Shares in Findel today rose 8.74 per cent after the battered home shopping group reassured investors that it had regained control of customers' bad debts after it was forced to issue a shock profits warning four months ago.

The company reported group sales up 2 per cent for the 19 weeks to August 15, and said its bad debts "continued to fall from their peak in March and are in line with our expectations."

Findel's stock rose 15.75p to 196p today but its shares are worth 75 per cent less than at their 782.6p peak in May last year, before the slowing economy piled pressure on household budgets and the company was forced to warn on profits.

While shareholders drew succour from today's statement, it emerged that Findel had lent £34 million to The Webb Group, an entertainment distribution group in which the home shopping company owns 30 per cent.

Findel has managed to claw back £8 million from the loan but it is still owed £26 million from financing The Webb Group's acquisitions. Last year, Findel bought ChoicesUK, a business that delivers DVDs to local shops, out of administration on behalf of The Webb Group.

Earlier this year, Findel's debts peaked at £385 million and analysts now hope the company can reduce its borrowings to at least £300 million.

According to Numis, Findel expects to cut its debt by £100 million over the next three years, including £20 million in this financial year.

Findel issued a profit warning in April, just two weeks after giving a positive update to the market, after the number of people falling behind on paying the company rose, forcing the group to set aside £5 million to cover bad debts.

Around 60 per cent of Findel's business is derived from home shopping, with the majority of sales from low-income households that are given credit by the company to buy products from its catalogues.

Sales from home shopping in the 19 weeks to August 15 rose by 3 per cent, which is in line with expectations.

However, in its educational operation, where it sells goods through catalogues to primary and secondary schools, sales were flat in the reported period. But Findel said trading has since improved, up 2 per cent, "benefitting from strong export orders".

Findel's smallest business, in healthcare, delivered the group’s strongest performance with sales up 16 per cent. The company sells healthcare products through catalogues to primary healthcare trusts as well as to households.

Findel said: "In the current economic environment the focus for the group remains on the efficient management of our business. The group is trading well and the board looks forward to a satisfactory outcome to the year."

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive