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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Card Factory Plc | LSE:CARD | London | Ordinary Share | GB00BLY2F708 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -3.00 | -2.95% | 98.80 | 99.60 | 100.20 | 102.20 | 97.50 | 100.00 | 938,125 | 16:35:03 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Greeting Cards | 463.4M | 44.2M | 0.1289 | 7.73 | 341.79M |
From Apr 2019 to Apr 2024
TIDMCARD
RNS Number : 8748K
Card Factory PLC
27 September 2016
27 September 2016
Card Factory plc ("Card Factory" or the "Group")
Interim results for the six months ended 31 July 2016
Further revenue and profit growth, and progress in line with strategy
Special dividend of 15 pence per share, reflecting Group's strong cash generation
Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, announces its interim results for the six months ended 31 July 2016.
Financial highlights
-- Revenues up 4.8% to GBP169.2m (H1 FY16: GBP161.4m)
o Card Factory like-for-like ("LFL") sales +0.2% (H1 FY16: +2.8%)
-- On an underlying basis:
o EBITDA growth of 5.1% to GBP34.2m (H1 FY16: GBP32.5m)
o Operating profit growth of 4.1% to GBP29.0m (H1 FY16: GBP27.8m)
o Profit before tax growth of 7.3% to GBP27.6m (H1 FY16: GBP25.7m)
o Basic EPS increased by 7.1% to 6.45 pence (H1 FY16: 6.02 pence)
o Leverage of 1.26 times underlying EBITDA for the 12 months ended 31 July 2016
-- Reported profit before tax growth of 12.5% to GBP27.0m (H1 FY16: GBP24.0m) -- Interim dividend increased by 12.0% to 2.8 pence per share (FY16: 2.5 pence)
-- Special dividend of 15 pence per share (FY16: 15 pence), a return of GBP51.1m to shareholders
-- A total of GBP163.8m returned to shareholders via dividends since IPO just over two years ago
Note
Underlying profit figures exclude costs principally relating to debt refinancing (FY16 only) and mark-to-market movements on derivatives not designated as a hedging relationship.
Business highlights
Further progress on all four pillars of the Group's growth strategy:
1. LFL sales growth
-- Improvements in quality and range of both card and non-card products delivering good ongoing growth in average spend
Hot Features
Premium
-- Softer footfall resulted in lower than normal sales growth from stores
-- Strong growth in sales from new Card Factory website
-- Overall Card Factory like-for-like ("LFL") sales +0.2% (H1 FY16: +2.8%)
2. Continuing new store roll out
-- 34 net new stores opened in the period, bringing total estate to 848
-- A further 6 net new stores opened since period end including at the Trafford Centre in Manchester, one of the UK's top retail locations
-- Strong pipeline of further new store opportunities - on track to deliver approximately 50 net new openings by the year end and starting to build pipeline for FY18
3. Delivering business efficiencies -- Maintenance of industry-leading underlying EBITDA margins at 20.2% (H1 FY16: 20.1%) -- Good prospects for further savings from efficiency initiatives underway
-- Additional initiatives being assessed aimed at offsetting FY18 margin headwinds, in particular foreign exchange
4. Development of complementary online sales channels -- Card Factory transactional website sales growth of c300%
-- Flat sales performance from gettingpersonal.co.uk; investments being made to return to targeted levels of growth
-- Investment of GBP1m in digital printing equipment to produce personalised paper products including cards
Karen Hubbard, Chief Executive Officer, commented:
"We have delivered a solid set of interim results with further growth in both revenue and profit, albeit with softer footfall resulting in slightly lower than normal sales growth from our stores.
"We remain highly cash generative and are pleased to be announcing another special dividend of 15 pence per share. Together with the interim dividend, this means we will have returned over GBP160m to shareholders since IPO just over two years ago.
"We remain the clear leaders in our market, with a strong value proposition, a unique vertically integrated operating model, significant scale advantages, and industry-leading margins. The potential for further growth - through like-for-like sales growth, further store roll-out and the full exploitation of our online channels - is exciting.
"Trading in recent weeks has been similar to the trends seen in the first half, with encouraging continued growth in average spend. We approach the important final quarter with confidence in the quality and value of our offer, including our new Christmas ranges, and remain confident of delivering full year underlying profit before tax within the range of expectations.
"We remain as convinced as ever of the strong growth prospects for the business, and of our ability to deliver further returns of surplus cash to shareholders over the medium term."
Interim results presentation
A presentation for analysts will be held today starting at 9.30am at UBS Limited, 1 Finsbury Avenue, London EC2M 2QS. If you would like to register for attendance then please contact Isabelle Grainger at MHP Communications on 02031288830 or isabelle.grainger@mhpc.com.
Enquiries
Card Factory plc Via MHP Communications on +44 (0) 203 128 8100
Karen Hubbard, Chief Executive Officer
Darren Bryant, Chief Financial Officer
MHP Communications +44 (0) 203 128 8100
John Olsen
Simon Hockridge
Card Factory plc ("Card Factory" or the "Group")
Interim results for the six months ended 31 July 2016
Chief Executive's Report
Overview
Following the record performance last year, Card Factory has had a solid first half to the financial year, generating further growth in revenues and profits, albeit we have not been immune to the effect of weaker footfall patterns on the high street. We remain, by some distance, the UK's leading specialist retailer of greeting cards, dressings and gifts.
Cash generation remains very strong, leading to a return of GBP51.1m of surplus cash to shareholders via a special dividend, the second such distribution we will have made since IPO just over two years ago.
Following an extensive induction programme, I have now been CEO for 5 months and have had the opportunity to confirm my initial view of the considerable strengths of the Group and the significant future opportunities open to it. I have inherited an excellent management team and a first class, high margin and strongly cash generative business with an incredibly successful and proven four pillar strategy. The underlying card market remains large and robust with Card Factory well established as the clear market leader. The very substantial barriers to entry built over the past decade, through significant investment, provide us with clear strategic advantage. As a consequence, we have seen no significant change in competition in the first half and we remain as convinced as ever of the strong growth prospects for the business, and of our ability to deliver further returns of surplus cash to shareholders over the medium term.
Strategically the four pillar approach has served the company well and will continue to do so in both the near and medium term. My focus will be on further enhancing and improving the key drivers that underpin those pillars, whilst delivering our vision for the business and ensuring that we are continually focussed on our customers and our people. Particular opportunities include extending the store roll-out programme into new types of location such as retail parks to ensure that the shape of our overall estate fully reflects the way in which our customers shop; making our first steps into the Republic of Ireland; accelerating the growth of our two online businesses, in part by more fully recognising the different segments of the markets that they each serve; and investing in system improvements to drive like-for-like sales growth and support business efficiency programmes.
In the meantime, the Group has continued to make progress in the first half, in each of its four strategic pillars:
1. Continue to grow like-for-like sales
As previously reported, sales growth in the first half was softer than levels recently achieved with variability in retail footfall impacting weekly sales patterns. Average spend has continued to grow consistently with new ranges of both card and non-card products resonating well with customers.
Like-for-like sales growth for Card Factory increased by +0.2% (H1 FY16: +2.8%) with strong growth from the new cardfactory.co.uk website. Excluding the website, like-for-like sales performance for our store network was broadly flat at -0.1% (H1 FY16: +2.7%) with consistently strong growth in average spend being offset by lower transaction numbers.
We believe that there is a significant opportunity to use the new cardfactory.co.uk website to leverage our existing in-store customer base to grow our share of the personalised card market considerably (see below). As expected, our online rate of sales growth slowed slightly in April as we reached the anniversary of the relaunch of the cardfactory.co.uk website.
2. Continue to roll out profitable new stores
In the first half we opened 34 net new stores (H1 FY16: 36) bringing the total estate to 848 stores as at 31 July 2016. The contribution of net new store openings to overall Group revenue growth was slightly lower than the first half last year, partly as a result of openings being on average slightly later than in the equivalent period last year.
We remain on track to deliver approximately 50 net new stores in the current financial year with all expected to be open in advance of the important Christmas season, having opened a further 6 net new stores since the half year point, including in the Trafford Centre in Manchester, one of the UK's premium retail locations.
In the first half we have also opened a small number of new stores in retail parks, a part of the market where we currently have limited exposure. Early signs are promising and we believe there is significant opportunity to expand our new store roll out into this type of location as smaller retail units, more appropriate for the Card Factory model, increasingly become available.
3. Continue to focus on delivering business efficiencies
It is pleasing to report that the Group's best-in-class margins have been maintained, notwithstanding the lower than anticipated like-for-like sales growth.
The Group has a long established track record of delivering a wide range of business efficiencies and consistently strong margins. This remains an important management focus with current initiatives including the negotiation of lower rental terms on existing leases, conversion to energy efficient LED lighting in stores, enhancement of our loss prevention function, investment in our supply chain and buying teams and further vertical integration of our online operations with a GBP1m investment in digital printing equipment.
Looking forward, the weakness of Sterling and anticipated increases in National Living Wage remain the most significant cost pressures on the business. A number of additional initiatives are underway, particularly on delivering further supply chain efficiencies, as the Group seeks to mitigate the resulting margin impact. A further update will be provided in due course.
4. Increase penetration of the complementary online market
We have been pleased with the performance of the new cardfactory.co.uk transactional website which has seen strong growth since its launch in April last year. The online personalised card market segment, estimated to be worth approximately GBP100m, remains an attractive market niche where we are currently under-represented with a share of less than 1% which we believe can be increased significantly. To that end we have recently accelerated the pace of development of the range of personalised cards and other personalised products available online as well as investing GBP1m in a new in-house digital print capability to produce a wide range of personalised paper products including greeting cards, diaries, notebooks and calendars.
Year-on-year sales performance at gettingpersonal.co.uk was flat, however, with improvements in average spend being offset by lower visitor numbers. Whilst gettingpersonal.co.uk faced very strong prior year comparatives in the first half (H1 FY16: +24.9%), the second quarter was particularly disappointing. We continue to target like-for-like sales growth of at least 10% at gettingpersonal.co.uk and, whilst current sales growth is below this level, we are investing in a number of business improvement initiatives in pursuit of this aim.
We remain optimistic that we will deliver substantial growth in revenue and profit from both of the Group's online channels over the medium term.
Revenue
Total revenues during the period grew by 4.8% to GBP169.2m (H1 FY16: GBP161.4m):
H1 FY17 H1 FY16 Increase
GBP'm GBP'm
Card Factory 162.3 154.5 +5.1%
Getting Personal 6.9 6.9 +0.2%
-------- --------
Group 169.2 161.4 +4.8%
-------- --------
Growth in like-for-like ("LFL") sales by retail channel, calculated on a calendar week basis, can be broken down as follows:
H1 FY17 H1 FY16
Card Factory stores -0.1% +2.7%
Card Factory online +289.2% +146.7%
------------- --------
Card Factory combined +0.2% +2.8%
------------- --------
Getting Personal +0.1% +24.6%
Total online combined +7.7% +26.3%
Operating costs
Underlying cost of sales and operating expenses continue to be well controlled and are broken down as follows:
H1 FY17 H1 FY16 Increase
----------------- -----------------
GBP'm % of GBP'm % of
revenue revenue
Cost of goods
sold 51.3 30.3% 50.7 31.4%
Store wages 30.5 18.0% 27.5 17.0%
Store property
costs 31.3 18.5% 29.6 18.3%
Other direct
expenses 8.3 4.9% 7.8 4.9%
------ --------- ------ ---------
Cost of sales 121.4 71.7% 115.6 71.6%
------ --------- ------ ---------
+1.2%
+10.8%
+5.9%
+6.6%
+5.0%
Operating
expenses* 13.6 8.1% 13.3 8.3% +2.4%
------ --------- ------ ---------
*excluding depreciation and amortisation
The overall ratio of cost of sales to revenue increased marginally to 71.7% on an underlying basis (H1 FY16: 71.6%) with the following movements in sub-categories:
- Cost of goods sold: principally comprises cost of raw materials, production costs, finished goods purchased from third party suppliers, import duty, freight/carriage costs and warehouse wages. The improvement in this cost ratio principally reflects improvements in underlying product margins and a better weighted average exchange rate relating to stock purchased in US Dollars. As noted in our H1 trading statement, for the full year we expect that US Dollar purchases in FY17 will be at a lower weighted average rate than that achieved in FY16.
- Store wages: includes wages and salaries for store based staff, together with bonuses, National Insurance, pension contributions, overtime, holiday and sick pay. This cost has increased as expected as new stores have been opened and pay increases have been awarded, including the impact of the new National Living Wage. The increase in the cost ratio reflects these factors together with the lower level of anticipated like-for-like sales.
- Store property costs: consists principally of store rents (net of rental incentives), business rates and service charges. This cost has increased in absolute terms as new stores have been opened but remained broadly constant as a ratio of revenue. We continue to target improvements in our overall rent roll as we reach break and expiry on existing leases.
- Other direct expenses: includes store opening costs, store utility costs, waste disposal, store maintenance, point of sale costs and pay per click ("PPC") expenditure. This cost category is largely variable in respect of existing stores and increases with new store openings. The ratio of other direct expenses remained constant at 4.9% with various business efficiency initiatives offsetting increases in PPC spend at Getting Personal.
Total underlying operating expenses (excluding depreciation and amortisation) in the first half increased to GBP13.6m (H1 FY16: GBP13.3m). This cost line includes items such as head office salaries and remuneration, costs relating to regional and area managers, design studio costs and insurance, together with other central overheads and administration costs. We continue to manage overheads tightly whilst continuing to invest for future growth.
Depreciation and amortisation increased from GBP4.7m to GBP5.2m reflecting ongoing investment in the business.
The underlying net financing expense reduced further by 34.7% to GBP1.4m (H1 FY16: GBP2.1m), principally reflecting improvements in margins payable under the Group's facility agreement following the debt refinancing completed in June last year.
As a consequence of the above factors, underlying profit before tax increased by 7.3% to GBP27.6m (H1 FY16: GBP25.7m), with the underlying effective tax rate of 20.4% (H1 FY16: 20.3%) remaining close to the statutory rate.
Underlying basic earnings per share increased by 7.1% to 6.45 pence (H1 FY16: 6.02 pence).
Capital expenditure of GBP5.6m (H1 FY16: GBP6.2m) included an investment of GBP1m in digital printing equipment to support planned growth in online revenues from personalised paper products. The Board continues to budget total annual capital expenditure of approximately GBP12m per annum.
Foreign exchange
With slightly over half of the Group's annual cost of goods sold expense relating to products sourced in US Dollars, the Group takes a prudent but flexible approach to hedging the risk of exchange rate fluctuations.
As disclosed in previous announcements, we have for some time been expecting foreign exchange gross margin pressure in FY17 and beyond due to the fall in the value of Sterling. This margin pressure and uncertainty has increased significantly following the result of the EU referendum.
At the date of this announcement, all of the anticipated FY17 US Dollar cash requirement is covered at an average rate of c$1.50. This average rate is significantly above the average spot rate for the period but approximately 8% below that achieved in FY16, with the weighted average rate delivered in H1 being greater than that expected in H2. Additional hedging is in place for approximately 50% of the anticipated FY18 US Dollar cash requirement at an average rate of c$1.45. The weighted average rates above assume all remaining structured options are exercisable, which would be the case with Sterling above $1.20.
Underlying EBITDA and Operating Profit
As expected, whilst there is some seasonality in our business, the Group delivered positive operating profit in each month of the first half.
The underlying EBITDA margin of the Group remained broadly flat at 20.2% (H1 FY16: 20.1%), notwithstanding like-for-like sales being slightly lower than anticipated, broken down as follows:
H1 FY17 H1 FY16 Increase/
GBP'm GBP'm (Decrease)
Underlying EBITDA
Card Factory 33.2 31.2 +6.3%
Getting Personal 1.0 1.3 -24.0%
-------- --------
Group 34.2 32.5 +5.1%
-------- --------
Underlying EBITDA
margin
Card Factory 20.5% 20.2% +0.3ppts
Getting Personal 13.9% 18.3% -4.4ppts
Group 20.2% 20.1% +0.1ppts
The lower underlying EBITDA margin at Getting Personal principally reflects investment in the business to support future revenue growth.
The underlying operating margin also remained broadly flat at 17.1% (H1 FY16: 17.3%).
Cash generation and returns
The Group remains highly cash generative, driven by its strong operating margins, limited working capital absorption and the relatively low capital expenditure requirements.
As at 31 July 2016, before deduction of capitalised debt costs, net debt totalled GBP121.7m (31 July 2015: GBP109.0m), reflecting strong cash generation during the period offset by the June payment of the FY16 final dividend (GBP20.4m) and the start of the normal working capital outflow relating to Christmas stock build:
As at 31 July 2016 2015
GBP'm GBP'm
Borrowings
Current liabilities 0.1 0.1
Non-current liabilities 124.2 119.0
------- -------
Total borrowings 124.3 119.1
Add: debt costs
capitalised 0.8 1.0
------- -------
Gross debt 125.1 120.1
Less cash (3.4) (11.1)
------- -------
Net debt 121.7 109.0
------- -------
Net debt at 31 July 2016 represented 1.26 times underlying EBITDA for the 12 months ended on that date, a similar level to the position reported at 31 July 2015 (1.20 times underlying EBITDA for the 12 months ended on that date).
As previously announced, over the medium term the Board expects to maintain leverage broadly in the range of 1.0 to 2.0 times net debt to underlying historic LTM EBITDA. Whilst this leverage ratio will typically vary during the financial year, the Board's current intention is to maintain average leverage around the mid point of this range. In assessing potential returns of surplus cash to shareholders, the Board will take into account, inter alia, the actual and projected leverage ratio (calculated on an LTM EBITDA basis) and the ongoing capital requirements of the business. This consideration will take into account expected cash generation and any resources required for strategic developments.
On a proforma basis, taking into account the interim and special dividends mentioned below as if they had been paid on 31 July 2016, leverage would have represented 1.89 times underlying EBITDA for the 12 months ended on that date. The Group typically delivers particularly strong cash generation in the second half of its financial year which contains the Christmas trading period. The Board therefore expects this ratio to reduce considerably by the year end.
Dividends
The Board has declared an interim ordinary dividend of 2.8 pence per share (FY16: 2.5 pence). The Board intends to continue with its progressive dividend policy, taking into account the Group's strong earnings potential and cash flow characteristics, while allowing it to retain sufficient capital to fund ongoing operating requirements and to invest in our long term growth plans. The Board continues to target dividend cover of between 2.0 and 3.0 times on an annual basis.
As previously stated, to the extent there is surplus capital within the business, the Board expects to return that capital to shareholders. The Board will consider the most appropriate method of returning such surplus cash from time to time, taking into account, amongst other things, views of shareholders and the liquidity of the shares. In line with this, the Board is pleased to announce the declaration of a special dividend of 15 pence per share, equating to a return of GBP51.1m.
Both the interim ordinary dividend and the special dividend will be paid on 25 November 2016 to those shareholders on the register at the close of business on 21 October 2016.
We will, at that point, have returned GBP163.8m to shareholders since IPO just over two years ago.
Outlook
Trading in recent weeks has been similar to the trends seen in the first half, with encouraging continued growth in average spend.
We approach the important Christmas quarter with confidence in the quality and value of our offer, including our new seasonal ranges, and we remain confident of delivering full year underlying profit before tax within the range of analysts' current expectations of GBP80.9m to GBP83.0m.
Card Factory is the clear leader in its market, with a strong value proposition, a unique vertically integrated operating model, significant scale advantages, and superior margins. The potential for further growth, through like-for-like sales growth, further store roll-out and the full exploitation of our online channels, is exciting. We remain as convinced as ever of the strong growth prospects for the business, and of our ability to deliver further returns of surplus cash to shareholders over the medium term.
Karen Hubbard
Chief Executive Officer
27 September 2016
Notes
1. Background information
Card Factory is the UK's leading specialist retailer of greeting cards, dressings and gifts. It focuses on the value and mid-market segments of the UK's large and resilient greeting cards market, and also offers a wide range of other quality products, including small gifts and gift dressings, at affordable prices. Card Factory principally operates through its nationwide chain of over 850 Card Factory stores, as well as through its online offerings: www.gettingpersonal.co.uk and www.cardfactory.co.uk.
The Group's clear strategy is focused on four pillars of growth:
- continuing to grow LFL sales; - continuing to roll out profitable new stores; - continuing to focus on delivering business efficiencies; and - increasing penetration of the complementary online market.
Card Factory commenced operations in 1997 with just one store and has expanded its store estate primarily through organic growth into a market-leading value retailer with a nationwide presence. The Group's stores are in a wide range of locations including on high streets in small towns through to major cities, shopping centre developments, out-of-town retail parks and factory outlet centres.
Since 2005, Card Factory has developed a vertically integrated business model with an in-house design team, an in-house printing facility and central warehousing capacity of over 360,000 sqft. This model differentiates the Group from its competitors by significantly reducing costs and adding value to customers in terms of both price and quality, underpinning the Group's motto: "compare the quality, compare the price".
In the financial year ended 31 January 2016, the Group achieved revenue growth of 8.0% to GBP381.6m (FY15: GBP353.3m) and underlying EBITDA growth of +7.7% to GBP95.0m (FY15: GBP88.2m) at a margin of 24.9% (FY15: 25.0%).
2. Calculation of percentage movements
Percentage changes have been calculated before figures were rounded to GBP0.1m.
3. Cautionary Statement
This announcement is based on information from unaudited management accounts and contains certain forward-looking statements with respect to the financial condition, results of operations, and businesses of Card Factory plc. These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by law, Card Factory plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein.
Condensed consolidated income statement
For the six months ended 31 July 2016
Six months ended Six months ended Year ended 31
31 July 2016 31 July 2015 January 2016
----------------------------------------- -------------------------------------- --------------------------------------
Underlying Non-underlying Total Underlying Non-underlying Total Underlying Non-underlying Total
(note (note (note
6) 6) 6)
Note GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Revenue 169.2 - 169.2 161.4 - 161.4 381.6 - 381.6
Cost of
sales (121.4) (0.1) (121.5) (115.6) 0.1 (115.5) (259.2) 3.9 (255.3)
--------------- ----- -------------- --------------- -------- ----------- --------------- -------- ----------- --------------- -------- Gross profit/(loss) 47.8 (0.1) 47.7 45.8 0.1 45.9 122.4 3.9 126.3 Operating expenses (18.8) (0.3) (19.1) (18.0) - (18.0) (37.1) (0.3) (37.4) --------------- ----- -------------- --------------- -------- ----------- --------------- -------- ----------- --------------- -------- Operating profit/(loss) 29.0 (0.4) 28.6 27.8 0.1 27.9 85.3 3.6 88.9 Finance income 7 - - - 0.3 - 0.3 0.3 - 0.3 Finance expense 7 (1.4) (0.2) (1.6) (2.4) (1.8) (4.2) (3.6) (1.9) (5.5) --------------- ----- -------------- --------------- -------- ----------- --------------- -------- ----------- --------------- -------- Net financing expense (1.4) (0.2) (1.6) (2.1) (1.8) (3.9) (3.3) (1.9) (5.2) Profit/(loss) before tax 27.6 (0.6) 27.0 25.7 (1.7) 24.0 82.0 1.7 83.7 Taxation 8 (5.6) 0.1 (5.5) (5.2) 0.3 (4.9) (17.0) (0.3) (17.3) Profit/(loss) for the period 22.0 (0.5) 21.5 20.5 (1.4) 19.1 65.0 1.4 66.4 --------------- ----- -------------- --------------- -------- ----------- --------------- -------- ----------- --------------- -------- Earnings pence pence pence pence pence pence per share - Basic 9 6.45 6.30 6.02 5.61 19.08 19.47 - Diluted 9 6.45 6.29 6.02 5.60 19.05 19.45 --------------- ----- -------------- --------------- -------- ----------- --------------- -------- ----------- --------------- --------
All activities relate to continuing operations.
Condensed consolidated statement of comprehensive income
For the six months ended 31 July 2016
Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
GBP'm GBP'm GBP'm
Profit for the period 21.5 19.1 66.4
--------------------------------- ----------- ----------- ------------
Items that are or may be
recycled subsequently into
profit or loss:
Effective portion of changes
in fair value of cash flow
hedges 1.9 (3.5) 0.7
Net change in fair value
of cash flow hedges recycled
to profit or loss (2.4) 0.6 (3.1)
Tax relating to components
of other comprehensive income 0.1 0.6 0.5
--------------------------------- ----------- ----------- ------------
Other comprehensive expense
for the period, net of tax (0.4) (2.3) (1.9)
Total comprehensive income
for the period attributable
to equity shareholders of
the parent 21.1 16.8 64.5
--------------------------------- ----------- ----------- ------------
Condensed consolidated statement of financial position
As at 31 July 2016
Note 31 July 31 July 31 January
2016 2015 2016
GBP'm GBP'm GBP'm
Non-current assets
Intangible assets 11 331.3 331.1 331.0
Property, plant and equipment 12 39.9 39.6 39.9
Deferred tax assets 0.5 - 0.2
Other receivables 1.0 1.1 1.0
Derivative financial instruments 13 0.7 0.1 1.8
---------------------------------- ----- -------- -------- -----------
373.4 371.9 373.9
Current assets
Inventories 46.4 46.8 50.4
Trade and other receivables 29.1 27.0 17.0
Derivative financial instruments 13 3.9 2.3 3.5
Cash and cash equivalents 3.4 11.1 11.3
---------------------------------- ----- -------- -------- -----------
82.8 87.2 82.2
Total assets 456.2 459.1 456.1
Current liabilities
Borrowings (0.1) (0.1) (0.1)
Trade and other payables (47.5) (47.8) (35.8)
Tax payable (5.7) (3.8) (8.8)
Derivative financial instruments 13 (0.2) (0.1) (0.2)
---------------------------------- ----- -------- -------- -----------
(53.5) (51.8) (44.9)
Non-current liabilities
Borrowings (124.2) (119.0) (134.1)
Trade and other payables (11.6) (10.7) (11.4)
Deferred tax liabilities - (0.2) -
Derivative financial instruments 13 - (0.2) -
---------------------------------- ----- -------- -------- -----------
(135.8) (130.1) (145.5)
Total liabilities (189.3) (181.9) (190.4)
Net assets 266.9 277.2 265.7
---------------------------------- ----- -------- -------- -----------
Equity
Share capital 14 3.4 3.4 3.4
Share premium 14 201.9 201.6 201.6
Hedging reserve 2.7 2.7 3.1
Reverse acquisition reserve (0.5) (0.5) (0.5)
Merger reserve 2.7 2.7 2.7
Retained earnings 56.7 67.3 55.4
---------------------------------- ----- -------- -------- -----------
Equity attributable to
equity holders of the
parent 266.9 277.2 265.7
---------------------------------- ----- -------- -------- -----------
Condensed consolidated statement of changes in equity
For the six months ended 31 July 2016
Six months ended 31 Share Share Hedging Reverse Merger Retained Total
July 2016 capital premium reserve acquisition reserve earnings equity
reserve
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Balance at 1 February
2016 3.4 201.6 3.1 (0.5) 2.7 55.4 265.7
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
Total comprehensive
income for the period
Profit or loss - - - - - 21.5 21.5
Other comprehensive
expense - - (0.4) - - - (0.4)
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
- - (0.4) - - 21.5 21.1
Transactions with owners,
recorded directly in
equity
Issue of shares (note
14) - 0.3 - - - - 0.3
Share based payment
charges - - - - - 0.3 0.3
Taxation on share based
payments recognised
in equity - - - - - (0.1) (0.1)
Dividends - - - - - (20.4) (20.4)
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
- 0.3 - - - (20.2) (19.9)
Balance at 31 July 2016 3.4 201.9 2.7 (0.5) 2.7 56.7 266.9
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
Six months ended 31 Share Share Hedging Reverse Merger Retained Total
July 2015 capital premium reserve acquisition reserve earnings equity
reserve
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Balance at 1 February
2015 3.4 201.6 5.0 (0.5) 2.7 70.7 282.9
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
Total comprehensive
income for the period
Profit or loss - - - - - 19.1 19.1
Other comprehensive
expense - - (2.3) - - - (2.3)
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
- - (2.3) - - 19.1 16.8
Transactions with owners,
recorded directly in
equity
Share based payment
charges - - - - - 0.6 0.6
Taxation on share based
payments recognised
in equity - - - - - 0.1 0.1
Dividends - - - - - (23.2) (23.2)
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
- - - - - (22.5) (22.5)
Balance at 31 July 2015 3.4 201.6 2.7 (0.5) 2.7 67.3 277.2
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
Year ended 31 January Share Share Hedging Reverse Merger Retained Total
2016 capital premium reserve acquisition reserve earnings equity
reserve
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Balance at 1 February
2015 3.4 201.6 5.0 (0.5) 2.7 70.7 282.9
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
Total comprehensive
income for the year
Profit or loss - - - - - 66.4 66.4
Other comprehensive
expense - - (1.9) - - - (1.9)
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
- - (1.9) - - 66.4 64.5
Transactions with owners,
recorded directly in
equity
Share based payment
charges - - - - - 1.3 1.3
Taxation on share based
payments recognised
in equity - - - - - 0.1 0.1
Dividends - - - - - (83.1) (83.1)
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
- - - - - (81.7) (81.7)
Balance at 31 January
2016 3.4 201.6 3.1 (0.5) 2.7 55.4 265.7
--------------------------- --------- --------- --------- ------------- --------- ---------- --------
Condensed consolidated cash flow statement
For the six months ended 31 July 2016
Note Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
GBP'm GBP'm GBP'm
Cash inflow from operating
activities 15 37.9 32.8 92.2
Corporation tax paid (8.8) (5.4) (13.0)
----------------------------------- ----- ----------- ----------- ------------
Net cash inflow from operating
activities 29.1 27.4 79.2
Cash flows from investing
activities
Purchase of property,
plant and equipment (4.7) (5.6) (10.5)
Purchase of intangible
assets (0.9) (0.6) (1.1)
Payment of deferred consideration - (0.8) (0.8)
Proceeds from sale of
property, plant and equipment - - 0.1
Interest received - 0.3 0.3
----------------------------------- ----- ----------- ----------- ------------
Net cash outflow from
investing activities (5.6) (6.7) (12.0)
Cash flows from financing
activities
Proceeds from bank borrowings - 144.2 144.2
Purchase of interest rate
caps - - (0.5)
Interest paid (1.3) (2.1) (3.3)
Repayment of bank borrowings (10.0) (197.5) (182.5)
Proceeds from new shares
issued 14 0.3 - -
Dividends paid (20.4) (23.2) (82.8)
----------------------------------- ----- ----------- ----------- ------------
Net cash outflow from
financing activities (31.4) (78.6) (124.9)
Net decrease in cash and
cash equivalents (7.9) (57.9) (57.7)
Cash and cash equivalents
at the beginning of the
period 11.3 69.0 69.0
----------------------------------- ----- ----------- ----------- ------------
Closing cash and cash
equivalents 3.4 11.1 11.3
----------------------------------- ----- ----------- ----------- ------------
Notes to the interim 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.
2 Basis of preparation
These unaudited condensed consolidated interim financial statements ('interim financial statements') for the six months ended 31 July 2016 comprise the Company and its subsidiaries (together referred to as the 'Group'). The interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and the requirements of IAS 34 Interim Financial Reporting as adopted by the European Union. The interim report was approved by the Board of Directors on 27 September 2016.
These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 January 2016 ('Annual Report') which have been prepared in accordance with IFRSs as adopted by the European Union. The comparative figures for the financial year ended 31 January 2016 are an extract from the Annual Report and are not the Group's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report was (i) unqualified, (ii) did not contain an emphasis of matter paragraph and (iii) did not contain any statement under section 498 of the Companies Act 2006. The statutory accounts for the year ended 31 January 2016 were approved by the Board of Directors on 4 April 2016 and delivered to the Registrar of Companies. The auditor's review report for the six month period ended 31 July 2016 is attached.
Significant judgements and estimates
The preparation of the interim financial statements requires the use of judgements, estimates and assumptions that affect the application of the Group's accounting policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements and key sources of estimation uncertainty were consistent with those applied to the consolidated financial statements for the year ended 31 January 2016.
Going concern
Taking into account current and anticipated trading performance, current and anticipated levels of borrowings and the availability of borrowing facilities and exposures to and management of the financial risks detailed in the Annual Report, the Board is of the opinion that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, the interim financial statements continue to be prepared on a going concern basis.
Cash flow presentation
The presentation of net repayments of bank borrowings for the six months ended 31 July 2015 has been adjusted to present both proceeds from and repayments of borrowing facilities amended and extended on 26 June 2015.
3 Principal accounting policies
The financial statements have been prepared under the historical cost convention except for derivative financial instruments which are stated at their fair value.
The accounting policies are consistent with those applied in the consolidated financial statements for the year ended 31 January 2016. New or amended international financial reporting standards that are effective in the current period do not have a significant impact on the interim financial statements.
EU Endorsed International Financial Reporting Standards effective in the current period
-- Amendments to IAS 16 and IAS 38 - Clarification of acceptable methods of depreciation and amortisation
-- Amendments to IAS 27 - Equity method in separate financial statements -- Annual Improvements to IFRSs 2012 - 2014 cycle -- Amendments to IAS 1 - Disclosure initiative
EU Endorsed International Financial Reporting Standards in issue but not yet effective
New and revised accounting standards, interpretations or amendments effective for future periods are currently awaiting EU endorsement.
4 Segmental reporting
The Group has two operating segments trading under the names Card Factory and Getting Personal. Card Factory retails cards and gifts in the UK principally through an extensive store network. Getting Personal is an online retailer of personalised cards and gifts. Getting Personal does not meet the quantitative thresholds of a reportable segment as defined in IFRS 8. Consequently the results of the Group are presented as a single reportable segment. Revenues outside of the UK are not significant at less than GBP0.1 million.
5 Underlying EBITDA
Underlying earnings before interest, tax, depreciation and amortisation ("EBITDA") represents underlying profit for the period before net finance expense, taxation, depreciation and amortisation.
Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
GBP'm GBP'm GBP'm
Underlying operating profit 29.0 27.8 85.3
Depreciation and amortisation 5.2 4.7 9.7
------------------------------- ----------- ----------- ------------
Underlying EBITDA 34.2 32.5 95.0
------------------------------- ----------- ----------- ------------
6 Non-underlying items
Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
GBP'm GBP'm GBP'm
Cost of sales
(Losses)/gains on foreign
currency derivative financial
instruments not designated
as a hedge (0.1) 0.1 3.9
---------------------------------- ----------- ----------- ------------
Operating expenses
Non-underlying operating
expenses (0.3) - (0.3)
---------------------------------- ----------- ----------- ------------
Net finance expense
Refinanced debt issue cost
amortisation - (1.8) (1.8)
Loss on interest rate derivative
financial instruments not
designated as a hedge (0.2) - (0.1)
---------------------------------- ----------- ----------- ------------
(0.2) (1.8) (1.9)
---------------------------------- ----------- ----------- ------------
Net fair value remeasurement gains and losses on derivative financial instruments
The Group utilises foreign currency contracts to manage the foreign exchange risk on U.S. Dollar denominated purchases and interest rate derivative contracts to manage the risk on floating interest rate bank borrowings. Fair value gains and losses on such instruments are recognised in the income statement to the extent they are not hedge accounted under IAS 39. Such gains and losses relate to future cash flows. In accordance with the commercial reasoning for entering into these agreements, these gains/losses are deemed not representative of the underlying financial performance in the year and presented as non-underlying items. Any gains or losses on maturity of such instruments are presented within underlying profit.
Refinanced debt issue cost amortisation
Debt issue costs totalling GBP1.8 million were expensed to the income statement in the prior period on completion of an amended and extended borrowing facility on 26 June 2015. This expense relates to costs that were not yet amortised in relation to the 30 May 2014 refinancing and is presented as a non-underlying item.
Non-underlying operating expenses
In January 2016, Card Factory plc announced the retirement and succession of the Chief Executive Officer. Costs attributable to the recruitment of the new CEO and dual remuneration costs during the handover period are presented as a non-underlying item.
7 Finance income and expense
Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
GBP'm GBP'm GBP'm
Finance income
Bank interest received - (0.3) (0.3)
----------------------------- ----------- ----------- ------------
Finance expense
Interest on bank loans and
overdrafts 1.3 2.2 3.3
Amortisation of loan issue
costs 0.1 2.0 2.1
Fair value loss on interest
rate derivative contracts 0.2 - 0.1
----------------------------- ----------- ----------- ------------
1.6 4.2 5.5
----------------------------- ----------- ----------- ------------
Net financing expense 1.6 3.9 5.2
----------------------------- ----------- ----------- ------------
Amortisation of loan issue costs in the prior period include GBP1.8 million expensed to the income statement in relation to loan issue costs not yet amortised on refinanced borrowing facilities. These costs are presented as a non-underlying item, see note 6.
Fair value losses on interest rate derivative contracts are presented as a non-underlying item, see note 6.
8 Taxation
The tax charge on underlying profit before tax for the interim period has been calculated on the basis of the estimated effective tax rate on underlying profit before tax for the full year to 31 January 2017 of 20.4% (six months ended 31 July 2015 20.3%, year ended 31 January 2016 20.7%).
9 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 share incentive awards granted to employees.
The Group has chosen to present an alternative earnings per share measure, with profit adjusted for non-underlying items to reflect the Group's underlying profit for the year. Underlying earnings is not a recognised profit measure under IFRS and may not be directly comparable with 'adjusted' profit measures used by other companies.
Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
Number Number Number
Weighted average number of
shares in issue 340,752,254 340,696,235 340,696,235
Weighted average number of
dilutive share options 346,121 363,656 478,006
------------------------------ ------------ ------------ ------------
Weighted average number of
shares for diluted earnings
per share 341,098,375 341,059,891 341,174,241
------------------------------ ------------ ------------ ------------
GBP'm GBP'm GBP'm
Profit for the financial
period 21.5 19.1 66.4
Non-underlying items 0.5 1.4 (1.4)
-------------------------------- ------ ------ ------
Total underlying profit for
underlying earnings per share 22.0 20.5 65.0
-------------------------------- ------ ------ ------
pence pence pence
Basic earnings per share 6.30 5.61 19.47
Diluted earnings per share 6.29 5.60 19.45
Underlying basic earnings
per share 6.45 6.02 19.08
Underlying diluted earnings
per share 6.45 6.02 19.05
----------------------------- ------ ------ ------
10 Dividends
The Directors have declared an interim dividend of 2.8 pence per share for the period ended 31 July 2016 which equates to GBP9.5 million and a special dividend of 15.0 pence per share which equates to GBP51.1 million. Both dividends will be paid on 25 November 2016 to shareholders on the register at the close of business on 21 October 2016. The interim and special dividend were approved by the Board on 27 September 2016 and, as such, have not been included as a liability as at 31 July 2016.
Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
Pence Pence Pence
per share per share per share
Dividends declared not yet
paid at 31 July 2016:
Special dividend for the 15.0p - -
year ended 31 January 2017
Interim dividend for the 2.8p - -
year ended 31 January 2017
----------------------------- ----------- ----------- ------------
17.8p - -
Dividends paid:
Final dividend for the year 6.0p - -
ended 31 January 2016
Special dividend for the
year ended 31 January 2016 - - 15.0p
Interim dividend for the
year ended 31 January 2016 - - 2.5p
Final dividend for the year
ended 31 January 2015 - 4.5p 4.5p
Interim dividend for the
year ended 31 January 2015 - 2.3p 2.3p
----------------------------- ----------- ----------- ------------
6.0p 6.8p 24.3p
23.8p 6.8p 24.3p
----------------------------- ----------- ----------- ------------
Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
GBP'm GBP'm GBP'm
Dividends declared not yet
paid at 31 July 2016:
Special dividend for the 51.1 - -
year ended 31 January 2017
Interim dividend for the 9.5 - -
year ended 31 January 2017
----------------------------- ----------- ----------- ------------
60.6 - -
Dividends paid:
Final dividend for the year 20.4 - -
ended 31 January 2016
Special dividend for the
year ended 31 January 2016 - - 51.1
Interim dividend for the
year ended 31 January 2016 - - 8.5
Final dividend for the year
ended 31 January 2015 - 15.4 15.4
Interim dividend for the
year ended 31 January 2015 - 7.8 7.8
----------------------------- ----------- ----------- ------------
20.4 23.2 82.8
81.0 23.2 82.8
----------------------------- ----------- ----------- ------------
11 Intangible assets
Goodwill Software Total
GBP'm GBP'm GBP'm
Cost
At 1 February 2016 328.2 7.3 335.5
Additions - 0.9 0.9
Disposal - (0.1) (0.1)
------------------------- --------- --------- ------
At 31 July 2016 328.2 8.1 336.3
Amortisation
At 1 February 2016 - 4.5 4.5
Provided in the period - 0.6 0.6
Disposals - (0.1) (0.1)
------------------------- --------- --------- ------
At 31 July 2016 - 5.0 5.0
Net book value
At 31 July 2016 328.2 3.1 331.3
------------------------- --------- --------- ------
At 31 January 2016 328.2 2.8 331.0
------------------------- --------- --------- ------
12 Property, plant and equipment
Freehold Leasehold Plant, equipment, Total
property improvements fixtures
& vehicles
GBP'm GBP'm GBP'm GBP'm
Cost
At 1 February
2016 17.3 28.8 43.7 89.8
Additions 0.1 1.9 2.7 4.7
Disposals - (0.4) (0.2) (0.6)
------------------ ---------- -------------- ------------------ ------
At 31 July 2016 17.4 30.3 46.2 93.9
Depreciation
At 1 February
2016 1.9 20.7 27.3 49.9
Provided in the
period 0.2 1.5 2.9 4.6
Disposals - (0.4) (0.1) (0.5)
------------------ ---------- -------------- ------------------ ------
At 31 July 2016 2.1 21.8 30.1 54.0
Net book value
At 31 July 2016 15.3 8.5 16.1 39.9
------------------ ---------- -------------- ------------------ ------
At 31 January
2016 15.4 8.1 16.4 39.9
------------------ ---------- -------------- ------------------ ------
13 Financial instruments
Financial instruments carried at fair value are measured by reference to the following fair value hierarchy:
-- Level 1: quoted prices in active markets for identical assets or liabilities
-- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
-- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Derivative financial instruments are carried at fair value and measured under a level 2 valuation method. Valuations are provided by the instrument counterparty.
31 July 31 July 31 January
2016 2015 2016
GBP'm GBP'm GBP'm
Derivative assets
Non-current
Interest rate contracts - - 0.3
Foreign exchange contracts 0.7 0.1 1.5
---------------------------- -------- -------- -----------
0.7 0.1 1.8
Current
Foreign exchange contracts 3.9 2.3 3.5
---------------------------- -------- -------- -----------
Derivative liabilities
Current
Interest rate contracts (0.2) (0.1) (0.2)
---------------------------- -------- -------- -----------
Non-current
Foreign exchange contracts - (0.2) -
---------------------------- -------- -------- -----------
14 Share capital and share premium
31 July 31 July 31 January
2016 2015 2016
Share capital (Number) (Number) (Number)
Allotted, called up and fully
paid ordinary shares of one
pence:
At the start of the period 340,696,235 340,696,235 340,696,235
Shares issued in relation 148,629 - -
to share options exercised
At the end of the period 340,844,864 340,696,235 340,696,235
------------------------------- ------------ ------------ ------------
GBP'm GBP'm GBP'm
Share capital
At the start of the period 3.4 3.4 3.4
Shares issued in relation - - -
to share options exercised
At the end of the period 3.4 3.4 3.4
------------------------------- ------------ ------------ ------------
GBP'm GBP'm GBP'm
Share premium
At the start of the period 201.6 201.6 201.6
Shares issued in relation 0.3 - -
to share options exercised
At the end of the period 201.9 201.6 201.6
------------------------------- ------------ ------------ ------------
15 Notes to the cash flow statement
Reconciliation of operating profit to cash generated from operations:
Six months Six months Year ended
ended ended 31 January
31 July 31 July 2016
2016 2015
GBP'm GBP'm GBP'm
Profit before tax 27.0 24.0 83.7
Net finance expense 1.6 3.9 5.2
------------------------------------ ----------- ----------- ------------
Operating profit 28.6 27.9 88.9
Adjusted for:
Depreciation and amortisation 5.2 4.7 9.7
Loss on disposal of fixed
assets 0.1 - 0.1
Cash flow hedging foreign
currency (gains)/losses (0.2) 0.6 2.4
Share based payments charge 0.3 0.6 1.3
------------------------------------ ----------- ----------- ------------
Operating cash flows before
changes in working capital 34.0 33.8 102.4
Increase in receivables (11.9) (9.3) (3.0)
Decrease/(increase) in inventories 4.0 (5.3) (8.9)
Increase in payables 11.8 13.6 1.7
------------------------------------ ----------- ----------- ------------
Cash inflow from operating
activities 37.9 32.8 92.2
------------------------------------ ----------- ----------- ------------
16 Analysis of net debt
Six months ended At 1 February Cash flow Non-cash At 31 July
31 July 2016 2016 changes 2016
GBP'm GBP'm GBP'm GBP'm
Unsecured bank
loans (134.2) 10.0 (0.1) (124.3)
Cash and cash equivalents 11.3 (7.9) - 3.4
--------------------------- -------------- ---------- --------- -----------
Total net debt (122.9) 2.1 (0.1) (120.9)
--------------------------- -------------- ---------- --------- -----------
Six months ended At 1 February Cash flow Non-cash At 31 July
31 July 2015 2015 changes 2015
GBP'm GBP'm GBP'm GBP'm
Unsecured bank
loans (170.4) 53.3 (2.0) (119.1)
Cash and cash equivalents 69.0 (57.9) - 11.1
--------------------------- -------------- ---------- --------- -----------
Total net debt (101.4) (4.6) (2.0) (108.0)
--------------------------- -------------- ---------- --------- -----------
Year ended 31 January At 1 February Cash flow Non-cash At 31 January
2016 2015 changes 2016
GBP'm GBP'm GBP'm GBP'm
Unsecured bank
loans (170.4) 38.3 (2.1) (134.2)
Cash and cash equivalents 69.0 (57.7) - 11.3
--------------------------- -------------- ---------- --------- --------------
Total net debt (101.4) (19.4) (2.1) (122.9)
--------------------------- -------------- ---------- --------- --------------
In the prior year the Group amended and extended the bank borrowing facility to a GBP200 million revolving credit facility terminating 26 June 2020 with an additional GBP100 million accordion. Borrowings under the revised facility attract interest at LIBOR plus a margin in the range 1.0% to 2.0%, subject to a leverage ratchet (LIBOR plus 1.25% at 31 July 2016). The facilities are subject to financial covenants typical to an arrangement of this nature.
17 Principal risks and uncertainties
The Board and the senior management team are collectively responsible for managing risks and uncertainties across the Group. In determining the Group's risk appetite and how risks are managed, the Board, Audit and Risk Committee and the senior management team look to ensure an appropriate balance is achieved which enables the Group to achieve its strategic and operational objectives and facilitates the long-term success of the Group. The Group's Audit and Risk Committee is responsible for reviewing the Group's risk management framework and ensuring that it enables the Committee and the Board to carry out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.
The principal risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and beyond, and which could cause actual results to differ materially from expected and historical results are as follows:
- Changes in consumer demands and market trends - Increased competition - Damage to brand and reputation - Success of, or inability to implement, Group strategy - Inability to find suitable locations for new stores - Supply chain and product sourcing - Attracting, motivating and retaining key personnel - Treasury and financial risk - Business continuity and response to major incidents - Compliance with legal requirements, standards and regulations - Maintenance and performance of IT systems - Development of the Group's online business
The Board considers that these principal risks and uncertainties affecting the Group (as published and explained in more detail on pages 21 to 23 of the Group's Annual Report for the year ended 31 January 2016) remain unchanged other than in respect of the potential impacts of Brexit.
Brexit
On 23 June 2016 the UK held a referendum and voted in favour of leaving the EU. The subsequent fall in the value of Sterling increases the financial risks and uncertainties in respect of foreign exchange adversely impacting future performance. The impact on US Dollar denominated purchases is largely mitigated in the current financial year by the foreign exchange hedging policy of the Group. Management continue to monitor developments and prepare contingency plans to mitigate, as far as possible, any adverse impacts on the Group.
Responsibility statement of the Directors in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board
Karen Hubbard Darren Bryant Chief Executive Officer Chief Financial Officer
27 September 2016
Independent review report to Card Factory plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2016 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Nicola Quayle (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DW
27 September 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AKADDFBKDACB
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