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celebrate
all life’s moments
Annual Report
and Accounts 2024
We are the UK’s leading specialist retailer of cards, gifts and celebration essentials,
with an estate of over 1,000 stores across the UK & Ireland as well as an expanding
international presence in South Africa, Australia and the Middle East, and a
growing online and omnichannel offer.
To deliver on our purpose of making sharing in and celebrating life’s moments
special and accessible for everyone, we design and manufacture an extensive
range of high quality cards, gifts and celebration essentials at exceptional value.
Welcome to cardfactory – where everyone
can celebrate life’s special moments
Strategic Report
1 FY24 highlights
2 Our focus
8 Our investment case
10 Chair’s statement
12 Our markets
14 Our brand
16 Our business model
18 CEO’s review
20 ‘Opening our New Future’ strategy
22 Strategy in action
32 ESG
40 Climate change and TCFD
48 Our stakeholders (Section 172 statement)
56 CFO’s review
64 Risk management
69 Non-financial and sustainability
information statement
Financial Statements
116 Independent auditor’s report
124 Consolidated income statement
124 Consolidated statement of comprehensive income
125 Consolidated statement of financial position
126 Consolidated statement of changes in equity
127 Consolidated cash flow statement
127 Notes to the financial statements
155 Parent Company statement of financial position
155 Parent Company statement of changes in equity
156 Parent Company cash flow statement
156 Notes to the Parent Company financial statements
Company Information
161 Glossary
165 Advisers and contacts
Governance
70 Board of Directors
72 Chair’s Letter – Corporate Governance
73 Corporate Governance Report
80 Chair’s Letter – Audit & Risk Committee
81 Audit & Risk Committee Report
84 Chair’s Letter – Remuneration
Committee
88 Directors’ Remuneration Report –
Remuneration Policy
96 Annual Report on Remuneration
108 Chair’s Letter – Nomination Committee
109 Nomination Committee Report
110 Directors’ Report
115 Statement of Directors’ Responsibilities
Contents
Delivering
on our
purpose
pages 2-3
Delivering
through
our
strategy
pages 4-5
Delivering
through
our people
and culture
pages 6-7
2.4
(4.0)
15.1
FY22
12.9
FY23
14.4
FY24
FY21
FY20
11.1
(16.4)
65.2
FY22
52.4
FY23
65.6
FY24
FY21
FY20
113.6
79.9
124.8
FY22
107.8
FY23
118.7
FY24
FY21
FY20
(3.9)
0.1
(0.5)
FY22
6.7
FY23
7.6
FY24
FY21
FY20
0.9
2.4
1.1
FY22
0.5
FY23
0.3
FY24
FY21
FY20
364.4
285.1
451.5
FY22
463.4
FY23
510.9
FY24
FY21
FY20
Governance Financial StatementsStrategic Report
1
FY24 HIGHLIGHTS
Delivering the building blocks for growth
£65.6m
Profit Before Tax (£m)
14.4p
Basic EPS
(p)
Summary of the financial period
– Continued positive momentum across
thebusiness driving revenueand profit
growth.
– Strong performance in stores
underlinesstrategic role in our
omnichannel ambition.
– Strategy delivering positive outcomes
across all building blocks of growth.
– Cultural progress and new sustainability
strategy launched.
– Further strengthening of the balance
sheet with reduction in net debt.
– Updated capital allocation policy in place
and resumption of dividend.
£510.9m
Revenue (£m)
+7.6%
cardfactory LFL sales (%)
2
(excluding periods of store closure)
0.3x
Leverage
2
(excluding lease liabilities)
£118.7m
Operating Cash Flow (£m)
More about us online:
www.cardfactoryinvestors.com
1. The above financial KPIs are either measures calculated in accordance with IFRS (see financial statements starting on page 124) or are
Alternative Performance Measures.
2. See the glossary on pages 161 to 164 for Alternative Performance Measures (APMs) and other explanatory information.
FY24 means the financial year to 31 January 2024.
Financial Key Performance Indicators (KPIs)
1
Card Factory plc Annual Report and Accounts 20242
Delivering on our purpose is helping
cardfactory unlock our future growth.
Through our extensive and expanding range of affordable
and high-quality cards, gifts and celebration essentials we are
helping customers create truly memorable celebrations that
drive satisfaction and trust. Our extensive store network and
the investments we are making in our online and omnichannel
propositions make it easier to create a celebration. Through
our partner network in the UK and internationally, we are more
accessible to more customers in more places.
OUR FOCUS
We make sharing in and
celebrating life’s moments
special and accessible
foreveryone.
purpose
Delivering on our
Governance Financial StatementsStrategic Report
3
We are living our purpose
Our purpose is the thread that ties
everything we do at cardfactory together,
ensuring we deliver an exceptional
experience for our customers, drive
product innovation and achieve our
online and omnichannel ambitions.
Within our extensive store network,
colleagues are engaging customers to
understand how we can help make the
life moment they are celebrating special.
As we transform into an omnichannel
business, our offer has never been
moreaccessible.
We are diversifying our product range,
expanding our gifts and celebration
essentials offer and ensuring that
we provide the broadest selection of
products and categories that can help
our customers celebrate the special
moment that they are planning both
inthe UK and internationally.
Card Factory plc Annual Report and Accounts 20244
OUR FOCUS CONTINUED
strategy
Delivering through our
We are the leading omnichannel retailer of cards,
giftsand celebration essentials, with an extensive UK
&Ireland footprint and growing international presence.
FY24 was a year of delivery for our ‘Opening Our New
Future’ strategy. We achieved significant milestones
across all our areas of focus.
By delivering on the strategy, cardfactory will become:
• The first omnichannel brand helping customers
everyday to celebrate life’s special moments;
• The UK’s no.1 destination for all customers seeking
unrivalled quality, value, choice, convenience and
experience; and
• A global competitor putting cards and gifts in the
hands of more customers.
Governance Financial StatementsStrategic Report
5
Delivering on our strategy
As we deliver on our ‘Opening Our New
Future’ strategy, we are achieving significant
milestones across our three primary areas of
focus: 1. online and omnichannel; 2. gifts and
celebration essentials and 3. partnerships. Core
business growth continues with investment
into the core of the business: our stores in the
UK and Ireland, with highlights including 26
netnew stores opening in FY24, with 43 stores
opened or refurbished over the year.
Online & omnichannel
Our first omnichannel proposition,
Click & Collect, which combines our
online and stores channels, has been
operating across our UK stores for almost
12 months. Wealso completed the
replatforming of both cardfactory.co.uk
and gettingpersonal.co.uk, which provides
the foundation we are building on while
we invest in our online future, expanding
our online range, and improving our
customerexperience.
Gifts & celebration essentials
The continued expansion of our gifts and
celebration essentials ranges is driving sales
growth. This has been supported by a space
realignment programme across 729 UK &
Ireland stores that has created additional
space for these products without sacrificing
the breadth of range for our greeting cards.
Partnerships
FY24 saw two milestone partnership
agreements signed. Through our partnership
with Liwa, the first cardfactory stores are
trading in the Middle East. With Matalan,
we have expanded our partnership to full
rollout across all their UK stores. Finally, our
acquisition of SA Greetings added 6,500
partnership distribution points as well as
company owned and franchise-operated
Cardies stores in South Africa.
Find out more about
Our strategy online
Scalable central model, driving organisational efficiency
Creative | Manufacturing | Technology
ExperienceConvenience
‘Opening Our New Future’
Value & choice
See our Strategy section on
pages 20-31
26
net new store
openings
Card Factory plc Annual Report and Accounts 20246
Creating a culture that is driving growth
Creating a culture that unlocks cardfactory’s potential is
fundamental for a business which is serious about a growth
agenda. The milestones we have achieved on the delivery of
our strategy, as outlined in our strategy section, pages 20 to
31, can be attributed to the incredible headway we have made
evolving our culture and behaviours.
Transforming business culture is a journey. It is about
understanding the fundamental challenges, unlocking
anaturalaffinity for doing the right thing, and training
toencourage the right outcomes.
We have made substantial progress on this cultural
transformation journey and the progress we have made
isalready paying off.
OUR FOCUS CONTINUED
culture
Delivering through
our people and
Governance Financial StatementsStrategic Report
7
Enablers of change
Cultural transformation
We have placed customer data at the
heart of our decision-making, resulting in
a continually improving range, which is
surprising and delighting customers and
so driving sales.
Developing our leadership
We have had a strong focus on building
our leadership team capability, ensuring
we have the right people with the right
capabilities and experience to drive
forward our growth agenda.
Transformation capability
Led through our Transformation
Office, we are building the people-led
capabilities to deliver on the five-year
transformation plan.
Pay and benefits
We are using pay and benefits changes
as a lever for retaining and attracting
fresh new talent while ensuring that
everyone is rewarded fairly, inclusively
and competitively.
Values
Our values are actively embraced
ineverything we do, from the way
wemake decisions, and interact with
our customers and each other, through
tohow we are approaching the delivery
of our strategy.
5th Best Big
Company to
Work For in 2023
1
1. Best Companies award 2023.
Read more about our colleagues onpages52–53
Card Factory plc Annual Report and Accounts 20248
Opportunity
for future growth
cardfactory is now growing within the
celebration occasions market, combining
our greeting cards offer with our growing
gifts and celebration essentials ranges.
We are addressing a c.£13.4 billion
market in the UK with further growth
opportunities internationally through
ourfranchise and wholesale partners.
Virtuous circle of design,
manufacturing and retail
provides barriers to entry
We design 80% of our cards and 70%
of our gifts and celebration essentials
in-house through our team of over 70
creative designers, verse writers and
creative management. This allows us to
rapidly respond to changes in customer
taste and needs, from changing styles
and genres, attracting Gen Z shoppers’
to understanding when customers are
looking for support in difficult times, such
as our range of cards for encouragement
and wellbeing for children. In FY24, we
manufactured 198 million of our cards
and other products at our Printcraft
production facility in Baildon, Yorkshire.
Established brand –
making celebrating life’s
moments accessible for all
We are the most trusted brand in our sector
in the UK
1
with our brand anchored in
the core truth that life needs celebration.
However, our customers find bringing
celebrations to life is not always easy;
it can feel both time consuming and
costs can add up. From this, we defined
our brand purpose: We make sharing in
and celebrating life’s moments special
and accessible for everyone. In FY24, we
began to bring the brand to life across all
touchpoints (see pages 14 and 15).
At the same time, we have made enormous
headway on improving our gifts and
celebration essentials offer, which is the
biggest growth area. We are ranked no.1
for ‘good value’ and ranked the no.1 for a
‘wide range of products
1
.’
OUR INVESTMENT CASE
Investing
in growth
In FY25, we will continue delivering on our
‘Opening Our New Future’ strategy while
maintaining growth across our market-
leading store estate.
Expanding
within
c.£13.4 billion
UK market
80% of
cards and
70% of gifts
are designed
in-house
No.1 for
range, value
and choice
1. Savanta BrandVue Feb 2023 to Jan 2024
(Awareness: 89%, Consideration: 37.4%).
Keycompetitors are specialist UK card and
giftretailers.
2. See the glossary on pages 161 to 164 for
alternativeperformance measures (‘APMs’)
andother explanatory information. FY23
meansthe financial year to 31 January 2023.
Governance Financial StatementsStrategic Report
9
Growing sales
and profit
Group revenue of £510.9 million in
FY24 was up +10.3% compared to
FY23, reflecting continued positive
momentum across the business and
effective execution of our strategy. Total
store revenue grew +8.8%, including
the contribution from 26 net new store
openings during the period. cardfactory’s
LFL
2
revenue grew +7.6%, driven by
a strong store performance, with
growth in card, gifts and celebration
essentials, combined with positive
traction in online. This led to an adjusted
PBT growth of £13.2million (+27.0%),
excluding one-off gains, to £62.1 million
(FY23:£48.8million).
Final dividend of 4.5 pence
recommended (record date 31 May 2024).
Proven sources
of growth
Our online sales rose during the key
Christmas trading period driven by
range expansion, improved customer
experience and the full rollout of Click
&Collect across our UK stores – our first
omnichannel proposition to go live.
We completed our space realignment
programme across 729 stores in the
UK& Ireland, which delivered significant
growth across gifts and celebration
essentials in the key Christmas trading
season. Highlights included +25% LFL
forgifts and +77% for confectionery,
while still driving growth for cards.
Significant progress
made expanding our
partnership relationships
Through our partnership programme,
cardfactory now has presence across
Australia, South Africa and the Middle
East. This follows the opening of
our franchisee’s first stores in Dubai,
Abu Dhabi and Al Ain, as well as the
acquisition of SA Greetings, which
includes 23 company-owned Cardies
stores, an online store, and four
franchise-operated stores, as well as
6,500 partnership distribution points
across South Africa.
In the UK, as well as the continued strength
of our relationship with Aldi, we expanded
our agreement with Matalan to rollout
across their 223 store network.
£62.1m
adjusted PBT
(up from
£48.9m
in FY23)
2
Click & Collect
nationwide
UK rollout
completed
Over 8,000
partnership
distribution
points
CHAIR’S STATEMENT
Paul Moody
Non-Executive Chair
results
Driving
Introduction
The strong revenue growth we saw in the year demonstrates
the strength of our customer proposition and the benefits of
the ‘Opening Our New Future’ strategy. There is continued
good momentum within the business with our offer is
resonating well withour customers.
Our value offer remains crucial to our success, particularly
during the ongoing cost-of-living challenge that
dominated consumer spending decisions through 2023.
Range development and innovation to broaden customer
appeal ensured we remained relevant for customers to
supportgrowth.
Investments made in support of our strategy are now
delivering positive outcomes across all growth areas with
the store evolution programme, Click & Collect and new
partnerships being particular highlights. This success
can substantially be attributed to the cultural journey
cardfactory has been on over the past three years, which
has transformed our ability to understand the needs of our
customers and execute at pace, thanks to the hard work
and dedication of colleagues. In FY24, it was clear that as
cardfactory transforms itself into a truly customer-centric
business, we have been able to more effectively respond to
the needs of ourcustomers.
Year in review
Our store estate remains our greatest asset, with the revenue
performance reflecting the strength of our value and quality
proposition, combined with the positive contribution we
saw from the store evolution programme. The market-leading
performance of our stores underlines the importance of
this customer channel with further opportunities for growth,
driven by product and range development, whilst providing a
competitive advantage in helping deliver our omnichannel
strategic ambition.
Stable transaction volumes, and an increase in average
basket value resulted in good levels of growth, which reflects
our strategic focus to increase our share of the gifts and
celebration essentials categories; they now represent over
half of sales. At the same time, we continued to enjoy good
levels of Like-for-like (LFL) card sales growth. We also saw
strong seasonal performance across the year, especially
Christmas, as customers responded well to our festive offer
across cards and the expanded gifting range.
Card Factory plc Annual Report and Accounts 202410
Find out more
about our approach
to Governance
We were encouraged by the performance in
cardfactory.co.uk, which gained traction in
the year as a direct consequence of ongoing
investment in online infrastructure and the
customer experience. Notably, the successful
launch of our Click & Collect service has
reinforced our belief in the potential
foromnichannel.
Progress in building our partnerships channel
was evidenced by signing our Middle East
partnership and the expansion of our Matalan
trial to a full UK rollout across 223 stores.
In April 2023 we were pleased to complete the
acquisition of SA Greetings. Performance has
been in line with expectations and we remain
positive about the wholesale opportunity that
this acquisition provides.
Outlook and macro environment
We continue to operate within a resilient
market, which demonstrates a continuing shift
in card purchases back to physical stores. We
remain focused on developing our core value
and quality proposition and maintaining low
price points as customers continue to seek
value for money.
The Board is encouraged by trading since
the start of the new financial year, which has
been in line with expectations. We saw positive
momentum continue across our FY25 Spring
seasons of Valentine’s Day and Mother’s Day,
with good growth across all product categories.
The planned capital expenditure of £25 million
in FY25 will ensure that we are able to deliver
further strategic progress including investment
in stores, technology infrastructure and the next
phase of the ERP implementation to support
operational efficiency and effectiveness
improvements.
Our clear focus on increased efficiencies
and productivity, alongside targeted pricing
action, will enable us to navigate the
inflationaryenvironment.
ESG strategy
In FY24 we launched our ‘Delivering a
Sustainable Future’ plan outlining an updated
and expanded sustainability plan to the end of
2028, with clear and transparent commitments
and goals. The strategy is built around five
important areas for our business, both now
and in the future: (1) Climate; (2) Waste and
Circularity; (3) Protecting Nature; (4) People &
Equity; and (5) Governance; each aligned with
the relevant UN Sustainable Development
Goals (SDGs).
This ambitious plan is aligned to the outcomes
of a materiality assessment refresh completed
in FY24 and includes significant focus on
reducing our Scope 1, 2 and 3 emissions;
waste generated across our operations;
understanding and addressing our impact
on nature and biodiversity; and ensuring
we continue to provide the right level of
pay, benefits and support for colleagues
acrosscardfactory.
Board appointments
In May 2023, the Board welcomed Matthias
Seeger as Chief Financial Officer. Matthias
brings extensive financial experience to the
business with the expertise and values that will
support cardfactory’s strategic projects and
significant change programme over the next
few years.
Capital allocation policy
The Board is pleased to confirm that, following
the repayment of CLBILs in September 2023
and Term Loan A at the end of January 2024,
we are no longer restricted from paying
dividends. Therefore, the Board has approved
an updated capital allocation policy, which
reflects our commitment to balancing
investment in driving the growth of the business
and delivering cash returns to shareholders,
which together should drive shareholder value.
At the AGM on 20 June 2024, the Board will
recommend reinstating an ordinary dividend
of 4.5p per share for FY24, which includes an
amount to reflect the fact that it was not able
to pay an interim dividend in the year. Pending
shareholder approval, the dividend will be
paid on 28 June 2024 with a record date of
31 May 2024. This is a progressive dividend
policy, targeting a dividend cover of between
2x and 3x Adjusted EPS with a target Adjusted
Leverage (exc. Leases) of below 1.5x throughout
the financial year.
Summary
With continued positive momentum across the
business, the Board remains confident in the
compelling growth opportunity for the Group
and in the delivery of the FY27 targets outlined
at the Capital Markets Strategy Update in
May2023.
Paul Moody
Non-Executive Chair
30 April 2024
Governance Financial StatementsStrategic Report
11
Overall Current Consumer Sentiment Index
7
0
2
-2
-4
-6
-8
-10
-12
Feb22 Feb23July22 July23 Jan24
OUR MARKETS
The opportunity in these markets is significant
– with an estimated £8 billion
5
addressable
greeting cards opportunity, which increases to
c.£80 billion
5
when celebration essentials and
gifts areincluded.
Over 27 years, we have established a strong
foundation in the UK greeting cards market by
consistently delivering great range and quality
at low prices. We are using this foundation
to grow successfully into adjacent categories
across gifts and celebration essentials, for
instance within balloons and soft toys.
Market trends – consumer and society
Over the past year, the celebration occasions
market, like other retail markets, was and
continues to be impacted by macro trends
in the economy and in consumer behaviour.
Cost-of-living pressure on households,
driven by increased consumer prices and
interest rates, has suppressed consumer
spending power.
The cost of posting cards has also been
impacted with Royal Mail price increases in
April and October 2023 adding 30p to the
cost of first-class standard postage. With 71%
consumers posting at least one of their next five
greeting cards
6
, postage price inflation impacts
the cost of card giving for the majority. Despite
this inflationary pressure we have observed
a gradual increase in consumer economic
confidence across 2023. Globaldata’s index of
‘Overall Present Consumer Sentiment’, although
remaining negative, has increased from -6.5 to
-3.7 between February 2023 and January 2024
7
.
The celebration occasions market continues to
be resilient. Kantar UK data indicates that in
physical retail the market grew year-on-year
by+1.7%. This increase is driven by growth in
both consumer volume (+0.7%) and shopper
spend (+2.8%)
8
.
Consumers continue to seek value for money
in their purchasing of greeting cards, which is
maintained as a key driver of retailer choice
alongside wide range, quality, convenience
and availability
9
.
779m
Overall UK card
market volume
(2023)
9
£13.4bn
Targeted UK celebration
occasionopportunity
2,3,4
£80bn
Targeted international opportunity
5
Overview of our markets
Our market is defined by everything customers
need to celebrate a life moment – this is the
celebration occasions market. It is made up
of three categories: greeting cards, gifts and
celebration essentials.
• Greeting cards – cards purchased in-store
or online that help customers to celebrate
all of life’s moments and occasions, such as
birthdays, weddings and Christmas.
• Gifts – items purchased to help celebrate
a person or occasion, bought individually
or with a card. Includes stationery
(e.g.calendars and notebooks) and craft,
small toys, books, candles, homewares such
as mugs, glassware etc. and other small gift
items such as keyrings and novelty gifts.
• Celebration essentials – all the products
needed to turn a life moment into a
celebration occasion. Includes balloons,
party products, wrap, bags and accessories.
This broad celebration occasions market
is significant in size and creates a targeted
cardfactory market opportunity of c.£13.4 billion
in the UK. This includes the UK greeting cards
market worth c.£1.4 billion
2
, UK celebration
essentials at c.£2 billion
3
and the UK market
(forthese categories) of gifts at c.£10 billion
4
.
Internationally, we have identified opportunities
for cardfactory in seven priority markets.
+1.7%
Celebration occasion physical
retail market value growth (UK)
8
+1.2ppt
Celebration occasion customers
shopping with cardfactory (UK)
8
Card Factory plc Annual Report and Accounts 202412
Celebrating life’s moments is an important part of the way we live. 96%¹
ofUK adults celebrate one or more life moment occasions, ranging from
deeply personal life moments to significant collective cultural moments.
These occasions are much cherished, and shape individual, family
and community habits and rituals. Helping customers celebrate these
occasionsis what cardfactory is here to do.
To deliver the ambition of the ‘Opening Our
New Future’ strategy, our focus is to grow
within the celebration occasions market –
bothin the UK & Ireland and across
our seven target international markets.
Personal  Societal
UK greeting cards volume, channel
mix online/offline 2022 -2023
9
2022 2023
Online
Offline
85%
15%
83%
17%
1. Bespoke celebration occasions research
commissioned with Disrupt (2000 consumers
surveyed). Dec 2023.
2. cardfactory bespoke annual UK Greeting
Card Market Survey FY23 (4,501 participants)
commissioned with Dynata. Feb 2023.
3. Kantar Worldpanel Plus (Physical Retail) data to
52 w/e 22 Jan 2023 & GlobalData Retail Occasions
Series UK, Partyware 2022.
4. Kantar Worldpanel Plus (Physical Retail) data to
52 w/e 22 Jan 2023 & Whitecap Consulting Ltd.
Sept 2021.
5. GlobalData Global Expansion Project. Jul 2022.
6. cardfactory survey via OnePulse. Nov 2023.
7. GlobalDataRetail’s UK Present Consumer
Sentiment Report. Jan2023.
8. Kantar Worldpanel Plus, Celebration Occasions
Physical Retail, 52wk data to end Jan 2024.
9. cardfactory bespoke annual UK greeting cards
market surveys Feb 2023 and Feb 2024 (3034+
participants annually) commissioned with Dynata.
10. Kantar Worldpanel Plus, Celebration Occasions
Physical Retail, 52wk data to 24 Dec 2023.
In this context, the cardfactory core
proposition continues to resonate strongly.
Kantar data indicates that cardfactory has
attracted more shoppers, increasing by 1.2ppts
to 59.4%
8
of UK adults, outperforming the
total celebration occasions market. Shopper
behaviour continues to evolve with regards
to online and physical retail channels and is
returning to shopping patterns seen pre-2020,
before the Covid pandemic. Physical retail
channels are benefiting from this return, while
the online retail market is still yet to find its
new baseline. This continued rebalancing
is evidenced through the volume of cards
purchased online declining to 15% in 2023
versus 17% in 2022
9
.
Evolving competitive mix with strong
performance from celebration specialists
Competitors within the UK celebration
occasions market can be categorised
as: grocery multiples (e.g. Tesco, Asda),
celebrations specialists (e.g.cardfactory,
Clintons), discounters (e.g. B&M, Home
Bargains) and online pure-plays (e.g. Moonpig,
Funky Pigeon). The competitive context
in 2023 has evolved. Within the physical
retail celebration occasions market, grocery
multiples and celebration specialists have
experienced sales value growth of 1.5% and
2.5%respectively
10
. This contrasts with value
decline of 4.1% for the discounter segment.
Greeting cards
The UK card market consumer volume
continues to show resilience amid squeezed
household budgets. 41.6 million UK adults
purchased single greeting cards in 2023
9
,
slightly up on adults purchasing in 2022
(41.2 million). The value of greeting cards
purchasedhas also grown with the average
price paid increasing 16% from £1.66 to £1.93
9
.
While the proportion of consumers purchasing
cards remains consistently high, the volume of
cards purchased in 2023 dropped by 8% from
851 million to 779 million
9
driven by cost-of-
livingpressures.
Against a challenging 2023 consumer backdrop,
cardfactory has been successful in reinforcing
our leadership position and building share
of spend of the greeting cards market. While
greeting cards continue to be a core focus,
the dynamics and total size of the market at
c.£1.4 billion highlights the importance of our
strategy and the sizable opportunity to grow
in the
c.£12 billion celebration essentials and
giftsmarkets.
Gifts
The UK gifts market has experienced growth
in 2023. Kantar physical retail data
10
for gifts
indicates +2.6% growth in consumer spending.
Three sub-categories are driving this growth:
stationery and craft (+9%), gift vouchers and
experience days (+5.5%), and soft toys (+3.7%).
With growing consumer confidence and
decreasing inflationary pressure on household
finances, we expect to see a continued growth
trend within gift purchasing across 2024.
Celebration essentials
Consumers purchasing celebration
essentials remains high at an overall level
of 93.6% of the UK adult population. This
represents a YOY participation growth of 0.4%.
With more consumers, overall spending on
celebration essentials has increased +3.1%
across 2023
10
.
First experience
moments
Smaller, more personal
moments which are a
first in life e.g. first day
at school, first holiday,
first partner / love
Lifetime
moments
The most universal,
but not guaranteed,
these are happy
times such as
marriage, having
children, birthdays,
anniversaries
Sombre life
moments
Moments we all go
through but are less
positive such as illness
and death
Annual calendar
moments
More recent traditions
such as Valentine’s Day,
Halloween
Achievement moments
Milestone moments
that transition you
through life e.g. passing
a test, graduation, buying
first home, moving
to a new place
Personalised life moments
Specific rituals or traditions
that are idiosyncratic and
specific to the individual or
their close family e.g. arrival
of family pet, remembering
a loved one
Cultural collective
moments
Moments often based
on religious festivals or
age-old traditions
e.g. Christmas, Easter,
Eid, Diwali
Customer
life moment
celebrations
1
P
e
r
s
o
n
a
l
S
o
c
i
e
t
a
l
Governance Financial StatementsStrategic Report
13
Read more about our
Brand online
OUR BRAND
We have a market leading and well-loved brand
which has grown over 27 years since our first
storeopened in Wakefield in 1997.
Our appeal is nationwide and universal across
consumer segments. Nine out of ten consumers
areaware of cardfactory as a brand, and almost
fourin ten consumers would consider us when
choosing aretailer for a celebration occasion
3
.
A core enabler of the ‘Opening Our New Future’
strategy is the strength ofthe cardfactory brand.
At its heart isour purpose – to make sharing in and
celebrating life’s moments special and accessible
for everyone – which we have now embedded
across our organisation.
Customers associate cardfactory with value
and quality. Bespoke research conducted
in 2023
1
reports that the cardfactory brand
is strong in the main drivers of quality –
including a wide range and cards that suit
recipients. This combines with our bespoke
value research from 2022
2
to highlight
cardfactory’s overall strength in value for
money. Customers who shop with us show
a high level of satisfaction, as reflected by
our strong net promoter score relative to the
competitor average
3
.
Card Factory plc Annual Report and Accounts 202414
Bringing our brand to life for customers
and colleagues
Having defined and launched our purpose and
values in 2022, we built on those foundations
in 2023 to embed the brand in the experiences
we create both internally and externally.
1. Brand Board and ambassadors
In June 2023 we appointed a team of brand
ambassadors from across the organisation.
Their role includes championing the brand
and promoting the delivery of the purpose
within their respective functions. We also
launched our Brand Board, a bi-monthly
meeting of our ambassadors. The aim
of the Brand Board is to facilitate the
development of ideas, sharing of best
practice and providing oversight to the
delivery of functional brand plans.
2. Brand marketing
An example of our ongoing focus on
strengthening our brand is the ‘celebrate
a great deal’ marketing campaign which
launched in Q3 of 2023. The campaign
aimed to reinforce perceptions of value for
money and lowest price – both important
drivers of retailer choice in the market.
The campaign ran nationally in-store,
across social media and digital display
advertising. Additional selected regions
ran radio advertising as part of a
broader programme of media investment
testing. The campaign succeeded in
improving brand consideration and
raising brand image attributes for
value and quality. From consumer
research completed before and after
the campaign, non-cardfactory shopper
consideration increased 4ppts. Brand
image attribute strength for ‘quality’
and ‘good value’ increased by 7ppts
and8pptsrespectively
4
.
3. Brand-led service experience
Our brand strategy also drives the
experiences we deliver and features
prominently in our customer service
improvement initiative, known as ‘The
cardfactory Way’ (see pages 30 and 31).
As we look forward into 2024 and beyond,
we will continue to use our brand purpose
for inspiration. It will guide all colleagues
to focus on our customers’ needs so we
can continue helping customers celebrate
all of life’s moments.
+19pp
difference brand
awareness vs
key competitor
average
3
+20pp
difference in
consideration vs
key competitor
average
3
+14.1
difference in
NPS score vs
key competitor
average
3
1. Brand awareness
2. Brand consideration
3. NPS
• Good value
• Wide range of products
• Ease of finding what you want
• For people like you
• Trusted
• Convenient
4. cardfactory no.1 metrics
3
5. Values
• We lead the way
• We celebrate our differences
• We make it happen
• We do the right thing
• We care
1. Bespoke cardfactory quality research
commissioned with boxclever
(430+consumers). June 2023.
2. cardfactory price and value research
commissioned with boxclever, November 2022.
3. Savanta BrandVue Feb 2023 to Jan 2024.
Key competitors are specialist UK card and
giftretailers.
4. Savanta bespoke campaign impact research.
September and October 2023.
15
Governance Financial StatementsStrategic Report
2.
Manufacturing
1.
Design
3.
Retailing
3.2.1.
OUR BUSINESS MODEL
A unique
vertically
integrated
model
80
Design colleagues
469
Support colleagues
133
Manufacturing colleagues
237
Distribution colleagues
9,075
Retail colleagues
1,058
Retail stores
Data-led design ensures rapid
response to changing consumer
trends and preferences.
• End-to-end control of product chain
allows flexible and rapid adaptation e.g.
to reprint an unexpectedly popular line.
• Card designs are planned in line
with the forward price architecture
(‘design to the budget’).
Large-scale print facility inBaildon,
Yorkshire, (Printcraft) is a key USP
forcardfactory.
• Produces 70% of all cards we retail through
our store network as well
as our online cards.
• Continued investment ensures lowest
cost to operate print facilities and maintains
quality of product.
Own estate of over 1,000 retail
stores across UK & Ireland; online;
and partnering with other retailers
to extend reach.
• UK & Ireland store network is main
route to market.
• Together, our stores and online
presence is unlocking our omnichannel
growth opportunity.
All data correct as at 31 January 2024.
Card Factory plc Annual Report and Accounts 202416
Our distribution
capability
We are in the process of
expanding our distribution
capacity, providing the capacity
headroom through the five year
strategy for all omnichannel
and partner needs.
Our ongoing
potential
We continue to grow our store
estate of 1,000+ stores in the
UK & Ireland while developing
our omnichannel capabilities.
We will have additional
touchpoints through our online
offer and via our UK and
international retail partners.
Our production
capability
Our in-house manufacturing
facility produces cards for our
UK, Ireland and international
partner stores. We can produce
new ranges in as little as four
weeks and remanufacture
quick selling lines in just days.
This allows us to maintain
both our quality and value
formoneycredentials.
Our buying
capability
As part of our expansion both
internationally and across
gifting, we are developing the
sourcing and buying capability
that we need to support a fully
optimised global supply base.
This ensures we can deliver
at speed to market with a
continual focus on sustainability,
product development
and cost management,
enabling our offer to exceed
customerexpectations.
Our design
capability
Our design capability is
evolving to use more insights,
sales data and trend analysis.
This ensures our product
offering for both card and
gifts meets the needs of loyal
customers while appealing
to new demographics
in the UK and for our
partnersinternationally.
As our business transforms itself
into an omnichannel retailer with
an international presence, our
business model will evolve.
As we deliver on our ‘Opening Our New Future’
strategy, we are evolving our business model in
five areas:
Insight-led
design
Speed to
market from
UK production
Supports
global supply
base
Capacity
headroom to
meet demand
Expanding
customer
touchpoints
Governance Financial StatementsStrategic Report
17
CEO’S REVIEW
Darcy Willson-Rymer
Chief Executive Officer
Driving
Introduction
Three years into cardfactory’s transformation
journey, we are seeing the positive impact
of the changes that have been made
across the business. The strong revenue
growth we delivered in FY24 is testament
to the successful delivery of our change
programme and the hard work of colleagues
throughoutcardfactory.
By putting the customer first in our decision-
making, we have continued to innovate and
expand our offer while remaining true to our
value for money credentials. As we broaden
our appeal by extending our range across the
celebrations occasions market, we are seeing
positive responses from customers as they
choose to pair their card purchases with gifts
and celebration essentials products.
As we continue to invest in our ‘Opening Our
New Future’ strategy, we are delivering on the
key initiatives at pace and ensuring that we
are maximising our growth opportunities in
store, across our digital channels, and through
our expanding partnership programme.
Progress on our strategy delivery is ensuring
we are on track to meet our growth targets
over the five years of the plan.
FY24 performance
In FY24, revenue grew by +10.3% to £510.9
million for the twelve months with store
revenue, which represented 93.8% of total
Group revenue, growing by +8.7% compared
to the prior year. On a Like-for-like (LFL) basis
store revenue grew +7.7%, with development
of our store layout, experience and ranges
driving growth, alongside the annualisation
ofFY23 targeted price increases.
Transaction volumes remained stable
and,combined with an increase in average
basket value of +8.1% LFL, demonstrated
the importance of focusing on growing
our share of the gifts and celebration
essentialscategories.
Card Factory plc Annual Report and Accounts 202418
As we continued to respond to changing
customer needs through ongoing range
enhancements, we have increased our
average card selling price from £1.09
to £1.21. We saw card growth continue
at +4.9% while still protecting our
value-for-moneyproposition.
The positive impact of our store evolution
programme enabled the optimisation of
space within stores and balance between
card, gifts and celebration essentials. This
contributed to strong LFL growth in gifts
+15.8% and celebration essentials +6.7%.
We continued to see strong seasonal
performance across the year with our
Christmas offer performing particularly
well, leading to year-on-year increases in
transactions and average basket value.
Customer research is driving our greeting
cards designs in response to consumer trends,
leading to a wider breadth of celebratory
captions with examples including cards from
pets as well as broader diversity and inclusion.
Investment in our online capability, platform
performance, and customer experience
improvements, as well as further range
expansion, led to improved performance in
cardfactory.co.uk with LFL sales growth of
+0.4%. This traction led to an encouraging
performance in the second half of the year
with 11.4% LFL sales growth with this positive
performance continuing into FY25.
There was good progress on our partnership
strategy with both new and existing retail
partnerships, plus the acquisition of SA
Greetings, driving revenue growth of £12.0
million to £17.0 million. this included positive
contribution in FY24 from our new partnership
with Liwa Trading Enterprises in the Middle
East and from expanding our partnership with
Matalan in theUK.
Strategy delivery
FY24 was a year of delivery for our ‘Opening
Our New Future’ growth strategy. We are on
track to meet our growth ambition of revenue
of £650 million in FY27, as outlined at our
Capital Markets Strategy Update in May 2023.
Growth within our core business continued
with 26 net new stores in FY24, ensuring we
remain on track to deliver 90 new stores over
the course of the five-year plan to FY27. Our
agile store optimisation programme ensures
we continue to maintain an exceptional
record on store profitability. Within our store
evolution programme, we completed our
space realignment project in 729 stores which
saw everyday card space reduced by 7%.
There was no negative impact seen, while
gifts and celebration essentials were given
additional space resulting in sales uplift.
The successful rollout of ‘The cardfactory Way’
customer service excellence programme for
all store colleagues led to increased customer
interaction on the shop floor, enabling tailored
customer service, product recommendations
and improved basket value.
Range improvements and expansion
continued for card, gifts and celebration
essentials, with new own-label ranges, a new
stationery range and the introduction of key
licensed ranges.
Our omnichannel programme saw the
successful nationwide rollout of our new Click&
Collect service with customers opting for 7.8%
of online orders to be collected in-store and
50% of these Click & Collect transactions
were from customers new to cardfactory.co.uk.
We have already reduced customer order to
collection lead times from 3-5 days at rollout
to 1-2 days on average by September 2023.
Wider digital investment saw the completion of
the replatforming project for cardfactory.co.uk
and gettingpersonal.co.uk, enabling benefits of
using consistent systems, tools andprocesses.
Our partnership programme in the UK
continued to expand with the rollout across
all 223 Matalan stores by December 2023.
Internationally, the first four franchised stores
were opened in the Middle East with up to
36 stores planned over the next four years.
Response from customers in the Middle East
has been positive and as expected, gifts and
celebration essential ranges have performed
well given the strong gifting culturein this
market, with stationery, soft toys, balloons
and gift bags contributing to almost 50% of
total sales. The acquisition of SA Greetings
has provided a leading presence in the South
African market through 27 Cardies stores, an
online store and 6,500 partnership distribution
points (operated by wholesale partners),
while opening up strategic wholesale
growthopportunities.
People and culture
cardfactory has been on a transformative
cultural journey over the past three years and
the growth we are seeing as a business can be
linked to the cultural progress we have made.
Today, our focus is on customer, community
and purpose. By building a deep
understanding of the celebratory needs of our
customers, both in the UK and internationally,
we are able to adapt and change so that
we continue to lead the market. We are
also building an inclusive community within
cardfactory and one that is dedicated to
giving something back to the communities
we work within. Putting our purpose first in
everything we do ensures we have a collective
and collaborative approach to decision-making.
The cultural progress we have made has
been considerable. This has been recognised
through our externally facilitated Best
Companies ‘bHeard’ colleague survey, where
we received a two-star Outstanding to work
for accreditation in September 2023 and were
also recognised as the ‘5th Best Big Company
to Work For’.
ESG progress
Following the launch of our ‘Delivering a
Sustainable Future’ plan, we made good
progress across all areas of focus within
the strategy. One highlight was seeing the
results of our waste reduction efforts coming
through with the elimination of non-essential
single use plastic in our own-label products
and packaging, increasing recyclability and
engaging with suppliers to reduce waste in
products and packaging. In FY25 we will take
our plans further by publishing our science-
based, near-term targets to help deliver our
goal of ’Net Zero by 2050’. We are embedding
sustainability into business planning and
decision-making to ensure our commitments
are at the forefront of how we work and the
decisions we make every day. See pages
32 to 39 for more detail on ESG and our
sustainability plans.
Summary
With strong operating cash generation, a
continually strengthening balance sheet,
ongoing reductions in net debt and our
updated capital allocation policy in place,
we can continue to invest with confidence
in the building blocks of growth. In addition,
we continue to proactively manage risks
from inflationary headwinds. Having made
significant progress on our strategy delivery in
FY24, we are confident that we will continue
to make strategic and cultural progress in
FY25 and meet our FY27 growth targets.
Darcy Willson-Rymer
Chief Executive Officer
30 April 2024
The strong revenue growth we
delivered in FY24 is testament to the
successful delivery of our change
programme and the hard work of
colleagues throughout cardfactory.”
Governance Financial StatementsStrategic Report
19
Card Factory plc Annual Report and Accounts 202420
‘OPENING OUR NEW FUTURE’ STRATEGY
In FY24, key initiatives were delivered
and started across all pillars within our
‘Opening Our New Future’ strategy.
Major milestones were achieved across
our three primary areas of focus:
1
omnichannel (stores & online);
2
gifts & celebration essentials; and
3
partnerships.
Our ability to execute on our strategy was achieved
by focusing on the right capabilities, systems and
structures across the business.
By delivering on the strategy, cardfactory will become:
• The first omnichannel brand helping customers
every day to celebrate life’s special moments;
• The UK’s no.1 destination for all customers seeking
unrivalled quality, value, choice, convenience and
experience; and
• A global competitor putting cards and gifts in the
hands of more customers.
cardfactory,
Westfield London.
Opened April 2024.
Value & choice
Retaining our UK leadership
position incards while growing
our gifts and celebration
essentialscategories.
Read more on pages 22- 24
Convenience
Providing cardfactory customers
with an outstanding, seamless
shopping experience in the UK
and internationally.
Read more onpages 25-28
Experience
Delivering an exceptional
experience for customers and a
values-led culture of accountability
and empowerment.
Read more onpages 29-31
The leading omnichannel retailer in our sector with an extensive
UK & Ireland footprint and growing international presence
Value & choice ExperienceConvenience
cardfactory
‘Opening Our New Future’
ManufacturingCreative
Scalable central
model, driving
organisational
efficiency
Insight driven product,
design and creative
content publisher at the
heart of cardfactory IP
Ability to scale up
production to meet
increased demand in line
with projections
Enabling greater efficiency,
more agile practices and
the ability to do business
world-wide
Technology
Leadership
in card
Authority
in gifts &
celebration
essentials
Extensive
UK & Ireland
footprint
Digital
experience
innovation
Growing
international
presence
Customer
&community
focus
Passionate
colleagues
Governance Financial StatementsStrategic Report
21
Three years into cardfactory’s transformation journey,
we are seeing the positive impact of the changes that
havebeen made across the business.”
Darcy Willson-Rymer
Chief Executive Officer
We have a clear strategic direction,
detailed plans and a disciplined
approach for delivery. This is built
on the cultural and behavioural
progress we made over the last
two years, that removed barriers
to change and created the
environment to drive forward our
transformation. We have a strong
leadership team with relevant
experience and capability in place
to deliver on the building blocks of
our growth.
Card Factory plc Annual Report and Accounts 202422
Value & choice
STRATEGY IN ACTION
Continued investment in customer insight
isdriving the cardfactory range development
and product innovation across our cards,
gifts and celebration essentials categories.
By understanding our customers better than
we have ever done before, we are achieving
sales growth across all our existing and
newcategories.
Central to our card strategy is maintaining our
value-for-money proposition, which sits at the
heart of our brand purpose. As we continued
to respond to changing customer needs
through ongoing range enhancements we
have increased our average selling price from
99p to £1.11 which has been achieved through
a new higher price point balanced with a
15p price point (for limited periods). This has
allowed us to retain our value proposition with
greeting cards. We are also now delivering
year-round relevant customer promotions.
However, where customers place greater value
on the celebration, we have increased prices
and this approach has proved successful.
By using customer research, we are adapting
our greeting cards designs to respond to
consumer trends. Our range is continually
evolving to include a wider breadth of
celebratory captions with examples including
helping people celebrate a pet’s birthday,
supporting a wider breadth of religious
festivals and broader diversity and inclusion
such as cards for Pride.
For both cards as well as gifts and celebration
essentials, we have invested in simplifying the
in-store experience. Customers have responded
positively to the work we have completed
to improve the ease of shopping cards in
fixtures, installing better store navigation,
andimproving our visualmerchandising.
We are successfully delivering on our strategy
to become an authority in the gifts and
celebration essentials markets. This is a
considerable opportunity for cardfactory
with an identified addressable UK market of
c.£12 billion. Over half of our sales are now
from gifts and celebration essentials, with a
range that offers both value for money own
label ranges as well as well recognised footfall
driving third party brands. It also capitalises
on the 70% of UK customers looking for gifts
to accompany their card purchase.
Retaining our UK
leadership position in
cards while growing our
gifts and celebration
essentials categories.”
Governance Financial StatementsStrategic Report
23
Adam Dury
Chief Commercial
Officer
Space
realignment
contributed to
improved sales
Read more about
Value and Choice
online
Q: What is cardfactory’s
approach to pricing?
A
It is essential that
cardfactory retains its
value-for-money credentials
while staying true to our
quality promise. Customers
can still buy cards at just
29p and we have recently
introduced cards for as little
as 15p or 10 for £1, while
continuing to deliver year-
round relevant promotions.
At the same time, we have
continued to develop our
range, broadening our
customer appeal while
offering cards at a range of
price points as we know some
customers place a higher
value on quality and choice.
Q: How will cardfactory
drive future growth
across all three categories
of cards, gifts and
celebration essentials?
A
At the heart of our
growth strategy is our
commitment to putting the
needs of our customer first.
Through our investment in
customer insight, we are
innovating our range to
help customers celebrate an
ever-increasing breadth of
celebration and life occasions.
Q: What is the
opportunity for gifts and
celebration essentials?
A
This is a significant
growth opportunity for
cardfactory. We are
expanding into new
categories, while maintaining
a balance between own
brand products and footfall
driving third party brands.
The changes to store layouts
have been instrumental,
enabling a greater range of
products that are easy for
customers to find.
Q: How is cardfactory
maintaining its
leadership in cards?
A
We are taking a blended
strategy that optimises
customer choice with an easy
to curate range of cards,
intelligently stretching our
average selling price. This
ensures there is newness
across the range to broaden
customer appeal, and
simplifying our in-store
experience.
Between May and December 2023, we
delivered the first most significant phase of
our store evolution programme, completing
space realignment across 729 stores in the
UK & Ireland. This is a capex light initiative,
expected to pay back within a year.
The programme involved reducing average
card space within the store by 7%. As the
average store had more space allocated to
cards then gifts, reducing the card space
made more space available for our gifts and
celebration essentials ranges which were
then able to increase by 16%. The work was
completed in time for the key Christmas
trading season contributing to our highest
ever Christmas sales. The programme
supported the growth of both cards and gifts
sales with strong growth in key expanded
categories such as gifting (+40%), soft toys
(+32%), and stationery (+18%).
Another successful part of the store evolution
programme was a greater investment to refit
a smaller number of stores that builds upon a
successful trial carried out in 2022. The refits
involved an enhanced look and feel, easier
navigation through the store and other design
improvements, including increased store
flexibility and operational efficiencies. The
programme successfully delivered above the
target 10% sales uplift while remaining within
our target payback period of approximately
three years. Over the peak Christmas period,
the three trial stores saw sales growth of
30% compared to other stores. As a result, all
future new stores and refits will now adopt to
this updated store format.
The store evolution programme has helped
transform the customer experience in store
whiledriving sales growth.
CASE STUDY
&A
Card Factory plc Annual Report and Accounts 202424
Initiative Objective Progress Results Next steps
Leadership
in card
Retaining position as the UK’s
leading provider of cards.
• Maintained value for money proposition with cards
still starting from just 29p.
• Stretched the average selling price from 99p to £1.11.
• Continued to deliver year-round relevant
customerpromotions including trialling 15p or
10for£1promotion.
• Developed the range to respond to consumer trends
(including diversity, sustainability and a wider
breadth of celebratory captions) while optimising
customer choice with easy-to-shop curated
cardranges.
• Simplified the in-store experience.
• Continued positive performance in
everyday and seasonal card ranges,
with+5.4% LFL growth.
• Refined card range in response to
changing customer demand.
Grow card market authority through
continued range development and
curation, including tailored ranges
by regions and demographics, to
further improve customer choice and
value-for-money offer.
Authority
in gifts and
celebration
essentials
Grow market share within
c.£12billion gifts and
celebration essentials market.
• Over half of our sales are now from gifts and
celebration essentials.
• Space realignment in 729 stores provided 16%
additional space for gifts and celebration essentials,
while not impacting the ability to grow card sales.
• Strong growth in our gifts and
celebration essentials ranges of +9.9%
LFL, including double-digit growth in
categories such as candles and soft toys.
• Increased space in time for Christmas
trading season leading to gifts +25%
LFL & confectionery +77% LFL.
• New Disney and licensed ranges
resonated with customers.
As we continue to focus on growing UK
market share of c.£12 billion gifts and
celebration essentials market, we will
expand key categories including baby
gifting and stationery, alongside further
space optimisation for growth ranges
such as pet gifting.
Value & choice
STRATEGY IN ACTION CONTINUED
Governance Financial StatementsStrategic Report
25
Providing cardfactory
customers with an
exceptional, seamless
shopping experience
in the UK and
internationally.”
Convenience
Significant progress was made across
all the initiatives that deliver exceptional
convenience for our customers in the UK and
internationally. Building on our market-leading
physical footprint in the UK, we are creating a
seamless shopping experience for our customers
anywhere and at any time theychoose.
The transformation of cardfactory into an
omnichannel business of greeting cards, gifts
and celebration essentials began in FY24 with
the successful nationwide rollout of our Click
& Collect service, the first of our omnichannel
propositions. Customers have responded
positively with in-store collection representing
7.8% of all online orders in December 2023
and 50% of these Click & Collect transactions
from new customers to cardfactory.co.uk.
Recognising that we have an opportunity
to improve our online proposition, we
are focusing on creating a competitive
experience that meets and exceeds customer
expectations. In FY24 we completed the
replatforming project for our two sites,
cardfactory.co.uk and gettingpersonal.
co.uk, with both websites now on a common
technology base so we can leverage the
advantages of using consistent systems, tools
and processes.
Having invested in new talent and by bringing
on board a new technology partner, we are
now expanding the online range, especially
for gifting, and delivering improvement to the
customer experience.
Our partnership programme in the UK
continued to expand with the rollout across
all 223 Matalan stores. Internationally we
entered the Middle East market through a
franchise partnership with Liwa. The first
four stores have already opened, with up to
36 stores planned over the next five years.
The acquisition of SA Greetings has also
provided a leading presence in the South
Africa market which includes 23 company-
owned Cardies stores, anonline store, and
four franchise-operated stores, as well as 6,500
partnership distribution points operated by its
wholesalepartners.
Our UK store estate remains our greatest asset
with successful, profitable stores on high streets,
retail parks and other locations throughout
the UK & Ireland. As of 31 January 2024 we
had 1,058 stores across the UK & Ireland, of
which 43 are new stores or fully refitted during
the year, with a net increase of 26 stores year-
on-year. Over the course of the five year plan,
we will have added 90 additional new stores
between FY23 and FY27. Our agile management
of the store estate ensures we are responding to
changing footfall trends on high streets.
Finally, in FY24 we embarked upon our store
evolution programme making significant
in-store improvements through a space
realignment programme across 729 stores
to make shopping for our cards and gifting
range easier (see page 23 for more details).
Card Factory plc Annual Report and Accounts 202426
Read more about
Convenience
online
STRATEGY IN ACTION CONTINUED
Syed Kazmi
Executive Director for
Business Development
In April 2023, we signed a franchise partnership
with Liwa in the Middle East. The first four
stores are already open in Dubai, Abu Dhabi
and Al Ain with up to 36 stores to be opened
over the next five years.
Liwa is the ideal partner for cardfactory in
the Middle East. As a franchisee, Liwa focuses
on specialist retail brands across both value
and premium. They have the franchise rights
for a portfolio of international brands, with
a strong presence across the Middle East
region. Their business model is set up to work
collaboratively with their partner brands, with
Liwa managing the initial brand engagement
into the Middle East market.
To support Liwa we are leveraging our
in-house design studio to support their
marketing calendar with Eid and Ramadan
cards and gifts. At the same time, we’re
providing third party products as per
customer demand. As we scale further we’ll
be looking to bring more of the design and
sourcing in-house.
Our offer and approach are tailored to the
needs of each market. In the Middle East, as
well as in several other international markets,
there is a greater opportunity for gifts and
celebration essentials due to the strong gifting
culture. On average 90% of customers buy a
gift when they purchase a card, whereas in
the USA, it’s only around 45%.
Additionally, within the Middle East the average
selling price of cards is around £4.20, compared
to the cardfactory figure of just £1.11 in the UK
1
.
This gives us the chance to disrupt the market
with our value and quality offering.
1. Globaldata – July 2022.
In every way possible the stores look, feel and
operate in exactly the same way as our newer
cardfactory stores in the UK & Ireland. The
stores were built with an updated store design
concept based on the principles tested in the
UK and elevated to the mall specifications in
the market.
Response from customers in the Middle East
has been positive with customer footfall
conversion averaging 30% across the first
stores. As expected, our gifts and celebration
ranges have performed well as per the strong
gifting culture in market, with stationery, soft
toys, balloons and gift bags contributing to
almost 50% of total sales.
The Middle East is the ideal market for expanding
our international franchise footprint.
Q: What is cardfactory’s
partnership ambition?
A
Expanding our retail
partnerships are a key
element of our future growth
and for FY27 our annualised
target for partnerships is to
grow revenue to £80 million,
mostly from international
opportunities. The recent
partnership agreements we
have signed demonstrates
the progress we are making.
Q: What are your next
priorities?
A
Our focus is to work with
low to mid level complexity
model partners, such as with
Liwa in the Middle East. This
will allow us to build the
right infrastructure needed
to support accelerated
growthinternationally.
Q: What is the
franchisemodel?
A
We have two
partnership models:
franchise, where the partner
will operate everything using
our brand and offer; and
wholesale, where we’ll have
our products in store either
cardfactory branded, such as
in Matalan, or white labelled,
such as in Aldi. This is based
on a partner’s specific
requirements. Like franchise,
this could also include a
cardfactory branded shop
ina shop.
Q: What are the target
markets?
A
We have identified
seven international target
markets. These markets
were identified from
GlobalData market research
which sized the cards and
gifting opportunities within
eachmarket.
CASE STUDY
Up to 36 Middle
East stores in
5 years
(UAE, Qatar, Kuwait,
Saudi Arabia,
Bahrain, Oman)
&A
Governance Financial StatementsStrategic Report
27
Initiative Objective Progress Results Next steps
Click &
Collect
To offer customers more
convenience by giving them
more choice in how they shop
with us.
• National rollout completed April 2023. • Customers choosing to collect in store,
increasing from launch, to represent 7.8%
of orders in December 2023.
• Average order value (AOV) £5/40% higher
than average online AOV. >10% of the
orders resulted in an additional store sale.
• Improved order to collection times from 3-5
days to1-2 days.
• Working towards a pick-from-store
solution that will enable same
daycollection.
Digitally
engage
customers
in-store
To connect our online and
retail channels to give
customers a consistent and
seamless experience across
alltouchpoints.
• Initial trials to engage with customers in-store.
• Point of Sale (POS) upgrade/replacement
programme – review and selection completed.
• Loyalty – completed customer research to
understand what’s important and defined our
strategic ambition.
• Trial ongoing. • POS upgrade/replacement to enable
future omnichannel capabilities.
• Increase store awareness of
online by trialling a range of new
awarenessinitiatives.
• Working to identify where loyalty fits
within our broad technology roadmap.
Range
expansion
To generate incremental sales
by expanding the online range
into new categories.
• Launched additional personalised gifting
ranges in FY24 including a range of in-house
alcohol gifts and a selection of drop-ship
photogifts.
• 16% growth in personalised gifting sales
during Christmas.
• Focus on expansion of personalised
card and gift ranges.
• Focus on expanding celebration
essentials range, including premium
personalised balloons, fancy dress and
personalised party accessories.
Online
& App
experience
To make cardfactory.co.uk
and the cardfactory app (App)
the easiest place to create
uniquecelebrations.
• Significantly improved and enhanced the
website user and delivery experience.
• Launched attached gifting which recommends
relevant gifts when a customer adds a card
tobasket.
• Launched App-only promotions to allow us
toincentivise customers to download the App.
• Introduced tiered delivery pricing for multi-card
orders to improve gross margin position.
• 5% increase in personalised card and gift
basket mix.
• AOV +11% YoY.
• 19% growth in App sales YoY.
• Findability improvements.
• Date picker functionality for flowers
and balloons.
• Online event reminder journey
improvements.
• Product personalisation
journeyimprovements.
Convenience
Digital experience & innovation
Card Factory plc Annual Report and Accounts 202428
Convenience continued
Extensive UK & Ireland footprint
Growing international presence
Initiative Objective Progress Results Next steps
Store
evolution
programme
In-store improvements to make
shopping our gifting range
easier, improve store navigation
and overall appearance.
• Space realignment initiative rolled out across
729 stores.
• Successfully trialled new store format with
enhanced look and feel, easier navigation
andother design improvements.
• Card space reduced by 7%, gifting and
celebration essentials space increased
by16%.
• Strong growth seen from key expanded
categories: gifting (+40%), soft toys (+32%),
and stationery (+18%).
• Successfully maintained card sales from
reduced space, improving density by 9%.
• All new stores and refits in FY25
toadhere to new store format.
Relocation
strategy
Continually adapt to changing
consumer footfall trends and
ensure exceptionally few loss-
making stores.
• Continue with our core principle of lower cost,
flexible leases with a target three-to-five-year
break clause.
• Less than 1% of the retail estate is loss
making providing the business with an
exceptionally strong store portfolio.
• Continue with relocation programme.
Central
London
stores
Test central London store
format as underpenetrated
market.
• Test and learn optimisation of three trial stores. • Double digit LFL growth vs. FY23.
• Improved trading margin.
• London only ranges proving popular.
• One new London store confirmed in
FY25 (Cheapside opened March 2024).
Further openings under review.
Republic
of Ireland
stores
Expand Republic of
Ireland store portfolio as
underpenetrated market.
• Six new stores opened in the Republic of Ireland
in FY24.
• All stores achieving profitability targets. • Continue with plan for 40 Republic
ofIreland stores by FY27.
Initiative Objective Progress Results Next steps
UK & Ireland
partnerships
Secure UK & Ireland wholesale
partners that extend our UK &
Ireland distribution point reach.
• Full rollout across Matalan’s entire UK estate
of223stores in FY24.
• Profitable contribution from existing and
new partnerships.
• Identify additional partners in the UK
& Ireland and progress preliminary
discussions with current prospects.
International
partnerships
Secure franchise and wholesale
partners across our seven
international markets of interest.
• Signed franchise partnership agreement with
Liwa in the Middle East; acquired SA Greetings
inSouthAfrica.
• Profitable contribution from existing and
new partnerships.
• Four stores already opened in the
Middle East.
• SA Greetings successfully integrated into
cardfactory.
• Identify additional partners in
our seven international markets
ofinterest.
• Review of other potential
international markets.
STRATEGY IN ACTION CONTINUED
Governance Financial StatementsStrategic Report
29
Delivering an exceptional
experience for customers
and a values-led culture
of accountability and
empowerment.”
Experience
The transformation of cardfactory into a
customer-centric business is unlocking our
growth opportunity. Customer data is now at
the heart of our decision-making and touches
every part of the business.
The outcome is a continually improving range
which is surprising and delighting customers
and therefore driving sales. Customer data
has driven the thinking behind the improved
store layout and the experience that we
are rolling out across our estate in different
ways. At the same time, it is underpinning
our omnichannel strategy with our first
omnichannel service rollout, Click & Collect,
demonstrating the positive impact that
thiswill bring.
One of the most significant developments
in FY24 was the rollout of our ‘The
cardfactory Way’ customer experience
training programme across all our stores. Itis
designed to transform the way colleagues
engage customers in store, making them feel
‘welcomed’, ‘wowed’ and ‘won over’.
As well as a customer-centric transformation,
cardfactory is also on a cultural journey
involving rapid and rewarding change that is
benefiting colleagues across the business and
providing the core foundation for delivering
on our growth strategy.
We have had a strong focus on building our
leadership team capability. This has included
new talent, ensuring we have the right people
with the right capabilities and experience to
drive forward our growth agenda. In addition,
we have been investing in the time and the
training required for us to have the calibre of
leadership we need at all levels of thebusiness.
Our pay and benefits offer is being improved
to ensure we retain and attract new talent
while ensuring all colleagues are rewarded
fairly, inclusively and competitively. We have
made a commitment to continue investment
into pay and benefits in order to reach our
aspiration of being a market medianemployer.
The success of this cultural change can be
seen through the two star ‘Best Companies
To Work For’ rating we achieved in 2023, with
cardfactory being ranked the fifth ‘Best Big
Company To Work For’ in the UK. See more
about our colleague engagement on pages
52 and 53.
Read more about
Experience
online
Card Factory plc Annual Report and Accounts 202430
Steve Lilley
Executive Director
Retail Operations
&A
Q: How is cardfactory
improving the customer
experience in store?
A
Through ‘The cardfactory
Way’ we are creating a step
change in the approach store
colleagues take to engaging
customers. More time is
now spent on the shop floor
engaging with customers and
ensuring they are receiving
the direct help they need to
find the celebratory products
they areafter.
Q: How are you
measuring success?
A
As well as a new
customer feedback forum,
wehave introduced a
mystery shopper programme
across our stores, which is
driving positive change.
Q: How are
you supporting
colleaguetraining?
A
The implementation
of our new Enterprise
Resource Planning (ERP)
system is helping to free
up store colleague time
while also improving the
customer experience by
ensuring the right stock is
always available in store.
It is also enabling our new
omnichannel propositions,
which further enhance the
customerexperience.
Q: What is coming next?
A
All colleagues, especially
those in store, recognise that
to be successful we need
to deliver on our purpose
of making sharing in and
celebrating life’s moments
special and accessible
for everyone. That means
engaging our customers to
understand the life moment
they want to celebrate
and ensuring that we help
them source the products
they need to make that
celebration as special
aspossible.
The first phase of ‘The cardfactory Way’
training programme was rolled out in
2023, helping store colleagues ensure that
customers are ‘welcomed’, ‘wowed’ and
‘wonover’:
• To be Welcomed: When they come into
store or whatever channel they use, feeling
comfortable, reassured and at ease.
• To feel Wowed: To have our customers
feeling inspired and delighted; where
expectations are exceeded and
memorable moments are created.
• And to be Won-over: For our customers’
expectations to be exceeded, leaving them
positive and upbeat, feeling valued and
appreciated, and happy to have chosen
cardfactory to help create their celebration.
This first phase of the programme has delivered
positive customer engagement results. In Q3,
we had our mystery shopper programme with
scores improving by +5ppt, followed by +3ppt
in Q4, versus the start of 2023.
One example of the impact the training
can have is from the experience of Molly
Rourke, store manager of our Manchester
Arkwright store. The training for Molly and
her team helped them put more focus on
customer needs and how the team can
improve both average units per basket and
average basket value, as well as improve
mystery shopper results. The team spends
more time on the shop floor, engaging new
systems to help colleagues work smartly
onstockreplenishment.
‘The cardfactory Way’ training programme is
helping transform the customer experience in store.
CASE STUDY
STRATEGY IN ACTION CONTINUED
Governance Financial StatementsStrategic Report
31
Initiative Objective Progress Results Next steps
Pay &
benefits
Continue to focus on the right
pay and benefits to attract and
retain talent and an aspiration
to be ‘at market’.
• Increased colleague discount from 15% to 25%.
• Continued with pay philosophy of being ‘at market’
by applying our pay review considering individual
circumstance versus midpoint data whilst also
considering ongoing inflation and cost-of-living.
• Our survey results reflecting pay
and benefits which we call ‘fair deal’
showed the most significant increase
in score – up 10% which suggests the
work we are doing is impacting our
colleaguespositively.
• Introducing a trial of volunteering
days across the business.
• Build out year four of the
roadmap with a likely focus
onretirementsavings.
Leadership Our emphasis on leadership
development continues to
support on delivering our
strategy.
• Brought in specific talent to support on delivering
the strategy in several parts of the business
including the IT and Digital teams.
• Strengthened our leadership teams which supports
decision making, widens communication channels
and promotes development.
• Clearly defined talent and succession approach
which enables planning for success as well as
mitigating risk by identifying clear successors
andclear gaps.
• High levels of engagement with core
leadership development programmes;
Leading Self, and Leading Others.
• Launch of ‘women in leadership’ offering.
• Success in coaching programmes
forsenior managers.
• Launch of Women’s Network and
more activity specifically supporting
‘women in leadership’.
• Identification of ‘high potential’
colleagues and targeted
programmes to support talent
pipelinedevelopment.
• Coaching skills development for all
Regional Managers in our Retail
fieldteam.
Colleague
experience
To elevate the colleague
experience, weaving our
purpose through everything
that we do.
• Using data and insight from our survey and our
forums we can hear our colleague voice and drive
initiatives based on feedback.
• Improved our induction and onboarding processes
to improve the experience and bring through the
spirit of celebration on accepting a new role and
joining a new company.
• Highlighted recognition against our values via our
internal Colleague Moment Awards.
• Automation and visual uplift of job
offer and onboarding, improving
theexperience.
• Enhanced induction for our support centre
colleagues, refreshing our material and
highlighting our strategy and brand.
• Enhanced induction for our 6,000
seasonal colleagues ensuring a smooth
and engaging introduction to the business.
• To build a plan for ‘giving something
back’ that reflects our colleagues and
our communities.
• To continue to elevate the colleague
experience at key moments in their
employment journey such as promotions,
celebrating learning or personal family
events ensuring they have the right
support and infrastructure.
Passionate colleagues
Initiative Objective Progress Results Next steps
Customer
experience
programme
Improve customer experience
in store.
• Launched ‘The cardfactory Way’ customer
experience training programme to transform the
engagement of customers in store.
• Q3 Mystery Shopper programme scores
improved by +5ppt, followed by +3ppt in
Q4, versus the start of 2023.
• Second phase of programme being
launched in FY25.
ESG Continue to build upon
our environmental social
governance (ESG) credentials
with our aim of being
recognised as a socially
and environmentally
responsiblebusiness.
• Completion of Scope 1, 2 and 3
emissionsassessment.
• Completed refresh of materiality assessment.
• Committed to updated five-year ESG strategy
androadmap.
• Targets set for five year ‘Delivering a
Sustainable Future’ plan.
• Adopted Net Zero target by 2050.
• Net Zero goals to be finalised and
published in FY25.
Experience
Customer & community focus
Card Factory plc Annual Report and Accounts 202432
sustainability
Our
ENVIRONMENTAL,
SOCIAL, AND
GOVERNANCE (ESG)
strategy
Our sustainability strategy
is underpinned by strong
governance to ensure
we do the right thing,
acting withintegrity and
transparency, in line with
our values.”
Governance Financial StatementsStrategic Report
33
We believe that operating
sustainably is critical to
the long-term health of
ourbusiness and the world
we operate in.
FY24 marked a significant step forward in
advancing our sustainability ambition with
the launch of our ‘Delivering a Sustainable
Future’ plan. This plan was informed by an
updated materiality assessment completed
by a specialist consultancy in June 2023. This
provided a refreshed view of cardfactory’s
most significant environmental and social
impacts and risks and of the themes
prioritised by our colleagues, customers,
suppliers and other stakeholders. The
assessment highlighted that our most
material issues are:
• our Scope 3 supply chain and Scope 1 and
2 production emission levels;
• supply chain engagement and
transparency in terms of nature impacts
and maintenance of high labour
standards as we drive growth;
• continuing to reduce waste across our
business and for product end-of-life; and
• pay, benefits and cost-of-living support
forcolleagues.
‘Delivering a Sustainable Future’ addresses
these material topics, outlining an updated
and expanded sustainability plan for the next
five years to the end of 2028, with clear and
transparent commitments and goals. The
strategy is built around four important pillars
for our business, both now and in the future:
● 1. Climate
● 2. Waste and Circularity
● 3. Protecting Nature
● 4. People and Equity
We maintain a policy whereby each pillar
is aligned with the relevant UN Sustainable
Development Goals (SDGs) to ensure our
strategy is aligned to global imperatives. This
is supported by a comprehensive approach to
governance to oversee progress and embed
sustainability across our business. The goals
against each of these pillars reflect both
previous and new commitments to reflect
materiality and our Net Zero journey and
will evolve each year to build in longer-term
targets, while maintaining full transparency
of reporting against these.
Our sustainability strategy is fully aligned
with our broader business strategy. The
process of embedding sustainability into
business planning and ‘Opening Our New
Future’ strategy reviews will be a key priority
in FY25 to ensure our commitments are at the
forefront of how we work and the decisions
we make every day.
Sustainability governance
Our sustainability strategy is underpinned by strong
governance to ensure we do the right thing, acting
withintegrity and transparency, in line with our values.
Our 2023 materiality assessment refresh enabled
us to update corporate risks and opportunities and
assign appropriate actions within our core operations
and strategy. The refresh also highlighted our most
material governance requirements as incorporation
of sustainability into core business planning, decision-
making and into accountabilities and responsibilities
across our organisation.
Good governance holds us accountable to delivering
on these priorities, with clear sustainability ownership
structures at Board and senior management team level.
cardfactory’s Chair has accountability for sustainability
at a Board level, reviewing activity monthly and leading
the Board in assessing strategy, progress and risks on a
six-monthly basis. At the senior management team level,
cardfactory’s Chief Commercial Officer is responsible
for leading our sustainability programme delivery across
the business.
Our sustainability strategy, supporting roadmap and
reporting are fully transparent in terms of actions and
deliverables. We are developing an operationalisation
plan and supporting dashboard to enable our
ChiefCommercial Officer and workstream owners
toreview progress against this monthly and the
seniormanagement team to review quarterly.
At cardfactory, we combine our commitment
tovalue with an equal commitment to play
our part in protecting the planet and supporting
our colleagues and local communities.”
Card Factory plc Annual Report and Accounts 202434
Our ‘Delivering a Sustainable Future’ strategy
ESG CONTINUED
Climate Waste and
Circularity
Protecting
Nature
People
and Equity
Governance
We will play our part in tackling
the climate crisis, and adapt our
business to achieve Net Zero and
remain resilient.
Read more on page35
We will continue our journey
to become a circular business
by redesigning products and
packaging, using fewer materials,
and finding new ways to increase
recycling, recovery and re-use of
our products.
Read more on page 36
We will operate in a way that
reduces harm to our planet
and helps restore our natural
environment.
Read more onpage 37
We will actively champion the
wellbeing of everyone within
our business, supply chain and
communities by creating an
environment that allows them
tothrive.
Read more on pages38-39
We will operate with transparency
and integrity, embedding
sustainability in everything we do.
Read more on page 33
Publish Net Zero goals in FY25. Minimise waste across all
operations.
Explore further opportunities to
protect nature and biodiversity
in all of the countries in which we
operate.
Celebrate difference, ensuring
equity of opportunity and reward
for all colleagues.
Do the right thing, ensuring our
sustainability commitments are
reflected across all operations and
decision making.
Work with our suppliers to align
them to our Net Zero goals and
reduce emissions.
Increase recycling and recyclability
across operations, products and
packaging.
Reduce our use of scarce natural
resources (such as helium and
water) across operations and
supplychain.
Deliver an excellent colleague
support programme.
Increase transparency of supply
chain activity to ensure people and
environmental performance align
with sustainability commitments.
Build resilience to climate
change into our operations and
supplychain.
Redesign our products and
packaging to use less materials.
Nurture our communities and ensure
we deliver meaningfulimpact.
Address gifts and celebration
product end-of-life, exploring
opportunities for re-use or recycling.
Make sharing and celebrating life’s
moments accessible for everyone.
Governance Financial StatementsStrategic Report
35
How did we do?
Achieved
Partially achieved
Still to be achieved
Climate
We will play our part in tackling the climate crisis, achieving Net Zero to reduce our environmental
impact and adapting our business to respond to the challenges of a changing climate.
1. Compared to FY22 baseline.
Goals
• Define and publish
science-based Net Zero
targets and pathway.
• All company cars to be
electric/hybrid by end
of FY24, reducing fleet
carbon by 90%
1
.
• Complete LED rollout
in UK manufacturing by
end of FY24.
• Align top suppliers to
cardfactory Net Zero
targets.
For additional information on
Climate, please see TCFD
(Task Force on Climate-Related
Financial Disclosures) on
pages 40-47
FY24 progress highlights
We completed a Scope 1, 2 and 3 GHG emissions inventory for
cardfactory’s entire operations and supply chain for FY22.
Scope 1 675 tCO
2
e (1% of total)
Scope 2 (market-based): 5,172 tCO
2
e (7% of total)
Scope 3 70,915 tCO
2
e (92% of total)
• We have set a ‘Net Zero by 2050’ goal, and defined science-based
near-term targets to help deliver this:
– we will reduce absolute Scope 1 and 2 GHG emissions by 54.6%
by 2033 (from a 2022 base year); and
– we will reduce Scope 3 emissions by 61.1% by 2033 on an
economic intensity basis (from a 2022 base year).
• Our Net Zero pathway currently includes the following initiatives, in
line with previous goals set:
– All our company cars are now electric or hybrid.
– Our LED lighting rollout is complete across our Printcraft
manufacturing facility and stores (excludes stockroom space).
– 100% of our top suppliers have engaged with us on
environmental goals.
– Discussions are underway with our logistics partners to define options
for electrification of last-mile delivery vehicles. The technology
required for electrification of HGVs is not currently developed; this will
continue to be reviewed as new technology becomes available.
• Stage one of embedding sustainability considerations into business
planning has been completed; risks and opportunities associated
with each strategic initiative have been identified and workshopped
with the leadership team and will be reflected in the next review of
‘Opening Our New Future’ strategy.
• Targets for moving additional product manufacturing from the Far
East to UK have not yet been defined due to changing sourcing
requirements as celebration essentials and gifting ranges expand.
Plans for FY25
• Complete GHG emissions
inventory for FY23 and
FY24data.
• Complete LED rollout across
distribution centres and
support buildings.
• Define our renewable energy
transition plans, including
potential for a corporate
power purchase agreement.
• Engage with top suppliers
on Net Zero targets.
• Review current risk and
impacts of extreme weather
across the supply chain
to begin the mitigation
planning process.
• Incorporate sustainability
considerations into business
planning and strategy review
process, including sourcing
and logistical considerations
of international growth and
category expansion.
Reducing emissions
across ourbusiness
cardfactory’s commitment to
become a Net Zero business
by 2050 is driving change
across our operations and
supply chain. Alongside
switching to LED lighting and
electric or hybrid company
cars, we are defining plans
to move to renewable energy
sources and working with our
major suppliers to understand
how their own Net Zero plans
align with cardfactory’s.
Responsibility for this
change sits with colleagues
across our business,
including cardfactory’s
Head of Construction and
Maintenance:
As a major retailer, we must
tackle climate change.
As well as decarbonising
our own operations and
looking at how we can
take less from nature, we
can help motivate change
across the companies who
supply and transport our
products. Playing our part
is important to cardfactory
colleagues and this is an
example of this in action.”
Spotlight
How did we do?
Achieved
Partially achieved
Still to be achieved
Waste & Circularity
We will continue our journey to become a circular business by redesigning products and packaging,
using less materials and finding ways to increase recycling, recovery and re-use of our products.
Goals
• Remove single-use plastic from
90% of own-label products sold
1
by
end of FY24.
• Remove plastic-based glitter from
all products by end of FY24.
• Reduce in-store, point-of-sale
poster volume materials by 50%
byend of FY24
1
.
• All new gift wrap sold will be 100%
recyclable by end of FY24.
• All new gift bags and gift boxes to
be 100% recyclable by end of FY25.
FY24 progress highlights
• We have removed single-use
plastic from 90% of our own-label
products (excludes foil balloons)
andpackaging
1
.
• We have eliminated plastic-based
glitter from all products, replacing
itwith biodegradable or mica-based
alternatives.
• We have reduced our in-store,
point-of-sale poster volume
materialsby50%
1
.
• All our new gift wrap is now 100%
recyclable.
• Paper banding trial underway at
Printcraft to test viability of replacing
plastic film tertiary packaging
oncards.
• Review underway with suppliers to
investigate feasibility of moving all
paper-based product and logistics
packaging to FSC-certified.
• We are on track to label all primary
and secondary packaging to show
components and recyclability of
each component in line with new
Extended Producer Responsibility
ofPackaginglegislation.
Plans for FY25
• All new own-label soft toy fillings
will be made from 100% recycled
materials.
• Continue to review products and
packaging on an ongoing basis,
removing non-essential single-use
plastic and ensuring any remaining
plastic is recyclable.
• All our new gift bags and gift boxes
will be 100% recyclable.
• Investigate potential measures and
partnerships to address product end
of life andfurther reduce waste.
• Complete Extended Producer
Responsibility ofPackaging legislation
requirement by mid-FY25.
Redesigning our products
and packaging
Over the last three years, cardfactory
has made significant progress on our
drive to reduce waste. Our first phase
of work has focused on elimination of
non-essential single use plastic in our
own-label products and packaging,
increasing recyclability and engaging
with suppliers to reduce waste in
products, packaging and logistics.
cardfactory’s Buying Director oversees
much of this activity:
Our team’s work to tackle waste
reduction has already had a
significant impact. For example, this
year, we’ve removed 109.8 tonnes
of plastic from our party products –
equivalent to 11 million water bottles
2
and over the Christmas period we
removed a further 4.8tonnes of plastic
by replacing cellophane wrap with
labels on our festive wrappingpaper.
Where removal isn’t possible, we’ve
introduced recyclable product and
packaging components. Looking
ahead, our ultimate goal is to use less
raw materials in the first place and so
we are actively re-designing products
and packaging to help minimise our
environmental impacts.”
Spotlight
Card Factory plc Annual Report and Accounts 202436
ESG CONTINUED
1. Compared to FY22 baseline.
2. 500ml water bottles weighing 10g each.
How did we do?
Achieved
Partially achieved
Still to be achieved
Protecting nature
We will operate in a way that reduces harm to our planet and helps restore our natural environment.
Goals
• All cardfactory paper party products
to be FSC-certified by end of FY25.
• Woodland Trust partnership to
plant more than 12,000 native
trees in the UK, mitigating up
to 3,200tonnes of CO
2
during
trees’lifetime.
FY24 progress highlights
• More than 60% of cardfactory
paper party products are now
FSC-certified.
• Woodland Trust partnership expanded
to plant 25,105 native trees in the UK,
removing 6,276 tonnes of CO
2
from the
air over the lifetime of the trees.
Plans for FY25
• All cardfactory paper party products
will be FSC-certified.
• Conduct review to understand the
impact of our supply chain activity
on the natural environment, including
biodiversity loss, water use and
chemical use and disposal.
Restoring nature with the
WoodlandTrust
Trees and woods are essential in
the fight against climate change,
absorbing carbon, reducing pollution
and flooding and supporting people,
wildlife and farming in adapting
to the climate and nature crises.
However, for the UK to minimise the
pace and level of climate change to
reach its carbon Net Zero target by
2050 and adapt to its unavoidable
impacts, it needs asignificant increase
in native trees and woodland.
As a first step in our plans to protect
and restore nature, cardfactory is
partnering with the Woodland Trust to
create new native woodland through
their Woodland Carbon Scheme.
Since October 2022, the partnership
has supported the planting of 25,105
UK native trees, which have the
potential to sequester 6,276 tonnes of
CO
2
from the atmosphere throughout
their lifetime.
cardfactory’s support has enabled us to
create new native woodland and essential
green spaces, ensuring that everybody in
the UK has equitable access to the benefits
of trees where they live. The trees planted
will act as important carbon stores, aiding
the fight against climate change and
assisting nature’s recovery. Ourpartnership
stands as a great example of how a business
can actively contribute to environmental
conservation efforts.” TheWoodland Trust
partnership manager.
Spotlight
Governance Financial StatementsStrategic Report
37
1. Compared to FY22 baseline.
How did we do?
Achieved
Partially achieved
Still to be achieved
People & equity
We will actively champion the wellbeing of everyone within our business, our supply chain and our
communities by creating an environment that allows them to thrive.
Our colleagues Spotlight
Card Factory plc Annual Report and Accounts 202438
ESG CONTINUED
1. Compared to FY22 baseline.
Goals
• Continue evolving cardfactory
culture to embed our purpose,
values and sustainability
commitments.
• Expand diversity, equity and
inclusion (DE&I) data to ensure
our strategy and activity reflects
our colleague and customer
communities.
• Continue to support colleagues
with our comprehensive wellbeing
offer, covering mental, physical and
financial wellbeing.
FY24 progress highlights
• We completed ‘wellbeing leadership’
workshops for all our senior leaders to
make wellbeing integral to business
leadership and operations.
• 90% of colleagues responded to
ourannual engagement survey.
• We were named fifth ‘Best Big
Company to Work’ for in the UK
byBest Companies.
• We secured 10% improvement
on ‘fairdeal’ ratings, reflecting
colleagues’ experience of reward, pay
andbenefits.
• We revised our DE&I strategy to
drive colleague-owned activity
and engagement across all areas
of the business using the following
framework pillars: ‘Let’s Talk About’;
‘Let’s Learn’; ‘Let’s Celebrate’;
‘Let’sRaise Awareness’.
• We delivered a DE&I focus on
disability awareness.
• We increased mental health awareness
across the business and added to our
‘support’ card range with a range of
cards promoting children and young
people’s mental health awareness.
For more on our colleague initiatives,
pleasesee Our Colleagues on pages 52-53
Plans for FY25
• Launch ‘count me in’ campaign to
collect colleague diversity data and
develop diversity metrics based on
insight (continuation of FY24 plans).
• Review talent strategy to define
commitment and approach with
alignment to purpose, to include
internal mobility.
• Deliver the next phase of reward and
benefit roadmap to ensure equity of
reward across our diverse colleague
population.
• Deliver training to secure family
friendly employer accreditation.
Celebrating our differences
Making sure that every cardfactory
colleague and customer feels welcome,
valued and confident to share their
perspective is fundamental to delivering
on our purpose. Actively embracing
people of all different backgrounds,
cultures, communities and requirements
brings a richness and strength to our
team, our culture and our customers’
experience when they visit our stores
orinteract with our marketing.
Our DE&I strategy encompasses how we
recruit, welcome and develop colleagues,
how we communicate and our range of
cards and gifts. Colleagues of different
communities and backgrounds are actively
involved in developing ranges, making sure
these reflect the communities we serve and
the life moments they want to celebrate.
cardfactory’s Editorial Manager is one of
these team members:
This aspect of my job is something I am
very passionate about and proud of. This
is about representation – making sure
that everyone can go into cardfactory
and see themselves reflected. For people
who go through life feeling different, this
is so important and can make a genuine
difference in people’s lives.”
Goals
• Continue to support ‘The Card Factory
Foundation’.
• Continue to identify and support
charity and community partners that
align with our values and business.
• Continue to support colleagues
whoare engaged with local causes
and charities.
FY24 progress highlights
• We donated £518,078 to Macmillan
Cancer Support, taking the total
raised since 2006 to £8.3 million.
• We donated more than £1 million
to ‘The Card Factory Foundation’,
contributing to the Foundation’s
Match Fund, Community Fund and
Family Fund.
• We generated £125,000 in boxed
Christmas card donations for four UK
charities and donated €0.10 for every
€1.00 raised in the Republic of Ireland
toMake a Wish Ireland.
Plans for FY25
• Launch colleague volunteering
programme.
• Select FY25 charity partner(s)
forChristmas boxed cards, aligned
topurpose.
• Continue to support ‘The Card Factory
Foundation’ and charity partners.
17 years of partnership
with Macmillan Cancer Support
In FY24, cardfactory marked 17 years
of our fundraising partnership with
Macmillan Cancer Support. We have
raised £8.3 million in total through
colleague and customer donations
and matched funding of colleagues’
efforts by ‘The Card Factory
Foundation’ wherever possible.
cardfactory’s Head of Retail
Operations and Communications has
led the partnership since 2007:
In the UK, one in two people will
be diagnosed with cancer in their
lifetime and so we know supporting
Macmillan will in turn support
many colleagues and customers.
The Macmillan team manages to
make everyone’s experience of their
support feel personal and I am
honoured to be able to play a part
at a time when they are needed
more than ever. The partnership is so
successful because colleagues across
the business get involved, coming
up with new ways to raise funds.
Macmillan is part of our culture and
we are already looking forward to
hitting £9million in fundraising.”
Our communities Spotlight
Governance Financial StatementsStrategic Report
39
Card Factory plc Annual Report and Accounts 202440
CLIMATE CHANGE AND TCFD
This section details the Group’s climate-
related disclosures, in alignment to the
Task Force on Climate-Related Financial
Disclosures (TCFD) recommendations. The
overall format from the FY23 report has been
retained with the aim of providing clarity and
clearly demonstrating continued progress
against the TCFD recommendations.
The Group has achieved compliance for
all but one of the required disclosures, the
exception concerning the Groups strategies
and resilience to climate-related scenarios.
Full compliance will be achieved within the
next 12-24 months. The Group recognises this
continues to be a work in progress and, in
order to achieve compliance across all TCFD
recommendations, remains actively engaged
in initiatives that will enable it to further
improve disclosures in subsequent years. It
is anticipated that this will include a deeper
understanding and disclosure of the overall
materiality of climate-related issues and
improved links to overall business strategy.
The Group completed a materiality
assessment refresh in June 2023 to
understand potential climate-related risks,
opportunities and the impact for cardfactory.
The exercise, which included senior
management team members, considered the
likelihood of risks materialising and potential
impacts including financial, reputational,
operational or regulatory.
Business growth has also been considered
in terms of potential impact on material risk,
including the Group’s international growth
plans and expansion of celebration essentials
and gift ranges. All identified risks have
been incorporated into the Group’s overall
risk register and will form part of business
decision-making.
The business is in the process of
quantifying climate-related impacts, risks
and opportunities as part of its Net Zero
pathway planning and overall business
planning and will report on these once this
work is progressed. Therefore, the climate-
related risks, opportunities and impacts
detailed within this report are based on a
qualitativeanalysis.
There has been significant progress made
throughout FY24, with successful completion
of many of the plans detailed in the FY23
report including the full Scope 1, 2 and 3
Greenhouse Gas (GHG) assessment and the
setting of a science-based Net Zero goal.
Governance Financial StatementsStrategic Report
41
Governance
Disclose the organisation’s governance around
climate-related risks and opportunities.
TCFD recommendation Current status Updates and plans for FY25
Describe the Board’s
oversight of climate-
related risks and
opportunities.
TCFD progress
Climate-related risks and opportunities have
previously been assessed by the Board as part of
the general business risk management described
on page 65. In FY24 the Group launched the
‘Delivering a Sustainable Future’ plan; as
described in the sustainability strategy on page
34. cardfactory’s Chair has accountability for
sustainability at a PLC Board level, reviewing
activity monthly and leading the Board in
assessing strategy, progress and risks on a six-
monthly basis. At the senior management team
level, cardfactory’s Chief Commercial Officer
is responsible for leading our sustainability
programme delivery across the business.
cardfactory’s Chair is accountable for the Group’s
sustainability plan with the Chief Commercial
Officer responsible for leading the programme
across the business. The senior management
team reviews this on a quarterly basis.
Continued six-monthly reviews of the ‘Delivering
aSustainable Future’ plan by the Board.
Quarterly reviews of progress, reporting and
programme delivery by the cardfactory senior
management team.
Establish management processes for capturing
data and incorporating SA Greetings climate
impact future plans into the overall Group
strategy (along with any other future potential
business growth drivers).
Describe management’s
role in assessing and
managing climate-related
risks and opportunities.
TCFD progress
cardfactory’s Chair has accountability for
sustainability at a PLC Board level, reviewing
activity monthly and leading the Board in
assessing strategy, progress and risks on a six-
monthly basis. At the senior management team
level, cardfactory’s Chief Commercial Officer
is responsible for leading our sustainability
programme delivery across the business. The
Chief Commercial Officer, members of the senior
management team and external specialist
consultants meet on a monthly basis to review
progress to key aspects of the Climate pillar of
The Groups Sustainability strategy.
Further information regarding the Group’s
approach to managing climate-related priorities
are detailed on pages 40 to 46.
The materiality assessment refresh completed
in June 2023, along with the calculation of the
Group’s full GHG inventory, has provided deeper
insight into the Group’s climate-related risks and
opportunities. In conjunction with the continued
consultancy work, this will further inform the
Group’s strategy and future plans as part of the
‘Delivering a Sustainable Future’ plan. During FY25
there are plans to complete a climate impact
review; this will form part of the Groups’ risk
mitigation plans and will be reviewed annually.
TCFD requirements met
TCFD requirements
not yet fully achieved
Card Factory plc Annual Report and Accounts 202442
CLIMATE CHANGE AND TCFD CONTINUED
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s business,
strategy and financial planning where such information is material.
TCFD recommendation Current status Risk Timeline
Describe the
climate-related
risks and
opportunities
the organisation
has identified
over the short,
medium and
long term.
TCFD progress
Risks Opportunities
1. cardfactory’s supply chain relies extensively on imports from the
Far East. There are limited opportunities for a local supply base
for gifting ranges which could reduce our carbon footprint, whilst
maintaining our ‘value’ proposition. Our strategy targets increasing
volumes of complementary product sales, which without mitigation
will increase our carbon footprint.
1. Our strategy of increasing the proportion of cards produced in the UK, by increasing card
production capacity at Printcraft, will reduce emissions from transportation for imports
from the Far East. We will continue to look for opportunities to move manufacturing from
the Far East to the UK or Europe, to consolidate shipments and, where possible, to locate
manufacturing close to the end market.
S
M
2. cardfactory fails to engage on climate risks to identify and
pursue opportunities for competitive advantage, failing to meet
expectations of investors, customers and other stakeholders.
2. Presentation of our climate-related credentials is expected to strengthen brand
reputation which should deliver commercial benefit, as a result of meeting expectations
of investors, customers and stakeholders.
S
M
3. cardfactory’s international strategy, aimed at growing the Group’s
international presence, will increase our carbon footprint within our
own operations and the associated supply chain.
3. The Group is in the process of incorporating ESG factors into all decision making, ensuring
that international growth plans consider and mitigate environmental and social impact
alongside commercial factors. In addition, learnings from the Group’s UK & Ireland energy
reduction initiatives, full GHG inventories and ‘Delivering a Sustainable Future’ plan could
lead to an accelerated carbon mitigation programme within the international strategy.
S
M
4. Managing legacy stock, where recycling may not be economically
viable and redundancy of stock results in increased waste.
4. Improved processes to minimise legacy stock risk, including improved stock management
and more local, smaller production runs from Printcraft reduces the risk of such legacy
issues arising in the future.
S
M
5. Businesses seeking to use ‘green’ raw materials are expected
to increase demand for FSC certified raw materials (to replace
plastics and other materials e.g. in packaging). Long lead times will
constrain supply, inflating cost prices.
5. At present, use of recycled card in product ranges is not considered viable but innovation
in artificially grown pulp may address supply constraints in the future to address demand
and price inflation.
S
M
6. Changes to consumer behaviour leading to an increasing desire
to purchase sustainable products from sustainable businesses.
Areduction in revenue and market share may occur if the Group
fails to meet and disclose its ESG targets and strategy.
6. Consumer behaviour and purchasing habits are reflecting an increasing desire to choose
sustainable products from sustainable businesses. The Group’s continued focus on
disclosing and delivering on its ESG strategy and targets, and ensuring increasing visibility
of these with consumers, has potential to positively impact revenue and market share.
S
M
7. Levies and surcharges are to be applied for packaging,
Greenhouse Gas (GHG) emissions, which could increase operating
costs and require investment in alternative solutions.
7. By reducing waste and GHG emissions in advance of such levies applying, cost increases can
be minimised. Significant progress already made (see sustainability section on page 36) in
removing non-essential single-use plastic from gifting range, handmade cards and packaging.
S
M
L
8. Energy costs are expected to increase over time, particularly
withlimited energy security in the UK that could affect availability
forcardfactory’s future needs.
8. Potential opportunity for cardfactory to commit to a long-term power purchase
arrangement which can be used as a basis for investment in additional green energy
capacity and mitigate price risk from volatile wholesale electricity costs.
  
M
L
9. The Group’s business strategy includes sale of balloons, many of
which are helium filled. Helium is a non-renewable natural element
with limited supply, which may be subject to increased cost as
supply reduces.
9. Opportunity for cardfactory to innovate on alternative product ranges and balloon filling
components to anticipate availability falling and/or helium price increases.
  
M
L
10. Increased extreme weather events leading to flooding risk from
higher water levels and extreme heat waves from global warming
could impact cardfactory’s key operational sites and supply chain.
10. In terms of cardfactory’s own operations, the support centre and distribution centres are
not at any material risk from flooding. While the Printcraft facility is next to a river which
could be at risk of flooding without appropriate flood defences being adopted, the risk
to Printcraft is deemed minimal at present. As many stores are subject to relatively short-
term leases, stores can be relocated on lease events if flooding is considered to be a
material risk. cardfactory is aware that the increasing effects of climate change may start
to impact its supply chain partners and will conduct annual reviews of risk and impacts
of extreme weather as part of climate change mitigation measures.
  
M
L
Risk Term:
TCFD requirements met
TCFD requirements
not yet fully achieved
S
Short
1-2 years
Long
10-15 years
M
Medium
3-9 years
L
Governance Financial StatementsStrategic Report
43
TCFD recommendation Current status Risk Timeline
Describe the
impact of
climate-related
risks and
opportunities on
the organisation’s
business, strategy
and financial
planning.
TCFD progress
Implications
1. Improving our credentials could enhance our profile and opportunity with new trade customers and shoppers. Through delivering ‘Our Sustainable Future’ plan, this
may attract new investors, customers and stakeholders.
S
M
2. Alternative ranges and sources will be constantly reviewed to balance climate risks with maintaining a value offer to our customers.
S
M
3. Plans for the international strategy will consider country-specific climate-related legislation, property acquisitions and store fit out specifications along with the
impact and location of key suppliers within the international supply chain.
S
M
4. Improved stock management significantly reduces exposure to stock wastage. Any disposal of stock is managed through suppliers with green credentials for waste
management, to minimise the need for landfill.
S
M
5. Development of ‘recycled card’ products could be used as a unique selling proposition, whilst managing costs and improving cardfactory’s sustainability credentials.
S
M
6. Increased levels of sustainable design and materials in product and packaging development, and increased communication around ESG targets and strategy,
willbroaden customer appeal.
  
M
L
7. Planned levies and surcharges to be monitored and action taken to minimise the implications for such charges on cardfactory.
  
M
L
8. In addition to supporting development of additional green energy generation, this may mitigate future cost increases, whilst reducing the Group’s GHG emissions.
  
M
L
9. Long-term strategy to be developed to mitigate this risk while continuing to meet customer appetite for party and celebration events by developing alternative
products and exploring innovations in balloon filling components.
  
M
L
10. Plans to increase capacity at Printcraft will require extending the property, which will require an assessment of any flood defence measures to protect this key
production facility in the long term. Design and layout required to minimise risk of equipment damage if extreme flooding is realised. Climate resilience review
willidentify supply chain risk and outline measures to address this, including collaboration with suppliers and partners where needed.
  
M
L
Describe the
resilience of the
organisation’s
strategy,
taking into
consideration
different climate-
related scenarios,
including a 2°C or
lower scenario.
TCFD progress
Climate-related measures are a key pillar of our ‘Delivering a Sustainable Future’ plan and are incorporated into the risk management framework, however as reported
last year the Group is not yet in a position to fully report on its resilience with respect to specific quantified climate scenarios.
While significant steps have been made with the calculation of the Group’s first full Scope 1, 2 and 3 GHG emissions inventory and the development of a Net Zero target
and draft transition plans, the Group recognises that it is likely to take a further 12-24 months to fully undertake a rigorous and quantified climate-related scenario
planning assessment, tailored to cardfactory’s business and supply chain, before being able to meet the requirements in this area. The climate risk review planned for
FY25 will form part of this exercise and, along with a deeper understanding of key contributors to the Groups GHG emissions and overall operations in relation to climate
risk, will inform the scenario assessments and subsequent strategies.
The transition and physical scenarios that will be explored in further detail are outlined below and have been selected to reflect a realistic and current scenario risk
anda future ‘worst case’ scenario.
1.5°C scenarios
This is based on a low-carbon transition scenario (transition risk) which includes regulatory, technology and policy changes that would be required to limit global
warming to 1.5°C. This will consider the possibility of new GHG carbon taxation measures, increased costs within the supply chain and general operations along withany
other relevant factors across all territories relevant to the Group’s operations and supply chain.
4.0°C scenarios
This is based on the assumption that there is limited regulatory support for global emissions reductions, therefore leading to increasing physical climate impacts
(physicalrisk). This would include extreme weather events such as flooding and heatwaves across all territories relevant to the Group’s operations and supply chain.
Risk Term:
TCFD requirements met
TCFD requirements
not yet fully achieved
S
Short
1-2 years
Long
10-15 years
M
Medium
3-9 years
L
Card Factory plc Annual Report and Accounts 202444
CLIMATE CHANGE AND TCFD CONTINUED
Risk Management
Disclose how the organisation identifies, assesses and manages climate-related risks.
TCFD recommendation Current status
Describe the organisation’s
process for identifying and
assessing climate-related
risks.
TCFD progress
Climate-related risk is managed in accordance with the overall risk management framework and is one of the five pillars of our ‘Delivering a
Sustainable Future’ plan (see page 35). Members of the Board and senior management team are primarily responsible for identifying emerging
risks and assessing, managing and mitigating risks, with support from internal and external specialists, as appropriate. A climate impact review
and mitigation plan is planned for FY25.
Describe the organisation’s
processes for managing
climate-related risks.
TCFD progress
The Board reviews progress on the overall strategy, including climate risks, twice per year, with an appropriate member of the senior
management team nominated to manage each risk and to lead development and implementation of mitigation including assessing the size
and scope of the identified risk. The Chief Commercial Officer who is responsible for the overall management of ESG and climate-related
risks, led two substantial reviews during the year with the senior management team and provided this team with monthly updates of any
relevantconsiderations.
Describe how processes for
identifying, assessing and
managing climate-related
risks are integrated into the
organisation’s overall risk
management.
TCFD progress
Led by the Chief Commercial Officer, the senior management team reviews all climate-related risks within the ESG plan twice during the
year, ensuring all key points are identified, assessed and incorporated into the overall risk management process. Updates are provided to the
Board and its Audit & Risk Committee at six-monthly intervals and any risks requiring immediate action are addressed as a priority within
operationalactivity.
The climate-related priorities within the ‘Delivering a Sustainable Future’ plan take account of the impacts, risks and priorities for our
stakeholders identified from the materiality refresh completed in FY24.
TCFD requirements met
TCFD requirements
not yet fully achieved
Governance Financial StatementsStrategic Report
45
Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
TCFD recommendation Current status Updates and plans for FY25
Disclose
the metrics
used by the
organisation to
assess climate-
related risks and
opportunities
in line with its
strategy and risk
management
process
TCFD progress
Climate
i. In conjunction with our external consultants, cardfactory has completed the Group’s
first full GHG inventory covering Scopes 1, 2 and 3 for the FY22 year; a total of 76,762
tCO
2
e. This will be the baseline for all future reduction targets.
ii. Following the completion of the FY22 GHG emissions calculation (the baseline), various
scenarios have been considered when setting Net Zero targets aligned with Science
Based Targets methodology, and a 2033 near term has been set for theGroup:
– Reducing absolute Scope 1 and 2 GHG emissions by 54.6%
– Reduce Scope 3 emissions (economic intensity basis) by 61.1%
– Commitment to achieve Net Zero emissions ahead of the UK Government’s 2050
national target
iii. All company cars within the Group are now electric or hybrid.
iv. Completion of LED rollout in Printcraft manufacturing and cardfactory store (excluding
stockroom space).
v. The Group has measured and disclosed mandatory Scope 1 and 2 GHG emissions and
in this report a five-year trajectory can be seen; an absolute reduction of 13.17% in GHG
emissions can be observed in FY24 when compared to FY20.
vi. In relation to the mandatory GHG emissions, the Group has also measured and
disclosed an intensity metric of tCO
2
e per £m turnover. In FY24 it shows a reduction of
23.22% compared to FY20.
vii. We will continuously improve our supply chain efficiencies and look for further
opportunities to move product manufacturing from the Far East to the UK and Europe.
Waste and circularity
viii. All new gift wrap is 100% recyclable.
ix. Single use plastics removed from 90% of own labelled products and packaging
(excludes foil balloons).
x. Target set to remove single-use plastic from 90% of our products sold to customers
byend of FY24.
xi. All products are 100% plastic glitter free.
xii. Reduced point of sale poster volume materials by 50%.
xiii. Reduced bubble wrap use across Printcraft and Logistics by 55%.
Protecting nature
xiv. All cards and gift wrap are FSC certified.
xv. More than 60% of cardfactory paper party products are now FSC-certified.
xvi. The partnership with the Woodland Trust been expanded, resulting in 25,105 native
trees being planted in the UK, removing 6,276 tonnes of carbon dioxide (see page 37).
Completion of the full GHG inventory across Scopes 1, 2 and 3 covering the FY23 and
FY24 periods will be completed in FY25. This will include the addition of capturing data
for SAGreetings and incorporating the associated emissions into future targets and
reduction pathways.
Assessment of setting a Net Zero target no later than 2050 and further exploration of
alignment with key milestones as detailed within the BRC Climate Action roadmap.
Further scoping of preferred carbon reduction pathways required to meet near term and
Net Zero targets including but not limited to:
• A potential commitment to sources of renewable electricity;
• Removal of natural gas and electrification of heat;
• Further decarbonisation of the Group’s fleet, with the most immediate potential
opportunity focused on vehicles used for ‘last mile’ delivery; and
• Improved methodologies for calculating Scope 3 GHG emissions by liaising more
closely with the supply chain.
Engaging with top suppliers to share environmental goals and capture specific relevant
data to inform GHG calculations, with the ultimate aim of agreeing Net Zero goals with
all tier one suppliers.
Continue to develop the Woodland Trust partnership to restore UK native woodland.
Conduct a review to understand the impact of supply chain activity on the natural
environment, including biodiversity loss.
Further embed sustainability considerations into international expansion and supply
chain planning.
Own-label soft toy fillings to be made with 100% recyclable materials.
All new gift bags and gift boxes will be 100% recyclable.
Further review of products to remove non-essential single use plastics and investigate
potential for circular use of end-of-life products.
All cardfactory paper party products will be FSC-certified.
Maintain Woodland Trust partnership and explore further opportunities to protect
nature and biodiversity across our value chain.
TCFD requirements met
TCFD requirements
not yet fully achieved
Card Factory plc Annual Report and Accounts 202446
CLIMATE CHANGE AND TCFD CONTINUED
Metrics and Targets continued
TCFD recommendation Current status Updates and plans for FY25
Disclose Scope
1, Scope 2 and,
if appropriate,
Scope 3
greenhouse gas
(GHG) emissions
and the related
risks.
TCFD progress
See Scope 1 and Scope 2 emissions on page 47.
Scope 3 emissions for FY22 have been calculated across all relevant Scope 3 categories.
In FY22, cardfactory’s Scope 3 emissions totalled 76,762 tCO
2
e representing 92.4% of the
Groups overall GHG footprint.
Full Scope 1, 2 and 3 assessments for FY23 and FY24 will be completed in FY25
with the aim of disclosing all relevant emissions and a three year trajectory in the
FY25AnnualReport.
Describe the
targets used by
the organisation
to manage
climate-related
risks and
opportunities
and performance
against targets.
TCFD progress
The Group has measured and disclosed mandatory Scope 1 and 2 GHG emissions and a
five-year trajectory can be seen in this report. Previously no formal targets have been set,
however as set out within this report, the Group has taken numerous active steps to reduce
emissions. Significant progress has been made in FY24 as the Group has now set science-
based near term and Net Zero targets.
An absolute reduction of 13.17% in GHG emissions can be observed in FY24 when compared
to FY20.
The Group has also measured and disclosed an intensity metric of tCO
2
e per £m turnover.
In FY24 it shows a reduction of 23.22% compared to FY20.
This year, the Group has delivered its first full Scope 3 assessment (for FY22 period) and will
disclose Scope 3 GHG emissions for subsequent years in future reports.
With the full Scope 1, 2 and 3 assessment for FY22 now completed, the Group has
explored science-based Net Zero pathways and has set a near term 2033 target
(against a FY22 baseline) with the aim of setting a Net Zero target for 2050 or before
early in FY25.
During FY25 Q2 the Group expects to review the findings as a result of its compliance
with phase 3 of the Energy Savings Opportunity Scheme (ESOS). Throughout FY24 and
early FY25 physical assessments of a cross section of properties within the Group have
been conducted; identifying areas for energy saving and carbon reduction. This exercise
will assist in further informing our Net Zero pathways and investment decisions in order
to meet the Group’s reduction targets.
TCFD requirements met
TCFD requirements
not yet fully achieved
Governance Financial StatementsStrategic Report
47
Greenhouse gas emissions
Total Scope 1 and 2 GHG emissions have increased by 26.4% compared to last year. Of the total increase in Scope 1 and 2 GHG emissions, 8.2% is attributable to the increased size of our store
portfolio and expanded partnership activity in the UK. The remaining 18.2% of the increase relates to Rest of World, which is largely attributable to the acquisition of SA Greetings. Whilst total
emissions have increased compared to last year, absolute emissions have reduced by 13.17% compared to FY20, this highlights the successful impact of the energy efficiency projects; absorbing
significant business growth whilst reducing overall emissions.
Energy and Carbon Country FY24
tCO
2
e
FY24
%
FY23
tCO
2
e
FY23
%
FY22
tCO
2
e
FY22
%
FY21
tCO
2
e
FY21
%
FY20
tCO
2
e
FY20
%
Scope 1 emissions
(combustion of fuel
– direct emissions)
tCO
2
e
UK 789 63% 724 99% 672 99.6% 777 99.6% 1,029 100.0%
RoW 463 37% 4 1% 3 0.4% 3 0.4% 0 0.0%
Total 1,251 100% 728 100% 675 100% 780 100% 1,029 100%
Scope 2 emissions
(purchased energy
– indirect emission)
tCO
2
e
UK 4,852 88% 4,479 96% 4,238 99% 4,245 99% 6,754 99%
RoW 684 12% 163 4% 45 1% 44 1% 34 1%
Total 5,539 100% 4,642 100% 4,283 100% 4,289 100% 6,788 100%
Total energy use
(kWh)
UK 25,564,019 89% 25,651,206 98% 22,269,584 99% 20,476,623 99% 30,130,676 100%
RoW 3,080,177 11% 449,480 2% 225,256 1% 189,524 1% 134,830 0%
Total 28,644,196 100% 26,100,686 100% 22,494,840 100% 20,666,147 100% 30,265,506 100%
Intensity metric FY24 tCO
2
e FY23 tCO
2
e FY22 tCO
2
e FY21 tCO
2
e FY20 tCO
2
e Variance(%)
Total emissions
6,788 5,370 4,958 5,069 7,817 -13.17%
Emissions intensity
(tCO
2
e/£m turnover)
13.30 11.59 13.61 17.78 17.31 -23.22%
Methodology and emissions data
The above emissions data has been produced in accordance
with the Streamlined Energy and Carbon Reporting (SECR)
framework, under the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018. The footprint is calculated in accordance
with the Greenhouse Gas (GHG) Protocol and Environmental
Reporting Guidelines, including SECR guidance. DEFRA
emission factors have been used for all emission sources
to allow an activity to be converted into carbon dioxide
equivalent (CO
2
e).
Energy efficiency
During FY24 the Group continued and completed the
upgrade and decarbonisation of the car fleet. There are
now 25 fully electric cars and 35 hybrid cars in the fleet.
In terms of other energy efficiency action, the LED rollout
across our retail space was completed prior to FY24 (2022);
the benefit of which can be observed in the in the reduction
of UK Scope 2 emissions when compared to FY20.
Throughout FY24 the focus has been on establishing a
Net Zero target and developing draft transition plans to
achieve these targets. As a result, a range of technologies
and efficiency measures are under consideration to not
only reduce energy consumption, but also decarbonise the
Group’s activities. It is expected that the transition plans
will be further developed during FY25 with key projects
being identified for future implementation.
Card Factory plc Annual Report and Accounts 202448
OUR STAKEHOLDERS
Strengthening stakeholder
engagement
Governance Financial StatementsStrategic Report
49
The Board identifies Shareholders, Customers,
Colleagues and Suppliers as cardfactory’s key
stakeholders, whose interests significantly affect
theaccomplishment of our mission.”
Effectively engaging with our stakeholders
is crucial in ensuring their interests are
acknowledged and incorporated into the
decision-making processes of both our Board
and senior management team. This approach
promotes the long-term success of the
Company and the Group as a whole.
Moreover, the Board and senior management
team also consider the ramifications of their
decisions on a broader range of stakeholders,
such as landlords, regulators, HMRC,
debt funders, local communities and the
environment. The impact of relevant decisions
on stakeholders is included in Board reports, for
the Board and management team to deliberate
on stakeholder viewpoints, alongside alignment
of decisions with the strategic plan.
Addressing stakeholder impact
We actively recognise the repercussions of
key choices on various stakeholder groups,
ensuring their voices are acknowledged
and understood and competing interests
of stakeholder groups are accounted for
as we ensure a balanced outcome in our
decision-making. The Board takes on a
proactive role in engaging with stakeholders
while also receiving regular updates from
the management team to remain appraised
ofstakeholder concerns and issues.
For certain stakeholders, particularly
Suppliers, the Board deems it fitting for senior
management or their direct reports to lead
stakeholder engagement, provided that
insights and feedback are communicated
backto the Board.
Key performance indicators
andreporting
Monthly updates on key performance
indicators (KPIs) align with the interests of
major stakeholder groups, such as Colleagues,
Customers and Shareholders. The KPIs’
structure and content are reviewed annually
to ensure the Board and senior management
team access the most relevant data,
facilitating informed decision-making and
identifying areas for improvement. Specific
KPIs adopted and performance for the period
are set out on pages 12 to 15 and 51 (Market,
Brand and Customers), pages 1 and 50
(Shareholders), and page 52 (Colleagues).
Updated KPI reporting incorporates an
increased focus on real-time data, in line with
the Company’s shift toward a more customer-
centric mindset. This includes monthly customer
research data, featuring customer optimism,
switching data, net promoter scores and brand
awareness comparisons between cardfactory
and competing brands (see page 15).
1
Read more about our Shareholders
onpage 50
2
Read more about our Customers
onpage 51
3
Read more about our Colleagues
onpages 52-53
4
Read more about our Suppliers
onpages 54-55
Section 172 statement on stakeholder
engagement
Stakeholder consultation and use of KPI
reporting summarised on pages 49 to 55,
provide the Board insight on the (often
conflicting) priorities of key stakeholder
groups, which the Board and senior
management team assess and seek to
balance in decision-making, with full regard
to the long term consequences of decisions,
impacts on the stakeholder groups and
on cardfactory’s ‘doing the right thing’
and being a good corporate citizen. This
approach supports the Board in meeting their
responsibilities under 172(1)(a) to (f) of the
Companies Act 2006.
Card Factory plc Annual Report and Accounts 202450
OUR STAKEHOLDERS CONTINUED
Continuity in shareholder relations
Our commitment is to maintain the interactive
shareholder relations. The approaching AGM
will take place at 11am on 20 June, 2024, at
the Company’s registered office at Century
House, Brunel Road, Wakefield 41 Industrial
Estate, Wakefield, West Yorkshire WF2 0XG.
The Board invites shareholders to raise
queries before the AGM and aims to provide
written answers before the final date for
submission of proxy votes. This is intended to
assist shareholders in making well-informed
decisions. Subsequently, relevant queries
and responses will be made available on the
investor website after the AGM.
Balancing short term shareholder
returns with longer term investment
The Board has conducted an extensive review
of its capital allocation policy, with a view to
improve total shareholder return in the longer
term, in light of restrictions on dividends
being lifted from 31 January 2024. The Board
consulted a number of shareholders to
ensure it had a clear appreciation for their
preferences, to seek to develop a policy that
balances alternate priorities between cash
dividends, share buybacks, and augmenting
value through share price appreciation.
The Board has carefully weighed options
ranging from intensifying short- and medium-
term yields to pursuing strategic avenues for
resilient long-term returns. Historic, frequent
special dividends have been dispensed with,
as the Company primes for future growth
through investments in omnichannel and
partnership channels. Selective acquisitions
are also considered for strategic expansion,
allwhile preserving adaptability for
unforeseen challenges.
Consequently, the Board has updated
the Company’s capital allocation policy
(summarised in the CFO report on page
63) and adopted a clear framework that
adopts a waterfall of priorities, comprising
(1) maintaining a strong balance sheet;
(2) investing for growth; (3) returns to
shareholders (with a clear dividend
cover proposal) and (4) disciplined use
ofsurpluscash.
Shareholder engagement and
valueoptimisation
The Board is careful to incorporate
shareholder sentiment into its decision-
making. Throughout the year, Directors are
kept informed of shareholder perspectives
through various channels, including feedback
during Annual General Meetings (AGMs),
discussions and enquiries post-financial
results, the Capital Markets Update in
May2023 and other interactions.
Specifically, consultations with 17 top
shareholders in December 2023 and January
2024 shaped the proposed Remuneration
Policy amendments, allowing for the
absorption of broader shareholder insight.
Significant shareholders were also consulted
on the capital allocation policy during March
2024. Feedback was shared with the entire
Board and management team, ensuring
that the views from our core investors and
potential shareholders are respected in
pursuit of long-term returns.
Enhancing shareholder communication
The Board has redoubled its efforts to elevate
shareholder communications, prioritising
transparency and the conveyance of strategic
plans through public announcements and
investor presentations. In May 2023 we shared
a Capital Markets Strategy Update with
shareholders and in FY25 and beyond we
are committed to continually enhancing the
updates we are able to provide.
Performance insight through KPIs
Monthly performance reviews during FY24
encompassed financial KPIs, as set out on
page one and in the CFO Review on page
57, alongside a broader balanced scorecard
of 20 performance metrics that not only
resonate with our stakeholders but also offer
foresight into focal points for the business.
Notable shareholder centric measures include
like-for-like sales, profit before tax (PBT),
operating expenses and return on capital
employed (ROCE). Additional non-financial
measures tackle operation efficiency and
customer and colleague metrics. The Board
also conducts regular assessments of key
strategic initiatives, which underpin sales
growth and operational efficiencies. More
extensive internal reporting of c.30 metrics
has been adopted following a review of
internal performance reporting at the end of
the period. The extended scorecard includes
measures specific to strategic growth areas
for partnerships, omnichannel and online.
Policy updates and shareholder value
Throughout the year, key policies affecting
shareholder value, such as hedging strategies
(encompassing currency, interest rates,
and energy costs – see note 24 on page
151), the Remuneration Policy (see page 88)
alongside capital allocation and dividend
policies (see page 63), have been reviewed
and refined, taking account of the views
of our shareholders, and including specific
shareholder consultation.
Our Shareholders
1
See our Corporate Governance Report
onpages 73-79
Governance Financial StatementsStrategic Report
51
Our Customers
2
Colleagues who join research sprints can
observe, interact and collaborate with
customers, driving customer closeness
acrossthe business.
Further, analysis on basket data has been
pivotal in unlocking understanding of
customer purchase behaviour, and then
informing thinking on product range,
placement, pricing and promotions.
Defining and executing our customer
experience strategy
We continue to invest in our customer
services function with recent improvements
including system updates, chatbots, improved
customer communications, enhanced
contact centre availability and new customer
contact channels – each contributing to an
improvedcustomer journey.
Looking ahead to FY25
In FY25, we will look to further understand our
customers’ wider celebration needs, ensuring
that we are consistently serving them better.
We will also look to maximise existing customer
feedback on the cardfactory proposition and
will seek to get additional customer feedback
across all of our channels. A newly established
‘voice of the customer’ steering group, made up
of a cross-functional group of colleagues, will
focus on generating insight and driving action
in response. We remain committed to enriching
our knowledge, empowering our teams to be
curious with data and to make better, customer
focused decisions accordingly.
Insight driving action
Protecting our value proposition
While consumer anxieties have marginally
lessened year on year, the cost of living crisis
has had a significant impact. We have seen
its impact on value perceptions at large and
for many, the importance of price has grown.
Despite cardfactory being recognised
as a value for money leader, when early
signs of increasing competitor challenge
became evident, research swiftly guided
us to the most impactful response. New
pricing strategies, such as offering 15p
cards or bundles of 10 for £1, paired with
our ‘Celebrate a great deal’ campaign
proved successful, delivering positive shifts
in ‘value’ and ‘quality’ perceptions along
with ‘likelihood to recommend’. On the back
of this, we mitigated the immediate threat
and improved customer and non-customer
perceptions of cardfactory alike.
Enhancing the Christmas experience
Christmas 2022’s increased footfall and
subsequent operational challenges
highlighted areas for improvement. Insight
into the customer experience during this peak
period directed us to provide more support,
resulting in additional festive recruitment and
company-wide training in ‘The cardfactory
Way’. Despite more shoppers and the
potential for increased pressure in 2023,
positive outcomes were substantial; year-
on-year higher service audit scores, stronger
customer recommendation, more appreciation
of our service and overall a notably enhanced
festive customer experience.
Building on strong insight foundations
Understanding our customers and market
has never been more important. In FY23 we
extended our core insights capabilities to
direct future growth which was built upon in
FY24 to further refine, enrich and leverage
our customer knowledge through fresh
insights and new data sources.
Diverse insights for informed actions
We continue to use a broad range of leading
insight tools and established sources to ensure
we understand everything from macro trends
(GlobalData) to market environment (Kantar
Worldpanel) and understanding who our
customers and potential customers are through
segmentation. We look to understand how our
customers perceive and experience us through
sources such as Savanta Brandvue, Feefo,
Hotjar and ‘tellcardfactory’, our key platform
for customer experience feedback. We then
examine their ensuing behaviour through
Kantar data and internal basket analysis.
Our interaction with over 12,000 monthly
respondents through our ‘tellcardfactory’
platform highlights our data-driven
commitment to customer satisfaction, and
netpromoter score (NPS) remains a key KPI.
Weare continuously analysing changing
market dynamics alongside our customers’
evolving needs so we can refine our actions
andrespond appropriately at pace.
Elevating understanding through new
initiatives and improved data integration
In FY23, we established our new customer
segmentation. This is a framework that
positioned us to better understand
our customers, non-customers and the
headroom available for growth. In FY24, that
knowledge has been enriched. Integrating
these segments with various data sources
has identified insightful consumer trends,
preferences in products and rich understanding
of occasions and celebration-related
behaviours. As market dynamics change, the
ability to look wider and further out is critical.
Analysis undertaken to understand views
about product quality highlighted the need for
strategic action to move perception forwards
with non-customers. In response, we developed
more quality-centric marketing campaigns
to reassert our brand ethos and ‘value for
money’ credentials. This proved successful in
challenging non-customer perceptions of the
brand, as an example, doubling the levels of
brand warmth pre to post campaign
1
.
We’ve introduced new sources of consumer
research – such as our panel of soon to be
2,000 celebration enthusiasts - giving us the
ability to widen our insights on consumers,
categories and occasions.
Group discussions, polls, diaries and surveys
via this panel are not only insightful for us
but serve as a platform to nurture customer-
centric perspectives across the business.
1. Source: Savanta: cardfactory’s ‘Celebrate
a great deal’ campaign analysis.
Card Factory plc Annual Report and Accounts 202452
OUR STAKEHOLDERS CONTINUED
Our Colleagues
3
Introduction
Our ambition is to attract, develop and retain
the best talent into our business. With a
highly engaged and high performing team,
supported by an outstanding colleague
experience, we can deliver on our strategy.
We continue to develop an inclusive culture
empowered by exceptional leadership, with
celebration at our core, and driven by passion
and commitment. To build on and enhance our
colleague proposition, we use data and insights
from both our colleagues and external sources.
Engaging and communicating
withourcolleagues
Colleague voice
We value our colleagues’ contribution
and want to ensure their voices are heard.
Welisten to our colleagues in different ways
to enable us to make informed decisions
about how to invest and make improvements
whilst also considering affordability.
Best Companies, a leading employee
engagement specialist, supports in facilitating
our internal ‘bHeard’ engagement survey
which measures colleague engagement across
all areas of the business. In our latest survey
in September 2023, we received a two-star
‘Outstanding to work for’ accreditation and
were also recognised as thefifth ‘Best Big
Company To Work For’.
Colleague forums and colleague
listeninggroup
Our colleague forums provide us with an
opportunity to listen to colleagues and take
on board feedback on how they feel.
In 2023 we refreshed the forum and created
the combined listening group (CLG). We
have functional forums (for colleagues within
our stores, distribution centre and support
centre), that then roll up to combine as the
CLG which is chaired by Paul Moody, Chair.
Colleagues are able to share their experiences
and the feedback gathered from the groups
they represent. The feedback from these
groups in 2023 resulted in an increase in
ourcolleague discount from 15% to 25%.
Thisensures we prioritise what is important
toour colleagues as part of our ongoing
benefitsenhancements.
We have also used our colleague forums
to consult on proposed changes to the
Remuneration Policy and to discuss our
smartworking principles.
Key performance indicators (KPIs)
Our colleague KPIs include colleague turnover
rates, where we ended the year at 33.3% versus
a target of 35%. As the employment market
has steadied, we have seen less movement
and reduced attrition. We have continued to
measure the rate of internally filled vacancies
and have achieved 32% against a target of
19%, driven by significant movement within
retail, especially during Christmas. With
91% of our population working in stores, this
represents a positive improvement on a more
transient population. As we build out our
talent strategy, we continue our aim to move
internal talent and to develop our colleagues.
Colleague policies
In 2023 we continued to build on our suite
of people policies that support and engage
our colleagues and enable our leaders to use
clear guidelines and processes. We updated
some core people policies to simplify the
tone and to clearly mirror the ACAS (The
Advisory, Conciliation and Arbitration Service)
guidelines – these policy updates included
absence, disciplinary and grievance and
compassionate leave. Flexible working and
carer’s leave have been updated to reflect
changes to legislation in April 2024.
Reward – pay and benefits
Our ambition is to have a reward offering that
is in line with the market while providing a
differentiator that supports us in attracting and
retaining the best talent in the industry. Over the
last three years significant investment has been
made, including the introduction of a death in
Our ambition is to attract, develop
and retain the best talent into
ourbusiness.”
91%
of our population work in retail
service benefit for all, enhanced family friendly
policies including kinship leave, and building a
transparent framework around pay.
For pay, we have seen high inflation
impacting pay and pay reviews alongside an
increase to the National Living Wage of 9.8%.
This has reduced the gap between lower
earners and the next level up. A pay review
has been applied to maintain a differential
within our retail and supply teams and we
have applied a pay review for our salaried
colleagues that both reflects inflation and
our continued ambition to be a mid market
payer. We recognise that retirement benefits
have scope for improvement, consistent with
colleague feedback, however we have not
been able to progress enhancements during
FY24 given the detriment on shareholders.
We continue to evolve our colleague offer
and, from feedback, it is clear from colleagues
that there is an appetite to ‘giving something
back’. As we progress into FY25, we will
introduce a trial of volunteering days to
support our colleagues’ desire to support their
local communities.
Coaching leadership
Integral to our cultural journey is the way we
lead and our commitment to leaders as they
continue to raise their self-awareness and role
model our leadership behaviours. A core skill to
leadership at cardfactory is coaching.
This features in our ‘leading others’ programme
and for senior leadership colleagues and others
within the senior leadership group, we offer the
L5 coaching qualification apprenticeship.
Governance Financial StatementsStrategic Report
53
Diversity, equity and inclusion
Since launching our diversity, equity and
inclusion (DE&I) strategy and plan in 2021,
we’re committed to evolving our strategy to
reflect the needs of our colleague communities
and the communities we serve. We will
continue to ensure our efforts are seen and
felt throughout the business from product
to accessibility in store and through being a
family friendly employer. This coincides with
our strategy to drive activity through specific
learning opportunities such as: ‘Let’s Talk
About’, ‘Let’sLearn’, ‘Let’s Raise Awareness’
and ‘Let’sCelebrate’. These are colleague-led
sessions that reflect topics that our colleagues
want to engage with and discuss within
thebusiness. In 2023 we launched our Disability
Awareness community network group, to guide
the business on how to support colleagues with
FInd out more about
our Culture and
Values online
We do the
right thing
We make it
happen
We
celebrate our
differences
We lead
the way
We care
Our
values
• Coaching for senior female leaders; and
• Investment in supporting women across
work/life cycles from miscarriage to return
to work and menopause, with education
and awareness. The investment began
inFY24 and will continue into FY25.
Wellbeing
Following feedback in our ‘bHeard’ survey
in September 2023, wellbeing continues to
be important to our colleagues. We have an
extensive wellbeing colleague offer including
access to an employee assistance programme;
mental health first aiders and financial
wellbeing products. At the beginning
of FY25 wereminded colleagues of the
support available through a ‘We Care’ card,
which summarised our offer and the various
services around financial, physical and mental
wellbeing.
Our strategic approach to wellbeing ensures
three things:
• Prevention – understanding how
our leadership team can support or
impactwellbeing;
• Protection – knowing what colleagues need
to maintain their wellbeing at work; and
• Support - noticing when colleagues
arestruggling.
To support this strategy, we held wellbeing
leadership workshops for 78 senior leaders
inthe second half of 2023. We also continue
to support mental health awareness through
our product ranges and charitable activity.
Talent acquisition
In 2023 over 6,000 colleagues joined our
business, this included a mix of permanent
and seasonal colleagues. Our focus is to
build our direct sourcing model by creating
candidate talent pools and networks. This
will reduce our reliance on agencies and in
turn reduce spend and will increase retention
as we continue to invest in the colleague
experience at this crucial time of starting a
new job.
Talent and succession planning
In FY24 we focused on embedding talent
and succession planning deeper in the
organisation, with reviews completed down to
our senior leader group level. We have driven
talent and succession planning by building
talent pipelines, identifying successors and
creating robust development plans. This is
supported by a continued focus on coaching,
mentoring and creating opportunities to support
development and to promote from within.
Values
We launched our refreshed values in 2022,
andthey continue to guide us in the way
we do things. They are weaved into our
performance management process so
that ‘how’ we do things is measured and
is as important as the ‘what’. Our annual
recognition event, the Colleague Moment
Awards, has been elevated and is a yearly
celebration of colleagues who live and
breathe our values.
disabilities better, whether new to the business
or those who become disabled during their
appointment. This has included education and
awareness events, and learning modules plus a
manager toolkit and an improved induction. For
more information on FY24 progress highlights
and plans for FY25 see page 31.
Women in Leadership
We are determined to understand the
challenges of women at work, both historically
and in the current experiences of work.
As in many other retail organisations, we
know there is more to do to increase female
representation in our senior leadership team.
To support career progression we have
introduced a women’s network and targeted
leadership development including:
Card Factory plc Annual Report and Accounts 202454
OUR STAKEHOLDERS CONTINUED
Our Suppliers
4
– BSCI (Business Social Compliance
Initiative): A globally recognised ethical
audit, adhering to the International
Labour Organization (ILO) standards,
and conducted only by approved
auditcompanies.
– SA8000: A widely recognised set of
ethical audit standards by Social
Accountability International, applicable
to factories and organisations worldwide.
• Technical audits (based on ISO 9001)
covering products and product safety for
initial factory setup and high-risk areas,
ensuring the supplier has capability to
produce products of the required quality.
• Forest Stewardship Council
R
(FSC
R
,
Licence code: FSC-C128081) licensing
and compliance with the UK and EU
TimberRegulations.
• Compliance with Anti Bribery and
Corruption laws and regulations forms part
of the supplier on boarding process.
• Compliance with the Modern Slavery
Act; details are available in the modern
slavery statements on the cardfactory
investorwebsite.
No audit, no order policy
We maintain a steadfast ‘no audit, no
order’ policy, meaning suppliers must have
completed the onboarding processes
and received satisfactory ethical and
technical audits before an order is placed.
In 2023, several members of our cardfactory
commercial team visited East Asian suppliers,
to review ways of working and supplier
capability, as is standard practice.
FSC commitment and packaging review
In the last quarter of 2023, cardfactory
successfully passed its seventh FSC audit.
Across the supply base we continually
explore ways to increase the percentage
of FSC products across all of our product
ranges including transportation packaging.
Additionally, we will continue to work with
our suppliers to review the correct balance
between reducing plastic packaging (highly
recycled and recyclable content) with non-
recyclable packaging (landfill).
Quality assurance enhancement
We continually work with our suppliers
to ensure we develop products that are
aligned to our strategy both within the UK
and internationally, ensuring a balance
between commerciality whilst complying
with all local legislation. In the third quarter
of 2023, an additional technologist joined
the Quality Assurance team to provide our
supply base with the required support. We
also started working with an internationally
renowned testing company which ensures
products are safe, legal and suitable for all
current and future markets. The long-term
goal is to establish a first-class Quality
Assurancedepartment.
Building sustainable supplier
relationships and bolstering
ESGcommitment
Our suppliers are a key stakeholder
across our entire organisation and our
objective is to build long-term strategic
partnerships that are mutually beneficial
for both parties. Ourcommercial function
takes responsibility for managing supplier
relationships effectively to deliver the right
balance between realising the commercial
opportunity, meeting environmental
requirements and maintaining the
importance of delivering products and
services for our customers.
Supplier long term interests
Our supplier engagement and approach
recognises the benefits of developing long term,
mutually beneficial relationships with a range of
trusted suppliers, who collectively are capable
of meeting our current and future needs.
We partner with suppliers that demonstrate
long term strategic investment in their
businesses that can support our future growth
plans. We work closely with suppliers to
ensure that their strategic initiatives realise
efficiencies and economies of scale that will,
allow us to continually supply innovative
products of great quality and value to our
customers. This benefits our shareholders as
we recognise the need to ensure a balanced
return on the products we source from
thesesuppliers.
Supplier sourcing strategy
Our sourcing focus aligns to our commercial
strategy to expand our product offer on gifts and
celebration essentials. We have formed strategic
partnerships with key suppliers, specialists in
their fields, to enable range expansion and
support our sales growth and future ambitions
as a celebration destination. We listen to our
suppliers and make strategic supplier decisions
that benefit all our stakeholders. Key to defining
our supplier sourcing strategy, is the process we
follow to enable us to source the right product,
at the right quality from suppliers with the right
capability, at the right price. Meeting all these
requirements as part of a product strategy
sign-off process ensures we meet customer
needs, whilst producing good quality, legally and
ethically compliant products, which maximise
profits for our shareholders.
Supplier onboarding and requirements
Product suppliers, once selected, undergo a
thorough onboarding process, ensuring they
understand our policies, including:
• Ethical audit requirements (child labour,
forced labour, disciplinary practices, health
and safety, discrimination, freedom of
association, collective bargaining, working
hours, remuneration and environmental
aspects) through:
– SMETA (Sedex Members Ethical
Trade Audit): A globally recognised
ethical audit conducted by affiliate
auditcompanies.
Governance Financial StatementsStrategic Report
55
Our suppliers are a key
stakeholder across our entire
organisation and our objective
is to build long-term strategic
partnerships with them.”
Supplier viewpoint survey and
environmental focus
Based on feedback from supplier viewpoint
surveys in previous years, the focus has shifted
towards environmentally friendly practices
and products. We now request information
such as environmental policies and carbon
reduction programmes. The survey will be
completed by the end of Q1 of 2024, with
the collated information guiding buying and
supplier selection.
Upcoming legislation in 2025
The Quality Assurance team works
collaboratively with suppliers to identify a
pathway that mitigates risk and adheres to
the legislative requirements. This approach
ensures that the processes put in place
work for suppliers, for cardfactory and for
customers. We are aware of several new
environmental protection legislations,
including the Deposit Return Scheme,
Packaging Waste (Extended Producer
Responsibility) and Single Use Plastic Ban
(England, Wales and Northern Ireland).
There have been delays to certain legislation
coming into effect, but we are expecting
implementation from 2025.
Printcraft
We have recently invested in new
finishing machinery at our vertically
integrated card manufacturing site
(Printcraft). This new machinery will
drive efficiency gains through improved
automation which will speed up finishing
and ease capacity flow during peak. This
not only supports the future growth of our
partnerships business, but also enables us
to deliver on our ambitions to bring more
card production back to the UK.
Matthias Seegar
Chief Financial Officer
Card Factory plc Annual Report and Accounts 202456
CFO’S REVIEW
growth
Delivering
Financial highlights
The Group delivered a strong performance
and made good progress towards our strategic
ambition to deliver £650 million sales, 14% PBT
margin and 90 net new stores by FY27.
• Across our stores we continued to grow
with both higher revenues and positive and
like-for-like (LFL) sales compared to last
year, providing a strong platform for our
strategic growth plans and omnichannel
ambitions.
• We continued to strengthen our balance
sheet, with a reduction in closing net debt
of £22.8 million year-on-year (YOY) and
the repayment of CLBILs in September
2023 and Term Loan A at the end of
January 2024 resulting in the lifting of
dividendrestrictions.
• Total sales of £510.9 million increased
+10.3% from prior year, underpinned by
LFL sales of +7.7% in cardfactory stores.
• Adjusted PBT of £62.1 million up £13.2
million, reflecting a margin of 12.2% up
from 10.5% inFY23.
• Store portfolio stands at 1,058 stores at 31
January 2024, up 26 from 31 January 2023.
• Acquisition of SA Greetings for £2.5million
fixed cash consideration, which is
performing in line with expectations.
• Strong end to the year for online sales and
a positive LFL for cardfactory.co.uk for the
year of +0.4%.
• Recommencement of dividend – proposed
ordinary dividend for FY24 of 4.5 pence
pershare.
£510.9m
Revenue
£65.6m
Profit Before Tax
Governance Financial StatementsStrategic Report
57
Financial performance
FY24 FY23
Revenue £510.9m £463.4m
EBITDA £122.6m £112.0m
Profit Before Tax £65.6m £52.4m
Adjusted Profit Before Tax £62.1m £48.9m
Basic earnings per share 14.4 pence 12.9 pence
Adjusted earnings per share 13.5 pence 12.1 pence
Dividend per share 4.5 pence 0.0 pence
Net debt £34.4m £57.2m
Cash from operations £118.7m £107.8m
Adjusted Leverage (exc. Leases) 0.4x 0.8x
Adjusted PBT excludes one-off transactions, which in FY24 include a one-off gain arising on the acquisition of
SA Greetings (£2.6 million), a gain resulting from the release of provisions related to the Group’s Covid grants
position (£2.0 million), and a charge relating to impairment of assets in Getting Personal (£1.1 million), a net gain
of £3.5million.
Following the cessation of capital expenditure and dividend restrictions from 31 January
2024, we have reviewed and updated our capital allocation policy. The Board is committed to
balancing delivery of sustainable long-term growth in shareholder value with progressive cash
returns, whilst being cognisant of the needs of its other stakeholders. On 26 April 2024, the
Group successfully refinanced its debt facilities, agreeing a new £125 million revolving credit
facility with a syndicate of banks, with an initial four-year term to April2028.
£118.7m
Cash from
operations
Sales
Total Sales
FY24
£m
FY23
£m
Change
%
Stores 478.9 440.4 +8.7%
cardfactory online 8.8 8.8 –
Getting Personal 5.9 8.5 -30.6%
Partnerships 17.0 5.0 +240.0%
Other 0.3 0.7 -57.1%
Group 510.9 463.4 +10.3%
Partnerships includes £10.4 million of sales from SA Greetings post-acquisition (FY23: £nil).
LFL Sales
FY24 FY23
Change
%
cardfactory Stores +7.7% +7.6% +0.1 ppts
cardfactory Online +0.4% -18.8% +19.2 ppts
cardfactory LFL +7.6% +6.7% +0.9 ppts
Getting Personal -26.1% -34.7% +8.6 ppts
Total Group sales for FY24 were £510.9 million, an increase of £47.5 million or +10.3% when
compared to the previous year. This represents good progress on our strategic ambition to
add £190 million of sales from the FY23 base by FY27. We are ahead of the compound annual
growth rate required of +8.85%. The sales growth in FY24 was underpinned by LFL sales in
cardfactory stores of +7.7% and a £10.4 million contribution to SA Greetings which we acquired
in the year.
Card Factory plc Annual Report and Accounts 202458
CFO’S REVIEW CONTINUED
Financial Performance continued
Sales continued
Store sales across the UK & Ireland of £478.9 million increased by £38.5 million or +8.7%
compared to the prior year, with LFL sales of +7.7%. Everyday ranges performed well, with gifts
and celebration essentials showing strong momentum with LFL sales of +9.8%, supported by
positive LFL growth in both everyday and seasonal card. Approximately a third of the total LFL
growth was delivered through annualisation of targeted price increases implemented in the
second half of FY23.
Transactions remained stable in the UK and increased +3.0% in the Republic of Ireland on
an LFL basis. Average basket values increased by +8.1%. The increase in basket values was
supported by higher average selling prices, delivered via a combination of the price activity
described above and continuing to expand and develop our range, particularly in gifting and
celebration essentials. Our range development has clearly resonated with customers, as party
and gifts both delivered higher sales volumes than in FY23.
We continue to optimise our store portfolio and during FY24 opened 39 new stores and closed
13, including three relocations. As a result, the total store portfolio increased by 26 stores to
1,058. This reflects good progress in delivering our target of 90 net new stores by FY27. The
value of our flexible approach to the store portfolio is illustrated in the incremental sales growth
delivered by non-LFL sales in the year.
Our partnerships business, which focuses on B2B sales, delivered total sales of £17.0 million
in FY24, compared to £5.0 million in FY23. This included a £10.4 million contribution from SA
Greetings since acquisition in April 2023. Other partnerships delivered total sales of £6.8 million,
including increased contributions from the rollout of our offer across the Matalan store estate in
the UK and the new franchise stores opened in the Middle East with our partner in the region,
Liwa Trading Enterprises.
In online, we are beginning to see positive traction from the investments made over recent
years, with cardfactory.co.uk delivering positive sales growth towards the end of the year
resulting in a LFL for the full year of +0.4%. Sales at Getting Personal fell YOY, but remain an
important factor in online volume and contribute to shared fulfilment costs. The cardfactory
platform remains our strategic investment focus, with an increasing proportion of our total
online range offered via cardfactory.co.uk.
Click & Collect is a key component of our omnichannel offer, differentiating cardfactory.
co.uk from pure play online and bricks and mortar retailers. The rollout was completed across
all UK stores in April 2023 and we have seen customers opting for 7.8% of all orders from
cardfactory.co.uk to be collected in store. Average basket values for Click & Collect were more
than double the average basket value of an online order.
Gross profit
FY24
£m
FY24
% Sales
FY23
£m
FY23
% Sales
Group sales 510.9 463.4
COGs (155.9) (30.5%) (146.8) (31.7%)
Product margin – constant currency 355.0 69.5% 316.6 68.3%
FX gains 0.6 0.1% 1.5 0.3%
Product margin 355.6 69.6% 318.1 68.6%
Store & warehouse wages (124.0) (24.3%) (109.6) (23.7%)
Property costs (24.7) (4.8%) (26.3) (5.7%)
Other direct costs (22.0) (4.3%) (21.5) (4.7%)
Gross profit 184.9 36.2% 160.7 34.7%
Product margin calculated on a constant currency basis using a consistent GBPUSD exchange rate across both
periods. FX gains and losses reflect conversion from the constant rate to prevailing market rates.
Overall gross profit for the Group increased by £24.2 million, or +15.1%, to £184.9 million.
Product margin, when calculated using a constant GBPUSD exchange rate YOY, improved by
+1.2ppts to 69.5%. This improvement includes a normalisation in international freight rates when
compared to the prior year. This saving helped to offset price inflation in material costs and the
effect of a slight shift towards lower-margin non-card products in salesmix.
The Group purchases approximately half of its goods for resale in US Dollars from suppliers
in the Far East. Currency gains associated with this activity of £0.6 million were lower than in
the prior year. Our well-established currency hedging policy continues to protect us against
volatility in GBPUSD exchange rates. Our average USD delivered rate in FY24 of 1.3121 was lower
than the prior year (1.3241), but ahead of the average spot exchange rate for the period.
Store and warehouse wages increased by £14.4 million (13.1%), which included the impact of
the national living wage increasing by +9.7% from April 2023, as well as expanding the store
portfolio. Property costs, which cover business rates, insurance and service charges (rent is
reflected in depreciation and interest costs as a result of the lease accounting rules in IFRS 16)
reduced by £1.6 million including a net saving in business rates costs following the most recent
revaluation exercise effective from April 2023.
Governance Financial StatementsStrategic Report
59
Other direct expenses include warehouse costs, store opening costs, utilities, maintenance, point
of sale and pay-per-click expenditure. A large proportion of costs in this category are variable
in relation only to the size of the store portfolio, meaning whilst overall costs increased slightly,
in line with the increase in number of stores in the period, they fell as a percentage of sales
given the improved trading performance in the year. The Group has continued to benefit from
its long-term energy hedge in FY24, which fixed commodity unit costs at FY22 levels. All of the
Group’s UK energy costs will continue to benefit from this hedge until September 2024.
EBITDA & operating profit
FY24
£m
FY24
% Sales
FY23
£m
FY23
% Sales
Group sales 510.9 463.4
Gross profit 184.9 36.2% 160.7 34.7%
Other operating income 2.0 0.4% – –
Operating expenses (64.3) (12.6%) (48.7) (10.5%)
EBITDA 122.6 24.0% 112.0 24.2%
Depreciation & amortisation (10.4) (2.0%) (10.3) (2.2 %)
Right-of-use asset depreciation (34.7) (6.8%) (35.1) (7.5%)
Impairment charges (1.1) (0.2%) (2.8) (0.6%)
Operating profit 76.4 15.0% 63.8 13.8%
Operating expenses (excluding depreciation and amortisation) include remuneration for central
and regional management, business support functions, design studio costs and business
insurance together with central overheads and administration costs.
Total operating expenses have increased £15.6 million compared to the prior year, which reflects
up-front investment in capability, capacity, systems and processes to enable us to deliver the
strategy. These investments are principally in central staff costs, supporting major IT projects
and in marketing where spend has historically been very low. This increase also includes a
contribution of £2.6 million due to the acquisition of SA Greetings.
As a result, driven primarily by the improved trading performance, EBITDA improved to £122.6
million (FY23: £112.6 million); however the investment for future growth means EBITDA margin fell
slightly from 24.2% to 24.0%. Excluding the one-off impact of other income from the release of
provisions related to government support received during the pandemic, EBITDA margin would
have been 23.4%.
It should be noted that EBITDA does not include any benefit from reduced store rental costs as
these are reflected in depreciation and interest costs under IFRS accounting.
Right of use asset depreciation continues to fall reflecting our flexible approach to managing
the store portfolio. We maintain an average lease term of five years, with a break clause at
three years. On average 20% of the lease portfolio renews each year enabling us to capture
reductions in market rents where available. During FY24, we achieved rent reductions on
renewal of up to 20% which will flow through depreciation charges in future years.
EBITDA after deducting depreciation and interest charges relating to store leases,
was£81.8million (a margin of 16.0%) in FY24 compared to £71.1 million in FY23 (a margin of
15.4%).
Depreciation and amortisation, at £10.4 million, remained broadly in line with the prior year.
Impairment charges reflect a write down in respect of Getting Personal assets, following a
further period of reduced sales.
Profit Before Tax
FY24
£m
FY24
% Sales
FY23
£m
FY23
% Sales
Group sales 510.9 463.4
Operating profit 76.4 15.0% 63.8 13.8%
Gain on acquisition 2.6 0.5% – –
Finance costs (13.4) (2.6%) (11.4) (2.5%)
Profit Before Tax 65.6 12.8% 52.4 11.3%
One-off transactions (3.5) (0.6%) (3.5) (0.8%)
Adjusted Profit Before Tax 62.1 12.2% 48.9 10.5%
The total reported result for the year includes an acquisition gain in respect of SA Greetings
of £2.6 million, and a further £2.0 million gain as a result of releasing provisions no longer
considered to be required in respect of Covid business support grants received subject to
subsidy control. These items, along with the impairment charge in respect of Getting Personal
of £1.1million, are considered to be one-off in nature and have been excluded from Adjusted
PBT. (FY23: One-off gains in relation to CJRS settlement and refinancing excluded totalling
£3.5million from Adjusted PBT).
Total finance costs increased by £2.0 million to £13.4 million.
Card Factory plc Annual Report and Accounts 202460
CFO’S REVIEW CONTINUED
Financial Performance continued
Profit Before Tax continued
The composition of our finance costs is set out in the table below. The increase in both interest
payable on loans and interest in respect of leases reflects the increase in SONIA interest rates
during the period, from 3.4% at 31 January 2023 to 5.2% at 31 January 2024.
FY24
£m
FY23
£m
Interest on loans 6.5 6.0
Loan issue cost amortisation 0.6 0.9
IFRS 16 leases interest 6.3 4.5
Total finance expenses 13.4 11.4
FY24
£m
FY23
£m
IFRS 16 depreciation 34.5 36.3
IFRS 16 leases interest 6.3 4.5
Total IFRS 16 40.8 40.8
IFRS 16 depreciation includes impairment and gains/losses on disposal. Total costs in this table reflect lease costs
not included in the calculation of EBITDA, above.
The average cost of debt, taking into account margin, indexation and the impact of hedging
activity, in the period was 7.4% (FY23: 5.7%). The impact of this increase on our overall debt
service cost was mitigated by the Group continuing to deleverage and lower levels of gross debt
drawn when compared to FY23. As a result, Profit Before Tax for the year was £65.6 million, up
£13.2 million from £52.4 million for the previous year.
Adjusted PBT, which excludes the impact of one-off transactions in the period that are not
reflective of the Group’s underlying trading performance, was £62.1 million compared to
£48.9million in FY23.
Taxation
In March 2023, the results of our latest business risk review were confirmed with HMRC, at which
we achieved a ‘Low’ risk rating in all of the categories assessed. The tax charge for FY24 of £16.1
million reflects an effective tax rate of 24.5% and has increased £7.9 million compared to FY23.
The effective rate of tax for the year is higher than the equivalent rate applied for the same
period last year (15.6%) largely due to increases in corporation tax rates effective from 1 April
2023 and the impact of prior year adjustments that reduced the FY23 charge. The rate is slightly
higher than the standard rate applicable to the current financial year (24.0%).
The Group makes UK corporation tax payments under the ‘Very Large’ companies’ regime
and thus pays its expected tax bill for the financial year in quarterly instalments in advance.
Corporation tax payments in FY24 totalled £13.5 million (FY23: £7.9 million).
Earnings per share
The net result for the year was a Profit after tax of £49.5 million, increased from £44.2 million in
FY23. As a result, basic earnings per share (EPS) for the year was 14.4 pence, with diluted EPS of
14.3 pence.
FY24 FY23
Profit after tax (£m) 49.5 44.2
Basic EPS (pence) 14.4 pence 12.9 pence
Diluted EPS (pence) 14.3 pence 12.8 pence
Adjusted EPS, which excludes the post-tax effect of one-off transactions in the period, was 13.5
pence compared to 12.1 pence in FY23. A reconciliation of all Alternative Performance Measures
is set out in the appendix on page pages 161 to 164.
Cash flows
FY24
£m
FY23
£m
Cash from Operating Activities (after tax) 105.2 99.9
Cash used in Investing Activities (30.0) (18.2)
Cash used in Financing Activities (73.2) (110.1)
Impact of foreign currency exchange rates (0.8) –
Net Cash Flow for Year 1.2 (28.4)
Operating cash flows less lease repayments 61.5 42.9
Operating cash conversion (%) 96.8% 96.3%
Free Cash Flow 27.1 16.7
The Group continued to deliver strong cash performance in FY24, with cash from operations
(before corporation tax payments) of £118.7 million increased from £107.8 million in the prior
year, reflecting the improved trading performance described above. There was a small decrease
in working capital outflow, with deployment of working capital normalised following the
impact of the pandemic. FY23 also included a one-off cash benefit from the alignment of VAT
payments with our financial year end that did not recur in FY24.
Governance Financial StatementsStrategic Report
61
Operating cash conversion, which is the ratio of Cash from Operations to EBITDA, improved
slightly as a result to 96.8% (FY23: 96.3).
Capital expenditure increased to £27.8 million in the year, as we invested in infrastructure and
growth projects to support our strategy.
Free cash flow, which we define as net cash before M&A activity, distributions or debt
repayments, was £27.1 million. We invested £2.5 million in the acquisition of SA Greetings (see
below) and made net debt repayments of £23.6 million. The increase in free cash flow supports
the recommencement of dividend payments, as described in further detail below.
Balance sheet
Acquisition of SA Greetings
As reported in the FY23 preliminary results, on 25 April 2023 the Group acquired 100% of the
issued equity of SA Greetings Corporation (Pty) Ltd (‘SA Greetings’) for fixed cash consideration
of £2.5 million, funded from existing cash reserves.
SA Greetings is the leading wholesaler of greetings cards and gift packaging in South Africa. It
also operates 27 ‘Cardies’ retail stores including four stores operated by franchisees, an online
store and owns and operates a roll wrap production facility. Its head office and main warehouse
are located in Johannesburg, with sales offices in Durban and Cape Town. The acquisition gives
the Group immediate access to the South African market via an established, successful business
and expands cardfactory’s global presence in line with ourstrategy.
SA Greetings delivered sales of £10.4 million during the period from acquisition to the end of the
year and made a small positive contribution to Profit Before Tax. We look forward to exploring
the full range of opportunities to support the development of the SA Greetings business and
enhance the Group’s production, wholesale and retail offer in both South Africa and the UK.
The Group has concluded the accounting for the acquisition and recognised a gain
on acquisition of £2.6 million. See note 30 to the consolidated financial statements for
moreinformation.
Capital expenditure
Total capital investments to grow the business and deliver the strategy were £27.8 million in
FY24, increased from £18.2 million in FY23 and slightly ahead of our capital markets update
guidance as we accelerated certain investment plans and including the impact of capital
expenditure in SA Greetings.
Key investments included the continued delivery of our long term project to upgrade our
business support systems, with extended ERP functionality in relation to inventory management,
developing our network infrastructure in stores, enhancing platform functionality in
cardfactory.co.uk, and expanding our online fulfilment capacity in Printcraft.
In addition, we continue to invest in opening new stores and refreshing the store estate –
including delivery of our space realignment programme, which, as part of our store evolution
programme, has expanded the amount of space in store available for gifts and celebration
essentials, without negatively impacting cardLFLs.
Looking forward, in line with the guidance given at our Capital Markets Strategy Update in
May 2023, we expect annual capital expenditure to remain around the £25 million mark. FY25
priorities include a point of sale (POS) upgrade in stores and other infrastructure projects to
enable us to deliver online and partnerships growth.
Net debt
FY24
£m
FY24
Leverage
FY23
£m
FY23
Leverage
Current borrowings 7.1 27.1
Non-current borrowings 37.9 40.4
Total Borrowings 45.0 67.5
Add back capitalised debt costs 0.7 1.4
Gross Bank Debt 45.7 68.9
Less cash (11.3) (11.7)
Net Debt (exc. Leases) 34.4 57.2
Leverage (exc. Leases) 0.3x 0.5x
Adjusted Leverage (exc. Leases) 0.4x 0.8x
Lease Liabilities 100.8 105.4
Net Debt (inc. Leases) 135.2 162.6
Leverage (inc. Leases) 1.2x 1.4x
We continued to strengthen our balance sheet in FY24, with a further reduction in net debt at 31
January 2024 of £22.8 million supported by strong operating cash flow combined with careful
allocation of capital to invest and deliver future growth.
The Group focuses on net debt excluding lease liabilities, this reflects the way the Group’s
covenants are calculated in its financing facilities. Leverage compares the ratio of net debt
to EBITDA as calculated above, Adjusted Leverage reflects adjustments in the Group’s bank
facilities to deduct lease-related EBITDA charges from EBITDA. A full description, calculation
and reconciliation of Alternative Performance Measures is provided in the appendix
on pages 161 to 164.
Card Factory plc Annual Report and Accounts 202462
CFO’S REVIEW CONTINUED
Balance sheet continued
Net debt continued
The Group’s banking facilities and amounts drawn in the current and prior periods are
summarised in the table below:
Facility
31 January
2024
£m
31 January
2023
£m
£11.25m Term Loan ‘A’ – 9.0
£18.75m Term Loan ‘B’ 18.8 18.8
£20m CLBILs – 16.1
£100m Revolving Credit Facility 26.0 23.0
Overdraft facilities 0.2 1.8
Property mortgage 0.6 –
Accrued interest 0.1 0.2
Gross Bank Debt 45.7 68.9
During FY24, we made repayments of £16.1 million in respect of the CLBILs facilities and £9.0
million in respect of term loans. At 31 January 2024 the Group had undrawn committed facilities
of £74.0 million (FY23: £75.2 million).
The CLBILs facilities were fully extinguished on 25 September 2023 and Term Loan ‘A’ fully
extinguished on 31 January 2024. Following these repayments, restrictions in the Group’s
financing facilities relating to capital expenditure and distributions were released.
Subsequent to the year end, on 26 April 2024, the Group successfully concluded a refinancing of
its debt facilities, having agreed a new four-year £125 million committed revolving credit facility
with a syndicate of banks. The existing revolving credit facility and Term Loan B have been fully
repaid and cancelled.
The new facilities have an initial maturity date in April 2028, with options to extend by up to
19 months, subject to lender approval. The facilities include a £75 million accordion, which
can be drawn subject to lender approval. The interest margin on the facilities is dependent
upon the Group’s leverage position, with margins between 1.9-2.8% which is lower than the
previousfacilities. The new facilities include covenants for a maximum leverage ratio (calculated
as net debt excluding leases divided by EBITDA less rent costs for the prior 12 months) of 2.5x
and a fixed charge cover ratio of at least 1.75x. The leverage covenant is consistent with the
Group’s definition of Adjusted Leverage. The Group expects to operate comfortably within these
covenant levels for the foreseeable future.
The new facilities are on what we consider to be market standard terms, marking an end to the
more restrictive conditions applied during the pandemic years and providing a firm platform
from which we can execute our strategy. Notably, dividend and capital expenditure limitations
are now removed.
The Group’s cash generation profile typically follows an annualised pattern, with higher cash
outflows in the first half of the year associated with lower seasonal sales and investment in
working capital ahead of the Christmas season. The inverse is then usually true in the second
half, as Christmas sales led to reduced stock levels and higher cash inflows. As a result, net debt
at the end of the year is usually lower than the intra-year peak, which typically occurs during the
third quarter. During FY24, Adjusted Leverage at the intra-year peak was approximately 1.2x.
Capital structure and distributions
The Group has reviewed and updated its capital allocation policy as outlined below. The Board
is focused on delivering attractive, progressive, sustainable returns to shareholders, whilst
continuing to drive the growth of the business.
The Board confirms that it has decided to recommend the payment of an ordinary dividend.
Whilst any dividend will be dependent on, inter alia, the performance and prospects of the
Group, the Board will target a progressive dividend policy, which it expects to deliver a dividend
cover over time of between 2x and 3x Adjusted EPS.
The ordinary dividend will comprise interim and final dividends; the Board currently expects the
interim dividend to be around one quarter of the total dividend for the previous year, each year.
For the financial year ending 31 January 2024, the Board is cognisant of the fact that it was not
able to pay an interim dividend in the year. The Board is therefore recommending a dividend
of 4.5 pence per share, an amount which would have been split between interim and final
dividends if the Board had been able to pay an interim dividend. This dividend is covered by
Adjusted EPS to 31 January 2024 by 3x.
At the Annual General Meeting on 20 June 2024, the Board will recommend to shareholders a
resolution to pay the dividend for the year. If approved, the dividend will be paid on 28 June
2024 with a record date of 31 May 2024.
Where the Board concludes that the Group has excess cash, taking into account, inter alia, the
performance and prospects of the Group, together with any potential investment opportunities,
the Board expects to make additional returns to shareholders. The Board will consider at the
time the most appropriate method of returning such cash to shareholders.
The Board is committed to funding ordinary and additional shareholder returns from the free
cash generation of the Group, and will target maintaining an Adjusted Leverage (exc. Leases)
ratio below 1.5x throughout the financial year.
Governance Financial StatementsStrategic Report
63
Capital allocation policy
cardfactory aims to balance delivery of sustainable, long-term growth in
shareholder value against cash returns to shareholders and the needs of
its other stakeholders.
Each year, the Group will assess the appropriate use of free cash after
allocating funds to investments that will deliver the stated strategy. The
Group is committed to a transparent, systemic and disciplined use of cash.
Business expenditures and investment opportunities will change over
time. The Board will, as part of its annual planning cycle, review
investment opportunities and allocate capital between strengthening the
balance sheet, investment to deliver the strategy and returns to shareholders
in line with the below principles and taking into account prevailing
wider macro-economic factors.
Outlook
The Board remains confident in the compelling growth opportunity for our business, and our
medium-term ambitions to deliver £650 million of sales, Profit before tax margins of 14% and 90
net new stores by the end of FY27.
We expect to see continued top line growth in FY25, driven largely by same store sales and the
continued growth of our store portfolio.
Whilst the cost-of-living crisis has eased, inflationary challenges remain for retailers –
particularly in wages, freight and energy.
We are well placed to manage these challenges and remain confident in offsetting cost
inflation over the course of the year through ongoing improvements in efficiencies and
productivity and leveraging our vertically integrated business model.
Profit before tax growth in FY25 is expected to be weighted to the second half of the year,
reflecting phasing of planned investments and inflation recovery actions.
Matthias Seeger
Chief Financial Officer
30 April 2024
Any dividend will depend on, inter alia, the performance and prospects of the Group. Adjusted Leverage is defined under Alternative Performance Measures in the Glossary on pages 161 to 164.
Maintain a strong balance sheet:
Retain sufficient cash and committed facilities to ensure liquidity headroom
throughout the annual operating cycle; maintain Adjusted Leverage below 1.5x
throughout the year.
Invest to deliver the strategy:
Capital will be invested each year to ensure the Group complies with obligations
and delivers its business plans; investments to accelerate business progress need to
deliver attractive returns in excess of cost of capital.
Regular, progressive returns to shareholders:
The Board anticipates an ordinary dividend, targeting dividend cover between
2-3x Adjusted EPS, paid as interim (c.25%) and final (c.75%) dividends. The Board
will consider, from time to time, share purchases to offset dilution from employee
shareschemes.
Disciplined use of surplus cash:
Total returns will not exceed free cash generated.
Card Factory plc Annual Report and Accounts 202464
RISK MANAGEMENT
Risk management, is
an integral aspect of
conducting business.”
Managing our risks
Risk management, an integral aspect of
conducting business, involves striking a
balance between risk and reward, dictated
by careful assessment of potential outcomes,
impacts and risk appetite.
Approach to risk management
cardfactory’s risk management framework
establishes the identification, assessment,
mitigation and monitoring of risks that
could potentially impede our objectives.
This framework uses a top-down approach
to pinpoint the Group’s principal risks
and a bottom-up strategy for identifying
operationalrisks.
A Group risk register evaluates the business’
gross level of risk (likelihood and impact), the
extent of mitigating controls and the resultant
net level of risk. It also details any forthcoming
plans to mitigate or reduce risks. Risk appetite
and target risk are designated to each risk.
Each risk has an assigned senior management
team member. Critical rated risks are
examined and updated twice yearly, while all
others undergo an annual review. Risks are
discussed at the senior management team’s
monthly meeting on a rolling basis.
The Head of Internal Audit & Loss Prevention
produces a risk management update at each
Audit & Risk Committee meeting, including an
overview of changes to specific risks reviewed
during the period and a summary of the
Group risk register.
With the oversight of the Board and detailed
scrutiny by the Audit & Risk Committee,
members of the senior management team are
responsible for identifying emerging risks and
executing mitigation plans. A comprehensive
review of all risks and the adequacy of the
process to identify up and coming risks was
conducted at the end of the financial year.
The Audit & Risk Committee assists the Board
in maintaining a robust risk management
framework by approving the risk management
process and frequently reviewing the Group’s
principal risks and risk appetite. More
information on risk governance can be found
in the Audit & Risk Committee Report on
pages 81 to 83.
Internal Audit also offers independent
assurance to management and the Audit &
Risk Committee over specific risk areas as
part of the Group’s annual audit plan.
Governance Financial StatementsStrategic Report
65
Principal risks and uncertainties
In October 2023, the Audit & Risk
Committee sponsored a review of the
risk management framework. This review,
led by the Head of Internal Audit & Loss
Prevention and one of our internal audit
partners, identified several opportunities
to further enhance the framework,
including updating risk management
roles and responsibilities and introducing
supplementary impact criteria to guide
risk owners when assessing risks.
Moreover, a risk management workshop
with the senior management team was
conducted, reviewing existing risks to
affirm their validity, considering the
removal or merging of any risks and
evaluating any new risks to be included in
the Group risk register. The outcome was
the consolidation of several risks and the
addition of four new risks to the register,
as outlined in our principal risks and
uncertainties below.
The Audit & Risk Committee has carried
out a thorough assessment of the emerging
and principal risks facing the Group.
Modifications to the Group risk register
have been made including the addition
of four new risks, including cost price
inflation. On the contrary, ERP (Enterprise
Resource Planning) implementation
has been removed due to its successful
implementation in the year. Furthermore,
the risks associated with Corporate Social
Responsibility breach, retail partner
exposure, customer preference and
brand customer experience have been
consolidated and merged within into other
principal risks or functional risks.
As stated in last year’s report, target risk
has now been assigned to all risks and is
monitored and reported at each Audit &
Risk Committee meeting.
1 IT infrastructure & security
2 Business continuity
3 Supply chain
4 Cyber
5 Geopolitical instability
6 Regulatory compliance
7 ESG compliance & climate
change risks
8 Cost price inflation
Risk management process
Card Factory plc Board
Maintains sound risk management and internal control systems.
Assesses principal risks.
Audit & Risk Committee
Sets out the risk management framework.
Assesses the effectiveness of risk management and internal control systems.
Maintains oversight of risk monitoring activities.
Internal Audit
Coordinates risk management activities.
Reviews risk registers.
Agrees on risk mitigation plans.
Prepares risk reporting.
Operational Management
All colleagues are responsible for managing risks within their area,
overseen by their respective senior management team member.
Senior Management Team
Manages risks within each of their respective areas of responsibility.
Is accountable for mitigating risks where appropriate.
Reviews and updates risks on a rolling monthly basis.
Is primarily responsible for monitoring, identifying and reporting emerging risks.
Bottom up
Top down
Identify
•
Risk registers compiled.
•
Risk mapping to identify
emerging issues.
Assess
•
Determining the likelihood
ofrisk occurrence.
•
Evaluating the potential impact.
Mitigate
•
Agreeing actions to manage
the identified risks.
•
Ensuring control measures
arein place.
Monitor
•
Reviewing the effectiveness
ofcontrols.
•
Maintaining continued
oversight and tracking.
01
02
03
04
Likelihood
Impact
8
6
54 2 31
7
See pages 66 to
68 for a detailed
review of our
principal risks and
uncertainties
The risks noted above are shown on a net basis.
Card Factory plc Annual Report and Accounts 202466
RISK MANAGEMENT CONTINUED
Risk trend
Link to strategy:
01
Increasing breadth of product offering
02
Create a full omnichannel offer
03
A robust and scalable central model
Increasing DecreasingStable
Strategic Risks
Risk Trend Description Mitigation
ESG compliance
and climate
change risks
Strategy
01
03
Failure to meet requirements of
Institutional Investors, customers and
other stakeholders on ESG requirements
may have an adverse impact on our
colleagues, customers, suppliers and our
reputation which could lead to a decline
in sales and profits.
• ‘Delivering a Sustainable Future’ plan launched which outlines our sustainability strategy. Thestrategy is built
around four key areas where we want to deliver a positive impact: climate, waste & circularity, protecting
nature and people & equity.
• Each pillar has a roadmap, detailing commitments and targets with owners assigned.
• Various other actions in relation to ESG can be found on pages 32 to 39.
Operational Risks
Risk Trend Description Mitigation
IT infrastructure
andsecurity
Strategy
02
03
Outdated, unsupported IT systems and
software could expose the business to
security incidents, unauthorised access
and data breaches resulting in fines/
censure/outages/disruption/lost sales/
revenue etc.
• An IT strategy is in place that includes the approach being taken regarding the removal / migration of out
of date / legacy systems, including ringfencing systems to provide an additional layer of security. Also, IT
specialists support out of date / legacy systems and back up arrangements and an IT disaster recovery plan
isin place.
Business
continuity
Strategy
02
03
Significant disruption to the operation,
including support centre, distribution
centres, the Printcraft site, design studio
and IT systems could severely impact the
Group’s ability to supply stores and retail
partners or fulfil online sales resulting in
financial loss, fines, loss of sales and/or
reputational damage.
• A ‘Business Continuity Management Framework’ and a ‘Business Continuity Policy’ are in place, which are
reviewed annually and approved by the senior management team.
• ‘Crisis Management Plan’ and business continuity plans are in place for all operations of the business which are
reviewed annually or when major changes to processes occur or incidents arise. These plans include business
impact analysis, crisis response teams, recovery techniques, resources etc.
• An IT disaster recovery plan is in place for all operations of the business which is reviewed annually or when
major changes to processes occur or incidents arise.
• The business continuity and IT disaster recovery plans are tested annually with lessons learned being produced
and plans updated accordingly.
Governance Financial StatementsStrategic Report
67
Risk trend
Link to strategy:
01
Increasing breadth of product offering
02
Create a full omnichannel offer
03
A robust and scalable central model
Risk Trend Description Mitigation
Cyber
Strategy
02
03
NEW
Prolonged loss or disruption to
ITcapability which could result in
unauthorised access/data breaches,
void of insurance cover, malware,
ransomware, significant IT disruption,
fines for negligence by the ICO, legal
prosecution from customers, settlements,
leading to a loss of sales, reduction
in share price and lack of confidence
byshareholders.
• The IT strategy includes our approach regarding the removal / migration of out of date / legacy systems as
noted in the IT Infrastructure and Security risk.
• Point of Sale meets all payment card industry (PCI) compliance requirements and PCI training is refreshed
annually and completion rates tracked.
• Two-factor authentication (2FA) has been implemented across the majority of our systems.
• ‘Bring Your Own Device’ policy approved and in place with a mobile device management system rolled out
tosenior management and 2FA in place for password changes.
• Cyber expertise is employed within the business and appropriate cyber controls are in place. Plans designed
tocontinue to address multiple cyber risks, alongside further risk mitigations arising from replacement
oflegacy systems, are also in place.
• Data Protection Officer in place.
• Crisis management and IT disaster recovery plans in place for all operations of the business which are reviewed
annually or when major changes to processes occur or incidents arise.
Supply Chain
Strategy
01
NEW
The Group uses many third parties for
the supply of products, predominantly
based in China.
Risks include the potential for
supplier failures, risks associated with
manufacturing and importing goods
from overseas, potential disruption
at various stages of the supply
chain and suppliers failing to act or
operate ethically which could result
in unavailability of stock leading to
reduced sales.
• Multiple suppliers utilised across product and category ranges to off-set supply or cost pressures.
• Detailed critical path process in place for each season detailing plans from design through to delivery,
whichisreviewed weekly and actions taken if issues arise.
• All overseas suppliers sign up to an online compliance platform providing all necessary documentation
including adherence to the Modern Slavery Act.
• External and ethical audits and Sedex membership performed with a ‘no audit, no order’ policy.
• All product testing and quality control inspections undertaken by authorised accredited providers.
• Active monitoring of shipping channels and when issues arise these are discussed by the senior management
team as to potential impact with plans drawn up to off-set any delays in goods being received.
• Multiple shipping agents and lines are utilised.
Increasing DecreasingStable
Card Factory plc Annual Report and Accounts 202468
RISK MANAGEMENT CONTINUED
Risk trend
Link to strategy:
01
Increasing breadth of product offering
02
Create a full omnichannel offer
03
A robust and scalable central model
Risk Trend Description Mitigation
Regulatory
compliance
Strategy
01
03
NEW
The Group is exposed to a diverse
number of legal and regulatory
compliance requirements including
Modern Slavery Act, the General Data
Protection Regulation (GDPR), Listing
Rules, employment law, tax, FSC,
product safety, competition law, etc.
Failure to comply with these laws and
regulations could lead to financial
claims, penalties, awards of damages,
fines or reputational damage which
could significantly impact the financial
performance of the business.
• Compliance responsibilities matrix in place detailing all compliance-related matters across the organisation
with assigned owners.
• Ongoing review of regulatory changes monitored by relevant owners to identify developments and ensure
changes to operations, processes, training, as applicable.
• External advisers in place who provide ad hoc information updates or highlight changes to existing legislation
or new regulations coming into force that may impact the organisation.
• Access to external bodies who provide updates on specific regulations e.g. product labelling and
productsafety.
• Governance, Listing Rules, DTRs, Market Abuse etc. overseen by the General Counsel.
• Quality assurance process in place to ensure that products comply with legal / ethical regulations / legislation etc.
Financial Risks
Risk Trend Description Mitigation
Geopolitical
instability
Strategy
03
Geopolitical instability may result in
cardfactory being unable to secure
the products required to fulfil customer
demand on time and at acceptable
prices. This could result in customer
dissatisfaction, reputational impact, loss
of market share, loss of sales and erosion
of expected profit margins.
• Continual review of supply base to understand best route to market (and to protect prices and impact on
trading performance) including options to move supply to new territories and using UK-based suppliers to
assist in mitigating any supply issue.
• Price elasticity assessments undertaken to provide insights on consequences of future price increases.
• Review of import tariff duties and ‘live’ Government legislative changes in the UK and new territories to ensure
we are always sourcing from the best source to support the overall business.
• Continual review of global matters that may affect supply.
Cost price
inflation
Strategy
03
NEW
Increasing input costs without mitigating
actions will either result in lower levels of
profitability/generation of cash or forces
higher prices resulting in possible impact
on value perception and/or customers
choosing to buy elsewhere.
• Input costs are monitored and proactive plans are developed as part of the annual planning and monthly
review process to mitigate cost price inflation.
• Hedging in place for foreign exchange, interest and energy; policies reviewed annually and hedging position
reviewed monthly.
• Management of freight rates process in place and market monitored to identify any potential increases so that
these can be factored into pricing decisions.
Increasing DecreasingStable
The Strategic Report, which was approved by the Board on 29 April 2024 and is set out on pages 1 to 69.
Darcy Willson-Rymer
Chief Executive Officer
30 April 2024
Governance Financial StatementsStrategic Report
69
NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT
Non-financial and sustainability information statement
In accordance with Sections 414CA and 414CB of the Companies Act 2006, the following table summarises where
you can find further information in this Annual Report on each of the key areas of disclosure that these sections require.
Reporting requirement Relevant information Policies and standards
Information necessary to understand the Company’s development, performance and position and the impact of its activity
relating to:
1. Environmental matters, sustainability and climate-related information (including governance arrangements, the impact
of the Company’s business on the environment).
Pages 32 to 47 Page 54
2. The Company’s employees. Pages 38, 52 and 53 Page 52
3. Social matters. Pages 39, 54 Page 54
4. Respect for human rights. Pages 54 and 55 Page 54
5. Anti-corruption and anti-bribery matters. Pages 54 and 55, 68, 79, Pages 54 and 79
Required information
6. Description of the Company’s business model. Pages 16 and 17
7. Description of policies (and any due diligence processes implemented pursuant to those policies) pursued by the
Company in respect of items 1 to 5 above and a description of the outcome of those policies.
See the sections referred to above
8. A clear and reasoned explanation if the Company does not pursue any policies in respect of the above matters. Not applicable
9. Description of the principal risks relating to items 1 to 5 above and where relevant and proportionate, a description
ofthe business relationships, products and services which are likely to cause adverse impacts in those areas of risk and
adescription of how it manages such risks.
Pages 64 to 68
10. Description of the non-financial key performance indicators relevant to the Company’s business. Pages 48 to 55
11. Where appropriate, references to and additional explanations of amounts included in the accounts. The accounts are produced in accordance
with UK-adopted international accounting
standards and applicable law. See pages 161
to 164 for alternative performance measures.
Card Factory plc Annual Report and Accounts 202470
BOARD OF
DIRECTORS
Paul Moody
Non-Executive Chair
Darcy Willson-Rymer
Chief Executive Officer
Matthias Seeger
Chief Financial Officer
Date of appointment
19 October 2018
Paul has extensive retail experience having
served 20 years at Britvic plc, including
eight years as Chief Executive Officer.
Paulis currently Chair of 4imprint Group plc,
having been appointed in February 2016.
Paul was Chair of Johnson Service Group
plc between May 2014 and August 2018 and
was a Non-Executive Director and Chair
of the Remuneration Committee of Pets at
Home plc from March 2014 until July 2020.
Paul assumed the interim role as Executive
Chair of CardFactory plc from 1 July 2020 to
8March2021.
Paul is the designated Non-Executive
Director for workforce engagement and
isthe member of the Board accountable
forsustainability and ESG.
Current external appointments
Non-Executive Chair of 4imprint Group plc.
Date of appointment
8 March 2021
Prior to joining the Company, Darcy served
as CEO of Costcutter Supermarkets Group
for eight years and was CEO of Clinton
Cards plc from 2011 to 2012. Before joining
Clinton Cards, Darcy held a range of roles in
international branded businesses, including
Managing Director (UK & Ireland) of
Starbucks Coffee Company, and senior roles
at Yum Restaurants International, including
Operations Director of KFC Great Britain,
and Director of Operations and Franchise,
Europe, KFC and Pizza Hut.
Date of appointment
22 May 2023
Matthias was CFO of Ambassador Cruise
Line Limited between February 2022
and May 2023, having previously been
CFO of Costcutter Supermarkets Group
from September 2015 to September 2021.
Previous roles include senior finance roles
with Procter & Gamble, in Germany, the
UK, Belgium and Switzerland, between
1991 and 2013. Matthias has a Master’s
Degree inEngineering and an MBA from the
University of Texas.
R N
Committee membership
AR
Audit & Risk
R
Remuneration
N
Nomination
Chair
Governance Financial StatementsStrategic Report
71
Roger Whiteside OBE
Senior Independent Non-Executive Director
Nathan (Tripp) Lane
Non-Independent
Non-Executive Director
Robert (Rob) McWilliam
Independent
Non-Executive Director
Indira Thambiah
Independent
Non-Executive Director
Date of appointment
4 December 2017
Roger has extensive retail experience,
latterly Chief Executive Officer of Greggs plc,
prior to May 2022. Prior to this role, Roger
served as Chief Executive of both Thresher
Group and Punch Taverns. Roger was also a
founding member and the Joint Managing
Director of Ocado. Roger spent the early
part of his career at Marks & Spencer where
he led the food division for the business.
Date of appointment
9 April 2020
Tripp is the founder of Delancey Cove LLC,
where he focuses on management and
corporate governance for turnarounds and
special situations. Tripp has significant retail
and consumer sector experience having
invested extensively in the sector via private
equity, public equity and distressed debt.
Tripp served on the Board of New Look for
five years and is currently a Non-Executive
Director of Slater & Gordon UK Holdings
Limited, RetailNext Holdings, Inc. (USA),
and CellC Limited (South Africa), and was
recently appointed Chair of LBI ehf (Iceland).
Prior to founding Delancey Cove, Tripp
founded his own financial advisory business,
Resegon Capital Partners, and was an
investment professional for BlueMountain
Capital and Apax Partners.
Current external appointments
Member of Delancey Cove LLC, and Non-
Executive Director of Slater & Gordon UK
Holdings Limited, RetailNext Holdings Inc.,
LBI ehf., CellC Limited, Quoizel, LLC; LB New
Holdco, LLC and Matrix Holdco, LLC.
Date of appointment
1 November 2021
Rob was Chief Financial Officer of Asda
from 2018 to 2021; and between 1997 and
2012 held a number of senior roles within
the Asda group including Commercial
Finance & Strategy Director and Business
Change Director. In between his two periods
with Asda, Rob was Vice President, UK,
Finance Director and then Vice President
of Consumables at Amazon UK. Rob was
Independent Director of YPO (from 2017
to September 2021) and was previously a
Non-Executive Director of Ten Entertainment
Group plc where he was also the Chair of the
Risk and Audit Committee.
Current external appointments
Rob is currently Non-Executive Director
andAudit Committee chair of the Solicitors
Regulation Authority, Non-Executive Director
of Venture Simulations Limited and part time
CFO of Fruugo plc (unlisted).
Date of appointment
1 September 2022
Indira is an experienced multi-channel retail
executive and consultant, with previous
roles including Head of Multi-Channel for
Home Retail Group (Argos & Homebase)
and Vice President, Europe at online sales
marketplace, Zulily. Indira has successfully
managed a number of private businesses,
most recently Roof-Maker (CEO, 2018 to
2022). Indira has also been an Independent
Non-Executive Director and member
ofthe Remuneration Committee at each
ofSuperdry plc (2010 to 2013) and Yorkshire
Building Society (2007 to 2010). Indira is
aqualified Chartered Accountant.
Current external appointments
Indira is currently Non-Executive Director and
Trustee of Vivibarefoot Limited and Non-
Executive Director of Warpaint Londonplc
(AIM:W7L).
AR R N R RN NAR AR
Card Factory plc Annual Report and Accounts 202472
CORPORATE GOVERNANCE
CHAIR’S LETTER
Paul Moody
Non-Executive Chair
Dear Shareholder
The latest financial year has been a period of investment as the ‘Opening Our New Future’
strategy is pursued and refined, and a period of growth, as the benefits of the increased focus
on gifts and celebration essentials from the stable and growing Store estate combined with
progress on the two strategic growth areas: partnerships and our online and omnichannel
priorities.
Governance has played its role in supporting
the business and management team to realise
these objectives and to support planning for
future growth as this strategy continues to be
reviewed and refined.
The Board has been largely stable during the
year, which commenced with Roger Whiteside
taking on the role as Senior Independent
Director; Indira Thambiah assuming the
chair of the Remuneration Committee; and
the arrival of Matthias Seeger as CFO from
May 2023. Following a review of the Board’s
composition and succession planning,
we are actively progressing a proposed
appointment of an additional non-executive
director and hope to update the market soon,
whenthisiscomplete.
The period has afforded us many opportunities
to engage with our shareholders and to ensure
we understand their views and preferences.
This included a consultation on the terms
of our Remuneration Policy, as part of the
triennial review. Following the removal of
restrictions on shareholder returns being lifted
from our debt facilities, at the year-end, we have
also consulted our larger shareholders as we
assess and refine the capital allocation policy,
described in the CFOReview on page 63.
We have also listened to feedback from our
retail investors and commissioned Edison
Group to produce independent analyst
research on Card Factory plc, which will be
available to retail and many current and
prospective investors.
As the Board member appointed with
accountability for sustainability, I am
pleasedwith the significant milestones
achieved during the period in assessing
our Scope3 emissions for FY22 and
establishmentofour Net Zero targets and
thepathway to improving our impact on
nature and the environment (see page 37).
The award of ‘5thBest Big Company to
Work For’ from BestCompanies recognised
the investment over the last number of
years in improving theculture, transparency
and equality for all our colleagues,
which continues to be an area for future
improvement, as we focus on ‘givingback’
and supporting our communities, which our
colleagues tell us are the next key areas for
improvement.
As we build on year-on-year improved
financial performance as we pursue our
‘Opening Our New Future’ strategy, we
continue to review the strategic priorities
and improve use of insights to respond to
evolving customer preferences and to market
challenges, to balance the priorities of our
stakeholders, as we pursue our Vision.
Paul Moody
Chair
30 April 2024
Governance has played its role in supporting
thebusiness and management team to realise
theseobjectives.”
Governance Financial StatementsStrategic Report
73
CORPORATE GOVERNANCE REPORT
Leadership and approach
The Board is committed to the highest
standards of corporate governance. The Board
understands the importance of its leadership
on governance in setting the culture and
values and in the achievement of long-term
sustainable success, while successfully
managing risks for ourstakeholders.
We believe that good governance is
demonstrated by applying corporate
governance principles and following the more
detailed provisions and guidance in a way
that enhances or protects the long-term value
of the business. This ensures a pragmatic
governance culture sits alongside the
entrepreneurial and community-minded spirit
which has enabled cardfactory to develop
intothe business it is today.
Key governance activities
Key activities during the year included:
• Annual review of the five-year strategy
andthe budget and annual operating
plan, priority strategic projects for long-
term growth and investment priorities for
the current financial year.
• Review of the Remuneration Policy and
stakeholder consultation on the proposed
Remuneration Policy (see pages 84
and85).
• Assessment of acquisition opportunities
and strategy (including the acquisition of
SA Greetings in April 2023) and alignment
with strategic priorities.
• Material progress in further development
of our ESG strategy, including assessment
of our Scope 3 greenhouse gas emissions
for the base year of 2022, to support
target setting to reduce our impact on the
environment. Paul Moody, Chair, assumed
accountability for the cardfactory ESG
programmes, to ensure appropriate Board
representation and leadership.
• Reassessment of updated succession
planning for the senior management team
and their direct reports and identification
of input to be provided by the Board
members to support further development.
• The ongoing improvement of our colleague
engagement, support and development,
including progressive updates to reward and
benefits to support recruitment and retention.
• Development and finalisation (post year
end) of a refreshed capital allocation policy,
withinput from shareholder consultation.
Compliance statement – Code principles
The following table references sections of this
report that demonstrate compliance with the
principles of the Code:
Pages Pages Pages
Board leadership and
company purpose
Division of
responsibilities
Audit, risk and internal
control
Promoting and
preserving long-term
value
8, 9 Board structure and
independence
73, 74 Audit and Risk
Committee report
80–83
Purpose, values,
strategy and culture
2–7 Board responsibilities 74 Independence and
effectiveness of
external auditor and
internal audit
83
Section 172 statement 49 Board experience 70, 71 Fair, balanced and
understandable
83
Board engagement
with shareholders
and stakeholders
50–55 Composition,
succession, and
evaluation
Risk management
and internal control
framework
64–68
Managing director
conflicts of interests
77 Nominations
Committee report
108,
109
Remuneration
Workforce policies
and practices
52, 53 Board succession
planning
72, 73,
77, 108
Remuneration
Committee report
(including Policy)
84–107
Board evaluation 77
Code compliance
During FY24, the Company fully complied
with the principles and provisions of the UK
Corporate Governance Code (2018) published
by the Financial Reporting Council (Code).
The Company intends to continue to comply
with the Code, a copy of which can be
obtained from frc.org.uk. The Board intend to
adopt the updated UK Corporate Governance
Code, published in January 2024, which will
apply to the Company from the financial year
to commence in February 2025.
The Board has focused on ensuring it
provides strategic challenge and direction
to the management team and supports the
management team in the framing of the
strategic priorities, which include reassessment
of values, cultural development and addressing
stakeholder feedback. Specific examples
include undertaking an annual review of the
strategic plan and reviewing the specific
priorities to support delivery of the strategic
plan, with a detailed operating plan to support
achievement of an ambitious change agenda
to the business to realise long-term growth.
TheBoard and its committees have also
adopted detailed activity schedules to ensure
that over the course of a year, it undertakes the
reviews and assessments required by the Code.
The Code and Listing Rules require the
Company to provide explanation of any
provisions of the Code that are not complied
with during the year. The Company does not
currently meet the gender diversity targets
specified in LR 9.8.6 R(9) as less than 40%
of the Board are women and a woman does
not hold one of the senior board positions.
The Board recognises the benefits of securing
greater diversity across all aspects of the
business and intends to seek to improve
Committed to the
highest standards
Card Factory plc Annual Report and Accounts 202474
the diversity of the Board and the senior
management team, as part of its succession
planning. Further detail can be found in the
Nomination Committee report on page 109.
TCFD reporting
For the purposes of LR 9.8.6(8) R, please see
pages 41 to 46, which assesses the consistency
of our climate-related financial disclosures
against the TCFD Recommendations and
Recommended Disclosures and identifies one
amber item where reporting is not yet in full
compliance with TCFD Recommendations,
namely development of our strategy to account
for climate related scenarios, which we expect
to complete in the next 12 to 24 months.
Board composition, balance and
independence
The Board currently comprises seven
members. During the FY24 financial year, seven
Directors served on the Board: Paul Moody,
RogerWhiteside, Tripp Lane, Rob McWilliam,
Indira Thambiah, Darcy Willson-Rymer and
Matthias Seeger (from 22 May 2023).
The Code recommends that at least half the
board of directors of a UK-listed company,
excluding the chair, should comprise non-
executive directors, determined by the board
to be independent in character and judgement
and free from relationships or circumstances
which may affect, or could appear to affect,
the director’s judgement. The Board considers
all of the current Non-Executive Directors,
with the exception of Nathan (Tripp) Lane, as
independent Non-Executive Directors (within
the meaning of theCode).
Tripp Lane was appointed to the Board
on 9April 2020 following constructive
discussions between the Company, Teleios
Capital Partners LLC (Teleios), a long-term
shareholder which held a c.13% interest in the
Company at the time (now 11.7%) and another
major shareholder. Given the circumstances
surrounding his appointment, including the
Board’s understanding that Teleios agreed
to supplement Tripp’s remuneration with a
one-off payment to secure his candidacy, and
following an agreement for a future payment
to Tripp by Teleios Capital Partners LLC, to be
based on the Card Factoryplc share price and
dividends (announced in June 2022).
The Board continues to consider that it is not
appropriate to view Tripp as an independent
Non-Executive Director for the purposes of
the Code, notwithstanding that Tripp is not
a nominated Director of Teleios, or acting on
their behalf.
Paul Moody was independent prior to his
appointment as Chair in October 2018. Paul
held the position as interim Executive Chair
between July 2020 and March 2021, following
the resignation of the previous CEO, pending
appointment of Darcy Willson-Rymer as CEO.
The Board has considered whether the Chair’s
independence may have been compromised
as a result of his interim role as Executive Chair,
but concurred that he remains appropriately
independent, but with additional insights to
support his challenge of the management team.
The constitution of the Company’s Board
complies with the Code’s recommendation,
with three members of the Board being judged
to be independent and (excluding the Chair)
three being non-independent (i.e. two Executive
Directors and Tripp Lane).
The Board considers the balance of skills and
experience of the Board to be appropriate
for its current requirements and is confident
that it continues to be an effective and
efficient decision-making body that supports
the Group’s strategy and growth. Following
review of succession planning the Company is
progressing the recruitment of an additional
independent Non-Executive Director.
The skills and experience of the Board is kept
under constant review, together with succession
planning for the Board as awhole.
During the year the Board considered and
approved external appointments with private
companies, including the appointment
of Rob McWilliam as part time, interim
CFO of Fruugo plc (where he had held the
office of Non-Executive Director, prior to
this appointment) and various additional
appointments of Tripp Lane to the boards of a
number of companies. The Board considered
that these appointments gave rise to no
conflict of interest and did not interfere with
the time commitments to the Company.
Board responsibility
The Company has a clear division of
responsibilities between the Non-Executive
Chair and the Chief Executive Officer. In general
terms, the Non-Executive Chair is responsible
for running the Board and the Chief Executive
is responsible for running the Group’s business
on a day-to-day basis.
This clear division of responsibilities, when
taken together with the schedule of matters
that the Board has reserved for its own
consideration, ensures that no one person
has unlimited and unchecked power to
make decisions that may have a material
impact on the Group as a whole. A copy
of the matters reserved for the Board is
available on cardfactory’s investor website
(cardfactoryinvestors.com).
Board attendance
During the year, the Board held nine scheduled meetings and ten other ad hoc Board or sub-
committee meetings. The Committees of the Board also convened meetings during the year,
with attendance as follows:
Director Role
Scheduled
Board
meetings
Other
Board or
Committee
meetings
Remuneration
Committee
(6 meetings)
Audit & Risk
Committee
(6 meetings)
Nomination
Committee
(1 meeting)
Paul
Moody
Non-Executive Chair
& Chair of Nomination
Committee 9 of 9 5 of 6 5 of 6 – 1 of 1
Roger
Whiteside
Senior Independent
Non-Executive Director 9 of 9 4 of 4 5 of 6 5 of 6 1 of 1
Nathan (Tripp)
Lane
Non-Independent
Non-Executive Director 9 of 9 4 of 4 – – –
Rob
McWilliam
Independent
Non-Executive Director 9 of 9 4 of 4 6 of 6 6 of 6 1 of 1
Indira
Thambiah
Independent
Non-Executive Director 9 of 9 4 of 4 6 of 6 6 of 6 1 of 1
Darcy
Willson-Rymer
Chief Executive Officer
9 of 9 10 of 10 – – –
Matthias
Seeger¹
Chief Financial Officer
6 of 6 6 of 6 – – –
1. Matthias Seeger was appointed 22 May 2023.
CORPORATE GOVERNANCE REPORT CONTINUED
Governance Financial StatementsStrategic Report
75
Board activities and effectiveness
Board meetings are structured to ensure
they focus on key strategic matters that
affect the business and examples of topics
reviewed during the year are set out on the
right. Additionally, the Board considers any
decisions that are within the matters reserved
for the Board.
The Board had in place a schedule of matters
that were discussed during the year and a
similar schedule is in place for the current
financial year. As part of normal planning,
the Board puts these schedules in place in
advance of each financial year.
The Board meetings include a rolling agenda
of key strategic, operational, governance and
risk topics, as well as updates on financial and
non-financial KPIs, key strategic programmes
and operational and financial performance,
which includes periodic presentations from
the senior management team. These ensure
that the Non-Executive Directors remain
informed of key developments within the
Group and the progress in achieving the
strategic objectives.
The key topics discussed by the Board during the year were:
Strategy Performance Governance
• Group strategy and
annual operating plan.
• Shareholder engagement
on Strategy including
approach to the May 2023
Capital Markets Strategy
Update.
• Group budget.
• Commercial strategy
andpriorities in delivery
ofstrategic projects.
• People strategy and
colleague engagement.
• Retail estate location
strategy (leased / business
partner locations).
• Omnichannel strategy.
• IT strategy, cyber security
and ERP investment
review.
• Hedging, capital and
dividend policies.
• Annual results.
• Interim results.
• Key project updates.
• KPIs and balanced
scorecard performance.
• Capital investment review.
• Operational reviews.
• Seasonal, divisional and
strategic initiative trading
reviews.
• Market performance
including customer data
and insights.
• SA Greetings acquisition
and review of
performance.
• Remuneration Committee
assessment of business
performance for variable
pay awards (annual bonus
and share awards).
• Health and safety
performance.
• Remuneration Policy
review and stakeholder
consultations.
• Internally conducted
Board and Committee
effectiveness evaluations.
• Regular reviews of
performance against
Board objectives.
• Senior management
appointments.
• Colleague engagement,
including diversity, equity
and inclusion, culture
andvalues.
• Shareholder value
creation and shareholder
feedback.
• ESG strategy,
engagement, including
activity via ‘The Card
Factory Foundation’.
• Succession planning.
• Governance and legal
updates and approvals.
• Board meeting priorities.
• Organisational design.
• Principal risks reviews.
• Internal audit reviews.
• Committee reviews as
required by applicable
terms of reference and
updates to Committee
terms of reference.
All Directors receive papers in advance of
Board meetings including regular reports from
the senior management team covering the
parts of the business they are responsible for.
Minutes of all Board and Committee meetings
are taken by the General Counsel & Company
Secretary. The minutes record actions,
decisions and resolutions arising out of the
topics discussed and summary resolutions of
actions accompany the minutes which enables
the Board to regularly monitor progress.
Board strategy day
The Board held its annual strategy day with
the senior management team in July 2023.
This focused primarily on understanding
market insights, particularly in respect of our
value and quality perceptions, and a review
and assessment of opportunities to evolve the
cardfactory strategy over the medium and
longer term.
Non-Executive Director meetings
The Chair and the other Non-Executive
Directors met on three separate occasions
in the year without Executive Directors
being present. They intend to continue to
meet regularly to ensure that any concerns
can be raised and discussed outside formal
Board meetings. On a separate occasion,
as part of the annual Board effectiveness
review, the Senior Independent Director
and the other Non-Executive Directors met
without the Chair to discuss his performance.
The Chair and the other Non-Executive
Directors regularly have informal meetings
with the Executive Directors and other
members of the senior management team
in the business, at a store location or at the
Group’ssupportcentre.
Card Factory plc Annual Report and Accounts 202476
cardfactory culture
The Board rely on various indicators to assess
the culture of cardfactory, including regular
presentations from the management team,
the results of colleague engagement surveys,
feedback from the colleague listening group
(CLG), which the Chair attends as designated
Director for workforce engagement, and also
ad hoc discussions with colleagues as part of
Director store and site visits. The Board
recognises the collegiate culture in the
business, with colleagues commonly referring
to the ‘cardfactory family’. Improvements have
been realised over the last few years (reflected
in the improving colleague engagement
scores from Best Companies surveys, most
recently achieving the accolade in November
2023 of being the fifth ‘Best Big Company To
Work For’), which evidences progress from a
focus on ‘fair deal’ for colleagues and
improving benefits and reward in a balanced
way, improving colleague communications
and open engagement and action from that
engagement, including regular business
briefings with open Q&As with the management
team, CLG consultations and specific
consultations e.g. on DE&I.
Board committees
The Board has three Committees:
• an Audit & Risk Committee;
• a Nomination Committee; and
• a Remuneration Committee.
If the need should arise, the Board may
set up additional Committees. Terms of
reference (each of which comply with the
Code) for each of these Committees is
published on cardfactory’s investor website
(cardfactoryinvestors.com).
Audit & Risk Committee
The Audit & Risk Committee assists the Board
in discharging its responsibilities required
byDTR 7.1.3 R including responsibility for:
• financial reporting;
• external and internal audits, including
reviewing and monitoring the integrity
ofthe Group’s annual and interim
financialstatements;
• reviewing and monitoring the extent
of thenon-audit work undertaken by
externalauditors;
• advising on the appointment of
externalauditors;
• overseeing the Group’s relationship with
itsexternal auditors;
• reviewing the effectiveness of the external
audit process;
• reviewing the effectiveness of the Group’s
internal controls and systems; and
• whistleblowing and loss prevention.
The ultimate responsibility for reviewing and
approving the Annual Report & Accounts and
the half-year results remains with the Board.
The Audit & Risk Committee will give due
consideration to laws and regulations, the
provisions of the Code and the requirements
of the Listing Rules. The Code recommends
that an audit committee should comprise at
least three members who are independent
non-executive directors and that at least one
member should have recent and relevant
financial experience. The Audit & Risk
Committee was chaired by Rob McWilliam,
who the Directors consider has recent and
relevant financial experience. The Audit & Risk
Committee’s other members during the period
were Roger Whiteside and Indira Thambiah.
The Audit & Risk Committee met six times
during the year and, in future, will meet no
fewer than three times per year.
The Audit & Risk Committee has access to
sufficient resources to carry out its duties,
including the services of the Group General
Counsel and Company Secretary and
the Group’s Head of Internal Audit & Loss
Prevention. Independent external legal and
professional advice can also be taken by
the Audit & Risk Committee if it believes it
isnecessary to do so.
The Audit & Risk Committee Chair usually
attends the Annual General Meetings of the
Company and is available to respond to
questions from shareholders on the activities
of the Audit & Risk Committee during the
year,a report on which is set out on pages 80
to 83 of the Governance section of this Annual
Report.
Remuneration Committee
The Remuneration Committee assists the
Board in determining its responsibilities in
relation to remuneration, including:
• making recommendations to the Board
on the Company’s policy on executive
remuneration;
• setting the over-arching principles,
parameters and governance framework
of the Group’s remuneration policy and
ensuring incentives and rewards are
aligned with the Group’s culture;
• determining the individual remuneration
and benefits package of each of the
Company’s Executive Directors, its
Company Secretary and other members of
the Group’s senior management team; and
• ensuring appropriate engagement with
shareholders and the workforce takes
place on executive remuneration policy
and its alignment with wider Company
paypolicy.
The Remuneration Committee also ensures
compliance with the Code in relation
to remuneration and is responsible for
preparing an annual Remuneration Report
for approval by the Company’s members
at its AGM. The Remuneration Committee
undertook a triennial review of the Company’s
Remuneration Policy at the end of the recent
financial year and are presenting the new
Remuneration Policy to shareholders at the
2024 AGM.
The Code provides that a remuneration
committee should comprise at least three
members who are independent non-executive
directors, free from any relationship or
circumstance which may or would be likely
to, or appear to, affect their judgement
and that the chair of the board of directors
may also be a member provided he is
considered independent on appointment.
The Remuneration Committee during the
period was chaired by Indira Thambiah.
TheCommittee’s other members during the
period were Paul Moody, Roger Whiteside,
and RobMcWilliam.
The Remuneration Committee met six times
during the year. In future, it will meet not less
than twice a year.
The Board and the Remuneration Committee
have engaged Deloitte LLP, the professional
services firm, to advise and assist in
connection with the Group’s executive
remuneration arrangements and its reporting
obligations. Deloitte LLP provide a number of
other consultancy services to the cardfactory
Group, including Debt Advisory.
A report on the Remuneration Committee’s
activities during the year, together with the
Directors’ Remuneration Report is set out on
pages 84 to 107 of the Governance section of
this Annual Report.
CORPORATE GOVERNANCE REPORT CONTINUED
Governance Financial StatementsStrategic Report
77
Nomination Committee
The Nomination Committee assists the Board
in discharging its responsibilities relating to
the composition and make-up of the Board
and any Committees of the Board. It is also
responsible for periodically reviewing the
Board’s structure and identifying potential
candidates to be appointed as Directors or
Committee members as the need may arise.
The Nomination Committee is responsible for
evaluating the balance of skills, knowledge
and experience and the size, structure and
composition of the Board and Committees
of the Board, retirements and appointments
of additional and replacement Directors
and Committee members and will make
appropriate recommendations to the Board
on such matters.
The Code recommends that a majority of the
members of a nomination committee should
be independent non-executive directors. The
Nomination Committee is chaired by Paul
Moody and its other members during the
year were, Roger Whiteside, Rob McWilliam
and Indira Thambiah. The Directors therefore
consider that the Company is in compliance
with the Code.
The Company adopts a rigorous process
when recruiting Executive Directors and
members of the senior management team,
which includes multiple interviews with the
Board and peers; psychometric test and
interviews with an occupational psychologist,
with a focus on making appointments where
emotional intelligence, leadership and cultural
fit are key requirements in addition to role-
specific skills and experience.
The Nomination Committee met one time
during the year. In future, the Committee will
meet not less than once a year. A report on the
activities of the Nomination Committee during
the year is set out on pages 108 and 109 of
theGovernance section of this Annual Report.
Board evaluation
The Chair and Company Secretary undertook
an internal Board evaluation during 2023,
comprising a comprehensive review of the
all aspects of the Board’s effectiveness.
Additional Committee effectiveness reviews
of each of the Audit & Risk Committee and
the Remuneration Committee were also
undertaken. The reviews included surveys of
the Directors, who scored various statements
applicable to the Board and each Committee
and key roles on each Board or Committee
(but without making assessments of individual
Director performance). Data and supporting
comments were collated, anonymised and
shared with the Directors, with comparisons
to prior year scores (where available). The
Chair also held meetings with each of the
Directors to discuss the Board effectiveness
and individual contributions. The conclusions
and recommendations were presented to the
Board for discussion, which were used to set
new Board objectives. In addition to reviews of
the collective effectiveness of the Board, the
Senior Independent Director collated views
from the other Directors, to provide similar
feedback to the Chair. TheBoard effectiveness
review identified the followingstrengths:
• Progress made in developing the strategic
focus of the Board and better use
ofmeetings;
• Members of the Board have a good mix
of skills and experience, and provide
constructive challenge to support effective
decision making; and
• Areas for further improvement include
increased focus on creation of shareholder
value and succession planning for the
Board and executive management team,
which should include enhancing the
Board’s diversity.
The Board set the following collective
objectives in October 2023, which are to be
progressed during the subsequent 12 month
period, which are subject to regular reviews:
• Strategic Plans: Closer oversight and
scrutiny by the Board on the key
strategicpriorities:
– Omnichannel and online;
– Partnerships; and
– Infrastructure and systems, to
demonstrate progress and update
stakeholders to build shareholder value.
• To improve shareholder returns, including
development of capital allocation policy,
investment priorities, and shareholder
returns and communicate final terms,
onceresolved.
• Ensure a cohesive plan towards achieving
Net Zero using science-based targets which
can be achieved without compromising
published financial targets for FY27.
• Further improve the Board’s diversity
to achieve Listing Rules requirements
by December 2024. Develop a clear
succession plan for Board Directors,
andnarrow the gap on succession
planning for senior management.
In addition to the Board effectiveness review,
the Board reflected on the achievement of
the objectives adopted in November 2022.
It was agreed that good progress was made
in meeting these objectives, in particular
inimproving the size of the Board, frequency
of meetings and more focused agenda
management. Clear improvements have been
made in Board papers and the process and
clarity inshareholder communications.
On completion of the Board effectiveness
review, the Nomination Committee resolved
to commence recruitment of an additional
Non-Executive Director, which would increase
the size of the Board in the short term, whilst
ensuring continuity and succession in advance
of any current Non-Executive Director
choosing to stand down.
Board evaluation will continue to be
conducted on an annual basis. The Company
will conduct an externally facilitated
evaluation in the financial year ending
31January 2025.
Conflicts of interest
The Companies Act 2006 allows the board
ofa public company to authorise conflicts
and potential conflicts of interest of individual
directors where the articles of association of
the company contain an enabling provision.
The Company’s Articles of Association
give the Board this authority subject to the
following safeguards:
• Directors who have an interest in matters
under discussion at a Board meeting
must declare that interest and abstain
fromvoting.
• Only Directors who have no interest in
the matter being considered are able
to authorise a conflict of interest and,
intaking that decision, the Directors
must act in a way they consider, in good
faith, would be most likely to promote
thesuccess of the Company.
The Directors are able to impose limits or
conditions when giving authorisation if they
feel this is appropriate. All Directors are
required to disclose any actual or potential
conflicts to the Board and there are no current
matters disclosed that are considered by the
Board to give rise to a conflict of interest.
Allconflicts are considered by the Board
and any authorisations given are recorded in
the Board’s minutes and reviewed annually
bytheBoard.
The Board considers that its procedures to
authorise conflicts of interest and potential
conflicts of interest are operating effectively.
Card Factory plc Annual Report and Accounts 202478
Appointment and removal of Directors
All Directors have service agreements or
letters of appointment in place and the
details of their terms are set out in the
Directors’ Remuneration Report on
pages 93 and 94.
The Articles of Association of the Company
provide that a Director may be appointed
by ordinary resolution of the Company’s
shareholders in general meeting or by the
Board so long as the Director stands down
and offers themself for election at the next
AGM of the Company. Consistent with the
Code, the Articles also provide that each
Director must stand down and offer themself
for re-election by shareholders at the AGM
every year.
Directors may be removed by a special
resolution of shareholders or by an ordinary
resolution of which special notice has been
given in accordance with the Companies
Act 2006. The Articles of Association of the
Company also provide that the office of
a Director shall be vacated if he or she is
prohibited by law from being a Director or
is bankrupt; and that the Board may resolve
that his or her office be vacated if he or she
is of unsound mind or is absent from Board
meetings without consent for six months or
more. A Director may also resign from the
Board. The Nomination Committee makes
recommendations to the Board on the
appointment and removal of Directors.
Powers of Directors
The business of the Company is managed
by the Board, which may exercise all of
the powers of the Company, subject to the
requirements of the Companies Act 2006, the
Articles of Association of the Company and
any special resolution of the Company.
The Board has adopted internal delegations
of authority in accordance with the Code
which incorporate matters which are
reserved to the Board or Committees and
the powers and duties of the Chair and the
ChiefExecutive Officer, respectively.
At the AGM of the Company, the Board will
seek authority to issue shares and to buy-back
and reissue shares. Any shares bought back
would either be held in treasury, cancelled or
sold in accordance with the provisions of the
Companies Act 2006. For further details see
the Notice of Annual General Meeting which
accompanies this Annual Report.
Advice, indemnities and insurance
All Directors have access to the advice
and services of the Company Secretary. In
addition, Directors may seek legal advice at
the Group’s cost if they consider it necessary
in connection with their duties.
Each Director of the Company (and of each
other Group company) has (and had, during
the financial year to 31 January 2024) the
benefit of a qualifying third-party indemnity
provision, as defined by section 236 of the
Companies Act 2006, as permitted by the
Company’s Articles of Association. In addition,
Directors and officers of the Company and
its subsidiaries are covered by Directors’
and Officers’ liability insurance. No amount
was paid under any of these indemnities or
insurances during the year other than the
applicable insurance premiums.
Articles of Association
The Company’s Articles of Association can
only be amended by a special resolution
of its shareholders in a general meeting, in
accordance with the Companies Act 2006.
Governance and risk
The Board has adopted the risk management
framework described on pages 64 and 65 of
this Annual Report.
The Board and the Audit & Risk Committee
have reviewed the effectiveness of the Group’s
risk management framework, the Group’s risk
register and their alignment with the Group’s
strategic objectives in accordance with the
Internal control and audit
Overall responsibility for the system of internal control and reviewing its effectiveness lies
with the Board. In its day-to-day operations, the Group adopts the three lines of defence
methodology and continuously assesses the performance of its internal controls and, where
necessary, looks to enhance its control environments. The Head of Internal Audit & Loss
Prevention coordinates the Group’s programme of internal audit activity, supported by two
independent accountingfirms.
The Group’s system of internal control can be summarised as follows
Board Audit & Risk Committee Senior Management Team
• Takes collective
responsibility for
internalcontrol.
• Reserves certain matters
for the Board.
• Oversees the control
framework and
responsibility for it.
• Approves key policies and
procedures.
• Monitors development
ofperformance.
• Oversees effectiveness
of internal control
framework.
• Receives reports from the
external auditor.
• Approves the annual
internal audit programme.
• Receives internal audit
reports.
• Responsible for operating
within the control
framework.
• Monitors compliance with
policies and procedures.
• Recommends changes to
controls where needed.
• Monitors performance.
Internal Audit Compliance and safety risk assessors Loss Prevention Team
• The internal audit function
during the period was
overseen by the Head
of Internal Audit & Loss
Prevention.
• Reviews compliance with
internal procedures to
ensure that good health
and safety standards are
observed.
• Focuses on cash losses,
theft and fraud in stores.
CORPORATE GOVERNANCE REPORT CONTINUED
Code for the period ended 31 January 2024
and up to the date of approving the Annual
Report and Accounts.
The Board as a whole considered the
principal risks and relevant mitigating actions
and determined that they were acceptable for
a retail business of the size and complexity as
that operated by the Group.
Governance Financial StatementsStrategic Report
79
Specific elements of the current internal
control framework include:
• a list of matters specifically reserved for
Board approval;
• a clear framework for delegated
responsibilities, mandating escalation of
decisions to more senior colleagues within
the business, or ultimately the Board,
where appropriate;
• clear structures and accountabilities for
colleagues, well understood policies and
procedures, all of which the Executive
Directors are closely involved with;
• every member of the senior management
team having clear responsibilities and
operating within defined policies and
procedures covering such areas as capital
expenditure, treasury operations, financial
targets, human resources management,
customer service and health and safety;
• the Executive Directors and the senior
management team monitoring compliance
with these policies and procedures and, in
addition, regularly reviewing performance
against budget, analysis of variances,
major business issues, key performance
indicators and the accuracy of business
forecasting; and
• a continuous review programme of store
compliance by the loss prevention team in
relation to financial procedures in stores,
and by risk assessors working in the health
and safety team and by other teams within
the Group.
The Audit & Risk Committee has responsibility
for overseeing the Group’s system of internal
controls and the programme of activities
performed by internal audit and receives
the report of the external auditor as part
of the annual statutory audit. Additional
information on the activities of the Audit &
Risk Committee can be seen in the report of
the Audit & Risk Committee on page 81.
The Board and the Audit & Risk Committee
have monitored and reviewed the
effectiveness of the Group’s internal control
systems in accordance with the Code for
the period ended 31 January 2024 and up
to the date of approving the Annual Report
& Accounts and confirmed that they are
satisfactory. Internal control systems such
as this are designed to manage rather than
eliminate the risk of failure to achieve business
objectives and can provide only reasonable
and not absolute assurance against material
accounting misstatement or loss. Where
any significant failures or weaknesses are
identified from the systems of internal control,
action is taken to remedy these.
Disclosures under DTR 7.2.6 R
The disclosures the Company is required to
make pursuant to DTR 7.2.6 R are contained
inthe Directors’ Report on pages 110 to 114.
Anti-bribery
The Group has implemented internal
procedures, colleague training and measures
(including the provision of an Anti-Corruption
and Bribery Policy) with the aim of ensuring
compliance with the UK Bribery Act 2010
(asamended) by the Company and other
members of the Group.
Whistleblowing
The Group is committed to conducting its
business with honesty and integrity, with
high standards of corporate governance
and in compliance with legislation and
appropriate codes of practice. We expect all
colleagues to maintain such high standards
but recognise that all organisations face
the risk of things going wrong from time to
time or of unknowingly harbouring illegal or
unethicalconduct.
We recognise that a culture of openness
and accountability is essential in order
to prevent such situations occurring or
to address them when they do occur. We
provide a whistleblowing line and maintain
a whistleblowing policy that is designed
to encourage colleagues to report such
situations without fear of repercussions or
recriminations provided that they are acting
in good faith. By having early knowledge
of any wrongdoing or illegal or unethical
behaviour, we improve our ability to intervene
and stop it. The policy sets out how any
concerns can be raised and the response
that can be expected from the Company
and provides colleagues with the assurance
that they can do this in complete confidence.
Our loss prevention team, in its day-to-day
activities, seeks to reinforce this message
and, in addition, the Group periodically uses
communication campaigns to supplement
this. The Audit & Risk Committee is notified
ofany whistleblowing reports.
This report was reviewed and approved by
theBoard on 29 April 2024.
Paul Moody
Chair
30 April 2024
AUDIT & RISK COMMITTEE
CHAIR’S LETTER
Rob McWilliam
Chair of the Audit & Risk Committee
We have continued to
focus our energy on Risk
Management this year,
resulting in a refreshed
Group risk register.”
Dear Shareholder
I am pleased to present this year’s Audit & Risk
Committee (Committee) Report. The Report
outlines how the Committee discharged its
responsibilities over the pastyear and the key
areas it considered indoingso.
The Committee fulfils a vital role in the
Company’s governance framework, providing
valuable independent challenge and oversight
across all financial reporting and internal
control procedures. Ultimately, it ensures
our shareholders’ interests are protected.
In the year, the Committee has overseen a
comprehensive review of the Group’s risk
management framework, which was supported
by one of our internal audit partners and has
resulted in a refreshed Group risk register which
focuses on the key risks that the Company is
facing. Further details ofthis review can be
seen on pages 64 and 65.
The Committee approved a retender of the
internal audit service this year. A detailed
tender exercise has been performed, resulting
in the appointment of two professional
services firms to support the Head of Internal
Audit & Loss Prevention in delivering the
annual internal audit plan. An Internal Audit
Manager has also been appointed to further
strengthen the internal audit and governance
capability within the Group.
The Committee, in addition to its focus on
risk management, has allocated a significant
proportion of its time during the year to
internal audit, specifically, the delivery of the
annual internal audit plan and implementation
of recommendations. It has confidence in the
Group’s overall control environment and in
management’s commitment to identifying and
improving areas where the Group’s systems
and processes need modernisation.
The Committee and management have
reviewed the new UK Corporate Governance
Code and have commenced activity to
ensure compliance from 1 February 2025,
including the FRC’s Audit Committee Minimum
Standard. A project has also commenced in
relation to provision 29, i.e. monitoring the
Group’s risk management and internal controls
framework and review of its effectiveness
toensure that we comply with this provision
commencing 1 February 2026. The Committee
will take an active role in this to ensure
compliance with the new requirements.
Over the course of the next 12 months,
theCommittee will continue to develop
andrefine its work on the effectiveness of the
risk management process, the delivery of the
annual internal audit plan and the adoption
of the UK Corporate Governance reforms.
Inaddition it will also continue to ensure that
its activities are focused on business issues that
add to or preserve value and that it remains
aligned with the strategic goals ofthe Group.
The report that follows provides further detail
on the Committee’s activities during the year.
I look forward to addressing any questions
in respect of the work of the Audit & Risk
Committee in advance of the AGM in June2024.
Yours sincerely
Rob McWilliam
Chair of the Audit & Risk Committee
30 April 2024
Committee members
FY24 Meeting
attendance
Rob McWilliam (Chair) 6/6
Roger Whiteside 5/6
Indira Thambiah 6/6
Card Factory plc Annual Report and Accounts 202480
This report provides details of the role of the
Audit & Risk Committee and the work it has
undertaken during the year.
Role of the Audit & Risk Committee
The principal responsibilities of the
Committee, which has received delegated
authority from the Board, are to:
• oversee the integrity of the Group’s financial
statements and public announcements
relating to financialperformance;
• oversee the Group’s external audit process
including its scope, the extent of the non-
audit services provided by our auditor and
our auditor’s independence andeffectiveness;
• monitor the effectiveness of financial
controls;
• evaluate the process for identifying and
managing risk throughout the Group;
• ensure the effectiveness and independence
of the Group’s internal audit function; and
• ensure that the Annual Report & Accounts
are fair, balanced and understandable.
A more detailed explanation of the Audit &
Risk Committee’s role, its meeting frequency,
attendance and membership (both during the
period and as at the date of this report) are
set out in the Corporate Governance Report
on pages 74 and 76.
The Chief Executive Officer, the Chief
Financial Officer, the Chair of the Board,
the Head of Internal Audit & Loss Prevention
and the Controller – Corporate Finance
usually attend meetings of the Committee
by invitation, along with representatives from
our auditor, Mazars LLP. In addition, subject
matter experts and external accounting firms
engaged to support internal audit are also
invited to attend meetings of the Committee
where required. The General Counsel &
Company Secretary acts as secretary to
theCommittee.
Activities during the year
During the year, the work of the Committee
has principally fallen under the following areas:
• Reviewing the integrity of the draft
financial statements for the year ending
January 2023, the appropriateness of
accounting policies with a particular
focus on stock provisions, going concern
and viability statements and the auditor’s
report regarding its findings on the
annualresults.
• Assessing whether the Annual Report &
Accounts for the year ending January
2023, taken as a whole, were fair, balanced
and understandable and provided the
information necessary for shareholders to
assess the Company’s strategy, business
model and performance.
• Reviewing the systems and controls that
the Group has in place to enable the
Board to make proper judgements on
a continuing basis as to the financial
positionand prospects of the Group.
• Verifying the independence of the
Group’s auditor, approving their
audit plan and audit fee and setting
performanceexpectations.
• Approval of the Group’s half-year results
statements published in September 2023.
• Overseeing the Group’s approach to risk
management, ensuring that the principal
risks are regularly reviewed by the senior
management team.
• Reviewing the Group’s risk register in March,
April, September, November andJanuary.
• Monitoring developments in legislation,
reporting and practice which affect
matters for which the Committee
isresponsible.
• Approval of the FY24 internal audit
plan, reviewing the findings of, and the
implementation of actions arising from
internal audit reviews undertaken.
• Reviewing the Company’s procedures for
detecting fraud and systems and controls
for the prevention of bribery.
• Reviewing the outcome and actions taken
relating to whistleblowing cases.
• Reviewing the Group’s tax strategy.
• Assessing its own performance against
itsterms of reference.
Activities after the year-end
In the period following the year-end, the
Committee met in April 2024 and reviewed
the following:
• The Group’s risk register including an
assessment of how risks are assessed,
how risk appetite and target risk are
assigned, and a review of the emerging
risks identified by the management team,
assupplemented by the Committee.
• The principal risks facing the Group
including those that would threaten its
business model, future performance,
solvency or liquidity.
• The process undertaken by management
to support the Group’s going concern
statement (which is set out on page 112)
including the time period assessed and
the principal risks and combinations
ofrisksmodelled.
• The integrity of the draft financial statements
for the year ended January 2024, including
the appropriateness of accounting policies
and going concern assumptions.
• The external auditor’s report.
• Whether this Annual Report & Accounts,
taken as a whole, are fair, balanced
and understandable and provide the
information necessary for shareholders
to assess the Company’s position and
performance, business model and strategy.
• The performance, effectiveness,
independence and qualifications of
theexternal auditor.
Significant areas of judgement
Within its terms of reference, the Committee
monitors the integrity of the Group’s annual
and half-year results, including a review of
the significant financial reporting matters,
judgements and estimates contained in them.
At its meeting in April 2024, the Committee
reviewed the FY24 financial year and
considered a paper prepared by management
regarding the significant accounting policies,
disclosures, estimates and judgements
affecting the financial statements for the year.
The Committee also reviewed the report
of the external auditor, which included
comments on the matters prepared and
presented by management, plus other matters
insofar as relevant to the audit opinion. The
significant accounting issues discussed in
respect of FY24 were:
• Inventory counts, valuation and
provisioning.
• Impairment reviews (including goodwill).
• Grant income provisions.
Inventory
The Group has significant volumes, and a
broad range, of inventory. The Group makes
use of technology, such as hand-held terminal
devices, to support stock control processes
and reduce the risk of manual error in stock
counts, which are a key control in respect of
the inventory balance. An inventory count is
undertaken at both the half-year and the year
end which covers a significant majority of
the value of stock on hand at each date, with
stock not counted at these dates typically
counted recently at the end of a season
(for example, any residual Christmas stock
is counted during January). The Committee
reviewed the process by which the year-end
inventory valuation had been prepared and
challenged management to ensure key risk
areas had been given due consideration.
AUDIT & RISK COMMITTEE REPORT
Governance Financial StatementsStrategic Report
81
AUDIT & RISK COMMITTEE REPORT CONTINUED
The Group continues to hold material
inventory provisions which, by their nature,
involve a significant degree of estimation;
however as a result of lower gross stock
holdings, better than previously anticipated
sell-through rates and a reduction in the
volume of legacy or discontinued stock lines,
provision values have reduced compared to
the prior year
The provision is calculated with reference to
the Group’s merchandising plans and considers
the age and turn of inventory on a line-by-
line basis. Whilst the overall methodology
is unchanged year-on-year, the Group has
updated assumptions regarding stock turn and
sell through rates based on the latest available
sales data. Lines that are old, not on plan for
future sales, or where the Group holds large
volumes of inventory compared to recent sales
data are provided against either in part or
in full. The partial provisioning percentages
are set based on the Group’s expectations of
likely sell-through rates based on historical
experience and are adjusted where necessary
to reflect changes in sell-through levels. The
nature of this estimation is such that the range
of reasonably possible outcomes is material
and, as a result, inventory provisioning is
considered a source of significant estimation
uncertainty for the financial statements.
As part of its review, the Committee
considered the calculation of the provision
and challenged management’s assumptions.
As part of the review, it was noted that sell
through rates in FY24 had been better than
in the prior year and better than expected
when the FY23 accounts were approved.
Accordingly, management’s assessment of
the provisioning percentages to apply to each
provision category were reduced compared
to the prior year. The Committee also noted
that, reflecting the findings of the most recent
sales data covering FY24, management had
extended the period over which historical
sales are considered when determining
whether the stock holding at year end was
high compared to historical sales levels. The
Committee considered the underlying data
and challenged management regarding their
assessment to extend this period.
Having considered these matters, and the
views of the external auditor, the Committee
concluded that the inventory valuation,
provision and associated disclosures
included in the financial statements were
materiallyappropriate.
Grant income
During the Covid-19 pandemic, the Group
received significant values of income from
government schemes intended to support
businesses affected by national and regional
Covid-19 lockdown restrictions.
Under IAS 20, the Group is only permitted to
recognise government grant income when there
is reasonable assurance that any conditions
attached to the grant will be complied with.
The grant income received by the Group is
subject to UK subsidy control conditions, as well
as specific conditions attached to the grants
themselves. The unprecedented nature of
Covid-19 support funding meant application of
these conditions was, and remains, subject to a
degree of interpretation.
The Group recognised grant income of
£8.0million in FY22 and recorded a provision
of £7.4 million in respect of amounts that may
need to ultimately be repaid. During FY24,
the Group has continued discussions with its
advisors and government to seek a settlement
of the amounts outstanding and, having
reached an agreement in principle prior to
31 January 2024, subsequent to the year-end
agreed a partial settlement of the amounts
outstanding with the Department of Business
and Trade. The partial settlement amounted
to £3.3 million, which was repaid on 5 April
2024. A further amount remains outstanding
which the Group continues to discuss with the
relevant government departments with the
support of its external advisors.
Management’s assessment of the unsettled
amount still outstanding is £2.2 million and,
as a result, has released £2.0 million from
the provision value at 31 January 2024,
leaving a provision value of £5.3 million at
31 January 2024.
The Committee reviewed management’s
assessment of the provision value and
challenged the assumptions made around
retention of both the amounts recognised in
respect of income and the residual provision
value. The Committee also considered and
challenged the timing of recognition of the
additional income, management’s decision
to exclude the £2.0 million of income from
Adjusted PBT and the presentation of this
amount as Other Income in the accounts.
Having considered the view of the external
auditor, and noting the independent advice
received, the Committee concluded that the
position adopted was based on a balanced
interpretation of available guidance but
included an appropriate element of caution in
light of the remaining inherent uncertainty. In
reaching its conclusion, the Committee noted
that the estimation uncertainty had been
disclosed in the notes to the accounts.
Impairment reviews
Impairment reviews are an area of
management and audit focus; however
the Group’s assessment of whether or
not impairment is considered a source of
significant estimation uncertainty depends
upon the results of the reviews and the level
of headroom and associated sensitivity to
changes in key assumptions. Accordingly,
noting the material value of goodwill on the
balance sheet and the reduction in sales
performance of certain of the Group’s cash
generating units (CGUs). The Committee
considered the impairment reviews prepared
by management.
The reviews concluded that no impairment
charges were required in respect of the group
of CGUs that make up the cardfactory stores
business, to which the Group’s goodwill
balance is allocated, nor for the CF Online
CGU. However, impairment charges were
recorded in respect of the Getting Personal
CGU (£1.1 million). The Group recorded a net
nil impairment charge in respect of individual
store assets, which is comprised of £2.7 million
of impairment charges and £2.7 million of
impairment charge reversals.
The Committee considered the key
assumptions used in preparing the
impairment reviews and the sensitivity of the
results to changes in those assumptions. The
Committee also considered the recoverability
of the Parent Company investments as part of
their review. Having challenged management
regarding the application of those
assumptions, and considered the views of the
auditor, the Committee concluded that the
reviews had been prepared on a reasonable
The Committee will
continue to develop and
refine its work on the
effectiveness of the risk
management process...”
Card Factory plc Annual Report and Accounts 202482
and appropriate basis. Having considered the
level of headroom and the relative sensitivity
to key assumptions, the Committee concurred
with management’s view that reasonably
possible changes in the key assumptions
would not result in an impairment charge
where one had not been recorded, nor
materially change the impairment charges
that had been recorded.
Accordingly, the Committee considered that
the disclosure of the estimation uncertainty as
not significant was appropriate and balanced
the inherent complexity and due focus of the
reviews against the lack of sensitivity of the
estimates to changes.
Assessment of Annual Report
&Accounts
The Committee confirmed to the Board
that it considered this Annual Report &
Accounts as a whole to be fair, balanced
and understandable, to the extent possible,
while complying with all applicable legal,
regulatoryand reporting requirements.
Internal audit
The Head of Internal Audit & Loss Prevention
is responsible for devising and coordinating
the agreed programme of internal audit
reviews and is supported by two independent
accounting firms in the delivery of the
annualplan.
Internal audit reports are shared with Mazars
LLP, who are also invited to attend the Audit &
Risk Committee’s meetings, ensuring external
auditors have full disclosure to allow them
to account for internal audit findings in their
audit scope.
In line with good practice, the Committee,
supported by the Head of Internal Audit &
Loss Prevention, will continue to assess its
approach to internal audit to ensure it supports
a rigorous control framework across the Group.
Loss prevention
The loss prevention team and its programme
of activities are embedded in the
business. Direct engagement and regular
communication with colleagues across
the business remain critical to the team’s
effectiveness and the team’s core fraud and
theft detection activities are supplemented
by a programme of data reviews, store audits,
KPI monitoring, colleague education, training
and development.
External auditor
Mazars LLP have conducted the statutory
audit for the financial year ended 31 January
2024 and have attended all scheduled
Committee meetings held during that
financial year, as well as the Committee
meeting held during April 2024. The
Committee had the opportunity to meet
privately with the auditors during the period.
The Audit & Risk Committee discussed and
agreed the scope of the audit with Mazars
in January 2024 and have since agreed
their audit fees. The Committee reviewed
the audit quality and the effectiveness of
the external audit in line with the Financial
Reporting Council’s ‘Practice aid for audit
committees (December 2019)’. It considered
the results of external quality inspections by
the Audit Quality Inspection Team on other
Mazars clients, and received representations
from management as to how the audit
was conducted, to allow it to make its own
assessment of the effectiveness of the audit
process with particular reference to audit
planning, design and execution of the audit.
The Committee also considered the
effectiveness of the audit through the
reporting from and communications with the
auditor and an assessment of the auditors
approach to key areas of judgement and any
errors identified during the audit, in addition
to the work performed as part of Mazars’ first
year transition. The Committee concluded
that the audit was effective.
The fee paid to Mazars LLP for the statutory
audit of the Group and Company financial
statements and the audit of the Company’s
subsidiaries pursuant to legislation was £553k.
A breakdown of fees paid to Mazars LLP
during the financial year is set
out in note 3 to the financial statements on
page 137.
The Committee received representations from
Mazars LLP during the year with regard to
its independence from the Company. Having
considered these representations and that
Mazars are only engaged to perform the audit
and there are no conflicts of interest effective
in auditing the Group, the Committee
considers that Mazars LLP is sufficiently
independent.
The Committee has taken appropriate steps
to ensure that Mazars LLP is independent
of the Company and has obtained written
confirmation that it complies with guidelines
on independence issued by the relevant
accountancy and auditing bodies. The
Committee took account of the auditors
approach to the current year audit, the
proposed audit strategy and the fact that this
is the first year Mazars have undertaken the
audit following a tender process and therefore
the audit is led by a Partner on her first year
of the engagement.
The Group has no contractual arrangements
that restrict its choice of auditor.
Use of auditors for non-audit work
The Committee recognises that the use
of audit firms for non-audit services can
potentially give rise to conflicts of interest.
During the year the Committee reviewed
and approved an updated policy regarding
the use of audit firms for non-audit services,
which is published on the Group’s investor
website (cardfactoryinvestors.com). In
addition to responsible for oversight of the
Group’s auditor on behalf of the Board, the
Committee also monitors the implementation
of the non-audit services policy.
The updated policy contained no material
changes to the substance of the policy; which
sets out the Group’s general principle that
non-audit work shall not be allocated to the
external auditor unless a number of stringent
criteria are met, such criteria being designed
to ensure any non-audit or audit-related work
awarded to the external auditor should not
compromise independence.
During FY24, Mazars LLP did not provide any
non-audit services to the Group, other than
its review of the half-year interim report and
financial statements, which is considered
closely related to the audit. Such a review
is pre-approved by the Group’s non-audit
services policy.
The aggregate fees paid to Mazars LLP for
services closely related to the audit was £85k,
equivalent to 15.4% of the audit fee.
Further details are given in note 3 to the
financial statements on page 137.
The Committee is satisfied that the overall
levels of audit-related and non-audit fees and
the nature of the services provided are such
that they will not compromise the objectivity
and independence of the auditor.
This report was reviewed and approved by
theAudit & Risk Committee on 29 April 2024.
Rob McWilliam
Chair of the Audit & Risk Committee
30 April 2024
Governance Financial StatementsStrategic Report
83
REMUNERATION COMMITTEE
CHAIR’S LETTER
In developing our Policy, we consulted with our largest
shareholders, the proxy agencies and our colleagues
and received useful feedback on the proposed policy
and our approach to implementation which helped
shape the final proposal.”
Indira Thambiah
Chair of the Remuneration Committee
Dear Shareholder
I am pleased to present the Remuneration Report for the financial year to 31 January 2024
(FY24) and to propose a new Remuneration Policy for the next three years, which is being
put to shareholders forapproval at the 2024 AGM.
Remuneration Policy review
During the year the Committee, supported
by our external advisors, Deloitte, has
undertaken a thorough review of the current
approach to remuneration to ensure that
our pay arrangements continue to support
cardfactory’s strategy and the delivery
of long-term sustainable returns for our
shareholders. As part of this review we
considered a range of alternative approaches,
however, we concluded that the current
combination of the annual bonus and our RSP
continues to be the best incentive framework
for cardfactory for the following reasons:
• Since 2018, the RSP has worked well
to support us in appropriately aligning
executive pay with the strategic ambition
of the Group and subsequent delivery of
the Group’s strategy. It has allowed us to
be flexible in where we direct our focus,
enabling us to effectively execute on our
longer-term strategic priorities that can
change over the course of a three-year
policy period and beyond.
• In FY22, we launched our ‘Opening Our
New Future’ strategy with the aim of
becoming the leading omnichannel
retailer in our sector. The Board is pleased
with Management’s progress to date in
delivering on our strategic blocks of growth
across the business. While we now have
abroader and more established strategy,
we are still exposed to a significant
amount of external market volatility,
andthe RSP allows us to continue to focus
on our longer-term ambitions and be agile
in our decision-making.
• The RSP provides a focus on long-term,
sustainable business growth and is
complemented by our annual bonus,
whichallows us to drive and reward
key annual financial and strategic
priorities ofthe Group which provide the
foundations of long-term sustainable
shareholder value delivery.
• The RSP provides an effective alignment
of participants’ interests with shareholders,
promoting direct share ownership among
the senior management team and below
and rewarding for delivering strong,
sustainable share price growth. The underpin
ensures there is no reward for failure.
• It is simple to operate, well understood,
and is seen as motivational by participants,
who value the line of sight on vesting
outcomes. Our current executive team
have been recruited since the introduction
of the RSP and all have been positively
engaged with it.
Committee members
FY24 Meeting
attendance
Indira Thambiah (Chair) 6/6
Paul Moody 5/6
Roger Whiteside 5/6
Rob McWilliam 6/6
Introduction
This Directors’ Remuneration Report is
divided into three sections: (1) this Letter
outlining key decisions (pages 84 to 86); (2)
the proposed Directors’ Remuneration Policy
(pages 88 to 95); and (3) the Annual Report on
Remuneration for the year to 31 January 2024
(pages 96 to 107).
This proposed Remuneration Policy (Policy)
will be put to shareholders for approval at the
AGM to be held on 20 June 2024, and subject
to shareholder approval, shall take effect
from that date. This Letter and the Annual
Report on Remuneration will also be put to an
advisory shareholder vote at this AGM.
Card Factory plc Annual Report and Accounts 202484
The Committee considers
the Remuneration Policy
to be effective and that
it operated as intended
during FY24.”
We are therefore not proposing any significant
changes to the Policy including no change to
the maximum incentive opportunities under
the Policy. However, some minor updates are
proposed as follows:
• Simplification of vesting period: to align with
market practice, to remove complexity for
participants and for the Committee and the
teams that administer the plan, 100% of the
RSP awards will vest on the third anniversary
of grant and will be subject to a holding
period (save for a sale of shares to satisfy tax
and national insurance arising from vesting)
that expires on the fifth anniversary of grant.
Under the previous policy, 50% vested on
the third anniversary, 25% on the fourth
anniversary and the balance on the fifth
anniversary. In practice, this change does not
affect when the Executive Directors’ awards
are released to them, since under both
arrangements, all awards are held until the
fifth anniversary of grant; and
• Enhancements to the RSP underpin to
strengthen reference to ESG performance:
our growth strategy is underpinned by our
commitment to operate sustainably across
all areas of our business. The new underpin
wording states that in assessing performance
for the Restricted Shares, the Committee will
consider financial and non-financial KPIs of
the business as well as delivery against its
strategic priorities and ESG commitments.
In developing our Policy, we consulted with
our largest shareholders, the proxy agencies
(who represent wider shareholder interests)
and our colleagues via the colleague listening
group (CLG) and received useful feedback
on the proposed policy and our approach to
implementation which helped shape the final
proposal. We are confident that the proposed
Policy achieves an appropriate balance
between the Director and management team
interests and the wider stakeholder groups,
whilst aligning the longer term interests of
Directors with shareholders.
Application of the Remuneration Policy
during FY24
The Committee considers the Remuneration
Policy to be effective and that it operated as
intended during FY24, stretching the Executive
Directors and management team to improve
profitability and focus on core strategic growth
areas whilst enhancing the customer experience.
The Committee welcomes the improvements
in trading performance during the year, which
resulted in a profit upgrade in August 2023.
The annual bonus is due to pay out at
82.5% of maximum for the CEO and CFO
(before pro-rating for the proportion of the
period the CFO was employed). The Group’s
PBT performance during the year was
£65.6million. For the purpose of determining
the annual bonus, the Committee made
certain adjustments to PBT (outlined below) to
ensure that the PBT used for bonus purposes
fairly reflected the underlying performance
on which it considers management should
be rewarded on. The adjusted PBT for annual
bonus purposes was £62.1 million, which
is lower than the Group reported PBT. The
adjusted PBT exceeded the stretch target
of £60 million and vested in full (70% of
maximum bonus). The adjusted PBT was post
(a) reduction of the actual PBT by £2.6 million
on account of one-off gain recognised on the
purchase of SA Greetings and (b) a reduction
of £2.0 million in respect of the gain from
the release of a provision for repayment of
Covid grants following part resolution of the
grant receipts exceeding state aid limits, on
settlement of the overpayment being agreed
with HM Treasury and (c) which were partly
offset by a £1.1 million impairment charge
(see page 59). The remaining 30% of the
annual bonus was assessed based on three
strategicobjectives:
1. The stretch target set for driving sales
growth in the key strategic growth
channels for cardfactory.co.uk (12.5% of
maximum bonus), which was not achieved,
and therefore no portion of this element of
the annual bonus will pay out.
2. Performance against the retail partner
sales growth (12.5% of maximum bonus)
exceeded the stretch target and therefore
will pay out in full.
3. The Net Promoter Score threshold target
(5% of maximum bonus) was not achieved
and no portion of this element of the
annual bonus will pay out.
Further details are disclosed on page 97.
The Committee considered whether the
outcome was appropriate, taking account
of the colleague, shareholder and other
stakeholder experience and resolved that
thepayout was fair and therefore no exercise
of discretion was required. Although two of
the strategic objectives were not achieved, the
foundations for future growth have been made.
A large proportion of colleagues will receive
bonus payments forthe same period, including
some realising up to 100% of their maximum
bonus potential. The Committee recognise the
significant trading performance over the period
and significant improvement inprofitability
in excess of stretch targets, inparallel with
ongoing investment for future growth and
reduction in net debt.
Restricted Share awards granted in 2021 are
scheduled to vest from June 2024, subject to
the performance underpin and any discretion
the Committee may exercise. Themeasurement
period for the performance underpin for these
awards was 1 February 2021 to 31 January 2024.
For the performance underpin to be met, the
Committee must be satisfied that business
performance over the underpin period is robust
and sustainable. In assessing the underpin, the
Committee considered financial and non-
financial KPIs of the business as well as delivery
against strategic priorities. The Committee
considered that cardfactory’s performance over
the underpin period has been strong and that
through management action, cardfactory is now
well positioned with a strong leadership team,
to realise the strategic growth for the benefit of
all stakeholders. TheCommittee was mindful
of the shareholder guidance to assess vesting
of awards to avoid windfall gains. The2021 RSP
awards share price at grant was 76.45 pence,
higher than the 2020 RSP awards share price at
grant of 39.74 pence, therefore the Committee
judged that there was no need to adjust award
levels at grant for ‘windfall gains’. The Committee
also considered that the growth in share price
since that grant is attributable to successful
implementation of the strategic plan by the
Executive Directors and senior management
team and is satisfied that the outcome is in-
line with shareholders and wider stakeholder
experience. On this basis the Committee
was comfortable that the award should vest
in full. Therefore, the Committee resolved to
approve vesting of the 2021 RSP awards and
determined that it was not necessary to exercise
any discretion in respect of the awards. Further
details are disclosed on page 99.
Governance Financial StatementsStrategic Report
85
Board changes
As previously announced, Matthias Seeger,
took up his role as CFO from 22 May 2023.
Roger Whiteside assumed the role of Senior
Independent Director and Indira Thambiah
was appointed as Chair of the Remuneration
Committee from 1 February 2023.
How we intend to apply the Remuneration
Policy in FY25
Base Salary
The Committee reviewed the annual salary
for the management team, including the CEO,
CFO and Chair. In determining increases, the
Committee took into account market data
as well as the average salary increase across
the workforce of 9.1%, noting the majority of
colleagues had received an increase of at least
4%, however some higher increases had been
awarded to take account of the increases in
National Living Wage and National Minimum
Wage (+9.8%). As a result, the Committee
determined the CEO, the CFO, theChair and
other members of the management team
would receive a salary increase of 4% for FY25
with increases taking effect on 1April 2024. The
Board also reviewed NED fees, also awarding a
4% increase. Details of these increases are set
out on pages 104 and 106.
Pension and benefits
Pension entitlements will be maintained at
current levels, which align with the current
3% of salary rate (for salary above the lower
earnings threshold of £6,240 p.a.) applicable
to the majority of colleagues. There are no
changes to benefitsproposed.
Annual bonus
The maximum annual bonus entitlement will
be maintained at 125% and 100% of basic
salary for the CEO and CFO, respectively. The
FY25 annual bonus entitlement will be assessed
based on achievement of (a) PBT realised over
the financial year (for 70% of the maximum
entitlement) and (b) the remaining 30% of
total bonus will be determined by the following
strategic objectives, aligned to thestrategy:
• cardfactory.co.uk sales (15% of maximum
bonus entitlement); and
• retail partnership sales (15% of maximum
bonus entitlement).
Taking into account the increasing
importance of ESG to the business and to our
shareholders as well as feedback received
through the Policy consultation process, the
Committee has introduced an ESG underpin
as part of the annual bonus whereby the
Committee may reduce the annual bonus
payout by up to 10% if the Committee
considers that there has not been sufficient
progress in delivering our ESG strategy.
To inform its decision making at year-end,
the Committee will review a dashboard
summarising progress against our ESG
commitments, which may include but is not
limited to:
• progression of our customer and
employee experience;
• progression in reducing the Group’s carbon
footprint, waste reduction and progression
of sustainability initiatives within the Group;
• progression against the Group’s
commitment to act responsibly with
respect to the environment, aiming for
a sustainable approach to the use of
resources, avoiding irresponsible disposal
of products and unnecessary waste;
• progression against our refreshed DE&I
strategy; and
• the Group’s compliance against industry
standard ESG guidelines and best
practices and active management of
ESGconsiderations and risks.
RSP
The maximum RSP award will be maintained
at 87.5% and 75% of basic salary for the
CEO and CFO, respectively. The Committee
proposes to proceed to award Restricted
Shares after the 2024 AGM, once the new
Policy with the revised vesting period for
awards is in place. The awards will be subject
to the same performance underpin adopted in
previous years which will include assessment
of improvement to the business’s impact on
society. As noted above, the underpin for
FY25 awards will be enhanced to include
consideration of our progress against our
ESG commitment. We propose to retain
the additional discretion to scale back
awards on vesting, if necessary, to reflect
theshareholderexperience.
Share plan rules
Our current long-term incentive plan rules are
due to expire and therefore the Committee
took this opportunity to review and update
the rules to ensure that they reflect current
market practice and are sufficiently flexible
going forwards. As part of this review, we
have enhanced the malus and clawback
provision to reflect prevailing best practice
(see page 90). Our SAYE rules were also due
to expire next year so we are also taking the
opportunity to renew these rules to ensure that
we can continue to offer this benefit to our
UK employee base and to provide us with an
ability to extend this on equivalent terms to
colleagues outside the UK. Shareholders will be
asked to approve these rules at the AGM and
details will be provided in the notice of AGM.
Conclusion
The Committee is comfortable that the
Remuneration Policy continues to provide
a strong link to the business strategy and
provides an appropriate link between reward
and performance. Future objectives and
outcomes will be closely aligned, ensuring
they support the delivery of the Group’s
strategy. The Committee will continue to take
account of investor guidelines and the wider
shareholder and other stakeholder experience
in determining the operation of the Policy and
remuneration outcomes each year.
I look forward to addressing any questions
from shareholders in respect of this Report at
or in advance of the AGM and look forward
to your support on the resolution to approve
the proposed Remuneration Policy and the
Annual Report on Remuneration.
Yours sincerely
Indira Thambiah
Chair of the Remuneration Committee
30 April 2024
The business has a
strengthened balance
sheet now in place and
we are clear on our core
business priorities and
building blocks of growth.”
REMUNERATION COMMITTEE CONTINUED
Card Factory plc Annual Report and Accounts 202486
Governance Financial StatementsStrategic Report
87
DIRECTORS’ REMUNERATION REPORT
Introduction
The Directors’ Remuneration Policy section (pages 88 to 95) sets out the proposed Remuneration Policy which shall be put to shareholders for approval at the AGM of the Company to be held on
20June 2024, which will apply from this date and is intended to operate for the full three-year period as permitted under the regulations.
Directors’ Remuneration Policy
cardfactory’s policy for Executive Directors’ remuneration aims to provide a competitive package of fixed and performance-linked pay, which supports the long-term strategic objectives of the
business. The policy has been tested against the six factors listed in Provision 40 of the UK Corporate Governance Code:
• Clarity – the policy is as clear as possible and is described in straightforward concise terms to shareholders and the workforce in this report.
• Simplicity – our remuneration structures are simple and Restricted Shares are significantly simpler than other types of long-term incentive plans operated in most other UK-listed companies.
• Risk – the remuneration policy has been shaped to discourage inappropriate risk taking through a weighting of incentive pay towards shares, an appropriate balance between financial and
non-financial measures in the annual bonus, recovery provisions and in-employment and post-employment shareholding requirements.
• Predictability – elements of the policy are subject to caps and the Restricted Shares are significantly more predictable than performance-based long-term incentive plans operated in
most other UK-listed companies. The Committee may exercise its discretion to adjust Directors’ remuneration if a formula-driven incentive pay out is inappropriate in the circumstances.
Theillustration of the application of the Policy is set out on page 92 and indicates the potential values that may be earned through the remuneration structure.
• Proportionality – there is a sensible balance between fixed pay and variable pay and incentive pay is weighted to shares rather than cash.
• Alignment to culture – there will be a strong emphasis on consistency of approach and fairness of remuneration outcomes across the workforce.
Policy table for Executive Director remuneration
The key components of Executive Directors’ remuneration are as follows:
Purpose and link to strategy Operation Maximum opportunity Performance metrics
FIXED PAY
Base salary
To attract and retain
talent by ensuring base
salaries are competitive
in the relevant talent
market and to reflect
an Executive’s skills
andexperience.
Base salaries are normally reviewed annually, with
reference to factors including scope of role, individual
performance, experience, market competitiveness
of totalremuneration, inflation and salary increases
acrossthe Group.
Increases are normally effective from 1 April.
While there is no maximum salary, Executive
Directors’ salary increases will normally be in line
with the average percentage increase for the
wider employee population.
In certain circumstances (including, but not
limited to, a material increase in job size
or complexity, promotion, recruitment or
development of the individual in the role or a
significant misalignment with the market) the
Committee has discretion to make appropriate
adjustments to salary levels to ensure they
remain fair and competitive.
Business and individual performance are both
considerations in setting base salary.
Pension
To provide post-retirement
benefits, facilitating the
attraction and retention of
executive talent.
Executive Directors may receive a Company contribution
into a pension plan and/or a cash allowance in lieu
ofpension.
The maximum Company contribution or cash
allowance will not exceed the percentage
rate available to the majority of the workforce
(currently 3% of salary).
None
Card Factory plc Annual Report and Accounts 202488
Purpose and link to strategy Operation Maximum opportunity Performance metrics
Benefits
To provide Executive
Directors with a reasonable
level of benefits.
Benefits may include private medical insurance,
lifeinsurance, income protection and the provision
ofacar orcar allowance.
The Committee may introduce other benefits if it is
considered appropriate to do so.
Executive Directors shall be reimbursed for all reasonable
expenses and the Company may settle any tax incurred.
Where an Executive Director is required to relocate to
perform their role, the appropriate one-off or ongoing
expatriate benefits may be provided (e.g. housing,
schooling etc).
There is no maximum opportunity for benefits,
as there may be factors outside of the
Company’s control which change the cost to the
Company (e.g. increases in insurance premiums).
The cost of providing benefits for the year
under review are disclosed in the Annual Report
onRemuneration.
None
VARIABLE PAY
Annual bonus
To focus Executives on
delivery of year-on-year
financial and non-
financial performance.
The part of the bonus
invested in shares helps
towards achieving an
appropriate balance
between year-on-year
financial performance
and longer-term value
creation; contributes
to higher executive
shareholdings; and
supports alignment with
shareholder interests.
Bonus payments will normally be determined based on
performance in a single financial year and payment will
normally be made in cash or in shares or a combination
of the two.
If participants have not met the minimum shareholding
requirement, one third of any bonus (after payment of tax)
would normally be required to be used to acquire shares
in the Company, which would normally be required to be
held for three years.
Clawback and malus provisions apply. The Committee has
discretion to reduce the amount of any bonus potential
and require repayment of any bonus paid within two years
of payment, in the event of material misstatement or
error in accounts or in calculation of bonus, misconduct,
corporate failure, serious reputational damage, material
failure of risk management or in other circumstances
where the Committee consider it appropriate.
Maximum award level under the annual bonus
in respect of any financial year is 125% of salary.
Performance measures and targets are set by the
Committee and the Committee determines the
extent to which the targets have been achieved.
A majority of bonus will normally be based on
financial measures.
For achievement of threshold performance for
any financial measure, up to 15% of the maximum
financial target element of the bonus is earned
(though the Committee may increase this to
up to 25% of maximum if this is considered
appropriate). Normally 50% of the bonus shall pay
out for on-target levels of performance.
The Committee may adjust the bonus if it
considers the outcome is not representative of the
underlying financial or non-financial performance
of the Company or the participant or is otherwise
not appropriate in the circumstances. When
making this judgement, the Committee may take
into account such factors as it considers relevant.
Governance Financial StatementsStrategic Report
89
DIRECTORS’ REMUNERATION REPORT CONTINUED
Purpose and link to strategy Operation Maximum opportunity Performance metrics
Restricted Shares
To align the interests
of Executives with
shareholders in growing
the value of the business
over the long term.
The Committee may grant annual awards of Restricted
Shares, structured as conditional awards or nil-cost options.
Awards normally vest after three years, subject to
continuedemployment.
All shares will normally be held for at least five years from
grant (except for sales to meet tax and social security
on vesting). The holding period and vesting period will
normally continue post cessation of employment to the
extent that awards do not lapse on cessation.
An additional benefit may be provided in cash or shares
related to dividends that would have been paid over the
vesting period or holding period on awards that vest.
Clawback and malus provisions apply. The Committee has
discretion to reduce the amount of any unvested award and
require repayment of any vested award within two years
of vesting, in the event of material misstatement or error in
accounts or in calculation of the share award, misconduct,
corporate failure, serious reputational damage, material
failure of risk management or in other circumstances where
the Committee consider it appropriate.
In accordance with the Companies Act, in order to fund the
nominal value on the allotment of shares to participants on
vesting, the participant will receive a ‘nominal bonus’ which
is paid to Card Factory plc equivalent to the nominal value
of the number of shares that will vest.
Maximum award level under the Restricted
Shares in respect of any financial year is 87.5%
of salary face value at grant plus the nominal
bonus, on vesting.
In order for Restricted Shares to be capable of
vesting, the Committee must be satisfied that
a performance underpin has been achieved.
It is currently intended that the performance
underpin will be that the Committee must be
satisfied that business performance is robust,
sustainable, that the business has improved its
impact on society and the environment and
management has strengthened the business.
In assessing performance, the Committee
will consider financial and non-financial KPIs
of the business as well as delivery against
strategic priorities and ESG commitments.
TheCommittee may determine that alternative
performance underpins shall apply.
The Committee may in its discretion adjust
incentive plan outturn levels, if it considers that
the outcome does not reflect the underlying
financial or non-financial performance of
the participant over the relevant period or
that such vesting level is not appropriate in
the context ofrelevant circumstances. When
making this judgement, the Committee may
take into account such factors as it considers
relevant. Full disclosure ofthe Committee’s
assessment will be made in the Annual Report
on Remuneration for the year in which the
assessment is made.
SAYE
To encourage share
ownership across the
workforce.
Executive Directors may participate in the SAYE Plan
– a UK tax-qualified scheme. Executive Directors may
participate in any other all-employee plans on the same
basis as other employees as appropriate.
Participation may be up to HMRC
approvedlimits.
None
Shareholding guidelines
To encourage share
ownership and ensure
alignment of Executive
interests with those of
shareholders, both while
they are in service and after
cessation of employment
(see page 94).
Executives are expected to build up and maintain a
beneficial holding of shares in the Company defined as
a percentage of salary, which is currently 250% of base
salary for the CEO and 200% of base salary for the CFO.
Executive Directors will normally be required to retain
shares that vest from future Bonus and Restricted Share
awards until the shareholding guideline has been met.
Details of the current guidelines and Executive
Director shareholdings are included in the
Annual Report on Remuneration.
None
Card Factory plc Annual Report and Accounts 202490
Performance measure selection and approach to target setting
The measures used in the annual bonus are selected to reflect the Company’s main financial
KPIs and other strategic objectives for the year. Performance targets are set to be stretching
but achievable, considering the Company’s strategic priorities and the economic environment
in which the Company operates. Financial targets are set taking into account a range of both
internal and external reference points including the Group’s strategic and operating plan.
Adjustments to targets
The Remuneration Committee may adjust the calculation of short- and long-term performance
underpins for outstanding Restricted Share awards in specific circumstances and within the
limits of applicable plan rules, provided that the revised conditions are not materially less
challenging than the original conditions. Such circumstances include changes in accounting
standards, major corporate events such as rights issues, share buybacks, special dividends,
corporate restructurings, mergers, acquisitions and disposals.
Other uses of discretion
The Committee, consistent with market practice, retains discretion over a number of areas
relating to the operation and administration of the Policy. These include (but are not limited to)
the following:
• Selecting who participates in the incentive plans;
• Determining the timing of award grants and/or payments;
• Determining the quantum of awards and/or payments (within the limits set out in the Policy
table above);
• Determining the form of awards (which may be granted as conditional share awards,
nilornominal cost options, forfeitable awards or, exceptionally, in cash);
• Adjusting awards in the event of any variation of the Company’s share capital or any
demerger, special dividend or any other corporate event that may affect the current
orfuture value of the award;
• Granting good leaver status (in addition to any specified categories) for incentive plan
purposes based on the rules of the plan;
• Determining the treatment of awards in the event of corporate transactions, such as a
takeover or restructuring, including measurement of performance conditions/underpins,
approach to pro-rating for time and whether existing share awards may, instead of vesting,
be replaced by an equivalent grant of a new award in a different company, as determined
bythe Committee; and
• Determining whether (and to what extent) malus and/or clawback shall apply to any incentive.
Differences in remuneration policy operated for other employees
The policy and practice with regard to the remuneration of the senior management team below
the Board will normally be consistent with that of the CEO and CFO. The senior management
team will normally participate in the same annual bonus scheme and will receive Restricted Share
awards alongside the Executive Directors.
The Policy for our Executive Directors is considered alongside the remuneration philosophy and
principles that underpin remuneration for the wider Group. The remuneration arrangements
for other employees reflect the seniority of each role. As a result, the levels and structure of
remuneration for different groups of employees will differ from the policy for Executives as set out
above, but with the common intention that remuneration arrangements for all groups are fair.
Summary of decision-making process and changes to policy
During the year, the Committee undertook a review of the Directors’ Remuneration Policy and
its implementation to ensure that the Policy supports the execution of strategy and the delivery
of sustainable long-term shareholder value. The Committee discussed the content of the
Policy at Remuneration Committee meetings during the year. Throughout the review process,
the Committee took into account the 2018 UK Corporate Governance Code, wider workforce
remuneration and emerging best practice in relation to Executive Director remuneration.
To minimise any potential conflicts of interest, the Committee also considered input from
management and our independent advisers through an open and transparent internal
consultation process. The Committee considers that the overall remuneration framework –
based on an annual bonus plan plus a RSP – remains appropriate to continue to incentivise
management to drive long-term sustainable performance for shareholders.
The Committee has simplified the vesting schedule for the RSP. Previously, awards vested in
tranches (50% after three years, 25% after four years and 25% after five years); this has been
simplified such that 100% of awards vest after three years. The impact on the timing of release
of awards is unchanged, since vested awards must still all be held until the fifth anniversary
ofgrant. The underpin for the RSP has also been expanded to incorporate consideration of
ESGcommitments. Minor changes have been made to the wording of the Policy to aid operation,
toincrease clarity and to align with typical market practice.
Approved payments
The Committee reserves the right to make any remuneration payments and/or payments for loss
of office (including exercising any discretions available to it in connection with such payments)
notwithstanding that they are not in line with the Policy set out above where the terms of the
payment were agreed (i) before the Policy set out above came into effect, provided that the terms
of the payment were consistent with any shareholder-approved Directors’ remuneration policy in
force at the time they were agreed; or (ii) at a time when the relevant individual was not a Director
of the Company (or other persons to whom the Policy set out above applies) and, in the opinion of
the Committee, the payment was not in consideration for the individual becoming a Director of the
Company or such other person. For these purposes, ‘payments’ includes the Committee satisfying
awards of variable remuneration and, in relation to an award over shares, the terms of the payment
are ‘agreed’ no later than at the time the award is granted. ThisPolicy applies equally to any
individual who is required to be treated as a Director under the applicableregulations.
Governance Financial StatementsStrategic Report
91
Reward scenarios
The graphs below provide estimates of the potential future reward opportunities for Executive
Directors and the potential split between the different elements of remuneration under four
different performance scenarios: ‘Minimum performance’, ‘Performance in line with expectations’
and ‘Maximum performance’ and ‘Maximum performance (with 50% share price increase)’.
The projected value for Restricted Shares excludes the impact of any dividend accrual. The
following reflects annual entitlements and assumes that future Restricted Share awards are
notscaledback:
Chief Executive Officer
Maximum performance
(with 50% share price increase)
Maximum performance
Performance in line
with expectations
Minimum performance
0 400,000
100%
£533k
£1,270k
£1,578k
£1,793k
42% 24% 34%
34% 39% 27%
30% 34% 36%
800,000 1,200,000 1,600,000 2,000,000
Chief Financial Officer
Maximum performance
(with 50% share price increase)
Maximum performance
Performance in line
with expectations
Minimum performance
0
100%
£401k
£850k
£1,029k
£1,164k
47% 21% 32%
39% 35% 26%
34% 31% 35%
500,000 1,000,000 1,500,000
Fixed Pay Annual Bonus LTIP
DIRECTORS’ REMUNERATION REPORT CONTINUED
In illustrating potential reward opportunities, the following assumptions are made:
Fixed pay¹ Annual bonus LTIP: Restricted shares
Minimum Salary and benefits as
at 1 April 2024.
The CEO & CFO each
receive a pension
contribution of 3%
on income exceeding
£6,240p.a.
No annual bonus
payable.
Assumes no restricted
sharesvest.
Mid As above. On-target annual
bonus payable.
(50% of maximum).
87.5% and 75% of base
salary for the CEO and CFO
vest, respectively. Assumes
all RSP awards vest
Maximum As above. Maximum annual
bonus payable of
125% and 100%
of base salary for
the CEO and CFO,
respectively.
As above.
Maximum
performance
with 50%
share price
increase
As above. As above. In the maximum scenario
the chart additionally
shows the value of the
Restricted Shares and total
remuneration, if the share
price increases by 50%.
1. Benefits paid for the most recent financial year. As noted on page 97, the FY24 single figure values for the CFO is
from his appointment on 22 May 2023, therefore the value has been annualised to give an indicative annual value.
Approach to remuneration for new Director appointments
In determining appropriate remuneration for a new Director, the Committee will take into
consideration all relevant factors to ensure that arrangements are in the best interests of
both cardfactory and its shareholders and will be mindful to pay at the appropriate level
on recruitment. The Remuneration Committee will seek to ensure that the remuneration
arrangements will be in line with those outlined in the policy table above. Executives may
participate in the incentive plan for their financial year of appointment and such participation
maybe be pro-rated taking into account the period of the year in employment.
The maximum level of variable remuneration which may be awarded (excluding any ‘buyout’
awards referred to below) in respect of recruitment is 125% of salary (in respect of annual bonus)
and 87.5% of salary (in respect of RSP awards), which is in line with the current maximum limit
under the annual bonus and RSP.
Card Factory plc Annual Report and Accounts 202492
The Committee may make an award in respect of a new appointment to ‘buy out’ outstanding
variable pay opportunities or contractual rights forfeited on leaving a previous employer.
In doing so, the Committee will take account of relevant factors including any performance
conditions attached to these awards, the likelihood of those conditions being met and the
proportion of the vesting period remaining. When determining any such ‘buyout’, the guiding
principle would be that awards would generally be on a ‘like-for-like’ basis unless this is
considered by the Committee not to be practical or appropriate.
In cases of appointing a new Executive Director by way of internal promotion, the approach
will be consistent with the policy for external appointees detailed above (save for ‘buy outs’).
Where an individual has contractual commitments made prior to their promotion to the Board,
the Company will continue to honour these arrangements. Measures used for below Board
employees may be different from those used for Executive Directors to tailor incentives to a
particular division, role or individual.
Where an Executive Director has been appointed to the Board at a lower than typical market
salary to allow for growth in the role, larger increases may be awarded to move salary
positioning closer to typical market level as the Executive Director gains experience.
To facilitate any ‘buyout’ awards outlined above, in the event of recruitment, the Committee
may grant awards to a new Executive Director relying on the exemption in the Listing Rules
which allows for the grant of awards to facilitate, in unusual circumstances, the recruitment
of an Executive Director without seeking prior shareholder approval or under any other
appropriate Company incentive plan.
The remuneration package for a newly appointed Non-Executive Director would normally
beinline with the structure set out in the policy table for Non-Executive Directors on pages 94
and 95, and on page 106.
Service contracts and exit payment policy
Executive Directors
The Committee sets notice periods for the Executive Directors of no more than 12 months.
TheExecutive Directors may be put on garden leave during their notice period (for up to
sixmonths) and the Company can elect to terminate their employment by making a payment
in lieu of notice equivalent to basic salary and benefits (including pension contributions).
Anypayment in lieu will normally be made on a monthly basis and subject to mitigation
but theCommittee retains discretion to pay any payment in lieu of notice in a lump sum
ifappropriate in the circumstances. Executive Directors’ service contracts are available to view
atthe Company’s registered office and at the forthcoming AGM.
Executive Director Date of service contract Notice period
Darcy Willson-Rymer 18 December 2020 9 months
Matthias Seeger 12 December 2022 9 months
If employment is terminated by the Company, the departing Executive Director may have a
legal entitlement (under statute or otherwise) to additional amounts, which would need to be
met. In addition, the Committee may:
• settle any claims by or on behalf of the Executive Director in return for making an
appropriate payment; and
• contribute to the legal fees incurred by the Executive Director in connection with the
termination of employment, where the Company wishes to enter into a settlement
agreement (as provided for below) and the individual must seek independent legal advice.
In certain circumstances, the Committee may approve new contractual arrangements
with departing Executive Directors including (but not limited to) settlement, confidentiality,
outplacement services, restrictive covenants and/or consultancy arrangements. These will only
be entered into where the Committee believes that it is in the best interests of the Company
and its shareholders to do so.
The Company’s policy on termination payments is to consider the circumstances on a case-
by-case basis, considering the Executive’s contractual terms, the circumstances of termination
and any duty to mitigate. The table on the next page summarises how incentives are typically
treated indifferent circumstances:
Governance Financial StatementsStrategic Report
93
Plan Scenario Timing of vesting/payment Calculation of vesting/payment
Annual
bonus
Default treatment No bonus is paid n/a
Any reason the
Committee may
determine.
Normal payment
date, although the
Committee has
discretion to accelerate.
The Committee has
discretion to remove
the requirement to
acquire shares with
annual bonus earned in
year of departure.
The Committee will
normally determine the
bonus outcome based on
circumstances and the date
of leaving. Performance
against targets is typically
assessed at the end of the
year in the normal way
and any resulting bonus
will normally be prorated
for time served during the
year. The Committee may
disapply time prorating in
exceptional circumstances.
Shares
acquired
byDirectors
with annual
bonus.
Not applicable as shares
are purchased and owned
outright by the Executive.
The three-year restriction on
sale of shares will normally
continue to apply.
Restricted
Shares
Default treatment Awards lapse n/a
Death, injury or
disability, redundancy,
retirement, the sale
of the employing
Company or business
out of the Group or
any other reason as
the Committee may
determine.
Normal vesting date
and holding period
would normally
continue to apply,
although the Committee
has discretion to
accelerate vesting and
remove or reduce the
holding requirement
in exceptional
circumstances.
Any outstanding awards
will normally be prorated
for service over the three
financial years starting with
the year in which the award
is made and over which the
underlying performance of
the Company will be reviewed
to determine vesting. The
Committee may disapply
time prorating in exceptional
circumstances.
SAYE Treated in line with
HMRC rules.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Post-employment shareholding
Executive Directors are normally expected to hold the lower of:
• The number of shares held by the Director on the date they step down from the Board,
wheresuch shares had been (or are subsequently) acquired from Company share plan
awards and investment of bonuses received before or after the termination of employment,
other than permitted sales to meet tax liabilities (but excluding shares otherwise purchased
in the market); and
• For each of the following periods following termination of the employment:
– during the first 12-month period: such number of shares held, on the date their
employment ends, plus shares acquired under employee awards during that period, the
value required to be held in accordance with the shareholding guideline applicable to
that former Executive Director; and
– for the subsequent 12-month period: 50% of the value or number of shares held, at
the end of the first 12 month period, the value required to be held in accordance with
theshareholding guideline applicable to that former Executive Director; and
– after 24 months: no shareholding requirement shall apply, other than any outstanding
holding periods applying under this policy in respect of specific awards or purchases
using bonus proceeds.
The Committee retains discretion to waive or reduce this guideline if is not considered to be
appropriate in the specific circumstance.
Non-Executive Directors
The Chair and Non-Executive Directors were appointed on the dates set out in the table below.
Their letters of appointment set out the terms of their appointment and are available for
inspection at the Group’s registered office and at the AGM. Appointments are initially for three
years (subject to annual re-election at the AGM) and unless agreed by the Board, they may not
remain in office for a period longer than six years or two terms in office, whichever is shorter.
The Chair and the Non-Executive Directors may resign from their positions but must serve the
Board six and one months’ written notice, respectively.
Non-Executive Director Letter of appointment date
Paul Moody 19 October 2018
Roger Whiteside 27 November 2017
Nathan (Tripp) Lane 9 April 2020
Rob McWilliam 11 October 2021
Indira Thambiah 22 August 2022
Non-Executive Directors are not eligible to participate in the annual bonus or any equity
schemes, do not receive any additional pension or benefits on top of their fees and are not
entitled to a termination payment.
Card Factory plc Annual Report and Accounts 202494
Consideration of employee remuneration and employment conditions in the Group
The Committee considers the remuneration and employment conditions elsewhere in the
Group when determining remuneration for Executive Directors. The colleague listening group
(CLG) and the wider colleague forums (which feed into the CLG) were consulted on the draft
of this Remuneration Policy in January and February 2024 and considered the changes to
align Executive Directors with the workforce to be appropriate. The Group uses Willis Tower
Watson benchmarking data to review salary and benefits for all pay grades, with this data
being supplemented by executive benchmarking data for other UK listed companies (primarily
a wide range of companies with comparable market capitalisation and constituents of these
Companies that are primarily retail businesses), compiled by Deloitte, as its remuneration
adviser.
Consideration of shareholder views
The Company is committed to engaging with significant investors on remuneration matters
and consulted with 17 of its largest shareholders and three recognised investor bodies to receive
their feedback and reflect their comments prior to proposal of this Remuneration Policy to
shareholders at the 2024 AGM. The majority of those consulted were supportive of the proposals,
as proposed. When determining remuneration policy and its application, the Committee considers
the guidelines of shareholder bodies and shareholders’ views. The Committee is open to feedback
from shareholders on remuneration policy and arrangements and commits to consult in advance
of any significant changes to remuneration policy or its operation. The Committee continues
tomonitor trends and developments in corporate governance and market practice to ensure the
structure of Executive remuneration remains appropriate.
External directorships
The Committee acknowledges that Executive Directors may be invited to become independent
non-executive directors of other quoted companies which have no business relationship with
the Company and that these duties can broaden their experience and knowledge to the benefit
of the Company.
Executive Directors are permitted to accept such appointments with the prior approval of the
Chair. Approval will only be given where the appointment does not present a conflict of interest
with the Group’s activities and the wider exposure gained will be beneficial to the development
of the individual. Where fees are payable in respect of such appointments, these would be
retained by the Executive Director.
Policy table for Non-Executive Director remuneration
The key components of Non-Executive Directors’ remuneration are as follows:
Purpose and link to strategy Operation Maximum opportunity Performance metrics
Non-Executive
Directors’ fees
To attract Directors
with the appropriate
skills and experience,
and to reflect the
time commitment
in preparing for
and attending
meetings, the duties
and responsibilities
of the role and
the contribution
expected from the
Non-Executive
Directors.
Annual fee for Chair and
Non-Executive Directors.
Additional fees may be
paid for additional roles
or time commitment,
e.g. chairing Board
Committees.
Non-Executive Directors
do not participate in any
incentive schemes or
receive any other benefits
(other than travel
expenses, which may be
grossed up for tax).
Benefits may be
introduced if considered
appropriate.
Any increases
to NED fees will
be considered
following a thorough
review process and
considering wider
market factors.
The maximum
aggregate annual
fee for all Directors
provided in the
Company’s Articles
of Association is
currently £1,000,000
pa.
Performance of
the Board as a
whole will be
reviewed regularly
as part of a
Board evaluation
process.
Minor changes
The Committee may make minor amendments to the Policy set out above (if required for legal,
regulatory, exchange control, tax or administrative purposes or to take account of a change
inlegislation) without requiring prior shareholder approval for that amendment.
Governance Financial StatementsStrategic Report
95
Annual Report on Remuneration
This is the Annual Report on Remuneration for the financial year ended 31 January 2024. This report sets out how the current Remuneration Policy (adopted in 2021) has been applied in the financial
year being reported on and how the proposed Remuneration Policy (set out on pages 88 to 95) will be applied in the coming year (on the basis it is adopted by shareholders at the 2024 AGM).
Remuneration at a Glance
Overview of Executive Director Remuneration for FY24 and FY25.
Element FY24 FY25
Basic Salary From 1 April 2023:
CEO: £472,500
CFO: £345,000
From 1 April 2024: (+4%):
CEO: £491,400
CFO: £358,800
Average workforce change: +9.1%
Pension 3% of basic salary in excess of £6,420 pa. No Change
Benefits Car Allowance and family private medical insurance. No Change
Annual Bonus opportunity CEO: Maximum of 125% of basic salary.
CFO: Maximum of 100% of basic salary.
• 70% based on PBT performance.
• 12.5% based on online sales (strategic growth objective).
• 12.5% based on retail partner sales (strategic growth objective).
• 5% based on NPS increase.
Bonus earned:
70% of 70%
0% of 12.5%
12.5% of 12.5%
0% of 5%
No Change
No Change
• 70% based on PBT performance.
• 15% based on online sales (strategic growth objective).
• 15% based on retail partner sales (strategic growth objective).
ESG underpin: Up to 10% of earned bonus may be forfeited if there has not
been sufficient progress on delivering our ESG strategy.
Subject to malus and clawback within two years of payment. No Change
One third of bonus (after tax) to be invested in shares
ifshareholding target not achieved.
No Change
RSP opportunity and
timeframes
CEO: Maximum of 87.5% of basic salary.
CFO: Maximum of 75% of basic salary.
Awards (subject to underpin) vest as follows: 50% after three years (subject to
underpins), 25% after four years andbalance after five years. Holding period
applied to fifth anniversary of grant (save for sale to fund tax on vesting).
Subject to malus and clawback within two years of vesting.
No Change
No Change
Awards to vest after three years (subject to underpins) with a further two
year holding period (save for sale to fund tax and national insurance on
vesting). Underpin enhanced to include consideration of progress against ESG
commitments.
No Change
SAYE participation In line with HMRC rules. No Change
Shareholding target CEO: 250% of basic salary (not yet achieved).
CFO: 200% of basic salary (not yet achieved).
No Change
No Change
Post termination
shareholding
Holding requirement reduces to 50% after 12 months
with no minimum requirement after 24 months.
No Change
Notice Period 9 months No Change
DIRECTORS’ REMUNERATION REPORT CONTINUED
Card Factory plc Annual Report and Accounts 202496
Single figure total remuneration paid to Executive Directors – audited
The table below sets out the total remuneration received by each Executive Director providing services to the Company for the year ended 31 January 2024 (FY24) and the prior year:
Financial Year Salary Benefits
1
Pension
2
Other
3
FY24 earned
Bonus
4
Restricted
Share value
5
SAYE
Value
6
Total
Remuneration
Total Fixed
Remuneration
Total Variable
Remuneration
Darcy Willson-Rymer FY24 468,750 27,347 13,313 – 483,398 531,567 440 1,524,815 509,410 1,015,405
FY23 450,000 26,996 13,313 – 450,000 – 2,250 942,559 490,309 452,250
Matthias Seeger
7
FY24 240,615 9,739 5,081 130,000 198,848 – 2,241 586,524 255,436 331,088
FY23 – – – – – – – – – –
1. Benefits comprise car or car allowance and family private medical insurance (both of which are taxable) and also the value of insurance premiums paid (a non-taxable benefit) under the Group Life Assurance and Income
Protection Schemes.
2. Pension benefit comprises payments to a stakeholder pension scheme (defined contribution) or a cash payment in lieu of pension contributions.
3. In accordance with the agreed terms of appointment, summarised in the FY23 Annual Report, the Company paid the sum of £130,000 to Matthias Seeger in July 2023 in lieu of an equivalent bonus forfeited by him that he would
have received from his previous employer.
4. See details of FY24 bonus payments in the Remuneration Committee Chair’s letter and below. This annual bonus is due to be paid in May 2024. One-third of the bonus (after payment of tax) must be used to acquire
CardFactoryplc shares.
5. The value for FY24 is based on the average share price over the three-month period to 31 January 2024 (102.33 pence), as the 2021 RSP awards, with a performance period that ended on 31 January 2024, will vest from
14June2024, see page 99 for details. The value includes a nominal bonus award of 1 pence per share to fund the Companies Act requirement for payment of nominal value on allotment of the shares. Of the £531,567 restricted
shares value for Darcy Willson-Rymer, £127,529 is attributable to share price growth.
6. Embedded value of SAYE options at grant (i.e. the value of the discount). There are no performance conditions.
7. Matthias Seeger was appointed as an Executive Director (CFO) on 22 May 2023 and the remuneration disclosed is from this date. Matthias Seeger did not have any Restricted Share awards eligible to vest for FY24.
Annual bonus payments and link to performance
Bonus opportunities for FY24 were 125% of salary for Darcy Willson-Rymer and 100% of salary
for Matthias Seeger pro-rated for the proportion of the financial year in which he was in-post.
The bonus was subject to achieving Profit Before Tax targets (70% of the opportunity) and
Strategic Objectives (30% of the opportunity). As a result of strong financial performance and
partial achievement of the strategic objectives, the total bonus payout for FY24 was 82.5% of
maximum. This resulted in total bonus payments of £483,398 for the CEO and £198,848 for the
CFO. In line with policy, one-third of the bonus (after payment of tax) must be used to acquire
Card Factory plc shares which must be held for three years.
PBT (70% of bonus opportunity) – audited
The PBT performance targets for the year and final performance achieved against this element
are as set out of the table below. The Committee reduced the actual PBT realised during FY24
by £3.5 million (for the purpose of determining the bonus payable) to remove the benefit from
the one off £2.6 million benefit from revaluation of SA Greetings; the £2.0 million profit realised
from release of a provision relating to repayment of Covid grants, which were partly offset by an
impairment charge of £1.1m.
Performance level
FY24
PBT
target range
Percentage of
total PBT bonus
pool available
if performance
level achieved
PBT
realised (after
adjustments)
Percentage of
total bonus
pool payable
(% of maximum)
Threshold £50m 15%
£62.1m
70%
of 70%
Target £57m 50%
Maximum £60m 100%
Governance Financial StatementsStrategic Report
97
Achievement against strategic objectives (30% of bonus opportunity) – audited
The strategic objectives for the CEO and CFO were set at the start of the year and outlined in last year’s report. The strategic objectives have been reviewed in detail with one objective being achieved
and two objectives not being achieved, giving an achievement of 12.5% of the maximum 30% of the total bonus opportunity. The specific outcomes for each objective were as follows:
Strategic objective Link to strategy Target and Stretch performance set Outcome
Bonus achieved
(% of maximum)
cardfactory.co.uk
sales.
Omnichannel is one of the key
strategic sales channels targeting
system updates to improve the
customer journey to improve
customer retention and sales.
Threshold: cardfactory.co.uk sales of £9.54 million (i.e. +8.4% from FY23).
Target: cardfactory.co.uk sales to achieve £10.6 million (i.e. +20.4% from FY23).
Stretch: cardfactory.co.uk sales to achieve £11.66 million (i.e. +31.8% from FY23).
£8.8 million. nil of 12.5%
Retail partnership
sales.
Development of retail partnerships
is a key growth sales channel.
Threshold: business partner sales (excluding SA Greetings) of £5.13m (i.e. +2.6% from FY23).
Target: business partner sales (excluding SA Greetings) of £5.7m (i.e. +14% from FY23).
Stretch: business partner sales (excluding SA Greetings) of £6.27m (i.e. +25.4% from FY23).
£6.3 million 12.5% of 12.5%
Customer brand
improvement through
improvement in net
promoter score (NPS).
Realisation of key strategic
priorities: model store trials, pricing
changes and gifts and celebration
essentials (both in stores and
online).
Threshold: NPS score of +42.699.
Target: NPS score +43.699.
Stretch: NPS score of +44.699.
Average NPS
score was 41.4
nil of 5%
For each element of the bonus, 15% of the maximum potential bonus opportunity pays out for threshold performance, 50% of maximum potential bonus opportunity paying out for target
performance with 100% of the maximum potential bonus opportunity paying out for maximum performance. Straight-line payout applies between Threshold, Target and Stretch.
The Committee considered whether the outcome was appropriate, taking account of the colleague, shareholder and other stakeholder experience and resolved that the payout was fair and
therefore no exercise of discretion was required. Although two of these strategic objectives have not been realised (and the bonus paid being reduced accordingly), progress has been made during
the year to support future sales growth in the online business.
Grants of Restricted Shares FY24 – audited
Conditional awards of Restricted Shares were granted to the Executive Directors on 24 May
2023. In line with our approach in previous years, annual RSP awards of shares worth 87.5% of
basic salary for theCEO and 75% of salary for the CFO.
Executive Director
Number of
Restricted
Shares
awarded
1
Face value of
award value as
a % of salary
Face/maximum
value of
Restricted
Shares at grant
date
1
Measurement
period for
performance
underpin
Darcy Willson-Rymer 428,432 87.5% £413,437 1.2.23–31.1.26
Matthias Seeger 268,134 75% £256,750 1.2.23–31.1.26
1. Based on the average share price for the three months to and including 23 May 2023 of 96.5 pence.
For these Restricted Shares to vest, the Committee must be satisfied that business performance
over the three years commencing 1 February 2023 is robust and sustainable, that the business
improved its impact on society and the environment and that management has strengthened
DIRECTORS’ REMUNERATION REPORT CONTINUED
the business. In assessing performance, the Committee will consider financial and non-financial
KPIs of the business as well as delivery against strategic priorities. To the extent it is not satisfied
with performance the Committee may scale back the level of vested awards including to zero.
An additional discretion allows scale back on vesting to minimise excess gains from share price
increases between grant and vesting. There will be full disclosure in the Annual Report and
Accounts of the Committee’s determination of this ‘performance underpin’.
Upon determination by the Remuneration Committee of the full or partial satisfaction of the
performance underpin condition, any Restricted Shares will vest as follows:
• 50% of the Restricted Shares on the third anniversary of the date of grant;
• 25% of the Restricted Shares on the fourth anniversary of the date of grant; and
• 25% of the Restricted Shares on the fifth anniversary of the date of grant.
100% of the vested Restricted Shares will be subject to a holding period which (save for
permitted sales to meet tax liabilities from vesting) will normally end on the fifth anniversary
ofthe date of grant.
Card Factory plc Annual Report and Accounts 202498
2021 LTIP Restricted Share award vesting – audited
Restricted Share awards granted in June 2021 are scheduled to vest from June 2024, subject to the
performance underpin and any discretion the Committee may exercise. The measurement period
for the performance underpin for these awards was 1 February 2021 to 31 January 2024. For the
performance underpin to be met, the Committee must be satisfied that business performance over
the performance period was robust and sustainable. In assessing the underpin, the Committee
considered financial and non-financial KPIs of the business as well as delivery against strategic
priorities. The Committee considered that cardfactory’s performance over the performance period
has been strong and that through management action, cardfactory is now well positioned with
a strong leadership team, to realise the strategic growth for the benefit of all stakeholders. The
Committee was mindful of the shareholder guidance to assess vesting of awards to avoid windfall
gains. It was noted that share price when the 2021 grant was granted (76.45 pence) was higher than
the grant price for the 2020 award (39.74 pence) and therefore the Committee judged that there
was no need to adjust award levels at grant for ‘windfall gains’. The Committee also considered
that the growth in share price since that grant is attributable to successful implementation of the
strategic plan by the Executive Directors and senior management team and is satisfied that the
outcome is in-line with shareholders and wider stakeholder experience.
The Committee also noted that over the period:
• the significant improvement in the business performance over the performance period, with
all financial key performance indicators (including Revenue, PBT, Basic EPS, Leverage and
Share Price) being materially improved over the period;
• Total Shareholder Return (TSR) over the period significantly exceeded of the FTSE Small Cap
and FTSE 250 indexes;
• although not formally incorporated in the underpin assessment, the material progress made
in respect of sustainability priorities, including reduction in waste and packaging, assessment
of wider Scope 3 emissions and significant improvement in colleague engagement scores
based on Best Companies ‘bHeard’ scoring; and
• that vesting of the awards in full reflects the performance of the business over that period
and delivery of the strategic plan.
Card Factory
FTSE 250
FTSE SmallCap
Value of £100 invested at 1 Feb 2021 to 31 Jan 2024
On this basis the Committee was comfortable that the award should vest in full. Therefore, the
Committee resolved to approve vesting of the 2021 RSP awards and determined that it was not
necessary to exercise any discretion in respect of the awards.
Under the terms of these 2021 awards, 50% of any award that vests will vest on the third anniversary
of grant (i.e. on 14 June 2024), 25% on the fourth anniversary and 25% on the fifthanniversary.
Governance Financial StatementsStrategic Report
99
SAYE – audited
Awards under the HMRC-approved SAYE plan were granted to all participating employees on
27 June 2023. Options were granted at a discount of 20% to the share price on grant and vest
after three years subject to continued employment.
Executive Director
Number of
SAYE options
awarded
Face/maximum
value of awards
at grant date
1
% of award
vesting at
threshold
Performance
period
Darcy Willson-Rymer
2
2,467 £2,203 n/a n/a
Matthias Seeger 12,587 £11,240 n/a n/a
1 Value stated is the value of the shares under option, being the number of shares times the value determined
over the three days to and including 1 June 2023, of 89.3 pence.
2 Darcy Willson-Rymer’s participation in the SAYE plan was limited to ensure HMRC maximum monthly savings
thresholds were not exceeded, taking account of participation in other SAYE annual awards.
Single figure total fees paid to Non-Executive Directors – audited
The table below sets out a single figure for the total remuneration received by each
Non-Executive Director for the year ended 31 January 2024 and the prior year.
Base fee paid Additional fees Total
Non-Executive Director FY24 FY23 FY24 FY23 FY24 FY23
Paul Moody (Chair) £170,313 £146,400 – – £170,313 £146,400
Roger Whiteside (SID)
1
£58,330 £45,750 – – £58,330 £45,750
Nathan (Tripp) Lane £49,317 £45,750 – – £49,317 £45,750
Rob McWilliam £49,010 £45,750 £10,000 £8,133 £59,010 £53,883
Indira Thambiah
2
£49,010 £19,125 £10,000 – £59,010 £19,125
1. Roger Whiteside assumed the role of Senior Independent Director from 1 February 2023.
2. Indira Thambiah was appointed on 1 September 2022 and assumed the role as Chair of the Remuneration
Committee from 1 February 2023.
Payments for loss of office and payments to former Directors – audited
No payments for loss of office or payments to past Directors have been paid during the year
which have not already been disclosed in previous years.
Historical TSR performance and CEO remuneration
The graph below illustrates the total shareholder return (TSR) of Card Factory against
the FTSE250 Index and FTSE Small Cap Index over the period since the Group listed on
20May2014. These indices have been chosen as they are recognised, broad-equity market
indices ofwhich the Group has been a member for this period.
Card Factory
FTSE 250
FTSE SmallCap
£100 Invested TSR
0
50
100
150
200
20 May
2014
31 Jan
2015
31 Jan
2016
31 Jan
2017
31 Jan
2018
31 Jan
2019
31 Jan
2020
31 Jan
2021
31 Jan
2022
31 Jan
2023
31 Jan
2024
CEO
2023/24
(FY24)
2022/23
(FY23)
2021/22
1
(FY22)
2020/21
2
(FY21)
2019/20
(FY20)
2018/19
(FY19)
2017/18
(FY18)
2016/17
3
(FY17)
2015/16
(FY16)
2014/15
(FY15)
Single figure of
remuneration
(£’000) 1,525 943 829 525 593 611 496 1,005 951 884
Annual bonus
outcome
(% of max) 82.5% 80% 66% – 10% 15% – 20% 79% 77%
LTIP vesting
4
(% of max) 100% n/a n/a 50% – – n/a 46.6% n/a n/a
1. For FY22, the amounts set out in the FY23 Annual Report are grossed up, on a pro rata basis to show the
position for comparison purposes assuming Darcy Willson-Rymer had been appointed from 1 February 2021
rather than 8 March 2021 (the date of his actual appointment).
2. For FY21 this represents all remuneration paid to Karen Hubbard to 30 June 2020 (the date of her resignation)
and payments to Karen Hubbard during her period of garden leave to 31 December 2020 and the proportion
ofthe pro rata Restricted Share award that vested in July 2021.
3. For FY17 this represents the aggregate single figure for Karen Hubbard (from date of appointment as CEO)
andRichard Hayes (to date of stepping down as CEO).
4. All LTIP awards vesting from and including FY21 were restricted share awards granted under the LTIP. Awards
vesting to and including FY20 were performance share awards under the LTIP.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Card Factory plc Annual Report and Accounts 2024100
Percentage change in remuneration of Directors and all employees
The table below shows the change each year for each Director’s salary/fees, benefits and bonus, for each of the last four financial periods, as compared to the salary change for all employees
(excluding such Directors), based on a total full-time equivalent reward for the relevant financial year. Where a Director was appointed or resigned part way through the financial year, their salary/
fees, benefits and bonus are grossed up to reflect as full-year equivalent to provide for meaningful reflection for the year-on-year change:
Executive Directors Non-Executive Directors
Year-on-Year change %
Average
employee
1
Darcy
Willson-Rymer²
Matthias
Seeger
Paul
Moody
Roger
Whiteside
Nathan
(Tripp) Lane
Rob
McWilliam
Indira
Thambiah
FY24 compared to FY23
Salary/Fees 10.27% 4.17% n/a 16.33% 27.5% 7.8% 9.51% 28.56%
Bonus 9.77% 7.42% n/a n/a n/a n/a n/a n/a
Benefits
4
3.45% 1.3% n/a n/a n/a n/a n/a n/a
FY23 compared to FY22
Salary/Fees 13.25% 0% – -3.0% 3.4% 1.7% 1.7% n/a
Bonus 10.81% 34.5% – n/a n/a n/a n/a n/a
Benefits 17.75% 5.7% – n/a n/a n/a n/a n/a
FY22 compared to FY21
Salary/Fees 4.7% 1.0% – -54.0% 0% 0% n/a –
Bonus 89.36% 100% – n/a n/a n/a n/a –
Benefits 28.7% -60.8% – n/a n/a n/a n/a –
FY21 compared to FY20
Salary/Fees 5.3% – – 127.88% -1.67%³ n/a – –
Bonus -64.3% – – n/a n/a n/a – –
Benefits 12.8% – –
n/a n/a n/a – –
1. The Average Employee is the FTE for all UK Group employees. Data for FY23 compared to FY22 and for FY22 compared to FY21 for the average employee bonus and benefits have been restated to ensure the bonus amount
reported is the bonus earned in the financial year, rather than the date on which the bonus is paid (which relates to the amount earned in the prior financial year).
2. Darcy Willson-Rymer’s remuneration information change for FY22 compared to FY21 reflects the annualised salary and benefit for Darcy (who was appointed 8 March 2021) compared to the annualised data for the former CEO,
Karen Hubbard, for FY21, on the basis stated in note 2 to the preceding table.
3. Reduction in fees received during FY21 (compared to FY20) is attributable to waivers of fees by Directors over the periods of lockdown due to the Covid-19 pandemic.
4. Benefits includes all income in the Single Figure tables excluding Salary/Fees and Bonus. The increase in Benefits for the average employee in FY24 reflects the increase to national minimum/living wage effected in April 2023
(with many other benefits being applied to these increased rates).
Governance Financial StatementsStrategic Report
101
CEO to employee pay ratio
FY24 Method
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
Ratio Option A 67.6 : 1 64.3 : 1 61.8 : 1
Employee salary £21,969 £23,028 £23,979
Employee total remuneration £22,564 £23,719 £24,665
FY23 ratio Option A 44.7 : 1 43.6 : 1 42.1 : 1
FY22 ratio Option A 51.9 : 1 40.3 : 1 38.2 : 1
FY21 ratio Option A 31.4 : 1 30.6 : 1 29.5 : 1
FY20 ratio Option A 35.2 : 1 33.1 : 1 32.2 : 1
cardfactory has chosen Option A (pursuant to the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 (as amended)), which provides a comparison
of the Company’s full-time equivalent total remuneration for all UK employees against the CEO
for the FY24 financial year as the most appropriate methodology to report the ratio, in line with
the recommendation from the UK Government Department for Business, Energy and Industrial
Strategy and shareholder and proxy-voting bodies.
The Committee considers pay ratios as one of many reference points when considering
remuneration. Throughout the Group, pay is aligned with our pay principles, is structured to be
as consistent as possible and is market-competitive in the context of the sector in which we
operate. The Committee notes the limited comparability of pay ratios across companies and
sectors, given the diverse range of business models and employee population profiles which
exist across the market. A significant proportion of the CEO’s potential pay is delivered in
variable remuneration which may therefore fluctuate significantly on a year-to-year basis.
The ratios are impacted by the demographic makeup of our workforce. Over 93% of our
colleagues work in our retail stores and warehouses where rates of pay are lower than those
for management roles and those colleagues based at our support centre. This reflects the
retail sector more broadly. In addition, while warehouse and retail colleagues are eligible to
participate in SAYE plans and have access to incentive and bonus schemes, the CEO’s higher
bonus and RSP opportunities reflect the nature and complexity of the role as well as the
remuneration levels in retail businesses of a similar size. The variable pay component of CEO
pay and specifically RSPs earned in this financial year account for the increase in the pay ratio
in 2024 compared to 2023.
As such and as required in the regulations the Company is satisfied that the ratios are appropriate
and fair and is consistent with the Company’s wider pay, reward and progression policies
affecting our colleagues.
The Committee recognises that the material increase in the CEO pay ratio in FY24 arises
from the CEO having now completed three successful years’ service, over which time financial
performance has improved and progress on the strategic priorities as a foundation for future
growth have been realised. The CEO will now receive shares under the Restricted Share awards
granted in 2021. Whilst the CEO single figure earnings has therefore increased significantly, the
majority of the Group’s employees are not subject to equivalent variable pay awards. Many
employees earn National Minimum Wage and National Living Wages (which were subject to a
+9.8% increase applicable from April 2023) and have also benefited from further enhancements
to pay and benefits as part of an ongoing programme to provide a ‘fair deal’ for colleagues
on our journey to becoming a median market payer, which included an investment of £2.5
million in 2023 to ensure salaries align with benchmark data applicable to their specific roles.
The Committee notes the CEO pay ratio, although much greater for FY24, is below reported
CEO pay ratios by comparable retail or high-street businesses which also pay NMW/NLW or
marginally above to a large proportion of their workforce.
Distribution statement
The charts below illustrate the year-on-year change in total remuneration for all employees
andtotal shareholder distributions (‘TSD’)
£162.4m
£132.2m
Total remuneration
(up 17.5%)
2022/20232023/2024
150
165
£m
135
120
105
90
75
60
45
15
30
0
2022/20232023/2024
£15.5m
£0m
Total Shareholder Distributions
(+£15.5m)
18
£m
16
14
12
10
8
6
2
4
0
The total remuneration paid in respect of FY24 (as set out in note 5 to the financial statements
which form part of this report on page 138) was £162.4 million (FY23: £138.2 million).
DIRECTORS’ REMUNERATION REPORT CONTINUED
Card Factory plc Annual Report and Accounts 2024102
Statement of shareholder voting
The following table shows the results of the shareholder votes on the Annual Report on Remuneration at the 2023 AGM and for the Directors’ Remuneration Policy at the 2021 AGM:
Remuneration Policy 2021 Annual Report on Remuneration 2023
Total number
of votes
% of
votes cast
Total number
of votes
% of
votes cast
For (including discretionary) 189,960,737 94.98 220,865,634 99.94
Against 10,033,932 5.02 126,084 0.06
Total votes cast (excluding withheld votes) 199,994,669 – 220,891,718 –
Total votes withheld 29,676 – 9,651 –
Total votes cast
1
(including withheld votes) 200,024,345 – 220,882,067 –
1. A withheld vote is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a resolution.
Directors’ shareholdings and interest in shares – audited
The Committee sets shareholding guidelines for Executive Directors. Executive Directors are required to retain shares that vest from future Restricted Share awards and acquire shares with
one-third of any bonus (after payment of tax) until the shareholding requirement is met. The current guideline is to build and maintain, over time, a holding of shares in the Company equivalent
invalue to at least 250% and 200% of base salary for the CEO and CFO, respectively. The Executive Directors have not yet met the shareholding guideline.
Shares held RSP awards held SAYE options held
Director
Owned
outright
1
Unvested and
not subject to
performance
Unvested and
subject to
performance
Unvested
and subject
to continued
employment
Current
shareholding
(% of salary/
fee
2
)
Shareholding
requirement
(% of salary/
fee)
Guideline
met?
Executive Directors
Darcy Willson-Rymer 265,753 514,436 1,208,629 34,412 52.53% 250% No
Matthias Seeger – – 268,134 12,587 0% 200% No
Non-Executive Directors
Paul Moody 200,000 – – –
Roger Whiteside 22,250 – – –
Nathan (Tripp) Lane 200,000 – – –
Rob McWilliam 32,578 – – –
Indira Thambiah – – – –
1. Including shares owned by connected persons.
2. Calculated in respect of shares ‘owned outright’, by applying the closing share price of the Company on Wednesday 31 January 2024 of 93.4 pence and applying annual salary as at this date.
Governance Financial StatementsStrategic Report
103
During the year, no RSP awards vested and no share options under the SAYE plan were exercised by the Directors. Since the end of the year, the Committee approved the vesting (subject to the
LTIP rules and terms of the awards) of all awards granted in 2021, which includes RSP awards over 514,436 shares granted to Darcy-Willson Rymer which are now classified as unvested awards not
subject to performance conditions (as reflected in the table above). Otherwise, there have been no changes in the numbers of shares owned by the Directors and their connected persons between
the end of the year and the date of this report.
Details of Directors’ interests in shares in incentive plans – audited
Date of grant
Share price
at grant Exercise price
2
Number of
shares awarded
Face value
at grant
3
Performance period Exercise period
Darcy Willson-Rymer
Restricted shares¹ 24.05.23 96.5p n/a 428,432 £413,437 01.02.23 – 31.01.26 n/a
Restricted shares¹ 12.05.22 50.468p n/a 780,197 £393,750 01.02.22 – 31.01.25 n/a
Restricted shares¹ 14.06.21 76.54p n/a 514,436 £393,750 01.02.21 – 31.01.24 n/a
SAYE 27.06.23 89.3p 71.5p 2,467 £440.6 – 01.07.26 – 31.12.26
SAYE 08.06.22 61.07p 48.86p 18,419 £2,249 – 01.07.25 – 31.12.25
SAYE 08.07.21 66.87p 53.496p 13,526 £1,814 – 01.08.24 – 31.01.25
Matthias Seeger
Restricted shares¹ 24.05.23 96.5p n/a 268,134 £256,750 01.02.23 – 31.01.26 n/a
SAYE 27.06.23 89.3p 71.5p 12,587 £2,248 – 01.07.26 – 31.12.26
1. The number of shares comprising each RSP award was calculated based on the average, middle-market quotation of a share in the capital of the Company over the three months prior to the date of grant. Performance conditions
and underpins for the restricted share awards granted in 2021 and 2023 are set out on page 99. The restricted share awards made in 2022 are subject to the same performance conditions and underpin applicable to the awards
made in 2023, save the performance period is 1 February 2022 to 31 January 2025.
2. In respect of restricted share awards, the employer pays a nominal bonus of 1 pence per share at the time of vesting. This nominal bonus is applied to pay the subscription price to meet the Companies Act requirements
forpayment of nominal value on allotment.
3. Face value of SAYE awards at grant is the value of the 20% difference between the share value at grant and the exercise price, across all shares under option.
How the Policy will be applied in FY25
Salary
The Committee reviewed the annual salary for the management team, including the CEO, CFO and Chair. In determining increases, the Committee took into account market data with
comparisons to other UK listed retail businesses and to UK listed companies with similar market capitalisations as well as taking into account the average salary increase across the workforce
of 9.1%, noting the majority of colleagues had received an increase of at least 4%, however some higher increases had been awarded to take account the increases in National Living Wage and
National Minimum Wage (+9.8%). As a result, the Committee determined the CEO, the CFO, the Chair and other members of the management team would receive a salary increase of 4% for FY25
with increases taking effect on 1 April 2024.
The salaries of the Executive Directors with effect from 1 April 2024 are as follows:
Executive Director 1 April 2024 1 April 2023
Darcy Willson-Rymer £491,400 £472,500
Matthias Seeger £358,800 £345,000¹
1. Salary from 1 April 2023 is the annual salary that will be paid to Matthias Seeger who was appointed as CFO from 22 May 2023.
DIRECTORS’ REMUNERATION REPORT CONTINUED
Card Factory plc Annual Report and Accounts 2024104
Benefits and pension
These will be paid in line with the Policy.
Annual bonus
The annual bonus for FY25 is capped at 125% and 100% of salary for the CEO and CFO (respectively), up to 70% is based on Group PBT performance and the remaining 30% can be realised from
achievement of strategic objectives. The annual bonus is also subject to an ESG underpin which has been introduced from FY25 in response to shareholder feedback.
The financial targets have been set by the Committee and will require Executive Directors to deliver significant stretch performance compared to market expectations at the start of the financial
year and the financial performance realised in FY24. Given the close link between these targets and cardfactory’s competitive strategy, financial targets are considered commercially sensitive but
will be published in next year’s Annual Report on Remuneration.
The objectives set for both the CEO and CFO for FY25, which are shared by all of the senior management team are as follows:
Objective Link to strategy
Bonus potential (% of
maximum bonus opportunity)
Financial objectives 70% total
PBT based target Group financial performance and improvementin profitability. 70%
Strategic objectives 30% total
cardfactory.co.uk sales Online sales (including certain omnichannel initiatives) is one of the key strategic sales channels targeting sales growth. 15%
Retail partnership sales Development of retail partnerships is a key growth sales channel. 15%
1. Quantums for Threshold, Target and Stretch for each objective are commercially sensitive and will be published in the Annual Report on Remuneration for the year to 31 January 2025.
For each element of the bonus, 15% of the maximum potential bonus opportunity pays out for threshold performance, 50% of maximum potential bonus opportunity paying out for target
performance with 100% of the maximum potential bonus opportunity paying out for maximum performance. Straight-line payout applies between Threshold, Target and Stretch.
Taking into account the increasing importance of ESG to the business and to our shareholders as well as feedback received through the consultation process the Committee has introduced an
ESG underpin whereby the Committee may reduce the annual bonus payout by up to 10% if the Committee considers that there has not been sufficient progress in delivering our ESG strategy.
To inform its decision making at year-end the Committee will review a dashboard summarising progress against our ESG commitments, which may include but is not limited to: progression of
our customer and employee experience; progression in reducing the Group’s carbon footprint, waste reduction and progression of sustainability initiatives with the Group; progression against the
Group’s commitment to act responsibly with respect to the environment, aiming for a sustainable approach to the use of resources, avoiding irresponsible disposal of products and unnecessary waste;
progression against our refreshed DE&I strategy; the Group’s compliance against industry standard ESG guidelines and best practices and active management of ESG considerations andrisks.
Governance Financial StatementsStrategic Report
105
Restricted Shares
Restricted Shares will be granted over shares with a value at the time of grant of up to 87.5% of
salary and 75% of salary for the Chief Executive and Chief Financial Officer, respectively, subject
to a performance underpin and the other terms described in the new Remuneration Policy and
under the renewed LTIP Scheme Rules, both of which are subject to approval by shareholders at
the AGM to be held on 20 June 2024. Any awards are proposed to be granted following the AGM.
The Restricted Share Awards will be subject to a performance underpin whereby in order for the
Restricted Shares to vest the Committee must be satisfied that business performance is robust,
sustainable, that the business has improved its impact on society and the environment and
management has strengthened the business. In assessing performance, the Committee will consider
financial and non-financial KPIs as well as delivery against strategic priorities and ESG commitments.
There will be full disclosure in the Annual Report and Accounts, at the time of vesting, of the
Committee’s determination of the performance underpin.
Non-Executive Director fees
The Chair and Non-Executive Director fees, in line with other members of the management
team, will be subject to a 4% increase to be effective from 1 April 2024:
From
1 April 2024
From
1 April 2023
Base fees
Chair £182,000 £175,000
Senior Independent Director £62,400 £60,000
Non-Executive Director £52,000 £50,000
Additional fees
Chair of the Remuneration Committee £10,400 £10,000
Chair of the Audit & Risk Committee £10,400 £10,000
DIRECTORS’ REMUNERATION REPORT CONTINUED
Remuneration Committee membership and advisors
The Remuneration Committee membership during the period is set out in the Corporate
Governance Report on page 76.
The Committee fulfils its duties with a combination of both formal meetings and informal
consultation with relevant parties, both internal and external. The Committee appointed
Deloitte LLP as principal external advisors in August 2023, who were appointed by the
Committee following a tender process. Prior to this appointment, Korn Ferry had been retained
as the Committee’s advisors. Korn Ferry does not provide any other services to the Company.
Deloitte LLP provide other services to the Group, including debt advisory services. Both Deloitte
LLP and Korn Ferry are signatories to the Code of Conduct for Remuneration Consultants in
the UK, details of which can be found on the Remuneration Consultants Group’s website at
remunerationconsultantsgroup.com. Accordingly, the Committee is satisfied that the advice
received is objective and independent. During the financial year to 31 January 2024, fees of
£4,788 (inc. VAT) were paid to Korn Ferry and fees of £67,578 (inc. VAT) were paid to Deloitte
LLP in respect of advice to the Committee. The Committee is comfortable that the Deloitte
and Korn Ferry engagement partners and team that provides remuneration advice to the
Committee do not have connections with the Company or its Directors that may impair their
independence. The Committee reviewed the potential for conflicts of interest and judged that
there were appropriate safeguards against such conflicts.
Committee activities
During FY24 and up to the approval of this Report, the Committee met to consider the following
remuneration matters:
• Review the operation of the Remuneration Policy in FY24, assess appropriateness of the
policy, review of alternative approaches to remuneration as part of the triennial review of the
Remuneration Policy, consult with shareholders on the proposed changes and finalise the
proposed Remuneration Policy, taking account of feedback received.
• Consider and finalise the terms for renewal of the LTIP Rules and SAYE Rules and
approvalofthe resolutions proposed at the 2024 AGM.
• Consider performance against targets and resulting bonus payments for FY23 and proposed
bonus awards for FY24 and vesting of the 2020 and 2021 Restricted Share awards under the
Long Term Incentive Plan.
• Finalise the financial targets and (since the year-end) consider the performance against
the targets and resulting bonus payments and consideration of the exercise of discretion
for the FY24 annual executive bonus plan and to agree the measures and targets for the
FY25annual executive bonus.
Card Factory plc Annual Report and Accounts 2024106
• Consider and approve annual salary increases for the senior management team, the CEO
and the Chair, and the wider workforce salary and benefit reviews.
• Assess good leaver designations and approval of terms for certain leavers.
• Review developing trends in remuneration market practice, investor guidelines
andgovernance.
• Review and consider wider Group remuneration policies and practices and the approach
toemployee engagement as it relates to remuneration matters.
• Undertake various other reviews and approvals (as appropriate) in accordance
withtheterms of reference for the Committee adopted by the Company.
• Formally approve the Directors’ Remuneration Report as set out in this Annual Report.
The work of the Remuneration Committee
Set out below are those areas of the Committee’s work that it is required to report under
the Code and reporting regulations and which are not covered elsewhere in this Directors’
Remuneration Report.
Engagement with stakeholders
The Committee consulted with shareholders and the Colleague Listening Group on the changes
proposed to be made to the Directors’ Remuneration Policy (set out on pages 88 to 95).
Further details of the consultation are set out on page 95. Support for the current Directors’
Remuneration Policy, that was adopted at the 2021 AGM, has the support of 94.98% and the
FY23 Directors’ Remuneration Report at the 2023 AGM received support from shareholders
holding 99.94% of the votes cast. There were no material concerns for the Committee to
consider from the AGM voting outcomes. Encouragingly our employee engagement scores
increased significantly during the year, as assessed using a ‘bHeard’ survey, assessed by Best
Companies Limited (see page 52). cardfactory continues to work on some of the key themes
and outputs from the survey and we continue with the Colleague Listening Group which
complements existing forms of employee engagement. It also forms the basis of engagement
on those matters specifically required under the Code, including to explain the alignment of
the Executive Directors’ Remuneration Policy to the wider Group. Paul Moody is the Designated
Director to lead the Board’s consultation of colleagues via the CLG. Further details of
stakeholder engagement are set out on pages 48 to 55.
There were no matters arising during the year that required consultation by the Remuneration
Committee with shareholders.
Determining Executive Director remuneration
The Committee considers the appropriateness of the Executive Directors’ remuneration,
notonly in the context of overall business performance and environmental, governance and
social matters, but also in the context of wider workforce pay conditions (taking into account
workforce policies and practices as well as the ratio of CEO pay to all-employee pay) and
external market data, to ensure that it is fair and appropriate for the role, experience of the
individual, responsibilities and performance delivered.
More specifically the Committee will continue to consider the application of discretion in
application of the Directors’ Remuneration Policy to adjust for any excessive returns from
general market changes, and to account for wider stakeholder experience, in particular
inrespect of the exercise of discretion inrespect of bonus and share awards and in setting
anynew targets for future annual bonus schemes.
Wider workforce matters
The Committee, as part of its wider remit under the Code, considers workforce remuneration
policy and practices. This includes our Gender Pay statistics, which are published on our investor
relations website (cardfactoryinvestors.com) and our DE&I strategy (see page 53) and our DE&I
policy which is summarised on page 109. The Committee has also considered the Group’s wider
review of remuneration across the entire workforce following an extensive grading of roles and
benchmarking of remuneration and benefits associated with each role.
This report was reviewed and approved by the Remuneration Committee on 29 April 2024.
Indira Thambiah
Chair of the Remuneration Committee
30 April 2024
Governance Financial StatementsStrategic Report
107
NOMINATION COMMITTEE
CHAIR’S LETTER
Paul Moody
Chair of the Nomination Committee
Committee members
FY24 Meeting
attendance
Paul Moody (Chair) 1/1
Roger Whiteside 1/1
Rob McWilliam 1/1
Indira Thambiah 1/1
FY24 has been a year of further progress, particularly
on succession planning and board effectiveness
evaluation.”
Dear Shareholder
Introduction
FY24 has been a year of further progress for
the Nomination Committee, particularly on
succession planning and board effectiveness
evaluation. The key activities of the
Committee during the period include:
• The internally conducted evaluation of
the Board’s effectiveness (July to October
2023) culminating in review of performance
against the Board objectives set in
November 2022 and setting new Board
objectives (see page 77).
• Review of the Board’s, the senior
management team and their direct report’s
succession planning and actions to support
the future internal promotion of internal
candidates. One of the outcomes of this
review included appointment of Odgers
Berndtson to support the appointment of
an additional Non-Executive Director, which
is ongoing at the time of publication of this
Annual Report. Save for prior appointments
of Odgers Berndtson by the Company for
Board appointments, and appointment of
Odgers Berndtson by boards that each of
Rob McWilliam and I are Non-Executive
Directors, Odgers Berndtson do not have
any other connections with either the
Company or the Directors.
• Review and assessment of the recruitment and
appointment of the Chief Information Officer
(a member of the senior management team),
who joined the business in December 2023.
• Oversight and engagement on the
sustainability and ESG agenda, in particular
supporting progress on ensuring cardfactory
is a genuine diverse and inclusive place to
work and to review the progress in improving
the culture within the business (see page 38).
• The Board recognises that changes in
the composition of the Board and senior
management team early in the year
resulted in a reduced diversity, inconsistent
with the diversity reflected across the
entire colleague base. The Board recognise
the need for much improvement and
aspire to achieve the gender targets and
maintain the ethnicity targets arising from
the Parker review. A specific objective
of the Board (following the Board
effectiveness review completed in October
2023) is to enhance the Board’s diversity
and meet the Listing Rules requirements by
December 2024. The current recruitment
of an additional Non-Executive Director
is expected to support progress towards
meeting this objective.
• We are scheduled to undertake an externally
moderated Board effectiveness assessment
later in 2024, and will progress our succession
planning and diversity and inclusion agenda.
Yours sincerely
Paul Moody
Chair
30 April 2024
Card Factory plc Annual Report and Accounts 2024108
This report provides details of the role of
the Nomination Committee, the work it has
undertaken during the year and details of
how it intends to carry out its responsibilities
goingforward.
Role of the Nomination Committee
The purpose of the Committee is to:
• Assist the Board by keeping the composition
and performance of the Board and its
Committees under continuous review to
ensure it has the necessary balance of skills
and experience to fulfil its purpose.
• Ensure a thorough and transparent process
is adopted for making new appointments
to the Board.
• Oversee diversity, inclusion and succession,
not only within the Board but across the
Group’s senior management team.
A more detailed explanation of the Nomination
Committee’s role, membership, meeting
frequency and terms of reference are set out in
the Corporate Governance Report on page 77.
Committee activity
The Committee’s main activity during the
year, and its plans for the year ahead, are as
described in more detail in the introductory letter
to this report.
DE&I Policy
Our policy is that the Board and the Group’s
senior management team should always be
diverse, with selection being made irrespective
of personal attributes, but we feel that quotas
are not appropriate as they are likely to
lead to compromised decisions on Board
and senior management team membership,
quality and size.
We will, however, seek to ensure that specific effort is made, both at Board and senior management team level, to bring forward female
candidates and those from a range of ethnic and social backgrounds for appointments. We are committed to providing equal opportunities
for all our colleagues and to having a diverse workforce of gender, age, nationality, education and background. We are a founding signatory,
alongside 50 other leading retailers, to the British Retail Consortium’s Diversity and Inclusion Charter. Details of some of our commitments and
progress during the year can be found in the ESG Report from pages 32 to 39 and in respect of our Colleague engagement on pages 52 and 53.
We published our Gender Pay Gap Report in April 2024, which reports on the gender pay gap as at 5 April 2023. A copy of the report has been
published on cardfactory’s investor website (cardfactoryinvestors.com).
Our latest data on gender and (for the Board and senior management team) ethnicity as at the reference date of 31 January 2024, is as follows:
Gender composition
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(CEO, CFO, SID, Chair)
Number in executive
management
(excl. Board members)
Percentage of
executive management
(excl. Board members)
Men 6 85.7% 4 8 88.8%
Women 1 14.3% – 1 11.1%
Ethnic diversity
Number of
Board members
Percentage
of the Board
Number of senior
positions on the Board
(CEO, CFO, SID, Chair)
Number in executive
management
Percentage of
executive management
White British or other White
(including minority-white groups) 6 85.7% 4 8 88.8%
Mixed/Multiple Ethnic Groups – – – – –
Asian/Asian British 1 14.3% – 1 11.1%
Black/African/Caribbean/
BlackBritish – – – – –
Other ethnic group, including Arab – – – – –
Not specified/prefer not to say – – – – –
NOMINATION COMMITTEE REPORT
For the 39 direct reports to the executive management team as at 31
January 2024, 54% (21 individuals) are women 48% (18 individuals) are
male. Of the entire workforce of 9991 as at 31 January 2024, 81% (8,141
individuals) are women and 19% (1,850 individuals) are male.
Board evaluation
The Company undertook an internal Board effectiveness evaluation
(having completed an external review in 2021). Further details are set
out in the Corporate Governance Report on page 77. Board evaluation
will continue to be conducted on an annual basis, with an externally
facilitated evaluation scheduled to be completed during thefinancial
year to 31 January 2025.
Tenure and re-election of Directors
In accordance with the UK Corporate Governance Code, all the
Directors will seek election or re-election (as appropriate) at the
nextAGM on 20June 2024.
Paul Moody
Chair of the Nomination Committee
30 April 2024
Governance Financial StatementsStrategic Report
109
Card Factory plc Annual Report and Accounts 2024110
DIRECTORS’ REPORT
The Directors present their report together
with the audited financial statements for the
year ended 31 January 2024.
Introduction
This section of the Annual Report & Accounts
includes additional information required to
be disclosed under the Companies Act 2006
(‘the Companies Act’), the UK Corporate
Governance Code 2018 (the ‘Code’ or the ‘UK
Corporate Governance Code’), the Disclosure
Guidance and Transparency Rules (the ‘DTRs’)
and the Listing Rules (the ‘Listing Rules’) of the
Financial Conduct Authority.
Some of the information we are required to
include in the Directors’ Report is included
in other sections of this Annual Report and
Accounts and is referred to below. Where
reference is made to these other sections, they
are incorporated into this report by reference.
Incorporation, listing and structure
The Company was incorporated and
registered in England and Wales on 17
April 2014 under the Companies Act with
registration number 9002747.
The entire issued ordinary share capital of the
Company is admitted to the premium listing
segment of the Official List of the Financial
Conduct Authority and to trading on the
London Stock Exchange main market for
listed securities. The liability of the members
of the Company is limited.
The Company is domiciled in the United
Kingdom and its registered office is at Century
House, Brunel Road, Wakefield 41 Industrial
Estate, Wakefield, West Yorkshire, WF2 0XG.
The telephone number of the Company’s
registered office is +44 1924 839150.
The Company indirectly owns subsidiaries
incorporated overseas. See note 4 to the
Company Financial Statements on page 158.
Strategic Report
The Strategic Report, which was approved
by the Board on 29 April 2024 and is set out
on pages 1 to 69, contains a fair review of
the Group’s business, a description of the
emerging and principal risks and uncertainties
facing the Group and an indication of the
likely future developments of the Group.
The review is intended to be a balanced and
comprehensive analysis of the development
and performance of the Group’s business
during the financial year and the position
of the Group’s business at the end of that
year. The report includes, to the extent
necessary for an understanding of the
development, performance or position of the
Group’s business, analysis using financial key
performance indicators.
The Strategic Report also includes the main
trends and factors likely to affect the future
development, performance and position
of the Group’s business. It also includes
information about environmental matters
(including reporting in accordance with the
Task Force on Climate-Related Financial
Disclosures (TCFD)), the Group’s employees,
social and community issues and (on pages
49 to 55) details of how we engage with
suppliers, customers and other stakeholders.
This Directors’ Report should be read in
conjunction with the Strategic Report, which
also contains details of the principal activities
of the Group during the year. When taken
together, the Strategic Report and this
Directors’ Report constitute the management
report for the purposes of DTR 4.1.8 R.
Results and dividends
The consolidated profit for the Group for the
year after taxation was £49.5 million (FY23:
£44.2 million). The results are discussed in
greater detail in the CFO’s pages 56 to 63.
The Directors propose a final dividend of
4.5 pence per share in respect of the period
ended 31 January 2024, to be paid on 28
June 2024 to shareholders on the register on
the record date of 31 May 2024, subject to
shareholder approval at the AGM to be held
on 20 June 2024 (FY23 final dividend: nil). No
interim dividend has been paid in respect of
the period ended 31 January 2024 (FY23: nil).
Post year-end events
On 26 April 2024, the Group entered into new
debt facilities, details of which are set out in
the CFO Review on page 62.
Otherwise, there have been no other
significant post year-end events.
Share capital, shareholders and
restrictions on transfers of shares
The Company has only one class of shares:
ordinary shares of 1 pence each.
Further details of the Company’s share
capital, including changes in the issued share
capital in the year under review, are set out in
note 19 to the financial statements which form
part of this report on pages 145 to 146. Since
the end of the FY24 financial year, to 29 April
2024 (being the latest practicable date prior
to publication of this report), the Company
issued 68,256 shares to satisfy awards granted
and vesting under the Company’s SAYE plan.
Save for this issue, no additional shares have
been issued between the end of the financial
year under review and the date of approval
of this Report. The total issued share capital
of the Company as at 29 April 2024 (being
the latest practical date before publication of
this report) is 345,644,617. No shares are held
intreasury.
Details of awards outstanding under share-
based incentive schemes are given in note 25
to the financial statements which form part
of this report on pages 152 to 153. Details of
the share-based incentive schemes in place
are provided in the Directors’ Remuneration
Report on pages 88 to 95. Awards granted
under the share-based incentive schemes are
generally satisfied on vesting or exercise by
the allotment of new shares.
The rights and obligations attaching to the
ordinary share capital of the Company are
contained within the Company’s Articles
of Association (‘Articles’) which were
adopted on 28 July 2021. The Articles are
accessible from Companies House and the
cardfactoryinvestors.com website.
Governance Financial StatementsStrategic Report
111
The Articles do not contain any restrictions on the transfer of ordinary shares in the Company
other than the usual restrictions applicable where any amount is unpaid on a share. Certain
restrictions are also imposed by laws and regulations (such as insider trading and marketing
requirements) and requirements of the Listing Rules whereby Directors and certain employees
ofthe Company require approval of the Company in order to deal in the Company’s shares.
Shareholder and voting rights
All members who hold ordinary shares are entitled to attend and vote at the AGM. On a show
of hands at a general meeting every member present in person shall have one vote and on a
poll every member present in person or by proxy shall have one vote for every ordinary share
held. No shareholder holds ordinary shares carrying special rights relating to the control of
theCompany.
Substantial shareholders
At 29 April 2024 the following had notified the Company on form TR1 of a disclosable interest of
3% or more of the nominal value of the Company’s ordinary shares:
Shareholder
No. of
ordinary shares
Percentage
of issued
share capital
Teleios Capital Partners LLC 37,998,886 10.99%
Artemis Investment Management LLP 29,731,077 8.61%
Aberforth Partners LLP 22,753,964 6.59%
JP Morgan Asset Management 18,650,368 5.40%
Jupiter Asset Management 17,133,053 4.96%
Majedie Asset Management Limited 16,819,832 4.87%
The Wellcome Trust 10,733,554 3.11%
The notified shareholding for Teleios Capital Partners LLC as at 31 January 2023 was 40,115,038
shares which amounted to 11.61% of the then issued share capital. Otherwise, the shareholdings
noted above reflect the notifications received as at 31 January 2024.
Change of control
There are no agreements between the Company and its Directors or employees providing
for additional compensation for loss of office or employment (whether through resignation,
redundancy or otherwise) that occurs because of a takeover bid. The only significant agreement
to which the Company is a party that takes effect, alters or terminates upon a change of control
of the Company following a takeover bid, and the effect thereof, is the Company’s committed
bank facilities dated 26 April 2024 which contain a provision such that, in the event of a change
of control, the facilities may be cancelled and all outstanding amounts, together with accrued
interest, will become repayable on the date falling 30 days following written notice being given
by the lenders that the facility has been cancelled.
Transactions with related parties
The only material transactions with
related parties during the year were those
transactions detailed in note 28 on page 153
of the Annual Report and Accounts.
Directors
The Directors of the Company and their
biographies are set out on pages 70 and 71.
Details of changes to the Board during the
period are set out on page 72. Details of how
Directors are appointed and/or removed are
set out in the Corporate Governance Report
on page 78.
Powers of Directors
Specific powers of the Directors in relation
to shares and the Company’s Articles of
Association are referred to in the Corporate
Governance Report on pages 78. As at 31
January 2024, the Directors had shareholder
authority, granted at the AGM in 2023, to
effect a purchase by the Company of up to
34,265,427 of its own shares. None of this
authority had been used during FY24. This
authority is proposed to be renewed at the
AGM to be held in 2024.
Directors’ indemnities and insurance
Information relating to Directors’ indemnities
and the Directors’ and Officers’ liability
insurance that the Company has purchased is
set out in the Corporate Governance Report
on page 78.
Employees
Information relating to employees of the
Group, including the colleague listening
group and employee forums which facilitate
understanding colleague views in decision
making, is set out on pages 52 and 53. Share
incentive schemes in which employees
participate are described in the Directors’
Remuneration Report on pages 88 to 95 and
in note25 to the financial statements on
pages 152 and 153.
We recognise that a diverse workforce is
important to our culture and this includes the
employment of disabled persons. Full and fair
consideration is given to applications from
disabled persons and support is available
for colleagues who have become disabled
during their employment. Our approach
is non-discriminatory and proactive. At
any point during the colleague lifecycle
from recruitment through job changes
or promotions and with training and
development opportunities we will support
disabled colleagues by making adjustments to
accommodate their requirements and would
seek professional occupational health advice
when required. We have a broad offering
of wellbeing support including an employee
assistance programme and a mental health
first aiders network. We encourage any
colleague with a disability to talk to their
manager or to get support from the People
Team to ensure that they can successfully
balance a health condition with work.
Getting a job at cardfactory and access to
training and career development is based on
merit on we would not consider any protected
characteristic as a barrier to recruitment or
progression. For more information on our
approach to disability in the workplace see
page 53.
Greenhouse gas emissions
The TCFD Report on pages 40 to 46 sets out
the greenhouse gas emissions disclosures and
the energy efficiency action taken during the
financial year are summarised on page 47.
Political donations
The Group has not made any political
donations in the past and does not intend
tomake any in the future.
Card Factory plc Annual Report and Accounts 2024112
Treasury and risk management and financial instruments
The Group’s approach to treasury and financial risk management is explained in note 23
to the accounts on pages 148 to 150. These risks are managed in accordance with the risk
management framework described on pages 64 and 65, which includes a list of the principal
risks and uncertainties that affect or are likely to affect the Group. The financial position of the
Group, its cash flow, liquidity position and borrowing facilities are described in the CFO’s review
on pages 56 to 63.
Tax
The Group pays corporation tax on its operations in the United Kingdom and does not operate
in any tax havens or use any tax avoidance schemes. A copy of the Group’s tax strategy is
available on cardfactory’s investor website (cardfactoryinvestors.com).
Disclosures required under Listing Rule 9.8.4 R
In accordance with Listing Rule 9.8.4C, the information required to be disclosed in the Annual
Report by Listing Rule 9.8.4 R is detailed in the following sections:
Disclosure Cross reference
Amount of interest capitalised by the Group during FY24 and
the amount and treatment of any related tax relief. R1
Not Applicable
Any information required by Listing Rule 9.2.18 R (publication
of unaudited financial information). R2
Not Applicable
Details of any long-term incentive schemes. R4 Page 90
Details of any arrangements under which any Director has
waived or agreed to waive any emoluments for FY24 or any
future emoluments. R5 R6
Not Applicable
Details of cash allotments of shares by Card Factory plc or
any major subsidiary undertaking, during FY24. R7 R8
See note 7 to the notes to the
Parent Company financial
statements on page 159
Details of any placing of shares by Card Factory plc during
FY24. R9
Not Applicable
Details of any contract of significance in which a Director
or controlling shareholder is materially interested, subsisting
during FY24.R10
Not Applicable
Details of any contract for the provision of services to the
Group by a controlling shareholder subsisting during FY24. R11
Not Applicable
Details of any arrangement under which a shareholder has
waived or agreed to waive any dividends. R12
Not Applicable
A statement by the Board in respect of any agreement with a
controlling shareholder. R14(a)
Not Applicable
Disclosure required under Listing Rule 7
(Corporate Governance)
The Corporate Governance Report on pages
73 to 79 contains disclosures required under
Listing Rules 7.2.2, 7.2.3, 7.2.5, 7.2.6 and 7.2.7,
which form part of this Directors’ Report.
Disclosure required under Listing Rule
9.8.6(8) R
The Company has included climate-related
disclosures consistent with the TCFD
recommendations and recommended
disclosures (dated June 2017) as updated by
the Task Force’s 2021 Annex, on pages 40
to 47 of this Annual Report. The Company’s
compliance with the TCFD reporting and
identification of the matters which the
Company is not yet compliant with are set out
on pages 40 to 47. The sections identified in
green or amber in the table on pages 40 to 47
explain the status of the Company’s progress
to be able to fully report against the TCFD
requirements in future years.
Going concern
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
the going concern basis of accounting
remainsappropriate.
More information in respect of going concern,
including the factors considered in reaching
this conclusion, is provided in note 1 to the
consolidated financial statements in pages
127 to 136.
Longer-term viability
In accordance with the UK Corporate
Governance Code, the Directors have
assessed the viability of the Group over a
period longer than that required in respect
of going concern. The assessment has been
made taking into account the Group’s current
position, business plan, and the principal risks
and uncertainties described in the Strategic
Report on pages 66 to 68.
In making this statement, the Board has
carried out a robust assessment of the
emerging and principal risks facing the
Group, including those that would threaten its
business model, future performance, solvency
or liquidity.
Viability period
The Directors have determined that the five
years to 31 January 2029 is an appropriate
period over which to provide its viability
statement, being the timeframe used by the
Board in its strategic planning process and
consistent with the Group’s investment cycles.
Five years would require extension options in
the Group’s newly agreed financing facilities
to be successfully exercised, but the Board
currently have no reason to believe that
the Group’s existing facilities would not be
extended, renewed or replaced on broadly
similar terms at that time.
Board assessment
The Board has reviewed the Group’s detailed
five-year strategic plan (the ‘Plan’), including
an assessment of the key operational and
financial assumptions, and considered
downside scenarios and stress testing. The
Plan was updated to reflect the positive
trading performance in FY24 and assumes
a conservative model of sales growth across
the five year horizon, and reflects delivery of
key strategic projects to support growth in
online and partnerships. In addition, the Plan
includes expected cost headwinds arising, in
particular, from wage inflation, lower GBPUSD
exchange rates that may be applicable from
the end of the Group’s existing hedge, and
the impact of potential rising prices on freight
and utilities. The plan indicates that the
Group will remain profitable, cash generative
and demonstrated that the Group would
DIRECTORS’ REPORT CONTINUED
Governance Financial StatementsStrategic Report
113
have headroom and comply with covenants
equivalent to those set out in our April 2022
facilities. These April 2024 financing package
extend the available facilities to £125 million
with a relative easing of restrictions and
covenant requirements in relation to the 2022
financing package.
In assessing viability, the Board has
considered a variety of downside scenarios
arising from the Group’s principal risks and
uncertainties (see pages 66 to 68). These
downside risks included severe, but plausible,
scenarios with the ability to reduce the
Group’s sales, profitability and cash flow both
over sustained periods and, in particular, over
the Christmas season which still delivers a
higher proportion of the Group’s sales and
profits compared to other periods in the
year. Reverse stress test scenarios were also
considered that considered the extent to
which such a scenario would need to persist
or extend in order to result in a breach of our
covenants or liquidity position. In all cases,
the review concluded that the extent of
scenario required to result in a breach was of
such severity such that the scenario was not
considered reasonable plausible.
Whilst these reviews do not consider all the
possible scenarios that the Group might face,
the Directors consider that this assessment
of the Group’s prospects is reasonable in
light of the particular uncertainties facing the
Group at this time. In particular, the Directors
noted that in all of the scenarios considered,
a reasonable degree of further actions would
be available to the Group to mitigate the
effects of downside risks. Such mitigating
actions could include further curtailing
of discretionary operating and capital
expenditure or postponement or cancellation
of dividend payments. It was noted that
the Group has successfully taken significant
mitigating actions to preserve liquidity during
the Covid-19 pandemic.
Whilst there continue to be inherent risks and uncertainties in the Group’s wider operating
environment, the Board is confident that the Group continues to have access to sufficient
liquidity to meet its liabilities as they fall due and manage reasonably foreseeable downside
scenarios if they should arise. This assessment is based upon the Group’s current financial
position and the headroom in the Group’s financing facilities.
Accordingly, the Board confirms that it has a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due in the period to 31January
2029.
Assumption Assumption limitations
Available funding
The strategic plan was developed assuming that the covenants and
headroom under the current facilities available in the 2022 financing
package were consistent throughout the five years. These facilities
have since been replaced in April 2024 as a new financing package
has been agreed, extending the available facilities to £125 million
over an extended term, with a relative easing of restrictions and
covenant requirements in relation to the 2022 financing package.
The key limitation in respect of financing relates to the ability of
the Group to meet its covenant requirements in order to continue
to access available facilities. The Board is satisfied that, under the
current facilities, the Group should have sufficient headroom to meet
covenant requirements across the viability period, including in downside
scenarios. Liquidity and covenant headroom is at its tightest during the
first 12-18 months of the plan, with cash inflows across the five-year term
gradually increasing headroom over time.
Capital investment
The Group’s capital investment plans remain focused on supporting
key strategic initiatives to deliver the Plan. Capital investment
was high relative to prior years as we invest in order to deliver our
strategy as set out in May 2023. Investment is expected to remain
at approximately £25 million from FY25 and through the remainder
of the plan.
Capital investment is entirely within the control of the Board. Reducing
capital expenditure, if required, reflects a key mitigation in severe
downside scenarios.
Strategic initiatives
The Plan reflects the Group’s strategic initiatives and assumes
gradual revenue growth across the five-year term.
The Board undertakes a full review of principal risks, uncertainties and
downside scenarios taking into account the impact of the Group’s
ability to deliver its strategy are reviewed.
Distributions to shareholders
Following the cessation of previous restrictions and successful
deleveraging of the balance sheet over a number of years, the
Board has assessed cash flow forecasts, the availability of financing
and the Group’s plans to return surplus cash to shareholders in its’
strategic plan. A final dividend of 4.5 pence per share is proposed in
respect of the period ended 31 January 2024 subject to Shareholders’
approval at the AGM on 20 June 2024 and is to be paid on 28
June 2024 to shareholders on the register on the record date
of 31 May 2024 (See page 63 for more information regarding future
distribution expectations).
Capital management is entirely within the control of the Board and
accordingly there are no limitations to these assumptions. The Group’s
Capital Allocation Policy requires that the Board balances investment
and returns against protecting the balance sheet.
Card Factory plc Annual Report and Accounts 2024114
Disclosure of information and
appointment of auditors
So far as each Director is aware, there is
no relevant audit information of which the
Company’s auditor is unaware and the
Directors have taken all the steps which
they ought to have taken as Directors to
make themselves aware of any relevant
audit information and to establish that
the Company’s auditor is aware of
thatinformation.
This confirmation is given and should be
interpreted in accordance with the provisions
of Section 418 of the Companies Act.
On behalf of the Board, the Audit & Risk
Committee has reviewed the effectiveness,
performance, independence and objectivity
of the existing external auditor, Mazars LLP,
for the year ended 31 January 2024 and
concluded that the external auditor was in
all respects effective, as explained on page
83. The Company first appointed Mazars
LLP on June 2023 as its auditor following
a competitive tender undertaken in 2022
resulting in Mazars LLP first audit being the
audit of the accounts for the 12 months to
31 January 2024. Mazars LLP has expressed
its willingness to be re-appointed as auditor.
Accordingly, and in accordance with Section
489 of the Companies Act, resolutions to
re-appoint Mazars LLP as auditor and
to authorise the Directors to determine
its remuneration will be proposed at the
forthcoming AGM of theCompany.
Information regarding forward-looking
statements
The reports and financial statements
contained in this Annual Report and Accounts
contain certain forward-looking statements
with respect to the financial condition,
results of operations and businesses of Card
Factory plc. These statements and forecasts
involve risk, uncertainty and assumptions
because they relate to events and depend
upon circumstances that will occur in the
future. There are a number of factors that
could cause actual results or developments
to differ materially from those expressed or
implied by these forward-looking statements
and forecasts. Nothing in this Annual Report
and Accounts should be construed as a
profitforecast.
AGM
The AGM of the Company will be held at
11.00am on 20 June 2024 at the Company’s
registered office at Century House, Brunel
Road, Wakefield 41 Industrial Estate, Wakefield
WF2 0XG. A formal notice of meeting,
explanatory circular and a form of proxy will
accompany this Annual Report and Accounts.
Shareholders are encouraged to submit their
questions in advance and to submit their votes
by proxy in accordance with the instructions in
the encloseddocuments.
Approval of the Annual Report
The Strategic Report and the Corporate
Governance Report were approved by the
Board on 29 April 2024.
Ciaran Stone
Company Secretary
30 April 2024
DIRECTORS’ REPORT CONTINUED
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Governance Financial StatementsStrategic Report
115
The Directors are responsible for preparing
the Annual Report and the Group and Parent
Company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to
prepare Group and Parent Company financial
statements for each financial year. Under that
law they are required to prepare the Group
financial statements in accordance with UK-
adopted international accounting standards
and applicable law and have elected to
prepare the Parent Company financial
statements on the same basis.
Under company law the Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group and
Parent Company and of the Group’s profit
or loss for that period. In preparing each of
the Group and Parent Company financial
statements, the Directors are required to:
• select suitable accounting policies and
then apply them consistently;
• make judgements and estimates that are
reasonable, relevant and reliable;
• state whether they have been prepared in
accordance with UK-adopted international
accounting standards;
• assess the Group and Parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
• use the going concern basis of accounting
unless they either intend to liquidate the
Group or the Parent Company or to cease
operations or have no realistic alternative
but to do so.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Parent
Company’s transactions and disclose with
reasonable accuracy at any time the financial
position of the Parent Company and enable
them to ensure that its financial statements
comply with the Companies Act 2006. They
are responsible for such internal control as
they determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error, and have general
responsibility for taking such steps as are
reasonably open to them to safeguard the
assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the
Directors are also responsible for preparing a
Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate
Governance Statement that complies with
that law and those regulations.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on the
Company’s website. Legislation in the UK
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
In accordance with Disclosure Guidance
and Transparency Rule 4.1.14 R, the financial
statements will form part of the annual
financial report prepared using the single
electronic reporting format under the TD ESEF
Regulation. The auditor’s report on these
financial statements provides no assurance
over the ESEF format.
Responsibility statement of the
Directors in respect of the Annual
Report and Accounts
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.
By order of the Board
Darcy Willson-Rymer
Chief Executive Officer
30 April 2024
Card Factory plc Annual Report and Accounts 2024116
Opinion
We have audited the financial statements of Card Factory Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 January 2024 which comprise the Consolidated
income statement, Consolidated statement of comprehensive income, Consolidated statement
of financial position, Consolidated statement of changes in equity, Consolidated cash flow
statement, Parent company statement of financial position, Parent company statement of
changes in equity, Parent company cash flow statement and notes to the financial statements,
including material accounting policy information.
The financial reporting framework that has been applied in their preparation is applicable law
and UK-adopted International Accounting Standards and, as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion, the financial statements:
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at
31 January 2024 and of the group’s profit for the year then ended;
• have been properly prepared in accordance with UK-adopted International Accounting
Standards and, as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in the
“Auditor’s responsibilities for the audit of the financial statements” section of our report. We are
independent of the group and the parent company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standards as applied to listed entities and public interest entities and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
Our audit procedures to evaluate the directors’ assessment of the group’s and the parent
company’s ability to continue to adopt the going concern basis of accounting included but were
not limited to:
• Undertaking an initial assessment at the planning stage of the audit to identify events or
conditions that may cast significant doubt on the group’s and the parent company’s ability
to continue as a going concern;
• Obtaining an understanding of the relevant controls relating to the directors’ going concern
assessment;
• Making enquiries of the directors to understand the period of assessment considered by
them, the assumptions they considered and the implication of those when assessing the
group’s and the parent company’s future financial performance;
• Challenging the appropriateness of the directors’ key assumptions in their cash flow
forecasts, as described in note 1, by reviewing supporting and contradictory evidence in
relation to these key assumptions and assessing the directors’ consideration of severe but
plausible scenarios. We have challenged reverse stress tests performed by management and
assessed the viability of mitigating actions within the directors’ control;
• Testing the accuracy and functionality of the model used to prepare the directors’ forecasts;
• Assessing the historical accuracy of forecasts prepared by the directors;
• Engaging in regular discussions with the directors regarding the status of negotiations in
respect of new financing options;
• Considering the consistency of the directors’ forecasts with other areas of the financial
statements and our audit; and
• Evaluating the appropriateness of the directors’ disclosures in the financial statements on
going concern.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on
the group’s and the parent company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
INDEPENDENT AUDITOR’S REPORT
to the members of Card Factory Plc
Governance Financial StatementsStrategic Report
117
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
In relation to Card Factory Plc’s reporting on how it has applied the UK Corporate Governance
Code, we have nothing material to add or draw attention to in relation to the directors’
statement in the financial statements about whether the director’s considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
In relation to Card Factory Plc’s reporting on how it has applied the UK Corporate Governance
Code, we have nothing material to add or draw attention to in relation to:
• the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting; and
• the directors’ identification in the financial statements of the material uncertainty related to
the group’s and the parent company’s ability to continue as a going concern over a period of
at least twelve months from the date of approval of the financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We summarise below the key audit matters in forming our opinion above, together with an
overview of the principal audit procedures performed to address each matter and our key
observations arising from those procedures.
These matters, together with our findings, were communicated to those charged with
governance through our Audit Completion Report.
Key audit matter How our scope addressed this matter
Store inventory completeness and existence
Refer to page 134 (accounting policy), and page
143 financial disclosures.
We have identified a significant risk over the
existence of store inventory due to the level
of manual processing involved to determine
the inventory quantities held at the year-end.
Stores do not have a full stock loop process
and store inventory quantities held at
the year-end are determined by year end
physical counts which rely on manual count
procedures. The high volume and large
range of inventory inherently increases the
likelihood of error.
Based on our assessment of the inherent
risk and the audit effort that was required to
obtain sufficient and appropriate evidence
over the balance at the year end, we have
determined store inventory completeness
and existence to be a Key audit Matter.
Our audit procedures included but were not
limited to:
• Testing the design and implementation of
key controls related to this business process.
• Performing independent inventory counts
for a selection of stores. We traced the
results of the inventory counts we attended
through to the accounting system. In
performing these counts, we incorporated
unpredictability regarding the location of
the stores visited.
• Performing independent counts over
seasonal inventory post year end and
performing roll back procedures.
• Where management counts were
performed on a date other than the year
end, testing management’s reconciliation
of their count results by recalculating the
mathematical accuracy of this analysis and
agreeing the movement including sales
and receipts to the stores to supporting
evidence.
• Performing risk assessment procedures to
identify unusual movements and trends in
inventory values.
Our observations
The results of our procedures were satisfactory.
Control recommendations relevant to store
inventory counts were communicated to the
Audit Committee.
Card Factory plc Annual Report and Accounts 2024118
Key audit matter How our scope addressed this matter
Inventory valuation
Refer to page 128 (key sources of estimation
uncertainty, 134 (accounting policy), and page
143 financial disclosures.
The Group has significant levels of inventory
and management exercise judgement to
estimate the value of stock that is considered
slow moving or discontinued, and the
required provision per the requirements of
IAS 2 – Inventories. We have identified a
risk of fraud relating to inventory valuation
estimates.
The determination of the Net Realisable
Value (‘NRV’) of inventory has a high degree
of estimation uncertainty and there is an
increased risk of fraud and error due to the
manual nature of the process.
Our audit procedures included but were not
limited to:
• Assessing the appropriateness of the
Group’s inventory provisioning policies
based on our understanding of the
business.
• Testing the design and implementation of
key controls related to this business process.
• Inspecting historical sales per stock line
and challenging the group on the extent to
which historical sales inform the provision
estimated per stock line at the year-end
date.
• Re-calculating provision rates applied to
each stock line.
• Reperforming the provision calculations
based on the Group’s provisioning
methodology.
• Inspecting a sample of stock lines in each
seasonal category to validate that the
determination of category was appropriate.
• Comparing sales data in the period to
the stock quantities recorded at year
end to assess whether slow moving stock
line and discontinued inventories were
appropriately considered in the provisioning
methodology.
Our observations
The results of our procedures were satisfactory.
Control recommendations relevant to
inventory provisioning were communicated to
the Audit Committee.
Key audit matter How our scope addressed this matter
Recoverability of Goodwill
Refer to page 134 (accounting policy), and page
140 financial disclosures.
The carrying value of Card Factory plc’s
goodwill is a material balance of £313.8m at
31January 2024.
There is a risk of error relating to the
calculation of the recoverable amount. There
is a significant risk that the assessment
may not have been performed in line with
the requirements of IAS 36 and that the
assumptions used such as discount and
growth rates are not supported by qualitative
or quantitative information.
Management exercise judgement and there
is inherent estimation uncertainty when
projecting cash flows into the future to
determine value in use.
We have identified this as a Key Audit Matter
based on the levels of audit attention in this
area and the significant quantum of this
balance to the group’s balance sheet (56% of
total assets).
Our audit procedures included, but were not
limited to:
• Testing the design and implementation of
key controls related to this business process.
• Inspecting management’s inputs and
key assumptions in VIU calculations,
including the mathematical accuracy of the
calculations.
• Agreeing assumptions to supporting
documentation such as board’s approved
budgets.
• Assessing the underlying assumptions
behind the impairment assessment, and
challenging management on alternative
assumptions and estimates by using
alternative data sources.
• Assessing and challenging the discount rate
calculated by management.
• Performing sensitivity analysis on the key
assumptions, including consulting with
valuation experts in our review of discount
rates used.
Our observations
The results of our procedures were satisfactory.
Control recommendations relevant to Goodwill
impairment were communicated to the Audit
Committee.
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Card Factory Plc
Governance Financial StatementsStrategic Report
119
Key audit matter How our scope addressed this matter
Recoverability of parent company’s investment
in subsidiary
Refer to page 157 (accounting policy), and page
158 financial disclosures.
The parent company holds a material
investment in subsidiaries of £316.2m at
31January 2024.
There is a risk of error relating to the
identification of impairment triggers,
and the judgement required when
assessing for impairment. There is a risk
of material misstatement of asset values
if management’s assessment does not
accurately consider potential triggers.
We have identified recoverability of parent
company’s investment in subsidiaries as
a Key Audit Matter. This is based on the
quantum of this balance relative to the
parent company Statement of financial
position (99% of total assets).
Our audit procedures included, but were not
limited to:
• Testing the design and implementation of
key controls related to this business process.
• Inspecting and challenging management’s
impairment trigger assessment including
but not limited to the following procedures:
• Inspecting of the carrying value with
specific reference to the year-end market
capitalisation.
• Considering other internal and external
triggers per IAS 36 Impairment of Assets.
Our observations
The results of our procedures were satisfactory
with no matters to report to the Audit
Committee.
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We set certain
quantitative thresholds for materiality. These, together with qualitative considerations, helped us
to determine the scope of our audit and the nature, timing and extent of our audit procedures
on the individual financial statement line items and disclosures and in evaluating the effect
of misstatements, both individually and on the financial statements as a whole. Based on our
professional judgement, we determined materiality for the financial statements as a whole as
follows:
Group materiality
Overall materiality £3.2m
How we determined it 5% of profit before tax
Rationale for benchmark
applied
Profit Before Tax is the primary benchmark for Public Interest
Entities. The entity is profit orientated and we have determined
that Profit Before Tax is of principal interest to the users of the
financial statements.
Performance materiality Performance materiality is set to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
We set performance materiality at £1.9m, which represents 60%
of overall materiality.
Reporting threshold We agreed with the directors that we would report to them
misstatements identified during our audit above £0.1m as
well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
Card Factory plc Annual Report and Accounts 2024120
Parent company materiality
Overall materiality £1.5m
How we determined it 0.5% of total assets
Rationale for benchmark
applied
Card Factory Plc is a holding entity, and therefore not
profit or revenue focused. Total assets is deemed to be the
most appropriate benchmark for the users of the financial
statements. We have selected 0.5% of Total Equity which is
capped at component materiality.
Performance materiality Performance materiality is set to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
We set performance materiality at £0.9m, which represents
60% of overall materiality.
Reporting threshold We agreed with the directors that we would report to them
misstatements identified during our audit above £45k as well as
misstatements below that amount that, in our view, warranted
reporting for qualitative reasons.
As part of designing our audit, we assessed the risk of material misstatement in the financial
statements, whether due to fraud or error, and then designed and performed audit procedures
responsive to those risks. In particular, we looked at where the directors made subjective
judgements, such as assumptions on significant accounting estimates.
We tailored the scope of our audit to ensure that we performed sufficient work to be able
to give an opinion on the financial statements as a whole. We used the outputs of our risk
assessment, our understanding of the group and the parent company, their environment,
controls, and critical business processes, to consider qualitative factors to ensure that we
obtained sufficient coverage across all financial statement line items.
Our group audit scope included an audit of the group and the parent company financial
statements. Based on our risk assessment, three components including the parent company
were subject to full scope audit performed by the group audit team and one component was
subject to the audit of one or more balances and/or class of transactions. The component
scoped in for audit procedures over one or more account balances and/or disclosures were not
individually financially significant enough to require a full scope audit for group purposes, but
the group audit risk assessment identified specific material balances and/or disclosures to be
addressed. In addition, two components were subject to analytical procedures and review of
financial information by the group audit team.
We set out below a summary of the group approach to demonstrate the coverage of group
revenue, profit before tax, and total assets resulting from auditing the components including the
parent company.
Revenue
Profit
before tax
Total
assets
Full scope audit 95% 94% 98%
Audit procedures over one or more account balances
and/or disclosures 2% 0% 1%
Review of financial information 3% 6% 1%
The audit of the component financial information was performed by the same group
engagement team under the group engagement partner’s direct supervision. Component
materiality ranges from between £0.3m to £3.2m.
At the parent company level, the group audit team also tested the consolidation process and
carried out analytical procedures to confirm our conclusion that there were no significant risks
of material misstatement of the aggregated financial information.
Other information
The other information comprises the information included in the annual report other than the
financial statements and our auditor’s report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained
in the course of audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Card Factory Plc
Governance Financial StatementsStrategic Report
121
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year
for which the financial statements are prepared is consistent with the financial statements
and those reports have been prepared in accordance with applicable legal requirements;
• the information about internal control and risk management systems in relation to financial
reporting processes and about share capital structures, given in compliance with rules 7.2.5
and 7.2.6 in the Disclosure Guidance and Transparency Rules sourcebook made by the
Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and
has been prepared in accordance with applicable legal requirements; and
• information about the parent company’s corporate governance code and practices and
about its administrative, management and supervisory bodies and their committees
complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements
in the:
• strategic report or the directors’ report; or
• information about internal control and risk management systems in relation to financial
reporting processes and about share capital structures, given in compliance with rules 7.2.5
and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the parent company financial statements and the part of the directors’ remuneration report
to be audited are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a corporate governance statement has not been prepared by the parent company.
Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement relating
to CardFactory Plc’s compliance with the provisions of the UK Corporate Governance
Statementspecified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with the
financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified, set out on page 130;
• Directors’ explanation as to its assessment of the entity’s prospects, the period this
assessment covers and why they period is appropriate, set out on page 130;
• Directors’ statement on fair, balanced and understandable, set out on page 115;
• Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks, set out on page 115;
• The section of the annual report that describes the review of effectiveness of risk
management and internal control systems, set out on page 78; and;
• The section describing the work of the audit committee, set out on page 80.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on page 115, the
directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and
the parent 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 group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Card Factory plc Annual Report and Accounts 2024122
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
Based on our understanding of the group and the parent company and their industry, we
considered that non-compliance with the following laws and regulations might have a material
effect on the financial statements: employment regulation, health and safety regulation, anti-
money laundering regulation, non-compliance with implementation of government support
schemes relating to COVID-19 and data protection.
To help us identify instances of non-compliance with these laws and regulations, and in
identifying and assessing the risks of material misstatement in respect to non-compliance, our
procedures included, but were not limited to:
• Gaining an understanding of the legal and regulatory framework applicable to the group
and the parent company, the industry in which they operate, and the structure of the group,
and considering the risk of acts by the group and the parent company which were contrary
to the applicable laws and regulations, including fraud;
• Inquiring of the directors, management and, where appropriate, those charged with
governance, as to whether the group and the parent company is in compliance with laws
and regulations, and discussing their policies and procedures regarding compliance with
laws and regulations;
• Inspecting correspondence with relevant licensing or regulatory authorities;
• Reviewing minutes of directors’ meetings in the year; and
• Discussing amongst the engagement team the laws and regulations listed above, and
remaining alert to any indications of non-compliance.
We also considered those laws and regulations that have a direct effect on the preparation of
the financial statements, such as tax legislation, pension legislation, the Companies Act 2006.
In addition, we evaluated the directors’ and management’s incentives and opportunities for
fraudulent manipulation of the financial statements, including the risk of management override
of controls, and determined that the principal risks related to posting manual journal entries
to manipulate financial performance, management bias through judgements and assumptions
in significant accounting estimates, in particular in relation to the estimate of stock lines that
may require writing down to realisable value, revenue recognition (which we pinpointed to the
occurrence of stores and online revenue), and significant one-off or unusual transactions.
Our procedures in relation to fraud included but were not limited to:
• Making enquiries of the directors and management on whether they had knowledge of any
actual, suspected or alleged fraud;
• Gaining an understanding of the internal controls established to mitigate risks related
tofraud;
• Discussing amongst the engagement team the risks of fraud;
• Addressing the risks of fraud through management override of controls by performing
journal entry testing;
• Seeking disconfirming evidence by obtaining external records to assess management
assumptions against.
• Incorporating an element of unpredictability in the selection of the nature, timing, and extent
of audit procedures performed.
• Including the use of data analytics to identify outliers in testing performed.
The primary responsibility for the prevention and detection of irregularities, including fraud,
rests with both those charged with governance and management. As with any audit, there
remained a risk of non-detection of irregularities, as these may involve collusion, forgery,
intentional omissions, misrepresentations or the override of internal controls.
The risks of material misstatement that had the greatest effect on our audit are discussed in the
“Key audit matters” section of this report.
A further description of our responsibilities is available on the Financial Reporting Council’s
website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Card Factory Plc
Governance Financial StatementsStrategic Report
123
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the Audit
and Risk committee on 3 May 2023 to audit the financial statements for the year ending
31January2024 and subsequent financial periods. The period of total uninterrupted
engagement is 1 year, covering the years ending 1 February 2023 to 31 January 2024.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group
or the parent company and we remain independent of the group and the parent company in
conducting our audit.
Our audit opinion is consistent with our additional report to the audit committee.
Use of the audit report
This report is made solely to the company’s members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required to state to them in an auditor’s
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 and the company’s members as a
body for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules,
these financial statements will form part of the electronic reporting format prepared annual
financial report filed on the National Storage Mechanism of the Financial Conduct Authority.
This auditor’s report provides no assurance over whether the annual financial report will be
prepared using the correct electronic reporting format.
Charlene Lancaster (Senior Statutory Auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
One St Peter’s Square
Manchester
M2 3DE
30 April 2024
Card Factory plc Annual Report and Accounts 2024124
CONSOLIDATED INCOME STATEMENT
For the year ended 31 January 2024
20242023
Note£m£m
Revenue
2
510.9
463.4
Cost of sales
(326.0)
(302 .7)
Gross profit
1 84 .9
1 60.7
Other operating income
22
2.0
–
Operating expenses
3
(110. 5)
(9 6 .9)
Operating profit
3
76 . 4
63.8
Gain on bargain purchase
30
2.6
–
Finance expense
6
(13 .4)
(11 .4)
Profit before tax
65.6
52 .4
Taxation
7
(1 6.1)
(8 .2)
Profit for the year
49. 5
44. 2
Earnings per share
pence
pence
– Basic
9
14. 4
1 2 .9
– Diluted
9
14 .3
12.8
All activities relate to continuing operations.
20242023
£m£m
Profit for the year
49. 5
44. 2
Items that may be recycled subsequently into profit
or loss:
Exchange differences on translation of foreign
operations
(0. 5)
(0. 2)
Cash flow hedges – changes in fair value
24
(2 .9)
8.2
Cost of hedging reserve – changes in fair value
24
0 .1
(0. 2)
Tax relating to components of other comprehensive
income
13
0. 7
(1. 2)
Other comprehensive income for the period, net of
incometax
(2. 6)
6.6
Total comprehensive income for the period attributable
toequity shareholders of the parent
4 6.9
50. 8
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 January 2024
Governance Financial StatementsStrategic Report
125
20242023
Note£m£m
Non-current assets
Intangible assets
10
331.4
326. 3
Property, plant and equipment
11
4 5.9
32. 2
Right of use assets
12
9 9. 2
100. 5
Deferred tax assets
13
1.2
2 .1
Derivative financial instruments
24
0.6
0. 5
478 .3
4 61 . 6
Current assets
Inventories
14
50.0
45.3
Trade and other receivables
15
11.6
13 .3
Derivative financial instruments
24
0 .9
5. 3
Cash at bank and in hand
16
11 .3
11 .7
73.8
75 .6
Total assets
5 52 .1
5 3 7. 2
Current liabilities
Borrowings
17
(7.1)
(2 7. 1)
Lease liabilities
12
(25 .3)
(2 7. 3)
Trade and other payables
18
(80 .1)
(84. 7)
Provisions
22
(7. 5)
(9. 5)
Tax payable(0. 4)–
Derivative financial instruments
24
(1 .7)
(1. 4)
(1 2 2 .1)
(150.0)
20242023
Note£m£m
Non-current liabilities
Borrowings
17
(3 7.9)
(4 0. 4)
Lease liabilities
12
(75 .5)
(78 .1)
Derivative financial instruments
24
(0.8)(0.5)
(114. 2)
(1 19. 0)
Total liabilities
(23 6. 3)
(2 69. 0)
Net assets
315.8
268 .2
Equity
Share capital
19
3.5
3.4
Share premium
19
2 02. 7
202 .2
Hedging reserve
(0. 6)
3.5
Cost of hedging reserve
–
(0.1)
Reverse acquisition reserve
(0. 5)
(0. 5)
Merger reserve
2.7
2.7
Retained earnings
1 08.0
5 7. 0
Equity attributable to equity holders of the parent
315.8
26 8. 2
The financial statements on pages 124 to 154 were approved by the Board of Directors on
30 April 2024 and were signed on its behalf by
Darcy Willson-Rymer
Chief Executive Officer
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 January 2024
Card Factory plc Annual Report and Accounts 2024126
Reverse
Share Share Hedging Cost of hedging acquisition Merger Retained Total
capitalpremiumreservereservereservereserveearnings equity
£m£m£m£m£m£m£m£m
At 31 January 2022
3. 4
202 . 2
1.3
–
(0. 5)
2.7
1 0.5
2 1 9. 6
Total comprehensive income for the period
Profit or loss
–
–
–
–
–
–
44. 2
44.2
Other comprehensive income
–
–
6 .1
(0.1)
–
–
0. 6
6.6
–
–
6 .1
(0.1)
–
–
4 4.8
50. 8
Hedging gains/(losses) and costs of hedging transferred to the cost of inventory
–
–
(5. 2)
–
–
–
–
(5. 2)
Deferred tax on transfers to inventory
–
–
1.3
–
–
–
–
1.3
Transactions with owners, recorded directly in equity
Share-based payment charges (note 25)
–
–
–
–
–
–
1 .7
1 .7
Dividends (note 8)
–
–
–
–
–
–
–
–
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
5 7. 0
26 8.2
Total comprehensive income for the period
Profit or loss
–
–
–
–
–
–
49. 5
4 9.5
Other comprehensive income
–
–
(2 .2)
0.1
–
–
(0. 4)
(2 .5)
–
–
(2 . 2)
0 .1
–
–
4 9.1
4 7. 0
Hedging gains/(losses) and costs of hedging transferred to the cost of inventory
–
–
(2 . 5)
–
–
–
–
(2 . 5)
Deferred tax on transfers to inventory
–
–
0.6
–
–
–
–
0.6
Deferred tax related to Share-based payments
–
–
–
–
–
–
(0. 2)
(0. 2)
Transactions with owners, recorded directly in equity
Shares issued (note 19)
0 .1
0. 5
–
–
–
–
–
0.6
Share-based payment charges (note 25)
–
–
–
–
–
–
2 .1
2 .1
Dividends (note 8)
–
–
–
–
–
–
–
–
Total contributions by and distributions to owners
0 .1
0. 5
–
–
–
–
2 .1
2 .7
At 31 January 2024
3.5
202 .7
(0 .6)
–
(0.5)
2.7
1 08 .0
315. 8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 January 2024
Governance Financial StatementsStrategic Report
127
20242023
Note£m£m
Cash from operations
20
118 .7
1 0 7. 8
Corporation tax paid
(13. 5)
(7. 9)
Net cash inflow from operating activities
105.2
9 9.9
Cash flows from investing activities
Purchase of property, plant and equipment
11
(1 8. 8)
(8 .8)
Purchase of intangible assets
10
(9.0)
(9. 4)
Acquisition of SA Greetings net of cash acquired
30
(2 .2)
Net cash outflow from investing activities
(30 .0)
(1 8. 2)
Cash flows from financing activities
Interest paid on bank borrowings
6
(6 . 5)
(6 . 2)
Proceeds from bank borrowings
21
1 67. 0
2 7. 8
Repayment of bank borrowings
21
(190 .6)
(7 2 .9)
Other financing costs paid
6
–
(1 .8)
Shares issued under employee share schemes
25
0.6
–
Payment of lease liabilities
21
(3 7. 5)
(52 .5)
Interest paid in respect of lease liabilities
21
(6 .2)
(4 .5)
Net cash outflow from financing activities
(73. 2)
(110.1)
Impact of changes in foreign exchange rates
(0.8)
–
Net increase/(decrease) in cash and cash equivalents
1.2
(2 8. 4)
Cash and cash equivalents at the beginning of the year
9.9
38.3
Closing cash and cash equivalents
16
1 1 .1
9.9
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 January 2024
1 Accounting policies
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, Wakefield 41 Industrial Estate, Wakefield WF2 0XG.
These consolidated financial statements consolidate the financial statements of the Company
and its subsidiaries (together referred to as the ‘Group’). A full list of the Group’s subsidiaries is
provided in note 4 to the Parent Company accounts.
The principal activities of the Group and the nature of the Group’s operations are as a vertically
integrated, omnichannel retailer of cards, gifts and celebration essentials.
These financial statements are presented in Sterling, which is also the Company’s functional
currency, and are rounded to the nearest million. Foreign operations are included in accordance
with the policies set out within this note.
Throughout these financial statements, references to ‘FY24’ refer to the financial year ended 31
January 2024, and references to ‘FY23’ refer to the financial year ended 31 January 2023.
Basis of preparation
These financial statements have been prepared in accordance with UK-adopted International
Accounting Standards (‘UK IFRS’), applicable law and with the requirements of the Companies
Act 2006.
The financial statements have been prepared on a going concern basis. In adopting the going
concern basis, the Board has considered the financial position of the Group, its cash flows,
liquidity position and borrowing facilities as set out in CFO’s review on pages 56 to 63.
The financial statements have been prepared under the historical cost convention, except
for certain assets and liabilities that are measured at fair value (including derivative financial
instruments and assets and liabilities valued as part of the acquisition of SA Greetings).
Accounting judgements and estimates
The preparation of financial statements in conformity with UK IFRS requires judgement to be
applied in forming the Group’s accounting policies. It also requires the use of estimates and
assumptions that affect the reported amount of assets, liabilities, income and expenses. Actual
results may subsequently differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates
are recognised prospectively in the period in which the estimate is revised.
Judgements are also reviewed on an ongoing basis to ensure they remain appropriate. The
Group does not consider there to be any judgements made in the current period that have had
a significant material effect on the amounts recognised in the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
Card Factory plc Annual Report and Accounts 2024128
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Key sources of estimation uncertainty
The key sources of estimation uncertainty, being those estimates and assumptions that carry
the most significant risk of a material adjustment to the carrying amounts of assets and
liabilities in the next financial year, are set out below.
Inventory provisioning
The Group holds significant volumes, and a broad range of inventory. The inventory provision
is calculated in accordance with a documented policy, that is based on historical experience
and the Group’s stock management strategy, which determines the range of product that
will be available for sale in-store and online. The Group provides against the carrying value
of inventories where it is anticipated the amount realised may be below the cost recognised.
Provision is made in full where there are no current plans to trade prior season stock through
stores, and partial provision is made against seasonal stock from prior seasons or where certain
ranges do not perform as anticipated. The amounts provided for partial provisions are adjusted
annually to reflect experience.
In FY24, the Group applied a consistent inventory provisioning policy with that applied in
the prior year, making only small amendments to partial provisioning percentages based on
the Group’s experience of stock sell through rates for partially provided product lines. These
changes are not considered to have had a material impact on the overall value of the provision,
although reduced the value of the provision compared to the prior year.
At the end of FY24, the total inventory provision was £9.6 million (FY23: £16.1 million), comprised
of fully-provided stock lines of £1.3 million and partially provided lines of £8.3 million.
The reduction in the value of the provision year-on-year generally reflects the continued
normalisation of stock levels following the Covid pandemic as well as the reduction due to
changes in provisioning percentages as a result of higher sell through rates in FY24 compared
with the prior year. As a result, the overall proportion of gross inventory provided for reduced
compared to the prior year.
The full range of reasonably possible outcomes in respect of the provision is difficult to calculate
at the balance sheet date as it is dependent on the accuracy of forecasts for sales volumes and
future decisions we may take on aged, discontinued and potentially excess stock in response
to market and supply developments. The Group believes it has taken a balanced approach
in determining the provision. It has considered the nature of the estimates involved and has
concluded that it is possible, on the basis of existing knowledge, that outcomes within the next
financial year may be different from the Group’s assumptions applied as at 31 January 2024,
and could require a material adjustment to the carrying amount of the provision in the next
financial year.
The element of the provision which is most sensitive to estimation is the percentages applied
to the various categories of stock in stores and distribution centres. A 5% change in the
percentages applied to each category would cause a +/-£0.7 million movement in the overall
value of the provision.
Other sources of estimation uncertainty
Grant income
During the Covid-19 pandemic, the Group received financial assistance under various Government
schemes intended to support businesses affected by local and national restrictions, including CJRS
payments, business rates relief and lockdown grant payments. IAS 20 requires that the Group has
reasonable assurance that the various conditions attached to Government grants will be complied
with before recognising the income in its financial statements. Income received under the lockdown
grant schemes is subject to conditions applied by the UK’s subsidy control regime, in addition to the
rules and conditions attached to each individual grant. The most material of these conditions relate
to determining the eligible period for grant receipts and the calculation of the Group’s ‘uncovered
fixed costs’ in the eligible period, upon which the value of permitted relief is based. The nature of
the grants received, and the unprecedented nature of the pandemic and the support mechanisms
available, means the conditions and rules attached to each payment are complex and open to a
degree of interpretation at the balance sheet date. Accordingly, the Group had to make certain
assumptions regarding which of the payments received it is reasonably certain to have met all of
the conditions for, and thus that the grants are unlikely to be repaid in a future period.
After making a provision for amounts the Group does not believe meet the above criteria (see
note 22), the Group recognised £8.0 million of other operating income in relation to such grants
received during FY22.
In July 2022, following an unprompted disclosure to HMRC and resulting investigation, the
Group made a payment of £2.3 million in final settlement of its CJRS position. As a result of
this settlement, the Group released a further £2.5 million from the provision that is no longer
expected to be required, as the matter is now closed. This release was recognised as a one-off
benefit in the income statement in FY23.
Subsequent to the balance sheet date, the Group has reached a proposed settlement with the
Department for Business and Trade for a portion of the provision that relates to business support
grants received by the Group during FY21 and FY22. The value of the proposed settlement is
£3.3 million and following a review of the residual position, the Group has released a further £2.0
million from the provision which reflects a proportionate reduction in the value of the provision
for the amounts still to be settled. This release has been recognised as a one-off benefit in other
operating income in the FY24 income statement. The business support grants settlement of £3.3
million was paid in April 2024.
The Group continues to hold discussions regarding settlement of the remaining element of the
provision and to date has received no new substantive evidence regarding its position in respect
of other support received relating to business rates relief. A further provision of £2.2 million is
held at the balance sheet date in respect of potential repayment of support received in excess
of subsidy control thresholds for business rates relief, consistent with the nature of the provision
held in the prior year. The minimum requirement for this element of the provision is expected to be
£1.2 million, subject to interpretation of the guidance relating to individual support schemes and
subsidy control thresholds. The Group believes a range of reasonably possible outcomes remains
and that the Group’s provision reflects a reasonable assessment of the amount that may be
repayable. The Group does not believe that any position within the range of reasonably possible
outcomes would reflect a material change to the provision held at the balance sheet date.
Governance Financial StatementsStrategic Report
129
1 Accounting policies continued
Other sources of estimation uncertainty continued
Impairment testing
An impairment review is conducted annually in respect of goodwill, and as required for other
assets and cash-generating units (‘CGUs’) where an indicator of potential impairment exists.
The carrying amounts of the assets involved and the level of estimation uncertainty inherent
in determining appropriate assumptions for the calculation of the assets’ recoverable amounts
means impairment reviews are an area of significant management focus. However, whether that
estimation uncertainty is significant to the financial statements is not known until the analysis is
concluded. The Group generally considers the estimation uncertainty in impairment reviews to
be significant if a reasonably possible change in the key assumptions would lead to a material
change in the accounting outcome.
Goodwill
In FY24, the Group conducted an impairment review in respect of goodwill. The carrying amount
of goodwill in the consolidated balance sheet of £313.8 million is allocated in its entirety to the
group of CGUs, shared assets and functions that comprise the Group’s Stores business and
noted no reasonably possible change in assumptions that would lead to a material change in
the accounting outcome.
Right of use assets and tangible assets
In addition, the Group conducted a store-level impairment review specifically covering right-of-
use assets and property, plant and equipment insofar as they are directly allocable to stores. As
below, the Group estimates the value in use of ROU and tangible assets at a store level based
on future cash flows derived from forecasts included within the Group’s approved budget.
The Group assesses indicators of impairment for the store portfolio on the basis of whether a
material impairment charge (or reversal) could arise in respect of the store portfolio as a whole
in the period. Due to the challenging macro-economic environment, existence of a material
carried forward impairment charge, and an ongoing expectation that around 1% of the store
portfolio can be loss-making at any time, the Group concluded this condition was met for FY24.
Intangible assets
Due to the existence of intangible assets that are not yet ready for use, the Group also
conducted an impairment test of each of the Card Factory Online and Getting Personal CGUs.
Approach and results
The Group assessed the recoverable amount of these CGUs on a value in use basis, using
consistent assumptions across all reviews where applicable, with estimates of future cash
flows derived from forecasts included within the Group’s approved budget adjusted to exclude
cash flows from new stores and initiatives so as to assess the assets in their current state and
condition. Where impairment reviews are prepared in respect of assets not yet ready for use,
future development costs and revenues are not excluded so as to fairly reflect the value of
the assets being developed and costs to complete. The assessment of future cash flows that
underpin such impairment reviews inherently require the use of estimates, notably in respect
of future revenues, operating costs including material, freight, wage and energy inflation,
terminal growth rates, foreign currency exchange rates, and discount rates. The results of the
impairment tests are set out in note 10 (intangible assets) and note 12 (leases) which includes
the key assumptions considered. The impairment test in respect of the Stores business and Card
Factory Online had significant headroom and accordingly, having undertaken scenario analysis
on the key assumptions, the Group does not believe there are any reasonably possible changes
in those key assumptions that would lead to a material impairment. The impairment tests show
that reasonably possible changes in the assumptions relating to the Online assets could lead
to an immaterial impairment charge in the future if Online sales do not grow in line with our
expectations in future years.
The Group recorded a net nil impairment charge in respect of stores, which is comprised
of £2.7 million of impairment charges and £2.7 million of impairment charge reversals. The
reversals reflect those stores where an impairment charge made in a prior period has been
reversed due to improved trading and outlook. The net impairment charge in the current year
included a net reversal to impairment on Right of use assets of £0.2 million and a net charge
to PPE of £0.2 million. Having considered scenarios consistent with those reviewed in respect
of goodwill impairment testing, the Group is satisfied that reasonable changes in the key
assumptions would not materially change the impairment charge for stores.
The Group booked an impairment charge in respect of intangible assets of £1.1 million. The
charge relates to costs incurred in developing the Online Platform within the Getting Personal
CGU that is considered to be impaired as a result of the expected future cash flows expected to
be derived from the Getting Personal CGU. Although an impairment has been recorded against
the intangible asset carrying value, the Getting Personal platform continues to trade and
provides valuable support to the overall strategy of growing online sales across both platforms
and makes an important contribution to total online sales volumes. The Group’s strategic focus
online continues to be the CF Online platform where the Group is investing and is encouraged
by recent positive LFL (Like-for-like) sales performance.
Climate change
The Group has reviewed the potential impact of climate change and ESG-related risks and
uncertainties on the consolidated financial statements. Given the nature of the Group’s business
and operations, the exposure to both physical and transitional risks associated with climate
change is considered to be low.
In particular, the Group has considered climate change in respect of impairment testing
(potential impact of climate and ESG risks on estimates of future cash flows, notes 10 and 11),
going concern (note 1, below), and inventory provisions (impact of customer preferences and
ESG considerations on potential stock obsolescence, note 14 and above) and concluded in each
case that there is no material impact in each area at 31 January 2024.
Card Factory plc Annual Report and Accounts 2024130
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Going concern basis of accounting
The Board continues to have a reasonable expectation that both the Group and the Parent
Company have adequate resources to continue in operation for at least the next 12 months
and that the going concern basis of accounting remains appropriate.
The Group has delivered a strong financial performance in the current financial year, with
encouraging sales momentum in the second full year of trading after two consecutive years that
were materially affected by the Covid-19 pandemic. LFL sales have been positive and the Group
has delivered robust operating cash flows allowing the Group to reduce net debt and leverage
year-on-year. Trading since the balance sheet date has remained in line with expectations
and there have been no material events that have adversely affected the Group’s liquidity
headroom.
The Group’s financing facilities at the balance sheet date (see note 17) extended to September
2025 which covers a period greater than the minimum assessment period of 12 months from the
date of approval of the financial statements. Subsequent to the year end, on 26 April 2024, the
Group entered into an updated £125 million revolving credit facility with an initial term to April
2028 (see note 17). The Board believes that the updated facilities provide adequate headroom
for the Group to execute its strategic plan. At 31 January 2024, net debt (excluding lease
liabilities) was £34.9 million and the Group had £74.0 million of undrawn facilities.
The UK Corporate Governance Code requires that an assessment is made of the Group’s
ability to continue as a going concern for a period of at least 12 months from the signing
of these financial statements; however it is not specified how far beyond 12 months should
be considered. For the purpose of assessing the going concern assumption, the Group has
prepared cash flow forecasts for the 12 month period following the date of approval of these
accounts, which incorporate the updated debt facilities and related covenant measures. These
forecasts are extracted from the Group’s approved budget and strategic plan which covers a
period of five years. Within the 12-month period, the Group has considered qualitative scenarios
and the Group’s ability to operate within its existing banking facilities and meet covenant
requirements. Beyond the 12-month period, the Group has qualitatively considered whether
any factors (for example the timing of debt repayments, or longer-term trading assumptions)
indicate a longer period warrants consideration.
The results of this analysis were:
• The Group’s base case forecasts indicate that the Group will continue to trade profitably,
generate positive operating cash flows and retain substantial liquidity headroom against
facility limits and meet all covenant requirements on the relevant test dates (see note 17 for
more information in respect of covenant requirements) in the 12-month period.
• In the Board’s view, there are no other factors arising in the period immediately following 12
months from the date of signing these accounts that warrant further consideration.
• Scenario analysis, which considered a reduction in sales, profitability and cash flows on both
a permanent basis of circa 10%, or a significant one-off event affecting the Christmas period
and reducing sales by 25%, indicated that the Group would maintain liquidity headroom and
covenant compliance throughout the 12-month period. The analysis did not consider any
potential upside from mitigating actions that could be taken to reduce discretionary costs
and provide further headroom.
In addition, the Group conducted a reverse stress test analysis which considered the extent of
sales loss or cost increase that would be required to result in either a complete loss of liquidity
headroom or a breach of covenants associated with the Group’s financing. Seasonality of the
Group’s cash flows, with higher purchases and cash outflows over the summer to build stock for
Christmas, means liquidity headroom is at its lowest in September and October ahead of the
Christmas season. Conversely, covenant compliance is most sensitive early in the year.
The reverse stress test analysis demonstrated that the level of sales loss or cost increase
required (either on a sustained basis or as a significant one-off downside event) to result
in either a covenant breach or exhausting liquidity would require circumstances akin to a
pandemic lockdown for a period of several weeks, or other events with a similar quantum of
effect that would be unprecedented in nature. Accordingly, such scenarios are not considered
to be reasonably likely to occur. Such scenarios, in excess of the scenarios considered above,
are not considered reasonably plausible and the analysis did not consider any potential upside
from mitigating actions that could be taken to reduce discretionary costs and provide further
headroom or the increased headroom afforded by the new facilities agreed.
Over recent years, the business has demonstrated a significant degree of resilience and a
proven ability to manage cash flows and liquidity during a period of unprecedented economic
downturn. Accordingly the Board retains confidence that, were such a level of downturn to
reoccur in the assessment period, the Group would be able to take action to mitigate its effects.
Subsequent to the year end on 26 April 2024, the Group successfully concluded a refinancing of
its debt facilities, having agreed a new four-year £125 million committed revolving credit facility
with a syndicate of banks. The existing revolving credit facility and Term Loan B have been fully
repaid and cancelled.
The new facilities have an initial maturity date in April 2028, with options to extend by up to
19 months, subject to lender approval. The facilities include a £75 million accordion, which can
be drawn subject to lender approval. The interest margin on the facilities is dependent upon
the Group’s leverage position, with margins between 1.9-2.8% which is lower than the previous
facilities. The new facilities include covenants for a maximum leverage ratio (calculated as net
debt excluding leases divided by EBITDA less rent costs for the prior 12 months) of 2.5x and a
fixed charge cover ratio of at least 1.75x. The Group expects to operate comfortably within these
covenant levels for the foreseeable future. Based on these factors, the Board has a reasonable
expectation that the Group has adequate resources and sufficient loan facility headroom and
accordingly the accounts are prepared on a going concern basis.
Governance Financial StatementsStrategic Report
131
1 Accounting policies continued
Principal accounting policies
The principal accounting policies set out below have been applied consistently to all periods
presented in these consolidated financial statements.
Changes in significant accounting policies
The following new standards and amendments to IFRS were effective for the first time in the
current financial year:
• IFRS 17 – Insurance Contracts
• Amendments to IFRS 17 – Initial application of IFRS 17 and IFRS 9 – comparative information
• Amendments to IFRS 4 – Extension to the temporary exemption from applying IFRS 9
• Amendments to IAS 1 – Disclosure of accounting policies
• Amendments to IAS 12 – Deferred tax related to assets and liabilities arising from a single
transaction
• Amendments to IAS 12 – International Tax Reform - Pillar Two Model Rules
• Amendments to IAS 8 – Definition of accounting estimates
New standards and amendments to existing standards effective in the period have not had a
material effect on the Group’s financial statements.
UK endorsed standards and amendments issued but not yet effective
The following new standards and amendments to IFRS have been issued but are not yet
effective.
• Amendments to IFRS 16 – Lease Liability in a Sale and Leaseback
1
• Amendments to IAS 1 – Classification of Liabilities as Current or Non-Current
1
• Amendments to IAS 1 – Non-current liabilities with Covenants
1
• Amendments to IAS 7 and IFRS 7 – Supplier Finance Arrangements
1
1. Effective for annual periods starting on or after 1 January 2024.
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.
As a result, the Group has reclassified amounts due under its revolving credit facility (see note
17) as non-current on the basis that it has the right to roll over such obligations until September
2025 and is compliant with all relevant covenant requirements at the balance sheet date.
Comparatives for the year ended 31 January 2023 in these financial statements have been
restated on the same basis.
The adoption of these amendments has had no other impact on the Group’s financial
statements.
The application of the remaining standards and amendments in future periods is not currently
expected to have a material impact on the Group’s financial statements.
Basis of consolidation
These consolidated financial statements incorporate the financial results of the Company and
all of its subsidiaries made up to 31 January each year. Subsidiaries are entities controlled by
the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to direct the activities that affect those
returns through its power over the entity. The financial statements of subsidiaries are included in
the consolidated financial statements from the date on which control commences until the date
on which control ceases. Intercompany transactions and balances between Group companies
are eliminated upon consolidation.
Business combinations
Subject to the transitional relief in IFRS 1, all business combinations have historically been
accounted for by applying the acquisition method as at the acquisition date, which is the date
on which control is transferred to the Group, as set out in IFRS 3.
The Group measures goodwill at the acquisition date as the fair value of the consideration
transferred less the fair value of identifiable assets acquired and liabilities assumed. Where
net assets acquired are in excess of the fair value of consideration, a gain on bargain purchase
is recognised in the Consolidated Income Statement immediately, which is the case for the
acquisition of SA Greeting in the year. Costs related to the acquisition are expensed to the
income statement as incurred .
Acquisitions prior to 1 February 2011 (date of transition to IFRS)
IFRS 1 grants certain exemptions from the full requirements of IFRS in the transition period.
The Group and Company elected not to restate business combinations that took place prior
to 1 February 2011. In respect of acquisitions prior to the transition date, goodwill is included
at 1 February 2011 on the basis of its deemed cost at that date, which represents the amount
recorded under UK GAAP.
Card Factory plc Annual Report and Accounts 2024132
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Revenue
Group revenue is principally attributable to the retail sale of cards, dressings and gifts subject
to a single performance obligation fulfilled by receipt of goods at the point of payment with
minimal returns and refunds. Revenue is recognised at the point the customer is deemed to
have taken delivery of the goods.
Revenue attributable to online sales is recognised on delivery of goods to the customer.
Revenue attributable to retail partners and non-retail customers currently represents a small
percentage of Group revenue and revenue is typically recognised at a point in time based on
a single performance obligations supplying standard Group products. The single performance
obligation varies by Partnership agreement, including from the point of dispatch to delivery
to end customer. Payment terms for retail partners are typically 30-60 days from invoicing.
Payment terms for wholesale revenue are typically 30-90 days from invoicing.
Certain contracts with retail partners may be subject to a cost of entering into the contract
along with a minimum order quantity and/or volume-related rebate for an initial period of the
contract. These contracts also give rise to performance-based variable consideration including
license and franchise fees. These amounts are not material in the current year reflecting the small
proportion of revenue arising under such contracts.
Government grants
Income associated with Government support initiatives is recognised where there is reasonable
assurance that the grant will be received and the Group will comply with all attached
conditions. Grants are recognised in the income statement over the period necessary to match
them with the related costs for which they are to compensate. If costs have already been
incurred, the grant income is recognised immediately at the point the above criteria are met.
In addition, the Group has accessed financing facilities under the Coronavirus Large Business
Interruption Loan Scheme (CLBILS). The CLBILS facilities are backed by a government
guarantee. As this guarantee cannot reasonably have a value placed upon it, the Group
considers the guarantee a form of government assistance under IAS 20. The Group has
accounted for its CLBILS facilities in accordance with its usual policy for bank borrowings,
described below under ‘non-derivative financial liabilities’. The key terms of the CLBILS facilities
are described in note 17 and this facility has been repaid in full as at 31 January 2024.
Finance expense
Finance expense comprises interest charges, including interest on leases under IFRS 16, and
losses on interest rate derivative financial instruments. Borrowing costs that are directly
attributable to the acquisition, construction or production of an asset that takes a substantial
time to be prepared for use, are capitalised as part of the cost of that asset. Interest expense
is recognised in the income statement as it accrues, using the effective interest method. The
effective interest method takes into account fees, commissions or other incremental transaction
costs integral to the yield. Accounting policies for leases are detailed separately.
Cash and cash equivalents
Cash and cash equivalents includes short-term deposits with banks and other financial
institutions, cash held in stores in the form of till floats, money market funds and credit card
payments where cash is received into the bank within 2 working days of the transaction. Bank
transactions are recorded on their settlement date.
Foreign currencies
Functional and presentation currency
The consolidated financial statements are presented in pound Sterling, which is the functional
currency of the Company.
Foreign operations
The Group has one foreign subsidiary with a Euro functional currency. On consolidation,
assets and liabilities of foreign operations are translated into Sterling at the prevailing market
exchange rate on the balance sheet date. The results of foreign operations are translated into
Sterling at average rates of exchange for the year.
Transactions and balances
The Group has currency transactions in respect of inventory purchases and certain sales to retail
partners that are denominated in US Dollars. Transactions in foreign currencies are recorded
at the exchange rate on the transaction date. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in foreign currencies are recognised in the
income statement within cost of sales, except when deferred in other comprehensive income as
qualifying cash flow hedges. Foreign currency gains and losses are reported on a net basis.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in
the income statement except to the extent that it relates to items recognised directly in equity
or through other comprehensive income, in which case it is recognised in equity or other
comprehensive income respectively. Current tax is the expected tax payable or receivable on
the taxable income or loss for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: the initial recognition of goodwill; the
initial recognition of assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination, and differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will
be available against which the temporary difference can be utilised.
Governance Financial StatementsStrategic Report
133
1 Accounting policies continued
Dividends
Dividends are recognised as a liability in the period in which they are approved.
Financial instruments
Non-derivative financial assets
Non-derivative financial assets comprise trade and other receivables and cash and cash
equivalents. The Group classifies all its non-derivative financial assets as financial assets at
amortised cost. Financial assets at amortised cost are initially measured at fair value plus
directly attributable transaction costs, except for trade and other receivables without a
significant financing component that are initially measured at transaction price. Subsequent to
initial recognition non-derivative financial assets are carried at amortised cost less allowances
for expected credit losses.
Cash and cash equivalents comprise cash in hand, at bank and on short-term deposit for less
than three months. Bank overdrafts, within borrowings, that are repayable on demand and form
an integral part of the Group’s cash management are included as a component of cash and
cash equivalents for the purpose of the cash flow statement.
Non-derivative financial liabilities
Non-derivative financial liabilities comprise bank borrowings and trade and other payables.
Non-derivative financial liabilities are initially recognised at fair value, less any directly
attributable transaction costs and subsequently stated at amortised cost using the effective
interest method. Accounting policies for lease liabilities are detailed separately.
Where bank borrowings are refinanced, the Group assesses whether the transaction results
in new facilities or a modification of the previous facilities. Where the transaction results in a
modification of the facilities, the Group assesses whether that modification is substantial by
reference to whether the present value of the cash flows of the new facilities is more than 10%
different to the present value of the cash flows of the previous facilities. Where a modification
is substantial, the Group derecognises the original liability and recognises a new liability for the
modified facilities with any transaction costs expensed to the income statement. Where the
modification is non-substantial, the Group amends the carrying amount of the liability to reflect
the updated cash flows and amends the effective interest rate from the modification date.
The modification of the Group’s borrowings as a result of the refinancing in April 2022 was
assessed to be non-substantial.
Derivative financial instruments
Derivative financial instruments are mandatorily categorised as fair value through profit or loss
(‘FVTPL’) except to the extent they are part of a designated hedging relationship and classified
as cash flow hedging instruments.
The Group utilises foreign currency derivative contracts and US Dollar denominated cash
balances 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.
Derivative financial instruments not designated as an effective hedging relationship principally
relate to structured foreign exchange options that form part of the foreign exchange risk
management policy detailed in note 23 of the financial statements. Gains and losses in respect
of foreign exchange and interest rate derivative financial instruments that are not part of an
effective hedging relationship are recognised within cost of sales and net finance expense.
Cash flow hedges
The Group applies cash flow hedge accounting in respect of certain derivative financial
instruments for the forward purchase of foreign currency, and interest rate swaps. The Group’s
hedging activities are described in further detail in note 23.
When a derivative is designated as a cash flow hedging instrument, the effective portion of
changes in the fair value of the derivative is recognised in other comprehensive income (‘OCI’)
and accumulated in the hedging reserve. The effective portion of changes in the fair value of
the derivative that is recognised in OCI is limited to the cumulative change in fair value of the
hedged item, determined on a present value basis, from inception of the hedge. Any ineffective
portion of changes in the fair value of the derivative is recognised immediately in profit or loss.
The Group determines the existence of an economic relationship between the hedging
instrument and hedged item based on the currency, amount and timing of their respective cash
flows, applying a hedge ratio of 1:1. The Group assesses whether the derivative designated in
each hedging relationship is expected to be and has been effective in offsetting changes in
cash flows of the hedged item using the hypothetical derivative method.
In these hedge relationships, the main sources of ineffectiveness are:
• changes in the timing of the hedged transactions; and
• the effect of the counterparties’ and the Group’s own credit risk on the fair value of derivative
contracts, which is not reflected in the change in the fair value of the hedged cash flows.
The Group designates only the change in fair value of the spot element of forward exchange
contracts as the hedging instrument in cash flow hedging relationships. The change in fair value
of the forward element of forward exchange contracts (‘forward points’) is separately accounted
for as a cost of hedging and recognised in a costs of hedging reserve within equity.
When foreign exchange hedged forecast transactions subsequently result in the recognition of
inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve is
included directly in the initial cost of the inventory.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is
sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively.
When hedge accounting for cash flow hedges is discontinued, the amount that has been
accumulated in the hedging reserve remains in equity until it is included in the cost of inventory
on its initial recognition or, for interest cash flow hedges, it is reclassified to profit or loss in the
same period or periods as the hedged interest future cash flows affect profit or loss .
Card Factory plc Annual Report and Accounts 2024134
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Derivative financial instruments continued
Cash flow hedges continued
If the hedged future cash flows are no longer expected to occur, then the amounts that have
been accumulated in the hedging reserve and the cost of hedging reserve are immediately
reclassified to profit or loss .
Fair value estimation
The techniques applied in determining the fair values of financial assets and liabilities are
disclosed in note 24.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and
accumulated impairment losses.
Depreciation is charged to the income statement on a straight-line basis over the estimated
useful lives as follows:
• Buildings 25 – 50 years
• Leasehold improvements shorter of 5 years and lease term
• Plant and equipment, fixtures and fittings 3 – 10 years
• Motor vehicles 4 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
Depreciation on assets under construction does not commence until they are complete and
available for use and the asset has been classified into one of the categories as above.
Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to
CGUs (as described in note 10) and is not amortised but is tested annually for impairment.
Software
Computer software is carried at cost less accumulated amortisation and any provision
for impairment. Costs relating to development of computer software are capitalised if the
recognition criteria of IAS 38 ‘Intangible Assets’ are met or expensed as incurred otherwise.
Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated
amortisation and less accumulated impairment losses.
Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated
useful lives of intangible assets unless such lives are indefinite. Intangible assets with an
indefinite useful life and goodwill are systematically tested for impairment at each balance
sheet date. Other intangible assets are amortised from the date they are available for use.
The estimated useful life of software is three to ten years.
Impairment of non-financial assets
The carrying values of non-financial assets are reviewed for impairment where there is
an indication of impairment. If an impairment loss arises, the asset value is adjusted to its
estimated recoverable amount and the impairment loss is recognised in the income statement.
Similarly, if an impairment reversal arises, the asset value is adjusted to its carrying amount,
provided this exceeds the recoverable amount, and the impairment reversal is recognised in the
income statement.
Goodwill and intangible assets not yet ready for use or with an indefinite useful economic life
are reviewed for impairment annually.
Provisions
A provision is recognised where the Group has a present legal or constructive obligation as a
result of a past event, which will more likely than not result in the Group being required to make
a payment (or other outflow of economic benefits) in order to settle the obligation.
Provisions are valued at the Group’s best estimate of the amount that will be required to settle
the obligation.
Specific information in respect of the provisions recorded in each financial year covered by
these accounts is provided in the provisions note.
Inventories
Inventories are stated at the lower of cost and net realisable value.
For inventories manufactured by the Group, cost is based on the first-in first-out principle and
includes expenditure incurred in acquiring the inventories, production costs and other costs in
bringing them to their existing location and condition. For manufactured inventories and work in
progress, cost includes an appropriate share of overheads based on normal operating capacity.
Given the significant volumes involved, for inventories held in and for retail stores the Group
applies a moving average price methodology based on the cost of inventory purchases. The
moving average price is updated to reflect the latest cost each time inventory is purchased.
Intra-Group profit on inventory (i.e. the difference between the retail standard cost and actual
manufactured cost) is eliminated on consolidation.
Provisions are made for obsolete, slow-moving and discontinued inventories, based on
experience and the Group’s merchandising plans for current and future seasons.
Governance Financial StatementsStrategic Report
135
1 Accounting policies continued
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares are shown in equity as a deduction from the proceeds.
Merger reserve
On 30 April 2014 Card Factory plc acquired 100% of the share capital of CF Topco Limited in
a share for share exchange, thereby inserting Card Factory plc as the Parent Company of the
Group. The shareholders of CF Topco Limited became 100% owners of the enlarged share
capital of Card Factory plc. The premium arising on the issue of shares is recognised in the
merger reserve.
Share-based payments
The Company issues equity-settled share-based payments to employees within the Group
through the Card Factory Restricted Share Awards Scheme (‘RSA’) (previously through the
(‘LTIP’)) and the Card Factory SAYE Scheme (‘SAYE’), see note 25 for further details. The cost of
equity-settled share awards is measured as the fair value of the award at the grant date using
the Black-Scholes model.
The cost of the awards is expensed to the income statement, together with a corresponding
adjustment to equity, on a straight-line basis over the vesting period of the award. The total
income statement charge is based on the Group’s estimate of the number of share awards
that will eventually vest in accordance with the vesting conditions. The awards do not include
market-based vesting conditions. At each balance sheet date, the Group revises its estimate of
the number of awards that are expected to vest. Any revision to estimates is recognised in the
income statement, with a corresponding adjustment to equity.
Leases
Definition of a lease
Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the
use of an identified asset for a period of time in exchange for consideration.
The Group has assessed that its entire store lease portfolio, some warehousing locations, an
office location and motor vehicles are lease contracts. Other contracts assessed, 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. The Group recognises the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
For property leases containing a non-lease component (for instance a lease inclusive of rates
and service charge), the Group has elected to apply the practical expedient not to separate
the non-lease component from the lease component and treat the whole contract as a lease.
A small proportion of the store lease portfolio are subject to an element of turnover linked
variable rents that are excluded from the definition of a lease under IFRS 16. The Group does
not have any significant lessor contracts.
Accounting as a lessee
The Group recognises a right-of-use asset and a lease liability at the lease commencement
date. The right-of-use asset is initially measured at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or before the commencement date,
plus any initial direct costs incurred, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the
commencement date to the end of the lease term. The right-of-use asset is periodically reduced
by any impairment losses and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not
paid at the commencement date, discounted using the interest rate implicit in the lease or,
if that rate cannot be readily determined, the Group’s incremental borrowing rate. Typically,
the Group uses its incremental borrowing rate, at the date of lease commencement, as the
discount rate.
The Group determines its incremental borrowing rate by reference to its own funding
arrangements, which are subject to leverage margin ratchets, variable three-month SONIA
interest rates and periodic refinancing, thereby ensuring they remain a reasonable reflection of
the Group’s current borrowing costs. The Group’s leases are predominantly in respect of its store
portfolio, which represent the majority of the Group’s revenue and therefore the Group’s borrowing
costs, as at the date of lease commencement, are deemed to be representative of the incremental
borrowing costs for additions to right-of-use assets. The Group does not believe there are
significant differences between the risk margins that would apply across its lease portfolio. The
term and payment profile are reflected in the discount rate applied to each individual lease by
virtue of the variable interest-curve component of the incremental borrowing rate.
The assessment of lease term may include the application of judgement, particularly in respect
of options to break, often included in the Group’s property leases. The Group assesses lease
term as the non-cancellable period of the lease plus an assessment of reasonably certain
continued tenancy in respect of tenant options to break or renew. This period usually equates to
the full term of the lease. The Group considers that lease renewal is reasonably certain when it
has determined whether the store meets its strategic requirements and is confident the landlord
is supportive of lease renewal and on terms acceptable to the Group. This typically occurs in the
latter stages of an existing lease.
After initial recognition, the lease liability is measured at amortised cost using the effective
interest method. It is remeasured when there is a change in future lease payments arising from
a change in an index, rate or contractual market rent review or if there is a significant event or
change in circumstances as a result of which the Group changes its assessment of whether it
will exercise a break option. When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or
loss if the carrying amount of the right-of-use asset has been reduced to zero.
Card Factory plc Annual Report and Accounts 2024136
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 Accounting policies continued
Leases continued
Accounting as a lessee continued
From time to time, a lease may expire without a new lease being agreed. In such circumstances,
if the Group has not served or received notice under the terms of the lease, it may continue to
occupy the store whilst a new lease is agreed, referred to as a ‘holdover arrangement’. Most of
the store portfolio is protected by the Landlord and Tenant Act (1954), under which as tenant the
Group has an automatic right to a new lease subject to certain specific grounds under which the
landlord can cancel. Under a holdover arrangement, the lease typically continues on a rolling
basis on the same financial terms as the previous lease until new terms are formally agreed. The
Group accounts for holdover arrangements by assuming a new five-year lease with payments
equivalent to those previously agreed. Five years represents the average term of a lease
across the Group’s store portfolio, inclusive of break periods considered reasonably likely not
to be exercised. In rare circumstances, the holdover lease may be calculated using alternative
assumptions that better reflect the Group’s expectations regarding the likely cost and term of
the new lease being negotiated. When new terms are agreed, the holdover lease is modified
according to the Group’s normal accounting policy for lease modifications, as described above.
Where a lease expires at the end of its contractual term, including where the store in question
enters a holdover arrangement, the right-of-use asset cost and accumulated depreciation
associated with that lease is treated as a disposal.
2 Segmental reporting
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 30). The results of SA Greetings
have been included in the Partnerships segment for the year ended 31 January 2024.
The accounting policies applied in preparing financial information for each of the Group’s
segments are consistent with those applied in the preparation of the consolidated financial
statements. The Group’s support centre and administrative functions are run by the cardfactory
Stores segment, with operating costs recharged to other segments where they are directly
attributable to the operations of that segment.
The Board reviews revenue and EBITDA by segment, with the exception of Printcraft by virtue
of its operations being predominantly intra-group in nature. Note that under IFRS EBITDA is
considered to be a non-GAAP measure as considered in the appendix to these financial statements.
Whilst only cardfactory Stores meets the quantitative thresholds in IFRS to require disclosure, the
Group’s other trading segments are reported below as the Group considers that this information
is useful to stakeholders in the context of the Group’s ‘Opening Our New Future’ strategy.
Revenue and EBITDA for each segment, and a reconciliation to the consolidated operating
profit per the financial statements, is provided in the table below:
2024 2023
Revenue: £m £m
cardfactory Stores
478.9
440.4
cardfactory Online
8.8
8.8
Getting Personal
5.9
8.5
Partnerships
17.0
5.0
Other
0.3
0.7
Consolidated Group revenue
510.9
463.4
Of which derived from customers in the UK
484.8
451.6
Of which derived from customers overseas
26.1
11.8
2024 2023
EBITDA
1
:
£m £m
cardfactory Stores
127.4
116.1
cardfactory Online
(3.7)
(2.2)
Getting Personal
(2.0)
(1.5)
Partnerships
1.2
1.4
Other
(0.3)
(1.8)
Consolidated Group EBITDA
122.6
112.0
Consolidated Group depreciation, amortisation & impairment
(47.4)
(48.7)
Consolidated Group gain on disposal
1.2
0.5
Consolidated Group Operating Profit
76.4
63.8
1. This is an Alternative Performance Measure not defined under IFRS.
Governance Financial StatementsStrategic Report
137
2 Segmental reporting continued
The ‘Other’ category principally reflects central overheads, Printcraft sales to third parties and
consolidation adjustments not impacting another operating segment.
Group revenue is almost entirely derived from retail customers. Average transaction value is
low and products are transferred at the point of sale. Group revenue is presented as a single
category as, by segment, revenues are subject to substantially the same economic factors that
impact the nature, amount, timing and uncertainty of revenue and cash flows.
The table below sets out a geographical analysis of revenues for the current and prior year:
2024 2023
£m £m
Revenue derived from customers in the UK
484.8
451.6
Revenue derived from customers overseas
26.1
11.8
Consolidated revenue
510.9
463.4
Revenue from overseas reflects revenue earned from i) the Group’s Stores in the Republic
of Ireland (£11.1 million in FY24 and £8.1 million in FY23), ii) the Group’s wholesale and retail
activities in South Africa (£10.4 million in FY24), and iii) from other retail partners based outside
of the UK (£4.6 million in FY24 and £3.7 million in FY23).
Of the Group’s non-current assets, £10.0 million (2023: £5.0 million) relates to assets based
outside of the UK, principally in relation to the Group’s stores in the Republic of Ireland and
in South Africa. Non-current assets based in the Republic of Ireland are £4.8 million as at 31
January 2024 (FY23: £5.0 million) and non-current assets based in South Africa are £5.2 million
(FY23: nil). The increase compared to the prior year reflects the impact of the acquisition of
SA Greetings.
3 Operating profit
Operating profit is stated after charging/(crediting) the following items:
2024 2023
£m £m
Staff costs (note 5)
162.4
138.2
Depreciation expense
– owned fixed assets (note 11)
7.6
8.0
– right of use assets (note 12)
35.9
35.7
Amortisation expense (note 10)
2.8
2.3
Impairment of right-of-use assets (note 12)
(0.2)
1.3
Impairment of tangible assets (note 11)
0.2
–
Impairment of intangible assets (note 10)
1.1
1.5
Profit on disposal of fixed assets (note 12)
(1.2)
(0.6)
Foreign exchange gain
0.6
1.5
The total fees payable by the Group to Mazars LLP (2023: KPMG LLP) and their associates
during the period was as follows:
2024 2023
£’000 £’000
Audit of the consolidated and Company financial statements
55
30
Amounts receivable by the Company’s auditor and its associates in
respect of:
Audit of financial statements of subsidiaries of the Company
498
620
Audit-related assurance services
85
50
Total fees
638
700
4 EBITDA
EBITDA represents profit for the period before net finance expense, taxation, gains or losses on
disposal, depreciation, amortisation and impairment charges.
2024 2023
£m £m
Operating profit
76.4
63.8
Depreciation, amortisation and impairment
47.4
48.8
Gain on disposal
(1.2)
(0.6)
EBITDA
122.6
112.0
1
1. This is an Alternative Performance Measure not defined under IFRS.
5 Employee numbers and costs
The average number of people employed by the Group (including Directors) during the year,
analysed by category, was as follows:
2024 2023
Number Number
Management and administration
534
482
Operations
9,797
9,367
10,331
9,849
Card Factory plc Annual Report and Accounts 2024138
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5 Employee numbers and costs continued
The aggregate payroll costs of all employees including Directors were as follows:
2024 2023
£m £m
Employee wages and salaries
143.1
120.5
Equity-settled share-based payment expense
2.0
1.7
Social security costs
9.3
8.2
Defined contribution pension costs
2.1
1.8
Total employee costs
156.5
132.2
Agency labour costs
5.9
6.0
Total staff costs
162.4
138.2
Key management personnel
The key management personnel of the Group comprise the Card Factory plc Board of Directors
and the Executive Board. Key management personnel compensation is as follows:
2024 2023
£m £m
Salaries and short-term benefits
7.4
6.1
Equity-settled share-based payment expense
1.6
1.4
Social security costs
1.0
0.8
Defined contribution pension costs
0.2
0.2
10.2
8.5
Remuneration of Directors
2024 2023
£m £m
Directors’ remuneration
1.6
1.9
Amounts receivable under long-term incentive schemes
0.5
0.1
Company contributions to defined contribution pension plans
–
–
2.1
2.0
The table above includes the remuneration of Directors in each year. Director’s remuneration for
the prior period includes £40k in respect of compensation for loss of office for Kris Lee following
his resignation on 31 January 2023.
Amounts receivable under long-term incentive schemes reflects the value of options exercised
during the year.
Further details of the remuneration of the current directors are disclosed in the Directors’
Remuneration Report on pages 96 to 107. The basis of calculation for certain items described in
the Directors’ Remuneration Report may differ to that used in this note, reflecting differences in
the relevant regulations.
6 Finance expense
2024 2023
£m £m
Finance expense
Interest on bank loans and overdrafts
6.5
6.0
Amortisation of loan issue costs
0.6
0.9
Lease interest
6.3
4.5
13.4
11.4
7 Taxation
The tax charge includes both current and deferred tax. The tax charge reflects the estimated
effective tax on the profit before tax for the Group for the year ended 31 January 2024 and the
movement in the deferred tax balance in the year, so far as it relates to items recognised in the
income statement.
Taxable profit or loss differs from profit or loss before tax as reported in the income statement,
because it excludes items of income or expenditure that are either taxable or deductible in
other years or never taxable or deductible.
Recognised in the income statement
2024 2023
£m £m
Current tax charge/(credit)
Current year
13.8
8.3
Adjustments in respect of prior periods
0.2
(1.6)
Total current tax charge
14.0
6.7
Deferred tax charge/(credit)
Origination and reversal of temporary differences
2.1
2.5
Adjustments in respect of prior periods
–
(1.8)
Effect of change in tax rate
–
0.8
Total deferred tax charge
2.1
1.5
Total income tax charge
16.1
8.2
The effective tax rate of 24.5% (2023: 15.6%) on the profit before taxation for the year is slightly
higher than (2023: lower than) the average rate of mainstream corporation tax in the UK for the
year of 24% (2023: 19%).
Governance Financial StatementsStrategic Report
139
7 Taxation continued
The tax charge is reconciled to the standard rate of UK corporation tax as follows:
2024 2023
£m £m
Profit before tax
65.6
52.4
Tax at the standard UK corporation tax rate of 24%
1
(2023: 19.0%)
15.8
10.0
Tax effects of:
Expenses not deductible for tax purposes
0.6
0.7
Income not taxable for tax purposes
(0.6)
–
Adjustments in respect of prior periods
0.3
(3.3)
Effect of change in tax rate
–
0.8
Total income tax charge
16.1
8.2
Total taxation recognised through the income statement, other comprehensive income and
through equity are as follows:
2024
2023
Current Deferred Total Current Deferred Total
£m £m £m £m £m £m
Income statement
14.0
2.1
16.1
6.7
1.5
8.2
Other comprehensive
income
–
(0.7)
(0.7)
–
1.2
1.2
Equity
–
(0.4)
(0.4)
–
(1.3)
(1.3)
Total tax
14.0
1.0
15.0
6.7
1.4
8.1
1. In October 2022, the Government announced changes to the Corporation Tax rate increasing the main
rate of Corporation Tax to 25% (previously 19%). This became effective as at 1 April 2023 giving an average
Corporation Tax rate of 24.03% for the year to 31 January 2024.
8 Dividends
There were no dividends paid in either the current or the previous year. Following the
cessation of restrictions in the Group’s financing facilities in relation to dividend payments, at
the forthcoming Annual General Meeting, the Board will recommend to shareholders that a
resolution is passed to approve payment for a final dividend for the year ended 31 January 2024
of 4.5 pence per share (equivalent to approximately £15.5 million) payable on 28 June 2024. The
dividend has not been recorded as a liability at 31 January 2024.
The Board is cognisant of the fact it was unable to pay an interim dividend for the year ended
31 January 2024 and therefore the final dividend for the year reflects an amount that would
have been split between interim and final dividends, had an interim dividend been able to be
paid. The proposed final dividend is therefore also the total dividend payable in respect of the
2024 financial year.
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.
2024 2023
(Number) (Number)
Weighted average number of shares in issue
343,339,468
342,328,622
Weighted average number of dilutive share options
3,940,467
1,604,107
Weighted average number of shares for diluted earnings per share
347,279,935
343,932,729
£m
£m
Profit for the financial period
49.5
44.2
pence
pence
Basic earnings per share
14.4
12.9
Diluted earnings per share
14.3
12.8
Card Factory plc Annual Report and Accounts 2024140
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
10 Intangible assets
Goodwill Software Total
£m £m £m
Cost
At 1 February 2023
328.2
26.0
354.2
Additions
–
9.0
9.0
At 31 January 2024
328.2
35.0
363.2
Amortisation/impairment
At 1 February 2023
14.4
13.5
27.9
Amortisation in the period
–
2.8
2.8
Impairment in the period
–
1.1
1.1
At 31 January 2024
14.4
17.4
31.8
Net book value
At 31 January 2024
313.8
17.6
331.4
At 31 January 2023
313.8
12.5
326.3
During the year, the Group recognised an impairment charge of £1.1 million in respect of the
online platform for Getting Personal. The charge to the Getting Personal assets reflects the
more focused investment being targeted at the CF Online platform as considered in note 1. As
at 31 January 2024, the Group held £1.9 million of assets under construction within Software.
Goodwill Software Total
£m £m £m
Cost
At 1 February 2022
328.2
17.0
345.2
Additions
–
9.4
9.4
Disposals
–
(0.4)
(0.4)
At 31 January 2023
328.2
26.0
354.2
Amortisation/impairment
At 1 February 2022
14.4
10.1
24.5
Amortisation in the period
–
2.3
2.3
Impairment in the period
–
1.5
1.5
Amortisation on disposals
–
(0.4)
(0.4)
At 31 January 2023
14.4
13.5
27.9
Net book value
At 31 January 2023
313.8
12.5
326.3
At 31 January 2022
313.8
6.9
320.7
Goodwill arising on the acquisition of Getting Personal in 2011 of £14.4 million was allocated
to the Getting Personal CGU, which corresponds to the Getting Personal operating segment
(see note 2). Goodwill in respect of the Getting Personal CGU was fully written down in 2020.
All remaining goodwill is in respect of the cardfactory Stores business, which is comprised of
all of the cardfactory Stores (each an individual CGU for asset impairment testing purposes),
associated central functions and shared assets.
Cardfactory Stores is the lowest level at which the Group’s management monitors goodwill
internally. The total carrying amount of the cardfactory Stores group of CGUs for impairment
testing purposes, inclusive of liabilities that are necessarily considered in determining the
recoverable amount, at 31 January 2024 was £341.1 million (2023: £315.5 million).
The recoverable amount has been determined based on a value-in-use calculation. This
value-in-use calculation is based on the Group’s most recent approved five-year strategic plan,
to exclude any value from planned new stores or initiatives, so as to assess the valuation of
the assets in their current state and condition. The key assumptions used in determining the
recoverable amount are:
• Future trading performance including sales growth, product mix, material and
operating costs;
• Foreign exchange rates applicable to the Group’s purchases of goods for resale;
• The terminal growth rate applied; and
• The discount rate.
The values assigned to the variables that underpin the Group’s expectations of future trading
performance were determined based on historical performance and the Group’s expectations
with regard to future trends. Where applicable, amounts take into account the Group’s hedges
and fixed contracts, changes in market prices and rates, and relevant industry and consumer
data to inform expectations around future trends. The Group assumes a long-term GBPUSD
exchange rate in line with published forward curves at the balance sheet date, adjusted to
reflect the value of forward contracts in place. The fair value of these contracts is included
in the carrying amount. A 0% (2023: 0%) terminal growth rate is applied beyond the five-
year term of the plan, representing a sensitised view of the Group’s estimate of the long-term
growth rate of the sector. Whilst such long-term rates are inherently difficult to benchmark
using independent data, the Group’s reverse stress-testing of the goodwill impairment model
indicated a significant negative terminal decline would be required in order to eliminate the
headroom completely.
The forecast cash flows are discounted at a pre-tax rate of 13.0% (2023: 12.0%). The discount
rate is derived from a calculation using the capital asset pricing model to calculate cost
of equity utilising available market data. The discount rate is compared to the published
discount rates of comparable businesses and relevant industry data prior to being adopted.
No impairment loss was identified. The valuation indicates sufficient headroom such that any
reasonably possible change to the key assumptions would not result in an impairment of the
related goodwill.
Governance Financial StatementsStrategic Report
141
10 Intangible assets continued
Impairment testing: Intangible assets not yet available for use
Both the Getting Personal and cardfactory Online CGUs include intangible assets that are not
yet available for use. Accordingly, an impairment test in respect of these CGUs was carried out
at 31 January 2024.
The total carrying amount of the Getting Personal and cardfactory Online CGUs for impairment
testing purposes, inclusive of liabilities that are necessarily considered in determining the
recoverable amount, at 31 January 2024 was not material individually. The value of intangible
assets not yet available for use included in the carrying amount was £1.1 million for Getting
Personal and £2.7 million for CF Online.
The key assumptions are consistent with those set out above in respect of the goodwill
impairment review, with the exception of foreign exchange rates which are not significant to
the analysis for these CGUs. To ensure the analysis fairly reflected the expected value in use of
the assets within each CGU, the estimated future cash flows included all costs to complete the
assets under development and sales associated with those assets once deployed into use.
The CF Online valuation indicated sufficient headroom such that any reasonably possible
change in assumptions would not result in a material impairment charge. The Group booked an
impairment charge in respect of intangible assets in Getting Personal of £1.1 million, reflecting
costs incurred in developing a new Online Platform that is considered to be impaired as a result
of the outlook for the Getting Personal CGU. The Group’s strategic focus online continues to be
the CF Online platform where the Group is investing and is encouraged by recent positive LFL
sales performance.
11 Property, plant and equipment
Plant,
equipment,
Freehold Leasehold fixtures &
property improvements vehicles Total
£m £m £m £m
Cost
At 1 February 2023
18.6
40.8
78.2
137.6
Additions
1.3
–
17.5
18.8
Acquisition of SA Greetings (note 30)
2.7
–
–
2.7
At 31 January 2024
22.6
40.8
95.7
159.1
Depreciation
At 1 February 2023
4.9
39.0
61.5
105.4
Depreciation in the period
0.4
1.0
6.2
7.6
Impairment in the period
–
–
0.2
0.2
At 31 January 2024
5.3
40.0
67.9
113.2
Net book value
At 31 January 2024
17.3
0.8
27.8
45.9
At 31 January 2023
13.7
1.8
16.7
32.2
Plant,
equipment,
Freehold Leasehold fixtures &
property improvements vehicles Total
£m £m £m £m
Cost
At 1 February 2022
17.9
40.8
70.3
129.0
Additions
0.9
–
7.9
8.8
Disposals
(0.2)
–
–
(0.2)
At 31 January 2023
18.6
40.8
78.2
137.6
Depreciation
At 1 February 2022
4.4
37.3
55.7
97.4
Depreciation in the period
0.5
1.7
5.8
8.0
At 31 January 2023
4.9
39.0
61.5
105.4
Net book value
At 31 January 2023
13.7
1.8
16.7
32.2
At 31 January 2022
13.5
3.5
14.6
31.6
As at 31 January 2024, the Group held assets under construction of £2.2 million within Plant,
equipment, fixtures and vehicles.
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
2024 2023
£m £m
Buildings
98.2
100.2
Motor Vehicles
1.0
0.3
99.2
100.5
Card Factory plc Annual Report and Accounts 2024142
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12 Leases continued
The right-of-use assets movement in the year is as follows:
2024 2023
£m £m
At the beginning of the year
100.5
98.5
Acquisition of SA Greetings
1.9
–
Additions:
Buildings
32.0
39.4
Motor vehicles
1.2
0.2
Disposals
(0.7)
(0.6)
Depreciation charge:
Buildings
(35.4)
(35.3)
Motor Vehicles
(0.5)
(0.4)
Net Impairment Reversal/(Charge)
0.2
(1.3)
At the end of the year
99.2
100.5
Disposals and depreciation on disposals include fully depreciated right of use assets in respect
of expired leases where the asset remained in use whilst a lease renewal was negotiated. The
net impairment reversal and disposals above relate entirely to Buildings.
Impairment Testing: Store assets
Reflecting continued macro-economic uncertainty, cost inflation and the existence of
loss making stores within the portfolio, the Group considers that an indicator of potential
impairment exists in respect of the store portfolio and, accordingly, an impairment review of the
Group’s store assets was undertaken in the 2024 financial year.
For this purpose, each of the Group’s stores is considered to be a CGU, with each store’s
carrying amount determined by assessing the value of right-of-use assets and property, plant
and equipment insofar as they are directly allocable to an individual store.
The assessment of whether an indicator of impairment may exist in respect of store assets is
considered across the store portfolio and not on a store-by-store basis. Accordingly, the store
impairment review considers all stores in the portfolio.
The recoverable amount of each store was determined based on the expected future cash flows
applicable to each store, assessed using a basis consistent with the future cash flows used in
the goodwill impairment test described in note 10, but limited to the term of the current lease
as assessed under IFRS 16. As a result, the key assumptions are also considered to be consistent
with those described in note 10, in addition to the allocation of central and shared costs to
individual stores insofar as such an allocation can be made on a reasonable and consistent
basis. Such costs are allocated on the basis of the relative contribution of each individual store.
Application of these assumptions resulted in a net impairment charge of £nil (2023: £1.3 million),
comprised of impairment charges of £2.7 million (2023: £3.7 million) and the reversal of previous
impairment charges of £2.7 million (2023: £2.4 million). The net impairment charge in the current
year included a net reversal to impairment on Right of use assets of £0.2 million and a net
impairment charge to PPE of £0.2 million.
Having conducted scenario analysis, the Group does not consider any reasonably possible
change in the key assumptions would result in a material change to the impairment charge.
Lease liabilities
2024 2023
£m £m
Current lease liabilities
(25.3)
(27.3)
Non-current lease liabilities
(75.5)
(78.1)
Total lease liabilities
(100.8)
(105.4)
Lease expense
2024 2023
£m £m
Depreciation expense on right of use assets
35.9
35.7
(Reversal of Impairment)/impairment of right of use assets
(0.2)
1.3
Profit on disposal of right of use assets
(1.2)
(0.5)
Lease interest
6.3
4.5
Expense relating to short-term and low value leases
–
–
Expense relating to variable lease payments
0.6
0.2
Total lease related income statement expense
41.4
41.2
1
2
1. Contracts subject to the election not to apply the requirements of IFRS 16 to short-term or low value leases.
2. A small proportion of the store lease portfolio are subject to an element of turnover linked variable rents that
are excluded from the definition of a lease under IFRS 16.
Accounting policies for leases are detailed in note 1. Assets, liabilities and the income statement
expense in relation to leases are detailed above.
Disposals and depreciation/impairment on disposals includes fully depreciated right-of-use
assets where the lease term has expired, including amounts in respect of leases that have
expired but the asset remained in use whilst a new lease was negotiated. Profits on disposal
arise where leases that have been exited before the end of the lease term where the asset has
been previously impaired. The Group’s full accounting policy in respect of leases and right-of-
use assets is set out in note 1.
Governance Financial StatementsStrategic Report
143
13 Deferred tax assets and liabilities
Deferred tax is the tax expected to be payable or recoverable on differences between the
carrying amount of an asset or liability in the financial statements and the corresponding tax
bases used in the computation of taxable profit/loss.
Movement in deferred tax during the year:
Derivative
financial
Share– instruments Other
Fixed based and hedge IFRS 16 temporary
assets payments accounting Leases Tax losses differences Total
£m £m £m £m £m £m £m
At 1 February 2022
0.8
0.5
(0.3)
–
2.2
0.4
3.6
Credit/(charge) to
income statement
(0.2)
–
–
–
(2.2)
0.8
(1.6)
Credit/(charge)
to other
comprehensive
income
–
0.9
(2.1)
–
–
–
(1.2)
Charge to equity
–
–
1.3
–
–
–
1.3
At 31 January 2023
0.6
1.4
(1.1)
–
–
1.2
2.1
Acquisition of
subsidiary
0.1
–
–
–
–
–
0.1
Credit/(charge) to
income statement
(2.4)
–
–
–
–
0.3
(2.1)
Credit/(charge)
to other
comprehensive
income
–
–
0.7
–
–
–
0.7
Charge to equity
–
(0.2)
0.6
–
–
–
0.4
At 31 January 2024
(1.7)
1.2
0.2
–
–
1.5
1.2
Deferred tax assets and liabilities are offset to the extent they are levied by the same tax
authority and the Group has a legally enforceable right to do so, otherwise they are shown
separately in the balance sheet.
Deferred tax assets and liabilities are offset as follows:
2024 2023
£m £m
Deferred tax assets
2.9
3.2
Deferred tax liabilities
(1.7)
(1.1)
Net deferred tax asset
1.2
2.1
The Finance Act 2021 contained legislation to increase the mainstream corporation tax rate
in the UK from 19% to 25%, which came into effect from 1 April 2023. The Group has therefore
measured deferred tax assets and liabilities at this higher rate of tax.
14 Inventories
2024 2023
£m £m
Finished goods
49.5
44.7
Work in progress
0.5
0.6
50.0
45.3
Inventories are stated net of provisions totalling £9.6 million (2023: £16.1 million). The cost
of inventories recognised as an expense and charged to cost of sales in the year, net of
movements in provisions, was £155.8 million (2023: £145.3 million).
15 Trade and other receivables
2024 2023
£m £m
Current
Trade receivables
3.1
2.0
Other receivables
0.2
–
Prepaid property costs
3.8
2.9
Other prepayments
4.5
8.4
11.6
13.3
The Group has net US Dollar denominated trade and other receivables of £0.3 million
(2023: £0.8 million) and net South African Rand denominated trade and other receivables of
£2.3 million (2023: nil).
Group revenue is principally attributable to the retail sale of cards, dressings and gifts.
Revenue is subject to a single performance obligation fulfilled by receipt of goods at the point
of payment with minimal returns and refunds. Trade receivables are attributable to retail
partnerships and non-retail sales. No significant impairment loss has been recorded against
trade receivables.
The Group has net US Dollar denominated trade and other receivables of £0.3 million
(2023: £0.8 million). Group revenue is principally attributable to the retail sale of cards, dressings
and gifts. Revenue is subject to a single performance obligation fulfilled by receipt of goods
at the point of payment with minimal returns and refunds. Trade receivables are attributable
to retail partnerships and non-retail sales which generated revenue of £5.6 million (2023: £5.6
million) in the year. No significant impairment loss has been recorded against trade receivables.
Card Factory plc Annual Report and Accounts 2024144
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16 Cash and cash equivalents
2024 2023
£m £m
Cash at bank and in hand
11.3
11.7
Cash presented as current assets in the balance sheet
11.3
11.7
Bank overdraft
(0.2)
(1.8)
Overdraft presented as current liabilities in the balance sheet
(0.2)
(1.8)
Net cash and cash equivalents
11.1
9.9
The Group manages its liquidity requirements on a Group-wide basis and regularly sweeps
and pools cash in order to optimise returns and / or ensure the most efficient deployment of
borrowing facilities in order to minimise fees whilst maintaining sufficient short-term liquidity to
meet its liabilities as they fall due.
Cash in bank accounts and overdrafts are presented net where the Group has a legal right
to offset amounts – such as those with the same banking provider or included in netting
arrangements under its financing facilities.
The Group’s cash and cash equivalents are denominated in the following currencies:
2024 2023
£m £m
Sterling
6.8
0.2
Euro
3.3
4.8
US Dollar
1.2
4.9
South African Rand
(0.2)
–
11.1
9.9
17 Borrowings
2024 2023
£m £m
Current liabilities
Bank loans and accrued interest
6.9
25.3
Bank overdraft
0.2
1.8
Total current liabilities
7.1
27.1
Non-current liabilities
Bank loans
37.9
40.4
Current liabilities includes bank loans where the liability is due to be settled in the next 12
months (such as scheduled repayments in respect of secured term loans and CLBILs). Following
early adoption of amendments to IAS 1, the Group has reclassified amounts due under its
secured revolving credit facility as non-current on the basis that it has the right to roll over such
obligations until September 2025 and is compliant with all relevant covenant requirements at
the balance sheet date. Comparatives for the year ended 31 January 2023 in these financial
statements have been restated on the same basis. The amount reclassified as non-current
liabilities in the comparative period is £23.0 million, there would have been no reclassification in
FY22 as the balance drawn on the RCF was nil.
Bank loans
Bank borrowings as at 31 January 2024 are summarised as follows:
Interest margin
Liability Interest rate ratchet range
£m % %
31 January 2024
Secured term loans –
–
5.00 + SONIA
–
Tranche ‘A’
Secured term loans –
18.8
5.50 +SONIA
–
Tranche ‘B’
Secured CLBILs
–
See note
–
Secured revolving credit
26.0
Margin + SONIA
2.75 – 4.50
Total facility size =
facility £100 million
Accrued interest
0.1
Property mortgage
0.6
Bank overdraft
0.2
Debt issue costs
(0.7)
45.0
Governance Financial StatementsStrategic Report
145
Interest margin
Liability Interest rate ratchet range
£m % %
31 January 2023
Secured term loans –
9.0
5.00 + SONIA
–
Tranche ‘A’
Secured term loans –
18.8
5.50 +SONIA
–
Tranche ‘B’
Secured CLBILs
16.1
See note
–
Secured revolving credit
23.0
Margin + SONIA
2.75 – 4.50
Total facility size =
facility £100 million
Accrued interest
0.2
Bank overdraft
1.8
Debt issue costs
(1.4)
67.5
The Group’s primary financing facilities at the balance sheet date were entered into as part of
a refinancing exercise in April 2022. During FY24, the Group made repayments in respect of the
revised Term Loan and CLBILS facilities of £25.1 million and as a result the Term Loan ‘A’ and
CLBILs facilities were fully repaid. The term of the remaining Term Loan ‘B’ and RCF extended to
September 2025. The Group had undrawn, committed facilities at 31 January 2024 of
£74 million.
As part of the transaction to acquire SA Greetings (see note 30) the Group acquired a property
mortgage and overdraft facility, which are denominated in South African Rand. The carrying
amount of these facilities at 31 January 2024 was £0.8 million.
At the balance sheet date, the Group remained subject to two financial covenants, tested
quarterly, in relation to leverage (ratio of net debt to EBITDA) and interest cover (ratio of interest
and rent costs to EBITDA). Covenant thresholds were 2.5x leverage and 1.75x interest cover.
In addition, the terms of the facilities prevented the Group from making any distributions to
shareholders whilst the CLBILS and Term Loan ‘A’ remained outstanding and places a limit on
the total value of capital expenditure the Group can make in each financial year to FY25.
Debt issue costs in respect of the April 2022 refinancing totalled £1.8 million and are being
amortised to the income statement over the duration of the revised facilities.
Subsequent to the year end on 26 April 2024, the Group successfully concluded a refinancing of
its debt facilities, having agreed a new four-year £125 million committed revolving credit facility
with a syndicate of banks. The existing revolving credit facility and Term Loan B have been fully
repaid and cancelled as part of refinancing.
The new facilities have an initial maturity date in April 2028, with options to extend by up to
19 months, subject to lender approval. The facilities include a £75 million accordion, which can
be drawn subject to lender approval. The interest margin on the facilities is dependent upon
the Group’s leverage position, with margins between 1.9-2.8% which is lower than the previous
facilities. The new facilities include covenants for a maximum leverage ratio (calculated as net
debt excluding leases divided by EBITDA less rent costs for the prior 12 months) of 2.5x and a
fixed charge cover ratio of at least 1.75x tested semi-annually. The Group expects to operate
comfortably within these covenant levels for the foreseeable future .
18 Trade and other payables
2024 2024
£m £m
Current
Trade payables
25.1
29.2
Other taxation and social security
21.8
20.6
Property accruals
7.4
7.8
Payroll accruals
12.8
13.9
Other accruals
13.0
13.2
80.1
84.7
The Group has net US Dollar denominated trade and other payables of £10.1 million (2023: £10.1
million) and net South African Rand denominated trade and other payables of £1.2m (2023: nil).
19 Share capital and share premium
2024 2023
(Number) (Number)
Share capital
Allotted, called up and fully paid ordinary shares of one pence:
At the start of the period
342,636,090
341,878,341
Issued in the period (note 25)
2,940,271
757,749
At the end of the period
345,576,361
342,636,090
17 Borrowings continued
Card Factory plc Annual Report and Accounts 2024146
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
19 Share capital and share premium continued
£m
£m
Share capital
At the start of the period
3.4
3.4
Issued in the period (note 25)
0.1
–
At the end of the period
3.5
3.4
£m
£m
Share premium
At the start of the period
202.2
202.2
Issued in the period (note 25)
0.5
–
At the end of the period
202.7
202.2
Shares issued in the period relate entirely to those issued upon vesting of employee share
schemes. See note 25.
20 Notes to the cash flow statement
Reconciliation of operating profit to cash generated from operations:
2024 2023
£m £m
Profit before tax
65.6
52.4
Gain on bargain purchase
(2.6)
–
Net finance expense
13.4
11.4
Operating profit
76.4
63.8
Adjusted for:
Depreciation and amortisation
46.3
46.0
Impairment of right-of-use assets
(0.2)
1.3
Impairment of tangible assets
0.2
–
Impairment of intangible assets
1.1
1.5
Gain on disposal of fixed assets
(1.2)
(0.5)
Cash flow hedging foreign currency movements
(0.4)
0.8
Unrealised foreign exchange (gains) / losses
0.5
–
Share-based payments charge
2.1
1.7
Operating cash flows before changes in working capital
124.8
114.6
Decrease/(increase) in receivables
3.6
(5.2)
Decrease/(increase) in inventories
(1.2)
(12.2)
(Decrease)/increase in payables
(6.5)
13.3
Movement in provisions
(2.0)
(2.7)
Cash inflow from operating activities
118.7
107.8
Governance Financial StatementsStrategic Report
147
21 Analysis of net debt
At 1 February Non-cash At 31 January
2023 Cash flow changes 2024
£m £m £m £m
Secured bank loans and accrued interest
(note17)
(65.7)
30.1
(9.2)
(44.8)
Lease liabilities
(105.4)
43.7
(39.1)
(100.8)
Total debt
(171.1)
73.8
(48.3)
(145.6)
Add: debt costs capitalised
(1.4)
–
0.7
(0.7)
Add: bank overdraft
(1.8)
1.8
(0.2)
(0.2)
Less: cash and cash equivalents (note 16)
11.7
(0.4)
–
11.3
Net debt
(162.6)
75.2
(47.8)
(135.2)
Lease liabilities
105.4
(43.7)
39.1
100.8
Net debt excluding lease liabilities
(57.2)
31.5
(8.7)
(34.4)
At 31
At 1 February Non-cash January
2022 Cash flow changes 2023
£m £m £m £m
Secured bank loans and accrued interest
(note17)
(111.0)
51.4
(6.1)
(65.7)
Lease liabilities
(119.8)
57.0
(42.6)
(105.4)
Total debt
(230.8)
108.4
(48.7)
(171.1)
Add: debt costs capitalised
(1.5)
(1.8)
1.9
(1.4)
Add: bank overdraft
–
(1.8)
–
(1.8)
Less: cash and cash equivalents (note 16)
38.3
(26.6)
11.7
Net debt
(194.0)
78.2
(46.8)
(162.6)
Lease liabilities
119.8
(57.0)
42.6
105.4
Net debt excluding lease liabilities
(74.2)
21.2
(4.2)
(57.2)
Non-cash changes in respect of lease liabilities reflect changes in the carrying amount of leases
arising from additions, disposals and modifications.
22 Provisions
Covid-19 Property
related support provisions Total
£m £m £m
At 1 February 2022
12.2
–
12.2
Transfer from contract liabilities
–
2.5
2.5
Provisions utilised during the year
(2.3)
(0.9)
(3.2)
Provisions released during the year
(2.5)
(0.9)
(3.4)
Amounts provided during the year
–
1.4
1.4
At 31 January 2023
7.4
2.1
9.5
Provisions utilised during the year
–
(0.2)
(0.2)
Provisions released during the year
(2.0)
0.2
(1.8)
Amounts provided during the year
–
–
–
At 31 January 2024
5.4
2.1
7.5
Covid-19-related support provisions reflect amounts received under one-off schemes designed
to provide support to businesses affected by Covid-19 restrictions, including lockdown grants
and CJRS, in excess of the value the Group reasonably believes it is entitled to retain under
the terms and conditions of those schemes. The provisions have been estimated based on
the Group’s interpretation of the terms and conditions of the respective schemes and, where
applicable, independent professional advice. Although the actual amount that will be repaid is
not certain, events through the year to 31 January 2024 have added a level of comfort that the
outstanding provision is materially correct.
In July 2022, following an unprompted disclosure to HMRC and resulting investigation, the
Group made a payment of £2.3 million in final settlement of its CJRS position. As a result of
this settlement, the Group released a further £2.5 million from the provision that is no longer
expected to be required, as the matter is now closed. This release has been recognised as a
one-off benefit in the income statement in FY23.
Subsequent to the balance sheet date, the Group have reached a proposed settlement with
the Department for Business and Trade for a portion of the provision that relates to regarding
business support grants received by the Group during FY21 and FY22. The value of the proposed
settlement is £3.3 million and following a review of the residual position, the Group has released
£2.0 million from the provision which reflects a proportionate reduction in the value of the
provision for the amounts to be settled. The business support grants settlement was paid in
April 2024 but was unpaid at the year-end and £3.3 million remains in the provision held on the
balance sheet.
Card Factory plc Annual Report and Accounts 2024148
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
22 Provisions continued
The Group continues to hold discussions regarding settlement of the remaining element of the
provision and to date has received no new substantive evidence regarding its position in respect
of other support received relating to business rates relief. A further provision of £2.2 million is
held at the balance sheet date in respect of potential repayment of support received in excess
of subsidy control thresholds for business rates relief, consistent with the nature of the provision
held in the prior year. The minimum requirement for this element of the provision is expected to
be £1.2 million, subject to interpretation of the guidance relating to individual support schemes
and subsidy control thresholds. The Group believes a range of reasonably possible outcomes
remains and that the Group’s provision reflects a reasonable assessment of the amount that
may be repayable. The Group does not believe that any position within the range of reasonably
possible outcomes would reflect a material change to the provision held at the balance sheet
date and this provision is classified as current as the Group is actively aiming to resolve this
settlement in the next 12 months.
The Group maintains provisions in respect of its store portfolio to cover both the estimated cost
of restoring properties to their original condition upon exit of the property and any non-lease
components of lease contracts (such as service charges) that may be onerous. Despite the size
of the Group’s store portfolio, such provisions are generally small which is consistent with the
Group’s experience of actual dilapidations and restoration costs. Specific provisions are usually
made where the Group has a reasonable expectation that the related property may be exited,
or is at a higher risk of exiting, in the near future and are generally expected to be utilised in the
short-term. Any non-current portion of the provision is considered immaterial.
23 Financial risk management
The principal financial risks faced by the Group are liquidity, foreign currency, interest rate and
counterparty credit risk.
The Board have overall responsibility for managing risks and uncertainties across the Group.
The principal financial risks and uncertainties and the actions taken to mitigate them are
reviewed on an ongoing basis. Further details of the Group’s approach to managing risk are
included in the Principal Risks and Uncertainties section of the Strategic Report on pages 64 to
68 and in the Corporate Governance Report on pages 73 to 79.
Liquidity risk
The Group has continued to generate significant operating cash inflows. Cash flow forecasts
are prepared to assist management in identifying future liquidity requirements. At the balance
sheet date, the Group had net debt (note 21) of £34.4 million (2023: £57.2 million) and undrawn
RCF facility of £74.0 million (see note 17).
On 21 April 2022, the Group agreed an updated and amended financing package with
its banking partners, which reduced the overall quantum and extended the term of the
Group’s facilities.
The revised facilities comprised term loans of £30 million, CLBILS of £20 million and an RCF
of £100 million. The CLBILS has been fully repaid in the year to 31 January 2024. The Term
Loans are set in two tranches, both with an amortising repayment profile. Tranche ‘A’ has a final
maturity in January 2024 and has been fully repaid in the year, Tranche ‘B’ is coterminous with
the RCF in September 2025.
The table below analyses the contractual cash flows of the Group’s non-derivative financial
liabilities as at the balance sheet date. The amounts disclosed in the tables are the contractual
undiscounted cash flows, including contractual interest. Where amounts are not yet fixed,
principally in respect of interest payments linked to SONIA in the Group’s bank facilities, the
values have been determined with reference to forward curves at the balance sheet date.
Less than One to Two to More than
one year two years five years five years Total
£m £m £m £m £m
At 31 January 2024
Bank loans
8.5
38.3
–
–
46.8
Lease liabilities
29.5
29.7
49.4
6.9
115.5
Trade and other payables
80.1
–
–
–
80.1
118.1
68.0
49.4
6.9
242.4
At 31 January 2023
Bank loans
52.4
18.8
–
–
71.2
Lease liabilities
32.7
31.3
47.9
7.8
119.7
Trade and other payables
84.7
–
–
–
84.7
169.8
50.1
47.9
7.8
275.6
On 26 April 2024, the Group concluded a refinancing of its debt facilities, replacing the existing
facilities with a £125 million revolving credit facility with an initial term to April 2028. See note 17
for further detail.
The table below analyses the contractual cash flows of the Group’s derivative financial
instruments as at the balance sheet date. The amounts disclosed represent the total contractual
undiscounted cash flows at the balance sheet date exchange and interest rates.
Governance Financial StatementsStrategic Report
149
23 Financial risk management continued
Less than One to Two to More than
one year two years five years five years Total
£m £m £m £m £m
At 31 January 2024
Foreign exchange contracts
– Inflow
63.6
28.3
–
–
91.9
– Outflow
(64.5)
(28.1)
–
–
(92.6)
Interest rate contracts
– Inflow
0.1
–
–
–
0.1
– Outflow
–
(0.1)
–
–
(0.1)
At 31 January 2023
Foreign exchange contracts
– Inflow
76.4
21.9
–
–
98.3
– Outflow
(72.6)
(21.2)
–
–
(93.8)
Interest rate contracts
– Inflow
1.1
–
–
–
1.1
– Outflow
–
(0.2)
(0.2)
–
(0.4)
Foreign currency risk
The Group has an exposure to foreign currency risk due to a significant proportion of the
Group’s retail products being procured from overseas suppliers with purchases denominated
in US Dollars. The Group has an established currency hedging policy reviewed annually which
aims to mitigate the risk of adverse currency movements whilst providing sufficient flexibility
and available credit lines to act when markets are volatile.
The Group’s policy requires forward cover, using a combination of currency on hand, expected
receipts and derivative contracts, of between 50% and 100% of the next 12 months’ rolling
forecast US Dollar requirements, between 25% and 75% forward cover for the period 12 to 24
months, and up to 50% for the period 24 to 36 months. The policy permits a proportion of each
year’s US Dollar requirement to be covered by structured options and similar instruments.
The table below analyses the sensitivity of the Group’s US Dollar denominated financial
instruments to a 10 cent movement in the USD to GBP exchange rate at the balance sheet date,
holding all other assumptions constant.
2024
2023
Impact on cash Impact on cash
Impact on profit flow hedging Impact on profit flow hedging
after tax reserve after tax reserve
£m £m £m £m
10 cent increase
(2.6)
(2.7)
(2.9)
(3.3)
10 cent decrease
3.0
3.2
2.1
4.0
The Group generates a small proportion of its total revenue in Euros as a result of its operations
in the Republic of Ireland. Euro receipts are used to settle obligations denominated in Euros or
are converted to GBP using either spot or forward contracts to manage liquidity .
Interest rate risk
The Group’s principal interest rate risk arises from its long-term borrowings. Bank borrowings
are denominated in Sterling and are borrowed at floating interest rates (see note 17). The Group
has an established policy that permits the use of interest rate derivative financial instruments
to mitigate the interest rate risk on an element of these borrowing costs. Current Group policy
requires between 25% and 75% of forecast floating interest rate borrowings to be hedged
for the next 24 months, up to 50% for the period 24 to 36 months and up to 25% for periods
greater than 36 months.
The table below shows the impact on the reported results of a 50 basis point increase or
decrease in the interest rate for the year.
2024
2023
Impact on cash Impact on cash
Impact on profit flow hedging Impact on profit flow hedging
after tax reserve after tax reserve
£m £m £m £m
50 basis point interest rate increase
(0.3)
0.1
(0.2)
0.3
50 basis point interest rate decrease
0.3
(0.1)
0.2
(0.3)
Counterparty credit risk
The Group is exposed to counterparty credit risk on its holdings of cash and cash equivalents
and derivative financial assets. To mitigate the risk, counterparties are limited to high credit-
quality financial institutions and exposures are monitored on a monthly basis. Sterling cash
balances have historically been maintained at near zero or overdrawn within the facility
to minimise interest expense on the RCF, thereby reducing counterparty credit risk on
cash balances.
Card Factory plc Annual Report and Accounts 2024150
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23 Financial risk management continued
Counterparty credit risk continued
The Group is also exposed to counterparty credit risk in relation to certain payments in advance
of goods to overseas suppliers. To limit this exposure, goods from overseas suppliers are not
paid until after shipment, except for a limited number of deposit payments in prepayments.
Credit risk in respect of trade receivables on revenues from retail partners and non-retail
customers, and other receivables and prepayments, is not significant to the Group. Revenues
from retail partners and non-retail customers represented £14.5 million in the year (2023:
£5.6 million) and trade receivables at 31 January 2024 were £3.1 million (2023: £2.4 million). Total
trade and other receivables at 31 January 2024 are £11.0 million (FY23: £13.3 million). The Group
considers expected credit losses as not material and no impairment allowances have been
recognised in respect of credit risk.
Capital management
Following the cessation of investment and dividend restrictions contained within its financing facilities,
the Board has reviewed and approved an updated capital management policy for the Group.
The aim of the updated policy is to balance delivery of sustainable, long-term growth in
shareholder value against cash returns to shareholders and the needs of the Group’s other
stakeholders. Each year, the Group will assess the appropriate use of free cash after allocating
funds to investments that will deliver the stated strategy. The Group is committed to a
transparent, systemic and disciplined use of cash. The Board will, as part of its annual planning
cycle, review investment opportunities and allocate capital between strengthening the balance
sheet, investment to deliver the strategy and returns to shareholders.
The Board monitors the Group’s capital structure principally through reviewing free cash
generation and Adjusted Leverage – the ratio of net debt (excluding lease liabilities) to EBITDA
(after deducting rent-related costs). The Group’s long-term target is to maintain a maximum
Adjusted Leverage position of 1.5 times.
The Group defines capital as equity attributable to the equity holders of the parent plus net
debt. Net debt is shown in note 21.
The Group has prioritised de-levering the business during and since the Covid-19 pandemic,
protecting liquidity to ensure it can continue to meet the needs of all stakeholders in the longer
term. Alongside the restrictions imposed by the Group’s financing facilities (see note 17), this has
resulted in no distributions to shareholders being made during FY22, FY23 and FY24. Following
the cessation of restrictions from 31 January 2024, the Board has proposed a final dividend of
4.5 pence per share in respect of the 2024 financial year (see note 8).
Details on Group borrowings are set out in note 17 of the consolidated financial statements.
The Group has a continued focus on free cash flow generation. The Board monitors a range
of financial metrics together with banking covenant ratios, maintaining suitable headroom to
ensure that the Group’s financing requirements continue to be serviceable.
Further detail regarding covenant restrictions and liquidity forecasts are provided in notes 1 and 17.
24 Financial instruments
Fair value
IFRS 13 requires categorisation of the Group’s financial instruments, where measured at fair
value, in accordance with the fair value hierarchy to illustrate the basis upon which the fair
value has been determined:
• Level 1: fair value measurements are derived from quoted prices in active markets for
identical assets or liabilities;
• Level 2: fair value measurements are based on 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: fair value measurements derived from valuation techniques that use inputs that are
not based on observable market data (unobservable inputs).
The fair value of the Group’s foreign currency and interest rate derivative financial instruments
are largely determined by comparison between forward market prices and the contract price;
therefore, these contracts are categorised as Level 2.
Governance Financial StatementsStrategic Report
151
24 Financial instruments continued
Derivative financial instruments
The balance sheet date fair value of derivative financial instruments is as follows:
2024 2023
£m £m
Derivative assets
Non-current
Interest rate contracts
–
0.2
Foreign exchange contracts
0.6
0.3
0.6
0.5
Current
Interest rate contracts
0.2
1.1
Foreign exchange contracts
0.7
4.2
0.9
5.3
Derivative liabilities
Current
Interest rate contracts
(0.1)
–
Foreign exchange contracts
(1.6)
(1.4)
(1.7)
(1.4)
Non-current
Interest rate contracts
(0.1)
(0.2)
Foreign exchange contracts
(0.7)
(0.3)
(0.8)
(0.5)
Net derivative financial instruments
Interest rate contracts
–
1.1
Foreign exchange contracts
(1.0)
2.8
(1.0)
3.9
Interest rate contracts
At 31 January 2024 the Group held fixed for floating SONIA interest rate swaps to hedge a
portion of the variable interest rate risk on bank borrowings. Notional principal amounts for
interest hedges totalled £20.0 million for the period to October 2024 at an average fixed rate of
3.9%, then reducing to £10.0 million for the period to October 2025 at an average fixed rate of
5.1% (2023: £50.0 million for the period to October 2023, then reducing to £20.0 million for the
period to October 2024, then reducing to £10 million for the period to October 2025).
Unhedged fair value movements of £nil (2023: £nil) were expensed to the income statement
within financial expense.
Foreign exchange contracts
At 31 January 2024 the Group held a portfolio of foreign currency derivative contracts with
notional principal amounts in GBP totalling £92.6 million (2023: £93.8 million) to mitigate the
exchange risk on future US Dollar denominated trade purchases.
Foreign currency derivatives with a notional value of £41.6 million were designated in cash flow
hedging relationships at 31 January 2024 (2023: £47.0 million). Of this amount, £32.2 million is
expected to unwind in the next 12 months with an average strike price of 1.24 and £9.4 million is
expected to unwind between 13 and 24 months at an average strike price of 1.27. The average
strike prices reflect only those derivatives designated into hedging relationships, and not the
Group’s whole portfolio of currency purchase contracts.
Foreign currency derivative contracts with a notional value of £51.0 million representing a fair
value liability of £0.3 million (2023: £46.8 million representing a fair value liability of £0.4 million)
were not designated as hedging relationships.
Fair value movements in foreign currency derivatives are recognised in other comprehensive
income to the extent the contract is part of an effective hedging relationship. The fair value
movements of £0.1 million that do not form part of an effective hedging relationship have been
charged to the income statement (2023: £0.5 million) within cost of sales.
Card Factory plc Annual Report and Accounts 2024152
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
24 Financial instruments continued
Classification of financial instruments
The table below shows the classification of financial assets and liabilities at the balance sheet
date. Fair value disclosures in respect of lease liabilities are not required.
Financial Financial
Cash flow assets at liabilities at
Mandatorily hedging amortised amortised
at FVTPL instruments cost cost
At 31 January 2024 £m £m £m £m
Financial assets measured at fair value
Derivative financial instruments
0.9
0.6
–
–
Financial assets not measured at fair value
Trade receivables
–
–
3.1
–
Cash and cash equivalents
–
–
11.3
–
Financial liabilities measured at fair value
Derivative financial instruments
(1.2)
(1.3)
–
–
Financial liabilities not measured at fair value
Secured bank loans
–
–
–
(44.8)
Unsecured bank overdrafts
–
–
–
(0.2)
Trade and other payables
–
–
–
(80.1)
(0.3)
(0.7)
14.4
(125.1)
At 31 January 2023
£m
£m
£m
£m
Financial assets measured at fair value
Derivative financial instruments
0.5
5.3
–
–
Financial assets not measured at fair value
Trade receivables
–
–
2.0
–
Cash and cash equivalents
–
–
11.7
–
Financial liabilities measured at fair value
Derivative financial instruments
(0.9)
(1.0)
–
–
Financial liabilities not measured at fair value
Secured bank loans
–
–
–
(65.7)
Unsecured bank overdrafts
–
–
–
(1.8)
Trade and other payables
–
–
–
(84.7)
(0.4)
4.3
13.7
(152.2)
The fair values of financial instruments have been assessed as approximating to their carrying
values. Derivative financial instruments are utilised to mitigate foreign exchange risk on the
requisition of inventory and interest rate risk on borrowings. Derivatives not designated as
a hedging relationship are mandatorily classified at FVTPL. Prepayments do not meet the
definition of Financial Instruments and as such are not disclosed in the above table, the FY23
figures have been updated to reflect this.
25 Equity-settled share-based payment arrangements
Card Factory Restricted Share Awards and Long Term Incentive Plan
The Company grants restricted share awards (‘RSAs’) to the Executive Directors, members of
the senior management team and senior employees within the Group under the terms of the
Group’s LTIP. Grants are made annually under the scheme, subject to approval by the Board.
The award comprises a right to receive free shares or nil cost options. The shares are to be
issued within 30 days, or as soon as practicable, after the vesting date. Grants awarded in the
year to Executive Directors and senior management vest in stages over three, four and five years
and vested shares may not be sold (other than to pay taxes due on vesting) until the end of the
five-year period. Grants awarded in the year to senior employees are subject to a three-year
vesting period. All restricted share awards are subject to a performance underpin through which
the Remuneration Committee can exercise discretion to reduce the number of awards that will
vest based on certain defined criteria.
Grants awarded prior to 31 January 2018 under the LTIP were subject to a three-year vesting
period with performance conditions and a two-year holding period for awards in favour of
senior management. Further details on Executive Director share awards are provided in the
Remuneration Report on pages 96 to 107.
Card Factory SAYE Scheme (‘SAYE’)
The SAYE scheme is open to all employees (in years prior to FY19 length of service eligibility
applied). Grants are made annually under the scheme, subject to approval by the Board.
Options may be exercised under the scheme within six months of the completion of the three-
year savings contract. There is provision for early exercise in certain circumstances such as
death, disability, redundancy and retirement.
Reconciliation of outstanding awards
RSA/LTIP
SAYE
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
Outstanding at 1 February 2022
4,449,002
£0.01
4,124,201
£0.37
Granted during the year
3,799,855
£0.01
2,267,990
£0.49
Exercised during the year
(736,764)
£0.01
(20,985)
£0.27
Forfeited during the year
(664,953)
£0.01
(1,178,977)
£0.56
Outstanding at 31 January 2023
6,847,140
£0.01
5,192,229
£0.42
Granted during the year
2,162,869
£0.01
1,476,343
£0.72
Exercised during the year
(1,170,305)
£0.01
(1,769,966)
£0.27
Forfeited during the year
(210,756)
£0.01
(901,863)
£0.56
Outstanding at 31 January 2024
7,628,948
£0.01
3,996,743
£0.56
Governance Financial StatementsStrategic Report
153
25 Equity-settled share-based payment arrangements continued
Reconciliation of outstanding awards continued
The weighted average remaining contractual for options under the SAYE scheme is 1.4 years
and under the RSA/LTIP scheme is 1.9 years.
Fair value of awards
The fair value of awards granted during the year has been measured using the Black-Scholes
model assuming the inputs below.
2024
2023
RSA/LTIP (1)
SAYE
RSA/LTIP (1)
RSA/LTIP (2)
SAYE
Granted during the year
2,162,869
1,476,343
3,417,583
382,272
2,267,990
Fair value at grant date
£0.92
£0.43
£0.62
£0.64
£0.34
Share price at grant date*
£0.92
£0.87
£0.62
£0.64
£0.63
Exercise price*
£0.01
£0.72
£0.01
£0.01
£0.49
Expected volatility
63%
58%
72%
72%
72%
Expected term (years)
3 to 5
3
2.5 to 5
3 to 5
3
Expected dividend yield
N/A**
0%
N/A**
N/A**
0%
Risk free interest rate
4.32%
5.05%
1.20%
1.69%
1.81%
* The exercise price for SAYE awards is set at a 20% discount to an average market price determined in
accordance with scheme rules. The share price at the grant date is the closing price on the grant date. The
outstanding SAYE awards as at 31 January 2024 have an exercise price ranging from £0.49 to £0.72.
** RSA/LTIP awards have a £0.01 exercise price (covered via a nominal bonus award from the Group) and accrue
dividend equivalents over the vesting period, consequently the fair value at grant date is equal to the grant
date share price.
The expected volatility is based on historical volatility of the Company over the expected term
at the grant date.
Impact on the income statement
The total expense recognised in the income statement arising from share-based payments is as
follows:
2024 2023
All amounts exclude national insurance costs £m £m
RSA or LTIP
1.7
1.4
SAYE
0.4
0.3
Total share-based payment expense
2.1
1.7
26 Capital commitments
The Group had capital commitments at 31 January 2024 of nil (2023: £2.3 million).
27 Contingent liabilities
There were no material contingent liabilities at 31 January 2024 (2023: £nil).
28 Related party transactions
The Group has taken advantage of the exemptions contained within IAS 24 ‘Related Party
Disclosures’ from the requirement to disclose transactions between Group companies as these
have been eliminated on consolidation.
The Card Factory Foundation is considered a related party of the Group due to one common
individual considered as key management personnel. In the year ended 31 January 2024 the
Group donated £1.5 million (FY23: £1.4 million) to the Foundation from carrier bag sales and has
an outstanding balance owed to the Foundation of £0.5 million at 31 January 2024. A full listing
of the Group’s subsidiary undertakings is provided in the notes to the Company accounts on
page 158.
Transactions with key management personnel
The key management personnel of the Group comprise the Card Factory plc Board of Directors,
and the Executive Board. Disclosures relating to remuneration of key management personnel
are included in note 5 of the financial statements. Further details of Directors’ remuneration are
set out in the Directors’ Remuneration Report on pages 96 to 107. Directors of the Company and
their immediate families control 0.2% of the ordinary shares of the Company.
There were no other related party transactions in the year .
29 Subsequent events
Subsequent to the year end, on 26 April 2024, the Group successfully concluded a refinancing of
its debt facilities, having agreed a new four-year £125 million committed revolving credit facility
with a syndicate of banks. The existing revolving credit facility and Term Loan B have been fully
repaid and cancelled. See note 17 for further detail.
30 Business Combination
Business combinations are accounted for using the acquisition method. The identifiable
assets acquired and liabilities assumed are recognised at their fair values at the acquisition
date. Acquisition-related costs totalling £0.2 million have been expensed and included within
operating expenses in the Consolidated Income Statement.
Acquisition of SA Greetings Corporation (Pty) Ltd
On 25 April 2023, the Group acquired 100% of the share capital of SA Greetings Corporation
(Pty) Ltd and its subsidiaries, which trade as SA Greetings. SA Greetings is a wholesaler and
retailer of greeting cards and gift packaging based in South Africa, and the acquisition gives
the Group access to the South African cards and gifts market, expanding the international
partnerships business, and provides opportunities to grow and develop the business through
synergies with the Group’s existing range, production and supply chain. The total cash
consideration for the transaction was £2.5 million, all of which was paid on the acquisition date,
with no further contingent or deferred consideration payable.
Card Factory plc Annual Report and Accounts 2024154
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30 Business Combination continued
Acquisition of SA Greetings Corporation (Pty) Ltd continued
The purchase price allocation was prepared on a provisional basis in accordance with IFRS 3
with the fair values of the assets and liabilities set out below:
Fair value
£m
Non-current assets
4.7
Intangible assets
–
Property, plant & equipment
2.7
Right-of-use assets
1.9
Deferred tax assets
0.1
Current assets
5.9
Inventories
3.8
Trade & other receivables
1.8
Cash at bank and in hand
0.3
Total assets
10.6
Current liabilities
(4.2)
Borrowings
(1.5)
Lease liabilities
(0.8)
Trade & other payables
(1.8)
Tax payable
–
Contingent liabilities
(0.1)
Non-current liabilities
(1.3)
Borrowings
(0.5)
Lease liabilities
(0.8)
Total liabilities
(5.5)
Net assets
5.1
The gross contractual amounts receivable for trade & other receivables is £2.1 million and, at
the acquisition date, the Group’s best estimate of the contractual cash flows not expected to be
collected is £0.3 million.
The adjustments made to the identifiable assets and liabilities in the acquiree’s local financial
records in arriving at the provisional fair values required by IFRS 3 were:
• Recognising and measuring the acquiree’s lease liabilities as defined in IFRS 16, as if the
leases were a new lease at the acquisition date (£1.6 million adjustment to right-of-use
assets and lease liabilities). No adjustments were required to reflect lease terms that were
favourable or unfavourable to market terms.
• Recognising a contingent liability (£0.1 million) in relation to a legal process that remains in
progress. A corresponding contingent asset has not been recognised.
The fair value of the assets and liabilities acquired is £5.1 million, which is higher than the
fair value of the consideration paid of £2.5 million, therefore a gain on bargain purchase of
£2.6 million has been recognised in the Consolidated Income Statement in the period.
SA Greetings Corporation (Pty) Ltd contributed revenue of £10.4 million and a profit of
£0.2 million to the Group’s profit after tax for the period between the date of acquisition and the
reporting date.
If the acquisition of SA Greetings Corporation (Pty) Ltd had been completed on the first
day of the financial year, Group revenues for the year to 31 January 2024 would have been
£513.2 million and Group profit after tax would have been £47.0 million. SA Greetings has a
similar seasonal trading pattern to the rest of the Group and generates the majority of its sales
and profits in the second half of the financial year.
Governance Financial StatementsStrategic Report
155
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 January 2024
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 January 2024
Note
2024
£m
2023
£m
Non-current assets
Investments 4 316.2 316.2
Deferred tax assets 0.3 1.3
316.5 317.5
Current assets
Trade and other receivables 5 3.3 2.9
Total assets 319.8 320.4
Current liabilities
Trade and other payables 6 (2.8) (3.8)
Net assets 317.0 316.6
Equity
Share capital 7 3.5 3.4
Share premium 7 202.7 202.2
Merger reserve 2.7 2.7
Retained earnings 108.1 108.3
Equity attributable to equity holders of the parent 317.0 316.6
The Company’s loss for the year to 31 January 2024 was £2.3 million (2023: loss of £0.2 million).
The financial statements on pages 155 to 160 were approved by the Board of Directors on
30April 2024 and were signed on its behalf by
Darcy Willson-Rymer
Chief Executive Officer
Company number 09002747
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Retained
earnings
£m
Total
equity
£m
At 31 January 2022 3.4 202.2 2.7 106.7 315.0
Total comprehensive
income for the year
Profit or loss – – – (0.2) (0.2)
Transactions with owners,
recorded directly in equity
Share-based payments – – – 1.8 1.8
At 31 January 2023 3.4 202.2 2.7 108.3 316.6
Total comprehensive
income for the year
Profit or loss – – – (2.3) (2.3)
Transactions with owners,
recorded directly in equity
Shares issued 0.1 0.5 – – 0.6
Share-based payments – – – 2.1 2.1
At 31 January 2024 3.5 202.7 2.7 108.1 317.0
The notes that accompany these financial statements are included on pages 156 to 160.
Card Factory plc Annual Report and Accounts 2024156
PARENT COMPANY CASH FLOW STATEMENT
For the year ended 31 January 2024
Note
2024
£m
2023
£m
Cash (outflow)/inflow from operating activities 10 – –
Corporation tax paid – –
Net cash (outflow)/inflow from operating activities – –
Cash flows from investing activities – –
Dividends received – –
Net cash inflow from investing activities – –
Cash flows from financing activities – –
Dividends paid 3 – –
Net cash outflow from financing activities – –
Net increase in cash and cash equivalents – –
Cash and cash equivalents at the beginning of the
year – –
Closing cash and cash equivalents – –
The notes that accompany these financial statements are included on pages 156 to 160.
1 Accounting policies
Basis of preparation
These financial statements have been prepared in accordance with UK-adopted International
Accounting Standards (‘UK IFRS’) and applicable law.
The financial statements have been prepared under the historical cost convention and on the
going concern basis. The Directors’ assessment of going concern is set out on page 130 of the
consolidated financial statements.
Significant judgements and estimates
The preparation of financial statements in conformity with UK IFRS requires the use of
judgements, estimates and assumptions that affect the application of the Company’s
accounting policies and reported amounts of assets and liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
The Company has not identified any significant judgements or areas of significant estimation
uncertainty in the current year. However, reflecting the degree of management focus, notes
the following in respect of impairment testing:
Investment in subsidiaries impairment testing
The impairment testing of investment in subsidiaries requires judgement in determining the
assumptions to be used to estimate the value-in-use, including estimates of future revenues,
operating costs, terminal value growth rates, the and the pre-tax discount rate to be applied.
Whether or not the estimation used in determining these assumptions is significant depends
upon the outcome of the assessment and the level of headroom in the analysis and sensitivity
to changes in those assumptions.
Further detail is provided in note 4 to the Company financial statements. There were no
reasonably possible changes in key assumptions in the impairment test performed that would
result in an impairment charge.
Principal accounting policies
The principal accounting policies set out below have been applied consistently to all periods
presented in these financial statements.
Changes in significant accounting policies
New standards and amendments to existing standards effective in the period, which are set
out in full on page 131 of the consolidated financial statements, have not had a material effect
on the Company’s financial statements.
UK endorsed standards and amendments issued but not yet effective
A full list of standards and amendments that are in issue but not yet effective is provided on
page 131 of the consolidated financial statements.
The adoption of these standards and amendments in future periods is not expected to have a
material impact on the Company’s financial statements.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
Governance Financial StatementsStrategic Report
157
1 Accounting policies continued
Income statement
The Company made a profit after tax of £2.3 million for the year ended 31 January 2024 (2023:
£0.2 million loss), including £nil dividends received from subsidiary undertakings (2023: £nil). As
permitted by section 408 of the Companies Act 2006, the income statement of the Company is
not presented as part of the financial statements.
Investments
Investments in subsidiary undertakings are held at cost less any provision for impairment.
Financial instruments
Non-derivative financial assets
Non-derivative financial assets comprise trade and other receivables classified as financial
assets at amortised cost. The trade and other receivables do not have a significant financing
component and are initially measured at transaction price. At each reporting date, the
Company assesses whether financial assets carried at amortised cost are credit-impaired. A
financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on
the estimated future cash flows of the financial asset have occurred. The Company measures
loss allowances at an amount equal to lifetime expected credit loss.
Non-derivative financial liabilities
Non-derivative financial liabilities comprise trade and other payables. Trade and other
payables are initially recognised at fair value, less any directly attributable transaction costs
and subsequently stated at amortised cost using the effective interest method.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares are shown in equity as a deduction from the proceeds.
Merger reserve
On 30 April 2014 Card Factory plc acquired 100% of the share capital of CF Topco Limited in
a share for share exchange, thereby inserting Card Factory plc as the Parent Company of the
Group. The shareholders of CF Topco Limited became 100% owners of the enlarged share
capital of Card Factory plc. The premium arising on the issue of shares is recognised in the
merger reserve.
Share-based payments
The Company issues equity-settled share-based payments to employees within the group
through the Card Factory Restricted Share Awards Scheme (‘RSA’) and the Card Factory SAYE
Scheme (‘SAYE’), see note 25 of the consolidated financial statements for further details. The
cost of equity-settled share awards is measured as the fair value of the award at the grant date
using the Black-Scholes model.
The cost of awards to employees of the Company is expensed to the income statement of
relevant subsidiary companies, together with a corresponding adjustment to equity, on a
straight-line basis over the vesting period of the award. The cost of awards to employees of
subsidiary undertakings is immediately reimbursed by the subsidiary. The total cost of the
awards is based on the Company’s estimate of the number of share awards that will eventually
vest in accordance with the vesting conditions. The awards do not include market-based
vesting conditions. At each balance sheet date, the Company revises its estimate of the number
of awards that are expected to vest. Any revision to estimates is recognised in the income
statement, with a corresponding adjustment to equity. The expense recognised in the Company
income statement is subsequently charged to subsidiary entities to the extent that management
services are provided to those subsidiary entities.
Dividends
Dividends are recognised as a liability in the period in which they are approved such that the
Company is obliged to pay the dividend.
Taxation
Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised
in the income statement except to the extent that it relates to items recognised directly in
equity or through other comprehensive income, in which case it is recognised in equity or other
comprehensive income respectively.
Current tax is the expected tax payable or receivable on the taxable income or loss for the
period, using tax rates enacted or substantively enacted at the balance sheet date. Deferred
tax is provided on temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition of goodwill; the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit other than in
a business combination and differences relating to investments in subsidiaries to the extent that
they will probably not reverse in the foreseeable future. The amount of deferred tax provided
is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will
be available against which the temporary difference can be utilised.
Card Factory plc Annual Report and Accounts 2024158
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
2 Employee costs
The Company has no employees other than the Board of Directors. Full details of Directors’
remuneration are set out in the Directors’ Remuneration Report on pages 96 to 107.
3 Dividends
No dividends were paid during either the current or the previous financial year. The Board is not
recommending a final dividend in respect of the financial year ended 31 January 2024 (2023: no
final dividend).
4 Investments in subsidiaries
Subsidiary undertaking £m
At 31 January 2023 and 31 January 2024 316.2
The Company evaluates its investments in subsidiary undertakings annually for any indicators of
impairment. Management have considered that there are no indicators of impairment linked to
the Company investment in subsidiaries. The Directors are satisfied that there is no impairment
of the investment in subsidiaries.
Subsidiary undertakings
At 31 January 2024 the Company controlled 100% of the issued ordinary share capital of the
following subsidiaries, all of which are included in the consolidated financial statements. All
subsidiaries are registered in England and Wales with the exception of Card Factory Ireland
Limited, which is registered in the Republic of Ireland. The registered office of the Company is
Century House, Brunel Road, Wakefield 41 Industrial Estate, Wakefield, West Yorkshire, WF2 0XG.
Subsidiary undertaking Nature of business Registered office
CF Bidco Limited* Intermediate holding company Same as the Company
Sportswift Limited Sale of greeting cards and gifts Same as the Company
Printcraft Limited Printers Same as the Company
Getting Personal Limited Online sale of personalised
products and gifts
Same as the Company
Card Factory Ireland Limited Sale of greeting cards and gifts **
CF SA Holdings (Pty) Limited Intermediate holding company ***
SA Greetings Corporation (Pty)Ltd Intermediate holding company ***
SA Greetings (Pty) Limited Sale of greeting cards ***
CNA Properties (Baragwanath) (Pty) Limited Property Company ***
Funny Paper (Pty) Limited Dormant ***
CF Topco Limited* Dormant Same as the Company
CF Interco Limited Dormant Same as the Company
Short Rhyme Limited Dormant Same as the Company
Heavy Distance Limited Dormant Same as the Company
Getting Personal Group Limited Dormant Same as the Company
Getting Personal (UK) Limited Dormant Same as the Company
Lupfaw 221 Limited Dormant Same as the Company
Sportswift Properties Limited Dormant Same as the Company
CF Midco Limited Dormant Same as the Company
Century Cards Limited**** Dormant Same as the Company
Rose Card Limited**** Dormant Same as the Company
Celebration Cards Limited**** Dormant Same as the Company
Sportswift Trading Limited**** Dormant Same as the Company
CF Newco Limited**** Dormant Same as the Company
321 Cards Limited**** Dormant Same as the Company
Card Concepts Limited**** Dormant Same as the Company
Excelsior Graphics Limited**** Dormant Same as the Company
Card Factory Stores Limited**** Dormant Same as the Company
Card Factory Retail Limited**** Dormant Same as the Company
Card Factory Online Limited**** Dormant Same as the Company
Card Factory Greetings Limited**** Dormant Same as the Company
* Shares held directly. All other subsidiaries shares are held indirectly through subsidiary undertakings.
** 6th Floor, 2 Grand Canal Square, Dublin 2, Dublin, Republic of Ireland.
*** 2 Aeroton Road, Aeroton, Johannesburg 2013.
**** These Dormant entities have been struck off subsequent to the year end in March 2024.
Governance Financial StatementsStrategic Report
159
5 Trade and other receivables
2024
£m
2023
£m
Amounts owed by Group undertakings 3.2 2.7
VAT recoverable – –
Prepayments and other debtors 0.1 0.2
3.3 2.9
Trade and other receivables of the Company principally relate to balances due on demand
from subsidiary undertakings. The Company has assessed the expected credit loss as very low
and has made no provision for impairment.
6 Trade and other payables
2024
£m
2023
£m
Amounts owed to Group undertakings – 1.0
Trade payables 2.2 2.0
Accruals 0.6 0.8
2.8 3.8
7 Share capital and share premium
2024
(Number)
2023
(Number)
Share capital
Allotted, called up and fully paid ordinary shares of one pence:
At the start of the period 342,636,090 341,878,341
Shares issued in the year 2,940,271 757,749
At the end of the period 345,576,361 342,636,090
£m £m
Share capital
At the start of the period 3.4 3.4
Shares issued in the year 0.1 –
At the end of the period 3.5 3.4
£m £m
Share premium
At the start of the period 202.2 202.2
Shares issued in the year 0.5 –
At the end of the period 202.7 202.2
The company has only one class of shares, which are ordinary shares of 1 pence each, carrying
no right to a fixed income. No shareholders have waived their rights to dividends.
During the 2024 financial year, 2,940,271 shares (2023: 757,749 shares) were issued in satisfaction
of options vesting in accordance with the rules of the Group’s employee share schemes.
Full details in respect of the Group’s employee share schemes, including remaining options
outstanding, are included in note 25 to the consolidated financial statements.
8 Financial risk management
The financial risk management strategy of the Company is consistent with the Group strategy
detailed in note 23 of the consolidated financial statements. Company exposure to liquidity,
interest rate, foreign exchange and credit risk are principally to the extent they impact the trade
of its subsidiary investments. Trade and other receivables of the Company principally comprise
amounts due from Group undertakings.
Card Factory plc Annual Report and Accounts 2024160
9 Financial instruments
Classification of financial instruments
Financial assets have all been classified as financial assets at amortised cost. Financial
liabilities have all been classified as other financial liabilities.
Maturity analysis
All financial instrument assets and liabilities fall due in less than one year.
Fair values
The fair values of financial instruments have been assessed as approximating to their carrying
values.
10 Notes to the cash flow statement
2024
£m
2023
£m
Loss before tax (1.3) (0.6)
Dividends received – –
Operating loss (1.3) (0.6)
Adjusted for:
Share-based payment charge 1.3 0.4
Operating cash flows before changes in working capital – (0.2)
Decrease/(increase) in receivables 0.4 (0.4)
(Decrease)/increase in payables (1.0) 0.6
Cash outflow from operating activities (0.6) –
Issue of share capital 0.6 –
Cash inflow/(outflow) from financing activities 0.6 –
Net cash flow – –
The increase in payables stated above is adjusted to reflect amounts analysed elsewhere in the
cash flow statement, which are included within amounts owed to Group undertakings in the
statement of financial position.
11 Related party transactions
Amounts due to and from Group undertakings are set out in notes 5 and 6 of the financial
statements. Transactions between the Company and its subsidiaries were as follows:
2024
£m
2023
£m
Management services 2.1 2.1
Dividends received from Group undertakings – –
Inter-company working capital cash flows from Group undertakings 2.1 2.1
Transactions with key management personnel
The key management personnel of the Company comprise the Card Factory plc Board of
Directors. Disclosures relating to Directors’ remuneration are set out in the Remuneration
Report on pages 96 to 107. Directors of the Company control 0.02% of the ordinary shares of
theCompany.
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS CONTINUED
Governance Financial StatementsStrategic Report
161
GLOSSARY
Alternative Performance Measures (“APMS”) and other explanatory information
In the reporting of the consolidated financial statements, the Directors have adopted various
Alternative Performance Measures (‘APMs’) of financial performance, position or cash flows
other than those defined or specified under International Accounting Standards (‘IFRS’).
These measures are not defined by IFRS and therefore may not be directly comparable with
other companies’ APMs, including those in the Group’s industry or that appear to have similar
titles or labels. APMs should be considered in addition to IFRS measures and are not intended
to be a substitute for IFRS measurements.
The Directors believe that these APMs provide additional useful information on the performance
and position of the Group and are intended to aid the user in understanding the Group’s
results. The APMs presented are consistent with measures used internally by the Board and
management for performance analysis, planning, reporting and incentive setting purposes.
The table below sets out the APMs used in this report, with further information regarding the
APM, and a reconciliation to the closest IFRS equivalent measure, below.
Sales APMs Like-for-like sales (LFL)
Profitability APMs EBITDA
Adjusted Profit Before Tax (PBT)
Adjusted EPS
Financial position APMs Net Debt
Leverage and Adjusted Leverage
Cash flow APMS Operating Cash Conversion
Following the approval of the Group’s updated capital allocation policy, Adjusted Leverage
and Adjusted EPS have been included in this report for the first time. These measures play an
important role in the Group’s capital allocation decisions.
Sales APMs
LFL Sales
Closest IFRS Equivalent: Revenue.
Like-for-like or LFL calculates the growth or decline in gross sales in the current period versus a
prior comparative period.
For stores, LFL measures exclude any sales earned from new stores opened in the current period
or closed since the comparative period and only consider the time period where stores were
open and trading in both the current and prior period.
LFL measures for product lines or categories, where quoted, are calculated using the same
principles.
LFL measures for our online businesses (cardfactory.co.uk and gettingpersonal.co.uk) compare
gross sales for the current and comparative period made through the respective online
platform.
All LFL measures in this report compare FY24 to FY23, unless otherwise stated.
In addition, the Group reports combined Like-for-Iike sales measures for certain components of
the business as follows:
• ‘cardfactory LFL’ is defined as Like-for-like sales in stores plus Like-for-like sales from the
cardfactory website www.cardfactory.co.uk.
• ‘Online’: Like-for-like sales for cardfactory.co.uk and gettingpersonal.co.uk combined.
Sales by Printcraft, the Group’s printing division, to external third-party customers and
partnerships sales are excluded from any LFL sales measure.
Reconciliation of Revenue to LFL Sales
cardfactory
Stores
£m
cardfactory
Online
£m
cardfactory
LFL
£m
Getting
Personal
£m
Revenue FY24 478.9 8.8 487.7 5.9
VAT / other 89.9 1.9 91.8 1.5
Adjustment for Stores not open in both periods (7.6) – (7.6) –
LFL Sales FY24 561.2 10.7 571.9 7.4
Revenue FY23 440.4 8.8 449.2 8.5
VAT / other 83.4 1.9 85.3 1.4
Adjustment for Stores not open in both periods (2.7) – (2.7) –
LFL Sales FY23 521.1 10.7 531.8 9.9
LFL Sales Growth 7.7% +0.4% 7.6% -26.1%
Note percentages are calculated based on absolute figures before rounding.
Card Factory plc Annual Report and Accounts 2024162
Profitability APMs
EBITDA
Closest IFRS Equivalent: Operating Profit
1
EBITDA is earnings before interest, tax, gains or losses on disposal, depreciation, amortisation
and impairment charges. Earnings is equivalent to profit after tax calculated in accordance with
IFRS and each adjusting item is calculated in accordance with the relevant IFRS.
The Group uses EBITDA as a measure of trading performance, as it usually closely correlates to
the Group’s operating cash generation.
Reconciliation of EBITDA to Operating Profit
FY24
£m
FY23
£m
Operating Profit 76.4 63.8
Add back:
Depreciation 43.5 43.7
Amortisation 2.8 2.3
Gains on disposal (1.2) (0.6)
Impairment charges 1.1 2.8
EBITDA 122.6 112.0
1. Whilst operating profit is not defined formally in IFRS, it is considered a generally accepted accounting
measure.
Adjusted PBT
Closest IFRS Equivalent: Profit Before Tax.
Adjusted PBT is Profit Before Tax adjusted to exclude the effect of transactions that, in the opinion
of the Directors, are one-off in nature and as such are not expected to recur in future period and
could distort the impression of future performance trends based on the current year results. The
adjustments are consistent with those made in calculating Adjusted EBITDA, above, and similarly
the Group uses Adjusted PBT to assess its performance on an underlying basis excluding these
items and believe measures adjusted in this manner provide additional information about the
impact of unusual or one-off items on the Group’s performance in theperiod.
In FY24 the Directors have identified the following items that they believe to meet the definition
of ‘one-off’ for this purpose:
• The gain on bargain purchase related to the acquisition of SA Greetings of £2.6 million.
• A gain relating to the release of covid-related provisions of £2.0 million.
• An impairment charge relating to Getting Personal of £1.1 million.
The following items are taken into account in arriving at Adjusted PBT for the equivalent period
last year (FY23):
• A £2.5 million benefit arising as a result of releasing provisions no longer required following
settlement of the Group’s CJRS position with HMRC.
• A £1.0 million benefit arising as a result of the refinancing of the Group’s debt facilities in
April 2022.
Reconciliation of Adjusted PBT to Profit Before Tax
FY24
£m
FY23
£m
Profit Before Tax 65.6 52.4
Add back / (Deduct):
Acquisition gain (2.6) –
COVID provision release (2.0) –
GP Intangible impairment 1.1 –
CJRS settlement – (2.5)
Refinancing benefit – (1.0)
Adjusted PBT 62.1 48.9
Adjusted EPS
Closest IFRS Equivalent: Basic EPS.
Adjusted EPS is earnings per share adjusted to exclude the post-tax effect of items identified as
one-off and excluded from Adjusted PBT in the period. The Group calculates adjusted EPS as it
is the basis of dividend calculations under its capital allocation policy, under which the Board
targets a dividend cover ratio of between 2-3x Adjusted EPS.
The starting point of the calculation is Adjusted PBT, as calculated above.
GLOSSARY CONTINUED
Governance Financial StatementsStrategic Report
163
Calculation of Adjusted EPS
FY24
£m
FY23
£m
Adjusted PBT 62.1 48.9
Tax charge (16.1) (8.2)
Tax impact of non-underlying items 0.5 0.7
Adjusted PAT 46.5 41.4
Weighted average number of shares 343,339,468 342,328,622
Adjusted EPS 13.5p 12.1p
Financial position APMs
Net Debt
Closest IFRS Equivalent: No equivalent; however is calculated by combining IFRS measures for
Cash and Borrowings.
Net Debt is calculated by subtracting the Group’s cash and cash equivalents from its gross
borrowings (before debt-issue costs). Net Debt is a key measure of the Group’s balance sheet
strength, and is also a covenant in the Group’s financing facilities. The Group presents Net Debt
both inclusive and exclusive of lease liabilities, but focusses upon the value exclusive of lease
liabilities, which is consistent with the calculation used for covenant purposes.
Calculation of Net Debt
FY24
£m
FY23
£m
Current Borrowings 7.1 27.1
Non-Current Borrowings 37.9 40.4
Add back Debt Issue Costs 0.7 1.4
Gross Borrowings 45.7 68.9
Cash (11.3) (11.7)
Net Debt (exc. Leases) 34.4 57.2
Lease Liabilities 100.8 105.4
Net Debt (inc. Leases) 135.2
162.6
Leverage & Adjusted Leverage
Closest IFRS Equivalent: No equivalent; however is calculated with reference to Net Debt and
EBITDA, which are reconciled to relevant IFRS measures in this section.
Leverage is the ratio of Net Debt (excluding lease liabilities) to EBITDA for the previous 12
months expressed as a multiple. Adjusted Leverage is calculated in the same way, but deducts
lease-related charges from EBITDA. The Group monitors and reports leverage as a key measure
of its financing position and as an assessment of the Group’s ability to manage and repay
its debt position. Adjusted Leverage is consistent with a covenant defined within the Group’s
financing facilities.
Under its capital allocation policy, the Group targets Adjusted Leverage below 1.5x throughout
the financial year. As described in the financial review above, the Group’s cash flows and
earnings are materially affected by seasonality, with higher sales and cash flows in the second
half of the year linked to the Christmas season. As a result, net debt levels are lower and
Leverage improved at the year end, after the Christmas season.
Calculation of Leverage
FY24
£m
FY23
£m
Net debt (as calculated above) (A) 34.4 57.2
EBITDA (as calculated above) (B) 122.6 112.0
IFRS 16 depreciation (35.9) (35.7)
IFRS 16 impairment (0.2) (1.3)
Gains on modification/disposal 1.2 0.5
IFRS 16 interest (6.3) (4.5)
EBITDA less rent costs (C) 81.4 71.0
Leverage (A/B) 0.3x 0.5x
Adjusted Leverage (A/C) 0.4x 0.8x
Card Factory plc Annual Report and Accounts 2024164
Cash flow APMs
Operating cash conversion
Closest IFRS Equivalent: No equivalent; however is calculated with reference to Cash from
Operating Activities (an IFRS measure) and EBITDA, which is reconciled to Operating Profit in
this section
Operating cash conversion is Cash from operations (calculated as cash from operating activities
before corporation tax payments) per the cash flow statement prepared in accordance with
IFRS divided by EBITDA and expressed as a percentage.
Calculation of Operating Cash Conversion
FY24
£m
FY23
£m
Cash from Operations 118.7 107.8
EBITDA 122.6 112.0
Operating Cash conversion 96.8% 96.3%
Other financial calculation information
Unless otherwise stated, amounts in this report are presented in Pound Sterling (GBP), and have
been rounded to the nearest £0.1 million.
Information in tables or charts may not add down or across, or calculate precisely, due to
rounding.
Percentage movements, where provided, are based on amounts before they were rounded to
the nearest £0.1 million.
GLOSSARY CONTINUED
CBP00019082504183028
165
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ADVISERS AND CONTACTS
Corporate brokers
UBS Limited
5 Broadgate
London EC2M 2QS
Tel: 020 7567 8000
Investec Bank plc
2 Gresham Street
London EC2V 7QP
Tel: 020 7597 4000
Auditor
Mazars LLP
One St Peter’s Square
Manchester M2 3DE
Tel: 0161 238 9200
Principal bankers
National Westminster Bank plc
Leeds Corporate Office
3rd Floor
2 Whitehall Quay
Leeds LS1 4HR
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Tel: 0371 384 2030¹
Investor relations
Teneo
The Carter Building
11 Pilgrim Street
London EC4V 6RN
Tel: +44 020 7260 2700
Registered office
Century House
Brunel Road
Wakefield 41 Industrial Estate
Wakefield
West Yorkshire WF2 0XG
Company Registration No: 9002747
1.  Lines are open 8.30am to 5.30pm (UK time), Monday
to Friday, excluding English public holidays.
Card Factory plc
Century House
Brunel Road
Wakefield 41 Industrial Estate
Wakefield West Yorkshire WF2 0XG
www.cardfactoryinvestors.com