price of the Ordinary Shares taking into
account the impact of the Rights Issue. This will represent a discount of 36.8 per cent. to the Closing
Price on 10 February 2011, being the last Business Day before announcement of the Rights Issue and
the Placing. Given the size of the discount of the Placing Price, Shareholders are being asked to
approve the Placing at such Placing Price at the General Meeting in accordance with the Listing
Rules (which require shareholder approval for a placing at a discount of more than 10 per cent. to
the middle market price of the shares at the time of announcement of the placing).
David Sugden, Roger Siddle, Laurel Powers-Freeling and Eric Tracey, being Directors have
committed to subscribe (as Placees) for Placing Shares under the Placing and as they are each
Directors, the issue of such Placing Shares to them constitutes a related party transaction which,
under the Listing Rules, requires the approval of Shareholders (other than such Placees, who are not
permitted to vote) at the General Meeting.
Each subscription for Placing Shares pursuant to the Placing is conditional, inter alia, upon:
(i)                                                    the passing, without amendment, of Resolutions 1 to 6 (inclusive) at the General Meeting;
(ii)                                                   the Underwriting Agreement and the relevant Placing Letter having become unconditional in all
                                                       respects (save for the conditions relating to Admission and Placing Admission) and not having
                                                       been terminated in accordance with their terms; and
(iii) Placing Admission and Admission becoming effective by no later than 8.00 a.m. on                                                         4 April
      2011.
The Placing Shares will, when issued and fully paid, rank equally in all respects with the Existing
Ordinary Shares, including the right to receive dividends or distributions made, paid or declared after
the date of issue of the Placing Shares and otherwise pari passu with the Existing Ordinary Shares.
For the avoidance of doubt, the Placees will not be entitled to participate in the Rights Issue in
respect of their Placing Shares.
Applications will be made to the UK Listing Authority and to the London Stock Exchange for the
Placing Shares to be admitted to the premium listing segment of the Official List and to trading on
the London Stock Exchange’s main market for listed securities respectively. It is expected that Placing

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Admission will become effective on 1 March 2011 and that dealings in the Placing Shares will
commence on the London Stock Exchange at 8.00 a.m. on that date.

7.    Financial effects of the Rights Issue, the Placing and the Convertible Shares
Shareholders who do not take up any of their rights to subscribe for the New Ordinary Shares will
suffer an immediate dilution of 71.4 per cent. in their interests in the Company as a result of the
Rights Issue (before the dilutive impact of the Placing). Those Qualifying Shareholders who take up
all of the New Ordinary Shares provisionally allotted to them in full will, subject to fractions and the
effect of the Placing being completed, have the same proportionate voting and distribution rights as
held by them on the Record Date. The Placing Shares will represent approximately 0.3 per cent. of
the enlarged issued share capital of the Company immediately following completion of the Rights
Issue and the Placing. Assuming full take up in the Rights Issue, Shareholders will therefore suffer a
dilution of approximately 0.3 per cent. in their holdings of Ordinary Shares as a result of the Placing.
If the Convertible Shares are converted into Ordinary Shares in accordance with their rights,
Shareholders will suffer further dilution in their holdings of Ordinary Shares.

8.    Action to be taken in respect of the Rights Issue
The procedure for acceptance and payment of the Rights Issue depends on whether, at the time at
which acceptance and payment is made, the Nil Paid Rights are in certificated form (that is, are
represented by a Provisional Allotment Letter) or are in uncertificated form (that is, are in CREST).
Accordingly:
(i)                                                    if you are a Qualifying Non-CREST Shareholder, you will be sent a Provisional Allotment
                                                       Letter giving you details of your Nil Paid Rights by post on or about 28 February 2011; and
(ii)                                                   if you are a Qualifying CREST Shareholder, you will not be sent a Provisional Allotment
                                                       Letter. Instead, you will receive a credit to your appropriate stock accounts in CREST in
                                                       respect of the Nil Paid Rights as soon as practicable after 8.00 a.m. on 1 March 2011.
If you sell or have sold or otherwise transferred all of your Existing Ordinary Shares held (other than
ex-rights) in certificated form before 24 February 2011, please forward this document and any
Provisional Allotment Letter, if and when received, at once to the purchaser or transferee or the
bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the
purchaser or transferee, except that such documents should not be sent to any jurisdiction where to
do so might constitute a violation of local securities laws or regulations, including, but not limited to,
the Restricted Jurisdictions.
If you sell or have sold or otherwise transferred (other than ex-rights) only part of your holding of
Existing Ordinary Shares held in certificated form before the Ex-Rights Date, you should refer to the
instruction regarding split applications in Part III (Terms and Conditions) of this document and in the
Provisional Allotment Letter.
If you sell or have sold or otherwise transferred all or only part or some of your Existing Ordinary
Shares held (other than ex-rights) in uncertificated form before the Ex-Rights Date, a claim
transaction will automatically be generated by Euroclear which, on settlement, will transfer the
appropriate number of Nil Paid Rights to the purchaser or transferee.
The latest time and date for acceptance and payment in full in respect of the Rights Issue is expected to
be 11.00 a.m. on 15 March 2011, unless otherwise announced by the Company. The procedure for
acceptance and payment is set out in Part III (Terms and Conditions) of this document and, in respect
of Qualifying Non-CREST Shareholders, in the Provisional Allotment Letter.
For Qualifying Non-CREST Shareholders, the New Ordinary Shares will be issued in certificated
form and will be represented by definitive share certificates, which are expected to be despatched by
no later than 22 March 2011 to the registered address of the person(s) entitled to them.
For Qualifying CREST Shareholders, the Receiving Agent will instruct CREST to credit the stock
accounts of such Qualifying CREST Shareholders with their entitlements to New Ordinary Shares. It
is expected that this will take place by 8.00 a.m. on 16 March 2011.
Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST
sponsor regarding the action to be taken in connection with this document and the Rights Issue.
If you are in any doubt as to the action you should take, you should immediately seek your own
financial advice from your stockbroker, bank manager, solicitor, accountant or other independent

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financial adviser authorised under the FSMA or, if you are outside the United Kingdom, by another
appropriately authorised independent financial adviser.

9.    Directors’ intentions in respect of the Rights Issue and the Placing
The Directors who are entitled to take up New Ordinary Shares under the Rights Issue (holding in
aggregate 1,449,835 Existing Ordinary Shares) intend to take up, or procure that their nominees take
up, their rights in full in respect of 3,624,587 New Ordinary Shares.
It is intended that David Sugden, Roger Siddle, Laurel Powers-Freeling and Eric Tracey will be
Placees under the Placing and as such, provided that Resolutions 1 to 6 (inclusive) are passed at the
General Meeting, have committed to subscribe for 586,166, 4,689,332, 293,083 and 234,467 Placing
Shares respectively.

10. Dividends and dividend policy
The Board believes that the cash generated by the Group should be used to pay down debt and
invest in the initiatives identified by the Full Potential Review.
The Proposed Articles contain a provision whereby the consent of 85 per cent. of the holders of
Convertible Shares by nominal value is required for the distribution by way of dividend or otherwise,
in respect of any particular accounting reference period of the Company, of an amount, in aggregate,
in excess of 50 per cent. of the net income of the Group in respect of such accounting reference
period.
There are also restrictions within the Existing Revolving Credit Facilities whereby dividend payments
are dependent on certain leverage ratios being satisfied. If the New Revolving Credit Facilities are
implemented, the Company will be unable to pay any dividends whilst such facilities are in place and
will therefore be required to refinance or fully repay (and cancel all commitments under) such debt
facilities before it can pay dividends in the future. Furthermore, the Company currently does not have
sufficient distributable reserves from which to pay a dividend. As a consequence, the Board does not
expect to pay a dividend in the foreseeable future.
Subject to the above, the Board aims to resume dividend payments when possible and appropriate.

11. Share Schemes
Options and awards outstanding under the Employee Share Plans will be adjusted as a consequence
of the Rights Issue and the Placing in accordance with the rules of the relevant Employee Share Plan.
Participants will be notified of any adjustments in due course.
Shareholder approval is being sought at the General Meeting for two matters related to the Employee
Share Plans in order to enable Findel to be in a better position to recruit, retain and motivate the
Group’s key executives. One change relates to removing the existing limit on the number of Ordinary
Shares which may be issued to incentivise executives and the other relates to a special incentive
arrangement for Roger Siddle. Further details of the latter proposal are explained in more detail in
paragraph 10 of Part X (Additional Information) of this document.

12. Current trading and prospects
The Group’s interim results for the 2010 Interim Period are set out in Part V(5) (Historical Financial
Information on the Group) of this document. Since the end of that period, the performance of the
Group’s business has continued to follow the trends seen in that period.
The Group today announced its interim management statement covering the period from 1 October
2010 to today. Specific numerical references in the statement relate to the 17 week period ended 28
January 2011 unless otherwise referenced.
Overall sales for the Group on a continuing basis were slightly behind the equivalent period in the
prior financial year, with adverse weather conditions impacting a number of businesses in the Group.
The overall performance of the Group’s Home Shopping businesses has remained in line with the
trends seen during the first half of the year, and in aggregate sales were 1.7 per cent. below the prior
year for the period. Customer numbers at Express Gifts for the calendar year finished marginally
ahead of the Group’s expectations at 1.1 million. The impact of poor weather conditions was
relatively limited within Express Gifts during the Christmas period, but the business has now seen an
effect on sales caused by a backlog of catalogue deliveries within the Royal Mail network during
early January 2011. Express Gifts’ sales for the period were 4.3 per cent. behind the prior year, with

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a large part of the shortfall occuring in January. Kitbag had a record December, with sales being
almost 25 per cent. higher than the prior year in the month and up 18 per cent. in total for the last
17 weeks. Kleeneze’s sales in December 2010, however, were impacted by poor weather conditions
affecting the ability of distributors to reach their customers, and were 9 per cent. below the prior year
in the period.
The Education Supplies Division was heavily impacted by snow conditions, with up to 25 per cent. of
schools closed for a fortnight in December 2010 which affected orders significantly during the month.
Sales for the last 17 weeks were down 11 per cent. compared to the prior year. The overall profit
impact of this sales decline, however, was mitigated by the fact that December is traditionally one of
the lower order volume months of the year, given term ends and the forthcoming holiday period. The
Healthcare Division has continued to trade slightly ahead of the prior year.
In the short term the Group’s business continues to face a number of challenges, both in maintaining
supply chain effectiveness given current financial constraints and the more general external economic
environment. However, the proposed financial restructuring announced today will provide the Group
with the secure funding base and capital availability required to implement the Full Potential Review
programme and should give confidence to all stakeholders. The Board believes that successful delivery
of this programme will produce substantial benefits for all stakeholders in the longer-term.

13. Rule 9 Waiver
Under Rule 9 of the Code, any person or group of persons acting in concert who acquires an interest
in shares (as defined in the Code) which, taken together with the shares in which he and persons
acting in concert with him are already interested, carry 30 per cent. or more of the voting rights in a
company which is subject to the Code, is normally required to make a general offer to all of the
remaining shareholders to acquire their shares. Such an offer would have to be made in cash (or with
a full cash alternative) at a price not less than the highest price paid by him, or by any member of
the group of persons acting in concert with him, for any interest in shares in the company during the
12 months prior to the announcement of the offer.
Under the Code, a concert party arises where persons acting together pursuant to an agreement or
understanding, whether formal or informal, cooperate to obtain or consolidate control of a company.
Control means holding, or aggregate holdings of shares carrying 30 per cent. or more of the voting
rights of the company, irrespective of whether the holding or holdings give de facto control.
On completion of the Rights Issue and the Placing, assuming that Qualifying Shareholders do not
subscribe for any New Ordinary Shares pursuant to the Rights Issue, the TAM Concert Party could
hold up to 42.1 per cent. of the enlarged issued share capital of the Company as a result of the sub-
underwriting commitments provided by TAM (see paragraph 5.3 of Part VIII (Information on the
TAM Concert Party and Other Information Required for the Purposes of the Rule 9 Waiver) for
further information). If this were the case, the TAM Concert Party would normally be obliged to
make a general cash offer pursuant to Rule 9 of the Code to all other Shareholders to acquire their
Ordinary Shares. The Panel has agreed, however, to waive the obligation to make a general offer that
would otherwise arise as a result of the TAM Concert Party participating in the Rights Issue, subject
to the approval of the Independent Shareholders. Accordingly, Resolution 3 is being proposed at the
General Meeting and will be taken on a poll.
Following completion of the Rights Issue and the Placing, the TAM Concert Party’s combined interest
in shares may increase above its current percentage to above 30 per cent. of the Company’s voting share
capital, but it will not hold shares carrying more than 50 per cent. of such voting rights in the Company.
Any further increase in that interest in Ordinary Shares will be subject to the provisions of Rule 9 of the
Code.




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14. Irrevocable Undertakings
The Company has received:
(i)                                                    an Irrevocable Undertaking from Schroder, which manages and/or owns approximately 28.96
                                                       per cent. of the issued share capital of the Company as at 10 February 2011, being the latest
                                                       practicable date prior to publication of this document, to take up rights under the Rights Issue
                                                       in relation to 73,394,495 Existing Ordinary Shares equating to approximately 183,486,238 New
                                                       Ordinary Shares; and
(ii)                                                   an Irrevocable Undertaking from TAM, which manages and/or owns approximately 22.81 per
                                                       cent. of the issued share capital of the Company as at 10 February 2011, being the latest
                                                       practicable date prior to publication of this document, to take up rights under the Rights Issue
                                                       in respect of 97,147,987 Existing Ordinary Shares equating to approximately 242,869,967 New
                                                       Ordinary Shares.
Neither of these undertakings is capable of termination or rescission by the relevant party giving the
undertaking but will terminate automatically upon the earlier of:
(i)                                                    the Rights Issue lapsing or being terminated in accordance with its terms, or otherwise becoming
                                                       incapable of becoming unconditional; and
(ii)                                                   4 April 2011 or such later date as is determined in accordance with the terms of the relevant
                                                       undertaking.
Further details of these Irrevocable Undertakings are set out in paragraph 14.3 of Part X (Additional
Information) of this document.

15. Overseas Shareholders
The attention of Overseas Shareholders who have registered addresses outside the United Kingdom,
or who are resident in or ordinarily resident in, or citizens of countries other than the United
Kingdom, is drawn to the information in paragraph 8 of Part III (Terms and Conditions) of this
document.
New Ordinary Shares will be provisionally allotted (nil paid) to all Shareholders on the register at the
Record Date, including Overseas Shareholders. However, subject to certain exceptions, Shareholders
with registered addresses in the Restricted Jurisdictions are not being sent this document, will not be
sent a Provisional Allotment Letter and will not have their CREST accounts credited with Nil Paid
Rights.

16. United Kingdom Taxation
Certain information about UK taxation in relation to the Rights Issue is set out in Part IX
(Taxation) of this document. If you are in any doubt as to your tax position, or you are subject to
tax in a jurisdiction other than the United Kingdom, you should consult your own professional
adviser without delay.

17. General Meeting
Pursuant to the Notice of General Meeting contained in Part XII (Notice of General Meeting) of this
document, the General Meeting will be held on 28 February 2011 at 11:00 a.m. at the offices of
Clifford Chance LLP, 10 Upper Bank Street, London E14 5JJ. The General Meeting is being held for
the purpose of considering and, if thought fit, passing the following Resolutions.

Resolution 1
An ordinary resolution to grant the Directors authority to, subject to and conditional upon the
Underwriting Agreement becoming unconditional in all respects (save for any condition relating to
Admission), allot relevant securities for the purposes of section 551 of the 2006 Act provided that
such power be limited to the allotment of the New Ordinary Shares, the Placing Shares, the
Convertible Shares and any Ordinary Shares into which the Convertible Shares may be converted in
accordance with their terms up to an aggregate nominal amount of £109,814,359 pursuant to the
Rights Issue, the Placing and the issue of Convertible Shares to the Lenders (and any subsequent
conversion thereof into Ordinary Shares in accordance with their terms). This authority will expire on
the conclusion of the next annual general meeting of the Company and is in addition to any
subsisting authorities to allot securities in the Company. As at 10 February 2011 (being the last
practicable date prior to publication of this document), the Company holds 6,486,347 Ordinary

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Shares in treasury with a nominal value of £324,317.35 (representing approximately 1.3 per cent. of
the Company’s issued share capital as at 10 February 2011).
Resolution 2
A special resolution to grant (subject to Resolution 1 being passed) the Directors authority to, subject
to and conditional upon the Underwriting Agreement becoming unconditional in all respects (save for
any condition relating to Admission), allot equity securities for cash pursuant to the authority
conferred on them by Resolution 1 as if section 561 of the 2006 Act did not apply to such allotment
provided that such power be limited to the allotment of the New Ordinary Shares, the Placing
Shares, the Convertible Shares and the Ordinary Shares into which the Convertible Shares may be
converted in accordance with their terms, pursuant to the Rights Issue, the Placing and the issue of
Convertible Shares to the Lenders (and any subsequent conversion thereof into Ordinary Shares in
accordance with their terms). This power will expire on the conclusion of the next annual general
meeting of the Company and is in addition to any subsisting powers to disapply pre-emption rights.
Pursuant to this resolution, pre-emption rights would be disapplied in respect of New Ordinary
Shares, Placing Shares and Convertible Shares (and Ordinary Shares into which any Convertible
Shares may be converted) up to an aggregate nominal amount of £109,814,359.
Resolution 3
An ordinary resolution to approve (subject to Resolutions 1 and 2 being passed) the Rule 9 Waiver,
which will be taken on a poll and in respect of which only Independent Shareholders will be entitled
to vote. Accordingly, the TAM Concert Party will not be entitled to vote on this Resolution.
Resolution 4
A special resolution to adopt (subject to Resolutions 1 to 3 being passed) the Proposed Articles of
Association of the Company as the new Articles of Association of the Company in substitution for,
and to the exclusion of, the Existing Articles of Association of the Company. The Proposed Articles
of Association are proposed to be adopted by the Company in order to incorporate the rights and
restrictions attaching to the Convertible Shares to be created by the Company which are summarised
in paragraph 5.4 of Part X (Additional Information) of this document. The Proposed Articles of
Association will be available on the Company’s website (www.findel.co.uk) and for inspection at the
Company’s head office at 2 Gregory Street, Hyde, Cheshire, SK14 4TH from the date of publication
of this document until close of the General Meeting.
Resolution 5
An ordinary resolution to approve (subject to Resolutions 1 to 4 being passed) the Placing (and in
particular the discount at which the Placing Shares are being issued).

Resolution 6
An ordinary resolution to approve (subject to Resolutions 1 to 5 being passed) the entry by the
Company into placing arrangements with David Sugden, Roger Siddle, Laurel Powers-Freeling and
Eric Tracey under the Placing as required by the Listing Rules. This Resolution is being proposed in
accordance with the Listing Rules which require that Shareholder approval be obtained for the entry
by the Company into certain transactions and arrangements with related parties. David Sugden,
Roger Siddle, Laurel Powers-Freeling and Eric Tracey are considered to be related parties for the
purposes of the Listing Rules.

Resolution 7
An ordinary resolution to amend the rules of the Findel Performance Share Plan 2006 (the ‘‘PSP’’)
to remove the existing restriction that only half of the total 10 per cent. of the Company’s shares
which may be issued in any 10-year period under the Employee Share Plans can be used for executive
plans. This will give the Remuneration Committee discretion to use the entire 10 per cent. more
effectively.

Resolution 8
An ordinary resolution to grant the Directors authority to award Roger Siddle the right to acquire
25,857,775 Ordinary Shares in the Company (or such other number of Ordinary Shares which, when
added to the total number of Ordinary Shares over which a 200 per cent. of salary PSP award is
made to Mr. Siddle, will amount to no more than 35,236,438 Ordinary Shares in aggregate) under a
special award. The PSP does not permit awards above 200 per cent. of salary and, as a result, it is

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proposed that the Directors be granted the authority to make a special award to Mr. Siddle in
respect of the excess above that limit. Shareholder approval is being sought for the special award
only.

18. Action to be taken in respect of the General Meeting
You will find enclosed with this document a Form of Proxy for use at the General Meeting. To be
effective, the Form of Proxy must be completed and received by the Registrars’ office at Equiniti
Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA by 11:00 a.m. on
26 February 2011. Whether or not you propose to attend the General Meeting in person, it is important
that you complete and sign the enclosed Form of Proxy in accordance with the instructions printed
thereon and return it to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99
6DA as soon as possible and, in any event, so as to be received not later than 11:00 a.m. on 26 February
2011. The completion and return of a Form of Proxy will not preclude you from attending the General
Meeting and voting in person, if you so wish and are so entitled.
If you hold shares in CREST, you may appoint a proxy by completing and transmitting a CREST
PROXY INSTRUCTION to ID RA19 so that it is received by no later than 11:00 a.m. on
26 February 2011.

19. Importance of vote
Resolutions 1 to 4 (inclusive) must be passed by Shareholders at the General Meeting in order for the
Rights Issue to proceed and Resolutions 1 to 6 (inclusive) must be passed by Shareholders at the General
Meeting in order for the Placing to proceed.
Schroder and TAM which manage and/or own approximately 28.96 per cent.                and 22.81 per cent.
respectively of the issued share capital of the Company are supportive of the        Rights Issue and the
Placing and have irrevocably undertaken, on and subject to the terms of their        respective Irrevocable
Undertakings, to vote (to the extent that they each have authority to do so)          in favour of all the
Resolutions.
If Resolutions 1 to 4 (inclusive) are passed and the Rights Issue does proceed, £40 million of the
proceeds will be used to pre-pay indebtedness and cancel availability under the Existing Revolving Credit
Facilities. The remaining balance of the net proceeds of the Rights Issue will be retained by the Group,
initially to reduce indebtedness and subsequently to fund the initiatives identified by the Full Potential
Review. In addition, a further £40 million of indebtedness under the Existing Revolving Credit Facilities
will be released in consideration of the allotment and issue of Convertible Shares to the Lenders.
If, for any reason, Resolutions 1 to 4 (inclusive) are not passed or any of the other conditions of the
Rights Issue (as described in paragraph 2 of Part III (Terms and Conditions) of this document) are not
fulfilled, the Rights Issue will not proceed and the New Lending Facilities will not become available to
the Group. In this event, the Group’s debt financing will continue to be provided under the Existing
Lending Facilities and, as such, the Group will continue to be heavily indebted and subject to the
financial covenants and restrictions in its operational flexibility under the Existing Lending Facilities. The
Existing Lending Facilities will mature in January 2012 and if the New Lending Facilities do not
become available, certain waivers granted in anticipation of implementation thereof will cease to be
effective. Thus, if the Rights Issue does not complete and the New Lending Facilities do not become
available: (i) additional payment in kind interest will start to accrue and will be deemed to have accrued
since 1 January 2011 on the amount outstanding under the Existing Revolving Credit Facilities; and (ii)
the step down in the availability of the Existing Revolving Credit Facilities (which, absent the waiver,
would otherwise occur on 15 February 2011) will occur and the Company will be required to repay the
amount, if any, by which the drawn amount of either of the Existing Revolving Credit Facilities exceeds
the available amount of that facility as scheduled to be reduced on 15 February 2011. Whilst the Group
will be able to pay the additional payment in kind interest and repay the amount of any step down, if
the waivers cease to be effective, the consequences of absence of the waivers will be that the Group will
have reduced availability in funding and be subject to restrictions in its operational flexibility, and the
cost to the Group of its debt finance facilities will be increased.
Findel would need to renegotiate the terms of the Existing Lending Facilities prior to their maturity in
order to secure the availability of credit facilities beyond January 2012 so as to give the Directors
confidence that they will be able to prepare accounts in respect of the financial year ending 1 April 2011
(which is expected to be published in early June 2011) on a going concern basis. Whilst the Board
believes that the Group may be able to renegotiate or refinance the Existing Lending Facilities, there can

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be no certainty that the Group would be able to do this and in any event, the Directors believe that any
amendment to or refinancing of the Existing Lending Facilities would be significantly more expensive
and/or result in the imposition of significantly more restrictive covenants on the Group than would apply
under the New Lending Facilities. If the Group is unable to renegotiate or refinance the Existing
Lending Facilities prior to their maturity, there is a material risk that the Group would face insolvency
or be placed into administration at the maturity of the Existing Lending Facilities in January 2012.
For all of the reasons set out above, the Directors believe that the Rights Issue is in the Shareholders’
best interests and that it is important that Shareholders vote in favour of the Resolutions. The Board has
examined a number of alternatives, including asset disposals, as part of the Full Potential Review to
reduce indebtedness. In light of this, the Board does not believe that there are realistic alternative
sources of finance or actions to address the highly indebted position of the Group.

20. Recommendation
The Board, which has been so advised by Greenhill & Co. International LLP, considers the Rights Issue
to be fair and reasonable as far as Shareholders are concerned. The Board, which has been so advised
by Greenhill & Co. International LLP, considers the Placing to be fair and reasonable as far as
Shareholders are concerned. David Sugden, Roger Siddle, Laurel Powers-Freeling and Eric Tracey took
no part in the Board’s consideration of whether the Placing is fair and reasonable for Shareholders
because of their involvement in the Placing. The Board, which has been so advised by Greenhill & Co.
International LLP for the purposes of the Rule 9 Waiver, considers the Rule 9 Waiver to be fair and
reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In
providing advice to the Directors, Greenhill & Co. International LLP has taken into account the
commercial assessments of the Directors.
The Board considers that the Resolutions are in the best interests of the Company and Shareholders as a
whole. The Board unanimously recommends that all Shareholders (to the extent they are so entitled) vote
in favour of the Resolutions. Each Director intends to take up in full the New Ordinary Shares to which
he is entitled under the Rights Issue and vote in favour of the Resolutions in respect of their own total
beneficial holdings of 1,449,835 Existing Ordinary Shares representing, in aggregate, approximately 0.3
per cent. of the existing issued share capital of the Company as at 10 February 2011, being the latest
practicable date prior to publication of this document, save that David Sugden, Roger Siddle, Timothy
Kowalski and Laurel Powers-Freeling will not vote on any of the Resolutions because they do not
currently hold any Ordinary Shares and Eric Tracey will not vote on Resolution 6 because he is not
permitted by the Listing Rules to vote on such Resolution due to his participation in the Placing.

21. Further information and risk factors
Your attention is drawn to the further information set out in Parts II to XII of this document. You
should read the whole document and not rely solely on the information set out in this letter. In
addition, you should consider the risk factors set out on pages 11 to 22 of this document.
Part II (Some Questions and Answers on the Rights Issue and the Placing) answers some of the
questions most often asked by shareholders about a rights issue and the procedure for acceptance and
payment.
Yours sincerely




David Sugden
Chairman




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                                                                                              PART II

                                                            SOME QUESTIONS AND ANSWERS ON THE RIGHTS ISSUE
                                                                           AND THE PLACING
The New Ordinary Shares can be held in certificated form (that is, represented by a share certificate)
or in uncertificated form (that is, through CREST). Accordingly, these questions and answers are split
into four sections:

Section 1 (‘‘General’’) answers questions you may have of a general nature.
Section 2 (‘‘Ordinary Shares in certificated form’’) answers questions you may have in respect of the
procedures for Qualifying Shareholders who hold their Existing Ordinary Shares in certificated form
(‘‘Qualifying Non-CREST Shareholders’’). Please note Sections 1 and 4 may still apply to you.
Section 3 (‘‘Ordinary Shares in CREST’’) answers questions you may have in respect of the procedures for
Qualifying Shareholders who hold their Existing Ordinary Shares in CREST (‘‘Qualifying CREST
Shareholders’’). Please note that Section 1 and 4 may still apply to you.
Section 4 (‘‘Further procedures applicable to Ordinary Shares in certificated form or in CREST’’) answers
questions about your rights and the actions you may need to take and is applicable to Existing Ordinary
Shares whether held in certificated form or in CREST.
The questions and answers set out in this Part II (Some Questions and Answers on the Rights Issue) are
intended to be in general terms only and, as such, you should read Part III (Terms and Conditions) of this
document for full details of what action you should take. If you are in any doubt as to what action you should
take, you are recommended to seek immediately your own financial advice from your stockbroker, bank
manager, solicitor, accountant or other independent financial adviser, duly authorised under FSMA, if you are
resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.
If you are an Overseas Shareholder, you should read paragraph 8 of Part III (Terms and Conditions) of this
document and you should take professional advice as to whether you are eligible and/or you need to observe any
formalities to enable you to take up your rights.
If you do not know whether your Existing Ordinary Shares are in certificated or uncertificated form,
please call the Shareholder Helpline on 0871 384 2912 (from inside the United Kingdom) or +44 121
415 0175 (from outside the United Kingdom) between 8.30 a.m. and 5.30 p.m. (UK time) Monday to
Friday (except UK public holidays). Calls to the Shareholder Helpline cost 8 pence per minute from
a BT landline. Other network providers’ costs may vary. Calls to the Shareholder Helpline from
outside the UK will be charged at the applicable international rate. Different charges may apply to
calls from mobile telephones and calls may be recorded and randomly monitored for security and
training purposes. For legal reasons, the Shareholder Helpline will only be able to provide
information contained in this document and information relating to the Company’s register of
members and will be unable to give advice on the merits of the Rights Issue or to provide financial,
legal, tax or investment advice.

1.                                                     GENERAL
1.1                                                    What is a rights issue?
                                                       Rights issues are a way for companies to raise money. Companies do this by issuing shares for
                                                       cash and giving their existing shareholders a right to buy these shares in proportion to their
                                                       existing shareholdings. For example, a one for three rights issue means that a shareholder is
                                                       entitled to buy one new share for every three currently held. This Rights Issue is a 5 for 2
                                                       rights issue: an offer of 5 New Ordinary Shares for every 2 Existing Ordinary Shares held by
                                                       Qualifying Shareholders on the Record Date.
                                                       This Rights Issue is an offer by the Company of 1,223,605,440 New Ordinary Shares at a price
                                                       of 6.54 pence per New Ordinary Share. If you hold Existing Ordinary Shares on the Record
                                                       Date (other than those Shareholders with a registered address in the Restricted Jurisdictions)
                                                       you will be entitled to buy New Ordinary Shares under the Rights Issue.
                                                       New Ordinary Shares are being offered to Qualifying Shareholders in the Rights Issue at a
                                                       discount to the share price on the last dealing day before the details of the Rights Issue were
                                                       announced on 10 February 2011. The Issue Price of 6.54 per New Ordinary Share represents a
                                                       23.3 per cent. discount to the theoretical ex-rights price based on the Closing Price of 13.50
                                                       pence per Existing Ordinary Share on 10 February 2011, the last Business Day prior to the date

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                                                       of announcement of the terms of the Rights Issue and the Placing. Because of this discount and
                                                       while the market value of the Existing Ordinary Shares exceeds the Issue Price, the right to buy
                                                       the New Ordinary Shares is potentially valuable.
                                                       If you are a Qualifying Shareholder and you do not want to buy the New Ordinary Shares to
                                                       which you are entitled, you can instead sell or transfer your rights (called Nil Paid Rights) to
                                                       those New Ordinary Shares and receive the net proceeds, if any, of the sale or transfer in cash.
                                                       This is referred to as dealing ‘‘nil paid’’.

1.2                                                    What is the Placing?
                                                       The Placing is a proposed issue of Ordinary Shares on a non-pre-emptive basis by which Placees
                                                       will subscribe for a total of 5,803,048 Placing Shares at a price of 8.53 pence per Placing Share.
                                                       Assuming certain conditions are met, Placees will be issued with the Placing Shares.

1.3                                                    What happens next?
                                                       Before the Rights Issue can proceed, Resolutions 1 to 4 (inclusive) need to be approved by
                                                       Shareholders and before the Placing can proceed, Resolution 5 to 6 also need to be approved by
                                                       Shareholders. Accordingly, the Company has called the General Meeting to be held at 11:00 a.m.
                                                       on 28 February 2011 at the offices of Clifford Chance LLP, 10 Upper Bank Street, London E14
                                                       5JJ. The General Meeting Notice is set out in Part XII (Notice of General Meeting) of this
                                                       document.

1.4                                                    What do I need to do in relation to the Rights Issue?
                                                       If Resolutions 1 to 4 (inclusive) are passed at the General Meeting, it is intended that the
                                                       Rights Issue will proceed. If you are a Qualifying Non-CREST Shareholder, holding Ordinary
                                                       Shares in certificated form, it is expected that a Provisional Allotment Letter will be sent to you
                                                       on 28 February 2011.
                                                       If you are a Qualifying CREST Shareholder holding Existing Ordinary Shares in CREST, it is
                                                       expected that Nil Paid Rights will be credited to your stock account in CREST as soon as
                                                       reasonably practicable after 8.00 a.m. on 1 March 2011.

2.                                                     ORDINARY SHARES IN CERTIFICATED FORM
2.1                                                    How do I know if I am eligible to participate in the Rights Issue?
                                                       If you receive a Provisional Allotment Letter following the General Meeting and are not a
                                                       Shareholder with a registered address in (subject to certain exceptions) a Restricted Jurisdiction,
                                                       then you should be eligible to participate in the Rights Issue (as long as you have not sold all
                                                       of your Existing Ordinary Shares before 8.00 a.m. on 1 March 2011 (the time when the Existing
                                                       Ordinary Shares are expected to be marked ‘‘ex-rights’’ by the London Stock Exchange)).
                                                       If you do not receive a Provisional Allotment Letter, this probably means you are not eligible
                                                       to acquire any New Ordinary Shares (that is you are not a Qualifying Shareholder). Please see
                                                       paragraphs 2.5 and 4.6 below.

2.2                                                    What information will the Provisional Allotment Letter provide?
                                                       If you hold your Existing Ordinary Shares in certificated form and do not have a registered
                                                       address in (subject to certain exceptions) a Restricted Jurisdiction, you will be sent a Provisional
                                                       Allotment Letter. The Provisional Allotment Letter is expected to be sent to you on the date of
                                                       the General Meeting if Resolutions 1 to 4 (inclusive) are approved. The Provisional Allotment
                                                       Letter will show:
                                                            in Box 1: how many Existing Ordinary Shares you held at the close of business on
                                                            24 February 2011 (the Record Date);
                                                            in Box 2: how many New Ordinary Shares you are entitled to buy pursuant to the Rights
                                                            Issue; and
                                                            in Box 3: how much you need to pay if you want to take up your rights to buy all the
                                                            New Ordinary Shares provisionally allotted to you in full.
                                                       If (subject to certain exceptions) you have a registered address in a Restricted Jurisdiction, you
                                                       will not receive a Provisional Allotment Letter. Please see paragraph 2.5 below.

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2.3                                                    What are my choices and what should I do with the Provisional Allotment Letter?
                                                       The options below describe your choices in respect of the Rights Issue and the actions required.

                                                       2.3.1 You want to take up all of your rights

                                                            If you want to take up all of your rights to subscribe for the New Ordinary Shares to
                                                            which you are entitled, all you need to do is send the Provisional Allotment Letter,
                                                            together with your cheque or banker’s draft in sterling for the full amount shown in Box 3
                                                            on page 1 of the Provisional Allotment Letter, payable to ‘‘Equiniti Limited re: Findel plc
                                                            Rights Issue’’ and crossed ‘‘A/C payee only’’, by post or by hand (during normal office
                                                            hours) to the Receiving Agent at Aspect House, Spencer Road, Lancing, West Sussex,
                                                            BN99 6DA to arrive by no later than 11.00 a.m. on 15 March 2011 (the latest time and
                                                            date for acceptance and payment in full). Within the United Kingdom only, you can use
                                                            the reply-paid envelope which will be enclosed with the Provisional Allotment Letter. Full
                                                            instructions are set out in Part III (Terms and Conditions) of this document and will be set
                                                            out in the Provisional Allotment Letter. You are required to pay in full for all the rights
                                                            you take up.

                                                            Please note third party cheques (that is, cheques not drawn on an account of the person
                                                            lodging the Provisional Allotment Letter) may not be accepted other than building society
                                                            cheques or banker’s drafts. If payment is made by a building society cheque (not being
                                                            drawn on account of the applicant) or a banker’s draft, the building society or bank must
                                                            endorse on the cheque or draft the applicant’s name and the number of an account held in
                                                            the applicant’s name at the building society or bank, such endorsement being validated by
                                                            a stamp and an authorised signature.

                                                            A definitive share certificate will then be sent to you for the New Ordinary Shares that
                                                            you take up. Your definitive share certificate for New Ordinary Shares is expected to be
                                                            despatched to you by no later than 22 March 2011.

                                                            You will need your Provisional Allotment Letter to be returned to you if you want to deal
                                                            in your Fully Paid Rights. Your Provisional Allotment Letter will not be returned to you
                                                            unless you tick the appropriate box on the Provisional Allotment Letter.

                                                       2.3.2 You do not want to take up your rights at all

                                                            If you do not want to take up any of your rights, you do not need to do anything. If you
                                                            do not return your Provisional Allotment Letter subscribing for the New Ordinary Shares
                                                            to which you are entitled by 11.00 a.m. on 15 March 2011 (the latest time and date for
                                                            acceptance and payment in full), we have made arrangements under which the Underwriter
                                                            will try to find investors to take up your rights and the rights of other Qualifying
                                                            Shareholders who have not taken up their rights by 11.00 a.m. on 15 March 2011. If the
                                                            Underwriter finds investors who agree to pay a premium above the Issue Price and the
                                                            related expenses of procuring those investors (including any applicable brokerage and
                                                            commissions and amounts in respect of value added tax), you will be sent a cheque for
                                                            your share of the amount of that premium provided that this is £5.00 or more. No
                                                            payment will be made of individual amounts of less than £5.00 which amounts will be
                                                            aggregated and paid to the Company for its own benefit. Cheques are expected to be
                                                            despatched on or around 22 March 2011 and will be sent to your address appearing on
                                                            the Company’s register of members (or to the first-named holder if you hold your Existing
                                                            Ordinary Shares jointly).

                                                            If the Underwriter cannot find investors who agree to pay a premium over the Issue Price
                                                            and related expenses, so that your entitlement would be £5.00 or more, you will not
                                                            receive any payment. If and to the extent that investors cannot be so procured, the
                                                            Underwriter shall, as principal, subscribe for New Ordinary Shares not taken up (other
                                                            than the TAM Shares and the Schroder Shares). The proceeds of these subscriptions (less
                                                            fees and expenses including any amounts in respect of value added tax) will be aggregated
                                                            and paid to the Company for its own benefit.

                                                            Alternatively, if you do not want to take up your rights, you can sell or transfer your Nil
                                                            Paid Rights (see paragraph 2.3.3 below).

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                                                       2.3.3 You want to sell all of your Nil Paid Rights
                                                             If you want to sell all of your rights, you should complete and sign Form X on page 4 of
                                                             the Provisional Allotment Letter (if it is not already marked ‘‘Original Duly Renounced’’)
                                                             and pass the entire letter to your stockbroker, bank manager or other appropriate financial
                                                             adviser or to the transferee (provided they are not in a Restricted Jurisdiction).
                                                            The latest time and date for selling all of your Nil Paid Rights is 11.00 a.m. on 15 March
                                                            2011 (the latest time and date for acceptance and payment in full). Please ensure, however,
                                                            that you allow enough time so as to enable the person acquiring your rights to take all
                                                            necessary steps in connection with taking up the entitlement prior to 11.00 a.m. on 15
                                                            March 2011 (the latest time and date for acceptance and payment in full).
                                                       2.3.4 You want to take up some but not all of your Nil Paid Rights
                                                            If you want to take up some but not all of your Nil Paid Rights and wish to sell some or
                                                            all of those Nil Paid Rights that you do not want to take up, you should first apply to
                                                            have your Provisional Allotment Letter split by completing Form X on the Provisional
                                                            Allotment Letter, and returning it by post or by hand (during normal office hours) to the
                                                            Receiving Agent, to arrive by no later than 3.00 p.m. on 11 March 2011 (the last time and
                                                            date for splitting the Provisional Allotment Letter, nil paid), together with a covering letter
                                                            stating the number of split Provisional Allotment Letters required and the number of Nil
                                                            Paid Rights to be comprised in each split Provisional Allotment Letter. You should then
                                                            deliver the split Provisional Allotment Letter representing the New Ordinary Shares that
                                                            you wish to accept together with your cheque or banker’s draft made payable to ‘‘Equiniti
                                                            Limited re: Findel plc Rights Issue’’ to the Receiving Agent (see paragraph 2.3.1 above) to
                                                            arrive by no later than 11.00 a.m. on 15 March 2011 (the latest time and date for
                                                            acceptance and payment in full).
                                                            Alternatively, if you only want to take up some of your Nil Paid Rights (but not sell some
                                                            or all of the rest yourself, in which case the Underwriter will try to find investors for such
                                                            rights (in accordance with paragraph 2.3.2 above), you should complete Form X on the
                                                            Provisional Allotment Letter and return it with a cheque or banker’s draft made payable
                                                            to ‘‘Equiniti Limited re: Findel plc Rights Issue’’ to the Receiving Agent (see paragraph
                                                            2.3.1 above) to arrive by no later than 3.00 p.m. on 15 March 2011 (the last time and date
                                                            for splitting the Provisional Allotment Letter, nil paid) together with a covering letter
                                                            indicating the number of Nil Paid Rights that you wish to take up, in accordance with the
                                                            provisions set out on pages 2 and 3 of the Provisional Allotment Letter.
                                                            Further details are set out in Part III (Terms and Conditions) of this document and will be
                                                            set out in the Provisional Allotment Letter.

2.4                                                    How do I transfer my rights into the CREST system?
                                                       If you are a Qualifying Non-CREST Shareholder, but are a CREST member and want your
                                                       New Ordinary Shares to be in uncertificated form, you should complete Form X and the
                                                       CREST Deposit Form (both on page 4 of the Provisional Allotment Letter), and ensure they
                                                       are delivered to the CREST Courier and Sorting Service to be received by 3.00 p.m. on
                                                       10 March 2011 (date for depositing renounced Provisional Allotment Letters, nil or fully paid,
                                                       into CREST or for dematerialising Nil Paid or Fully Paid Rights into a CREST stock account)
                                                       at the latest. CREST sponsored members should arrange for their CREST sponsor to do this.
                                                       If you have transferred your rights into the CREST system, you should refer to paragraph 5 of
                                                       Part III (Terms and Conditions) of this document for details on how to pay for the New
                                                       Ordinary Shares.

2.5                                                    What if I do not receive a Provisional Allotment Letter?
                                                       If Shareholders approve Resolutions 1 to 4 (inclusive) at the General Meeting and if you do not
                                                       receive a Provisional Allotment Letter and you hold your Existing Ordinary Shares in
                                                       certificated form, this probably means that you are not eligible to participate in the Rights
                                                       Issue. Some Qualifying Non-CREST Shareholders, however, will not receive a Provisional
                                                       Allotment Letter but may still be eligible to participate in the Rights Issue, namely:
                                                       *    Qualifying CREST Shareholders who held their Existing Ordinary Shares in uncertificated
                                                            form on 24 February 2011 and who have converted them to certificated form;

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                                                       *     Qualifying Non-CREST Shareholders who bought Existing Ordinary Shares before 1 March
                                                             2011 but were not registered as the holders of those Existing Ordinary Shares at the close
                                                             of business on 24 February 2011; and
                                                       *     certain Overseas Shareholders who can demonstrate to the satisfaction of the Company
                                                             that they can lawfully take up their rights under the Rights Issue without contravention of
                                                             any relevant legal or regulatory requirements (see paragraph 4.6 below).
                                                       If you do not receive a Provisional Allotment Letter but think that you should have received
                                                       one, please contact the Shareholder Helpline on 0871 384 2912 (from inside the United
                                                       Kingdom) (or +44 121 415 0175 from outside the United Kingdom) between 8.30 a.m. and 5.30
                                                       p.m. (UK time) Monday to Friday (except UK public holidays). Calls to the Shareholder
                                                       Helpline cost 8 pence per minute from a BT landline. Other network providers’ costs may vary.
                                                       Calls to the Shareholder Helpline from outside the UK will be charged at the applicable
                                                       international rate. Different charges may apply to calls from mobile telephones and calls may be
                                                       recorded and randomly monitored for security and training purposes. For legal reasons, the
                                                       Shareholder Helpline will only be able to provide information contained in this document and
                                                       information relating to the Company’s register of members and will be unable to give advice on
                                                       the merits of the Rights Issue or to provide financial, legal, tax or investment advice.

2.6                                                    If I buy or have bought Ordinary Shares on or after the Record Date will I be eligible to participate in the
                                                       Rights Issue?
                                                       If you bought Ordinary Shares after the Record Date but prior to 8.00 a.m. on 1 March 2011
                                                       (the time when the Existing Ordinary Shares are expected to start trading ex rights on the
                                                       London Stock Exchange), you may be eligible to participate in the Rights Issue.
                                                       If you are in any doubt, please consult your stockbroker, bank or other appropriate financial
                                                       adviser, or whoever arranged your share purchase, to ensure you claim your entitlement.

2.7                                                    If I buy or have bought Ordinary Shares on or after 1 March 2011 (the date the Existing Ordinary
                                                       Shares start trading ex rights), will I be eligible to participate in the Rights Issue?
                                                       If you buy Ordinary Shares at or after 8.00 a.m. on 1 March 2011, you will not be eligible to
                                                       participate in the Rights Issue in respect of those Ordinary Shares (that is, you will not be
                                                       entitled to Nil Paid Rights in respect of Ordinary Shares acquired on or after 1 March 2011).

2.8                                                    What should I do if I have sold or transferred all or some of the Ordinary Shares before the close of
                                                       business on 1 March 2011 (the date the Existing Ordinary Shares start trading ex rights)?
                                                       If you sell or have sold or transfer or have transferred ALL of your Ordinary Shares before
                                                       1 March 2011, you should complete Form X on page 4 of the Provisional Allotment Letter and
                                                       send the entire Provisional Allotment Letter together with this document and any accompanying
                                                       documents to the stockbroker, bank or appropriate financial adviser through whom you made
                                                       the sale or transfer. However, you should not forward or transmit this document (subject to
                                                       certain exceptions) into a Restricted Jurisdiction.
                                                       If you sell or have sold or transfer or have transferred only SOME of your holding of Ordinary
                                                       Shares before 1 March 2011, you will need to complete Form X on page 4 of the Provisional
                                                       Allotment Letter and consult the stockbroker, bank or other appropriate financial adviser
                                                       through whom you made the sale or transfer, before taking any action, with regard to the
                                                       balance of rights due to you.

2.9                                                    How many New Ordinary Shares am I entitled to acquire?
                                                       Box 2 on page 1 of the Provisional Allotment Letter shows the number of New Ordinary Shares
                                                       you are entitled to buy if you are a Qualifying Non-CREST Shareholder. You are entitled to 5
                                                       New Ordinary Shares for every 2 Existing Ordinary Shares held on 24 February 2011, the
                                                       Record Date (rounding down any fractions). All Qualifying Non-CREST Shareholders will be
                                                       sent a Provisional Allotment Letter, assuming Resolutions 1 to 4 (inclusive) are passed.

2.10 I hold my Existing Ordinary Shares in certificated form. If I take up my rights, when will I receive my
     New Ordinary Share certificate?
     If you take up your rights under the Rights Issue, share certificates for the New Ordinary
     Shares are expected to be posted by 22 March 2011.

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3.                                                     ORDINARY SHARES IN CREST
3.1                                                    How do I know if I am eligible to participate in the Rights Issue?
                                                       If you are a Qualifying CREST Shareholder, your CREST stock account(s) will be credited with
                                                       your entitlement to Nil Paid Rights. The stock account(s) to be credited will be the account(s)
                                                       under participant ID and member account ID that apply to your Existing Ordinary Shares on
                                                       the Record Date. Assuming Resolutions 1 to 4 (inclusive) are passed, the Nil Paid Rights are
                                                       expected to be credited to your CREST stock account(s) and enabled shortly after 8.00 a.m. on
                                                       1 March 2011 (the time when the Existing Ordinary Shares are expected to be separated to be
                                                       marked ‘‘ex rights’’ by the London Stock Exchange). If you are a CREST personal member,
                                                       you should consult your CREST sponsor if you wish to check that your account has been
                                                       credited with your entitlement to Nil Paid Rights. The CREST stock account(s) of Overseas
                                                       Shareholders with registered addresses in (subject to certain exceptions) the Restricted
                                                       Jurisdictions will not be credited with Nil Paid Rights. Overseas Shareholders should refer to
                                                       paragraph 8 of Part III (Terms and Conditions) of this document.

3.2                                                    How do I take up my rights using the CREST system?
                                                       If you are a Qualifying CREST Shareholder, you should refer to paragraph 5 of Part III (Terms
                                                       and Conditions) of this document for details on how to take up and pay for your rights.
                                                       If you are a CREST member you should ensure that a Many To Many (‘‘MTM’’) instruction
                                                       has been input and has settled by 11.00 a.m. on 15 March 2011 (the last time and date for
                                                       acceptance and payment in full) in order to make a valid acceptance. If your Existing Ordinary
                                                       Shares are held by a nominee or you are a CREST sponsored member you should speak
                                                       directly to the stockbroker who looks after your stock or your CREST sponsor (as appropriate)
                                                       who will be able to help you. If you have further questions, particularly of a technical nature
                                                       regarding acceptance through the CREST system, you should telephone the CREST Service
                                                       Desk on 0845 964 5648 (+44 845 964 5648 if you are calling from outside the United
                                                       Kingdom). Details are provided in paragraph 4.9 below.

3.3                                                    If I buy or have bought Ordinary Shares on or after the Record Date will I be eligible to participate in the
                                                       Rights Issue?
                                                       If you bought Ordinary Shares after the Record Date but prior to 8.00 a.m. on 1 March 2011
                                                       (the time when the Existing Ordinary Shares are expected to start trading ex rights on the
                                                       London Stock Exchange) but were not registered as the holder of those Ordinary Shares at the
                                                       Record Date, you may be eligible to participate in the Rights Issue.
                                                       Euroclear will raise claims in the normal manner in respect of your purchase and your Nil Paid
                                                       Rights will be credited to your stock account(s) on settlement of those claims by 8.00 a.m. on
                                                       1 March 2011.

3.4                                                    If I buy or have bought Ordinary Shares on or after 1 March 2011 (the date the Existing Ordinary
                                                       Shares start trading ex rights), will I be eligible to participate in the Rights Issue?
                                                       If you buy Ordinary Shares at or after 8.00 a.m. on 1 March 2011, you will not be eligible to
                                                       participate in the Rights Issue in respect of those Ordinary Shares (that is, you will not be
                                                       entitled to Nil Paid Rights in respect of Ordinary Shares acquired on or after on 1 March
                                                       2011).

3.5                                                    What should I do if I have sold or transferred all or some of the Ordinary Shares before the close of
                                                       business on 1 March 2011 (the date the Existing Ordinary Shares start trading ex rights)?
                                                       You do not have to take any action except, where you sell or transfer all of your Ordinary
                                                       Shares before 1 March 2011, to send this document and any accompanying documents to the
                                                       purchaser or transferee or to the stockbroker, bank or other financial adviser through whom
                                                       you made the sale or transfer. However, you should not forward or transmit this document
                                                       (subject to certain exceptions) into a Restricted Jurisdiction.
                                                       A claim transaction in respect of that sale or transfer will automatically be generated by
                                                       Euroclear which, on settlement, will transfer the appropriate number of Nil Paid Rights to the
                                                       purchaser or transferee.

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3.6                                                    How many New Ordinary Shares am I entitled to acquire?
                                                       If you are a Qualifying CREST Shareholder, your stock account(s) will be credited with Nil
                                                       Paid Rights in respect of the number of New Ordinary Shares to which you are entitled based
                                                       on the number of Ordinary Shares you held on the Record Date. You can also view the claim
                                                       transactions in respect of purchases/sales effected from this date but before 1 March 2011 (the
                                                       date when the Existing Ordinary Shares are expected to be separated to be marked ‘‘ex rights’’
                                                       by the London Stock Exchange). If you are a CREST personal member, you should consult
                                                       your CREST sponsor. You are entitled to 5 New Ordinary Shares for every 2 Ordinary Shares
                                                       held on 24 February 2011, the Record Date (rounding down any fractions).

3.7                                                    If I take up my Nil Paid Rights, when will New Ordinary Shares be credited to my CREST stock
                                                       account(s)?
                                                       If you take up your Nil Paid Rights under the Rights Issue, New Ordinary Shares will be
                                                       credited to the CREST stock account(s) in which you hold your Fully Paid Rights on 16 March
                                                       2011.

4.                                                     FURTHER PROCEDURES APPLICABLE TO ORDINARY SHARES IN CERTIFICATED
                                                       FORM OR IN CREST
4.1                                                    What should I do if I think my holding of Ordinary Shares is incorrect?
                                                       If you have bought or sold Ordinary Shares shortly before 24 February 2011, your transaction
                                                       may not be entered on the register of members in time to appear on the register at the Record
                                                       Date.
                                                       If you are concerned about the figure in the Provisional Allotment Letter, the number of Nil
                                                       Paid Rights with which your stock account has been credited or otherwise concerned that your
                                                       shareholding is incorrect, please contact the Shareholder Helpline on 0871 384 2912 (or +44 121
                                                       415 0175 if you are calling from outside the United Kingdom). Lines are open from 8.30 a.m.
                                                       to 5.30 p.m. (UK time) Monday to Friday (except UK public holidays). Calls to the
                                                       Shareholder Helpline cost 8 pence per minute from a BT landline. Other network providers’
                                                       costs may vary. Calls to the Shareholder Helpline from outside the UK will be charged at the
                                                       applicable international rate. Different charges may apply to calls from mobile telephones and
                                                       calls may be recorded and randomly monitored for security and training purposes. Details are
                                                       provided in paragraph 4.9 below.

4.2                                                    What if the number of Ordinary Shares I hold is not exactly divisible by 2? Am I entitled to fractions of
                                                       New Ordinary Shares?
                                                       Your entitlement to New Ordinary Shares will be calculated at the Record Date (other than in
                                                       the case of those who bought shares after the Record Date but prior to 8.00 a.m. on 1 March
                                                       2011). Because this is a ‘‘5 for 2’’ rights issue, your entitlement is calculated by multiplying your
                                                       holding of Existing Ordinary Shares by 5 and dividing the result by 2. If the result is not a
                                                       whole number, you will not receive a New Ordinary Share in respect of the fraction of a New
                                                       Ordinary Share and your entitlement will be rounded down to the nearest whole number of
                                                       New Ordinary Shares, meaning that you will not receive a New Ordinary Share in respect of the
                                                       fractional entitlement.
                                                       The New Ordinary Shares representing the aggregated fractions that would otherwise be allotted
                                                       to Qualifying Shareholders will be sold in the market, nil paid, for the benefit of the Company.

4.3                                                    Will I be taxed if I take up or sell my rights or if my rights are sold on my behalf?
                                                       If you are resident in the United Kingdom for tax purposes, you should not have to pay UK
                                                       tax when you take up your rights, although the Rights Issue will affect the amount of UK tax
                                                       you may pay when you subsequently sell your Ordinary Shares. However, assuming that you
                                                       hold your Ordinary Shares as an investment, rather than for the purposes of a trade, you may
                                                       (subject to any available exemption or relief) be subject to capital gains tax on any proceeds
                                                       that you receive from the sale of your rights (unless, generally, the proceeds do not exceed
                                                       £3,000, or, if more, 5 per cent. of the market value of your Ordinary Shares, on the date of sale
                                                       or lapse, although in that case the amount of UK tax you may pay when you subsequently sell
                                                       all or any of your Ordinary Shares may be affected).

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                                                       Further information for Qualifying Shareholders who are resident in the United Kingdom for
                                                       tax purposes is contained in Part IX (Taxation) of this document. This information is intended
                                                       as a general guide to the current tax position in the United Kingdom and Qualifying
                                                       Shareholders should consult their own tax advisers regarding the tax treatment of the Rights
                                                       Issue in light of their own circumstances. Qualifying Shareholders who are in any doubt as to
                                                       their tax position, or who are subject to tax in any other jurisdiction, should consult an
                                                       appropriate professional adviser as soon as possible. Please note the Shareholder Helpline will
                                                       not be able to assist you with taxation issues.


4.4                                                    I understand that there is a period when there is trading in the Nil Paid Rights. What does this mean?
                                                       If you do not want to buy the New Ordinary Shares being offered to you under the Rights
                                                       Issue, you can instead sell or transfer your rights (called ‘‘Nil Paid Rights’’) to those New
                                                       Ordinary Shares and receive the net proceeds of the sale or transfer in cash. This is referred to
                                                       as dealing ‘‘nil paid’’. This means that, during the Rights Issue offer period (i.e. between
                                                       1 March 2011 and 15 March 2011), you can either purchase Ordinary Shares (which will not
                                                       carry any entitlement to participate in the Rights Issue (sometimes referred to as trading ‘‘ex’’))
                                                       and/or you can buy or sell the Nil Paid Rights.


4.5                                                    What if I want to sell the New Ordinary Shares for which I have paid?
                                                       If you are a Qualifying Non-CREST Shareholder, provided the New Ordinary Shares have been
                                                       paid for and you have requested the return of the receipted Provisional Allotment Letter (by
                                                       ticking the appropriate box of the Provisional Allotment Letter), you can transfer the Fully Paid
                                                       Rights by completing Form X (the form of renunciation) on the receipted page 4 of the
                                                       Provisional Allotment Letter in accordance with the instructions set out on pages 2 and 3 of the
                                                       Provisional Allotment Letter until 11.00 a.m. on 15 March 2011 (the latest time and date for
                                                       acceptance and payment in full).

                                                       After that time, you will be able to sell your New Ordinary Shares in the normal way. The
                                                       share certificate relating to your New Ordinary Shares is expected to be despatched to you by
                                                       no later than 22 March 2011. Pending despatch of the share certificate, instruments of transfer
                                                       will be certified by the Registrar against the register.

                                                       If you hold your New Ordinary Shares and/or rights in CREST, you may transfer the Fully
                                                       Paid Rights in the same manner as any other security that is admitted to CREST. Please
                                                       consult your stockbroker, bank or other appropriate financial adviser, or whoever arranged your
                                                       share purchase, for details.

                                                       Further details are set out in Part III (Terms and Conditions) of this document.


4.6                                                    What should I do if I live outside the United Kingdom?
                                                       Your ability to take up rights to New Ordinary Shares may be affected by the laws of the
                                                       country in which you live and you should take professional advice as to whether you require
                                                       any governmental or other consents or need to observe any other formalities to enable you to
                                                       take up your rights. Shareholders with registered addresses in a Restricted Jurisdiction are not
                                                       eligible to participate in the Rights Issue. Your attention is drawn to the information in
                                                       paragraph 8 of Part III (Terms and Conditions) of this document.

                                                       The Company has made arrangements under which the Underwriter will try to find investors by
                                                       the close of business on the second Business Day after 15 March 2011 to take up your rights
                                                       and those of other Qualifying Shareholders who have not taken up their rights. If the
                                                       Underwriter finds investors by 5.00 p.m. on the second Business Day after 15 March 2011 who
                                                       agree to pay a premium above the Issue Price and the related expenses of procuring those
                                                       investors (including any applicable brokerage and commissions and amounts in respect of value
                                                       added tax), you will be sent a cheque for your share of the amount of that premium provided
                                                       that this is £5.00 or more. Cheques are expected to be despatched on or around 22 March 2011
                                                       and will be sent to your address appearing on the Company register of members (or to the first-
                                                       named holder if you hold your Ordinary Shares jointly). If the Underwriter cannot find
                                                       investors who agree to pay a premium over the Issue Price and related expenses so that your
                                                       entitlement would be £5.00 or more, you will not receive any payment.

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4.7                                                    What if I am entitled to Ordinary Shares under a Share Option Scheme?
                                                       Participants in Share Option Schemes will be advised separately of adjustments (if any) to their
                                                       rights or as to any entitlement to participate in the Rights Issue.

4.8                                                    Do I need to comply with the Money Laundering Regulations (as set out in paragraphs 4.3 and 5.3 of
                                                       Part III (Terms and Conditions) of this document)?
                                                       If you are a Qualifying Non-CREST Shareholder, you do not need to follow these procedures if
                                                       the value of the New Ordinary Shares you are subscribing for is less than the sterling equivalent
                                                       of c15,000 (approximately £12,500) or if you pay for them by a cheque drawn on an account in
                                                       your own name and that account is one which is held with an EU- or UK-regulated bank or
                                                       building society.
                                                       If you are a Qualifying CREST Shareholder, you will not generally need to comply with the
                                                       Money Laundering Regulations unless you apply to take up all or some of your entitlement to
                                                       Nil Paid Rights as agent for one or more persons and you are not an EU- or UK-regulated
                                                       financial institution.
                                                       Qualifying Non-CREST Shareholders and Qualifying CREST Shareholders should refer to
                                                       paragraphs 4.3 and 5.3 of Part III (Terms and Conditions) of this document for a fuller
                                                       description of the requirements of the Money Laundering Regulations.

4.9                                                    What do I do if I have further questions about the Rights Issue or the action I should take?
                                                       If you have any other questions, please telephone the Shareholder Helpline on 0871 384 2912
                                                       (+44 121 415 0175 if you are calling from outside the United Kingdom). Calls to the
                                                       Shareholder Helpline cost 8 pence per minute from a BT landline. Other network providers’
                                                       costs may vary. Calls to the Shareholder Helpline from outside the UK will be charged at the
                                                       applicable international rate. Different charges may apply to calls from mobile telephones. This
                                                       Helpline is available from 8.30 a.m. to 5.30 p.m. (UK time) Monday to Friday (except UK
                                                       public holidays). If you hold your Ordinary Shares in CREST and you have any questions
                                                       regarding CREST procedures, please telephone the CREST Service Desk on 0845 964 5648 (+44
                                                       845 964 5648 if you are calling from outside the United Kingdom). The CREST Service Desk is
                                                       available from 9.00 a.m. to 5.00 p.m. Monday to Friday (excluding bank holidays). Please note
                                                       that calls may be recorded and randomly monitored for security and training purposes. For
                                                       legal reasons the Shareholder Helpline and/or the CREST Service Desk will only be available to
                                                       provide you with information contained in this document (other than information relating to the
                                                       Company’s register of members) and as such, will be unable to give advice on the merits of the
                                                       Rights Issue or to provide financial, legal, tax or investment advice. Shareholder Helpline staff
                                                       can explain the options available to you, which forms you need to fill in and how to fill them in
                                                       correctly.
                                                       Your attention is drawn to the further terms and conditions of the Rights Issue in Part III (Terms
                                                       and Conditions) of this document and in the case of Qualifying Non-CREST Shareholders in the
                                                       Provisional Allotment Letter which is proposed to be sent out immediately following the General
                                                       Meeting (assuming Resolutions 1 to 4 (inclusive) are passed).




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                                                                              PART III

                                                                  TERMS AND CONDITIONS
1.   SUMMARY OF THE RIGHTS ISSUE
The Company is proposing to raise proceeds of approximately £75 million (net of expenses) though
the Rights Issue at an Issue Price of 6.54 pence per New Ordinary Share. The Directors intend to use
the net proceeds of the Rights Issue to fund operational improvements identified by the Full Potential
Review and to restructure the Group’s existing indebtedness.
The Issue Price of 6.54 pence per New Ordinary Share represents a 23.3 per cent. discount to the
theoretical ex-rights price based on the Closing Price of 13.50 pence per Existing Ordinary Share on
10 February 2011, the last Business Day prior to the date of announcement of the terms of the
Rights Issue and the Placing.
Qualifying Shareholders who do not take up their entitlements to New Ordinary Shares will have
their proportionate shareholdings in the Company diluted by approximately 71.5 per cent. as a result
of the Rights Issue and the Placing. Those Qualifying Shareholders who take up their entitlements
under the Rights Issue in full will, subject to fractions, have their proportionate voting and
distribution rights in the Company diluted by approximately 0.3 per cent. as a result of the Placing.

2.    TERMS AND CONDITIONS OF THE RIGHTS ISSUE
Subject to the fulfilment of the conditions of the Underwriting Agreement, the New Ordinary Shares
will be offered by way of rights at 6.54 pence per New Ordinary Share, payable in full on acceptance
by Qualifying Shareholders, on the basis of:
                                                       5 New Ordinary Shares for every 2 Existing Ordinary Shares
held on the Record Date (and so in proportion for any other number of Existing Ordinary Shares
then held) and otherwise on the terms and conditions as set out in this document and, in the case of
Qualifying Non-CREST Shareholders, the Provisional Allotment Letters.
Nil Paid Rights (also described as New Ordinary Shares, nil paid) are entitlements to acquire the
New Ordinary Shares subject to payment of the Issue Price. The Fully Paid Rights are entitlements
to receive New Ordinary Shares for which payment has already been made.
Qualifying Shareholders’ holdings of Existing Ordinary Shares in certificated and uncertificated form
will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue.
Entitlements to New Ordinary Shares will be rounded down to the next lowest whole number and
fractions of New Ordinary Shares will not be allotted to Qualifying Shareholders. Such fractions will
be aggregated and, if possible, sold as soon as practicable after the commencement of trading in the
New Ordinary Shares. The net proceeds of such sales (after deduction of expenses) will be aggregated
and will ultimately accrue for the benefit of the Company. Accordingly, Qualifying Shareholders with
fewer than 2 Existing Ordinary Shares are not entitled to any New Ordinary Shares.
The attention of Overseas Shareholders or any person (including, without limitation, custodians, nominees
and trustees) who has a contractual or other legal obligation to forward this document or a Provisional
Allotment Letter into a jurisdiction other than the United Kingdom is drawn to paragraph 8 of this Part
III (Terms and Conditions). The offer of New Ordinary Shares under the Rights Issue will not be made
(subject to certain exceptions) into the Restricted Jurisdictions. Subject to the provisions of paragraph 8
below, Shareholders with a registered address in (subject to certain exceptions) a Restricted Jurisdiction
are not being sent this document, will not be sent Provisional Allotment Letters and will not have their
CREST accounts credited with Nil Paid Rights.
Application will be made to the FSA and to the London Stock Exchange respectively for admission
of all of the New Ordinary Shares (nil and fully paid) issued and to be issued: (i) to the premium
listing segment of the Official List; and (ii) to the London Stock Exchange’s market for listed
securities (together ‘‘Admission’’). It is expected that Admission will become effective and that dealings
in the New Ordinary Shares (nil paid) will commence on the London Stock Exchange at 8.00 a.m.
(London time) on 1 March 2011. The New Ordinary Shares and the Existing Ordinary Shares are in
registered form and can be held in certificated or uncertificated form via CREST.
The Existing Ordinary Shares are already admitted to CREST. Accordingly, no further application
for admission to CREST is required for the New Ordinary Shares and all such shares when issued
and fully paid, may be held and transferred by means of CREST.

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Application will be made for the Nil Paid Rights and the Fully Paid Rights to be admitted to
CREST as separate securities. Euroclear requires the Company to confirm to it that certain conditions
(imposed by the CREST Manual) are satisfied before Euroclear will admit any security to CREST.
As soon as practicable after Admission, the Company will confirm this to Euroclear. It is expected
that these conditions will be satisfied on Admission.
TAM and Schroder have each irrevocably undertaken to take up rights under the Rights Issue and
subscribe for the TAM Shares and Schroder Shares respectively. Further details of these undertakings
are contained in paragraph 14.3 of Part X (Additional Information) of this document.
Save in respect of the TAM Shares and the Schroder Shares, the Rights Issue has been fully
underwritten by the Underwriter and is conditional, inter alia, upon:
(i)                                                    the passing, without material amendment, of Resolutions 1 to 4 (inclusive) at the General
                                                       Meeting;
(ii)                                                   the Underwriting Agreement having become unconditional in all respects (save for the condition
                                                       relating to Admission) and not having been terminated in accordance with its terms; and
(iii) Admission becoming effective by not later than 8.00 a.m. on 1 March 2011 (or such later date
      as the parties to the Underwriting Agreement may agree, not being later than 14 March 2011).
The Underwriting Agreement is conditional upon certain matters being satisfied or not breached prior
to the Admission and may be terminated by the Joint Sponsors prior to Admission upon the
occurrence of certain specified events or if it is not declared or does not become unconditional in all
respects by 14 March 2011, in which case the Rights Issue will not proceed. The Underwriting
Agreement is not capable of termination following Admission. The Underwriter may arrange sub-
underwriting for some or all of the New Ordinary Shares.
The Underwriter and its affiliates may engage in trading activity in connection with their roles under
the Underwriting Agreement and in that capacity, may retain, purchase, sell, offer to sell or otherwise
deal for their own account in securities of the Company and related or other securities and
instruments (including Existing Ordinary Shares, Nil Paid Rights and Fully Paid Rights).
A summary of certain terms and conditions of the Underwriting Agreement is contained in paragraph
14 of Part X (Additional Information) of this document.
In addition, the Company will not proceed with the Rights Issue and the Placing if the Underwriting
Agreement is terminated at any time prior to Admission and commencement of dealing in the New
Ordinary Shares (nil paid).
Subject, inter alia, to the conditions referred to above being satisfied (other than the condition
relating to Admission) and save as provided in paragraph 8 below, it is intended that:
(i)                                                    Provisional Allotment Letters in respect of Nil Paid Rights will be despatched to Qualifying
                                                       Non-CREST Shareholders on 28 February 2011;
(ii)                                                   the Receiving Agent will instruct Euroclear to credit the appropriate CREST stock accounts of
                                                       Qualifying CREST Shareholders with such Shareholders’ entitlements to Nil Paid Rights with
                                                       effect from 8.00 a.m. on 1 March 2011;
(iii) the Nil Paid Rights and the Fully Paid Rights will be enabled for settlement by Euroclear by
      8.00 a.m. on 1 March 2011, as soon as practicable after the Company has confirmed to
      Euroclear that all the conditions for admission of such rights to CREST have been satisfied;
(iv) New Ordinary Shares will be credited to the relevant Qualifying Shareholders who validly take
     up their rights by 16 March 2011; and
(v)                                                    share certificates for the New Ordinary Shares will be despatched to Qualifying Non-CREST
                                                       Shareholders who validly take up their rights by no later than 22 March 2011.
The Provisional Allotment Letters in respect of Nil Paid Rights will be despatched to Qualifying
Non-CREST Shareholders at their own risk.
The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the
Existing Ordinary Shares, including the right to receive all dividends or other distributions made, paid
or declared after the date of this document.
The ISIN for the New Ordinary Shares and the Placing Shares will be the same as that of the
Existing Ordinary Shares, being GB0003374070. The ISIN code for the Nil Paid Rights is
GB00B3N6CT82 and for the Fully Paid Rights is GB00B67LQW11.

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Shareholders taking up their rights by completing a Provisional Allotment Letter or by sending a
MTM instruction to Euroclear will be deemed to have given the representations and warranties set
out in paragraph 8.5 of this Part III (Terms and Conditions), unless the requirement is waived by the
Company and the Underwriter.
All documents including Provisional Allotment Letters (which constitute temporary documents of title)
and cheques and certificates posted to, by or from Qualifying Shareholders and/or their transferees or
renouncees (or their agents, as appropriate) will be posted at their own risk.

3.   ACTION TO BE TAKEN
The action to be taken in respect of the New Ordinary Shares depends on whether, at the relevant time,
the Nil Paid Rights or the Fully Paid Rights in respect of which action is to be taken are in certificated
form (that is, are represented by Provisional Allotment Letters) or are in uncertificated form (that is, are
in CREST).
If you are a Qualifying Non-CREST Shareholder, please refer to paragraph 4 and paragraphs 6 to 11
below.
If you are a Qualifying CREST Shareholder, please refer to paragraph 5 and paragraphs 6 to 11
below and to the CREST Manual for further information on the CREST procedures referred to
below.
If you hold Existing Ordinary Shares and have a registered address in a Restricted Jurisdiction, please
refer to paragraph 8 below.
CREST sponsored members should refer to their CREST sponsors, as only their CREST sponsors will
be able to take the necessary actions specified below to take up the entitlements or otherwise to deal
with the Nil Paid Rights or Fully Paid Rights of CREST sponsored members.

4.    ACTION TO BE TAKEN BY QUALIFYING NON-CREST SHAREHOLDERS IN RELATION
      TO THE NIL PAID RIGHTS REPRESENTED BY PROVISIONAL ALLOTMENT LETTERS
All enquiries in relation to the Provisional Allotment Letters should be addressed to the Shareholder
Helpline on 0871 384 2912 (+44 121 415 0175 if you are calling from outside the United Kingdom)
between 8.30 a.m. and 5.30 p.m. (UK time) Monday to Friday (except UK public holidays). Calls to the
Shareholder Helpline cost 8 pence per minute from a BT landline. Other network providers’ costs may
vary. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable
international rate. Different charges may apply to calls from mobile telephones and calls may be
recorded and randomly monitored for security and training purposes. For legal reasons, the Shareholder
Helpline is only able to provide you with information contained in this document and information relating
to Findel’s register of members and will not be able to provide advice on the merits of the Rights Issue
or to provide financial, legal, tax or investment advice.

4.1                                                    General
                                                       Subject to the passing of Resolutions 1 to 4 (inclusive), it is expected that Provisional Allotment
                                                       Letters will be despatched to Qualifying Non-CREST Shareholders on 28 February 2011. Each
                                                       Provisional Allotment Letter will set out:
                                                       4.1.1 the holding of Existing Ordinary Shares in certificated form on which a Qualifying Non-
                                                             CREST Shareholder’s entitlement to New Ordinary Shares has been based;
                                                       4.1.2 the aggregate number and cost of New Ordinary Shares in certificated form which have
                                                             been provisionally allotted to that Qualifying Non-CREST Shareholder;
                                                       4.1.3 the procedures to be followed if a Qualifying Non-CREST Shareholder wishes to dispose
                                                             of all or part of his entitlement or to convert all or part of his entitlement into
                                                             uncertificated form; and
                                                       4.1.4 instructions regarding acceptance and payment, consolidation, splitting and registration of
                                                             renunciation.
                                                       On the basis that Provisional Allotment Letters are posted on 28 February 2011 and that
                                                       dealings in Nil Paid Rights commence on 1 March 2011, the latest time and date for acceptance
                                                       and payment in full will be 11.00 a.m. on 15 March 2011.

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                                                       If the Rights Issue is delayed so that Provisional Allotment Letters cannot be despatched on 28
                                                       February 2011, the expected timetable, as set out at the front of this document, will be adjusted
                                                       accordingly and the revised dates will be set out in the Provisional Allotment Letters and
                                                       announced on a Regulatory Information Service. All references in this Part III (Terms and
                                                       Conditions) should be read as being subject to such adjustment.

4.2                                                    Procedure for acceptance and payment
                                                       4.2.1 Qualifying Non-CREST Shareholders who wish to accept in full
                                                             Holders of Provisional Allotment Letters who wish to take up all of their entitlements
                                                             must return the Provisional Allotment Letter, together with a cheque or banker’s draft in
                                                             sterling, made payable to ‘‘Equiniti Limited re: Findel plc Rights Issue’’ and crossed ‘‘A/C
                                                             payee only’’, for the full amount payable on acceptance, in accordance with the
                                                             instructions printed on the Provisional Allotment Letter, by post or by hand (during
                                                             normal office hours only) to the Receiving Agent at Equiniti Limited, Corporate Actions,
                                                             Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, so as to arrive as soon
                                                             as possible and in any event so as to be received by not later than 11.00 a.m. on 15
                                                             March 2011 (the latest time and date for acceptance and payment in full). A reply-paid
                                                             envelope will be enclosed with the Provisional Allotment Letter for this purpose for use in
                                                             the United Kingdom only. If you post your Provisional Allotment Letter within the
                                                             United Kingdom by first-class post, it is recommended that you allow at least four days
                                                             for delivery.
                                                       4.2.2 Qualifying Non-CREST Shareholders who wish to accept in part
                                                             Holders of Provisional Allotment Letters who wish to take up some but not all of their
                                                             Nil Paid Rights and wish to sell some or all of those rights which they do not want to
                                                             take up, should first apply for split Provisional Allotment Letters by completing Form X
                                                             on page 4 of the Provisional Allotment Letter and returning it, together with a covering
                                                             letter stating the number of split Provisional Allotment Letters required and the number
                                                             of Nil Paid Rights or Fully Paid Rights (if appropriate) to be comprised in each split
                                                             Provisional Allotment Letter, by post or by hand (during normal office hours only) to the
                                                             Receiving Agent at Equiniti Limited, Corporate Actions, Aspect House, Spencer Road,
                                                             Lancing, West Sussex, BN99 6DA, by 3.00 p.m. on 11 March 2011, the latest time and
                                                             date for splitting the Provisional Allotment Letter, nil paid. The Provisional Allotment
                                                             Letter will then be cancelled and exchanged for the split Provisional Allotment Letters
                                                             required. Such holders of Provisional Allotment Letters should then deliver the split
                                                             Provisional Allotment Letter representing the rights they wish to take up together with a
                                                             cheque or banker’s draft in sterling for this number of rights, payable to ‘‘Equiniti
                                                             Limited re: Findel plc Rights Issue’’ and crossed ‘‘A/C payee only’’ by 11.00 a.m. on 15
                                                             March 2011, the latest time and date for acceptance. The further split Provisional
                                                             Allotment Letters (representing the New Ordinary Shares the Shareholder does not wish
                                                             to take up) will be required in order to sell those rights not being taken up.
                                                             Alternatively, Qualifying Non-CREST Shareholders who wish to take up some of their
                                                             rights, without selling or transferring the remainder, should complete Form X on page 4
                                                             of the original Provisional Allotment Letter and return it by post or by hand (during
                                                             office hours only) to the Receiving Agent at Equiniti Limited, Corporate Actions, Aspect
                                                             House, Spencer Road, Lancing, West Sussex, BN99 6DA, together with a covering letter
                                                             confirming the number of rights to be taken up and a cheque or banker’s draft in sterling
                                                             to pay for this number of shares, payable to ‘‘Equiniti Limited re: Findel plc Rights
                                                             Issue’’ and crossed ‘‘A/C payee only’’. In this case, the Provisional Allotment Letter and
                                                             payment must be received by the Receiving Agent by 11.00 a.m. on 15 March 2011, the
                                                             latest time and date for acceptance in full.
                                                       4.2.3 Company’s discretion as to validity of acceptances
                                                             If payment is not received in full by 11.00 a.m. on 15 March 2011, the latest date and
                                                             time for acceptance, the provisional allotment will be deemed to have been declined and
                                                             will lapse. The Company may elect, but shall not be obliged, to treat as valid (i)
                                                             Provisional Allotment Letters and accompanying remittances for the full amount due
                                                             which are received through the post prior to 5.00 p.m. on 15 March 2011 (the cover
                                                             bearing a legible postmark no later than 11.00 a.m. on 15 March 2011) and (ii)

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                                                             applications in respect of which remittances are received prior to 11.00 a.m. on 15 March
                                                             2011 from an authorised person (as defined in section 31(2) of the FSMA) specifying the
                                                             number of New Ordinary Shares to be acquired and undertaking to lodge the relevant
                                                             Provisional Allotment Letter duly completed in due course.

                                                             The Company with the agreement of the Underwriter may also (in their absolute
                                                             discretion) treat a Provisional Allotment Letter as valid and binding on the person(s) by
                                                             whom or on whose behalf it is lodged even if it is not completed in accordance with the
                                                             relevant instructions or is not accompanied by a valid power of attorney where required.

                                                             The Company reserves the right to treat as invalid any acceptance or purported
                                                             acceptance of the New Ordinary Shares that appears to the Company to have been
                                                             executed in, dispatched from or that provided an address for delivery of definitive share
                                                             certificates for New Ordinary Shares in the Restricted Jurisdictions.

                                                             A Qualifying Non-CREST Shareholder who makes a valid acceptance and payment in
                                                             accordance with this paragraph 4.2 is deemed to request that the New Ordinary Shares to
                                                             which they will become entitled be issued to them on the terms set out in this document
                                                             and subject to the memorandum of association and Articles of Association of the
                                                             Company.

                                                       4.2.4 Payments
                                                             All payments must be in sterling and made by cheque or banker’s draft made payable to
                                                             ‘‘Equiniti Limited re: Findel plc Rights Issue’’ and crossed ‘‘A/C payee only’’. Cheques or
                                                             banker’s drafts must be drawn on a bank or building society or branch of a bank or
                                                             building society in the United Kingdom or Channel Islands which is either a settlement
                                                             member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing
                                                             Company Limited or a member of either of the committees of the Scottish or Belfast
                                                             Clearing Houses or which has arranged for its cheques and banker’s drafts to be cleared
                                                             through facilities provided by any of those companies or committees and must bear the
                                                             appropriate sort code in the top right-hand corner. Third party cheques (other than
                                                             building society cheques or banker’s drafts where the building society or bank has
                                                             confirmed that the relevant Qualifying Non-CREST Shareholder has title to the underlying
                                                             funds) may not be accepted. Payments via CHAPS, BACS or electronic transfer will not
                                                             be accepted.

                                                             Cheques or banker’s drafts will be presented for payment upon receipt and it is a term of
                                                             the Rights Issue that cheques shall be honoured on first presentation. The Company and
                                                             the Underwriter may elect to treat as invalid acceptances in respect of which cheques are
                                                             not so honoured. The Company reserves the right to instruct the Receiving Agent to seek
                                                             special clearance of cheques and banker’s drafts to allow the Company to obtain value for
                                                             remittances at the earliest opportunity. No interest will be allowed on payments made
                                                             before they are due and any interest on such payments ultimately will accrue for the
                                                             benefit of the Company. All documents, cheques and banker’s drafts sent through the post
                                                             will be sent at the risk of the sender.

                                                             If the New Ordinary Shares have already been allotted to a Qualifying Non-CREST
                                                             Shareholder prior to any payment not being so honoured upon first presentation or such
                                                             acceptances being treated as invalid, the Company and the Underwriter may (in their
                                                             absolute discretion as to manner, timing and terms) make arrangements for the sale of
                                                             such New Ordinary Shares on behalf of such Qualifying Non-CREST Shareholders and
                                                             hold the proceeds of sale (net of the Company’s reasonable estimate of any loss it has
                                                             suffered as a result of the same and of the expenses of the sale, including, without
                                                             limitation, any stamp duty or SDRT payable on the transfer of such New Ordinary
                                                             Shares, and of all amounts payable by such Qualifying Non-CREST Shareholders
                                                             pursuant to the terms of the Rights Issue in respect of the acquisition of such New
                                                             Ordinary Shares) on behalf of such Qualifying Non-CREST Shareholders. Neither the
                                                             Company nor the Underwriter nor any other person shall be responsible for, or have any
                                                             liability for, any loss, expense or damage suffered by such Qualifying Non-CREST
                                                             Shareholders as a result.

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4.3                                                    Money Laundering Regulations
                                                       It is a term of the Rights Issue that, to ensure compliance with the Money Laundering
                                                       Regulations, the Receiving Agent, may require, at its absolute discretion, verification of the
                                                       identity of the person by whom or on whose behalf a Provisional Allotment Letter is lodged
                                                       with payment (which requirements are referred to below as the ‘‘verification of identity
                                                       requirements’’). If the Provisional Allotment Letter is submitted by a UK regulated broker or
                                                       intermediary acting as agent and which is itself subject to the Money Laundering Regulations,
                                                       any verification of identity requirements are the responsibility of such broker or intermediary
                                                       and not of the Receiving Agent. In such case, the lodging agent’s stamp should be inserted on
                                                       the Provisional Allotment Letter. The person lodging the Provisional Allotment Letter with
                                                       payment and in accordance with the other terms as described above (the ‘‘applicant’’), including
                                                       any person who appears to the Receiving Agent to be acting on behalf of some other person,
                                                       shall thereby be deemed to agree to provide the Receiving Agent with such information and
                                                       other evidence as the Receiving Agent may require to satisfy the verification of identity
                                                       requirements. The Receiving Agent may make a search using a credit reference agency for the
                                                       purpose of confirming such identity where deemed necessary. A record of each search will be
                                                       retained.
                                                       If the Receiving Agent determines that the verification of identity requirements apply to an
                                                       acceptance of an allotment and the verification of identity requirements have not been satisfied
                                                       (which the Receiving Agent shall in its absolute discretion determine) by 11.00 a.m. on 15 March
                                                       2011, the Company and the Underwriter may, in their absolute discretion, and without prejudice
                                                       to any other rights of the Company, treat the acceptance as invalid or may confirm the
                                                       allotment of the relevant shares to the acceptor but (notwithstanding any other term of the
                                                       Rights Issue) such New Ordinary Shares will not be issued to him or registered in his name
                                                       until the verification of identity requirements have been satisfied (which the Receiving Agent
                                                       shall in its absolute discretion determine). If the acceptance is not treated as invalid and the
                                                       verification of identity requirements are not satisfied within such period, being not less than
                                                       seven days after a request for evidence of identity is despatched to the acceptor, as the
                                                       Company may in its absolute discretion allow, the Company and the Underwriter will be
                                                       entitled to make arrangements (in their absolute discretion as to manner, timing and terms) to
                                                       sell the relevant shares (and for that purpose the Company will be expressly authorised to act as
                                                       agent of the acceptor). Any proceeds of sale (net of expenses) of the relevant shares which shall
                                                       be issued to and registered in the name of the purchaser(s) or an amount equivalent to the
                                                       original payment, whichever is the lower, will be held by the Company on trust for the
                                                       acceptor, subject to the requirements of the Money Laundering Regulations. The Receiving
                                                       Agent is entitled in its absolute discretion to determine whether the verification of identity
                                                       requirements apply to any acceptor and whether such requirements have been satisfied. Neither
                                                       the Company, the Underwriter nor the Receiving Agent will be liable to any person for any loss
                                                       suffered or incurred as a result of the exercise of any such discretion or as a result of any sale
                                                       of relevant shares.
                                                       Return of a Provisional Allotment Letter with the appropriate remittance will constitute a warranty
                                                       from the acceptor that the Money Laundering Regulations will not be breached by acceptance of
                                                       such remittance. If the verification of identity requirements apply, failure to provide the necessary
                                                       evidence of identity may result in your acceptance being treated as invalid or in delays in the
                                                       despatch of a receipted fully paid Provisional Allotment Letter or a share certificate.

                                                       The verification of identity requirements will not usually apply:
                                                       (i)  if the acceptor is an organisation required to comply with the Money Laundering
                                                            Directive 2005/60/EC of the European Parliament and of the EC Council of 26 October
                                                            2005 on the prevention of the use of the financial system for the purpose of money
                                                            laundering and terrorist financing; or
                                                       (ii)    if the acceptor is a regulated United Kingdom broker or intermediary acting as agent and
                                                               is itself subject to the Money Laundering Regulations; or
                                                       (iii)   if the acceptor (not being an acceptor who delivers his acceptance in person) makes
                                                               payment by way of a cheque drawn on an account in the name of such acceptor; or
                                                       (iv)    if the aggregate subscription price for the relevant shares is less than c15,000
                                                               (approximately £12,500).

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                                                       Where the verification of identity requirements apply, please note the following as this will assist
                                                       in satisfying the requirements. Satisfaction of the verification of identity requirements may be
                                                       facilitated in the following ways:
                                                       (a)   if payment is made by cheque or banker’s draft in sterling drawn on a branch in the
                                                             United Kingdom of a bank or building society and bears a UK bank sort code number in
                                                             the top right-hand corner, the following applies. Cheques should be made payable to
                                                             ‘‘Equiniti Limited re: Findel plc Rights Issue’’ and crossed ‘‘A/C payee only’’. Third party
                                                             cheques will not be accepted with the exception of building society cheques or banker’s
                                                             drafts where the building society or bank has confirmed the name of the account holder
                                                             by stamping or endorsing the building society cheque/banker’s draft to such effect. The
                                                             account name should be the same as that shown on the application;
                                                       (b)   if the Provisional Allotment Letter is lodged with payment by an agent which is an
                                                             organisation of the kind referred to in (i) above or which is subject to anti money
                                                             laundering regulation in a country which is a member of the Financial Action Task Force
                                                             (the non-European Union members of which are Argentina, Australia, Brazil, Canada,
                                                             Hong Kong, Iceland, Japan, Mexico, New Zealand, Norway, Russian Federation,
                                                             Singapore, South Africa, Switzerland, Turkey, the US and, by virtue of their membership
                                                             of the Gulf Co-operation Council, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the
                                                             United Arab Emirates), the agent should provide written confirmation with the Provisional
                                                             Allotment Letter that it has that status and a written assurance that it has obtained and
                                                             recorded evidence of the identity of the persons for whom it acts and that it will on
                                                             demand make such evidence available to the Receiving Agent or the relevant authority. If
                                                             the agent is not such an organisation it should contact the Receiving Agent at the address
                                                             shown on page 26 of this document; or
                                                       (c)   if a Provisional Allotment Letter is lodged by hand by the acceptor in person, he should
                                                             ensure that he has with him evidence of identity bearing his photograph (for example, his
                                                             passport) and evidence of his address.
                                                       In order to confirm the acceptability of any written assurance referred to in paragraph (b) above
                                                       or any other case, the acceptor should contact the Receiving Agent.

4.4                                                    Dealings in Nil Paid Rights
                                                       Assuming the Rights Issue becomes unconditional, dealings on the London Stock Exchange in
                                                       the Nil Paid Rights are expected to commence at 8.00 a.m. on 1 March 2011. A transfer of Nil
                                                       Paid Rights can be made by renunciation of the Provisional Allotment Letter in accordance
                                                       with the instructions printed on it and delivery of the letter to the transferee. The latest time
                                                       and date for registration of renunciation of Provisional Allotment Letters, nil paid, is expected
                                                       to be 11.00 a.m. on 15 March 2011.

4.5                                                    Dealings in Fully Paid Rights
                                                       After acceptance of the provisional allotment and payment in full in accordance with the
                                                       provisions set out in this document and the Provisional Allotment Letter, the Fully Paid Rights
                                                       may be transferred by renunciation of the relevant fully paid Provisional Allotment Letter and
                                                       delivering it, by post or by hand (during normal office hours) to the Receiving Agent at Aspect
                                                       House, Spencer Road, Lancing, West Sussex, BN99 6DA, by not later than 11.00 a.m. on
                                                       15 March 2011. To do this, Qualifying Non-CREST Shareholders will need to have their fully
                                                       paid Provisional Allotment Letters returned to them after acceptance has been effected by the
                                                       Receiving Agent. However, fully paid Provisional Allotment Letters will not be returned to
                                                       Shareholders unless their return is requested by ticking the appropriate box on the Provisional
                                                       Allotment Letter.
                                                       After 15 March 2011, the New Ordinary Shares will be in registered form and transferable in
                                                       the usual way (see paragraph 4.10 below).

4.6                                                    Renunciation and splitting of Provisional Allotment Letters
                                                       Qualifying Non-CREST Shareholders who wish to transfer all of their Nil Paid Rights or, after
                                                       acceptance of the provisional allotment and payment in full, Fully Paid Rights comprised in a
                                                       Provisional Allotment Letter may (save as required by the laws of certain overseas jurisdictions)
                                                       renounce such allotment by completing and signing Form X on page 4 of the Provisional

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                                                       Allotment Letter (if it is not already marked ‘‘Original Duly Renounced’’) and passing the entire
                                                       Provisional Allotment Letter to their stockbroker or bank or other appropriate financial adviser
                                                       or to the transferee. Once a Provisional Allotment Letter has been renounced, the letter will
                                                       become a negotiable instrument in bearer form and the Nil Paid Rights comprised in the
                                                       Provisional Allotment Letter may be transferred by delivery of the Provisional Allotment Letter
                                                       to the transferee. The latest time and date for registration of renunciation of Provisional
                                                       Allotment Letters, fully paid, is 11.00 a.m. on 15 March 2011.
                                                       If a holder of a Provisional Allotment Letter wishes to have only some of the New Ordinary
                                                       Shares registered in his name and to transfer the remainder, or wishes to transfer all the Nil
                                                       Paid Rights or (if appropriate) Fully Paid Rights but to different persons, he may have the
                                                       Provisional Allotment Letter split, for which purpose he or his agent must complete and sign
                                                       Form X on page 4 of the Provisional Allotment Letter. The Provisional Allotment Letter must
                                                       then be delivered by post or by hand (during normal office hours only) to the Receiving Agent
                                                       at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, by not later than 3.00 p.m.
                                                       on 11 March 2011, to be cancelled and exchanged for the split Provisional Allotment Letters
                                                       required. The number of split Provisional Allotment Letters required and the number of Nil
                                                       Paid Rights or (as appropriate) Fully Paid Rights to be comprised in each split letter should be
                                                       stated in a covering letter. Form X on page 4 of split Provisional Allotment Letters will be
                                                       marked ‘‘Original Duly Renounced’’ before issue. The Provisional Allotment Letter will then be
                                                       cancelled and exchanged for split Provisional Allotment Letters. The split Provisional Allotment
                                                       Letters representing New Ordinary Shares they wish to accept should be delivered together with
                                                       together with a cheque or bankers’ draft in sterling for this number of rights, payable to
                                                       ‘‘Equiniti Limited re: Findel plc Rights Issue’’ and crossed ‘‘A/C payee only’’ by 11.00 a.m. on
                                                       15 March 2011, the latest time and date for acceptance. The Provisional Allotment Letters
                                                       (representing the New Ordinary Shares they do not wish to take up) will be required in order to
                                                       sell those rights.
                                                       Alternatively, Qualifying Non-CREST Shareholders who wish to take up some of their Nil Paid
                                                       Rights, without selling or transferring the remainder, should complete Form X on page 4 of the
                                                       original Provisional Allotment Letter and return it, by post or by hand (during normal office
                                                       hours only) to the Receiving Agent at Aspect House, Spencer Road, Lancing, West Sussex,
                                                       BN99 6DA. In this case, the Provisional Allotment Letter and payment must be received by the
                                                       Receiving Agent by 11.00 a.m. on 15 March 2011, together with a covering letter confirming the
                                                       number of rights to be taken up and a cheque or banker’s draft in sterling to pay for this
                                                       number of New Ordinary Shares.
                                                       The Company and the Underwriter reserve the right to refuse to register any renunciation in
                                                       favour of any person in respect of which the Company and the Underwriter believe such
                                                       renunciation may violate applicable legal or regulatory requirements, including (without
                                                       limitation) any renunciation in the name of any person with an address outside the United
                                                       Kingdom.

4.7                                                    Registration in names of Qualifying Shareholders
                                                       A Qualifying Shareholder who wishes to have all the New Ordinary Shares to which he is
                                                       entitled registered in his name must accept and make payment for such allotment in accordance
                                                       with the provisions set out in this document and (in the case of Qualifying Non-CREST
                                                       Shareholders) the Provisional Allotment Letter.

4.8                                                    Registration in names of persons other than Qualifying Shareholders originally entitled
                                                       In order to register Fully Paid Rights in certificated form in the name of someone other than
                                                       the Qualifying Shareholders(s) originally entitled, the renouncee or his agent(s) must complete
                                                       Form Y on page 4 of the Provisional Allotment Letter (unless the renouncee is a CREST
                                                       member who wishes to hold such New Ordinary Shares in uncertificated form, in which case
                                                       Form X and the CREST Deposit Form (both on page 4 of the Provisional Allotment Letter)
                                                       must be completed (see paragraph 5 below)) and deliver the entire Provisional Allotment Letter,
                                                       when fully paid, by post or by hand (during normal office hours) to the Receiving Agent at
                                                       Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, by not later than the latest
                                                       time for registration of renunciations, which is expected to be 11.00 a.m. on 15 March 2011.
                                                       Registration cannot be effected unless and until the New Ordinary Shares comprised in a
                                                       Provisional Allotment Letter are fully paid.

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                                                       The New Ordinary Shares comprised in several renounced Provisional Allotment Letters may be
                                                       registered in the name of one holder (or joint holders) if Form Y on page 4 of the Provisional
                                                       Allotment Letter is completed on one Provisional Allotment Letter (the ‘‘Principal Letter’’) and
                                                       all the Provisional Allotment Letters are delivered in one batch. Details of each Provisional
                                                       Allotment Letter (including the Principal Letter) should be listed in a separate letter.


4.9                                                    Deposit of Nil Paid Rights or Fully Paid Rights into CREST
                                                       The Nil Paid Rights or Fully Paid Rights represented by the Provisional Allotment Letter may
                                                       be converted into uncertificated form, that is, deposited into CREST (whether such conversion
                                                       arises as a result of a renunciation of those rights or otherwise). Similarly, Nil Paid Rights or
                                                       Fully Paid Rights held in CREST may be converted into certificated form, that is, withdrawn
                                                       from CREST. Subject as provided in the next following paragraph or in the Provisional
                                                       Allotment Letter, normal CREST procedures and timings apply in relation to any such
                                                       conversion. Qualifying Shareholders are recommended to refer to the CREST Manual for details
                                                       of such procedures.

                                                       The procedure for depositing the Nil Paid Rights or, if appropriate, Fully Paid Rights
                                                       represented by the Provisional Allotment Letter into CREST, whether such rights are to be
                                                       converted into uncertificated form in the name(s) of the person(s) whose name(s) and address
                                                       appear(s) on page 1 of the Provisional Allotment Letter or in the name of a person or persons
                                                       to whom the Provisional Allotment Letter has been renounced, is as follows: Form X and the
                                                       CREST Deposit Form (both on page 4 of the Provisional Allotment Letter) will need to be
                                                       completed and the Provisional Allotment Letter deposited with the CCSS. In addition, the
                                                       normal CREST Stock Deposit procedures will need to be carried out, except that (a) it will not
                                                       be necessary to complete and lodge a separate CREST Transfer Form (on page 4 of the
                                                       Provisional Allotment Letter) (prescribed under the Stock Transfer Act 1963) with the CCSS
                                                       and (b) only the whole of the Nil Paid Rights or the Fully Paid Rights represented by the
                                                       Provisional Allotment Letter may be deposited into CREST. If a Qualifying Shareholder wishes
                                                       to deposit some only of the Nil Paid Rights or the Fully Paid Rights represented by the
                                                       Provisional Allotment Letter into CREST, he must first apply for split Provisional Allotment
                                                       Letters by following the instructions in paragraph 4.6 above. If the rights represented by more
                                                       than one Provisional Allotment Letter are to be deposited, the CREST Deposit Form on each
                                                       Provisional Allotment Letter must be completed and deposited. A Consolidation Listing Form
                                                       (as defined in the Regulations) must not be used.

                                                       A holder of the Nil Paid Rights (or, if appropriate, the Fully Paid Rights) represented by a
                                                       Provisional Allotment Letter who is proposing to convert those rights into uncertificated form
                                                       (whether following a renunciation of such rights or otherwise) is recommended to ensure that
                                                       the conversion procedures are implemented in sufficient time to enable the person holding or
                                                       acquiring the Nil Paid Rights (or, if appropriate, the Fully Paid Rights) in CREST following
                                                       the conversion to take all necessary steps in connection with taking up the entitlement prior to
                                                       11.00 a.m. on 15 March 2011. In particular, having regard to processing times in CREST and on
                                                       the part of the Receiving Agent, the latest recommended time for depositing a renounced
                                                       Provisional Allotment Letter (with Form X and the CREST Deposit Form on page 4 of the
                                                       Provisional Allotment Letter duly completed) with the CCSS in order to enable the person
                                                       acquiring the Nil Paid Rights (or, if appropriate, the Fully Paid Rights) in CREST as a result of
                                                       the conversion to take all necessary steps in connection with taking up the entitlement prior to
                                                       11:00 a.m. on the 15 March 2011 is 3.00 p.m. on 10 March 2011.

                                                       When Form X and the CREST Deposit Form (both on page 4 of the Provisional Allotment
                                                       Letter) have been completed, the title to the Nil Paid Rights or the Fully Paid Rights
                                                       represented by the Provisional Allotment Letters will cease to be renounceable or transferable by
                                                       delivery, and for the avoidance of doubt any entries in Form Y will not subsequently be
                                                       recognised or acted upon by the Receiving Agent. All renunciations or transfers of Nil Paid
                                                       Rights or Fully Paid Rights must be effected through the CREST system once such Nil Paid
                                                       Rights or Fully Paid Rights have been deposited into CREST.

                                                       CREST sponsored members should contact their CREST sponsor as only their CREST sponsor
                                                       will be able to take the necessary action to take up the entitlement or otherwise to deal with the
                                                       Nil Paid Rights or Fully Paid Rights of the CREST sponsored member.

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4.10 Issue of New Ordinary Shares in definitive form
     Definitive share certificates in respect of the New Ordinary Shares to be held in certificated form
     are expected to be despatched by post by 22 March 2011, at the risk of the person entitled
     thereto, to Qualifying Non-CREST Shareholders (or their transferees who hold Fully Paid
     Rights in certificated form), or in the case of joint holdings, to the first-named Shareholders, at
     their registered address (unless lodging agent details have been completed on page 4 of the
     Provisional Allotment Letter). After despatch of the definitive share certificates, Provisional
     Allotment Letters will cease to be valid for any purpose whatsoever. Pending despatch of
     definitive share certificates, instruments of transfer of the New Ordinary Shares will be certified
     by the Registrar against the register.

5.                                                     ACTION TO BE TAKEN BY QUALIFYING CREST SHAREHOLDERS IN RELATION TO NIL
                                                       PAID RIGHTS AND FULLY PAID RIGHTS IN CREST

5.1                                                    General
                                                       Subject as provided in paragraph 8 of this Part III (Terms and Conditions), it is expected that
                                                       each Qualifying CREST Shareholder will receive a credit to its stock account in CREST of its
                                                       entitlement to Nil Paid Rights on 1 March 2011. It is expected that such rights will be enabled
                                                       by 8.00 a.m. on 1 March 2011. The CREST stock account to be credited will be an account
                                                       under the participant ID and member account ID that apply to the Existing Ordinary Shares in
                                                       uncertificated form held at the close of business on the Record Date by the Qualifying CREST
                                                       Shareholder in respect of which the Nil Paid Rights are provisionally allotted.
                                                       The maximum number of New Ordinary Shares that a Qualifying CREST Shareholder may take
                                                       up is up to that which have been provisionally allotted to that Qualifying CREST Shareholder
                                                       and for which he receives a credit of entitlement into his stock account in CREST. The
                                                       minimum number of New Ordinary Shares a Qualifying CREST Shareholder may take up is
                                                       one.
                                                       The Nil Paid Rights will constitute a separate security for the purposes of CREST and can
                                                       accordingly be transferred, in whole or in part, by means of CREST in the same manner as any
                                                       other security that is admitted to CREST.
                                                       If, for any reason, it is impracticable to credit the stock accounts of Qualifying CREST
                                                       Shareholders, or to enable the Nil Paid Rights by 8.00 a.m. on 1 March 2011, Provisional
                                                       Allotment Letters shall, unless the Company and the Underwriter determine otherwise, be sent
                                                       out in substitution for the Nil Paid Rights which have not been so credited or enabled and the
                                                       expected timetable as set out in this document will be adjusted as appropriate with the consent
                                                       of the Underwriter. References to dates and times in this document should be read as subject to
                                                       any such adjustment. The Company will make an appropriate announcement on a Regulatory
                                                       Information Service giving details of any revised dates but Qualifying CREST Shareholders may
                                                       not receive any further written communication.
                                                       CREST members who wish to take up their entitlements in respect of, or otherwise to transfer, Nil
                                                       Paid Rights or Fully Paid Rights held by them in CREST should refer to the CREST Manual for
                                                       further information on the CREST procedures referred to below. If you are a CREST sponsored
                                                       member, you should consult your CREST sponsor if you wish to take up your entitlement as only
                                                       your CREST sponsor will be able to take the necessary action to take up your entitlements or
                                                       otherwise to deal with your Nil Paid Rights or Fully Paid Rights.

5.2                                                    Procedure for acceptance and payment

                                                       5.2.1 MTM instructions
                                                             CREST members who wish to take up all or some of their entitlement in respect of Nil
                                                             Paid Rights in CREST must send (or, if they are CREST sponsored members, procure
                                                             that their CREST sponsor sends) an MTM instruction to Euroclear that, on its
                                                             settlement, will have the following effect:
                                                             (a)   the crediting of a stock account of the Receiving Agent under the participant ID and
                                                                   member account ID specified below, with the number of Nil Paid Rights to be taken
                                                                   up;

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                                                             (b)   the creation of a settlement bank payment obligation (as this term is defined in the
                                                                   CREST Manual), in accordance with the RTGS payment mechanism (as this term is
                                                                   defined in the CREST Manual), in favour of the RTGS settlement bank of the
                                                                   Receiving Agent in sterling in respect of the full amount payable on acceptance in
                                                                   respect of the Nil Paid Rights referred to in sub-paragraph (a) above; and
                                                             (c)   the crediting of a stock account of the accepting CREST member (being an account
                                                                   under the same participant ID and member account ID as the account from which
                                                                   the Nil Paid Rights are to be debited on settlement of the MTM instruction) of the
                                                                   corresponding number of Fully Paid Rights to which the CREST member is entitled
                                                                   on taking up his Nil Paid Rights referred to in sub-paragraph (a) above.
                                                       5.2.2 Contents of MTM instructions
                                                             The MTM instruction must be properly authenticated in accordance with Euroclear’s
                                                             specifications and must contain, in addition to the other information that is required for
                                                             settlement in CREST, the following details:
                                                             (a)   the number of Nil Paid Rights to which the acceptance relates;
                                                             (b)   the participant ID of the accepting CREST member;
                                                             (c)   the member account ID of the accepting CREST member from which the Nil Paid
                                                                   Rights are to be debited;
                                                             (d)   the participant ID of the Receiving Agent, in its capacity as a CREST receiving
                                                                   agent. This is 6RA47;
                                                             (e)   the member account ID of the Receiving Agent, in its capacity as a CREST
                                                                   receiving agent. This is RA045001;
                                                             (f)   the number of Fully Paid Rights that the CREST member is expecting to receive on
                                                                   settlement of the MTM instruction. This must be the same as the number of Nil
                                                                   Paid Rights to which the acceptance relates;
                                                             (g)   the amount payable by means of the CREST assured payment arrangements on
                                                                   settlement of the MTM instruction. This must be the full amount payable on
                                                                   acceptance in respect of the number of Nil Paid Rights referred to in sub-paragraph
                                                                   (a) above;
                                                             (h)   the intended settlement date. This must be on or before 11.00 a.m. on 15 March
                                                                   2011;
                                                             (i)   the Nil Paid Rights ISIN number which is GB00B3N6CT82;
                                                             (j)   the Fully Paid Rights ISIN number which is GB00B67LQW11;
                                                             (k)   the Corporate Action Number for the Rights Issue. This will be available by viewing
                                                                   the relevant corporate action details in CREST; and
                                                             (l)   a contact name and telephone number (in the free format shared file note).
                                                       5.2.3 Valid acceptance
                                                             An MTM instruction complying with each of the requirements as to authentication and
                                                             contents set out in paragraph 5.2.2 above will constitute a valid acceptance where either:
                                                             (a)   the MTM instruction settles by not later than 11.00 a.m. on 15 March 2011; or
                                                             (b)   at the discretion of the Company and the Underwriter:
                                                                   (i)    the MTM instruction is received by Euroclear by not later than 11.00 a.m. on
                                                                          15 March 2011; and
                                                                   (ii)   a number of Nil Paid Rights at least equal to the number of Nil Paid Rights
                                                                          inserted in the MTM instruction is credited to the CREST stock member
                                                                          account of the accepting CREST member specified in the MTM instruction at
                                                                          11.00 a.m. on 15 March 2011; and
                                                                   (iii) the relevant MTM instruction settles by 2.00 p.m. on 15 March 2011 (or such
                                                                         later time and/or date as the Company and the Underwriter may determine).
                                                             An MTM instruction will be treated as having been received by Euroclear for these
                                                             purposes at the time at which the instruction is processed by the Network Providers’
                                                             Communications Host (as this term is defined in the CREST Manual) at Euroclear of the

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                                                             network provider used by the CREST member (or by the CREST sponsored member’s
                                                             CREST sponsor). This will be conclusively determined by the input time stamp applied to
                                                             the MTM instruction by the Network Providers’ Communications Host.
                                                       5.2.4 Representations, warranties and undertakings of CREST members
                                                             A CREST member or CREST sponsored member who makes a valid acceptance in
                                                             accordance with this paragraph 5.2 represents, warrants and undertakes to the Company
                                                             and the Underwriter that he has taken (or procured to be taken), and will take (or will
                                                             procure to be taken), whatever action is required to be taken by him or by his CREST
                                                             sponsor (as appropriate) to ensure that the MTM instruction concerned is capable of
                                                             settlement at 11.00 a.m. on 15 March 2011 and remains capable of settlement at all times
                                                             after that until 2.00 p.m. on 15 March 2011 (or until such later time and date as the
                                                             Company and the Underwriter may determine. In particular, the CREST member or
                                                             CREST sponsored member represents, warrants and undertakes that, at 11.00 a.m. on 15
                                                             March 2011 and at all times thereafter until 2.00 p.m. on 15 March 2011 (or until such
                                                             later time and date as the Company and the Underwriter may determine), there will be
                                                             sufficient Headroom within the Cap in respect of the cash memorandum account to be
                                                             debited with the amount payable on acceptance to permit the MTM instruction to settle.
                                                             CREST sponsored members should contact their CREST sponsor if they are in any
                                                             doubt.
                                                             If there is insufficient Headroom within the Cap in respect of the cash memorandum
                                                             account of a CREST member or CREST sponsored member for such amount to be
                                                             debited or the CREST member’s or CREST sponsored member’s acceptance is otherwise
                                                             treated as invalid and New Ordinary Shares have already been allotted to such CREST
                                                             member or CREST sponsored member, the Company may (in its absolute discretion as to
                                                             the manner, timing and terms) make arrangements for the sale of such shares on behalf of
                                                             that CREST member or CREST sponsored member and hold the proceeds of sale (net of
                                                             the Company’s reasonable estimate of any loss that it has suffered as a result of the
                                                             acceptance being treated as invalid and of the expenses of sale, including, without
                                                             limitation, any stamp duty or SDRT payable on the transfer of such shares, and of all
                                                             amounts payable by the CREST member or CREST sponsored member pursuant to the
                                                             provisions of this Part III (Terms and Conditions) in respect of the acquisition of such
                                                             shares) on behalf of such CREST member or CREST sponsored member. Neither the
                                                             Company nor the Underwriter nor any other person, shall be responsible for, or have any
                                                             liability for, any loss, expense or damage suffered by such CREST member or CREST
                                                             sponsored member as a result.
                                                       5.2.5 CREST procedures and timings
                                                             CREST members and CREST sponsors (on behalf of CREST sponsored members) should
                                                             note that Euroclear does not make available special procedures in CREST for any
                                                             particular corporate action.
                                                             Normal system timings and limitations will therefore apply in relation to the input of an
                                                             MTM instruction and its settlement in connection with the Rights Issue. It is the
                                                             responsibility of the CREST member concerned to take (or, if the CREST member is a
                                                             CREST sponsored member, to procure that his CREST sponsor takes) the action
                                                             necessary to ensure that a valid acceptance is received as stated above by 11.00 a.m. on
                                                             15 March 2011. In connection with this, CREST members and (where applicable) CREST
                                                             sponsors are referred in particular to those sections of the CREST Manual concerning
                                                             practical limitations of the CREST system and timings.
                                                       5.2.6 CREST member’s undertaking to pay
                                                             A CREST member or CREST sponsored member who makes a valid acceptance in
                                                             accordance with the procedures set out in this paragraph 5.2: (a) undertakes to pay to the
                                                             Company, or procure the payment to the Company of, the amount payable in sterling on
                                                             acceptance in accordance with the above procedures or in such other manner as the
                                                             Company may require (it being acknowledged that, where payment is made by means of
                                                             CREST RTGS payment mechanism, the creation of an RTGS payment obligation in
                                                             Pounds Sterling in favour of the Receiving Agent’s RTGS settlement bank (as defined in
                                                             the CREST Manual) in accordance with the RTGS payment mechanism shall, to the
                                                             extent of the obligation so created, discharge in full the obligation of the CREST member

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                                                            (or CREST sponsored member) to pay to the Company the amount payable on
                                                            acceptance); and (b) requests that the Fully Paid Rights and/or New Ordinary Shares to
                                                            which he will become entitled be issued to him on the terms set out in this document and
                                                            subject to the memorandum of association and articles of association of the Company.
                                                            If the payment obligations of the relevant CREST member or CREST sponsored member
                                                            in relation to such New Ordinary Shares are not discharged in full and such New
                                                            Ordinary Shares have already been allotted to the CREST member or CREST sponsored
                                                            member, the Company or the Underwriter may (in their absolute discretion as to manner,
                                                            timing and terms) make arrangements for the sale of such New Ordinary Shares on behalf
                                                            of the CREST member or CREST sponsored member and hold the proceeds of sale (net
                                                            of the Company’s reasonable estimate of any loss it has suffered as a result of the same
                                                            and of the expenses of the sale, including, without limitation, any stamp duty or SDRT
                                                            payable on the transfer of such New Ordinary Shares, and of all amounts payable by
                                                            such CREST member or CREST sponsored member pursuant to the terms of the Rights
                                                            Issue in respect of the acquisition of such New Ordinary Shares) or an amount equal to
                                                            the original payment of the CREST member or CREST sponsored member. Neither the
                                                            Company nor the Underwriter nor any other person shall be responsible for, or have any
                                                            liability for, any loss, expense or damage suffered by the CREST member or CREST
                                                            sponsored member as a result.

                                                       5.2.7 Discretion as to rejection and validity of acceptances
                                                             The Company and the Underwriter may agree in their absolute discretion to:
                                                            (a)   reject any acceptance constituted by an MTM instruction, which is otherwise valid,
                                                                  in the event of breach of any of the representations, warranties and undertakings set
                                                                  out or referred to in this paragraph 5.2. Where an acceptance is made as described
                                                                  in this paragraph 5.2, which is otherwise valid, and the MTM instruction concerned
                                                                  fails to settle by 11.00 a.m. on 15 March 2011 (or by such later time and date as the
                                                                  Company and the Underwriter have determined), the Company and the Underwriter
                                                                  shall be entitled to assume, for the purposes of its right to reject an acceptance
                                                                  contained in this paragraph 5.2, that there has been a breach of the representations,
                                                                  warranties and undertakings set out or referred to in this paragraph 5.2 unless the
                                                                  Company is aware of any reason outside the control of the CREST member or
                                                                  CREST sponsor (as appropriate) for the failure to settle;
                                                            (b)   treat as valid (and binding on the CREST member or CREST sponsored member
                                                                  concerned) an acceptance which does not comply in all respects with the
                                                                  requirements as to validity set out or referred to in this paragraph 5.2;
                                                            (c)   accept an alternative properly authenticated dematerialised instruction from a
                                                                  CREST member or (where applicable) a CREST sponsor as constituting a valid
                                                                  acceptance in substitution for, or in addition to, an MTM instruction and subject to
                                                                  such further terms and conditions as the Company and the Underwriter may
                                                                  determine;
                                                            (d)   treat a properly authenticated dematerialised instruction (in this sub-paragraph (d)
                                                                  (the ‘‘first instruction’’) as not constituting a valid acceptance if, at the time at which
                                                                  the Receiving Agent receives a properly authenticated dematerialised instruction
                                                                  giving details of the first instruction, either the Company or the Receiving Agent has
                                                                  received actual notice from Euroclear of any of the matters specified in Regulation
                                                                  35(5)(a) of the CREST Regulations in relation to the first instruction. These matters
                                                                  include notice that any information contained in the first instruction was incorrect or
                                                                  notice of lack of authority to send the first instruction; and
                                                            (e)   accept an alternative instruction or notification from a CREST member or CREST
                                                                  sponsored member or (where applicable) a CREST sponsor, or extend the time for
                                                                  acceptance and/or settlement of an MTM instruction or any alternative instruction
                                                                  or notification, if, for reasons or due to circumstances outside the control of any
                                                                  CREST member or CREST sponsored member or (where applicable) CREST
                                                                  sponsor, the CREST member or CREST sponsored member is unable validly to take
                                                                  up all or part of his Nil Paid Rights by means of the above procedures. In normal
                                                                  circumstances, this discretion is only likely to be exercised in the event of any

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                                                                  interruption, failure or breakdown of CREST (or of any part of CREST) or on the
                                                                  part of facilities and/or systems operated by the Receiving Agent in connection with
                                                                  CREST.


5.3                                                    Money Laundering Regulations
                                                       If you hold your Nil Paid Rights in CREST and apply to take up all or part of your
                                                       entitlement as agent for one or more persons and you are not a UK or EU regulated person or
                                                       institution (e.g. a UK financial institution), then, irrespective of the value of the application, the
                                                       Receiving Agent is entitled to take reasonable measures to establish the identity of the person or
                                                       persons (or the ultimate controller of such person or persons) on whose behalf you are making
                                                       the application. You must therefore contact the Receiving Agent before sending any MTM
                                                       instruction or other instruction so that appropriate measures may be taken.

                                                       Submission of an MTM instruction which constitutes, or which may on its settlement constitute,
                                                       a valid acceptance as described above constitutes a warranty and undertaking by the applicant
                                                       to provide promptly to the Receiving Agent any information the Receiving Agent may specify
                                                       as being required for the purposes of the verification of the identity requirements in the Money
                                                       Laundering Regulations or the FSMA. Pending the provision of such information and other
                                                       evidence satisfactory to as to identify having consulted with the Company and the Underwriter,
                                                       the Receiving Agent may take, or omit to take, such action as it may determine to prevent or
                                                       delay settlement of the MTM instruction. If such information and other evidence of identity has
                                                       not been provided within a reasonable time, then the Receiving Agent will not permit the MTM
                                                       instruction concerned to proceed to settlement but without prejudice to the right of the
                                                       Company to take proceedings to recover any loss suffered by it as a result of failure by the
                                                       applicant to provide such information and other evidence.


5.4                                                    Dealings in Nil Paid Rights in CREST
                                                       Assuming the Rights Issue becomes unconditional, dealings in the Nil Paid Rights on the
                                                       London Stock Exchange are expected to commence at 8.00 a.m. on 1 March 2011. A transfer
                                                       (in whole or in part) of Nil Paid Rights can be made by means of CREST in the same manner
                                                       as any other security that is admitted to CREST. The Nil Paid Rights are expected to be
                                                       disabled in CREST after the close of CREST business on 15 March 2011.


5.5                                                    Dealings in Fully Paid Rights in CREST
                                                       After acceptance of the provisional allotment and payment in full in accordance with the
                                                       provisions set out in this document, the Fully Paid Rights may be transferred by means of
                                                       CREST in the same manner as any other security that is admitted to CREST. The last time for
                                                       settlement of any transfer of Fully Paid Rights in CREST is expected to be 11.00 a.m. on
                                                       15 March 2011. The Fully Paid Rights are expected to be disabled in CREST after the close of
                                                       CREST business on 15 March 2011.

                                                       After 15 March 2011, the New Ordinary Shares will be registered in the name(s) of the
                                                       person(s) entitled to them in the Company’s register of members and will be transferable in the
                                                       usual way (see paragraph 5.7 of this Part III (Terms and Conditions)).


5.6                                                    Withdrawal of Nil Paid Rights or Fully Paid Rights from CREST
                                                       Nil Paid Rights or Fully Paid Rights held in CREST may be converted into certificated form,
                                                       that is, withdrawn from CREST. Normal CREST procedures (including timings) apply in
                                                       relation to any such conversion.

                                                       The recommended latest time for receipt by Euroclear of a properly authenticated dematerialised
                                                       instruction requesting withdrawal of Nil Paid Rights or, if appropriate, Fully Paid Rights from
                                                       CREST is 4.30 p.m. on 9 March 2011, so as to enable the person acquiring or (as appropriate)
                                                       holding the Nil Paid Rights or, if appropriate, Fully Paid Rights following the conversion to
                                                       take all necessary steps in connection with taking up the entitlement prior to 11.00 a.m. on 15
                                                       March 2011. You are recommended to refer to the CREST Manual for details of such
                                                       procedures.

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5.7                                                    Issue of New Ordinary Shares in CREST
                                                       Fully Paid Rights in CREST are expected to be disabled in CREST after the close of CREST
                                                       business on 15 March 2011 (the latest date for settlement of transfers of Fully Paid Rights in
                                                       CREST). New Ordinary Shares (in definitive form) will be issued in uncertificated form to those
                                                       persons registered as holding Fully Paid Rights in CREST at the close of business on the date
                                                       on which the Fully Paid Rights are disabled. The Receiving Agent will instruct Euroclear to
                                                       credit the appropriate stock accounts of those persons (under the same participant ID and
                                                       member account ID that applied to the Fully Paid Rights held by those persons) with their
                                                       entitlements to New Ordinary Shares with effect from the next Business Day (expected to be 16
                                                       March 2011).

5.8                                                    Right to allot/issue in certificated form
                                                       Despite any other provision of this document, the Company reserves the right to allot and/or
                                                       issue any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares in certificated form. In
                                                       normal circumstances, this right is only likely to be exercised in the event of an interruption,
                                                       failure or breakdown of CREST (or of any part of CREST) or on the part of the facilities and/
                                                       or systems operated by the Receiving Agent in connection with CREST.

6.                                                     PROCEDURE IN RESPECT OF RIGHTS NOT TAKEN UP (WHETHER CERTIFICATED OR
                                                       IN CREST) AND WITHDRAWAL
6.1                                                    Procedure in respect of New Ordinary Shares not taken up
                                                       If an entitlement to New Ordinary Shares is not validly taken up by 11.00 a.m. on 15 March
                                                       2011, in accordance with the procedure laid down for acceptance and payment, then that
                                                       provisional allotment will be deemed to have been declined and will lapse. The Underwriter will
                                                       endeavour to procure, by not later than 5.00 p.m. on the second Business Day after 15 March
                                                       2011, subscribers for all (or as many as possible) of those New Ordinary Shares not taken up
                                                       (other than TAM Shares and Schroder Shares) at a price per New Ordinary Share which is at
                                                       least equal to the aggregate of the Issue Price and the expenses of procuring such subscribers
                                                       (including any applicable brokerage and commissions and amounts in respect of value added
                                                       tax).
                                                       Notwithstanding the above, the Underwriter may, at any time after 11.00 a.m. on 15 March
                                                       2011, cease to endeavour to procure any such subscribers if, in its opinion, it is unlikely that
                                                       any such subscribers can be procured at such a price and by such a time. If and to the extent
                                                       that subscribers for New Ordinary Shares (other than TAM Shares and Schroder Shares) cannot
                                                       be procured on the basis outlined above, the relevant New Ordinary Shares will be subscribed
                                                       for by the Underwriter or its sub-underwriters at the Issue Price pursuant to the terms of the
                                                       Underwriting Agreement.
                                                       Any premium over the aggregate of the Issue Price and the expenses of procuring subscribers
                                                       (including any applicable brokerage and commissions and amounts in respect of value added
                                                       tax) shall be paid (subject as provided in this paragraph 6):
                                                       (a)   where the Nil Paid Rights were, at the time they lapsed, represented by a Provisional
                                                             Allotment Letter, to the person whose name and address appeared on the Provisional
                                                             Allotment Letter;
                                                       (b)   where the Nil Paid Rights were, at the time they lapsed, in uncertificated form, to the
                                                             person registered as the holder of those Nil Paid Rights at the time of their disablement
                                                             in CREST; and
                                                       (c)   where an entitlement to New Ordinary Shares was not taken up by an Overseas
                                                             Shareholder, to that Overseas Shareholder.
                                                       New Ordinary Shares for which subscribers are procured on this basis will be reallotted to the
                                                       subscribers and the aggregate of any premiums (being the amount paid by the subscribers after
                                                       deducting the Issue Price and the expenses of procuring the subscribers, including any applicable
                                                       brokerage and commissions and amounts in respect of value added tax), if any, will be paid
                                                       (without interest) to those persons entitled (as referred to above) pro rata to the relevant lapsed
                                                       provisional allotments, save that amounts of less than £5.00 per holding will not be so paid but
                                                       will be aggregated and retained for the benefit of the Company.

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                                                       Any transactions undertaken pursuant to this paragraph 6 or paragraph 8 below shall be
                                                       deemed to have been undertaken at the request of the persons entitled to the lapsed provisional
                                                       allotments or other entitlements and neither the Company nor the Underwriter nor any other
                                                       person procuring subscribers shall be responsible for any loss or damage (whether actual or
                                                       alleged) arising from the terms or timing of any such subscription, any decision not to
                                                       endeavour to procure subscribers or the failure to procure subscribers on the basis so described.
                                                       The Underwriter will be entitled to retain any brokerage fees, commissions or other benefits
                                                       received in connection with these arrangements. Cheques for the amounts due will be sent in
                                                       sterling by post, at the risk of the person(s) entitled, to their registered addresses (the registered
                                                       address of the first-named in the case of joint holders), provided that, where any entitlement
                                                       concerned was held in CREST, the amount due will, unless the Company (in its absolute
                                                       discretion) otherwise determines, be satisfied by the Company procuring the creation of an
                                                       assured payment obligation in favour of the relevant CREST member’s (or CREST sponsored
                                                       member’s) RTGS settlement bank in respect of the cash amount concerned in accordance with
                                                       the RTGS payment mechanism.

6.2                                                    Withdrawal rights
                                                       Persons who have the right to withdraw their acceptances under Section 87Q(4) of FSMA after
                                                       a supplementary prospectus (if any) has been published and who wish to exercise such right of
                                                       withdrawal must do so by lodging a written notice of withdrawal, which must include the full
                                                       name and address of the person wishing to exercise such statutory withdrawal rights and, if such
                                                       person is a CREST member, the participant ID and the member account ID of such CREST
                                                       member. The notice of withdrawal must be delivered by post or by hand (during normal office
                                                       hours only) to the Receiving Agent, Equiniti Limited, at Aspect House, Spencer Road, Lancing,
                                                       West Sussex, BN99 6DA (please call Equiniti Limited on 0871 384 2921 (if calling from within the
                                                       United Kingdom, for which calls are charged at 8 pence per minute from a BT landline, and other
                                                       telephone provider costs may vary), or on +44 121 415 0175 (if calling from overseas) between the
                                                       hours of 8.30 a.m. and 5.30 p.m. (UK time) Monday to Friday (excluding UK public holidays) for
                                                       further details), to be received no later than two Business Days after the date on which the
                                                       supplementary prospectus was published, withdrawal being effective as at receipt of the written
                                                       notice of withdrawal. Notice of withdrawal given by any other means or which is deposited with
                                                       or received by the Receiving Agent after the expiry of such period will not constitute a valid
                                                       withdrawal. Furthermore, based on advice received by the Company as to the effect of statutory
                                                       withdrawal rights where the allotment contract is fully performed, the Company will not permit
                                                       the exercise of withdrawal rights after payment by the relevant Shareholder of its subscription in
                                                       full and the allotment of the New Ordinary Shares to such Shareholder becoming unconditional.
                                                       In such circumstances, Shareholders are advised to consult their professional advisers including
                                                       their legal advisers as this may be a matter of law.
                                                       Provisional allotments of entitlements to New Ordinary Shares which are the subject of a valid
                                                       withdrawal notice will be deemed to be declined. Such entitlements to New Ordinary Shares will
                                                       be subject to the provisions of paragraph 6.1 of this Part III (Terms and Conditions) as if the
                                                       entitlement had not been validly taken up.

7.   TAXATION
The information contained in Part IX (Taxation) of this document is intended only as a general guide
to the current tax position in the United Kingdom and Qualifying Shareholders should consult their
own tax advisers regarding the tax treatment of the Rights Issue in light of their own circumstances.
Shareholders who are in any doubt as to their tax position or who are subject to tax in any other
jurisdiction should consult an appropriate professional adviser immediately.

8.   OVERSEAS SHAREHOLDERS
This document has been approved by the FSA, being the competent authority in the United
Kingdom. It is expected that Shareholders in each member state of the European Economic Area will
be able to participate in the Rights Issue.
The making of the proposed offer of New Ordinary Shares to persons located or resident in, or who
are citizens of, or who have a registered address in countries other than the United Kingdom, may be
affected by the law or regulatory requirements of the relevant jurisdiction. Any Shareholder who is in
any doubt as to his position should consult an appropriate professional adviser without delay.

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8.1                                                    General
                                                       Qualifying Shareholders with registered addresses outside the United Kingdom, or who are resident
                                                       in, or citizens of, countries other than the United Kingdom are entitled to participate in the Rights
                                                       Issue. However, the ability of such Qualifying Shareholders to take up their rights or acquire New
                                                       Ordinary Shares may be affected by the laws of the relevant jurisdiction(s). Such persons should
                                                       consult their professional advisers as to whether they require any governmental or other consents or
                                                       need to observe any other formalities to enable them to take up their rights.
                                                       New Ordinary Shares will be provisionally allotted (nil paid) to all Shareholders on the register
                                                       at the Record Date (including those who do not constitute Qualifying Shareholders). However,
                                                       Provisional Allotment Letters will not be sent to, and Nil Paid Rights will not be credited to
                                                       CREST accounts of Shareholders with registered addresses in a Restricted Jurisdiction or their
                                                       agent or intermediary, except where the Company is satisfied that such action would not result
                                                       in the contravention of any registration or other legal requirement in any jurisdiction.
                                                       Subject to paragraphs 8.2 to 8.6 below, it is the responsibility of any person (including without
                                                       limitation, subsidiaries, nominees and trustees) outside the United Kingdom wishing to take up
                                                       their rights under the Rights Issue to satisfy themselves as to the full observance of the laws of
                                                       the relevant territory, including obtaining all necessary governmental or other consents which
                                                       may be required, observing all requisite formalities needing to be observed and paying any issue,
                                                       transfer or other taxes due in such territory. The comments set out in this paragraph 8 are
                                                       intended as a general guide only and any Overseas Shareholder who is in doubt as to his
                                                       position should consult his professional adviser without delay.
                                                       Receipt of this document and/or Provisional Allotment Letter or the crediting of Nil Paid
                                                       Rights to a stock account in CREST will not constitute an offer in those jurisdictions in which
                                                       it would be illegal to make an offer and, in those circumstances, this document and/or a
                                                       Provisional Allotment Letter must be treated as sent for information only and should not be
                                                       copied or redistributed.
                                                       No person (including, without limitation, authorisations, nominees and trustees) receiving a copy
                                                       of this document and/or a Provisional Allotment Letter and/or receiving a credit of Nil Paid
                                                       Rights or Fully Paid Rights to a stock account in any territory other than the United Kingdom
                                                       may treat the same as constituting an invitation or offer to him nor should he in any event use
                                                       the Provisional Allotment Letter or deal with Nil Paid Rights or Fully Paid Rights in CREST
                                                       unless, in the relevant territory, such an invitation or offer could lawfully be made to him or the
                                                       Provisional Allotment Letter could lawfully be used or dealt with without contravention of any
                                                       registration or other legal requirements. In such circumstances, this document and the
                                                       Provisional Allotment Letter are to be treated as sent for information only and should not be
                                                       copied or redistributed.
                                                       Persons (including, without limitation, custodians, nominees and trustees) receiving a copy of
                                                       this document and/or a Provisional Allotment Letter or whose stock account is credited with Nil
                                                       Paid Rights or Fully Paid Rights should not, in connection with the Rights Issue, distribute or
                                                       send the same or transfer Nil Paid Rights or Fully Paid Rights in or into any jurisdiction where
                                                       to do so would or might contravene local security laws or regulations. If a Provisional
                                                       Allotment Letter or a credit of Nil Paid Rights or Fully Paid Rights is received by any person
                                                       in any such territory, or by his agent or nominee, he must not seek to take up the rights
                                                       referred to in the Provisional Allotment Letter or in this document or renounce the Provisional
                                                       Allotment Letter or transfer the Nil Paid Rights or Fully Paid Rights unless the Company
                                                       determines that such actions would not violate applicable legal or regulatory requirements. Any
                                                       person (including, without limitation, custodians, nominees and trustees) who does forward this
                                                       document or a Provisional Allotment Letter or transfer Nil Paid Rights or Fully Paid Rights
                                                       into any such territories (whether pursuant to a contractual or legal obligation or otherwise)
                                                       should draw the recipient’s attention to the contents of this paragraph 8.
                                                       The Company and the Underwriter reserve the right to treat as invalid any acceptance or
                                                       purported acceptance of the offer of Nil Paid Rights, Fully Paid Rights or New Ordinary
                                                       Shares and will not be bound to allot or issue any New Ordinary Shares which:
                                                       (a)   appears to the Company or its agents to have been executed, effected or despatched from
                                                             a Restricted Jurisdiction unless the Company is satisfied that such action would not result
                                                             in the contravention of any registration or other legal requirement; or

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                                                       (b)   in the case of a Provisional Allotment Letter, provides an address for delivery of the share
                                                             certificates in or, in the case of a credit of New Ordinary Shares in CREST, to a CREST
                                                             member or CREST sponsored member whose registered address would be in a Restricted
                                                             Jurisdiction or any other jurisdiction outside the United Kingdom in which it would be
                                                             unlawful to deliver such share certificates or make such a credit unless the Company is
                                                             satisfied that such action would not result in contravention of any registration or other
                                                             legal requirement; or
                                                       (c)   appears to the Company or its agents to have been executed, effected or dispatched in a
                                                             manner which may involve a breach of laws or regulations of any jurisdiction, it if the
                                                             Company believes, or its agents believe, that the same may violate applicable legal or
                                                             regulatory requirements.
                                                       The provisions in respect of paragraph 6.1 of this Part III (Terms and Conditions) will apply to
                                                       Overseas Shareholders who do not take up their New Ordinary Shares provisionally allotted to
                                                       them or are unable to take up New Ordinary Shares provisionally allotted to them because such
                                                       action would result in contravention of applicable law or regulatory requirements. Such
                                                       Shareholders will be treated as Shareholders that have not taken up their entitlement for the
                                                       purposes of paragraph 6.1 above and the entitlement will lapse.
                                                       Despite any other provision of this document or the Provisional Allotment Letter, the Company
                                                       reserves the right to permit any Shareholder to take up his rights on the terms and conditions
                                                       in this document as if it were a Qualifying Shareholder if the Company in its sole and absolute
                                                       discretion is satisfied that the transaction in question is exempt from or not subject to the
                                                       legislation or regulations giving rise to the restrictions in question.
                                                       Those Shareholders who wish, and are permitted, to take up their entitlement should note that
                                                       payments must be made as described in paragraphs 4 ‘‘Qualifying Non-CREST Shareholders’’
                                                       and 5 ‘‘Qualifying CREST Shareholders’’ of this Part III (Terms and Conditions).
                                                       Overseas Shareholders should note that all subscription monies must be in sterling by cheque or
                                                       banker’s draft and should be drawn on a bank in the United Kingdom, made payable to
                                                       ‘‘Equiniti Limited re: Findel plc Rights Issue’’ and crossed ‘‘A/C payee only’’.

8.2                                                    Restricted Jurisdictions – United States
                                                       This document and the Provisional Allotment Letters are intended for use only in connection
                                                       with offers and sales of New Ordinary Shares outside the United States and are not to be sent
                                                       or given to any person within the United States. The Nil Paid Rights, the Fully Paid Rights
                                                       and the New Ordinary Shares have not been and will not be registered under the Securities Act
                                                       or any securities laws of any state or other jurisdiction of the United States and may not be
                                                       offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or
                                                       indirectly, within the United States except pursuant to an applicable exemption from the
                                                       registration requirements of the Securities Act and in compliance with any applicable securities
                                                       laws of any state or other jurisdiction of the United States. The Nil Paid Rights, Fully Paid
                                                       Rights and the New Ordinary Shares being offered outside the United States are being offered
                                                       in reliance on Regulation S.
                                                       Prospective investors are hereby notified that sellers of Nil Paid Rights, Fully Paid Rights or New
                                                       Ordinary Shares may be relying on the exemption from registration requirements of section 5 of
                                                       the Securities Act provided by Rule 144A thereunder.
                                                       The Company is not extending the Rights Issue into the United States and neither this
                                                       document nor a Provisional Allotment Letter will be sent to any Shareholder with a registered
                                                       address in the United States. Neither this document nor the Provisional Allotment Letter
                                                       constitutes or will constitute or form any part of an offer or an invitation to apply for or an
                                                       offer or an invitation to acquire any Nil Paid Rights, Fully Paid Rights or New Ordinary
                                                       Shares in the United States or otherwise dispatched from the United States. Subject to certain
                                                       exceptions, Provisional Allotment Letters or renunciations thereof sent from or post-marked in
                                                       the United States will be deemed to be invalid and all persons acquiring New Ordinary Shares
                                                       and wishing to hold such New Ordinary Shares in registered form must provide an address for
                                                       registration of the New Ordinary Shares issued upon exercise thereof outside the United States.
                                                       Any person who acquires New Ordinary Shares, Nil Paid Rights or Fully Paid Rights will be
                                                       deemed to have declared, warranted and agreed, by accepting delivery of this document or the
                                                       Provisional Allotment Letter taking up their entitlement or accepting delivery of the New

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                                                       Ordinary Shares, the Nil Paid Rights or the Fully Paid Rights, that they are not, and that at
                                                       the time of acquiring the New Ordinary Shares, the Nil Paid Rights or the Fully Paid Rights
                                                       they will not be, in the United States or acting on behalf of, or for the account or benefit of a
                                                       person on a non-discretionary basis in the United States or any State of the United States.
                                                       The Company and the Underwriter reserve the right to treat as invalid any Provisional
                                                       Allotment Letter (or renunciation thereof) that appears to the Company or the Underwriter or
                                                       their respective agents to have been executed in or despatched from the United States, or that
                                                       provides an address in the United States for the acceptance or renunciation of the Rights Issue,
                                                       or which does not make the warranty set out in the Provisional Allotment Letter to the effect
                                                       that the person accepting and/or renouncing the Provisional Allotment Letter does not have a
                                                       registered address and is not otherwise located in the United States and is not acquiring the Nil
                                                       Paid Rights, the Fully Paid Rights or the New Ordinary Shares with a view to the offer, sale,
                                                       resale, transfer, delivery or distribution, directly or indirectly, of any such Nil Paid Rights, Fully
                                                       Paid Rights or New Ordinary Shares in the United States or where the Company and the
                                                       Underwriter believe acceptance of such Provisional Allotment Letter may infringe applicable
                                                       legal or regulatory requirements. The Company will not be bound to allot (on a non-provisional
                                                       basis) or issue any New Ordinary Shares, Nil Paid Rights or Fully Paid Rights to any person
                                                       with an address in, who is otherwise located in, the United States in whose favour a Provisional
                                                       Allotment Letter or any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares may be
                                                       transferred or renounced. In addition, the Company and the Underwriter reserve the right to
                                                       reject any MTM instruction sent by or on behalf of any CREST member with a registered
                                                       address in the United States in respect of the Nil Paid Rights.
                                                       In addition, until 40 days after the commencement of the Rights Issue, an offer, sale or transfer
                                                       of the New Ordinary Shares, the Nil Paid Rights, the Fully Paid Rights or the Provisional
                                                       Allotment Letters within the United States by a dealer (whether or not participating in the
                                                       Rights Issue) may violate the registration requirements of the Securities Act if such offer or sale
                                                       is made otherwise than in accordance with Rule 144A.
                                                       The provisions of paragraph 6.1 above will apply to any rights not taken up. Accordingly,
                                                       Shareholders with a registered address in the United States will be treated as unexercising
                                                       holders and the Underwriter will endeavour to procure on behalf of such unexercising holders
                                                       subscribers for the New Ordinary Shares.

8.3                                                    Restricted Jurisdictions – Overseas territories other than the United States
                                                       Due to restrictions under the securities laws of the Restricted Jurisdictions, no Provisional
                                                       Allotment Letters will be sent to, and no Nil Paid Rights or Fully Paid Rights will be credited
                                                       to a stock account in CREST of Shareholders with registered addresses in a Restricted
                                                       Jurisdiction and, unless validly taken up, their settlements will be sold if possible in accordance
                                                       with the provisions of paragraph 6.1 above. The Provisional Allotment Letters and the Nil Paid
                                                       Rights, the Fully Paid Rights and the New Ordinary Shares may not be transferred or sold to
                                                       or renounced or delivered in, any Restricted Jurisdiction.
                                                       No offer of New Ordinary Shares is being made by virtue of this document or the Provisional
                                                       Allotment Letters in any Restricted Jurisdiction.

8.4                                                    Overseas territories other than the Restricted Jurisdictions
                                                       Provisional Allotment Letters will be sent to Qualifying Non-CREST Shareholders and the Nil
                                                       Paid Rights and Fully Paid Rights will be credited to the stock account in CREST of
                                                       Qualifying CREST Shareholders. Such Qualifying Shareholders may, subject to the laws of their
                                                       relevant jurisdiction, take up New Ordinary Shares under the Rights Issue in accordance with
                                                       the instructions set out in this document and (if relevant) the Provisional Allotment Letter. In
                                                       cases where Overseas Shareholders do not take up Nil Paid Rights, their entitlements will be
                                                       sold if possible in accordance with the provisions of paragraph 6.1 above.
                                                       Qualifying Shareholders who have registered addresses in, or who are resident or ordinarily
                                                       resident in, or citizens of, countries other than the United Kingdom should, however, consult
                                                       appropriate professional advisers as to whether they require any governmental or other consents
                                                       or need to observe any further formalities to enable them to apply for any New Ordinary
                                                       Shares, in respect of the Rights Issue.

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8.5                                                    Representations and warranties given by Overseas Shareholders
                                                       8.5.1 Qualifying Non-CREST Shareholders
                                                             Any person accepting and/or renouncing a Provisional Allotment Letter or requesting
                                                             registration of the New Ordinary Shares comprised therein represents and warrants to the
                                                             Company and the Underwriter that, except where proof has been provided to the
                                                             Company’s satisfaction that such person’s use of the Provisional Allotment Letter will not
                                                             result in the contravention of any applicable legal requirement in any jurisdiction:
                                                             (a)   such person is not accepting and/or renouncing the Provisional Allotment Letter, or
                                                                   requesting registration of the relevant New Ordinary Shares, from within a Restricted
                                                                   Jurisdiction;
                                                             (b)   such person is not in any territory in which it is unlawful to make or accept an offer
                                                                   to subscribe for New Ordinary Shares or to use the Provisional Allotment Letter in
                                                                   any manner in which such person has used or will use it;
                                                             (c)   such person is not acting on a non-discretionary basis for a person located within a
                                                                   Restricted Jurisdiction or any territory referred to in (b) above at the time the
                                                                   instruction to accept or renounce was given; and
                                                             (d)   such person is not acquiring New Ordinary Shares with a view to the offer, sale,
                                                                   resale, transfer, delivery or distribution, directly or indirectly, of any such New
                                                                   Ordinary Shares into a Restricted Jurisdiction or any territory referred to in (b)
                                                                   above.
                                                             The Company and Underwriter may treat as invalid any acceptance or purported
                                                             acceptance of the allotment of New Ordinary Shares comprised in, or renunciation or
                                                             purported renunciation of, a Provisional Allotment Letter if it:
                                                             (e)   appears to the Company to have been executed in or despatched from a Restricted
                                                                   Jurisdiction or otherwise in a manner which may involve a breach of the laws of any
                                                                   jurisdiction or if it believes the same may violate any applicable legal or regulatory
                                                                   requirement;
                                                             (f)   provides an address in a Restricted Jurisdiction for delivery of definitive share
                                                                   certificates for New Ordinary Shares (or any jurisdiction outside the United
                                                                   Kingdom in which it would be unlawful to deliver such certificates); or
                                                             (g)   purports to exclude the warranty required by this paragraph 8.5.1.

                                                       8.5.2 Qualifying CREST Shareholders
                                                             A CREST member or CREST sponsored member who makes a valid acceptance in
                                                             accordance with the procedures set out in this Part III (Terms and Conditions) represents
                                                             and warrants to the Company and the Underwriter that, except where proof has been
                                                             provided to the Company’s satisfaction that such person’s acceptance will not result in the
                                                             contravention of any applicable legal requirement in any jurisdiction:
                                                             (a)   it is not within a Restricted Jurisdiction;
                                                             (b)   it is not in any territory in which it is unlawful to make or accept an offer to
                                                                   subscribe for New Ordinary Shares;
                                                             (c)   it is not accepting on a non-discretionary basis for a person located within a
                                                                   Restricted Jurisdiction or any territory referred to in (b) above at the time the
                                                                   instruction to accept was given; and
                                                             (d)   it is not acquiring New Ordinary Shares with a view to the offer, sale, resale,
                                                                   transfer, delivery or distribution, directly or indirectly, of any such New Ordinary
                                                                   Shares into a Restricted Jurisdiction.

8.6                                                    Waiver
                                                       The provisions of this paragraph 8 and of any other terms of the Rights Issue relating to
                                                       Overseas Shareholders may be waived, varied or modified as regards specific Shareholders(s) or
                                                       on a general basis by the Company in its absolute discretion. Subject to this, the provisions of
                                                       this paragraph 8 supersede any terms of the Rights Issue in connection herewith.

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                                                       References in this paragraph 8 to Shareholders shall include references to the person or persons
                                                       executing a Provisional Allotment Letter and, in the event of more than one person executing a
                                                       Provisional Allotment Letter, the provisions of this paragraph 8 shall apply to them jointly and
                                                       to each of them.

9.   TIMES AND DATES
The Company shall, in its discretion and after consultation with its financial and legal advisers (and
with the agreement of the Underwriter), be entitled to amend the dates that Provisional Allotment
Letters are despatched or dealings in Nil Paid Rights commence or amend or extend the latest date
for acceptance under the Rights Issue and all related dates set out in this document and in such
circumstances shall notify the UK Listing Authority, and make an announcement on a Regulatory
Information Service approved by the UK Listing Authority and, if appropriate, may also notify
Shareholders but Qualifying Shareholders may not receive any further written communication.
If a supplementary prospectus is issued by the Company two or fewer Business Days prior to the
latest time and date for acceptance and payment in full under the Rights Issue specified in this
document (or such later date as may be agreed between the Company and the Underwriter), the
latest date for acceptance under the Rights Issue shall be extended to the date that is three Business
Days after the date of issue of the supplementary prospectus (and the dates and times of principal
events due to take place following such date shall be extended accordingly).

10. GOVERNING LAW
The terms and conditions of the Rights Issue as set out in this document and the Provisional
Allotment Letter shall be governed by, and construed in accordance with, English law.

11. JURISDICTION
The courts of England and Wales are to have exclusive jurisdiction to settle any dispute which may
arise out of or in connection with the Rights Issue, this document or the Provisional Allotment
Letter. By accepting rights under the Rights Issue in accordance with the instruction set out in this
document and, in the case of Qualifying Non-CREST Shareholders only, the Provisional Allotment
Letter, Qualifying Shareholders irrevocably submit to the jurisdiction of the courts of England and
Wales and waive any objection to proceedings in any such court on the ground of venue or on the
ground that proceedings have been brought in an inconvenient forum.




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                                                                                               PART IV

                                                                              INFORMATION ON THE GROUP
The following information should be read in conjunction with the more detailed information appearing
elsewhere in this document, including the financial and other information in Part V (Historical Financial
Information on the Group) and Part VI (Operating and Financial Review). The financial information
included in this Part IV (Information on the Group) has been extracted without material adjustment
from the financial information set out in Part V (Historical Financial Information on the Group) and
Part VII (Unaudited Pro Forma Financial Information), or has been extracted without material
adjustment from the Group’s accounting records.

1.    INTRODUCTION
The Findel Group contains market leading businesses in the home shopping, education supplies and
healthcare markets. It is primarily a distributor, handling and supplying specialist products
manufactured by third parties. The Group’s activities are focussed in five operating segments:
*                                                      Express Gifts is one of the largest direct mail order businesses in the UK, offering online and
                                                       via catalogue a broad range of home and leisure items, clothing, toys and gifts supported by a
                                                       flexible credit offer;
*                                                      Kleeneze is a leading network marketing company, specialising in supplying a wide range of
                                                       household and health & beauty products to customers through a network of independent
                                                       distributors across the UK and the Republic of Ireland;
*                                                      Kitbag is a leading retailer of sports leisurewear and official football kits both through its own
                                                       online operation, kitbag.com, as well as a number of partnership relationships with football
                                                       clubs and other sports organisations whereby Kitbag manages a range of retail, online and/or
                                                       mail order channels;
*                                                      the Education Supplies Division is one of the largest independent suppliers of resources and
                                                       equipment (excluding information technology and publishing) to schools and educational
                                                       establishments in the UK; and
*                                                      the Healthcare Division is a leading operator of outsourced Integrated Community Equipment
                                                       Services (ICES) contracts for NHS trusts and local authorities, and also supplies a wide range
                                                       of rehabilitation and care equipment to the public and private sectors via catalogue and the
                                                       internet.
The Express Gifts, Kleeneze and Kitbag operations are collectively referred to as the Home Shopping
Division in this document. The contribution to continuing Group revenue of the five operating
segments in the last financial year was:

                                                                                                                                            % of revenue
                                                                                                                                  for the 09/10 Financial
Division                                                                                                                                            Year

Home Shopping
    Express Gifts                                                                                                                                   42%
    Kleeneze                                                                                                                                        12%
    Kitbag                                                                                                                                           9%
Education Supplies                                                                                                                                  26%
Healthcare                                                                                                                                          11%
All of the Group’s operating sites are in the UK with the exception of product sourcing operations
based in Hong Kong and India.

2.   HISTORY AND DEVELOPMENT OF THE GROUP
Fine Art and Philately Limited (‘‘Fine Art’’) was established in 1955 and was engaged in the design
and manufacture of greeting cards and gift wrap, together with providing mail order services for
national charities and fund raising. Fine Art was floated on the Birmingham Stock Exchange in 1962
and the listing was switched to the London Stock Exchange in the early 1970s. By the 1980s, Fine
Art had grown to become a large greeting card manufacturer whilst at the same time developing
operations in the agency catalogue mail order market.

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In 1989, the Group entered the education supplies market and in the 1990s the strategic focus of the
Home Shopping Division was moved from agency mail order to direct mail order and the associated
provision of extended credit to its customer base. As well as creating an income source from credit
and other financial services, this move enabled the range of products that the division was able to sell
to increase substantially.
In 1997, the Group demerged into two distinct businesses: Fine Art Developments plc (mail order
and education supplies divisions) and Creative Publishing plc (card, giftwrap and stationery
manufacturing). In 1998, Creative Publishing plc was acquired by Hallmark Cards.
Since changing its name to Findel plc in 2000, the Group has consolidated its operations and
established its position as one of the UK’s leading home shopping, education supplies and healthcare
businesses. Key recent events in the development of the Group include:

2001                                                                          Acquisition of Novara plc (education and healthcare business).
                                                                              Disposal of Charity Mail Order division through a management buy out
                                                                              transaction.
2003                                                                          Acquisition of two further education supplies businesses: A to Z and WNW.
2004                                                                          Acquisition of the education supplies businesses GLS Educational Supplies
                                                                              Limited and Living and Learning Limited.
                                                                              Acquisition of Huntleigh National Care for the Healthcare Division.
2006                                                                          Acquisition of Letterbox Mail Order Limited, Kleeneze, I Want One of
                                                                              Those.com and Kitbag. The Group also purchased the remaining shares it
                                                                              did not already own in Confetti Network Limited and in Home Farm
                                                                              Hampers Limited. These acquisitions expanded the Home Shopping
                                                                              Division.
                                                                              Disposal of the Home Shopping retail shops operation.
2007                                                                          Acquisition of:
                                                                              *   The Cotswold Company Limited (for the Home Shopping
                                                                                  Division);
                                                                              *   Philograph Publications Limited (for the Education Supplies
                                                                                  Division); and
                                                                              *    Synergy Managed Equipment Services Limited (for the Healthcare
                                                                                   Division).
                                                                              Disposals of James Galt & Co. Limited and Home Farm Hampers Limited.
2009                                                                          Closure of Letterbox Mail Order and The Cotswold Company businesses.
2010                                                                          Disposals of Webb Group Limited, CWIO Limited, Confetti Network
                                                                              Limited and I Want One of Those.com Limited.

3.    DESCRIPTION OF BUSINESS
The Group operates under five operating segments: Express Gifts, Kleeneze, Kitbag (together referred
to as the Home Shopping Division), the Education Supplies Division and the Healthcare Division.
3.1                                                    Home Shopping Division
                                                       The Home Shopping Division consists of three operational segments: Express Gifts, Kitbag and
                                                       Kleeneze. Each of these segments owns and operates a number of brands offering a broad range
                                                       of products. In addition, the division has product sourcing operations in Hong Kong and India.

                                                       Express Gifts
                                                       Express Gifts provides personal shopping services via printed catalogues and the internet
                                                       branded under the Studio, Ace, and Health & Home Shopping brands, which provide a broad
                                                       range of home, leisure, entertainment and other consumer products. The Express Gifts business
                                                       represented approximately 42 per cent. of Group revenue in the 09/10 Financial Year.
                                                       Express Gifts has 1.7 million home shopping customers with a flexible extended credit account,
                                                       of whom over 1.1 million purchased from the Company in the last 12 months. The average
                                                       balance per active credit customer is around £240. Customers with a credit account may choose

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                                                       to pay off their outstanding balance over a flexible period to suit their individual needs, subject
                                                       only to a minimum payment against each four weekly statement, with customers typically taking
                                                       credit over a six or seven month period. Around 60 per cent. of Express Gifts’ customers take
                                                       advantage of credit terms.
                                                       The Company has considerable experience in managing its credit book and keeping control over
                                                       bad debt. The Company manages the early stages of collection of accounts in arrears itself
                                                       rather than through third-party collection agencies, which the Board believes results in a higher
                                                       recovery rate of bad debts. The Company currently maintains a gross credit book of
                                                       approximately £270 million against which are held bad debt provisions of approximately £105
                                                       million. New customer credit limits are carefully managed according to the results of detailed
                                                       credit scoring and currently range from £50 to £300.
                                                       The revenue generated by the Group’s credit business is a significant contributor to Group
                                                       revenues representing an average of over 13 per cent. of revenues over the last five years.

                                                       Kleeneze
                                                       Kleeneze is a network marketing business retailing a range of products encompassing home,
                                                       health, garden and beauty products through a network of self-employed distributors in the UK
                                                       and the Republic of Ireland. The Kleeneze business represented approximately 12 per cent. of
                                                       Group revenue in the 09/10 Financial Year.
                                                       In Kleeneze, the business’s direct customers are its self-employed distributors, who       in turn
                                                       develop their own end customer bases. Orders are generated from, and delivered to,        the end
                                                       customers by the distributors who also collect payment at time of delivery. The Group     provides
                                                       distributors with short term credit accounts in order for them to manage the delay        between
                                                       despatch of goods by the Group and receipt of payment from end customers.

                                                       Kitbag
                                                       Kitbag is one of the leading retailers of sports leisurewear and official football kits both through
                                                       its own online operation, kitbag.com, as well as a number of partnership relationships with
                                                       football clubs and other sports organisations whereby Kitbag manages a range of retail, online
                                                       and/or mail order channels. The Kitbag business represented approximately 9 per cent. of Group
                                                       revenue in the 09/10 Financial Year.
                                                       Kitbag’s mail order customers pay in full on despatch of their order. The majority of business is
                                                       transacted online via the Company’s own website and those it operates for its partners, and this
                                                       element of the business is supported by the distribution of printed catalogues. An increasing
                                                       component of Kitbag’s business is the management of full multi-channel retail contracts with
                                                       various business partners, combining online, catalogue and physical retail sales. The Board
                                                       believes that the ability to successfully manage a multi-channel approach is an important factor
                                                       in the ability of Kitbag to maintain and secure new partnership contracts with leading football
                                                       clubs and other sports organisations.

                                                       Overseas Sourcing
                                                       The Home Shopping Division also operates a product sourcing subsidiary, Fine Art
                                                       Developments (Far East) Limited (‘‘FAFE’’), which is registered in Hong Kong and was
                                                       established there in 1982. FAFE sources goods from Eastern Asia for supply to Findel and
                                                       external customers. As well as helping its customers find new products, FAFE is responsible for
                                                       factory vetting and audit (including monitoring adherence to the Group’s ethical sourcing
                                                       policies), product quality control, and logistics in respect of these goods. The business generates
                                                       revenue by charging commission on sales of the products which it sources for these intra-group
                                                       and external customers. Around 60 per cent. of FAFE’s turnover is with external customers,
                                                       whilst the key intra-group customers are the Home Shopping and Education Supplies Divisions.
                                                       In addition to the Hong Kong operation, the division has a small product sourcing and quality
                                                       control operation in India providing products for the Home Shopping and Education Supplies
                                                       Divisions.
3.2. Education Supplies Division
     The Education Supplies Division is one of the largest independent suppliers of resources
     (excluding information technology and publishing) to schools and other educational
     establishments in the UK with an estimated 8 per cent. market share. The Education Supplies
     Division represented approximately 26 per cent. of Group revenue in the 09/10 Financial Year.

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                                                       Its international unit exports to over 100 countries worldwide. Through its leading brands,
                                                       which operate both via printed catalogues and through a variety of e-procurement solutions, it
                                                       offers an extensive product range supporting subjects across the curriculum, as well as supplying
                                                       furniture, audio visual equipment and commodity products such as stationery and janitorial
                                                       materials. In addition to state and independent schools from nursery to secondary level, the
                                                       division supplies hospitals, charities, and other educational bodies.

                                                       Products are sold directly via specially targeted catalogues to pre-school, primary and secondary
                                                       schools, through a national sales force, exhibitions and workshops, and via online sales. As a
                                                       result of continual investment in product development the division offers a diverse range of
                                                       products.

                                                       The Education Supplies Division operates through a range of long established brands. The
                                                       brands are organised into three principal units, with a specific geographic and/or product focus.

                                                       National Brands
                                                       *     Four major catalogues, the largest being nearly 1,700 pages, provide a wide range of
                                                             curriculum related products covering all major subject areas and including teaching
                                                             equipment, learning aids, classroom supplies and furniture. Products are distributed
                                                             nationally to the vast majority of primary and secondary schools in the UK, and
                                                             elsewhere, and also to a range of other educational establishments, through the Hope
                                                             Education, NES Arnold, Step by Step and Galt Educational brands.

                                                       Regional Brands
                                                       *     The unit supplies consumable and capital equipment on a geographically localised basis,
                                                             including art materials, office stationery, cleaning and maintenance materials, furniture and
                                                             a wide range of larger classroom and office items through the GLS, A to Z, EDCO and
                                                             WNW brands.

                                                       Niche Brands
                                                       *     Each brand focusses on specialist areas: Philip Harris supplies science teaching equipment;
                                                             Davies provides sports equipment; LDA provides resources to help make teaching easier
                                                             and learning fun for all children – including those with special needs; and Philip & Tacey
                                                             provides education supplies and innovative teaching resources for schools in the UK and
                                                             worldwide.

                                                       In addition to UK catalogue trading, the Education Supplies Division operates in the following
                                                       areas:
                                                       *     working with major retailers and manufacturers supplying voucher-related education
                                                             supplies schemes; and
                                                       *     exporting throughout the world directly to international schools, through consolidators
                                                             and overseas distributors, and by tender to overseas governments and non-governmental
                                                             organisations.

                                                       The core customer base in the Education Supplies Division is mainly government-funded
                                                       schools, which the Directors consider reduces the likelihood of bad debts arising.

3.3                                                    Healthcare Division
                                                       The Healthcare Division operates through NRS and its subsidiary NRS Mobility Care Limited
                                                       and represented approximately 11 per cent. of Group revenue in the 09/10 Financial Year. NRS
                                                       is one of the largest contract providers of ICES in the UK and currently has 12 contracts with
                                                       expiry dates through to 2014 representing an estimated 40 per cent. of the market in private
                                                       hands. 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. In addition, NRS
                                                       offers via catalogue and online a range of around 3,000 assistive technology items to customer
                                                       groups in the NHS, professional health and social care organisations, nursing homes, sheltered
                                                       housing establishments and private individuals.

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4.                                                     COMPETITIVE LANDSCAPE
4.1                                                    Home Shopping Division
                                                       Findel’s Home Shopping Division is estimated by Verdict (UK Remote Shopping 2011) to be
                                                       the fourth largest direct mail order operation in the UK with a 5.6 per cent. share of the direct
                                                       mail order market.
                                                       The diverse product range and product personalisation facilities, combined with a flexible credit
                                                       offer, mean that Express Gifts does not have any directly equivalent competitor. However, the
                                                       business does face competition from a variety of sources for different elements of its business. In
                                                       the online and print catalogue retail sectors this comes from other catalogue retailers such as
                                                       Shop Direct Group and N Brown, although those companies have a much higher concentration
                                                       on clothing which is currently only a relatively small, but fast growing, part of the Express Gifts
                                                       offering. Across the rest of the product ranges, although Express Gifts itself has no stores, the
                                                       closest equivalent competitors are budget store retailers such as Wilkinson and Argos. Online
                                                       and catalogue offerings by supermarket chains such as Tesco, and a wide variety of other online
                                                       suppliers including Amazon also address areas of Express Gifts’ product ranges.
                                                       Kleeneze’s primary competitors are represented by other network marketing operations such as
                                                       Avon and Betterware.
                                                       Kitbag is one of the largest online sports retailers in Europe, with the majority of turnover
                                                       derived from operating dedicated online and catalogue product offers on behalf of individual
                                                       football clubs and other sports organisations. It has exclusive arrangements with different
                                                       football clubs although it competes in the sale of certain sports goods with other online sports
                                                       retailers. The combination of skills required for the management of Kitbag’s multi-channel
                                                       partnership contracts has, in the Board’s view, hitherto meant that Kitbag has faced limited
                                                       competition.
                                                       Although barriers to entry in the online retail and catalogue retail sector are low, the Directors
                                                       believe that the division’s strategy of diversified product range, multi-channel offering, the
                                                       provision of flexible credit to Express Gifts customers coupled with low operating costs through
                                                       the use of sophisticated distribution facilities, together with the division’s purchasing capabilities
                                                       through FAFE, all provide the division with competitive advantages. Furthermore, the planned
                                                       investment in systems discussed in paragraph 6 of this Part IV (Information on the Group) will
                                                       address legacy issues arising from the age of Express Gifts’ systems architecture and should
                                                       enable the Group to compete more effectively against both existing and new competitors.

4.2                                                    Education Supplies Division
                                                       The Education Supplies Division is one of the largest independent suppliers of educational
                                                       resources in the UK, with an estimated 8 per cent. market share.
                                                       Excluding information technology, the majority of suppliers by value operating in the education
                                                       supplies marketplace are regionally based businesses either owned or previously owned by local
                                                       authorities. These organisations predominantly sell consumable product into schools in the
                                                       locality and do not have a national presence. In addition, specific products such as office
                                                       stationery and equipment may be sourced through a variety of sources such as office product
                                                       suppliers, high street stationers or supermarkets.
                                                       Key competitors include Yorkshire Purchasing Organisation, Eastern Shires Purchasing
                                                       Organisation and RM Group plc. Many of the division’s larger competitors are public sector
                                                       bodies operating low price point strategies.

4.3                                                    Healthcare Division
                                                       NRS is one of the largest contract providers of ICES in the UK and currently has 12 contracts
                                                       with expiry dates through 2014 representing an estimated 40 per cent. of the market by value in
                                                       private hands. The principal competitors for these contracts are Medequip and Millbrook
                                                       Healthcare.
                                                       This is a growing market, with demand for community equipment services predicted by the UK
                                                       government to increase in the coming years in response to an ageing population and an increase
                                                       in the disabled population, as well as a gradual transfer of contract provision from the public to
                                                       the private sector.

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                                                       NRS also offers via catalogue and online a range of around 3,000 items of assistive technology.
                                                       This market is highly fragmented. The principal competitor to NRS in this market is Homecraft
                                                       Rolyan, with Drive, Sunrise Medical and Able To also having similar market share to NRS.

5.                                                     KEY STRENGTHS

5.1                                                    Experienced management team
                                                       The Group benefits from an experienced management team both at the Group level and in
                                                       Findel’s key operating businesses and divisions.
                                                       During 2009 and 2010 there were a number of significant changes to Findel’s Board of
                                                       Directors. In April 2010, David Sugden was appointed Chairman, having originally joined the
                                                       Board in a non-executive capacity in August 2009. David has extensive experience at chairman,
                                                       chief executive and finance director level. In August 2010, Timothy Kowalski joined the Board
                                                       as Group Finance Director. Timothy has over 26 years of experience with mainly consumer and
                                                       retail companies, including Homestyle plc and N Brown plc. In September 2010, Roger Siddle
                                                       was appointed Chief Executive, having initially led Findel’s Full Potential Review as a
                                                       consultant to the Group. Roger was previously chief executive of BPP Holdings plc, one of
                                                       Europe’s largest professional training and education companies, where he worked with David
                                                       Sugden as chairman until its successful sale to Apollo Global Inc. He is a former managing
                                                       partner of the UK business of Bain & Company, the leading global business consulting firm. In
                                                       October 2010, Laurel Powers-Freeling joined the Board in a non-executive capacity. Laurel is a
                                                       director of Bank of Ireland (U.K.) and BBA LIBOR Ltd and is a senior adviser to the Bank of
                                                       England.
                                                       Of the remaining members of the Board, Philip Maudsley (Executive Director) and Michael
                                                       Hawker and Stuart McKay (Non-Executive Directors) have a combined 60 years of experience
                                                       in the retail sector. Philip Maudsley has been employed by the Group since 1987 and has led
                                                       the Home Shopping Division since 1994 whilst Michael Hawker has held chief executive
                                                       positions at Otto UK and Redcats Group and has been a director of Sears plc. Stuart McKay
                                                       has over 35 years of experience in stationery supplies and retailing. Eric Tracey, Senior
                                                       Independent Director, joined the Board in August 2009 having previously been a partner at
                                                       Deloitte LLP for 25 years, acting finance director for Amey plc, and finance director for
                                                       Wembley plc.
                                                       Together, the Directors bring a broad base of relevant experience to the Group. The Directors
                                                       are committed to continuing their proactive management of the Group in challenging economic
                                                       circumstances and implementing both short and long term strategies identified in the Full
                                                       Potential Review for the creation of value for Shareholders.

5.2                                                    Well established brands
                                                       The Home Shopping Division has a number of brands which are active in the UK home
                                                       shopping market:
                                                       *     Express Gifts’ ‘‘Studio’’ and ‘‘Ace’’ brands have over 1.1 million active customers with a
                                                             credit account.
                                                       *     Kleeneze was established in 1923 and was a founder member of the Direct Selling
                                                             Association. It sells a wide range of products encompassing household and health &
                                                             beauty products through a network of self-employed distributors based throughout the
                                                             UK and the Republic of Ireland.
                                                       *     Kitbag is one of the leading UK retailers of sports leisurewear and official football kits
                                                             both through its own online operation, kitbag.com, as well as a number of partnership
                                                             relationships with football clubs and other sports organisations whereby Kitbag manages a
                                                             range of retail, online and/or mail order channels.
                                                       The Education Supplies Division benefits from market leading brands such as Hope Education
                                                       and NES Arnold, which carry an extensive choice of products. In addition to its large
                                                       mainstream brands which offer a ‘‘one-stop-shop’’, the Education Supplies Division has a
                                                       number of speciality brands with experience in their individual subject areas, such as science,
                                                       sport and special needs. Many of the division’s brands have supplied schools for over 100 years.

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5.3                                                    Sourcing and supplier relationships
                                                       With sales of £547 million during the 09/10 Financial Year and a multi-channel strategy, Findel
                                                       represents an important route to market for many of its suppliers. The Group works with a
                                                       broad range of suppliers, and no one supplier represents more than 3 per cent. of the Group’s
                                                       sales.
                                                       In addition to using external suppliers, the Company owns and operates the Hong Kong based
                                                       sourcing and procurement business, FAFE and a sourcing and procurement office in India.
                                                       These operations provide direct access to low cost sources of product.

5.4                                                    Product ranges
                                                       Nearly 30 per cent. of products in the main edition of Express Gifts’ 2010 Home Shopping
                                                       Christmas catalogue were exclusive to the Company, including an own brand clothing range and
                                                       a high number of personalised items. The Board believes that the Group’s comprehensive in-
                                                       house personalisation facilities give it a competitive advantage within UK retail, and lead to
                                                       over 25 per cent. of all orders from Express Gifts containing one or more personalised items.
                                                       The Education Supplies Division carries an extensive range of products in catalogues of up to
                                                       nearly 1,700 pages. It covers subjects across the curriculum as well as the administrative and
                                                       support needs of schools and educational establishments.

5.5                                                    Customer relationships and databases
                                                       The Board believes that the various businesses of the Home Shopping Division have significant
                                                       customer relationships which will support the ongoing success of the businesses. In Express
                                                       Gifts, over half of all active customers have been purchasing from Findel for five years or more
                                                       and over 70 per cent. of customers who shop in any year are previous customers. Furthermore,
                                                       many of the Express Gifts customers take advantage of the availability of flexible credit, which
                                                       increases their loyalty to the brands and the likelihood of new customers becoming frequent,
                                                       repeat customers.
                                                       The nature of the Home Shopping Division has also enabled Findel to establish extensive
                                                       databases containing customer details; in total the details of 3 million customers are held by the
                                                       Group across the Home Shopping Division. These databases facilitate targeted and effective
                                                       advertising of promotions and accurate monitoring of customer retention.
                                                       Kleeneze’s business is based on the recruitment and retention of distributors, of whom over 37
                                                       per cent. have been with Kleeneze for more than two years, and around 24 per cent. have been
                                                       with Kleeneze for more than five years. Distributors’ earnings are uncapped, which provides
                                                       significant incentive for successful distributors to remain with the business.
                                                       The Education Supplies Division has relationships with state and independent schools from
                                                       nursery to secondary level, hospitals, charities and other educational bodies. 82 per cent. of all
                                                       primary schools and 89 per cent. of all secondary schools purchased from the division in 2010.
                                                       Many of the division’s brands have been selling to schools for over 100 years and have built a
                                                       position of trust and authority with their customers.
                                                       The Healthcare Division is able to take advantage of the increasing number of local authorities
                                                       supplying mobility and other healthcare equipment via ICES contracts, and has excellent
                                                       established relationships with NHS trusts and local authorities in this market. The NRS brand
                                                       has been supplying the healthcare sector since 1948 and has grown substantially in recent years.

5.6                                                    Sophisticated distribution facilities
                                                       The Group has invested heavily in its distribution facilities and systems ensuring processing costs
                                                       are low and enabling low price point items to be processed profitably. The enhanced accuracy in
                                                       picking and packing provided by this investment ensures that costly customer complaints and
                                                       returns are minimised.

6.    GROWTH STRATEGY
Findel has historically implemented a strategy of developing the Group both organically and through
selective acquisitions, with the objective of building on the Group’s key strengths of sourcing and
selling. This strategy has been funded through retained cash and additional bank debt. Over the past
five years the Group has acquired several businesses, including Philograph Publications Limited,
Synergy Managed Equipment Services Limited, Kleeneze and Kitbag.

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During 2010, Findel undertook a Full Potential Review of all of the Group’s continuing operations
which included a bottom-up review of the strategy and operations of each major business and the
Group as a whole.
The Board believes the Group’s current challenges stem largely from a lack of focus on or investment
in its existing businesses, with the previous acquisition-based strategy leading to underinvestment in
key areas. In spite of this, the businesses now remaining in the Group are profitable and cash
generative at operating level and in many cases enjoy market leading positions. The Board believes
that, with the right focus and investment, these businesses are all capable of contributing to
significantly improved performance. Clear plans have been developed for each business to improve
performance. More details are set out below, but the core plans revolve around:
*                                                      a ‘‘Back to Basics’’ approach focussing on enhancing operations;
*                                                      investment into systems and processes (especially in Express Gifts and the Education Supplies
                                                       Division);
*                                                      the leveraging of the benefits of scale in sourcing; and
*                                                      implementation of a cultural change through the empowerment of divisional management.
To deliver Findel’s full potential will take time, with the Board’s expectation being that it will take at
least three to four years to achieve its goals. It will also require some investment with an incremental
funding requirement of approximately £35 million. This investment will be employed across the
Group’s businesses to deliver systems upgrades, new contract wins and efficient management of
projects and resources. It will allow the Group to release the pressure on its supply chain and
manage this important area and bring improvements for Findel’s suppliers and the Group.

6.1                                                    Home Shopping Division
                                                       Express Gifts
                                                       Express Gifts, Findel’s core credit-based home shopping business, is a major player in the UK
                                                       direct mail order market. It is a strong business, which has suffered from a lack of investment,
                                                       particularly in systems. Despite this, it remains profitable and the Board believes that with the
                                                       right strategy, focus and investment, the business can be improved substantially.
                                                       The marketplace in which Express Gifts operates has become increasingly competitive. High
                                                       street retailers’ catalogue and online offerings and pure online players, now compete with
                                                       traditional catalogue operators in the home shopping market. At the same time, customers’
                                                       expectations of the home shopping experience have grown significantly, with immediate feedback
                                                       and multiple service options the norm. Whilst the business has an efficient and low-cost
                                                       distribution capability, its existing systems platform both on and off-line has been underinvested
                                                       and has not been able to compete effectively in this fast-moving environment.
                                                       The Board sees significant opportunities to improve the performance of this business through
                                                       investment in three key areas:
                                                       *     Systems – Despite current success in maintaining Express Gifts’ customer base, historical
                                                             underinvestment needs to be reversed. A major project will be undertaken to upgrade
                                                             existing systems onto an integrated set of market leading applications. This programme
                                                             will be completed over the next three years, requiring investment of approximately £7
                                                             million.
                                                             This investment will provide real time information to customers and throughout the
                                                             business, create a common customer view for all sales channels and enable the business to
                                                             exploit the many opportunities created by the ability to interact online with consumers. It
                                                             will be implemented on a modular basis to reduce risk and enable earlier realisation of
                                                             certain benefits. The project will also encompass the re-engineering of supply chain and
                                                             customer facing processes.
                                                             As well as improving revenue through a significantly enhanced customer experience and
                                                             better stock availability, this investment is expected to reduce both product and operating
                                                             costs. Potential benefits are estimated to be at least £3 million per annum.
                                                       *     Credit management – The Group will implement behavioural scoring of its home shopping
                                                             credit customers. This dynamic technique, already used by Express Gifts’ major
                                                             competitors, will analyse customer behaviour patterns to predict future outcomes. This will
                                                             allow the Group to increase sales to more creditworthy customers whilst reducing bad

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                                                             debt and costs through more effective credit limit, authorisation and collection strategies.
                                                             This will require investment of between £0.5 million and £1 million over one year, leading
                                                             to estimated benefits of approximately £2 million per annum from the following year.
                                                       *     Buying processes – Buying and merchandising processes will be improved to address sales
                                                             decline in some of Express Gifts’ more established product ranges. Given the funding
                                                             constraints placed on the Group, buying practices have of necessity been, in the Board’s
                                                             view, sub-optimal and generally short-term. Once the balance sheet is restructured, it is
                                                             the Group’s intention to work with its suppliers to improve procurement efficiency. In
                                                             addition, the Company has identified a need to buy in a more focussed, but deeper
                                                             manner. In the short term, opportunities have been identified to re-profile stock buying to
                                                             allow the Group to fulfil a greater number of orders and provide a better service
                                                             experience – the business has suffered ‘‘stock outs’’ with a degree of regularity and it is
                                                             estimated that in 2009 this resulted in lost sales totalling over £20 million. The Board
                                                             believes that there is an opportunity to recover up to 25 per cent. of unmet demand.
                                                       In addition to these investments, pricing tests carried out as part of the Full Potential Review
                                                       have demonstrated that response rates can be significantly improved by increasing the value in
                                                       the Group’s offer, without detriment to overall contribution. This strategy fits the economic
                                                       challenges currently facing the Group’s customers and, as such, the increased value proposition
                                                       will be rolled out across the product offering in 2011. As well as the immediate benefit to sales,
                                                       improved response rates will deliver a higher base of active customers with which the Group can
                                                       engage.

                                                       Kleeneze
                                                       Findel’s Kleeneze network      marketing business operates across the UK and the Republic of
                                                       Ireland selling a wide range   of household and health & beauty items. The business utilises much
                                                       of the infrastructure and      resources of the Express Gifts business and benefits from this
                                                       operational leverage, with     potential significant profit benefits flowing from increasing sales
                                                       throughput.
                                                       The Full Potential Review has concluded that increasing distributor numbers is the most
                                                       effective way of increasing sales revenues, and has identified a number of geographic areas
                                                       within the UK which will support significantly increased numbers of distributors. The Group
                                                       has been trialling a variety of recruitment offers to grow the distributor base and is preparing to
                                                       launch more effective offers in 2011 to begin to re-grow the business.

                                                       Kitbag
                                                       Kitbag is a UK market leader and occupies a unique niche in a structurally attractive
                                                       marketplace with a very favourable competitive landscape. The success of the contract with
                                                       Everton FC, where the Group manages all their retail and online channels, has proven that the
                                                       Group’s outsourcing model creates value for its customers, their shirt sponsor and their kit
                                                       supplier.
                                                       The benefits this model can bring are of increasing attraction to football and other sports clubs
                                                       seeking to raise revenue whilst recognising that their retail operations are a small part of their
                                                       overall business. Moreover, replica kit sales, which are the core of Kitbag’s products ranges, are
                                                       currently a small part of the turnover of the major sports brands who wish to encourage high
                                                       quality retailers to carry their replica kits to maintain the status of their much higher volume
                                                       sports fashion products. The Board believes that there are few, if any, other operators that can
                                                       match Kitbag’s track record, sophisticated brand management and multi-channel retail
                                                       capabilities.
                                                       The Full Potential Review has identified an opportunity to accelerate the roll out of this model
                                                       of outsourced retail management to other football clubs. Kitbag has already established such
                                                       relationships with Manchester City FC and Nottingham Forest FC and has identified a clear
                                                       pipeline of other potential partnerships which are being actively pursued. The Board estimates
                                                       that this pipeline over the next three years could contain at least 15 further opportunities, with
                                                       annual revenue potential from each opportunity ranging from £3 million to over £10 million in
                                                       revenue. The Board therefore believes that Kitbag has the potential to become a significantly
                                                       larger business in the future and is likely to become an increasingly important contributor to
                                                       overall Group performance.

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6.2                                                    Education Supplies Division
                                                       The Education Supplies Division remains a UK market leader in the supply of resources
                                                       (excluding information technology and publishing) to schools. The Company’s estimates indicate
                                                       that the division has an 8 per cent. market share in an overall market worth approximately £1.5
                                                       billion. The division has, however, been losing market share for several years due to a general
                                                       failure to meet customer needs on a consistent basis in terms of price, range and service.
                                                       Actions have already been taken to change a significant proportion of the management team
                                                       and the Board is confident that improved performance can be delivered.
                                                       The Full Potential Review has identified a wide range of opportunities to improve business
                                                       performance, many of which require comparatively limited investment. Specific areas of focus
                                                       include:
                                                       *      improving supply chain management and leveraging benefits of scale – the Education
                                                              Supplies Division is in the process of updating and improving its stock forecasting
                                                              processes, which will drive a significant reduction in the number of deliveries it takes to
                                                              fulfil a customer order. The division is also rationalising its product range to reduce
                                                              unnecessary complexity in the range, making it easier for the customer to shop and also
                                                              offering cost price reduction opportunities as the division buys larger unit volumes from
                                                              its suppliers;
                                                       *      enhancing customer contact processes – the Education Supplies Division is reviewing all of
                                                              the processes that touch its customers and streamlining them so that it can provide
                                                              improved service at lower cost. This will require fundamental changes to working practices
                                                              and is in line with the division’s renewed commitment to giving customers what they want
                                                              in all aspects, in an effective and cost efficient way; and
                                                       *      improving pricing and category management – following a rationalisation of the product
                                                              range and a continued reduction in size of the supplier base, the Education Supplies
                                                              Division is in the process of renegotiating 2011 cost prices to ensure it remains
                                                              competitive in the marketplace. In parallel with this, category management has now been
                                                              implemented for all product ranges, ensuring a much more focussed approach to range
                                                              development and in-season trading.
                                                       The Board believes this programme should allow this business to deliver operating profit returns
                                                       on sales in line with its competitors which in some cases are as high as 9 per cent. The speed of
                                                       recovery will reflect the natural annual cycle in the business with the majority of sales made in
                                                       late summer and early spring, reflecting the school calendar.
                                                       The UK government’s Comprehensive Spending Review has changed the market environment,
                                                       but it is the Board’s view that the sector remains attractive and is likely to offer opportunities
                                                       for businesses with scale. This stems from the emergence of new school models, an increased
                                                       emphasis on innovative procurement channels, such as e-procurement, and a growing
                                                       requirement for ‘‘best value’’. In addition, the ending of the Building Schools for the Future
                                                       programme, in which Findel had limited participation, is expected to increase the requirement
                                                       for refurbishment and re-equipment of existing schools.

6.3                                                    Healthcare Division
                                                       NRS is one of the largest providers of outsourced Integrated Community Equipment Services
                                                       (ICES) to NHS trusts and local authorities. It operates in a growing market with favourable
                                                       demographics and an increasing transfer of services provision from the public to the private
                                                       sector (it is estimated that the outsourced proportion of this market in England is only 28 per
                                                       cent.). The UK government’s Comprehensive Spending Review will increase pressure on
                                                       healthcare budgets, which in turn will increase pressure on public bodies to save money. The
                                                       Board believes that these trends are likely to accelerate the move to outsourcing from which the
                                                       Healthcare Division is well placed to benefit. The pipeline of new ICES contracts expected to
                                                       come to market has expanded significantly over the last 12 months, with £35 million annual
                                                       contract value identified over the next two years compared to £17 million at the same time last
                                                       year.
                                                       As a market leader, NRS is well positioned to capitalise on this opportunity but has historically
                                                       suffered from underfunding and a lack of investment. The Full Potential Review process has
                                                       identified a number of key areas of investment required to realise the business’ growth potential
                                                       – in particular supporting the working capital and capital expenditure required when taking on
                                                       new contracts.

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                                                       The Board believes that the envisaged restructuring of the Group’s balance sheet will have a
                                                       significant beneficial impact on this business and that it will give customers greater confidence to
                                                       sign long-term supply contracts with the Healthcare Division.

7.    INTELLECTUAL PROPERTY
Findel considers its most important intellectual property to be its customer databases, brands and
domain names. The Group’s policy is to register its important brands as trademarks in those markets
that the Directors believe are, or are likely in the future to be, material to Findel’s business and the
Group aims to register the small remainder of its brands which are not yet registered. The Group
also registers domain names connected to its websites.
The Group considers the following to be its particularly important brands:
*                                                      the Home Shopping Division brand names Studio, Ace and Kleeneze;
*                                                      the e-commerce brand name Kitbag;
*                                                      the Education Supplies Division brand names NES Arnold, Hope Education, GLS Educational
                                                       Supplies, A to Z supplies, EDCO, Philip Harris, Davies Sports, Galt Educational, Philip &
                                                       Tacey, LDA and Step by Step;
*                                                      the Healthcare Division brand names NRS and Nottingham Rehab; and
*                                                      the product brand names TG, Nuvo and Multilink.

8.   INFORMATION TECHNOLOGY
Findel’s information technology systems are managed at a business unit level and cover all key
business processes in the value chain, including logistics, stock management, order processing and
website functions. Certain of these systems are considered business critical and plans are in place to
mitigate failures of these systems. In addition, each of Findel’s business units monitors its information
technology systems on an ongoing basis to ensure that they provide appropriate support for the
Group’s business model and strategy.

9.    INSURANCE
The Group has insurance that provides coverage for activities related to the Group’s operations. The
principal risks covered (with name of insurer(s)) are: material damage and business interruption
(Zurich and co-insurers Aviva), property damage (RSA, Allianz), public and products liability (ACE,
Chartis), employer’s liability (Zurich, Aviva, Chartis) and marine transit/stock throughput (RSA).
Insurance has been in place in respect of all the above risks since 1997 or earlier. In addition, cover
is maintained in respect of a variety of other classes of insurance including motor, engineering
inspection, computer, terrorism, contract works, directors and officers, and professional indemnity
insurance.

10. GOVERNMENTAL REGULATION
Findel is subject to a range of legal and regulatory requirements in the countries where it operates,
particularly in the areas of consumer protection (including product safety), competition, health and
safety, taxation, environment, labour and employment practices (including pensions).
The products which Findel sells are subject to various consumer protection laws in the markets in
which it operates, which has an effect on the pricing of products, product descriptions, promotional
activity and product safety among other things. The Group also offers consumer credit and financial
products, including payment protection insurance and extended warranties, which are subject to
compliance with legislation and regulation. Findel’s subsidiary, Express Gifts Limited, is authorised
and regulated by the FSA. Findel is also subject to legislation and regulation regarding products with
age restrictions on sale, data privacy, product packaging, collection and recycling of end of life
electrical products, money laundering, and trade waste. This legislative environment is supplemented
with codes of practice and additional guidance provided by various enforcing regulators, as well as
the activities of self-regulatory bodies such as the Advertising Standards Authority.
None of the governmental regulations to which the Group is subject has had a material adverse effect
on the Group’s financial condition, and the Group is not aware of any existing matters which it
presently expects to have a material adverse effect.




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                                                                                             PART V

                                                             HISTORICAL FINANCIAL INFORMATION ON THE GROUP
1.   INTRODUCTION
This Part V (Historical Financial Information on the Group) sets out financial information relating to
the Group as follows:
*                                                      Part V(2) contains consolidated financial information of the Group for each of the three
                                                       financial years ended 2 April 2010, 3 April 2009 and 31 March 2008. The financial information
                                                       comprises a restatement of the Group’s audited accounts for the relevant periods. For further
                                                       information on the restated financial information and the audited accounts, see the section
                                                       entitled Presentation of Financial and Other Information on page 28 of this document.
*                                                      Part V(3) contains an accountants’ report on the consolidated financial information set out in
                                                       part V(2) prepared by Deloitte LLP.
*                                                      Part V(4) contains unaudited consolidated financial information of the Group for the 26 week
                                                       period ended 1 October 2010 and the 26 week period ended 3 October 2009 which has been
                                                       replicated without material adjustment from the financial information of the Group for the
                                                       relevant periods published on 30 November 2010.
*                                                      Part V(5) contains an accountants’ review report on the consolidated financial information
                                                       relating to the Group for the 26 week period ended 1 October 2010 prepared by KPMG Audit
                                                       Plc.




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2.                                                     CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE FINANCIAL
                                                       YEARS ENDED 2 APRIL 2010, 3 APRIL 2009 AND 31 MARCH 2008

CONSOLIDATED INCOME STATEMENT
52 week period ended 2 April 2010

                                                                                               Before
                                                                                          exceptional
                                                                                            items and
                                                                                           terminated Exceptional Terminated
                                                                                           operations       items* operations**      Total
                                                                                 Notes           £000        £000       £000         £000

Revenue                                                                            3,5         547,013        —        53,162      600,175
Cost of sales                                                                                 (284,695)       —       (32,192)    (316,887)

Gross profit                                                                                   262,318         —        20,970     283,288

Trading costs                                                                       4         (229,334)       —       (85,230)    (314,564)
Exceptional operating costs (net)                                                   6
– Other exceptional items                                                                           —     (16,319)       (376)     (16,695)
– Pension curtailment gain                                                                          —       5,409          —         5,409
Share of result of associate                                                       19             (434)        —           —          (434)
Analysis of operating profit/(loss)
– EBITDA                                                                                        45,728    (10,910)     (2,005)      32,813
– Depreciation and amortisation                                                                (11,018)        —       (2,445)     (13,463)
– Impairment                                                                                    (2,160)        —      (60,186)     (62,346)
Operating profit/(loss)                                                              5           32,550    (10,910)    (64,636)     (42,996)

Finance costs                                                                       9          (31,266)   (12,157)        —        (43,423)
Analysis of finance income
– Movement on fair value of
  derivatives                                                                                    3,213        —           —          3,213
– Other                                                                                          7,082        —           —          7,082
Finance income                                                                      8          10,295         —           —        10,295

Profit/(loss) before tax                                                                        11,579     (23,067)    (64,636)     (76,124)
Income tax (expense)/income                                                        10          (3,242)      3,803          —           561

Profit/(loss) for the period attributable
 to the equity holders of the parent                                               11            8,337    (19,264)    (64,636)     (75,563)

Earnings/(loss) per share
Basic                                                                              14           2.21p                             (20.02)p
Diluted                                                                            14           2.21p                             (20.02)p

All results are from continuing operations.
The accompanying notes are an integral part of this consolidated income statement.
* Exceptional items are described in note 1.
** Terminated operations are described in note 1.




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CONSOLIDATED INCOME STATEMENT
52 week period ended 3 April 2009

                                                                      Before
                                                                 exceptional
                                                                   items and
                                                                  terminated Exceptional Terminated
                                                                  operations       items* operations**        Total
                                                       Notes            £000        £000       £000           £000

Revenue                                                   3,5         572,096             —      38,670     610,766
Cost of sales before exceptional items                               (278,171)            —     (21,260)   (299,431)
Exceptional stock rationalisation                                          —         (14,321)        —      (14,321)

Cost of sales                                                        (278,171)       (14,321)   (21,260)   (313,752)

Gross profit/(loss)                                                   293,925         (14,321)   17,410     297,014

Trading costs                                               4        (247,047)           —      (49,065)   (296,112)
Exceptional operating costs (net)                           6
– Additional debtors provision                                             —         (14,429)        —      (14,429)
– Other exceptional items                                                  —         (12,985)    (3,458)    (16,443)
Share of result of associate                              19              403         (4,743)        —       (4,340)
Analysis of operating profit/(loss)
– EBITDA                                                               57,391        (46,478)   (13,631)     (2,718)
– Depreciation and amortisation                                       (10,660)            —      (1,061)    (11,721)
– Impairment                                                               —              —     (20,421)    (20,421)
– Profit on disposal of land and
   buildings                                                              550            —          —          550
Operating profit/(loss)                                      5         47,281         (46,478)   (35,113)    (34,310)

Analysis of finance costs
– Movement on fair value of
  derivatives                                                          (3,361)           —          —        (3,361)
– Other                                                               (32,230)           —          —       (32,230)
Finance costs                                               9         (35,591)           —          —       (35,591)
Finance income                                              8          12,471            —          —        12,471

Profit/(loss) before tax                                               24,161         (46,478)   (35,113)    (57,430)
Income tax (expense)/income                               10          (6,766)         11,231      5,937      10,402

Profit/(loss) for the period attributable
  to the equity holders of the parent                     11          17,395         (35,247)   (29,176)    (47,028)

Earnings/(loss) per share
Basic                                                     14          14.38p                               (38.89)p
Diluted                                                   14          14.38p                               (38.89)p

All results are from continuing operations.
The accompanying notes are an integral part of this consolidated income statement.
* Exceptional items are described in note 1.
** Terminated operations are described in note 1.




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CONSOLIDATED INCOME STATEMENT
Year ended 31 March 2008

                                                                      Before
                                                                 exceptional
                                                                   items and
                                                                  terminated Exceptional Terminated
                                                                  operations       items* operations**        Total
                                                       Notes            £000        £000       £000           £000

Revenue                                                   3,5         585,181            —       55,184     640,365
Cost of sales                                                        (273,375)           —      (27,819)   (301,194)

Gross profit                                                          311,806             —      27,365     339,171

Trading costs                                               4        (249,063)           —      (30,340)   (279,403)
Exceptional operating costs (net)                           6
– Negative goodwill arising on
  acquisitions in the period                                               —             222         —          222
– Other exceptional items                                                  —         (13,750)    (2,119)    (15,869)
Share of result of associate                              19           (1,350)            —          —       (1,350)
Analysis of operating profit/(loss)
– EBITDA                                                              73,679         (13,528)    (3,698)     56,453
– Depreciation and amortisation                                       (9,286)             —      (1,396)    (10,682)
– Impairment                                                          (3,000)             —          —       (3,000)
Operating profit/(loss)                                      5         61,393         (13,528)    (5,094)     42,771

Loss on disposal of businesses                                             —             —        (561)        (561)
Analysis of finance costs
– Movement on fair value of
  derivatives                                                              (5)           —           —           (5)
– Other                                                               (32,145)           —          (30)    (32,175)
Finance costs                                               9         (32,150)           —          (30)    (32,180)
Finance income                                              8           9,735            —           —        9,735

Profit/(loss) before tax                                                38,978        (13,528)    (5,685)    19,765
Income tax (expense)/income                               10          (13,965)         3,664      1,839     (8,462)

Profit/(loss) for the period attributable
 to the equity holders of the parent                      11          25,013          (9,864)    (3,846)    11,303

Earnings per share
Basic                                                     14          20.71p                                 9.36p
Diluted                                                   14          20.39p                                 9.21p

All results are from continuing operations.
The accompanying notes are an integral part of this consolidated income statement.
* Exceptional items are described in note 1.
** Terminated operations are described in note 1.




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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Period ended 2 April 2010

                                                                                          2010             2009               2008
                                                                                          £000             £000               £000

(Loss)/profit for the period                                                            (75,563)         (47,028)          11,303
Currency translation (loss)/gain arising on consolidation                                 (590)           1,783              (87)

Total comprehensive income for period                                                  (76,153)         (45,245)          11,216


The total comprehensive income for the period is attributable to the equity shareholders of the parent company, Findel plc.




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CONSOLIDATED BALANCE SHEET
At 2 April 2010
                                                                                     2010       2009       2008
                                                                       Notes         £000       £000       £000

Non-current assets
Goodwill                                                                   15      47,299      54,073     64,431
Other intangible assets                                                    16      70,757      78,175     85,042
Property, plant and equipment                                              17      44,295      52,784     55,043
Investments in associates                                                  19          —          622      4,962
Loans and receivables due from associates                                  39          —       33,654     34,430

                                                                                  162,351     219,308    243,908

Current assets
Inventories                                                                20      73,607      74,024    107,793
Trade and other receivables                                                21     210,355     229,580    265,783
Current tax receivable                                                                 —        1,954         —
Derivative financial instruments                                            26          —           —         457
Cash at bank and in hand                                                   22      44,331       9,924     12,767

                                                                                  328,293     315,482    386,800

Total assets                                                                      490,644     534,790    630,708

Current liabilities
Trade and other payables                                                   23      81,269      98,290    106,987
Current tax liabilities                                                             7,393          —       7,672
Obligations under finance leases                                            24       1,006       1,393        595
Bank overdrafts and loans                                                  25     352,918      42,204     66,107
Derivative financial instruments                                            26           6       3,219        315
Provisions                                                                 27       1,661          —          —

                                                                                  444,253     145,106    181,676

Non-current liabilities
Bank loans                                                                 25           —     341,558    332,287
Obligations under finance leases                                            24            5        854        494
Provisions                                                                 27        5,019         —          —
Deferred tax liabilities                                                   28        7,345      6,752     10,324
Retirement benefit obligation                                               37          449      8,212     11,887

                                                                                   12,818     357,376    354,992

Total liabilities                                                                 457,071     502,482    536,668

Net assets                                                                         33,573      32,308     94,040

Equity
Share capital                                                              30       24,472      4,257      4,255
Capital redemption reserve                                                 31          403        403        403
Share premium account                                                      31       79,240     24,003     23,944
Merger reserve                                                             31       29,518     29,518     29,518
Own shares                                                                 31       (2,047)      (976)    (2,974)
Liability for share-based payments                                         31        4,379      1,342      1,342
Translation reserve                                                        32          702      1,292       (491)
(Accumulated losses)/retained earnings                                     33     (103,094)   (27,531)    38,043

Total equity                                                                       33,573      32,308     94,040


The accompanying notes are an integral part of this consolidated balance sheet.

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CONSOLIDATED CASH FLOW STATEMENT
Period ended 2 April 2010
                                                                                         2010       2009       2008
                                                                       Notes             £000       £000       £000

Operating activities
(Loss)/profit for the period                                                            (75,563)   (47,028)   11,303
Income tax (income)/expense                                                               (561)   (10,402)    8,462
Finance income                                                                         (10,295)   (12,471)   (9,735)
Finance costs                                                                           43,423     35,591    32,180
Loss on disposal of businesses                                                              —          —        561
Operating (loss)/profit                                                                 (42,996)   (34,310)   42,771
Adjustments for:
Depreciation of property, plant and equipment                                           8,338      7,997      7,423
Impairment of property, plant and equipment and
   software and IT development costs                                                    7,422      3,075         —
Amortisation of intangible assets                                                       5,125      3,724      3,259
Negative goodwill arising on acquisitions in the period                                    —          —        (222)
Impairment of goodwill and associated intangible assets                                52,829     17,346      3,000
Share-based payment expense                                                             2,186         —         973
(Profit)/loss on disposal of property, plant and
   equipment                                                                               (63)     1,440     (2,012)
Non-cash pension curtailment gain                                                       (5,409)        —          —
Pension contributions less income statement charge                                      (3,158)    (3,543)    (2,865)
Share of result of associate                                                               434      4,340      1,350
Operating cash flows before movements in working
   capital                                                                              24,708        69      53,677
Decrease/(increase) in inventories                                                       5,040    34,133     (10,286)
Decrease/(increase) in receivables                                                      16,403    39,796     (33,622)
(Decrease)/increase in payables                                                        (21,280)   (8,674)      7,888
Increase in provisions                                                                   6,680        —           —
Cash generated from operations                                                         31,551     65,324     17,657
Income taxes received/(paid)                                                            8,872     (2,797)    (4,439)
Interest paid (including £12,157,000 in respect of
   exceptional financing costs in the period ended
   2 April 2010)                                                                       (32,191)   (24,344)   (27,697)
Net cash generated from/(used in) operating activities                                  8,232     38,183     (14,479)
Investing activities
Interest received                                                                       2,072      1,497      1,079
Proceeds on disposal of property, plant and equipment                                     474        209      1,011
Purchases of property, plant and equipment and
   software and IT development costs                                                    (8,934)   (12,438)   (11,401)
Movements on loan with associate                                                        (8,030)       776    (34,430)
Acquisition of subsidiaries                                               40               643         —      (5,122)
Disposal of subsidiaries                                                                    —          —       8,856
Net cash used in investing activities                                                  (13,775)    (9,956)   (40,007)
Financing activities
Dividends paid                                                                              —     (16,548)   (17,027)
Repayments of obligations under finance leases                                           (1,251)      (614)       103
Net proceeds on issue of shares                                                         74,381         60        381
Movement on bank loans                                                                 (10,494)   (10,851)    53,612
Movement on securitisation loan                                                          2,348     (5,729)     8,076
Net cash generated from/(used in) financing activities                                  64,984     (33,682)   45,145
Net increase/(decrease) in cash and cash equivalents                                    59,441     (5,455)    (9,341)
Cash and cash equivalents at the beginning of the period                               (15,046)   (10,255)      (904)
Effect of foreign exchange rate changes                                                    (64)       664        (10)
Cash and cash equivalents at the end of the period                        22           44,331     (15,046)   (10,255)


The accompanying notes are an integral part of this consolidated cash flow statement.



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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Period ended 2 April 2010
                                                                                                                                           (Accumulated
                                                                     Capital      Share                        Liability for                     losses)/
                                                        Share    redemption    premium    Merger               share-based     Translation      retained      Total
                                                       capital       reserve    account   reserve   Own shares    payments         reserve      earnings     equity
                                                         £000          £000        £000     £000         £000          £000          £000           £000      £000


At 31 March 2007                                        4,250           403     23,568    29,518        (3,012)         369          (404)        43,805    98,497
Total comprehensive
  income for the period                                    —             —          —          —            —            —            (87)        11,303    11,216
Share issues                                                5            —         376         —            —            —             —              —        381
Own shares transferred
  from Employee Benefit
  Trust                                                    —             —          —          —            38           —             —             (38)       —
Credit to equity for share
  based payments                                           —             —          —          —            —           973            —              —         973
Dividends paid                                             —             —          —          —            —            —             —         (17,027)   (17,027)

At 31 March 2008                                        4,255           403     23,944    29,518        (2,974)       1,342          (491)        38,043    94,040

Total comprehensive loss
  for the period                                           —             —          —          —            —            —          1,783        (47,028)   (45,245)
Share issues                                               2             —          59         —            —            —             —              —          61
Impairment of own
  shares                                                   —             —          —          —         1,998           —             —          (1,998)        —
Dividends paid                                             —             —          —          —            —            —             —         (16,548)   (16,548)

At 3 April 2009                                         4,257           403     24,003    29,518          (976)       1,342         1,292        (27,531)   32,308

Total comprehensive loss
  for the period                                           —             —          —          —            —            —           (590)       (75,563)   (76,153)
Share issues                                           20,215            —      55,237         —        (1,071)          —             —              —      74,381
Share warrants issue                                       —             —          —          —            —           851            —              —         851
Share-based payments                                       —             —          —          —            —         2,186            —              —       2,186

At 2 April 2010                                        24,472           403     79,240    29,518        (2,047)       4,379           702       (103,094)   33,573




The total equity is attributable to the equity shareholders of the parent company, Findel plc.




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NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1.    General information and accounting policies
Findel plc is a company incorporated in the United Kingdom under the 2006 Act. The address of the
registered office is given on page 25 of this document. The nature of the Group’s operations and its
principal activities are set out in Part IV (Information on the Group) of this document.
This financial information is presented in sterling because that is the currency of the primary
economic environment in which the Group operates. Foreign operations are included in accordance
with the accounting policies set out below.

New and amended accounting standards
The following relevant new standards are applicable to the Group for the 09/10 Financial Year, and
have not been previously implemented.
*                                                      IAS 1 (revised), ‘‘Presentation of financial statements’’. The most significant change within IAS 1
                                                       (revised) is the requirement to produce a statement of comprehensive income setting out all
                                                       items of income and expense relating to non-owner changes in equity. There is a choice between
                                                       presenting comprehensive income in one statement or in two statements comprising an income
                                                       statement and a separate statement of comprehensive income. The Group has elected to present
                                                       comprehensive income in two statements. In addition, IAS 1 (revised) requires the statement of
                                                       changes in shareholders’ equity to be presented as a primary statement.
*                                                      IFRS 8, ‘‘Operating segments’’. IFRS 8 replaces IAS 14, ‘‘Segment reporting’’ and requires the
                                                       disclosure of segment information on the same basis as the management information provided
                                                       to the chief operating decision maker. The adoption of this standard has not resulted in a
                                                       change in the Group’s reportable segments.
*                                                      IFRS 7, ‘‘Financial instruments; disclosures’’. The amendment required enhanced disclosures in
                                                       respect of fair value measurement and liquidity risk.
*                                                      IAS 23 (revised) ‘‘Borrowing costs’’ and amendments to IFRS 2 ‘‘Share-based payments’’ have
                                                       not had a material impact on the financial information of the Group.

Accounting standards in issue but not yet effective
At the date of approval of this financial information, the following new or revised standards and
interpretations were in issue but not yet effective and have not been adopted in the financial
information:
*                                                      IFRS 2 (revised) ‘‘Share-based payments’’
*                                                      IFRS 3 (revised) ‘‘Business combinations’’
*                                                      IFRS 9 ‘‘Financial instruments’’
*                                                      IAS 24 (revised) ‘‘Related party disclosures’’
*                                                      IAS 27 (revised) ‘‘Consolidated and separate financial statements’’
*                                                      IAS 32 (revised) ‘‘Financial instruments; presentation’’
*                                                      IAS 39 (revised) ‘‘Financial instruments; recognition and measurement’’
*                                                      IFRIC 17 ‘‘Distribution of non-cash assets to owners’’
*                                                      IFRIC 19 ‘‘Extinguishing financial liabilities with equity instruments’’
The Directors anticipate that the adoption of the majority of the standards and interpretations in
future periods will not have a material impact on the financial information of the Group. IFRS 9
‘‘Financial instruments’’ will first apply to the 2014 annual report and accounts and the Directors will
be considering the impact of this new standard during the financial year ending 1 April 2011.

Income statement presentation
Exceptional items
Exceptional items are items which the Directors consider to be significant in aggregate, and are non-
recurring in nature. These are described in note 6.
Terminated operations
Terminated operations relate to businesses which have been sold or in the process of being sold or
exited at the date of approval of this document and have been separated to enhance the

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comparability of the ongoing business. They do not meet the definition of discontinued operations as
defined in IFRS 5, ‘‘Non-current assets held for sale and discontinued operations’’.

Basis of accounting
The financial information has been prepared in accordance with International Financial Reporting
Standards (IFRSs) adopted for use in the European Union and therefore comply with Article 4 of the
EU IAS Regulation. The financial information has been prepared on the going concern basis as set
out below.
The financial information has been prepared on the historical cost basis except for the revaluation of
certain financial instruments. The principal accounting policies adopted are set out below and have
been applied consistently in the current and prior period other than as set out above.

Going concern basis
In determining whether the Group’s financial information 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 the risks and uncertainties relating to its
business activities in the current economic climate.
The Directors have reviewed the latest trading and cash flow forecasts as part of their going concern
assessment. These forecasts include 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. The forecasts
assume receipt of the net proceeds from the proposed Rights Issue and Placing of £80.5 million and
the New Lending Facilities of £301.8 million.
At the General Meeting to be held on 28 February 2011, approval is to be sought from Shareholders
in relation to, inter alia, certain matters to enable the Company to raise approximately £80.5 million
(net of expenses) under the proposed Rights Issue and Placing. Subject to approval by Shareholders
of Resolutions 1 to 4 (inclusive) and the successful completion of the proposed Rights Issue, the New
Lending Facilities are expected to become effective. In forming their conclusions over the adoption of
the going concern basis, the Directors have considered the following:
*                                                      the possibility of the relevant Resolutions at the General Meeting not being approved;
*                                                      the terms of the Underwriting Agreement and the Irrevocable Undertakings; and
*                                                      the terms of the New Lending Facilities.
On the basis of the available evidence, the Directors consider the possibility of the proceeds of the
Rights Issue and the Placing not being received and the New Lending Facilities not becoming
available to the Group to be remote.
Through its various business activities, the Group is exposed to a number of significant risks and
uncertainties, referenced on pages 11 to 22 of this document (but which do not form part of the
financial information), which could affect the Group’s ability to meet its forecasts and hence its
ability to meet its banking covenants under the New Lending Facilities. The Directors have
considered the challenging economic conditions, the current competitive environment in which the
Group’s businesses operate and associated credit risk, together with the debt finance facilities
available to the Group and the potential actions that can be taken should revenues be worse than
expected to protect operating profits and cash flows.
After making enquiries, the Directors have formed a judgement that there is a reasonable expectation
that, taking into account the net proceeds of the Rights Issue and the Placing and the financing to be
made available under the New Lending Facilities if the Rights Issue is effective, the Group has
adequate resources to continue in operational existence for the foreseeable future. For this reason, the
going concern basis has been adopted in preparing this financial information.

Basis of consolidation
Subsidiaries
Subsidiaries are consolidated from the date on which control is transferred to the Group. They cease
to be consolidated from the date that the Group no longer has control.
Inter-company transactions, balances and unrealised gains on transactions between Group companies
are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.

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The financial statements of all subsidiaries are prepared to the same reporting date as the Company.

Associates
Associates are entities over which the Group has significant influence but not control. Significant
influence is the power to participate in the financial and operating policy decisions of the investee but
is not control or joint control over these policies. The equity method is used to account for
investments in associates and investments are initially recognised at cost.
The results and assets and liabilities of associates are incorporated in this financial information using
the equity method of accounting. Investments in associates are carried in the balance sheet at cost as
adjusted by post-acquisition changes in the Group’s share of the net assets of the associate, less any
impairment in the value of individual investments. Losses of an associate in excess of the Group’s
interest in that associate (which includes any long-term interests that, in substance, form part of the
Group’s net investment in the associate) are recognised only to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of the associate. Long-term
loans to associates are reviewed for impairment where relevant, in line with the accounting policy for
impairment of assets set out below.

Segment reporting
IFRS 8 requires operating segments to be identified on the internal financial information reported to
the Chief Operating Decision Maker (CODM) who is primarily responsible for the allocation of
resources to segments and the assessment of performance of the segments. The CODM is the Board
of the Company.
The CODM assesses profit performance using operating profit measured on a basis consistent with
the disclosure in the Group financial information.
The Group is currently organised into five operating segments which were the primary operating
segments:
*                                                      Express Gifts;
*                                                      Kleeneze;
*                                                      Kitbag;
*                                                      Education Supplies; and
*                                                      Healthcare.
The Express Gifts operating segment, the Kleeneze operating segment and the Kitbag operating
segment are together classed as Home Shopping.
Currently, the Group has five operating segments, although previously there were further segments
which have now been terminated. These terminated operations have been separated to enhance the
comparability of the ongoing business. In 2010 and 2009, terminated operations fell within Home
Shopping. In 2008, terminated operations comprised of operations within both Home Shopping and
Education Supplies.

Revenue recognition
Revenue comprises the fair value of the sale of goods and services to external customers, net of value
added tax, rebates, discounts and returns. Revenue is recognised as follows:

Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed
to the buyer upon delivery and the amount of revenue can be measured reliably. A provision for
estimated returns is made, representing the profit on goods sold during the period which will be
returned and refunded after the period end. Revenue is reduced by the value of sales returns provided
for during the period.

Interest income
Interest income on customer credit accounts is recognised on a time-proportion basis, using the
effective interest method. When a receivable is impaired, the Group reduces the carrying amount to
its recoverable amount, being the estimated future cash flow discounted at the original effective
interest rate.

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Rendering of services
Revenue is recognised in respect of non-interest related financial income, delivery charges and parcel
insurance. In addition, various services are provided under the Group’s healthcare contracts. Income
is recognised when the relevant service has been provided to the customer.

Foreign currency translation
Functional and presentational currency
The consolidated financial information is presented in sterling, which is the Company’s and the
Group’s functional and presentational currency. Items included in the financial information of each of
the Group’s entities are measured using the currency of the primary economic environment in which
the entity operates (the functional currency).

Transactions and balances
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the
transaction. At each balance sheet date, monetary assets and liabilities denominated in foreign
currencies are retranslated at the exchange rate prevailing at the balance sheet date. Translation
differences on monetary items are taken to the income statement with the exception of differences on
translations that are subject to effective cash flow hedges.
Translation differences on non-monetary items are reported as part of the fair value gain or loss and
are included in either equity or the income statement as appropriate.

Group companies
The results and financial position of overseas Group entities are translated into sterling as follows:
*                                                      assets and liabilities are translated at the closing rate at the date of that balance sheet;
*                                                      income and expenses are translated at the average exchange rate for the period; and
*                                                      all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign
entities are taken to equity. Tax charges and credits attributable to those exchange differences are
taken directly to equity. When a foreign operation is sold, such exchange differences are recognised in
the income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising
on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are
translated at the closing rate.

Share-based payments
The Group operates a number of equity-settled, share-based compensation plans.
The Group has applied the requirements of IFRS 2 ‘‘Share-based payments’’. In accordance with
IFRS 1, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002 that
were unvested at 1 January 2005.
The Group principally issues equity-settled share-based payments to certain employees. Equity-settled
share-based payments are measured at fair value (excluding the effect of non market-based vesting
conditions) at the date of grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting period, based on the
Group’s estimate of shares that will eventually vest and adjusted for the effect of non market-based
vesting conditions.
Fair value is usually measured by use of the Black Scholes model. The expected life used in the
model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.

Dividend distribution
Dividend distributions to Findel plc shareholders are recognised in the Group’s financial information
in the period in which the dividends are declared.

Property, plant and equipment
Property, plant and equipment are held at cost less accumulated depreciation and any impairment in
value.
Depreciation is charged on a straight-line basis as follows:

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*                                                      freehold properties are depreciated over 50 years;
*                                                      leasehold premises with lease terms of 50 years or less are depreciated over the remaining period
                                                       of the lease;
*                                                      plant and equipment are depreciated over three to 20 years according to the estimated life of the
                                                       asset;
*                                                      equipment on hire or lease is depreciated over the period of the lease; and
*                                                      land is not depreciated.

Software and information technology development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Expenditure on information technology software development is recognised as an internally-generated
intangible asset up to the point where the main projects cease to involve external contractors, and
only if all of the following conditions are met:
*                                                      an asset is created that can be identified (such as software and new processes);
*                                                      it is probable that the asset created will generate future economic benefits; and
*                                                      the development cost of the asset can be measured reliably.
Internally-generated intangible assets are amortised on a straight-line basis over their useful lives of
three to seven years. Where no internally-generated intangible asset can be recognised, development
expenditure is recognised as an expense in the period in which it is incurred.

Goodwill
Goodwill is the excess of the fair value of the consideration payable for an acquisition over the fair
value of the Group’s share of identifiable net assets of a subsidiary, associate or joint venture
acquired at the date of acquisition. Fair values are attributed to the identifiable assets, liabilities and
contingent liabilities that existed at the date of acquisition, reflecting their condition at that date.
Adjustments are made where necessary to bring the accounting policies of acquired businesses into
alignment with those of the Group.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of
associates and joint ventures is included in the carrying amount of the investment. Goodwill is stated
at cost less any impairment. Goodwill is not amortised but is tested annually for impairment. An
impairment charge is recognised for any amount by which the carrying value of goodwill exceeds its
fair value.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the
entity sold, allocated where necessary on a pro rata basis.
If the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and
contingent liabilities exceeds the cost of the business combination, the excess is recognised
immediately in the income statement.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion
of the net fair value of assets, liabilities and contingent liabilities recognised.

Other intangible assets
Intangible assets acquired as part of an acquisition of a business are capitalised separately from
goodwill if those assets are separable and their fair value can be measured reliably. Other intangible
assets acquired separately from the acquisition of a business are capitalised at cost and principally
relate to information technology software development costs.
The cost of intangible assets with finite useful economic lives is amortised on a straight-line basis over
that period. The carrying values of intangible assets are reviewed for impairment when events or
changes in circumstances indicate that the carrying values may not be recoverable.

Brand names
Legally protected or otherwise separable trade names acquired as part of a business combination are
capitalised at fair value on acquisition. Brand names are assumed to have an indefinite life and are
not amortised, but are subject to annual impairment tests.

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Customer relationships
Contractual and non-contractual customer relationships acquired as part of a business combination
are capitalised at fair value on acquisition and amortised on a straight-line basis over a period of
between two and 20 years, representing the Directors’ best estimate of their useful economic lives.

Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group
becomes a party to the contractual provisions of the instrument.

Financial assets
Financial assets are classified as either financial assets ‘‘at fair value through profit or loss’’
(‘‘FVTPL’’) or ‘‘loans and receivables’’. The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial recognition.

Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of
allocating interest income over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts (including all fees on points paid or received that form an
integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest basis for debt instruments.

Financial assets at FVTPL
Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is
designated as at FVTPL.
A financial asset is classified as held for trading if:
*                                                      it has been acquired principally for the purpose of selling in the near future;
*                                                      it is a part of an identified portfolio of financial instruments that the Group manages together
                                                       and has a recent actual pattern of short-term profit-taking; or
*                                                      it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon
initial recognition if:
*                                                      such designation eliminates or significantly reduces a measurement or recognition inconsistency
                                                       that would otherwise arise; or
*                                                      the financial asset forms part of a group of financial assets or financial liabilities or both, which
                                                       is managed and its performance is evaluated on a fair value basis, in accordance with the
                                                       Group’s documented risk management or investment strategy, and information about the Group
                                                       is provided internally on that basis.
Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit
or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned
on the financial asset. Fair value is determined in the manner described in note 38.

Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not
quoted in an active market are classified as loans and receivables. Loans and receivables are measured
at amortised cost using the effective interest method, less any impairment. Interest income is
recognised by applying the effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.

Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each
balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of
one or more events that occurred after the initial recognition of the financial asset, the estimated
future cash flows of the investment have been impacted.
Objective evidence of impairment could include:
*                                                      significant financial difficulty of the issuer or counterparty;

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*                                                      default or delinquency in interest or principal payments; or
*                                                      it becoming probable that the borrower will enter bankruptcy or financial reorganisation.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be
impaired individually are subsequently assessed for impairment on a collective basis. Objective
evidence of impairment for a portfolio of receivables includes the Group’s past experience of
collecting payments, an increase in the number of delayed payments in the portfolio past the average
credit period, as well as observable changes in national or local economic conditions that correlate
with default on receivables.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial
assets with the exception of trade receivables, where the carrying amount is reduced through the use
of an allowance account. When a trade receivable is considered uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off are credited against
the allowance account. Changes in the carrying amount of the allowance account are recognised in
profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed through profit or loss to the extent that the carrying amount
of the investment at the date the impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly
liquid investments that are readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.

Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the
asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership
of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred asset, the Group recognises its retained
interest in the asset and an associated liability for amounts it may have to pay. If the Group retains
substantially all the risks and rewards of ownership of a transferred financial asset, the Group
continues to recognise the financial asset and also recognises a collateralised borrowing for the
proceeds received.

Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into.

Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the
proceeds received, net of direct issue costs.

Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or ‘‘other financial liabilities’’.

Financial liabilities at FVTPL
Financial liabilities comprising derivative financial instruments are classified as at FVTPL where the
financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
*                                                      it has been incurred principally for the purpose of disposal in the near future;
*                                                      it is a part of an identified portfolio of financial instruments that the Group manages together
                                                       and has a recent actual pattern of short-term profit-taking; or
*                                                      it is a derivative that is not designated and effective as a hedging instrument.

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A financial liability other than a financial liability held for trading may be designated as at FVTPL
upon initial recognition if:
*                                                      such designation eliminates or significantly reduces a measurement or recognition inconsistency
                                                       that would otherwise arise; or
*                                                      the financial liability forms part of a group of financial assets or financial liabilities or both,
                                                       which is managed and its performance is evaluated on a fair value basis, in accordance with the
                                                       Group’s documented risk management or investment strategy, and information about the Group
                                                       is provided internally on that basis.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in
profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the
financial liability. Fair value is determined in the manner described in note 38.

Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction
costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest
method, with interest expense recognised on an effective yield basis. The effective interest method is a
method of calculating the amortised cost of a financial liability and of allocating interest expense over
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments through the expected life of the financial liability, or, where appropriate, a shorter period.
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or they expire.

Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest
rate and foreign exchange rate risk, including foreign exchange forward contracts, interest rate swaps
and foreign currency options. Further details of derivative financial instruments are disclosed in note
26.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and
are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss
is recognised in profit or loss immediately.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of
the instrument is more than 12 months and it is not expected to be realised or settled within 12
months. Other derivatives are presented as current assets or current liabilities.

Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is calculated on either standard cost or weighted average cost, depending on the circumstances
of the subsidiary, and where applicable includes those costs that have been incurred in bringing the
inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less applicable
variable selling expenses.

Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation but are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units).

Taxation
The tax currently payable or receivable is based on taxable profit or loss for the period. Taxable
profit differs from net profit as reported in the income statement because it excludes items of income
or expense that are taxable or deductible in other years and it further excludes items that are never
taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.

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Deferred taxation is provided in full on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial information. However, if the deferred
taxation arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it
is not accounted for. Deferred taxation is calculated using tax rates that are expected to apply when
the related deferred taxation asset is realised or the deferred taxation liability is settled.
Deferred taxation assets are recognised to the extent that it is probable that future taxable profit will
be available against which the temporary differences can be utilised.

Leases
Finance leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards
of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at
the lower of the fair value of the leased property and the present value of the minimum lease
payments. Each lease payment is allocated between the liability and finance charges so as to achieve a
constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance
charges, are included in other long-term payables. The interest element of the finance cost is charged
to the income statement over the lease period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period. Property, plant and equipment acquired under
finance leases is depreciated over the shorter of the anticipated useful life of the asset and its lease
term.
Operating leases
Leases in which a significant proportion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases. Payments made under operating leases are charged to the
income statement on a straight-line basis over the period of the lease. Incentives from lessors are
recognised as a systematic reduction of the charge over the lease term.

Retirement benefit costs
The Group has both defined benefit and defined contribution plans. A defined benefit plan is a
pension plan that defines an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and compensation. A defined
contribution plan is a pension plan under which the Group pays fixed contributions into an
independently administered fund. The Group has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to
employee service in the current and prior periods. The cost of providing these benefits, recognised in
the income statement, comprises the amount of contributions payable to the schemes in respect of the
year.
For defined benefit retirement plans, the cost of providing benefits is determined using the Projected
Unit Credit method, with actuarial valuations being carried out at each balance sheet date.
Actuarial gains and losses that exceed 10 per cent. of the greater of the present value of the Group’s
defined benefit obligation and the fair value of the plan assets are amortised over the expected
average remaining lives of the participating employees.
Past service cost is recognised immediately to the extent the benefits are already vested and otherwise
are amortised on a straight-line basis over the average period until the benefits become vested.
Current and past service costs and settlement gains are recognised within administrative expenses in
the income statement. Interest is included within finance costs.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the balance sheet date less the fair value of plan assets,
together with adjustments for unrecognised actuarial gains or losses and past service costs.

2.                                                     Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in note 1,
management has made the following judgements that have the most significant effect on the amounts
recognised in the financial information (apart from those involving estimations, which are dealt with
below).

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Retirement benefits (note 37) – within the UK, the Group operates a number of approved defined
benefit schemes. The pension costs relating to the retirement plans are accounted for under the
corridor approach under IAS 19 ‘‘Employee benefits’’ with the cost of providing retirement benefits
determined using the Projected Unit Credit method, and actuarial valuations being carried out at each
balance sheet date. Inherent in these valuations are key assumptions, including discount rates,
expected returns on plan assets, compensation increases and mortality rates. These actuarial
assumptions are reviewed annually and modified as appropriate in accordance with the advice of
independent qualified actuaries.
Share-based payments (note 29) – the Group offers share and share option plans to certain employees
as part of their compensation and benefits package, designed to improve alignment of the interests of
employees with those of shareholders. The costs relating to these share-based payments are accounted
for under IFRS 2 ‘‘Share-based payments’’, those costs being calculated principally using the Black-
Scholes model as a valuation basis. Inherent in these calculations are key assumptions regarding
expected volatility, an appropriate risk free rate and expected dividend yield. These assumptions are
reviewed annually and modified as appropriate.
Taxation (note 10) – accruals for tax contingencies require the exercise of judgement in relation to
potential tax exposures. Amounts accrued are based on interpretation of tax law and the likelihood of
settlement. Tax benefits are not recognised unless the tax positions are probable of being sustained.
Once considered to be probable, each material tax benefit is reviewed to assess whether a provision
should be taken against full recognition of the benefit on the basis of the potential settlement. All
such provisions are due within one year and therefore included within current tax. Deferred tax assets
are recognised to the extent that it is probable that taxable profit will be available against which the
asset can be utilised requiring judgements to be made in respect of the forecast of future taxable
income.

Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the
balance sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are discussed below.
Goodwill and other intangible assets (notes 15 and 16) – the Group has significant investments in
both goodwill and other intangible assets as a result of acquisitions of businesses and purchases of
such assets. Goodwill and certain intangible assets are held at cost and tested annually for
impairment. Tests for impairment are based on discounted cash flow projections, which require an
estimate of both future operating cash flows and an appropriate discount rate. Such estimates are
inherently subjective. Impairments have arisen in 2009 and 2010.
Trade receivables (note 21) – trade receivables are recognised on the balance sheet at original invoice
amount less provision for impairment. Provisions for impairment are established when there is
objective evidence that the Group will not be able to collect all amounts due and are based on
anticipated collection rates at each year end. These collection rates are estimated based on historical
and current trends and are inherently subjective.
Inventories (note 20) – inventories are recognised on the balance sheet at the lower of cost and net
realisable value. Net realisable value is based on the estimated selling price. Estimated selling prices
are based on historical and current trends and are inherently subjective.
Provisions (note 27) – the Group makes provisions in respect of onerous leasehold property contracts
and leasehold dilapidation commitments where it is probable that a transfer of economic benefit will
be required to settle a present obligation. Such estimates are inherently subjective and are made using
third party advice and the best information available at the balance sheet date.




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3.  Revenue and other income
An analysis of the Group’s revenue and other income is as follows:

                                                                                                      2010              2009     2008
                                                                                                      £000              £000     £000

Sale of goods                                                                                     505,231         507,538      534,301
Rendering of services                                                                              51,805          57,262       64,800
Interest                                                                                           43,139          45,966       41,264

Revenue                                                                                           600,175         610,766      640,365
Finance income                                                                                      7,082          12,471        9,735
Gain on derivatives                                                                                 3,213              —            —

Revenue and other income                                                                          610,470         623,237      650,100

4.  Trading costs
An analysis of the Group’s trading costs is as follows:

                                                                                                      2010              2009     2008
                                                                                                      £000              £000     £000

Selling and distribution costs                                                                    174,071         177,970      186,135
Administrative expenses                                                                           140,493         118,142       95,280
Other operating income                                                                                 —               —        (2,012)

                                                                                                  314,564         296,112      279,403

5.    Segmental analysis
Operating segments
The Board has been considering the information that is presented to them on each of the trading
divisions. In view of this, information on reporting segments has been amended to reflect this
accordingly. For management purposes, the Group is currently organised into five operating segments:
Express Gifts, Kleeneze, Kitbag, Education Supplies and Healthcare. Previously there were additional
segments which have now been terminated. These have been grouped under terminated operations.
Segment information about these operating segments is presented below.

2010
Revenue
                                                             Home Shopping
                                                       Express                        Education
                                                         Gifts  Kleeneze     Kitbag    Supplies Healthcare Terminated             Total
                                                         £000       £000      £000        £000        £000       £000             £000

Revenue before terminated
  operations                                           229,040    64,356     48,309    141,800      63,508         —            547,013
Terminated operations                                       —         —          —          —           —      53,162            53,162

Total revenue                                          229,040    64,356     48,309    141,800      63,508     53,162           600,175




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Loss after tax
                                                               Home Shopping
                                                         Express                          Education
                                                           Gifts Kleeneze       Kitbag     Supplies Healthcare Terminated Unallocated       Total
                                                           £000      £000        £000         £000        £000       £000       £000        £000

Continuing operating profit before
  exceptional items and
  terminated operations                                   20,197      6,449      1,715        2,074      2,549         —           —       32,984
Terminated operations                                         —          —          —            —          —     (64,260)         —      (64,260)
Other exceptional items (note 6)                          (3,325)        —          —       (10,093)      (470)      (376)     (2,431)    (16,695)
Pension curtailment gain (note 37)                            —          —          —            —          —          —        5,409       5,409
Share of result of associate (note 19)                        —          —          —            —          —          —         (434)       (434)

Reportable segment result                                 16,872      6,449      1,715       (8,019)     2,079    (64,636)      2,544     (42,996)

Finance income                                                                                                                             10,295
Finance costs                                                                                                                             (43,423)

Loss before tax                                                                                                                           (76,124)
Tax                                                                                                                                           561

Loss after tax                                                                                                                            (75,563)

Other information
                                                             Home Shopping
                                                       Express                           Education
                                                         Gifts  Kleeneze       Kitbag     Supplies Healthcare Terminated                    Total
                                                         £000       £000        £000         £000        £000       £000                    £000

Capital additions                                         1,314        —        1,322        3,336      1,355       1,604                  8,931
Depreciation and amortisation                             4,988       487         550        3,677      1,316       2,445                 13,463
Impairment losses                                           432        —           —         1,511        217      60,186                 62,346

Balance Sheet
Assets
Segment assets                                         212,903      32,478     17,797     133,297      23,769      10,088                430,332

Unallocated corporate assets                                                                                                              60,312

Consolidated total assets                                                                                                                490,644

Liabilities
Segment liabilities                                    (117,151)    (6,394)    (6,630)     (35,994)    (8,324)     (9,159)               (183,652)

Unallocated corporate liabilities                                                                                                        (273,419)

Consolidated total liabilities                                                                                                           (457,071)

Unallocated corporate assets and liabilities principally comprise cash and bank borrowings, loans and
receivables due from associates, and current and deferred tax provisions.




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2009
Revenue
                                                             Home Shopping
                                                       Express                         Education
                                                         Gifts  Kleeneze     Kitbag     Supplies Healthcare Terminated                   Total
                                                         £000       £000      £000         £000        £000       £000                   £000

Revenue before terminated
  operations                                           232,079     69,200    36,041      169,992     64,784         —                 572,096
Terminated operations                                       —          —         —            —          —      38,670                 38,670

Total revenue                                          232,079     69,200    36,041      169,992     64,784     38,670                610,766


Loss after tax
                                                             Home Shopping
                                                       Express                         Education
                                                         Gifts  Kleeneze     Kitbag     Supplies Healthcare Terminated Unallocated       Total
                                                         £000       £000      £000         £000        £000       £000       £000        £000

Continuing operating profit before
  exceptional items and
  terminated operations                                  26,836     5,639       610        8,629      5,164          —          —       46,878
Terminated operations                                        —         —         —            —          —     (31,655)         —      (31,655)
Stock rationalisation                                    (3,002)       —         —       (11,319)        —           —          —      (14,321)
Additional debtors provision                            (14,429)       —         —            —          —           —          —      (14,429)
Other exceptional items (note 6)                         (4,284)     (290)   (1,474)      (3,732)      (511)     (3,458)    (2,694)    (16,443)
Share of result of associate (note
  19)                                                       —         —            —         —           —          —       (4,340)     (4,340)

Reportable segment result                                 5,121     5,349      (864)      (6,422)     4,653    (35,113)     (7,034)    (34,310)

Finance income                                                                                                                          12,471
Finance costs                                                                                                                          (35,591)

Loss before tax                                                                                                                        (57,430)
Tax                                                                                                                                     10,402

Loss after tax                                                                                                                         (47,028)


Other information
                                                             Home Shopping
                                                       Express                         Education
                                                         Gifts  Kleeneze     Kitbag     Supplies Healthcare Terminated                   Total
                                                         £000       £000      £000         £000        £000       £000                   £000

Capital additions                                         4,218       —        124         3,709      1,428      4,650                 14,129
Depreciation and amortisation                             5,181      915       128         3,389      1,047      1,061                 11,721
Impairment losses                                            —        —         —             —          —      20,421                 20,421

Balance Sheet
Assets
Segment assets                                         219,372     34,033    17,371      145,820     23,741     20,018                460,355

Investments in associates                                                                                                                 622
Unallocated corporate assets                                                                                                           73,813

Consolidated total assets                                                                                                             534,790

Liabilities
Segment liabilities                                    (120,239)   (4,809)   (6,294)     (46,056)    (7,798)     (7,519)              (192,715)

Unallocated corporate liabilities                                                                                                     (309,767)

Consolidated total liabilities                                                                                                        (502,482)

Unallocated corporate assets and liabilities principally comprise cash and bank borrowings, loans and
receivables due from associates, and current and deferred tax provisions.


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2008
Revenue
                                                             Home Shopping
                                                       Express                         Education
                                                         Gifts  Kleeneze     Kitbag     Supplies Healthcare Terminated                   Total
                                                         £000       £000      £000         £000        £000       £000                   £000

Revenue before terminated
  operations                                           261,770     68,542    26,279      172,764     55,826         —                 585,181
Terminated operations                                       —          —         —            —          —      55,184                 55,184

Total revenue                                          261,770     68,542    26,279      172,764     55,826     55,184                640,365


Profit after tax
                                                             Home Shopping
                                                       Express                         Education
                                                         Gifts  Kleeneze     Kitbag     Supplies Healthcare Terminated Unallocated       Total
                                                         £000       £000      £000         £000        £000       £000       £000        £000

Continuing operating profit before
  exceptional items and
  terminated operations                                 39,088      7,735      861        15,477       (418)         —         —       62,743
Terminated operations                                       —          —        —             —          —       (2,975)       —       (2,975)
Negative goodwill arising on
  acquisitions in the period                                 —         —         —            —         222          —          —          222
Other exceptional items (note 6)                         (4,071)   (2,832)     (939)      (5,333)      (364)     (2,119)      (211)    (15,869)
Share of result of associate (note
  19)                                                       —         —            —         —           —          —       (1,350)     (1,350)

Reportable segment result                               35,017      4,903       (78)      10,144       (560)     (5,094)    (1,561)    42,771

Loss on disposal of business                                                                                                              (561)
Finance income                                                                                                                           9,735
Finance costs                                                                                                                          (32,180)

Profit before tax                                                                                                                       19,765
Tax                                                                                                                                    (8,462)

Profit after tax                                                                                                                        11,303


Other information
                                                             Home Shopping
                                                       Express                         Education
                                                         Gifts  Kleeneze     Kitbag     Supplies Healthcare Terminated                   Total
                                                         £000       £000      £000         £000        £000       £000                   £000

Capital additions                                         4,611         3      101         3,220      1,395      2,071                 11,401
Depreciation and amortisation                             4,522     1,208      146         2,654        756      1,396                 10,682
Impairment losses                                            —         —        —             —       3,000         —                   3,000

Balance Sheet
Assets
Segment assets                                         259,420     36,111    13,396      173,741     26,804     44,693                554,165

Investments in associates                                                                                                               4,962
Unallocated corporate assets                                                                                                           71,581

Consolidated total assets                                                                                                             630,708

Liabilities
Segment liabilities                                    (137,483)   (4,042)   (2,709)     (52,060)    (6,884)     (6,903)              (210,081)

Unallocated corporate liabilities                                                                                                     (326,587)

Consolidated total liabilities                                                                                                        (536,668)

Unallocated corporate assets and liabilities principally comprise cash and bank borrowings, loans and
receivables due from associates, and current and deferred tax provisions.


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Geographical segments
The Group’s operations are located in the United Kingdom and Hong Kong.
The following table provides an analysis of the Group’s sales by geographical market, irrespective of
the origin of the goods/services.

                                                                      2010          2009         2008
                                                                      £000          £000         £000

United Kingdom                                                     570,040       573,149      605,849
Europe                                                              17,384        16,192       14,379
Asia                                                                 6,419         5,425       12,666
Other                                                                6,332        16,000        7,471

                                                                   600,175       610,766      640,365

The following is an analysis of the carrying amount of non-current assets analysed by geographical
area in which the assets are located.

                                                                      2010          2009         2008
                                                                      £000          £000         £000

United Kingdom                                                     162,316       219,245      243,840
Hong Kong                                                               35            63           68

                                                                   162,351       219,308      243,908

Major customers
The Group has no transactions with any single customer that amounts to more than 10 per cent. of
the Group’s total revenue in any period.

6.   Exceptional items
The following is an analysis of the exceptional items arising within the Group during the three year
period.

                                                                      2010          2009         2008
                                                                      £000          £000         £000

Exceptional cost of sales
Stock rationalisation                                                   —         14,321           —
Exceptional operating costs (net)
Additional debtors provision                                             —        14,429           —
Pension curtailment gain (note 37)                                   (5,409)          —            —
Negative goodwill arising on acquisition in the period                   —            —          (222)
Other exceptional items
– restructuring costs                                                 5,827        9,739       11,758
– warehouse reorganisation costs                                      4,188        1,881        3,402
– costs in relation to business closures                                 —         4,823           —
– onerous lease provisions                                            6,680           —            —
– costs in relation to businesses disposed of in prior year              —            —           709
Exceptional financing costs
Debt refinancing costs                                               12,157            —            —

                                                                    23,443        45,193       15,647

The costs of stock rationalisation, the additional debtors provision and negative goodwill arising on
acquisition in the period are split by operating segment in note 5.
Restructuring costs in 2010 relate to the Express Gifts operating segment £1,557,000 (2009:
£2,812,000; 2008: £2,765,000), the Kleeneze operating segment £nil (2009: £290,000; 2008: £2,832,000),

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the Kitbag operating segment £nil (2009: £1,474,000; 2008: £939,000), the Education Supplies
operating segment £1,989,000 (2009: £1,851,000; 2008: £3,237,000) and the Healthcare operating
segment £43,000 (2009: £511,000; 2008: £364,000), with £1,862,000 (2009: £2,694,000; 2008: £211,000)
not allocated to a specific operating segment. The remainder £376,000 (2009: £107,000; 2008:
£1,410,000) related to terminated operations.
Warehouse reorganisation costs in 2010 relate to the Express Gifts operating segment £1,768,000
(2009: £nil; 2008: £1,306,000), the Education Supplies operating segment £1,701,000 (2009: £1,881,000;
2008: £2,096,000) and the Healthcare operating segment £427,000 (2009: £nil; 2008: £nil) with the
remainder unallocated £292,000 (2009: £nil; 2008: £nil).
Costs in 2009 in relation to business closures and in 2008 in relation to businesses disposed of in the
prior year both relate to operating segments which previously operated within the Home Shopping
operating segment.
The onerous lease provisions in 2010 relate to the Education Supplies operating segment £6,403,000
with the remaining cost of £277,000 not allocated to a specific operating segment.
Of the exceptional operating items listed above, £10,868,000 are classified as selling and distribution
costs (2009: £16,310,000; 2008: £3,402,000) and £418,000 are classified as administrative expenses
(2009: £14,562,000; 2008: £12,245,000).

7.    Terminated operations
In 2008, the Group incurred gains and losses on the disposal of the following businesses, each being
the proceeds of disposal less the carrying amount of the net assets of the relevant business and any
attributable goodwill. The gain on the sale of James Galt & Co Limited related to the Home
Shopping operating segment. All other losses related to the Education Supplies operating segment.

                                                                                    2010         2009           2008
                                                                                    £000         £000           £000

James Galt & Co                                                                        —           —           (2,481)
Percussion Plus                                                                        —           —            1,355
Weston                                                                                 —           —              419
Didax                                                                                  —           —            1,036
Protus                                                                                 —           —              232

                                                                                       —           —             561



In 2010, the operations of Webb, Confetti and I Want One of Those.com (‘‘IWOOT’’) were either
being sold or were in the process of being sold and as such meet the Group’s criteria to be treated as
terminated operations which prescribes that businesses sold or in the process of being sold or exited
prior to the approval of the financial information be disclosed separately as terminated operations.
Together with the terminated businesses in 2009, The Cotswold Company and Letterbox, and the
businesses disposed of in 2008 as noted above, these businesses have been separately disclosed within
the ‘‘terminated operations’’ column on the face of the income statement. All of the terminated
operations in 2010 and 2009 related to operating segments which previously operated within the
Home Shopping operating segment.

                                                                                          Loss before tax
                                                                Revenue                and exceptional items
                                                        2010        2009    2008      2010        2009          2008
                                                        £000        £000    £000      £000        £000          £000

Terminated operations                                  53,162     38,670   55,184   (64,260)    (31,655)       (3,005)




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8.                                                     Finance income

                                                                               2010     2009     2008
                                                                               £000     £000     £000

Interest on loans to, and other guarantees for, associates                       853    4,316    2,215
Interest on bank deposits                                                      1,215    2,177    1,623
Amounts arising on derivatives not in a designated
hedge accounting relationship                                                  3,213       —        —
Expected return on pension assets (note 37)                                    5,014    5,978    5,897

                                                                              10,295   12,471    9,735

9.                                                     Finance costs

                                                                               2010     2009     2008
                                                                               £000     £000     £000

Interest on bank loans and overdrafts                                         23,398   25,638   26,056
Interest on finance leases                                                        279      209      108
Exceptional debt refinancing costs                                             12,157       —        —
Amounts arising on derivatives not in a designated
hedge accounting relationship                                                     —     3,361        5
Interest on pension obligations (note 37)                                      5,818    5,846    5,345
Amortisation of banking fees                                                   1,771      537      666

                                                                              43,423   35,591   32,180




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10.                                                    Tax (income)/expense

                                                                                      2010       2009      2008
                                                                                      £000       £000      £000

Current tax
– current period (UK tax)                                                               —       (6,070)    8,345
– current period (overseas tax)                                                        412         461       430
– adjustments in respect of prior periods (UK tax)                                      57      (1,311)    1,270
– adjustments in respect of prior periods (overseas tax)                                —           90       (10)

                                                                                       469      (6,830)   10,035
Deferred tax
– current period                                                                      (686)     (3,476)   (1,626)
– adjustments in respect of prior periods                                             (344)        (96)       53

                                                                                     (1,030)    (3,572)   (1,573)

                                                                                      (561)    (10,402)    8,462

The tax (income)/expense for the year can be reconciled to the
  (loss)/profit per the income statement as follows:
(Loss)/profit before taxation                                                        (76,124)   (57,430)   19,765

Tax at the UK corporation tax rate of 28% (2009: 28%; 2008:
   30%)                                                                             (21,315)   (16,080)    5,930
Effects of:
Tax effect of result of associate                                                      122      1,215        405
Expenses not deductible for tax purposes                                            11,560      1,767      1,562
Movements on deferred tax assets                                                     9,649      3,691        270
Lower tax rates on overseas earnings                                                  (290)       (38)      (280)
Impact of loss carry back                                                               —        (405)        —
Adjustments relating to changes in UK tax legislation                                   —          59         —
Reversal of deferred tax asset relating to share options                                —         706         —
Change in the rate of UK corporation tax
– reduction in the net deferred tax liability                                           —          —        (738)

                                                                                      (274)     (9,085)    7,149
Adjustments in respect of prior periods – current tax                                   57      (1,221)    1,260
Adjustments in respect of prior periods – deferred tax                                (344)        (96)       53

                                                                                      (561)    (10,402)    8,462




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11.                                                    (Loss)/profit for the period

                                                                                             2010       2009      2008
                                                                                             £000       £000      £000

Stated after charging/(crediting):
Cost of inventories recognised as expense                                                  309,555    293,183   295,403
Impairment charge for inventories                                                            7,332     20,569     5,791
Amounts arising on derivatives not in a designated hedge
   accounting relationship                                                                  (3,213)     3,361         5
Depreciation of property, plant and equipment
– owned                                                                                      7,501      7,237     6,940
– held under finance leases and hire purchase agreements                                        837        760       483
Amortisation of intangible assets                                                            5,125      3,724     3,259
Impairment of goodwill                                                                      40,178     10,678     3,000
Impairment of intangible assets                                                             11,754      6,668        —
Impairment of property, plant and equipment                                                  6,736      3,075        —
(Profit)/loss on disposal of property, plant and equipment                                      (63)     1,440    (2,012)
Impairment charge for receivables                                                           31,564     49,979    30,776
Staff costs (note 12)                                                                       68,228     68,198    70,964
Auditors’ remuneration (see below)                                                           1,628      1,164     1,034

The analysis of auditors’ remuneration is as follows:
Fees payable to the Company’s auditors for the audit of the
   Company’s annual accounts                                                                  111        111        79
Fees payable to the Company’s auditors and their associates for
   other services to the Group:
– the audit of the Company’s subsidiaries pursuant to legislation                             384        320       322

Total audit fees                                                                              495        431       401

Other services pursuant to legislation
– reporting accountant (charged to share premium account)                                     600         —         —
– interim review                                                                               60         —         —
Corporate tax services                                                                        241        215       192
VAT services                                                                                   —         116       184
Internal control review                                                                         9         74        59
Corporate finance services                                                                     745        305       175
Other services                                                                                 70         15        15

Total non-audit fees                                                                         1,725       725       625

Fees payable to the Company’s auditors and their associates in
  respect of associated pension schemes
Audit                                                                                            8         8          8

                                                                                             2,228      1,164     1,034

Charged to income statement                                                                  1,628      1,164     1,034
Charged to share premium account                                                               600         —         —

                                                                                             2,228      1,164     1,034




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12. Staff costs
The average monthly number of employees (including executive directors) was:

                                                                          2010     2009      2008
                                                                           No.      No.       No.

Administration                                                            1,402    1,631     1,679
Production                                                                  278      178       147
Selling and distribution                                                  1,480    1,588     1,777

                                                                          3,160    3,397     3,603

Their aggregate remuneration comprised:

                                                                          2010     2009      2008
                                                                          £000     £000      £000

Wages and salaries                                                       61,845   61,895    63,596
Social security costs                                                     5,175    4,986     5,697
Other pension costs                                                       1,208    1,317     1,671

                                                                         68,228   68,198    70,964

13.                                                    Dividends

                                                                          2010     2009      2008
                                                                          £000     £000      £000

Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 3 April 2009 of nil pence per
share
(2008: 17.50p per share; 2007: 15.60p per share)                            —     14,897    13,259
Less: attributable to own shares held in Employee Benefit Trust              —       (197)     (178)

                                                                            —     14,700    13,081

Interim dividend for the period ended 2 April 2010 of nil pence
per share (2009: 2.20 pence per share; 2008: 4.70 pence per share)          —      1,873     3,999
Less: attributable to own shares held in Employee Benefit Trust              —        (25)      (53)

                                                                            —      1,848     3,946

                                                                            —     16,548    17,027




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14.                                                    Earnings per share

                                                                                        2010           2009           2008
                                                                                        £000           £000           £000

Net (loss)/profit attributable to equity holders of the parent for
   the purpose of basic and diluted earnings per share                                (75,563)      (47,028)        11,303
Losses from terminated businesses (net of tax)                                         64,636         29,176         4,205
Exceptional stock rationalisation (net of tax)                                             —          10,311            —
Additional debtor provision (net of tax)                                                   —          10,389            —
Negative goodwill arising on acquisitions in the period
   (net of tax)                                                                           —               —           (222)
Loss on disposal of businesses (net of tax)                                               —               —           (359)
Other exceptional items (net of tax)                                                  14,029           9,521        10,086
Share of result of associate (exceptional)                                                —            4,744            —
Exceptional finance costs (net of tax)                                                  9,129              —             —
Exceptional pension curtailment gain (net of tax)                                     (3,894)             —             —
Prior period adjustments in respect of tax on exceptional items                           —              282            —

Net profit attributable to equity holders of the parent for the
  purpose of continuing earnings per share*                                             8,337        17,395         25,013


                                                                                        2010           2009           2008
                                                                                         No             No             No

Weighted average number of shares in issue (as previously
  reported)                                                                       377,402,818     83,998,501     83,912,540
Equity issue adjustment                                                                    —      36,929,070     36,891,279

Weighted average number of shares (revised)                                       377,402,818 120,927,571 120,803,819

Dilutive share options                                                                    —              —        1,876,781

Adjusted weighted average number of shares                                        377,402,818 120,927,571 122,680,600


                                                                                        2010           2009           2008

(Loss)/earnings per share – basic                                                      (20.02)p       (38.89)p         9.36p

Earnings per share – continuing* basic                                                   2.21p         14.38p         20.71p

(Loss)/earnings per share – diluted                                                    (20.02)p       (38.89)p         9.21p

Earnings per share – continuing* diluted                                                 2.21p         14.38p         20.39p

* continuing operations before exceptional items and terminated operations.


Following the Placing and Open Offer and Firm Placing of 404,312,124 Ordinary Shares announced
on 24 July 2009 and approved at the Company’s Extraordinary General Meeting on 10 August 2009,
in accordance with paragraph 26 of IAS 33, ‘‘Earnings per share’’, the Group has treated the
discount element to the open offer part of the increase in share capital as if it were a bonus issue.
The effect of this is to increase the weighted average number of shares for reported prior periods,
with a resulting reduction in the reported basic and diluted earnings per share for the period ended
3 April 2009 and the year ended 31 March 2008.




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15.                                                    Goodwill

                                                                                                 £000

Cost
At 1 April 2007                                                                                65,879
Acquisition of subsidiaries                                                                     1,552

At 31 March 2008                                                                               67,431
Hindsight adjustments to provisionally determined goodwill arising on acquisitions in the
  prior year                                                                                      320

At 3 April 2009                                                                                67,751
Acquisition of subsidiaries                                                                    33,404

At 2 April 2010                                                                               101,155

Impairment
At 1 April 2007                                                                                    —
Provision for year                                                                              3,000

At 31 March 2008                                                                                3,000
Provision for period                                                                           10,678

At 3 April 2009                                                                                13,678
Provision for period                                                                           40,178

At 2 April 2010                                                                                53,856

Carrying amount
Net book value at 2 April 2010                                                                 47,299

Net book value at 3 April 2009                                                                 54,073

Net book value at 31 March 2008                                                                64,431

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units
(‘‘CGU’’s) that are expected to benefit from that business combination. After recognition of
impairment losses, the carrying amount of goodwill has been allocated as follows:

                                                                         2010        2009        2008
                                                                         £000        £000        £000

Home Shopping Division
Home Shopping (several CGUs)                                              320        7,094     17,482
Education Supplies Division
Findel Education (single CGU)                                           44,671      44,671     44,671
Healthcare Division
Nottingham Rehab (single CGU)                                            2,308       2,308      2,278

                                                                        47,299      54,073     64,431

The Group tests annually for impairment, or more frequently if there are indications that goodwill
might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The key
assumptions for the value in use calculations are those regarding the discount rates, growth rates and
management’s detailed budgets including expected changes to revenues and direct costs during the
period. The key assumptions are based on past experience adjusted for expected changes in future
conditions.
The Group prepares cash flow forecasts for the next three to five years derived from the most recent
budget information. Cash flows are extrapolated thereafter for 20 years based on an estimated growth

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rate of 3 per cent. (2009: 3 per cent.; 2008: 3 per cent.). This rate does not exceed the average long-
term growth rate for the relevant markets in the context of a 20 year forecast. The Group has
conducted a sensitivity analysis on the impairment test of each CGU’s carrying value. A cut in the
long-term growth rate to 2 per cent. would result in the carrying value of goodwill associated with
the Education Supplies Division being reduced to its recoverable amount. The pre-tax rate used to
discount the forecast cash flows is 12.5 per cent. (2009: 12.5 per cent.; 2008: 12.5 per cent.).

In 2010, the operations of Webb, Confetti and IWOOT were either being sold or were in the process
of being sold. As a result the carrying value of goodwill and intangible assets have been impaired to
reflect the actual consideration or estimated consideration received or to be received.

The impairment of goodwill and intangible assets (brand names) of £10.7 million and £6.7 million
respectively recorded in 2009 relates to the Home Shopping Division CGU and arose due to the
decision to close Letterbox and Cotswold.

The recoverable amount for each CGU exceeded its carrying value at the impairment test date.


16.                                                    Other intangible assets
                                                                                    Software
                                                                                      and IT
                                                                                 development                     Customer
                                                                                        costs   Brand names   relationships     Total
                                                                                        £000           £000           £000      £000

Cost
At 1 April 2007                                                                        4,666         61,231         21,540     87,437
Acquisition of subsidiaries                                                               —           2,220            598      2,818
Additions                                                                              3,379             —              —       3,379

At 31 March 2008                                                                       8,045         63,451         22,138     93,634
Additions                                                                              3,525             —              —       3,525

At 3 April 2009                                                                       11,570         63,451         22,138     97,159
Acquisition of subsidiaries                                                              529          1,989          3,808      6,326
Additions                                                                              3,135             —              —       3,135

At 2 April 2010                                                                       15,234         65,440         25,946    106,620

Accumulated amortisation and impairment
At 1 April 2007                                                                          769            —            4,564      5,333
Provision for year                                                                     1,007            —            2,252      3,259

At 31 March 2008                                                                       1,776             —           6,816      8,592
Provision for period                                                                   1,949             —           1,775      3,724
Impairment                                                                                —           6,668             —       6,668

At 3 April 2009                                                                        3,725          6,668          8,591     18,984
Provision for period                                                                   2,765             —           2,360      5,125
Impairment                                                                               686          8,531          2,537     11,754

At 2 April 2010                                                                        7,176         15,199         13,488     35,863

Carrying amount
Net book value at 2 April 2010                                                         8,058         50,241         12,458     70,757

Net book value at 3 April 2009                                                         7,845         56,783         13,547     78,175

Net book value at 31 March 2008                                                        6,269         63,451         15,322     85,042

Brand names, which arise from the acquisition of businesses, are deemed to have an indefinite life
and are subject to annual impairment tests, on the basis that they are expected to be maintained
indefinitely and are expected to continue to drive value for the Group.

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The amortisation period for customer relationships, which arise from the acquisition of businesses, is
between two and 20 years.
Brand names acquired in a business combination are allocated, at acquisition, to the cash generating
units (CGUs) that are expected to benefit from that business combination. The carrying amount of
brand names has been allocated as follows:

                                                                      2010          2009         2008
                                                                      £000          £000         £000

Home Shopping Division
Home Shopping (several CGUs)                                         7,228        13,770       20,438
Kleeneze (single CGU)                                               22,845        22,845       22,845
Education Supplies Division
Findel Education (single CGU)                                       20,102        20,102       20,102
Healthcare Division
Nottingham Rehab (single CGU)                                           66            66              66

                                                                    50,241        56,783       63,451

The Group tests annually for impairment, or more frequently if there are indications that the brand
names might be impaired.
These tests are conducted in a manner similar to those applied to goodwill as described in note 15.




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17.                                                    Property, plant and equipment

                                                                                             Land and buildings
                                                                                                                     Plant and
                                                                                             Freehold    Leasehold   equipment     Total
                                                                                                £000         £000         £000     £000

Cost
At 1 April 2007                                                                               24,740         2,461      45,456    72,657
Acquisition of subsidiaries                                                                        6            —        2,137     2,143
Disposal of subsidiaries                                                                          —             —         (957)     (957)
Additions                                                                                        430           331       7,261     8,022
Disposals                                                                                        (20)           —       (8,001)   (8,021)
Exchange differences                                                                              —             —           (2)       (2)

At 31 March 2008                                                                              25,156         2,792      45,894    73,842
Additions                                                                                      1,198            13       9,393    10,604
Disposals                                                                                         (5)           —       (5,254)   (5,259)
Exchange differences                                                                              —             —           66        66

At 3 April 2009                                                                               26,349         2,805      50,099    79,253
Acquisition of subsidiaries                                                                       —             19       1,179     1,198
Additions                                                                                         —             —        5,796     5,796
Disposals                                                                                       (936)           —         (260)   (1,196)
Exchange differences                                                                              —             —            2         2

At 2 April 2010                                                                               25,413         2,824      56,816    85,053

Accumulated depreciation and impairment
At 1 April 2007                                                                                5,764          492       12,682    18,938
Disposal of subsidiaries                                                                          —            —          (389)     (389)
Provision for year                                                                               542          206        6,675     7,423
Disposals                                                                                         —            —        (7,174)   (7,174)
Exchange differences                                                                              —            —             1         1

At 31 March 2008                                                                                6,306         698       11,795    18,799
Provision for period                                                                              394          48        7,555     7,997
Disposals                                                                                          (5)         —        (3,355)   (3,360)
Impairment                                                                                         —           —         3,075     3,075
Exchange differences                                                                               —           —           (42)      (42)

At 3 April 2009                                                                                6,695          746       19,028    26,469
Provision for period                                                                             835          261        7,242     8,338
Disposals                                                                                       (637)          —          (148)     (785)
Impairment                                                                                        —           501        6,235     6,736

At 2 April 2010                                                                                6,893         1,508      32,357    40,758

Carrying amount
Net book value at 2 April 2010                                                                18,520         1,316      24,459    44,295

Net book value at 3 April 2009                                                                19,654         2,059      31,071    52,784

Net book value at 31 March 2008                                                               18,850         2,094      34,099    55,043




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The following rates are used for the depreciation of property, plant and equipment:

Buildings                                                                        2 per cent.
Plant and equipment                                                              5 per cent. -33 per cent.
Leased assets                                                                    Term of lease
The net book value of plant and equipment held under finance leases at 2 April 2010 was £2.9
million (2009: £4.6 million; 2008: £2.1 million).

18. Subsidiaries
The principal subsidiary undertakings at 2 April 2010 were as follows:
Registered in England and Wales
Name                                                                                           Principal activity

Express Gifts Limited                                                                          Home Shopping
Kleeneze Limited                                                                               Home Shopping
Kitbag Limited                                                                                 Home Shopping
Findel Direct Limited                                                                          Home Shopping
Webb Group Limited                                                                             Home Shopping
Findel Education Limited                                                                       Education Supplies
Nottingham Rehab Limited                                                                       Healthcare

Registered and incorporated in Hong Kong
Name                                                                                           Principal activity

Fine Art Developments (Far East) Limited                                                       Procurement Services
All subsidiary undertakings are wholly owned directly by Findel plc and operate mainly in the
country in which they are registered.

19.                                                    Investment in associate
                                                                                                                      2010           2009             2008
                                                                                                                      £000           £000             £000

Cost of equity investment in associate                                                                                   —           5,358            5,358
Value of non-equity investment in associate                                                                              —           5,764            5,764
Share of post-acquisition loss, net of dividend received                                                                 —         (10,500)          (6,160)

                                                                                                                         —             622           4,962

Details of the Group’s associate at 3 April 2009 were as follows:

Name of associate                                                                  Proportion of voting power held             Principal activity

Webb Group Limited (‘‘Webb’’)                                                      30%                                         Home Shopping
Webb is registered in England and Wales.
The Group also held £5.9 million of non-voting preference shares in Webb.
Summarised financial information in respect of the Group’s associate is set out below:
                                                                                                                      2010           2009             2008
                                                                                                                      £000           £000             £000

Total assets                                                                                                            —           50,497           32,254
Total liabilities                                                                                                       —          (86,858)         (52,787)

Revenue                                                                                                              12,230         99,109          75,502
Loss for the period                                                                                                  (1,447)       (14,467)         (4,500)

Group’s share of associate’s loss for the period                                                                       (434)        (4,340)          (1,350)


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The remaining 70 per cent. of the issued share capital of Webb was acquired for £3 on 23 July 2009
as described in note 40. The revenue and loss stated above for 2010 are for the period from 3 April
2009 to 23 July 2009.
Details of the Group’s transactions with Webb are set out in note 39.
The basis of the review for impairment of the investment and the loans receivable from the associate
of £33.7 million at 3 April 2009 were similar to those adopted for goodwill as described in note 15
above, with no impairment identified.


20.                                                    Inventories

                                                                                              2010        2009       2008
                                                                                              £000        £000       £000

Inventories at cost                                                                          85,155      93,737    113,992
Provision for impairment                                                                    (11,548)    (19,713)    (6,199)

                                                                                            73,607      74,024     107,793


                                                                                              2010        2009       2008
                                                                                              £000        £000       £000

Movement in the provision for impairment:
Balance at beginning of period                                                               19,713       6,199      7,389
Acquisition of subsidiaries                                                                   1,255          —          —
Provision made in the period                                                                  7,332      20,569      5,791
Provision utilised in the period                                                            (16,752)    (7,055)     (6,981)

Balance at the end of the period                                                            11,548      19,713       6,199

The provision made in the period includes £nil (2009: £14,321,000; 2008: £nil) for stock rationalisation
(note 6).


21.                                                    Trade and other receivables

                                                                                              2010        2009       2008
                                                                                              £000        £000       £000

Amount receivable following the sale of goods                                               308,119     307,213    325,512
Allowance for doubtful debts                                                               (124,483)   (116,853)   (90,358)

Trade receivables                                                                          183,636     190,360     235,154
Other debtors                                                                                4,883      10,264       7,682
Prepayments                                                                                 21,836      28,956      22,947

                                                                                           210,355     229,580     265,783

Certain of the Group’s trade receivables are funded through a securitisation facility arranged by
HSBC Investment Bank plc and funded through a vehicle owned by GRE Trust Company (Ireland)
Limited. The facility is secured against those receivables and is without recourse to any of the
Group’s other assets. The finance provider will seek repayment of the finance, as to both principal
and interest, only to the extent that collections from the receivables financed allows, and the benefit
of additional collections remains with the Group. At the period end, receivables of £132,620,000
(2009: £128,955,000; 2008: £137,024,000) were funded through the securitisation facility, and the
facilities utilised were £94,160,000 (2009: £91,558,000; 2008: £97,287,000).
Included in other debtors are amounts of £2,000,000 (2009: £4,000,000; 2008: £nil), being deferred
consideration arising from the sale of premises at Hyde.

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Home Shopping
The average credit period taken on sales of goods is 223 days. Interest is charged at 2.6 per cent. per
month on the outstanding balance. Trade receivables are provided for based on estimated
irrecoverable amounts from the sale of goods, determined by reference to past default experience.
Before accepting any new customer, the Group uses an external credit scoring system to assess the
potential customer’s credit quality and defines credit limits by customer. Limits and scoring attributed
to customers are continually reviewed. There are no customers who represent more than 1 per cent.
of the total balance of Group trade receivables.
Included in the Group’s trade receivable balance are debtors with a carrying amount of £48,585,000
(2009: £51,045,000; 2008: £70,690,000) which are past due at the reporting date for which the Group
has not provided as there has not been a significant change in credit quality and the amounts are still
considered recoverable. The Group does not hold any collateral over these balances. The average age
of these receivables is 74 days (2009: 81 days; 2008: 113 days).
An additional debtor provision of £nil has been recorded in the period (2009: £14,429,000; 2008: £nil)
(note 6).

Education Supplies
The average credit period taken on sales of goods is 39 days. Trade receivables are provided for
based on estimated irrecoverable amounts from the sale of goods, determined by reference to past
default experience.
Given the nature of the public sector customer base within the Education Supplies operating segment,
it is not considered necessary to utilise formal credit scoring. However, credit references are sought
for all new customers prior to extending credit. There are no customers who represent more than 1
per cent. of the total balance of Group trade receivables.
Included in the Group’s trade receivable balance are debtors with a carrying amount of £3,716,000
(2009: £9,102,000; 2008: £9,287,000) which are past due at the reporting date for which the Group
has not provided as there has not been a significant change in credit quality and the amounts are still
considered recoverable. The Group does not hold any collateral over these balances. The average age
of these receivables is 39 days (2009: 80 days; 2008: 61 days).

Healthcare
The average credit period taken on sales of goods is 24 days. Trade receivables are provided for
based on estimated irrecoverable amounts from the sale of goods, determined by reference to past
default experience.
Given the nature of the public sector customer base within the Healthcare operating segment, it is not
considered necessary to utilise formal credit scoring. There are no customers who represent more than
1 per cent. of the total balance of Group trade receivables.
Included in the Group’s trade receivable balance are debtors with a carrying amount of £431,000
(2009: £1,752,000; 2008: £2,344,000) which are past due at the reporting date for which the Group
has not provided as there has not been a significant change in credit quality and the amounts are still
considered recoverable. The Group does not hold any collateral over these balances. The average age
of these receivables is 88 days (2009: 108 days; 2008: 113 days).
Movement in the allowance for doubtful debts:

                                                               Home      Education
                                                             Shopping     Supplies   Healthcare      2010
                                                                 £000        £000          £000      £000

Balance at the beginning of the period                        116,073          704           76    116,853
Acquisition of subsidiary                                       3,768           —            —       3,768
Impairment losses recognised                                   29,214        2,307           43     31,564
Amounts written off as uncollectible                          (27,640)          —           (62)   (27,702)

Balance at the end of the period                              121,415        3,011          57     124,483




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                                                               Home      Education
                                                             Shopping     Supplies    Healthcare      2009
                                                                 £000        £000           £000      £000

Balance at the beginning of the period                         89,320          798           240     90,358
Impairment losses recognised                                   49,789          131            59     49,979
Amounts written off as uncollectible                          (23,036)        (225)         (223)   (23,484)

Balance at the end of the period                              116,073         704            76     116,853


                                                               Home      Education
                                                             Shopping     Supplies    Healthcare      2008
                                                                 £000        £000           £000      £000

Balance at the beginning of the period                         77,284        1,271           516     79,071
Impairment losses recognised                                   30,570            7           199     30,776
Amounts written off as uncollectible                          (18,534)        (480)         (475)   (19,489)

Balance at the end of the period                               89,320         798           240      90,358



Ageing of past due but not impaired receivables – aged from due date:

                                                               Home      Education
                                                             Shopping     Supplies    Healthcare      2010
                                                                 £000        £000           £000      £000

0 – 60 days                                                    27,450        3,293          134      30,877
60 – 120 days                                                   7,501          290          180       7,971
120+ days                                                      13,634          133          117      13,884

Total                                                          48,585        3,716          431      52,732


                                                               Home      Education
                                                             Shopping     Supplies    Healthcare      2009
                                                                 £000        £000           £000      £000

0 – 60 days                                                    25,724        4,264           603     30,591
60 – 120 days                                                   7,373        2,121            16      9,510
120+ days                                                      17,948        2,717         1,133     21,798

Total                                                          51,045        9,102         1,752     61,899


                                                               Home      Education
                                                             Shopping     Supplies    Healthcare      2008
                                                                 £000        £000           £000      £000

0 – 60 days                                                    34,523        6,441           625     41,589
60 – 120 days                                                  15,496          845           192     16,533
120+ days                                                      20,671        2,001         1,527     24,199

Total                                                          70,690        9,287         2,344     82,321




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Ageing of impaired receivables – aged from due date:

                                                                                          Home     Education
                                                                                        Shopping    Supplies   Healthcare      2010
                                                                                            £000       £000          £000      £000

0 – 60 days                                                                                3,767          —           —        3,767
60 – 120 days                                                                              5,201          —           —        5,201
120+ days                                                                                112,447       3,011          57     115,515

Total                                                                                    121,415       3,011          57     124,483


                                                                                          Home     Education
                                                                                        Shopping    Supplies   Healthcare      2009
                                                                                            £000       £000          £000      £000

0 – 60 days                                                                                6,710         —            —        6,710
60 – 120 days                                                                              7,810         —             1       7,811
120+ days                                                                                101,553        704           75     102,332

Total                                                                                    116,073        704           76     116,853


                                                                                          Home     Education
                                                                                        Shopping    Supplies   Healthcare      2008
                                                                                            £000       £000          £000      £000

0 – 60 days                                                                                   —          —            11          11
60 – 120 days                                                                                 —          —             2           2
120+ days                                                                                 89,320        798          227      90,345

Total                                                                                     89,320        798          240      90,358

In determining the recoverability of a trade receivable the Group considers any change in the credit
quality of the trade receivable from the date credit was initially granted up to the reporting date. The
Group has no significant concentration of credit risk, with exposure spread over a large number of
counterparties and customers.

The Directors consider that the Group’s maximum exposure to credit risk is the carrying value of the
trade and other receivables and that their carrying amount approximates their fair value. In excess of
90 per cent. of the above amounts are greater than 120 days overdue in the current and prior years.


22.                                                    Cash at bank and in hand

                                                                                                       2010         2009       2008
                                                                                                       £000         £000       £000

Cash at bank and in hand                                                                              44,331        9,924     12,767

Cash and cash equivalents include the following for the purposes of
  the cash flow statement:
Cash at bank and in hand (as above)                                                                   44,331        9,924     12,767
Bank overdrafts                                                                                           —       (24,970)   (23,022)

                                                                                                      44,331      (15,046)   (10,255)

Cash and cash equivalents comprises cash and bank overdrafts held by the Group, and short-term
bank deposits with an original maturity of three months or less. The carrying amount of these assets
approximates their fair value.

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23.                                                    Trade and other payables

                                                                                                                         2010          2009          2008
                                                                                                                         £000          £000          £000

Trade payables                                                                                                          53,033        52,664       66,835
Other payables                                                                                                           5,971        12,168        9,931
Accruals                                                                                                                22,265        33,458       30,221

                                                                                                                        81,269        98,290      106,987

The average credit period taken for trade purchases is 53 days (2009: 66 days; 2008: 70 days). No
interest is charged on trade payables. The Group has financial risk management policies in place to
ensure that all payables are paid within the credit timeframe.
The Directors consider that the carrying amount of trade payables approximates their fair value.

24.                                                    Obligations under finance leases

                                                                                                                             Present value of minimum
                                                                                         Minimum lease payments                   lease payments
                                                                                         2010       2009        2008         2010         2009        2008
                                                                                         £000       £000        £000         £000         £000        £000

Amounts payable under finance leases:
Within one year                                                                          1,052     1,555         664         1,006       1,393        595
In the second to fifth years                                                                  7     1,012         589             5         849        494
In more than five years                                                                      —          7          —             —            5         —

                                                                                         1,059     2,574       1,253         1,011       2,247       1,089
Less future finance charges                                                                 (48)     (327)       (164)           —           —           —

Present value of lease obligations                                                       1,011     2,247       1,089         1,011       2,247       1,089

Less amounts due for settlement
   within one year                                                                                                          (1,006)     (1,393)       (595)

Amount due for settlement after one
  year                                                                                                                           5        854         494


It is the Group’s policy to lease certain of its fixtures and equipment under finance leases. The
average lease term is three years.
For the period ended 2 April 2010, the average borrowing rate was 7.50 per cent. (2009: 7.50 per
cent.; 2008: 7.50 per cent.).
Interest rates are fixed at the contract date, and thus expose the Group to fair value interest rate risk.
The fair value approximates their carrying value. All lease obligations are denominated in sterling.
The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets.




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25.                                                    Borrowings

                                                                                             2010        2009       2008
                                                                                             £000        £000       £000

Secured borrowing at amortised cost
Bank loans                                                                              352,918         91,558     97,287

Unsecured borrowing at amortised cost
Bank overdrafts                                                                                —        24,970     23,022
Bank loans                                                                                     —       267,234    278,085

                                                                                               —       292,204    301,107

                                                                                        352,918        383,762    398,394

Amount due for settlement within one year                                               352,918         42,204     66,107

Amount due for settlement after one year                                                       —       341,558    332,287

                                                                                        352,918        383,762    398,394


                                                                          Sterling           Euro   HK dollars      Total
                                                                             £000            £000        £000       £000

Analysis of borrowings by currency
2010
Bank loans                                                                352,918              —              —   352,918

2009
Bank overdrafts                                                            19,521              89        5,360     24,970
Bank loans                                                                358,792              —            —     358,792

                                                                          378,313              89        5,360    383,762

2008
Bank overdrafts                                                            22,353             498         171      23,022
Bank loans                                                                375,372              —           —      375,372

                                                                          397,725             498         171     398,394


                                                                                      2010             2009         2008

The average interest rates paid were as follows:
Bank overdrafts                                                                         —            5.32%         6.56%

Bank loans                                                                           4.23%           4.93%         6.72%

All borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.
The Group manages this risk by undertaking interest rate hedging as described in note 26.
The Directors consider that the carrying value of bank loans and overdrafts approximates their fair
value.
Bank overdrafts were repayable on demand, unsecured and predominantly carried interest at 1 per
cent. over the UK base rate. US dollar and Hong Kong dollar bank overdrafts carried interest at
rates based on the US prime rate.




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The Group has three principal bank loans:
(i)                                                      a secured, committed revolving credit facility of £250 million provided pursuant to an agreement
                                                         dated 3 September 2007 (as amended on 24 July 2009) which was originally due to expire on 3
                                                         September 2012. The terms of the facility provide for amounts drawn under the facility to carry
                                                         interest at 4 per cent. over LIBOR and, following the financial period ended 31 March 2010,
                                                         amounts drawn under the facility will carry interest at a variable rate over LIBOR determined
                                                         by reference to the Group’s ratio of net borrowings to earnings.
(ii)                                                     a secured, committed revolving credit facility of £45.0 million provided pursuant to an
                                                         agreement dated 24 July 2009 which was originally due to expire on 23 March 2011. Amounts
                                                         drawn under the facility carry interest at 4 per cent. over LIBOR.
(iii) a securitisation facility of up to £105.0 million, dated 23 March 2006 which was due to expire
      on 23 March 2011, the amount of the available facility being dependent upon the level of
      certain debtor balances within Express Gifts Limited. Amounts drawn under the facility carried
      interest at 0.6 per cent. over LIBOR.
As a result of the accounting irregularities in the Group’s Education Supplies Division, certain
representations and warranties made in connection with the bank facilities entered into at the time of
the refinancing in July 2009 were found to be untrue. In addition, certain other provisions contained
in these facilities had been breached. As a result of the breach to the banking covenants at 2 April
2010, all of the bank debt owed by the Group was reclassified as falling due within one year on the
consolidated balance sheet.
The Group agreed amendments to the outstanding £250 million Facility and £77.3 million Facility on
16 July 2010, the principle elements being:
*                                                        the facilities expire on 9 January 2012;
*                                                        as at 16 July 2010, the available facility under the £250 million Facility was an amount in excess
                                                         of £236.6 million which will reduce (subject to short-term increases to fund working capital
                                                         requirements) to an amount just in excess of £208.3 million prior to the termination date of the
                                                         £250 million Facility;
*                                                        as at 16 July 2010, the available facility under the £77.3 million Facility was £45.0 million which
                                                         will reduce (subject to short-term increases to fund working capital requirements) to an amount
                                                         just in excess of £39.6 million prior to the termination date of the £77.3 million Facility;
*                                                        the facilities require a commitment fee and charge interest at 5 per cent. over LIBOR to
                                                         31 December 2010 and 6.5 per cent. over LIBOR thereafter;
*                                                        new financial covenants have been agreed and permanent waivers obtained in relation to the
                                                         breaches referred to above.
Under certain circumstances additional fees from 14 January 2011 of up to a maximum of
approximately £5.0 million could become payable.
In addition, the Group amended the maturity date of its £105 million securitisation facility to 9
January 2012 and obtained a permanent waiver to the cross-default of the above banking facilities.
As a result of the above refinancing, bank loans which were shown as being due for settlement within
one year are now due for settlement after one year. Had these new arrangements been in place at
2 April 2010 the Group’s balance sheet would have been such that bank loans amounting to £321.3
million would have been reclassified as due in more than one year.
                                                                      2010        2009        2008
                                                                      £000        £000        £000

Borrowing facilities
The Group had undrawn committed borrowing facilities as follows:
Expiring in one year or less                                                                                                10,840*      62,720      48,000
Expiring in more than one year but not more than two years                                                                      —        13,442*         —
Expiring in more than two years                                                                                                 —            —       22,713*

                                                                                                                            10,840       76,162      70,713
*                                                      Securitisation facility

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26.                                                    Derivative financial instruments

                                                                                    2010                          2009                     2008
                                                                               Assets    Liabilities         Assets    Liabilities    Assets    Liabilities
                                                                                £000          £000            £000          £000       £000          £000

Forward foreign
   exchange contracts                                                              —             (6)             —            (30)       457            —
Interest rate
   derivatives                                                                     —             —               —         (3,189)        —           (315)

                                                                                   —             (6)             —         (3,219)       457          (315)

Analysed as:
Current                                                                            —             (6)             —         (3,219)       457          (315)
Non-current                                                                        —             —               —             —          —             —

                                                                                   —             (6)             —         (3,219)       457          (315)

Treasury and risk management
The Group’s treasury function seeks to reduce or eliminate exposure to foreign exchange, interest rate
and other financial risks, to ensure sufficient liquidity is available to meet foreseeable needs and to
invest cash assets safely and profitably. It does not engage in speculative transactions and transacts
only in relation to underlying business requirements.

Interest rate risk management
The Group’s interest rate exposure is managed by the use of fixed and floating rate borrowings and
by the use of derivative arrangements. The Group also mixes the duration of its borrowings to
smooth the impact of interest rate fluctuations.

Currency risk management
An increasing proportion of the products sold through the Group’s Home Shopping Division and the
Educational Supplies Division are procured through the Group’s Far East buying office. The currency
of purchase for these goods is principally the US dollar, with a proportion being in Hong Kong
dollars. The Group has a policy of hedging these foreign currency denominated transactions by
entering into forward exchange purchase contracts.

Borrowing risk
The Group’s exposure to borrowing and cash investment risk is managed by dealing only with banks
and financial institutions with strong credit ratings, within limits set for each organisation.

27.                                                    Provisions
                                                                                                                      Onerous Restructuring
                                                                                                                        leases    provision          Total
                                                                                                                         £000         £000           £000

 At 1 April 2007                                                                                                            —         1,681          1,681
 Utilised in the year                                                                                                       —        (1,681)        (1,681)

 At 31 March 2008                                                                                                           —           —               —
 Provided in the period                                                                                                     —           —               —

 At 3 April 2009                                                                                                            —           —               —
 Provided in the year                                                                                                    6,680          —            6,680

 At 2 April 2010                                                                                                         6,680          —            6,680

 Provision was made in 2010 for onerous leases for vacated leasehold properties. These provisions will
 be utilised over four years.

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The restructuring provision brought forward at 1 April 2007 predominantly related to redundancy
costs to be incurred in the reorganisation of the businesses acquired during the year ended 31 March
2007.
Provisions are disclosed as follows in the balance sheet:
                                                                                                         2010          2009     2008
                                                                                                         £000          £000     £000

Amounts included in current liabilities                                                                 1,661            —         —
Amounts included in non-current liabilities                                                             5,019            —         —

                                                                                                        6,680            —         —

28. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and
movements thereon during the current and prior reporting period:

                                                       Short-term    Accelerated     Retirement                       Other
                                                            timing        capital        benefit                   intangible
                                                       differences    allowances     obligations    Tax losses        assets    Total
                                                              £000          £000           £000          £000          £000     £000

At 1 April 2007                                            (1,823)         1,285          (4,463)          —         16,233    11,232
Arising on acquisition                                         —              (6)           (128)          —            799       665
Charge/(credit) to
  profit or loss for
  the period                                                  382         (1,452)         1,263            —         (1,766)   (1,573)

At 31 March 2008                                           (1,441)          (173)         (3,328)          —         15,266    10,324
Charge/(credit) to
  profit or loss for
  the period                                                  (82)         3,076          1,029         (3,855)      (3,740)   (3,572)

At 3 April 2009                                            (1,523)         2,903          (2,299)       (3,855)      11,526     6,752
Arising on acquisition                                         —              —               —             —         1,623     1,623
Charge/(credit) to
  profit or loss for
  the period                                                  640         (2,841)         2,173         2,758        (3,760)   (1,030)

At 2 April 2010                                              (883)            62           (126)        (1,097)       9,389     7,345


Certain deferred tax assets and liabilities have been offset in accordance with the Group’s accounting
policies.
The following is the analysis of the deferred tax balances (before offset) for balance sheet purposes:

                                                                                                         2010          2009     2008
                                                                                                         £000          £000     £000

Deferred tax liabilities                                                                               11,158        15,356    18,613
Deferred tax assets                                                                                    (3,813)       (8,604)   (8,289)

                                                                                                        7,345         6,752    10,324


On 22 June 2010, the Emergency Budget announced a change in corporation tax rates to reduce the
UK main tax rate from 28 per cent. to 24 per cent. over a four year period from April 2011. It is
anticipated that the Finance Act 2010 (2) will enact a 1 per cent. reduction effective of 1 April 2011.
Therefore the impact on the Group’s deferred tax liability of the change is anticipated to be £262,000
at the next balance sheet date.

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Recognition of deferred tax assets is based on management’s assumptions that it is                                              probable that the
entities will have taxable profits against which the unused tax losses and deductible                                            temporary timing
differences can be utilised. Generally, in determining the amounts of deferred                                                  tax assets to be
recognised, management uses profitability information and forecasted operating                                                   results based on
approved business plans.
The aggregate amount of temporary differences associated with deferred tax assets which have not
been recognised is £29,324,000 (2009: £13,232,000; 2008: £11,393,000). These amounts primarily relate
to carried forward tax losses and depreciation in advance of capital allowances. No asset has been
recognised in respect of these differences because there is insufficient evidence that the relevant
subsidiaries will make suitable future taxable profits against which these assets may be utilised.
The following are the major deferred tax assets not recognised by the Group and movements thereon
during the current and prior reporting period:
                                                            Depreciation
                                               Short-term in advance of
                                                    timing        capital
                                               differences    allowances   Tax losses       Total
                                                      £000          £000        £000         £000

 At 1 April 2007                                                                                  —               —              —             —
 Movements during the period                                                                      —             (655)       (10,738)      (11,393)

 At 31 March 2008                                                                                  —             (655)      (10,738)      (11,393)
 Movements during the period                                                                      (26)         (2,339)          526        (1,839)

 At 3 April 2009                                                                                  (26)         (2,994)      (10,212)      (13,232)
 Movements during the period                                                                        3          (2,370)       (7,282)       (9,649)
 Adjustments in respect of prior periods                                                           —              638        (1,699)       (1,061)
 Arising on acquisition                                                                          (290)           (116)       (4,976)       (5,382)

 At 2 April 2010                                                                                 (313)         (4,842)      (24,169)      (29,324)

 Post the balance sheet date, the Webb Group has been disposed of which will result in a reduction of
 unrecognised deferred tax assets available to the Group of £7.5 million.

 29.                                                   Share-based payments
 Equity settled share option schemes
 The Company has a share option scheme for all employees of the Group. Options are exercisable at
 a price equal to the average quoted market price of the Company’s shares on the date of grant. The
 vesting period is three years. If the options remain unexercised after a period of seven years from the
 date of grant, the option expires. Options are forfeited if the employee leaves the Group before the
 options vest.
                                       2010        2010       2009         2009          2008        2008
                                              Weighted                 Weighted                 Weighted
                                     No. of     average     No. of      average        No. of     average
                                      share     exercise     share      exercise        share     exercise
                                    options price (in £)   options price (in £)       options price (in £)

Outstanding at the
  beginning of the period                                                      414,530    4.61      442,566          4.45     548,248        4.29
Granted during the period                                                           —       —            —             —           —           —
Exercised during the period                                                         —       —       (28,036)         2.14    (105,682)       3.61
Cancelled during the period                                                   (225,688)   5.45           —             —           —           —

Outstanding at the end of
  the period                                                                  188,842     3.61      414,530          4.61    442,566         4.45

Exercisable at the end of
  the period                                                                  188,842     3.61      188,842          3.61    216,878         3.42


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The weighted average share price at the date of exercise for share options exercised during the prior
period was £2.90. The options outstanding at the end of the period have a weighted average
remaining contractual life of 1.2 years (2009: 3.2 years; 2008: 4.0 years). No options were granted in
relation to this scheme over the three year period.

Performance Share Plan (equity settled)
The Group issued to certain senior employees conditional awards of performance shares under a
Performance Share Plan (‘‘PSP’’) that require the Group to award shares to the employee on the
vesting of the award subject to the achievement of certain predetermined performance conditions. The
performance period is three years after which the awards may vest.
There are two distinct performance conditions that apply to all awards made under the PSP with the
exception of those awards granted in November 2008. Half of any award is subject to the growth in
the Company’s normalised earnings per share (‘‘EPS’’) growth in excess of ‘‘RPI’’. The remaining
half of an award will be subject to the relative total shareholder return (‘‘TSR’’) of the Company.
For awards granted in November 2008, awards will vest in full dependent on the achievement of a
debt reduction of not less than £100.0 million over the three years of the performance period whilst
maintaining a return on capital of not less than 17 per cent. in the final year.

                                                                      2010         2009         2008
                                                                     No. of       No. of       No. of
                                                                     shares       shares       shares

Outstanding at the beginning of the period                       2,746,890       629,614      279,013
Granted during the period                                        9,265,668     2,117,276      393,336
Adjustment as a result of the increased share capital           11,525,220            —            —
Vested during the period                                                —             —       (14,245)
Lapsed during the period                                          (320,194)           —       (28,490)

Outstanding at the end of the period                            23,217,584     2,746,890      629,614

The adjustment to the number of conditional shares granted is a result of the increase in the issued
share capital of the Company resulting from the Placing and Open Offer and Firm Placing during the
period. The adjustment equates to 4.7493465 shares for each share conditionally granted.
The estimated fair value of the awards granted during the period is £3,398,000 (2009: £1,731,000;
2008: £2,113,000). In each case these costs are expensed over three years.
The fair values of the awards in the current period and prior year were calculated using a Black-
Scholes option pricing model. The inputs into the model were as follows:

                                                                      2010          2009         2008

Weighted average share price (pence)                                   42.7         81.8        640.9
Weighted average exercise price (pence)                                 0.0          0.0          0.0
Expected volatility (%) (applicable to TSR performance
  condition)                                                          105.9         N/A          28.3
Expected life (years)                                                   3.0          3.0          3.0
Risk free rate (%) (applicable to TSR performance condition)            2.1         N/A           4.8
Expected dividend yield (%)                                             0.0          0.0          0.0
Weighted average fair value (TSR)                                      30.6         N/A         384.5
Weighted average fair value (non-TSR)                                  42.7         81.8        640.9

Expected volatility was determined by calculating the historical volatility of the Group’s share price
over the previous three years.
The Group recognised total expenses of £2,186,000 (2009: £nil; 2008: £973,000) related to equity-
settled share-based payment transactions in the year reflecting the charge arising in the period being
offset by the reversal of charges on non-market related performance criteria share options which are
no longer expected to vest.




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Other share-based payment plan
The Group issued to certain senior employees share appreciation rights (‘‘SAR’’s) under a Long Term
Investment Plan (‘‘LTIP’’), the performance criteria for which have been met previously, that require
the Group to pay the intrinsic value of the SAR to the employee at the date of exercise.

                                                                             2010           2010             2009           2009       2008           2008
                                                                                       Weighted                        Weighted                  Weighted
                                                                          No. of         average           No. of        average     No. of        average
                                                                         notional        exercise         notional       exercise   notional       exercise
                                                                           shares    price (in £)           shares   price (in £)     shares   price (in £)

Outstanding at the
  beginning of the
  period                                                                  834,849           1.38          834,849           1.38    846,848           1.40
Exercised during the
  period                                                                       —              —                —              —     (11,859)          2.64
Lapsed during the
  period                                                                 (822,990)          1.36               —              —          —              —

Outstanding at the
  end of the period                                                        11,859           2.64          834,849           1.38    834,989           1.38

Exercisable at the end
  of the period                                                            11,859           2.64          834,849           1.38    834,989           1.38

The remaining 11,859 interests in notional shares lapsed in May 2010.

Share warrants (equity settled)
Share warrants for 4,256,503 Ordinary Shares with an exercise price of 20 pence per share were issued
to the Group’s Lenders in connection with the Placing and Open Offer and Firm Placing (note 30).
The warrants may be exercised at any time in the four years, 11 August 2009 to 11 August 2013. The
fair value of each share warrant was 20 pence amounting to £851,000 in total. At 2 April 2010,
4,256,503 share warrants were outstanding.

30.                                                    Share capital

                                                                             2010          2009              2008           2010       2009           2008
                                                                            No. of        No. of            No. of
                                                                            shares        shares            shares          £000       £000           £000

Authorised
Ordinary shares of 5p
  each                                                                 750,000,000    95,000,000      95,000,000          37,500       4,750         4,750

Allotted, issued and fully
  paid
At the beginning of the
  period                                                                85,130,052    85,102,016      84,996,334           4,257       4,255         4,250
Exercise of share options                                                       —         28,036         105,682              —            2             5
Placing and open offer                                                 204,312,124            —               —           10,215          —             —
Firm placing                                                           200,000,000            —               —           10,000          —             —

At the end of the period                                               489,442,176    85,130,052      85,102,016          24,472       4,257         4,255


The Company has one class of Ordinary Shares which carry no right to fixed income.
On 24 July 2009, the Group announced a placing and open offer of 204,312,124 Ordinary Shares and
the firm placing of 200,000,000 Ordinary Shares at 20 pence per share. This was approved at the
Company’s Extraordinary General Meeting on 10 August 2009, and the shares were issued on
11 August 2009. Total proceeds raised were £80,862,000, less £1,071,000 relating to shares transferred
to the Employee Benefit Trust, and associated costs of the equity raising of £5,410,000 resulting in
net proceeds of £74,381,000.

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31.                                                    Capital reserves

                                                                                                                                  Liability
                                                                              Capital      Share                                 for share-
                                                                          redemption    premium          Merger                       based
                                                                              reserve    account         reserve   Own shares    payments       Total
                                                                                £000        £000           £000         £000           £000     £000

 At 1 April 2007                                                                 403     23,568          29,518        (3,012)         369     50,846
 Share issues                                                                     —         376              —             —            —         376
 Own shares
   transferred from
   Employee Benefit
   Trust                                                                          —          —               —            38            —         38
 Credit to equity for
   share-based
   payments                                                                       —          —               —            —            973       973

 At 31 March 2008                                                                403     23,944          29,518        (2,974)       1,342     52,233
 Share issues                                                                     —          59              —             —            —          59
 Impairment of own
   shares                                                                         —          —               —          1,998           —       1,998

 At 3 April 2009                                                                 403     24,003          29,518          (976)       1,342     54,290
 Share issues                                                                     —      55,237              —         (1,071)          —      54,166
 Share warrants issue                                                             —          —               —             —           851        851
 Share-based payments                                                             —          —               —             —         2,186      2,186

 At 2 April 2010                                                                 403     79,240          29,518        (2,047)       4,379    111,493

 Own shares comprises 6,486,347 (2009: 1,128,190; 2008: 1,128,190) Ordinary Shares of 5 pence each
 of the Company, representing 1.3 per cent. (2009: 1.3 per cent.; 2008: 1.3 per cent.) of the issued
 share capital of the Company at 2 April 2010. The maximum number of such shares held during the
 year was 6,486,347 (2009: 1,128,190; 2008: 1,142,435). These shares, which are held in an Employee
 Benefit Trust established for the purpose, were purchased in order to provide a hedge against the
 Group’s liabilities under the Long Term Incentive Plan and Performance Share Plan. The Employee
 Benefit Trust took up its entitlement of 2,707,656 ordinary shares under the placing and open offer
 (note 30) at 20 pence per share, amounting to £541,000 and subscribed for a further 2,650,501
 Ordinary Shares under the offer at 20 pence per share, amounting to £530,000.
 The liability for share-based payments represents the cumulative share option charge under IFRS 2
 less the value of any share options that have been exercised plus the value of the share warrants
 issued less the value of share warrants exercised.
 The capital redemption reserve arose on the purchase and cancellation of 8,060,234 Ordinary Shares
 during the year ended 31 March 1999.
 The merger reserve arose on the acquisition of the whole of the share capital of Novara plc during
 the year ended 31 March 2002. The difference between the nominal value of the shares issued and the
 fair value of the assets acquired was credited to the merger reserve.
 None of the above reserves are distributable.




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32.                                                    Translation reserve
                                                                                                                            £000

Balance at 1 April 2007                                                                                                      (404)
Currency translation loss arising on consolidation                                                                            (87)

Balance at 31 March 2008                                                                                                     (491)
Currency translation gain arising on consolidation                                                                          1,783

Balance at 3 April 2009                                                                                                     1,292
Currency translation loss arising on consolidation                                                                           (590)

Balance at 2 April 2010                                                                                                      702

The translation reserve represents movements in the consolidated balance sheet which are taken
directly to reserves, arising as a result of movements in exchange rates.

33.                                                    (Accumulated losses)/retained earnings
                                                                                                                            £000

At 1 April 2007                                                                                                            43,805
Dividends paid                                                                                                            (17,027)
Profit for the period attributable to equity holders of the parent                                                          11,303
Own shares transferred from Employee Benefit Trust                                                                             (38)

At 31 March 2008                                                                                                           38,043
Dividends paid                                                                                                            (16,548)
Loss for the period attributable to equity holders of the parent                                                          (47,028)
Impairment of own shares reserve                                                                                           (1,998)

At 3 April 2009                                                                                                           (27,531)
Loss for the period attributable to equity holders of the parent                                                          (75,563)

At 2 April 2010                                                                                                          (103,094)

34. Non cash transactions
During the period the Group entered into finance leases with a capital value at inception of £nil
(2009: £1,772,000; 2008: £nil).

35. Capital commitments
The Group had no capital commitments at 2 April 2010, 3 April 2009, or 31 March 2008.

36.                                                    Operating lease arrangements
                                                                                                        2010     2009       2008
                                                                                                        £000     £000       £000

Minimum lease payments recognised as an expense in the period                                          13,698   12,220    11,813

At the balance sheet date, the Group had outstanding commitments under non-cancellable operating
leases, which fall due as follows:
                                                                 2010         2009         2008
                                                                 £000         £000         £000

Within one year                                                                                        13,249   11,894    12,002
In the second to fifth years                                                                            38,706   32,984    33,011
After five years                                                                                        69,254   52,924    43,341

                                                                                                      121,209   97,802    88,354


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Operating lease payments predominantly represent rentals payable by the Group for certain of its
office and warehouse properties. Leases are negotiated for terms of seven to 25 years and rentals are
fixed for an average of three years.
The Group leases its premises at Hyde from HAM450 LLP, an unrelated third party, at £852,000 per
annum following its sale and leaseback by the Group on normal commercial terms on 1 April 2009.
The premises have a charge over them in favour of Mr K Chapman (a former director) and certain
other members of his family arising from a loan to assist with the purchase of the premises.

37.                                                    Retirement benefit plans
Defined contribution schemes
The Group operates a defined contribution retirement benefit plan for all qualifying employees. The
assets of the plan are held separately from those of the Group in funds under the control of trustees.
The only obligation of the Group with respect to the retirement benefit plan is to make the specified
contributions. The total expense recognised in the income statement of £530,000 (2009: £447,000;
2008: £438,000) represents contributions payable at rates specified by the rules of the plan.

Defined benefit schemes
The principal UK scheme (the ‘‘Findel Group Pension Fund’’) was assessed by Aon Consulting, the
scheme’s actuaries, at 6 April 2007 using the Projected Unit Credit Method. The principal actuarial
assumptions adopted in that valuation were that the annual rate of return on growth investments
would be 1.50 per cent. higher than the annual increase in total pensionable remuneration and the
return on bond investments would be between 2.05 per cent. and 2.25 per cent. higher than the
annual increase in present and future pensions in payment. The actuarial value of the assets was
sufficient to cover 91 per cent. of the benefits that had accrued to members, after allowing for
expected future increases in pensionable remuneration. The market value of the scheme’s assets at the
date of valuation was £66.8 million. The next formal valuation is due with an effective date no later
than 6 April 2010.
In addition, the Company sponsors the Findel Education Pension Scheme, which was assessed by
Aon Consulting, the scheme’s actuaries, at 6 April 2007. The principal actuarial assumptions adopted
in that valuation were that the annual rate of return on investments would be 1.25 per cent. (1.75 per
cent. for the purposes of the recovery plan) higher than the annual increase in total pensionable
remuneration and 2.75 per cent. higher than the assumed price inflation assumption. The market
value of the assets was sufficient to cover 85 per cent. of the benefits that had accrued to members,
after allowing for expected future increases in pensionable remuneration. The market value of the
scheme’s assets at the date of valuation was £19.4 million. The next formal valuation is due with an
effective date no later than 6 April 2010.
In January 2010 the Group decided to cease offering benefits under its defined benefit pension
schemes to those employees still within these arrangements. This led to the further accrual of benefits
ceasing from this date. This resulted in a curtailment gain of £6,624,000 (2009: £nil; 2008: £nil), of
which £5,409,000 (2009: £nil; 2008: £nil) has been recognised in the income statement and is disclosed
as an exceptional item.
The most recent valuations of the plans for IAS 19 purposes were carried out at 2 April 2010 by
Aon Consulting. The present value of the defined benefit obligation and the related current service
cost and past service cost were measured using the Projected Unit Credit Method.
The principal assumptions used for the purpose of the IAS 19 actuarial valuations were as follows:

                                                                                       2010   2009   2008
                                                                                         %      %      %

Discount rate for scheme liabilities                                                   5.50   6.70   6.70
Expected return on scheme assets                                                       6.30   6.70   6.80
Inflation                                                                               3.80   3.00   3.50
Rate of general increase in salaries                                                    n/a   4.75   5.25
Rate of increase to pensions in payment                                                3.00   3.00   3.50
Rate of increase to deferred pensions                                                  3.00   3.00   3.50
The assumption used for post-retirement mortality is equivalent to a life expectancy for a sample
male aged 65 retiring in April 2010 of 87.0 years (2009: 87.0 years; 2008: 87.0 years) (FGPF) and

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87.0 years (2009: 87.0 years; 2008: 84.8 years) (FEPS); and for a sample male retiring in April 2030
of 88.1 years (2009: 88.1 years; 2008: 88.1 years) (FGPF) and 88.1 years (2009: 88.1 years; 2008: 86.1
years) (FEPS).
The actual rate of return on assets was 27 per cent. (2009: (16) per cent.; 2008: (2) per cent.). The
overall expected rate of return of 6.70 per cent. (2009: 6.80 per cent.; 2008: 7.00 per cent.) is based
on market conditions at the balance sheet date, reflecting the mix of assets held.
An increase/decrease in the discount rate assumption of 0.1 per cent. would result in an increase/
decrease to the pension deficit of £2.1 million. An increase/decrease in the inflation rate assumption of
0.1 per cent. would result in an increase/decrease in the pension deficit of £1.5 million. An increase in
life expectancy by one year over the assumed rate would result in an increase in the pension deficit of
£3.5 million.
Amounts recognised in the profit and loss account in respect of the defined benefit plans are as
follows:
                                                                 2010       2009         2008
                                                                 £000       £000         £000

(i) included within administrative expenses
Current service cost                                                     678          938         1,203
Recognised actuarial losses                                               83           —             30
Gains on settlements and curtailments (exceptional item note 6)       (5,409)          —           (170)

Total operating (credit)/charge                                       (4,648)         938         1,063

(ii) included within financial income and costs
Expected return on pension assets                                     (5,014)      (5,978)        (5,897)
Interest cost                                                          5,818         5,846         5,345

Net cost/(income)                                                        804         (132)         (552)

The amount recognised in the balance sheet arising from the Group’s obligations in respect of its
defined benefit retirement benefit schemes is as follows:
                                                                 2010          2009         2008
                                                                 £000          £000         £000

Fair value of scheme assets                                           91,880        72,227       84,781
Present value of funded obligations                                 (115,352)      (88,317)     (88,220)

Deficit in the scheme                                                 (23,472)      (16,090)       (3,439)
Unrecognised actuarial losses/(gains)                                 23,023         7,878        (8,448)

Net pension liability recognised in the balance sheet                   (449)       (8,212)     (11,887)

The related deferred tax asset is disclosed in note 28.
Movements in the pension deficit were as follows:
                                                                        2010         2009          2008
                                                                        £000         £000          £000

Opening deficit                                                       (16,090)      (3,439)      (12,477)
Movement in period:
Acquisitions in the period                                                —             —           (428)
Current service cost                                                    (678)        (938)        (1,203)
Past service cost                                                         —             —            (30)
Gains on settlements and curtailments                                  6,624            —            170
Interest cost                                                         (5,818)      (5,846)        (5,345)
Expected return on pension assets                                      5,014         5,978         5,897
Actuarial loss                                                       (16,443)     (16,256)         6,049
Contributions                                                          3,919         4,411         3,928

Closing deficit                                                       (23,472)     (16,090)        (3,439)


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Movements in the present value of defined benefit obligations were as follows:

                                                                                              2010            2009          2008
                                                                                              £000            £000          £000

At beginning of period                                                                      (88,317)      (88,220)        (99,222)
Movement in period:
Acquisitions in the period                                                                       —              —         (2,321)
Current service cost                                                                           (678)         (938)        (1,203)
Past service cost                                                                                —              —            (30)
Interest cost                                                                                (5,818)       (5,846)        (5,345)
Contributions by the members                                                                   (126)         (156)          (171)
Gains on settlements and curtailments                                                         6,624             —            170
Actuarial (loss)/gain                                                                       (30,757)         3,613        13,442
Benefits paid                                                                                  3,720          3,230         6,460

At end of period                                                                           (115,352)      (88,317)        (88,220)

Movements in the fair value of scheme assets were as follows:

                                                                                              2010            2009          2008
                                                                                              £000            £000          £000

At beginning of period                                                                      72,227          84,781        86,745
Movement in period:
Acquisitions in the period                                                                      —               —           1,893
Contributions                                                                                3,919           4,411          3,928
Contributions by the members                                                                   126             156            171
Expected return on pension assets                                                            5,014           5,978          5,897
Actuarial gain/(loss)                                                                       14,314        (19,869)         (7,393)
Benefits paid                                                                                (3,720)        (3,230)         (6,460)

At end of period                                                                            91,880          72,227        84,781

The analysis of the scheme assets and the expected rate of return at the balance sheet date was as
follows:
                                                              Expected return                      Fair value of assets
                                                       2010            2009         2008       2010           2009           2008
                                                         %                %           %        £000           £000           £000

Equities/Property                                      7.75            8.00         8.00     49,412          35,818        49,369
Bonds                                                  5.50            5.50         4.60     41,708          34,511        33,825
Other                                                  0.50            5.25         5.25        760           1,898         1,587

                                                       6.30            6.70         6.60     91,880          72,227        84,781




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The history of experience adjustments is as follows:

                                                          2010             2009        2008        2007      2006
                                                          £000             £000        £000        £000      £000

Fair value of plan assets                               91,880           72,227      84,781      86,745     80,866
Fair value of defined benefit
  obligation                                           (115,352)         (88,317)    (88,220)   (99,222)   (99,788)

Deficit in the scheme                                    (23,472)         (16,090)     (3,439)   (12,477)   (18,922)

Experience adjustments on scheme
  liabilities
Amount (£000)                                           (30,757)          3,613        2,394        (16)    (4,498)
Percentage of scheme liabilities (%)                      (27%)             4%           3%        (0%)       (5%)
Experience adjustments on scheme
  assets
Amount (£000)                                           14,314           (19,869)     (7,393)    (1,379)     8,408
Percentage of scheme assets (%)                           16%              (28%)        (9%)       (2%)       11%
The Group made voluntary additional contributions of £3.2 million (2009: £3.5 million; 2008:
£2.7 million) into the defined benefit pension schemes during the year and anticipates continuing to
do so in the year ending 1 April 2011.

38. Financial instruments
Capital risk management
The Group manages its capital to ensure that the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of the net debt and equity
balance. The Board of Directors reviews the capital structure of the Group regularly considering both
the costs and risks associated with each class of capital. The capital structure of the Group consists
of:

                                                                                       2010        2009      2008
                                                                                       £000        £000      £000

Net debt
Obligations under finance leases (note 24)                                             1,011        2,247     1,089
Borrowings (note 25)                                                                352,918     383,762    398,394
Cash at bank and in hand (note 22)                                                  (44,331)     (9,924)   (12,767)

                                                                                    309,598     376,085    386,716

Equity
Share capital (note 30)                                                               24,472      4,257      4,255
Capital reserves (note 31)                                                           111,493     54,290     52,233
Translation reserve (note 32)                                                            702      1,292       (491)
(Accumulated losses)/retained earnings (note 33)                                    (103,094)   (27,531)    38,043

                                                                                     33,573      32,308     94,040

Gearing (being net debt divided by equity above)                                         9.2       11.6        4.1

Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements.

Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for
recognition, the basis of measurement and the basis on which income and expenses are recognised, in
respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1.



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Categories of financial instruments

                                                                                                                                               Carrying value
                                                                                                                                     2010              2009             2008
                                                                                                                                     £000              £000             £000

Financial assets
Held for trading                                                                                                                        —                —                457
Loans and receivables (including cash and cash equivalents)                                                                        254,686          273,158           312,980
Financial liabilities
Held for trading                                                                                                                         6            3,219               315
Amortised cost                                                                                                                     435,198          484,299           506,470
Financial risk management objectives
The Group’s financial risks include market risk (including currency risk and interest risk), credit risk,
liquidity risk and cash flow interest rate risk.
The Group seeks to minimise the effects of these risks by using derivative financial instruments to
manage its exposure. The use of financial derivatives is governed by the Group’s policies approved by
the Board of Directors. The Group does not enter into or trade financial instruments, including
derivative financial instruments, for speculative purposes.

Market risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency
exchange rates and interest rates. The Group enters into a variety of derivative financial instruments
to manage its exposure to interest rate and foreign currency risk, including:
*                                                      forward foreign exchange contracts to hedge the exchange rate risk arising on the purchase of
                                                       inventory in US dollars; and
*                                                      interest rate swaps to mitigate the risk of rising interest rates.

Foreign currency risk management
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to
exchange rate fluctuations arise. Exchange rate exposures are managed utilising forward foreign
exchange contracts.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary
liabilities at the reporting date are as follows:
                                                                                     Assets                          Liabilities                      Net exposure
                                                                             2010      2009     2008          2010       2009         2008        2010      2009         2008
                                                                             £000      £000     £000          £000       £000         £000        £000      £000         £000

Euro                                                                         4,616    2,912     3,286       (728)      (1,865)          (14)      3,888    1,047        3,272
Hong Kong dollar                                                             2,059      684        —      (1,226)      (6,161)         (213)        833   (5,477)        (213)
US dollar                                                                    6,196    8,166     3,132     (1,668)      (1,167)       (3,419)      4,528    6,999         (287)

                                                                            12,871   11,762     6,418     (3,622)       (9,193)      (3,646)      9,249       2,569     2,772


Foreign currency sensitivity analysis
A significant proportion of products sold through the Group’s Home Shopping and Educational
Supplies Divisions are procured through the Group’s Far East buying office. The currency of
purchase for these goods is principally the US dollar, with a proportion being in Hong Kong dollars.
The following table details the Group’s sensitivity to a 10 per cent. increase and decrease in sterling
against the relevant foreign currencies. 10 per cent. represents management’s assessment of the
reasonably possible change in foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts their translation at the period
end for a 10 per cent. change in foreign currency rates. The sensitivity analysis includes external loans
as well as loans to foreign operations within the Group where the denomination of the loan is in a
currency other than the currency of the lender or the borrower. A positive number below indicates an
increase in profit and other equity where sterling strengthens 10 per cent. against the relevant

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currency. For a 10 per cent. weakening of sterling against the relevant currency, there would be an
equal and opposite impact on the profit and other equity, and the balances below would be negative.
                                                                                                 Hong Kong dollar currency
                                                                Euro currency impact                     impact                       US dollar currency impact
                                                                2010      2009       2008         2010      2009       2008            2010       2009      2008
                                                                £000      £000       £000         £000      £000       £000            £000       £000      £000

Profit or loss and
  equity                                                        (353)       (95)       (297)           (76)      498           19        (412)           (636)      (1,291)


Forward foreign exchange contracts
The Group enters into forward foreign exchange contracts to manage the risk associated with
anticipated sales and purchase transactions out to approximately 12 months from the balance sheet
date.

The following table details the forward foreign currency contracts outstanding as at the period end.
All of these contracts are designated at fair value through the profit and loss account:

Outstanding contracts

                                                       Average contract exchange
                                                                 rate                 Foreign currency                   Sterling                Period end fair value
                                                         2010      2009      2008   2010     2009      2008      2010       2009     2008        2010     2009       2008
                                                         Rate      Rate      Rate US$000 US$000 US$000           £000       £000     £000        £000     £000       £000

Buy US dollars
Less than 3 months                                     1.5423    1.4746   1.9974    3,000      2,000     5,000   1,945     1,356     2,503         19         (5)       22
3 to 6 months                                          1.5415    1.4752   2.0409    3,000      4,000     5,000   1,946     2,711     2,450         19        (10)       89
6 months to 12
   months                                              1.5132    1.4760   2.0265    8,000      6,000    18,000   5,287     4,065     8,883        (44)       (15)      346

                                                       1.5254    1.4757   2.0239   14,000   12,000      28,000   9,178     8,132    13,836         (6)       (30)      457




Changes in the fair value of non-hedging currency derivatives amounting to £24,000 have been
credited to income in the period (2009: £487,000 charged to income; 2008: £584,000 credited to
income).

Interest rate risk management
The Group is exposed to interest rate risk as the Group borrows funds at both fixed and floating
interest rates. The risk is managed by the Group by maintaining a mix between fixed and floating
rate borrowings, and the use of interest rate swap contracts and forward interest rate contracts when
considered necessary. Hedging activities are evaluated regularly to align with interest rate views and
defined risk appetite; ensuring hedging strategies are applied, by either positioning the balance sheet
or protecting interest expense through different interest rate cycles.

The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the
liquidity risk management section of this note.

Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for both
derivatives and non-derivative instruments at the balance sheet date. For floating rate liabilities, the
analysis is prepared assuming the amount of liability outstanding at balance sheet date was
outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest
rate risk internally to key management personnel and represents management’s assessment of the
reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the
Group’s profit and equity reserves for the period ended 2 April 2010 would decrease/increase by
£1,765,000 (2009: decrease/increase by £1,919,000; 2008: decrease/increase by £1,992,000). This is
mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings.

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Interest rate swap contracts
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and
floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable
the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt
held and the cash flow exposures on the issued variable rate debt held. The fair value of interest rate
swaps at the reporting date is determined by discounting the future cash flows using the curves at the
reporting date and the credit risk inherent in the contract, and is disclosed below. The average
interest rate is based on the outstanding balances at the end of the financial year.
The following details the notional principal amounts and remaining terms of interest rate swap
contracts outstanding as at the current and previous reporting date.
The Group obtained interest rate derivatives in the prior year to manage its exposure to interest rate
movements on its bank borrowings by the use of fixed interest rate arrangements. At 3 April 2009,
contracts with a nominal value of £100.0 million had a fixed rate of 4.8 per cent. for the period to
4 January 2010. No interest rate derivative contracts were in place at 2 April 2010.
At 2 April 2010 the fair value of the Group’s interest rate derivatives is a liability of £nil (2009:
£3,189,000; 2008: £315,000). These amounts are based on quoted market prices for equivalent
instruments at the balance sheet date.
Changes in the fair value of non-hedging interest rate derivatives amounting to £3,189,000 have been
credited to income in the period (2009: £2,874,000 charged to income; 2008: £589,000 charged to
income).
Due to the nature of many of the Group’s hedging and derivative instruments, hedge accounting has
not been adopted for these hedging relationships. Consequently, all of these instruments are
designated at fair value through the profit and loss account.

Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in
financial loss to the Group. The Group’s credit risk is primarily attributable to its trade receivables.
The amounts presented in the balance sheet are net of allowances for doubtful receivables. An
allowance for impairment is made when there is an identified loss event which, based on previous
experience, is evidence of a reduction in the recoverability of the cash flows. A more detailed
commentary of the Group’s exposure to credit risk within its trade receivables, and the procedures
employed to manage this risk, is set out in note 21.
The Group does not have any significant credit risk exposure to any single counterparty or any
Group of counterparties having similar characteristics. The Group defines counterparties as having
similar characteristics if they are connected entities. Other than the loan to associate disclosed in note
39, concentration of credit did not exceed 5 per cent. of gross monetary assets at any time during the
year. The credit risk on liquid funds and derivative financial instruments is limited because the
counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The carrying amount of financial assets recorded in the financial information, which is net of
impairment losses, represents the Directors’ best estimate of the Group’s maximum exposure to credit
risk without taking account of the value of any collateral obtained.

Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has
built an appropriate liquidity risk management framework for the management of the Group’s short,
medium and long-term funding and liquidity management requirements. The Group seeks to manage
liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by
continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities. Included in note 25 is a description of additional undrawn facilities that the
Group has at its disposal to further reduce liquidity risk.




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Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities
based on the earliest date on which the Group can be required to pay. The table includes both
interest and principal cash flows.

                                                                                         Weighted
                                                                                           average
                                                                                          effective
                                                                                           interest     Less than
                                                                                               rate        1 year     1 to 5 years   5+ years     Total
                                                                                                 %           £000            £000       £000      £000

2010
Non-interest bearing                                                                            —            81,269            —          —      81,269
Finance lease liability                                                                       7.50            1,052            7          —       1,059
Variable interest rate instruments                                                            4.23          352,918            —          —     352,918

                                                                                                            435,239             7         —     435,246

2009
Non-interest bearing                                                                            —            98,290           —           —      98,290
Finance lease liability                                                                       7.50            1,555        1,012           7      2,574
Variable interest rate instruments                                                            4.96           59,043      376,884          —     435,927

                                                                                                            158,888      377,896           7    536,791

2008
Non-interest bearing                                                                            —           106,987           —           —     106,987
Finance lease liability                                                                       7.50              664          589          —       1,253
Variable interest rate instruments                                                            6.69           90,258      422,910          —     513,168

                                                                                                            197,909      423,499          —     621,408

The Group has access to financing and securitisation facilities, the total unused amount of which is
£10,840,000 (2009: £76,162,000; 2008: £70,713,000) at the balance sheet date. The Group expects to
meet its other obligations from operating cash flows and proceeds of maturing financial assets.
The Group enters into two types of derivative financial instruments relating to gross settled foreign
exchange contracts and net settled interest rate swaps which have been disclosed separately. When the
amount payable or receivable is not fixed, the amount disclosed has been determined by reference to
the interest and foreign currency rates prevailing at the balance sheet date.
The timing and fair value of the cash flows relating to the gross settled foreign exchange contracts
are detailed in the ‘‘outstanding contracts’’ table above.
The timing and fair value of the cash flows relating to the net settled interest rate swaps are
estimated as a £nil liability due within one year in respect of the period ended 2 April 2010. In
respect of the year ended 3 April 2009, there was a liability of £3,219,000 due in less than one year.
In respect of the year ended 31 March 2008, there was an asset of £44,000 of which £16,000 was due
in less than one year and £28,000 due between one and five years.

Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows.
*                                                      Foreign currency forward contracts are measured using quoted forward exchange rates and yield
                                                       curves derived from quoted interest rates matching maturities of the contracts.
*                                                      Interest rate swaps are measured at the present value of future cash flows estimated and
                                                       discounted based on the applicable yield curves derived from quoted interest rates.
*                                                      The fair value of other non-derivative financial assets and financial liabilities are determined in
                                                       accordance with generally accepted pricing models based on discounted cash flow analysis using
                                                       prices from observable current market transactions and dealer quotes for similar instruments.

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The Directors consider that the carrying amounts of financial assets and financial liabilities recorded
at amortised cost in the financial information approximate their fair value. The Group is required to
analyse financial instruments that are measured subsequent to initial recognition at fair value, grouped
into levels 1 to 3 based on the degree to which the fair value is observable.
*                                                      Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
                                                       markets for identical assets or liabilities;
*                                                      Level 2 fair value measurements are those derived from inputs other than quoted prices included
                                                       within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
                                                       indirectly (i.e. derived from prices); and
*                                                      Level 3 fair value measurements are those derived from valuation techniques that include inputs
                                                       for the asset or liability that are not based on observable market data (unobservable inputs).
The above financial assets and liabilities were measured at fair value on level 2 fair value
measurement bases.

39.                                                    Related party transactions
Trading transactions
Transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not discussed in this note.
During the period to 23 July 2010, the date on which the remaining 70 per cent. of the shares of the
Group’s associate, Webb, were acquired, the Group made purchases from its associate on normal
commercial terms of £1.60 million (2009: £6.91 million; 2008: £4.26 million) and in the same period
the Group supplied goods and services to its associate of £0.01 million (2009: £7.61 million; 2008:
£7.15 million). At 2 April 2010 the Group had trade payables due to its associate of £nil (2009: £1.74
million; 2008: £0.03 million) and trade receivables due from its associate of £nil (2009: £6.70 million;
2008: £10.04 million). At 2 April 2010, the Group had loans receivable from its associate of £nil
(2009: £33.65 million; 2008: £34.43 million). During the current period, interest income of £0.86
million (2009: £3.52 million; 2008: £2.22 million) has been recognised on the loan.
The Group has a trading relationship with Herbert Walker & Son (Printers) Limited (‘‘Herbert
Walker’’), a commercial printing company which is controlled by Mr K Chapman, a former director.
During the period to 2 April 2010, Group purchases from Herbert Walker on normal commercial
terms amounted to £0.47 million (2009: £0.32 million; 2008: £0.51 million) and in the same period the
Group supplied goods and services to Herbert Walker of £0.12 million (2009: £0.11 million; 2008:
£0.12 million). At 2 April 2010, the Group indebtedness to Herbert Walker was £0.02 million (2009:
£0.04 million; 2008: £0.03 million) and that of Herbert Walker to the Group was £0.01 million (2009:
£0.02 million; 2008: £0.03 million).
The Group also has a trading relationship with Collisons Limited (‘‘Collisons’’), a stationery supply
company which is controlled by Mr K Chapman, a former director. In the period to 2 April 2010,
purchases from Collisons amounted to £0.02 million (2009: £0.03 million; 2008: £nil). There were no
sales to Collisons in any period. All transactions are made on normal commercial terms. At 2 April
2010, the Group indebtedness to Collisons was £0.02 million (2009: £0.03 million; 2008: £nil).
On 1 April 2008, the Company entered into a five-year agreement with A F K Nelson Limited on
normal commercial terms in respect of premises at Nelson which it uses for warehouse and
distribution. The annual rent is £175,000 and the lease is terminable on six months’ notice by either
party. The directors of A F K Nelson Limited are Jonathan Chapman and James Chapman, who are
related to Mr K Chapman, a former director.
The Company is currently party to a five-year lease with Shawbrook Developments Limited on
normal commercial terms in respect of premises at Padiham which it uses for warehouse and
distribution. The annual rent is £0.3 million and the lease is terminable on six months’ notice by
either party. James Chapman is a director of, and shareholder in, Shawbrook Developments Limited
and is related to Mr K Chapman, a former director.
During the year ended 3 April 2009 an initial deposit of £0.5 million was repaid by Shawbrook
Developments Limited in relation to a proposed joint venture property project to improve the
warehouse and distribution capacity of the Group. This was cancelled as a consequence of current
market conditions.

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Compensation of key management personnel
The remuneration of the Directors including consultancy contracts and share-based payments and
excluding any dividends paid in respect of their shareholdings in 2009 and 2008, who are the key
management of the Group is summarised below.

                                                                   2010        2009         2008
                                                                   £000        £000         £000

Short-term employee benefits                                       1,829        1,932        3,796
Termination payments                                              1,042           —            —
Post-employment benefits                                             244          288          224

                                                                  3,115        2,220        4,020
Share-based payments                                              1,532           —           623

                                                                  4,647        2,220        4,643

40. Acquisition of business
During the year ended 31 March 2008, the Group acquired the entire share capital of the following
businesses:

                                                                              Date Consideration
                                                                                           £000

Synergy Managed Equipment Services Limited                            4 April 2007          1,462
Philograph Publications Limited                                       4 April 2007          1,398
Health & Home Shopping Limited                                   22 November 2007             700
Moving Solutions Limited                                            17 March 2008             170

                                                                                            3,730




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The following table sets out the aggregate book value and fair value of all net assets acquired during
this period, along with total consideration, the proportion of the consideration discharged by means
of cash and cash equivalents, and the total net cash outflow arising:

                                                                              Book value    Fair value
                                                                                   £000          £000

Intangible assets – brands (note 16)                                                  —          2,220
Intangible assets – customer relationships (note 16)                                  —            598
Property, plant and equipment (note 17)                                            2,274         2,143
Inventories                                                                        3,607         1,869
Trade and other receivables                                                        1,053         1,053
Cash and cash equivalents                                                         (1,392)       (1,392)
Trade and other payables                                                          (2,892)       (2,917)
Pension deficit                                                                        —           (428)
Current tax liabilities                                                              (91)          (81)
Deferred tax liabilities (note 28)                                                    —           (665)

                                                                                   2,559        2,400

Goodwill                                                                                        1,552
Negative goodwill                                                                                (222)

Total consideration                                                                             3,730

Satisfied by:
Cash                                                                                            3,574
Directly attributable costs                                                                       156

                                                                                                3,730

Net cash outflow arising on acquisition
Cash consideration                                                                              3,730
Cash and cash equivalents acquired                                                              1,392

                                                                                                5,122




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On 23 July 2009, the Group acquired the remaining 70 per cent. of the issued share capital of the
Webb Group Limited (‘‘Webb’’) for a nominal consideration of £3. The transaction has been
accounted for by the purchase method of accounting.

                                                                               Book value     Fair value
                                                                                    £000           £000

Goodwill                                                                             3,141             —
Intangible assets – software and IT development costs (note 16)                        529            529
Intangible assets – brands (note 16)                                                    —           1,989
Intangible assets – customer relationships (note 16)                                    —           3,808
Property, plant and equipment (note 17)                                              1,243          1,198
Inventories                                                                          5,121          4,797
Trade and other receivables                                                          7,516          3,232
Cash and cash equivalents                                                              643            643
Trade and other payables                                                           (46,457)       (47,076)
Current tax payable                                                                     (6)            (6)
Obligations under finance leases                                                        (16)           (16)
Bank loans                                                                          (2,273)        (2,273)
Deferred tax liabilities (note 28)                                                      —          (1,623)

Net liabilities                                                                    (30,559)       (34,798)

Acquired net liabilities of existing interest                                                     10,439

Net liabilities acquired                                                                          (24,359)
Goodwill arising on acquisition                                                                    24,359

Total consideration                                                                                   —

Net cash outflow arising on acquisition
Cash consideration                                                                                    —
Cash and cash equivalents acquired                                                                   643

                                                                                                     643

The goodwill associated with the original purchase of the 30 per cent. shareholding is £9,045,000. The
adjustments to fair value of £1,583,000 relating to previously held interests has been treated as an
impairment to intangible assets in the income statement, together with the subsequent impairment to
goodwill of the Webb business reflecting its disposal on 8 June 2010 for consideration of £1. If the
acquisition had occurred at the beginning of the year, Group revenue would have been £12,230,000
higher, and losses attributable to equity holders of the parent would have been £1,013,000 higher.
The goodwill arising on the acquisition of Webb is attributable to staff acquired as part of the
business, strategic acquisition synergies, and other opportunities which are specifically excluded in the
identification of intangible assets on acquisition by the relevant accounting standards.

41. Events after the balance sheet date
On 8 June 2010, the Webb Group Limited was sold for £1 cash.
The Group restructured its existing banking facilities on 16 July 2010 as described in note 25.
On 12 August 2010, the Group sold its wholly owned subsidiaries, CWIO Limited (formerly Findel
Direct Limited), Confetti Network Limited and I Want One of Those.com Limited for cash
consideration of £600,000 on completion.

Payment Protection Insurance (‘‘PPI’’)
One of the group’s Home Shopping subsidiaries, Express Gifts, is regulated by the FSA as an
insurance intermediary and as such is permitted to sell insurance products, including PPI.
The FSA published its final policy statement (PS 10/12) concerning the assessment and redress of PPI
complaints on 10 August 2010 and instructed firms to implement the measures contained in it by
1 December 2010. The new rules impose significant changes with respect to the handling of PPI mis-

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selling complaints. On 8 October 2010, the British Bankers’ Association filed an application for
judicial review of the FSA’s policy statement and of related guidance issued by the Financial
Ombudsman Service.
Relevant sales have been made by Express Gifts although Express Gifts ceased selling this product in
August 2008. Total complaints received from customers remain low as a proportion of total PPI sales
made – with 1,212 complaints received in the 12 months to 3 October 2010 of which 51 were upheld.
Express Gifts is investigating the impact of the new requirements but at this time, in light of the
uncertainly caused by the application for judicial review, it is not practical to evaluate the cases
concerned, nor therefore to make a reliable estimate of the amount of provision, if any, that will be
required. Express Gifts will review the cases when the requirements become clearer.




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3.                                                     ACCOUNTANTS’ REPORT ON THE CONSOLIDATED FINANCIAL INFORMATION OF
                                                       THE GROUP FOR THE FINANCIAL INFORMATION CONTAINED IN PART V(2)


                                                                                                            2 Hardman Street
                                                                                                                  Manchester
                                                                                                                   M60 2AT
The Board of Directors
on behalf of Findel plc
2 Gregory Street
Hyde
Cheshire
SK14 4TH
Greenhill & Co International LLP
Lansdowne House
57 Berkeley Square
London
W1J 6ER
J.P. Morgan Securities Ltd
10 Aldermanbury
London
EC2V 7RF


Dear Sirs

Findel plc
We report on the financial information set out in Part V(2) (Historical Financial Information on the
Group) of the prospectus dated 11 February 2011 of Findel plc (the ‘‘Company’’ and, together with its
subsidiaries, the ‘‘Group’’) (the ‘‘Prospectus’’). This financial information has been prepared for
inclusion in the Prospectus on the basis of the accounting policies set out in note 1 to the financial
information. This report is required by Annex I item 20.1 of Commission Regulation (EC) No 809/
2004 (the ‘‘Prospectus Directive Regulation’’) and is given for the purpose of complying with that
requirement and for no other purpose.

Responsibilities
The directors of the Company are responsible for preparing the financial information on the basis of
preparation set out in note 1 to the financial information and in accordance with IFRS as adopted
by the EU.
It is our responsibility to form an opinion as to whether the financial information gives a true and
fair view, for the purposes of the Prospectus and to report our opinion to you.
Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the
extent there provided, to the fullest extent permitted by law we do not assume any responsibility and
will not accept any liability to any other person for any loss suffered by any such other person as a
result of, arising out of, or in accordance with this report or our statement, required by and given
solely for the purposes of complying with Annex I item 23.1 of the Prospectus Directive Regulation,
consenting to its inclusion in the prospectus.

Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the
Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence
relevant to the amounts and disclosures in the financial information. It also included an assessment of
significant estimates and judgments made by those responsible for the preparation of the financial
information and whether the accounting policies are appropriate to the entity’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that

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the financial information is free from material misstatement whether caused by fraud or other
irregularity or error.
Our work has not been carried out in accordance with auditing or other standards and practices
generally accepted in jurisdictions outside the United Kingdom, including the United States of
America, and accordingly should not be relied upon as if it had been carried out in accordance with
those standards and practices.

Opinion
In our opinion, the financial information gives, for the purposes of the Prospectus, a true and fair
view of the state of affairs of the Group as at the dates stated and of its profits, cash flows and
changes in equity for the periods then ended in accordance with the basis of preparation set out in
note 1 and in accordance with IFRS as adopted by the EU.

Declaration
For the purposes of Prospectus Rule 5.5.3R(2)(f), we are responsible for this report as part of the
Prospectus and declare that we have taken all reasonable care to ensure that the information contained in
this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to
affect its import. This declaration is included in the Prospectus in compliance with Annex I item 1.2 of the
Prospectus Directive Regulation.

Yours faithfully



Deloitte LLP
Chartered Accountants
Deloitte LLP is a limited liability partnership registered in England and Wales with registered number
OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (‘‘DTTL’’), a
UK private company limited by guarantee, whose member firms are legally separate and independent
entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL
and its member firms.

Member of Deloitte Touche Tohmatsu Limited




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4.   UNAUDITED CONSOLIDATED FINANCIAL INFORMATION OF THE GROUP FOR THE 26
     WEEK PERIOD ENDED 1 OCTOBER 2010 AND THE 26 WEEK PERIOD ENDED 3
     OCTOBER 2009
CONDENSED CONSOLIDATED INCOME STATEMENT
26 week period ended 1 October 2010

                                                            Before
                                                       exceptional
                                                         items and
                                                        terminated   Exceptional    Terminated
                                                        operations         items     operations       Total
                                                              £000          £000          £000        £000

Revenue                                                   255,798            —            8,161     263,959
Cost of sales                                            (137,305)           —           (4,973)   (142,278)

Gross profit                                               118,493            —           3,188     121,681

Trading costs                                            (112,261)           —           (5,535)   (117,796)
Exceptional operating costs (net)
– Other exceptional items                                      —          (5,107)         (251)      (5,358)
– Pension curtailment gain                                     —              —             —            —
Share of result of associate                                   —              —             —            —
Analysis of operating profit/(loss)
– EBITDA                                                   11,401         (5,107)        (2,121)      4,173
– Depreciation and amortisation                            (4,829)            —            (477)     (5,306)
– Impairment                                               (1,193)            —              —       (1,193)
– Profit on disposal of land and buildings                     853             —              —          853
Operating profit/(loss)                                      6,232         (5,107)        (2,598)     (1,473)

Loss on disposal of businesses                                 —             —           (1,336)     (1,336)
Analysis of finance costs
– Movement on fair value of derivatives                      (217)            —             —          (217)
– Other                                                   (12,555)        (2,835)           —       (15,390)
Finance costs                                             (12,772)        (2,835)           —       (15,607)
Finance income                                              2,914             —             —         2,914

Loss before tax                                            (3,626)        (7,942)        (3,934)    (15,502)
Income tax income                                              —              —              —           —

Loss for the period                                        (3,626)        (7,942)        (3,934)    (15,502)

Loss per share
Basic                                                      (0.75)p                                  (3.21)p
Diluted                                                    (0.75)p                                  (3.21)p

All results are from continuing operations.




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CONDENSED CONSOLIDATED INCOME STATEMENT
26 week period ended 3 October 2009

                                                                  Before
                                                             exceptional
                                                               items and
                                                              terminated     Exceptional   Terminated
                                                              operations           items    operations        Total
                                                                    £000            £000         £000          £000
                                                             (Restated)*     (Restated)*   (Restated)*   (Restated)*

Revenue                                                         259,957             —          13,632       273,589
Cost of sales                                                  (135,837)            —          (7,252)     (143,089)

Gross profit                                                     124,120             —           6,380      130,500

Trading costs                                                  (120,389)            —          (8,830)     (129,219)
Exceptional operating costs (net)
– Other exceptional items                                              —           (986)         (196)       (1,182)
– Pension curtailment gain                                             —             —             —             —
Share of result of associate                                         (434)           —             —           (434)
Analysis of operating profit/(loss)
– EBITDA                                                          8,165            (986)       (1,906)        5,273
– Depreciation and amortisation                                  (4,868)             —           (740)       (5,608)
– Impairment                                                         —               —             —             —
Operating profit/(loss)                                            3,297            (986)       (2,646)         (335)

Finance costs                                                   (16,178)        (11,892)          —         (28,070)
Analysis of finance income
– Movement on fair value of derivatives                           1,868             —             —           1,868
– Other                                                           3,848             —             —           3,848
Finance income                                                    5,716             —             —           5,716

Loss before tax                                                  (7,165)        (12,878)       (2,646)      (22,689)
Income tax income                                                 2,006           3,298            —          5,304

Loss for the period                                              (5,159)         (9,580)       (2,646)      (17,385)

Loss per share
Basic                                                           (2.29)p                                     (7.70)p
Diluted                                                         (2.29)p                                     (7.70)p


*Details of restatement are included within notes 2 and 3.




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CONDENSED CONSOLIDATED INCOME STATEMENT
52 week period ended 2 April 2010

                                                                Before
                                                           exceptional
                                                             items and
                                                            terminated        Exceptional    Terminated
                                                            operations              items     operations      Total
                                                                  £000               £000          £000       £000

Revenue                                                         547,013               —          53,162     600,175
Cost of sales                                                  (284,695)              —         (32,192)   (316,887)

Gross profit                                                        262,318            —          20,970    283,288

Trading costs                                                  (229,334)              —         (85,230)   (314,564)
Exceptional operating costs (net)
– Other exceptional items                                               —         (16,319)         (376)    (16,695)
– Pension curtailment gain                                              —           5,409            —        5,409
Share of result of associate                                          (434)            —             —         (434)
Analysis of operating profit/(loss)
– EBITDA                                                            45,728        (10,910)       (2,005)     32,813
– Depreciation and amortisation                                    (11,018)            —         (2,445)    (13,463)
– Impairment                                                        (2,160)            —        (60,186)    (62,346)
Operating profit/(loss)                                              32,550        (10,910)      (64,636)    (42,996)

Finance costs                                                      (31,266)       (12,157)           —      (43,423)
Analysis of finance income
– Movement on fair value of derivatives                              3,213            —              —        3,213
– Other                                                              7,082            —              —        7,082
Finance income                                                      10,295            —              —      10,295

Profit/(loss) before tax                                             11,579        (23,067)      (64,636)    (76,124)
Income tax income/(expense)                                         (3,242)         3,803            —          561

Profit/(loss) for the period                                          8,337        (19,264)      (64,636)    (75,563)

Earnings/(loss) per share
Basic                                                                2.21p                                 (20.02)p
Diluted                                                              2.21p                                 (20.02)p


All results are from continuing operations.
The income statement presentation has been restated, see note 2.




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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
26 week period ended 1 October 2010

                                                                                                26 weeks to
                                                                            26 weeks to           3 October         52 weeks to
                                                                              3 October                2009             2 April
                                                                                  2009                 £000               2010
                                                                                  £000           (Restated)*              £000

Loss for the period                                                               (15,502)           (17,385)            (75,563)
Currency translation loss arising on consolidation                                   (103)              (473)               (590)

Total comprehensive income for the period                                         (15,605)           (17,858)            (76,153)


The total comprehensive income for the period is attributable to the equity shareholders of the parent company, Findel plc.
*Details of restatement are included within note 3.




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CONDENSED CONSOLIDATED BALANCE SHEET
At 1 October 2010

                                                                           3 October
                                                             1 October          2009     2 April
                                                                 2010           £000       2010
                                                                 £000     (Restated)*      £000

Non-current assets
Goodwill                                                        47,299        83,786     47,299
Other intangible assets                                         67,374        83,328     70,757
Property, plant and equipment                                   39,432        53,358     44,295
Retirement benefit asset                                            383            —          —

                                                              154,488       220,472     162,351

Current assets
Inventories                                                    88,077        99,791      73,607
Trade and other receivables                                   214,589       254,732     210,355
Derivative financial instruments                                    —             88          —
Cash and cash equivalents                                      21,994        48,021      44,331

                                                              324,660       402,632     328,293

Total assets                                                  479,148       623,104     490,644

Current liabilities
Trade and other payables                                        81,507      111,764      81,269
Current tax liabilities                                          7,411          994       7,393
Obligations under finance leases                                    338        1,268       1,006
Bank loans                                                      27,443       57,735     352,918
Derivative financial instruments                                    223        1,438           6
Provisions                                                       1,790           —        1,661

                                                              118,712       173,199     444,253

Non-current liabilities
Bank loans                                                    331,053       343,192           —
Obligations under finance leases                                    —            292            5
Provisions                                                      4,097            —         5,019
Deferred tax liabilities                                        7,318         8,592        7,345
Retirement benefit obligation                                       —          7,119          449

                                                              342,468       359,195      12,818

Total liabilities                                             461,180       532,394     457,071

Net assets                                                      17,968        90,710     33,573

Equity
Share capital                                                   24,472        24,472     24,472

Capital reserves                                               111,493      110,335      111,493
Translation reserve                                                599          819          702
Accumulated losses                                            (118,596)     (44,916)    (103,094)

Total equity                                                    17,968        90,710     33,573


*Details of restatement are included within note 3.




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CONDENSED CONSOLIDATED CASH FLOW STATEMENT
26 week period ended 1 October 2010
                                                                                26 weeks to
                                                                 26 weeks to      3 October     52 weeks
                                                                   1 October           2009    to 2 April
                                                                       2010            £000         2010
                                                                       £000     (Restated)*         £000
Operating activities
Loss for the period                                                  (15,502)       (17,385)     (75,563)
Income tax income                                                         —          (5,304)        (561)
Finance income                                                        (2,914)        (5,716)     (10,295)
Finance costs                                                         15,607         28,070       43,423
Loss on disposal of businesses                                         1,336             —            —

Operating loss                                                        (1,473)          (335)     (42,996)
Adjustments for:
Depreciation of property, plant and equipment                         3,998           3,170        8,338
Impairment of property, plant and equipment and software and
   IT development costs                                                1,193             —         7,422
Amortisation of intangible assets                                      1,310          2,438        5,125
Impairment of goodwill and associated intangible assets                   —              —        52,829
Share-based payment expense                                               —             510        2,186
(Profit)/loss on disposal of property, plant and equipment               (875)           203          (63)
Non-cash pension curtailment gain                                         —              —        (5,409)
Pension contributions less income statement charge                    (1,068)        (1,513)      (3,158)
Share of result of associate                                              —             434          434

Operating cash flows before movements in working capital                3,085          4,907       24,708
(Increase)/decrease in inventories                                   (18,047)       (20,780)       5,040
(Increase)/decrease in receivables                                    (8,244)       (23,659)      16,403
Increase/(decrease) in payables                                        4,354         10,904      (21,280)
(Decrease)/increase in provisions                                       (793)            —         6,680

Cash (used in)/generated from operations                             (19,645)       (28,628)      31,551
Income taxes received                                                    (10)         8,462        8,872
Interest paid                                                         (7,248)       (12,397)     (20,034)
Exceptional financing costs paid                                       (8,345)        (7,892)     (12,157)

Net cash (used in)/from operating activities                         (35,248)       (40,455)       8,232

Investing activities
Interest received                                                         6            870         2,072
Proceeds on disposal of property, plant and equipment                 5,393            452           474
Purchases of property, plant and equipment and software and IT
   development costs                                                  (4,018)        (4,408)      (8,934)
Loan advanced to associate                                                —          (8,030)      (8,030)
Acquisition of subsidiaries                                               —             643          643
Net cash outflow from sale of terminated operations                    (1,884)            —            —

Net cash used in investing activities                                  (503)        (10,473)     (13,775)

Financing activities
Repayments of obligations under finance leases                          (673)           (703)      (1,251)
Net proceeds from issue of shares                                        —           74,899       74,381
Bank loans drawn/(repaid)                                            21,555          42,167      (10,494)
Securitisation loan (repaid)/drawn                                   (7,470)         (2,304)       2,348

Net cash generated from financing activities                          13,412         114,059       64,984

Net (decrease)/increase in cash and cash equivalents                 (22,339)        63,131       59,441
Cash and cash equivalents
at the beginning of the period                                       44,331         (15,046)     (15,046)
Effect of foreign exchange rate changes                                   2             (64)         (64)

Cash and cash equivalents at the end of the period                   21,994          48,021       44,331



*Details of restatement are included within note 3.



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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                                        Capital   Translation   Accumulated
                                                       Share capital   reserves       reserve        losses       Total equity
                                                               £000       £000          £000          £000               £000

At 3 April 2010                                              24,472    111,493           702         (103,094)         33,573
Total comprehensive
   income
for the period                                                   —          —           (103)          (15,502)       (15,605)
Share based payments                                             —          —             —                 —              —

At 1 October 2010                                            24,472    111,493           599         (118,596)         17,968


                                                                        Capital   Translation   Accumulated
                                                       Share capital   reserves       reserve        losses       Total equity
                                                               £000       £000          £000          £000               £000

 At 4 April 2009 (as
    previously
    reported)                                                 4,257     54,290         1,292            (5,097)        54,742
 Prior year adjustment                                           —          —             —            (22,434)       (22,434)

 At 4 April 2009
   (restated)                                                 4,257     54,290         1,292           (27,531)        32,308
 Total comprehensive
   income for the
   period (restated)*                                            —          —           (473)          (17,385)       (17,858)
 Share issues                                                20,215     54,684            —                 —          74,899
 Share warrants issue                                            —         851            —                 —             851
 Share-based payments                                            —         510            —                 —             510

 At 3 October 2009
   (restated)*                                               24,472    110,335           819           (44,916)        90,710


                                                                        Capital   Translation   Accumulated
                                                       Share capital   reserves       reserve        losses       Total equity
                                                               £000       £000          £000          £000               £000

 At 4 April 2009
   (restated)                                                 4,257     54,290         1,292           (27,531)        32,308
 Total comprehensive
   income for the
   period                                                        —          —           (590)          (75,563)       (76,153)
 Share issues                                                20,215     54,166            —                 —          74,381
 Share warrants issue                                            —         851            —                 —             851
 Share-based payments                                            —       2,186            —                 —           2,186

 At 2 April 2010                                             24,472    111,493           702         (103,094)         33,573


*Details of restatement are included within note 3.
The total equity for the period is attributable to the equity shareholders of the parent company, Findel plc.




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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.                                                     General Information
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 DTR of the UK
FSA. 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 2 April 2010 except as described below. 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
2 April 2010.
The financial information for the period ended 2 April 2010 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 drew attention by way of emphasis without qualifying their report; and
(iii) did not contain a statement under sections 498(2) or (3) of the 2006 Act.

Going concern basis
The Group’s primary bank facilities are due for renewal in January 2012. However, as more fully
explained in the ‘‘Balance Sheet Restructuring’’ section of this statement, the Group is at an advanced
stage of implementing an appropriate long term financing package. As explained in that section there
is no certainty that the negotiations will reach a successful conclusion. In the absence of agreement,
the Directors have considered the Group’s forecasts, which include downside scenario and exclude the
benefit of any Full Potential Review initiatives that cannot be funded from the current facilities.
These show that the Group should be able to operate within its banking facilities and comply with its
banking covenants. Although the level of covenant headroom is not large, the Directors currently
believe it to be sufficient and have identified controllable mitigating actions should the Board’s
expectations not be met.
Through its various business activities the Group is exposed to a number of significant risks and
uncertainties, referenced below, which could affect the Group’s ability to meet these forecasts and
hence its ability to meet its banking covenants. The Directors have considered the challenging
economic conditions, the current competitive environment in which the Group’s businesses operate
and associated credit risks, together with the available ongoing committed finance facilities and the
potential actions that can be taken should revenues be worse than expected to protect operating
profits and cash flows.
After making enquires, the Directors have formed a judgement that there is a reasonable expectation
that the Group has adequate resources to continue in operational existence for the foreseeable future.
For this reason, the going concern basis has been adopted in preparing the interim financial
information.
Risks and uncertainties
The principal risks and uncertainties which could impact the Group’s long-term performance remain
those detailed on pages 10 to 12 of the 2010 Annual Report, a copy of which is available on the
Group’s website, www.findel.co.uk. 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 per cent. of annual sales occurring during that period.

2.   Accounting policies
Except as described below, the accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those applied by the Group in its
consolidated financial statements as at and for the 52 weeks ended 2 April 2010.

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Operating profit and exceptional items: The income statement presentation has been amended in the
current period to remove the reference to ‘‘benchmark profit’’ in favour of considering operating
profit before exceptional items and terminated operations. Exceptional items are items which the
Directors consider to be significant, in aggregate, and are non-recurring in nature. In the current
period, these items were restructuring costs, forensic accounting review costs and abortive disposal
costs. In the prior year, these items were restructuring costs, warehouse reorganisation costs and
onerous lease provisions. Terminated operations relate to businesses which have been sold or exited
during the period.
From 3 April 2010 the Group has applied IFRS 3 Business Combinations (2008) in accounting for
business combinations and the amendment to IAS 27 Consolidated and separate financial statements.
The application of this standard and the amendment has not had any impact on the results of the
Group. There are no other new or revised standards in the period which have a material impact on
the Group.

3.   Restatements in respect of prior years
Education Supplies Division accounting irregularities restatement
The impact of the Education Supplies Division accounting irregularities in the periods prior to 3 April
2009, on the Group’s balance sheet were as follows:
*                                                      overstatement of revenue principally relating to incorrect recognition of overseas contracts
                                                       reduced net assets at 3 April 2009 and 3 October 2009 by £5.4 million;
*                                                      incorrect recognition of purchasing rebate arrangements with suppliers together with associated
                                                       inflated inventory pricing arrangements reduced net assets at 3 April 2009 and 3 October 2009
                                                       by £6.2 million;
*                                                      overstatement of receivables and prepayments arising on disposal of certain businesses and
                                                       product lines, and understatement of credit notes reduced net assets at 3 April 2009 and
                                                       3 October 2009 by £3.4 million;
*                                                      incorrect capitalisation of non-current assets reduced net assets at 3 April 2009 and 3 October
                                                       2009 by £2.8 million; and
*                                                      the under accrual of certain customer rebate arrangements and other unrecorded liabilities
                                                       reduced net assets at 3 April 2009 and 3 October 2009 by £2.8 million.
Other adjustments to prior years
In preparing the financial statements for the period ended 2 April 2010 the Directors reviewed the
output of new financial systems and reports adopted by the Express Gifts business in respect of the
accounting for cut off in respect of the direct dispatch of goods, and the impact of insurance costs
and rebates received in pricing inventory. Following these improvements in financial reporting the
Directors decided to restate the comparatives in the financial statements. The impact was as follows:
*                                                      the change to cut off practice reduced net assets at 3 April 2009 by £0.9 million and at
                                                       3 October 2009 by £1.5 million. For the period ended 3 October 2009 revenue was reduced by
                                                       £4.1 million and cost of sales by £2.6 million; and
*                                                      the change to the pricing of inventory reduced inventory and net assets at 3 April 2009 and
                                                       3 October 2009 by £1.0 million.
In addition, amortisation of capitalised finance costs of £885,000 and £1,771,000 have been reclassified
from trading costs to finance costs in the periods ended 3 October 2009 and 2 April 2010 respectively.




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4.                                                       Trading costs
                                                                                                                                             26 weeks to        52 weeks to
                                                                                                                            26 weeks to        3 October            2 April
                                                                                                                              1 October             2009               2010
                                                                                                                                  2010              £000               £000
                                                                                                                                  £000        (restated)*        (restated)*

Selling and distribution costs                                                                                                    78,584          86,207             174,071
Administrative expenses                                                                                                           39,212          43,012             140,493

Trading costs                                                                                                                    117,796         129,219             314,564

*                                                      Details of restatement are provided in note 3.


5.                                                       Segmental analysis
Operating segments
The Board has been considering the information that is presented to them on each of the trading
divisions. In view of this, information on reporting segments has been amended to reflect this
accordingly. For management purposes, the Group is currently organised into five operating segments:
Express Gifts, Kleeneze, Kitbag, the Education Supplies Division and the Healthcare Division.
Segment information about these operating segments is presented below.

26 weeks to 1 October 2010
                                                                                       Home Shopping
                                                                                 Express                            Education
                                                                                   Gifts  Kleeneze        Kitbag     Supplies Healthcare Terminated                     Total
                                                                                   £000       £000         £000         £000        £000       £000                     £000

Segmental revenue
Revenue before
  terminated
  operations                                                                      94,763       31,416     26,128       70,848     32,643         —                    255,798
Terminated operations                                                                 —            —          —            —          —       8,161                     8,161

Total revenue                                                                     94,763       31,416     26,128       70,848     32,643      8,161                   263,959



                                                                                 Express                            Education
                                                                                   Gifts     Kleeneze     Kitbag     Supplies Healthcare Terminated Unallocated         Total
                                                                                   £000          £000      £000         £000        £000       £000       £000          £000

Loss after tax
Continuing operating
  profit before
  exceptional items and
  terminated
  operations                                                                      (1,544)        2,074     1,367        3,048      1,287          —            —        6,232
Terminated operations                                                                 —             —         —            —          —       (2,347)          —       (2,347)
Other exceptional items                                                           (1,027)         (209)     (205)      (1,274)      (442)       (251)      (1,950)     (5,358)

Reportable segment
  result                                                                          (2,571)        1,865     1,162        1,774        845      (2,598)      (1,950)     (1,473)

Loss on disposal of
  businesses                                                                                                                                                           (1,336)
Finance income                                                                                                                                                          2,914
Finance costs                                                                                                                                                         (15,607)

Loss before tax                                                                                                                                                       (15,502)
Tax                                                                                                                                                                        —

Loss for the period                                                                                                                                                   (15,502)


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26 weeks to 3 October 2009

                                                                Home Shopping
                                                         Express                              Education
                                                            Gifts  Kleeneze     Kitbag          Supplies Healthcare Terminated                     Total
                                                             £000       £000       £000             £000       £000       £000                      £000
                                                       (restated) (restated) (restated)       (restated) (restated) (restated)                (restated)

Segmental revenue
Revenue before
  terminated
  operations                                              97,664       32,517       22,356       76,510     30,910          —                   259,957
Terminated operations                                         —            —            —            —          —       13,632                   13,632

Total revenue                                             97,664       32,517       22,356       76,510     30,910      13,632                  273,589



                                                         Express                              Education
                                                            Gifts    Kleeneze       Kitbag      Supplies Healthcare Terminated Unallocated         Total
                                                             £000         £000         £000         £000       £000       £000       £000           £000
                                                       (restated)   (restated)   (restated)   (restated) (restated) (restated) (restated)     (restated)

Loss after tax
Continuing operating
  profit before
  exceptional items and
  terminated
  operations                                              (3,225)       3,050        1,076        1,720      1,110          —          —          3,731
Terminated operations                                         —            —            —            —          —       (2,450)        —         (2,450)
Other exceptional items                                     (267)          —            —          (719)        —         (196)        —         (1,182)
Share of result of
  associate                                                   —            —            —            —          —           —         (434)        (434)

Reportable segment
  result                                                  (3,492)       3,050        1,076        1,001      1,110      (2,646)       (434)        (335)

Finance income                                                                                                                                    5,716
Finance costs                                                                                                                                   (28,070)

Loss before tax                                                                                                                                 (22,689)
Tax                                                                                                                                               5,304

Loss for the period                                                                                                                             (17,385)




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52 weeks to 2 April 2010

                                                                Home Shopping
                                                         Express                              Education
                                                            Gifts  Kleeneze     Kitbag          Supplies Healthcare Terminated                     Total
                                                             £000       £000       £000             £000       £000       £000                      £000
                                                       (restated) (restated) (restated)       (restated) (restated) (restated)                (restated)

Segmental revenue
Revenue before
  terminated
  operations                                             229,040       64,356       48,309      141,800     63,508          —                   547,013
Terminated operations                                         —            —            —            —          —       53,162                   53,162

Total revenue                                            229,040       64,356       48,309      141,800     63,508      53,162                  600,175




                                                         Express                              Education
                                                            Gifts    Kleeneze       Kitbag      Supplies Healthcare Terminated Unallocated         Total
                                                             £000         £000         £000         £000       £000       £000       £000           £000
                                                       (restated)   (restated)   (restated)   (restated) (restated) (restated) (restated)     (restated)

Loss after tax
Continuing operating
  profit before
  exceptional items and
  terminated
  operations                                              20,197        6,449        1,715        2,074      2,549          —           —        32,984
Terminated operations                                         —            —            —            —          —      (64,260)         —       (64,260)
Other exceptional items                                   (3,325)          —            —       (10,093)      (470)       (376)     (2,431)     (16,695)
Pension curtailment
  gain                                                        —            —            —            —          —           —        5,409        5,409
Share of result of
  associate                                                   —            —            —            —          —           —         (434)        (434)

Reportable segment
  result                                                  16,872        6,449        1,715       (8,019)     2,079     (64,636)      2,544      (42,996)

Finance income                                                                                                                                   10,295
Finance costs                                                                                                                                   (43,423)

Loss before tax                                                                                                                                 (76,124)
Tax                                                                                                                                                 561

Loss for the period                                                                                                                             (75,563)




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

                                                             26 weeks to     26 weeks to    52 weeks to
                                                               1 October       3 October        2 April
                                                                   2010            2009           2010
                                                                   £000            £000           £000

Exceptional operating costs
Pension curtailment gain                                              —               —          (5,409)
Other exceptional items
– Restructuring costs                                              2,743            1,182        5,827
– Warehouse reorganisation costs                                     333               —         4,188
– Onerous lease provisions                                            —                —         6,680
– Forensic accounting review costs                                 1,558               —            —
– Abortive disposal costs                                            724               —            —

                                                                   5,358            1,182       11,286
Exceptional financing costs
Debt refinancing costs                                              2,835           11,892       12,157

Restructuring costs relate to the Express Gifts operating segment £245,000 (26 weeks ended 3 October
2009 £267,000; 52 weeks ended 2 April 2010 £1,557,000), the Kleeneze operating segment £63,000
(26 weeks ended 3 October 2009 £nil; 52 weeks ended 2 April 2010 £nil) and the Kitbag operating
segment £74,000 (26 weeks ended 3 October 2009 £nil; 52 weeks ended 2 April 2010 £nil), the
Education Supplies Division operating segment £926,000 (26 weeks ended 3 October 2009 £719,000;
52 weeks ended 2 April 2010 £1,989,000) and the Healthcare Division operating segment £278,000
(26 weeks ended 3 October 2009 £nil; 52 weeks ended 2 April £43,000), with £906,000 (26 weeks
ended 3 October 2009 £nil; 52 weeks ended 2 April 2010 £1,862,000) not allocated to a specific
operating segment. The remainder £251,000 relate to terminated operations (26 weeks to 3 October
2009 £196,000; 52 weeks to 2 April 2010 £376,000).
Warehouse reorganisation costs in the 26 weeks to 1 October 2010 relate solely to the Express Gifts
operating segment. In the 52 weeks ended 2 April 2010 warehouse reorganisation costs relate to the
Express Gifts operating segment £1,768,000, the Education Supplies Division operating segment
£1,701,000 and the Healthcare Division operating segment £427,000, with the remainder £292,000 not
allocated to a specific operating segment.
The onerous lease provisions for the 52 weeks ended 2 April 2010 relate to the Education Supplies
Division operating segment £6,403,000 with the remainder £277,000 not allocated to a specific
operating segment.
Forensic accounting review costs relate to the Express Gifts operating segment £449,000, the Kleeneze
operating segment £146,000, the Kitbag operating segment £131,000, the Education Supplies Division
operating segment £348,000 and the Healthcare Division operating segment £164,000, with the
remainder £320,000 not allocated to a specific operating segment.
The abortive disposal costs of £724,000 are not allocated to a specific operating segment.
Exceptional financing costs are discussed in note 10.




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7.    Loss on sale of terminated operations
Terminated operations comprise the Webb Group Limited sold on 8 June 2010, CWIO Limited
(formerly Findel Direct Limited), Confetti Network Limited and I Want One of Those.com Limited
sold on 11 August 2010, and The Cotswold Company and Letterbox terminated in 2009. All the
terminated operations were part of the Home Shopping Division operating segment. The results of
the terminated operations are presented in a separate column in the income statement.

                                                                                         26 weeks to
                                                                                           1 October
                                                                                               2010
                                                                                               £000

Consideration and costs
Consideration                                                                                     600
Sale costs                                                                                     (1,323)

                                                                                                (723)

Net assets sold                                                                                   613
Loss on sale                                                                                   (1,336)

                                                                                                (723)

Net cash outflow from sale of terminated operations
Cash consideration                                                                                600
Sale costs paid                                                                                (1,323)
Cash and cash equivalents sold                                                                 (1,161)

                                                                                               (1,884)

8.   Taxation
Income tax for the 26 week period ended 1 October 2010 is at nil per cent. of profit before tax based
on the effective tax rate for the full year.
No tax credit has been recognised in the current period, as no deferred tax asset has been recognised
in respect of tax losses arising in the period.




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9.                                                     Earnings per share
                                                                                  26 weeks to     26 weeks to     52 weeks to
                                                                                    1 October       3 October         2 April
                                                                                        2010             2009           2010
                                                                                        £000             £000           £000
                                                                                                   (restated)

Net loss attributable to equity holders of the parent for the
  purpose of basic and diluted earnings per share                                     (15,502)        (17,385)        (75,563)
Losses from terminated businesses (net of tax)                                          2,598           2,646          64,636
Loss on disposal of businesses (net of tax)                                             1,336              —               —
Other exceptional items (net of tax)                                                    5,107             986          14,029
Exceptional pension curtailment gain (net of tax)                                          —               —           (3,894)
Exceptional finance costs (net of tax)                                                   2,835           8,594           9,129

Net profit attributable to equity holders of the parent for
  the purpose of continuing earnings per share*                                        (3,626)         (5,159)          8,337

Weighted average number of shares                                                 482,955,829     225,700,608     377,402,818

Loss per share – basic                                                                  (3.21)p         (7.70)p        (20.02)p

(Loss)/earnings per share – continuing* basic                                           (0.75)p         (2.29)p          2.21p

Loss per share – diluted                                                                (3.21)p         (7.70)p        (20.02)p

(Loss)/earnings per share – continuing* diluted                                         (0.75)p         (2.29)p          2.21p

* continuing operations before exceptional items and terminated operations.


10. Amended credit facilities
As a result of the accounting irregularities in the Group’s Education Supplies Division, certain
representations and warranties made in connection with the bank facilities entered into at the time of
the refinancing in July 2009 were found to be untrue. In addition, certain other provisions contained
in these facilities were breached. As a result of the breach to the banking covenants at 2 April 2010,
all of the bank debt owed by the Group was reclassified as falling due within one year in the
consolidated balance sheet at 2 April 2010.
The Group agreed amendments to the outstanding £250 million Facility and £77.3 million Facility on
16 July 2010, the principal elements being:
*    the facilities expire on 9 January 2012;
*    as at 16 July 2010, the available facility under the £250 million Facility was an amount of
     £236.6 million which will reduce (subject to short-term increases to fund working capital
     requirements) to an amount just in excess of £208.3 million prior to the termination date of the
     £250 million Facility;
*    as at 16 July 2010, the available facility under the £77.3 million Facility was £45.0 million which
     will reduce (subject to short-term increases to fund working capital requirements) to an amount
     of £39.6 million prior to the termination date of the £77.3 million Facility;
*    the facilities require a commitment fee and charges interest at 5 per cent. over LIBOR to
     31 December 2010 plus, if refinancing is not proposed to the Lenders by 14 January 2011, an
     additional 1.50 per cent. capitalising interest;
*    new financial covenants have been agreed and permanent waivers obtained in relation to the
     breaches referred to above.
Under certain circumstances, additional fees from 14 January 2011 of up to a maximum of
approximately £5.0 million could become payable.
As a result of the above amendment to credit facilities, bank loans which were shown as being due
for settlement within one year at 2 April 2010 are now due for settlement after one year.
Management have assessed the impact of the modification to the Group’s credit facilities in line with
the guidance contained within IAS 39 and have concluded that it does not represent a significant

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modification. As part of this process the Group incurred fees and transaction costs of £6,199,000.
These costs have been capitalised and are being amortised using the effective rate of interest method.
Costs incurred as a result of the increase in the effective interest rate, amounting to £689,000 have
been treated as exceptional finance costs. A further £2,146,000 of fees were expensed immediately and
treated as exceptional finance costs, see note 6.
In the 26 weeks ended 3 October 2009 and the 52 weeks ended 2 April 2010, fees of £11,892,000 and
fees of £12,157,000 were expensed immediately to the income statement and treated as exceptional
finance costs. These costs were incurred in relation to the Group’s debt refinancing carried out in July
2009, where management assessed the impact of the modification as significant.
The Group has in addition a securitisation facility of up to £105.0 million which expires on 9 January
2012, the amount of the available facility being dependent upon the level of certain debtor balances
within Express Gifts Limited.

11. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties of the Company,
are not discussed in this note.
There were no related party transactions to be disclosed for the 26 weeks to 1 October 2010.
During the period to 4 April 2009 to 23 July 2009, the date on which the remaining 70 per cent. of
the shares of the Group’s associate, Webb Group Limited (‘‘Webb’’), were acquired, Group purchases
from Webb, on normal commercial terms amounted to £1,600,000 and in the same period the Group
supplied goods and services to its associate of £10,000. During the same period interest income of
£853,000 was recognised on the loan to Webb.
The Group had a trading relationship with Herbert Walker & Son (Printers) Limited (‘‘Herbert
Walker’’), a commercial printing company which was controlled by Mr K Chapman, a former
director (retired 1 April 2010). During the period to 3 October 2009, Group purchases from Herbert
Walker, on normal commercial terms amounted to £200,000 (52 weeks ended 2 April 2010: £470,000)
and in the same period the Group supplied goods and services to Herbert Walker of £90,000 (52
weeks ended 2 April 2010: £120,000). The Group indebtedness to Herbert Walker at 3 October 2009
was £70,000 and at 2 April 2010 was £20,000, and that of Herbert Walker to the Group at 3 October
2009 was £20,000 and at 2 April 2010 was £10,000.
The Group had a trading relationship with Collisons Limited (‘‘Collisons’’), a commercial printing
company which was controlled by Mr K Chapman, a former director (retired 1 April 2010). During
the period to 3 October 2009, Group purchases from Collisons, on normal commercial terms
amounted to £nil (52 weeks ended 2 April 2010: £20,000). There were no sales to Collisons in either
period. The Group indebtedness to Collisons at 3 October 2009 was £nil and at 2 April 2010 was
£20,000.
The Group leased the properties at Hyde, Nelson and Padiham as disclosed in notes 36 and 39 to the
2010 Annual Report.

12.                                                    Contingent liability
Payment Protection Insurance (PPI)
One of the Group’s Home Shopping subsidiaries Express Gifts Limited is regulated by the FSA as an
insurance intermediary and as such is permitted to sell insurance products, including Payment
Protection Insurance (‘‘PPI’’).
The FSA published its final policy statement (PS 10/12) concerning the assessment and redress of PPI
complaints on 10 August 2010 and instructed firms to implement the measures contained in it by
1 December 2010. The new rules impose significant changes with respect to the handling of PPI mis-
selling complaints. On 8 October 2010, the British Bankers’ Association filed an application for
judicial review of the FSA’s policy statement and of related guidance issued by the Financial
Ombudsman Service.
Relevant sales have been made by Express Gifts Limited although Express Gifts Limited ceased
selling this product in August 2008. Total complaints received from customers remain low as a
proportion of total PPI sales made – with 1,212 complaints received in the 12 months to 3 October
2010 of which 51 were upheld. Express Gifts Limited is investigating the impact of the new
requirements but at this time, in light of the uncertainly caused by the application for judicial review,
it is not practical to evaluate the cases concerned, nor therefore to make a reliable estimate of the
amount of provision, if any, that will be required. Express Gifts Limited will review the cases when
the requirements become clearer.

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5.                                                     ACCOUNTANTS’ REVIEW REPORT ON THE UNAUDITED CONSOLIDATED FINANCIAL
                                                       INFORMATION OF THE GROUP FOR THE 26 WEEK PERIOD ENDED 1 OCTOBER 2010

                                                                                                              KPMG Audit Plc
                                                                                                              St James’ Square
                                                                                                                   Manchester
                                                                                                                      M2 6DS
Independent review report by KPMG Audit Plc to Findel plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the
half-yearly financial report for the period ended 1 October 2010 which comprises the condensed
consolidated income statement, the condensed consolidated statement of comprehensive income, the
condensed consolidated balance sheet, the condensed consolidated cash flow statement, the condensed
consolidated statement of changes in equity and the related explanatory notes. We have read the
other information contained in the half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist
the Company in meeting the requirements of the Disclosure and Transparency Rules (the ‘‘DTR’’) of
the UK’s Financial Services Authority (the ‘‘UK FSA’’). Our review has been undertaken so that we
might state to the Company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company for our review work, for this report, or for the conclusions we have
reached.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The
Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of
the UK FSA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with
IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted
by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial
statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK
and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of
the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial
information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for the period ended 1 October 2010 is
not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR
of the UK FSA.

John Costello
for and on behalf of KPMG Audit Plc
Chartered Accountants
St James’ Square, Manchester, M2 6DS
30 November 2010


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                                                                                               PART VI

                                                                          OPERATING AND FINANCIAL REVIEW
The following is a discussion of the Group’s results of operations and financial condition for the 26 week
period ended 1 October 2010, the 09/10 Financial Year, the 08/09 Financial Year and the 07/08
Financial Year. Prospective investors should read the following discussion, together with the whole of this
document including Risk Factors, Important Information, Part V (Historical Financial Information on
the Group) and Part VII (Unaudited Pro Forma Financial Information) and should not just rely on the
key or summarised information contained in this Part VI (Operating and Financial Review). The
financial information in this Part VI (Operating and Financial Review) has been extracted without
material adjustment from the financial information contained in Part V (Historical Financial Information
on the Group) or has been extracted without material adjustment from the Group’s accounting records.
This section contains ‘‘forward looking statements’’. Those statements are subject to risks, uncertainties
and other factors that could cause the Company’s future results of operations or cash flows to differ
materially from the results of operations expressed or implied in such forward looking statements.
Among the important factors that could cause the Group’s actual results, performance or achievements
differ materially from those expressed in such forward looking statements include those in Forward
Looking Statements and Risk Factors in this document. All statements other than statements of
historical fact, such as statements regarding the Group’s future financial position, risks and uncertainties
relating to the Group’s business plans and objectives for future operations, are forward looking
statements.

1.    BUSINESS OVERVIEW
The Findel Group contains market leading businesses in the home shopping, education supplies and
healthcare markets. It is primarily a distributor, handling and supplying specialist products
manufactured by third parties. The Group’s activities are focussed in five operating segments:
*                                                      Express Gifts is one of the largest direct mail order businesses in the UK, offering online and
                                                       via catalogue a broad range of home and leisure items, clothing, toys and gifts supported by a
                                                       flexible credit offer;
*                                                      Kleeneze is a leading network marketing company, specialising in supplying a wide range of
                                                       household and health & beauty products to customers through a network of independent
                                                       distributors across the UK and the Republic of Ireland;
*                                                      Kitbag is a leading retailer of sports leisurewear and official football kits both through its own
                                                       online operation, kitbag.com, as well as a number of partnership relationships with football
                                                       clubs and other sports organisations whereby Kitbag manages a range of retail, online and/or
                                                       mail order channels;
*                                                      the Education Supplies Division is one of the largest independent suppliers of resources and
                                                       equipment (excluding information technology and publishing) to schools and educational
                                                       establishments in the UK; and
*                                                      the Healthcare Division is a leading operator of outsourced Integrated Community Equipment
                                                       Services (ICES) contracts for NHS trusts and local authorities, and also supplies a wide range
                                                       of rehabilitation and care equipment to the public and private sectors via a catalogue and the
                                                       internet.

2.                                                     INCOME STATEMENT PRESENTATION AND SEGMENTAL ANALYSIS
2.1                                                    Operating segments
                                                       The Group is currently organised for management purposes into five operating segments:
                                                       Express Gifts, Kleeneze and Kitbag (which, collectively, are referred to as the Home Shopping
                                                       Division), the Education Supplies Division and the Healthcare Division. The products and
                                                       services included within each of these segments are described in paragraph 3 of Part IV
                                                       (Information on the Group) of this document.

2.2                                                    Change in income statement presentation
                                                       The income statement presentation has been amended in the 2010 Interim Report to remove the
                                                       reference to ‘‘benchmark profit’’ in favour of considering operating profit before exceptional
                                                       items and terminated operations. Exceptional items are items which the Directors consider to be

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                                                       significant, in aggregate and non-recurring in nature. In the three-year period, these items were
                                                       exceptional stock rationalisation costs, additional debtors provision, pension curtailment gain,
                                                       negative goodwill on acquisition, restructuring costs, warehouse reorganisation costs, onerous
                                                       lease provisions and costs in relation to business closures. Terminated operations relate to
                                                       businesses which has been sold or exited during the period. In addition, amortisation of
                                                       capitalised finance costs have been reclassified from trading costs to finance costs.

                                                       The historical information has been restated to reflect this change in presentation. A
                                                       reconciliation of previously reported ‘‘benchmark’’ operating profit to operating profit before
                                                       exceptional items is set out below:
                                                                                                                         09/10         08/09         07/08
                                                                                                                      Financial     Financial     Financial
                                                                                                                          Year          Year          Year
                                                                                                                       £million      £million      £million

                                                       Benchmark operating profit (reported in the 2009 Annual
                                                         Report)                                                                                      72.3

                                                       Education Supplies Division prior year adjustments                                              (5.8)
                                                       Express Gifts prior year adjustments                                                             0.1
                                                       Reclassification of terminated operations                                                        (0.2)
                                                       Benchmark operating profit (reported in the 2010 Annual
                                                         Report)                                                          36.2          48.4

                                                       Reclassification from ‘‘other items’’
                                                         Share based payment charge                                        (2.2)           —           (1.0)
                                                         Amortisation (non-terminated operations)                          (1.1)         (1.6)         (1.7)
                                                         Impairment (non-terminated operations)                            (2.1)           —           (3.0)
                                                       Reclassification from trading costs to finance cost
                                                         Amortisation of banking fees                                         1.8         0.5           0.7

                                                       Operating profit before exceptional items and terminated
                                                         operations                                                       32.6          47.3          61.4


2.3                                                    Description of principal metrics used by the Group
                                                       The Group uses the following principal metrics to measure the performance of its key operating
                                                       divisions:
                                                       *     Revenue – comprises the value of goods and services, financial services income and
                                                             distribution charges payable by the customer and financial services.
                                                       *     Costs of sales – these costs comprise primarily product costs.
                                                       *     Selling and distribution costs – these costs include transportation costs incurred in shipping
                                                             product to customers and marketing costs including both paper-based and internet
                                                             channels. They also include other selling and distribution related costs such as payroll
                                                             costs of employees engaged in selling and distribution activities, property costs, such as
                                                             rent and rates and equipment depreciation costs.
                                                       *     Administrative costs – these costs include the bad debt charge in respect of the Home
                                                             Shopping credit business, payroll costs of employees in the Group’s finance, buying and
                                                             merchandising functions and head office functions and pensions costs in respect of the
                                                             Group’s defined benefit schemes.
                                                       *     Margins – the Group uses two measures of margin, gross margin and operating margin.
                                                             Gross margin is calculated as revenue less directly attributable costs of sales (the main
                                                             component of which is product sales) stated as a percentage of revenue. The Group uses
                                                             gross margin percentage on a regular basis to monitor the pricing of goods, and to
                                                             determine buying and marketing strategies over the course of each season. Operating
                                                             margin is calculated as gross margin less selling, distribution and administrative costs
                                                             stated as a percentage of revenue.

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3.                                                     FACTORS AFFECTING RESULTS AND OPERATIONS
3.1                                                    Economic environment
                                                       3.1.1 Home Shopping Division
                                                             The economic environment in which the Group operates has been difficult following the
                                                             global market downturn which began in 2007 and intensified in the second half of 2008.
                                                            Unemployment levels, consumer price inflation, consumer debt levels, availability of credit
                                                            and many other factors influence customers’ buying decisions and the Group has not been
                                                            immune to this.
                                                            In Express Gifts, the Group’s credit-based business, the first signs of decline were seen in
                                                            the final quarter of the 07/08 Financial Year when customers who had purchased goods in
                                                            the preceding Christmas season defaulted more frequently as the impact of rapidly rising
                                                            food, fuel and utility prices reduced their ability to service debt.
                                                            The 09/10 Financial Year saw a further deterioration in conditions with the economy
                                                            moving into recession. The business planned for this by reducing marketing spend and
                                                            stock intake accordingly. Nonetheless, the impact of the decline in consumer confidence
                                                            was such that the Group’s financial performance, as with the general retail sector, fell
                                                            significantly. The brands which were hardest hit were those selling to those customers in
                                                            higher demographic bands where the exposure to the falling housing market was most
                                                            significant. These brands included Cotswold and Letterbox which were closed to eliminate
                                                            future losses and to conserve cash.
                                                            Express Gifts also responded by significantly tightening its acceptance criteria for new
                                                            customers during 2009, which led to a reduction in customers, but also a reduction in the
                                                            level of bad debt.
                                                            The marketplace in which Express Gifts operates has become more competitive. High
                                                            street retailers’ catalogues and online offerings, and pure online players, now compete with
                                                            traditional catalogue operators in the home shopping market. At the same time,
                                                            customers’ expectations of the home shopping experience have grown significantly, with
                                                            immediate feedback and multiple service options the norm. Whilst the business has an
                                                            efficient and low-cost distribution capability, its existing systems platform both on and off-
                                                            line has been underinvested and has not been able to compete effectively in this fast-
                                                            moving environment.
                                                       3.1.2 Education Supplies Division
                                                             The Education Supplies Division is affected by changes in the level of public sector
                                                             funding to the education sector. In the initial stages of the global market downturn,
                                                             spending levels remained robust and the revenues of our education business remained
                                                             broadly stable. However, as the funding crisis intensified, UK government funding was
                                                             diverted to support the UK’s leading financial institutions.
                                                            The UK government’s recent Comprehensive Spending Review has changed the market
                                                            environment, but the sector remains attractive and is likely to offer opportunities for
                                                            businesses with scale. This stems from the emergence of new school models, an increased
                                                            emphasis on innovative procurement channels, such as e-procurement, and a growing
                                                            requirement for ‘‘best value’’. In addition, the ending of the Building Schools for the
                                                            Future programme, in which the Group has limited participation, is expected to increase
                                                            the requirement for refurbishment and re-equipment of existing schools.
                                                       3.1.3 Healthcare Division
                                                             The Healthcare Division has been largely unaffected by the global economic conditions.
                                                             The UK government’s recent Comprehensive Spending Review will increase pressure on
                                                             healthcare budgets, which in turn will increase pressure on public bodies to save money.
                                                             The Group believes that these trends are likely to accelerate the move to outsourcing,
                                                             from which the Healthcare Division is well placed to benefit.

3.2                                                    Exchange rates
                                                       The Group is exposed to certain transactional currency exposures arising when a Group
                                                       company makes purchases in currencies other than pounds sterling. The Group’s primary
                                                       exposure in this regard is to US dollars where product purchases are sourced from Asia. The

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                                                       exposure is both direct and indirect. Direct exposure comprises        the purchase of products
                                                       through our sourcing operation, FAFE whilst indirect exposure         comprises the purchase of
                                                       products from intermediary suppliers in both the UK and Europe        where those suppliers have
                                                       purchased product denominated in US dollars and have increased        their prices to reflect their
                                                       own increased costs.

3.3                                                    Consumer credit
                                                       Over the last two years the level of consumer credit in the UK has fallen substantially. The
                                                       dynamics of the Home Shopping businesses are such that this has affected different brands in
                                                       different ways.
                                                       In Express Gifts, the Group’s credit-based business, there has been an increase in the level of
                                                       credit applications year-on-year as consumers who had previously used alternative sources of
                                                       credit no longer found them available. However, the impact of the significant tightening of
                                                       underwriting standards undertaken during 2009 has led to a moderate reduction in the number
                                                       of credit customers.
                                                       In future periods as economic conditions improve, the Board believes that consumer credit
                                                       availability is unlikely to return to previous levels in the near term. This should present an
                                                       opportunity for growth at that time.

3.4                                                    De-gearing plan and reduction in net indebtedness
                                                       The level of debt in the Group has been considered to be too high for some time. Measures
                                                       were introduced in the middle of 2008 to improve the management of working capital, dispose
                                                       of surplus properties and conserve retained profits within the business.
                                                       In July 2009, the Group raised approximately £80.9 million before costs from the Placing and
                                                       Open Offer and Firm Placing, the net proceeds of which were used to repay debt. A number of
                                                       loss making and capital absorbing subsidiaries were either sold or terminated.
                                                       The combined effect of these initiatives has been to reduce net debt from £386.7 million at
                                                       31 March 2008 to £309.6 million at 2 April 2010. It is expected that the impact of the proposed
                                                       Rights Issue and Placing will reduce net debt by approximately a further £110.5 million.
                                                       The Board of Findel believes that reducing net indebtedness, if combined with planned
                                                       operational initiatives identified by the Full Potential Review, will provide a more secure funding
                                                       base, which will produce substantial benefits for all the Group’s stakeholders in the longer term.

3.5                                                    Seasonality
                                                       The Group’s business is highly seasonal, with a substantial proportion of the revenue and
                                                       operating profit of its Home Shopping Division generated during its third financial quarter,
                                                       which includes the key Christmas season. In the Education Supplies Division, the second and
                                                       fourth quarters represent a significant proportion of its revenue and operating profit driven by
                                                       the start of the new school year and the end of the public sector financial year respectively.
                                                       Any factors negatively impacting these periods including product sourcing issues, incorrect stock
                                                       forecasting, unfavourable economic conditions or changes in public sector funding or
                                                       government could have a disproportionately adverse effect on Findel’s financial performance for
                                                       the entire year.

3.6                                                    Acquisitions and disposals
                                                       Findel has completed a number of acquisitions, disposals and business terminations that have
                                                       affected the Group’s results across the periods presented herein. Acquisitions and disposals result
                                                       in step change increases and decreases, respectively, in revenues and costs. Acquisitions are
                                                       reflected in the Group’s financial statements as from the date of each acquisition. Accordingly,
                                                       the full-year effects of acquisitions on the income statement and the cash flow statement are not
                                                       reflected in the financial statements during the financial year in which such acquisitions are
                                                       completed, but only in the following financial year. The most significant acquisitions and
                                                       disposals for the periods under review are as follows:
                                                       *     on 4 April 2007, the Group acquired the entire issued share capital of Synergy Managed
                                                             Equipment Services Limited for a consideration of £1,462,000;

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                                                       *        on 4 April 2007, the Group acquired the entire issued share capital of Philograph
                                                                Publications Limited for a consideration of £1,398,000;
                                                       *        on 17 December 2007, the Group disposed of the entire issued share capital of James Galt
                                                                & Co Limited for a consideration of £8,443,000;
                                                       *        on 2 April 2009, the Group terminated the operations of The Cotswold Company Limited
                                                                and Letterbox Mail Order Limited;
                                                       *        on 8 June 2010, the Group disposed of the entire issued share capital of Webb Group
                                                                Limited for a nominal consideration of £1; and
                                                       *        on 12 August 2010, the Group disposed of the entire issued share capital of CWIO
                                                                Limited (formerly Findel Direct Limited), Confetti Network Limited and I Want One of
                                                                Those.com Limited for a combined consideration of £703,000.

3.7                                                    Stock Management
                                                       The growth of the Group’s business depends partly on the identification and sourcing of
                                                       products in alignment with customer demand. It is therefore important to ensure product trends
                                                       and product development are identified in line with customer preferences. Incorrect forecasting
                                                       can result in an excess or a shortage of stock. An excess of stock could result in an increase in
                                                       operating costs from write-downs or write-offs, and a shortage of stock could result in lost sales
                                                       and consequently lower revenues.

4.                                                     RESULTS OF OPERATIONS
4.1                                                    The 2010 Interim Period compared to the 2009 Interim Period
                                                                                                        2010 Interim Period                                  2009 Interim Period
                                                                                        Continuing    Exceptional Terminated                 Continuing    Exceptional Terminated
                                                                                        operations          items   operations      Total    operations          items   operations      Total
                                                                                          £million       £million     £million    £million     £million       £million     £million    £million

                                                       Revenue                               255.8             —           8.2      264.0         260.0             —          13.6      273.6
                                                       Operating profit/(loss)                  6.2           (5.1)        (2.6)      (1.5)          3.3           (1.0)        (2.6)      (0.3)
                                                       Loss on disposal of businesses           —              —          (1.3)      (1.3)           —              —            —          —
                                                       Net finance cost                        (9.9)          (2.8)          —       (12.7)        (10.5)         (11.9)          —       (22.4)

                                                       Loss before tax                        (3.7)          (7.9)        (3.9)     (15.5)         (7.2)         (12.9)        (2.6)     (22.7)
                                                       Income tax income                        —              —            —          —            2.0            3.3           —         5.3

                                                       Loss after tax for the period          (3.7)          (7.9)        (3.9)     (15.5)         (5.2)          (9.6)        (2.6)     (17.4)



                                                       4.1.1 Revenue
                                                             Revenue from continuing operations (before exceptional items and terminated operations)
                                                             was £255.8 million in the 2010 Interim Period, a decrease of £4.2 million, or 1.6 per cent.,
                                                             compared to £260.0 million in the 2009 Interim Period. The decrease was primarily due to
                                                             the Education Supplies Division reflecting the ongoing loss of market share seen during
                                                             the 09/10 Financial Year.
                                                       4.1.2 Operating profit
                                                             Operating profit from continuing operations (before exceptional items and terminated
                                                             operations) was £6.2 million in the 2010 Interim Period, an increase of £2.9 million, or
                                                             89.0 per cent., compared to £3.3 million in the 2009 Interim Period. The increase reflects
                                                             general improvements in margin and cost control.
                                                       4.1.3 Net finance costs
                                                             Net finance costs for continuing operations (before exceptional items and terminated
                                                             operations) were £9.9 million in the 2010 Interim Period, a decrease of £0.6 million, or 5.8
                                                             per cent., compared to £10.5 million in the 2009 Interim Period. The decrease principally
                                                             reflects the reduction in average borrowings following the Placing and Open Offer and
                                                             Firm Placing undertaken in July 2009.
                                                       4.1.4 Loss before tax
                                                             Loss before tax from continuing operations (before exceptional items and terminated
                                                             operations) was £3.7 million in the 2010 Interim Period, an improvement of £3.5 million,
                                                             or 49.4 per cent., compared to £7.2 million in the 2009 Interim Period, reflecting the net
                                                             effect of the factors described above.

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                                                       4.1.5 Income tax income
                                                             The income tax income from continuing operations (before exceptional items and
                                                             terminated operations) was £nil in the 2010 Interim Period, compared to income of £2.0
                                                             million in the 2009 Interim Period. The underlying effective tax rate was nil per cent. in
                                                             respect of the 2010 Interim Period and 28.0 per cent. in respect of the 2009 Interim
                                                             Period.

                                                       4.1.6 Loss after tax
                                                             Loss after tax from continuing operations (before exceptional items and terminated
                                                             operations) was £3.7 million in the 2010 Interim Period, an improvement of £1.5 million,
                                                             or 29.7 per cent., compared to £5.2 million in the 2009 Interim Period. The improvement
                                                             in loss after tax reflects the net effect of the factors described above.

                                                       4.1.7 Exceptional items
                                                             The main components of the exceptional items incurred in respect of the 2010 Interim
                                                             Period are explained below:
                                                                *        restructuring charges of £2.5 million (a further £0.2 million of costs related to
                                                                         terminated operations and are disclosed in this column in the statement);
                                                                *        warehouse reorganisation costs of £0.3 million;
                                                                *        forensic accounting review costs of £1.6 million;
                                                                *        abortive disposal costs of £0.7 million; and
                                                                *        debt refinancing costs of £2.8 million.
                                                                The main components of the exceptional items incurred in respect of the 2009 Interim
                                                                Period are explained below:
                                                                *        restructuring charges of £1.0 million (a further £0.2 million of costs related to
                                                                         terminated operations and are disclosed in this column in the income statement); and
                                                                *        debt refinancing costs of £11.9 million.

                                                       4.1.8 Terminated operations
                                                             Profit after tax on continuing operations (before exceptional costs and terminated
                                                             operations) is stated before the net loss in respect of terminated operations of £3.9 million
                                                             for the 2010 Interim Period. Terminated operations comprise the Webb Group Limited
                                                             which was disposed of on 8 June 2010, CW10 Limited (formerly Findel Direct Limited),
                                                             Confetti Network Limited and I Want One of Those.com Limited, disposed of on 11
                                                             August 2010, and The Cotswold Company and Letterbox which were terminated in 2009.
                                                                The net loss in respect of terminated operations for the 2009 Interim Period was £2.6
                                                                million.

4.2                                                    The 09/10 Financial Year compared to the 08/09 Financial Year
                                                                                                        09/10 Financial Year                                  08/09 Financial Year
                                                                                        Continuing    Exceptional Terminated                  Continuing    Exceptional Terminated
                                                                                        operations          items    operations      Total    operations          items    operations       Total
                                                                                          £million       £million      £million    £million     £million       £million       £million    £million

                                                       Revenue                               547.0             —           53.2      600.2         572.1             —            38.7      610.8
                                                       Operating profit/(loss)                 32.6          (11.0)        (64.6)     (43.0)         47.3          (46.5)         (35.1)     (34.3)
                                                       Net finance cost                       (21.0)         (12.1)           —       (33.1)        (23.1)            —              —       (23.1)

                                                       Profit/(loss) before tax                11.6          (23.1)        (64.6)     (76.1)         24.2          (46.5)         (35.1)     (57.4)

                                                       Income tax income/(expense)            (3.3)           3.8           —          0.5          (6.8)          11.3            5.9       10.4

                                                       Profit/(loss) after tax for the
                                                       period                                  8.3          (19.3)        (64.6)     (75.6)         17.4          (35.2)         (29.2)     (47.0)



                                                       4.2.1 Revenue
                                                             Revenue from continuing operations (before exceptional items and terminated operations)
                                                             was £547.0 million in the 09/10 Financial Year, a decrease of £25.1 million, or 4.4 per
                                                             cent., compared to £572.1 million in the 08/09 Financial Year. The decrease was primarily

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                                                             due to the Education Supplies Division. The past misstatement of results has masked an
                                                             ongoing material shortfall in underlying performance. The masking of these performance
                                                             issues has resulted in a delay in the implementation of appropriate corrective action.
                                                       4.2.2 Operating profit
                                                             Operating profit from continuing operations (before exceptional items and terminated
                                                             operations) was £32.6 million in the 09/10 Financial Year, a decrease of £14.7 million, or
                                                             31.2 per cent., compared to £47.3 million in the 08/09 Financial Year. In addition to the
                                                             impact of reduced level of revenues in the Education Supplies Division, the decrease
                                                             reflects reduced levels of financial services income in Express Gifts resulting from
                                                             challenging consumer conditions.
                                                       4.2.3 Net finance costs
                                                             Net finance costs for continuing operations (before exceptional items and terminated
                                                             operations) were £21.0 million in the 09/10 Financial Year, a decrease of £2.1 million, or
                                                             9.3 per cent., compared to £23.1 million in the 09/10 Financial Year. The decrease reflects
                                                             the reduction in average borrowings in the 09/10 Financial Year following the Placing and
                                                             Open Offer and Firm Placing in July 2009 and the fall in interest rates from the second
                                                             half of the 08/09 Financial Year.
                                                       4.2.4 Profit before tax
                                                             Profit before tax from continuing operations (before exceptional items and terminated
                                                             operations) was £11.6 million in the 09/10 Financial Year, a decrease of £12.6 million, or
                                                             52.1 per cent., compared to £24.2 million in the 08/09 Financial Year, reflecting the net
                                                             effect of the factors described above.
                                                       4.2.5 Income tax income/expense
                                                             The income tax expense was £3.3 million in the 09/10 Financial Year, a decrease of £3.5
                                                             million compared to the charge of £6.8 million in the 08/09 Financial Year. The
                                                             underlying effective tax rate was 28.0 per cent. in both years.
                                                       4.2.6 Profit after tax
                                                             Profit after tax from continuing operations was £8.3 million in the 09/10 Financial Year, a
                                                             decrease of £9.1 million, or 52.1 per cent., compared to £17.4 million in the 08/09
                                                             Financial Year. The decrease in profit after tax reflects the net effect of the factors
                                                             described above.
                                                       4.2.7 Exceptional items
                                                             The main components of the exceptional items incurred in respect of the 09/10 Financial
                                                             Year are explained below:
                                                             *    restructuring charges of £5.5 million (a further £0.4 million of costs related to
                                                                  terminated operations and are disclosed in this column in the income statement);
                                                             *    warehouse reorganisation costs of £4.2 million;
                                                             *    onerous lease provisions of £6.7 million;
                                                             *    pension curtailment gain of £5.4 million; and
                                                             *    debt refinancing costs of £12.1 million.
                                                             The main components of the exceptional items incurred in respect of the 08/09 Financial
                                                             Year are explained below:
                                                             *    additional charges in respect of stock provisioning amounting to £14.3 million;
                                                             *    additional charges in respect of debtor provisioning amounting to £14.4 million;
                                                             *    restructuring charges of £9.6 million (a further £0.1 million of costs related to
                                                                  terminated operations and are disclosed in this column in the income statement);
                                                             *    warehouse reorganisation costs of £1.9 million;
                                                             *    costs incurred in relation to business closures of £1.5 million (a further £3.3 million
                                                                  of costs related to terminated operations and are disclosed in this column in the
                                                                  income statement); and
                                                             *    costs incurred by the Group’s former associate Webb Group Limited of £4.8 million.

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                                                       4.2.8 Terminated operations
                                                             Profit after tax on continuing operations (before exceptional items and terminated
                                                             operations) is stated before the net losses in respect of terminated operations of £64.6
                                                             million for the 09/10 Financial Year. The results of the terminated operations in the
                                                             period are:
                                                                *        operating loss of £5.4 million relating to I Want One of Those.com;
                                                                *        operating loss of £0.1 million relating to Letterbox;
                                                                *        operating profit of £0.4 million relating to Cotswold;
                                                                *        operating loss of £12.7 million relating to Confetti;
                                                                *        operating loss of £2.4 million relating to Findel Direct;
                                                                *        operating loss of £44.0 million relating to Webb; and
                                                                *        exceptional operating costs of £0.4 million.

                                                                The net loss in respect of terminated operations for the 08/09 Financial Year was £35.1
                                                                million. The results of the terminated operations in the period are:
                                                                *        operating loss of £0.4 million relating to I Want One of Those.com;
                                                                *        operating loss of £11.0 million relating to Letterbox;
                                                                *        operating loss of £12.3 million relating to Cotswold;
                                                                *        operating loss of £0.9 million relating to Confetti;
                                                                *        operating loss of £7.0 million relating to Findel Direct; and
                                                                *        exceptional operating costs of £3.5 million.


4.3                                                    The 08/09 Financial Year compared to the 07/08 Financial Year
                                                                                                        08/09 Financial Year                                  07/08 Financial Year
                                                                                        Continuing    Exceptional Terminated                  Continuing    Exceptional Terminated
                                                                                        operations          items    operations      Total    operations          items    operations       Total
                                                                                          £million       £million      £million    £million     £million       £million       £million    £million

                                                       Revenue                               572.1             —           38.7      610.8         585.2             —           55.2       640.4
                                                       Operating profit/(loss)                 47.3          (46.5)        (35.1)     (34.3)         61.4          (13.5)         (5.1)       42.8
                                                       Loss on disposal of businesses           —              —             —          —             —              —           (0.6)       (0.6)
                                                       Net finance cost                       (23.1)            —             —       (23.1)        (22.4)            —             —        (22.4)

                                                       Profit/(loss) before tax                24.2          (46.5)        (35.1)     (57.4)         39.0          (13.5)          (5.7)      19.8

                                                       Income tax income/(expense)            (6.8)          11.3           5.9       10.4         (14.0)           3.7           1.8         (8.5)

                                                       Profit/(loss) after tax for the
                                                       period                                 17.4          (35.2)        (29.2)     (47.0)         25.0           (9.8)          (3.9)      11.3



                                                       4.3.1 Revenue
                                                             Revenue from continuing operations (before exceptional items and terminated operations)
                                                             was £572.1 million in the 08/09 Financial Year, a decrease of £13.1 million, or 2.2 per
                                                             cent., compared to £585.2 million in the 07/08 Financial Year. The decrease was in part
                                                             attributable to the difficult economic conditions prevailing the Express Gifts division and
                                                             in part due to the challenging public sector finances in the Education Supplies Division.

                                                       4.3.2 Operating profit
                                                             Operating profit from continuing operations (before exceptional items and terminated
                                                             operations) was £47.3 million in the 08/09 Financial Year, a decrease of £14.1 million, or
                                                             23.0 per cent., compared to £61.4 million in the 07/08 Financial Year. In addition to the
                                                             reduced level of revenues, gross margin fell across the Group businesses as the impact of
                                                             the economic downturn led to lower pricing, and the significant weakening of sterling
                                                             against the US dollar led to product price inflation.

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                                                       4.3.3 Net finance costs
                                                             Net finance costs for continuing operations (before exceptional items and terminated
                                                             operations) were £23.1 million in the 08/09 Financial Year, an increase of £0.7 million, or
                                                             3.1 per cent., compared to £22.4 million in the 07/08 Financial Year. The increase in the
                                                             charge for movement on fair value derivatives (£3.4 million) offset the benefit from the
                                                             fall in bank base rate in the second half of the 08/09 Financial Year.
                                                       4.3.4 Profit before tax
                                                             Profit before tax from continuing operations (before exceptional items and terminated
                                                             operations) was £24.2 million in the 08/09 Financial Year, a decrease of £14.8 million, or
                                                             38.0 per cent., compared to £39.0 million in the 07/08 Financial Year, reflecting the net
                                                             effect of the factors described above.
                                                       4.3.5 Income tax income/expense
                                                             The income tax expense was £6.8 million in the 08/09 Financial Year, a decrease of £7.2
                                                             million compared to the charge of £14.0 million in the 07/08 Financial Year. The
                                                             underlying effective tax rate was 28.0 per cent. in the 08/09 Financial Year compared to
                                                             35.8 per cent. in the 07/08 Financial Year. The higher tax rate in the 07/08 Financial Year
                                                             reflects the prior year adjustment to profit from the change in accounting policies and
                                                             accounting irregularities with minimal associated taxable benefit.
                                                       4.3.6 Benchmark profit after tax
                                                             Profit after tax from continuing operations was £17.4 million in the 08/09 Financial Year,
                                                             a decrease of £7.6 million, or 30.5 per cent., compared to £25.0 million in the 07/08
                                                             Financial Year. The decrease in profit after tax reflects the net effect of the factors
                                                             described above.
                                                       4.3.7 Exceptional items
                                                             The main components of the exceptional items incurred in respect of the 08/09 Financial
                                                             Year are explained below:
                                                             *    additional charges in respect of stock provisioning amounting to £14.3 million;
                                                             *    additional charges in respect of debtor provisioning amounting to £14.4 million;
                                                             *    restructuring charges of £9.6 million (a further £0.1 million of costs related to
                                                                  terminated operations and are disclosed in this column in the income statement);
                                                             *    warehouse reorganisation costs of £1.9 million;
                                                             *    costs incurred in relation to business closures of £1.5 million (a further £3.3 million
                                                                  of costs related to terminated operations and are disclosed in this column in the
                                                                  income statement); and
                                                             *    costs incurred by the Group’s former associate Webb Group Limited of £4.8 million.
                                                             The main components of the exceptional items incurred in respect of the 07/08 Financial Year
                                                             are explained below:
                                                             *     an exceptional credit of £0.2 million relating to negative goodwill on acquisitions
                                                                   arising in the period;
                                                             *    restructuring charges of £10.3 million (a further £1.4 million of costs related to
                                                                  terminated operations and are disclosed in this column in the income statement);
                                                             *    warehouse reorganisation costs of £3.4 million; and
                                                             *    costs in relation to businesses disposed of in the prior year (these costs relate to
                                                                  terminated operations and are disclosed in this column in the income statement).
                                                       4.3.8 Terminated operations
                                                             Profit after tax on continuing operations (before exceptional items and terminated
                                                             operations) is stated before the net losses in respect of terminated operations of £35.1
                                                             million for the 08/09 Financial Year. The results of the terminated operations in the
                                                             period are:
                                                             *    operating loss of £0.4 million relating to I Want One of Those.com;
                                                             *    operating loss of £11.0 million relating to Letterbox;
                                                             *    operating loss of £12.3 million relating to Cotswold;

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                                                               *     operating loss of £0.9 million relating to Confetti;
                                                               *     operating loss of £7.0 million relating to Findel Direct; and
                                                               *     exceptional operating costs of £3.5 million.
                                                               The net loss in respect of terminated operations for the 07/08 Financial Year was £5.1
                                                               million. The results of the terminated operations in the period are:
                                                               *     operating loss of £0.5 million relating to I Want One of Those.com;
                                                               *     operating loss of £0.4 million relating to Letterbox;
                                                               *     operating loss of £1.2 million relating to Cotswold;
                                                               *     operating profit of £0.6 million relating to Confetti;
                                                               *     operating loss of £1.3 million relating to Findel Direct;
                                                               *     operating profit of £0.8 million relating to Galt;
                                                               *     operating loss of £1.0 million relating to Edco; and
                                                               *     exceptional operating costs of £2.1 million.

5.                                                     REVENUE AND OPERATING PROFIT BY SEGMENT
5.1                                                    The 2010 Interim Period compared to the 2009 Interim Period

                                                                                                                           Revenue            Operating profit/(loss)*
                                                                                                                         2010          2009         2010          2009
                                                                                                                      Interim       Interim      Interim       Interim
                                                                                                                       Period        Period       Period        Period
                                                                                                                     £million      £million     £million      £million

                                                       Express Gifts                                                    94.8          97.7          (1.6)         (3.2)
                                                       Kleeneze                                                         31.4          32.5           2.1           3.0
                                                       Kitbag                                                           26.1          22.4           1.4           1.1
                                                       Education Supplies                                               70.9          76.5           3.0           1.7
                                                       Healthcare                                                       32.6          30.9           1.3           1.1
                                                       Associated undertaking                                             —             —             —           (0.4)

                                                       Total                                                           255.8         260.0           6.2           3.3

                                                       * before exceptional items and terminated operations.

                                                       5.1.1 Express Gifts
                                                             Revenue on continuing operations (before exceptional items and terminated operations)
                                                             for the Express Gifts division was £94.8 million in the 2010 Interim Period, a decrease of
                                                             £2.9 million, or 3.0 per cent., compared to revenue of £97.7 million in the 2009 Interim
                                                             Period. The key drivers of revenue in the 2010 Interim Period were:
                                                               *     strong performance in product sales per customer, which were up 1.4 per cent. on
                                                                     the prior year, reflecting the successful introduction of a clothing offering; and
                                                               *     a decline in financial services income. This was a consequence of a 5 per cent.
                                                                     reduction in the number of new customers accepted following the introduction of a
                                                                     more conservative lending policy as well as a challenging retail environment.
                                                               Operating loss on continuing operations (before exceptional items and terminated
                                                               operations) in the Express Gifts division was £1.6 million in the 2010 Interim Period, an
                                                               improvement of £1.6 million, 52.1 per cent., compared to operating loss of £3.2 million in
                                                               the 2009 Interim Period, principally reflecting a reduction in the level of bad debts seen
                                                               following the introduction of a more conservative lending policy.
                                                       5.1.2 Kleeneze
                                                             Revenue on continuing operations for the Kleeneze division was £31.4 million in the 2010
                                                             Interim Period, a decrease of £1.1 million, or 3.4 per cent., compared to revenue of £32.5
                                                             million in the 2009 Interim Period. The key driver of revenue in the 2010 Interim Period
                                                             was a lower response to advertising and a drop in conversion rates, together with a
                                                             decline in distributor numbers.

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                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) in the Kleeneze division was £2.1 million in the 2010 Interim Period, a
                                                             decrease of £0.9 million, or 32.0 per cent., compared to operating profit of £3.0 million in
                                                             the 2009 Interim Period. The key drivers of the decrease in operating profit in the 2010
                                                             Interim Period were lower revenue and the lower response to advertising.
                                                       5.1.3 Kitbag
                                                             Revenue on continuing operations for the Kitbag division was £26.1 million in the 2010
                                                             Interim Period, an increase of £3.7 million, or 16.9 per cent., compared to revenue of
                                                             £22.4 million in the 2009 Interim Period. The key driver of increased revenue in the 2010
                                                             Interim Period was the success of the full service model partner contracts signed with
                                                             Everton FC, Manchester City FC and Nottingham Forest FC since the second half of the
                                                             09/10 Financial Year.
                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) in the Kitbag division was £1.4 million in the 2010 Interim Period, an increase
                                                             of £0.3 million, or 27.0 per cent., compared to operating profit of £1.1 million in the 2009
                                                             Interim Period. The key driver of the increase in operating profit in the 2010 Interim
                                                             Period was the significant sales growth.
                                                       5.1.4 Education Supplies Division
                                                             Revenue on continuing operations for the Education Supplies Division was £70.9 million
                                                             in the 2010 Interim Period, a decrease of £5.6 million, or 7.4 per cent., compared to
                                                             revenue of £76.5 million in the 2009 Interim Period. The past misstatement of results has
                                                             masked an ongoing material shortfall in underlying performance and a decline in market
                                                             share.
                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) in the Education Supplies Division was £3.0 million in the 2010 Interim
                                                             Period, an increase of £1.3 million, or 77.2 per cent., compared to operating profit of £1.7
                                                             million in the 2009 Interim Period. The key driver of the increase in operating profit in
                                                             the 2010 Interim Period was the result of operational improvements made following a
                                                             change in the senior management team offset by the sales decline discussed above.
                                                       5.1.5 Healthcare Division
                                                             Revenue on continuing operations for the Healthcare Division was £32.6 million in the
                                                             2010 Interim Period, an increase of £1.7 million, or 5.6 per cent., compared to revenue of
                                                             £30.9 million in the 2009 Interim Period. The increase in revenues reflects the introduction
                                                             of new products, the expansion of the customer base and the award of two new contracts
                                                             during the period.
                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) in the Healthcare Division was £1.3 million in the 2010 Interim Period, an
                                                             increase of £0.2 million, or 15.9 per cent., compared to operating profit of £1.1 million in
                                                             the 2009 Interim Period. The increase reflects the impact of increased sales discussed
                                                             above.




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5.2                                                    The 09/10 Financial Year compared to the 08/09 Financial Year
                                                                                                              Revenue                Operating profit / (loss)*
                                                                                                          09/10         08/09             09/10          08/09
                                                                                                       Financial     Financial        Financial     Financial
                                                                                                           Year          Year             Year           Year
                                                                                                        £million      £million         £million       £million

                                                       Express Gifts                                                 229.0   232.1          20.2         26.8
                                                       Kleeneze                                                       64.4    69.2           6.4          5.7
                                                       Kitbag                                                         48.3    36.0           1.7          0.6
                                                       Education Supplies                                            141.8   170.0           2.1          8.6
                                                       Healthcare                                                     63.5    64.8           2.6          5.2
                                                       Associated undertaking                                           —       —           (0.4)         0.4

                                                       Total                                                         547.0   572.1          32.6         47.3

                                                       * before exceptional items and terminated operations.


                                                       5.2.1 Express Gifts
                                                             Revenue on continuing operations (before exceptional items and terminated operations)
                                                             for the Express Gifts division was £229.0 million in the 09/10 Financial Year, a decrease
                                                             of £3.1 million, or 1.3 per cent., compared to revenue of £232.1 million in the 08/09
                                                             Financial Year. The key drivers of revenue in the 09/10 Financial Year were:
                                                               *     strong performance in product sales, which were up 2 per cent. on the prior year,
                                                                     reflecting the successful introduction of a clothing offering; and
                                                               *     a decline of 11 per cent. in financial services income. This was a natural consequence
                                                                     of reduced customer numbers, reflecting a more conservative lending policy as well
                                                                     as a challenging retail environment.

                                                               Operating profit on continuing operations (before exceptional items and terminated
                                                               operations) in the Express Gifts division was £20.2 million in the 09/10 Financial Year, a
                                                               decrease of £6.6 million, or 24.7 per cent., compared to operating profit of £26.8 million
                                                               in the 08/09 Financial Year. The decline in operating profit in the 09/10 Financial Year
                                                               reflected the reduced level of high margin financial services income in the period.

                                                       5.2.2 Kleeneze
                                                             Revenue on continuing operations for the Kleeneze division was £64.4 million in the 09/10
                                                             Financial Year, a decrease of £4.8 million, or 7.0 per cent., compared to revenue of £69.2
                                                             million in the 08/09 Financial Year, as a result of the decline in distributor numbers.

                                                               Operating profit on continuing operations (before exceptional items and terminated
                                                               operations) in the Kleeneze division was £6.4 million in the 09/10 Financial Year, an
                                                               increase of £0.7 million, or 14.3 per cent., compared to operating profit of £5.7 million in
                                                               the 08/09 Financial Year. The key drivers of the increase in operating profit in the 09/10
                                                               Financial Year were careful cost and margin management.

                                                       5.2.3 Kitbag
                                                             Revenue on continuing operations for the Kitbag division was £48.3 million in the 09/10
                                                             Financial Year, an increase of £12.3 million, or 34.0 per cent., compared to revenue of
                                                             £36.0 million in the 08/09 Financial Year. The key driver of increased revenue in the 09/10
                                                             Financial Year was the success of the full service model partner contract signed with
                                                             Everton FC during the period.

                                                               Operating profit on continuing operations (before exceptional items and terminated
                                                               operations) in the Kitbag division was £1.7 million in the 09/10 Financial Year, an
                                                               increase of £1.1 million, or 181.1 per cent., compared to operating profit of £0.6 million in
                                                               the 08/09 Financial Year. The key driver of the increase in operating profit in the 09/10
                                                               Financial Year was the significant sales growth.

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                                                       5.2.4 Education Supplies Division
                                                             Revenue on continuing operations for the Education Supplies Division was £141.8 million
                                                             in the 09/10 Financial Year, a decrease of £28.2 million, or 16.6 per cent., compared to
                                                             revenue of £170.0 million in the 08/09 Financial Year. The past misstatement of results
                                                             has masked an ongoing material shortfall in underlying performance. The masking of
                                                             these performance issues has resulted in a delay in the implementation of appropriate
                                                             corrective action.
                                                               Operating profit on continuing operations (before exceptional items and terminated
                                                               operations) in the Education Supplies Division was £2.1 million in the 09/10 Financial
                                                               Year, a decrease of £6.5 million, or 76.0 per cent., compared to operating profit of £8.6
                                                               million in the 08/09 Financial Year. The key driver of the decrease in operating profit in
                                                               the 09/10 Financial Year was the sales decline discussed above.
                                                       5.2.5 Healthcare Division
                                                             Revenue on continuing operations for the Healthcare Division was £63.5 million in the
                                                             09/10 Financial Year, a decrease of £1.3 million, or 2.0 per cent., compared to revenue of
                                                             £64.8 million in the 08/09 Financial Year. The decrease in revenues reflects the uncertainty
                                                             existing in the market over the past two years, whilst potential changes to the delivery
                                                             model were considered by the UK government.
                                                               Operating profit on continuing operations (before exceptional items and terminated
                                                               operations) in the Healthcare Division was £2.6 million in the 09/10 Financial Year, a
                                                               decrease of £2.6 million, or 50.6 per cent., compared to operating profit of £5.2 million in
                                                               the 08/09 Financial Year. The decrease reflects the reduction in gross margins where
                                                               existing contracts have been re-tendered over the period.

5.3                                                    The 08/09 Financial Year compared to the 07/08 Financial Year

                                                                                                                            Revenue            Operating profit / (loss)*
                                                                                                                        08/09         07/08         08/09          07/08
                                                                                                                     Financial     Financial    Financial     Financial
                                                                                                                         Year          Year         Year           Year
                                                                                                                      £million      £million     £million       £million

                                                       Express Gifts                                                    232.1         261.8           26.8         39.1
                                                       Kleeneze                                                          69.2          68.5            5.7          7.7
                                                       Kitbag                                                            36.0          26.3            0.6          0.9
                                                       Education Supplies                                               170.0         172.8            8.6         15.5
                                                       Healthcare                                                        64.8          55.8            5.2         (0.4)
                                                       Associated undertaking                                              —             —             0.4         (1.4)

                                                       Total                                                            572.1         585.2           47.3         61.4

                                                       * before exceptional items and terminated operations.

                                                       5.3.1 Express Gifts
                                                             Revenue on continuing operations for the Express Gifts division was £232.1 million in the
                                                             08/09 Financial Year, a reduction of £29.7 million, or 11.3 per cent., compared to revenue
                                                             of £261.8 million in the 07/08 Financial Year. A key driver of the decrease in revenue in
                                                             the 08/09 Financial Year was, in part, the difficult consumer environment. In addition,
                                                             recognising the economic conditions and the potential for increased debtor defaults, the
                                                             business took the decision to proactively reduce marketing spend in an attempt to reduce
                                                             new customer recruitment where debtor defaults are typically higher.
                                                               Operating profit on continuing operations (before exceptional items and terminated
                                                               operations) in the Express Gifts division was £26.8 million in the 08/09 Financial Year, a
                                                               decrease of £12.3 million, or 31.3 per cent., compared to benchmark operating profit of
                                                               £39.1 million in the 07/08 Financial Year. The decrease in operating profit in the 08/09
                                                               Financial Year reflected:
                                                               *     the reduced level of revenue in the period;
                                                               *     the higher levels of debtor defaults due to the difficult economic environment; and

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                                                             *    supplier price inflation due to the weakening of sterling against both the US dollar
                                                                  and Euro.
                                                       5.3.2 Kleeneze
                                                             Revenue on continuing operations for the Kleeneze division was £69.2 million in the 08/09
                                                             Financial Year, an increase of £0.7 million, or 1.0 per cent., compared to revenue of £68.5
                                                             million in the 07/08 Financial Year.
                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) in the Kleeneze division was £5.7 million in the 08/09 Financial Year, a
                                                             decrease of £2.0 million, or 27.1 per cent., compared to operating profit of £7.7 million in
                                                             the 07/08 Financial Year. The primary driver of the decrease in operating profit in the 08/
                                                             09 Financial Year was gross margin erosion resulting from supplier price inflation due to
                                                             the depreciation of sterling and the discounting of product prices in response to difficult
                                                             market conditions.
                                                       5.3.3 Kitbag
                                                             Revenue on continuing operations for the Kitbag division was £36.0 million in the 08/09
                                                             Financial Year, an increase of £9.7 million, or 37.1 per cent., compared to revenue of
                                                             £26.3 million in the 07/08 Financial Year. The key drivers of the increase in revenue in
                                                             the 08/09 Financial Year were the full year benefit of new contract revenue streams and
                                                             growth from existing contracts.
                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) in the Kitbag division was £0.6 million in the 08/09 Financial Year, a decrease
                                                             of £0.3 million, or 29.2 per cent., compared to operating profit of £0.9 million in the 07/
                                                             08 Financial Year. The primary driver of the decrease in operating profit in the 08/09
                                                             Financial Year was gross market erosion, as commented on above.
                                                       5.3.4 Education Supplies Division
                                                             Revenue on continuing operations for the Education Supplies Division was £170.0 million
                                                             in the 08/09 Financial Year, a decrease of £2.8 million, or 1.6 per cent., compared to
                                                             revenue of £172.8 million in the 07/08 Financial Year. The key driver of the decrease in
                                                             revenue in the 08/09 Financial Year was the reduction in spending in schools at the end
                                                             of the public sector year end resulting from an expectation that school budgets will be
                                                             reduced in future years due to the increasing public sector funding deficit.
                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) in the Education Supplies Division was £8.6 million in the 08/09 Financial
                                                             Year, a decrease of £6.9 million, or 44.2 per cent., compared to operating profit of £15.5
                                                             million in the 07/08 Financial Year. This reduction reflects:
                                                             *    the decrease in revenues;
                                                             *    the decrease in gross margins reflecting a change in mix to lower gross margin
                                                                  commodity products with schools deferring discretionary spend on higher margin
                                                                  items; and
                                                             *    the decrease in gross margin following the depreciation of sterling against both the
                                                                  US dollar and the Euro.
                                                       5.3.5 Healthcare Division
                                                             Revenue on continuing operations for the Healthcare Division was £64.8 million in the 08/
                                                             09 Financial Year, an increase of £9.0 million, or 16.0 per cent., compared to revenue of
                                                             £55.8 million in the 07/08 Financial Year. The increase in revenue reflects increased
                                                             activity across the main operating contracts and the full year benefits of new contracts
                                                             secured in the 07/08 Financial Year.
                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) in the Healthcare Division was £5.2 million in the 08/09 Financial Year, an
                                                             increase of £5.6 million compared to operating loss of £0.4 million in the 07/08 Financial
                                                             Year. The key drivers of the increase in operating profit in the 08/09 Financial Year were
                                                             the increased revenues. The loss in the 07/08 Financial Year included a charge of £3.0
                                                             million relating to the impairment of goodwill in respect of the decision not to renew
                                                             certain historic contracts.

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6.    FINANCIAL POSITION
An overview of the Group’s balance sheet for the 2010 Interim Period and 2009 Interim Period is as
follows:

                                                                                                                                      2010         2009
                                                                                                                                   Interim      Interim
                                                                                                                                    Period       Period
                                                                                                                                  £million     £million

Non-current assets                                                                                                                  154.5         220.5
Current assets                                                                                                                      324.7         402.6
Current liabilities                                                                                                                (118.7)       (173.2)

Net current assets                                                                                                                  206.0        229.4

Total assets less current liabilities                                                                                               360.5         449.9
Non-current liabilities                                                                                                            (342.5)       (359.2)

Net assets                                                                                                                           18.0          90.7

Share Capital                                                                                                                        24.5         24.5
Capital reserves                                                                                                                    111.5        110.3
Other reserves                                                                                                                        0.6          0.8
Retained earnings                                                                                                                  (118.6)       (44.9)

Total Equity                                                                                                                         18.0          90.7

An overview of the Group’s balance sheet for the 09/10, 08/09 and 07/08 Financial Years is as
follows:
                                                                                                                      09/10         08/09        07/08
                                                                                                                   Financial     Financial    Financial
                                                                                                                       Year          Year         Year
                                                                                                                    £million      £million     £million

Non-current assets                                                                                                     162.4        219.3         243.9
Current assets                                                                                                         328.3        315.5         386.8
Current liabilities                                                                                                   (444.3)      (145.1)       (181.7)

Net current (liabilities)/assets                                                                                      (116.0)       170.4        205.1

Total assets less current liabilities                                                                                   46.4        389.7         449.0
Non-current liabilities                                                                                                (12.8)      (357.4)       (355.0)

Net assets                                                                                                              33.6         32.3          94.0

Share Capital                                                                                                           24.5           4.3          4.3
Capital reserves                                                                                                       111.5          54.3         52.2
Other reserves                                                                                                           0.7           1.2         (0.5)
Retained earnings                                                                                                     (103.1)        (27.5)        38.0

Total Equity                                                                                                            33.6         32.3          94.0

6.1                                                    2010 Interim Period compared to 2009 Interim Period
                                                       Net assets and total equity at the end of the 2010 Interim Period were £18.0 million, a decrease
                                                       of £72.7 million, or 80.2 per cent., compared to net assets of £90.7 million at the end of the
                                                       2009 Interim Period. The decrease in net assets and total equity reflect the net effect of the
                                                       factors described below.




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                                                       6.1.1 Non-current assets
                                                             Non-current assets at the end of the 2010 Interim Period were £154.5 million, a decrease
                                                             of £66.0 million, or 29.9 per cent., compared to non-current assets of £220.5 million at the
                                                             end of the 2009 Interim Period. Non-current assets principally comprise acquired
                                                             intangible assets, property, plant and equipment and loan balances due from associated
                                                             undertakings.
                                                             The primary cause of the decrease was the write down of acquired intangible assets
                                                             comprising goodwill, brands and customer lists following the decision to sell Webb Group
                                                             Limited, CWIO Limited (formerly Findel Direct Limited), Confetti Network Limited and I
                                                             Want One of Those.com Limited.

                                                       6.1.2 Current assets
                                                             Current assets at the end of the 2010 Interim Period were £324.7 million, a decrease of
                                                             £77.9 million, or 19.3 per cent., compared to current assets of £402.6 million at the end of
                                                             the 2009 Interim Period. Current assets principally comprise inventories, trade receivables
                                                             and cash at bank and in hand.
                                                             The primary causes of the decrease were:
                                                             *    a change in accounting estimate in respect of stock provisioning;
                                                             *    a change in accounting estimate in respect of debtor provisioning; and
                                                             *    a reduction in the level of cash at bank and in hand.

                                                       6.1.3 Current liabilities
                                                             Current liabilities at the end of the 2010 Interim Period were £118.7 million, a decrease of
                                                             £54.5 million, or 31.5 per cent., compared to current liabilities of £173.2 million at the end
                                                             of the 2009 Interim Period. Current liabilities principally comprise trade payables, tax
                                                             liabilities and short-term bank borrowings.
                                                             The decrease in current liabilities was primarily the result of the reduced level of
                                                             borrowings and trade payables.

                                                       6.1.4 Non-current liabilities
                                                             Non-current liabilities at the end of the 2010 Interim Period were £342.5 million, a
                                                             decrease of £16.7 million, or 4.6 per cent., compared to current liabilities of £359.2 million
                                                             at the end of the 2009 Interim Period. Non-current liabilities principally comprise long-
                                                             term bank borrowings, deferred tax liabilities, provisions and retirement benefit
                                                             obligations.
                                                             The decrease in non-current liabilities was primarily the result of the reduced level of
                                                             borrowings.

6.2                                                    The 09/10 Financial Year compared to the 08/09 Financial Year
                                                       Net assets and total equity at the end of the 09/10 Financial Year were £33.6 million, an
                                                       increase of £1.3 million, or 3.9 per cent., compared to net assets of £32.3 million at the end of
                                                       the 08/09 Financial Year. The decrease in net assets and total equity reflect the net effect of the
                                                       factors described below.

                                                       6.2.1 Non-current assets
                                                             Non-current assets at the end of the 09/10 Financial Year were £162.4 million, a decrease
                                                             of £56.9 million, or 26.0 per cent., compared to non-current assets of £219.3 million at the
                                                             end of the 08/09 Financial Year. Non-current assets principally comprise acquired
                                                             intangible assets, property, plant and equipment and loan balances due from associated
                                                             undertakings.
                                                             The primary causes of the decrease were the absorption of the loan due from associate
                                                             into the Group balance sheet (2008/09: £33.6 million) and the write down of acquired
                                                             intangible assets comprising goodwill, brands and customer lists following the decision to
                                                             sell CWIO Limited (formerly Findel Direct Limited).

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                                                       6.2.2 Current assets
                                                             Current assets at the end of the 09/10 Financial Year were £328.3 million, an increase of
                                                             £12.8 million, or 4.1 per cent., compared to current assets of £315.5 million at the end of
                                                             the 08/09 Financial Year. Current assets principally comprise inventories, trade receivables
                                                             and cash at bank and in hand.
                                                             The primary reason for the increase was the £34.4 million improvement in the Group’s
                                                             cash balance year on year.

                                                       6.2.3 Current liabilities
                                                             Current liabilities at the end of the 09/10 Financial Year were £444.3 million, an increase
                                                             of £299.2 million, or 206.2 per cent., compared to current liabilities of £145.1 million at
                                                             the end of the 08/09 Financial Year. Current liabilities principally comprise trade payables,
                                                             tax liabilities and short-term bank borrowings.
                                                             The increase in current liabilities was the result of the reclassification of all of the bank
                                                             debt owed as due within one year. This reflected the breaching of certain provisions in the
                                                             Group’s banking agreements following the Education Supplies Division accounting
                                                             irregularities. If the refinancing carried out by the Group in July 2010 had been in place
                                                             at the balance sheet date, bank debt amounting to £321.3 million would have been
                                                             classified as non-current liabilities.

                                                       6.2.4 Non-current liabilities
                                                             Non-current liabilities at the end of the 09/10 Financial Year were £12.8 million, a
                                                             decrease of £344.6 million, or 96.4 per cent., compared to current liabilities of £357.4
                                                             million at the end of the 08/09 Financial Year. Non-current liabilities principally comprise
                                                             long-term bank borrowings, deferred tax liabilities, provisions and retirement benefit
                                                             obligations.
                                                             The decrease in non-current liabilities reflects the reclassification of bank debt described
                                                             above.

6.3                                                    The 08/09 Financial Year compared to the 07/08 Financial Year
                                                       Net assets and total equity at the end of the 08/09 Financial Year were £32.3 million, a decrease
                                                       of £61.7 million, or 65.6 per cent., compared to net assets of £94.0 million at the end of the 07/
                                                       08 Financial Year. The decrease in net assets and total equity reflect the net effect of the factors
                                                       described below.

                                                       6.3.1 Non-current assets
                                                             Non-current assets at the end of the 08/09 Financial Year were £219.3 million, a decrease
                                                             of £24.6 million, or 10.1 per cent., compared to non-current assets of £243.9 million at the
                                                             end of the 07/08 Financial Year. Non-current assets principally comprise acquired
                                                             intangible assets, property, plant and equipment and loan balances due from associated
                                                             undertakings.
                                                             The primary cause of the decrease was the write down of acquired intangible assets
                                                             comprising goodwill and customer lists following the decision to terminate the trading
                                                             activities of Cotswold and Letterbox.

                                                       6.3.2 Current assets
                                                             Current assets at the end of the 08/09 Financial Year were £315.5 million, a decrease of
                                                             £71.3 million, or 18.4 per cent., compared to current assets of £386.8 million at the end of
                                                             the 07/08 Financial Year. Current assets principally comprise inventories, trade receivables
                                                             and cash at bank and in hand.

                                                             The primary causes of the decrease were:
                                                             *    a change in accounting estimate in respect of stock provisioning (£14.3 million);
                                                             *    a change in accounting estimate in respect of debtor provisioning (£14.4 million);
                                                                  and
                                                             *    a reduction in overall stock balances following implementation of the Group’s cash
                                                                  generation programme.

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                                                       6.3.3 Current liabilities
                                                             Current liabilities at the end of the 08/09 Financial Year were £145.1 million, a decrease
                                                             of £36.6 million, or 20.1 per cent., compared to current liabilities of £181.7 million at the
                                                             end of the 07/08 Financial Year. Current liabilities principally comprise trade payables, tax
                                                             liabilities and short-term bank borrowings.
                                                             The decrease in current liabilities was primarily the result of the reduced level of short-
                                                             term borrowings.
                                                       6.3.4 Non-current liabilities
                                                             Non-current liabilities at the end of the 08/09 Financial Year were £357.4 million, an
                                                             increase of £2.4 million, or 0.6 per cent., compared to current liabilities of £355.0 million
                                                             at the end of the 07/08 Financial Year. Non-current liabilities principally comprise long-
                                                             term bank borrowings, deferred tax liabilities, provisions and retirement benefit
                                                             obligations.

7.                                                     CASH FLOW ANALYSIS
Net Cash Flow
                                                                                                                                           2010         2009
                                                                                                                                        Interim      Interim
                                                                                                                                         Period       Period
                                                                                                                                       £million     £million

Net cash outflow from operating activities                                                                                                 (35.2)      (40.5)
Net cash outflow from investing activities                                                                                                  (0.5)      (10.5)
Net cash inflow from financing                                                                                                               13.4       114.1

(Decrease)/increase in cash and cash equivalents                                                                                          (22.3)       63.1

Cash and cash equivalents at beginning of period                                                                                          44.3         (15.0)
Currency translation differences                                                                                                            —           (0.1)

Cash and cash equivalents at end of period                                                                                                22.0         48.0


                                                                                                                        09/10            08/09        07/08
                                                                                                                     Financial        Financial    Financial
                                                                                                                         Year             Year         Year
                                                                                                                      £million         £million     £million

Net cash inflow / (outflow) from operating activities                                                                            8.2         38.2        (14.5)
Net cash outflow from investing activities                                                                                    (13.8)        (9.9)       (40.0)
Net cash inflow / (outflow) from financing                                                                                       65.0        (33.7)        45.1

Increase/(decrease) in cash and cash equivalents                                                                             59.4          (5.4)        (9.4)

Cash and cash equivalents at beginning of period                                                                             (15.0)       (10.3)        (0.9)
Currency translation differences                                                                                              (0.1)         0.7           —

Cash and cash equivalents at end of period                                                                                   44.3         (15.0)       (10.3)

7.1                                                    The 2010 Interim Period compared to the 2009 Interim Period
                                                       7.1.1 Net cash outflow from operating activities
                                                             Net cash outflow from operating activities was £35.2 million in the 2010 Interim Period,
                                                             an improvement of £5.3 million from the net cash outflow of £40.5 million in the 2009
                                                             Interim Period. The improvement primarily comprised the net effects of the following:
                                                             *    a deterioration of £1.1 million in net operating losses;
                                                             *    a net improvement in working capital management of £10.8 million;
                                                             *    a reduction in tax cash flows of £8.5 million;

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                                                             *    a reduction in interest payments of £5.1 million; and
                                                             *    an increase in the cash cost of exceptional finance costs of £0.5 million.

                                                       7.1.2 Net cash outflow from investing activities
                                                             Net cash outflow from investing activities was £0.5 million in the 2010 Interim Period, a
                                                             reduction of £10.0 million from the net cash inflow of £10.5 million in the 2009 Interim
                                                             Period. The reduction primarily comprised the net effects of the following:
                                                             *    a reduction of £0.9 million in interest received;
                                                             *    a reduction of £5.3 million in net capital expenditure;
                                                             *    a reduction in loans to associates of £8.0 million; and
                                                             *    an increase of £1.9 million from the sale of terminated operations.

                                                       7.1.3 Net cash inflow from financing activities
                                                             Net cash inflow from financing activities was £13.4 million in the 2010 Interim Period, a
                                                             reduction of £100.7 million from the net cash inflow of £114.1 million in the 2009 Interim
                                                             Period. The reduction primarily comprised the net effects of the following:
                                                             *    £74.9 million in respect of the July 2009 share issue proceeds;
                                                             *    a reduction of £20.6 million in respect of bank loans drawn; and
                                                             *    a net reduction in securitisation cash flows of £5.2 million.

7.2                                                    The 09/10 Financial Year compared to the 08/09 Financial Year
                                                       7.2.1 Net cash inflow from operating activities
                                                             Net cash inflow from operating activities was £8.2 million in the 09/10 Financial Year, a
                                                             decrease of £30.0 million from the net cash inflow of £38.2 million in the 08/09 Financial
                                                             Year. The decrease primarily comprised the net effects of the following:
                                                             *    a decease of £14.7 million in operating profit from continuing operations (before
                                                                  exceptional items and terminated operations);
                                                             *    an increase in depreciation and amortisation of £1.2 million;
                                                             *    a net worsening in working capital management of £38.4 million;
                                                             *    an improvement in tax cash flows of £11.7 million;
                                                             *    an increase in interest payments of £7.8 million;
                                                             *    a reduction in the cash cost of exceptional items of £3.4 million; and
                                                             *    a reduction of £11.5 million in the cash cost of terminated operations.

                                                       7.2.2 Net cash outflow from investing activities
                                                             Net cash outflow from investing activities was £13.8 million in the 09/10 Financial Year,
                                                             an increase of £3.9 million from the net cash inflow of £9.9 million in the 08/09 Financial
                                                             Year. The increase primarily comprised the net effects of the following:
                                                             *    a decrease of £3.8 million in net capital expenditure; and
                                                             *    an increase in loans to associates of £8.8 million.

                                                       7.2.3 Net cash inflow / (outflow) from financing activities
                                                             Net cash inflow from financing activities was £65.0 million in the 09/10 Financial Year, an
                                                             increase of £98.7 million from the net cash outflow of £33.7 million in the 08/09 Financial
                                                             Year. The increase primarily comprised the net effects of the following:
                                                             *    an increase of £74.3 million in share issue proceeds;
                                                             *    a reduction of £16.5 million in dividends paid; and
                                                             *    a net improvement in securitisation cash flows of £8.1 million.

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7.3                                                      The 08/09 Financial Year compared to the 07/08 Financial Year
                                                         7.3.1 Net cash inflow / (outflow) from operating activities
                                                               Net cash inflow from operating activities was £38.2 million in the 08/09 Financial Year,
                                                               an increase of £52.7 million from the net cash outflow of £14.5 million in the 07/08
                                                               Financial Year. The increase primarily comprised the net effects of the following:
                                                                 *     a decrease of £14.1 million in operating profit from continuing operations (before
                                                                       exceptional items and terminated operations);
                                                                 *     a net improvement in working capital management of £72.5 million;
                                                                 *     an improvement in tax cash flows of £1.6 million;
                                                                 *     a reduction in interest payments of £3.4 million;
                                                                 *     a reduction in the cash cost of exceptional items of £0.8 million; and
                                                                 *     an increase of £8.4 million in the cash cost of terminated operations.
                                                         7.3.2 Net cash outflow from investing activities
                                                               Net cash outflow from investing activities was £9.9 million in the 08/09 Financial Year, a
                                                               decrease of £31.1 million from the net cash outflow of £40.0 million in the 07/08 Financial
                                                               Year. The decrease primarily comprised the net effects of the following:
                                                                 *     an increase of £1.8 million in net capital expenditure;
                                                                 *     an improved cash flow in loans to associates of £35.2 million; and
                                                                 *     a reduction in cash flow from acquisitions and disposals of subsidiaries of £3.7
                                                                       million.
                                                         7.3.3 Net cash (outflow) / inflow from financing activities
                                                               Net cash outflow from financing activities was £33.7 million in the 08/09 Financial Year, a
                                                               decrease of £78.8 million from the net cash inflow of £45.1 million in the 07/08 Financial
                                                               Year. The increase primarily comprised the net effects of the following:
                                                                 *     a reduction of £64.5 million in cash flows relating to the movement on bank loans;
                                                                       and
                                                                 *     a net reduction in securitisation cash flows of £13.8 million.

Free cash flow
                                                                                                                                                         2010        2009
                                                                                                                                                      Interim     Interim
                                                                                                                                                       Period      Period
                                                                                                                                                     £million    £million

Operating profit on continuing operations (before exceptional items and
terminated operations)                                                                                                                                   6.2         3.3
Depreciation and amortisation in excess of net capital expenditure                                                                                       6.5         1.1
Working capital                                                                                                                                        (22.7)      (33.5)
Interest paid                                                                                                                                          (12.7)      (11.5)
Taxation                                                                                                                                                  —          8.4
Pension contributions less income statement charge & share-based payment
charge                                                                                                                                                   (1.1)       (1.0)

Free cash flow*                                                                                                                                         (23.8)      (33.2)

Cash costs of terminated operations, exceptional items, acquisitions, disposals
and loans to associate                                                                                                                                 (11.9)      (17.7)

Net cash flow before financing activities                                                                                                                (35.7)      (50.9)

*                                                      Free cash flow comprises cash generated from continuing operations less capital expenditure.




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                                                                                                                                         09/10          08/09        07/08
                                                                                                                                      Financial      Financial    Financial
                                                                                                                                          Year           Year         Year
                                                                                                                                       £million       £million     £million

Operating profit on continuing operations (before exceptional
items and terminated operations)                                                                                                            32.6         47.3         61.4
Depreciation and amortisation in excess of net capital
expenditure                                                                                                                                  4.7          (0.3)         1.3
Working capital                                                                                                                             (1.9)         36.3        (36.1)
Interest paid                                                                                                                              (30.1)        (22.8)       (26.6)
Taxation                                                                                                                                     8.9          (2.7)        (4.4)
Pension contributions less income statement charge & share-
based payment charge                                                                                                                        (1.0)         (3.5)        (1.9)
Share of result of associate (non-exceptional)                                                                                               0.4          (0.4)         1.4

Free cash flow*                                                                                                                              13.6         53.9          (4.9)

Cash costs of terminated operations, exceptional items,
acquisitions, disposals and loans to associate                                                                                             (19.1)        (25.7)       (49.6)

Net cash flow before financing activities                                                                                                     (5.5)        28.2         (54.5)

*                                                      Free cash flow comprises cash generated from continuing operations less capital expenditure.


7.4                                                      The 2010 Interim Period compared to the 2009 Interim Period
                                                         7.4.1 Free cash flow
                                                               Free cash outflow for the 2010 Interim Period was £23.8 million, an improvement of £9.4
                                                               million compared to the free cash outflow of £33.2 million for the 2009 Interim Period.
                                                         7.4.2 Operating profit
                                                               Operating profit on continuing operations (before exceptional items and terminated
                                                               operations) increased by £2.9 million to £6.2 million in the 2010 Interim Period. The
                                                               explanations for this are detailed in paragraph 4.1.2 of this Part VI (Operating and
                                                               Financial Review). Depreciation and amortisation exceeded net capital expenditure by £6.5
                                                               million in the 2010 Interim Period, compared to £1.1 million in the 2009 Interim Period.
                                                                 The normal operating cycle of the Group sees an absorption of working capital in the
                                                                 first half of the year, as stocks are built in Express Gifts ahead of its peak sales period.
                                                                 Underlying working capital worsened by £22.7 million in the 2010 Interim Period,
                                                                 although this represented an improvement of £10.8 million compared to the £33.5 million
                                                                 absorbed in the 2009 Interim Period.
                                                                 Taxation cash flows were £nil in the 2010 Interim Period compared to the £8.4 million
                                                                 received during the 2009 Interim Period.

7.5                                                      The 09/10 Financial Year compared to the 08/09 Financial Year
                                                         7.5.1 Free cash flow
                                                               Free cash flow for the 09/10 Financial Year was £13.6 million, a decrease of £40.3 million
                                                               compared to the free cash flow of £53.9 million for the 08/09 Financial Year.
                                                         7.5.2 Operating profit
                                                               Operating profit on continuing operations (before exceptional items and terminated
                                                               operations) decreased by £14.7 million to £32.6 million in the 09/10 Financial Year. The
                                                               explanations for this are detailed in paragraph 4.2.2 of this Part VI (Operating and
                                                               Financial Review). However, depreciation and amortisation exceeded net capital
                                                               expenditure by £4.7 million in the 09/10 Financial Year, whereas in the 08/09 Financial
                                                               Year there was a shortfall of £0.3 million.
                                                                 Underlying working capital worsened by £1.9 million in the 09/10 Financial Year
                                                                 compared to an improvement of £36.3 million in the 08/09 Financial Year.

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                                                             Taxation cash flows were £11.6 million better in the 09/10 Financial Year compared to the
                                                             08/09 Financial Year, whereas net interest paid was £7.3 million worse.

7.6                                                    The 08/09 Financial Year compared to the 07/08 Financial Year
                                                       7.6.1 Free cash flow
                                                             Free cash flow for the 08/09 Financial Year was £53.9 million, an increase of £58.8
                                                             million compared to the free cash outflow of £4.9 million for the 07/08 Financial Year.
                                                       7.6.2 Operating profit
                                                             Operating profit on continuing operations (before exceptional items and terminated
                                                             operations) decreased by £14.1 million to £47.3 million in the 08/09 Financial Year. The
                                                             explanations for this are detailed in paragraph 4.3.2 of this Part VI (Operating and
                                                             Financial Review). However, depreciation and amortisation exceeded net capital
                                                             expenditure by £1.3 million in the 07/08 Financial Year, whereas in the 08/09 Financial
                                                             Year there was a shortfall of £0.3 million.
                                                             Underlying working capital improved by £36.3 million in the 08/09 Financial Year
                                                             compared to a worsening of £36.1 million in the 07/08 Financial Year.
                                                             Taxation cash outflows and net interest cash outflows were £1.7 million better and £3.8
                                                             million better in the 08/09 Financial Year compared to the 07/08 Financial Year
                                                             respectively.

7.7                                                    Capital expenditure
                                                       The following table provides an overview of the Group’s capital expenditure:
                                                                                                                          09/10       08/09       07/08
                                                                                                                       Financial   Financial   Financial
                                                                                                                           Year        Year        Year
                                                                                                                        £million    £million    £million

                                                       Purchases of property, plant and equipment and software
                                                       and IT development costs                                              8.9        14.1       11.4

                                                       Findel expects to finance future capital expenditure through a combination of cash generated
                                                       from operations, borrowings under its credit facilities and the proceeds of the Rights Issue and
                                                       the Placing.

7.8                                                    Contractual Obligations
                                                                                                                        At 2 April 2010
                                                                                                          Within       Between         After
                                                                                                          1 year    2 & 5 years      5 years      Total
                                                                                                         £million      £million     £million    £million

                                                       On balance sheet
                                                       Bank overdrafts                                        —              —           —           —
                                                       Bank debt (revolving credit facility)               256.6             —           —        256.6
                                                       Bank debt (securitisation facilities)                96.3             —           —         96.3
                                                       Derivative financial instruments                        —              —           —           —
                                                       Finance leases                                        1.0             —           —          1.0

                                                                                                           353.9             —           —        353.9

                                                       Off balance sheet
                                                       Operating leases                                     13.2           38.7         69.3      121.2

                                                                                                           367.1           38.7         69.3      475.1

                                                       As a result of the accounting irregularities in the Group’s Education Supplies Division certain
                                                       representations and warranties made in connection with the bank facilities entered into at the
                                                       time of the refinancing in July 2009 were found to be untrue. In addition, certain other

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                                                       provisions contained in these facilities have been breached. As a result of the breach to the
                                                       banking covenants at 2 April 2010, all of the bank debt owed by the Group was reclassified as
                                                       falling due within one year on the consolidated balance sheet.
                                                       As a result of the refinancing in July 2010, bank loans which were shown as being due for
                                                       settlement within one year are now due for settlement after one year. Had these new
                                                       arrangements been in place at 2 April 2010 the Group’s balance sheet would have been such
                                                       that £321.3 million of bank debt (revolving credit facility) would have been reclassified as due
                                                       between two and five years.
7.9                                                    Off-Balance sheet arrangements
                                                       Other than operating lease commitments relating to properties and other assets as disclosed in
                                                       paragraph 7.8 of this Part VI (Operating and Financial Review) above, the Group has not
                                                       entered into and is not a party to any material off-balance sheet arrangements.
7.10 Contingent liabilities
     Payment Protection Insurance (PPI)
     One of the Group’s Home Shopping subsidiaries Express Gifts Limited is regulated by the FSA
     as an insurance intermediary and as such is permitted to sell insurance products, including
     Payment Protection Insurance (‘‘PPI’’).
                                                       The FSA published its final policy statement (PS 10/12) concerning the assessment and redress
                                                       of PPI complaints on 10 August 2010 and instructed firms to implement the measures contained
                                                       in it by 1 December 2010. The new rules impose significant changes with respect to the handling
                                                       of PPI mis-selling complaints. On 8 October 2010, the British Bankers’ Association filed an
                                                       application for judicial review of the FSA’s policy statement and of related guidance issued by
                                                       the Financial Ombudsman Service.
                                                       Relevant sales have been made by Express Gifts Limited although Express Gifts Limited ceased
                                                       selling this product in August 2008. Total complaints received from customers remain low as a
                                                       proportion of total PPI sales made – with 1,212 complaints received in the 12 months to
                                                       3 October 2010 of which 51 were upheld. Express Gifts Limited is investigating the impact of
                                                       the new requirements but at this time, in light of the uncertainly caused by the application for
                                                       judicial review, it is not practical to evaluate the cases concerned, nor therefore to make a
                                                       reliable estimate of the amount of provision, if any, that will be required. Express Gifts Limited
                                                       will review the cases when the requirements become clearer.

8.    CAPITALISATION AND INDEBTEDNESS
The tables below set forth the Group’s total capitalisation and indebtedness as at 31 December 2010,
being the latest practicable date for this information prior to the publication of this document. These
tables should be read together with the financial statements and notes to those financial statements
included in Part V (Historical Financial Information on the Group) of this document.

8.1                                                    Capitalisation
                                                                                                                                                 £million

                                                       Called up share capital                                                                      24.5
                                                       Share premium account                                                                        79.2

                                                       Total capitalisation at 31 December 2010                                                    103.7


                                                       Total capitalisation excludes the capital redemption reserve, the merger reserve, the share option
                                                       reserve, the own shares and liability for share-based payment reserves, the translation reserve,
                                                       and the retained earnings of the Group, which together amounted to £(85.7) million at 1 October
                                                       2010.
                                                       There has been no material change to the capitalisation of the Group since 1 October 2010.




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8.2                                                    Indebtedness
                                                       The table below sets out the indebtedness of the Group as at 31 December 2010.

                                                                                                                                                £million

                                                       Total current debt
                                                       Guaranteed                                                                                     —
                                                       Secured                                                                                      12.1
                                                       Unguaranteed/unsecured                                                                        0.1

                                                                                                                                                    12.2
                                                       Total non-current debt
                                                       Guaranteed                                                                                    —
                                                       Secured                                                                                    347.8
                                                       Unguaranteed/unsecured                                                                        —

                                                       Total indebtedness as at 31 December 2010                                                  360.0

                                                       The following table sets out the net financial indebtedness of the Group as at 31 December
                                                       2010.

                                                                                                                                                £million

                                                       Cash at bank and in hand                                                                     19.2

                                                       Liquidity
                                                       Bank overdraft                                                                                 —
                                                       Bank debt (revolving credit facility)                                                       (12.0)
                                                       Current portion of finance leases                                                             (0.1)
                                                       Derivative financial instruments                                                              (0.1)

                                                       Current financial indebtedness                                                               (12.2)

                                                       Net current financial indebtedness                                                             7.0
                                                       Bank debt (revolving credit facility)                                                      (243.1)
                                                       Bank debt (securitisation facility)                                                        (104.7)

                                                       Non current financial indebtedness                                                          (347.8)

                                                       Net financial indebtedness as at 31 December 2010                                           (340.8)

                                                       In addition to this drawn debt the Group had £nil of undrawn committed bank facilities as at
                                                       31 December 2010 and £0.3 million which would be potentially available under securitisation
                                                       facilities should the associated debtor book increase.

9.                                                     LIQUIDITY AND CAPITAL RESOURCES
9.1                                                    Sources of liquidity
                                                       The Company’s primary sources of liquidity are cash flow from operations and borrowings
                                                       under the Existing Lending Facilities. In addition, Findel has made in the past and may make
                                                       in the future certain disposals of assets and businesses contributing to liquidity.
                                                       The Existing Lending Facilities comprise:
                                                       (i)     a revolving loan facility made available under a credit agreement by a syndicate of banks
                                                               on whose behalf Barclays Bank PLC acts as Agent and Security Trustee under which the
                                                               amount currently available for drawing is £234.01 million; and
                                                       (ii)    a revolving loan facility made available under a credit agreement by a syndicate of
                                                               Lenders on whose behalf Barclays Bank PLC acts as Agent and Security Trustee under
                                                               which the amount currently available for drawing is £42.73 million; and
                                                       (iii)   a securitisation facility made available under the RPA under which the current limit is
                                                               £105 million.

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                                                       If the Rights Issue proceeds, the Existing Lending Facilities will be amended so that the Group
                                                       will have the following facilities in place:
                                                       (i)     a £166.4 million revolving facility;
                                                       (ii)    a £30.4 million revolving facility; and
                                                       (iii)   a £105 million securitisation facility.
                                                       The terms on which capital is available to the Company, pursuant to the Existing Lending
                                                       Facilities, are set out in more detail in paragraph 18 of Part X (Additional Information) of this
                                                       document.

9.2                                                    Management of cash flow: forecast/budget/monitoring
                                                       Findel monitors cash flow closely through both the treasury and finance functions. Cash flow
                                                       forecasts are prepared on a daily, weekly, 17-week and 52-week basis. In addition, cash flow
                                                       measures such as free cash flow are analysed as part of the Group’s overall budgeting and
                                                       forecasting process, and performance is measured against budget each period. As part of the
                                                       Group’s budgeting process EBITDA, interest and net debt forecasts are compared to the
                                                       Group’s covenant structure.

9.3                                                    Net debt levels and working capital seasonality
                                                       Findel’s net debt levels and working capital balances vary significantly dependent on the time of
                                                       year. This variation reflects the seasonality of the Group’s businesses, with borrowings increasing
                                                       as stock levels are built up, and falling as stock is sold and converted to cash through the
                                                       normal working capital cycles.
                                                       Excluding the impact of acquisitions and disposals and other non-recurring events, Findel’s net
                                                       debt level and working capital are at their lowest each year at the end of March when stock
                                                       levels in the Education Supplies Division and Home Shopping Division are at seasonal lows.
                                                       Throughout the summer months net debt levels increase to fund stock purchases in advance of
                                                       September to November which is a critical period for both the Education Supplies Division and
                                                       the Home Shopping Division due to the back-to-school season and Christmas respectively. Stock
                                                       balances during this period convert to receivables which are then settled either immediately
                                                       (online brands), on standard terms of approximately 45 days (Education Supplies and
                                                       Healthcare Divisions) or over a longer period in the Express Gifts credit business where
                                                       extended rolling credit terms are offered.

10.   QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT FINANCIAL RISK
      MANAGEMENT
The Group’s normal operating, investing and financing activities expose it to a variety of financial
risks. The Group’s overall risk management process is designed to identify, manage and mitigate
financial risk, and the Group’s treasury operations are key in this.
Treasury operations are managed centrally within policies approved by the Board. Group treasury
reports regularly to the Executive Board. The major treasury risks to which the Group is exposed
relate to market risk (movements in foreign exchange and interest rates), liquidity risk and credit risk.
Areas where risks are most likely to occur are evaluated regularly using statistical modelling
techniques and regular reviews of forecast interest and foreign exchange rates are included in such
evaluations. The Group uses financial instruments and derivatives to manage these risks in accordance
with defined policies. Throughout the period under review, in accordance with Group policy, no
speculative use of derivative, foreign exchange or other instruments was permitted.

10.1 Exchange rate risk
     The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures
     to exchange rate fluctuations arise. Exchange rate exposures are managed utilising forward
     foreign exchange contracts.
                                                       The Group enters into forward foreign exchange contracts to manage the risk associated with
                                                       anticipated sales and purchase transactions out to approximately 12 months from the balance
                                                       sheet date.




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                                                                                                                            At 1 October 2010
                                                                                                                     Average       Foreign    Contract
                                                                                                                    exchange      currency       value
                                                                                                                         rate US$ millions    £millions
                                                       Buy US$
                                                         less than 3 months                                            1.5385         3,000        1,950
                                                         3 to 6 months                                                 1.4984         5,000        3,337
                                                         6 months +                                                        —             —            —

                                                                                                                       1.5132         8,000        5,287

10.2 Interest rate risk
     The Group is exposed to interest rate risk as the Group borrows funds at floating interest rates.
     The risk is managed by the Group by the use of interest rate swap contracts and forward
     interest rate contracts. Hedging activities are evaluated regularly to align with interest rate views
     and defined risk appetite, ensuring optimal hedging strategies are applied, by either positioning
     the balance sheet or protecting interest expense through different interest rate cycles.

                                                       Under interest rate swap contracts, the Group agrees to exchange the difference between fixed
                                                       and floating rate interest amounts calculated on agreed notional principal amounts. Such
                                                       contracts enable the Group to mitigate the risk of changing interest rates on the fair value of
                                                       issued fixed rate debt held and the cash flow exposures on the issued variable rate debt held.
                                                       The fair value of interest rate swaps at the reporting date is determined by discounting the
                                                       future cash flows using the curves at the reporting date and the credit risk inherent in the
                                                       contract, and is disclosed below. The average interest rate is based on the outstanding balances
                                                       at the end of the financial year.

                                                       No interest rate derivatives were outstanding as at 1 October 2010.


10.3 Liquidity risk
     It is the Group’s policy to maintain committed bank facilities sufficient to meet anticipated
     short-term and long-term requirements. In applying this policy the Group continuously monitors
     forecast and actual cash flows against the maturity profile of its banking facilities.

                                                       All the Group’s borrowings are on a committed basis. It is the Group’s treasury policy to
                                                       ensure that a specific level of committed funds are always available based on forecast working
                                                       capital requirements.


10.4 Credit risk
     The Group’s receivable balances comprise a large number of individually small amounts from
     non-connected customers. Concentration risk is therefore limited and maximum exposure is
     equal to the book value of receivables.

                                                       Some of the Group’s suppliers take out credit insurance to protect their receivables against the
                                                       risk of bad debt, insolvency or protracted default of their buyers, including Findel. Starting in
                                                       the second half of 2008, and as a result of the economic downturn, many credit insurers have
                                                       reduced or withdrawn the availability of insurance to the retail sector. As a consequence, there
                                                       has been a large reduction in credit insurance available to Findel’s suppliers. Findel has engaged
                                                       in and is continuing to engage in discussions with its suppliers and, in some cases, the credit
                                                       insurers to those suppliers, and continues to monitor actions taken by credit insurers. However,
                                                       the reduction in credit insurance may cause some suppliers to take actions to reduce their credit
                                                       exposure to Findel, including the sale of, or refusing to sell, products to Findel or seeking to
                                                       change their credit terms.

                                                       It is the Board’s belief that the Rights Issue and the Placing will represent a significant credit
                                                       event which may improve the level of credit insurance available to Findel’s suppliers in future
                                                       periods.

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10.5 Capital risk management
     It is the Group’s policy to maintain a strong capital base so as to maintain investor, creditor
     and market confidence and to sustain the future development of the business. The Board
     believes that, following the Rights Issue and the Placing, the capital base of the Group will be
     sufficient to achieve this objective.
                                                       The Group considers the manner in which funds are distributed to shareholders by assessing the
                                                       performance of the business, the level of available net funds and the short to medium-term
                                                       strategic plans as well as the need to meet banking covenants and borrowing ratios. Such
                                                       assessment will influence the level of dividends payable.

11. ESTIMATES, JUDGEMENTS AND CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities. Significant items subject to such
assumptions and estimates include the useful lives of assets; the measurement and recognition of
provisions; the recognition of deferred tax assets; and liabilities for potential corporation tax. Actual
results could differ from these estimates and any subsequent changes are accounted for with an effect
on income at the time such updated information becomes available.
The most critical accounting policies in determining the financial condition and results of the Group
are those requiring the greatest degree of subjective or complex judgements. These relate to certain
elements of revenue recognition, inventory valuation, the valuation of goodwill and acquired
intangible assets, share based payments, post-retirement benefits, taxation, trade receivables and
provisions are set out below.

11.1 Revenue recognition
     Revenue comprises the fair value of the sale of goods and services to external customers, net of
     value added tax, rebates, discounts and returns. Revenue is recognised as follows:

                                                       11.1.1 Sales of goods
                                                              Revenue is recognised when the significant risks and rewards of ownership of the goods
                                                              have passed to the buyer upon delivery and the amount of revenue can be measured
                                                              reliably. A provision for estimated returns is made, representing the profit on goods sold
                                                              during the period which will be returned and refunded after the period end. Revenue is
                                                              reduced by the value of sales returns provided for during the period.

                                                       11.1.2 Interest income
                                                              Interest income on customer credit accounts is recognised on a time-proportion basis,
                                                              using the effective interest method. When a receivable is impaired, the Group reduces the
                                                              carrying amount to its recoverable amount, being the estimated future cash flow
                                                              discounted at the original effective interest rate.

                                                       11.1.3 Rendering of services
                                                              Revenue is recognised in respect of non-interest related financial income, delivery charges
                                                              and parcel insurance. In addition, various services are provided under the Group’s
                                                              healthcare contracts. Income is recognised when the relevant service has been provided to
                                                              the customer.

11.2 Inventory valuation
     Inventories are valued at the lower of cost and net realisable value. Cost comprises direct
     purchase cost and those overheads that have been incurred in bringing the inventories to their
     present location and condition, both types of cost being measures using either a standard cost
     or a weighted average cost formula. Net realisable value represents the estimated selling price
     less all estimated and directly attributable costs of completion and costs to be incurred in
     marketing, selling and distribution. Net realisable value includes, where necessary, provisions for
     slow moving and damaged inventory. The provision represents the difference between the cost of

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                                                       stock and its estimated market value, based on ageing. Calculation of these provisions requires
                                                       judgements to be made which include forecast consumer demand, the promotional, competitive
                                                       and economic environments and inventory loss trends.

11.3 Impairment Reviews: Goodwill, intangible assets, long term loan and receivables property, plant &
     equipment and leases
     Assets that have an indefinite useful life are not subject to amortisation but are tested annually
     for impairment. Assets that are subject to amortisation are reviewed for impairment whenever
     events or changes in circumstances indicate that the carrying amount may not be recoverable.
     An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
     its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
     to sell and value in use. For the purposes of assessing impairment, assets are grouped at the
     lowest levels for which there are separately identifiable cash flows (cash-generating units).

11.4 Share based payments
     The Group operates a number of equity-settled, share based compensation plans.
                                                       The Group has applied the requirements of IFRS 2 Share-based payment. In accordance with
                                                       IFRS 1, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002
                                                       that were invested at 1 January 2005.
                                                       The Group principally issues equity-settled share-based payments to certain employees. Equity-
                                                       settled share-based payments are measured at fair value (excluding the effect of non market-
                                                       based vesting conditions) at the date of grant. The fair value determined at the grant date of the
                                                       equity-settled share-based payments is expensed on a straight-line basis over the vesting period,
                                                       based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of
                                                       non market-based vesting conditions.
                                                       Fair value is usually measured by use of the Black Scholes model. The expected life used in the
                                                       model has been adjusted, based on management’s best estimate, for the effects of non-
                                                       transferability, exercise restrictions, and behavioural considerations.

11.5 Defined benefit pension schemes
     The Group has both defined benefit and defined contribution plans. A defined benefit plan is a
     pension plan that defines an amount of pension benefit that an employee will receive on
     retirement, usually dependent on one or more factors such as age, years of service and
     compensation. A defined contribution plan is a pension plan under which the Group pays fixed
     contributions into an independently administered fund. The Group has no legal or constructive
     obligations to pay further contributions if the fund does not hold sufficient assets to pay all
     employees the benefits relating to employee service in the current and prior periods. The cost of
     providing these benefits, recognised in the income statement, comprises the amount of
     contributions payable to the schemes in respect of the year.
                                                       For defined benefit retirement plans, the cost of providing benefits is determined using the
                                                       Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet
                                                       date.
                                                       Actuarial gains and losses that exceed 10 per cent. of the greater of the present value of the
                                                       Group’s de