TIDMTHT
RNS Number : 3021B
Thorntons PLC
16 February 2011
Thorntons PLC
Announcement of Interim Results
Thorntons PLC ("Thorntons" or "the Company") today announced its
interim results for the 28 weeks ended 8 January 2011.
-- Revenues increased by 4.8% to GBP133.5 million (2010:
GBP127.4 million)
-- Profit before tax declined 8.5% to GBP8.3 million (2010:
GBP9.1 million)
-- Adverse weather conditions in Q2 affected sales and profits.
Supply chain disruption caused incremental costs of GBP0.5
million
-- Interim dividend maintained at 1.95 pence per share
-- Net debt reduced by GBP0.6 million to GBP14.0 million against
the same period last year
-- Earnings per share decreased by 5.3% to 8.9p (2010: 9.4p)
-- Trading since the period end has been challenging
John von Spreckelsen, Thorntons' Chairman, said:
"During a testing period, with weak consumer confidence and
adverse weather, I am pleased to report continued market share
gains for Thorntons, with group sales up 4.8%. Sales of Thorntons
branded products increased 5.5%. The decline in profit before tax
was caused by a combination of gross profit margin decline, which
occurred due to changes in the sales channel mix and some
discounting, as well as weather related impacts in Q2 on sales and
disruption to the supply chain.
"Looking forward, we believe that we are well placed to continue
to grow our Commercial, Franchise and Thorntons Direct operations.
Trading in our Own Stores will remain difficult, however we are
entering a period when a significant number of our Own Store leases
will be approaching renewal. This will provide the opportunity to
change the size and shape of the Own Store portfolio.
"Since the Second Quarter Trading Statement on 13 January 2011,
Own Store trading on the High Street has been weak. As a result the
Board is now more cautious about Own Store trading for the
remainder of the current financial year and including the important
trading periods of Mothers' Day and Easter. We expect Commercial
Sales and Thorntons Direct to continue to grow.
"The Board anticipates profits before taxation and exceptionals*
to be around the level reported last year. The interim dividend is
being maintained at 1.95p."
* Reported profit before tax and exceptionals for the year ended
26th June 2010 was GBP6.1m
For further information please contact:
Cardew Group T: 020 7930 0777
Emma Crawshaw / Georgina Hall
Interim management report
Over the period, we have continued to make progress as a
multi-channel distributor and manufacturer and are pleased to
report sales growth for the first half despite the impact of the
weather. Christmas is a key trading period for the Company but, as
a result of the adverse conditions in late November and December,
sales were negatively impacted across all the channels and,
accordingly, profit before tax declined 8.5% to GBP8.3 million
(2010: GBP9.1 million) over the period. The Board has decided to
maintain the interim dividend at 1.95p (2010: 1.95p).
Sales for the 28 week period to 8 January 2011 were up 4.8% to
GBP133.5 million (2010: GBP127.4 million), of which more than 98%
were sales of Thorntons branded product. While Own Store and
Franchise sales were down sales to our Commercial and Thorntons
Direct customers delivered 30.6% and 8.5% year on year growth
respectively. The Board remains committed to improving the trading
performance in our Own Stores through product innovation, improving
the in-store environment and customer service. At the same time the
business is approaching a period when a significant number of Own
Store leases will be coming up for renewal which will provide the
Board with the opportunity to review the size and shape of the
store portfolio.
Sales of Thorntons branded products continued to grow over the
period, increasing 5.5% to GBP132.7 million. With the Thorntons
brand holding circa 8% of the UK chocolate market, the key
challenge for the business now is to ensure that the changing
purchasing patterns of our consumers are reflected more closely in
our allocation of capital and management time between the channels,
so as to optimise our financial performance.
Retail
Own Stores
During the period under review, Own Store sales declined 5.9% to
GBP74.1 million (2010: GBP78.8 million). Like for like sales
declined 5.2% (2010: 2.4%), following a first quarter decline of
4.1% and a second quarter decline of 5.9%. The full impact of the
snow on Own Stores sales in the second quarter is difficult to
quantify.
During the Christmas period, it is normal to see some switching
of sales from our Own Stores to the Commercial channel,
particularly with boxed chocolates. We expect that the adverse
weather will have increased the level of switching over the
Christmas period.
As part of our product innovation, we successfully relaunched
the Classics range during the period, which resulted in a sales
uplift of 11.0%. A number of our seasonal lines also performed
well, notably our advent calendars, which saw sales increase 44.0%,
and our selection packs, which grew 17.1%.
During the period under review we closed nine stores, of which
three were resited. We now have 371 Own Stores.
Franchise
As with the Own Stores, our franchisees were impacted by the
adverse weather and as a consequence Franchise sales for H1
declined 4.9% to GBP7.8 million (2010: GBP8.2 million).
During the period, 17 sites were opened with ten closures,
resulting in a total number of 229 sites as at 8 January 2011. Of
the 17 openings, nine were with existing franchisees. We expect to
continue to expand the Franchise channel, although we anticipate
this will be at a rate slower than we originally envisaged.
Thorntons Direct
Over the period, Thorntons Direct sales increased 8.5% to GBP6.4
million (2010: GBP5.9 million). Developments in the web site during
the early part of 2010 improved functionality for both our consumer
and corporate customers. The growth was achieved in spite of the
weather which, like other on line retailers, restricted pre
Christmas deliveries to certain parts of the country. The Corporate
business reported particularly strong growth in the period which
also benefited from the introduction of a dedicated ordering
facility on our website.
Sales & Operations
Commercial
The Thorntons brand continued to grow and perform well across
all our major retail customers.
Commercial sales increased 30.6% to GBP45.2 million (2010:
GBP34.6 million) over the period. More than 98% of these were of
Thorntons branded product. The growth was achieved through
distribution gains in new stores and through increased sales
densities driven by successful seasonal lines. The Easter seasonal
period is viewed as a further growth opportunity for the Thorntons
brand and, for 2011, we are introducing new seasonal models and
promoted lines. Initial orders from our Commercial customers are
encouraging.
International sales progressed throughout the period with new
orders from Poland and the Far East. Continued growth was also
delivered in Ireland and the Middle East.
Margin and operating expenses
Gross margins declined 4.1% to 46.7% (2010: 50.8%). Factors that
contributed to this decline were:
1. As a result of the successful growth of Commercial, sales
from this channel now represent 33.9% of total Company sales (2010:
27.1%). Commercial sales are made at wholesale prices and
consequently reduce the overall margin percentage.
2. Higher levels of discounting and promotional support costs
incurred in both the Own Stores and Commercial channels.
3. Changes in product mix principally due to the growth in value
boxes in our Own Stores and seasonal exclusives lines in the
Commercial channel.
4. Raw material costs increased over the period and, whilst
retail prices on certain lines in Own Stores were increased in late
Autumn 2010 overall gross margin was impacted.
5. Incremental costs incurred across all channels as a result of
the adverse weather conditions in the period. These were estimated
to be GBP478,000.
We envisage that our gross margin percentage will benefit over
time through continued improvements in manufacturing efficiencies,
reduced discounting and promotional support together with product
value engineering and ingredient optimisation.
Operating expenses reduced by 3.1% to GBP54.1 million (2010:
GBP55.9 million), including the effect of inflation and higher
utility prices. This year's expense also includes a charge for
redundancy costs of GBP528,000 (2010: GBP444,000) and gross
impairment and onerous lease charges of GBP220,000 (2010:
GBP471,000). Of the impairment and onerous lease charges, GBP94,000
(2010: GBP362,000) relates to two stores in Eire.
Other operating income increased by 12.2% to GBP863,000 (2010:
GBP769 000). This increase was driven by growth from our existing
two main licensees for cakes and ice cream as well as from the
addition of two new licensees for Thorntons biscuits and chilled
desserts. These new ranges were launched in July 2010 and September
2010 respectively.
Financial position
Net debt at the end of the period was GBP14.0 million (2010:
GBP14.6 million) including GBP4.6 million (2010: GBP7.4 million) of
finance leases. The results for the 28 week period to 8 January
2011 form part of the bank covenant ratio tests, all of which have
been comfortably met.
Taxation
The total tax charge for the period under review was GBP2.3
million (2010: GBP2.8 million) with the underlying tax charge
amounting to 32.3% (2010: 30.6%) of profit before tax. This is
higher than the statutory rate of 27.75% (2010: 28.0%) mainly due
to the effect of permanently disallowable items and depreciation on
assets for which the Group receives no tax allowances.
Pension scheme
The valuation of the Thorntons' Pension Scheme as at 26 June
2010 has been updated on an actuarial basis applying current
discount and inflation rate assumptions and incorporating the
valuation of the plan assets as at 8 January 2011. The deficit is
now GBP22.3 million (2010: GBP24.2 million).
Principal risks & uncertainties
Our 2010 Annual Report (pages 23 and 24) set out our assessment
of the principal risks and uncertainties facing the business
together with the processes which are in place to monitor and
mitigate those risks where possible. Looking forward to the second
half of the current financial year, we believe that the risks and
processes identified in the 2010 Annual Report are still
applicable. In the current economic climate we continue to devote
more resources to our procurement activities to mitigate the
effects of inflation on our raw material costs as well as managing
the Group's credit risk whether from financial institutions,
customers or suppliers.
Board changes
In September 2010, Mike Davies, Chief Executive, having
previously informed us of his decision to leave, stepped down from
the Board and left the Company. Mark Robson assumed the role of
Interim Chief Executive and I took on the role of Executive
Chairman. On 4 January 2011 Jonathan Hart was appointed as Chief
Executive to the Board at which point Mark Robson and I returned to
our existing roles of Finance Director and Non-Executive Chairman
respectively. Jonathan brings a wealth of relevant experience to
Thorntons from the retail and consumer goods sectors. His most
recent position was as Managing Director of Caffe Nero, where he
has spent the last five years.
Outlook
The retail environment in the UK is challenging and is likely to
remain so for the balance of 2011 with consumers facing difficult
and uncertain times. Since our statement on 13 January 2011,
trading across our Retail estate has been weaker than we had
anticipated. Accordingly, the Board is cautious about trading for
the remainder of the year, including the two key trading periods of
Mothers' Day and Easter, and anticipate profit before taxation and
exceptionals for the current financial year to be around the level
reported last year. This is before any additional redundancy,
impairment or onerous lease charges that may be incurred in the
second half of the year.
Against this background we will continue to offer quality
products at an affordable price, covering a variety of price points
and special occasions.
Commodity prices remain volatile and we look to offset this
margin pressure through a tight focus on costs, manufacturing
efficiencies, product remodelling and price increases.
In our Own Stores, we will be focusing on targeted promotions,
product innovations, particularly on seasonal lines, and continuing
to improve the customer experience.
Further expansion will be targeted in both Thorntons Direct and
the Franchise channel and we have a strong Easter seasonal range
planned for the Commercial channel. Easter orders so far from our
Commercial customers are encouraging.
John von Spreckelsen
Chairman
15 February 2011
Consolidated income statement
28 weeks ended 8 January 2011
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
8 January 9 January 26 June
2011 2010 2010
Note GBP'000 GBP'000 GBP'000
------------------------------------- ---- ---------- ---------- ---------
Revenue 4 133,491 127,418 214,553
Cost of sales (71,169) (62,669) (108,009)
------------------------------------- ---- ---------- ---------- ---------
Gross profit 62,322 64,749 106,554
Operating expenses (54,137) (55,875) (100,676)
Other operating income 863 769 1,386
------------------------------------- ---- ---------- ---------- ---------
Operating profit 4 9,048 9,643 7,254
Finance income 11 177 212
Finance costs (758) (746) (1,329)
------------------------------------- ---- ---------- ---------- ---------
Profit before taxation 4 8,301 9,074 6,137
Taxation 5 (2,320) (2,780) (1,783)
------------------------------------- ---- ---------- ---------- ---------
Profit attributable to owners of the
parent 5,981 6,294 4,354
------------------------------------- ---- ---------- ---------- ---------
Earnings per share
Basic 6 8.9p 9.4p 6.5p
Diluted 6 8.8p 9.3p 6.5p
------------------------------------- ---- ---------- ---------- ---------
All activities in both the current and previous year relate to
continuing operations.
Consolidated statement of comprehensive income
28 weeks ended 8 January 2011
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
8 January 9 January 26 June
2011 2010 2010
GBP'000 GBP'000 GBP'000
------------------------------------------- ---------- ---------- ---------
Profit for the period 5,981 6,294 4,354
------------------------------------------- ---------- ---------- ---------
Other comprehensive income/(expense):
- actuarial gain/(loss) recognised in the
defined benefit pension scheme 1,357 (3,246) (4,040)
- movement of deferred tax on pension
liability (537) 934 1,131
------------------------------------------- ---------- ---------- ---------
Total other comprehensive income 820 (2,312) (2,909)
------------------------------------------- ---------- ---------- ---------
Total comprehensive income for the
financial period attributable to owners of
the parent 6,801 3,982 1,445
------------------------------------------- ---------- ---------- ---------
The notes below form an integral part of this condensed set of
financial statements.
Consolidated statement of changes in equity
28 weeks ended 8 January 2011
Share Share Retained
capital premium earnings Total
Note GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ---- ------- ------- --------- -------
At 27 June 2009 6,835 13,752 8,151 28,738
---------------------------------- ---- ------- ------- --------- -------
Profit for the period - - 6,294 6,294
Other comprehensive income - - (2,312) (2,312)
---------------------------------- ---- ------- ------- --------- -------
Total comprehensive income for the
period ended
9 January 2010 - - 3,982 3,982
Transactions with owners:
- new share capital issued 1 14 - 15
- share-based payment credit - - 181 181
- effect of tax on share option
movement - - (59) (59)
- dividends 7 - - (3,247) (3,247)
---------------------------------- ---- ------- ------- --------- -------
At 9 January 2010 6,836 13,766 9,008 29,610
---------------------------------- ---- ------- ------- --------- -------
At 26 June 2010 6,837 13,768 5,363 25,968
---------------------------------- ---- ------- ------- --------- -------
Profit for the period - - 5,981 5,981
Other comprehensive income - - 820 820
---------------------------------- ---- ------- ------- --------- -------
Total comprehensive income for the
period ended
8 January 2011 - - 6,801 6,801
Transactions with owners:
- share-based payment credit - - 157 157
- dividends 7 - - (2,747) (2,747)
---------------------------------- ---- ------- ------- --------- -------
At 8 January 2011 6,837 13,768 9,574 30,179
---------------------------------- ---- ------- ------- --------- -------
The notes below form an integral part of this condensed set of
financial statements.
Consolidated balance sheet
As at 8 January 2011
Unaudited Unaudited Audited
8 January 9 January 26 June
2011 2010 2010
Note GBP'000 GBP'000 GBP'000
-------------------------------------- ---- ---------- ---------- --------
Assets
Non-current assets
Intangible assets 8 3,228 3,993 3,451
Property, plant and equipment 9 56,979 60,030 58,533
-------------------------------------- ---- ---------- ---------- --------
60,207 64,023 61,984
-------------------------------------- ---- ---------- ---------- --------
Current assets
Inventories 28,939 26,476 30,393
Trade and other receivables 24,283 21,631 15,977
Cash and cash equivalents 11b 511 5,292 1,626
-------------------------------------- ---- ---------- ---------- --------
53,733 53,399 47,996
-------------------------------------- ---- ---------- ---------- --------
Total assets 113,940 117,422 109,980
-------------------------------------- ---- ---------- ---------- --------
Equity and liabilities
Shareholders' equity attributable to
owners of the parent
Ordinary shares 6,837 6,836 6,837
Share premium 13,768 13,766 13,768
Retained earnings 9,574 9,008 5,363
-------------------------------------- ---- ---------- ---------- --------
Total equity 30,179 29,610 25,968
-------------------------------------- ---- ---------- ---------- --------
Liabilities
Current liabilities
Trade and other payables 37,766 34,661 25,390
Borrowings 12,081 15,655 24,090
Current tax liabilities 2,854 3,026 614
Provisions for liabilities 512 315 297
-------------------------------------- ---- ---------- ---------- --------
53,213 53,657 50,391
-------------------------------------- ---- ---------- ---------- --------
Non-current liabilities
Borrowings 2,383 4,265 3,557
Deferred tax liabilities 1,914 1,944 1,800
Retirement benefit obligations 10 22,306 24,202 24,219
Other non-current liabilities 2,885 2,889 2,827
Provisions for liabilities 1,060 855 1,218
-------------------------------------- ---- ---------- ---------- --------
30,548 34,155 33,621
-------------------------------------- ---- ---------- ---------- --------
Total liabilities 83,761 87,812 84,012
-------------------------------------- ---- ---------- ---------- --------
Total equity and liabilities 113,940 117,422 109,980
-------------------------------------- ---- ---------- ---------- --------
The notes below form an integral part of this condensed set of
financial statements.
Consolidated statement of cash flows
28 weeks ended 8 January 2011
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
8 January 9 January 26 June
2011 2010 2010
Note GBP'000 GBP'000 GBP'000
Cash generated from operations 11a 20,680 20,195 14,579
Corporate taxation paid (503) (895) (2,255)
Interest received 11 177 177
------------------------------------- ---- ---------- ---------- ---------
Cash flows from operating activities 20,188 19,477 12,501
------------------------------------- ---- ---------- ---------- ---------
Cash flows from investing activities
Proceeds from sale of property, plant
and equipment 30 52 136
Purchase of property, plant and
equipment (4,535) (1,972) (4,605)
------------------------------------- ---- ---------- ---------- ---------
Net cash used in investing activities (4,505) (1,920) (4,469)
------------------------------------- ---- ---------- ---------- ---------
Cash flows from financing activities
Net proceeds from issue of ordinary
shares - 15 18
Interest paid (868) (781) (1,346)
Capital element of finance lease
repayments (1,683) (2,140) (3,613)
Borrowings (repaid)/advanced (11,500) (6,700) 2,500
Dividends paid (2,747) (3,247) (4,553)
------------------------------------- ---- ---------- ---------- ---------
Net cash used in financing activities (16,798) (12,853) (6,994)
Net (decrease)/increase in cash and
cash equivalents (1,115) 4,704 1,038
Cash and cash equivalents at
beginning of period 1,626 588 588
------------------------------------- ---- ---------- ---------- ---------
Cash and cash equivalents at end of
period 11b 511 5,292 1,626
------------------------------------- ---- ---------- ---------- ---------
The notes below form an integral part of this condensed set of
financial statements.
Notes to the interim financial statements
1 General information
Thorntons PLC ("the Company") is a company incorporated and
domiciled in the UK and is listed on the London Stock Exchange. The
address of the Company's registered office is Thornton Park,
Somercotes, Derbyshire DE55 4XJ.
The condensed set of financial statements ("financial
statements") for the 28 weeks ended 8 January 2011 was approved by
the Directors on 15 February 2011. These financial statements do
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. The financial information contained in
this set of financial statements in respect of the 52 weeks ended
26 June 2010 has been extracted from the Annual Report and
Accounts, which were approved by the Board of Directors on 7
September 2010 and delivered to the Registrar of Companies. The
report of the auditors on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under Section 498 of the Companies Act 2006.
The half-yearly results for the current and comparative periods
are unaudited. The auditors have carried out a review of this
condensed set of financial statements for the 28 weeks ended 8
January 2011 and their report is set out on page 15.
2 Basis of preparation
This condensed set of financial statements for the 28 weeks
ended 8 January 2011 has been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Services
Authority and with IAS 34 'Interim financial reporting' as adopted
by the European Union ("EU"). This condensed set of financial
statements should be read in conjunction with the annual financial
statements for the 52 weeks ended 26 June 2010 which have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the EU.
3 Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 26 June 2010, as
described in those annual financial statements.
The following new standards, amendments to standards or
interpretations are mandatory for the first time for the financial
year ending 25 June 2011 but are not considered to have a
significant impact:
Amendment to IAS 32 'Financial instruments: Presentation' on
classification or rights issues;
Amendment to IFRS 1 'First time adoption' on additional
exemptions; and
Amendments to IFRS 2 'Share-based payments' on group
cash-settled transactions. These amendments provide a clear basis
to determine the classification of share-based payment awards in
both consolidated and separate financial statements.
4 Segmental reporting
The Executive reviews the Group's internal reporting in order to
assess performance and allocate resources. The operating segments
of the Group have been determined on this basis.
All revenue arises from UK operations to external customers and
therefore the Executive does not consider the business from a
geographic perspective, only an operational one. Two reportable
segments, "Retail" which incorporates Own Stores, Franchise and
Thorntons Direct; and "Sales & Operations" ("S&O")
encompassing the Commercial trading channel and manufacturing
operations, have been identified. One Commercial customer now
represents greater than 10% of Group revenue, with revenue in the
period of GBP14.7million.
The Executive assesses the performance of the operating segments
based on a measure of operating profit. Costs specific to Head
Office and finance costs are not included in the result for each
operating segment as these costs are not managed on a segmented
basis.
Total segment assets exclude IT assets, non-trade receivables
and cash and cash equivalents as these are managed centrally.
Assets are substantially located in the UK.
Unaudited Unaudited Audited
28 weeks ended 28 weeks ended 52 weeks ended
8 January 2011 9 January 2010 26 June 2010
----------------------------------- ---------------------------------- -----------------------------------
Retail S&O Central Total Retail S&O Central Total Retail S&O Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ------- --------
Total revenue 88,283 45,208 - 133,491 92,857 34,561 - 127,418 151,947 62,606 - 214,553
--------------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ------- --------
Depreciation and
amortisation 1,994 2,780 854 5,628 2,243 2,830 1,224 6,297 3,994 5,239 2,032 11,265
Segment operating
profit 10,987 8,479 - 19,466 11,952 6,699 - 18,651 9,340 13,994 - 23,334
Head office costs (10,418) (9,008) (16,080)
Operating profit 9,048 9,643 7,254
Net finance costs (747) (569) (1,117)
--------------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ------- --------
Profit before
taxation 8,301 9,074 6,137
--------------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ------- --------
Additions to
non-current assets
(other than deferred
tax assets) 1,590 1,411 1,014 4,015 1,523 722 429 2,724 2,626 2,639 435 5,700
--------------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ------- --------
Total assets 18,962 82,445 12,533 113,940 20,615 79,028 17,779 117,422 16,888 79,363 13,729 109,980
--------------------- ------- ------- ------- -------- ------- ------- ------- ------- ------- ------- ------- --------
5 Taxation
During the year, as a result of the change in the UK main
corporation tax rate from 28% to 27% that was substantively enacted
on 20 July 2010 and effective from 1 April 2011, the relevant
deferred tax balances have been re-measured.
Further reductions to the UK corporation tax rate were announced
in the June 2010 Budget. The changes, which are expected to be
enacted separately each year, propose to reduce the rate by 1% per
annum to 24% by 1 April 2014. The changes had not been
substantively enacted at the balance sheet date and therefore are
not recognised in these financial statements.
The tax charge including deferred tax for the 28 weeks ended 8
January 2011 is based on a full year overall expected tax rate of
32.3% (full year 2010: 30.6%).
The current year rate has been calculated by reference to the
projected charge for the full year ending 25 June 2011 and reflects
the mainstream corporation tax rate of 27.75%. The ordinary tax
charge exceeds the charge based on these statutory rates,
principally due to depreciation on owned assets not qualifying for
capital allowances and other permanently disallowable items.
6 Earnings per share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period, excluding
those held in the employee share trust ("ESOP"), which are treated
as cancelled.
For diluted earnings per share the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares. Dilutive potential ordinary
shares are those share options granted to employees where the
exercise price is less than the average market price of the
Company's ordinary shares during the period.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below:
Unaudited Unaudited Audited
28 weeks ended 28 weeks ended 52 weeks ended
8 January 2011 9 January 2010 26 June 2010
Basic Diluted Basic Diluted Basic Diluted
earnings earnings earnings earnings earnings earnings
Earnings per per Earnings per per Earnings per per
GBP'000 share share GBP'000 share share GBP'000 share share
Profit
attributable
to owners of
the parent 5,981 8.9p 8.8p 6,294 9.4p 9.3p 4,354 6.5p 6.5p
------------- -------- -------- --------- -------- -------- --------- -------- -------- --------
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
8 January 9 January 26 June
2011 2010 2010
Weighted average number of ordinary shares 66,955,838 66,942,819 66,948,474
Dilutive effect of shares from share
options 1,124,218 916,665 7,440
------------------------------------------ ---------- ---------- ----------
Fully diluted weighted average number of
ordinary shares 68,080,056 67,859,484 66,955,914
------------------------------------------ ---------- ---------- ----------
7 Ordinary dividends
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
8 January 9 January 26 June
2011 2010 2010
GBP'000 GBP'000 GBP'000
------------------------------------------- ---------- ---------- ---------
Final dividend paid for the 52 weeks ended
26 June 2010 of 4.10p
(52 weeks ended 27 June 2009: 4.85p) 2,747 3,247 3,247
Interim dividend paid in respect of the 52
weeks ended 26 June 2010 of 1.95p - - 1,306
------------------------------------------- ---------- ---------- ---------
Amounts recognised as distributions to
owners of the parent 2,747 3,247 4,553
------------------------------------------- ---------- ---------- ---------
The Directors have approved an interim dividend of 1.95p per
share in respect of the 28 weeks ended 8 January 2011. This will be
paid on 28 April 2011 to shareholders who are on the register of
members on 25 March 2011. The shares will be quoted ex- dividend on
23 March 2011.
8 Intangible assets
Unaudited
computer
software
GBP'000
---------------------------------- ---------
Cost
At 26 June 2010 26,328
Additions at cost 678
---------------------------------- ---------
At 8 January 2011 27,006
---------------------------------- ---------
Accumulated amortisation
At 26 June 2010 22,877
Charge for the period 901
---------------------------------- ---------
At 8 January 2011 23,778
---------------------------------- ---------
Net book amount at 8 January 2011 3,228
---------------------------------- ---------
Net book amount at 26 June 2010 3,451
---------------------------------- ---------
9 Tangible assets
Unaudited
property,
plant and
equipment
GBP'000
---------------------------------- ----------
Cost
At 26 June 2010 184,634
Additions at cost 3,337
Disposals (1,401)
---------------------------------- ----------
At 8 January 2011 186,570
---------------------------------- ----------
Accumulated depreciation
At 26 June 2010 126,101
Charge for the period 4,727
Disposals (1,237)
---------------------------------- ----------
At 8 January 2011 129,591
---------------------------------- ----------
Net book amount at 8 January 2011 56,979
---------------------------------- ----------
Net book amount at 26 June 2010 58,533
---------------------------------- ----------
10 Retirement benefit obligations
The valuation of the Thorntons' Pension Scheme at 26 June 2010
has been updated on an actuarial basis applying current discount
and inflation rate assumptions and incorporating the valuation of
the plan assets at 8 January 2011. This has led to a decrease in
the net deficit of GBP1.9 million from 26 June 2010.
In October 2009 and as part of the schedule of contributions
agreed with the Trustees to Thorntons' Pension Scheme, it was
further agreed that in addition to an annual contribution of GBP2.2
million, the Company would make an additional contribution over
each of the next three financial years equivalent to the higher of
either:
a third of any reduction in the net debt reported in the
statutory accounts for the years ending June 2010, 2011 and 2012;
or
the ongoing annual contribution of GBP2.2 million multiplied by
the percentage increase in the annual dividend above a minimum of
GBP4.0 million.
11 Cash flow from operating activities
a) Cash generated from operations
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
8 January 9 January 26 June
2011 2010 2010
GBP'000 GBP'000 GBP'000
------------------------------------------- ---------- ---------- ---------
Continuing operations
Operating profit 9,048 9,643 7,254
Adjustments for:
- depreciation and amortisation 5,628 6,297 11,265
- amortisation of Government grants
received (11) (11) (21)
- loss/(profit) on disposal of property,
plant and equipment 134 (37) (76)
- share-based payment charge 157 181 379
------------------------------------------- ---------- ---------- ---------
Operating cash flow before working capital
movements 14,956 16,073 18,801
Changes in working capital
Decrease/(increase) in inventories 1,454 (1,106) (5,023)
Increase in trade and other receivables (8,285) (7,542) (1,939)
Increase in payables 13,054 12,863 3,265
Increase in provisions 57 264 609
Decrease in post-employment benefit
obligations (556) (357) (1,134)
------------------------------------------- ---------- ---------- ---------
Cash generated from operations before
taxation 20,680 20,195 14,579
------------------------------------------- ---------- ---------- ---------
b) Cash and cash equivalents for the statement of cash flows
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
8 January 9 January 26 June
2011 2010 2010
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 511 5,292 1,626
-------------------------- ---------- ---------- ---------
12 Reconciliation of movement in net debt
Unaudited Unaudited Audited
28 weeks 28 weeks 52 weeks
ended ended ended
8 January 9 January 26 June
2011 2010 2010
GBP'000 GBP'000 GBP'000
------------------------------------------- ---------- ---------- ---------
(Decrease)/increase in cash and cash
equivalents (1,115) 4,704 1,038
Cash flows from decrease in debt 13,183 8,840 1,113
------------------------------------------- ---------- ---------- ---------
Change in net debt resulting from cash flow 12,068 13,544 2,151
Inception of new finance leases - (1,498) (1,498)
------------------------------------------- ---------- ---------- ---------
Movement in net debt in the period 12,068 12,046 653
Net debt at beginning of period (26,021) (26,674) (26,674)
------------------------------------------- ---------- ---------- ---------
Net debt at end of period (13,953) (14,628) (26,021)
------------------------------------------- ---------- ---------- ---------
13 Related party transactions
There are no related party transactions requiring disclosure in
the condensed set of financial statements.
14 Seasonality
Sales are subject to seasonal fluctuations, with peak Christmas
demand in the second quarter of the year. In the year ended 26 June
2010, the 28 week period to 9 January 2010 represented 59% of
annual sales.
Statement of directors' responsibility
The Directors confirm that, to the best of their knowledge, this
condensed set of financial statements has been prepared in
accordance with IAS 34 as adopted by the EU, and that the interim
management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8.
The Directors of Thorntons PLC are listed in the Thorntons PLC
Annual Report and Accounts 2010. Since the year end the only change
in directors is the resignation of Mike Davies and the subsequent
appointment of Jonathan Hart.
A list of current directors is maintained on the Thorntons PLC
website: www.thorntons.co.uk.
On behalf of the Board
John von Spreckelsen Mark Robson
Chairman Finance Director
15 February 2011
Auditors' report on review of consolidated half-yearly financial
information
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
28 weeks ended 8 January 2011, which comprises the Consolidated
income statement, Consolidated statement of comprehensive income,
Consolidated statement of changes in equity, Consolidated balance
sheet and Consolidated statement of cash flows as at 8 January
2011, and the comparative figures and associated notes. We have
read the other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
The annual financial statements of the Group are prepared in
accordance with IFRS as adopted by the European Union. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with International
Accounting Standard 34, 'Interim financial reporting', as adopted
by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. This report, including the
conclusion, has been prepared for and only for the Company for the
purpose of the Disclosure and Transparency Rules of the Financial
Services Authority and for no other purpose. We do not, in
producing this report, 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 review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the 28 weeks ended 8
January 2011 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
Leeds 15 February 2011
Notes:
(a) The maintenance and integrity of the Thorntons PLC web site
is the responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the Interim Report since it was initially
presented on the web site.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial information may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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