30
April 2024
Card Factory plc
("cardfactory" or the "Group")
Preliminary results for the
year ended 31 January 2024
Strong growth across the
business and continued strategic delivery, underpinned by a
strengthened balance sheet, allows for the resumption of
dividends.
cardfactory, the UK's leading
specialist retailer of greeting cards, gifts and celebration
essentials, announces its preliminary results for the year ended 31
January 2024 ("FY24").
Financial summary1
Financial Metrics
|
FY24
|
FY23
|
Change £
|
Change %
|
Revenue
|
£510.9m
|
£463.4m
|
£47.5m
|
+10.3%
|
EBITDA
|
£122.6m
|
£112.0m
|
£10.6m
|
+9.5%
|
Profit Before Tax (PBT)
|
£65.6m
|
£52.4m
|
£13.2m
|
+25.2%
|
Adjusted PBT2
|
£62.1m
|
£48.9m
|
£13.2m
|
+27.0%
|
Adjusted Leverage (exc.
Leases)
|
0.4x
|
0.8x
|
(0.4x)
|
-
|
Net Debt (exc. Leases)
|
£34.4m
|
£57.2m
|
£(22.8)m
|
-39.9%
|
Cash from operations
|
£118.7m
|
£107.8m
|
£10.9m
|
+10.1%
|
Basic EPS
|
14.4p
|
12.9p
|
1.5p
|
+11.6%
|
Adjusted EPS3
|
13.5p
|
12.1p
|
1.4p
|
+11.6%
|
Dividend per share
|
4.5p
|
-
|
4.5p
|
-
|
1 For further information and definitions of Like-for-like (LFL)
and other alternative performance measures see Explanatory Notes
(below) "Alternative Performance Measures ("APMs").
2 Adjusted
PBT excludes one-off gains of £2.6 million gain on SA Greetings
acquisition, £2.0 million gain on release of Covid provisions,
partly offset by £1.1 million impairment charge.
3 Adjusted
EPS excludes the post-tax effect of one-off
transactions.
Key
highlights:
·
Group revenue of £510.9 million in FY24, +10.3%
compared to FY23, reflecting continued positive momentum across the
business and effective execution of our strategy:
o Total store revenue grew +8.7%, including contribution from 26
net new store openings during the period.
o cardfactory's LFL4
revenue grew +7.6%, driven by a strong store
performance, with growth in card, gifts and celebration essentials,
combined with positive traction in online.
o Store revenue grew +7.7% on a LFL basis reflecting development
of our store layout, customer experience and ranges, as well as
annualisation of targeted price increases.
o cardfactory.co.uk sales grew +0.4% on an LFL basis with a
particularly strong performance in the second half, reflecting the
impact of ongoing investment in capabilities.
o Partnerships revenue of £17.0 million includes SA Greetings,
acquired in April 2023, contributing £10.4 million of revenue in
line with expectations.
·
EBITDA for the full year grew to £122.6 million
(FY23: £112.0m) which includes £2.0 million one-off release of
Covid grant provisions and ongoing investment in capability and
capacity to deliver future growth.
·
Adjusted PBT growth of £13.2 million (+27.0%),
excluding one-off gains, to £62.1 million (FY23: £48.9 million)
driven by revenue growth and improved margin with inflationary
pressures managed through a combination of efficiency measures and
the annualisation of targeted price increases.
·
Operating cash conversion was 96.8% for the full
year (FY23: 96.3%) with cash from operations of £118.7
million.
·
Successful completion of refinancing with £125
million RCF with four-year fixed term and option to extend at a
lower margin than current facilities.
·
Capex investment in FY24 of £27.8 million (FY23:
£18.2 million) continued to drive positive progress on strategic
delivery, including the completion of Phase 2 ERP implementation,
our store evolution programme, and online platform
development.
·
Our balance sheet continued to strengthen with a
reduction in net debt (excluding lease liabilities) to £34.4
million at the end of January (FY23: £57.2 million) as a result of
operating cash generation and careful management of working
capital.
·
Recommencement of dividends, with a recommended
dividend of at 4.5p per share for FY24, in line with our updated
Capital Allocation Policy.
4 For further information and definitions of Like-for-like (LFL)
and other alternative performance measures see Explanatory Notes
(below) "Alternative Performance Measures ("APMs").
Consistent delivery against our strategic
priorities:
·
Stores
o Strong store performance reflecting efficient management of
profitable portfolio, investing in service experience and our focus
on unlocking the opportunity of our omnichannel
strategy.
o Total store revenue grew +8.7%
compared to prior year with 26 net new store openings during the
period, growing our total UK & Ireland estate to 1,058 stores
at year end. Similar number of store
openings expected in FY25, as we remain on track to deliver our
FY27 store expansion target.
o Positive impact of our store evolution programme enabled the
optimisation of space and balance between card, gifts and
celebration essentials and contributed to strong LFL growth in
gifts and celebration essentials of +9.8%.
o Targeted price increases delivered approximately one-third of
the LFL store growth with our value and quality proposition
continuing to resonate with customers.
o Average basket value (ABV) increased +8.1% LFL and transaction
volumes remained stable, reflecting our strategic focus to further
grow share of gifts and celebration essentials
categories.
o Strong seasonal performance across the year, in particular our
festive offer across cards and our expanded gifting
offer.
·
Leadership in
card
o Innovation and range development to broaden customer appeal
and price points contributed to +4.8% LFL growth in card.
Continuing to tailor offering for different regions and
demographics to further grow card market authority.
o Successful implementation of card pricing architecture
maintained our long-standing value-for-money credentials and low
entry price points by ensuring the right balance of targeted price
increases and rotating promotional offers.
·
Gifts &
celebration essentials
o As
we continue to focus on growing our UK market share of the circa.
£12 billion gifts and celebration essentials market, we expanded
our ranges further in FY24, including own-label ranges, a new
stationery range and the introduction of key licensed ranges.
Particularly strong LFL growth in soft toys +42%, stationery +63%
and pocket money toys +44%.
o FY25
will see further expansion including baby gifting and stationery,
alongside further space optimisation for growth ranges such as pet
gifting.
·
Online including
omnichannel
o Click & Collect nationwide rollout completed in April
2023, with customers opting for 7.8% of all online orders to be
collected in store as we build our omnichannel
proposition.
o Performance at cardfactory.co.uk gained traction in FY24 with
LFL sales growth of +0.4%. Encouraging H2 performance with +11.4%
LFL sales growth, reflecting the impact of ongoing investment in
online capability, platform performance and customer experience.
This positive traction has continued into FY25 resulting in five
consecutive months of sales growth.
o gettingpersonal.co.uk LFL sales in the period fell -26.1%
(FY23: -34.7%), as anticipated, following strategic focus on
cardfactory.co.uk in FY24 and work now underway to scope future
proposition for Getting Personal.
·
Partnerships
o Good
progress on new and existing retail partnerships plus acquisition
of SA Greetings drove revenue growth of +£12.0 million to £17.0
million, up 240.0%, including positive contribution in FY24 from
our new partnership with Liwa Trading Enterprises in the Middle
East and from expanding our partnership with Matalan in the
UK.
o Acquisition of SA Greetings has provided a leading presence in
the South Africa market through 27 Cardies stores, an online store,
and 6,500 partnership distribution points, while opening up
strategic wholesale growth and synergy opportunities.
o Remain focused on building the right infrastructure that will
allow us to expand across identified markets.
·
ESG
o Launched our 'Delivering a Sustainable Future' plan outlining
an updated and expanded sustainability plan to the end of 2028,
with clear and transparent commitments and established a 'Net-Zero
by 2050' goal with near-term, science based targets to help deliver
this.
o The
strategy is built around five important areas for our business,
both now and in the future: (1) Climate; (2) Waste and Circularity;
(3) Protecting Nature; (4) People & Equity and (5) Governance;
each aligned with the relevant UN Sustainable Development Goals
(SDGs).
Capital allocation policy & refinancing
·
Following the repayment of
CLBILS and Term Loan A under our 2022 facilities, we are no longer
restricted from paying dividends.
·
New four-year £125 million revolving credit
facilities in place, subject to extension options.
o The
Board has approved an updated capital allocation policy which
reflects our commitment to balancing
investment in driving the growth of the business and delivering
cash returns to shareholders, which together should drive
shareholder value.
o Dividend reinstated with the Board recommending 4.5p per share
for FY24, which includes an amount to reflect the fact that it was
not able to pay an interim dividend in the year.
o Pending shareholder approval, the
dividend will be paid on 28 June 2024 with a record date of 31 May
2024.
o Progressive dividend policy, targeting a dividend cover of
between 2x and 3x Adjusted EPS.
o Target Adjusted Leverage (exc. Leases) below 1.5x throughout
the financial year.
Current trading
·
Trading since the start of the new financial year
has been in line with the Board's expectations, with continued
positive momentum across card, gifts and celebration essentials for
the FY25 spring seasons of Valentine's Day and Mother's Day, with a record trading
day reported on the Saturday before Mother's Day.
Outlook
·
The Board remains confident in the long-term
compelling growth opportunity for cardfactory, and in its ability
to deliver on the medium-term ambitions of £650 million of sales,
Profit Before Tax margins of 14% and 90 net new stores by the end
of FY27.
·
We expect to continue to make strategic progress
toward these ambitions in FY25, and are encouraged by the start
that we have made to the year
·
As anticipated, PBT growth in FY25 is expected to
be weighted toward the second half of the year due to the phasing
of planned investment and inflationary recovery actions.
·
Through the course of the year we expect to manage
the overall inflationary environment through the ongoing
improvements in efficiencies and productivity and leveraging the
benefits of our vertically integrate business model.
·
Consequently, expectations for FY25 remain
unchanged.
Darcy Willson-Rymer, Chief Executive Officer,
commented:
"I am delighted with the progress we
have made through the year which would not have been achieved
without the commitment and efforts of our
colleagues.
"Now, three years into our 'Opening
our New Future Strategy', cardfactory is financially and
operationally a much stronger business. This means that we are able
to both reinstate the dividend and invest in the future, while
effectively navigating the ongoing economic environment. We have
confidence in our strong value and quality customer proposition,
and remain on track for both this financial year and for achieving
our FY27 targets outlined at our Capital Markets Day in May last
year."
Preliminary results webcast
There will be a meeting for analysts
and investors today at 10:00am in central London. We will also
provide a live video webcast of the presentation, available by
registering via the following link:
https://storm-virtual-uk.zoom.us/webinar/register/WN_jrHCkBGbTN-TdCwKK5SWXw
Those analysts who wish to join in
person are requested to contact Teneo by emailing:
cardfactory@teneo.com
to receive full attendance details.
A copy of the webcast and
accompanying presentation will be made available via the
cardfactory investor relations website: www.cardfactoryinvestors.com/investors
Enquiries:
Card Factory plc
via Teneo (below)
Darcy Willson-Rymer, Chief Executive
Officer
Matthias Seeger, Chief Financial
Officer
Teneo
+44
(0) 207 353 4200
James Macey White / Jo
Blackshaw
cardfactory@teneo.com
Card Factory plc
("cardfactory" or the "Group")
Preliminary results for the
year-ended 31 January 2024
CHAIR'S STATEMENT
Introduction
The strong revenue growth we saw in
the year demonstrates the strength of our customer proposition and
the benefits of the 'Opening Our New Future' strategy. There is continued good
momentum within the business with our offer is resonating well with
our customers.
Our value offer remains crucial to
our success, particularly during the ongoing cost-of-living
challenge that dominated consumer spending decisions through 2023.
Range development and innovation to broaden customer appeal ensured
we remained relevant for customers to support growth.
Investments made in support of our
strategy are now delivering positive outcomes across all growth
areas with the store evolution programme, Click & Collect and
new partnerships being particular highlights. This success can
substantially be attributed to the cultural journey cardfactory has
been on over the past three years which has transformed our ability
to understand the needs of our customers and execute at pace,
thanks to the hard work and dedication of colleagues. In FY24, it
was clear that as cardfactory transforms itself into a truly
customer-centric business, we have been able to more effectively
respond to the needs of our customers.
Year in review
Our store estate remains our
greatest asset, with the revenue performance reflecting the
strength of our value and quality proposition, combined with the
positive contribution we saw from the store evolution programme.
The market leading performance of our stores underlines the
importance of this customer channel with further opportunities for
growth, driven by product and range development, whilst providing a
competitive advantage in helping deliver our omnichannel strategic
ambition.
Stable transaction volumes, and an
increase in average basket value, resulted in good levels of growth
which reflects our strategic focus to increase our share of the
gifts and celebration essentials categories; they now represent
over half of sales. At the same time, we continued to enjoy good
levels of Like-for-like card sales growth. We also saw strong
seasonal performance across the year, especially during the
Christmas season, as customers responded well to our festive offer
across cards and the expanded gifting range.
We were encouraged by the
performance in cardfactory.co.uk, which gained traction in the year
as a direct consequence of ongoing investment in online
infrastructure and the customer experience. Notably, the successful
launch of our Click & Collect service has reinforced our belief
in the potential for omnichannel.
Progress in building our
partnerships channel was evidenced by signing our Middle East
partnership and the expansion of our Matalan trial to a full UK
rollout across 223 stores.
In April 2023 we were pleased to
complete the acquisition of SA Greetings. Performance has been in
line with expectations and we remain positive about the wholesale
opportunity that this acquisition provides.
Outlook and macro environment
We continue to operate within a
resilient market which demonstrates a continuing shift in card
purchases back to physical stores. We remain focused on developing
our core value and quality proposition and maintaining low price
points as customers continue to seek value for money.
The Board is encouraged by trading
since the start of the new financial year which has been in line
with expectations. We saw positive momentum continue across our
FY25 spring seasons of Valentine's Day and Mother's Day, with good growth across all
product categories.
The planned capital expenditure of
£25 million in FY25 will ensure that we are able to deliver further
strategic progress including investment in stores, technology
infrastructure and the next phase of the ERP implementation to
support operational efficiency and effectiveness
improvements.
Our clear focus on increased
efficiencies and productivity, alongside targeted pricing action,
will enable us to navigate the inflationary environment.
ESG
strategy
In FY24 we launched our
'Delivering a Sustainable
Future' plan outlining an updated and expanded sustainability plan
to the end of 2028, with clear and transparent commitments and
goals. The strategy is built around five important areas for our
business, both now and in the future: (1) Climate; (2) Waste and
Circularity; (3) Protecting Nature; (4) People & Equity; and
(5) Governance; each aligned with the relevant UN Sustainable
Development Goals (SDGs).
This ambitious plan is aligned to
the outcomes of a materiality assessment refresh completed in FY24
and includes significant focus on reducing our scope 1, 2 and 3
emissions; waste generated across our operations; understanding and
addressing our impact on nature and biodiversity; and ensuring we
continue to provide the right level of pay, benefits and support
for colleagues across cardfactory.
Board appointments
In May 2023, the Board welcomed
Matthias Seeger as Chief Financial Officer. Matthias brings
extensive financial experience to the business with the expertise
and values that will support cardfactory's strategic projects and
significant change programme over the next few years.
Capital allocation policy
The Board is pleased to confirm
that, following the repayment of CLBILs in September 2023 and Term
Loan A at the end of January 2024, we are no longer restricted from
paying dividends. Therefore, the Board has approved an updated
capital allocation policy which reflects our commitment to
balancing investment in driving the growth of the business and
delivering cash returns to shareholders, which together should
drive shareholder value.
At the AGM on 20 June 2024, the
Board will recommend reinstating an ordinary dividend of 4.5p per
share for FY24, which includes an amount to reflect the fact that
it was not able to pay an interim dividend in the year. Pending
shareholder approval, the dividend will be paid on 28 June 2024
with a record date of 31 May 2024. This is a progressive dividend
policy, targeting a dividend cover of between 2x and 3x Adjusted
EPS with a target Adjusted Leverage (exc. Leases) of below 1.5x
throughout the financial year.
Summary
With continued positive momentum
across the business, the Board remains confident in the compelling
growth opportunity for the Group and in the delivery of the FY27
targets outlined at the Capital Markets Strategy Update in May
2023.
Paul Moody
Chair
30 April 2024
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
Three years into cardfactory's
transformation journey, we are seeing the positive impact of the
changes that have been made across the business. The strong revenue
growth we delivered in FY24 is testament to the successful delivery
of our change programme and the hard work of colleagues throughout
cardfactory.
By putting the customer first in our
decision-making, we have continued to innovate and expand our offer
while remaining true to our value for money credentials. As we
broaden our appeal by extending our range across the celebrations
occasions market, we are seeing positive responses from customers
as they choose to pair their card purchases with gifts and
celebration essentials products.
As we continue to invest in our
'Opening Our New Future' strategy, we are delivering on the key
initiatives at pace and ensuring that we are maximising our growth
opportunities in store, across our digital channels, and through
our expanding partnership programme. Progress on our strategy
delivery is ensuring we are on track to meet our growth targets
over the five years of the plan.
FY24 performance
In FY24, revenue grew by +10.3% to
£510.9 million with store revenue, which represented 93.7% of total
group revenue, growing by +8.7% compared to the prior year. On a
Like-for-like basis store revenue grew +7.7%, with development of
our store layout, experience and ranges driving growth, alongside
the annualisation of FY23 targeted price increases.
Transaction volumes remained stable
and, combined with an increase in average basket value of +8.1%
LFL, demonstrated the importance of focusing on growing our share
of the gifts and celebration essentials categories. As we continued
to respond to changing customer needs through ongoing range
enhancements, we have increased our average card selling price from
£1.09 to £1.21. We saw card growth continue at +4.8% while still
protecting our value for money proposition.
The positive impact of our store
evolution programme enabled the optimisation of space within stores
and balance between card, gifts and celebration essentials. This
contributed to strong LFL growth in gifts +15.8% and celebration
essentials +6.7%.
We continued to see strong seasonal
performance across the year with our Christmas offer performing
particularly well, leading to year-on-year increases in
transactions and average basket value. Customer research is driving
our greeting cards designs in response to consumer trends, leading
to a wider breadth of celebratory captions with examples including
cards from pets as well as broader diversity and
inclusion.
Investment in our online capability,
platform performance, and customer experience improvements, as well
as further range expansion, led to improved performance in
cardfactory.co.uk with LFL sales growth of +0.4%. This traction led
to an encouraging performance in the second half of the year with
+11.4% LFL sales growth with this positive performance continuing
into FY25. There was good progress on our partnership
strategy with both new and existing retail
partnerships, plus the acquisition of SA Greetings, driving revenue
growth of £12.0 million to £17.0 million. This included positive contribution in FY24 from our new
partnership with Liwa Trading Enterprises in the Middle East and
from expanding our partnership with Matalan in the UK.
Strategy delivery
FY24 was a year of delivery for
our 'Opening Our
New Future' growth strategy. We are on track to meet our growth
ambition of revenue of £650 million in FY27, as outlined at our
Capital Markets Strategy Update in May 2023.
Growth within our core business
continued with 26 net new stores in FY24, ensuring we remain on
track to deliver 90 new stores over the course of the five-year
plan to FY27. Our agile store optimisation programme ensures we
continue to maintain an exceptional record on store profitability.
Within our store evolution programme, we completed our space
realignment project in 729 stores which saw everyday
card space reduced by 7%. There was no negative impact seen,
while gifts and celebration essentials were given additional space
resulting in sales uplift.
The successful rollout of
'The cardfactory Way'
customer service excellence programme for all store colleagues led
to increased customer interaction on the shop floor, enabling
tailored customer service, product recommendations and improved
basket value.
Range improvements and expansion
continued for card, gifts and celebration essentials, with new
own-label ranges, a new stationery range and the introduction of
key licensed ranges.
Our omnichannel programme saw the
successful nationwide rollout of our new Click & Collect
service with customers opting for 7.8% of online orders to be
collected in-store and 50% of these Click & Collect
transactions were from customers new to cardfactory.co.uk. We have
already reduced customer order to collection lead times from 3-5
days at rollout, to 1-2 days on average by September 2023. Wider
digital investment saw the completion of the replatforming project
for cardfactory.co.uk and gettingpersonal.co.uk, enabling benefits
of using consistent systems, tools and processes.
Our partnership programme in the UK
continued to expand with the rollout across all 223 Matalan stores
by December 2023. Internationally, the first four franchised stores
were opened in the Middle East with up to 36 stores planned over
the next four years. Response from customers in the Middle East has
been positive and as expected, gifts and celebration essential
ranges have performed well given the strong gifting culture in this
market, with stationery, soft toys, balloons and gift bags
contributing to almost 50% of total sales.
The acquisition of SA Greetings has
provided a leading presence in the South African market through 27
Cardies stores, an online store, and 6,500 partnership distribution
points (operated by wholesale partners), while opening up strategic
wholesale growth opportunities.
People & culture
cardfactory has been on a
transformative cultural journey over the past three years and the
growth we are seeing as a business can be linked to the cultural
progress we have made.
Today, our focus is on customer,
community and purpose. By building a deep understanding of the
celebratory needs of our customers, both in the UK and
internationally, we are able to adapt and change so that we
continue to lead the market. We are also building an inclusive
community within cardfactory and one that is dedicated to giving
something back to the communities we work within. Putting our
purpose first in everything we do ensures we have a collective and
collaborative approach to decision-making.
The cultural progress we have made
has been considerable. This has been recognised through our
externally facilitated Best Companies 'b-Heard' colleague survey,
where we received a two-star 'Outstanding' to work for
accreditation in September 2023 and were also recognised as the
'5th Best Big Company to Work For'.
ESG
progress
Following the launch of our
'Delivering a Sustainable Future' plan, we made good progress
across all areas of focus within the strategy. One highlight was
seeing the results of our waste reduction efforts coming through
with the elimination of non-essential single use plastic in our
own-label products and packaging, increasing recyclability and
engaging with suppliers to reduce waste in products and
packaging.
In FY25 we will take our plans
further by publishing science based, near-term targets to help
deliver our goal of 'Net Zero by 2050' in our FY24 Annual Report.
We are embedding sustainability into business planning and
decision-making to ensure our commitments are at the forefront of
how we work and the decisions we make every day. More detail on ESG
and our sustainability plans will be available in our FY24 Annual
Report.
Summary
With strong operating cash
generation, a continually strengthening balance sheet, ongoing
reductions in net debt and our updated capital allocation policy in
place, we can continue to invest with confidence in the building
blocks of growth. In addition, we continue to proactively manage
risks from inflationary headwinds.
Having made significant progress on
our strategy delivery in FY24, we are confident that we will
continue to make strategic and cultural progress in FY25 and meet
our FY27 growth targets.
Darcy Willson-Rymer
Chief Executive Officer
30 April 2024
CHIEF FINANCIAL OFFICER'S REVIEW
Financial highlights
The Group delivered a strong
performance and made good progress towards our strategic ambition
to deliver £650 million sales, 14% PBT margin and 90 net new stores
by FY27.
- Across our stores, we continued to
grow with both higher revenues and positive LFL sales compared to
last year, providing a strong platform for our strategic growth
plans and omnichannel ambitions.
- We continued to strengthen our
balance sheet, with a reduction in closing net debt of £22.8
million, year on year, and the repayment of CLBILs in September
2023 and Term Loan A at the end of January 2024 resulting in the
lifting of dividend restrictions.
- Total sales of £510.9 million
increased +10.3% from prior year, underpinned by LFL sales of +7.7%
in cardfactory stores.
- Adjusted PBT of £62.1 million, up
£13.2 million, reflecting a margin of 12.2%, up from 10.5% in
FY23.
- Store portfolio stands at 1,058
stores at 31 January 2024, up 26 from 31 January 2023.
- Acquisition of SA Greetings for
£2.5 million fixed cash consideration, which is performing in line
with expectations.
- Strong end to the year for online
sales and a positive LFL for cardfactory.co.uk for the year of
+0.4%.
- Recommencement of dividend -
proposed ordinary dividend for FY24 of 4.5 pence per
share.
|
FY24
|
FY23
|
Revenue
|
£510.9m
|
£463.4m
|
EBITDA
|
£122.6m
|
£112.0m
|
Profit Before Tax
|
£65.6m
|
£52.4m
|
Adjusted Profit Before
Tax
|
£62.1m
|
£48.9m
|
Basic earnings per share
|
14.4 pence
|
12.9 pence
|
Adjusted earnings per
share
|
13.5 pence
|
12.1 pence
|
Dividend per share
|
4.5 pence
|
0.0 pence
|
Net debt
|
£34.4m
|
£57.2m
|
Cash from operations
|
£118.7m
|
£107.8m
|
Adjusted Leverage (exc.
Leases)
|
0.4x
|
0.8x
|
Adjusted PBT excludes one-off
transactions, which in FY24 include a one-off gain arising on the
acquisition of SA Greetings (£2.6 million), a gain resulting from
the release of provisions related to the Group's covid grants
position (£2.0 million), and a charge relating to impairment of
assets in Getting Personal (£1.1 million), a net gain of £3.5
million.
Following the cessation of capital
expenditure and dividend restrictions from 31 January 2024, we have
reviewed and updated our capital allocation policy. The Board is
committed to balancing delivery of sustainable long-term growth in
shareholder value with progressive cash returns, whilst being
cognisant of the needs of its other stakeholders.
On 26 April 2024, the Group
successfully refinanced its debt facilities, agreeing a new £125
million revolving credit facility with a syndicate of banks, with
an initial four-year term to April 2028.
Financial performance
Sales
|
Total Sales
|
|
FY24
£m
|
FY23
£m
|
Change %
|
Stores
|
478.9
|
440.4
|
+8.7%
|
cardfactory online
|
8.8
|
8.8
|
-
|
Getting Personal
|
5.9
|
8.5
|
-30.6%
|
Partnerships
|
17.0
|
5.0
|
+240.0%
|
Other
|
0.3
|
0.7
|
-57.1%
|
Group
|
510.9
|
463.4
|
+10.3%
|
Partnerships includes £10.4 million
of sales from SA Greetings post-acquisition (FY23:
£nil).
|
LFL
Sales
|
|
FY24
|
FY23
|
Change %
|
cardfactory stores
|
+7.7%
|
+7.6%
|
+0.1 ppts
|
cardfactory Online
|
+0.4%
|
-18.8%
|
+19.2 ppts
|
cardfactory LFL
|
+7.6%
|
+6.7%
|
+0.9 ppts
|
Getting Personal
|
-26.1%
|
-34.7%
|
+8.6 ppts
|
Total Group sales for FY24 were
£510.9 million, an increase of £47.5 million or +10.3% when
compared to the previous year.
This represents good progress on our
strategic ambition to add £190 million of sales from the FY23 base
by FY27. We are ahead of the compound annual growth rate required
of +8.85%. The sales growth in FY24 was underpinned by LFL sales in
cardfactory stores of +7.7% and a £10.4 million contribution from
SA Greetings which we acquired in the year.
Store sales across the UK &
Ireland of £478.9 million increased by £38.5 million or +8.7%
compared to the prior year, with LFL sales of +7.7%. Everyday
ranges performed well, with gifts and celebration essentials
showing strong momentum with LFL sales of +9.8%, supported by
positive LFL growth in both everyday and seasonal card.
Approximately a third of the total LFL growth was delivered through
annualisation of targeted price increases implemented in the second
half of FY23.
Transactions remained stable in the
UK and increased +3.0% in the Republic of Ireland on an LFL basis.
Average basket values increased by +8.1%. The increase in basket
values was supported by higher average selling prices, delivered
via a combination of the price activity described above and
continuing to expand and develop our range, particularly in gifts
and celebration essentials. Our range development has clearly
resonated with customers, as party and gifting both delivered
higher sales volumes than in FY23.
We continue to optimise our store
portfolio and during FY24 opened 39 new stores and closed 13,
including three relocations. As a result, the total store portfolio
increased by 26 stores to 1,058. This reflects good progress in
delivering our target of 90 net new stores by FY27. The value of
our flexible approach to the store portfolio is illustrated in the
incremental sales growth delivered by non-LFL sales in the
year.
Our partnerships business, which
focuses on B2B sales, delivered total sales of £17.0 million in
FY24, compared to £5.0 million in FY23. This included a £10.4
million contribution from SA Greetings since acquisition in April
2023. Other partnerships delivered total sales of £6.6 million,
including increased contributions from the rollout of our offer
across the Matalan store estate in the UK and the new franchise
stores opened in the Middle East with our partner in the region,
Liwa Trading Enterprises.
In online, we are beginning to see
positive traction from the investments made over recent years, with
cardfactory.co.uk delivering positive sales growth towards the end
of the year resulting in an LFL for the full year of +0.4%. Sales
at Getting Personal fell year-on-year, but remain an important
factor in online volume and contribute to shared fulfilment costs.
The cardfactory platform remains our strategic investment focus,
with an increasing proportion of our total online range offered via
cardfactory.co.uk.
Click & Collect is a key
component of our omnichannel offer, differentiating cardfactory
from pure play online and bricks and mortar retailers. The rollout
was completed across all UK stores in April 2023, and we have seen
customers opting for 7.8% of all orders from cardfactoryco.uk to be
collected in store. Average basket values for Click &
Collect were more than double the average basket value of an online
order.
Gross profit
|
FY24
£m
|
FY24 % Sales
|
FY23
£m
|
FY23 % Sales
|
Group sales
|
510.9
|
|
463.4
|
|
COGs
|
(155.9)
|
(30.5%)
|
(146.8)
|
(31.7%)
|
Product margin - constant currency
|
355.0
|
69.5%
|
316.6
|
68.3%
|
FX gains
|
0.6
|
0.1%
|
1.5
|
0.3%
|
Product margin
|
355.6
|
69.6%
|
318.1
|
68.6%
|
Store & warehouse
wages
|
(124.0)
|
(24.3%)
|
(109.6)
|
(23.7%)
|
Property costs
|
(24.7)
|
(4.8%)
|
(26.3)
|
(5.7%)
|
Other direct costs
|
(22.0)
|
(4.3%)
|
(21.5)
|
(4.7%)
|
Gross Profit
|
184.9
|
36.2%
|
160.7
|
34.7%
|
Product margin calculated on a
constant currency basis using a consistent GBPUSD exchange rate
across both periods. FX gains and losses reflect conversion from
the constant rate to prevailing market rates.
Overall gross profit for the Group
increased by £24.2 million, or +15.1%, to £184.9
million.
Product margin, when calculated
using a constant GBPUSD exchange rate year-on-year, improved by
+1.2ppts to 69.5%. This improvement includes a normalisation in
international freight rates when compared to the prior year. This
saving helped to offset price inflation in material costs and the
effect of a slight shift towards lower-margin non-card products in
sales mix.
The Group purchases approximately
half of its goods for resale in US dollars from suppliers in the
Far East. Currency gains associated with this activity of £0.6
million were lower than in the prior year. Our well-established
currency hedging policy continues to protect us against volatility
in GBPUSD exchange rates. Our average USD delivered rate in FY24 of
1.3121 was lower than the prior year (1.3241), but ahead of the
average spot exchange rate for the period.
Store and warehouse wages increased
by £14.4 million (13.1%), which included the impact of the national
living wage increasing by +9.7% from April 2023, as well as
expanding the store portfolio. Property costs, which cover business
rates, insurance and service charges (rent is reflected in
depreciation and interest costs as a result of the lease accounting
rules in IFRS 16) reduced by £1.6 million including a net saving in
business rates costs following the most recent revaluation exercise
effective from April 2023.
Other direct expenses include
warehouse costs, store opening costs, utilities, maintenance, point
of sale and pay-per-click expenditure. A large proportion of costs
in this category are variable in relation only to the size of the
store portfolio, meaning whilst overall costs increased slightly in
line with the increase in number of stores in the period, they fell
as a percentage of sales given the improved trading performance in
the year. The Group has continued to benefit from its long-term
energy hedge in FY24, which fixed commodity unit costs at FY22
levels. All of the Group's UK energy costs will continue to benefit
from this hedge until September 2024.
EBITDA & operating profit
|
FY24
£m
|
FY24 % Sales
|
FY23
£m
|
FY23 % Sales
|
Group sales
|
510.9
|
|
463.4
|
|
Gross profit
|
184.9
|
36.2%
|
160.7
|
34.7%
|
Other operating income
|
2.0
|
0.4%
|
-
|
-
|
Operating expenses
|
(64.3)
|
(12.6%)
|
(48.7)
|
(10.5%)
|
EBITDA
|
122.6
|
24.0%
|
112.0
|
24.2%
|
Depreciation &
amortisation
|
(10.4)
|
(2.0%)
|
(10.3)
|
(2.2 %)
|
Right-of-use asset
depreciation
|
(34.7)
|
(6.8%)
|
(35.1)
|
(7.5%)
|
Impairment charges
|
(1.1)
|
(0.2%)
|
(2.8)
|
(0.6%)
|
Operating profit
|
76.4
|
15.0%
|
63.8
|
13.8%
|
Operating expenses (excluding
depreciation and amortisation) include remuneration for central and
regional management, business support functions, design studio
costs and business insurance together with central overheads and
administration costs.
Total operating expenses have
increased £15.6 million compared to the prior year, which reflects
up-front investment in capability, capacity, systems and processes
to enable us to deliver the strategy. These investments are
principally in central staff costs, supporting major IT projects
and in marketing where spend has historically been very low. This
increase also includes a contribution of £2.6 million due to the
acquisition of SA Greetings.
As a result, driven primarily by the
improved trading performance, EBITDA improved to £122.6 million
(FY23: £112.0 million); however the investment for future growth
means EBITDA margin fell slightly from 24.2% to 24.0%. Excluding
the one-off impact of other income from the release of provisions
related to government support received during the pandemic, EBITDA
margin would have been 23.4%.
It should be noted that that EBITDA
does not include any benefit from reduced store rental costs as
these are reflected in depreciation and interest costs under IFRS
accounting.
Right of use asset depreciation
continues to fall reflecting our flexible approach to managing the
store portfolio. We maintain an average lease term of five years,
with a break clause at three years. On average 20% of the lease
portfolio renews each year enabling us to capture reductions in
market rents where available. During FY24, we achieved rent
reductions on renewal of up to 20% which will flow through
depreciation charges in future years.
EBITDA, after deducting depreciation
and interest charges relating to store leases, was £81.8 million (a
margin of 16.0%) in FY24 compared to £71.1 million in FY23 (a
margin of 15.4%).
Depreciation and amortisation, at
£10.4 million, remained broadly in line with the prior
year.
Impairment charges reflect a write
down in respect of Getting Personal assets, following a further
period of reduced sales.
Profit Before Tax
|
FY24
£m
|
FY24 % Sales
|
FY23
£m
|
FY23 % Sales
|
Group sales
|
510.9
|
|
463.4
|
|
Operating profit
|
76.4
|
15.0%
|
63.8
|
13.8%
|
Gain on acquisition
|
2.6
|
0.5%
|
-
|
-
|
Finance costs
|
(13.4)
|
(2.6%)
|
(11.4)
|
(2.5%)
|
Profit Before Tax
|
65.6
|
12.8%
|
52.4
|
11.3%
|
One-off transactions
|
(3.5)
|
(0.6%)
|
(3.5)
|
(0.8%)
|
Adjusted Profit Before Tax
|
62.1
|
12.2%
|
48.9
|
10.5%
|
The total reported result for the
year includes an acquisition gain in respect of SA Greetings of
£2.6 million, and a further £2.0 million gain as a result of
releasing provisions no longer considered to be required in respect
of Covid business support grants received subject to subsidy
control. These items, along with the impairment charge in respect
of Getting Personal of £1.1 million, are considered to be one-off
in nature and have been excluded from Adjusted PBT. (FY23: One-off
gains in relation to CJRS settlement and refinancing excluded
totalling £3.5 million from Adjusted PBT).
Total finance costs increased by
£2.0 million to £13.4 million.
The composition of our finance costs
is set out in the table below. The increase in both interest
payable on loans and interest in respect of leases reflects the
increase in SONIA interest rates during the period, from 3.4% at 31
January 2023 to 5.2% at 31 January 2024.
|
FY24
£m
|
FY23
£m
|
Interest on loans
|
6.5
|
6.0
|
Loan issue cost
amortisation
|
0.6
|
0.9
|
IFRS 16 Leases interest
|
6.3
|
4.5
|
Total finance expenses
|
13.4
|
11.4
|
|
FY24
£m
|
FY23
£m
|
IFRS 16 depreciation
|
34.5
|
36.3
|
IFRS 16 leases interest
|
6.3
|
4.5
|
Total IFRS 16 expenses
|
40.8
|
40.8
|
IFRS 16 depreciation includes
impairment and gains/losses on disposal. Total costs in this table
reflect lease costs not included in the calculation of EBITDA,
above.
The average cost of debt, taking
into account margin, indexation and the impact of hedging activity,
in the period was 7.4% (FY23: 5.7%). The impact of this increase on
our overall debt service cost was mitigated by the Group continuing
to deleverage and lower levels of gross debt drawn when compared to
FY23.
As a result, Profit Before Tax for
the year was £65.6 million, up £13.2 million from £52.4 million for
the previous year.
Adjusted PBT, which excludes the
impact of one-off transactions in the period that are not
reflective of the Group's underlying trading performance, was £62.1
million compared to £48.9 million in FY23.
Taxation
In March 2023 the results of our
latest business risk review were confirmed with HMRC, at which we
achieved a 'Low' risk rating in all of the categories
assessed.
The tax charge for FY24 of £16.1
million reflects an effective tax rate of 24.5% and has increased
£7.9 million compared to FY23.
The effective rate of tax for the
year is higher than the equivalent rate applied for the same period
last year (15.6%) largely due to increases in corporation tax rates
effective from 1 April 2023 and the impact of prior year
adjustments that reduced the FY23 charge. The rate is slightly
higher than the standard rate applicable to the current financial
year (24.0%).
The Group makes UK corporation tax
payments under the 'Very Large' companies' regime and thus pays its
expected tax bill for the financial year in quarterly instalments
in advance. Corporation tax payments in FY24 totalled £13.5 million
(FY23: £7.9 million).
Earnings per share
The net result for the year was a
Profit After Tax of £49.5 million, increased from £44.2 million in
FY23. As a result, basic earnings per share (EPS) for the year was
14.4 pence, with diluted EPS of 14.3 pence.
|
FY24
|
FY23
|
Profit after tax (£m)
|
49.5
|
44.2
|
Basic EPS (pence)
|
14.4 pence
|
12.9 pence
|
Diluted EPS (pence)
|
14.3 pence
|
12.8 pence
|
Adjusted EPS, which excludes the
post-tax effect of one-off transactions in the period, was 13.5
pence compared to 12.1 pence in FY23. A reconciliation of all
Alternative Performance Measures is set out in the appendix
below.
Cash flows
|
FY24
£m
|
FY23
£m
|
Cash from Operating Activities
(after tax)
|
105.2
|
99.9
|
Cash used in Investing
Activities
|
(30.0)
|
(18.2)
|
Cash used in Financing
Activities
|
(73.2)
|
(110.1)
|
Impact of foreign currency exchange
rates
|
(0.8)
|
-
|
Net
Cash Flow for Year
|
1.2
|
(28.4)
|
|
|
|
Operating cash flows less lease repayments
|
61.5
|
42.9
|
Operating cash conversion (%)
|
96.8%
|
96.3%
|
Free Cash Flow
|
27.1
|
16.7
|
The Group continued to deliver
strong cash performance in FY24, with cash from operations (before
corporation tax payments) of £118.7 million increased from £107.8
million in the prior year, reflecting the improved trading
performance described above. There was a small decrease in working
capital outflow, with deployment of working capital normalised
following the impact of the pandemic. FY23 also included a one-off
cash benefit from the alignment of VAT payments with our financial
year end that did not recur in FY24.
Operating cash conversion, which is
the ratio of Cash from Operations to EBITDA, improved slightly as a
result to 96.8% (FY23: 96.3%).
Capital expenditure increased to
£27.8 million in the year, as we invested in infrastructure and
growth projects to support our strategy.
Free cash flow, which we define as
net cash before M&A activity, distributions or debt repayments,
was £27.1 million. We invested £2.5 million in the acquisition of
SA Greetings (see below) and made net debt repayments of £23.6
million. The increase in free cash flow supports the recommencement
of dividend payments, as described in further detail
below.
Balance sheet
Acquisition of SA Greetings
As reported in the FY23 preliminary
results, on 25 April 2023 the Group acquired 100% of the issued
equity of SA Greetings Corporation (Pty) Ltd ("SA Greetings") for
fixed cash consideration of £2.5 million, funded from existing cash
reserves.
SA Greetings is the leading
wholesaler of greetings cards and gift packaging in South Africa.
It also operates 27 'Cardies' retail stores including four stores
operated by franchisees, an online store, and owns and operates a
roll wrap production facility. Its head office and main warehouse
are located in Johannesburg, with sales offices in Durban and Cape
Town.
The acquisition gives the Group
immediate access to the South African market via an established,
successful business and expands cardfactory's global presence in
line with our strategy.
SA Greetings delivered sales of
£10.4 million during the period from acquisition to the end of the
year and made a small positive contribution to Profit Before Tax.
We look forward to exploring the full range of opportunities to
support the development of the SA Greetings business and enhance
the Group's production, wholesale and retail offer in both South
Africa and the UK.
The Group has concluded the
accounting for the acquisition and recognised a gain on acquisition
of £2.6 million. See note 30 to the consolidated financial
statements for more information.
Capital expenditure
Total capital investments to grow
the business and deliver the strategy were £27.8 million in FY24,
increased from £18.2 million in FY23 and slightly ahead of our
capital markets update guidance as we accelerated certain
investment plans and including the impact of capital expenditure in
SA Greetings.
Key investments included the
continued delivery of our long-term project to upgrade our business
support systems, with extended ERP functionality in relation to
inventory management, developing our network infrastructure in
stores, enhancing platform functionality in cardfactory.co.uk, and
expanding our online fulfilment capacity in Printcraft.
In addition, we continue to invest
in opening new stores and refreshing the store estate, including
delivery of our space realignment programme which as part of our
store evolution programme, has expanded the amount of space in
store available for gifts and celebration essentials without
negatively impacting card LFLs.
Looking forward, in line with the
guidance given at our Capital Markets Strategy Update in May 2023,
we expect annual capital expenditure to remain around the £25
million mark. FY25 priorities include a point of sale (POS) upgrade
in stores and other infrastructure projects to enable us to deliver
online and partnerships growth.
Net
debt
|
FY24
£m
|
FY24 Leverage
|
FY23
£m
|
FY23 Leverage
|
Current borrowings
|
7.1
|
|
27.1
|
|
Non-current borrowings
|
37.9
|
|
40.4
|
|
Total Borrowings
|
45.0
|
|
67.5
|
|
Add back capitalised debt
costs
|
0.7
|
|
1.4
|
|
Gross Bank Debt
|
45.7
|
|
68.9
|
|
Less cash
|
(11.3)
|
|
(11.7)
|
|
Net
Debt (exc. Leases)
|
34.4
|
|
57.2
|
|
Leverage (exc. Leases)
|
|
0.3x
|
|
0.5x
|
Adjusted Leverage (exc. Leases)
|
|
0.4x
|
|
0.8x
|
Lease Liabilities
|
100.8
|
|
105.4
|
|
Net
Debt (inc. Leases)
|
135.2
|
|
162.6
|
|
Leverage (inc. Leases)
|
|
1.2x
|
|
1.4x
|
We continued to strengthen our
balance sheet in FY24, with a further reduction in net debt at 31
January 2024 of £22.8 million supported by strong operating cash
flow combined with careful allocation of capital to invest and
deliver future growth.
The Group focuses on net debt
excluding lease liabilities, this reflects the way the Group's
covenants are calculated in its financing facilities. Leverage
compares the ratio of net debt to EBITDA as calculated above,
Adjusted Leverage reflects adjustments in the Group's bank
facilities to deduct lease-related charges from EBITDA. A full
description, calculation and reconciliation of Alternative
Performance Measures is provided in the appendix below.
The Group's banking facilities and
amounts drawn in the current and prior periods are summarised in
the table below:
Facility
|
31
January 2024
£m
|
31
January 2023
£m
|
£11.25m Term Loan 'A'
|
-
|
9.0
|
£18.75m Term Loan 'B'
|
18.8
|
18.8
|
£20m CLBILs
|
-
|
16.1
|
£100m Revolving Credit
Facility
|
26.0
|
23.0
|
Overdraft facilities
|
0.2
|
1.8
|
Property mortgage
|
0.6
|
-
|
Accrued interest
|
0.1
|
0.2
|
Gross Bank Debt
|
45.7
|
68.9
|
During FY24, we made repayments of
£16.1 million in respect of the CLBILs facilities and £9.0 million
in respect of term loans. At 31 January 2024 the Group had undrawn
committed facilities of £74.0 million (FY23: £75.2
million)
The CLBILs facilities were fully
extinguished on 25 September 2023 and Term Loan 'A' fully
extinguished on 31 January 2024. Following these repayments,
restrictions in the Group's financing facilities relating to
capital expenditure and distributions were released.
Subsequent to the year end, on 26
April 2024, the Group successfully concluded a refinancing of its
debt facilities, having agreed a new four-year £125 million
committed revolving credit facility with a syndicate of banks. The
existing revolving credit facility and Term Loan B have been fully
repaid and cancelled.
The new facilities have an initial
maturity date in April 2028, with options to extend by up to 19
months, subject to lender approval. The facilities include a £75
million accordion, which can be drawn subject to lender approval.
The interest margin on the facilities is dependent upon the Group's
leverage position, with margins between 1.9-2.8% which is lower
than the previous facilities.
The new facilities include covenants
for a maximum leverage ratio (calculated as net debt excluding
leases divided by EBITDA less rent costs for the prior 12 months)
of 2.5x and a fixed charge cover ratio of at least 1.75x. The
leverage covenant is consistent with the Group's definition of
Adjusted Leverage. The Group expects to operate comfortably within
these covenant levels for the foreseeable future.
The new facilities are on what we
consider to be market standard terms, marking an end to the more
restrictive conditions applied during the pandemic years and
providing a firm platform from which we can execute our strategy.
Notably, dividend and capital expenditure limitations are now
removed.
The Group's cash generation profile
typically follows an annualised pattern, with higher cash outflows
in the first half of the year associated with lower seasonal sales
and investment in working capital ahead of the Christmas season.
The inverse is then usually true in the second half, as Christmas
sales led to reduced stock levels and higher cash inflows. As a
result, net debt at the end of the year is usually lower than the
intra-year peak, which typically occurs during the third quarter.
During FY24, Adjusted Leverage at the intra-year peak was
approximately 1.2x.
Capital structure & distributions
The Group has reviewed and updated
its capital allocation policy (as outlined below). The Board is
focused on delivering attractive, progressive, sustainable returns
to shareholders, whilst continuing to drive the growth of the
business.
The Board confirms that it has
decided to recommend the payment of an ordinary
dividend. Whilst any dividend will be dependent on, inter
alia, the performance and prospects of the Group, the Board will
target a progressive dividend policy, which it expects to deliver a
dividend cover over time of between 2x and 3x Adjusted
EPS.
The ordinary dividend will comprise
interim and final dividends; the Board currently expects the
interim dividend to be around one quarter of the total dividend for
the previous year, each year.
For the financial year ending 31
January 2024, the Board is cognisant of the fact that it was not
able to pay an interim dividend in the year. The Board is
therefore recommending a dividend of 4.5p per share, an amount
which would have been split between interim and final dividends if
the Board had been able to pay an interim dividend. This dividend
is covered by Adjusted EPS to 31 January 2024 by 3x.
At the Annual General Meeting on 20
June 2024, the Board will recommend to shareholders a resolution to
pay the dividend for the year. If approved, the dividend will be
paid on 28 June 2024 with a record date of 31 May 2023.
Where the Board concludes that the
Group has excess cash, taking into account, inter alia, the
performance and prospects of the Group, together with any potential
investment opportunities, the Board expects to make additional
returns to shareholders. The Board will consider at the time the
most appropriate method of returning such cash to
shareholders.
The Board is committed to funding
ordinary and additional shareholder returns from the free cash
generation of the Group, and will target maintaining an Adjusted
Leverage (exc. Leases) ratio below 1.5x throughout the financial
year.
Outlook
The Board remains confident in the
compelling growth opportunity for our business, and our medium-term
ambitions to deliver £650 million of sales, PBT margins of 14% and
90 net new stores by the end of FY27.
We expect to see continued top line
growth in FY25, driven largely by same store sales and the
continued growth of our store portfolio.
Whilst the cost-of-living crisis has
eased, inflationary challenges remain for retailers, particularly
in wages, freight and energy. We are well placed to manage these
challenges and remain confident in offsetting cost inflation over
the course of the year through ongoing improvements in efficiencies
& productivity and leveraging our vertically integrated
business model. PBT growth in FY25 is expected to be weighted to
the second half of the year, reflecting phasing of planned
investments and inflation recovery actions.
Matthias Seeger
Chief Financial Officer
30 April 2024
Capital Allocation Policy
cardfactory aims to balance delivery
of sustainable, long-term growth in shareholder value against cash
returns to shareholders and the needs of its other
stakeholders.
Each year, the Group will assess the
appropriate use of free cash after allocating funds to investments
that will deliver the stated strategy. The Group is committed to a
transparent, systemic and disciplined use of cash.
Business expenditures and investment
opportunities will change over time. The Board will, as part of its
annual planning cycle, review investment opportunities and allocate
capital between strengthening the balance sheet, investment to
deliver the strategy and returns to shareholders in line with the
below principles and taking into account prevailing wider
macro-economic factors.
·
Maintain a strong
balance sheet: Retain sufficient
cash and committed facilities to ensure liquidity headroom
throughout the annual operating cycle; maintain Adjusted Leverage
below 1.5x throughout the year.
·
Invest to deliver
the strategy: Capital will be
invested each year to ensure the group complies with obligations
and delivers its business plans; investments to accelerate business
progress need to deliver attractive returns in excess of cost of
capital.
·
Regular,
progressive returns to shareholders:
The Board anticipates an ordinary dividend, targeting dividend
cover between 2-3x Adjusted EPS, paid as interim (c.25%) and final
(c.75%) dividends. The Board will consider, from time to time,
share purchases to offset dilution from employee share
schemes.
·
Disciplined use
of surplus cash: Total returns will
not exceed free cash generated.
Any dividend will depend on,
inter-alia, the performance and prospects of the Group. Adjusted
Leverage is defined under Alternative Performance Measures,
below.
Condensed consolidated financial statements
Consolidated income statement for
the year ended 31 January 2024
|
Note
|
2024
£'m
|
2023
£'m
|
Revenue
|
4
|
510.9
|
463.4
|
Cost of sales
|
|
(326.0)
|
(302.7)
|
Gross profit
|
|
184.9
|
160.7
|
|
|
|
|
Other operating income
|
20
|
2.0
|
-
|
Operating expenses
|
5
|
(110.5)
|
(96.9)
|
Operating profit
|
5
|
76.4
|
63.8
|
Gain on bargain purchase
|
23
|
2.6
|
-
|
Finance expense
|
8
|
(13.4)
|
(11.4)
|
Profit before tax
|
|
65.6
|
52.4
|
|
|
|
|
Taxation
|
9
|
(16.1)
|
(8.2)
|
Profit for the year
|
|
49.5
|
44.2
|
|
|
|
|
Earnings per share
|
|
Pence
|
pence
|
- Basic
|
11
|
14.4
|
12.9
|
- Diluted
|
11
|
14.3
|
12.8
|
All activities relate to continuing
operations.
Consolidated statement of comprehensive
income
For the year ended 31 January 2024
|
|
2024
£'m
|
2023
£'m
|
Profit for the year
|
|
49.5
|
44.2
|
Items that may be recycled
subsequently into profit or loss:
|
|
|
|
Exchange differences on translation
of foreign operations
|
|
(0.5)
|
(0.2)
|
Cash flow hedges - changes in fair
value
|
|
(2.9)
|
8.2
|
Cost of hedging reserve - changes in
fair value
|
|
0.1
|
(0.2)
|
Tax relating to components of other
comprehensive income
|
9
|
0.7
|
(1.2)
|
Other comprehensive income for the
period, net of income tax
|
|
(2.6)
|
6.6
|
|
|
|
|
Total comprehensive income for the
period attributable to equity shareholders of the parent
|
|
46.9
|
50.8
|
Consolidated statement of financial
position
As at 31 January 2024
|
Note
|
2024
£'m
|
2023
£'m
|
Non-current assets
|
|
|
|
Intangible assets
|
12
|
331.4
|
326.3
|
Property, plant and
equipment
|
13
|
45.9
|
32.2
|
Right of use assets
|
14
|
99.2
|
100.5
|
Deferred tax assets
|
|
1.2
|
2.1
|
Derivative financial
instruments
|
|
0.6
|
0.5
|
|
|
478.3
|
461.6
|
Current assets
|
|
|
|
Inventories
|
15
|
50.0
|
45.3
|
Trade and other
receivables
|
|
11.6
|
13.3
|
Derivative financial
instruments
|
|
0.9
|
5.3
|
Cash at bank and in hand
|
16
|
11.3
|
11.7
|
|
|
73.8
|
75.6
|
Total assets
|
|
552.1
|
537.2
|
|
|
|
|
Current liabilities
|
|
|
|
Borrowings
|
17
|
(7.1)
|
(27.1)
|
Lease liabilities
|
14
|
(25.3)
|
(27.3)
|
Trade and other payables
|
|
(80.1)
|
(84.7)
|
Provisions
|
20
|
(7.5)
|
(9.5)
|
Tax payable
|
|
(0.4)
|
-
|
Derivative financial
instruments
|
|
(1.7)
|
(1.4)
|
|
|
(122.1)
|
(150.0)
|
Non-current liabilities
|
|
|
|
Borrowings
|
17
|
(37.9)
|
(40.4)
|
Lease liabilities
|
14
|
(75.5)
|
(78.1)
|
Derivative financial
instruments
|
|
(0.8)
|
(0.5)
|
|
|
(114.2)
|
(119.0)
|
Total liabilities
|
|
(236.3)
|
(269.0)
|
|
|
|
|
Net assets
|
|
315.8
|
268.2
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
|
3.5
|
3.4
|
Share premium
|
|
202.7
|
202.2
|
Hedging reserve
|
|
(0.6)
|
3.5
|
Cost of hedging reserve
|
|
-
|
(0.1)
|
Reverse acquisition
reserve
|
|
(0.5)
|
(0.5)
|
Merger reserve
|
|
2.7
|
2.7
|
Retained earnings
|
|
108.0
|
57.0
|
Equity attributable to equity
holders of the parent
|
|
315.8
|
268.2
|
Consolidated statement of changes in
equity
For the year ended 31 January 2024
|
Share capital
£'m
|
Share premium
£'m
|
Hedging reserve
£'m
|
Cost of hedging reserve
£'m
|
Reverse acquisition
reserve
£'m
|
Merger reserve
£'m
|
Retained earnings
£'m
|
Total
equity
£'m
|
At 31 January 2022
|
3.4
|
202.2
|
1.3
|
-
|
(0.5)
|
2.7
|
10.5
|
219.6
|
Total comprehensive income for the
period
|
|
|
|
|
|
|
|
|
Profit or loss
|
-
|
-
|
-
|
-
|
-
|
-
|
44.2
|
44.2
|
Other comprehensive
income
|
-
|
-
|
6.1
|
(0.1)
|
-
|
-
|
0.6
|
6.6
|
|
-
|
-
|
6.1
|
(0.1)
|
-
|
-
|
44.8
|
50.8
|
Hedging gains/(losses) and costs of
hedging transferred to the cost of inventory
|
-
|
-
|
(5.2)
|
--
|
--
|
--
|
--
|
(5.2)
|
Deferred tax on transfers to
inventory
|
-
|
-
|
1.3
|
-
|
-
|
-
|
-
|
1.3
|
Transactions with owners, recorded
directly in equity
|
|
|
|
|
|
|
|
|
Share-based payment
charges
|
-
|
-
|
-
|
-
|
-
|
-
|
1.7
|
1.7
|
Dividends (note 10)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Total contributions by and
distributions to owners
|
-
|
-
|
-
|
-
|
-
|
-
|
1.7
|
1.7
|
At 31 January
2023
|
3.4
|
202.2
|
3.5
|
(0.1)
|
(0.5)
|
2.7
|
57.0
|
268.2
|
Total comprehensive income for the
period
|
|
|
|
|
|
|
|
|
Profit or loss
|
-
|
-
|
-
|
-
|
-
|
-
|
49.5
|
49.5
|
Other comprehensive
income
|
-
|
-
|
(2.2)
|
0.1
|
-
|
-
|
(0.4)
|
(2.5)
|
|
-
|
-
|
(2.2)
|
0.1
|
-
|
-
|
49.1
|
47.0
|
Hedging gains/(losses) and costs of
hedging transferred to the cost of inventory
|
-
|
-
|
(2.5)
|
--
|
--
|
--
|
--
|
(2.5)
|
Deferred tax on transfers to
inventory
|
--
|
-
|
0.6
|
-
|
-
|
-
|
-
|
0.6
|
Deferred tax related to Share-based
payments
|
--
|
-
|
--
|
-
|
-
|
-
|
(0.2)
|
(0.2)
|
|
|
|
|
|
|
|
|
|
Transactions with owners, recorded
directly in equity
|
|
|
|
|
|
|
|
|
Shares issued
|
0.1
|
0.5
|
-
|
-
|
-
|
-
|
-
|
0.6
|
Share-based payment
charges
|
-
|
-
|
-
|
-
|
-
|
-
|
2.1
|
2.1
|
Dividends (note 10)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Total contributions by and
distributions to owners
|
0.1
|
0.5
|
-
|
-
|
-
|
-
|
2.1
|
2.7
|
|
|
|
|
|
|
|
|
|
At 31 January 2024
|
3.5
|
202.7
|
(0.6)
|
-
|
(0.5)
|
2.7
|
108.0
|
315.8
|
Consolidated cash flow statement
For the year ended 31 January 2024
|
Note
|
2024
£'m
|
2023
£'m
|
|
|
|
|
Cash from operations
|
18
|
118.7
|
107.8
|
Corporation tax paid
|
|
(13.5)
|
(7.9)
|
Net cash inflow from operating
activities
|
|
105.2
|
99.9
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
Purchase of property, plant and
equipment
|
13
|
(18.8)
|
(8.8)
|
Purchase of intangible
assets
|
12
|
(9.0)
|
(9.4)
|
Acquisition of SA Greetings net of
cash acquired
|
23
|
(2.2)
|
-
|
Net cash outflow from investing
activities
|
|
(30.0)
|
(18.2)
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
Interest paid on bank
borrowings
|
8
|
(6.5)
|
(6.2)
|
Proceeds from bank
borrowings
|
19
|
167.0
|
27.8
|
Repayment of bank
borrowings
|
19
|
(190.6)
|
(72.9)
|
Other financing costs
paid
|
8
|
-
|
(1.8)
|
Shares issued under employee share
schemes
|
|
0.6
|
-
|
Payment of lease
liabilities
|
19
|
(37.5)
|
(52.5)
|
Interest paid in respect of lease
liabilities
|
19
|
(6.2)
|
(4.5)
|
Net cash outflow from financing
activities
|
|
(73.2)
|
(110.1)
|
|
|
|
|
Impact of changes in foreign
exchange rates
|
|
(0.8)
|
-
|
Net increase/(decrease) in cash and
cash equivalents
|
|
1.2
|
(28.4)
|
Cash and cash equivalents at the
beginning of the year
|
|
9.9
|
38.3
|
Closing cash and cash
equivalents
|
16
|
11.1
|
9.9
|
Notes to the condensed consolidated
financial statements
1 General
information
Card Factory plc ('the Company') is
a public limited company incorporated in the United Kingdom. The
Company is domiciled in the United Kingdom and its registered
office is Century House, Brunel Road, 41 Industrial Estate,
Wakefield WF2 0XG.
The Group financial statements
consolidate those of the Company and its subsidiaries (together
referred to as the 'Group').
2 Basis of preparation
This preliminary announcement and
condensed consolidated financial statements have been prepared in
accordance with the recognition and measurement principles of
UK-adopted International Accounting Standards ('UK-IFRS') in
conformity with the requirements of the Companies Act
2006.
It does not include all the
information required for full annual accounts. The financial
information contained in this preliminary announcement does not
constitute the company's statutory accounts for the years ended 31
January 2024 ('FY24') or 31 January 2023 ('FY23') but is derived
from these accounts.
Statutory accounts for the year
ended 31 January 2023 have been delivered to the registrar of
companies, and those for the year ended 31 January 2024 will be
delivered to the registrar in due course. The auditor has reported
on those accounts; the audit reports were (i) unqualified, (ii) did
not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
Going concern basis of
accounting
The Board continues to have a
reasonable expectation that both the Group and the parent company
have adequate resources to continue in operation for at least the
next 12 months and that the going concern basis of accounting
remains appropriate.
The Group has delivered a strong
financial performance in the current financial year, with
encouraging sales momentum in the second full year of trading after
two consecutive years that were materially affected by the Covid-19
pandemic. LFL sales have been positive and the Group has delivered
robust operating cash flows allowing the Group to reduce net debt
and leverage year-on-year. Trading since the balance sheet date has
remained in line with expectations and there have been no material
events that have adversely affected the Group's liquidity
headroom.
The Group's financing facilities at
the balance sheet date (see note 17) extended to September 2025
which covers a period greater than the minimum assessment period of
12 months from the date of approval of the financial statements.
Subsequent to the year end, on 26 April 2024, the Group entered
into an updated £125 million revolving credit facility with an
initial term to April 2028 (see note 17). The Board believes that
the updated facilities provide adequate headroom for the Group to
execute its strategic plan. At 31 January 2024, net debt (excluding
lease liabilities) was £34.4 million and the Group had £74.0
million of undrawn facilities.
The UK Corporate Governance Code
requires that an assessment is made of the Group's ability to
continue as a going concern for a period of at least 12 months from
the signing of these financial statements; however it is not
specified how far beyond 12 months should be considered. For the
purpose of assessing the going concern assumption, the Group has
prepared cash flow forecasts for the 12 month period following the
date of approval of these accounts, which incorporate the updated
debt facilities and related covenant measures. These forecasts are
extracted from the Group's approved budget and strategic plan which
covers a period of five years. Within the 12-month period, the
Group has considered qualitative scenarios and the Group's ability
to operate within its existing banking facilities and meet covenant
requirements. Beyond the 12-month period, the Group has
qualitatively considered whether any factors (for example the
timing of debt repayments, or longer-term trading assumptions)
indicate a longer period warrants consideration.
The results of this analysis
were:
The Group's base case forecasts
indicate that the Group will continue to trade profitably, generate
positive operating cash flows and retain substantial liquidity
headroom against facility limits and meet all covenant requirements
on the relevant test dates (see note 17 for more information in
respect of covenant requirements) in the 12-month
period.
In the Board's view, there are no
other factors arising in the period immediately following 12 months
from the date of signing these accounts that warrant further
consideration.
Scenario analysis, which considered
a reduction in sales, profitability and cash flows on both a
permanent basis of circa 10%, or a significant one-off event
affecting the Christmas period and reducing sales by 25%, indicated
that the Group would maintain liquidity headroom and covenant
compliance throughout the 12 month period. The analysis did not
consider any potential upside from mitigating actions that could be
taken to reduce discretionary costs and provide further
headroom.
In addition, the Group conducted a
reverse stress test analysis which considered the extent of sales
loss or cost increase that would be required to result in either a
complete loss of liquidity headroom or a breach of covenants
associated with the Group's financing. Seasonality of the Group's
cash flows, with higher purchases and cash outflows over the summer
to build stock for Christmas, means liquidity headroom is at its
lowest in September and October ahead of the Christmas season.
Conversely, covenant compliance is most sensitive early in the
year.
The reverse stress test analysis
demonstrated that the level of sales loss or cost increase required
(either on a sustained basis or as a significant one-off downside
event) to result in either a covenant breach or exhausting
liquidity would require circumstances akin to a pandemic lockdown
for a period of several weeks, or other events with a similar
quantum of effect that would be unprecedented in nature.
Accordingly, such scenarios are not considered to be reasonably
likely to occur.
Such scenarios, in excess of the
scenarios considered above, are not considered reasonably plausible
and the analysis did not consider any potential upside from
mitigating actions that could be taken to reduce discretionary
costs and provide further headroom or the increased headroom
afforded by the new facilities agreed.
Over recent years, the business has
demonstrated a significant degree of resilience and a proven
ability to manage cash flows and liquidity during a period of
unprecedented economic downturn. Accordingly the Board retains
confidence that, were such a level of downturn to reoccur in the
assessment period, the Group would be able to take action to
mitigate its effects.
Subsequent to the year end, on 26
April 2024, the Group successfully concluded a refinancing of its
debt facilities, having agreed a new four-year £125 million
committed revolving credit facility with a syndicate of banks. The
existing revolving credit facility and Term Loan B have been fully
repaid and cancelled.
The new facilities have an initial
maturity date in April 2028, with options to extend by up to 19
months, subject to lender approval. The facilities include a £75
million accordion, which can be drawn subject to lender approval.
The interest margin on the facilities is dependent upon the Group's
leverage position, with margins between 1.9-2.8% which is lower
than the previous facilities. The new facilities include covenants
for a maximum leverage ratio (calculated as net debt excluding
leases divided by EBITDA less rent costs for the prior 12 months)
of 2.5x and a fixed charge cover ratio of at least 1.75x. The Group
expects to operate comfortably within these covenant levels for the
foreseeable future.
Based on these factors, the Board
has a reasonable expectation that the Group has adequate resources
and sufficient loan facility headroom and accordingly the accounts
are prepared on a going concern basis.
Accounting judgements and
estimates
The preparation of financial
statements in conformity with UK IFRS requires judgement to be
applied in forming the Group's accounting policies. It also
requires the use of estimates and assumptions that affect the
reported amount of assets, liabilities, income and expenses. Actual
results may subsequently differ from these estimates.
Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to estimates are
recognised prospectively in the period in which the estimate is
revised.
Judgements are also reviewed on an
ongoing basis to ensure they remain appropriate. The Group does not
consider there to be any judgements made in the current period that
have had a significant material effect on the amounts recognised in
the financial statements.
Key sources of estimation
uncertainty
The key sources of estimation
uncertainty, being those estimates and assumptions that carry the
most significant risk of a material adjustment to the carrying
amounts of assets and liabilities in the next financial year, are
set out below.
Inventory provisioning
The Group holds significant volumes,
and a broad range of inventory. The inventory provision is
calculated in accordance with a documented policy, that is based on
historical experience and the Group's stock management strategy,
which determines the range of product that will be available for
sale in-store and online. The Group provides against the carrying
value of inventories where it is anticipated the amount realised
may be below the cost recognised. Provision is made in full where
there are no current plans to trade prior season stock through
stores, and partial provision is made against seasonal stock from
prior seasons or where certain ranges do not perform as
anticipated. The amounts provided for partial provisions are
adjusted annually to reflect experience.
In FY24, the Group applied a
consistent inventory provisioning policy with that applied in the
prior year, making only small amendments to partial provisioning
percentages based on the Group's experience of stock sell through
rates for partially provided product lines. These changes are not
considered to have had a material impact on the overall value of
the provision, although reduced the value of the provision compared
to the prior year.
At the end of FY24, the total
inventory provision was £9.6 million (FY23: £16.1 million),
comprised of fully-provided stock lines of £1.3 million and
partially provided lines of £8.3 million. The reduction in the
value of the provision year-on-year generally reflects the
continued normalisation of stock levels following the Covid
pandemic as well as the reduction due to changes in provisioning
percentages as a result of higher sell through rates in FY24
compared with the prior year. As a result, the overall proportion
of gross inventory provided for reduced compared to the prior
year.
The full range of reasonably
possible outcomes in respect of the provision is difficult to
calculate at the balance sheet date as it is dependent on the
accuracy of forecasts for sales volumes and future decisions we may
take on aged, discontinued and potentially excess stock in response
to market and supply developments. The Group believes it has taken
a balanced approach in determining the provision. It has
considered the nature of the estimates involved and has concluded
that it is possible, on the basis of existing knowledge, that
outcomes within the next financial year may be different from the
Group's assumptions applied as at 31 January 2024, and could
require a material adjustment to the carrying amount of the
provision in the next financial year.
The element of the provision which
is most sensitive to estimation is the percentages applied to the
various categories of stock in stores and distribution centres. A
+/-5% change in the percentages applied to each category would
cause a +/-£0.7m movement in the overall value of the
provision.
Other sources of estimation
uncertainty
Grant income
During the Covid-19 pandemic, the
Group received financial assistance under various Government
schemes
intended to support businesses
affected by local and national restrictions, including CJRS
payments, business rates relief and lockdown grant payments. IAS 20
requires that the Group has reasonable assurance that the various
conditions attached to Government grants will be complied with
before recognising the income in its financial statements. Income
received under the lockdown grant schemes is subject to conditions
applied by the UK's subsidy control regime, in addition to the
rules and conditions attached to each individual grant. The most
material of these conditions relate to determining the eligible
period for grant receipts and the calculation of the Group's
'uncovered fixed costs' in the eligible period, upon which the
value of permitted relief is based. The nature of the grants
received, and the unprecedented nature of the pandemic and the
support mechanisms available, means the conditions and rules
attached to each payment are complex and open to a degree of
interpretation at the balance sheet date. Accordingly, the Group
had to make certain assumptions regarding which of the payments
received it is reasonably certain to have met all of the conditions
for, and thus that the grants are unlikely to be repaid in a future
period.
After making a provision for amounts
the Group does not believe meet the above criteria (see note 20),
the Group recognised £8.0 million of other operating income in
relation to such grants received during FY22.
In July 2022, following an
unprompted disclosure to HMRC and resulting investigation, the
Group made a payment of £2.3 million in final settlement of its
CJRS position. As a result of this settlement, the Group released a
further £2.5 million from the provision that is no longer expected
to be required, as the matter is now closed. This release was
recognised as a one-off benefit in the income statement in
FY23.
Subsequent to the balance sheet
date, the Group has reached a proposed settlement with the
Department for Business and Trade for a portion of the provision
that relates to business support grants received by the Group
during FY21 and FY22. The value of the proposed settlement is £3.3
million and, following a review of the residual position, the Group
has released a further £2.0 million from the provision which
reflects a proportionate reduction in the value of the provision
for the amounts still to be settled. This release has been
recognised as a one-off benefit in other operating income in the
FY24 income statement. The business support grants settlement of
£3.3m was paid in April 2024.
The Group continues to hold
discussions regarding settlement of the remaining element of the
provision and to date has received no new substantive evidence
regarding its position in respect of other support received
relating to business rates relief. A further provision of £2.2
million is held at the balance sheet date in respect of potential
repayment of support received in excess of subsidy control
thresholds for business rates relief, consistent with the nature of
the provision held in the prior year. The minimum requirement for
this element of the provision is expected to be £1.2 million,
subject to interpretation of the guidance relating to individual
support schemes and subsidy control thresholds. The Group believes
a range of reasonably possible outcomes remains and that the
Group's provision reflects a reasonable assessment of the amount
that may be repayable. The Group does not believe that any position
within the range of reasonably possible outcomes would reflect a
material change to the provision held at the balance sheet
date.
Impairment testing
An impairment review is conducted
annually in respect of goodwill, and as required for other assets
and cash-generating units ('CGUs') where an indicator of potential
impairment exists. The carrying amounts of the assets involved and
the level of estimation uncertainty inherent in determining
appropriate assumptions for the calculation of the assets'
recoverable amounts means impairment reviews are an area of
significant management focus. However, whether that estimation
uncertainty is significant to the financial statements is not known
until the analysis is concluded. The Group generally considers the
estimation uncertainty in impairment reviews to be significant if a
reasonably possible change in the key assumptions would lead to a
material change in the accounting outcome.
Goodwill
In FY24, the Group conducted an
impairment review in respect of goodwill. The carrying amount of
goodwill in the consolidated balance sheet of £313.8 million is
allocated in its entirety to the group of CGUs, shared assets and
functions that comprise the Group's Stores business and noted no
reasonably possible change in assumptions that would lead to a
material change in the accounting outcome.
Right of use assets and Tangible assets
In addition, the Group conducted a
store-level impairment review specifically covering right-of-use
assets and property, plant and equipment insofar as they are
directly allocable to stores. As below, the Group estimates the
value in use of ROU and tangible assets at a store level based on
future cash flows derived from forecasts included within the
Group's approved budget. The Group assesses indicators of
impairment for the store portfolio on the basis of whether a
material impairment charge (or reversal) could arise in respect of
the store portfolio as a whole in the period. Due to the
challenging macro-economic environment, existence of a material
carried forward impairment charge, and an ongoing expectation that
around 1% of the store portfolio can be loss-making at any time,
the Group concluded this condition was met for FY24.
Intangible assets
Due to the existence of intangible
assets that are not yet ready for use, the Group also conducted an
impairment test of each of the Card Factory Online and Getting
Personal CGUs.
Approach and results
The Group assessed the recoverable
amount of these CGUs on a value in use basis, using consistent
assumptions across all reviews where applicable, with estimates of
future cash flows derived from forecasts included within the
Group's approved budget adjusted to exclude cash flows from new
stores and initiatives so as to assess the assets in their current
state and condition. Where impairment reviews are prepared in
respect of assets not yet ready for use, future development costs
and revenues are not excluded so as to fairly reflect the value of
the assets being developed and costs to complete. The assessment of
future cash flows that underpin such impairment reviews inherently
require the use of estimates, notably in respect of future
revenues, operating costs including material, freight, wage and
energy inflation, terminal growth rates, foreign currency exchange
rates, and discount rates.
The results of the impairment tests
are set out in note 12 (intangible assets) and note 14 (leases)
which includes the key assumptions considered. The impairment test
in respect of the Stores business and Card Factory Online had
significant headroom and accordingly, having undertaken scenario
analysis on the key assumptions, the Group does not believe
there are any reasonably possible changes in those key assumptions
that would lead to a material impairment. The impairment tests show
that reasonably possible changes in the assumptions relating to the
Online assets could lead to an immaterial impairment charge in the
future if Online sales do not grow in line with our expectations in
future years.
The Group recorded a net nil
impairment charge in respect of stores, which is comprised of £2.7
million of impairment charges and £2.7 million of impairment charge
reversals. The reversals reflect those stores where an impairment
charge made in a prior period has been reversed due to improved
trading and outlook. The net impairment charge in the current year
included a net reversal to impairment on Right of use assets of
£0.2m and a net charge to PPE of £0.2m. Having considered scenarios
consistent with those reviewed in respect of goodwill
impairment testing, the Group is satisfied that reasonable changes
in the key assumptions would not materially change the impairment
charge for stores.
The Group booked an impairment
charge in respect of intangible assets of £1.1 million. The charge
relates to costs incurred in developing the Online Platform within
the Getting Personal CGU that is considered to be impaired as a
result of the expected future cash flows expected to be derived
from the Getting Personal CGU. Although an impairment has been
recorded against the intangible asset carrying value, the Getting
Personal platform continues to trade and provides valuable support
to the overall strategy of growing online sales across both
platforms and makes an important contribution to total online sales
volumes. The Group's strategic focus online continues to be the CF
Online platform where the Group is investing and is encouraged by
recent positive LFL (Like-for-like) sales performance.
Climate Change
The Group has reviewed the potential
impact of climate change and ESG-related risks and uncertainties on
the consolidated financial statements. Given the nature of the
Group's business and operations, the exposure to both physical and
transitional risks associated with climate change is considered to
be low.
In particular, the Group has
considered climate change in respect of impairment testing
(potential impact of climate and ESG risks on estimates of future
cash flows, notes 12 and 13), going concern (note 1, below), and
inventory provisions (impact of customer preferences and ESG
considerations on potential stock obsolescence, note 15 and above)
and concluded in each case that there is no material impact in each
area at 31 January 2024.
3
Principal accounting policies
The preliminary announcement has
been prepared using accounting policies that are consistent with
those published in the Group's accounts for the year-ended 31
January 2022 (available on the Company's website).
Amended standards and
interpretations effective in the period do not have a material
effect on the Group's financial statements.
In the period the Group has
early-adopted the requirements of Classification of Liabilities as
Current or Non-current and Non-current Liabilities with Covenants
(Amendments to IAS 1). These amendments clarify the treatment of
non-current liabilities with covenants attached to them - in
particular, that when assessing whether a liability with covenants
is current or non-current, an entity should classify a liability as
non-current if it has the right to defer settlement of an
obligation for a period of at least 12 months from the balance
sheet date. Covenants shall affect this analysis only if the entity
is required to comply with the covenant on or before the end of the
reporting period.
Comparatives for the year ending 31
January 2023 in these financial statements have been restated on
the same basis.
The adoption of these amendments has
had no other impact on the Group's financial statements.
4 Segmental
reporting and revenue
Following investment in the Group's
people, systems and infrastructure to support its strategy, the
Group is organised into five main business areas which meet the
definition of an Operating segment under IFRS, those being
cardfactory Stores, cardfactory Online, Getting Personal,
Partnerships and Printcraft. Each of these business areas has a
dedicated management team and reports discrete financial
information to the Board for the purpose of decision
making.
·
cardfactory Stores retails greeting cards,
celebration accessories, and gifts principally through an extensive
UK store network, with a small number of stores in the Republic of
Ireland.
·
cardfactory Online retails greetings cards,
celebration accessories, and gifts via its online
platform.
·
Getting Personal is an online retailer of
personalised cards and gifts.
·
Partnerships sells greetings cards, celebration
accessories and gifts via a network of third party retail partners
both in the UK and overseas.
·
Printcraft is a manufacturer of greetings cards
and personalised gifts, and sells the majority of its output
intra-group to the Stores and online businesses.
The Group acquired SA Greetings on
25 April 2023 (see note 23). The results of SA Greetings have been
included in the Partnerships segment for the year ended 31 January
2024.
The accounting policies applied in
preparing financial information for each of the Group's
segments are consistent with those applied in the preparation of
the consolidated financial statements. The Group's support centre
and administrative functions are run by the cardfactory Stores
segment, with operating costs recharged to other segments where
they are directly attributable to the operations of that
segment.
The Board reviews revenue and EBITDA
by segment, with the exception of Printcraft by virtue of its
operations being predominantly intra-group in nature. Note that
under IFRS EBITDA is considered to be a non-GAAP measure as
considered in the appendix to these financial statements. Whilst
only cardfactory Stores meets the quantitative thresholds in IFRS
to require disclosure, the Group's other trading segments are
reported below as the Group considers that this information is
useful to stakeholders in the context of the Group's Opening Our
New Future strategy.
Revenue and EBITDA for each segment,
and a reconciliation to the consolidated operating profit per the
financial statements, is provided in the table below:
|
2024
|
|
2023
|
|
£'m
|
|
£'m
|
Revenue:
|
|
|
|
cardfactory Stores
|
478.9
|
|
440.4
|
cardfactory Online
|
8.8
|
|
8.8
|
Getting Personal
|
5.9
|
|
8.5
|
Partnerships
|
17.0
|
|
5.0
|
Other
|
0.3
|
|
0.7
|
Consolidated Group
revenue
|
510.9
|
|
463.4
|
Of which derived from customers in
the UK
|
484.8
|
|
451.6
|
Of which derived from customers
overseas
|
26.1
|
|
11.8
|
EBITDA1:
cardfactory Stores
|
|
127.4
|
|
116.1
|
cardfactory Online
|
|
(3.7)
|
|
(2.2)
|
Getting Personal
|
|
(2.0)
|
|
(1.5)
|
Partnerships
|
|
1.2
|
|
1.4
|
Other
|
|
(0.3)
|
|
(1.8)
|
Consolidated Group
EBITDA1
|
|
122.6
|
|
112.0
|
Consolidated Group depreciation,
amortisation & impairment
|
|
(47.4)
|
|
(48.7)
|
Consolidated Group gain on
disposal
|
|
1.2
|
|
0.5
|
Consolidated Group Operating
Profit
|
|
76.4
|
|
63.8
|
1This is an Alternative Performance
Measure not defined under IFRS
The
"Other" category principally reflects central overheads, Printcraft
sales to third parties and consolidation adjustments not impacting
another operating segment.
Group revenue is almost entirely
derived from retail customers. Average transaction value is low and
products are transferred at the point of sale. Group revenue is
presented as a single category as, by segment, revenues are subject
to substantially the same economic factors that impact the nature,
amount, timing and uncertainty of revenue and cash
flows.
The table below sets out a
geographical analysis of revenues for the current and prior
year:
|
2024
£'m
|
2023
£'m
|
Revenue derived from customers in
the UK
|
484.8
|
451.6
|
Revenue derived from customers
overseas
|
26.1
|
11.8
|
Consolidated revenue
|
510.9
|
463.4
|
Revenue from overseas reflects
revenue earned from i) the Group's Stores in the Republic of
Ireland (£11.1 million in FY24 and £8.1 million in FY23), ii) the
Group's wholesale and retail activities in South Africa (£10.4
million in FY24), and iii) from other retail partners based outside
of the UK (£4.6 million in FY24 and £3.7 million in
FY23).
Of the Group's non-current assets,
£10.0 million (2023: £5.0 million) relates to assets based outside
of the UK, principally in relation to the Group's stores in the
Republic of Ireland and in South Africa. Non-current assets based
in the Republic of Ireland are £4.8 million as at 31 January 2024
(FY23: £5.0 million) and non-current assets based in South Africa
are £5.2 million (FY23: nil). The increase compared to the prior
year reflects the impact of the acquisition of SA
Greetings.
5 Operating
profit
Operating profit is stated after
charging/(crediting) the following items:
|
2024
£'m
|
2023
£'m
|
Staff costs (note 7)
|
162.4
|
138.2
|
Depreciation expense
|
|
|
- owned fixed assets (note
13)
|
7.6
|
8.0
|
- right of use assets (note
14)
|
35.9
|
35.7
|
Amortisation expense (note
12)
|
2.8
|
2.3
|
Impairment of right-of-use assets
(note 14)
|
(0.2)
|
1.3
|
Impairment of tangible assets (note
13)
|
0.2
|
-
|
Impairment of intangible assets
(note 12)
|
1.1
|
1.5
|
Profit on disposal of fixed assets
(note 14)
|
(1.2)
|
(0.6)
|
Foreign exchange gain
|
0.6
|
1.5
|
The total fees payable by the Group
to Mazars LLP (2023: KPMG LLP) and their associates during the
period was as follows:
|
2024
£'000
|
2023
£'000
|
Audit of the consolidated and
Company financial statements
|
55
|
30
|
Amounts receivable by the Company's
auditor and its associates in respect of:
|
|
|
Audit of financial statements of
subsidiaries of the Company
|
498
|
620
|
Audit-related assurance
services
|
85
|
50
|
Total fees
|
638
|
700
|
6
EBITDA
EBITDA represents profit for the
period before net finance expense, taxation, gains or losses on
disposal, depreciation, amortisation and impairment
charges.
|
2024
£'m
|
2023
£'m
|
Operating profit
|
76.4
|
63.8
|
Depreciation, amortisation and
impairment
|
47.4
|
48.8
|
Gain on disposal
|
(1.2)
|
(0.6)
|
EBITDA1
|
122.6
|
112.0
|
1This is an Alternative Performance
Measure not defined under IFRS
7 Employee numbers
and costs
The average number of people
employed by the Group (including Directors) during the year,
analysed by category, was as follows:
|
2024
Number
|
2023
Number
|
Management and
administration
|
534
|
482
|
Operations
|
9,797
|
9,367
|
|
10,331
|
9,849
|
The aggregate payroll costs of all
employees including Directors were as follows:
|
2024
£'m
|
2023
£'m
|
Employee wages and
salaries
|
143.1
|
120.5
|
Equity-settled share-based payment
expense
|
2.0
|
1.7
|
Social security costs
|
9.3
|
8.2
|
Defined contribution pension
costs
|
2.1
|
1.8
|
Total employee costs
|
156.5
|
132.2
|
Agency labour costs
|
5.9
|
6.0
|
Total staff costs
|
162.4
|
138.2
|
Key management personnel
The key management personnel of the
Group comprise the Card Factory plc Board of Directors and the
Executive Board. Key management personnel compensation is as
follows:
|
2024
£'m
|
2023
£'m
|
Salaries and short-term
benefits
|
7.4
|
6.1
|
Equity-settled share-based payment
expense
|
1.6
|
1.4
|
Social security costs
|
1.0
|
0.8
|
Defined contribution pension
costs
|
0.2
|
0.2
|
|
10.2
|
8.5
|
Remuneration of Directors
|
2024
£'m
|
2023
£'m
|
Directors' remuneration
|
1.6
|
1.9
|
Amounts receivable under long-term
incentive schemes
|
0.5
|
0.1
|
Company contributions to defined
contribution pension plans
|
-
|
-
|
|
2.1
|
2.0
|
The table above includes the
remuneration of Directors in each year. Director's remuneration for
the prior period includes £40k in respect of compensation for loss
of office for Kris Lee following his resignation on 31 January
2023.
Amounts receivable under long-term
incentive schemes reflects the value of options exercised during
the year.
Further details of the remuneration
of the current directors are disclosed in the Directors'
Remuneration Report in the final Annual Report. The basis of
calculation for certain items described in the Directors'
Remuneration Report may differ to that used in this note,
reflecting differences in the relevant regulations.
8 Finance
expense
|
2024
£'m
|
2023
£'m
|
Finance expense
|
|
|
Interest on bank loans and
overdrafts
|
6.5
|
6.0
|
Amortisation of loan issue
costs
|
0.6
|
0.9
|
Lease interest
|
6.3
|
4.5
|
|
13.4
|
11.4
|
9
Taxation
The tax charge includes both current
and deferred tax. The tax charge reflects the estimated effective
tax on the profit before tax for the Group for the year ended 31
January 2024 and the movement in the deferred tax balance in the
year, so far as it relates to items recognised in the income
statement.
Taxable profit or loss differs from
profit or loss before tax as reported in the income statement,
because it excludes items of income or expenditure that are either
taxable or deductible in other years or never taxable or
deductible.
Recognised in the income
statement
|
2024
£'m
|
2023
£'m
|
Current tax
charge/(credit)
|
|
|
Current year
|
13.8
|
8.3
|
Adjustments in respect of prior
periods
|
0.2
|
(1.6)
|
Total current tax charge
|
14.0
|
6.7
|
|
|
|
Deferred tax
charge/(credit)
|
|
|
Origination and reversal of
temporary differences
|
2.1
|
2.5
|
Adjustments in respect of prior
periods
|
-
|
(1.8)
|
Effect of change in tax
rate
|
-
|
0.8
|
Total deferred tax charge
|
2.1
|
1.5
|
|
|
|
Total income tax charge
|
16.1
|
8.2
|
The effective tax rate of 24.5%
(2023: 15.6%) on the profit before taxation for the year is
slightly higher than (2023: lower than) the average rate of
mainstream corporation tax in the UK for the year of 24% (2023:
19%).
The tax charge is reconciled to the
standard rate of UK corporation tax as follows:
|
2024
£'m
|
2023
£'m
|
Profit before tax
|
65.6
|
52.4
|
Tax at the standard UK corporation
tax rate of 25%1 (2023: 19.0%)
|
15.8
|
10.0
|
Tax effects of:
|
|
|
Expenses not deductible for tax
purposes
|
0.6
|
0.7
|
Income not taxable for tax
purposes
|
(0.6)
|
-
|
Adjustments in respect of prior
periods
|
0.3
|
(3.3)
|
Effect of change in tax
rate
|
-
|
0.8
|
Total income tax charge
|
16.1
|
8.2
|
Total taxation recognised through
the income statement, other comprehensive income and through equity
are as follows:
|
2024
|
2023
|
|
Current
£'m
|
Deferred
£'m
|
Total
£'m
|
Current
£'m
|
Deferred
£'m
|
Total
£'m
|
Income statement
|
14.0
|
2.1
|
16.1
|
6.7
|
1.5
|
8.2
|
Other comprehensive
income
|
-
|
(0.7)
|
(0.7)
|
-
|
1.2
|
1.2
|
Equity
|
-
|
(0.4)
|
(0.4)
|
-
|
(1.3)
|
(1.3)
|
Total tax
|
14.0
|
1.0
|
15.0
|
6.7
|
1.4
|
8.1
|
1 In October
2022, the Government announced changes to the Corporation Tax rate
increasing the main rate of Corporation Tax to 25% (previously
19%). This became effective as at 1 April 2023 giving an average
Corporation Tax rate of 24.03% for the year to 31 January
2024.
10 Dividends
There were no dividends paid in
either the current or the previous year.
Following the cessation of
restrictions in the Group's financing facilities in relation to
dividend payments, at the forthcoming Annual General Meeting, the
Board will recommend to shareholders that a resolution is passed to
approve payment for a final dividend for the year ended 31 January
2024 of 4.5 pence per share (equivalent to approximately £15.5
million) payable on 28 June 2024. The dividend has not been
recorded as a liability at 31 January 2024.
The Board is cognisant of the fact
it was unable to pay an interim dividend for the year ended 31
January 2024 and therefore the final dividend for the year reflects
an amount that would have been split between interim and final
dividends, had an interim dividend been able to be paid. The
proposed final dividend is therefore also the total dividend
payable in respect of the 2024 financial year.
11 Earnings per
share
Basic earnings per share is
calculated by dividing the profit for the period attributable to
ordinary shareholders by the weighted average number of
ordinary shares in issue during the period.
Diluted earnings per share is based
on the weighted average number of shares in issue for the period,
adjusted for the dilutive effect of potential ordinary shares.
Potential ordinary shares represent employee share incentive awards
and save as you earn share options.
|
2024
(Number)
|
2023
(Number)
|
Weighted average number of shares in
issue
|
343,339,468
|
342,328,622
|
Weighted average number of dilutive
share options
|
3,940,467
|
1,604,107
|
Weighted average number of shares
for diluted earnings per share
|
347,279,935
|
343,932,729
|
|
£'m
|
£'m
|
Profit for the financial
period
|
49.5
|
44.2
|
|
Pence
|
pence
|
Basic earnings per share
|
14.4
|
12.9
|
Diluted earnings per
share
|
14.3
|
12.8
|
12 Intangible
assets
|
Goodwill
£'m
|
Software
£'m
|
Total
£'m
|
Cost
|
|
|
|
At 1 February 2023
|
328.2
|
26.0
|
354.2
|
Additions
|
-
|
9.0
|
9.0
|
At 31 January 2024
|
328.2
|
35.0
|
363.2
|
Amortisation/impairment
|
|
|
|
At 1 February 2023
|
14.4
|
13.5
|
27.9
|
Amortisation in the
period
|
-
|
2.8
|
2.8
|
Impairment in the period
|
-
|
1.1
|
1.1
|
At 31 January 2024
|
14.4
|
17.4
|
31.8
|
|
|
|
|
Net book value
|
|
|
|
At 31 January 2024
|
313.8
|
17.6
|
331.4
|
At 31 January 2023
|
313.8
|
12.5
|
326.3
|
During the year, the Group
recognised an impairment charge of £1.1 million in respect of work
performed for the online platform for Getting Personal. The charge
to the Getting Personal assets reflects the more focussed
investment being targeted at the CF Online platform as considered
in note 1.
As at 31 January 2024, the Group
held £1.9 million of assets under construction within
Software.
|
Goodwill
£'m
|
Software
£'m
|
Total
£'m
|
Cost
|
|
|
|
At 1 February 2022
|
328.2
|
17.0
|
345.2
|
Additions
|
-
|
9.4
|
9.4
|
Disposals
|
-
|
(0.4)
|
(0.4)
|
At 31 January 2023
|
328.2
|
26.0
|
354.2
|
Amortisation/impairment
|
|
|
|
At 1 February 2022
|
14.4
|
10.1
|
24.5
|
Amortisation in the
period
|
-
|
2.3
|
2.3
|
Impairment in the period
|
-
|
1.5
|
1.5
|
Amortisation on disposals
|
-
|
(0.4)
|
(0.4)
|
At 31 January 2023
|
14.4
|
13.5
|
27.9
|
|
|
|
|
Net book value
|
|
|
|
At 31 January 2023
|
313.8
|
12.5
|
326.3
|
At 31 January 2022
|
313.8
|
6.9
|
320.7
|
|
|
|
|
|
|
Goodwill arising on the acquisition
of Getting Personal in 2011 of £14.4 million was allocated to the
Getting Personal CGU, which corresponds to the Getting Personal
operating segment (see note 4). Goodwill in respect of the Getting
Personal CGU was fully written down in 2020.
All remaining goodwill is in respect
of the cardfactory Stores business, which is comprised of all of
the cardfactory Stores (each an individual CGU for asset impairment
testing purposes), associated central functions and shared assets.
Cardfactory Stores is the lowest level at which the Group's
management monitors goodwill internally.
The total carrying amount of the
cardfactory Stores group of CGUs for impairment testing purposes,
inclusive of liabilities that are necessarily considered in
determining the recoverable amount, at 31 January 2024 was £341.1
million (2023: £315.5 million).
The recoverable amount has been
determined based on a value-in-use calculation. This value-in-use
calculation is based on the Group's most recent approved five-year
strategic plan, to exclude any value from planned new stores or
initiatives, so as to assess the valuation of the assets in their
current state and condition.
The key assumptions used in
determining the recoverable amount are:
·
Future trading performance including sales growth,
product mix, material and operating costs;
·
Foreign exchange rates applicable to the Group's
purchases of goods for resale;
·
The terminal growth rate applied; and
·
The discount rate.
The values assigned to the variables
that underpin the Group's expectations of future trading
performance were determined based on historical performance and the
Group's expectations with regard to future trends. Where
applicable, amounts take into account the Group's hedges and fixed
contracts, changes in market prices and rates, and relevant
industry and consumer data to inform expectations around future
trends.
The Group assumes a long-term GBPUSD
exchange rate in line with published forward curves at the balance
sheet date, adjusted to reflect the value of forward contracts in
place. The fair value of these contracts is included in the
carrying amount.
A 0% (2023: 0%) terminal growth rate
is applied beyond the five-year term of the plan, representing a
sensitised view of the Group's estimate of the long-term growth
rate of the sector. Whilst such long-term rates are inherently
difficult to benchmark using independent data, the Group's reverse
stress-testing of the goodwill impairment model indicated a
significant negative terminal decline would be required in order to
eliminate the headroom completely.
The forecast cash flows are
discounted at a pre-tax rate of 13.0% (2023: 12.0%). The discount
rate is derived from a calculation using the capital asset pricing
model to calculate cost of equity utilising available market data.
The discount rate is compared to the published discount rates of
comparable businesses and relevant industry data prior to being
adopted.
No impairment loss was identified.
The valuation indicates sufficient headroom such that any
reasonably possible change to the key assumptions would not result
in an impairment of the related goodwill.
Impairment Testing: Intangible assets not yet available for
use
Both the Getting Personal and
cardfactory Online CGUs include intangible assets that are not yet
available for use. Accordingly, an impairment test in respect of
these CGUs was carried out at 31 January 2024.
The total carrying amount of the
Getting Personal and cardfactory Online CGUs for impairment testing
purposes, inclusive of liabilities that are necessarily considered
in determining the recoverable amount, at 31 January 2024 was not
material individually. The value of intangible assets not yet
available for use included in the carrying amount was £1.1 million
for Getting Personal and £2.7 million for CF Online.
The key assumptions are consistent
with those set out above in respect of the goodwill impairment
review, with the exception of foreign exchange rates which are not
significant to the analysis for these CGUs. To ensure the analysis
fairly reflected the expected value in use of the assets within
each CGU, the estimated future cash flows included all costs to
complete the assets under development and sales associated with
those assets once deployed into use.
The CF Online valuation indicated
sufficient headroom such that any reasonably possible change in
assumptions would not result in a material impairment
charge.
The Group booked an impairment
charge in respect of intangible assets in Getting Personal of £1.1
million, reflecting costs incurred in developing a new Online
Platform that is considered to be impaired as a result of the
outlook for the Getting Personal CGU. The Group's strategic focus
online continues to be the CF Online platform where the Group is
investing and is encouraged by recent positive LFL sales
performance.
13 Property, plant and
equipment
|
Freehold
property
£'m
|
Leasehold improvements
£'m
|
Plant, equipment, fixtures &
vehicles
£'m
|
Total
£'m
|
Cost
|
|
|
|
|
At 1 February 2023
|
18.6
|
40.8
|
78.2
|
137.6
|
Additions
|
1.3
|
-
|
17.5
|
18.8
|
Acquisition of SA Greetings (note
23)
|
2.7
|
-
|
-
|
2.7
|
At 31 January 2024
|
22.6
|
40.8
|
95.7
|
159.1
|
Depreciation
|
|
|
|
|
At 1 February 2023
|
4.9
|
39.0
|
61.5
|
105.4
|
Depreciation in the
period
|
0.4
|
1.0
|
6.2
|
7.6
|
Impairment in the period
|
-
|
-
|
0.2
|
0.2
|
At 31 January 2024
|
5.3
|
40.0
|
67.9
|
113.2
|
|
|
|
|
|
Net book value
|
|
|
|
|
At 31 January 2024
|
17.3
|
0.8
|
27.8
|
45.9
|
At 31 January 2023
|
13.7
|
1.8
|
16.7
|
32.2
|
|
Freehold
property
£'m
|
Leasehold improvements
£'m
|
Plant, equipment, fixtures &
vehicles
£'m
|
Total
£'m
|
Cost
|
|
|
|
|
At 1 February 2022
|
17.9
|
40.8
|
70.3
|
129.0
|
Additions
|
0.9
|
-
|
7.9
|
8.8
|
Disposals
|
(0.2)
|
-
|
-
|
(0.2)
|
At 31 January 2023
|
18.6
|
40.8
|
78.2
|
137.6
|
Depreciation
|
|
|
|
|
At 1 February 2022
|
4.4
|
37.3
|
55.7
|
97.4
|
Depreciation in the
period
|
0.5
|
1.7
|
5.8
|
8.0
|
Depreciation on disposals
|
-
|
-
|
-
|
-
|
At 31 January 2023
|
4.9
|
39.0
|
61.5
|
105.4
|
|
|
|
|
|
Net book value
|
|
|
|
|
At 31 January 2023
|
13.7
|
1.8
|
16.7
|
32.2
|
At 31 January 2022
|
13.5
|
3.5
|
14.6
|
31.6
|
As at 31 January 2024, the Group
held assets under construction of £2.2 million within Plant,
equipment, fixtures and vehicles.
14 Leases
The Group has lease contracts,
within the definition of IFRS 16 leases, in relation to its entire
Store lease portfolio, some warehousing locations and motor
vehicles. Other contracts, including distribution contracts and IT
equipment, are deemed not to be a lease within the definition of
IFRS 16 or are subject to the election not to apply the
requirements of IFRS 16 to short-term or low value
leases.
Right of use assets
|
2024
|
2023
|
|
£m
|
£m
|
Buildings
|
98.2
|
100.2
|
Motor Vehicles
|
1.0
|
0.3
|
|
99.2
|
100.5
|
The right-of-use assets movement in the year is as
follows:
|
2024
|
2023
|
|
£m
|
£m
|
At
the beginning of the year
|
100.5
|
98.5
|
Acquisition of SA
Greetings
|
1.9
|
-
|
Additions:
|
|
|
Buildings
|
32.0
|
39.4
|
Motor Vehicles
|
1.2
|
0.2
|
Disposals
|
(0.7)
|
(0.6)
|
Depreciation charge:
|
|
|
Buildings
|
(35.4)
|
(35.3)
|
Motor Vehicles
|
(0.5)
|
(0.4)
|
Net Impairment Reversal /
(Charge)
|
0.2
|
(1.3)
|
At
the end of the year
|
99.2
|
100.5
|
Disposals and depreciation on
disposals include fully depreciated right of use assets in respect
of expired leases where the asset remained in use whilst a lease
renewal was negotiated. The net impairment reversal and disposals
above relate entirely to Buildings.
Impairment Testing: Store
assets
Reflecting continued macro-economic
uncertainty, cost inflation and the existence of loss making stores
within the portfolio, the Group considers that an indicator of
potential impairment exists in respect of the store portfolio and,
accordingly, an impairment review of the Group's store assets
was undertaken in the 2024 financial year.
For this purpose, each of the
Group's stores is considered to be a CGU, with each store's
carrying amount determined by assessing the value of right-of-use
assets and property, plant and equipment insofar as they are
directly allocable to an individual store. The assessment of
whether an indicator of impairment may exist in respect of store
assets is considered across the store portfolio and not on a
store-by-store basis. Accordingly, the store impairment review
considers all stores in the portfolio.
The recoverable amount of each store
was determined based on the expected future cash flows applicable
to each store, assessed using a basis consistent with the future
cash flows used in the goodwill impairment test described in note
12, but limited to the term of the current lease as assessed under
IFRS 16. As a result, the key assumptions are also considered to be
consistent with those described in note 12, in addition to the
allocation of central and shared costs to individual stores insofar
as such an allocation can be made on a reasonable and consistent
basis. Such costs are allocated on the basis of the relative
contribution of each individual store.
Application of these assumptions
resulted in a net impairment charge of £nil (2023: £1.3 million),
comprised of impairment charges of £2.7 million (2023: £3.7
million) and the reversal of previous impairment charges of £2.7
million (2023: £2.4 million). The net impairment charge in the
current year included a net reversal to impairment on Right of use
assets of £0.2m and a net impairment charge to PPE of
£0.2m.
Having conducted scenario analysis,
the Group does not consider any reasonably possible change in the
key assumptions would result in a material change to the impairment
charge.
Lease liabilities
|
2024
|
2023
|
|
£m
|
£m
|
Current lease liabilities
|
(25.3)
|
(27.3)
|
Non-current lease
liabilities
|
(75.5)
|
(78.1)
|
Total lease liabilities
|
(100.8)
|
(105.4)
|
Lease expense
|
|
2024
|
|
2023
|
|
|
£m
|
|
£m
|
Depreciation expense on right of use
assets
|
|
35.9
|
|
35.7
|
|
(Reversal of Impairment) /
impairment of right of use assets
|
|
(0.2)
|
|
1.3
|
|
Profit on disposal of right of use
assets
|
|
(1.2)
|
|
(0.5)
|
|
Lease interest
|
|
6.3
|
|
4.5
|
|
Expense relating to short-term and
low value leases1
|
|
-
|
|
-
|
|
Expense relating to variable lease
payments2
|
|
0.6
|
|
0.2
|
|
Total lease related income statement
expense
|
|
41.4
|
|
41.2
|
|
|
|
|
|
|
|
|
|
|
1 Contracts subject to
the election not to apply the requirements of IFRS 16 to short-term
or low value leases.
2 A small proportion of
the store lease portfolio are subject to an element of turnover
linked variable rents that are excluded from the definition of a
lease under IFRS 16.
Accounting policies for leases are
detailed in note 1. Assets, liabilities and the income statement
expense in relation to leases are detailed below.
Disposals and
depreciation/impairment on disposals includes fully depreciated
right-of-use assets where the lease term has expired, including
amounts in respect of leases that have expired but the asset
remained in use whilst a new lease was negotiated. Profits on
disposal arise where leases that have been exited before the end of
the lease term where the asset has been previously impaired. The
Group's full accounting policy in respect of leases and
right-of-use assets is set out in note 1.
15 Inventories
|
2024
£'m
|
2023
£'m
|
Finished goods
|
49.5
|
44.7
|
Work in progress
|
0.5
|
0.6
|
|
50.0
|
45.3
|
Inventories are stated net of
provisions totalling £ million (2023: £16.1 million). The cost of
inventories recognised as an expense and charged to cost of sales
in the year, net of movements in provisions, was £155.8 million
(2023: £145.3 million).
16 Cash and cash
equivalents
|
2024
£'m
|
2023
£'m
|
Cash at bank and in hand
|
11.3
|
11.7
|
Cash presented as current assets in the balance
sheet
|
11.3
|
11.7
|
|
|
|
Bank overdraft
|
(0.2)
|
(1.8)
|
Overdraft presented as current liabilities in the balance
sheet
|
(0.2)
|
(1.8)
|
|
|
|
Net
cash and cash equivalents
|
11.1
|
9.9
|
The Group manages its liquidity
requirements on a Group-wide basis and regularly sweeps and pools
cash in order to optimise returns and / or ensure the most
efficient deployment of borrowing facilities in order to minimise
fees whilst maintaining sufficient short-term liquidity to meet its
liabilities as they fall due.
Cash in bank accounts and overdrafts
are presented net where the Group has a legal right to offset
amounts - such as those with the same banking provider or included
in netting arrangements under its financing facilities.
The Group's cash and cash
equivalents are denominated in the following currencies:
|
2024
£'m
|
2023
£'m
|
Sterling
|
6.8
|
0.2
|
Euro
|
3.3
|
4.8
|
US Dollar
|
1.2
|
4.9
|
South African Rand
|
(0.2)
|
-
|
|
11.1
|
9.9
|
17 Borrowings
|
2024
£'m
|
2023
£'m
|
Current liabilities
|
|
|
Bank loans and accrued
interest
|
6.9
|
25.3
|
Bank overdraft
|
0.2
|
1.8
|
Total current liabilities
|
7.1
|
27.1
|
|
|
|
Non-current liabilities
|
|
|
Bank loans
|
37.9
|
40.4
|
Current liabilities includes bank
loans where the liability is due to be settled in the next 12
months (such as scheduled repayments in respect of secured term
loans and CLBILs). Following early adoption of amendments to IAS 1,
the Group has reclassified amounts due under its secured revolving
credit facility as non-current on the basis that it has the right
to roll over such obligations until September 2025 and is compliant
with all relevant covenant requirements at the balance sheet date.
Comparatives for the year ended 31 January 2023 in these financial
statements have been restated on the same basis. The amount
reclassified as non-current liabilities in the comparative period
is £23.0m, there would have been no reclassification in FY22 as the
balance drawn on the RCF was nil.
Bank loans
Bank borrowings as at 31 January
2024 are summarised as follows:
|
Liability
£'m
|
Interest rate
%
|
Interest margin
ratchet range
%
|
|
31 January 2024
|
|
|
|
|
Secured term loans - Tranche
'A'
|
-
|
5.00 + SONIA
|
-
|
|
Secured term loans - Tranche
'B'
|
18.8
|
5.50 +SONIA
|
-
|
|
Secured CLBILs
|
-
|
See note
|
-
|
|
Secured revolving
credit facility
|
26.0
|
Margin + SONIA
|
2.75 - 4.50
|
Total
facility size = £100 million
|
Accrued interest
|
0.1
|
|
|
|
SA Greetings property
mortgage
|
0.6
|
|
|
|
Bank overdraft
|
0.2
|
|
|
|
Debt issue costs
|
(0.7)
|
|
|
|
|
45.0
|
|
|
|
31 January 2023
|
|
|
|
|
Secured term loans - Tranche
'A'
|
9.0
|
5.00 + SONIA
|
-
|
|
Secured term loans - Tranche
'B'
|
18.8
|
5.50 +SONIA
|
-
|
|
Secured CLBILs
|
16.1
|
See note
|
-
|
|
Secured revolving
credit facility
|
23.0
|
Margin + SONIA
|
2.75 - 4.50
|
Total
facility size = £100 million
|
Accrued interest
|
0.2
|
|
|
|
Bank overdraft
|
1.8
|
|
|
|
Debt issue costs
|
(1.4)
|
|
|
|
|
67.5
|
|
|
|
The Group's primary financing
facilities at the balance sheet date were entered into as part of a
refinancing exercise in April 2022. During FY24, the Group made
repayments in respect of the revised Term Loan and CLBILS
facilities of £25.1 million and as a result the Term Loan 'A' and
CLBILs facilities were fully repaid. The term of the remaining Term
Loan 'B' and RCF extended to September 2025. The Group had undrawn,
committed facilities at 31 January 2024 of £74 million.
As part of the transaction to
acquire SA Greetings (see note 23) the Group acquired a property
mortgage and overdraft facility, which are denominated in South
African Rand. The carrying amount of these facilities at 31 January
2024 was £0.8 million.
At the balance sheet date, the Group
remained subject to two financial covenants, tested quarterly, in
relation to leverage (ratio of net debt to EBITDA) and interest
cover (ratio of interest and rent costs to EBITDA). Covenant
thresholds were 2.5x leverage and 1.75x interest cover. In
addition, the terms of the facilities prevented the Group from
making any distributions to shareholders whilst the CLBILS and Term
Loan 'A' remained outstanding and placed a limit on the total value
of capital expenditure the Group can make in each financial year to
FY25.
Debt issue costs in respect of the
April 2022 refinancing totalled £1.8 million and are being
amortised to the income statement over the duration of the revised
facilities.
Subsequent to the year end, on 26
April 2024, the Group successfully concluded a refinancing of its
debt facilities, having agreed a new four-year £125 million
committed revolving credit facility with a syndicate of banks. The
existing revolving credit facility and Term Loan B have been fully
repaid and cancelled as part of the refinancing.
The new facilities have an initial
maturity date in April 2028, with options to extend by up to 19
months, subject to lender approval. The facilities include a £75
million accordion, which can be drawn subject to lender approval.
The interest margin on the facilities is dependent upon the Group's
leverage position, with margins between 1.9-2.8% which is lower
than the previous facilities. The new facilities include covenants
for a maximum leverage ratio (calculated as net debt excluding
leases divided by EBITDA less rent costs for the prior 12 months)
of 2.5x and a fixed charge cover ratio of at least 1.75x tested
semi-annually. The Group expects to operate comfortably within
these covenant levels for the foreseeable future.
18 Notes to the cash flow
statement
Reconciliation of operating profit
to cash generated from operations:
|
2024
£'m
|
2023
£'m
|
Profit before tax
|
65.6
|
52.4
|
Gain on bargain purchase
|
(2.6)
|
-
|
Net finance expense
|
13.4
|
11.4
|
Operating profit
|
76.4
|
63.8
|
Adjusted for:
|
|
|
Depreciation and
amortisation
|
46.3
|
46.0
|
Impairment of right-of-use
assets
|
(0.2)
|
1.3
|
Impairment of tangible
assets
|
0.2
|
-
|
Impairment of intangible
assets
|
1.1
|
1.5
|
Gain on disposal of fixed
assets
|
(1.2)
|
(0.5)
|
Cash flow hedging foreign currency
movements
|
(0.4)
|
0.8
|
Unrealised foreign exchange (gains)
/ losses
|
0.5
|
-
|
Share-based payments
charge
|
2.1
|
1.7
|
Operating cash flows before changes
in working capital
|
124.8
|
114.6
|
Decrease/(increase) in
receivables
|
3.6
|
(5.2)
|
Decrease/(increase) in
inventories
|
(1.2)
|
(12.2)
|
(Decrease)/increase in
payables
|
(6.5)
|
13.3
|
Movement in provisions
|
(2.0)
|
(2.7)
|
Cash inflow from operating
activities
|
118.7
|
107.8
|
19 Analysis of net
debt
|
At 1 February
2023
£'m
|
Cash flow
£'m
|
Non-cash
changes
£'m
|
At 31 January
2024
£'m
|
Secured bank loans and accrued
interest (note 17)
|
(65.7)
|
30.1
|
(9.2)
|
(44.8)
|
Lease liabilities
|
(105.4)
|
43.7
|
(39.1)
|
(100.8)
|
Total debt
|
(171.1)
|
73.8
|
(48.3)
|
(145.6)
|
Add: debt costs
capitalised
|
(1.4)
|
-
|
0.7
|
(0.7)
|
Add: bank overdraft
|
(1.8)
|
1.8
|
(0.2)
|
(0.2)
|
Less: cash and cash equivalents
(note 16)
|
11.7
|
(0.4)
|
-
|
11.3
|
Net debt
|
(162.6)
|
75.2
|
(47.8)
|
(135.2)
|
Lease liabilities
|
105.4
|
(43.7)
|
39.1
|
100.8
|
Net debt excluding lease
liabilities
|
(57.2)
|
31.5
|
(8.7)
|
(34.4)
|
|
At 1 February
2022
£'m
|
Cash flow
£'m
|
Non-cash
changes
£'m
|
At 31 January
2023
£'m
|
Secured bank loans and accrued
interest (note 17)
|
(111.0)
|
51.4
|
(6.1)
|
(65.7)
|
Lease liabilities
|
(119.8)
|
57.0
|
(42.6)
|
(105.4)
|
Total debt
|
(230.8)
|
108.4
|
(48.7)
|
(171.1)
|
Add: debt costs
capitalised
|
(1.5)
|
(1.8)
|
1.9
|
(1.4)
|
Add: bank overdraft
|
-
|
(1.8)
|
-
|
(1.8)
|
Less: cash and cash equivalents
(note 16)
|
38.3
|
(26.6)
|
-
|
11.7
|
Net debt
|
(194.0)
|
78.2
|
(46.8)
|
(162.6)
|
Lease liabilities
|
119.8
|
(57.0)
|
42.6
|
105.4
|
Net debt excluding lease
liabilities
|
(74.2)
|
21.2
|
(4.2)
|
(57.2)
|
Non-cash changes in respect of lease liabilities reflect
changes in the carrying amount of leases arising from additions,
disposals and modifications.
20 Provisions
|
Covid-19-related support
£'m
|
Property provisions
£'m
|
Total
£'m
|
At
1 February 2022
|
12.2
|
-
|
12.2
|
Transfer from contract
liabilities
|
-
|
2.5
|
2.5
|
Provisions utilised during the
year
|
(2.3)
|
(0.9)
|
(3.2)
|
Provisions released during the
year
|
(2.5)
|
(0.9)
|
(3.4)
|
Amounts provided during the
year
|
-
|
1.4
|
1.4
|
At
31 January 2023
|
7.4
|
2.1
|
9.5
|
Provisions utilised during the
year
|
-
|
(0.2)
|
(0.2)
|
Provisions released during the
year
|
(2.0)
|
0.2
|
(1.8)
|
Amounts provided during the
year
|
-
|
-
|
-
|
At 31 January 2024
|
5.4
|
2.1
|
7.5
|
Covid-19-related support provisions
reflect amounts received under one-off schemes designed to provide
support to businesses affected by Covid-19 restrictions, including
lockdown grants and CJRS, in excess of the value the Group
reasonably believes it is entitled to retain under the terms and
conditions of those schemes. The provisions have been estimated
based on the Group's interpretation of the terms and conditions of
the respective schemes and, where applicable, independent
professional advice. Although the actual amount that will be repaid
is not certain, events through the year to 31 January 2024 have
added a level of comfort that the outstanding provision is
materially correct.
In July 2022, following an
unprompted disclosure to HMRC and resulting investigation, the
Group made a payment of £2.3 million in final settlement of its
CJRS position. As a result of this settlement, the Group released a
further £2.5 million from the provision that is no longer expected
to be required, as the matter is now closed. This release has been
recognised as a one-off benefit in the income statement in
FY23.
Subsequent to the balance sheet
date, the Group have reached a proposed settlement with the
Department for Business and Trade for a portion of the provision
that relates to regarding business support grants received by the
Group during FY21 and FY22. The value of the proposed settlement is
£3.3 million and following a review of the residual position, the
Group has released £2.0m from the provision which reflects a
proportionate reduction in the value of the provision for the
amounts to be settled. The business support grants settlement was
paid in April 2024 but was unpaid at the year-end and £3.3m remains
in the provision held on the balance sheet.
The Group continues to hold
discussions regarding settlement of the remaining element of the
provision and to date has received no new substantive evidence
regarding its position in respect of other support received
relating to business rates relief. A further provision of £2.2
million is held at the balance sheet date in respect of potential
repayment of support received in excess of subsidy control
thresholds for business rates relief, consistent with the nature of
the provision held in the prior year. The minimum requirement for
this element of the provision is expected to be £1.2 million,
subject to interpretation of the guidance relating to individual
support schemes and subsidy control thresholds. The Group believes
a range of reasonably possible outcomes remains and that the
Group's provision reflects a reasonable assessment of the amount
that may be repayable. The Group does not believe that any position
within the range of reasonably possible outcomes would reflect a
material change to the provision held at the balance sheet date and
this provision is classified as current as the Group is actively
aiming to resolve this settlement in the next 12 months.
The Group maintains provisions in
respect of its store portfolio to cover both the estimated cost of
restoring properties to their original condition upon exit of the
property and any non-lease components of lease contracts (such as
service charges) that may be onerous. Despite the size of the
Group's store portfolio, such provisions are generally small which
is consistent with the Group's experience of actual dilapidations
and restoration costs. Specific provisions are usually made where
the Group has a reasonable expectation that the related property
may be exited, or is at a higher risk of exiting, in the near
future and are generally expected to be utilised in the short-term.
Any non-current portion of the provision is considered
immaterial.
21 Related party
transactions
The Group has taken advantage of the
exemptions contained within IAS 24 'Related Party Disclosures' from
the requirement to disclose transactions between Group companies as
these have been eliminated on consolidation.
The Card Factory Foundation is
considered a related party of the Group due to one common
individual considered as key management personnel. In the year
ended 31 January 2024 the Group donated £1.5 million (FY23: £1.4m)
to the Foundation from carrier bag sales and has an outstanding
balance owed to the Foundation of £0.5m at 31 January
2024.
22 Subsequent
events
Subsequent to the year end, on 26
April 2024, the Group successfully concluded a refinancing of its
debt facilities, having agreed a new four-year £125 million
committed revolving credit facility with a syndicate of banks. The
existing revolving credit facility and Term Loan B have been fully
repaid and cancelled. See note 17 for further detail.
23 Business
combination
Business combinations are accounted
for using the acquisition method. The identifiable assets acquired
and liabilities assumed are recognised at their fair values at the
acquisition date.
Acquisition-related costs totalling
£0.2 million have been expensed and included within operating
expenses in the Consolidated Income Statement.
Acquisition of SA Greetings Corporation (Pty)
Ltd
On 25 April 2023, the Group acquired
100% of the share capital of SA Greetings Corporation (Pty) Ltd and
its subsidiaries, which trade as SA Greetings.
SA Greetings is a wholesaler and
retailer of greeting cards and gift packaging based in South
Africa, and the acquisition gives the Group access to the South
African cards and gifts market, expanding the international
partnerships business, and provides opportunities to grow and
develop the business through synergies with the Group's existing
range, production and supply chain.
The total cash consideration for the
transaction was £2.5M, all of which paid on the acquisition date,
with no further contingent or deferred consideration
payable.
The purchase price allocation was
prepared on a provisional basis in accordance with IFRS 3 with the
fair values of the assets and liabilities set out below:
|
|
Fair
value
|
|
|
£'m
|
Non-current assets
|
|
4.7
|
Intangible assets
|
|
-
|
Property, plant &
equipment
|
|
2.7
|
Right-of-use assets
|
|
1.9
|
Deferred tax assets
|
|
0.1
|
|
|
|
Current assets
|
|
5.9
|
Inventories
|
|
3.8
|
Trade & other
receivables
|
|
1.8
|
Cash at bank and in hand
|
|
0.3
|
|
|
|
Total assets
|
|
10.6
|
|
|
|
Current liabilities
|
|
(4.2)
|
Borrowings
|
|
(1.5)
|
Lease liabilities
|
|
(0.8)
|
Trade & other
payables
|
|
(1.8)
|
Tax payable
|
|
-
|
Contingent liabilities
|
|
(0.1)
|
|
|
|
Non-current liabilities
|
|
(1.3)
|
Borrowings
|
|
(0.5)
|
Lease liabilities
|
|
(0.8)
|
|
|
|
Total liabilities
|
|
(5.5)
|
|
|
|
Net
assets
|
|
5.1
|
|
|
|
The gross contractual amounts
receivable for trade & other receivables is £2.1 million and,
at the acquisition date, the group's best estimate of the
contractual cash flows not expected to be collected is £0.3
million.
The adjustments made to the
identifiable assets and liabilities in the acquiree's local
financial records in arriving at the provisional fair values
required by IFRS 3 were:
·
Recognising and measuring the acquiree's lease
liabilities as defined in IFRS 16, as if the leases were a new
lease at the acquisition date (£1.6 million adjustment to
right-of-use assets and lease liabilities). No adjustments were
required to reflect lease terms that were favourable or
unfavourable to market terms.
·
Recognising a contingent liability (£0.1 million)
in relation to a legal process that remains in progress. A
corresponding contingent asset has not been recognised.
The fair value of the assets and
liabilities acquired is £5.1M, which is higher than the fair value
of the consideration paid of £2.5M, therefore a gain on bargain
purchase of £2.6M has been recognised in the Consolidated Income
Statement in the period.
SA Greetings Corporation (Pty) Ltd
contributed revenue of £10.4 million and a profit of £0.2 million
to the Group's profit after tax for the period between the date of
acquisition and the reporting date.
If the acquisition of SA Greetings
Corporation (Pty) Ltd had been completed on the first day of the
financial year, Group revenues for the year to 31 January 2024
would have been £513.2 million and Group profit after tax would
have been £47.0 million. SA Greetings has a similar seasonal
trading pattern to the rest of the Group and generates the majority
of its sales and profits in the second half of the financial
year.
Explanatory Notes
Alternative Performance Measures ("APMS") and other
explanatory information
In the reporting of the consolidated
financial statements, the Directors have adopted various
Alternative Performance Measures ('APMs') of financial performance,
position or cash flows other than those defined or specified under
International Accounting Standards ('IFRS').
These measures are not defined by
IFRS and therefore may not be directly comparable with other
companies' APMs, including those in the Group's industry or that
appear to have similar titles or labels. APMs should be considered
in addition to IFRS measures and are not intended to be a
substitute for IFRS measurements.
The Directors believe that these
APMs provide additional useful information on the performance and
position of the Group and are intended to aid the user in
understanding the Group's results. The APMs presented are
consistent with measures used internally by the Board and
management for performance analysis, planning, reporting and
incentive setting purposes.
The table below sets out the APMs
used in this report, with further information regarding the APM,
and a reconciliation to the closest IFRS equivalent measure,
below.
Sales APMs
|
Like-for-like Sales (LFL)
|
|
|
Profitability APMs
|
EBITDA
Adjusted Profit Before Tax
(PBT)
Adjusted EPS
|
|
|
Financial Position APMs
|
Net Debt
Leverage and Adjusted
Leverage
|
|
|
Cash Flow APMS
|
Operating Cash Conversion
|
Following the approval of the
Group's updated capital allocation policy, Adjusted Leverage and
Adjusted EPS have been included in this report for the first time.
These measures play an important role in the Group's capital
allocation decisions.
Sales APMs
LFL
Sales
Closest IFRS Equivalent: Revenue
Like-for-like or LFL calculates the
growth or decline in gross sales in the current period versus a
prior comparative period.
For stores, LFL measures exclude any
sales earned from new stores opened in the current period or closed
since the comparative period and only consider the time period
where stores were open and trading in both the current and prior
period.
LFL measures for product lines or
categories, where quoted, are calculated using the same
principles.
LFL measures for our online
businesses (cardfactory.co.uk and gettingpersonal.co.uk) compare
gross sales for the current and comparative period made through the
respective online platform.
All LFL measures in this report
compare FY24 to FY23, unless otherwise stated.
In addition, the Group reports
combined Like-for-Iike sales measures for certain components of the
business as follows:
·
"cardfactory LFL" is defined as Like-for-like
sales in stores plus Like-for-like sales from the cardfactory
website www.cardfactory.co.uk.
·
"Online": Like-for-like sales for
cardfactory.co.uk and gettingpersonal.co.uk
combined.
Sales by Printcraft, the Group's
printing division, to external third-party customers and
partnerships sales are excluded from any LFL sales
measure.
Reconciliation of Revenue to LFL Sales
|
|
cardfactory Stores
£m
|
cardfactory Online
£m
|
cardfactory LFL
£m
|
Getting Personal
£m
|
Revenue FY24
|
478.9
|
8.8
|
487.7
|
5.9
|
VAT / other
|
89.9
|
1.9
|
91.8
|
1.5
|
Adjustment for Stores not open in
both periods
|
(7.6)
|
-
|
(7.6)
|
-
|
LFL Sales FY24
|
561.2
|
10.7
|
571.9
|
7.4
|
|
|
|
|
|
Revenue FY23
|
440.4
|
8.8
|
449.2
|
8.5
|
VAT / other
|
83.4
|
1.9
|
85.3
|
1.4
|
Adjustment for Stores not open in
both periods
|
(2.7)
|
-
|
(2.7)
|
-
|
LFL Sales FY23
|
521.1
|
10.7
|
531.8
|
9.9
|
|
|
|
|
|
LFL
Sales Growth
|
7.7%
|
+0.4%
|
7.6%
|
-26.1%
|
Note percentages are calculated based
on absolute figures before rounding.
Profitability
APMs
EBITDA
Closest IFRS Equivalent: Operating
Profit1
EBITDA is earnings before interest,
tax, gains or losses on disposal, depreciation, amortisation and
impairment charges. Earnings is equivalent to profit after tax
calculated in accordance with IFRS and each adjusting item is
calculated in accordance with the relevant IFRS.
The Group uses EBITDA as a measure
of trading performance, as it usually closely correlates to the
Group's operating cash generation.
Reconciliation of EBITDA to Operating Profit
|
|
FY24
£m
|
FY23
£m
|
Operating Profit
|
76.4
|
63.8
|
Add back:
|
|
|
Depreciation
|
43.5
|
43.7
|
Amortisation
|
2.8
|
2.3
|
Gains on disposal
|
(1.2)
|
(0.6)
|
Impairment charges
|
1.1
|
2.8
|
|
|
|
EBITDA
|
122.6
|
112.0
|
1 Whilst operating profit is not
defined formally in IFRS, it is considered a generally accepted
accounting measure
Adjusted PBT
Closest IFRS Equivalent: Profit Before Tax
Adjusted PBT is Profit Before Tax
adjusted to exclude the effect of transactions that, in the opinion
of the Directors, are one-off in nature and as such are not
expected to recur in future period and could distort the impression
of future performance trends based on the current year results. The
adjustments are consistent with those made in calculating Adjusted
EBITDA, above, and similarly the Group uses Adjusted PBT to assess
its performance on an underlying basis excluding these items and
believe measures adjusted in this manner provide additional
information about the impact of unusual or one-off items on the
Group's performance in the period.
In FY24 the Directors have
identified the following items that they believe to meet the
definition of 'one-off' for this purpose:
·
The gain on bargain purchase related to the
acquisition of SA Greetings of £2.6 million.
·
A gain relating to the release of covid-related
provisions of £2.0 million
·
An impairment charge relating to Getting Personal
of £1.1 million
The following items are taken into
account in arriving at Adjusted PBT for the equivalent period last
year (FY23):
·
A £2.5 million benefit arising as a result of
releasing provisions no longer required following settlement of the
Group's CJRS position with HMRC.
·
A £1.0 million benefit arising as a result of the
refinancing of the Group's debt facilities in April
2022.
Reconciliation of Adjusted PBT to Profit Before
Tax.
|
|
FY24
£m
|
FY23
£m
|
Profit Before Tax
|
65.6
|
52.4
|
Add back / (Deduct):
|
|
|
Acquisition gain
|
(2.6)
|
-
|
COVID provision release
|
(2.0)
|
-
|
GP Intangible impairment
|
1.1
|
-
|
CJRS settlement
|
-
|
(2.5)
|
Refinancing benefit
|
-
|
(1.0)
|
|
|
|
Adjusted PBT
|
62.1
|
48.9
|
|
|
|
Adjusted EPS
Closest IFRS Equivalent: Basic EPS
Adjusted EPS is earnings per share
adjusted to exclude the post-tax effect of items identified as
one-off and excluded from Adjusted PBT in the period.
The Group calculates adjusted EPS as
it is the basis of dividend calculations under its capital
allocation policy, under which the Board targets a dividend cover
ratio of between 2-3x Adjusted EPS.
The starting point of the
calculation is Adjusted PBT, as calculated above.
Calculation of Adjusted EPS
|
|
|
FY24
£m
|
FY23
£m
|
Adjusted PBT
|
62.1
|
48.9
|
Tax charge
|
(16.1)
|
(8.2)
|
Tax impact of non-underlying items
|
0.5
|
0.7
|
Adjusted PAT
|
46.5
|
41.4
|
|
|
|
Weighted average number of
shares
|
343,339,468
|
342,328,622
|
|
|
|
Adjusted EPS
|
13.5p
|
12.1p
|
Financial Position
APMs
Net
Debt
Closest IFRS Equivalent: No equivalent; however is calculated
by combining IFRS measures for Cash and
Borrowings.
Net Debt is calculated by
subtracting the Group's cash and cash equivalents from its gross
borrowings (before debt-issue costs). Net Debt is a key measure of
the Group's balance sheet strength, and is also a covenant in the
Group's financing facilities. The Group presents Net Debt both
inclusive and exclusive of lease liabilities, but focusses upon the
value exclusive of lease liabilities, which is consistent with the
calculation used for covenant purposes.
Calculation of Net Debt
|
|
|
FY24
£m
|
FY23
£m
|
Current Borrowings
|
7.1
|
27.1
|
Non-Current Borrowings
|
37.9
|
40.4
|
Add back Debt Issue Costs
|
0.7
|
1.4
|
Gross Borrowings
|
45.7
|
68.9
|
Cash
|
(11.3)
|
(11.7)
|
|
|
|
Net
Debt (exc. Leases)
|
34.4
|
57.2
|
Lease Liabilities
|
100.8
|
105.4
|
Net
Debt (inc. Leases)
|
135.2
|
162.6
|
Leverage & Adjusted Leverage
Closest IFRS Equivalent: No equivalent; however is calculated
with reference to Net Debt and EBITDA, which are reconciled to
relevant IFRS measures in this section.
Leverage is the ratio of Net Debt
(excluding lease liabilities) to EBITDA for the previous 12 months
expressed as a multiple. Adjusted Leverage is calculated in the
same way, but deducts lease-related charges from EBITDA. The Group
monitors and reports leverage as a key measure of its financing
position and as an assessment of the Group's ability to manage and
repay its debt position. Adjusted Leverage is consistent with a
covenant defined within the Group's financing
facilities.
Under its capital allocation policy,
the Group targets Adjusted Leverage below 1.5x throughout the
financial year. As described in the financial review above, the
Group's cash flows and earnings are materially affected by
seasonality, with higher sales and cash flows in the second half of
the year linked to the Christmas season. As a result, net debt
levels are lower and Leverage improved at the year end, after the
Christmas season.
Calculation of Leverage
|
|
|
FY24
£m
|
FY23
£m
|
Net debt (as calculated above)
[A]
|
34.4
|
57.2
|
|
|
|
EBITDA (as calculated above)
[B]
|
122.6
|
112.0
|
IFRS 16 depreciation
|
(35.9)
|
(35.7)
|
IFRS 16 impairment
|
0.2
|
(1.3)
|
Gains on
modification/disposal
|
1.2
|
0.5
|
IFRS 16 interest
|
(6.3)
|
(4.5)
|
EBITDA less rent costs
[C]
|
81.8
|
71.0
|
|
|
|
Leverage (A/B)
|
0.3x
|
0.5x
|
Adjusted Leverage (A/C)
|
0.4x
|
0.8x
|
Cash Flow
APMs
Operating Cash Conversion
Closest IFRS Equivalent: No equivalent; however is calculated
with reference to Cash from Operating Activities (an IFRS measure)
and EBITDA, which is reconciled to Operating Profit in this
section
Operating cash conversion is Cash
from operations (calculated as cash from operating activities
before corporation tax payments) per the cash flow statement
prepared in accordance with IFRS divided by EBITDA and expressed as
a percentage.
Calculation of Operating Cash Conversion
|
|
|
FY24
£m
|
FY23
£m
|
Cash from Operations
|
118.7
|
107.8
|
|
|
|
EBITDA
|
122.6
|
112.0
|
|
|
|
Operating Cash conversion
|
96.8%
|
96.3%
|
Other Financial Calculation
Information
Unless otherwise stated, amounts in
this report are presented in Pound Sterling (GBP), and have been
rounded to the nearest £0.1 million.
Information in tables or charts may
not add down or across, or calculate precisely, due to
rounding.
Percentage movements, where
provided, are based on amounts before they were rounded to the
nearest £0.1 million.