Annual Report & Accounts 2002 - Clintons · adjusted sales figures for an earlier Easter this year,...

Annual Report & Accounts 2002Clinton Cards is the UK’s largest specialist

retailer of greetings cards and related products

www.clintoncards.co.uk

CARDS PLC�

CONTENTS

01 Results at a glance

02 Chairman’s statement

05 The Greeting Card Market

06 Operating review

08 Directors and advisers

09 Directors’ report

11 Corporate Governance

13 Auditors’ report

14 Consolidated profit and loss account

15 Balance sheets

16 Consolidated cash flow statement

17 Notes to the financial statements

30 Notice of Annual General Meeting

Profile

Clinton Cards is the largest specialist

retailer of greetings cards, plush merchan-

dise (soft toys) and related products in the

UK with nearly 700 shops and conces-

sions within Debenhams stores. Clinton

Cards was founded in 1968 when Don

Lewin, the present Chairman, opened his

first shop in Epping, Essex. The business

grew to 77 shops by 1988 and was then

successfully floated on the London Stock

Market. This enabled the company to

increase its rate of growth and by the

summer of 1994 the business comprised

277 shops. In October 1994 Clintons

acquired 83 shops from Hallmark Cards

and in September 1995 acquired 112 shops

from Carlton Cards. In October 1998 the

entire share capital of GSG Holdings

Limited was purchased adding a further

211 shops to the portfolio. These three

important transactions and continuing

organic growth were financed without

recourse to shareholders. Clintons operate

shops ranging in size from its typical

1,600 square feet shop to its largest shop

situated in Bath totalling 9,000 square

feet on one floor which also contains a

coffee shop. Clinton Cards offers the most

extensive range of quality greetings cards,

gift dressing and plush merchandise avail-

able in any high street. This is especially

so at seasonal times such as Valentine’s

Day, Mother’s Day, Father’s Day,

Christmas and Easter. Clintons has taken

the lead in offering cards for numerous

other occasions such as the UK Patron

Saints’ Days as well as festivals and New

Year celebrations of other nationalities.

01 Clinton Cards PLC

Results and five year history at a glance

Results and five year history at a glance

2002 2001 2000 1999 1998

£’000 £’000 £’000 £’000 £’000

Turnover (excluding VAT) 289,251 268,832 253,642 208,460 152,790

Profit before goodwill and taxation 20,996 19,121 17,623 16,186 7,676

Profit before taxation 19,652 17,777 16,279 15,798 7,676

Tangible fixed assets 54,423 48,118 46,110 40,208 26,983

Shareholders’ funds 69,452 60,659 52,334 46,148 26,097

Number of shops at year end 672 676 695 722 476

Average number of shops during year 668 686 706 564 476

Dividend per share 6.74p 5.88p 5.23p 4.60p 3.00p

Basic earnings per share before goodwill 21.43p 19.91p 16.92p 17.98p 9.03p

Basic earnings per share after goodwill 19.48p 17.96p 14.96p 17.34p 9.03p

* Pre amortisation of goodwill

0

50

100

150

200

250

300

200220012000199919980

5

10

15

20

25

20022001200019991998

0

10

20

30

40

50

60

70

80

20022001200019991998

Shareholders’ funds (£m)

0

5

10

15

20

25

20022001200019991998

Earnings*/dividend per share (pence)

Profit before taxation* (£m)Turnover (£m)

TradingThe year to January 2002 was another

year of excellent progress achieving

record sales and profits. Sales (including

value added tax) for the 52 weeks to 27

January 2002 increased by 7.7% to

£339.4 million from £315.3 million last

time. Like for like sales increased by

6.0% (2001: 3.6%).

Financial resultsProfit before tax for the period increased

by 10.7% to £19.7 million compared to

£17.8 million last year. Profit before tax

and amortisation of goodwill rose by

9.9% to £21.0 million (2001: £19.1 mil-

lion) and this was achieved after charging

for losses on sale of fixed assets in the

period of £1.6 million (2001: £0.2 mil-

lion).

DividendYour Board is pleased to recommend a

final dividend of 5.40 pence per share

(2001: 4.60 pence) an increase of 17.4%.

Together with the interim dividend of

1.34 pence, the total for the year is 6.74

pence (2001: 5.88 pence), an increase of

14.6%. The dividend is covered 2.9 times.

Subject to shareholder approval, the final

dividend is payable on 5 June 2002 to all

shareholders on the register at the close

of business on 10 May 2002.

DevelopmentOur strategic objective of improving our

store portfolio continued with the open-

ing of new stores, modernising existing

businesses or, when opportunities were

identified, relocating to larger improved

sites. Further details are set out in the

Operating Review on page 6.

Our total trading space at the year end

was 1.08 million square feet, up from

1.06 million square feet last year, in spite

of trading from four less stores.

We are pleased with our trading within

Debenhams department stores.

Concessions were being operated

throughout the year in about 40 stores

selling everyday cards and, in addition,

Christmas cards and wrap were sold in

over 90 Debenhams stores during the

Christmas trading period. This level of

activity will be continued during 2002.

As mentioned in our Christmas trading

update, we trialled 35 temporary new for-

mat stores selling only calendars in the

run up to Christmas and the New Year.

We were pleased with the results from

these stand alone "Calendar Experience"

sites and we anticipate extending the con-

cept ahead of next Christmas.

The average number of visitors to the

Clinton Cards web site continues to grow.

It is certainly an effective marketing tool

complementing our core business. It is

fully transactional selling personalised

everyday and seasonal cards, wedding sta-

tionery and gifts and sales from the site

are in line with our expectations. Details

of many of the products sold in store are

displayed as well as other information

about the Company.

Current trading and prospectsTrading in the first 10 weeks of the new

financial year has started well. Having

adjusted sales figures for an earlier Easter

this year, like for like sales in 614 compa-

rable stores increased by 5.5% and this

performance is against a very strong start

to last year which, in the first nine weeks,

achieved an increase of 12.6%.

Our success is the result of the hard work

and loyalty of the many staff employed

across the Group and, on behalf of the

Board, I would like to extend our sincere

thanks to them all.

Many opportunities exist to progress our

business and the Board remains confi-

dent of achieving further growth in the

current year and beyond. We have estab-

lished a very strong brand in the UK. Our

strategy remains on track to be trading

from more than 800 stores by the end of

2006.

Don Lewin OBEChairman

16 April 2002


Chairman’s statement





The greeting card market



The estimated size of the greeting card

market ranges from £1.0 billion to £1.2

billion. Clinton Cards has approximately

17.0% of this market which comprises

three types of buying:

60%EverydayBirthday

Get Well

Anniversary etc.

30%Christmas

10%SpringValentine’s Day

Mother’s Day

Easter

Father’s Day

Global greeting card consumptionMore cards are received per capita each

year in the UK than anywhere else:

UK 52

USA 48

Canada 38

Australia 30

Scandinavia 30

Netherlands 25


Everyday

Christmas

Spring

0

10

20

30

40

50

60

NetherlandsScandinaviaAustraliaCanadaUSAUK

Operating review

Financial resultsSales (including value added tax) for the

52 weeks to 27 January 2002 increased by

7.7% to £339.4 million (2001: £315.3 mil-

lion). Profit before tax for the 52 weeks to

27 January 2002 increased by 10.7% to

£19.7 million compared with £17.8 mil-

lion last year. Profit before tax and amor-

tisation of goodwill rose by 9.9% to £21.0

million (2001: £19.1 million). This was

achieved in spite of a significantly higher

charge in the year of £1.6 million for loss-

es on sale of fixed assets which compares

with only £0.2 million the previous year.

About half of this charge is in respect of

the disposal of five stores and similar

transactions of this magnitude are unlike-

ly to be repeated.

Net interest charged in the period was

£687,000 (2001: £744,000). This

decrease is partly as a result of reducing

stock levels during the year to a more

usual year end level of £34.6 million

(2001: £40.8 million) which also helped

to reduce average gearing through the

year to 17.3%, down from 28.9% for the

corresponding period.

Operating profit pre goodwill increased to

£21.7 million compared with £19.9 mil-

lion last year, an increase of 9.2%.

Basic earnings per share increased by

8.5% to 19.48p (2001: 17.96p). Earnings

per share before the amortisation of good-

will increased 7.6% to 21.43p (2001:

19.91p).

The turnover and profit figures set out

above represent another year of record

results.

Total shareholders' funds increased by

14.5% from £60.7 million to £69.5 million.

TradingLike for like sales for the 52 week period

to 27 January 2002 increased by 6.0%

compared to 3.6% last year. The first half

of the year was particularly strong with

like for like sales climbing by 9.9%. Core

paper products showed a reasonable

increase in the second half but gifts fared

less favourably during the Christmas trad-

ing period.

The sales mix of our three core product

areas remained fairly similar to previous

years. Cards were about 65%, gift dress-

ing was 10% and gifts were 25%.

The Company enjoys excellent relation-

ships with its suppliers, most of whom

have been dealing with the Company for

many years. The constant review and

development of new and exciting ranges

of merchandise enables the Company to

enhance and build on its very strong

brand in the UK. This is emphasised fur-

ther by our national radio advertising

which takes place throughout the year.

We calculate our share of the greeting

card market to be about 17%.

OutletsWe continued to seek opportunities to

improve our store portfolio. 38 stores

were modernised, 12 existing businesses

were extended and 14 others were relocat-

ed to larger improved sites.

Our total trading space at the year end

was 1.08 million square feet, up from

1.06 million square feet last year, in spite

of trading from four less stores. We

opened 39 new stores and closed or re-

sited 43 resulting in 672 at the year end.

The average selling space per shop is

approximately 1,600 square feet.

In November we relocated two businesses

in Bath into our largest shop to date. It

comprises 10,500 square feet of selling

space including a 1,000 square feet coffee

shop. The size of this shop enables us to

display the most comprehensive selection

of our product ranges even when devot-

ing necessary space to our seasonal prod-

ucts. We have identified 50 locations

where we believe larger format stores are

feasible.

The total investment in our stores during


Operating review


Operating review

the year was £11.6 million comprising £5

million in new stores and £6.6 million

on modernising existing stores.

Since the year end we have opened 4 new

stores and the Group remains on target to

achieve 700 stores by the year end. We

estimate that we will be trading from

more than 800 stores by the end of

2006.

ConcessionsWe are pleased with our trading within

Debenhams department stores.

Concessions were being operated in

about 40 stores selling everyday cards

throughout the year and in addition

Christmas cards and wrap were sold in

over 90 Debenhams stores throughout

the Christmas trading period. This level

of activity will be continued during 2002.

Calendar SitesAs mentioned in our Christmas trading

update, we trialled 35 temporary new for-

mat stores selling only calendars in the

run up to Christmas and the New Year.

We were pleased with the results from

these stand alone "Calendar Experience"

sites and we anticipate extending the con-

cept ahead of next Christmas.

E-commerce (www.clintoncards.co.uk)The average number of visitors to our site

was approximately 2,300 per day (2001:

475). It is certainly an effective marketing

tool complementing our core business.

Sales from the site are in line with our

expectations. As well as personalised

products such as wedding stationery, gift

mugs, Christmas cards etc., the service

offering customers the opportunity to

order cards, attach a message on line and

have it posted on their behalf to a recipi-

ent is proving to be very popular. We

anticipate a growing demand for this

service.

Systems and Information TechnologyAt the year end we accelerated our invest-

ment in information technology and in

the year invested £3.4 million which

included computers and Electronic Point

of Sale (EPOS) terminals in stores as well

as Head Office system. EPOS terminals

had been installed in 440 stores and will

be installed in all stores by the Autumn of

2002. A new central data warehousing

system has been installed where the high

volumes of raw EPOS data are stored and

used to generate meaningful reports to

help the business improve sales and prof-

it.

The computerised back office support sys-

tem which was in 225 stores at the begin-

ning of the financial year was in 525

stores by the year end and is in all stores

at the date of this statement. This system

complements our EPOS technology and

helps shop management and central serv-

ices to communicate electronically, elimi-

nating many labour intensive and ineffi-

cient processes. The system is constantly

being enhanced with new or updated

modules and will soon be used for plac-

ing and tracking orders with suppliers.

StaffThe average number of staff employed

during the year was 6,200 many of

whom are part time. The full time equiva-

lent number is just over 4,600 (2001:

4,550). Our policy is that wherever possi-

ble we fill any vacancies by internal pro-

motion. To help in this process we have

comprehensive training and ongoing

development programmes for all shop

staff which enables them to gain addition-

al skills to meet the future needs of our

business.

The loyalty and hard work of all our staff

enables Clinton Cards to maintain its

market leading position in the industry

and we would extend a well deserved

thank you to them all.

Clinton LewinManaging Director

16 April 2002

The total investment in our stores during the year was £11.6million comprising £5 million in new stores and £6.6 millionon modernising existing stores.


Directors and Advisers

Directors

Don Lewin OBEAged 68, is Chairman and Chief Executive.

He is the founder of Clinton Cards and

has been involved in the greeting card

business for nearly 40 years, first as an

agent and subsequently as one of the origi-

nators of the concept of specialist greeting

card shops. He is actively involved with all

areas of the business but in particular with

the strategic development and performance

of the Group.

Clinton Lewin Aged 40, is Managing Director. He is

Don Lewin’s son and has been with

Clinton Cards for 25 years. During this

time he has been involved in all aspects

of the business and in recent years has

focused on leading the Company’s man-

agement team and implementing the

Group’s business policies and strategies.

Barry HartogAged 55, is Finance Director and Company

Secretary. He is a Chartered Certified

Accountant and joined the Group in May

1991. He was a director of Our Price Music

for ten years and has held other senior

positions in the retail industry. His pri-

mary responsibilities are for the financial

control, information systems and adminis-

tration of Clinton Cards.

Debbie Darlington Aged 33, is Product Development Director

and was appointed to the Board in

September 2000. She is the daughter of

Don Lewin and has been working for

Clinton Cards for almost 16 years. She

has served on the management board for

nearly ten years and is a director of our

principal trading subsidiary. She brings a

valuable perspective and a wealth of opera-

tional experience to the Board. Her knowl-

edge of the greeting card and soft toy

industry as well as the Clinton Cards busi-

ness is extensive.

Stuart HoulstonAged 45, is Property Director and was

appointed to the Board in January 2001.

He joined the Group in 1994 prior to

which he was Franchise Development

Director of Hallmark Cards where he

worked for 15 years. He has extensive

knowledge of retail property and its devel-

opment and is involved in all aspects of

managing the Company’s extensive prop-

erty portfolio.

John RobinsonAged 48, is Retail Director and was

appointed to the Board in January 2001.

He joined the Group in 1988 prior to

which he gained retail experience work-

ing with other retail chains including

Superdrug and Tesco. He is responsible

for the day to day operations of all the

retail outlets through a network of field

staff.

John Coleman Aged 66, is a Non-executive Director and

is chair of the Remuneration Committee

and a member of the Audit and

Nomination Committees. He is a practis-

ing consultant with Romain Coleman &

Co., one of the Group’s solicitors where

he was formerly the senior partner. He

has acted for the Company since its incor-

poration being primarily concerned in

property and commercial matters.

Robert Gunlack Aged 55, is a Non-executive Director and

is chair of the Audit Committee and a

member of the Remuneration and

Nomination Committees. He is a

Chartered Accountant and was appointed

a director in June 1992. He was formerly

a partner of Price Waterhouse. He is cur-

rently Chairman of Capital Bars Plc and

is on the Boards of MSB International

Plc, CDB Meats Limited, Julia Schofield

Consultants Ltd and a number of other

private companies.

Brian Jackson Aged 54, is a Non-executive Director and

was appointed to the Board in November

2000. He is chair of the Nomination

Committee and a member of the

Remuneration and Audit Committees. He

brings significant retailing experience to

the Board having spent 11 years at Martin

Retail Group Plc, the national chain of

newsagents, convenience stores and high

street outlets. He joined Martins in 1988

and as Chief Executive, rapidly grew the

business taking it out of losses and

increasing Group profit by over 50%

between 1997 and 1999 finally master-

minding the sale of the business to TM

Group in 1999. Prior to joining Martins,

he was a Director of Bejam Group Plc.

Advisers

Secretary and Registered Office: Barry

Hartog FCCA, The Crystal Building

Langston Road, Loughton, Essex IG10 3TH

Auditors: PricewaterhouseCoopers, 1

Embankment Place, London WC2N 6RH

Stockbrokers: Beeson Gregory,

The Registry, Royal Mint Court, London

EC3N 4LB

Merchant Bankers: HSBC Investment

Bank plc, Vintners Place, 68 Upper

Thames Street, London EC4V 3BJ

Bankers: HSBC Bank plc, 27-32 Poultry,

London EC2P 2BX

Solicitors: Romain Coleman & Co., 183/185

Hoe Street, Walthamstow, London E17 3AP

Travers Smith Braithwaite, 10 Snow Hill,

London EC1A 2AL

Registrars and Transfer Agents: Capita IRG

Plc, Balfour House, 390/398 High Road,

Ilford, Essex IG1 1NQ

Registered Number: 985739


Directors’ report

The following directors retire by rotation

and, being eligible, offer themselves for

re-election. A separate resolution will be

proposed for each.

Mr B R Hartog – Mr Hartog is

finance director and has a service con-

tract determinable on six months

notice.

Mr J F Coleman – Mr Coleman is a

non executive director and has no

service contract.

Mr R H Gunlack – Mr Gunlack is a

non executive director and has no

service contract.

The directors’ share interests are shown

in note 21 to the financial statements. The

Company has arranged liability insurance

covering the directors and officers of the

Company and its subsidiaries.

EmployeesThe directors consider that the

involvement and commitment of employ-

ees is important to the success of the

Group. Employees are informed of devel-

opments through a periodical newsletter

and area briefings. It is the policy of the

Board for directors and senior manage-

ment to visit shops regularly and to

ensure that all staff are involved in the

development of the Group. Senior staff

participate in a profit related bonus

scheme and share option scheme.

Disabled persons are given full and fair

consideration for all job vacancies for

which they offer themselves as suitable

applicants. It is the Group’s policy to

encourage and assist in the employment

and training of disabled persons. Where

an existing employee becomes disabled,

their services will be retained wherever

practicable.

Charitable donationsDuring the year the Group made charita-

ble donations of £185,102 (2001:

£104,555).

Payments to suppliersThe Company agrees ongoing payment

terms with all its major suppliers and

abides by them. Other suppliers are paid

according to the terms agreed at the time

of ordering goods or services. The num-

ber of days taken to pay trade creditors for

the year was 30 days (2001: 31 days) based

on the ratio of Company trade creditors at

the end of the year to the amounts

invoiced during the year by trade suppli-

ers. This excludes seasonal purchases

which are paid for as each season finishes.

Annual General MeetingResolutions will be proposed as special

business at the Annual General Meeting

as follows:

Resolution 7

Resolution 7 is to provide for the directors

to continue to have authority to allot unis-

sued shares in the capital of the Company

with a total nominal value of up to

£2,200,000 which represents approxi-

mately 32% of the issued share capital of

the Company. This authority is intended

to last until the Annual General Meeting

in 2007. The Directors have no present

intention to issue any shares except in

connection with the Company’s employee

share scheme.

Resolution 8

Resolution 8 will only be proposed if res-

olution 7 is passed. Resolution 8 would,

as in previous years, renew the directors’

power to allot shares up to a total nominal

value of £344,103 (representing 5% of the

issued share capital of the Company)

without having to offer them to existing

shareholders in proportion to their exist-

ing holdings. It would also empower the

directors to issue shares in connection

with an issue to existing shareholders

which is pro rata to their existing hold-

ings and take certain practical steps to

facilitate such an issue.

Resolution 9

This resolution would renew the authority

for the Company to purchase its shares in

Principal activitiesThe principal activity of the Group is the

specialist retailing of greeting cards and

associated products.

Results and dividendsThe results of the Group are shown in the

consolidated profit and loss account on

page 14. A detailed review of the Group’s

activities and of future developments is

contained within the Operating Review

on page 6. The directors are proposing a

final dividend of 5.40p per ordinary share

to be paid on 5 June 2002 to all share-

holders on the register at the close of

business on 10 May 2002. Together with

the interim dividend of 1.34p this will rep-

resent a total dividend for the year of

6.74p per share (2001: 5.88p).

Going concernAfter making enquiries, the directors

have a reasonable expectation that the

Company and the Group have adequate

resources to continue in operational exis-

tence for the foreseeable future and have

therefore used the going concern basis in

preparing the financial statements.

Share capitalDetails of the share capital are set out in

note 20 to the financial statements. Other

than those of directors, whose interests

are set out in note 21 to the financial

statements, the following shareholdings

have been notified to the Company as

being 3% or more of the issued share cap-

ital as at 16 April 2002.

Number of % of Share

Shares Capital issued

Henderson Investors Ltd 9,608,939 14.0%

UK Greetings 7,670,852 11.1%

CGNU Plc 4,317,766 6.3%

Directors and interestsThe directors, together with a brief biog-

raphy, are listed on page 8. In accordance

with the Company’s Articles one third of

the directors shall retire by rotation. Each

of the directors will face re-election at

least every three years.

Directors’ report

the market up to a limit of 10% of the

issued share capital of the Company in

the period up to the Annual General

Meeting in 2003. The minimum and

maximum prices are set out in the resolu-

tion. The directors would only exercise

this authority if they were satisfied that a

purchase would result in an increase in

expected earnings of the shares and

would be in the interests of shareholders

generally.

The directors consider all these resolu-

tions to be in the best interests of the

shareholders as a whole and unanimously

recommend that you vote in favour of

them, as they shall in relation to their

own shareholdings.

AuditorsA resolution proposing the re-appoint-

ment of PricewaterhouseCoopers as audi-

tors to the Company will be put to the

Annual General Meeting.

By Order of the Board

B R HartogCompany Secretary

16 April 2002

Registered in England

Registered No. 985739

Registered Office:

The Crystal Building

Langston Road

Loughton

Essex IG10 3TH


Directors’ report

Directors’ report


Corporate governance

Combined Code complianceIn June 1988 the Committee on

Corporate Governance published the

Combined Code which embraced the

earlier Cadbury and Greenbury Codes on

corporate governance. The Board agrees

with the general principles advocated in

the Combined Code but, mindful of the

size of the Company and its current

management structure, does not think it

applicable to incorporate the recommen-

dations in their entirety.

DirectorsThe Board of Directors comprises six

executive directors and three non-execu-

tive directors. A short biography of each

director is given on page 8. The Board

met ten times during the year under

review and there is a formal schedule of

matters specifically reserved for its

approval. Before each meeting, a detailed

agenda together with a comprehensive

management information pack is

provided to each director. The Board

discusses and approves, among other

things, group strategy, capital expendi-

ture, annual budgets, corporate gover-

nance issues, accounting policies, internal

control and dividend policy. It monitors

and questions monthly performance and

reviews anticipated results. Day to day

management of the Group is delegated to

the executive directors. All of the execu-

tive directors have written service

contracts with variable periods of determi-

nation but none longer than six months.

The three non-executive directors are

appointed for a three year term when a

further term may be agreed. These

appointments can be terminated at any

time and with no notice. A new three year

term for John Coleman and Robert

Gunlack was agreed and they will serve

until September 2004. Brian Jackson will

serve until October 2003. John Coleman

is a practising consultant with Romain

Coleman & Co., one of the Group's solici-

tors where he was formerly the senior

partner. Robert Gunlack and Brian

Jackson have no other relationship with

the Company and are considered by the

Board to be independent. The non-execu-

tive directors, who comprise one third of

the Board, are considered to be of suffi-

cient calibre and stature to carry signifi-

cant weight in the Board decisions.

Although there is no recognised senior

non-executive director, each of them is

happy to act as a point of contact for any

concerns to be raised.

All directors are required to submit them-

selves for re-election at an annual general

meeting at least once every three years.

The advice and services of the Company

Secretary is available to all directors.

Directors may also seek independent

professional advice in the furtherance of

their duties at the Company’s expense.

Board committeesThere are three main committees of the

Board:

a) Audit CommitteeThe Audit Committee comprises the

three non-executive directors and is

chaired by Robert Gunlack. It has terms

of reference setting out its duties and

procedures. The Audit Committee advises

the Board on the appointment and the

remuneration of the external auditors.

The Committee discusses the nature and

scope of the audit with the external audi-

tors and provides a forum for reporting

by the Group's external auditors on any

matters it considers appropriate. The

Committee reviews the Group's

accounting policies and financial reporting

and the effectiveness of its risk manage-

ment and internal control procedures.

b) Nomination CommitteeThe Nomination Committee comprises

the three non-executive directors and Don

Lewin and is chaired by Brian Jackson.

The Nomination Committee met on five

occasions in the financial year to monitor,

among other things, the performance of

the executive directors and review succes-

sion planning.

c) Remuneration CommitteeThe Board has considered and followed

the best practise provisions set out in

schedules A and B of the Code dealing

with performance related pay and the

remuneration report respectively. The

three non-executive directors constitute

the Remuneration Committee chaired by

John Coleman.

Remuneration policyThe Remuneration Committee advises

the Chairman on levels of remuneration

for executive directors which are then

subject to ratification by the Board. The

policy for determining salaries and

granting options is based upon the

Group's aim of retaining and motivating

its executives and rewarding them accord-

ingly.

The company operates a profit related pay

scheme for senior executives including

the executive directors. It is not a long

term scheme and any payment is based

on annual achievement against pre-deter-

mined profit and profit margin criteria.

Payments awarded are not pensionable

and are calculated on a sliding scale rela-

tive to an executive's annual salary.

All pension schemes operated by the

Company, including those of the execu-

tive directors, are defined contribution

money purchase pension schemes. The

assets of the schemes are held separately

from those of the Company in independ-

ently administered funds.

Details of directors’ remuneration are

given in note 10 to the financial state-

ments. Interests in the share capital of

the Company and entitlements under the

Executive Share Option Scheme are given

in note 21 to the financial statements.

Relations with shareholdersThe Company recognises the importance

of communicating with current and

potential shareholders. It does this

through the Annual Report and Accounts,

the Interim Statement and any trading


updates. This information is also available

on the Company website (www.clinton-

cards.co.uk). All directors are available at

the Annual General Meeting where share-

holders can ask questions or represent

their views. Institutional investors and

analysts often request meetings with the

Company offering an opportunity for

directors to explain the business and its

aspirations.

As set out in the Notice of Meeting on

page 30 each substantially separate issue

proposed at the Annual General Meeting

has a separate resolution. This in partic-

ular relates to the annual report and

accounts and the election or re-election of

an individual director.

All proxy votes lodged by the deadline set

out in the Notice of Meeting are counted

and made available at the Annual General

Meeting.

Corporate social responsibilityThe Group is mindful of the growing

focus on corporate social responsibility

and recognises its own responsibilities in

areas such as the environment, the

community, its workforce, its suppliers

and human rights in the supply chain.

The Board is in the process of developing

appropriate policies and guidelines to

enable it to implement and monitor such

additional procedures as necessary. It will

be able to report more fully on this matter

in the future.

Directors' responsibilitiesThe directors are required by the

Companies Act 1985 to prepare financial

statements for each financial year and to

present them annually to the Company's

members at the Annual General Meeting.

The directors are responsible for

preparing the financial statements under

the going concern basis.

The financial statements, which must

comply with applicable accounting stan-

dards, must give a true and fair view of

the state of affairs of the Company and

the Group at the end of the financial year,

and of the Group's profit or loss for that

period.

The directors are responsible for the

adoption of suitable accounting policies

and their consistent use in the financial

statements, supported where necessary by

reasonable and prudent judgements.

They are also responsible for maintaining

adequate accounting records and suffi-

cient internal controls to safeguard the

assets of the Group and for taking reason-

able steps towards preventing and

detecting any irregularities including

fraud.

Internal controlThe Company, as required by the London

Stock Exchange, has complied with the

Combined Code provisions on internal

control having established the procedures

necessary to implement the guidance

issued in September 1999 (The Turnbull

Committee report) and by reporting in

accordance with that guidance. The direc-

tors are responsible for the Group's

system of internal controls.

These controls are established in order to

safeguard shareholders' investment and

the Group's assets, maintain proper

accounting records and ensure that finan-

cial information used within the business

or published is reliable.

The system of internal control is designed

to manage rather than eliminate the risk

of failure of the business objectives of the

Group. In pursuing these objectives,

internal controls can only provide reason-

able and not absolute assurance against

material misstatement or loss.

The controls include the following:

● clear definition of the responsibilities

and authority delegated to business

management

● a planning process, including detailed

annual profit, capital and cash flow

budgets which are approved by the Board

● monthly comparison and review of

actual results against budget and prior

year

● clearly defined requirements for

approval and control of capital expenditure

● a branch audit programme which

ensures that all shops are subjected to an

internal audit at least three times a year.

The Board examines the effectiveness of

the system of internal controls. This is

achieved primarily through a review of

the branch audit programme and its find-

ings, reviews of the monthly, half year

and annual financial statements, review

of operational reports and a review of the

nature, scope and findings of the external

audit. Any significant issues or identified

risks are closely examined so that appro-

priate action can be taken.

The Board has reviewed the effectiveness

of the Group’s system of internal controls

throughout the period.

The internal audit function focuses prin-

cipally on shop operations using a combi-

nation of office based staff and specialist

field based audit staff. The Board has

decided that their areas of responsibility

will be extended to include other areas of

control within the organisation.





Independent auditors’ report to the members of Clinton Cards PLC

We have audited the financial statements

which comprise the consolidated profit

and loss account, the balance sheets of

the Group and Company, the consolidat-

ed cash flow statement and the related

notes.

Respective responsibilities of directors and auditorsThe directors' responsibilities for prepar-

ing the annual report and the financial

statements in accordance with applicable

United Kingdom law and accounting

standards are set out in the statement of

directors' responsibilities.

Our responsibility is to audit the financial

statements in accordance with relevant

legal and regulatory requirements, United

Kingdom Auditing Standards issued by

the Auditing Practices Board and the

Listing Rules of the Financial Services

Authority.

We report to you our opinion as to

whether the financial statements give a

true and fair view and are properly pre-

pared in accordance with the Companies

Act 1985. We also report to you if, in our

opinion, the directors' report is not con-

sistent with the financial statements, if

the company has not kept proper account-

ing records, if we have not received all the

information and explanations we require

for our audit, or if information specified

by law or the Listing Rules regarding

directors' remuneration and transactions

is not disclosed.

We read the other information contained

in the annual report and consider the

implications for our report if we become

aware of any apparent misstatements or

material inconsistencies with the finan-

cial statements. The other information

comprises only the directors’ report, the

chairman’s statement, the operating

review and the corporate governance

statement.

We review whether the corporate gover-

nance statement reflects the Company's

compliance with the seven provisions of

the Combined Code specified for our

review by the Listing Rules, and we report

if it does not. We are not required to con-

sider whether the board's statements on

internal control cover all risks and con-

trols, or to form an opinion on the effec-

tiveness of the Company's or Group's cor-

porate governance procedures or its risk

and control procedures.

Basis of audit opinionWe conducted our audit in accordance

with auditing standards issued by the

Auditing Practices Board. An audit

includes examination, on a test basis, of

evidence relevant to the amounts and dis-

closures in the financial statements. It

also includes an assessment of the signifi-

cant estimates and judgements made by

the directors in the preparation of the

financial statements, and of whether the

accounting policies are appropriate to the

company's circumstances, consistently

applied and adequately disclosed.

We planned and performed our audit so

as to obtain all the information and expla-

nations which we considered necessary in

order to provide us with sufficient evi-

dence to give reasonable assurance that

the financial statements are free from

material misstatement, whether caused

by fraud or other irregularity or error. In

forming our opinion we also evaluated

the overall adequacy of the presentation

of information in the financial state-

ments.

OpinionIn our opinion the financial statements

give a true and fair view of the state of

affairs of the company and the Group at

27 January 2002 and of the profit and

cash flows of the Group for the 52 weeks

then ended and have been properly pre-

pared in accordance with the Companies

Act 1985.

PricewaterhouseCoopersChartered Accountants and Registered

Auditors

London

16 April 2002

Independent auditors’ report to the members of ClintonCards PLC

Insert header

Consolidated profit and loss account for the 52 weeks ended 27 January 2002

Continuing operations

2002 2001

Notes £'000 £'000

2 (restated)

Turnover (including VAT) 339,429 315,290

VAT (50,178) (46,458)______ ______

Turnover (excluding VAT) 3 289,251 268,832

Cost of sales (259,078) (242,195)______ ______

Gross profit 30,173 26,637

Administrative expenses

Loss on sale of operating fixed assets 2 (1,588) (234)

Amortisation of goodwill (1,344) (1,344)

Other (7,202) (6,813)

(10,134) (8,391)

Other operating income 4 300 275______ ______

Operating profit 20,339 18,521

Interest receivable 224 246

Interest payable 5 (768) (817)

Property provision discount (143) (173)______ ______

Profit on ordinary activities before taxation 6 19,652 17,777

Tax on profit on ordinary activities 7 (6,253) (5,427)______ ______

Profit on ordinary activities after taxation 13,399 12,350

Dividends 8 (4,638) (4,047)

______ ______

Transfer to reserves 22 8,761 8,303______ ______

Earnings per share: 9

Basic earnings 19.48p 17.96p

Diluted earnings 19.46p 17.94p

Basic earnings before amortisation of goodwill 21.43p 19.91p______ ______

● As permitted by Section 230 of the Companies Act 1985, the Company has not presented its own profit and loss account. The profit

for the year dealt with in the accounts of Clinton Cards PLC is £6,000,000 (2001: £3,999,000).

● The Group has no recognised gains or losses other than the profit for the year disclosed in the profit and loss account.

● The profits before and after taxation stated above are identical to their historical cost equivalent.

● The notes on pages 17 to 29 form part of these financial statements.


Consolidated profit and loss account

Insert header

Balance sheets at 27 January 2002

The Group The Company

Notes 2002 2001 2002 2001

£'000 £'000 £'000 £'000

Fixed assets

Intangible assets 11 22,467 23,811 - -

Tangible assets 12 54,423 48,118 - -

Investments 13 - - 28,768 28,768______ ______ ______ ______

76,890 71,929 28,768 28,768______ ______ ______ ______

Current assets

Stocks 34,559 40,806 - -

Debtors 14 10,969 11,009 3,094 1,148

Cash at bank and in hand 33,704 17,617 - -______ ______ ______ ______

79,232 69,432 3,094 1,148

Current liabilities

Creditors: due within one year 15 (78,096) (72,546) (3,716) (3,164)______ ______ ______ ______

Net current assets/(liabilities) 1,136 (3,114) (622) (2,016)______ ______ ______ ______

Total assets less current liabilities 78,026 68,815 28,146 26,752

Creditors: due after one year 16 (2,878) (3,365) - -

Provisions for liabilities and charges 18 (5,696) (4,791) - -______ ______ ______ ______

Net assets 69,452 60,659 28,146 26,752______ ______ ______ ______

Capital and reserves

Called up share capital 20 6,882 6,878 6,882 6,878

Share premium account 22 15,428 15,400 15,428 15,400

Merger reserve 22 3,932 3,932 3,932 3,932

Profit and loss account 22 43,210 34,449 1,904 542______ ______ ______ ______

Equity shareholders' funds 23 69,452 60,659 28,146 26,752______ ______ ______ ______

The notes on pages 17 to 29 form part of these financial statements.

Approved by the Board on 16 April 2002

D J Lewin, OBE B R Hartog, FCCA

Chairman Finance Director


Balance sheets

Consolidated cash flow statement for the 52 weeks ended 27 January 2002

2002 2001

Notes £'000 £'000 £’000 £’000

Net cash inflow from operating activities 25 38,118 23,731

Returns on investments and servicing of finance

Interest received 256 288

Interest paid (736) (763)

Finance lease interest paid (38) (30)_______ _______

Net cash outflow from returns on investments

and servicing of finance (518) (505)

Taxation

Corporation tax paid (5,165) (5,287)

Capital Expenditure

Payments to acquire tangible fixed assets (12,388) (9,098)

Receipts for disposal of tangible fixed assets 504 493_______ _______

Net cash outflow for capital expenditure (11,884) (8,605)

Equity dividends paid (4,086) (3,597)_______ _______

Net cash inflow before financing 16,465 5,737

Financing

Issue of shares in respect of options 26 32 22

Capital element of finance lease payments (410) (93)_______ _______

(378) (71)_______ _______

Increase in cash 27 16,087 5,666_______ _______


Consolidated cash flow statement

Notes to the financial statements

1. Accounting policiesThe Group's principal accounting policies are set out below:

a) Basis of accounting The financial statements have been prepared under the historical cost convention and in accordance with

accounting standards applicable in the United Kingdom. Accounting policies have been consistently

applied. The Group have adopted FRS 17 "Retirement Benefits" in these financial statements. The adoption

of this standard has had no impact on the profit and loss account or assets of the Group. FRS 18

“Accounting Policies” has also been adopted in the current year but this does not require any change in

accounting policies.

b) Basis of consolidation The Group financial statements consolidate the financial statements of Clinton Cards PLC and its wholly

owned subsidiaries all of which have a co-terminus year end. The results of subsidiaries acquired or dis-

posed of during the year are consolidated from/to the date of acquisition or disposal.

c) Deferred taxation Deferred tax is provided, on an undiscounted basis, in respect of the tax effect of all timing differences at

the rates of tax expected to apply when timing differences reverse.

d) Intangible fixed assets Intangible fixed assets represent purchased goodwill on the acquisition of The Greeting Store Group

Limited. Amortisation is provided in order to write off the cost of this goodwill in equal annual instalments

over its estimated economic life of 20 years. For acquisitions prior to 1 February 1998 goodwill remains

written off against reserves.

e) Tangible fixed assets Tangible fixed assets are stated at cost less accumulated depreciation and are depreciated over their esti-

mated useful lives on a reducing balance basis (except where otherwise stated). The principal annual rates

are as follows:

Freehold land - Nil

Freehold buildings - 2% on a straight line basis

Leasehold property - Over the life of the lease on a straight

line basis taking into account statutory

extensions where appropriate.

Fixtures and fittings - 15%

Motor vehicles - 25%

Computer equipment - 20%

f) Impairment The need for any additional write down of fixed assets is assessed by comparing the carrying value of the

asset on an income generating unit, an individual store or a group of stores which operate within a single

market place with its net realisable value or its value in use. The value in use is determined from the esti-

mated discounted future cash flows. Discount rates used are based on the current cost of borrowing. Any

charge arising is included within the depreciation charge for the year.

g) Disposal of tangible Profits and losses on disposal of tangible fixed assets or closure of a store represents the difference

fixed assets between the net proceeds or future value in use and the net carrying value at the date of sale or closure.

h) Operating leases Amounts payable under operating leases in respect of properties occupied by the Group are written off as

incurred. Future liabilities in respect of the rents of leased properties sub-let to third parties at a shortfall or

which are currently empty are recognised and provided for.

i) Finance leases Assets acquired under finance leases are capitalised at fair market value. The capitalised value is depreciat-

ed over the expected useful life of the assets. The related lease obligations, excluding finance charges allo-

cated to future periods, are included in creditors. Finance charges are taken over the period of the agree-

ment at a constant periodic rate on the remaining balance of the obligation.



1. Accounting policies (cont)

j) Pre-opening costs All revenue costs associated with the opening of new shops are charged to the profit and loss account as

incurred.

k) Stocks Stocks represent finished goods for resale, excluding any stocks held on a sale or return basis and are stat-

ed at the lower of cost and net realisable value. The value of sale or return stock at the year end was £4.0

million (2001: £4.9 million).

l) Rebates and Rebates from suppliers are taken to the profit and loss account as they are earned. Rebates received in

deferred income advance are classified as deferred income.

m) Reverse premiums Reverse premiums received and the value of any rent free period in excess of three months granted on

and rent free periods acquiring a new shop are included in deferred income and released to the profit and loss account over a

period of five years which represents the usual rent review pattern.

n) Lease provisions Provision has been made for vacant and partly sub-let leasehold properties, for the shorter of the remaining

period of the lease, which at 27 January 2002 is an average of 10 years and the period until, in the directors'

opinion, they will be able to exit the lease commitment. The amount provided is based on the future rental

obligations together with other fixed outgoings, net of any sub-lease income. Sub-lease income has only

been taken into account where sub-leases are currently in place. In determining the provision, the cash

flows have been discounted on a pre tax basis using a risk free rate of return.

o) Pension contributions Pension costs, all of which relate to defined contribution schemes, are recognised in the profit and loss

account as incurred.

p) Financial instruments Financial assets and liabilities arise during the normal course of business. The Company does not use any

derivative or hedging transactions.

2. Change of presentationThe loss on sale of tangible fixed assets has hitherto been included in cost of sales. It will now be disclosed on the profit and loss

account under administrative expenses. The prior year figures have been restated to reflect this change in presentation.

3. Turnover and cost of salesTurnover represents goods sold to customers less returns and Value Added Tax. Turnover is derived from UK sales of greetings

cards and ancillary products and from a concession operated within a Debenhams store in Dublin. Information has been presented

as a single geographical segment as the revenue and profit of the Dublin operation are not significant.

4. Other operating income2002 2001

£'000 £'000

Commissions received from the sale of stamps 300 275______ ______

5. Interest payable 2002 2001

£'000 £'000

Payable in respect of:

Bank overdraft 673 731

Finance leases 38 30

Other interest 57 56______ ______

768 817______ ______



6. Profit on ordinary activities before taxation2002 2001

£'000 £'000

This is stated after charging:

Amounts due under operating leases – land and buildings 59,962 57,682

Staff costs (see note 10) 52,151 49,260

Depreciation - owned assets 7,190 6,090

- held under finance leases 222 52

Amortisation of intangible fixed assets 1,344 1,344

Loss on sale of tangible fixed assets 1,588 234

Auditors' remuneration: Audit fee 93 70

Other fees 81 118______ ______

The audit fee above includes £11,000 (2001: £11,000) in respect of the Company. Other fees paid to the Group's auditors include

amounts for corporate taxation assistance and audit related services.

7. Tax on profit on ordinary activities2002 2001

£'000 £'000

UK Corporation tax

Current year 6,424 5,633

Prior year (993) (783)______ ______

5,431 4,850

Deferred tax (see note 18) 822 577

______ ______

6,253 5,427______ ______

The tax assessed for the year is lower than the standard rate of corporation tax in the UK

The differences are explained below:

2002 2001

£'000 £'000

Profit on ordinary activities before tax 19,652 17,777______ ______

Profit on ordinary activities at the UK standard rate of 30% (2001: 30%) 5,896 5,333

Effects of:

Expenses not deductible for tax purposes (primarily goodwill amortisation) 429 426

Non qualifying depreciation and disposal of fixed assets 929 381

Capital allowance in excess of depreciation (830) (510)

Adjustment to tax charge in respect of previous periods (993) (780)______ ______

Current tax charge for the year 5,431 4,850______ ______

8. Dividends2002 2001

£'000 £'000

Interim dividend paid 1.34p (2001: 1.28p) per share 922 883

Proposed final dividend 5.40p (2001: 4.60p) per share 3,716 3,164______ ______

4,638 4,047______ ______



9. Earnings per shareThe basic earnings per share is calculated by dividing the profit after taxation by the weighted average number of shares in issue

during the period. For diluted earnings per share the weighted average number of ordinary shares is increased to assume conver-

sion of all dilutive potential ordinary shares. These comprise share options granted to employees and directors where the exercise

price is less than the average market price of the company's ordinary shares during the year. Basic earnings per share before amor-

tisation of goodwill is calculated using the basic earnings figure above excluding the charge for amortisation of goodwill. This sup-

plemental earnings per share has been provided in order that the effects of goodwill amoritsation on reported earnings can be fully

appreciated.

2002 2001

Weighted Weighted

average average

number Per number Per

Earnings of shares share Earnings of shares share

£'000 '000 pence £'000 '000 pence

Basic earnings per share 13,399 68,791 19.48 12,350 68,772 17.96

Dilutive shares – options - 67 (0.02) - 50 (0.02)______ ______ _____ ______ ______ _____

Diluted basic earnings per share 13,399 68,858 19.46 12,350 68,822 17.94______ ______ _____ ______ ______ _____

Basic earnings per share 13,399 68,791 19.48 12,350 68,772 17.96

Amortisation of goodwill 1,344 - 1.95 1,344 - 1.95______ ______ _____ ______ ______ _____

Basic earnings before goodwill 14,743 68,791 21.43 13,694 68,772 19.91______ ______ _____ ______ ______ _____

10. Directors and employees2002 2001

£'000 £'000

a) Staff costs for the year were:

Wages and salaries 49,179 46,439

Social security costs 2,813 2,678

Other pension costs 159 143______ ______

52,151 49,260______ ______

b) The average number of persons employed by the Group was:

2002 2001

Administrative 184 186

Shops 6,031 5,946______ ______

6,215 6,132______ ______

Average number of full-time equivalents 4,638 4,555______ ______



c) Directors’ remuneration excluding pension contributions:

Taxable Profit related

Salary/fees benefits bonus Total

2002 2001

£'000 £'000 £'000 £’000 £’000

D J Lewin 500 26 33 559 530

C S Lewin 222 16 16 254 220

B R Hartog 153 19 11 183 163

D M Darlington (appointed 01.09.00) 103 21 7 131 50

S P Houlston (appointed 29.01.01) 100 8 7 115 -

J S Robinson (appointed 29.01.01) 100 6 7 113 -

J F Coleman 15 - - 15 8

R H Gunlack 15 - - 15 8

B Jackson (appointed 01.11.00) 15 - - 15 2

P M Osman (resigned 09.01.01) - - - - 223____ ____ ____ ____ ____

1,223 96 81 1,400 1,204____ ____ ____

Aggregate pension contributions (note d) 52 40____ ____

Aggregate directors’ remuneration 1,452 1,244____ ____

d) Directors’ pension contributions are as follows:

Pension contributions

2002 2001

£'000 £'000

D J Lewin - -

C S Lewin 23 21

B R Hartog 8 8

D M Darlington 11 4

S P Houlston 5 -

J S Robinson 5 -

J F Coleman - -

R H Gunlack - -

B Jackson - -

P M Osman - 7____ ____

Total 52 40____ ____

e) Other information:

Taxable benefits largely relate to motor vehicles expenditure and health insurance.

A profit related bonus scheme for directors and senior staff has been operating since 1997.

No payment under this scheme was paid to the directors in 2001.

Messrs Hartog, Houlston and Robinson have options to subscribe for ordinary shares and details are shown in Note 21.

No options were exercised by any director in the period.

All pension contributions are based upon salaries, excluding bonuses, and are to money purchase schemes.

Eventual benefits are not linked to salaries paid.

The executive directors have service contracts, determinable on six months notice with the exception of Messrs Houlston and

Robinson which are determinable on three months notice.

J F Coleman is the senior partner of Romain Coleman & Co., the Company solicitors.

Fees paid to Romain Coleman during the period amounted to £292,000 (2001: £252,000).



11. Intangible fixed assets - GroupIntangible fixed assets represents purchased goodwill on the acquisition of GSG Holdings Limited in October 1998.

Net book

Cost Amortisation value

£’000 £’000 £’000

At 28 January 2001 26,887 3,076 23,811

Amortisation charge for the period - 1,344 1,344______ ______ ______

At 27 January 2002 26,887 4,420 22,467______ ______ ______

12.Tangible fixed assets – Group

Freehold Short Fixtures

land and leasehold and Motor

buildings property fittings vehicles Total

£’000 £’000 £’000 £’000 £’000

Cost at 28 January 2001 2,396 15,236 57,781 2,206 77,619

Additions at cost - 911 14,519 380 15,810

Disposals - (1,776) (1,105) (594) (3,475)____________________________________________________________

At 27 January 2002 2,396 14,371 71,195 1,992 89,954____________________________________________________________

Accumulated depreciation

At 28 January 2001 82 3,373 25,095 951 29,501

Charge for the period 18 833 6,243 318 7,412

Disposals - (636) (398) (348) (1,382)____________________________________________________________

At 27 January 2002 100 3,570 30,940 921 35,531____________________________________________________________

Net book value

At 27 January 2002 2,296 10,801 40,255 1,071 54,423____________________________________________________________

At 28 January 2001 2,314 11,863 32,686 1,255 48,118____________________________________________________________

Included in the net book value of £54,423,000 above is undepreciated freehold land of £1,477,000 and fixture and fittings held

under finance leases at a cost of £3,100,000 (2001: £400,000) and after accumulated depreciation of £412,320 (2001: £190,400).



13.Fixed asset investments – Company2002

£’000

Investments comprise shares in subsidiaries at cost

Cost at 28 January 2001 and 27 January 2002 28,768______

The Company is the ultimate holding company of the following principal subsidiaries, all of which

are registered in England.

Percentage of ordinary shares held by

Company Subsidiary Activity

Clinton Cards (Essex) Limited 100% Retailer of greetings cards

GSG Holdings Limited 100% Sub-holding company

The Greetings Store Group Limited 100% Retailer of greetings cards

Papertree Limited 100% Retailer of greetings cards

Strand Cards Limited 100% Retailer of greetings cards

Plumbell Limited 100% Sub-holding company

Macnoll Limited 100% Sub-holding company

Clinton Cards (Ireland) Limited is a wholly owned subsidiary of Clinton Cards PLC and is registered in Southern Ireland.

14.DebtorsGroup Company

2002 2001 2002 2001

£’000 £’000 £’000 £’000

Amounts owed by subsidiary - - 3,094 1,148

Other debtors 919 1,366 - -

Prepayments 10,050 9,643 - -_______ _______ _______ _______

10,969 11,009 3,094 1,148_______ _______ _______ _______

15. Creditors: due within one year Group Company

2002 2001 2002 2001

£’000 £’000 £’000 £’000

Finance leases (note 17) 1,377 93 -

Trade creditors 46,890 42,497 -

Corporation tax 4,408 4,141 -

Other taxation and social security 8,416 7,805 -

Other creditors 2,740 2,223 -

Accruals and deferred income 10,549 12,623 -

Dividends 3,716 3,164 3,716 3,164_______ _______ _______ _______

78,096 72,546 3,716 3,164_______ _______ _______ _______



16. Creditors: due after one year – Group

2002 2001

£'000 £'000

Amounts due on finance leases (note 17) 996 105

Deferred income 1,882 3,260______ ______

2,878 3,365______ ______

17.Finance lease commitments – Group2002 2001

£'000 £'000

Due in less than one year 1,377 93

Between one and two years 996 105

Between two and five years - -______ ______

2,373 198______ ______

18.Provisions for liabilities and charges - Group

The provision for deferred taxation set out below represents full provision for accelerated capital allowances and other short term

timing differences at 30%. No provision has been made for corporation tax on gains arising from the sale of short leasehold prop-

erties amounting to approximately £1.1 million (2001: approximately £1.1 million) as the company expects to offset any such gains

in full with capital losses.

Leased properties Deferred tax Total

£’000 £’000 £’000

At 28 January 2001 2,124 2,667 4,791

Utilised in period (365) - (365)

Charged in period 305 822 1,127

Unwinding of discount 143 - 143______ ______ ______

At 27 January 2002 2,207 3,489 5,696______ ______ ______



19. Financial instruments – GroupThe Group’s financial instruments comprise trade debtors, trade creditors, cash and overdrafts arising directly from its operations.

The Group’s objective is to finance its operations from internally generated funds, bank overdraft and loan facilities using its cash

management strategy. The policy of the Group is not to enter into any derivative or hedging transactions and the Group has not

done so during the period. It utilises stepped overdraft facilities reflecting seasonal trading patterns which are negotiated each year

together with a revolving credit facility which expires in August 2001, for which there is a small fixed non-utilisation fee.

As permitted by FRS13, Derivatives and Other Financial Instruments, amounts dealt with below, with the exception of finance leas-

es, exclude short term debtors and creditors.

The Group held the following financial instruments at 27 January 2002:

2002 2001

£'000 £'000

Cash balance 33,704 17,617

Finance leases (note 17) 2,373 198

Provision for vacant or sub-let properties (note 18) 2,207 2,124______ ______

The main risks arising from the Group’s financial instruments are interest rate and liquidity risks.

Interest rate risk: The Group had no borrowings at the year end and did not require any overdraft facility. For periods during the

year it utilises overdraft facilities which attract a floating rate of interest linked to HSBC Bank base rate. Short term deposits, includ-

ed within the cash balance, are made at rates linked to bank base rates and deposits at the year end were with HBDS plc Group.

The provision for vacant or sub-let properties are considered to be floating rate financial liabilities. This is because in establishing

the provisions, the cash flows have been discounted and the discount rate is re-appraised at each half yearly reporting date to

ensure that it reflects current market assessments of the time value of money and the risks specific to the liability. For the period

ended 27 January 2002 the discount rate is 5.0% (2001: 7.0%).

The finance leases at 27 January 2002 bear an average fixed rate of interest of 4.0% (2001: 10.6%).

Liquidity risk: Commitments under finance leases and their maturity profile are set out in note 17. The maturity profile of the provi-

sion for vacant or sub-let properties is:

2002 2001

£'000 £'000

Due in less than one year 418 366

Between one and five years 1,132 1,036

In more than five years 657 722______ ______

2,207 2,124______ ______

The cash balance includes deposits placed on money markets on call at prevailing interest rates.

Currency risk: There is minimal currency risk as, with the exception of some transactions in Euros in respect of a Debenhams con-

cession in Dublin, all other company transactions are denominated in sterling.

The fair value of the financial assets and liabilities approximate to their carrying cost.



20. Called up share capital

The authorised share capital of the Company throughout the period was 91,000,000 ordinary shares

of 10p each. The issued and fully paid share capital was as follows:

Number of Shares £’000

At 28 January 2001 68,785,705 6,878

Issued in respect of share options for cash 35,000 4____________ ______

At 27 January 2002 68,820,705 6,882____________ ______

Share options are in existence in respect of 63,000 shares, exercisable between 8 November 1996 and 21 November 2004 at prices

ranging between 34p and 52p. Further share options are in existence in respect of 372,000 shares exercisable between 16

November 2001 and 9 July 2011 at prices between 135p and 148p providing that earnings per share in the period from the grant of

the option to the date of any exercise grow by at least RPI + 3% per annum.

21.Directors’ interestsThe number of ordinary shares held by the directors and their families at 27 January 2002 were:

Beneficial Non Beneficial

2002 2001 2002 2001

D J Lewin 13,211,921 13,361,921 9,195,142 9,245,142

C S Lewin 2,266,120 2,266,120 - -

B R Hartog 78,000 78,000 - -

D M Darlington 2,365,898 2,365,898 - -

S P Houlston 9,000 - - -

J S Robinson - - - -

J F Coleman 11,349 11,349 9,195,142 9,245,142

R H Gunlack 34,650 34,650 - -

B Jackson - - - -

2,355,898 shares included in the beneficial holding of D M Darlington are included in the non beneficial holdings of Messrs Lewin

and Coleman. There were no changes in directors’ interests between 27 January 2002 and 16 April 2002. 9,195,142 (2001:

9,245,142) shares included in the non-beneficial holding of D J Lewin are duplicated in the non-beneficial holding of J F Coleman.

No director either during the year or at the year end had a material interest in any contract which was significant to the business of

the Group.

In addition to the above, the following directors have options to subscribe for ordinary shares as follows:

Option Options Options Options

Date of price 28 January granted Exercised 27 January

grant pence 2001 in period in period 2002

B R Hartog November 1998 135 15,000 - - 15,000

S P Houlston November 1998 135 10,000 - - 10,000

J S Robinson November 1998 135 10,000 - - 10,000

J S Robinson November 1994 34 12,000 - - 12,000

Under the rules of the Executive Share Option Scheme, options may be exercised not less than three years and not more than ten

years from the date the options were granted. Options granted from November 1998 are exercisable providing that earnings per

share in the period from the grant of the option to the date of any exercise grow by at least RPI + 3% per annum.

The middle market price of Clinton Cards PLC ordinary shares at 27 January 2002 was 145.0p (2001: 106.5p). During the year the

market price ranged between 106.5p and 175.5p. The average price of Clinton Cards PLC ordinary shares during the financial year

was 143.4p (2001: 106.5p).



22. ReservesShare

premium Merger Profit and

account reserve loss account Total

£’000 £’000 £’000 £’000

Group:

Balance at 28 January 2001 15,400 3,932 34,449 53,781

Premium on new shares issued 28 - - 28

Retained profit - - 8,761 8,761______ ______ ______ ______

Balance at 27 January 2002 15,428 3,932 43,210 62,570______ ______ ______ ______

Company:

Balance at 28 January 2001 15,400 3,932 542 19,874

Premium on new shares issued 28 - - 28

Retained profit - - 1,362 1,362______ ______ ______ ______

Balance at 27 January 2002 15,428 3,932 1,904 21,264______ ______ ______ ______

Cumulative goodwill written off directly against the Group profit and loss account reserve in prior years amounts to £123,000. In

the event of a sale of the related business the appropriate amount of goodwill will be charged to the profit and loss account.

23.Equity shareholders’ fundsGroup Company

2002 2001 2002 2001

£’000 £’000 £’000 £’000

Profit for the financial period 13,399 12,350 6,000 3,999

Dividends paid and proposed (4,638) (4,047) (4,638) (4,047)______ ______ ______ _____

Retained profit/(loss) 8,761 8,303 1,362 (48)

Shares issued during the period 32 22 32 22

Shareholders’ funds at 28 January 2001 60,659 52,334 26,752 26,778______ ______ ______ ______

Shareholders’ funds at 27 January 2002 69,452 60,659 28,146 26,752______ ______ ______ ______

24. Operating lease commitmentsAt 27 January 2002 the Group had annual commitments under operating leases expiring as follows:

Land and Buildings

2002 2001

£'000 £'000

Within one year 942 1,148

Between two and five years 4,416 3,813

In more than five years 54,533 52,378______ ______

59,891 57,339______ ______



25.Reconciliation of operating profit to net cash inflow from operating activities

2002 2001

£'000 £'000

Operating profit 20,339 18,521

Amortisation of goodwill 1,344 1,344

Depreciation charges 7,412 6,142

Movement on provisions (60) (554)

Loss on sale of tangible fixed assets 1,588 234

Decrease/(increase) in stock 6,247 (9,404)

Decrease in debtors 8 264

Increase in creditors 1,240 7,184______ ______

Net cash inflow from operating activities 38,118 23,731______ ______

26. Analysis of changes in financing during the yearShare Share Merger

capital premium reserve

£’000 £’000 £’000

At 28 January 2001 6,878 15,400 3,932

Issued in respect of share options for cash 4 28 -______ ______ ______

Balance at 27 January 2002 6,882 15,428 3,932______ ______ ______

27. Reconciliation of net cash flow to movement in net cash2002 2001

£'000 £'000

Increase in cash 16,087 5,666

(Increase)/decrease in debt and lease financing (2,172) 93______ ______

Change in net cash 13,915 5,759

Opening net cash 17,419 11,660______ ______

Closing net cash 31,334 17,419______ ______

28. Analysis of changes in net cash28 January New finance 27 January

2001 leases Cash flow 2002

£’000 £’000 £’000 £’000

Cash 17,617 - 16,087 33,704

Finance leases (198) (2,582) 410 (2,370)______ ______ ______ ______

Net cash 17,419 (2,582) 16,497 31,334______ ______ ______ ______



29. Capital commitments

At 27 January 2002 the Group had contractual capital commitments of £23,000 (2001: £267,000). There were other capital com-

mitments of £168,000 (2001: £265,000).

30. Pensions

The Group operates defined contribution money purchase pension schemes for employees. The assets of the schemes are held

separately from those of the company in independently administered funds. Annual contributions to the schemes charged to the

profit and loss account during the year amounted to £158,531 (2001: £142,813).



Notice is hereby given that the thirty sec-

ond Annual General Meeting of Clinton

Cards PLC will be held at The Crystal

Building, Langston Road, Loughton, Essex

on Thursday 30 May 2002 at 10.30 a.m.

for the following purposes.

Ordinary Business1. To receive and adopt the directors’

Report and Accounts for the year

ended 27 January 2002 together with

the Auditors’ Report thereon.

2. To declare a final ordinary dividend of

5.40p per ordinary share.

3. To re-elect Mr J F Coleman, a director

retiring by rotation.

4. To re-elect Mr R H Gunlack, a director


5. To re-elect Mr B R Hartog, a director


6. To re-appoint PricewaterhouseCoopers

as Auditors of the Company and to

authorise the Board of Directors to

agree their remuneration.

Special BusinessTo consider and if thought fit, to pass the

following Resolutions of which

Resolutions 7 and 9 will be proposed as

Ordinary Resolutions and Resolution 8 will

be proposed as a Special Resolution:

7. That for the purposes of section 80 of

the Companies Act 1985 (the "Act")

and so that any expression used in

this resolution shall bear the same

meaning (as in the said section 80):

(i) the directors be and are generally

and unconditionally authorised to

exercise all the powers of the

Company to allot relevant securi-

ties (within the meaning of sec-

tion 80 of the Act) up to an aggre-

gate nominal amount of

£2,200,000 to such persons and

at such times and on such terms

as they think proper during the

period expiring at the end of five

years from the passing of this res-

olution, unless sooner revoked or

varied by the Company in general

meeting; and

(ii) the Company be and is authorised

to make prior to the expiry of such

period any offer or agreement

which would or might require rele-

vant securities to be allotted after

the expiry of the said period and

the directors may allot relevant

securities in pursuance of any

such offer or agreement not with-

standing the expiry of the authori-

ty given by this resolution; and

(iii) so that the authority hereby given

shall be in substitution for any

existing authorities under section

80 of the Act.

8. That, subject to the passing of

Resolution 7 above, in accordance

with section 95 of the Companies Act

1985 (the "Act"), the directors be and

are hereby empowered until the date

which is five years from the date of

this resolution to allot equity securi-

ties (as defined in section 94(2) of the

Act) for cash pursuant to the authority

to allot relevant securities (as defined

in section 80 of the Act) conferred on

them by Resolution 7 above as if sec-

tion 89 (1) of the Act did not apply to

any such allotment, such power being

limited to:

(i) the allotment of equity securities

in connection with the issue or

offering in favour of holders of

equity securities and any other

persons entitled to participate in

such issue or offering where the

equity securities respectively

attributable to the interest of such

holders and persons are propor-

tionate (as nearly as may be) to

the respective numbers of equity

securities held by or deemed to be

held by them on the record date of

such allotment, subject only to

such exclusions or other arrange-

ments as the directors may con-

sider necessary or expedient to

deal with fractional entitlements

or legal or practical problems aris-

ing under the laws or require-

ments of any overseas territory or

the requirements of any regulatory

authority or any stock exchange;

(ii) the allotment (other than pursuant

to the power referred to in sub-

paragraphs 7(i) and 7(ii) above of

equity securities up to an aggre-

gate nominal amount of £344,103

representing 5% of the issued

share capital of the Company.

save that the Company may, before


Notice of Annual General Meeting




expiry of that authority, make offers or

agreements which would or might

require equity securities to be allotted

after such expiry and the directors may

allot equity securities pursuant to any

such offers or agreement as if such

authority had not expired.

9. That the Company be and is hereby

authorised to make market purchases

(within the meaning of a section

163(3) of the Companies Act 1985) of

its ordinary shares of 10p each upon

or subject to the following conditions:

(a) the maximum number of ordinary

shares of 10p each in the

Company which may be pur-

chased is 6,850,000 representing

approximately 10% of the issued

share capital of the Company.

(b) the maximum price of which ordi-

nary shares may be purchased

shall be 5% above the average of

the middle market quotations for

the ordinary shares as taken from

the London Stock Exchange Daily

Official List for the ten business

days preceding the date of pur-

chase and the minimum price

shall be 10p being the nominal

value of the ordinary shares (in

both cases exclusive of expenses);

and

(c) the authority to purchase con-

ferred by this resolution shall

expire on the date of the next

Annual General Meeting after the

passing of this Resolution or the

date being fifteen months after the

passing of this Resolution

(whichever is the earlier) save that

the Company may, before such

expiry, enter into a contract of pur-

chase under which such purchase

may be completed or executed

wholly or partly after the expiration

of this authority.

By Order of the Board

B R Hartog

Company Secretary

30 April 2002

Registered Office:


Langston Road

Loughton

Essex IG10 3TH

Notes1. A shareholder entitled to attend and vote at

the meeting is entitled to appoint a proxy

and/or alternate proxies (who need not be a

member of the Company) to attend and, on a

poll, vote in his/her place.

2. To be valid, Forms of Proxy, duly signed,

together with the power of attorney or authori-

ty (if any) under which they are signed (or a

certified copy of such power or authority)

must be lodged with the Company’s Registrar,

Capita IRG Plc, Balfour House, 390-398

High Road, Ilford, Essex IG1 1NQ by not

later than 10.30 a.m. on 28 May 2002.

Completion of a Form of Proxy will not affect

the right of a member to attend and vote at

the meeting.

3. Pursuant to regulation 34 of the Uncertified

Securities Regulations 1995 the Company

gives notice that only those shareholders

entered on the register of members of the

Company at 6.00 p.m. on 28 May 2002 will

be entitled to attend or vote at the aforesaid

general meeting in respect of the number of

shares registered in their name at that time. If

the meeting is adjourned, the time by which a

person must be entered in the register of mem-

bers in order to have the right to attend or vote

at the adjourned meeting is 6.00 p.m. on the

day preceding the date fixed for the adjourned

meeting. Changes to entries in the register

after the relevant time will be disregarded in

determining the rights of any person to attend

or vote at any meeting.

4. The Register of Directors’ Interests in Shares

will, together with the Directors’ Service

Agreements, be available for inspection during

usual business hours on any weekday at the

registered office from this date until the date of

the Annual General Meeting and at the place

of meeting for fifteen minutes prior to and

until the termination of the meeting.


Shop locations

Shop locations

Clinton Cards PLC

Head Office


Langston Road

Loughton

Essex IG10 3TH

Telephone: 020 8502 3711

Fax: 020 8502 0295

www.clintoncards.co.uk

Date post:	16-Feb-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Annual Report & Accounts 2002 - Clintons · adjusted sales figures for an earlier Easter this year,...

Documents