Notice of AGM

RNS Number : 1831D

Card Factory PLC

25 April 2017

 

25 April 2017

Card Factory plc

Annual Financial Report and Notice of AGM

Card Factory plc ("Card Factory" or the "Company") announces that it has published its Annual Report and Accounts for the year ended 31 January 2017 and Notice of the Company's 2017 Annual General Meeting.

The Annual General Meeting to which the notice relates is to be held at 11.00 a.m. on Thursday 25 May 2017 at the offices of Linklaters LLP, One Silk Street, London EC2Y 8HQ.

Copies of the documents listed below have today been posted to shareholders:

1.      Annual Report and Accounts 2017;

2.      Notice of 2017 Annual General Meeting; and

3.      Form of Proxy for the 2017 Annual General Meeting.

A copy of each of these documents has also been submitted to the UK Listing Authority via the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do.

These documents will also be accessible later today via the Company's investor relations website www.cardfactoryinvestors.com.

Card Factory's preliminary results announcement on 28 March 2017 (which is available via the Company's investor relations website referred to above) included, in addition to the preliminary financial results for the year ended 31 January 2017, information on important events that occurred during the year and their impact on those financial results. That information, together with the information set out in the Appendix below is provided in compliance with the requirements of DTR6.3.5(2)(b). This information is not a substitute for reading the full Annual Report and Accounts for the year ended 31 January 2017.

For further information:

Shiv Sibal, Company Secretary and Group General Counsel Card Factory plc

Tel: [phone]

ENDS

APPENDIX

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Card Factory group (the "Group") are set out below, together with details of how these are currently mitigated. For further information on how the Group manages risk, see pages 23 to 26 of the Strategic Report and also page 45 of the Corporate Governance Report within the Annual Report and Accounts 2017 ("Annual Report").

Risk Type	Description	Mitigation
Market Since 2016: No change	The Group continues to generate almost all of its revenue from the sale of greeting cards, dressings and gifts. Although the Group has a proven track record of understanding the needs of our customers, trends and tastes can change, often quite quickly, and there is a risk that we may not be able to effectively predict and respond to changing consumer demands and market trends which could affect our sales, performance and reputation.	·      Regular customer surveys and market research supported by experienced marketing resource. ·      Significant additional investment in and collaboration between our in-house design and buying teams during the year. ·      Investment in our merchandising team to improve customer shopping experience. ·      Developing multiple sales channels, particularly online, to respond to changing consumer demands. ·      Strong focus on product innovation with designs continuously refreshed through key trading seasons and new product ranges being introduced. ·      Detailed sales analysis guides design and purchasing decisions. ·      Weekly trading meetings driving better 'real time' decision-making. ·      Vertically integrated model helps the Group position itself to quickly respond to changes in its markets.
Competition Since 2016: No change	Competition in the greeting card, dressings and gifting sectors continues to intensify particularly during key seasons like Christmas. Product choice and quality, store location and design, inventory, price and customer service remain key to differentiating our offering. We compete with a wide range of retailers (including new entrants) and, as the quality and range of products we offer has grown, our competitor group has widened. Significant competitors include national retailers who enjoy strong brand presence recognition, financial resources and purchasing economies of scale, any of which could give them a competitive advantage.	·      Sustained investment in the assets, systems and people supporting our vertically integrated model which underpins our competitive position. ·      In-house design and print operations help maintain and improve the quality and value of our offering. ·      Strong focus on innovation and product development helps refresh and strengthen our proposition each year. ·      All key elements of competitor activity, including new store openings and market entrants, closely monitored with selective localised strategies used to remain competitive. ·      Rigorous store selection process to ensure our store opening programme enables us to maintain our competitive position. ·      Continuous review of individual store performance and customer trends and behaviours supported by more targeted externally facilitated customer research.
Our Brands Since 2016: No change	'Card Factory' and 'Getting Personal' are the Group's key brand assets. Protecting and enhancing them underpins our reputation. If we are unable to protect them or we fail to sustain our appeal to our customers, our reputation and our sales and future prospects could be jeopardized.	·      Rigorous protection of our intellectual property, and greater guidance and education for our buying team when buying third party product. ·      Regular reviews of customer trends and competitor activity. ·      Customer surveys address brand perception with specialist marketing resource now supporting activity driven from these. ·      Product innovation and closer collaboration between our design and buying teams to ensure we're giving customers the quality and value they expect from Card Factory. ·      Development of our dedicated quality control function that works with our design, buying and print teams and third-party suppliers to ensure product quality and safety.
Business Strategy Since 2016: No change	The Group's four pillar strategy has been developed with the aim of achieving long-term value for our shareholders. If the strategy and vision for the business are not properly developed, communicated or delivered, the Group's performance could suffer. Strategy implementation requires careful prioritisation of resource to ensure a focus on those initiatives from which the business will benefit most.	·      New CEO has provided further insight and experience in the continued development of the Group's strategy. ·      We regularly monitor the implementation of, and performance against, strategy both at Board and senior management team level. ·      Business objectives, and how we prioritise and communicate these are set in the context of our four pillar strategy. ·      Continued investment in the senior management team to ensure the Group has the capacity and capability to implement its strategy. ·      Competitor analysis, customer research and sales data used to bring focus to the development of our retail proposition.
Store Portfolio Expansion Since 2016: No change	The Group has an extensive store network across a wide range of locations and demographics but, in line with our strategy, further profit growth depends in part on us being able to find good locations for new stores. Managing the competition for retail sites and achieving acceptable commercial terms are key to our strategy. Supporting our growing portfolio through our operational infrastructure, financial systems and managerial controls and procedures is critical to the Group's success.	·      Maintained database of new store opportunities. ·      Additional specialist resource recruited into the property team to implement acquisition strategy. ·      Further development of our appraisal process for new store locations including store formats with the benefit of the additional insight and experience of our new Property Director. ·      Commercial analysis conducted on new stores to assess potential sales and profitability taking into account the number of other Card Factory and competitor stores in close proximity. ·      Commercial developments monitored in the real estate market and our strategy is adjusted where a change may adversely affect a store's potential profitability. ·      Group's operational capabilities support the current portfolio expansion strategy in the UK.
Sourcing/ Supply Chain Since 2016: No change	Third-parties, including many in the Far East, supply nearly all of our non-card products, our handcrafted greeting cards and certain raw materials. If they fail to satisfy orders it may affect the business or result in us having to seek alternative suppliers, who may not be able to fulfil our needs. We are also exposed to changes in supplier dynamics and increases in raw material prices. Our supplier profile means we are subject to the risks of manufacturing and importing of goods from overseas including freight costs and duty, as well as supply interruption and reputational risk arising from supplier labour practices.	·      Strong relationships with key suppliers. ·      Continuously developing and broadening supplier base providing greater flexibility and reducing reliance on individual suppliers. ·      Periodic inspections and third-party facilitated technical audits of factories operated by major suppliers with clear actions where weaknesses are identified. ·      Sedex membership ('the Supplier Ethics Data Exchange') combined with a programme of standalone ethical audits of key suppliers. ·      Dedicated product quality control function which is responsible for the testing and inspection of products. ·      During 2015, both Sportswift Limited (which trades as 'Card Factory') and Printcraft Limited, obtained Forest Stewardship Council ('FSC') certification.
Key Personnel Since 2016: Increased	The Group's Four Pillar strategy and long-term success depend on our ability to: develop and manage succession plans for the Group's senior management team; sustain and develop our senior management team and employees; and to build our teams where this supports our growth and ensures we have appropriate capability and capacity to pursue our strategic goals.	·      On joining, Karen Hubbard, undertook an extensive tailored induction and handover programme with support from the former CEO, the CFO and the rest of the Board and senior management team. ·      Management development has been supported using external agencies and, in some cases, one-to-one business mentors. ·      Succession plans for the whole of the senior management team are being developed and the succession of our CFO is being managed by the Nomination Committee. ·      The Group has recruited a new Human Resources Director who will oversee the development of the Group's wider people strategy. ·      The Group's Remuneration policy (set out in the Annual Report on pages 56 to 64) is designed to incentivise senior management and promote the long-term success of the Group but will be reviewed in light of recent developments regarding remuneration strategy. ·      Delivery of the Group's strategic objectives and business performance are currently and will remain central to any remuneration policy the Group adopts with remuneration structured to align the interests of the senior management team and shareholders.
Managing Change Since 2016: NEW	As the Group seeks both to increase scale and improve efficiency, the number of business initiatives it wishes to undertake also increases. This introduces a risk of management overload and 'business as usual' activities could be compromised.	·      A dedicated Programme Director has been recruited to manage some of the important projects the Group is pursuing and to ensure change is being managed alongside 'business as usual' priorities and takes into account capacity within the relevant teams. ·      Members of the Board have 'buddied up' with members of the senior management team to provide additional mentoring and support. ·      Specialist resource is supporting the Group's marketing activities and online development. ·      The Group's senior management team carefully prioritise projects and initiatives to ensure they support delivery of the Group's strategy. ·      Board receives regular updates and has the opportunity to challenge the initiation or speed of progression of major projects.
Finance and Treasury Since 2016: Increased	Our funding arrangements and the fact that we source the majority of our non-card merchandise, as well as handmade cards and certain raw materials, from suppliers in the Far East mean that a lack of appropriate levels of covenant headroom and/or cash resources in the Group, or significant variations in interest or exchange rates, could have an impact on our operations and performance. The CFO's Review on page 20 of the Annual Report sets out in further detail the risk to the Group of recent exchange rate fluctuations after the UK's decision to leave the European Union.	·      Current financing arrangements and Group cash generation continue to provide the Group with appropriate financial support and cash resources for the delivery of its strategy. ·      Treasury management processes and policy in place to govern cash management and manage exposure to foreign exchange and interest rate fluctuations including those resulting from the Brexit decision. ·      Foreign exchange and interest rate hedging contracts pre-approved directly by the CFO and communicated to the Board monthly. ·      Treasury strategy reviewed and approved annually by the Board with periodic consultation between the CFO and the Chairman of the Audit and Risk Committee. ·      The Group's programmes within its Business Efficiencies strategic pillar have been reviewed to ensure opportunities for cost savings are being robustly pursued. ·      Further details of the Group's financial position are described in the CFO's Review on pages 21 and 22 of the Annual Report and the Group's viability statement is in the Directors' Report on page 77.
Business Continuity Since 2016: No change	Any major disruption to any of the parts of our vertically integrated business model, in particular to our printing facility, Printcraft, our distribution centre or our design studio, could severely affect our ability to supply our stores. Disruption to any of these functions could also force us to use third-party providers which could be expensive and on onerous terms.	·      The Group's crisis management arrangements continue to be developed and have been reviewed by our internal audit services provider Deloitte LLP with our Audit and Risk Committee providing further guidance to the senior management team. ·      Crisis management arrangements will be supplemented by periodic scenario testing which will allow the Group's arrangements to evolve ensuring they meet the needs of the business. ·      Stock held across multiple locations to mitigate the risk of a catastrophic event at any one of our storage facilities. ·      Group IT systems are subject to specific disaster recovery arrangements. ·      The Group also maintains appropriate business interruption insurance cover.
Compliance Since 2016: No change	The Group is subject to legislation and regulations in areas including corporate governance, the listing and trading of our shares, employment (including that relating to the introduction of the new National Living Wage), product quality, trading, the environment, health and safety, bribery and data protection. Any failure to comply with these could lead to penalties, fines, damages, claims or reputational damage which could impact the financial performance of the business.	·      Policies and procedures are in place governing behaviours in all key areas, some which address mandatory requirements and others adopted voluntarily. ·      Senior management team members manage compliance of the Group's key operational teams with escalation and disciplinary action where needed. ·      Group's General Counsel and Company Secretary oversees compliance with the support of external advisers. Senior management team members liaise with him to ensure issues are identified and managed. ·      Impact of new legislation on the Group is monitored with changes implemented where required, eg Market Abuse Regulations.
Information Technology Since 2016: Increased	Reliable, resilient and efficient IT systems, including those supporting our retail operations (both physical and online), our head office function and our in-house design and printing operations, are important to the Group. Failure to adequately develop and maintain these or any prolonged system performance problems or cyber-attack could seriously affect our ability to implement the Group's strategy and to carry on the business.	·      Since their appointment, our internal audit services provider Deloitte LLP, have largely focused their work on the Group's use of technology and the structure and resources supporting this. ·      Detailed reviews of the Group's point of sale technology systems and the resilience of our IT systems, including their ability to withstand cyber-threats, have been carried out by Deloitte with actions and recommendations being monitored by the Audit and Risk Committee including further investment in additional cyber-security measures. ·      The Group has conducted a detailed review of its IT strategy and governance. ·      Further investment has been made in the systems supporting both the Card Factory and Getting Personal trading websites. ·      Key IT risks are documented and agreed service levels for recovery of key business systems are in place.
Online Since 2016: No change	The Group's online presence, via our Getting Personal and Card Factory transactional websites, remains a relatively new and developing part of the business but is one of our four strategic pillars of growth. Our websites operate in a very competitive market with relatively low barriers to entry. If they do not evolve to account for changing customer tastes and the different devices being used by customers to make online purchases, they may not deliver the anticipated revenue growth. This may also affect our reputation and customer perception of our brands.	·      Investment in the management team at Getting Personal. ·      New team reviewing Card Factory online proposition and marketing activity supporting this. ·      Online focused team put in place within the Group's design studio. ·      Continued investment in offering via in-house web development team. ·      Analysing various data (transactional, industry, competitor, etc) to ensure we respond appropriately to changing customer tastes. ·      Mobile sites have evolved to reflect evolution in consumer behaviour to new channels.

Directors' Responsibility Statement

The Annual Report and Accounts 2017 contains a responsibility statement by Karen Hubbard, Chief Executive Officer, and Darren Bryant, Chief Financial Officer, by order of the Board in the following form:

"We confirm that to the best of our knowledge:

·      the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

·      the Strategic Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy."

Related Party Transactions

Details of the only material transactions with related parties during the financial year ended 31 January 2017 are set out in note 28 of the financial statements on page 112 of the Annual Report.

 

END

 

 

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