RNS No 1496a
THORNTONS PLC
10th March 1998
Announcement of Interim Results
for the 28 weeks ended 10 January 1998
Highlights
Continuing operations
1998 1997
Turnover #80.3m #65.5m Up 22.6%
Operating profit before
exceptional items #11.8m #10.2m Up 15.9%
Profit before tax and
exceptional items #11.5m #9.9m Up 15.5%
Earnings per share excluding
tax relief for prior year
foreign losses 11.70p 9.55p Up 22.5%
Interim dividend per
ordinary share 1.80p 1.65p Up 9.1%
* Accelerated new shop opening programme - 61 new shops
(38 new; 23 resites) in the first half.
* Own shop sales rose by 35.4% in the 28 weeks with like
for like growth of 12.0%.
* At 10 January 1998 - 327 own shops trading compared
with 296 at the same point of the previous year.
* Good progress being made on all five new business
initiatives.
* Consolidation of all chocolate manufacturing and packing
operations proceeding to plan and budget.
Chairman John Thornton commented: "We are delighted with
the sales momentum already achieved as a result of the
many successful new product launches, combined with the
acceleration of our shop opening programme. Progress has
continued in the second half of the year, with own shop
sales in the eight weeks ending 7 March 1998 showing
overall growth of 30% and like for like growth of 8% in
line with our second half targets.
We are on track to meet our full year targets and look
forward to a successful outcome for the year as a whole."
Chairmans and Chief Executives Statement
The 28 weeks ended 10 January 1998 saw strong growth in
both sales and profits as we continued to perform in line
with, and in some areas, ahead of our strategic plan
targets.
Results
Overall sales from continuing businesses in the 28 weeks
totalled #80.3 million, an increase of 22.6% compared
with the #65.5 million in the same period of the previous
year.
Operating profit from continuing operations before
exceptional items rose by 15.9% to #11.8 million from
#10.2 million last year.
Profit before tax grew by 15.5% from #9.9 million last
year to #11.5 million this year.
Profit after tax grew by 1.6% to #7.6 million, as the tax
rate returned to a more normalised level of 34% compared
with the reduced rate of 25% in the previous year, which
benefitted from relief for prior year foreign losses.
Excluding this non-recurring tax benefit, earnings per
share rose from 9.55 pence to 11.70 pence an increase of
22.5%.
Own Shops
Own shop sales rose by 35.4% in the 28 weeks with like
for like growth of 12.0% benefitting from the success of
the day to day product ranges introduced in the second
half of the previous year, which performed ahead of
expectation.
Over the key seven week Christmas trading period ending
on 27 December, own shop sales grew by 35.0% with like
for like sales up 14.1% as customers responded
enthusiastically to new products - both seasonal and day
to day - and to the improvements in the size, location
and look of our retail estate.
Overall sales growth was driven by an acceleration in the new
shop opening programme with 61 new shops opened in the
period. This includes 38 new locations, where sales continue
to track slightly ahead of our location model targets,
together with 23 resites where average sales increases of 60%
have been achieved compared with their previous locations.
At 10 January 1998 there were 327 own shops trading
compared with 296 at the same point of the previous year.
Of the 327, only 54 now remain in the old image, compared
with 119 a year ago.
Franchise
In the 28 weeks ending 10 January 1998 (compared with the
same period of the previous year) franchise sales fell by
12.4% from #6.4 million to #5.6 million as we continued
to close underperforming or inappropriate franchise
locations. At 10 January there were 160 franchises
trading, down from 221 at 11 January 1997.
Commercial
Commercial sales in the 28 weeks ended 10 January 1998
showed a 6.6% decline compared with the same period of
the previous year. We continue to focus on the priority
areas of Marks & Spencer, Boots, duty free and exports.
New Business Trials
Progress was made on all five new business initiatives
currently being evaluated. Although the full review
processes will not be completed until the summer at the
earliest, the current position on each of the trials is
as follows:
Cafe Format
There were eight shops trading at 10 January 1998
offering a combined cafe and confectionery offer. These
are performing well, with very encouraging sales and
significant increases in customer flows over the
Christmas period. It is, however, still too early to
ascertain whether the increase in profit for the combined
cafe offer will meet our investment criteria and four
more cafe trials are being undertaken to test different
locations, formats, layouts and ranges in order to allow
the full potential to be evaluated.
Travel locations
A new design of barrow at Waterloo Station led to a
spectacular sales increase of over 300%, while work
continues to build the product range and presentation
format to allow us to trade successfully from airport
locations.
Sugar Confectionery
A launch is now being considered for Autumn 1998 for the
first wave of the "Thorntons Original Sweetshop" range of
traditional sugar confectionery products, expanding our
current toffee and fudge offering to include gift and
treat lines.
Mail Order
Two mail order brochures have now been trialled with two
more planned, providing invaluable learning on the
optimum structure for a future mail order business plan.
Franchise
Six new look franchise trial shops were opened in the
Autumn. These will be closely monitored to assess
whether this could be the vehicle for relaunching our
franchise offer in two hundred smaller catchment
locations.
Manufacturing Strategy
The project to consolidate all chocolate manufacturing
and packing operations onto our Thornton Park site is
proceeding to plan and to budget, with the new packing
facilities likely to be commissioned by October 1998 and
fully operational by early 1999.
Balance sheet and cashflows
Net assets at 10 January totalled #46.0 million, up 16.0%
compared with the #39.7 million at the same point in the
previous year. The net cash inflow from operating
activities was #23.4 million, an increase of #8.7 million
from the previous year. Capital expenditure, net of
disposal proceeds, rose from #7.8 million in the first
half of 1996/97 to #12.3 million in the first half of the
current year, including #3.0 million expenditure to date
on the manufacturing and packing investment at Thornton
Park.
The net cash position at 10 January 1998 was a surplus of
#2.9 million compared with a #7.5 million surplus at the
same point last year.
Dividend
Your board has declared an interim dividend of 1.80 pence
(net) per share, an increase of 9.1% compared with last
years interim dividend of 1.65 pence (net) per share.
This interim dividend will be paid on 30 April 1998 to
shareholders on the register at the close of business on
20 March 1998.
Outlook
We are delighted with the sales momentum already achieved
as a result of the many successful new product launches,
combined with the acceleration of our shop opening
programme. Progress has continued in the second half of
the year, with own shop sales in the eight weeks ending 7
March 1998 showing overall growth of 30% and like for
like growth of 8% in line with our second half targets.
The new Childrens Range was introduced into stores on 16
February following the successful PR launch at the
Natural History Museum and initial consumer responses
have been very promising.
Own shop like for like sales for the second half in total
are targeted to continue at good single digit levels, as
the incremental impact of the 63 refits completed in the
first half of last year drop out of the comparisons. Own
shop sales in total are expected to continue to show good
growth, benefitting from our plans to open more than 100
shops in the full year, compared with our original target
of 80.
Whilst the acceleration in our shop opening programme is
positive in the context of achieving our strategic plan,
there is likely to be a short term dilution in margins as
a result of the increased investment. Nevertheless, we
are on track to meet our full year targets and look
forward to a successful outcome for the year as a whole.
John Thornton Roger Paffard
Chairman Chief Executive
10 March 1998 10 March 1998
Contact:
Roger Paffard, Chief Executive 0171 4665000
on Tuesday, 10 March thereafter on 01773 540550
Jonathan Fellows, Director of Finance 0171 466 5000
on Tuesday 10 March thereafter on 01773 540550
Tim Anderson/Charles Ryland,
Buchanan Communications 0171 466 5000
Consolidated Profit and Loss Account
Unaudited results for 28 weeks ended 10 January 1998
For 28 weeks For 28 weeks
ended 10 January ended 11 January
1998 1997
Continuing Continuing Discontinued
Operations Operations Operations Total
#000 #000 #000 #000
Turnover 80,291 65,459 2,079 67,538
Cost of sales (36,943) (29,883) (705)(30,588)
_______ _______ _____ ______
Gross profit 43,348 35,576 1,374 36,950
_______ _______ _____ ______
Selling &
distribution
costs (24,907) (19,030) (1,564)(20,594)
Administrative
expenses (6,914) (6,577) (109) (6,686)
Other operating
income 250 192 - 192
Provision utilised - - 299 299
______ ______ _____ ______
Operating profit 11,777 10,161 - 10,161
______ ______ _____ ______
Exceptional items
Fundamental business
restructuring
- continuing - - - -
Disposal of
Gartner Pralines -
discontinued - - - -
Disposal of
French operations -
discontinued - - - (3,052)
Provision utilised - - - 3,052
________ ______ _____ ______
- - - -
________ ______ _____ ______
Profit ordinary
activities
before interest 11,777 - - 10,161
Interest
receivable &
similar income 141 - - 67
Interest payable
& similar
income (435) (289)
_________ ______ _____ ______
Profit on
ordinary
activities
before taxation 11,483 - - 9,939
Taxation (3,908) - - (2,485)
_________ ______ ____ ______
Profit on
ordinary activities
after taxation 7,575 - - 7,454
Dividends (1,198) - - (1,070)
_________ ______ ____ ________
Retained profit
for the period 6,377 - - 6,384
_________ ______ ____ ______
Earnings per
ordinary share 11.70 - - 11.55
_________ ______ ____ ______
Analysed as:
Attributable to
profit before
exceptional items 11.70 11.55 - 11.55
Attributable to
exceptional items - - - -
Excluding taxation
relief for prior
year foreign losses 11.70 9.55 - 9.55
Dividend per
ordinary share 1.80 - - 1.65
Consolidated Profit and Loss Account
Unaudited results for 28 weeks ended 10 January 1998
For 52 weeks ended 28 June
1997
Continuing Discontinued
Operations Operations Total
#000 #000 #000
Turnover 109,209 2,079 111,288
Cost of sales (51,504) (705) (52,209)
_______ _____ _______
Gross profit 57,705 1,374 59,079
_______ _____ _______
Selling & distribution
costs (35,636) (1,564) (37,200)
Administrative expenses (11,257) (109) (11,366)
Other operating income 454 - 454
Provision utilised - 299 299
_______ ______ _______
Operating profit 11,266 - 11,266
_______ _______ ______
Exceptional items
Fundamental business
restructuring - continuing - - (768)
Disposal of Gartner Pralines -
discontinued - - (191)
Disposal of French operations -
discontinued - - (3,584)
Provision utilised - - 4,543
_______ ______ _______
- - -
_______ ______ _______
Profit ordinary activities
before interest - - 11,266
Interest receivable & similar
income - - 411
Interest payable & similar
income (136)
______ ______ ______
Profit on ordinary
activities
before taxation - - 11,541
Taxation - - (2,950)
______ _____ _____
Profit on ordinary
activities
after taxation - - 8,591
Dividends - - (3,796)
_______ _____ _______
Retained profit
for the period - - 4,795
_______ _____ _______
Earnings per
ordinary share - - 13.32
_______ _____ ______
Analysed as:
Attributable to
profit before
exceptional items 13.32 - 13.32
Attributable to
exceptional items - - -
Excluding taxation
relief for prior year
foreign losses 11.44 - 11.44
Dividend per
ordinary share - - 5.85
Consolidated Balance Sheet
As at As at As at
10 January 1998 11 January 1997 28 June 1997
#000 #000 #000
Fixed assets
Tangible assets 59,752 46,316 52,033
Investments
- purchase of own shares 650 600 835
______ ______ ______
60,402 46,916 52,868
______ ______ ______
Current assets
Stocks 13,458 9,702 10,556
Debtors: amounts falling
due after one year 2,660 2,222 2,001
Debtors: amounts falling
due within one year 8,947 9,957 5,328
Investments - 55 55
Cash at bank and in hand 2,947 10,647 895
______ ______ ______
28,012 32,583 18,835
______ ______ ______
Creditors: amounts
falling due within one year:
Bank loans and overdrafts - (3,212) (6,959)
Other creditors (37,224) (28,928) (20,400)
______ ______ ______
(37,224) (32,140) (27,359)
______ ______ ______
Net current
(liabilities)/assets (9,212) 443 (8,524)
______ ______ ______
Total assets less
current liabilities 51,190 47,359 44,344
Provisions for liabilities
and charges (5,145) (7,668) (5,901)
______ ______ ______
Net assets 46,045 39,691 38,443
______ ______ ______
Capital and reserves
Share capital 6,577 6,475 6,494
Share premium 11,355 9,905 10,206
Revaluation reserve 839 1,368 1,268
Profit and loss account 27,274 21,943 20,475
______ ______ ______
Equity shareholders funds 46,045 39,691 38,443
______ ______ ______
Net cash / (debt) 2,947 7,490 (6,009)
Net assets per share 70.01p 61.30p 59.2p
Consolidated Statement of Total Recognised Gains and Losses
For 28 weeks For 28 weeks For 52 weeks
ended ended ended
10 January 1998 11 January 1997 28 June 1997
#000 #000 #000 #000 #000 #000
Profit after
tax attributable
to shareholders 7,575 7,454 8,591
Revaluation
surplus
realised
on property
disposal 429 - 100
Translation
differences
arising
on overseas
investments
and investment
financing (6) (355) (334)
______ ______ ______ ______
423 (355) (234)
______ ______ ______ ______
Total
recognised
gains and
losses in
the period 7,998 7,099 8,357
_______ ______ ______ ______
Historical cost results
There was no material difference between the result as
disclosed in the Consolidated Profit and Loss Account and
the result on an unmodified historical cost basis.
Movements in Shareholders Funds
For 28 weeks For 28 weeks For 52 weeks
ended ended ended
10 January 11 January 28 June
1998 1997 1997
#000 #000 #000
Profit after tax
attributable to
shareholders 7,575 7,454 8,591
Dividends (1,198) (1,070) (3,796)
______ ______ ______
6,377 6,384 4,795
Other recognised
losses in the period (6) (355) (334)
New share capital
issued 1,231 393 713
______ ______ ______
Net increase in
shareholders funds 7,602 6,422 5,174
Opening shareholders
funds 38,443 33,269 33,269
______ ______ ______
Closing shareholders
funds 46,045 39,691 38,443
______ ______ ______
Consolidated Cash Flow Statement
Unaudited results for 28 weeks ended 10 January 1998
For 28 weeks For 28 weeks For 52 weeks
ended ended ended
10 January 11 January 28 June
1998 1997 1997
#000 #000 #000 #000 #000 #000
Cash inflow from
operating
activities 23,411 14,712 12,981
Returns on
investments
and servicing
of finance (420) 106 467
Taxation (274) (242) (1,655)
Capital
expenditure and
financial
investment (12,349) (8,408) (17,956)
Acquisitions
and disposals - (645) (1,095)
Equity dividends
paid (2,730) (2,453) (3,519)
______ _______ _____ _______ _____ _______
Cash inflow
before use
of liquid
resources
and financing 7,638 3,070 (10,777)
Management of
liquid
resources (1,894) (5,000) 4,513
Financing
- Issue of
shares 1,232 393 713
Financing
- (Decrease)
/increase
in debt (3,950) (2,137) 1,813
______ ______ _______ ______ _____ _______
(2,718) (1,744) 2,526
Increase
/(decrease)
in cash in
the period 3,026 (3,674) (3,738)
______ ______ _______ ________ _____ _______
Reconciliation
of net cash
flow to movement
in net debt
Increase
/(decrease) in
cash in the
period 3,026 (3,674) (3,738)
Cashflow from
decrease
/(increase)
in debt 3,950 2,137 (1,813)
Cashflow from
increase
/(decrease)
in liquid
resources 1,894 5,000 (4,513)
______ _______ ________ ______ _____ ______
Change in
net debt
resulting
from cashflow 8,870 3,463 (10,064)
Cash,
overdrafts
and loans
disposed with
subsidiary - 647 647
Translation
difference 86 73 101
______ ______ ________ ______ ______ ________
Movement in
net debt in
the period 8,956 4,183 (9,316)
______ ______ ________ _______ ______ ________
Net debt at
beginning
of period (6,009) 3,307 3,307
______ ______ ________ _______ ______ ________
Net debt at
end of period 2,947 7,490 (6,009)
______ ______ ________ _______ ______ ________
Analysis of Net Debt
Group 1998
At Other At
28 June Cash Subsidiary non-cash Exchange 10 January
1997 Flow Disposed changes Movement 1998
#000 #000 #000 #000 #000 #000
Cash at bank
and in hand 408 196 - - - 604
Overdrafts (3,009) 2,830 - 93 86 -
_____ _____ ______ ______ ______ ______
(2,601) 3,026 - 93 86 604
_____ _____ ______ ______ ______ _______
Debt due
within one
year (3,950) 3,950 - - - -
_____ _____ ______ ______ ______ _______
Current
asset
investments 55 38 - (93) - -
Cash on
deposit 487 1,856 - - - 2,343
_______ _____ ______ ______ ______ ______
Total
net debt (6,009) 8,870 - - 86 2,947
_______ _____ ______ ______ ______ ______
Group 1997 At Other At
29 June Cash Subsidiary non-cash Exchange 11 January
1996 Flow Disposed changes Movement 1997
#000 #000 #000 #000 #000 #000
Cash at bank
and in hand 1,050 (238) (147) - (18) 647
Overdrafts (48)(3,436) 349 - (77) (3,212)
_____ _____ ______ _____ _____ _____
1,002 (3,674) 202 - (95) (2,565)
_____ _____ ______ _____ _____ _____
Debt due
within
one year (2,750) 2,137 445 - 168 -
_____ _____ ______ ______ _____ _____
Current asset
investments 55 - - - - 55
Cash on
deposit 5,000 5,000 - - - 10,000
_____ _____ ______ ______ _____ ______
Total net
debt 3,307 3,463 647 - 73 7,490
_____ _____ ______ ______ _____ _____
Notes to Financial Statements
1. Basis of preparation of the Financial Statements
The interim financial statements, which are abridged,
have been prepared on the basis of accounting policies
set out in the 1997 Annual Report and are unaudited.
The Balance Sheet as at 28 June 1997, the Consolidated
Profit and Loss Account and Consolidated Cashflow
Statement for the 52 weeks ended 28 June 1997 are
extracts from the Annual Report 1997, which have been
delivered to the Registrar of Companies. The auditors
report on the Annual Report was unqualified and did not
contain a statement under Section 237 of the Companies
Act 1985.
2. Segmental analysis
The Groups continuing activities arise from UK
operations only.
3. Interest payable & similar charges
For 28 weeks For 28 weeks For 52 weeks
ended ended ended
10 January 1998 11 January 1997 28 June 1997
#000 #000 #000
Borrowings
wholly repayable
within
five years 466 175 123
Exchange
differences
and other interest 3 114 13
____ _____ ______
Total interest
payable & similar
charges 469 289 136
Interest capitalised (34) - -
____ _____ ______
Net interest payable
& similar charges 435 289 136
____ _____ ______
4. Taxation
Taxation is provided at 34%, being the anticipated rate
of taxation for the full year.
The 1997 taxation provisions were provided at a much
lower rate after taking account of a credit for losses
arising in overseas subsidiaries in prior years.
5. Earnings per share
Earnings per share have been based on the Group profit
attributable to ordinary shareholders of #7,575,000
(1997: #7,454,000) and the average number of shares in
issue of 64,737,478 (1997: 64,548,649). The trust
operating the Long Term Incentive Plan has waived all but
a nominal sum as dividends on the 504,610 shares in its
possession throughout the period and, in accordance with
SSAP 3 'Earnings per share', the full holding is excluded
from the weighted average number of shares in issue for
the purposes of the basic earnings per share calculation.
6. Reconciliation of operating profit to operating
cashflows
For 28 weeks For 28 weeks For 52 weeks
ended ended ended
10 January 11 January 28 June
1998 1997 1997
#000 #000 #000
Operating profit 11,777 10,161 11,266
(Profit)/loss on
disposal of
fixed assets (165) 58 (799)
Depreciation
charges 4,532 3,830 7,596
Amortisation of
Long Term
Incentive Plan 185 - 200
Cashflows relating
to previous years
restructuring
provision (756) (1,984) (3,152)
Increase in
stocks (2,902) (2,043) (3,658)
Increase in
debtors (3,979) (2,759) (594)
Increase in
creditors 14,719 7,449 2,122
_______ ________ ________
Net cash inflow
from operating
activities 23,411 14,712 12,981
______ ________ ________
7. Interim Report
The Interim Report will be posted to shareholders.
Copies for general release will be available from the
Company Secretary, Thorntons PLC, Thornton Park,
Somercotes, Alfreton, Derbyshire, DE55 4XJ from 17 March
1998.
END
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