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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Thorntons | LSE:THT | London | Ordinary Share | GB0008901935 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 142.875 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMTHT
RNS Number : 1748G
Thorntons PLC
02 March 2015
For immediate release
Thorntons Plc ("Thorntons" or "the Company")
Half Year Results for the 28 weeks to 10 January 2015
Financial Highlights
-- Revenues GBP128.2 million (2014: GBP139.7 million) -- Profit before tax and exceptional items GBP6.5 million (2014: GBP7.2 million) -- EBIT margin 6.4% (2014: 6.2%) -- Basic EPS 7.2 pence (2014: 7.8 pence) -- Cash generated from operations GBP10.7 million (2014: GBP13.0 million) -- Exceptional items before tax GBPnil (2014: GBP1.0 million)
Operational Highlights
-- FMCG division sales declined 11.2% to GBP62.7 million (2014: GBP70.6 million)
o UK Commercial sales declined 12.4% to GBP54.7 million (2014: GBP62.4 million):
- Good growth in many grocery, convenience and high street accounts offset by underperformance in two key accounts
- Grew market share in Seasonal Specialities to 7.3% (2014: 6.4%)
o International sales grew 19.9% to GBP5.4 million (2014: GBP4.5 million)
-- Retail division reported 2.2% continued like-for-like growth (2014: 2.1%)
o Outstanding Christmas with December like for like sales growth of 7.8%
o On track to close around 20 stores during the financial year, towards creating a sustainable store portfolio of between 180 and 200 stores
o Consumer Direct sales increased 11.4% to GBP4.5 million (2014: GBP4.1 million)
o Franchise sales decreased 12.0% to GBP4.5 million (2014: GBP5.1 million).
Jonathan Hart, Thorntons' Chief Executive Officer, commented:
"We report a mixed performance from our two divisions. Our Retail division delivered further like for like sales growth as a result of actions we have taken to improve its performance. Our FMCG division, however, suffered from difficult trading conditions in its UK Commercial sales channel. We responded quickly by controlling costs and production.
"Our retail performance and brand tracker demonstrate that the Thorntons' brand continues to strengthen, providing us with the confidence that we can improve certain commercial relationships, focussing on sustainable growth. We continue to make planned investments in people, systems, and manufacturing capability, needed to succeed in the FMCG market. We have taken the first steps in a programme to improve the effectiveness and efficiency of the core business, restructuring our executive team and business functions in order to create an organisation that will win in FMCG.
"The difficult trading conditions in our UK Commercial channel have persisted into the second half. Ahead of our key spring seasons, we continue to be cautious in our expectations for the full year. We maintain strict control of costs and production and remain confident of our strategy. We are well positioned to take advantage of an improvement in consumer spending."
Introduction
The first half of the financial year saw a mixed trading performance as we continued to make progress with our strategy of transforming Thorntons from a business focused primarily on retail distribution towards an emerging international FMCG company with a strong UK multichannel retail division. Alongside positive results from our Retail division we were disappointed that the continued growth anticipated in the UK Commercial channel in our FMCG division was not delivered. This was the result of an unexpected reduction in orders from two of our major grocery partners. In addition, the period saw disruption in supply and service to our customers as a result of now resolved short-term difficulties at our new centralised warehouse.
During the period under review, profit before tax and exceptional items declined by 8.8% to GBP6.5 million (2014: GBP7.2 million). Having considered the current and future capital requirements of the business, the Board has decided not to pay an interim dividend (2014: nil pence). The Board intends to adopt a progressive dividend policy as soon as the trading performance and prospects for the business allow.
Overall sales decreased by 8.2% to GBP128.2 million (2014: GBP139.7 million). While we continue to anticipate an overall sales decline in our Retail division as we progress with the planned reduction in our Own Store estate towards our longer-term ambition of between 180 and 200 stores, the overall Company sales decline during the period was the result of the unanticipated reduction in sales in our UK Commercial channel. We have clearly identified the key drivers and are addressing them. We remain confident that our strategy of Rebalance and grow, Revitalise and Restore is the right one and that the work we are doing to strengthen the Thorntons brand continues to be well regarded by our consumers.
FMCG division
Total sales in the FMCG division declined by 11.2% to GBP62.7 million (2014: GBP70.6 million) as further growth in our International channel was offset by the unanticipated decline in our UK Commercial channel.
UK Commercial
Sales to the grocers and other third-party retailers declined by 12.4% to GBP54.7 million (2014: GBP62.4 million). Despite an increase in sales in many of our grocery, convenience and high street accounts we experienced an unexpected reduction in previously indicated orders from two of our major grocery accounts where, in particular, prior year selling space to high-volume lines was not repeated. This resulted in a decline in our overall share of the Christmas market (Total Boxed Chocolates plus Seasonal Specialities - 18 weeks to 27 December) to 7.4% from 8.4% the prior year. The significant majority of this shortfall is attributable to these two grocery accounts. Analysis of Nielsen data shows that grocers that supported Thorntons during the period performed better in the Total Boxed Chocolate category. As such we are confident that this issue reflects the need to improve our commercial relationship with these two grocers and is not a reflection on shopper demand or regard for the Thorntons brand, which remains strong and growing.
Sales of Seasonal Specialities grew by 10.3%, resulting in a market share of 7.3%, an increase from 6.4% the prior year, with sales of Advent calendars and our Snowman models being the highlights of another strong season.
International
International sales grew by 19.9% to GBP5.4 million (2014: GBP4.5 million). This increase was primarily driven by our activity in the United States where during the period, we saw our largest ever international shipment; a mix of private label and Thorntons branded products. We are currently undertaking a review of seasonal performance with our US customers in order to evaluate our next steps. Our Australian supply chain is now established, positioning us well, and we remain encouraged by the prospects in this region. Traveller demand for our brand in tax and duty-free locations in the UK and UAE remains encouraging and presents opportunities for future growth.
Private label
Sales of Private Label declined to GBP2.3 million (2014: GBP3.4 million). Whilst this remains a small part of our business, we continue to seek opportunities to grow profitably in this area with partners where we have no possibility to sell Thorntons branded goods. After the close of the period we secured a significant contract with our largest long-term private label customer that should see a return to substantial growth in this part of our business during the next financial year.
Manufacturing operations and supply chain
The period saw continued investment in our manufacturing facility in line with our previously outlined strategy of investing in areas of competitive advantage. We successfully installed an additional decorated hollow production line, adding further capacity to meet our requirements for Easter 2015 and beyond. Furthermore, the planned investment in a new moulded line for inlaid chocolates continues, ready for installation in late spring/summer of 2015. This will deliver capability to meet market trends as well as support efficiency improvements and deliver future capacity.
In response to the unanticipated decline in orders from two of our grocery partners our manufacturing operations again demonstrated flexibility, responding quickly in order to minimise the effect on stockholding levels. Although finished stocks are higher than expected, the quality of stock is good with seasonal stock at usual levels. Stockholding consists primarily of year-round inlaid boxed chocolates and a sizeable level of 2015 Easter stock, reflecting the slightly earlier timing of the season this year.
During November, and despite extensive planning and testing, we encountered significant short-term difficulties in the commissioning of our new central warehouse. Consolidating up to seven separate locations, including our warehouse at Thornton Park in Alfreton, this new facility operated by our logistics partner has been commissioned to provide improved service levels and future capacity. Notwithstanding the significant effect on our business in terms of late and lost sales, the problems encountered were quickly identified and resolved and the new warehouse capably handled several record weeks of volume in December.
In terms of input costs, the price of cocoa continued to rise in the early part of the period but has now reduced a little from this peak. As always, we continue to work hard to protect margins by leveraging our global purchasing reach, product and packaging re-engineering, range refreshment, ingredient optimisation, manufacturing efficiencies and category management. Our procurement extends on a global basis and we continue to take opportunities to forward buy in order to secure prices in core commodities, thereby enabling more robust planning. Looking forward, we anticipate a more benign overall input cost environment with a modest level of input cost inflation during 2015.
Retail division
Total sales for the Retail division declined by 5.2% to GBP65.5 million (2014: GBP69.1 million). After a subdued first quarter for our Retail division, the key Christmas quarter saw a strong performance in particular from our Own Stores and Consumer Direct channels. Like for like sales increased by 2.2% (2014: 2.1%) for the period. This included an outstanding December (up to Christmas Eve) which saw like-for-like growth of 7.8%, highlighting the strength of the Thorntons brand and product offer. It also demonstrates the value of the initiatives we have applied to this division over recent years.
Own Stores
During the period, Own Store sales reduced by 6.5% to GBP55.0 million (2014: GBP58.8 million), mainly as a result of our planned store closures. The economic environment remained challenging for our shoppers despite small signs of improvement towards the end of the period.
We closed 16 stores (2014: 15 stores) over the period at a cost of GBP0.4 million (2014: GBP0.9 million), mainly in line with lease expiry. We relocated three of these stores and will continue to do small numbers of these in locations of high footfall where we do not have optimum stores or locations. We refurbished a further 8 stores, bringing the total number of refurbished stores to 36. We continue to take advantage of opportunities in the property market, retaining stores on short-term leases or licences if attractive terms are available. We remain confident in our strategy of "right-sizing" our retail estate. We expect to close approximately 20 stores during this financial year towards achieving our longer-term objective of creating a flexible and sustainable estate of between 180 and 200 stores. We ended the first half with 247 stores.
During the Christmas season we successfully opened temporary kiosk merchandising units in 35 malls and shopping centres, extending the reach of our Own Stores network during this period of seasonal strength for Thorntons.
Excellent growth in shopper demand for our Advent calendars, boxed chocolates and seasonal specialities, including our highly successful Snowman range, were highlights of an outstanding run up to Christmas and clearly reflect our shoppers' appreciation for our brand, product offer and in-store experience.
Consumer Direct
A good performance from our online business saw sales increase by 11.4% to GBP4.5 million (2014: GBP4.1 million). Sales of our hampers were again a highlight of our performance, with sales increasing by 49% over the period. Despite being a small part of our overall sales mix, during the period under review we have had success in delivering a more profitable balance between sales and marketing investment and we continue to focus on this.
Franchise
Franchise sales declined by 12.0% to GBP4.5 million (2014: GBP5.1 million). During the period six franchises opened and six closed, resulting in 175 franchises at the end of the period. During the period one of our multiple franchise partners underwent a change of ownership process that resulted in a significant shortfall in sales for us during the peak selling period. Additionally, the challenges experienced in our new central warehouse created disruption in service to our franchisees during November, a key period of peak stock intake, resulting in some level of sales shortfall.
Financial performance
The period under review saw both revenues and profits lower than in the first half last year. This has had a predictable impact on the six KPIs that are used to monitor the financial health and progress of the business.
These KPIs are set out below:
Pre-exceptional profit before tax GBP6.5 million (2014: GBP7.2 million)
Pre-exceptional EBIT margin % 6.4% (2014: 6.2%)
Earnings per share 7.2 pence (2014: 7.8 pence)
Cash from operations GBP10.7 million (2014: GBP13.0 million)
Net sales growth -8.2% (2014: +4.5%)
FMCG sales participation 48.9% (2014: 50.5%)
The business saw cash flow from operations fall from GBP13.0 million in the first half last year to GBP10.7 million in the period under review, partly due to lower operating cash flow before working capital of GBP0.9 million driven by lower operating profit and depreciation charges.
Combined with the above movement, a working capital cash outflow of GBP0.7 million in the period under review, compared to a GBP0.7 million cash inflow in the same period last year, accounts for the full annual variance of GBP2.3 million. The main driver of the switch to a working capital outflow in the first half of this year was the planned increase in debtor balances and the lower associated cash inflow from debtors as our transformation into an FMCG business continues.
Total cash flow in the period under review was an inflow of GBP1.6 million, compared to an inflow of GBP7.1 million in the same period last year. Of this GBP5.5 million adverse variance, the GBP3.2 million not accounted for in operational cash flow movements was due to higher cash interest costs of GBP1.1 million, the result of higher average net debt, and higher capital expenditure of GBP2.0 million, plus a further GBP0.1 million of other negative cash flow movements.
We closed the period under review with net debt of GBP30.8 million, GBP11.0 million higher than the same period last year.
The Company continues to have access to c.GBP75 million of committed cash funding until October 2018 and a further GBP5 million overdraft renegotiated annually.
Full details of closing net debt and the movements since the first half of last year and the year-end position are given in note 14 to these accounts.
After making the appropriate enquiries, the Directors believe that the Company continues to have sufficient financial resources to continue trading as a going concern.
Margin and operating expenses
The unanticipated switch in the participation of higher gross margin sales through our Retail division led to an increase in statutory gross margins, which improved to 41.9% from 41.5%. As we have stated previously, we make a higher gross margin on our Retail divisional sales than we do on our FMCG divisional sales, but this is reversed lower down the Income statement, where at the net margin level we make a greater percentage margin on our FMCG sales. Please see our segmental analysis in note 6 to these accounts for further details of our divisional split of revenues and margins.
Pre-exceptional operating costs in the period under review reduced to GBP46.1 million from GBP50.1 million in the same period last year. This was primarily due to the ongoing store closure programme, which saw the net closure of another 13 stores in the financial half-year period. In addition, management responded swiftly to the revenue shortfalls, resulting in approximately GBP1 million of lower central operating costs than in the first half last year. As a percentage of sales, pre-exceptional operating expenses remained broadly flat at 36%.
As we have previously outlined, the most important measure of our overall financial performance is our pre-exceptional EBIT margin and, despite disappointing revenue results and a modest reversal in our FMCG sales revenue participation, proactive cost management generated a modest increase in our pre-exceptional EBIT margin to 6.4%, up from 6.2% last financial half year.
Other operating income declined marginally to GBP0.6 million (2014: GBP0.7 million) with a small decrease in licensing income.
Exceptional costs
Exceptional costs in the half year under review were GBPnil (2014: GBP1.0 million), with no significant changes to levels of onerous lease provision or asset impairment required in the period. Further details of these charges in 2014 are given in note 7 to this report.
Taxation
The accounting charge for taxation through the Income statement for the period under review was GBP1.7 million (2014: GBP1.0 million), compared to the pre-exceptional PBT in the Income statement, the tax charge equates to a percentage rate of 26%. This is higher than the statutory rate of taxation due to adjustments for non-allowable depreciation and other permanent non-qualifying expenditure. The equivalent percentage rate from the Income statement in the first half last year was 14.9%, as that half benefited from a one-off credit of GBP0.3 million for prior year tax over-payments and a GBP0.5 million credit for the impact of the lowering of the statutory tax rates on the Company's deferred tax assets.
Pension scheme
The deficit on the Company's defined benefit scheme was GBP36.7 million at the half-year end (2014: GBP28.3 million). The main driver of the increase in this long-term liability was the decrease in the discount rate used to express these future liabilities to a present value. The scheme remains closed to new members and to future accrual. Following the most recent triennial valuation of the defined benefit scheme, the Company and trustees are finalising a new deficit recovery schedule which will see the annual deficit payment increase from GBP2.75 million to GBP3.25 million per annum.
Principal risks and uncertainties
Key risks are regularly reviewed by the Executive Directors and Senior Management. The key risks and uncertainties facing the business are detailed in note 17.
Executive and Board responsibility changes
We have identified the transformation of our people, systems and processes as an essential enabler of achieving our stated strategy to transform our business towards an emerging FMCG company with a strong UK retail division. Towards that objective, effective today, we have made changes to executive roles and responsibilities with the objective of increasing our focus on winning in FMCG whilst ensuring a strong UK retail division.
We have created two new operating boards, one for each operating division - FMCG and Retail. The FMCG operating board, chaired by the Chief Executive Officer ("CEO"), has the objective of creating a core business focus around developing a class-leading approach to FMCG, improving efficiencies and aligning resources to deliver. A key part of this is developing a strong relationship between the marketing and commercial sales functions. To this end, a new role of Sales and Marketing Director has been created. Simon Foster, previously our Marketing Director, takes on the additional responsibility for UK Commercial sales and brings his extensive branded FMCG experience and skills to the role. In addition, the importance of our international development has been recognised by moving this to report directly into the CEO.
The Retail operating board will be chaired by a new role of Managing Director - Retail division. Geoff Kershaw, previously Retail Trading Director, steps up to this role, which brings together responsibility for the business performance of the entire division. A key accountability in the near term is to establish the desired relationships for this division as the largest customer of the "core" FMCG division.
A smaller Group Executive board has been established and will be accountable for overall Company strategy, business review and Group-wide policy.
In terms of Executive Board roles and responsibilities, Barry Bloomer takes the new role of Chief Operating Officer with immediate effect. He retains his responsibilities for all operations and supply chain activity and for the IT function. He now adds to this the responsibility for product development, providing him an entire view of the end-to-end product production process, from the development of product from marketing briefs, to manufacturing and distribution to the end customer.
Barry Bloomer relinquishes his responsibilities for UK Commercial and International sales, affording a flatter management structure of the FMCG division and for these key parts of the business to be led directly by the CEO.
Mike Killick's responsibilities remain unchanged though his title changes to Chief Financial Officer.
Summary and outlook
The overall performance of the business in the first half of this financial year was disappointing. Our Retail division has seen a remarkable turnaround over the past few years and we are proud of this achievement. Our FMCG division has hitherto demonstrated strong and consistent growth over many years, led by outstanding UK Commercial sales growth. Our strategy has been demonstrably correct and our previous results have evidenced this. It is in this context that we look back on recent events.
The Thorntons brand remains strong and is growing further in the eyes of our consumers. This setback in our UK Commercial sales is a reflection of a short-term issue in our new warehouse and of business relationships with two of our grocery partners. We continue to invest in developing our commercial sales capability and category management skills and our planned investment in systems, logistics and manufacturing capability to meet the needs of our customers. We understand the issues that we have recently faced and are confident that the actions we are taking and plan to take will go far in addressing them. Last autumn, in setting out our plans for the next three years, we identified the transformation of our core business to an FMCG focus as our biggest challenge. We are taking the first essential steps towards this goal and remain confident that this objective is the correct one.
The performance of our business in the first half was not as we planned; nevertheless it demonstrates management's agility in controlling and managing costs and activities. As we continue with the transformation of the business, so we seek further efficiencies. We have restructured executive responsibilities and have embarked upon the next phase of our organisation review. Whilst we continue to invest in the people, systems, insights and manufacturing assets needed to support our transformation, we anticipate that this process will deliver meaningful cost-efficiencies in the next financial year, albeit with some associated one-off costs of change.
The difficult trading conditions in our UK Commercial sales have persisted into the second half. Ahead of our key spring seasons, we continue to be cautious in our expectations for the full year. We maintain strict control of costs and production and remain confident of our strategy. We are well positioned to take advantage of an improvement in consumer spending.
We are confident that during 2015, by accelerating our transformation and adopting a clearly articulated shopper and category-led approach, we can re-establish the previously positive sales trajectory in our UK Commercial sales channel.
There is still much to do in delivering to our vision for the future of Thorntons. On behalf of the Board I would like to thank everyone who continues to contribute to our transformation: our hard-working and passionate colleagues, loyal franchisees, commercial partners and suppliers.
On behalf of the Board
Jonathan Hart
Chief Executive Officer
27 February 2015
Consolidated income statement
28 weeks ended 10 January 2015
Unaudited 28 weeks ended Unaudited 28 weeks ended Audited 52 weeks ended 10 January 2015 11 January 2014 28 June 2014 Note GBP'000 GBP'000 GBP'000 ------------------- ------ -------------------------- -------------------------- ------------------------ Revenue 6 128,236 139,746 222,437 Cost of sales (74,452) (81,702) (125,249) ---------------------- ------ -------------------------- -------------------------- ------------------------ Gross profit 53,784 58,044 97,188 Operating expenses - operating expenses before exceptional items (46,120) (50,079) (88,400) - exceptional items 7 - (988) (1,367) -------------------- ------ -------------------------- -------------------------- ------------------------ Total operating expenses (46,120) (51,067) (89,767) -------------------- ------ -------------------------- -------------------------- ------------------------ Other operating income 591 651 1,216 -------------------- ------ -------------------------- -------------------------- ------------------------ Operating profit - operating profit before exceptional items 8,255 8,616 10,004 - exceptional items 7 - (988) (1,367) -------------------- ------ -------------------------- -------------------------- ------------------------ Total operating profit 6 8,255 7,628 8,637 -------------------- ------ -------------------------- -------------------------- ------------------------ Net finance costs - net finance costs before exceptional items (1,706) (1,435) (2,493) - exceptional items - - (176) -------------------- ------ -------------------------- ------------------------ Net finance costs (1,706) (1,435) (2,669) -------------------- ------ -------------------------- -------------------------- ------------------------ Profit before taxation - profit before taxation and exceptional items 6,549 7,181 7,511 - exceptional items 7 - (988) (1,543) -------------------- ------ -------------------------- -------------------------- ------------------------ Total profit before taxation 6,549 6,193 5,968 -------------------- ------ -------------------------- -------------------------- ------------------------ Taxation - taxation before exceptional items (1,706) (1,070) (909) - exceptional items 7 - 98 213 -------------------- ------ -------------------------- -------------------------- ------------------------ Total taxation 8 (1,706) (972) (696) ---------------------- ------ -------------------------- -------------------------- ------------------------ Profit attributable to owners of the parent - profit attributable to owners of the parent before exceptional items 4,843 6,111 6,602 - exceptional items 7 - (890) (1,330) Total profit attributable to owners of the parent 4,843 5,221 5,272 ---------------------- ------ -------------------------- -------------------------- ------------------------ Earnings per share Basic 9 7.2p 7.8p 7.8p Diluted 9 6.5p 7.1p 7.1p ---------------------- ------ -------------------------- -------------------------- ------------------------
All activities in both the current and previous periods relate to continuing operations.
The notes below form an integral part of this condensed set of financial statements.
Consolidated statement of comprehensive income
28 weeks ended 10 January 2015
Unaudited 28 weeks Audited 52 weeks Unaudited 28 weeks ended 11 ended 28 ended 10 January 2015 January 2014 June 2014 GBP'000 GBP'000 GBP'000 ------------------------------ ----------------------- ------------------------ ----------------------- Profit for the period 4,843 5,221 5,272 ------------------------------- ----------------------- ------------------------ ----------------------- Other comprehensive (expense)/income: - actuarial loss recognised in the defined benefit pension scheme (9,472) (6,699) (6,710) - movement of deferred tax on pension liability 1,894 1,417 700 Total other comprehensive expense (7,578) (5,282) (6,010) -------------------------------- ----------------------- ------------------------ ----------------------- Total comprehensive expense for the financial period attributable to owners of the parent (2,735) (61) (738) ---------------------------------- ----------------------- ------------------------ -----------------------
The above items of other comprehensive income are not expected to be subsequently reclassified to profit and loss.
The notes below form an integral part of this condensed set of financial statements.
Consolidated statement of changes in equity
28 weeks ended 10 January 2015
Accumulated losses Total Ordinary shares Share premium restated* restated* GBP'000 GBP'000 GBP'000 GBP'000 At 29 June 2013 6,837 13,768 (2,326) 18,279 ------------------------- -------------------- -------------------- ------------------------- -------------------- Restatement of stock - - (1,243) (1,243) Effect of tax on the above - - 295 295 At 29 June 2013 restated 6,837 13,768 (3,274) 17,331 ------------------------- -------------------- -------------------- ------------------------- -------------------- Profit for the period - - 5,221 5,221 Other comprehensive expense - - (5,282) (5,282) ------------------------- -------------------- -------------------- ------------------------- -------------------- Total comprehensive expense for the 28 weeks ended 11 January 2014 - - (61) (61) ------------------------- -------------------- -------------------- ------------------------- -------------------- Transactions with owners: - new share capital issued 6 48 - 54 - share-based payment charge - - 116 116 - effect of tax on share option movement - - 319 319 At 11 January 2014 6,843 13,816 (2,900) 17,759 ------------------------- -------------------- -------------------- ------------------------- -------------------- At 29 June 2013 6,837 13,768 (2,326) 18,279 ------------------------- -------------------- -------------------- ------------------------- -------------------- Restatement of stock - - (1,243) (1,243) Effect of tax on the above - - 295 295 At 29 June 2013 restated 6,837 13,768 (3,274) 17,331 ------------------------- -------------------- -------------------- ------------------------- -------------------- Profit for the period - - 5,272 5,272 Other comprehensive expense - - (6,010) (6,010) ------------------------- -------------------- -------------------- ------------------------- -------------------- Total comprehensive expense for the 52 weeks ended 29 June 2013 - - (738) (738) ------------------------- -------------------- -------------------- ------------------------- -------------------- Transactions with owners: - new share capital issued 25 264 - 289 - share-based payment charge - - 297 297 - effect of tax on share option movement - - 241 241 At 28 June 2014 6,862 14,032 (3,474) 17,420 ------------------------- -------------------- -------------------- ------------------------- -------------------- At 28 June 2014 6,862 14,032 (3,474) 17,420 ------------------------- -------------------- -------------------- ------------------------- -------------------- Profit for the period - - 4,843 4,843 Other comprehensive expense: - actuarial loss - - (9,472) (9,472) - movement of deferred tax on pension liability - - 1,894 1,894 Other comprehensive expense - - (7,578) (7,578) ------------------------- -------------------- -------------------- ------------------------- -------------------- Total comprehensive expense for the 28 weeks ended 10 January 2015 - - (2,735) (2,735) ------------------------- -------------------- -------------------- ------------------------- -------------------- Transactions with owners: - new share capital issued 22 50 - 72 - share-based payment charge - - 5 5 - effect of tax on - - - - share option movement At 10 January 2015 6,884 14,082 (6,204) 14,762 ------------------------- -------------------- -------------------- ------------------------- --------------------
* Reported balances at 11 January 2014 and 28 June 2014 have been restated; see note 5 for details.
The notes below form an integral part of this condensed set of financial statements.
Consolidated balance sheet
as at 10 January 2015
Unaudited 10 January Unaudited 11 January Audited 28 June 2014 2015 2014 restated* restated* Note GBP'000 GBP'000 GBP'000 Assets Non-current assets Intangible assets 10 2,168 1,262 1,789 Property, plant and equipment 11 45,749 43,202 43,400 Deferred tax assets 4,498 3,104 2,816 52,415 47,568 48,005 ------------------------- ----- ------------------------- ------------------------ ------------------------- Current assets Inventories 42,954 34,506 47,573 Trade and other receivables 39,241 35,849 21,724 Cash and cash equivalents 13b 4,039 2,350 1,085 86,234 72,705 70,382 ------------------------- ----- ------------------------- ------------------------ ------------------------- Total assets 138,649 120,273 118,387 --------------------------- ----- ------------------------- ------------------------ ------------------------- Equity and liabilities Equity attributable to owners of the parent Ordinary shares 6,884 6,843 6,862 Share premium 14,082 13,816 14,032 Accumulated losses (6,204) (2,900) (3,474) Total equity 14,762 17,759 17,420 --------------------------- ----- ------------------------- ------------------------ ------------------------- Liabilities Non-current liabilities Borrowings 961 502 1,366 Retirement benefit obligations 12 36,672 28,311 27,659 Provisions for liabilities 1,411 1,957 1,908 Other non-current liabilities 1,873 2,042 1,934 40,917 32,812 32,867 ------------------------- ----- ------------------------- ------------------------ ------------------------- Current liabilities Trade and other payables 47,041 46,147 34,297 Borrowings 33,871 21,617 32,663 Current tax liabilities 986 842 129 Provisions for liabilities 1,072 1,096 1,011 82,970 69,702 68,100 ------------------------- ----- ------------------------- ------------------------ ------------------------- Total liabilities 123,887 102,514 100,967 --------------------------- ----- ------------------------- ------------------------ ------------------------- Total equity and liabilities 138,649 120,273 118,387 -------------------------- ----- ------------------------- ------------------------ -------------------------
* Reported balances at 11 January 2014 and 28 June 2014 have been restated; see note 5 for details.
The notes below form an integral part of this condensed set of financial statements.
Consolidated statement of cash flows
28 weeks ended 10 January 2015
Unaudited 28 weeks Unaudited 28 weeks Audited 52 weeks ended 10 January 2015 ended 11 January 2014 ended 11 January 2014 Note GBP'000 GBP'000 GBP'000 --------------------- ----- ------------------------ -------------------------- ------------------------- Cash flows from operating activities Cash generated from operations 13a 10,742 13,010 4,572 Corporate taxation paid (638) (464) (1,410) Net cash generated from operating activities 10,104 12,546 3,162 ----------------------- ----- ------------------------ -------------------------- ------------------------- Cash flows from investing activities Proceeds from sale of property, plant and equipment 43 - 4 Purchase of property, plant and equipment (6,153) (4,005) (6,164) Net cash used in investing activities (6,110) (4,005) (6,160) ----------------------- ----- ------------------------ -------------------------- ------------------------- Cash flows from financing activities Net proceeds from issue of ordinary shares 72 54 289 Interest paid (1,915) (831) (1,315) Capital element of finance lease repayments (497) (664) (1,041) Borrowings advanced/(repaid) 1,300 (7,300) 3,600 Net cash used in financing activities (1,040) (8,741) 1,533 ----------------------- ----- ------------------------ -------------------------- ------------------------- Net increase/(decrease) in cash and cash equivalents 2,954 (200) (1,465) Cash and cash equivalents at beginning of period 1,085 2,550 2,550 ------------------------ ----- ------------------------ -------------------------- ------------------------- Cash and cash equivalents at end of period 13b 4,039 2,350 1,085 ----------------------- ----- ------------------------ -------------------------- -------------------------
The notes below form an integral part of this condensed set of financial statements.
Notes to the half-year 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 principal activities of the Company and its subsidiaries during the period were the manufacturing, retailing and distribution of high-quality confectionery and other sweet foods.
The condensed and consolidated set of half-yearly financial statements ("the financial statements") for the 28 weeks ended 10 January 2015 was approved by the Directors on 27 February 2015. 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 28 June 2014 has been extracted from the Annual Report and Accounts, which were approved by the Board of Directors on 9 September 2014 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-year results for the current and comparative periods are unaudited. The auditors have carried out a review of these financial statements for the 28 weeks ended 10 January 2015 and their report is set out below.
2 Basis of preparation
This condensed set of financial statements for the 28 weeks ended 10 January 2015 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct 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 28 June 2014, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and on a going concern basis.
3 Accounting policies and risk
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 28 June 2014 as described in those annual financial statements.
Financial risk management and financial instruments
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
The financial statements do not include all the financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 28 June 2014. There have been no changes in the risk management department or in any risk management policies since the year end.
4 Estimates
The preparation of half-yearly financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed half-year financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the period ended 10 January 2015, with the exception of changes in estimates that are required in determining the provision for income taxes and disclosure of exceptional items.
5 Restatements
Following a review of overheads included within the valuation of inventory, it was identified that historically, a net GBP1.2 million of costs had been capitalised which do not meet the definition under IAS 2 'Inventories'. The prior year comparatives have been restated to correct for this error.
The effect of this restatement has been to reduce, for the prior period, the opening inventory valuation by a net GBP1.2 million. As this error arose in previous periods, there is no material impact on the income statement of any periods reported in these financial statements. There is also no impact on other comprehensive income, earnings per share or the cash flow statement as a result of this restatement.
The restatement has been made in accordance with IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors'. The effect of the restatement to the financial statements including the related impact on taxation is summarised in the table below:
28 weeks ended 11 28 weeks ended 11 28 weeks ended 11 28 weeks ended 11 January 2014 January 2014 January 2014 January 2014 Reported Restated Movement Reported Restated Movement GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ------------- ------------------ ------------------- ----------------------- ------------------- ------------------- ----------------------- Profit before tax 6,193 6193 - 5,968 5968 - -------------- ------------------ ------------------- ----------------------- ------------------- ------------------- ----------------------- Inventory 35,749 34,506 (1,243) 48,816 47,573 (1,243) Current tax liabilities 1,137 842 (295) 424 129 295 Accumulated losses (1,952) (2,900) (948) (2,526) (3,474) 948 -------------- ------------------ ------------------- ----------------------- ------------------- ------------------- -----------------------
6 Segmental reporting
The Executive Directors, considered to be the Chief Operating Decision Maker, review 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, the "Retail" division, which incorporates Own Stores, Franchise and Consumer Direct, and the "FMCG" division, encompassing the UK Commercial and international trading channels and manufacturing operations, have been identified. This latter segment has previously been referred to as "Sales & Operations" ("S&O"). One Commercial customer represents greater than 10% of Group revenue, with revenue in the period of GBP13.3 million (2014: GBP19.6 million).
The Executive assesses the performance of the operating segments based on a measure of earnings before interest and tax ("EBIT", equivalent to 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 located in the UK.
Unaudited Unaudited Audited 28 weeks 28 weeks 52 ended 10 ended 11 weeks ended January January 28 2015 2014 June 2014 ---------------------- ------------------------------------------- ------------------- -------------------- -------------------------------------------------- -------------------- --------------------- -------------------------------------------------- -------------------- Retail FMCG Central Total Retail FMCG Central Total Retail FMCG 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 65,519 62,717 - 128,236 69,149 70,597 - 139,746 111,396 111,041 - 222,437 ---------------- ---------------------- -------------------- --------------------- ------------------- -------------------- ------------------------ ------------------------ -------------------- --------------------- ------------------------ ------------------------ -------------------- Depreciation and amortisation* 820 1,811 586 3,217 898 2,396 636 3,930 1,681 4,069 1,104 6,854 ---------------- ---------------------- -------------------- --------------------- ------------------- -------------------- ------------------------ ------------------------ -------------------- --------------------- ------------------------ ------------------------ -------------------- Segment operating profit 5,821 10,333 - 16,154 4,967 12,783 - 17,750 4,220 22,147 - 26,367 Head Office costs (7,899) (9,134) (16,363) Exceptional items - - - - (988) - - (988) (1,167) - (200) (1,367) ---------------- ---------------------- -------------------- --------------------- ------------------- -------------------- ------------------------ ------------------------ -------------------- --------------------- ------------------------ ------------------------ -------------------- Operating profit 8,255 7,628 8,637 Net finance costs (1,706) (1,435) (2,669) Profit before taxation 6,549 6,193 5,968 ---------------- ---------------------- -------------------- --------------------- ------------------- -------------------- ------------------------ ------------------------ -------------------- --------------------- ------------------------ ------------------------ -------------------- Additions to non-current assets (other than deferred tax assets) 1,081 3,824 1,048 5,953 1,638 1,767 521 3,926 2,432 3,677 1,554 7,663 Total assets** 14,535 110,815 13,299 138,649 14,526 96,320 9,427 120,273 12,180 98,227 7,980 118,387 ---------------- ---------------------- -------------------- --------------------- ------------------- -------------------- ------------------------ ------------------------ -------------------- --------------------- ------------------------ ------------------------ --------------------
* Excluding exceptional impairment
** Reported balances at 11 January 2014 and 28 June 2014 have been restated; see note 5 for details
7 Exceptional items Unaudited 28 weeks ended Unaudited 28 weeks ended Audited 52 weeks ended 10 January 2015 11 January 2014 28 June 2014 GBP'000 GBP'000 GBP'000 Impairment and onerous lease charges - 988 1,167 Refinancing costs - - 376 Total exceptional items - 988 1,543 -------------------------- --------------------------- -------------------------- ------------------------- Tax charge attributable to exceptional items - (98) (213) Total exceptional items after tax - 890 1,330 --------------------------- --------------------------- -------------------------- -------------------------
Impairment and onerous lease charges
As a result of the performance of Retail Own Stores, impairment and onerous lease charges have been required in prior years. An onerous lease provision is made in respect of stores for which projected discounted cash flows inclusive of attributable overheads are insufficient to cover property costs up to the lease expiry date, held at the level of the projected shortfall. Additionally, where these discounted cash flows fall below the net book value of store assets, an impairment provision is made.
Refinancing
A new agreement with the Group's existing lenders was completed and signed in July 2014. This agreement runs to October 2018. The exceptional costs in the prior year are the associated professional fees, shown in Operating expenses on the Income statement, and the write-off of remaining unamortised arrangement fees for the previous facility, shown in Finance costs.
8 Taxation
Legislation to reduce the rate of corporation tax from 23% to 20% was included in the Finance Act 2013. As it had been substantively enacted at the balance sheet date, the Company's profits for this accounting period are taxed at an effective rate of 20.75% and will be taxed at 20% in the future. There have been no further indications of any changes in the rate of corporation tax.
The tax charge for the 28 weeks ended 10 January 2015 is based on a full year overall expected effective tax rate of 22.8% (full year 2014: 23.8%). The charge for the period is lower than this expected rate, primarily due to the impact of the remeasurement of deferred tax balances for the above.
The current year rate has been calculated by reference to the projected charge for the full year ending 27 June 2015 and reflects the mainstream corporation tax rate of 20.75%. 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.
9 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 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:
9 Earnings per share (continued)
Unaudited 28 weeks Unaudited 28 weeks Audited 52 weeks ended 10 January ended 11 January ended 28 June 2014 2015 2014 ---------------------------------------------------------- --------------------------------------------------------------------------------- ------------------------------------------------------------------------------ Basic Diluted Basic Diluted Basic Diluted earnings earnings earnings earnings earnings earnings per per per per per per Earnings share share Earnings share share Earnings share share GBP'000 GBP'000 GBP'000 -------------- ------------------ ------------------ ------------------ ------------------------- -------------------------- -------------------------- ----------------------- ------------------------- -------------------------- Profit before exceptional items 4,843 7.2p 6.5p 6,111 9.1p 8.3p 6,602 9.8p 8.9p Effect of exceptional items - - - (890) (1.3)p (1.2)p (1,330) (2.0)p (1.8)p Profit attributable to owners of the parent 4,843 7.2p 6.5p 5,221 7.8p 7.1p 5,272 7.8p 7.1p ----------------- ------------------ ------------------ ------------------ ------------------------- -------------------------- -------------------------- ----------------------- ------------------------- -------------------------- Audited Unaudited Unaudited 52 28 weeks 28 weeks weeks ended ended ended 10 January 11 January 28 June 2015 2014 2014 -------------- ------------------ ------------------ ------------------ ------------------------- -------------------------- -------------------------- ----------------------- ------------------------- -------------------------- Weighted average number of ordinary shares 67,279,391 66,957,509 67,053,102 Dilutive effect of shares from share options 7,543,648 6,541,612 7,155,508 Full diluted weighted average number of ordinary shares 74,823,039 73,499,121 74,208,610 --------------------------------------------------------- ------------------ ------------------------- -------------------------- -------------------------- ----------------------- ------------------------- --------------------------
10 Intangible assets
Unaudited computer software GBP'000 Cost At 28 June 2014 29,295 Additions at cost 784 Disposals - At 10 January 2015 30,079 ------------------------------------- -------------------------- Accumulated amortisation At 28 June 2014 27,506 Charge for the period 405 Disposals - At 10 January 2015 27,911 Net book amount at 10 January 2015 2,168 -------------------------------------- -------------------------- Net book amount at 28 June 2014 1,789 -------------------------------------- --------------------------
11 Property, plant and equipment
Unaudited property, plant and equipment GBP'000 Cost At 28 June 2014 179,243 Additions at cost 5,169 Disposals (2,356) At 10 January 2015 182,056 ------------------------------------- ---------------------- Accumulated amortisation At 28 June 2014 135,843 Charge for the period 2,812 Disposals (2,348) At 10 January 2015 136,307 Net book amount at 10 January 2015 45,749 -------------------------------------- ---------------------- Net book amount at 28 June 2014 43,400 -------------------------------------- ----------------------
No impairment charge for the period has been recognised within the depreciation charge for the period (2014: GBP552,000).
In addition to the above, at the period end date there were contracts placed for future capital expenditure not provided in the financial statements of GBP2,239,000 (2014: nil).
12 Retirement benefit obligations
The valuation of the Thorntons' Pension Scheme ("the Scheme") at 28 June 2014 has been updated on an actuarial basis applying current discount and inflation rate assumptions and incorporating the valuation of the plan assets at 10 January 2015 and payments made into the scheme during the period.
In August 2012, and as part of the Schedule of Contributions agreed with the Trustees to the Scheme, it was agreed that, in addition to an annual deficit contribution of GBP2.75 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 excluding VAT creditors for the years ending June 2013, 2014 and 2015; or
-- the amount of dividends paid to shareholders above the level of GBP1.5 million. 13 Cash flow from operating activities
a) Cash generated from operations
Unaudited 28 weeks ended Unaudited 28 weeks ended Audited 52 weeks ended 10 January 2015 11 January 2014 28 June 2014 GBP'000 GBP'000 GBP'000 ------------------------- ------------------------- ------------------------- ------------------------- Continuing operations Operating profit 8,255 7,628 8,637 Adjustments for: - depreciation and amortisation 3,217 4,482 7,450 - amortisation of Government grants received (10) (10) (20) - (profit)/loss on disposal of property, plant and equipment (35) 40 80 - share-based payment charge 5 116 297 -------------------------- ------------------------- ------------------------- ------------------------- Operating cash flow before working capital movements 11,432 12,256 16,444 Changes in working capital Decrease/(increase) in inventories 4,619 3,241 (9,826) Increase in trade and other receivables (16,749) (17,373) (3,445) Increase in trade and other payables 12,958 16,353 4,231 (Decrease)/increase in provisions (437) 187 (42) Increase in post-employment benefit obligations (1,081) (1,654) (2,790) ---------------------------- ------------------------- ------------------------- ------------------------- Cash generated from operations 10,742 13,010 4,572 --------------------------- ------------------------- ------------------------- -------------------------
b) Cash and cash equivalents for the statement of cash flows
Unaudited Unaudited 28 weeks ended 28 weeks ended Audited 52 10 January 11 January weeks ended 2015 2014 28 June 2014 GBP'000 GBP'000 GBP'000 --------------------------- --------------------- --------------------- --------------------- Cash and cash equivalents at end of period 4,039 2,350 1,085 ----------------------------- --------------------- --------------------- ---------------------
14 Reconciliation of movement in net debt
Unaudited 28 weeks ended Unaudited 28 weeks ended Audited 52 weeks ended 10 January 2015 11 January 2014 28 June 2014 GBP'000 GBP'000 GBP'000 ------------------------ -------------------------- -------------------------- ------------------------ Increase/(decrease) in cash and cash equivalents 2,954 (200) (1,465) Cash flows from (decrease)/increase in debt (803) 7,964 (2,559) -------------------------- -------------------------- -------------------------- ------------------------ Movement in net debt in the period 2,151 7,764 (4,024) Inception of new finance leases - - (1,387) Net debt at beginning of period (32,944) (27,533) (27,533) -------------------------- Net debt at end of period (30,793) (19,769) (32,944) ------------------------- -------------------------- -------------------------- ------------------------
15 Related-party transactions
There are no related-party transactions requiring disclosure in these financial statements.
16 Seasonality
Sales are subject to seasonal fluctuations, with peak Christmas demand in the second quarter of the year. In the 52 weeks ended 28 June 2014, the 28 week period to 11 January 2014 represented 63% of annual sales.
17 Principal risks and uncertainties
Key risks are reviewed by the Executive Directors and Senior Management. The assessment of risks on the basis of likelihood and potential impact, together with the controls and actions to manage or mitigate them, are reviewed by the Audit Committee and Board. The key risks and uncertainties facing the business are considered to be as follows:
-- economic and industry risks; -- operational risks; and -- people risks.
These risks and uncertainties are unchanged from those as at 28 June 2014, and further details on them are set out in our 2014 Annual Report and Accounts. This is available on our website at investors.thorntons.co.uk.
Statement of Directors' responsibility
The Directors confirm that these condensed half-yearly financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim financial reporting', as adopted by the European Union and that the half-yearly management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report.
The Directors of Thorntons PLC are listed in the Thorntons PLC Annual Report and Accounts 2014.
A list of current Directors is maintained on the Thorntons PLC website: www.thorntons.co.uk.
On behalf of the Board
Jonathan Hart Mike Killick Chief Executive Officer Chief Financial Officer
27 February 2015
This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, Directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this document and, unless otherwise required by applicable law, the Company undertakes no obligation to update or revise these forward-looking statements. Nothing in this document should be construed as a profit forecast. The Company and its Directors accept no liability to third parties in respect of this document save as would arise under English law.
Independent review report to Thorntons PLC
Report on the half-year financial statements
Our conclusion
"We have reviewed the half-year financial statements, defined below, in the Half-yearly Report of Thorntons PLC for the 28 weeks ended 10 January 2015. Based on our review, nothing has come to our attention that causes us to believe that the half-year financial statements are 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 Conduct Authority.
This conclusion is to be read in the context of what we say in the remainder of this report. "
What we have reviewed
The half-year financial statements, which are prepared by Thorntons PLC, comprise:
-- the consolidated statement of financial position as at 10 January 2015;
-- the consolidated income statement and consolidated statement of comprehensive income for the period then ended;
-- the consolidated statement of cash flows for the period then ended; -- the consolidated statement of changes in equity for the period then ended; and -- the explanatory notes to the half-year financial statements.
As disclosed in note 2, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The half-year financial statements included in the Half-yearly Report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
What a review of half-year financial statements involves
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.
We have read the other information contained in the Half-yearly Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the half-year financial statements.
Responsibilities for the half-year financial statements and the review
Our responsibilities and those of the directors
The Half-yearly Report, including the half-year financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half-yearly Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on the half-year financial statements in the Half-yearly Report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, 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.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
27 February 2015
Notes:
(a) The maintenance and integrity of the Thorntons PLC website 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 financial statements since they were initially presented on the website.
(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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