TIDMCARD
RNS Number : 5986N
Card Factory PLC
26 September 2023
26 September 2023
Card Factory plc ("cardfactory" or the "Group")
Interim results for the six months ended 31 July 2023
Strong performance through HY24, driven by Stores and strategic
progress.
cardfactory, the UK's leading specialist retailer of greeting
cards, gifts and celebration essentials, announces its interim
results for the six months ended 31 July 2023 ('HY24').
Business highlights
-- Group revenue of GBP220.8 million in HY24, up by 11.5%
compared to HY23, reflecting continued good momentum across the
business, particularly in the core Stores business.
o Revenue growth during the period was driven by cardfactory
LFL(1) sales growth of +10.0%.
o Store revenue saw strong growth at +10.5% LFL in HY24
reflecting the resonance of our value and quality proposition;
store range and layout developments and the annualisation of
targeted price increases.
o Strong growth in gifts and celebration essentials of +13.1%
LFL was a key driver of revenue growth in HY24 and builds on the
continued greeting cards revenue growth +7.7% LFL in HY24.
o As anticipated, cardfactory Online LFL sales were down 13.1%
vs. HY23, reflecting investment phase of this channel and the
continued rebalancing of retail sales between online and in Store
across the sector.
o Positive progress in Partnerships with total revenue of GBP6.4
million, including 23.5% increase from existing Partnerships to
GBP4.2 million plus GBP2.2 million from SA Greetings. New
agreements signed with Matalan in the UK and Liwa Trading
Enterprises in the Middle East.
-- Strong PBT growth of GBP10.4 million, up to GBP24.7 million
reflecting the strong trading performance growth in HY24. Adjusted
PBT of GBP22.1 million, an increase of GBP11.3 million compared to
HY23, excluding one-off gains in both periods.
-- Strengthened balance sheet with a reduction in net debt
(excluding lease liabilities) to GBP71.9 million (HY23: GBP96.6
million) as a result of operating cash generation and normalisation
of working capital.
Financial summary 2
Financial Metrics HY24 HY23 Change
------------------------- ---------- ---------- --------
Revenue GBP220.8m GBP198.0m 11.5%
EBITDA GBP51.1m GBP43.8m 16.7%
Profit Before Tax (PBT) GBP24.7m GBP14.3m 72.7%
Adjusted PBT 3 GBP22.1m GBP10.8m 104.6%
Net Debt (exc. Leases) GBP71.9m GBP96.6m (25.6%)
Leverage (exc. Leases) 0.6x 0.9x (0.3x)
Cash from Operations GBP36.3m GBP19.7m 84.3%
Basic EPS 5.6 pence 3.4 pence 64.7%
Adjusted EPS(4) 5.0 pence 2.5 pence 100.0%
------------------------- ---------- ---------- --------
(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) Figures include provisional post-acquisition trading results
in respect of SA Greetings
3 Adjusted PBT excludes impact of one-off items of GBP2.6
million gain on purchase of SA Greetings in HY24 (HY23: GBP3.5
million of gains following release of provision for CJRS settlement
and refinancing).
(4) Adjusted EPS based on Adjusted PBT less tax at the effective
tax rate for the period.
Highlights of our strategic progress
-- Channels
o Commenced rollout of Store Evolution Programme with positive
initial results.
o Completed the UK rollout of Click & Collect with early
indications this is contributing to in-Store revenue growth.
o 11 net new Stores opened in HY24 across the UK and the
Republic of Ireland.
o New customer service excellence programme introduced for all
store colleagues.
o New long-term master franchise agreement signed with Middle
East-based partner, Liwa and first four Stores opened in Abu Dhabi
and Dubai since the end of the period.
o New long-term partnership agreed with Matalan in the UK.
o Completed the acquisition of South African-based SA Greetings,
supporting our partnership strategy in the region.
-- Categories
o Ongoing insight-led innovation and range development driving
greeting card revenue growth.
o Strong performance in gifts and celebration essentials
reflecting the introduction of new ranges, as well as expansion and
refreshes of existing ranges.
-- ESG
o Completed a greenhouse gas emissions assessment across the
business and value chain, which has provided a clear picture of
scope 1, 2 and 3 emissions.
o Updated sustainability strategy to support the mitigation of
ESG-related risks and identification of new opportunities across
five focus areas: Climate; Waste and Circularity; Protecting
Nature; People and Equity; and Governance.
Outlook:
-- Strength of performance in the first half, together with our
current outlook for the second half, the Board is confident in
delivering a good outturn for the year.
-- Trading since the August 2023 update has been in line with Board's expectations.
-- Given the combination of good trading momentum across the
business and the successful delivery against our strategic
initiatives, we remain confident in the long-term financial and
operational targets set out at our Capital Markets Strategy Update
in May 2023.
Darcy Willson-Rymer, Chief Executive Officer, commented:
"We are delighted to announce a strong performance in the first
six months of this year."
"We continue to build the key foundations for growth through the
delivery of our 'Opening Our New Future' strategy. Our value and
quality proposition and the strength of our store estate resonates
with customers and positions us well to navigate the challenging
economic backdrop in the run up to the Christmas trading season.
Continued leveraging of the insights gathered from our investment
in customer data is enabling us to evolve and optimise our store
formats and ranges across cards, gifts and celebration essentials,
all underpinned by our discipline in maintaining a resilient
financial position."
"I would like to thank colleagues across the cardfactory
business for their ongoing dedication in delivering on our
strategic building blocks of growth. We continue to focus on the
delivery of our long-term targets and in achieving our ambition of
becoming a market leading omnichannel retailer of cards and
gifts."
Interim results webcast
There will be a meeting for analysts and investors at 10 am on
the morning of the announcement 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_DBSqx1sWSDyTYfe2K8ObOQ
Those analysts who wish to join in person are requested to
contact Teneo on the number provided below or 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 .
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
BUSINESS UPDATE
Performance in the period
A strong performance in the first half of the year was driven by
the good momentum across cardfactory, particularly in our core
Stores business and progress across our strategic building blocks
of growth.
Our Store revenue, which represents 94% of total group revenue,
grew strongly at +10.5% LFL in HY24. This reflects developments to
the breadth and depth of store ranges, as well as improvements to
merchandising layouts and the annualisation of targeted price
increases. In addition, both transactions and average basket values
increased compared to the same period last year. Our strong
value-for-money offer across both Everyday and Seasonal ranges has
continued to resonate with customers, with our offer across our
Spring seasons in particular landing well with customers through
HY24. Highlights included Valentine's Day +13.5% LFL and Fathers'
Day +8.4% LFL.
The growing importance of gifts and celebration essentials has
been a key driver of growth in the first half of the year, with LFL
revenue growth of 13.1%. This has been the result of focused range
development and the broadening of categories with the introduction
of new ranges in stationery and toys and the expansion of branded
confectionery ranges. The growth in gifts and celebration
essentials builds on our continued strength in greetings cards,
where we have seen revenue growth of +7.7% in HY24 reflecting
ongoing insight-led innovation and range development. Our continued
leadership in card is reflected in the growth we have seen across a
number of Everyday and seasonal card ranges, including our Everyday
male card range which saw +11.2% LFL growth in the period,
following a successful range change at the end of February 2023 and
an updated licensed offer. We have utilised customer data and
insight to inform our card pricing strategy to ensure the right
balance of targeted price increases whilst maintaining our
long-standing value-for-money credentials, through a combination of
low entry price points and rotating promotional offers.
As anticipated, cardfactory Online LFL sales were down -13.1%
YOY in HY24 vs. HY23, due to the investment phase of this channel
and the continued rebalancing of online/offline retail sales across
the sector. Whilst we expect Online performance to continue this
trend through the second half of the year, we will continue to
invest in our digital offer and experience as part of our
omnichannel ambition.
Partnerships also continued to perform well in HY24 with total
revenue of GBP6.4 million. Excluding the contribution from
newly-acquired SA Greetings, Partnerships sales were up by +23.5%
to GBP4.2m compared to HY23. In April 2023 we completed the
acquisition of South Africa-based SA Greetings, supporting our
partnership strategy in the region by providing access to key
wholesale accounts through the Group's printing, merchandising and
warehousing capacity.
Strategy update
Progress continues at pace on the delivery of our 'Opening Our
New Future' growth strategy which is transitioning cardfactory into
an omnichannel retailer of cards, gifts and celebration essentials
in the UK and internationally. Several significant strategy
milestones were achieved in HY24 in line with the expectations we
set out at our Capital Markets Strategy Update in May 2023.
Stores
-- Successfully commenced rollout of our Store Evolution
Programme, which is on track to achieve our targets. This consists
of three components: capex light space realignment completed in
over 700 stores with the programme due to be completed in 750
stores by the end of October 2023; display reorganisation is
progressing well with 24 stores now complete, with a further five
stores due to complete by Christmas 2023; and updated store design
being applied to new Stores and a select number of existing Stores
in line with current refit costs. Early results are showing
increased customer satisfaction and a positive revenue impact with
the reduction in space allocated to cards not adversely impacting
category sales, while revenue growth resulted from increased space
seen in celebration essentials and gifting.
-- Introduced a new customer service excellence programme for
all store colleagues, which focuses on enhanced customer
interaction to enable tailored service and product recommendations
and upsell.
-- Continued development of our store portfolio, with 1,043
Stores across the UK and Republic of Ireland at the end of the
half-year period. We opened 11 net new Stores in HY24.
Leadership in card
-- Ongoing insight-led innovation and range development
continues to deliver greetings card revenue growth of +7.7% LFL in
the half-year.
-- Updated approach to generating newness for customers through
increased refreshes of best-selling lines.
Gifts and celebration essentials
-- Strong LFL growth in gifts and celebration essentials of
+13.1% reflects strategic developments and new ranges introduced in
the first half of the year.
-- New ranges introduced in HY24 including stationery which saw
growth of +68.5% LFL following the range refresh and soft toys
achieving growth of +34.5% LFL including the introduction of Blue
Nose Friends and Tatty Teddy ranges.
-- Strong performance also seen in confectionery which delivered
a +9.0% LFL growth from the expansion of our branded offering to
include Lindor, Haribo, Cadburys and Guylian.
Omnichannel and Online
-- Nationwide UK rollout of Click & Collect, our first
omnichannel proposition, completed on 23rd April 2023.
-- We are encouraged to see early indications that our
omnichannel proposition is contributing to Store revenue growth,
with 9% of Click & Collect customers making additional
purchases when collecting their orders in-store. Basket spend of
these customers is typically 25% higher than our average in-store
basket spend.
-- Investment in our Online platforms continues focused on
developing our online capability, platform performance and customer
experience.
-- Work underway to clarify cardfactory online proposition and marketing strategy.
Partnerships
-- New long-term master franchise agreement signed with Middle
East based Liwa Trading Enterprises in April 2023. First four
franchise Stores opened in August and September 2023 in Abu Dhabi
and Dubai with plans to open around 36 Stores in total over the
next five years.
-- Agreed new long-term partnership with Matalan which will see
cardfactory cards and celebration essentials available across their
entire UK estate of 223 stores. Recently completed the first phase
of the rollout to 22 Stores with the second phase now underway and
due to complete by the end of 2023.
-- Continue to progress conversations with other prospective
partners across our seven markets of interest.
-- Completed the acquisition of South African-based SA Greetings
in April 2023. As well as an established retail estate of 28
Stores, this supports our partnership strategy in the region by
providing access to key wholesale accounts through the Group's
printing, merchandising and warehousing capacity.
ESG progress
Since our last update in May, we have continued to make good
progress on our sustainability commitments and remain on-track to
remove single-use plastic from 90% of products sold and ensure all
new gift wrap sold is 100% recyclable by the end of FY25. We have
also continued to reduce carbon emissions from our operations and
deliver on our plans to ensure we are a diverse, equitable and
inclusive employer and support our local communities.
As we continue the successful delivery of our 'Opening Our New
Future' growth strategy, we are evolving our approach to
sustainability, expanding our scope and working to embed this
throughout our business. As a first step in this process, in HY24
we have developed the first stage of an ambitious new five-year ESG
strategy: 'Delivering a Sustainable Future'. This strategy will be
our most comprehensive yet, with focus areas and commitments that
mitigate risk, address key material impacts, and provide
differentiation and commercial opportunity. This strategy will be
delivered through a detailed action plan which we are set to
complete by the end of FY24 with clear metrics to deliver on the
commitments set over the next five years. We will provide an update
on the action plan in our Annual Report in May 2024.
Notable updates since the FY23 preliminary results in May 2023
include:
-- Scope 1, 2 and 3 emissions assessment complete, with net-zero
goals to published in our Annual Report in May 2024.
-- Materiality Assessment refresh completed to update and
prioritise material ESG impacts and risks, informing ESG focus and
strategy.
-- New, evidence based five-year 'Delivering a Sustainable
Future' ESG strategy published, focusing on five key areas:
Climate; Waste and Circularity; Protecting Nature; People and
Equity; Governance.
Preparations for Christmas
We are well prepared for our key Christmas trading season. Our
Christmas programme has now launched and includes our first fully
integrated marketing campaign. New products include an expanded
gift offer to provide customers with new and exciting ranges in
areas such as toys, food and confectionery, and own label. As part
of the space realignment project, we have continued to optimise
space to ensure the correct balance between Christmas card,
Christmas gifting and Christmas celebration essentials.
From a supply perspective, all stock has been manufactured in
line with the required delivery dates and there have been no issues
with inbound logistics for any stock manufactured overseas.
Recruitment of seasonal colleagues for the Christmas season has
commenced and we are confident in our ability to not only meet
staffing requirements for this seasonal peak but to also provide
customers with an enhanced experience.
Current trading and outlook
Whilst we remain mindful of the challenging economic backdrop
and the impact of the cost-of-living crisis on discretionary spend,
we continue to be encouraged by the resilience of the celebration
occasions market and the growth opportunity it presents. Our
experience in the first half of the year confirms that our value
and quality proposition across our card, gift and celebration
essential ranges continues to resonate well with customers.
Based on our performance in the first half and our outlook for
the second half, the Board is confident in delivering a good
outturn for the year.
Trading since the August 2023 update has been in line with
Board's expectations.
Given the combination of good trading momentum across the
business and the successful delivery against our strategic
initiatives, we remain confident in the long-term financial and
operational targets set out at our Capital Markets Strategy Update
in May 2023.
Group Financial Review
Financial Highlights
Against a continuing backdrop of challenging economic conditions
for both business and consumers, cardfactory has continued to
demonstrate momentum in sales and a strong financial performance in
the six months ended 31 July 2023 (HY24).
The highlights of the period are as follows:
-- Strong sales growth in Stores, with LFL sales of +10.5%
(HY23: +6.1%), of which one-third was driven by targeted price
activity in prior year, plus transaction gains and range
development.
-- Improved margins, with EBITDA for the six months of GBP51.1
million, GBP7.3 million ahead of the same period last year.
-- Profit Before Tax of GBP24.7 million (HY23: GBP14.3 million).
Adjusted PBT of GBP22.1 million (HY23: GBP10.8 million) excludes
one-off gain on acquisition and represents a margin of 10.0%.
-- Positive operating cash flows and reduction in net debt to
GBP71.9 million, which has reduced by GBP24.7 million compared to
the same time last year.
-- Investing to deliver our strategy with capital expenditure of
GBP15.3 million (HY23: GBP5.6 million).
-- Acquisition of SA Greetings for fixed cash consideration of GBP2.5 million.
HY24 HY23 Change Change %
Revenue GBP220.8m GBP198.0m GBP22.8m 11.5%
------------- ------------- -------------- ------------
EBITDA GBP51.1m GBP43.8m GBP7.3m 16.7%
------------- ------------- -------------- ------------
EBITDA margin 23.1% 22.1% 1.0% 1 ppts
------------- ------------- -------------- ------------
Profit Before Tax (PBT) GBP24.7m GBP14.3m GBP10.4m 72.7%
------------- ------------- -------------- ------------
Adjusted PBT (1) GBP22.1m GBP10.8m GBP11.3m 104.6%
------------- ------------- -------------- ------------
Adjusted PBT margin 10.0% 5.4% 4.6% 4.6 ppts
------------- ------------- -------------- ------------
Basic earnings per share 5.6 pence 3.4 pence 2.2 pence 64.7%
------------- ------------- -------------- ------------
Net debt (exc. Leases) GBP71.9m GBP96.6m (GBP24.7m) (25.6%)
------------- ------------- -------------- ------------
Cash from Operations GBP36.3m GBP19.7m GBP16.6m 84.3%
------------- ------------- -------------- ------------
Leverage 0.6x 0.9x (0.3x) (33.3%)
------------- ------------- -------------- ------------
(1) Adjusted PBT excludes impact of one-off items of GBP2.6
million gain on purchase of SA Greetings in HY24 (HY23: GBP3.5
million of gains following release of provision for CJRS settlement
and refinancing)
Financial Performance
Sales
Total Sales
HY24 HY23 Change
GBPm GBPm %
--------- --------- -----------
cardfactory Stores 208.6 186.6 11.7%
--------- --------- -----------
cardfactory Online 3.4 4.0 (15.0%)
--------- --------- -----------
Getting Personal 2.4 4.0 (40.0%)
--------- --------- -----------
Partnerships 6.4 3.4 88.2%
--------- --------- -----------
Group 220.8 198.0 11.5%
--------- --------- -----------
LFL Sales
HY24 HY23 Change %
---------------- ---------------- --------------
cardfactory Stores +10.5% +6.1% +4.5 ppts
---------------- ---------------- --------------
cardfactory Online +17.1 ppts
* 13.1% * 30.2%
---------------- ---------------- --------------
cardfactory
LFL +10.0% +4.1% +5.9 ppts
---------------- ---------------- --------------
Getting Personal +0.1 ppts
* 36.6% * 36.7%
---------------- ---------------- --------------
Total Group sales for HY24 were GBP220.8 million, an increase of
GBP22.8 million compared to the same period last year.
Our Stores remain the core of our business and the source of a
significant majority of our revenues. Like-for-like (LFL) sales in
Stores were +10.5% compared to last year, including the annualised
impact of targeted pricing actions taken in the second half of the
prior financial year. Excluding this price impact, LFL sales were
underpinned by growth in transaction numbers and our range
development, particularly in gifts and celebration essentials.
Combined sales performance for our Spring seasons (Valentines,
Father's Day, Mother's Day) demonstrated positive LFL performance.
This was supported by a robust performance of our Everyday ranges,
where we continue to focus on our value-for-money offer.
Optimisation of the Store portfolio continues to be an important
source of sales growth. During HY24 we opened 18 new Stores and
closed seven Stores, including one relocation. This resulted in a
net increase in the overall store portfolio of 11 Stores. At 31
July 2023, our Store portfolio stood at 1,043 Stores, including 27
Stores in the Republic of Ireland and three central London
Stores.
As outlined at our Capital Markets Strategy Update in May 2023,
our Online businesses are in an investment phase as we build the
technology infrastructure to support future growth. We also
continue to see a rebalancing of online and offline sales as
customers continued to return to the high street. In this context,
revenues for cardfactory.co.uk and gettingpersonal.co.uk were both
reduced compared to the same period last year at GBP3.4 million
(HY23: GBP4.0 million) and GBP2.4 million (HY23: GBP4.0 million)
respectively. We expect this trend in sales to continue through the
remainder of the current financial year, as we focus on our digital
offer and experience as part of our omnichannel ambitions.
We have driven good momentum in Partnerships, with the opening
of the first Middle East franchise store through our partner Liwa
Trading Enterprises and commencement of a full rollout to Matalan
stores in the UK. Whilst these activities are yet to make a
significant financial contribution at the half year, they represent
important strategic milestones in our plan to grow Partnerships
sales. Our existing Partnerships performed well, with sales from
Partnerships increasing 23.5% when compared to HY23 to GBP4.2
million.
In addition, on 25 April 2023 we completed the acquisition of SA
Greetings, providing the Group with access to the South African
card and gifting market. SA Greetings is performing in line with
our expectations and contributed GBP2.2 million of sales in the
period between acquisition and the half year. We will report SA
Greetings as part of our Partnerships results going forward, the
majority of its revenue derived from sales to retail partners in
South Africa.
Gross Profit
HY24 HY24 HY23 HY23
GBPm % Sales GBPm % Sales
Group Sales 220.8 198.0
-------- ----------- --------- ------------
COGs (64.5) (29.2%) (63.4) (32.0%)
-------- ----------- --------- ------------
Product Margin -
Constant Currency(1) 156.3 70.8% 134.6 68.0%
-------- ----------- --------- ------------
FX gains / losses (1.1) (0.5%) 1.9 1.0%
-------- ----------- --------- ------------
Product Margin 155.2 70.3% 136.5 69.0%
-------- ----------- --------- ------------
Store & Warehouse
Wages (53.3) (24.1%) (48.3) (24.4%)
-------- ----------- --------- ------------
Property Costs (11.9) (5.4%) (12.2) (6.2%)
-------- ----------- --------- ------------
Other Direct Costs (8.7) (3.9%) (10.2) (5.2%)
-------- ----------- --------- ------------
Gross Profit 81.3 36.8% 65.8 33.2%
-------- ----------- --------- ------------
(1) 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.
Gross profit for the Group, when compared to the same period
last year, increased by GBP15.5 million to GBP81.3 million, with a
3.6ppts improvement in gross margin to 36.8%.
Inflationary pressure has begun to reduce in the period, aided
by a substantial reduction in international freight costs. The
overall trend in gross margin reflects our continued active
management of the cost base, we continue to see benefit from our
longstanding energy hedge which will continue until September 2024
at current levels.
Product margin includes the purchase price of goods, along with
inbound freight, carriage and packing. Calculated on a constant
currency basis, product margin improved 2.8ppts from 68.0% in HY23
to 70.8% in HY24. This improvement largely reflects the annualised
impact of targeted price increases implemented last year on sales,
as well as the reduction in freight rates noted above. Product
margin also benefitted from a reduction in stock provisions as
overall inventory levels continue to normalise following the
pandemic and our strong sales performance improves sell-through
rates and reduces the risk of inventory obsolescence. The income
statement impact from stock provisions was approximately GBP1.5
million during the period, improving margin by approximately
0.7ppts.
The Group purchases approximately 50% of its total goods for
resale in US dollars and has a well-established hedging policy to
manage the risk of adverse fluctuations in market GBPUSD rates. In
the six months ended 31 July 2023, we achieved an average rate of
approximately GBP1:$1.31 on US dollar purchases, slightly adverse
to the rate achieved in the equivalent period last year, reflecting
the weakening of sterling in the period, but still significantly
ahead of the average market spot rate for the year.
Direct wages, including store and warehouse colleagues, include
a 9.6% increase in National Living Wage from April 2023 in addition
to incremental costs as we have invested in improving our pay and
benefits offer to colleagues. These increases were partially offset
by productivity and efficiency benefits. When taking into account
the effect of strong LFL sales improvement from the same Stores in
the period, store and warehouse wages reduced slightly as a
percentage of sales. The prior year also included a one-off GBP2.5
million benefit relating to settlement of our CJRS position, which
was equivalent to 1.3ppts.
Property costs reduced by 0.8ppts as a percentage of sales, as
we begin to see the benefit of an average reduction in the rateable
value of our Store portfolio from the start of the new rates
year.
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 and
available trading days, meaning they fell as a percentage of sales
given the improved trading performance in the year. The Group has
benefitted from its long-term energy hedge which fixed commodity
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
HY24 HY24 HY23 HY23
GBPm % Sales GBPm % Sales
Group Sales 220.8 198.0
------- ---------- ------- ----------
Gross Profit 81.3 36.8% 65.8 33.2%
------- ---------- ------- ----------
Operating Expenses (30.2) (13.7%) (22.0) (11.1%)
------- ---------- ------- ----------
EBITDA 51.1 23.1% 43.8 22.1%
------- ---------- ------- ----------
Depreciation
& Amortisation (5.1) (2.3%) (4.9) (2.5%)
------- ---------- ------- ----------
Right-of-use
asset depreciation (17.9) (8.1%) (17.4) (8.8%)
------- ---------- ------- ----------
Impairment Charges - -- (1.5) (0.7%)
------- ---------- ------- ----------
Operating Profit 28.1 12.7% 20.0 10.1%
------- ---------- ------- ----------
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 increased by GBP8.2 million compared to
the same period last year, equivalent to 2.6ppts as a percentage of
sales. This predominantly reflects investment in our colleagues,
with approximately GBP5 million of the increase in relation to
staff costs. The annual pay award effective in the period was
higher than the prior year, reflecting the impact of the cost of
living crisis. As we reported at our Capital Markets Strategy
Update in May 2023, we have made significant progress in our plans
to deliver a pay and benefits model that is fit for cardfactory's
future, with an increase in median pay and significant benefits
improvements which have already had a positive impact on staff
retention. We have invested in our leadership and support
capabilities, including in IT where technology is a key enabler to
our omnichannel ambitions.
The acquisition of SA Greetings added GBP1.4 million of
operating costs in the period.
Driven by the improved trading performance, effective management
of inflationary pressures and carefully targeted investment for
growth, Group EBITDA increased to GBP51.1 million in HY24.
Total depreciation and amortisation charges, including
depreciation on right-of-use assets which are predominantly related
to our Store portfolio, increased by GBP0.7 million compared to the
same period last year.
Profit Before Tax
HY24 HY24 HY23 HY23
GBPm % Sales GBPm % Sales
Group Sales 220.8 198.0
-------- ---------- -------- -----------
Operating Profit 28.1 12.7% 20.0 10.1%
-------- ---------- -------- -----------
Gain on acquisition 2.6 1.2% - -
-------- ---------- -------- -----------
Finance Costs (6.0) (2.7%) (5.7) (2.9%)
-------- ---------- -------- -----------
Profit Before Tax 24.7 11.2% 14.3 7.2%
-------- ---------- -------- -----------
Adjusting items (2.6) (3.5)
-------- ---------- -------- -----------
Adjusted Profit Before
Tax 22.1 10.8
-------- ---------- -------- -----------
Total finance costs at GBP6.0 million increased slightly from
the prior period. Market interest rates have risen sharply over the
last 12 months - on 31 July 2023 the Sterling Overnight Index
Average (SONIA) rate stood at 4.93%, compared to 1.19% on the same
day last year.
HY24 HY23
GBPm GBPm
Interest on loans 2.9 3.1
------- -------
Loan issue cost amortisation 0.3 0.6
------- -------
IFRS 16 Leases interest 2.8 2.0
------- -------
Total Finance Expenses 6.0 5.7
------- -------
Our facilities, described in further detail below, were renewed
and updated in April 2022 and provide much greater flexibility to
the Group. This flexibility, in combination with continued delivery
of operating cash flows, has enabled us to reduce levels of gross
debt. Taken in conjunction with our interest rate hedging
programme, which has provided a degree of protection from increases
in market rates during FY24, the interest payable on our debt
facilities reduced compared to the previous year. The average cost
of debt, taking into account margin, indexation and the impact of
hedging activity, in the period was 6.6% (HY23: 5.6%).
The interest cost associated with our lease portfolio increased
to GBP2.8 million, reflecting the increase in market interest
rates.
We recognised a one-off benefit in relation to the SA Greetings
acquisition, due to the provisional fair value of the acquired net
assets being GBP2.6 million greater than the consideration paid.
See note 18 to the interim consolidated financial statements for
more information regarding the acquisition.
As a result of the above factors, Profit Before Tax for the year
was GBP24.7 million, up GBP10.4 million from GBP14.3 million for
the previous year.
Adjusted Profit Before Tax, which excludes the impact of the
gain on acquisition, was GBP22.1 million, compared to GBP10.8
million in the same period last year. See the "Alternative
Performance Measures ("APMs") and other explanatory information"
section, below, for further information regarding Adjusted Profit
Before Tax and other alternative performance measures used by the
Group.
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 the six months ended 31 July 2023 of GBP5.5
million is based on the expected effective tax rate for the full
year of 22.2%. This rate is higher than the equivalent rate applied
for the same period last year (19.6%) largely due to increases in
corporation tax rates effective from 1 April 2023. The rate is
slightly lower than the standard rate applicable to the current
financial year (24%) due to the impact of capital allowances.
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 the six months ended 31 July 2023 were GBP6.1
million.
Earnings per share
The net result for the period was a profit after tax of GBP19.2
million, increased from GBP11.5 million in the same period last
year. As a result, basic earnings per share (EPS) for the period
was 5.6 pence, with diluted EPS of 5.5 pence.
Adjusted EPS, which is based on earnings calculated by applying
the effective tax rate to Adjusted PBT for the period, was 5.0
pence for HY24 (HY23: 2.5 pence).
We remain focused on delivering value for shareholders via
execution of our strategy.
HY24 HY23
Profit after tax (GBPm) 19.2 11.5
----------- -----------
Basic EPS (pence) 5.6 pence 3.4 pence
----------- -----------
Diluted EPS (pence) 5.5 pence 3.3 pence
----------- -----------
Cash flows
HY24 HY23
GBPm GBPm
Cash from Operating Activities 30.2 19.8
-------- ---------
Cash used in Investing Activities (17.5) (5.6)
-------- ---------
Cash used in Financing Activities (1.4) (44.0)
-------- ---------
Net Cash Flow for period 11.3 (29.8)
-------- ---------
Operating cash flows less lease
repayments 10.3 (11.1)
-------- ---------
Operating cash conversion 71.0% 45.0%
-------- ---------
The Group continued to deliver positive cash performance in the
six months ended 31 July 2023, cash from operations (before lease
repayments and tax) was GBP36.3 million (HY23: GBP19.7 million)
which contributed to an overall reduction in net debt (see
below).
The increase in operating cash flows reflects our improved
trading performance and the normalisation of our working capital
profile as we have exited and recovered from the effects of the
Covid pandemic. The Group's trading pattern is seasonal, with
greater sales and thus cash inflows in the second half of the year.
The inverse is true in the first half, as stock builds ahead of the
key Christmas season. In that context the working capital outflow
in the six months ended 31 July 2023 of GBP17.1 million was in line
with expectations and improved by GBP5.8 million compared to the
same period last year.
Operating cash conversion (which is cash from operations
expressed as a percentage of EBITDA for the period) was 71.0%
(HY23: 45.0%).
Capital expenditure increased from GBP5.6 million to GBP15.3
million. Our consistently positive operating cash performance and
strengthening of the balance sheet since the pandemic has enabled
us to drive investment in the key projects to help deliver our
strategy which is covered in further detail below. Total cash used
in investing activities includes the GBP2.5 million consideration
paid in respect of the SA Greetings acquisition.
Cash generated from financing activities includes a net GBP24.7
million draw on our debt facilities (HY23: GBP6.9 million of debt
repayments) and GBP19.9 million of payments in respect of lease
liabilities for the Store portfolio (HY23: GBP30.9 million).
Lease repayments were significantly lower than the same period
last year. FY23 represented the final year where we were making
payments in respect of rents deferred during the pandemic. Lease
payments in the current year have thus returned to a more
normalised level.
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 GBP2.5 million, funded from existing cash reserves.
SA Greetings is the leading wholesaler of greetings cards and
gift packaging in South Africa. It also operates 24 'Cardies'
retail stores with four further stores operated by franchisees 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. We expect
the acquisition to make a small positive contribution to the
Group's EBITDA and PBT in FY24 and look forward to exploring the
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 provisionally concluded the accounting for the
acquisition and recognised a gain on acquisition of GBP2.6 million.
See note 18 to the consolidated interim financial statements for
more information.
Capital Expenditure
Total capital expenditure in the six months ended 31 July 2023
was GBP15.3 million, increased from GBP5.6 million in HY23 as we
invested in both infrastructure and growth projects.
During the six months ended 31 July 2023, we continued to invest
in our Group-wide ERP implementation, the second major phase of
which successfully went live in August 2023 and will deliver supply
chain and inventory management benefits.
Alongside investment in our Store Evolution Programme, we are
also delivering a network infrastructure upgrade, which is key to
delivering future technology projects in Store to enhance the
omnichannel experience.
Ongoing investment in our Online platforms and digital
experience remains a key focus area.
Net Debt
HY24 Net HY24 Leverage HY23 Net HY23 Leverage
Debt Debt
GBPm GBPm
Current borrowings 23.6 18.6
---------- --------------- ---------- ---------------
Non-current borrowings 74.8 84.9
---------- --------------- ---------- ---------------
Total Borrowings 98.4 103.5
---------- --------------- ---------- ---------------
Add back capitalised
debt costs 1.0 1.6
---------- --------------- ---------- ---------------
Gross Bank Debt 99.4 105.1
---------- --------------- ---------- ---------------
Less cash 27.5 (8.5)
---------- --------------- ---------- ---------------
Net Debt (exc. Leases) 71.9 96.6
---------- --------------- ---------- ---------------
Leverage (exc. Leases) 0.6x 0.9x
---------- --------------- ---------- ---------------
Lease Liabilities 101.6 109.4
---------- --------------- ---------- ---------------
Net Debt (inc. Leases) 173.5 206.0
---------- --------------- ---------- ---------------
Leverage (inc. Leases) 1.5x 1.9x
---------- --------------- ---------- ---------------
The Group focuses on net debt excluding lease liabilities, this
reflects the way the Group's covenants are calculated in its
financing facilities. During the first six months of the year,
growth in sales and profitability has continued to drive positive
operating cash flows and enabled continued reduction in net debt,
with a GBP24.7 million reduction year on year.
The Group's banking facilities and amounts drawn in the current
and prior periods are summarised in the table below:
Facility 31 July 2023 31 July 2022 31 January
2023
(HY24) (HY23) (FY23)
GBP11.25m Term Loan 'A' GBP4.6m GBP11.2m GBP9.0m
--------------- --------------- -------------
GBP18.75m Term Loan 'B' GBP18.8m GBP18.8m GBP18.8m
--------------- --------------- -------------
GBP20m CLBILs GBP8.2m GBP20.0m GBP16.1m
--------------- --------------- -------------
GBP100m Revolving Credit GBP60.0m GBP55.0m GBP23.0m
Facility(1)
--------------- --------------- -------------
Overdraft facilities GBP7.2m -- GBP1.8m
--------------- --------------- -------------
Other Term Facilities GBP0.5m - -
--------------- --------------- -------------
Accrued interest GBP0.3m GBP0.1m GBP0.2m
--------------- --------------- -------------
Gross Bank Debt GBP99.4m GBP105.1m GBP68.9m
--------------- --------------- -------------
1 Overdraft facilities from part of, and to the extent utilised
reduce available commitment under, the GBP100 million RCF.
During the six months ended 31 July 2023, we have made
repayments of GBP4.4 million in respect of term loans and GBP7.9
million in respect of the CLBILs facilities. At 31 July 2023, the
Group had undrawn committed facilities of GBP33 million.
Following the half-year end, on 25 September 2023, the Group
made the final repayments in respect of the CLBILs facilities which
are now fully extinguished.
The Group's cash generation profile typically follows an
annualised pattern, cash outflows are higher 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.
The Group continues to hold a provision of GBP7.4 million
relating to the potential overpayment of government support during
the pandemic, with reference to subsidy control limits. The Group
is actively taking steps to resolve its position.
Capital Structure & Distributions
The Board remains committed to maintaining a capital structure
that is conservative yet efficient in terms of providing long-term
returns to shareholders after allowing for investment to fund
ongoing operational requirements and strategic growth.
Although the CLBILs have been repaid following the half-year
end, the Group remains prohibited from making distributions under
the terms of its financing facilities until such time as tranche
'A' of the term loans is fully repaid. Accordingly, there were no
dividend payments made in either HY24 or the preceding year.
The final maturity date for tranche 'A' of the term loans is 31
January 2024, and accordingly the earliest that dividend payments
will be considered is during the FY25 financial year.
Consolidated income statement
For the six months ended 31 July 2023
Note Six months Six months Year ended
ended 31 ended 31 31 January
July 2023 July 2022 2023
GBPm GBPm GBPm
Revenue 220.8 198.0 463.4
Cost of sales (139.5) (132.2) (302.7)
-------------------------- ----- ----------- ----------- ------------
Gross profit 81.3 65.8 160.7
Operating expenses (53.2) (45.8) (96.9)
Operating profit 28.1 20.0 63.8
Gain on bargain purchase 18 2.6 - -
Finance expense 6 (6.0) (5.7) (11.4)
-------------------------- ----- ----------- ----------- ------------
Profit Before tax 24.7 14.3 52.4
Taxation 7 (5.5) (2.8) (8.2)
Profit for period 19.2 11.5 44.2
-------------------------- ----- ----------- ----------- ------------
Earnings per share pence pence pence
- Basic 8 5.6 3.4 12.9
- Diluted 8 5.5 3.3 12.8
-------------------------- ----- ----------- ----------- ------------
All activities relate to continuing operations.
Consolidated statement of comprehensive income
For the six months ended 31 July 2023
Six months Six months Year ended
ended 31 ended 31 31 January
July 2023 July 2022 2023
GBPm GBPm GBPm
Profit for the period 19.2 11.5 44.2
--------------------------------------------- ----------- ----------- ------------
Items that are or may be recycled
subsequently into profit or loss:
Exchange differences on translation
of foreign operations 0.1 - (0.2)
Cash flow hedges - changes in fair
value (3.4) 7.8 8.2
Cost of hedging reserve - changes
in fair value 0.2 (0.4) (0.2)
Tax relating to components of other
comprehensive income 0.8 (1.4) (1.2)
--------------------------------------------- ----------- ----------- ------------
Other comprehensive (expense)/income
for the period, net of income tax (2.3) 6.0 6.6
Total comprehensive income for the
period attributable to equity shareholders
of the parent 16.9 17.5 50.8
--------------------------------------------- ----------- ----------- ------------
Consolidated statement of financial position
As at 31 July 2023
Note 31 July 31 July 2022 31 January
2023 2023
GBPm GBPm GBPm
Non-current assets
Intangible assets 10 331.0 321.6 326.3
Property, plant and equipment 11 40.8 29.9 32.2
Right of use assets 12 98.6 101.4 100.5
Deferred tax assets 2.9 2.5 2.1
Derivative financial instruments 15 0.7 2.0 0.5
---------------------------------- ----- -------- ------------- -----------
474.0 457.4 461.6
Current assets
Inventories 13 49.5 46.2 45.3
Trade and other receivables 23.6 18.4 13.3
Tax receivable 0.9 - -
Derivative financial instruments 15 1.7 8.2 5.3
Cash at bank and in hand 27.5 8.5 11.7
---------------------------------- ----- -------- ------------- -----------
103.2 81.3 75.6
Total assets 577.2 538.7 537.2
Current liabilities
Borrowings (23.6) (18.6) (27.1)
Lease liabilities 12 (26.0) (29.3) (27.3)
Trade and other payables (78.7) (76.8) (84.7)
Provisions 17 (9.2) (7.4) (9.5)
Tax payable - (4.4) -
Derivative financial instruments 15 (2.5) (0.1) (1.4)
(140.0) (136.6) (150.0)
Non-current liabilities
Borrowings (74.8) (84.9) (40.4)
Lease liabilities 12 (75.6) (80.1) (78.1)
Derivative financial instruments 15 (1.0) (0.3) (0.5)
---------------------------------- ----- -------- ------------- -----------
(151.4) (165.3) (119.0)
Total liabilities (291.4) (301.9) (269.0)
Net assets 285.8 236.8 268.2
---------------------------------- ----- -------- ------------- -----------
Equity
Share capital 3.4 3.4 3.4
Share premium 202.3 202.2 202.2
Hedging reserve 0.6 6.9 3.5
Cost of hedging reserve - (0.4) (0.1)
Reverse acquisition reserve (0.5) (0.5) (0.5)
Merger reserve 2.7 2.7 2.7
Retained earnings 77.3 22.5 57.0
---------------------------------- ----- -------- ------------- -----------
Equity attributable to equity
holders of the parent 285.8 236.8 268.2
---------------------------------- ----- -------- ------------- -----------
Consolidated statement of changes in equity
For the six months ended 31 July 2023
Share Share Hedging Cost Reverse Merger Retained Total
capital premium reserve of acquisition reserve earnings equity
hedging reserve
reserve
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Six months ended 31 July
2023
At 31 January 2023 3.4 202.2 3.5 (0.1) (0.5) 2.7 57.0 268.2
-------------------------- --------- --------- --------- --------- ------------- --------- ---------- --------
Total comprehensive
expense
for the period
Profit or loss - - - - - - 19.2 19.2
Other comprehensive
expense - - (2.5) 0.1 - - 0.1 (2.3)
-------------------------- --------- --------- --------- --------- ------------- --------- ---------- --------
-- - (2.5) 0.1 - - 19.3 16.9
Hedging gains and losses
and
costs of hedging
transferred
to the cost of inventory - - (0.5) - - - - (0.5)
Deferred tax on transfers
to
inventory - - 0.1 -- - - - 0.1
Transactions with owners,
recorded directly in
equity
Share-based payment
charges - 0.1 - - - - 1.0 1.1
Dividends (note 9) - - - - - - - -
Total contributions by
and
distributions to owners - 0.1 - - - - 1.0 1.1
At 31 July 2023 3.4 202.3 0.6 - (0.5) 2.7 77.3 285.8
-------------------------- --------- --------- --------- --------- ------------- --------- ---------- --------
Six months ended 31 July
2022
At 31 January 2022 3.4 202.2 1.3 - (0.5) 2.7 10.5 219.6
-------------------------- --------- --------- --------- --------- ------------- --------- ---------- --------
Total comprehensive
expense
for the period
Profit or loss - - - - - - 11.5 11.5
Other comprehensive
expense - - 6.3 (0.3) - - - 6.0
-------------------------- --------- --------- --------- --------- ------------- --------- ---------- --------
-- - 6.3 (0.3) - - 11.5 17.5
Hedging gains and losses
and
costs of hedging
transferred
to the cost of inventory - - (0.9) (0.1) - - - (1.0)
Deferred tax on transfers
to
inventory - - 0.2 -- - - - 0.2
Transactions with owners,
recorded directly in
equity
Share-based payment
charges - - - - - - 0.5 0.5
Dividends (note 9) - - - - - - - -
Total contributions by
and
distributions to owners - - - - - - 0.5 0.5
At 31 July 2022 3.4 202.2 6.9 (0.4) (0.5) 2.7 22.5 236.8
-------------------------- --------- --------- --------- --------- ------------- --------- ---------- --------
Year ended 31 January 2023
At 31 January 2022 3.4 202.2 1.3 - (0.5) 2.7 10.5 219.6
------------------------------- ---- ------ ------ ------ ------ ---- ----- ------
Total comprehensive expense
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 and 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 9) - - - - - - - -
------------------------------- ---- ------ ------ ------ ------ ---- ----- ------
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
------------------------------- ---- ------ ------ ------ ------ ---- ----- ------
Consolidated cash flow statement
For the six months ended 31 July 2023
Note Six months Six months Year ended
ended 31 ended 31 31
July 2023 July 2022 January 2023
GBPm GBPm GBPm
Cash from operations 16 36.3 19.7 107.8
Corporation tax paid (6.1) 0.1 (7.9)
----------------------------------- ----- ----------- ----------- --------------
Net cash inflow from operating
activities 30.2 19.8 99.9
Cash flows from investing
activities
Purchase of property, plant
and equipment 11 (9.0) (2.6) (8.8)
Purchase of intangible assets 10 (6.3) (3.0) (9.4)
Acquisition of SA Greetings
net of cash acquired 18 (2.2) - -
Net cash outflow from investing
activities (17.5) (5.6) (18.2)
Cash flows from financing
activities
Proceeds from bank borrowings 37.0 73.8 (6.2)
Interest paid (3.4) (3.5) 27.8
Repayment of bank borrowings (12.3) (80.7) (72.9)
Other financing costs paid - (0.7) (1.8)
Payment of lease liabilities (19.9) (30.9) (52.5)
Interest in respect of lease
liabilities 6 (2.8) (2.0) (4.5)
----------------------------------- ----- ----------- ----------- --------------
Net cash inflow/(outflow)
from financing activities (1.4) (44.0) (110.1)
Net increase/(decrease) in
cash in the period 11.3 (29.8) (28.4)
Cash and cash equivalents at
the beginning of the period 9.9 38.3 38.3
Exchange gains on cash and 0.2 - -
cash equivalents
Closing cash and cash equivalents 21.4 8.5 9.9
----------------------------------- ----- ----------- ----------- --------------
Notes to the condensed consolidated 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.
The Group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the 'Group').
2 Basis of preparation
These unaudited condensed consolidated interim financial
statements ('interim financial statements') for the six months
ended 31 July 2023 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 United Kingdom. The interim report was approved by the Board of
Directors on 25 September 2023.
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 2023 ('Annual Report') which have been prepared in
accordance with UK-adopted international financial reporting
standards (UK IFRS) and applicable law.
The comparative figures for the financial year ended 31 January
2023 are an extract from the Annual Report and are not the Group's
statutory accounts for that financial year within the meaning of
section 434 of the Companies Act 2006. 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 2023 were approved
by the Board of Directors on 2 May 2023 and delivered to the
Registrar of Companies.
Significant judgements and sources of estimation uncertainty
The preparation of the interim financial statements in
accordance with UK IFRS requires the application of judgement in
forming the Group's accounting policies. It also requires the use
of estimates and assumptions that affect the reported amounts of
assets, liabilities, income and expenses. Actual results may
subsequently differ from these estimates.
Estimates and assumptions are reviewed on an ongoing basis, with
revisions recognised in the period in which the estimates are
revised and in any future periods affected. Judgements are also
reviewed on an ongoing basis to ensure they remain appropriate.
There were no judgements made in the six months ended 31 July
that had a material effect on the Group's interim financial
statements.
The review of estimates and assumptions in the period concluded
that the key sources of estimation uncertainty were the same as
those that applied to the consolidated financial statements for the
year ended 31 January 2023. In each case, estimates were made using
a consistent methodology, with inputs and assumptions updated to
reflect the Group's latest forecasts and prevailing market
conditions at the balance sheet date where appropriate.
As part of this process, the Group amended assumptions in
respect of inventory provisions where sales data for the six months
ended 31 July 2023 indicated a lower provisioning requirement for
certain categories of inventory than had previously been applied.
Changes to these assumptions reduced the value of inventory
provisions by approximately GBP1.1 million, compared to the
provision value had it been calculated using the previous
assumptions. The total inventory provision at 31 July 2023 was
GBP12.3 million (see note 13).
Comparative information
The Group provides comparative financial information in these
interim financial statements for both the six months ended 31 July
2022 ('HY23') and the year ended 31 January 2023 ('FY23'). Where
included within text, income statement comparatives refer to the
six months ended 31 July 2022 and balance sheet comparatives are as
at 31 January 2023, unless otherwise stated.
Going concern basis of accounting
The Board continues to have a reasonable expectation that the
Group has adequate resources to continue in operation for at least
the next 12 months and that application of the going concern basis
of accounting remains appropriate.
The Group has delivered a strong financial performance in the
six months ended 31 July 2023, with encouraging sales momentum,
improving profit margins and positive operating cash generation. In
additional, net debt levels have continued to fall (compared to the
equivalent period last year) and the Group has reduced its leverage
ratio year-on-year. See the Business Update and Group Financial
Review in this report for more information regarding trading in the
first half of the year.
The Group's current financing facilities (see note 14) extend to
September 2025. The Board believes that the current facilities
provide adequate headroom for the Group to execute its strategic
plan. At 31 July 2023, net debt (excluding lease liabilities) was
GBP71.9 million and the Group had GBP33.9 million of undrawn
facilities.
The Group's most recent cash flow forecasts, which cover the
period extending 12 months from the date these interim financial
statements were approved, indicate that the Group expects to have
significant headroom within its agreed financing arrangements,
comfortably meet all covenant tests within those arrangements, and
would be able to settle its liabilities as they fall due for the
duration of the forecasts, including repayment of borrowings in
line with the amortising repayment schedule set out in the terms of
the 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 Group's 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. At the
half-year, the forecast has been updated to reflect current
performance and expectations for the remainder of the current
financial year. Given the strong performance in the six months
ending 31 July 2023, the Group's forecast for the 12 month period
has improved from that considered at the FY23 year-end.
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 make scheduled debt repayments whilst retaining
substantial liquidity headroom against current facility limits and
meet all covenant requirements on the relevant test dates in the 12
month period.
-- Debt repayments continue in the 12 months following the going
concern period and the Group's current facilities expire in
September 2025. The Board currently expects the Group will be able
to renew its facilities at a level commensurate with its
requirements from this point.
-- In the Board's view, there are no other factors arising in
the period immediately following 12 months from the date of these
accounts that warrant further consideration.
-- The Group performed a desktop review of the scenario analysis
performed for, and originally described on page 120 of, it's FY23
Annual Report & Accounts. Given the improved performance in the
six months ending 31 July 2023, headroom on all of the scenarios
considered (which included a permanent drop in sales, profitability
and cash flows, or an acute, severe event occurring in the peak
Christmas season) had increased.
The Group also conducted a desktop review of the reverse stress
test analysis originally performed for the FY23 Annual Report &
Accounts, 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 covenant breach during the period.
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.
Updating the reverse stress test analysis to reflect actual
performance in the period to 31 July 2023 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 a breach 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. As with the scenario analysis above, the stress
test was conducted before considering any potential benefit from
available mitigating actions.
Over the preceding two 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.
Based on these factors, the Board has a reasonable expectation
that the Group has adequate resources and sufficient liquidity
headroom, and accordingly these interim accounts are prepared on
the going concern basis.
3 Principal accounting policies
The interim financial statements have been prepared under the
historical cost convention except for certain assets and
liabilities (principally 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 2023.
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 18).
The results of SA Greetings have been provisionally included in the
Partnerships segment for the six months ended 31 July 2023.
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. 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
consolidated operating profit, is provided in the table below:
Six months Six months Year ended
ended 31 ended 31 31 January
July 2023 July 2022 2023
GBPm GBPm GBPm
Revenue:
cardfactory Stores 208.4 186.2 440.4
cardfactory Online 3.4 4.0 8.8
Getting Personal 2.4 4.0 8.5
Partnerships 6.4 3.4 5.0
Other 0.2 0.4 0.7
--------------------------------- ----------- ----------- -------------
Consolidated Group revenue 220.8 198.0 463.4
--------------------------------- ----------- ----------- -------------
Of which derived from customers
in the UK 210.2 192.4 451.6
Of which derived from customers
overseas 10.6 5.6 11.8
--------------------------------- ----------- ----------- -------------
EBITDA:
cardfactory Stores 55.2 46.0 116.1
cardfactory Online (1.9) (0.9) (2.2)
Getting Personal (1.1) (0.4) (1.5)
Partnerships 1.5 1.2 1.4
Other (2.6) (2.1) (1.8)
-------------------------------------- ------- ------- -------
Consolidated Group EBITDA 51.1 43.8 112.0
Consolidated Group depreciation,
amortisation & impairment (24.0) (24.2) (48.7)
Consolidated Group gain on disposal 1.0 0.4 0.5
-------------------------------------- ------- ------- -------
Consolidated Group Operating
Profit 28.1 20.0 63.8
-------------------------------------- ------- ------- -------
The "Other" column principally reflects central overheads and
Printcraft sales to third parties.
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.
Revenue from overseas reflects revenue earned from i) the
Group's Stores in the Republic of Ireland, ii) the Group's
wholesale and retail activities in South Africa (via its SA
Greetings subsidiary), and iii) from other retail partners based
outside of the UK.
5 EBITDA
Earnings before interest, tax, depreciation, amortisation and
impairment charges (EBITDA) represents profit for the period before
net finance expense, taxation, depreciation, amortisation and
impairment of assets.
Six months Six months Year ended
ended 31 ended 31 31 January
July 2023 July 2022 2023
GBPm GBPm GBPm
Operating profit 28.1 20.0 63.8
Depreciation, amortisation and impairment 24.0 24.2 48.7
Gain on disposal (1.0) (0.4) (0.5)
------------------------------------------- ----------- ----------- ----------------
EBITDA 51.1 43.8 112.0
------------------------------------------- ----------- ----------- ----------------
6 Finance expense
Six months Six months Year ended
ended 31 ended 31 31 January
July 2023 July 2022 2023
GBPm GBPm GBPm
Finance expense
Interest on bank loans and overdrafts 2.9 3.1 6.0
Amortisation of debt issue costs 0.3 0.6 0.9
Lease interest 2.8 2.0 4.5
6.0 5.7 11.4
--------------------------------------- ----------- ----------- -------------
7 Taxation
The tax charge for the six months ending 31 July 2023 has been
calculated on the basis of the estimated effective tax rate on
Profit Before Tax for the full financial year to 31 January 2024,
which has been assessed as 22.2% (HY23: 19.6%).
The estimated effective tax rate is lower than the standard rate
of corporation tax in the UK applicable for the period (24%),
principally due to deductions for capital allowances being greater
than the equivalent depreciation charge for the period.
8 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 and save as you earn share
options.
Six months Six months Year ended
ended 31 ended 31 31 January
July 2023 July 2022 2023
(Number) (Number) (Number)
Weighted average number of shares
in issue 342,701,920 342,098,789 342,328,622
Weighted average number of dilutive
share options 4,586,823 1,449,318 1,604,107
------------------------------------- ------------ ------------ ------------
Weighted average number of shares
for diluted earnings per share 347,288,743 343,548,107 343,932,729
------------------------------------- ------------ ------------ ------------
GBPm GBPm GBPm
--------------------------------- ----- ----- -----
Profit for the financial period 19.2 11.5 44.2
--------------------------------- ----- ----- -----
pence pence pence
---------------------------- ------ ------ ------
Basic earnings per share 5.6 3.4 12.9
Diluted earnings per share 5.5 3.3 12.8
---------------------------- ------ ------ ------
9 Dividends
The Directors have not declared an interim dividend for the
period ended 31 July 2023. There were no dividends paid in the
previous financial year ended 31 January 2023.
Whilst the Group's CLBILS and certain of its term loan
facilities, as drawn at 31 July 2023, remain outstanding, the Group
is prohibited from making distributions.
10 Intangible assets
Goodwill Software & Total
Other intangible
assets
GBPm GBPm GBPm
Cost
At 1 February 2023 328.2 26.0 354.2
Additions - 6.3 6.3
Transfers - - -
At 31 July 2023 328.2 32.3 360.5
Amortisation and impairment
At 1 February 2023 14.4 13.5 27.9
Amortisation in the period - 1.6 1.6
Impairment in the period - - -
At 31 July 2023 14.4 15.1 29.5
Net book value
At 31 July 2023 313.8 17.2 331.0
----------------------------- --------- ------------------ ------
At 31 January 2023 313.8 12.5 326.3
----------------------------- --------- ------------------ ------
11 Property, plant and equipment
Freehold Leasehold Plant, equipment, Total
property improvements fixtures &
vehicles
GBPm GBPm GBPm GBPm
Cost
At 1 February 2023 18.6 40.8 78.2 137.6
Additions 0.7 0.2 8.1 9.0
Acquisition of SA Greetings
(note 18) 2.7 - 0.4 3.1
Disposals - - -- -
----------------------------- ---------- -------------- ------------------ ------
At 31 July 2023 22.0 41.0 86.7 149.7
Depreciation and impairment
At 1 February 2023 4.9 39.0 61.5 105.4
Depreciation in the
period 0.2 0.6 2.7 3.5
Depreciation on disposals - - - -
At 31 July 2023 5.1 39.6 64.2 108.9
Net book value
At 31 July 2023 16.9 1.4 22.5 40.8
----------------------------- ---------- -------------- ------------------ ------
At 31 January 2023 13.7 1.8 16.7 32.2
----------------------------- ---------- -------------- ------------------ ------
12 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 Buildings Motor Vehicles Total
GBPm GBPm GBPm
Cost
At 1 February 2023 279.3 0.8 280.1
Additions 15.0 0.8 15.8
Disposals (23.6) (0.6) (24.2)
Acquisition of SA Greetings 1.5 - 1.5
Effect of foreign exchange rates 0.1 - 0.1
----------------------------------
At 31 July 2023 272.3 1.0 273.3
Depreciation and impairment
At 1 February 2023 179.0 0.6 179.6
Depreciation in the period 18.7 0.2 18.9
Depreciation on disposals (22.9) (0.6) (23.5)
Impairment on disposals -(0.3) - (0.3)
---------------------------------- ---------- --------------- -------
At 31 July 2023 174.5 0.2 174.7
Net book value
At 31 July 2023 97.8 0.8 98.6
---------------------------------- ---------- --------------- -------
At 31 January 2023 100.3 0.2 100.5
---------------------------------- ---------- --------------- -------
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.
Lease liabilities Six months Six months Year ended
ended 31 ended 31 31 January
July 2023 July 2022 2023
GBPm GBPm GBPm
------------------------------- ----------- ----------- ----------------
Current lease liabilities (26.0) (29.3) (27.3)
Non-current lease liabilities (75.6) (80.1) (78.1)
------------------------------- ----------- ----------- ----------------
Total lease liabilities (101.6) (109.4) (105.4)
------------------------------- ----------- ----------- ----------------
Lease expense Six months Six months Year ended
ended 31 ended 31 31 January
July 2023 July 2022 2023
GBPm GBPm GBPm
-------------------------------------- ----------- ----------- ----------------
Depreciation expense on right of
use assets 18.9 17.8 35.7
Impairment of right of use assets - - 1.3
Profit on disposal of right of use
assets (1.0) (0.4) (0.5)
Lease interest 2.8 2.0 4.5
Expense relating to short term and - - -
low value leases
Expense relating to variable lease
payments 0.1 0.1 0.2
-------------------------------------- ----------- ----------- ----------------
Total lease related income statement
expense 20.8 19.5 41.2
-------------------------------------- ----------- ----------- ----------------
13 Inventories
31 July 31 July 2022 31 January
2023 2023
GBPm GBPm GBPm
------------------ -------- ------------- ---------------
Finished Goods 48.4 45.3 44.7
Work in progress 1.1 0.9 0.6
------------------ -------- ------------- ---------------
49.5 46.2 45.3
------------------ -------- ------------- ---------------
Inventories are stated net of provisions totalling GBP12.3
million (FY23: GBP16.1 million. HY23: GBP18.5 million). The value
of inventories written down in the period was GBP6.6 million.
The cost of inventories recognised as an expense and charged to
cost of sales in the period, net of movements in provisions, was
GBP65.6 million (HY23: GBP61.3 million).
14 Analysis of net debt
Six months ended 31 July At 1 February Cash flow Non-cash At 31 July
2023 2023 changes 2023
GBPm GBPm GBPm GBPm
Unsecured bank loans and accrued
interest (65.7) (21.7) (4.9)* (92.3)
Lease liabilities (105.4) 21.3 (17.5) (101.6)
Total debt (171.1) (0.4) (22.4) (193.9)
Debt costs capitalised (1.4) - 0.4 (1.0)
Bank overdraft (1.8) (4.3) - (6.1)
Cash and cash equivalents 11.7 15.8 - 27.5
---------------------------------- -------------- ---------- --------- -----------
Net debt (162.6) 11.1 (22.0) (173.5)
Lease liabilities 105.4 (21.3) 17.5 101.6
---------------------------------- -------------- ---------- --------- -----------
Net debt excluding lease
liabilities (57.2) (10.2) (4.5) (71.9)
---------------------------------- -------------- ---------- --------- -----------
*Non-cash changes include bank loans and interest acquired as a
result of the acquisition of SA Greetings (see note 18).
Six months ended 31 July At 1 February Cash flow Non-cash At 31 July
2022 2022 changes 2022
GBPm GBPm GBPm GBPm
Unsecured bank loans and accrued
interest (111.0) 7.0 0.5 (103.5)
Lease liabilities (119.8) 32.9 (22.5) (109.4)
Total debt (230.8) 39.9 (22.0) (212.9)
Debt costs capitalised (1.5) (0.7) 0.6 (1.6)
Cash and cash equivalents 38.3 (29.8) - 8.5
------------------------------------------------- -------------- ---------- --------- --------------
Net debt (194.0) 9.4 (21.4) (206.0)
Lease liabilities 119.8 (32.9) 22.5 109.4
------------------------------------------------- -------------- ---------- --------- --------------
Net debt excluding lease
liabilities (74.2) (23.5) 1.1 (96.6)
------------------------------------------------- -------------- ---------- --------- --------------
Year ended 31 January 2023 At 1 February Cash flow Non-cash At 31 January
2022 changes 2023
GBPm GBPm GBPm GBPm
Unsecured bank loans and accrued
interest (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)
Debt costs capitalised (1.5) (1.8) 1.9 (1.4)
Bank overdraft - (1.8) - (1.8)
Cash and cash equivalents 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)
------------------------------------------------- -------------- ---------- --------- --------------
The Group's banking facilities, when agreed in April 2022,
comprised term loans of GBP30 million (Term Loan 'A' of GBP11
million and Term Loan 'B' of GBP19 million), CLBILs of GBP20
million and a Revolving Credit Facility (RCF) of up to GBP100
million.
The CLBILs facilities are subject to an amortising repayment
profile, with the final repayments due in September 2023. The term
loan facilities are also subject to an amortising repayment profile
with final maturity in September 2025. The RCF is available to draw
to meet the Group's working capital requirements as needed, with
the final maturity also due in September 2025. The first scheduled
repayments under the term loan and CLBILs facilities occurred in
January 2023. At 31 July 2023, the Group had made total repayments
of GBP6.6 million in respect of Term Loan A, and GBP11.8 million in
respect of the CLBILs facilities. Following the balance sheet date,
on 25 September 2023, the Group made the final repayments due in
respect of the CLBILs facilities, which are now fully
extinguished.
The Term Loan 'A' interest rate margin was 5.0% over SONIA, and
the Term Loan 'B' interest rate margin was 5.5% over SONIA. The
CLBILS facilities attract interest rates of between 3.1% and 3.75%
over SONIA or the Bank of England Base Rate. The RCF, when drawn,
is subject to an interest rate ratchet of between 2.75% and 4.5%
over SONIA based upon the Group's leverage position.
The Term Loan and CLBILS facilities were drawn in full from the
refinancing date, with the RCF drawn to replace the existing term
loans and CLBILs that were paid down. The RCF was subsequently
drawn during the period to support liquidity when needed and
includes up to GBP17.5 million that can be utilised as an overdraft
facility on certain of the Group's bank accounts. The full RCF
remains available to draw on if required, with GBP33.9 million of
undrawn committed facilities available to the Group at the balance
sheet date.
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 are phased to return
to 2.5x leverage and 1.75x interest cover by January 2024.
In addition, the terms of the facilities prevent the Group from
making any distributions to shareholders whilst the CLBILS and Term
Loan 'A' remain outstanding and places a limit on the total value
of capital expenditure the Group can make in each financial year to
FY25. The Group expects to be able to operate and have sufficient
headroom within these covenants to deliver its strategy.
The Group's cash generation profile typically follows a seasonal
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 lead to reduced stock
levels and higher cash inflows. As a result, net debt at the end of
both the half year and at the year-end is usually lower than the
intra-year peak, which typically occurs during the third
quarter.
15 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 2022 31 January
2023 2023
GBPm GBPm GBPm
Derivative assets
Non-current
Interest-rate contracts 0.2 0.3 0.2
Foreign exchange contracts 0.5 1.7 0.3
-------------------------------------- -------- ------------- -----------
0.7 2.0 0.5
Current
Interest-rate contracts 0.8 0.7 1.1
Foreign exchange contracts 0.9 7.5 4.2
-------------------------------------- -------- ------------- -----------
1.7 8.2 5.3
Derivative liabilities
Current
Interest rate contracts - - -
Foreign exchange contracts (2.5) (0.1) (1.4)
-------------------------------------- -------- ------------- -----------
(2.5) (0.1) (1.4)
Non-current
Interest rate contracts - - (0.2)
Foreign exchange contracts (1.0) (0.3) (0.3)
-------------------------------------- -------- ------------- -----------
(1.0) (0.3) (0.5)
Net derivative financial instruments
Interest rate contracts 1.0 1.0 1.1
Foreign exchange contracts (2.1) 8.8 2.8
-------------------------------------- -------- ------------- -----------
(1.1) 9.8 3.9
-------------------------------------- -------- ------------- -----------
16 Notes to the cash flow statement
Reconciliation of operating profit to cash generated from
operations:
31 July 31 July 2022 31 January
2023 2023
GBPm GBPm GBPm
Profit Before Tax 24.7 14.3 52.4
Gain on bargain purchase (2.6) - -
Net finance expense 6.0 5.7 11.4
------------------------------------- -------- ------------- -----------
Operating profit 28.1 20.0 63.8
Adjusted for:
Depreciation and amortisation 24.0 22.7 46.0
Impairment of right-of-use assets - 1.5 1.3
Impairment of intangible assets - - 1.5
Gain on disposal of fixed assets (1.0) (0.4) (0.5)
Cash flow hedging foreign currency
movements 1.3 (1.7) 0.8
Share-based payments charge 1.0 0.5 1.7
------------------------------------- -------- ------------- -----------
Operating cash flows before changes
in working capital 53.4 42.6 114.6
Decrease in receivables (8.5) (10.3) (5.2)
Increase in inventories (0.4) (13.0) (12.2)
(Decrease)/increase in payables (7.9) 5.2 13.3
Movement in provisions (0.3) (4.8) (2.7)
------------------------------------- -------- ------------- -----------
Cash from Operations 36.3 19.7 107.8
------------------------------------- -------- ------------- -----------
Changes in working capital differ from the absolute amounts
shown in the consolidated statement of financial position due to
the impact of balances acquired as part of the transaction to
acquire SA Greetings (see note 18). The net cash outflow in respect
of acquisition consideration net of cash balances acquired of
GBP2.2 million is included in cash used in investing activities in
the consolidated cash flow statement.
17 Provisions
Six months ended 31 July 2023 Covid-19-related Property Total
support Provision
GBPm GBPm GBPm
--------------------------------------- ----------------- ----------- ------
At 1 February 2023 7.4 2.1 9.5
Transfer from contract liabilities - - -
Provisions utilised during the period - (0.1) (0.1)
Provisions released during the period - (0.4) (0.4)
Provisions provided during the period - 0.2 0.2
--------------------------------------- ----------------- ----------- ------
At 31 July 2023 7.4 1.8 9.2
--------------------------------------- ----------------- ----------- ------
Six months ended 31 July 2022 Covid-19-related Property Total
support Provision
GBPm GBPm GBPm
--------------------------------------- ----------------- ----------- ------
At 1 February 2022 12.2 - 12.2
Transfer from contract liabilities -- - -
Provisions utilised during the period (2.3) - (2.3)
Provisions released during the period (2.5) - (2.5)
Provisions provided during the period - - -
--------------------------------------- ----------------- ----------- ------
At 31 July 2022 7.4 - 7.4
--------------------------------------- ----------------- ----------- ------
Year ended 31 January 2023 Covid-19-related Property Total
support Provision
GBPm GBPm GBPm
------------------------------------- ----------------- ----------- ------
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)
Provisions provided during the year - 1.4 1.4
------------------------------------- ----------------- ----------- ------
At 31 January 2023 7.4 2.1 9.5
------------------------------------- ----------------- ----------- ------
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.
However, the actual amount that will be repaid is not certain.
In July 2022, following an unprompted disclosure to HMRC and
resulting investigation, the Group made a payment of GBP2.3 million
in final settlement of its CJRS position. As a result of this
settlement, the Group released a further GBP2.5 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 the period.
The remaining provision relates to covid-related lockdown grants
and similar support schemes. The Group is taking steps to confirm
amounts repayable and settle its positions.
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. Such
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. Accordingly such
provisions are generally expected to be utilised in the short-term.
Amounts relating to property provisions, previously recognised and
presented within contract liabilities, were reclassified to
provisions in the year ended 31 January 2023. Comparative balances
have not been reclassified as the amounts were not considered
material.
18 Business Combinations
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 GBP0.2 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 GBP2.5M,
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
GBPm
Non-current assets 4.7
Intangible assets -
Property, plant & equipment 3.0
Right-of-use assets 1.6
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 (4.1)
Borrowings (1.5)
Lease liabilities (0.8)
Trade & other payables (1.8)
Tax payable -
Contingent liabilities (0.1)
Non-current liabilities (1.4)
Borrowings (0.6)
Lease liabilities (0.8)
Total liabilities (5.5)
Net assets 5.1
------------------------------ -----------
Note - figures in the above table may not fully cast due to
rounding.
The gross contractual amounts receivable for trade & other
receivables is GBP2.1 million and, at the acquisition date, the
group's best estimate of the contractual cash flows not expected to
be collected is GBP0.3 million.
The adjustments made to the assets and liabilities included in
the acquiree's local financial records in arriving at the
provisional fair values required by IFRS 3 were:
-- Removing non-identifiable assets of GBP0.1 million in respect of pre-existing goodwill.
-- Converting the local financial records from IFRS for SMEs to
full IFRS by 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 (GBP1.6 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.
-- A fair value adjustment to recognise a contingent liability
(GBP0.1 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
GBP5.1M, which is higher than the fair value of the consideration
paid of GBP2.5M, therefore a gain on bargain purchase of GBP2.6M
has been recognised in the Consolidated Income Statement in the
period.
The fair values in the table above are provisional and remain
subject to finalisation. In particular, independent valuations of
certain items of property, plant and equipment remain in progress
at 31 July 2023. The Group expects to conclude the assessment of
fair values ahead of publishing its preliminary results for the
FY24 financial year.
SA Greetings Corporation (Pty) Ltd contributed revenue of GBP2.2
million and a loss of GBP0.3 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 period to 31 July 2023 would have been GBP223.1M
and Group profit after tax would have been GBP16.7M. 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.
19 Principal risks and uncertainties
The principal risks and uncertainties facing the Group are
materially unchanged since the publication of the Annual Report (as
published and explained in more detail on pages 58 to 62 of the
Group's Annual Report for the year ended 31 January 2023) and are
set out below for each category of risk.
Financial Risks:
-- Geopolitical Instability
Operational Risks:
-- ERP Implementation
-- IT Infrastructure and risk of IT/security disruption
-- Retail partner exposure
-- Supplier CSR breach
-- Business Continuity
Strategic Risks:
-- ESG Compliance and climate change risks
-- Adapting to customer preferences
-- Brand customer experience
The Board also consider that these risks are the principal risks
and uncertainties affecting the remainder of the current financial
year, with the exception of ERP Implementation where the risk has
reduced following the implementation of the second major phase of
this project in August 2023.
20 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 consolidated.
A full listing of the Group's subsidiary undertakings is
provided in the 2023 Annual Report and Accounts on page 147. Since
31 January 2023, the Group has added five new subsidiaries, in
connection with the acquisition of SA Greetings, as set out
below:
-- CF SA Holdings (Pty) Limited - holding company
-- SA Greetings Corporation (Pty) Limited - holding company
-- SA Greetings (Pty) Limited - trading company
-- CNA Properties (Baragwanath) (Pty) Ltd - property company
-- Funny Paper (Pty) Ltd - dormant
The Group owns 100% of each of these entities, all of which are
incorporated in South Africa at the registered address 2 Aeroton
Road, Aeroton, Johannesburg, Gauteng 2001.
The key management personnel of the Group comprise the Card
Factory plc Board of Directors, the Executive Board and the Senior
Leadership Team. Disclosures relating to remuneration of key
management personnel are included in note 5 of the 2023 Annual
Report and Accounts financial statements. Further details of
Directors' remuneration are set out in the Directors' Remuneration
Report of the Annual Report and Accounts on pages 74 to 97.
Directors of the Company and their immediate families control 0.02%
of the ordinary shares of the Company.
There were no other related party transactions in the
period.
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 United Kingdom;
-- 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
Darcy Willson-Rymer Matthias Seeger
Chief Executive Officer Chief Financial Officer
26 September 2023
INDEPENT REVIEW REPORT TO CARD FACTORY PLC
Conclusion
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 2023 which comprises consolidated income
statement, consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated
statement of changes in equity, consolidated cash flow statement
and related notes.
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 2023 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 (Revised), "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued for use in the United Kingdom. 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
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.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with UK adopted IFRSs. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial
Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410 (Revised), however future events or
conditions may cause the entity to cease to continue as a going
concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of the review report
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK) 2410 issued by
the Financial Reporting Council. Our work has been undertaken so
that we might state to the Company those matters we are required to
state to it in an independent review 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
formed.
Mazars LLP
Chartered Accountants
One St Peter's Square
Manchester
M2 3DE
26 September 2023
Alternative Performance Measures ("APMs") and other explanatory
information
In the reporting of the preliminary results and condensed
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 Financial Reporting 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 Earnings per Share
(EPS)
------------------------------------
Financial Position APMs Net Debt
Leverage
------------------------------------
Cash Flow APMS Operating Cash Conversion
------------------------------------
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 HY24 to HY23, 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 cardfactory cardfactory Getting Personal
Stores Online LFL GBPm
GBPm GBPm GBPm
------------ ------------ ------------ -----------------
Revenue HY24 208.6 3.4 212.0 2.4
------------ ------------ ------------ -----------------
VAT 40.4 0.8 41.2 0.6
------------ ------------ ------------ -----------------
Adjustment for Stores
not open in both periods (4.6) - (4.6) -
------------ ------------ ------------ -----------------
LFL Sales HY24 244.4 4.2 248.6 3.0
------------ ------------ ------------ -----------------
Revenue HY23 186.6 4.0 190.6 4.0
------------ ------------ ------------ -----------------
VAT 36.2 0.8 37.0 0.8
------------ ------------ ------------ -----------------
Adjustment for Stores
not open in both periods (1.6) - (1.6) -
------------ ------------ ------------ -----------------
LFL Sales HY23 221.2 4.8 226.0 4.8
------------ ------------ ------------ -----------------
LFL Sales Growth +10.5% -13.1% +10.0% -36.6%
------------ ------------ ------------ -----------------
Note percentages are calculated based on absolute figures before
rounding.
Profitability APMs
EBITDA
Closest IFRS Equivalent: Operating Profit [1]
[1] Whilst operating profit is not defined formally in IFRS, it
is considered a generally accepted accounting measure.
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
HY24 HY23
GBPm GBPm
----------- -----------
Operating Profit 28.1 20.0
----------- -----------
Add back:
----------- -----------
Depreciation 22.4 21.5
----------- -----------
Amortisation 1.6 1.2
----------- -----------
Gains on disposal (1.0) (0.4)
----------- -----------
Impairment charges - 1.5
----------- -----------
EBITDA 51.1 43.8
----------- -----------
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 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 the six months ended 31 July 2023, the Directors have
identified the following items that they believe to meet the
definition of 'one-off' for this purpose:
-- The provisional gain on bargain purchase related to the
acquisition of SA Greetings of GBP2.6 million.
The following items are taken into account in arriving at
Adjusted PBT for the equivalent period last year (HY23):
-- A GBP2.5 million benefit arising as a result of releasing
provisions no longer required following settlement of the Group's
CJRS position with HMRC.
-- A GBP1.0 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
HY24 HY23
GBPm GBPm
------- -------
Profit Before Tax 24.7 14.3
------- -------
Add back / (Deduct):
------- -------
Acquisition gain (2.6) -
------- -------
CJRS settlement - (2.5)
------- -------
Refinancing benefit - (1.0)
------- -------
Adjusted PBT 22.1 10.8
------- -------
Adjusted EPS
Closest IFRS Equivalent: Basic Earnings per Share
Adjusted EPS calculates Earnings per Share with an amended
earnings figure 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 calculation applies the effective tax rate for the period
(determined by dividing the tax charge by Profit Before Tax for the
period), to Adjusted PBT (as calculated above) to determine an
adjusted earnings figure. No adjustments are made to the weighted
average number of shares used in the EPS calculation.
The Group uses Adjusted EPS to assess performance and
shareholder value on a basis excluding one-off transactions; and
believe measures adjusted in this manner provide additional
information about the impact of unusual or one-off transactions on
the Group's performance in the period.
Reconciliation of Adjusted EPS to
Basic EPS.
HY24 HY23
------------- -------------
Weighted average
number of shares
in issue (A) 342,701,920 342,098,789
------------- -------------
Profit for the GBP19.2m GBP11.5m
period (B)
------------- -------------
Basic EPS (B)/(A) 5.6 pence 3.4 pence
------------- -------------
Adjusted PBT GBP22.1m GBP10.8m
------------- -------------
Effective tax rate 22.2% 19.6%
------------- -------------
Tax charge on Adjusted (GBP4.9m) (GBP2.1m)
PBT
------------- -------------
Adjusted Profit GBP17.2m GBP8.7m
for the period
(C)
------------- -------------
Adjusted EPS (C)/(A) 5.0 pence 2.5 pence
------------- -------------
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
HY24 HY23
GBPm GBPm
-------- -------
Current Borrowings 23.6 18.6
-------- -------
Non-Current Borrowings 74.8 84.9
-------- -------
Add back Debt Issue
Costs 1.0 1.6
-------- -------
Gross Borrowings 99.4 105.1
-------- -------
Cash (27.5) (8.5)
-------- -------
Net Debt (exc.
Leases) 71.9 96.6
-------- -------
Lease Liabilities 101.6 109.4
-------- -------
Net Debt (inc.
Leases) 173.5 206.0
-------- -------
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 to EBITDA for the previous 12
months expressed as a multiple. 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. Leverage is also a covenant defined within the Group's
financing facilities.
The Group targets a longer-term Leverage ratio of around 0.5x to
1.5x when calculated across a financial year. As described in the
Group Financial Review , 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
HY24 HY23
GBPm GBPm
------- -------
Net Debt (as calculated
above) 71.9 96.6
------- -------
EBITDA for H1 (as calculated
above) 51.1 43.8
------- -------
EBITDA for H2 of prior
year 71.2 62.0
------- -------
EBITDA (last 12 months) 122.3 105.8
------- -------
Leverage 0.6x 0.9x
------- -------
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
HY24 HY23
GBPm GBPm
------- -------
Cash from Operations 36.3 19.7
------- -------
EBITDA 51.1 43.8
------- -------
Operating Cash conversion 71.0% 45.0%
------- -------
Other Financial Calculation Information
Unless otherwise stated, amounts in this report are presented in
Pound Sterling (GBP), and have been rounded to the nearest GBP0.1
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 GBP0.1 million.
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END
IR FZGZLMKZGFZZ
(END) Dow Jones Newswires
September 26, 2023 02:00 ET (06:00 GMT)
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