Final Results- Replacement

30th April 2012

Flying Brands Limited (the "Company" or the "Group")

Annual Results Announcement - Replacement

For The Year Ended 30th December 2011

Please find enclosed financial information from the the Annual Report and Accounts.

We announced on 27th April 2012 that we had obtained shareholder approval for the disposal of our Gifts Division and the disposal of our Garden Bird Supplies, Garden Centre Online and Listen2 businesses. We expect to complete these disposals shortly and will announce their completion in due course. After completion of these disposals, the remaining business of the Group will comprise the freehold property at Retreat Farm, the Growing and Live Dispatch business ("GLD") based at Retreat Farm and the Gardening Direct retail business. Currently, the Board is in discussions with a number of prospective purchasers of the Gardening Direct retail business. It is not our current intention to sell either Retreat Farm or the GLD business. We will update shareholders on the progress of discussions for the sale of Gardening Direct at the latest by the date of release of our Interim Announcement and it is our intention at that time to update shareholders on the future of the Group as a whole.

Today we are releasing our annual results for the year ended 30thDecember 2011. A copy of the full text of our Annual Report and financial statements, including the Chairman's Statement and Business Review is attached to this announcement.

In our Annual Report we announce that we have embarked on a restructuring programme to cut central overheads to a level more appropriate to our reduced operational size and that we expect to have reduced costs significantly by the end of the first half of 2012. As a first step we have entered into a contract with Promotional Logistics Limited (trading as Prolog) for the outsourcing of our remaining call centre activities with effect from early June 2012. The proposed closure of our call centre will also enable us to close our Chelmsford Head Office and we have exercised the break clause in our lease and will be vacating these premises in late June 2012.

Finally, we have agreed an overdraft facility of £0.25m with Barclays Bank which will provide the Group with additional short-term working capital should this be required to enable us to continue to operate Gardening Direct in the usual course.

For further information, please contact:

Chairman's statement

In our half yearly report we announced that the first half of 2011 had been a very difficult one for Flying Brands as a result of poor trading performance across all our brands and the consequent need to renegotiate our banking arrangements. These difficulties continued into the second half of the year and it became apparent that the downturn in trading meant that the Company could no longer service its then level of borrowings and that this meant in turn that it could not finance its ambitions for the gifts and gardening businesses. In addition, we recognised that the working capital position of the Company had become uncomfortably stretched and that we needed to cut significantly the cash outflows from the business. Our working capital difficulties were further exacerbated as a number of significant trade creditors reduced substantially the amount of credit they were prepared to allow the Company.

We therefore embarked on a strategy to cut our bank borrowing, reduce our level of trade creditors and exit those businesses that we felt we could no longer adequately support. This resulted in a number of actions.

First, we renegotiated the terms of our investment in Dealtastic so that we had no future funding commitments.

Second, we sold our glasshouse premises at Meadow Springs for £1.225m and part of our premises at Retreat Farm for £2.1m. The proceeds of these sales were used mainly to repay bank borrowing of £2.85m and £0.25m of the £1.25m still owed to the vendors of Flowers Direct.

Third, we reviewed our plans for the Gifts division and concluded that the Company no longer had the financial resources to implement its strategy of investing in new areas of corporate and third party business to compensate for declining sales in its traditional "boxed flowers" business. Accordingly we agreed to sell our Gifts division to Interflora® British Unit for a gross consideration of £2.4m.

Fourth, we agreed to sell our Garden Bird Supplies, Garden Centre Online and Listen2 businesses for a gross consideration of £0.8m. Garden Bird Supplies has suffered from a significant increase in competition in its sector coupled with steep rises in the price of the commodities making up its products and will in future require a considerable investment in marketing to restore it to its previous levels of profits. We took the view that this business should therefore be sold along with Garden Centre Online and Listen2.

After completion of these disposals, the business of the Company will comprise the freehold property at Retreat Farm, the Growing and Live Dispatch business ("GLD") based at Retreat Farm and the Gardening Direct retail business. The Board is currently in discussions with a number of prospective purchasers of the retail business. It is not our current intention to sell either Retreat Farm or GLD.

We have also embarked on a restructuring programme to reduce central overheads to a level more appropriate to our slimmed down business and we expect to have reduced overheads very significantly by the end of the first half of 2012.

We expect to be in a position to update shareholders on the progress of the discussions for the sale of Gardening Direct before the end of June 2012 and it is our intention at that time to update shareholders on the future of the Company as a whole.

Tim TrotterChairman27th April 2012

Business review

To the members of Flying Brands Limited

This business review has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Flying Brands Limited and its subsidiary undertakings when viewed as a whole.

The Group's restructuring

During the course of this financial year the Directors have reviewed the Group's operations. They established that after heavy trading losses were incurred in its Gifts division, the Group was not in a position to make the investment necessary to bring this division back into profitability. In light of this, the decision was made to sell this division. As outlined in note 33 to financial statements, this was concluded on 21st February 2012 with a disposal to Interflora®.

Following the Interflora® transaction, the Directors determined that the retail business of the Group was of insufficient size to make it financially viable. In view of this the Directors concluded that the most appropriate way to enhance shareholder value was to embark upon a disposal strategy for all the Group's retail brands.

As outlined in note 33, the Group agreed to sell GBS, GCO and L2 to a subsidiary of the MBL Group PLC on 30th March 2012. This disposal leaves only the GD brand remaining. The Directors are negotiating with a number of interested parties and believe that a disposal of GD can be achieved by 28th December 2012.

The Group's future business model

Following the completion of all of the disposals outlined in the section above, the Group will retain the GLD business based at the freehold Retreat Farm site in Jersey, and will focus on supplying live product to retailers engaged in the sale of bedding out plant and shrubs. The financial impact of the disposal on the performance in 2011 is detailed in note 32.

Review of the Group's progress

During the year, the Group saw a material downturn in the level of its sales activity across all brands. This coupled with the failed investment in Dealtastic lead to its divestment of surplus land assets to repay its bank borrowings. The lack of available cash to invest in marketing of the Group's brands compounded the problem in sales leading to the Group incurring substantial operating losses. At this point, the Directors concluded that the Group must embark on a disposal strategy to realise shareholder value from its brands and reduce the operating model to a point where it could eventually breakeven. To this end the Directors have negotiated two disposals - that of the Gifts division and that of GBS/GCO/L2 and are negotiating a third disposal - that of GD. Following the completion of this final disposal the Group will be left with the GLD business and the freehold property at Retreat Farm, from which it trades.

Objectives:

·; The Directors aim to stabilise the remaining business.

·; The Group aims to return to profitability and positive cash flow.

·; The Directors aim to seek alternative opportunities in which to invest the Group's capital.

The primary elements of the Board's strategy to achieving the objectives are as follows:

·; Complete the agreed disposals as speedily and cost effectively as possible;

·; review the activities of the GLD operation to optimise production/ trading performance;

·; locate alternative investments sympathetic to the historical focus of the Group.

Results for the 2011 financial year

A summary of the key financial results is set out in the table below and discussed in the summary across the page. For explanation of abbreviations see definitions on the inside front cover.

Reportable segment (loss)/profit is (loss)/profit before interest, tax and impairment of goodwill and intangible assets and other one-off charges. This is reconciled to the consolidated income statement in note 4.1 (a).

Summary by division

Interest

The net interest cost for the Group for the year was £0.1m (2010: £0.1m).

Loss before tax

Group loss before tax (excluding losses arising from discontinued activities) for the year was £3.2m (2010: £3.7m), this loss includes a profit on disposal of property (net of costs) of £0.7m.

Taxation

Taxation was £0.1m for the year, £0.1m higher than the year before. This higher charge reflects adjustments to previous years' tax estimates.

Earnings per share

Basic and diluted loss per share for the year was 32.6p (2010: 1.4p).

Dividend and dividend policy

The Directors will not be proposing a final dividend with respect to the financial year ended 30th December 2011 (2010: £0.2m). During the course of this financial year no interim dividend was paid (2010: £0.4m) but a final dividend with respect to the financial year ended 31st December 2010 was paid of £0.2m (2010: £nil).

Financial position

The Group's balance sheet as at 30th December 2011 can be summarised as set out in the table below:

Financial position…(continued)

The main movements in net assets during the year were as follows:

(i) Losses incurred in the Gifts division and the other divisions (reduction in net assets of £2.8m);

(ii) the disposal of the freehold properties in Jersey (reduction in property, plant and equipment of £2.4m);

(iii) the impairments against goodwill and intangible assets (reduction in net assets of £5.5m);

(iv) repayment of bank debt (reduction in liabilities of £2.9m); and

(v) revaluation of Retreat Farm (increase in net assets of £1.5m).

Capital structure

The Group has no net bank debt (2010: £0.6m). During the year, the Group's facilities with the Bank were repaid in full. At the present time, the Group retains clearing facilities with its bank along with an overdraft facility of £0.25m.

Research and development and capital expenditure

During the year, the Group invested £0.2m in capital expenditure (2010: £0.4m). All items of capital expenditure were incidental to the operations of the Group and none of the expenditure was of a strategic nature. The Group made no investment in research and development during the year (2010: £nil).

Cash flow

Net cash outflow for 2011 was £1.7m (2010: £2.0m). This outflow reflects the heavy trading losses incurred in the Gifts division, the disappointing returns from Dealtastic (see notes 30 and 31 for further information on this investment) along with the repayment of bank borrowings. An agreement was signed on 27th April 2012 with the bank for an overdraft facility of £0.25m.

Interest paid resulted in a net outflow of £0.1m which was unchanged from 2010. Net proceeds from disposals of property, plant and equipment were £3.3m (2010: £0.8m).

Principal risks and uncertainties

The principal risks are those risks that the Board believes the Group faces at the date of this report. They include certain risks relating to the GD business that is the subject of on-going sales discussions.

Liquidity and investments

The Group's net debt position has changed over the year with asset disposals being used to clear secured debt, redeem a small proportion of the loan notes arising from the acquisition of FD and fund operating working capital requirements. These requirements arose primarily due to the Group incurring trading losses that caused several loan covenants to be breached all of which were subsequently waived by the Bank.

Post balance sheet events

After the year end the following events occurred:

(i) The Group entered into a contract to sell its Gifts division to Interflora®. The details of this transaction were contained in a circular sent to the shareholders on 11th April 2012. The disposal generated gross proceeds of £2.4m.

(ii) The Group entered into a contract to sell GBS, GCO and L2 on 30th March 2012. The details of this transaction were contained in a circular sent to the shareholders on 11th April 2012. The transaction generated gross disposal proceeds of £0.8m.

(iii) The Group entered into a revised loan agreement with Palatine on 5th April 2012 to defer payment of the £1.0m owing to it (see note 17) until 31st December 2012, at the latest. Details of this transaction were contained in an announcement to shareholders on 5th April 2012.

(iv) The Group entered into an overdraft facility with the Bank for a total sum of £0.25m. This facility, like all overdraft facilities, is repayable on demand by the Bank.

Principal risks and uncertainties…(continued)

The Group is subject to the following material uncertainties:

(i) Currently the Group has modest banking facilities upon which it can call. In the event of a significant issue arising for which the Group is required to access substantial liquid funds in excess of its overdraft facility, it may not be possible to obtain additional funds as and when required.

(ii) As previously communicated in a circular sent to shareholders on 11th April 2012, the Board stated that without further asset disposals or access to additional banking facilities, the Group may not be able to operate beyond October 2012. To be able to continue operating beyond that date, the Group must either complete the disposal of the GD business or locate alternate sources of finance.

(iii) The Group entered into an agreement with Palatine to defer repayment of its £1m loan until the earlier of the disposal of GD or 31st December 2012. In the event that a disposal of GD is not achieved, it may not be possible for the Group to repay this loan.

(iv) The Board is negotiating with various interested parties who may purchase the business and assets of GD. In the absence of alterative finance, a successful completion of this disposal is required to continue trading and repay the loan to Palatine. In the event this does not happen, then the Board will be forced to seek alternative sources of finance.

Key performance indicators

The Board monitors the performance of the Group and implementation of strategy by reviewing monthly management accounts, managers' reports and KPIs. Throughout the year in question the Board monitored the following KPIs:

Future development

The external economic climate has forced a number of changes on the Group during the year. It has seen a downturn in activity levels in all its brands but particularly in its Gifts division. The Group's borrowings were at such a level that a divestment policy had to be adopted by the Board to fund on-going trading losses and repay loans. This has created a scenario where the remainder of the retail brands within the Group are of insufficient scale to make their continued operation viable.

In view of this, the Board has adopted a divestment plan that ultimately will see the Group consist of a growing and live-despatch business based in Jersey. At the point at which the disposal of GD completes, the Directors will reassess the strategic direction of the Group and communicate this to shareholders in the appropriate manner.

Significant relationships

The Group has a share option scheme in place to reward and to incentivise the most senior employees. During the year no share options have been exercised and it is doubtful that any of these options will be exercised in the foreseeable future.

Going concern basis

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in this review. The financial position of the Group, its cash flows and liquidity position are described in this business review. In addition, notes 2 and 27 to the financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposure to credit risk and liquidity risk.

As highlighted in note 27 to the financial statements, the Group meets its day to day working capital requirements though its on-going cash flows along with an overdraft facility. The current economic conditions have resulted in declining revenue and profits, and the Directors have subsequently sought to realise value through a series of disposals.

The Directors have prepared detailed working capital projections for the Group to support the decision to prepare the financial statements on the going concern basis. The working capital projections include assumptions such as sales demand, the disposal of further assets and the identification and securing of alternative sources of finance where required. However, by their nature, the assumptions are not confirmed and the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. As such there is a material uncertainty in relation to going concern, particularly as to the following:

i) Over the level of demand for the Group's products;

ii) The ability of the Group to complete the disposal of the GD business for an adequate consideration before October 2012; and

iii) The ability of the Directors to secure alternative sources of finance in the event that a disposal of GD and the repayment of the Palatine loan cannot be achieved.

Notwithstanding the above, the Board remains confident that a sale of the GD business can be completed in the time available.

The Group's forecasts and projections, taking account of the uncertainties described above and reasonably possible changes in trading performance, show that the Group has a reasonable expectation of maintaining sufficient working capital to enable the Group to meet its liabilities as they fall due for the foreseeable future, being a period of not less than 12 months from the date of approval of this report.

Thus the Directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Consolidated income statement

52 weeks ended 30th December 2011

Consolidated statement of comprehensive income

52 weeks ended 30th December 2011

Consolidated balance sheet

As at 30th December 2011

The financial statements on pages 32 to 63 were approved by the Board of Directors on 27th April 2012 and signed on its

behalf by:

S S Cook S J Dootson

Director Director

Consolidated statement of changes in equity

52 weeks ended 30th December 2011

Consolidated cash flow statement

52 weeks ended 30th December 2011

1 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all financial periods presented, unless otherwise stated.

1.1 Basis of preparation and going concern basis

Flying Brands Limited (the Company) is a limited liability company incorporated and domiciled in Jersey. The Consolidated financial statements of the Company comprise the Company and its subsidiaries (together referred to as the Group). The accounting policies of the Company are the same as for the Group except where separately disclosed.

These consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union (adopted IFRS).

The financial statements have been prepared on a historic cost basis other that for the revaluation of certain properties.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in this review. The financial position of the Group, its cash flows and liquidity position are described in this business review. In addition, notes 2 and 27 to the financial statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposure to credit risk and liquidity risk.

As highlighted in note 27 to the financial statements, the Group meets its day to day working capital requirements though its on-going cash flows along with an overdraft facility. The current economic conditions have resulted in declining revenue and profits, and the Directors have subsequently sought to realise value through a series of disposals.

The Directors have prepared detailed working capital projections for the Group to support the decision to prepare the financial statements on the going concern basis. The working capital projections include assumptions such as sales demand, the disposal of further assets and the identification and securing of alternative sources of finance where required. However, by their nature, the assumptions are not confirmed and the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. As such there is a material uncertainty in relation to going concern, particularly as to the following:

i) Over the level of demand for the Group's products;

ii) The ability of the Group to complete the disposal of the GD business for an adequate consideration before October 2012; and

iii) The ability of the Directors to secure alternative sources of finance in the event that a disposal of GD and the repayment of the Palatine loan cannot be achieved.

Notwithstanding the above, the Board remains confident that a sale of the GD business can be completed in the time available.

The Group's forecasts and projections, taking account of the uncertainties described above and reasonably possible changes in trading performance, show that the Group has a reasonable expectation of maintaining sufficient working capital to enable the Group to meet its liabilities as they fall due for the foreseeable future, being a period of not less than 12 months from the date of approval of this report.

Thus the Directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.

The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial assets and liabilities. A summary of the more important Group accounting policies follow, together with an explanation of where changes have been made to previous policies on the adoption of new accounting standards in the period.

The preparation of financial statements in conformity with adopted IFRSs requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or action, actual results ultimately may differ from those estimates.

1.2 Basis of consolidation

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities generally accompanying a shareholding of more than one half of the voting rights.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable assets, liabilities and contingent liabilities acquired is recorded as goodwill. The results of the subsidiary undertakings acquired or disposed of during the period are included in the Consolidated Income Statement from the date that control commences until the date control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

1.3 Segment reporting

An operating segment is a component of the Group that engages in business activity from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with and of the Group's other components. All operating segments' operating results, for which discrete financial information is available, are reviewed regularly by the Group's Board to make decisions about resources to be allocated to the segment and assess its performance.

1.4 Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement.

1.5 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquirer. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRSs. Changes in the fair value of contingent consideration classified as equity are not recognised.

Where a business combination is achieved in stages, the Group's previously-held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

The acquirer's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3(2008) are recognised at their fair value at the acquisition date, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

• liabilities or equity instruments related to the replacement by the Group of an acquiree's share-based payment awards are measured in accordance with IFRS 2 Share-based Payment; and

• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year.

1.6 Investments in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Where a Group entity transacts with an associate, profits and losses are eliminated to the extent of the Group's interest in the relevant associate.

1.7 Property, plant and equipment

All property, plant and equipment is shown at cost less subsequent depreciation and impairment other than properties which are stated at their revalued amounts being fair value at the date of revaluation, less subsequent depreciation. Cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation on assets is calculated using a straight-line method to allocate the cost to each asset less its residual value over its estimated useful life, as follows:

Freehold land is not depreciated.

From 2nd July 2011 the Group changed its accounting policy for property, plant and equipment, adopting the revaluation model for land and buildings. Management takes the view that this policy provides reliable and more relevant information because it deals more accurately with the components of property, and is based on up-to-date values. In addition management has revised the useful economic lives of the buildings to 25 years from the date of revaluation, as this is the best estimate for the remaining lives. The policy has been applied prospectively from 2nd July 2011 because it was not practicable to estimate the effects of applying the policy either retrospectively or prospectively from any earlier date. Accordingly, the adoption of the new policy has no effect on prior years. The effect on the current year is to increase the carrying amount of property on 2nd July 2011 by £2,344,000; create a revaluation surplus on 2nd July 2011 of £2,344,000; decrease depreciation expense by £38,000: and reduce profit on disposal of property by £874,000. Since the revalued properties are is located in Jersey, there was no effect on either deferred tax provision or tax expense. The assets' residual values and useful lives are reviewed and adjusted if appropriate, at each Balance sheet date. Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the consolidated income statement.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other costs including repairs and maintenance are charged to the Consolidated Income Statement during the financial period in which they are incurred.

1.8 Goodwill and intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is not amortised, but is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purposes of impairment testing.

(b) Intangibles - trademarks

Trademarks obtained on the acquisition of subsidiaries are shown at fair value. They have a definite useful life and are carried at fair value at the date of acquisition less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the trademarks over their estimated useful lives.

(c) Intangibles - customer lists

Customer lists obtained on the acquisition of subsidiaries are shown at fair value. They have a definite useful life and are carried at fair value at the date of acquisition less accumulated amortisation. Amortisation is calculated using the reducing balance method based on the estimated annual attrition rate percentages.

(d) Software

Computer software and associated development costs that generate economic benefits beyond one year are capitalised as an intangible asset and amortised on a straight line basis between three and five years depending on the estimated useful economic life.

(e) Flowers Direct relay network

The Group acquired the rights to manage a substantial linked (relay) network of florist shops when it acquired Flowers Direct. This network enables the Group to deliver florist and same day delivered bouquets and represents a substantial amount of the turnover of the Flowers Direct business. This has therefore been recognised as an intangible asset. The value of this asset will be amortised based on the anticipated decline in the number of florists annually on a reducing balance method.

1.9 Impairment

(a) Financial assets

A financial asset is assessed at each reporting date to determine whether there is any evidence that it is impaired. A financial asset is considered impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. Individual significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the consolidated income statement.

(b) Non-financial assets

The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at each reporting date. The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the consolidated income statement. An impairment loss in respect of goodwill is not reversed irrespective of whether that loss is recovered subsequently. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognised.

1.10 Financial assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

1.11 Non-current assets held for sale

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

1.12 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a first in first out basis and includes transport and handling costs. Net realisable value is the price at which inventory can be sold in the normal course of business after allowing for the costs of realisation. Provision is made where necessary for obsolete, slow moving or defective inventories.

1.13 Trade receivables

Trade receivables are recognised initially at amortised cost, which is the fair value of consideration receivable and is adjusted for provision or impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all the monies due. The amount of the provision is recognised in the consolidated income statement immediately.

1.14 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-term highly liquid investments with maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the consolidated cash flow statement.

Notes to the financial statements…(continued)

1 Summary of significant accounting policies…(continued)

1.15 Bank borrowings

Interest-bearing loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

1.16 Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of Ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Repurchase of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from retained earnings.

Share-based payments

The Group provides share-based payment arrangements to certain employees. These are equity-settled arrangements and are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value is expensed on a straight line basis over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number of shares or options that will vest.

The fair values of the share-based payment arrangements are measured as follows:

·; Long Term Incentive Plan (EPS based) - using the Monte Carlo model;

·; Long Term Incentive Plan (Total Shareholder Return basis) - using a pricing model adjusted to reflect Total Shareholder Return market-based performance conditions;

See note 25 for a further description of the share-based payment plans.

1.17 Revenue recognition

Revenue represents the invoiced value of goods supplied and is stated net of VAT and any trade discounts. Revenue is recognised at the date of despatch of goods to customers. Provision is made for refunds in the period the goods are despatched. Provision is made for expected returns or bad debts of continuity products. Credit card commission and the cost of overseas bouquets are treated as cost of sales. Commission income is recognised on completion of transmission of orders between network florists. Interest income is recognised using an accrual based method.

1.18 Leases

Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Rentals payable under operating leases are taken to the consolidated income statement on a straight-line basis over the lease term.

Leases in which the lessee assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an equal amount to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

1.19 Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved.

1.20 Taxation

Income tax payable is provided on taxable profits using tax rates enacted or substantively enacted at the balance sheet date.

Deferred taxation is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related balance sheet tax asset is realised or the deferred liability is settled. Deferred income tax assets are recognised to the extent that it is possible that future taxable profit will be available against which temporary differences can be utilised. Income tax is recognised in the consolidated income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

1 Summary of significant accounting policies…(continued)

1.21 Pensions

The Group makes contributions to some employees' and Directors' personal pension defined contribution schemes. These payments are accounted for on an accruals basis.

1.22 Financial instruments

(a) Financial guarantee contracts

Where Group companies enter into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Group considers these to be insurance arrangements, and accounts for them as such. In this respect, the Group treats the guarantee contract as a formal contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.

(b) Non-derivative financial instruments

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described below.

1.23 Termination benefits

Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy, and the Group has created a valid expectation in those affected that it will carry out that plan.

1.24 Adoption of new and revised IFRS

The following new and revised Standards and Interpretations have been adopted in the current period. Their adoption has not had any significant impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements.

At the date of authorisation of these financial statements, the following Standards and Interpretations which have not yet been applied in these financial statements were in issue but not yet effective (and in some cases, had not yet been adopted by the EU):

The Directors anticipate that the adoption of the Standards and Interpretations listed above in future periods will have no material impact on the financial statements of the Group.

Notes to the financial statements…(continued)

2 Financial risk and credit management

The Group has exposure to the following risks from its use of financial instruments:

(a) Credit risk

(b) Liquidity risk

(c) Market risk

This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risks and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.

The Group Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

(a) Credit risk

Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations, and arises principally from the Group's receivables from customers.

Trade and other receivables

The Group's exposure to credit risk is influenced by the type of customer the Group contracts with. The Group is exposed to a high number of low value receivables from retail customers. The Group assesses the risk of these customers by applying historical trends to the likely event of these customers defaulting. Impairment to the value of this receivable is applied in line with the historical trends identified and any changes in risk to the portfolio of the debt.

(b) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. During the latter part of 2011, the Group repaid all its bank borrowings leaving it without committed banking facilities. The strategy of the Directors (outlined earlier) is designed to address the risk that the Group has insufficient liquid resources to satisfy its requirements.

(c) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Currency risk

The Group is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of the Group entities, primarily the Euro and US Dollar. The risks in the period to 30th December 2011 were minimal. The Group currently does not hedge any of its currency exposure due to the minimal impact of these currencies and will not need to do so in the foreseeable future following the decision to close all its overseas operations.

Interest rate risk

The Group has no floating rate loans. Thus the Group has no exposure to interest rate risk.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor the return on capital, which the Group defines as net operating income divided by total shareholders' equity. The Board also monitors the level of dividends to ordinary shareholders.

From time to time the Group purchases its own shares on the market; the timing of these purchases depends on market prices. Primarily the shares are intended to be used for issuing shares under the Group's share option programme. Buy and sell decisions are made on a specific transaction basis by the Board of Directors; the Group does not have a defined share buy-back plan.

There were no changes in the Group's approach to capital management during the year.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

3 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

(a) Estimated impairment of goodwill and intangible assets

The Group tests annually, whether goodwill and intangible assets have suffered any impairment this is in accordance with the accounting policy stated in note 1.9. The valuation of cash generating units has been based on recoverable amounts. It is possible that the recoverable amounts estimated for the intangible software assets may be inaccurate as the period over which the Group will benefit from these assets may be shorter than estimated. In this event an impairment will be required.

(b) Discontinued operations

The Directors have assumed for the purposes of presenting the financial information contained in this report, that the business and assets relating to the Gardening Direct brand will be sold in the 12 months ending 28th December 2012. In the event that the Directors conclude that such a disposal cannot be completed by that date, they will revisit this conclusion. Until completion of a sale, the business will continue to be operated as a going concern.

(c) Deferred tax assets

The Directors have included within the consolidated balance sheet a deferred asset of £155,000. Given the Group's strategy of divestment of assets to enhance shareholder value, it is probable that a number of capital gains will be crystallised on disposal during the foreseeable future. The Group is carrying a significant value of capital losses forward which will be used to relieve any capital gains on disposal. As such the Directors have concluded that the likely value of the deferred tax asset is fairly stated at £155,000.

(d) Going concern basis of preparation

The Directors decision to prepare these accounts on a going concern basis is based on assumptions which are discussed innote 1.1 and in the business review on page 13.

(e) Change in accounting policy re valuation of properties

The Directors have assessed that the adoption of a policy of revaluation of the Group's property assets better reflects the financial position of the Group. The valuation was made on the basis of market value and details of the valuation are disclosed in note 13. Such a valuation necessarily involves estimation and the carrying value of the assets under this policy may change significantly based on market conditions in the next financial period.

Notes to the financial statements…(continued)

4 Segmental analysis

The Directors have taken the decision to market for sale all the brands owned by the Group. This includes the reportable divisions of Garden, Gifts and Entertainment. Once this disposal programme is complete, the one remaining trading asset in the Group will be a growing and live despatch business based in Jersey.

The three reportable segments, as described below, are the Group's strategic business units. Subject to the disposal programme these business units offer different products and services and are managed separately because they require different business strategies.

For each strategic business unit the Group's Board continues to review high level internal management reports on a monthly basis. The following summary describes the operations in each of the Group's reportable segments:

The Group reported on Greetings Direct and Dealtastic separately as these had been abandoned or discontinued during the period.

The accounting policies of the reportable segments are the same as described in note 1. Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before interest and tax, as included in the internal management reports that are reviewed by the Group's Board.

Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these sectors. Inter-segment pricing is determined on an arm's length basis.

4.1 Segmentation by primary divisions

(a) Segment results

52 weeks ending 30th December 2011