Annual Report & Accounts 2011 - Clintons · 2017-06-07 · 06 CLINTON CARDS PLC Annual Report and...

Annual Report& Accounts

for the 52 weeks ended 31 July 2011

2011

www.clintoncards.co.uk

01 CLINTON CARDS PLC Annual Report and Financial Statements 2011

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Contents

Board of Directors 20

Corporate Governance 22

Directors’ Report 26

Directors’ Remuneration Report 29

Our Governance

Section 3

Independent Auditors Report 34

Consolidated Statement of Comprehensive Income 35

Consolidated Balance Sheet 36

Consolidated Statement of Changes in Equity 37

Consolidated Cash Flow Statement 38

Company Balance Sheet 39

Company Statement of Changes in Equity 39

Company Cash Flow Statement 40

Notes to the Financial Statements 41

Notice of Annual General Meeting 65

Our Financials

Section 4

About Us 4

Message from the Chairman 5

Clintons at a Glance 6

Illustrated Life Cycle 8

About Clintons

Section 1

Business and Financial Review 12

Corporate Social Responsibility 15

Risks and Uncertainties 16

Our Performance

Section 2

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Section 1

ContentsAbout Us 4Message from the Chairman 5Clintons at a Glance 6Illustrated Life Cycle 8

About Clintons


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About Us

Clinton Cards is the UK’s largest specialist retailer of greetings cards, plush merchandise (soft toys) and related products, with almost 800 stores nationwide.

Established in 1968, Clinton Cards has a significant and resilient high street retail presence and is continuing to extend its appeal to a wider audience through ongoing investment in the “Clintons” and “Birthdays” stores presence. We employ over 8,000 full-time and part-time people and are committed to developing a business that maintains a resonance with its customers.

Investor Proposition Statement

1. Opportunity to leverage the business transformation already underway – new board appointment and new systems underpinned by a strong brand

2. Exposure to a significant market opportunity – the UK has a strong greetings card culture, with a market estimated to be worth in excess of £1.5 billion

3. Highly experienced in the markets we serve – continuously refining our product propositions to provide a superior customer offering

4. Strong retail footprint – rolling out our new store design, combining our strong retail heritage with developments in technology driven personalisation and new mediums for celebrating life’s special moments

5. Driving market growth – leveraging our supply chain relationships to develop new, innovative and exclusive ranges

6. Disciplined financial management – working to ensure our cost structure is reflective of turnover and driving opportunities for margin improvement

Ourvalues

SURPRISINGRESPONSIBLE

FAMILY SPIRITED

ASPIRATIONAL


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Message from the Chairman

Welcome

There is a shared recognition across the group of the need to respond to the challenges of having a visible high street presence and a resilient business model . . . We start this new and exciting phase with a very strong brand.

Dear Shareholder

Evolving the Clintons storyClinton Cards has come through a challenging year, a period in which a number of iconic retailers have suffered and struggled against ongoing economic uncertainty. I am therefore pleased to report that the Group has agreed an extension to the revolving credit facility with its joint lenders until July 2013.

Our business is continuing to evolve and, benefiting from a strengthened management team, we are embarking on a series of initiatives to improve the Group’s performance. Together these represent important steps both in our ability to continue to meet the changing needs of our customers and to ensure that we establish a solid platform for driving investor returns.

My main focus will be to continue to work with the Board to transform the business so that the foundations are established for realising commercial success, enabling Clintons to prosper in a rapidly changing retail landscape.

Although the business continues to face a number of challenges, Clintons remains an exciting and positive place to work, supported by a strong and resilient presence on our nation’s high streets.

Progress during 2011Our actions to drive down cost, to differentiate our offering and to improve profitability will take time to show through in our results but the months ahead should provide clear evidence of the progress we are making.

Against this backdrop, I am delighted to welcome to the Board Darcy Willson-Rymer. Darcy was previously Managing Director of Starbucks UK. He will build upon the opportunities created by the changes we have started to make and robustly address the challenges that lie ahead. Darcy has an excellent track record of managing change as well as substantial retail experience.

Looking to the futureThere is a shared recognition across the Group of the need to respond to the challenges of having a visible high street presence and a resilient business model if we are to return to a period of sustained performance. In the coming months we will outline in more detail the outcome of the strategic review being led by Darcy Willson-Rymer and the journey that lies ahead. We start this new and exciting phase with a very strong brand and an improving portfolio of stores and products.

Don Lewin, OBEChairman


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Cards 59% Gift Dressing 9% Gifts & other 32%

Group Sales Mix

Clintons at a Glance

Clintons Stores

Operating across more than 600 stores located in prime locations, we provide customers with quality led choice. We offer merchandise to cater for a wide range of significant events in the lives of our diverse customer base.

We have also been busy listening to what our customers want from us. As a result, we have launched four re-designed stores, featuring new layouts, colour schemes and directional signage. We believe that by proactively listening to our customers they will be encouraged to visit our stores more frequently.

Clintons through its extensive UK high street presence and its revamped website, offers customers the most extensive range of quality greetings cards, gift dressing and plush (soft toys) merchandise across the UK retail sector.

Clintons Online

Our online channel was re-vamped during the year. The changes focused on new site designs and layouts as well as greater functionality for our customers, including a reminder service, “wish-lists” and our fully functioning personalisation service. We will continue to develop our digital offering during 2012.

exclusiveranges

• Boofle• Clinton collection • A la mode• Deco• Simply Clinton

Our Business


Clintons Sales Mix

Store facts

09 10 11

Spend per head (L4L):

£5.3

3

£5.3

9

£5.3

9

£5.3

3

08 0908 10 11

Sales per sq ft:

£299£3

16

£304

£298

Store portfolio

654

64120

61

No. of stores at start of year New stores Relocations Disposals No. of stores at end of year


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Birthdays Stores

Birthdays through over 150 high visibility stores offer a great range of cards and gifts for budget conscious customers. During the year we introduced a new pricing structure to improve our competitiveness and developed our value card offering moving more of our range to 59p & 99p. We also extended our Yours Truly cellowrap card range with an entry price point of 59p.

The development of party ranges continues to make Birthdays a destination party location with our latest development being the launch of a new group exclusive party essentials range.

Forthcoming Developments:

We have developed a number of exciting and innovative customer offerings and anticipate rolling a variety of initiatives out across our store portfolio during 2012.

Products• Fizzy Moon• Elliot• Yours Truly• Plain Colour Value Wrap• Party essentials


Birthdays Sales Mix

Store facts

09 10 11

Spend per head (L4L):

£4.8

6

£4.7

4

£4.6

0

£4.4

5

08 0908 10 11

Sales per sq ft:

£249

£245

£248

£235

Store portfolio

176

15628

26

No. of stores at start of year New stores Relocations Disposals No. of stores at end of year


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Illustrated Life Cycle

Life’s MomentsThere are many occasions for celebration throughout the calendar year and we are well positioned to offer the appropriate cards, gift dressing & gifts to express that sentiment.

Valentine s dayFebruary

Total of 2.2 million Valentine’s Day cards sold in 2011

St patrick s dayMarch

Total of 54,000 St Patrick’s Day cards sold in 2011

WeddingJune

Peak month for Wedding cards Total of 1.7 million cards sold in seasonTotal of 480,000 Wedding gifts sold so far in 2011

’

’


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For more info on our card ranges go towww.clintoncards.co.uk

Exam ResultsAugust

Peak month for Exam ResultsApproximately 2.4 million students receive their Exam Results in August

Birthdays & Moving house

September

September is the peak month for Birthdays as well as for Moving HouseApproximately 51 million Birthday Cards are sold each year

diwaliOctober

Around 900,000 Hindus, Sikhs and Jains celebrate Diwali every year in the UK

christmasDecember

Total of 18.4m Christmas Cards sold in 2010Total of 4.4m Christmas Wrap items sold in 2010Total of 3.8m Christmas Gifts sold in 2010

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Section 2

ContentsBusiness and Financial Review 12

Corporate Social Responsibility 15

Risks and Uncertainties 16

Our Performance


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Business and Financial Review

The strengthened management team is undertaking a review of the Group’s operations, with an early focus on improving customer experience, our store portfolio, supply chain management and digital offering.

A Transitional Year

TradingIn the 52 weeks ended 31 July 2011 trading has been conducted in an environment characterised by low consumer confidence and weak footfall. These factors impacted significantly on Group sales which declined by 2.9% on a like for like basis comprising a reduction in Clintons of 3.4% from 596 stores and an increase of 0.4% from 127 Birthdays stores. Total revenue from continuing operations for the 52 weeks ended 31 July 2011 was £364.2m compared with £394.0m for the 52 weeks ended 1 August 2010. Adjusted operating profit for the Group was £3.2m (2010: £18.8m). This figure comprises a profit of £7.0m (2010: £19.3m) for Clintons and a loss of £3.8m (2010: £0.5m loss) for the Birthdays brand.

At the beginning of the period Birthdays was trading from 14 stores in the Republic of Ireland which had suffered from a combination of declining sales and increased occupancy costs. During the period under review it became apparent that this position was unlikely to reverse in the medium term with expectations that full year losses to July 2011 would escalate to approximately £1.4m. Accordingly the Board decided to seek to dispose of the operation. On 1st March 2011 the Group petitioned the Court to appoint a liquidator to instigate an orderly winding up of its subsidiary Birthdays (Ireland) Limited. The largest unsecured creditor was its parent company, Birthdays Retail Limited, with £1.5m owed.

Against a backdrop of this challenging environment and the significant reduction in revenues across the Group, we have taken a more robust view of forecast trading performances which have impacted carrying values of both assets and liabilities. This has resulted in a significant increase in impairment of store based fixed assets of £5.7m (2010: £0.5m) and an increase in provision for onerous leases of £4.6m (2010: £1.2m). These two non-cash items are considered to be exceptional by their size and have been shown accordingly in the Group’s results.

Capital InvestmentIn the 52 weeks to 31 July 2011 the Group invested a total of £6.6m in the business. £3.7m was invested in the store portfolio, £2.5m on information technology systems and £0.4m on the motor vehicle fleet.

When reviewing the amount invested in new and future stores, it should be noted that contributions from landlords in the form of reverse premiums and/or extended rent free periods in excess of three months amounted to £2.0m. This amount is included in deferred income and credited to the income statement over the period of the respective leases but excluded from the table below.

Investment by brand:

Clinton Birthdays Cards Retail Group £m £m £m New and future stores 1.4 0.2 1.6 Modernisation of existing stores 1.6 0.5 2.1 3.0 0.7 3.7 Information systems 2.5 Other 0.4 Total investment 6.6

Group losses arising from the sale of property, plant and equipment in the period amounted to £1.0m (2010: £1.5m).

Cash Flow, Interest and BorrowingsNet debt before financing costs at 31 July 2011 was £34.3m, a reduction of £1.5m compared with £35.8m at 1 August 2010. Cash generated from operations during the 52 week period amounted to £10.8m compared with £25.3m in the 52 weeks to 1 August 2010.

Average net borrowings for the 52 week period were £22.9m compared to £26.0m in the 52 weeks to 1 August 2010.


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The net interest paid in the period to 31 July 2011 amounted to £1.88m (52 weeks to 1 August 2010: £1.96m). Interest on amounts drawn down against the Group’s revolving credit facility is paid at LIBOR plus a lender’s margin. To minimise exposure to fluctuations in LIBOR, a hedge agreement was entered into on 31 July 2009 expiring in December 2011. This comprises an interest rate swap with a fixed rate of interest of 1.5% until July 2010 and 2.3% until December 2011. The Board will review its strategic options for future hedging arrangements on a monthly basis to ensure interest rate risks are mitigated.

Net corporation tax paid in the period amounted to £0.8m (2010: £4.3m) of which £0.4m related to the final instalment for 2010 and £0.4m to the interim instalment for 2011.

Cash expenditure in the 52 weeks to 31 July 2011 on property, plant and equipment was £6.7m (2010: £4.6m).

Inventory has increased by £6.3m over the 52 week period due to an increase in seasonal carryover and an extension of our gift offering. The seasonal stock carryover will be sold through in the next appropriate season. A higher proportion of stock is made up of gift items and reflects the increase in gifting revenue generated during the 52 week period.

Management recognise the need for improvement of controls in relation to stock holdings and we have now strengthened processes in this area.

Trade creditors have increased primarily due to extended creditor terms, a proportion of which will reverse in the next 52 week period. In addition rent creditors have increased due to the August quarter rent payments falling due after the year end.

FinancingWe are pleased to report that the Group has agreed an extension to its revolving credit facility with its joint lenders, Barclays Bank and Royal Bank of Scotland, until July 2013. The maximum available draw down will be £55m. Peak borrowings in November 2011 were £42.7m compared to £53.1m in 2010 reflecting the ongoing progress of cash management and controls.

TaxationThere is a Group taxation charge of £1.4m (2010: £3.6m) which is offset by a £0.4m credit relating to discontinued operations. £1.6m related to deferred tax of which £2.6m was an adjustment to prior year mainly due to revised asset values on shops acquired from Birthdays Limited in 2009. This also created a prior year adjustment of (£0.5m) for corporation tax. No corporation tax liability arose for the current 52 week period.

Earnings Per Share and DividendThe adjusted basic loss per share for the 52 weeks to 31 July 2011 was 2.25p compared to a profit of 5.28p for the 52 weeks to 1 August 2010.

The basic loss per share from continuing operations was 7.26p (2010: profit 3.57p).

The Board has decided not to propose a final dividend for the 52 weeks to 31 July 2011 (2010: Nil). In the longer term, the Board remains committed to paying a dividend when there is evidence of a consistent upward trend in profitability.

Shareholders’ FundsTotal shareholders’ funds at 31 July 2011 amounted to £23.0m (2010: £38.2m). Net assets per share at the period end were 11.1p (2010: 18.48p).

Store DevelopmentThe Clintons brand In the 52 week period, we opened one new store, relocated six stores and disposed of 14 stores resulting in 641 stores trading at 31 July 2011 with a trading area of 1.24 million square feet. The average trading area of a Clintons store at the year end is 1,931 square feet.

Utilising the experience gained from our four new format stores, which have had positive customer feedback, we have designed a lower cost refit to modernise all stores. These will be trialled in three additional stores before Christmas.

Celebrity Fastcards

As part of our commitment to place product innovation at the heart of our offering we have signed an exclusive agreement to offer Celebrity Fastcards to the UK market. This product allows users to send personalised celebrity video messages to friends and family via email or mobile.

A first of its kind in the UK market we are selling £3.99 video cards in store and through our website. Celebrities available include David Hasselhoff, The Saturdays, Alesha Dixon and Jerry Springer. www.clintoncards.co.uk/celebrityfastcards

SpotlightProduct


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Business and Financial Review (continued)

The Birthdays brand In the 52 week period, we relocated two stores and disposed of 20 stores, including 14 relating to the liquidation of Birthdays (Ireland) Limited, resulting in 156 stores trading at 31 July 2011. The average trading area of a Birthdays store at the year end is 1,746 square feet and a total trading area of 0.27 million square feet.

StaffThe average number of staff employed during the period was 8,350 (2010: 8,463). Administrative staff totalled 231 (2010: 236) and store and field staff totalled 8,119 (2010: 8,227). Many of the store staff are part time employees and the number of full time equivalent staff was 4,795 (2010: 5,065). Staff have moved across the two brands either as a result of re-branding stores or to fill vacancies at all levels within the business. The Group operates a policy of appointing internal candidates wherever possible to fill any vacancies which arise. Clearly the operation of two sizeable chains enhances these opportunities.

Strategy and OutlookThe first 16 weeks of the current financial year to 20 November have seen like for like sales 2.4% lower than the same period last year, with the Clinton brand 2.6% lower and Birthdays reduced by 1.4%.

The strengthened management team is undertaking a review of the Group’s operations, with an early focus on improving customer experience, our store portfolio, supply chain management and digital offering. While the current macro-economic environment remains challenging, the team believes that this review and subsequent actions will benefit the Group’s future performance. The team is excited about taking the business forward.

Darcy Willson-Rymer Group Chief Executive Officer

Paul SaladorGroup Finance Director

BOOFLE

The original Boofle concept created in 2007, has continued to grow as an exclusive card and gift range, offering a comprehensive collection of product for all key seasons and events for Clintons and is estimated to grow to annual revenue streams of £28m during 2012. The Boofle interactive brand website was launched in May 2011 and a further phase is planned for launch early in 2012.

SpotlightProduct


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Corporate Social Responsibility

“Responsible retailing”

Members: Group Finance Director, Group Human Resources Director, Brand Operations Managers and the Group Property Manager.

Our commitment to sustainable growth is linked to the responsible implementation of our commercial strategy. Based around four core themes our CSR initiatives are focused on where we believe we can make a positive difference:

MarketplaceOur marketplace initiatives focus on working with our suppliers to ensure the sustainability of our products. This includes:

Sourcing with integrity: we have developed long term relationships with many of our suppliers, built on trust and an understanding of mutual benefits. We pay our suppliers a fair price and provide reassurance as to the provenance and quality of the products we sell. Our customers are increasingly interested in where our products come from and how they are made. We require our suppliers to follow the various codes embodied in the conventions and recommendations of the International Labour Organisation.

Customer engagement: we talk to our customers to understand key issues and gain insight.

Product location: we make our biggest promotions highly visible within the store. Product adjacencies are designed to promote customer satisfaction and ease.

Selling products we are proud of: we strive to source products that our customers want in a way that provides quality merchandise for a fair price.

EnvironmentWe are continually reviewing our environmental initiatives to focus on how we show respect for our environment. This includes:

Working with our suppliers: to reduce the amount of packaging we use with our products and deliver to stores at the right time in the most cost-effective way.

Reducing the environmental footprint of our store portfolio: we continue to search for ways to reduce the amount of energy consumed by our stores and the logistics associated with stocking our stores. This includes automatic metering systems and low energy lighting solutions.

WorkplaceOur approach to workplace-based initiatives is to make Clintons a great place to work. We do this by investing in our people to inspire a caring culture and to develop the skills that they need to drive the company’s performance. This includes:

Encouraging diversity and inclusion: developing a workforce that reflects the local communities we serve. All staff are treated in a fair and consistent manner.

Staff engagement: striving for satisfaction levels above other retailing groups. Delivering sustainable growth requires empowering people to act responsibly and to be trusted to do the right thing. All employees are expected to observe and follow the Company’s policies and procedures clearly set out in the Staff Handbook. There are procedures enabling staff to be able to report directly to any director concerns they may have in respect of serious wrong doing.

Staff development: creating an environment that allows our staff to fully develop skills, talents and interests. We do this by providing training opportunities, from front line staff through to senior management.

Health and wellbeing: we are continually working across our business to prevent occupational injuries and illnesses. The Group complies with its obligations under the Control of Asbestos Regulations and the Disability Discrimination Act 1995.

CommunityOur perspective on community-based initiatives is to create better opportunities for those communities we serve. This includes:

Creating local jobs: we attract staff living locally to the stores in which they work. The benefit of a national footprint is that we are able to offer work opportunities across broad locations from high street stores in smaller towns to large out of town retail parks.

Creating products influenced by local tastes: we are increasingly incorporating into our product range, merchandise that reflects the make-up of the local community. During the year we sold cards and gifts that celebrated a number of non-Christian festivals and patron saint days.

Store-based appeals: during the year our stores were encouraged to sell products with charitable contributions.

As a leading high street retailer we are well placed to make a positive contribution to the economy, the environment and the communities in which we operate. Our Corporate Social Responsibility Committee headed by Paul Salador meets at least three times a year to consider CSR policy and initiatives across the group. Other members of staff are co-opted as necessary.

Every week, Clinton Cards offers over 5,000 products, undertakes 1.4m customer transactions, employs over 8,000 staff and maintains relationships with over 100 suppliers. Our aim is to provide our customers with affordable, quality products that are sustainably and ethically sourced.

Paul SaladorChair of the CSR Committee


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Risks and Uncertainties

Risk description Impact Mitigation Trend

STR

ATEG

IC R

ISK

S

Execution of strategy:The business needs to develop a strategy that responds to the challenges of the market place so as to position itself for long-term growth

• Loss of market share

• Reduction in EBITDA

• Deterioration in cash flows

• Strategy review commenced in 2010 and to be further developed following the arrival of the new Chief Executive. This will focus on producing a clear route map for the delivery of strategic objectives across the business

• Regular review of progress against plan

Structural risk:The retail landscape is undergoing significant change as new technologies, platforms and routes to market are established. Clintons needs to ensure that it can get product that people want in a way that they desire

• Reduction in customer loyalty

• Erosion of market share

• Exposure to a high fixed cost structure

• Implementation of a variety of trading platforms

• Developing innovative new products and services to drive nascent market opportunities

• Development of marketing strategy to improve loyalty and increase customer conversion

Market conditions:As a business Clintons needs to manage the seasonal nature of its business as well as its cyclical exposure to the wider economy

• Reduced spend per transaction

• Reduction in number of customers

• Improving return on investment in the store portfolio

• Ensuring an appropriate balance within the store and product portfolio

• Building and maintaining strong customer relationships

• Providing multiple opportunities for customers’ to celebrate life’s moments

OPE

RAT

ION

AL

RIS

KS

Information systems and business continuity:Our business is dependent upon systems to get our products to our customers

• Lost contribution from potential sales

• Customers switch to other retailers

• Negative effect on customer goodwill

• Reputational damage

• Group Information Systems Committee meets on a regular basis

• Business continuity plans are documented and regularly tested

• Investment in IT infrastructure

People:Our investor proposition is dependent upon our ability to attract, retain and motivate people across all levels of the business

• Financial and operational underperformance

• Increased staff turnover

• Reduction in staff morale

• Investment in training and development

• Staff surveys and internal communication programme

• Appropriate incentive reward schemes

Security:Our business is exposed to inventory shrinkage as a result of internal and external theft

• Increased internal shrinkage

• Increased external shrinkage

• Reduced margins

• Internal audit of store operations by loss prevention team

• Use of covert surveillance to monitor till operations

• Exception reporting to highlight abnormal trends

• Use of deterrents e.g. CCTV, security guards and product tagging

FIN

AN

CIA

L R

ISK

S

Financing:Access to finance or willingness to invest may be restricted in an uncertain economic environment. Clintons needs to maintain a robust balance sheet so as to respond to market opportunities as well as meeting its long-term funding obligations

• Limited access to financing and reduced liquidity

• Inability to fund potentially value creating investment opportunities

• Diversion of cash flows to interest

• Ensuring appropriate funding across debt and equity

• Robust cash management process ensuring sufficient financial headroom

• Hedging strategy to mitigate interest rate risk

Margin protection and growth:Delivering sustainable margins requires innovation with respect to cost base, system processes, store format and product development

• Reduction in EBITDA • Development of new store formats

• Collaboration with our supply chain to ensure product valued by our customers at appropriate cost

• Delivery of efficiencies

• Development of our e-commerce platform and social media initiatives

Risks and UncertaintiesClintons operates in a highly competitive market, which is being transformed by diverse trading platforms, new channels to market, changing customer preferences and buying behaviour. The broader economic environment also remains uncertain.

Clintons strives to identify, manage and respond to major risks that have the ability to impact the business. The risks outlined below are not exhaustive as there may be risks and uncertainties that are not yet known or are currently assessed as immaterial.


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Risk description Impact Mitigation Trend

STR

ATEG

IC R

ISK

S

Execution of strategy:The business needs to develop a strategy that responds to the challenges of the market place so as to position itself for long-term growth

• Loss of market share

• Reduction in EBITDA

• Deterioration in cash flows

• Strategy review commenced in 2010 and to be further developed following the arrival of the new Chief Executive. This will focus on producing a clear route map for the delivery of strategic objectives across the business

• Regular review of progress against plan

Structural risk:The retail landscape is undergoing significant change as new technologies, platforms and routes to market are established. Clintons needs to ensure that it can get product that people want in a way that they desire

• Reduction in customer loyalty

• Erosion of market share

• Exposure to a high fixed cost structure

• Implementation of a variety of trading platforms

• Developing innovative new products and services to drive nascent market opportunities

• Development of marketing strategy to improve loyalty and increase customer conversion

Market conditions:As a business Clintons needs to manage the seasonal nature of its business as well as its cyclical exposure to the wider economy

• Reduced spend per transaction

• Reduction in number of customers

• Improving return on investment in the store portfolio

• Ensuring an appropriate balance within the store and product portfolio

• Building and maintaining strong customer relationships

• Providing multiple opportunities for customers’ to celebrate life’s moments

OPE

RAT

ION

AL

RIS

KS

Information systems and business continuity:Our business is dependent upon systems to get our products to our customers

• Lost contribution from potential sales

• Customers switch to other retailers

• Negative effect on customer goodwill

• Reputational damage

• Group Information Systems Committee meets on a regular basis

• Business continuity plans are documented and regularly tested

• Investment in IT infrastructure

People:Our investor proposition is dependent upon our ability to attract, retain and motivate people across all levels of the business

• Financial and operational underperformance

• Increased staff turnover

• Reduction in staff morale

• Investment in training and development

• Staff surveys and internal communication programme

• Appropriate incentive reward schemes

Security:Our business is exposed to inventory shrinkage as a result of internal and external theft

• Increased internal shrinkage

• Increased external shrinkage

• Reduced margins

• Internal audit of store operations by loss prevention team

• Use of covert surveillance to monitor till operations

• Exception reporting to highlight abnormal trends

• Use of deterrents e.g. CCTV, security guards and product tagging

FIN

AN

CIA

L R

ISK

S

Financing:Access to finance or willingness to invest may be restricted in an uncertain economic environment. Clintons needs to maintain a robust balance sheet so as to respond to market opportunities as well as meeting its long-term funding obligations

• Limited access to financing and reduced liquidity

• Inability to fund potentially value creating investment opportunities

• Diversion of cash flows to interest

• Ensuring appropriate funding across debt and equity

• Robust cash management process ensuring sufficient financial headroom

• Hedging strategy to mitigate interest rate risk

Margin protection and growth:Delivering sustainable margins requires innovation with respect to cost base, system processes, store format and product development

• Reduction in EBITDA • Development of new store formats

• Collaboration with our supply chain to ensure product valued by our customers at appropriate cost

• Delivery of efficiencies

• Development of our e-commerce platform and social media initiatives

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Section 3

ContentsBoard of Directors 20

Corporate Governance 22

Directors’ Report 26

Directors’ Remuneration Report 29

Our Governance


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Board of Directors

Paul SaladorGroup Finance Director

Paul Salador joined the Group in April 1996 and is a Chartered Certified Accountant. Paul was appointed to the Board on 1 February 2009 following three years as Deputy Group Finance Director. His primary responsibilities are for all aspects of Group finance and administration. He has previous experience in both industry and practice.

Clinton LewinGroup Managing Director

Clinton Lewin is Don Lewin’s son and has been with Clinton Cards for more than 30 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 management team and implementing the Group’s business policies and strategies.

Darcy Willson-RymerChief Executive Officer

Darcy joined as Chief Executive Officer in October 2011. Prior to joining Clinton Cards, Darcy was Managing Director of Starbucks Coffee Company, UK and Ireland. Darcy’s brief is to use his extensive knowledge of the rapidly changing retail landscape and track record of managing change to ensure the business prospers through its next phase. Darcy is dedicated to enabling the business and its colleagues to grow in order to deliver an unrivalled customer service and experience.

Debbie DarlingtonProduct Development Director

Debbie Darlington was appointed to the Board in September 2000. She is the daughter of Don Lewin and has been working for Clinton Cards for 24 years. She has served on the management board and as a director of the Group’s principal trading subsidiary for 17 years.

John RobinsonBuying Director of the Clintons brand

John Robinson was appointed to the Board in January 2001. He joined the Group in 1988 prior to which he gained retail experience working with other retail chains including Superdrug and Tesco.

Stuart HoulstonGroup Property Director

Stuart Houlston 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. From April 2006 to October 2011 Stuart had the additional responsibility of Managing Director for the Birthdays brand.

Meet the boardExecutive Directors


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Don Lewin OBENon-Executive Chairman

Don Lewin is the founder of Clinton Cards and has been involved in the greetings card business for more than 40 years, first as an agent and subsequently as one of the originators of the concept of specialist greetings card stores.

Robert GunlackSenior Non-Executive director

Senior Non-Executive director and chair of the Audit Committee and a member of the Remuneration and Nomination Committees. Robert Gunlack is a Chartered Accountant and formerly a partner in Price Waterhouse. He joined Clinton Cards as a Non-Executive director in 1992 and is currently a director of LabM Limited and a number of other private companies.

Brian JacksonNon-Executive director

Brian Jackson 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 masterminding the sale of the business to TM Group in 1999. Prior to joining Martins, he was a Director of Bejam Group Plc.

John ColemanNon-Executive director

Non-Executive director and chair of the Remuneration Committee and a member of the Audit and Nomination Committees. John Coleman is a solicitor and former senior partner of Romain Coleman, one of the Group’s solicitors.

Non-Executive directors


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Corporate Governance

Chairman’s IntroductionThe Board act as stewards of the business. As a Board we focus on protecting business performance as well as our brands, reputation in the marketplace and our stakeholder relationships. We also believe that changes in Board composition both this year and plans for next year provide ongoing opportunities to refresh our approach to governance including our core stakeholder relationships.

The following corporate governance report highlights how the Board has applied the principles of good corporate governance as set out in the UK Corporate Governance Code 2010 (the Code). In line with the Code the Board has decided to align this report with the core themes identified in the Code:

• Leadership• Effectiveness• Accountability• Remuneration• Relations with Shareholders

LEADERSHIPQ: How has the Board changed during the year?A: The most significant change in the year has been the appointment of Darcy Willson-Rymer as Chief Executive Officer, effective 10th October 2011. This has enabled Don Lewin to become Non-Executive Chairman in preparation for his role as Life President during 2012. This means going forward we will be compliant with the Code in establishing separate roles for Chairman and Chief Executive. An overview of all the directors who held office during the year is set out below:

Director Designation Don Lewin Non-Executive Chairman* Darcy Willson-Rymer Chief Executive Officer** Clinton Lewin Group Managing Director Barry Hartog Group Commercial Director (resigned 31 May 2011) Debbie Darlington Product Development Director Stuart Houlston Group Property Director John Robinson Buying Director Paul Salador Finance Director & Company

Secretary John Coleman Non-Executive director Robert Gunlack Non-Executive director Brian Jackson Non-Executive director * Was Chief Executive and Executive Chairman until 1st August 2011,

becoming non-Executive Chairman. Between 1st August 2011 and 10th October 2011 the position of Chief Executive remained vacant.

** Darcy Willson-Rymer’s appointment of Chief Executive was effective 10th October 2011.

Q: What is the structure of the Board?A: As at 31 July 2011 the Board consisted of a Non-Executive Chairman, six Executive directors and three Non-Executive directors. Following the appointment of Darcy Willson-Rymer on 10th October 2011, separate individuals held the office of Chairman and Chief Executive Officer and the number of executive directors on the board increased to seven.

Biographies of the current directors are provided on pages 20 and 21.

Q: What is the Board responsible for?A: The Board maintains a formal agreed schedule of matters specifically reserved for Board approval. Matters reserved for consideration by the Board include:

• Establishing long-term strategic objectives;

• Approving annual operating and capital budgets;

• Reviewing business performance;

• Overseeing the Group’s risk management and internal control systems;

• Corporate governance arrangements;

• Shareholder return policy; and

• Ensuring appropriate resources are in place to enable the Group to meet its objectives.

The Board delegates responsibility for overseeing the implementation of strategy and policies to the Group Executive.

Q: How independent are the Non-Executive directors?A: The non-executive directors have served on the Board for more than nine years and therefore are not considered to be independent in accordance with the Code. However, the Non-Executive directors are considered to be of sufficient calibre and stature to carry significant weight as part of the Board’s decision-making process. In addition, we have announced that John Coleman and Robert Gunlack will be leaving the Board following the appointment of two new non-executive directors. This appointment process is currently ongoing.

Q: How independent is the Non-Executive Chairman?A: Don Lewin is not regarded as independent given his significant equity interest in the business. In addition he has served on the Board for more than nine years and for the majority of this time he also held an executive position in addition to his role as Chairman. However, the Board believes that his position provides a strong interest in challenging and scrutinising management to secure the long-term success of the business.

Q: What is the Chairman responsible for?A: The Chairman is primarily responsible for leading the Board and ensuring its effectiveness. In particular, the Chairman:

AREAS OF NON-COMPLIANCE• Non-Executive directors are not considered to be

independent in accordance with the Code

• Directors are not re-elected on an annual basis

• Non-Executive directors comprise less than half of the Board


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• Chairs the Board meetings, setting the agenda and ensuring that management information packs are distributed to the Board in sufficient time to be fully digested prior to each board meeting.

• Promotes high standards of corporate governance and ethical behaviour and ensuring compliance of the Code where possible having regard for the Company’s size and existing management structure.

• Leads on Board performance evaluation, including the evaluation of the Board collectively, individually and the individual Board sub-committees.

• As founder and a major shareholder the Chairman holds regular meetings with the non-executive directors without the presence of other executives to review board matters specifically from shareholders’ perspectives.

• Maintains an effective working relationship with the Chief Executive Officer by providing support and advice.

Q: What is the Chief Executive Officer responsible for?A: Darcy Willson-Rymer is responsible for the executive management of the Group and for ensuring the implementation of the Board’s strategy and policy within the constraints of approved budgets, resources and timescales.

Q: What is the role of the Senior Independent Director?A: Robert Gunlack as senior non-executive director is an additional point of contact for shareholders should alternative channels be exhausted or inappropriate.

Q: Does the Chairman hold any other appointments?A: No, Don Lewin does not hold any other appointments.

Q: How are new directors to the Board assisted?A: The Chairman assisted by the Company Secretary ensures that all new board members receive an induction that covers their duties and responsibilities as directors. In addition, new directors are provided with briefing packs to ensure they can orientate themselves as quickly and effectively as possible. Prior to Darcy Willson-Rymer’s effective start date and as part of his induction process he met with all senior executives within the business and visited a number of the stores.

EFFECTIVENESSQ: How does the Board allocate its time?A: Below is a chart summarising the approximate time spent by the Board discussing a variety of agenda items during the year to 31 July 2011.

Q: How frequently did the Board meet in the reporting period?A: The Board held ten scheduled Board meetings during the year at the Company’s head office. Details of Board and sub-committee attendance by all directors who held office during the 52 weeks to 31 July 2011 are set out below:

Main Director Board Audit Co Nom Co Rem Co Don Lewin 6/10 1/1 Darcy Willson-Rymer — Clinton Lewin 10/10 Barry Hartog 8/10 Debbie Darlington 8/10 Stuart Houlston 9/10 John Robinson 9/10 Paul Salador 9/10 John Coleman 10/10 2/2 1/1 1/1 Robert Gunlack 7/10 2/2 1/1 1/1 Brian Jackson 7/10 2/2 1/1 1/1

Q: How does the Board split between executive and Non-Executive directors?A: The Board believes that there should be an appropriate combination of executive and non-executive directors. However, given its composition the Board does not currently comply with the requirement that at least half the Board (excluding the Chairman) should comprise non-executive directors. Following recently announced actual and planned changes to Board composition the split between executive and non-executive directors is currently under review. The current mix of directors is shown below:

Q: Has the Company adopted the Code’s new recommendations for the annual re-election of directors?A: Currently one third of the Board submits for re-election at each AGM as part of the group’s formal retirement by rotation policy. The directors to retire will be those who wish to retire and those who have served on the Board for a three-year period following their previous re-appointment. Under the current Articles every director must offer themselves for re-election every three years.

During the period under review the Board discussed its policy on the re-election of directors following the recommendations of the Code. Given the size of the Company and its status as a non-FTSE 350 company the Board will continue to review market practice in this area and will make a decision following the announced changes to the Board’s composition. In the meantime, retirement by rotation will continue on a triennial basis.

Strategy 30% Operations 30% Finance & Risk 30% Governance 10%

Non-Executive Chairman 1 Executive directors 6 Non-Executive directors 3


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Corporate Governance (continued)

“The Audit Committee has responsibility for reviewing the effectiveness of the Group’s financial reporting system, policies and procedures for risk management and internal control. The committee also keeps under review its relationship with the auditors, including their terms of engagement, fees, independence, expertise, resources and qualification as well as the overall effectiveness of the audit process. It makes recommendations to the Board in relation to the appointment, re-appointment and removal of the external auditor and to the provision of non-audit services by the external auditor. The committee is also required to report to the Board on any matters which it considers that action or improvement is needed and make recommendations as to the steps to be taken.”

Robert GunlackChair of the Audit Committee

Q: Do the Directors have access to independent professional advice?A: Yes, in addition to having access to the advice and services of the Company Secretary, all directors are able to seek independent professional advice in the course of their professional duties, at the Company’s expense. If any director has concerns regarding unresolved business issues they are entitled to require the Company Secretary to minute that concern. Should resignations subsequently occur in relation to unresolved business issues the Chairman would bring these concerns to the attention of the Board.

Q: Do you have any sub-committees?A: Yes, there are three main committees of the Board. All committees held meetings during the year and were attended by all of the relevant committee members. Sub-committees are not only a requirement of the Code but they also ease main Board workload and assist in the more efficient and effective execution of Board responsibilities. The committees are as follows:

• Audit Committee

• Nomination Committee

• Remuneration Committee

Each committee has its own terms of reference, compliant with the Code and sets out each Committee’s duties and responsibilities. Copies of these terms of reference are available on the Company’s website (www.clintoncards.co.uk)

AUDIT COMMITTEE

Chaired By: Robert Gunlack

Members: Robert Gunlack, John Coleman and Brian Jackson

Recent and relevant experience: As a chartered accountant Robert Gunlack has both recent and relevant financial experience.

Number of meetings: Two scheduled meetings

Other invitees: Finance Director and external auditors in attendance for appropriate agenda items.

Group’s Auditors: PriceWaterhouseCoopers LLP (PwC). The external auditors are required to rotate the audit partners responsible for the Group every five years. There are no contractual obligations restricting the company’s choice of external auditors.

Activities: Review of the Group’s accounting policies, financial reporting, risk management and internal control policies and assessment and recommendation to re-elect PwC as the Group’s auditors at the 2011 AGM.

Q: How does the Audit Committee ensure that auditor objectivity and independence is safeguarded when non- audit services are provided by the auditors?A: This is dealt with at each Audit Committee Meeting when the auditors set out the extent of the different work they have undertaken, who in their firm was responsible and whether the appointment was agreed in advance by the Committee or requires ratification where engaged between meetings by the executive directors.

PricewaterhouseCoopers LLP have been the company’s auditors since 1988. The Audit Committee considers that the relationship with the auditors is working well and remains satisfied with their effectiveness. Accordingly, it has not considered it necessary to date to require the firm to tender for the audit work. The external auditors are required to rotate the audit partners responsible for the Group audit every five years and the current lead partner has been in place for three years.

NOMINATION COMMITTEE

Chaired By: Brian Jackson

Members: Brian Jackson, John Coleman, Robert Gunlack and Don Lewin

Number of meetings: One scheduled meeting

Use of External Consultants: A third party executive search consultancy was appointed to select candidates for the position of Chief Executive Officer.

Activities: Monitoring and discussing the performance of the executive directors and review of succession planning to ensure the requisite skills and expertise are available to the Board.

“The Nomination Committee has responsibility for reviewing the size, structure and composition of the Board, succession planning including the retirement and appointment of board members and making appropriate recommendations to ensure there is an appropriate mix of skills and experience on the Board.”

Brian JacksonChair of the Nomination Committee


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REMUNERATION COMMITTEE

Chaired By: John Coleman

Members: John Coleman, Robert Gunlack and Brian Jackson

Number of meetings: One scheduled meeting

Invitees: Don Lewin as Chairman assisted the Committee in some areas.

Activities: Recommended to the Board the remuneration package for the Non-Executive Chairman and executive directors and approved the compensation package for Darcy Willson-Rymer, following his recent appointment as Chief Executive Officer.

Q: How do you assess the effectiveness of the Board and its sub-Committees?A: Through attendance at Board and Executive meetings the Chairman continually evaluates the performance of individual directors. During 2012 the Chairman will review a more formal process for evaluating not only individual members but also the Board collectively and its sub-committees. The Chairman will report on progress made in this area in the 2012 Corporate Governance statement.

ACCOUNTABILITYQ: How does the Board ensure internal controls are effective?A: The Board undertakes an annual review of the effectiveness of the Group’s systems of internal control in accordance with Turnbull guidance. The Board has delegated responsibility to the Audit Committee for the regular risk based approach to monitoring internal controls and to review annually the financial, operational and compliance controls. This includes ensuring a formal communication process to highlight and report any significant weaknesses or failures to the Board.

Q: What is the purpose of these controls?A: These controls have been established to safeguard shareholders’ investments and the Group’s assets, maintain proper accounting records and to ensure that the financial information used within the business or published externally is timely and reliable. The system of internal controls is designed to manage rather than eliminate risk. In addition, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss.

Q: Do you have an internal audit capability?A: The store audit function focuses principally on shop operations using a combination of office based staff and specialist field based audit staff. Their areas of responsibility also include other areas of control within the organisation.

Q: How does the Board deal with conflicts of interest?A: Company policy requires that if a director becomes aware that they have a direct or indirect interest in an existing or proposed transaction with the Company they should notify the Board at the next board meeting or by providing a written declaration. Directors have a continuing duty to update any changes in such interests.

Q: How has the Board responded to the Bribery and Corruption Act 2010?A: The Bribery Act 2010 outlines four corporate offences, three of which also apply to individuals. These offences, whether for commercial organisations or for individuals, apply regardless of where in the world the bribes are offered or received and regardless of whether the bribery is direct or via a connected party such as an agent or partner.

The Board is in the process of putting in place a policy in line with the Ministry of Justice’s guidelines, in particular Offence 4 requiring organisations to demonstrate that “Adequate Procedures” have been implemented to prevent bribery. To this extent our policy takes a proportionate approach to implementing procedures to prevent bribery based on risk and makes recommendations against the MOJ’s six principles of compliance: proportionate procedures, top level commitment, risk assessment, due diligence, communication and training and monitoring and review. Further information regarding Company policy in this area can be found on our website: www.clintoncards.co.uk.

REMUNERATIONDetails on remuneration can be found in the remuneration report on pages 29 to 31.

RELATIONS WITH SHAREHOLDERSQ: How would you describe the responsibilities you have to shareholders?A: The Board takes its primary role of representing and promoting the interests of its shareholders in addition to being accountable to them for the long-term performance and success of the business.

Q: How does the Board engage with shareholders?A: The Board reinforces its commitment to shareholder engagement and dialogue through a number of different channels including presentations, conference calls, face-to-face meetings and the AGM. Following the announcement of results, trading updates and interim management statements conference calls take place with analysts and major shareholders to update them on the progress the Company has made towards its goals and invite them to ask questions and to provide feedback.

Q: To whom do shareholders address any concerns to?A: The Chief Executive and Finance Director are available to meet shareholders during the year. The Chairman and Senior Independent Director are available to discuss any issues or concerns that shareholders may have.

Q: What is the purpose of the AGM?A: The AGM is an opportunity for all shareholders to vote on resolutions put forward and to directly ask the Board any questions they may have. At least 21 days before the AGM shareholders receive the Notice of AGM, a copy of this report (if they request a copy in writing) and a Form of Proxy.

“The Remuneration Committee determines the remuneration of the executive directors and reviews that of senior management.”

John ColemanChair of the RemunerationCommittee


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Directors’ Report

The Directors present their report and the audited consolidated financial statements for the Group and Company for the 52 weeks ended 31 July 2011.

PRINCIPAL ACTIVITIES The principal activity of the Group is the specialist retailing of greetings cards and associated products. This is carried out through two brands on the high street, Clintons Cards and Birthdays.

Details of all the subsidiary undertakings are set out in note 16 to the financial statements.

BUSINESS REVIEW The Company is required by the Companies Act to set out a review of the business of the Group for the 52 weeks ended 31 July 2011, the position of the Group at the period end and a description of the principal risks and uncertainties facing the Group.

The information set out in this review, which should be read in conjunction with the further information in the Business and Financial Review set out on pages 12 to 14, is prepared in order to help shareholders better understand the Company's results and strategies and to appreciate the business risks and uncertainties and how these are managed by directors and senior management.

Clinton Cards is the largest specialist retailer of greetings cards, plush merchandise (soft toys) and related products in the U.K. At the period end on 31 July 2011, the business was operating 797 stores and comprises two brands. Clintons operates 641 stores and is a premium brand offering the most extensive range of quality greetings cards, gift dressing and plush merchandise available 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. Birthdays operates 156 stores and carries similar product categories to Clintons but is aimed at the value end of the market.

Both brands benefit from a shared infrastructure of finance, accounting, human resources and information systems and focus on their respective markets.

Risks and uncertainties The Board and senior management are responsible for identifying and managing potential risks and uncertainties which could have an impact on the performance of the Group. The key risks are disclosed on pages 16 and 17.

Key performance indicators The Board and the executive management of each brand, as well as measuring achievement against budgets, monitor certain key performance indicators on pages 6 and 7 together with net debt of the business as shown in note 28

RESULTS AND DIVIDENDS Group revenue for the 52 weeks ended 31 July 2011 was £432.0m and the adjusted profit before tax was £0.3m compared with £457.5m and £15.9m respectively in the 52 week period to 1 August 2010. The detailed results of the Group are set out in the Consolidated Statement of Comprehensive Income on page 35. A detailed review of the Group's activities and future developments is contained within the Business and Financial Review on pages 12 to 14.

The Board continues to keep its dividend policy under review and will look to resume payments as soon as there is evidence of a consistent upward trend in profitability. However, debt reduction remains a high priority.

GOING CONCERN After making enquiries, the directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and have therefore used the going concern basis in preparing the financial statements.

FINANCIAL INSTRUMENTS Details of the financial instruments are set out in note 21 to the financial statements.

SHARE CAPITAL Details of share capital are set out in note 26 to the financial statements. No shareholder holds securities carrying special rights with regards to control of the company and there are no restrictions on voting rights. Other than those of directors whose interests are set out in the Directors' Remuneration Report on page 31, the following shareholdings have been notified to the Company as having 3% or more of the issued share capital as at 28 November 2011:

Number of % of Share Shares Capital issued Bestinver 38,797,104 18.75%UBS Wealth Management 14,906,606 7.20%Henderson Global Investors 7,460,000 3.61%

ACQUISITION OF COMPANY’S OWN SHARES At 31 July 2011 there was an authority in existence granted by the shareholders at a Annual General Meeting of the Company on 23 November 2010 to purchase, in the market, up to 10% of the issued share capital. During the financial period no purchases were made under this authority or proposed to be made and no purchases or options or contracts to make purchases have been made or entered into since the end of the financial period.

POST BALANCE SHEET EVENTSAt 31 July 2011 the Group had facilities which were due to expire in January 2012. On the 27 October 2011 these facilities were extended until July 2013.


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DIRECTORS AND INTERESTS The directors, together with a brief biography, are listed on pages 20 and 21.

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. The following directors retire by rotation and, being eligible, offer themselves for re-election.

• Mr C S Lewin is the Group Managing Director and has a service contract determinable on six months notice.

• Mrs D M Darlington is the Product Development Director and has a service contract determinable on six months notice.

• Mr B Jackson is a non executive director and has no service contract.

In addition, in accordance with the Articles, Mr Paul Salador (Finance Director, with a service contract determinable on 3 months’ notice) must also retire due to being elected before the AGM which took place two years ago. He too, being eligible, offers himself for re-election. A separate resolution will be proposed for each. In the opinion of the Chairman the performance of all the directors retiring by rotation or pursuant to the terms of the Articles of Association continues to be effective and demonstrates commitment to their respective roles.

DIRECTORS’ INDEMNITIES As at the date of this report and throughout the year, qualifying third party indemnities are in force where the Company has agreed to indemnify the directors, to the extent permitted by law and the Company’s Articles of Association, in respect of all losses arising out of, or in connection with, the execution of their powers, duties and responsibilities as directors of the Company or any of its subsidiaries.

EMPLOYEES The directors consider that the involvement and commitment of employees is important to the success of the Group. Employees are informed of developments through information published on the Company's intranet facility and area briefings. It is the policy of the Board for directors and senior management to visit stores regularly and to ensure that all staff are involved in the development of the Group. A new profit related bonus scheme is being developed to reward senior staff on the achievement of personal, departmental and overall company objectives.

Consultation with employees or their representatives has continued at all levels, with the aim of ensuring that their views are taken into account when decisions are made that are likely to affect their interests and that all employees are aware of the financial and economic performance of the company as a whole.

In addition there is a periodic performance related bonus scheme for store managers held at appropriate times of the year.

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.

DONATIONS During the period the Group made charitable donations of £360,909 (2010: £389,000). The principal beneficiaries were:

• Barts & The London Hospital £100,200• Marie Curie Cancer Care £86,008 • Breast Cancer Care £35,921

In addition, there were numerous smaller payments to other charities. No political donations were made in the period (2010: Nil).

PAYMENTS TO SUPPLIERS The Group 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 number of days taken to pay trade creditors from continuing operations in the year was 88 days (2010: 59 days) based on the ratio of trade creditors at the end of the year to the amounts invoiced during the year by trade suppliers. This excludes seasonal purchases which are paid for as each season finishes.

The Company had no trade creditors.

CHANGE OF CONTROL The Company is not party to any agreements that would take effect, alter or terminate upon a change of control following a takeover bid. The Company does not have agreements with any Director or other officer that would provide compensation for loss of office or employment resulting from a takeover.

CORPORATE GOVERNANCE The Company’s statement on corporate governance can be found in the Corporate Governance Report on pages 22 to 25 of these financial statements. The Corporate Governance Report forms part of this directors’ report and is incorporated into it by cross-reference.


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Directors’ Report (continued)

ANNUAL GENERAL MEETING Notice of the Annual General Meeting to be held at 10:30 a.m. on Thursday 5 January 2012 at The Crystal Building, Langston Road, Loughton, Essex is included with this document.

Shareholders holding shares in uncertificated form in CREST may appoint a proxy or proxies using the CREST proxy voting service. This will be available in respect of the forthcoming Annual General Meeting and further details are available in the Notice of Annual General Meeting.

Certain special business is to be proposed at the Annual General Meeting, further details of which are set out in the Notice, including:

• The adoption of new Articles of Association to take account of various legislative changes since the 2010 Annual General Meeting, and to increase the Company’s external borrowing powers from two to four times the adjusted capital and reserves;

• Granting the directors authority to allot ordinary shares; and

• Approving the disapplication of pre-emption rights.

AUDITORS So far as each of the directors is aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the Company’s auditors are unaware. Also each director has taken all the steps they ought to have taken as a director to make themselves aware of any relevant audit information (as defined) and to establish that the Company’s auditors are aware of that information.

A resolution to re-appoint PricewaterhouseCoopers LLP as auditors to the Company will be proposed at the Annual General Meeting.

STATEMENT OF DIRECTORS’ RESPONSIBILITIESThe directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financialstatements in accordance with applicable law and regulations.

Company law requires the directors to prepare financialstatements for each financial year. Under that law the directors have prepared the Group and parent Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are

reasonable and prudent;• state whether applicable IFRSs as adopted by the

European Union have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors confirm that they have complied with the aboverequirements in preparing these financial statements.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and the Group and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the company’s websites (www.clintoncards.co.uk, www.birthdays.co.uk, www.purepartyonline.co.uk). Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the directors, whose names and functions are listed in the Directors Remuneration Report confirm that, to the bestof their knowledge:

• the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

• the Chairman’s Statement, the Business and Financial Review and the Directors’ Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

By Order of the Board Registered Office:

P N Salador The Crystal BuildingCompany Secretary Langston Road30 November 2011 Loughton Essex IG10 3TH

Registered in England Registered No. 00985739


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Directors’ Remuneration Report

This report has been prepared by the Remuneration Committee and approved by the Board in accordance with the Directors' Remuneration Report Regulations 2002. As required by the Regulations, a resolution to approve the report will be proposed at the forthcoming Annual General Meeting. The Regulations require that only certain parts of the report are audited and therefore the report has been divided into separate sections for audited and unaudited information.

1. UNAUDITED INFORMATION Remuneration Committee The Remuneration Committee comprises all the non-executive directors, namely: J F Coleman (Chairman) R H Gunlack B Jackson

The Committee met once formally during the year to which D J Lewin was invited to attend. Additionally, there were regular communications and informal meetings when remuneration policy was discussed.

Remuneration policy The policy applies to the year under review and future years. The Remuneration Committee advises the Chairman on levels of remuneration for executive directors which are then subject to ratification by the Board. The main elements of the remuneration package for executive directors are:

a) Fixed Basic annual salary Benefits in kind b) Variable % of salary Annual bonuses relating to Company performance and strategic objectives Up to 40% Pension arrangements

D J Lewin is not included in the provisions relating to annual bonus.

The policy for determining the levels of remuneration is based upon the Group's aim of retaining and motivating its executives and rewarding them accordingly. The remuneration of non-executive directors is determined by the Board.

Basic Salary Salaries for executive directors are reviewed annually and are targeted at the median position in the relevant pay peer groups and also taking into account the size, complexity and responsibility of the individual’s role. It also considers the balance between the fixed and variable rewards.

Basic salaries for the executive directors have not been increased since April 2008 except for the Group Finance Director, Paul Salador, whose performance was reviewed on

1 February 2010 (the first anniversary of his appointment) when he also took on additional responsibilities. Annual reviews are set for August each year and the next review of basic salaries will take place in August 2012 and even then only provided certain thresholds are met.

The basic salary for D J Lewin was reduced from £1.0m to £0.3m on his transition from Chairman and Chief Executive to Non-Executive Chairman.

Performance related bonus The Performance Related Bonus Scheme introduced for the year commencing 2008 is still in place but no bonuses were paid for the year in question. Payments made in respect of the scheme are not pensionable. It continues to be the Remuneration Committee's desire to strengthen the link between executive pay and performance.

Pension arrangements All current pension schemes operated by the Group, including those of the executive directors, are defined contribution money purchase pension schemes. Eventual benefits are not linked in any way to salaries paid. The assets of the schemes are held separately from those of the Group in independently administered funds.

Directors' contracts The executive directors have written service contracts as follows:

Date of Service Notice Contract Period D J Lewin 15 April 1988 6 months C S Lewin 15 April 1988 6 months D M Darlington 1 September 2000 6 months S P Houlston 11 January 2001 3 months J S Robinson 11 January 2001 3 months P N Salador 26 March 2010 3 months D Willson-Rymer 6 July 2011 6 months

The Executive Directors all have rolling service agreements with no fixed expiry date.

In the event of early termination, the executive directors' service contracts provide for compensation in respect of salary and benefits for the notice period.

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. The three year term for John Coleman and Robert Gunlack runs until September 2013. The three year term for Brian Jackson runs until October 2012.


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Directors' Remuneration Report (continued)

Performance graph The following graph shows the Company's performance, measured by total shareholder returns (including the re investment of dividends) for the five years to 31 July 2011. It is compared with the FTSE General Retailers Index and the FTSE Small Cap Index as these are both appropriate.

2. AUDITED INFORMATION Directors' emoluments Salary/ Taxable 2011 2010 fees benefits 52 weeks 52 weeks £’000 £’000 £’000 £’000 Executive D J Lewin 1,004 49 1,053 1,050 C S Lewin 448 37 485 485 B R Hartog (retired 31 May 2011) 179 15 194 278 S P Houlston 183 12 195 202 D M Darlington 178 41 219 217 J S Robinson 175 11 186 192 P N Salador 185 10 195 170 Non-Executive J F Coleman 25 — 25 25 R H Gunlack 25 — 25 25 B Jackson 25 — 25 25 2,427 175 2,602 2,669

Taxable benefits largely relate to the supply of a car and health insurance.

No payment was made in the year under the performance related bonus scheme (2010: Nil).

Directors’ pension contributions 2011 2011 52 weeks 52 weeks £’000 £’000 C S Lewin 30 30 B R Hartog (retired 31 May 2011) 10 12 S P Houlston 9 9 D M Darlington 15 15 J S Robinson 9 9 P N Salador 9 8 82 83

All pension contributions are based upon salaries, excluding bonuses, and are to money purchase schemes. Eventual benefits are not linked to salaries paid.

0

20

40

60

80

100

120

140

160

180

Aug-2006 Aug-2007 Aug-2008 Aug-2009 Aug-2010 Aug-2011

Tota

l Sha

reho

lder

Ret

urn

(reb

ased

to 1

00)

Clinton Cards FTSE All Share General Retailers FTSE Small Cap


20684.04 30/11/11 Proof 13

Total remuneration

2011 2010 52 weeks 52 weeks £’000 £’000 Short term employment benefits 2,602 2,669 Post employment benefits 82 83 2,684 2,752

Directors' interests The number of ordinary shares held by the directors and their families at 31 July 2011 were:

Beneficial Non Beneficial 2011 2010 2011 2010 D J Lewin 31,635,763 31,635,763 27,585,426 27,585,426 C S Lewin 7,048,360 7,048,360 — —P N Salador — — — —S P Houlston 42,000 42,000 — — D M Darlington 7,097,694 7,097,694 — — J S Robinson — — — —J F Coleman 33,783 33,783 27,585,426 27,585,426 R H Gunlack 103,950 103,950 — — B Jackson — — — —

7,097,694 (2010: 7,097,694) shares included in the beneficial holding of D M Darlington are included in the non beneficial holdings of Messrs. D J Lewin and J F Coleman. 27,585,426 (2010: 27,585,426) shares included in the non-beneficial holding of D J Lewin are duplicated in the non-beneficial holding of J F Coleman. There were no changes in directors' interests between 31 July and 30 November 2011. 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.

There were no share option schemes in operation for directors as at 31 July 2011.

Approved by J F Coleman (Chairman of the Remuneration Committee) 30 November 2011

20684.04 30/11/11 Proof 13

20684.04 30/11/11 Proof 13

ContentsIndependent Auditors Report 34

Consolidated Statement of Comprehensive Income 35

Consolidated Balance Sheet 36

Consolidated Statement of Changes in Equity 37

Consolidated Cash Flow Statement 38

Company Balance Sheet 39

Company Statement of Changes in Equity 39

Company Cash Flow Statement 40

Notes to the Financial Statements 41

Notice of Annual General Meeting 65

Section 3

Our Financials

Section 4

Independent Auditors' Report


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS

OF CLINTON CARDS PLC

We have audited the financial statements of Clinton Cards plc

for the 52 week period ended 31 July 2011 which comprise

the Consolidated Statement of Comprehensive Income,

Consolidated and Parent Company Balance Sheets, the

Consolidated and Parent Company Statements of Changes in

Equity, the Consolidated and Parent Company Cash Flow

Statements and the related notes. The financial reporting

framework that has been applied in their preparation is

applicable law and International Financial Reporting

Standards (IFRSs) as adopted by the European Union and,

as regards the parent company financial statements, as

applied in accordance with the provisions of the Companies

Act 2006.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors‟

Responsibilities set out on page 28, the directors are

responsible for the preparation of the financial statements and

for being satisfied that they give a true and fair view. Our

responsibility is to audit and express an opinion on the

financial statements in accordance with applicable law and

International Standards on Auditing (UK and Ireland). Those

standards require us to comply with the Auditing Practices

Board‟s Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and

only for the company‟s members as a body in accordance

with Chapter 3 of Part 16 of the Companies Act 2006 and for

no other purpose. We do not, in giving these opinions, accept

or assume responsibility for any other purpose or to any other

person to whom this report is shown or into whose hands it

may come save where expressly agreed by our prior consent

in writing.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and

disclosures in the financial statements sufficient to give

reasonable assurance that the financial statements are free

from material misstatement, whether caused by fraud or error.

This includes an assessment of: whether the accounting

policies are appropriate to the group‟s and the parent

company‟s circumstances and have been consistently applied

and adequately disclosed; the reasonableness of significant

accounting estimates made by the directors; and the overall

presentation of the financial statements. In addition, we read

all the financial and non-financial information in the Annual

Report to identify material inconsistencies with the audited

financial statements. If we become aware of any apparent

material misstatements or inconsistencies we consider the

implications for our report.

Opinion on financial statements

In our opinion:

the financial statements give a true and fair view of the

state of the group‟s and of the parent company‟s affairs

as at 31 July 2011 and of the group‟s loss and group‟s

and parent company‟s cash flows for the 52 week period

then ended;

the group financial statements have been properly

prepared in accordance with IFRSs as adopted by the

European Union;

the parent company financial statements have been

properly prepared in accordance with IFRSs as adopted

by the European Union and as applied in accordance

with the provisions of the Companies Act 2006; and

the financial statements have been prepared in

accordance with the requirements of the Companies Act

2006 and, as regards the group financial statements,

Article 4 of the lAS Regulation.

Opinion on other matters prescribed by the Companies

Act 2006

In our opinion:

the part of the Directors‟ Remuneration Report to be

audited has been properly prepared in accordance with

the Companies Act 2006;

the information given in the Directors‟ Report for the

financial year for which the financial statements are

prepared is consistent with the financial statements; and

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to

you if, in our opinion:

adequate accounting records have not been kept by the

parent company, or returns adequate for our audit have

not been received from branches not visited by us; or

the parent company financial statements and the part of

the Directors‟ Remuneration Report to be audited are not

in agreement with the accounting records and returns; or

certain disclosures of directors‟ remuneration specified

by law are not made; or

we have not received all the information and

explanations we require for our audit

Under the Listing Rules we are required to review:

the directors‟ statement, set out in the Directors Report,

in relation to going concern;

the parts of the Corporate Governance Statement

relating to the company‟s compliance with the nine

provisions of the UK Corporate Governance Code

specified for our review; and

certain elements of the report to shareholders by the

Board on directors‟ remuneration.

Andrew Latham (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

1 Embankment Place

London

WC2N 6RH

30 November 2011

Consolidated Statement of Comprehensive Income For the 52 weeks ended 31 July 2011


31 July

2011 1 August

2010

Note £'000 £'000

Continuing operations

Revenue (including VAT) 432,037 457,459

Revenue (excluding VAT) 3 364,218 394,007

Cost of sales (including exceptional items) (357,589) (365,374)

Gross profit 6,629 28,633

Other operating income 5 94 148

Loss on sale of property, plant and equipment 6 (985) (1,469)

Administrative expenses (13,850) (11,609)

Operating (loss)/profit 3, 6 (8,112) 15,703

Analysed as:

Operating profit before exceptional items 2,218 17,369

Net impairment to property, plant and equipment * 6 (5,686) (477)

Charges in respect of onerous leases * 6 (4,644) (1,189)

Operating (loss)/profit (8,112) 15,703

Finance income 9 96 253

Finance costs 9 (2,992) (3,149)

Change in fair value of financial instruments 9 356 (824)

Unwinding of property provision discount 9 (10) (7)

(Loss)/profit before taxation (10,662) 11,976

Taxation 10 (1,428) (3,646)

(Loss)/profit from continuing operations (12,090) 8,330

Loss for the period from discontinued operations 4 (2,943) (952)

(Loss)/profit for the period attributable to owners of the company (15,033) 7,378

Other comprehensive income (net of tax):

Currency translation differences (233) (92)

Total comprehensive (expenses)/income for the period attributable to owners of the company (15,266) 7,286

(Loss)/earnings per share for profit attributable to owners of the company 12

From continuing operations:

Basic (loss)/earnings per share (pence) (5.84) 4.03

Diluted (loss)/earnings per share (pence) (5.84) 4.00

From continuing & discontinued operations:

Basic (loss)/earnings per share (pence) (7.26) 3.57

Diluted (loss)/earnings per share (pence) (7.26) 3.54 Note: The directors consider that the presentation below reflects the underlying performance of the Group based on ongoing store operations before the fair value movements on financial instruments, loss on disposal of property, plant and equipment and exceptional items.

** The prior year comparatives have been restated to reflect the results of Birthdays (Ireland) Limited as discontinued.

Non-GAAP measure: adjusted profit before taxation from continuing operations £'000 £'000

(Loss)/profit before taxation (10,662) 11,976

Adjustments for:

IAS32 and IAS39 'Financial Instruments' - Fair value remeasurements (356) 824

Loss on disposal of property, plant and equipment 985 1,469

* Exceptional items 10,330 1,666

Adjusted profit before taxation 297 15,935

Consolidated Balance Sheet As at 31 July 2011


As at As at 31 July

2011 1 August

2010

Note £'000 £'000

Non current assets

Goodwill 13 17,326 17,326

Other intangible assets 14 1,750 1,750

Property, plant and equipment 15 48,729 58,162

Deferred tax asset 24 - 172

67,805 77,410

Current assets

Inventories 17 43,202 37,653

Trade and other receivables 18 18,917 17,882

Current tax asset 886 -

Cash and cash equivalents 19 19,673 7,225

82,678 62,760

Total assets 150,483 140,170

Current liabilities

Borrowings 20 (53,527) (41,566)

Trade and other payables 22 (55,458) (47,370)

Derivative financial instruments 21b (218) (574)

Current tax liabilities - (456)

Provisions 23 (5,221) (639)

(114,424) (90,605)

Net current liabilities (31,746) (27,845)

Non current liabilities

Deferred tax liabilities 24 (1,289) -

Other non current liabilities 25 (9,025) (9,417)

Provisions 23 (2,772) (1,909)

(13,086) (11,326)

Total liabilities (127,509) (101,931)

Net assets 22,973 38,239

Shareholders' equity

Called up share capital 26 20,693 20,693

Share premium account 5,873 5,873

Capital redemption reserve 50 50

Translation reserve - 233

Other reserves 27 308 308

(Accumulated losses)/retained earnings (3,951) 11,082

Total equity 22,973 38,239

The notes on pages 41 to 64 form part of these financial statements

Approved by the Board on 30 November 2011

D J Lewin, OBE Darcy Willson-Rymer

Chairman Chief Executive Officer

Consolidated Statement of Changes in Equity For the 52 weeks ended 31 July 2011


Called-up share

capital

Share premium account

Capital redemption

reserve Translation

reserve Other

reserves

(Accumulated losses)

/retained earnings

Total equity

£'000 £'000 £'000 £'000 £'000 £'000 £'000

At 2 August 2009 20,693 5,873 50 325 308 3,704 30,953

Profit for the period - - - - - 7,378 7,378

Other comprehensive income:

Currency translation differences - - - (92) - - (92)

Total comprehensive income/(expense) for the period - - - (92) - 7,378 7,286

At 1 August 2010 20,693 5,873 50 233 308 11,082 38,239

Loss for the period - - - - - (15,033) (15,033)

Other comprehensive income:

Currency translation differences - - - (233) - - (233)

Total comprehensive expense for the period - - - (233) - (15,033) (15,266)

At 31 July 2011 20,693 5,873 50 - 308 (3,951) 22,973

Consolidated Cash Flow Statement For the 52 weeks ended 31 July 2011


**Restated 52 weeks

ended 52 weeks

ended 31 July

2011 1 August

2010

Note £'000 £'000

Cash flows from operating activities

(Loss)/profit before tax from continuing operations (10,662) 11,976

Loss before tax from discontinued operations (3,329) (952)

Adjustments for:

Net finance costs 2,550 3,752

Depreciation 15 8,380 9,487

Net impairment of property, plant and equipment 15 5,686 657

Loss on sale of property, plant and equipment 6 985 1,469

Net assets written off relating to discontinued operations 1,360 -

Operating cash flows before movements in working capital 4,970 26,389

Increase in inventories (6,283) (1,436)

(Increase)/decrease in trade and other receivables (1,647) 1,443

Increase/(decrease) in trade and other payables 8,270 (1,930)

Movement in provisions 5,445 785

Cash generated from operations 10,755 25,251

Interest received 96 253

Interest paid (1,977) (2,216)

Net taxation paid (808) (4,252)

Net cash generated from operating activities 8,066 19,036

Cash flows from investing activities

Cash disposed of with discontinued operations (486) -

Proceeds/(payments) relating to disposal of property, plant and equipment 539 (246)

Purchase of property, plant and equipment (6,671) (4,621)

Net cash used in investing activities (6,618) (4,867)

Cash flows from financing activities

Increase/(decrease) in borrowings 28 11,000 (16,000)

Net cash used in financing activities 11,000 (16,000)

Net increase/(decrease) in cash and cash equivalents 12,448 (1,831)

Cash and cash equivalents at beginning of period 7,225 9,056

Cash and cash equivalents at end of period 19 19,673 7,225

Note: The reconciliation of net debt for the period is set out in note 28.

** The prior year comparatives have been restated to reflect the results of Birthdays (Ireland) Limited as discontinued.

Company Balance Sheet As at 31 July 2011


As at As at 31 July

2011 1 August

2010

Note £'000 £'000

Assets

Non-current assets

Investments 16 15,522 28,770

15,522 28,770

Liabilities

Current liabilities

Financial liabilities - borrowings 20 (12,356) (25,604)

(12,356) (25,604)

Net assets 3,166 3,166

Shareholders' equity

Called up share capital 20,693 20,693

Share premium account 27 5,873 5,873

Capital redemption reserve 27 50 50

Retained earnings (23,450) (23,450)

Total equity 3,166 3,166

Approved by the Board on 30 November 2011

D J Lewin, OBE Darcy Willson-Rymer

Chairman Chief Executive Officer

Company Statement of Changes in Equity As at 31 July 2011

Called up share

capital

Share premium account

Capital redemption

reserve Retained earnings

Total equity

£'000 £'000 £'000 £'000 £'000

At 2 August 2009 20,693 5,873 50 (23,450) 3,166

Profit and total comprehensive income for the period - - - - -

Transactions with owners:

Dividends paid - - - - -

At 1 August 2010 20,693 5,873 50 (23,450) 3,166

Transactions with owners:

Dividends paid - - - - -

At 31 July 2011 20,693 5,873 50 (23,450) 3,166

Company Cash Flow Statement For the 52 weeks ended 31 July 2011


52 weeks

ended 52 weeks

ended

31 July

2011 1 August

2010

Note £'000 £'000

Cash flows from operating activities

Loss before taxation - -

Operating cash flows before movements in working capital - -

(Decrease) in amounts due to group companies - -

Cash generated from operations - -

Cash flows from financing activities:

Dividends paid to group shareholders 11 - -

Net cash used in financing activities - -

Net increase/(decrease) in cash and cash equivalents - -

Cash and cash equivalents at beginning of period - -

Cash and cash equivalents at end of period - -

Notes to the Financial Statements


General information

The Group and Company financial statements of Clinton Cards PLC for the 52 weeks ended 31 July 2011 were authorised for

issue in accordance with a resolution of the directors on 30 November 2011. Clinton Cards PLC is a Public Limited Company

incorporated and domiciled in England and Wales.

The term „Company‟ refers to Clinton Cards PLC and „Group‟ refers to the Company and all its subsidiary undertakings all of

which have a co-terminus year end.

The Group and Company financial statements are presented in pounds sterling and all values are rounded to the nearest

thousand pounds (£‟000) except where otherwise indicated.

1 Accounting policies

a) Basis of preparation

(i) The financial statements of the Group and the Company have been prepared in accordance with International

Financial Reporting Standards (IFRS) as adopted for use in the European Union.

(ii) As highlighted in note 21 to the financial statements, the Group meets its day to day working capital requirements

through a secured sterling revolving credit facility. At the Balance Sheet date this was due to expire in January 2012.

On 27 October 2011 these facilities were extended until July 2013 with a maximum draw down available of £55m.

The current economic conditions create uncertainty particularly over the level of demand for the Group's products. The

Group's forecasts and projections, taking account of reasonably possible adverse changes in trading performance,

show that the Group should be able to operate within both the level of its current facilities and banking covenants

through to expiry in July 2013.

(iii) The principal accounting policies applied in the preparation of these Group and Company financial statements are set

out below. These policies have been consistently applied to all the years presented unless otherwise stated.

(iv) Standards, amendments and Interpretations effective in the period:

IFRS 5 (amendment) „Non-current assets held for sale and discontinued operations‟.

Various amendments have arisen from the improvements to International Financial Reporting Standards (issued in

2009 & 2010) none of which had a significant impact on the financial position or performance of the Group.

(v) The financial statements have been prepared under the historical cost convention except for the derivative financial

instruments, which are measured at fair value.

b) Statement of compliance

The Group and Company financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS) as adopted for use in the European Union and interpretations issued by the International Financial

Reporting Interpretations Committee (IFRIC) as they apply to the accounts of the Group and the Company for the 52

weeks ended 31 July 2011 applied in accordance with the provisions of the Companies Act 2006. Any reference to IFRS

means as adopted for use in the European Union.

No Statement of Comprehensive Income is presented for Clinton Cards PLC as provided by Section 408 of the

Companies Act 2006. In the results for the 52 weeks to 31 July 2011 a profit of £nil (2010: £nil) has been dealt with in the

accounts of the Company.

c) Basis of consolidation

The consolidated financial statements incorporate the accounts of the Group and the Company made up to the nearest

Sunday to 31 July. The financial period for 2011 is the 52 weeks to 31 July 2011. The financial period for 2010 was the

52 weeks from 2 August 2009 to 1 August 2010.

The results of subsidiaries are consolidated using the purchase method of accounting, from the date on which control of

the net assets and operation of the acquired company are effectively transferred to the Group. Similarly, the results of

subsidiaries divested cease to be consolidated from the date on which control of the net assets and operations are

transferred out of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.



d) Exceptional items

Items that are significant in size and unusual or infrequent in nature are presented as exceptional items in the income

statement. The directors are of the opinion that the separate recording of exceptional items provides helpful information

about the Group‟s underlying business performance.

e) Foreign currencies

The presentation currency of the Group is pounds sterling which is the Company‟s functional and presentation currency.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the date of the

transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation

at year end exchange rates of monetary assets and liabilities denominated in foreign currency are recognised in the

consolidated statement of comprehensive income at the date of the transaction and subsequent date of retranslation.

Assets and liabilities of overseas operations are translated into pounds sterling at the exchange rates ruling at the balance

sheet date. Trading results are translated at the average rates for the period. Exchange differences arising on the

consolidation of the net assets of overseas operations are dealt with through the foreign currency translation reserve,

whilst those arising from trading transactions are dealt with in the income statement.

f) Revenue recognition

Revenue of the Group comprises sales to third parties, net of applicable discounts, value added tax and other sales

related taxes and is derived from the retail sale of greetings cards and ancillary products. Revenue is recognised on

exchange of goods as this is the point that all risks and rewards are deemed to be transferred.

Commissions receivable from the sales of stamps, gift cards and mobile phone “top up” cards are recognised at the point

of sale and are included in cost of sales.

g) Employee costs

The costs of holiday benefits and long term service awards are accrued over the period the service is provided by the

employee.

h) Operating leases

Charges in relation to operating leases, being leases which do not transfer substantially all the risks and rewards of

ownership of an asset, are charged to the income statement as an expense on a straight-line basis over the lease term.

Operating lease income is credited to cost of sales and is recognised in the income statement as it is earned.

i) Reverse premiums and rent free periods

Reverse premiums received and the value of any rent free period granted on acquiring a new lease are included in

deferred income and released to the income statement over the lease term.

j) Pre-opening costs

All revenue costs associated with the opening of new stores are charged to the income statement as incurred.

k) Pension contributions

Pension costs, all of which relate to defined contribution schemes, are recognised in the income statement as incurred.

l) Rebates and deferred income

Rebates from suppliers are taken to the income statement as they are earned and credited to cost of sales. Rebates

received in advance are classified as deferred income.

m) Taxation

The taxation expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the

income statement because it excludes items of income and expense that are taxable or deductible in other years and it

further excludes items that are never taxable or deductible. The Group and Company‟s liability for current tax is calculated

using rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax expected to be payable or recoverable on differences at the balance sheet date between the tax bases of

assets and liabilities and their carrying amounts for financial reporting purposes is accounted for using the liability method.

Deferred liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to

the extent that it is probable that taxable profits will be available against which deductible temporary differences can be

utilised.

Deferred tax assets and liabilities are recognised separately on the balance sheet. Such assets and liabilities are not

recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business

combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the rates of taxation enacted or substantively enacted at the balance sheet date and is not

discounted.

Deferred tax is released to the income statement at the same time as the taxable transaction is recognised in the

consolidated statement of comprehensive income.



n) Goodwill and business combinations

Goodwill arising on acquisition is initially measured at cost, being the excess of the costs of the acquisition over the

Group‟s interest in the net fair value of the acquired entity‟s identifiable assets and liabilities at the date of acquisition.

Where the fair value of the acquired assets is more than the consideration paid, the difference is recorded immediately in

the income statement.

Goodwill is not amortised, but is reviewed for impairment at least annually. Goodwill is allocated to Groups of cash

generating units for the purposes of impairment testing. Impairments are recognised immediately in the income statement.

As permitted by IFRS1 goodwill on acquisitions arising prior to 2 March 2004 has been retained at net book value and is

tested annually for impairment.

o) Other intangible assets

The acquired brand is stated at cost less amortisation and any provisions for impairment. The acquired brand is deemed to

have an indefinite useful economic life and is therefore not subject to amortisation but is reviewed for impairment at least

annually. The acquired brand is assessed on the basis of the acquired business being a Group of cash generating units.

p) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any provision for impairment. They

are depreciated over their estimated useful lives on a reducing balance basis (except where otherwise stated below). The

principal annual rates are as follows:

Freehold land Nil

Freehold buildings 2% on a straight line basis

Short 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%

Profits and losses on disposal of property, plant and equipment or closure of a store represents the difference between the

net proceeds and the net carrying value at the date of sale or closure.

q) Investments of the Company

Investments of the Company are held at cost less any provision for impairment.

r) Impairment

The carrying amount of the Group‟s non-monetary assets other than inventories and deferred tax assets, are reviewed

each balance sheet date to determine whether there is an indication of impairment. If any such indication exists, the

assets‟ recoverable amount is estimated. An impairment loss is recognised in the income statement whenever the carrying

amount of the assets exceeds its recoverable amount.

Where an impairment loss subsequently reverses, the carrying amount of the asset, with the exception of goodwill and

other intangibles, is increased to the revised estimate of its recoverable amount. This cannot exceed the carrying amount

prior to the impairment charge. An impairment recognised in the income statement in respect of goodwill and other

intangibles is not subsequently reversed.

s) Inventories

Inventories represent finished goods for resale, excluding any inventories held on a sale or return basis, and are stated at

the lower of cost or net realisable value.

t) Cash and cash equivalents

Cash and short-term deposits included in the balance sheet comprise cash in hand and short-term deposits with an

original maturity of three months or less.

Cash and cash equivalents included in the cash flow statement includes cash and short-term deposits net of bank

overdrafts.

An analysis of cash and cash equivalents is shown in note 19.

u) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business

from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they

are presented as non-current liabilities.

v) Derivative financial instruments

The Group uses financial instruments, principally interest rate swaps, to reduce the risk of interest rate movements. It does

not hold or issue derivative financial instruments for speculative purposes. Derivatives are initially recognised at cost on

the date a derivative contract is entered into and subsequently measured at their fair value. The fair value of derivative

financial instruments, which are traded in active markets, is based on quoted market prices at the balance sheet date.

Changes in the fair value of these instruments are recognised in the income statement.



w) Onerous lease provisions

Provisions are recognised when the Group has a present obligation (legal or otherwise) as a result of a past event and it

is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a

reliable estimate can be made of the amount of the obligation. If material, the provisions are discounted using an

appropriate current pre-tax interest rate.

x) Segmental information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating

decision-maker. The chief operating decision-maker has been identified as the executive board that makes strategic

decisions. The chief operating decision maker reviews adjusted operating profit monthly at board meetings as a key

measure of the segments‟ results. Adjusted profit is a measure of operating profit stated before profit or loss on disposal

of property, plant and equipment, fair value movements on financial instruments and exceptional items.

y) Warrants

Warrants issued are treated as equity settled share based payments as it is the Company's intention to settle such

transactions in equity as opposed to cash. The estimated fair value of the warrants is charged to the period in which they

are granted in accordance with the services provided by the lenders in exchange for the warrants issued.

z) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at

amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in

the income statement over the period of the borrowings using the effective interest method.

Fees paid on the revision of loan facilities are recognised as transaction costs of the facility to the extent that it is probable

that some or all of the facility will be drawn down. In this case, the fees are deferred and amortised over the period of the

facility to which they relate.

aa) Standards, amendments and interpretations to existing standards that are not yet effective and have not been

early adopted by the Group

The following standards and amendments to existing standards have been published and are mandatory for the Group‟s

accounting periods beginning on or after 1 January 2011 or later periods, but the Group has not early adopted them:

IAS 24 (amendment), „Related party disclosures.‟ The amendment clarifies and simplifies the definition of a related

party and is not expected to have a material impact on the Group or Company‟s financial statements.

IFRIC 14 (amendment) „Prepayments of a minimum funding requirement‟. The amendment will not have an impact on

the Group or Company‟s financial statements as it does not operate a defined benefit pension arrangement.

There are a number of minor amendments to IFRS 7 „Financial instruments: Disclosures‟, IAS 1 „Presentation of

financial statements‟ and IFRIC 13 „Customer loyalty programmes‟ which are part of the IASB‟s annual improvements

project issued in 2010. These amendments are unlikely to have an impact on the Group or Company‟s financial

statements and have not therefore been analysed in detail.

IAS 12 (amendment) „Income taxes‟. This amendment introduces an exception to the existing principle for the

measurement of deferred tax assets or liabilities arising on investment property. The amendment is subject to

endorsement by the EU and will not have an impact on the Group or Company‟s financial statements as it does not

hold investment property.

IFRS 9 „Financial instruments – classification and measurement‟. This is the first part of a new standard on

classification and measurement of financial assets and liabilities that will replace IAS39. This standard is still subject

to endorsement by the EU and is not expected to have a material impact on the Group or Company‟s financial

statements.

IFRS10 „Consolidated financial statements‟. The standard provides additional guidance to assist in determining

control where this is difficult to assess. This standard is still subject to endorsement by the EU and is not expected to

have a material impact on the Group or Company‟s financial statements.

IAS19 (amendment) „Employee benefits‟. The amendment to the standard is still subject to endorsement by the EU.

The amendment will not have an impact on the Group or Company‟s financial statements as it does not operate a

defined benefit pension arrangement.

IFRS11 „Joint arrangements‟. This standard is still subject to endorsement by the EU and will not have an impact on

the Group or Company‟s financial statements as it does not operate any joint arrangements.

IFRS12 „Disclosures of interests in other entities‟. This standard is still subject to endorsement by the EU and will not

have an impact on the Group or Company‟s financial statements.

IFRS13 „Fair value measurement‟. This standard provides guidance on how the accounting should be applied where

the use of fair value is already required and is still subject to endorsement by the EU. It is not expected to have a

material impact on the Group or Company‟s financial statements.

IAS1 (amendment) „Financial statement presentation‟ requires items to be grouped in OCI based on whether they will

be subsequently reclassified to profit or loss. This amendment is still subject to endorsement by the EU and is not

expected to have a material impact on the Group or Company‟s financial statements.

ab) Estimates and critical areas of judgement

The accounting policies in respect of estimates and critical areas of judgement are included in note 2.



2 Use of estimates and critical areas of judgement

In the process of applying the Group‟s accounting policies which are described in note 1, the directors need to make

certain judgements and estimations that affect the reported amounts of assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates

are based on management‟s best knowledge of the amount, events or actions, actual results ultimately may differ from

those estimates. Key areas where estimation is required and there is uncertainty of value or outcome at the balance sheet

date are set out below:

a) Valuations of other intangible assets (brands)

Externally acquired brands are recognised when they are controlled through contractual or other legal rights and fair value

can be reliably measured. Their fair value is estimated using risk-adjusted future cash flows discounted using appropriate

interest rates. These future cash flows are based on business forecasts and are therefore inherently judgemental. Future

events could cause the value of these assets to be impaired. These could include a material deterioration in future

trading or a material change in estimated future costs.

b) Impairment of assets

The carrying value of intangible assets and property, plant and equipment are reviewed annually for impairment, or

sooner if there is an indication that the assets might be impaired. Impairment is determined with reference to the higher of

net realisable value and value in use, measured by reference to risk-adjusted future cash flows. Goodwill is allocated to a

group of stores. For stores to which goodwill is allocated, impairment testing is performed in two stages. Firstly the

tangible assets are assessed for impairment and any charges are recognized against the property, plant and equipment

balances. Subsequently, the group of CGUs to which the goodwill is allocated is assessed for impairment as a whole in

order to test the goodwill for impairment. Any impairments identified through this process are recognized against the

goodwill balance.

Significant assumptions are made in calculating these future cash flows, such as long-term growth rates and discount

rates. The discount rate used of 13% is based on similar sized companies in retail. The long term growth rate of 2.25% is

based on forecasts included in industry reports. Management determined budgeted gross margin and revenues based on

past performance and its expectations of future market conditions. Changes in assumptions could change the outcomes

of the impairment reviews. These could include material changes in future trading resulting in an increase or decrease in

impairment or material changes in estimated future costs.

c) Onerous 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 31 July 2011 was an average of 3.6 years (2010: 3.8 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. In addition provision has been made in respect of loss making stores where losses are not expected to

reverse during the remainder of the lease term. The amount provided is based on an estimated one-off payment to exit the

lease arrangement. Significant assumptions are used in making these calculations and changes in assumptions and future

events could cause the value of these provisions to change. This would include sub-let premises becoming vacant, the

liquidation of an assignee resulting in a property reverting to the Group or closing an uneconomic store and sub-letting at

below passing rent.

d) Inventories

All inventory invoiced or contracted for (excluding products specifically purchased on sale or return agreements or on

consignment) is physically counted at retail values at the year end and half year. These values are converted to cost

based on average margins attained in the quarter preceding the count and further adjustments are made to reflect the net

realisable value of any slow moving stock. This process by its nature has an element of estimation embedded in it. All

counts, calculations and impairment estimates are based on product categories rather than individual stock lines.



3 Segmental information

Revenue principally arises from provision of goods in the United Kingdom. There are no sales between the business

segments.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating

decision-maker. The chief operating decision-maker has been identified as the executive board that makes strategic

decisions.

The Group is currently organised into two operating divisions namely Clinton Cards and Birthdays Retail.

Store information Clinton

Cards Birthdays

Retail Continuing operations

Store numbers No. No. No.

Stores at 2 August 2009 681 180 861

Additions 2 17 19

Disposals (including relocations) (30) (21) (51)

Relocations 1 - 1

Stores at 1 August 2010 654 176 830

Additions 1 6 7

Disposals (including relocations) (20) (14) (34)

Relocations 6 2 8

Discontinued operations - (14) (14)

Stores at 31 July 2011 641 156 797

Trading area (square feet) 000 000 000

Trading area at 2 August 2009 1,307 298 1,605

Additions 5 28 33

Disposals (42) (29) (71)

Relocations (8) - (8)

Trading area at 1 August 2010 1,262 297 1,559

Additions 3 5 8

Disposals (41) (17) (58)

Relocations 13 3 16

Discontinued operations - (16) (16)

Trading area at 31 July 2011 1,237 272 1,509

Average store size sq ft sq ft sq ft

At 2 August 2009 1,919 1,657 1,864

At 1 August 2010 1,930 1,688 1,878

At 31 July 2011 1,931 1,746 1,895



3 Segmental information (continued)

Clinton

Cards Birthdays


Discontinued operations Group

Income Statement £'000 £'000 £'000 £'000 £'000

52 weeks ended 31 July 2011

Revenue (excluding VAT) 312,878 51,340 364,218 3,347 367,565

Adjusted operating profit/(loss) 7,004 (3,801) 3,203 (558) 2,645

Net impairment to property, plant and equipment (4,126) (1,560) (5,686) - (5,686)

Charges in respect of onerous leases (1,819) (2,825) (4,644) (1,411) (6,055)

Loss on sale of property, plant and equipment (574) (411) (985) - (985)

Operating (loss)/profit as reported 485 (8,597) (8,112) (1,969) (10,081)

Assets written off on liquidation - (1,360) (1,360)

Net finance costs (2,550) - (2,550)

Loss before tax (10,662) (3,329) (13,991)

Taxation (1,428) 386 (1,042)

Loss after tax (12,090) (2,943) (15,033)

52 weeks ended 1 August 2010

Revenue (excluding VAT) 336,922 57,085 394,007 6,035 400,042

Adjusted operating profit/(loss) 19,354 (516) 18,838 (747) 18,091

Net impairment to property, plant and equipment (364) (113) (477) (180) (657)

Charges in respect of onerous leases (1,189) - (1,189) - (1,189)

Loss on sale of property, plant and equipment (833) (636) (1,469) - (1,469)

Operating profit/(loss) as reported 16,968 (1,265) 15,703 (927) 14,776

Net finance costs (3,727) (25) (3,752)

Profit/(loss) before tax 11,976 (952) 11,024

Taxation (3,646) - (3,646)

Profit/(loss) after tax 8,330 (952) 7,378



3 Segmental information (continued)

Clinton

Cards Birthdays


Discontinued operations Group

Balance Sheet £'000 £'000 £'000 £'000 £'000

Assets at 31 July 2011 126,742 23,741 150,483 - 150,483

Liabilities as at 31 July 2011 (61,649) (12,334) (73,983) - (73,983)

Net assets excluding Group borrowings 65,093 11,407 76,500 - 76,500

Group borrowings (53,527)

Net assets as at 31 July 2011 22,973

Assets at 1 August 2010 116,731 21,644 138,375 1,795 140,170

Liabilities as at 1 August 2010 (52,608) (6,526) (59,134) (1,231) (60,365)

Net assets excluding Group borrowings 64,123 15,118 79,241 564 79,805

Group borrowings (41,566)

Net assets as at 1 August 2010 38,239

Clinton

Cards

Birthdays

Retail

Continuing

operations

Discontinued

operations Group

Other segmental information £'000 £'000 £'000 £'000 £'000

Non current assets

52 weeks ended 31 July 2011

Additions to property, plant and equipment 5,926 682 6,608 4 6,612

Depreciation 7,352 988 8,340 40 8,380

Impairment recognised in the period 4,511 1,602 6,113 - 6,113

Impairment reversed in the period (384) (43) (427) - (427)

52 weeks ended 1 August 2010

Additions to property, plant and equipment 2,860 1,465 4,325 - 4,325

Depreciation 8,279 1,208 9,487 - 9,487

Impairment recognised in the period 1,681 100 1,781 180 1,961

Impairment reversed in the period (1,317) 13 (1,304) - (1,304)



4 Discontinued operations

After a period of actively seeking to sell the Birthdays Ireland business, a decision was taken to explore alternative options.

On 1 March 2011 following a petition placed before the Courts, Birthdays (Ireland) Limited was placed into liquidation. As

control of the Company ceased at that date the results and assets were deconsolidated and treated as discontinued in the

results of the 52 weeks ended 31 July 2011.

As a result, the prior period comparatives have been restated to remove the results of Birthdays (Ireland) Limited which

are shown as discontinued operations.

2011 2010

52 weeks 52 weeks

£'000 £'000

Revenue 3,347 6,035

Expenses (3,905) (6,987)

Loss before tax of discontinued operations (558) (952)

Tax 386 -

Loss after tax of discontinued operations (172) (952)

Net assets written off on liquidation (1,360) -

Provision for onerous lease (1,411) -

(2,943) (952)

The cash flows of Birthdays' Republic of Ireland operations up to the date of the liquidation are shown below:

Operating cash flows 332 (662)

Investing cash flows (4) (7)

Total cash flows 328 (669)

Balance Sheet

Property, plant and equipment 455 491

Inventories 913 736

Deferred tax asset (116) (116)

Trade and other receivables 279 379

Cash and cash equivalents 486 158

Trade, other payables and provisions (657) (483)

Net assets written off relating to discontinued operation 1,360 1,165

Basic and diluted loss per share (pence) (1.42) (0.46)



5 Other operating income

Continuing operations Discontinued operations

2011 2010 2011 2010

52 weeks 52 weeks 52 weeks 52 weeks

£'000 £'000 £'000 £'000

Sundry income 94 148 - -

6 Operating (loss)/profit


2011 2010 2011 2010 52 weeks 52 weeks 52 weeks 52 weeks

This is stated after charging/(crediting): Note £'000 £'000 £'000 £'000

Staff costs 8 78,187 78,163 890 1,521

Depreciation of owned property, plant and equipment 15 8,340 9,382 40 105

Net impairment charge in respect of property, plant and equipment 15 5,686 477 - 180

Loss on disposal of tangible fixed assets 985 1,469 - -

Charges in respect of onerous leases 3 4,644 1,189 1,411 -

Operating lease rentals - land and buildings 85,336 87,692 981 1,762

Sub lease income - land and buildings (3,776) (3,792) - -

Auditors' remuneration 7 214 224 1 3 Included in the operating lease rentals for land and buildings is £443,000 (2010: £168,000) for contingent rents expensed

during the period. The value of contingent rents is dependent on store revenues.

7. Auditors' remuneration


2011 2010 2011 2010 52 weeks 52 weeks 52 weeks 52 weeks

Fees payable to auditors for: £'000 £'000 £'000 £'000

Audit Services

Audit of parent Company and Group accounts 203 173 - -

Non-Audit services

Audit of Company's subsidiaries pursuant to legislation - 20 - -

Other audit related services 11 7 - -

Tax services - 24 1 3

214 224 1 3



8 Staff costs


2011 2010 2011 2010


Note £'000 £'000 £'000 £'000

Staff costs for the Group during the period (including directors):

Salaries and wages 73,782 73,728 813 1,388

Social security costs 4,214 4,244 76 132

Other pension costs 30 191 191 1 1

78,187 78,163 890 1,521

2011 2010 2011 2010


No. No. No. No.

Average number of persons employed by the Group during the period:

Stores 8,119 8,227 129 123

Administrative 231 236 - -

8,350 8,463 129 123

Average number of full-time equivalents 4,795 5,065 81 78

2011 2010 2011 2010


£'000 £'000 £'000 £'000

Remuneration of key management:

Salaries and short-term employee benefits 2,602 2,669 - -

Payments to money purchase pension schemes 82 83 - -

2,684 2,752 - -

The directors of the Group are the key management of the Group. Key management compensation includes salaries,

national insurance costs, pension costs and other employment benefits such as company cars and private medical

insurance. Further information about the remuneration of individual directors is provided in the Directors‟ Remuneration

Report on page 30.



9 Finance costs - net


2011 2010 2011 2010


Note £'000 £'000 £'000 £'000

Finance income:

Interest on bank deposits 96 253 - -

Other interest received - - - -

Total finance income 96 253 - -

Finance costs:

Interest payable on bank loans and overdraft (2,007) (2,164) - (25)

Amortisation of finance costs (985) (985) - -

Other interest paid - - - -

Total finance costs (2,992) (3,149) - (25)

Change in fair value of derivative financial instruments

21 356 (824) - -

Unwinding of property provision discount 23 (10) (7) - -

Finance costs - net (2,550) (3,727) - (25)



10 Taxation


2011 2010 2011 2010


£'000 £'000 £'000 £'000

Analysis of charge in period:

UK corporation tax

Current period 386 3,991 (386) -

Previous periods (535) (584) - -

Total current tax (credit)/charge (149) 3,407 (386) -

Deferred tax (see note 24)

Current period (949) (183) (116) -

Previous periods 2,526 422 116 -

Total deferred tax charge 1,577 239 - -

Taxation charge/(credit) for the period 1,428 3,646 (386) -

Reconciliation between expected and actual tax charge:

(Loss)/profit before taxation (10,662) 11,976 (3,329) (952)

(Loss)/profit before tax at standard rate of UK corporation tax of 27.33% (2010: 28%) (2,914) 3,353 (910) (266)

Tax rate differences 245 29 40 (29)

Expenses not deductible for tax purposes 1,092 336 251 -

Prior year adjustment to corporation tax (535) (584) - -

Group relief surrendered (229) (222) 229 222

Non qualifying depreciation and disposal of fixed assets 1,127 312 4 73

Prior year adjustment to deferred tax 2,642 422 - -

Taxation charge/(credit) for the period 1,428 3,646 (386) -

There is no tax associated with items within Other Comprehensive Income (2010: Nil).

The Group has tax losses of £360,000 (2010: Nil) that are available indefinitely for offset against future taxable profits of

the companies in which the losses arose. The Group also has deductible temporary differences of £1.2m (2010: Nil).

Deferred tax assets have not been recognised in respect of these losses or deductible temporary differences as they may

not be used to offset taxable profits elsewhere in the Group and they have arisen in subsidiaries that have been loss-

making for some time.

The change in the rate of corporation tax is not expected to have a significant impact on the Group.

A resolution passed by Parliament on 29 March 2011 reduced the main rate of corporation tax to 26% from 1 April 2011.

Legislation to reduce the main rate of corporation tax from 26% to 25% from 1 April 2012 was included in the Finance Act

2011. Given these rate reductions had been enacted at the balance sheet date, these are, therefore, included in these

financial statements and have been reflected in the standard tax rate disclosed above. 11 Dividends

The directors are not proposing a final dividend in respect of the financial period ended 31 July 2011 (2010:Nil)



12 Earnings per share

The basic earnings per share is calculated by dividing the (loss)/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 conversion of all dilutive potential ordinary shares.

52 weeks to 31 July 2011 52 weeks to 1 August 2010

Earnings

Weighted average number

of shares

Per share

amount Earnings


of shares

Per share

amount

£'000s '000 pence £'000s '000 pence

(Loss)/profit from continuing operations (12,090) 206,925 (5.84) 8,330 206,925 4.03

Loss from discontinued operations (2,943) - (1.42) (952) - (0.46)

Basic (loss)/profit per share (15,033) 206,925 (7.26) 7,378 206,925 3.57

Effect of dilutive warrants issued - - - - 1,210 (0.03)

Diluted (loss)/profit per share (15,033) 206,925 (7.26) 7,378 208,135 3.54

Supplementary earnings per share figures are presented as set out below. These exclude the impact of the net

impairment to property, plant and equipment, charges in respect of onerous leases, loss on discontinued operations, loss

on sale of property, plant and equipment, the change in the fair value of financial instruments and adjusted for the effect

of the related taxation.

52 weeks to 31 July 2011 52 weeks to 1 August 2010

Earnings


of shares

Per share

amount Earnings


of shares

Per share

amount

£'000s '000 pence £'000s '000 pence

Basic (loss)/profit per share (15,033) 206,925 (7.26) 7,378 206,925 3.57

Net impairment to property, plant and equipment 5,686 - 2.74 477 - 0.23

Charges in respect of onerous leases 4,644 - 2.24 1,189 - 0.57

Loss from discontinued operations before tax 3,329 - 1.61 952 - 0.46

Change in fair value of financial instruments (356) - (0.17) 824 - 0.40

Loss on sale of property, plant and equipment 985 - 0.48 1,469 - 0.71

Related taxation effect (3,905) - (1.89) (1,375) - (0.66)

Basic adjusted (loss)/profit from continuing operations (4,650) 206,925 (2.25) 10,914 206,925 5.28

Effect of dilutive warrants issued - - - - 1,210 (0.02)

Diluted adjusted (loss)/ profit from continuing operations (4,650) 206,925 (2.25) 10,914 208,135 5.26

There have been no transactions in shares or share options that would impact earnings per share since the balance

sheet date.



13 Goodwill

All goodwill is allocated to all stores relating to the acquisition of GSG Holdings Limited (GSG) in 1998.

£'000

Cost

At 2 August 2009 and 1 August 2010 19,779

At 31 July 2011 19,779

Impairment


At 31 July 2011 2,453

Net book value at 31 July 2011 and 1 August 2010 17,326

These cash generating units represent the lowest level within the Group at which goodwill is monitored for internal

management purposes.

All recoverable amounts were measured based on estimated value in use. The forecast cash flows were based on the

approved annual budget for the next financial year and management projections for the following five years. Growth

included in managements five year projections is based on best estimates for revenue and costs which range between

-2% and 2% (2010: 0% and 2.5%). Long run growth rate is estimated at 2.25%. Leases have been assumed to continue

for a maximum of 20 years except where the net present value of future earnings for a cash generating unit are negative.

The cash flows were discounted using a pre-tax discount rate of 13.0% (2010: 9.3%).

No impairment was recognised for GSG for the 52 week period ending 31 July 2011 (2010: £nil).

A reduction in estimated revenue growth of 1% in year 2 of the projections would result in an impairment of £1.1m. An

increase in store occupancy costs and staff costs of 1% in year 2 of the projection would result in an impairment of £2.5m.

A 1% reduction to 12% in the discount rate used to calculate the net present value of future earnings would result in

additional cash flows of £1.5m. 14 Intangible assets

Brand

£'000

Group

Cost


Additions -

At 1 August 2010 1,750

At 31 July 2011 1,750

Amortisation

At 2 August 2009 and 1 August 2010 -

Charge for the period -

At 31 July 2011 -

Net book value at 31 July 2011 1,750

Net book value at 1 August 2010 1,750

The Company has no intangible assets.

The intangible assets relate to the brand valuation attached to Birthdays Retail Limited resulting from its purchase in June

2009 from administration. The brand is allocated to cash generating units which is determined to be all stores trading

with the Birthdays fascia. The forecast cash flows were based on the approved annual budget for the next financial year

and management projections for the following five years. Growth included in management‟s five year projections is

based on best estimates for revenue and costs which range between -5% and 2% (2010: 0% and 2.5%). The long run

growth rate is estimated at 2.25%. Leases have been assumed to continue for a maximum of 20 years except where the

net present value of future earnings for a cash generating unit are negative. The cash flows were discounted using a pre-

tax discount rate of 13.0% (2010: 9.3%).

A further reduction in estimated revenue growth of 1% in year 2 of the projections would result in an impairment of £1.4m.

An increase in store occupancy costs and staff costs of 1% in year 2 of the projection would result in an impairment of

£1.1m. A 1% reduction in the discount rate used to calculate the net present value of future earnings would result in an

additional £0.8m of cash flow.



15 Property, plant and equipment

Freehold land and buildings

Short leasehold

property

Fixtures and

fittings Motor

vehicles Computer equipment Total

£'000 £'000 £'000 £'000 £'000 £'000

Group

Cost

At 2 August 2009 5,585 16,730 82,961 2,108 8,722 116,106

Additions - 782 1,210 509 1,824 4,325

Disposals - (350) (2,651) (632) - (3,633)

At 1 August 2010 5,585 17,162 81,520 1,985 10,546 116,798

Additions - 929 2,715 436 2,532 6,612

Disposals - (643) (3,510) (356) (271) (4,780)

Transfer to discontinued operations - (261) (2,023) - (40) (2,324)

At 31 July 2011 5,585 17,187 78,702 2,065 12,767 116,306

Accumulated depreciation and impairment

At 2 August 2009 325 6,755 39,379 1,442 3,001 50,902

Charge for the period 32 1,126 6,782 275 1,272 9,487

Impairment recognised in the period - 541 1,420 - - 1,961

Impairment reversed in the period - (355) (949) - - (1,304)

Disposals - (238) (1,698) (474) - (2,410)

At 1 August 2010 357 7,829 44,934 1,243 4,273 58,636

Charge for the period 32 979 5,524 286 1,559 8,380

Impairment recognised in the period - 1,463 4,650 - - 6,113

Impairment reversed in the period - (194) (233) - - (427)

Disposals - (324) (2,404) (257) (271) (3,256)

Transfer to discontinued operations - (150) (1,694) - (25) (1,869)

At 31 July 2011 389 9,603 50,777 1,272 5,536 67,577

Net book value at 31 July 2011 5,196 7,584 27,925 793 7,231 48,729

Net book value at 1 August 2010 5,228 9,333 36,586 742 6,273 58,162

Net book value at 2 August 2009 5,260 9,975 43,582 666 5,721 65,204

Included in the net book value of £48,729,000 above is freehold land of £3,994,000 (2010: £3,994,000) which is not

subject to depreciation. The Directors of the Company believe the market value of freehold land is in excess of the

carrying value.

The impairment recognised for the period ended 31 July 2011 is a result of the worsening economic environment and

represents the excess of the carrying amount of property, plant and equipment when compared to the assets‟ recoverable

amount. The net impairment is included within cost of sales in the Consolidated Comprehensive Statement of Income.

The assets‟ recoverable amount is calculated by measuring for each store which, for the purposes of assessing store

assets, is deemed to be a cash generating unit, the net present value of anticipated future cash flows over the average life

of the store assets. The cash flows are discounted using a pre-tax discount rate of 13.0% (2010: 9.3%).

Reversal of impairments are attributable to those cash generating units whose anticipated future cash flows now exceed

the carrying value of the property, plant and equipment of that unit.

A further reduction in estimated revenue growth of 1% in year 2 of the projections would result in an impairment of £0.6m.

An increase in store occupancy costs and staff costs of 1% in year 2 of the projections would result in an impairment of

£1.2m. A 1% reduction to 12% of the discount rate used to calculate the net present value of future earnings would not

impact the current impairment provision.

At 31 July 2011 the Group had contractual capital commitments of £357,000 (2010: £466,000).

The Company has no property, plant and equipment.



16 Investments

31 July

2011 1 August

2010

£'000 £'000

Company

Subsidiaries 15,522 28,770

15,522 28,770

The Company has written down the value of its investment in GSG Holdings Limited to its recoverable amount.

Subsidiaries

The Company is the ultimate holding company of the following principal subsidiaries:

Name of company Country of incorporation Principal activity

Percentage of ordinary

shares directly owned

Percentage of ordinary

shares indirectly

owned

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

Selectacard Limited England Dormant 100%

GSG Holdings Limited England Intermediate holding company 100%

The Greetings Store Group Limited England Dormant 100%

Papertree Limited England Dormant 100%

Strand Cards Limited England Dormant 100%

Macnoll Limited England Intermediate holding company 100%

Clintons Card Services Limited England Dormant 100%

Inspirations (UK) Limited England Dormant 100%

Birthdays Direct Limited England Dormant 100%

William McCracken Limited England Dormant 100%

Lancedown Limited England Employee share ownership trustee 100%

Birthdays Retail Limited England Retailer of greetings cards 100%

Debbie Lou's Friendship Stores Limited

England Dormant 100%

17 Inventories

Total inventories of £43.2m (2010: £37.7m) represent finished goods for resale, excluding any goods held on a sale or

return basis. The value of sale or return inventories at 31 July 2011 was £1.0m (2010: £0.7m).

During the period £0.9m (2010: £1.3m) of inventory write downs were charged to cost of sales.

The Company has no inventory.



18 Trade and other receivables

31 July

2011 1 August

2010

£'000 £'000

Other receivables 1,780 957

Prepayments 17,137 16,925

18,917 17,882

Movement on the provision for impairment of trade and other receivables are as follows:

Beginning of financial period 4 214

Provision for receivables impairment 3 -

Amounts utilised - (210)

End of financial period 7 4

All other receivables are aged less than 90 days.

Trade and other receivables are all denominated in sterling.

Concentrations of credit risk with respect to other receivables are limited due to the Group‟s debtor base being small and

unrelated. Due to this, the directors believe there is no further credit risk provision required in excess of normal

provisions for doubtful receivables, estimated by the Group‟s management based on prior experience and their

assessment of the current economic environment.

The directors consider that the carrying amount of other receivables approximate their fair value.

The Company has no trade and other receivables. 19 Cash and cash equivalents

31 July

2011

1 August 2010

£'000 £'000

Cash in hand and at bank held in Sterling 14,749 5,427

Sterling equivalent of cash in hand and at bank held in Euros - 148

Short term deposits held in Sterling 4,924 1,650

19,673 7,225

The Group has a pooled banking arrangement for all sterling current account balances across the Group and has the

facility of offsetting cash balances against borrowings.

Short-term deposits are made for varying periods of between one day and three months depending on the cash

requirements of the Group and earn interest based on base rate plus a margin.

The carrying amount of these assets approximate to their fair values.

The Company has no cash or cash equivalents. The borrowings are as set out in notes 20 and 28.



20 Borrowings

Group Company

31 July

2011 1 August

2010 31 July

2011 1 August

2010

£'000 £'000 £'000 £'000

Bank borrowings (see note 21b) 53,527 41,566 - -

Borrowings from Group companies - - 12,356 25,604

53,527 41,566 12,356 25,604

Bank borrowings comprise a secured sterling revolving credit facility until July 2013 with any amounts drawn down

repayable within six months. The bank facility contains covenants and is guaranteed by companies within the Group.

Draw downs under the facility are subject to interest based on LIBOR plus the lenders' margin. The weighted average

interest rate paid in the period was 6% (2010: 5.70%).

Included in the bank borrowings above are finance costs incurred in obtaining the revised facility of £0.5m (2010: £1.4m)

which remain capitalised and are being amortised over the period of the remaining facility.

The credit facilities are equally split between two lenders, Barclays Bank PLC and The Royal Bank of Scotland PLC which

at the date of this report, according to Standard and Poor's, have a long term credit rating of AA- and A+ respectively.

The directors consider that the carrying amount approximates the fair value of these liabilities.

The Company has unsecured non interest bearing short term borrowings from Group companies which are repayable on

demand. Intercompany debt of £13,247,138 was forgiven by formal deed as of 31 July 2011. 21 Financial instruments

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

a) Financial assets

The interest rate profile of the financial assets of the Group at 31 July 2011 was as follows:

31 July

2011

1 August

2010

Sterling Euros Total Sterling Euros Total

£'000 £'000 £'000 £'000 £'000 £'000

Non interest earning financial assets 1,780 - 1,780 957 - 957

Floating rate financial assets 19,673 - 19,673 7,077 148 7,225

21,453 - 21,453 8,034 148 8,182

Non interest earning financial assets comprise other receivables (note 18).

Floating rate financial assets comprise cash and cash equivalents which include short-term deposits placed for varying

periods of between one day and three months depending on the cash requirements of the Group and earn interest based

on LIBOR plus a margin. The Company had no financial assets.



21. Financial instruments (continued)

b) Financial liabilities

The financial liabilities of the Group are denominated in sterling and the interest rate profile was as follows:

Group Company

31 July

2011 1 August

2010 31 July

2011 1 August

2010

£'000 £'000 £'000 £'000

Non interest bearing financial liabilities 50,116 41,947 12,356 25,604

Fixed and capped rate financial liabilities 54,000 43,000 - -

Derivative financial instruments 218 574 - -

104,334 85,521 12,356 25,604

Non interest bearing financial liabilities comprise trade payables, other payables and other accruals (note 22).

The fixed and capped rate financial liabilities comprise the revolving credit facility put in place in November 2004, to

finance the purchase of Birthdays and the working capital requirements of the Group going forward. Amounts drawn on

this facility are repayable within six months and are subject to interest rates based on LIBOR plus a lenders‟ margin. In

order to minimise the Group‟s exposure to fluctuations in LIBOR, the Group has entered into a 29 month interest rate

swap agreement which expires in December 2011. The swap applies to interest charges on 70% of the Group‟s

borrowings and swaps LIBOR for a fixed interest rate of 1.3% to July 2010 and 2.3% thereafter. The remaining 30% of

the debt remains subject to fluctuations in LIBOR.

The fair value of the derivative financial instruments at 31 July 2011 was £218,000 liability (2010: £574,000 liability). The

Group‟s accounting policy relating to accounting for derivative financial instruments is included in the accounting policies

note.

Derivative financial instruments comprise the fair value of a swap based on quoted market prices at the balance sheet

date.

c) Fair values

The fair value of the financial assets and liabilities approximate to their carrying cost. Fair value has been determined by

reference to the market value at the balance sheet date or by discounting the relevant future cash flows using current

interest rates for similar instruments.

d) Facilities

In November 2004 the Group entered into an agreement with Barclays Bank Plc and The Royal Bank of Scotland Plc who

provided a five year unsecured sterling revolving credit facility of £110m comprising £50m to finance the acquisition of

Birthdays and £60m for the working capital requirements of the Group until December 2009. In March 2009 security over

all assets was given to the lenders jointly and the facility was extended until January 2012. In October 2011 the facility

was extended again to July 2013 with a maximum draw down available of £55m. Interest on the drawn down portion of

the facility is calculated at LIBOR plus the lenders' margin.

The Group manages its interest rate and liquidity risk by ensuring the availability of an adequate working capital facility,

working within it and using it efficiently to minimise interest charges. Covenants set by lenders are monitored using

forecasts of trading performance and the Group uses interest rate derivatives where appropriate to reduce its exposure to

interest rate changes.

At 31 July 2011 the Group had an undrawn committed facility of £6m (2010: £15m).

At the end of the period, the ratio of net debt to total equity was 149% (2010: 94%)

e) Other financial risks

i) Credit risk

The exposure to credit risk is monitored on an ongoing basis. At the balance sheet date there were no significant

concentrations of credit risk. The Group also operated a cash pooling arrangement (see note 19).

ii) Capital risk

The capital structure of the Group consists of debt and equity attributable to the equity holders of the parent company.

The group‟s objectives when managing capital are to safeguard the group‟s ability to continue as a going concern in order

to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to

reduce the cost of capital. Consistent with others in the industry, the group monitors capital on the basis of the gearing

ratio. This ratio is calculated as net debt divided by equity. Net debt is calculated as total borrowings less cash and cash

equivalents.



22 Trade and other payables

31 July

2011 1 August

2010

£'000 £'000

Trade payables 31,793 24,879

Other taxation and social security 3,710 3,980

Other payables 9,397 6,765

Deferred income 1,632 1,443

Other accruals 8,926 10,303

55,458 47,370

The average credit period taken for trade payables from continuing operations is 88 days (2010: 59 days). The directors

consider that the carrying amount of trade payables approximates to their fair value.

The Company has no trade and other payables. 23 Provisions

Onerous

leases Employee

benefits Total

£'000 £'000 £'000

Group

At 2 August 2009 1,556 108 1,664

Utilised in the period (337) (30) (367)

Charged in the period 1,189 55 1,244

Unwinding of discount 7 - 7

At 1 August 2010 2,415 133 2,548

Utilised in the period (611) (83) (694)

Charged in the period 6,055 74 6,129

Unwinding of discount 10 - 10

At 31 July 2011 7,869 124 7,993

The provision for onerous leases relates to empty properties or properties sub-let at less than their passing rent over the

life of the lease and stores where losses are not expected to reverse during the remainder of the lease term. For the

period ended 31 July 2011 the discount rate used in calculating the provision was 0.5% (2010: 0.5%).

Employee benefits provision comprises the costs of long term service awards. The cost is accrued over the period the

service is provided by the employee. The provision is expected to be utilised after 5 years.

The maturity profile of the provisions is as follows:

As at As at

31 July

2011 1 August

2010

£'000 £'000

Within one year 5,221 639

Current liabilities 5,221 639

Between one and five years 2,031 1,816

More than five years 741 93

Non current liabilities 2,772 1,909

Total provisions 7,993 2,548

The provisions falling due within one year has increased significantly on prior year due to the estimated cost of exit of

several loss making leases not expected to reverse during the remainder of the lease term.

The Company has no provisions.



24 Deferred tax (liabilities)/assets

31 July

2011 1 August

2010

£'000 £'000

Group

Analysis of deferred tax (liabilities)/assets

Short term timing differences 32 37

Accelerated capital allowances and other timing differences (1,321) 135

(1,289) 172

The movement in deferred tax (liabilities)/assets

Balance at start of period 172 411

Prior period adjustments (2,526) (422)

Credited in the period 1,065 183

Balance at end of period (1,289) 172

The provision for deferred taxation represents full provision for accelerated capital allowances and other short term timing

differences at 25% (2010: 28%).

The closing deferred tax liability includes £1,321,000 (2010: £135,000) expected to reverse within the next 12 months of

the balance sheet date.

The Company has no deferred tax assets or liabilities. 25 Other non-current liabilities

31 July

2011 1 August

2010

£'000 £'000

Deferred income


More than five years 7,393 2,863

Non current liabilities 9,025 9,417

Other non-current liabilities comprise reverse premiums received and the value of any rent free period granted on

acquiring a new lease. 26 Called up share capital

31 July

2011 1 August

2010 31 July

2011 1 August

2010

number number £'000 £'000

Authorised

Ordinary shares of 10p each 276,000,000 276,000,000 27,600 27,600

Issued

Fully paid ordinary shares of 10p each 206,925,115 206,925,115 20,693 20,693

Details of directors' interests in the share capital of the Company are provided in the audited section of the Directors'

Remuneration Report on page 31.



27 Statement of changes in total equity

The total of the called up share capital and share premium account represent the total net proceeds on issue of the

Company‟s equity share capital.

The capital redemption reserve relates to the nominal value of Clinton Cards PLC shares purchased in the open market

and subsequently cancelled.

The translation reserve contains all foreign exchange differences arising from the translation of the Group‟s net

investment in its Irish subsidiaries.

In June 2009 the Company issued 2,069,251 warrants to each of Barclays and Royal Bank of Scotland in exchange for a

waiver of the fees in respect of the reset of the Group's banking covenants. The warrants can be exercised at the

holders' discretion between 25 June 2010 and 1 July 2019. These have been treated as equity settled share based

payments and are included in other reserves at a fair value of £0.3m calculated using the Black Scholes model. The key

assumptions input are volatility of 37%, 10 year risk free rate of 4.5% and dividend yield of 4.5%. These warrants remain

unexercised at the year end. 28 Reconciliation of net debt

Cash Borrowings Net debt

£'000 £'000 £'000

Group

Balance at 2 August 2009 9,056 (56,581) (47,525)

Cash flow (1,831) 16,000 14,169

Amortisation of finance costs - (985) (985)

Balance at 1 August 2010 7,225 (41,566) (34,341)

Cash flow 12,448 (11,000) 1,448

Additional finance costs - 23 23

Amortisation of finance costs - (984) (984)

Balance at 31 July 2011 19,673 (53,527) (33,854)

Financing costs capitalised - (473) (473)

Net debt before financing costs 19,673 (54,000) (34,327)

The Company has no cash and cash equivalents.

The Company has borrowings from a subsidiary of £12.4m (2010: £25.6m)



29 Operating lease commitments

The Group leases retail outlets, offices and storage facilities under non-cancellable operating lease agreements. The

leases have various terms, escalation clauses and renewal rights.

The total undiscounted future minimum rents payable under non cancellable operating leases were as follows:

Land and buildings


31 July

2011 1 August

2010 31 July

2011 1 August

2010

£'000 £'000 £'000 £'000

Within one year 81,052 83,104 138 1,570

Between one and five years 262,862 281,511 552 6,274

Over five years 129,997 161,580 947 13,407

473,911 526,195 1,637 21,251

The total of future minimum operating sublease receipts expected to be received were as follows:

Land and buildings

31 July 2011

1 August 2010

£'000 £'000

Within one year 3,105 3,082


Over five years 2,891 4,046

14,655 16,840

The Company has no operating lease commitments. 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 from continuing operations charged to the income statement account during the period amounted to £191,000

(2010: £192,000) of which £21,141 was outstanding at 31 July 2011 (2010: £23,293). 31 Related parties

The Group has no related party transactions which do not eliminate on consolidation except key management

compensation as set out in note 8.

The Company has only had transactions with Clinton Cards (Essex) Limited. There have been no transactions with any

other subsidiary company. In the period the Company received a dividend from Clinton Cards (Essex) Limited, its

principal trading subsidiary of £Nil (2010: Nil). Dividends paid by the Company during the period to Group shareholders

amounting to £Nil (2010: £Nil)

For the Company the non interest bearing debt due to Clinton Cards (Essex) Limited as at 31 July 2011 and payable on

demand is £12.4m (2010: £25.6m).

Notes


Notice is hereby given that the forty second Annual General Meeting of Clinton Cards PLC will be held at The Crystal Building,

Langston Road, Loughton, Essex on Thursday 5th January 2012 at 10.30 a.m. for the following purposes.

Ordinary Business

1. To receive and adopt the directors' Report and Financial Statements for the 52 weeks ended 31 July 2011 together with the

Auditors' Report thereon.

2. To approve the Directors' Remuneration Report for the 52 weeks ended 31 July 2011.

3. To elect Mr Darcy Willson-Rymer, a director appointed by the Board on 10 October 2011

4. To re-elect Mr C S Lewin, a director retiring by rotation.

5. To re-elect Mrs D M Darlington, a director retiring by rotation.

6. To re-elect Mr B Jackson, a director retiring by rotation.

7. To re-elect Mr P Salador, a director retiring pursuant to the terms of the Articles of Association

8. To appoint PricewaterhouseCoopers LLP as Auditors of the Company and to authorise the Board of Directors to agree their

remuneration.

Special Business

To consider and, if thought fit, to pass the following resolutions of which resolution 9 will be proposed as an ordinary resolution

and resolutions 10, 11 and 12 will be proposed as special resolutions.

9. That for the purposes of section 551 of the Companies Act 2006 (the "Act") and so that any expression used in this

resolution shall bear the same meaning (as in the said section 551):

(i) the directors be and are generally and unconditionally authorised to exercise all the powers of the Company to allot

shares and to grant such subscription and conversion rights as are contemplated by sections 551(1)(a) and (b) of the

Act respectively up to an aggregate maximum nominal amount of £6,897,000 to such persons and at such times and on

such terms as they think proper during the period expiring at the end of the next annual general meeting of the

Company, unless sooner revoked or varied by the Company in general meeting;

(ii) the directors be and are generally and unconditionally authorised to exercise all powers of the Company to allot equity

securities (as defined in section 560 of the Act) in connection with a rights issue in favour of the holders of equity

securities and any other persons entitled to participate in such issue where the equity securities respectively attributable

to the interests of such holders and persons are proportionate (as nearly as maybe) to the respective number of equity

securities held by them up to an aggregate nominal amount of £6,897,000 during the period expiring at the end of the

next annual general meeting of the Company subject only to such exclusions or other arrangements as the directors

may consider necessary or expedient to deal with fractional entitlements or legal or practical problems under the laws or

requirements of any recognised regulatory body or stock exchange in any territory;

(iii) the Company be and is hereby authorised to make prior to the expiry of such period any offer or agreement which would

or might require such shares or rights to be allotted or granted after the expiry of the said period and the directors may

allot such shares or grant such rights in pursuance of any such offer or agreement notwithstanding the expiry of the

authority given by this resolution; and

(iv) so that the authority hereby given shall be in substitution for any existing authorities under section 551 of the Act.

10. That, subject to the passing of resolution 9 set out in the notice of this meeting, in accordance with section 570 of 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

securities (as defined in section 560(1) of the Act) for cash pursuant to the authority to allot such shares or grant such rights

conferred on them by resolution 8 set out in the notice of this meeting as if section 561(1) and sub-sections (1) to (6) of

section 562 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 (but in

the case of the authority granted under resolution 9(ii) by way or a rights issue only) 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 proportionate (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 arrangements as the

directors may consider necessary or expedient to deal with fractional entitlements or legal or practical problems arising

under the laws or requirements of any overseas territory or the requirements of any regulatory authority or any stock

exchange; and

(ii) the allotment (other than pursuant to the power referred to in sub-paragraphs 10(i) above) of equity securities up to an

aggregate nominal amount of £1,034,625 representing 5 per cent of the issued share capital of the Company.

save that the Company may, before 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.

Notes


11. That the Articles of Association of the Company in the form produced to the meeting and initialled by the chairman of the

meeting for the purposes of identification be approved and adopted as the Articles of Association of the Company with

effect from the end of this meeting in substitution for and to the exclusion of the existing Articles of Association of the

Company as deemed to be altered by virtue of section 28 of the Act.

12. That a general meeting of the Company other than an annual general meeting may be called on not less than 14 clear days'

notice.

By order of the Board

Paul Salador

Company Secretary

30 November 2011

Registered office:

The Crystal Building

Langston Road

Loughton

Essex IG10 3TH

Notes

1. As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at a general

meeting of the Company. Any member or his proxy attending the meeting has the right to ask any question at the meeting relating to the business of the meeting.

2. Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated.

3. A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint as your proxy a person other than the Chairman of the meeting, insert their full name in the box on your proxy form. If you sign and return your proxy form with no name inserted in the box, the Chairman of the meeting will be deemed to be your proxy. Where you appoint as your proxy someone other than the Chairman, you are responsible for ensuring that they attend the meeting and are aware of your voting intentions. If you wish your proxy to make any comments on your behalf, you will need to appoint someone other than the Chairman and give them the relevant instructions directly.

4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. In the event of a conflict between a blank proxy form and a proxy form which states the number of shares to which it applies, the specific proxy form shall be counted first, regardless of whether it was sent or received before or after the blank proxy form, and any remaining shares in respect of which you are the registered holder will be apportioned to the blank proxy form. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, you should contact Capita Registrars, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.

5. To direct your proxy how to vote on the resolutions mark the appropriate box on your proxy form with an „X‟. To abstain from voting on a resolution, select the relevant “Vote withheld” box. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

6. To appoint a proxy using this form, your proxy form must be: • completed and signed; • sent or delivered to Capita Registrars, PXS, The Registry, 34 Beckenham, Kent, BR3 4TU; and • received by Capita Registrars no later than 10.30 a.m. on Tuesday 3

rd January 2012.

If you hold your shares in uncertificated form, use the CREST electronic proxy appointment service as described in note 14 below. 7. In the case of a member which is a company, your proxy form must be executed under its common seal or signed on its behalf by one

authorised signatory, or a director of the Company in the presence of a witness. 8. Any power of attorney or any other authority under which your proxy form is signed (or a duly certified copy of such power or authority) must

be included with your proxy form. 9. As an alternative to completing your hard-copy proxy form, you can appoint a proxy electronically at www.capitashareportal.com. For an

electronic proxy appointment to be valid, your appointment must be received by no later than 10.30 a.m. on Tuesday 3rd January 2012.

10. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.

11. You may not use any electronic address provided in your proxy form to communicate with the Company for any purposes other than those expressly stated.

12. Nominated persons (a) Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy information rights (a Nominated Person) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the annual general meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. (b) The statement of the rights of shareholders in relation to the appointment of proxies in paragraph (1) above does not apply to Nominated Persons. The rights described in that paragraph can only be exercised by shareholders of the Company.

13. As at 28th November 2011 the issued share capital of the Company consists of 206,925,115 Ordinary Shares of 10 pence each, carrying one

vote each. Therefore, the total number of voting rights of the Company as at 28th November 2011 is 206,925,115.

Notes


14. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the annual

general meeting to be held at 10.30 a.m. on Thursday 5th January 2012 and any adjournment(s) thereof by using the procedures described

in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider should refer to their CREST sponsors or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited‟s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the Company‟s agent, Capita Registrars Limited (CREST Participant ID: RA10), no later than 48 hours before the time appointed for the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the Company‟s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.

CREST members and, where applicable, their CREST sponsor or voting service provider should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsor or voting service provider are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended).

15. Pursuant to section 360B of the Act and Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), the Company specifies that only those members entered on the register of members of the Company at 6.00 p.m. on Tuesday 3

rd January 2012 or, in the

event that this meeting is adjourned, in the register of members as at 6.00 p.m. on the day two days before the date of any adjourned meeting, shall be entitled to attend and vote at the meeting in respect of the number of ordinary shares registered in their names at that time. Changes to the entries on the register of members by the close of business on Tuesday 3

rd January 2012 or, in the event that this meeting is

adjourned, in the register of members before the close of business on the day two days before the date of the adjourned meeting, shall be disregarded in determining the rights of any person to attend or vote at the meeting.

16. In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint holding.

17.The following documents are available for inspection on the Company's website at www.clintoncards.co.uk, at the registered office of the Company during usual business hours on any weekday (Saturdays, Sundays and public holidays excluded) from the date of this notice until the conclusion of the annual general meeting and will be available for inspection at the place of the annual general meeting for at least 15 minutes prior to and during the meeting:

(a) copies of the directors service contracts with the Company; (b) the articles of association of the Company; (c) the audited consolidated accounts of the Company for the 52 weeks ended 31 July 2011 and the 52 weeks ended 1 August

2010 pursuant to Rule 2b(b) of the Code; (d) material contracts entered into by the Company and/or its subsidiaries, other than in the ordinary course of business, during

the period of 2 years preceding the date of this document; and (e) a copy of the notice of annual general meeting.

18. The information required to be published by s.311(A) of the Act (information about the contents of this notice and numbers of shares in the Company and voting rights exercisable at the meeting and details of any members' statements, members' resolutions and members' items of business received after the date of this notice) may be found at www.clintoncards.co.uk.

19.Members representing 5% or more of the total voting rights of all the members or at least 100 persons (being either members who have a right to vote at the meeting and hold shares on which there has been paid up an average sum, per member, of £100 or persons satisfying the requirements set out in s.153(2) of the Act) may require the Company, under s.527 of the Act to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the annual general meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Act. The business which may be dealt with at the annual general meeting includes any statement that the Company has been required under section 527 of the Act to publish on a website.

http://www.clintoncards.co.uk/

Notes


Clinton Cards PLCThe Crystal BuildingLangston RoadLoughtonEssexIG10 3TH

Tel: 020 8502 3711Fax: 020 8502 0295

www.clintoncards.co.ukwww.birthdays.co.ukwww.purepartyonline.co.uk

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