For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220523:nRSW4693Ma&default-theme=true
RNS Number : 4693M Card Factory PLC 23 May 2022
23 May 2022
Card Factory plc
Annual Financial Report and Notice of AGM
Card Factory plc ("Card Factory" or the "Company") announces that it has
published its Annual Report and Accounts for the year ended 31 January 2022
and Notice of the Company's 2022 Annual General Meeting.
The Annual General Meeting is to be held at the Company's registered office,
at Century House, Brunel Road, Wakefield 41 Industrial Estate, Wakefield, WF2
0XG at 11.00 a.m. on Thursday 23 June 2022.
Copies of the documents listed below have been posted to shareholders on
Friday 20 May 2022:
1. Annual Report and Accounts 2022;
2. Notice of 2022 Annual General Meeting; and
3. Form of Proxy for the 2022 Annual General Meeting.
The Annual Report and Accounts and the Notice of the 2022 Annual General
Meeting will also be accessible later today via the Company's investor
relations website www.cardfactoryinvestors.com
(http://www.cardfactoryinvestors.com) . In compliance with LR 9.6.1, the
Company has today submitted electronic copies of the above documents to the
National Storage Mechanism appointed by the Financial Conduct Authority and
these will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Card Factory's preliminary results announcement on 3 May 2022 (which is
available via the Company's investor relations website referred to above)
included, in addition to the preliminary financial results for the year ended
31 January 2022, information on important events that occurred during the year
and their impact on those financial results. That information, together with
the information set out in the Appendix below is provided in compliance with
the requirements of DTR6.3.5(2)(b). This information is not a substitute for
reading the full Annual Report and Accounts for the year ended 31 January
2022.
For further information:
Ciaran Stone, Group General Counsel and Company Secretary Tel: 01924 839150
Card Factory plc
ENDS
Appendix
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Card Factory group (the
"Group") are set out below, together with details of how these are currently
mitigated. For further information on how the Group manages risk, see pages 38
to 41 of the Strategic Report and also pages 66 and 67 of the Corporate
Governance Report within the Annual Report and Accounts 2022 ("Annual
Report").
Risk Description Mitigation
Financial Risks
Shipping Shipping delays: Delays realised on incoming stock from the Far East arising Shipping delays: Stock orders brought forward to address anticipated delays
from capacity constraints, delaying supply of stock to customers. and use of multiple shipping partners to secure shipping capacity.
Since 2021: New
Shipping costs: Significant increase in container importation costs (from c. Shipping costs: Retail pricing increases applied and being planned, with
USD2,000 to current average of USD12,000) impacts profitability. ongoing review of country of supply (including on-shoring supply), container
volumes and fill to reduce overall costs.
Geopolitical Instability Suppliers: Specific categories of product rely on one supplier, region or Suppliers: Diversification of supply base, including on-shoring supply to the
country. China remains as a substantial source of supply. UK. No product exposure to Russia or Ukraine. Planned global review of supply
chain to identify alternatives.
Since 2021: Unchanged
Customers: Restricted supply may impact availability or require price
increases for the consumer. Profitability could be impacted from lost or Customers: Diversification of supply mitigates availability, with price
reduced sales. increases being implemented with analysis on price elasticity.
Tariffs: Duties and tariffs could force need for alternative supply. Tariffs: Ongoing identification of changes to duties and tariffs to respond as
required.
Impact of Covid-19 New variants or outbreaks may require mandatory store closure or reduce store Processes, training, signage and PPE capable of being deployed as required.
footfall, impacting revenue and profitability, however, risk of further Planned omnichannel and growth of retail partnerships will provide additional
Since 2021: Reduced government restriction is considered increasingly remote. revenue outside of our store estate. Headroom in banking covenants provides
some scope to absorb impact of mandatory store closures.
Finance & Treasury Bank facilities: Future lockdowns or restrictions on trade causing Bank facilities: Headroom in banking covenants and cash flow forecasts are
underperformance could cause cash flow constraints or risk breach of banking kept under review, with contingency planning to address any identified issues.
covenants.
Since 2021: Unchanged
FX/Commodities: Hedging for US Dollars currency requirements and energy
FX/Commodities: The Group is exposed to foreign currency exchange rate effected for up to three years.
fluctuations and commodity pricing (including wood pulp and energy).
Margin pressure: Regular review of retail pricing and maintain margins and
Margin pressure: Inflation and price increases may impact operating margins efficiency improvements and cost controls adopted to manage overheads.
for the business.
Operational Risks
ERP Implementation Ongoing design and phased implementation of ERP systems (Enterprise Resource Initial phase implementation (including finance and master data) completed
Planning) to replace end-of-life core IT infrastructure. Significant risk of without any material disruption. Re-phasing to include incremental
business disruption, data loss or inefficiencies if design, planning, testing implementation phases has been undertaken to reduce risks on cut-over
and transition are not successful. Risks that the solution may not fully
Since 2021: Unchanged realise the expected benefits and provide the required platform to realise the and to reduce reliance on legacy systems at risk of failure in advance of peak
strategic plan, including development of the omnichannel offer to customers, trading seasons and to enable realisation of key components of the strategic
improvement of engagement with retail partners and operational efficiencies in plan. Additional focus on business process engineering, resourcing and change
our retail stores. management being deployed support successful implementation.
IT Infrastructure & Security IT infrastructure: Unsupported and legacy software, some of which is subject IT infrastructure: The IT strategy implementation is ongoing, which includes
to material tailoring, requires ongoing support to maintain functionality and ongoing specialist support for legacy systems and migration to new systems,
significant transactional volumes. Realisation of strategic objectives is including the ERP implementation (see above).
partially restricted by current system limitations.
Since 2021: Unchanged
IT security: Cyber expertise is employed within the business, with appropriate
IT security: Reliance on IT systems to support all operations could be exposed measures and future plans to continue to address multiple cyber risks,
to cyber risks. alongside further risk mitigations arising from replacement of legacy systems.
Business continuity Production failure: The business places significant reliance on its Printcraft Production failure: Business Continuity and Disaster Recovery plans have been
(single site) facility which prints 70% of cards and a significant proportion fully assessed and updated with scenario planning and training scheduled. This
of personalised online orders. If this site is unable to operate, there could includes identification of alternative suppliers for impacted production
be a significant impact on operations. processes, although outsourcing will impact profitability. Insurance is also
Since 2021: Increased
maintained.
Online fulfilment: Online orders are primarily fulfilled from the same
Printcraft single site, with reliance on specialist packaging equipment. Online fulfilment: Short-term outages can be mitigated by adjustment of
Capacity limitations, if not addressed, may limit sales opportunities in peak delivery times for online orders. Business Continuity plans include use of
seasons. third parties, with the ongoing IT infrastructure improvements and ERP
implementation expected to further improve IT resilience and functionality.
Planning permission has been obtained to construct an additional building to
create capacity for online fulfilment, to relieve capacity constraints.
Loss of key personnel and organisational culture Loss of key personnel: Risk that the business doesn't have the expertise and Loss of key personnel: A number of changes to the management team have been
capacity to meet the requirements of the business, in particular to deliver effected with additional capacity constraints having been identified and
Since 2021: Unchanged complex change to realise the strategic targets. appropriate appointments prioritised.
Organisational culture: Failure to maintain and develop a cohesive culture Organisational culture: Improvements to pay and benefits, values review,
capable of realising the Group's strategic objectives. leadership framework and DE&I consultations and strategy developments,
demonstrate progress against colleague engagement feedback.
Supplier CSR breach Supply base audits: Risk of failure by suppliers to maintain compliance Supply base audits: Processes adopted for suppliers to agree to appropriate
standards in their supply chains (e.g. Modern Slavery, Anti Bribery & standards, which are subject to regular audit to validate compliance, with a
Corruption) and for products supplied (e.g. safety and labelling standards) strict 'no audit - no order' policy in place.
which could damage Card Factory's reputation.
Since 2021: Unchanged
Getting Personal: The risk profile for most suppliers to Getting Personal is
Getting Personal: Suppliers to the Getting Personal business (who do not also significantly lower, with limited supplies from the Far East. Plans are in
supply Card Factory) have not been subject to the same supply base development to extend the quality control and technical team's scope to
requirements adopted by Card Factory brands. include these suppliers with adoption of appropriate requirements to mitigate
risks.
Retail Partner exposure Underperformance: Card Factory may not realise the growth in profitable Underperformance: Following a period of transition, a Business Development
revenue from retail partners, which is a significant component for future team is being formed to build relationships with existing partners and develop
growth of the business. a pipeline of future partners.
Since 2021: New
Brand impact: Card Factory's brand or reputation could be damaged by actions Brand impact: Brand standard requirements are being developed to provide a
by retail partners. clear framework for partners, with regular reviews adopted. Enhanced
requirements will be incorporated in any future retail partner requirements.
Strategic Risks
Investor Relations Risk that investor regard for Card Factory investment is restricted, with Additional investor relations expertise recruited to improve investor
limited conviction that the strategy and targets can be achieved. communications, to ensure clearer articulation of the strategy and to
Since 2021: Unchanged demonstrate progress made and to share additional data and insight in respect
of the card and gifting markets.
ESG Compliance and climate change risks Investors: Failure to develop sufficiently ambitious targets and demonstrate Investors: Ongoing development of ESG planning and target setting, including
progress could result in reduced investment appetite in Card Factory, material progress on DE&I strategy.
depressing share price.
Since 2021: Unchanged
Customers: Ongoing brand strategy development will include articulation of ESG
Customers: Customer demand may be impacted if ESG brand perceptions are not policy and developments to customers.
realised, impacting long-term prospects.
Energy and GHG emissions: Electricity prices fixed for a number of years with
Energy and GHG emissions: Availability, reliability of energy supply and specialist third party expertise engaged to assess and develop a trajectory
increased costs could impact trade. towards being carbon neutral.
Adapting to customer preferences Product and range development: Realisation of strategic targets relies upon Product and range development: Design, buying and merchandising teams are
successful adaptation to changing customer preferences for purchase via our using increased insight and data analysis to inform product and range
developing sales channels, including increased focus on omnichannel and retail decisions, with greater customer and competitor analysis.
partners.
Since 2021: Unchanged
Customer and marketing insight: Marketing and insight capabilities are being
Customer and marketing insight: Card Factory has historically adopted no developed, with support from partners such as Kantar and Brandvue Savanta to
meaningful customer and marketing insight to drive empirical decision making. improve understanding of our customers and to embed customer insight into
decision making.
Customer service and fulfilment: Realisation of a true omnichannel experience
for customers will require enhanced fulfilment and service expectations, which Customer service and fulfilment: Development of systems and capabilities is in
must be achieved for successful ongoing growth. progress to launch click and collect during FY23, with further enhancements
scheduled thereafter.
Brand customer experience Brand perception: Card Factory's brand recognition has fallen since 2019. If Brand perception: A customer marketing function is in development to develop
not addressed it could lead to transactional decline. and implement a brand strategy to elevate the brand's key attributes.
VFM proposition: Card Factory's strength in its value offering has been
Since 2021: New impacted by Covid-19 and increased competition from supermarkets. Price
increases may also impact the value proposition to customers. VFM proposition: The newly formed customer marketing team will increase
marketing activity, to elevate the VFM messaging and perception.
LFL declines: The UK card market is realising reduced volume demand, and if
not addressed, growth targets may not be achieved. LFL declines: Implementation of the strategic plan is designed to address LFL
declines, including an increase in range and sales of complementary
categories, increasing customer retention and use of marketing to extend brand
appeal to new customers.
Directors' Responsibility Statement
The Annual Report and Accounts 2022 contains a statement of directors'
responsibility by Darcy Willson-Rymer, Chief Executive Officer, and Kristian
Lee, Chief Financial Officer, by order of the Board in the following form:
"We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole; and
· the Strategic Report includes a fair review of the development
and performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy."
Related Party Transactions
Details of the only material transactions with related parties during the
financial year ended 31 January 2022 are set out in note 28 of the financial
statements on page 151 of the Annual Report and Accounts.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END ACSBKNBNBBKDAPB