REG - Card Factory PLC - Final Results <Origin Href="QuoteRef">CARDC.L</Origin> - Part 2
28/03/2017 07:06
- Part 2: For the preceding part double click ID:nRSb6757Aa
- - 65.7 64.6
Transactions with owners, recorded directly in equity
Issue of shares - 0.3 - - - - 0.3
Share based payment charges - - - - - 0.2 0.2
Taxation on share based payments recognised in equity - - - - - (0.1) (0.1)
Dividends (note 8) - - - - - (81.2) (81.2)
Total contributions by and distributions to owners - 0.3 - - - (81.1) (80.8)
At 31 January 2017 3.4 201.9 2.0 (0.5) 2.7 40.0 249.5
Consolidated cash flow statement
For the year ended 31 January 2017
Note 2017 2016
£'m £'m
Cash inflow from operating activities 10 99.4 92.2
Corporation tax paid (17.6) (13.0)
Net cash inflow from operating activities 81.8 79.2
Cash flows from investing activities
Purchase of property, plant and equipment (8.6) (10.5)
Purchase of intangible assets (1.8) (1.1)
Payment of deferred consideration - (0.8)
Proceeds from sale of property, plant and equipment - 0.1
Interest received 0.1 0.3
Net cash outflow from investing activities (10.3) (12.0)
Cash flows from financing activities
Proceeds from bank borrowings - 144.2
Purchase of interest rate derivatives (0.1) (0.5)
Interest paid (2.6) (3.3)
Repayment of borrowings (5.0) (182.5)
Proceeds from new shares issued 0.3 -
Dividends paid (81.1) (82.8)
Net cash outflow from financing activities (88.5) (124.9)
Net decrease in cash and cash equivalents (17.0) (57.7)
Cash and cash equivalents at the beginning of the year 11.3 69.0
Closing cash and cash equivalents 11 (5.7) 11.3
Notes to the financial statements
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').
Basis of preparation
The financial information contained in this preliminary announcement does not
constitute the company's statutory accounts for the year ended 31 January 2017
within the meaning of section 434 of the Companies Act 2006 (the "Act") but is
derived from those accounts. Statutory accounts for the year ended 31 January
2017 will be delivered to the registrar in due course. The auditor has
reported on those accounts. The report was (i) unqualified, (ii) did not
included a reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Underlying profit and earnings
The Group has chosen to present an underlying profit and earnings measure. The
Group believes that underlying profit and earnings provides additional useful
information for shareholders. Underlying earnings is not a recognised profit
measure under EU IFRS and may not be directly comparable with 'adjusted'
profit measures reported by other companies. The reported non-underlying
adjustments are as follows:
Net fair value remeasurement gains and losses on derivative financial
instruments
The Group utilises foreign currency derivative contracts to manage the foreign
exchange risk on US Dollar denominated purchases and interest rate derivative
contracts to manage the risk on floating interest rate bank borrowings. Fair
value gains and losses on such instruments are recognised in the income
statement to the extent they are not hedge accounted under IAS 39. Such gains
and losses relate to future cash flows. In accordance with the commercial
reasoning for entering into the agreements, these gains/losses are deemed not
representative of the underlying financial performance in the year and
presented as non-underlying items. Any gains or losses on maturity of such
instruments are presented within underlying profit to the extent the gain or
loss is not recognised in the hedging reserve.
EPOS asset disposals and accelerated depreciation
Electronic point of sale ('EPOS') software implemented over recent years is to
be upgraded with a replacement system offering enhanced capabilities. The
resulting loss on disposal of redundant assets and accelerated depreciation
arising on assets to be replaced in advance of their original estimated useful
economic life are considered a one-off event and not representative of
underlying performance for the year. As such they are presented as a
non-underlying item.
Other non-underlying operating expenses
In January 2016, Card Factory plc announced the retirement and succession of
the Chief Executive Officer. Costs attributable to the recruitment of the new
CEO and dual remuneration costs during the handover period are presented as a
non-underlying item. In January 2017, Card Factory plc announced the
retirement and succession of the Chief Financial Officer. Costs attributable
to the recruitment of a new CFO are presented as a non-underlying item.
Refinanced debt issue cost amortisation
Debt issue costs totalling £1.8 million were expensed to the income statement
in the prior period on completion of an amended and extended borrowing
facility on 26 June 2015. This expense relates to costs that were not yet
amortised in relation to the 30 May 2014 refinancing and is presented as a
non-underlying item.
1 Non-underlying items
2017 2016
£'m £'m
Cost of sales
(Loss)/profit on foreign currency derivative financial instruments not designated as a hedge (0.6) 3.9
Operating expenses
Loss on disposal of redundant EPOS assets (0.9) -
Accelerated depreciation on EPOS assets (0.2) -
Other non-underlying operating expenses (0.4) (0.3)
(1.5) (0.3)
Net finance expense
Refinanced debt issue cost amortisation (note 6) - (1.8)
Loss on interest rate derivative financial instruments not designated as a hedge (note 6) (0.2) (0.1)
(0.2) (1.9)
2 Segmental reporting
The Group has two operating segments trading under the names Card Factory and
Getting Personal. Card Factory retails greeting cards, dressing and gifts in
the UK principally through an extensive store network. Getting Personal is an
online retailer of personalised cards and gifts. Getting Personal does not
meet the quantitative thresholds of a reportable segment as defined in IFRS 8.
Consequently the results of the Group are presented as a single reportable
segment. Revenues outside of the UK are not significant at less than £0.1
million.
The Chief Operating Decision Maker is the Board of Directors. Internal
management reports are reviewed by the Board of Directors on a monthly basis.
Performance of segments is assessed based on a number of financial and
non-financial KPIs including EBITDA as defined in note 4 and profit before
tax.
3 Operating profit
Operating profit is stated after charging/(crediting) the following items:
2017 2016
£'m £'m
Staff costs (note 5) 98.5 91.1
Depreciation expense
- owned fixed assets 9.2 8.6
Amortisation expense 1.7 1.1
Operating lease rentals:
- land and buildings 38.9 36.0
- plant, equipment and vehicles 0.5 0.4
Loss on disposal of fixed assets 1.1 0.1
Foreign exchange gain (2.6) (4.0)
Non-underlying items included in the above are detailed in note 1.
4 Underlying EBITDA
Underlying earnings before interest, tax, depreciation and amortisation
('EBITDA') represents underlying profit for the period before net finance
expense, taxation, depreciation and amortisation.
2017 2016
£'m £'m
Underlying operating profit 87.8 85.3
Underlying depreciation and amortisation* 10.7 9.7
Underlying EBITDA 98.5 95.0
* Underlying depreciation and amortisation excludes £0.2m accelerated
depreciation on EPOS assets (see note 1).
5 Staff numbers and costs
The average number of people employed by the Group (including Directors)
during the year, analysed by category, was as follows:
2017 2016
Number Number
Management and administration 357 321
Operations 9,571 9,220
9,928 9,541
The aggregate payroll costs of all employees including Directors were as
follows:
2017 2016
£'m £'m
Employee wages and salaries 89.4 81.1
Equity-settled share based payment expense 0.2 1.3
Social security costs 4.6 4.5
Defined contribution pension costs 0.4 0.3
Total employee costs 94.6 87.2
Agency labour costs 3.9 3.9
Total staff costs 98.5 91.1
6 Finance income and expense
2017 2016
£'m £'m
Finance income
Bank interest received (0.1) (0.3)
Finance expense
Interest on bank loans and overdrafts 2.6 3.3
Amortisation of loan issue costs 0.2 2.1
Fair value loss on interest rate derivative contracts 0.2 0.1
3.0 5.5
Net finance expense 2.9 5.2
Amortisation of loan issue costs in the prior period included £1.8 million in
relation to previous loan facilities, expensed to the income statement on
completion of an amended and extended borrowing facility on 26 June 2015 and
presented as non-underlying, see note 1. Fair value losses on interest rate
derivative contracts are presented as non-underlying items, see note 1.
7 Taxation
Recognised in the income statement
2017 2016
£'m £'m
Current tax expense
Current year 17.4 16.8
Adjustments in respect of prior periods - (0.1)
17.4 16.7
Deferred tax (credit)/charge
Origination and reversal of temporary differences (0.3) 0.5
Adjustments in respect of prior periods (0.1) 0.1
Effect of change in tax rate 0.1 -
(0.3) 0.6
Total income tax expense 17.1 17.3
The effective tax rate of 20.7% (2016: 20.7%) is higher than the standard rate
of corporation tax in the UK. The tax charge is reconciled to the standard
rate of UK corporation tax as follows:
2017 2016
£'m £'m
Profit before tax 82.8 83.7
Tax at the standard UK corporation tax rate of 20% (2016: 20.16%) 16.6 16.9
Tax effects of:
Expenses not deductible for tax purposes 0.5 0.4
Adjustments in respect of prior periods (0.1) -
Effect of change in tax rate 0.1 -
Total income tax expense 17.1 17.3
8 Dividends
The Board is recommending a final dividend in respect of the financial year
ended 31 January 2017 of 6.3 pence per share (2016: 6.0 pence per share),
resulting in a total final dividend of £21.5 million (2016: £20.4 million).
The dividend will, subject to shareholders' approval at the Annual General
Meeting on 25 May 2017, be paid on 9 June 2017 to shareholders on the register
at the close of business on 5 May 2017. No liability is recorded in the
financial statements in respect of this final dividend as it was not approved
at the balance sheet date.
Dividends paid in the year: Pence per share 2017 2016
£'m £'m
Special dividend for the year ended 31 January 2017 15.0p 51.1
Interim dividend for the year ended 31 January 2017 2.8p 9.6
Final dividend for the year ended 31 January 2016 6.0p 20.4
Special dividend for the year ended 31 January 2016 15.0p 51.1
Interim dividend for the year ended 31 January 2016 2.5p 8.5
Final dividend for the year ended 31 January 2015 4.5p 15.4
Interim dividend for the year ended 31 January 2015 2.3p 7.8
81.1 82.8
Dividends totalling £81.1 million (2016: £82.8 million) were paid in the year
with a further £0.1 million (2016: £0.3 million) accrued in relation to share
based long term incentive schemes.
9 Earnings per share
Basic earnings per share is calculated by dividing the profit for the period
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the period.
Diluted earnings per share is based on the weighted average number of shares
in issue for the period, adjusted for the dilutive effect of potential
ordinary shares. Potential ordinary shares represent employee share incentive
awards and save as you earn share options.
The Group has chosen to present an alternative earnings per share measure,
with profit adjusted for non-underlying items to reflect the Group's
underlying profit for the year. Underlying earnings is not a recognised profit
measure under IFRS and may not be directly comparable with 'adjusted' profit
measures used by other companies.
2017 2016
(Number) (Number)
Weighted average number of shares in issue 340,798,812 340,696,235
Weighted average number of dilutive share options 171,016 478,006
Weighted average number of shares for diluted earnings per share 340,969,828 341,174,241
£'m £'m
Profit for the financial year 65.7 66.4
Non-underlying items 1.8 (1.4)
Total underlying profit for underlying earnings per share 67.5 65.0
pence pence
Basic earnings per share 19.3 19.5
Diluted earnings per share 19.3 19.5
Underlying basic earnings per share 19.8 19.1
Underlying diluted earnings per share 19.8 19.1
10 Notes to the cash flow statement
Reconciliation of operating profit to cash generated from operations
2017 2016
£'m £'m
Profit before tax 82.8 83.7
Net finance expense 2.9 5.2
Operating profit 85.7 88.9
Adjusted for:
Depreciation and amortisation 10.9 9.7
Loss on disposal of fixed assets 1.1 0.1
Cash flow hedging foreign currency movements (0.2) 2.4
Share based payments charge 0.2 1.3
Operating cash flows before changes in working capital 97.7 102.4
Decrease/(increase) in receivables 1.1 (3.0)
Increase in inventories (1.0) (8.9)
Increase in payables 1.6 1.7
Cash inflow from operating activities 99.4 92.2
11 Cash and cash equivalents
2017 2016
£'m £'m
Cash at bank and in hand 3.0 11.3
Unsecured bank overdraft (note 12) (8.7) -
Net cash and cash equivalents (5.7) 11.3
12 Borrowings
2017 2016
£'m £'m
Current liabilities
Unsecured bank loans and accrued interest 0.1 0.1
Unsecured bank overdraft 8.7 -
8.8 0.1
Non-current liabilities
Unsecured bank loans 129.3 134.1
This information is provided by RNS
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