"Thorntons PLC Interim Report 2009"
Thorntons PLC Interim Report 2009 About Thorntons Established by Joseph William Thornton in 1911, Thorntons today is a £200m+ turnover company with 381 shops and cafés and 261 franchises, together with internet, mail order and commercial services. Financial summary 2009 2008 Change Revenue £128.4m £126.7m 1.3% Profit before tax £7.3m £11.9m Down 39.0% Operating cash flow before working capital movements £14.9m £19.0m Down 21.8% Underlying earnings per share* 7.5p 12.5p Down 39.6% Basic earnings per share 3.3p 12.5p Down 73.8% Interim dividend per share 1.2p 1.95p Down 0.75p Net debt £16.3m £11.3m £5.0m Gearing 43.8% 27.4% 16.4% * Underlying earnings per share excludes the impact of the one‑off deferred tax charge described in note 5. Financial calendar Interim dividend payable 30 April 2009 Accounting period end (52 weeks) 27 June 2009 Final results announced September 2009 Annual Report circulated September 2009 Annual General Meeting October 2009 Final dividend payable November 2009 IFC About Thorntons IFC Financial summary IFC Financial calendar 01 Interim management report 03 Consolidated income statement 04 Consolidated statement of recognised income and expense 05 Consolidated balance sheet 06 Consolidated cash flow statement 07 Notes to the interim financial statements 15 Responsibility statement A 16 uditors’ report on review of condensed consolidated half‑yearly financial information IBC Board of Directors and principal advisors Interim management report Sales for the 28‑week period to The new store concept that was Unfortunately our corporate sales to 10 January 2009 were £128.4m trialled in five stores performed better companies that use our products as (2008: £126.7m), which represents than the rest of the estate. However, gifts for their employees or customers growth of 1.3%. Profit before tax there are further improvements to have declined as most companies decreased to £7.3m (2008: £11.9m) be made before consideration is reduce any discretionary spend largely due to the poor trading in our given to rolling the concept out due to the credit crunch. own stores during the period before across the own store portfolio. The overall impact has been Christmas. Sales to our commercial Our new own store EPOS system modest growth of 1.3% for total customers, to our franchisees and from was successfully implemented before Thorntons Direct sales but margins our website all delivered growth despite Christmas and contributed to improving have improved by 1.5%. the tough conditions. customer service by significantly reducing Margins and operating expenses Our strategy of product innovation, transaction times and therefore queuing. Gross margins declined from improving the in‑store environment It also delivered on all the functional 51.5% of sales last year to 49.2% and customer service remains as benefits we had targeted. this year. Own store promotional relevant now as it has been but During the period we opened discount levels were significantly with much greater emphasis on a net three new stores and now higher than last year and achieved careful cost management to improve have 381 own stores. the desired result of clearing retail our profit performance in the short stock before Christmas. Opportunities term. Whilst the retail environment FRanchISe were also taken to increase volumes remains extremely challenging we Franchise sales increased by 3.7% of non‑seasonal commercial sales are confident that Thorntons will to £9.9m in the half year, benefiting and there was a continued shift in emerge from the current conditions from the same innovation as our own channel mix due to the higher relative a stronger, more profitable business. stores and from increased distribution growth of commercial sales. Sales price The Board has decided to pay a – we added a net nine new franchise increases broadly covered raw material dividend of 1.2p (2008: 1.95p). stores during the period increasing and manufacturing cost increases. the number of stores to 261. Sales Operating expense growth was Own StOReS cOmmeRcIal contained at 5.2% and included Like for like sales in our own stores Commercial sales grew by 8.9% the cost effects of inflation, a larger suffered from the widely reported to £32.4m despite the loss of the retail estate, higher utility costs reduction in footfall on the High Street Woolworths business. For perspective and increased investment in from mid October to mid December the Woolworths business represented retail merchandising. and from the very high level of £4.6m sales during the full year discounting prevalent from most in 2007/08 with over 60% in the Other operating income increased by retailers during that time. Thorntons’ first half. The difficulties faced by 36.1%, which is due entirely to growth policy of offering discounts, in line Woolworths were anticipated and in the licensing activities of the Group with other retailers, meant that all our receivables were well managed with its two main licensees. Christmas stock was cleared before resulting in a small bad debt of Financial position the end of the period. £150,000 when Woolworths Net debt at the end of the period went into administration. Product innovation continues to play was £16.3m including £9.2m an important role. Thorntons Moments, The Thorntons brand continues of finance leases compared with net launched in February 2008, has been to perform well in all our other debt at the end of the corresponding a great success and contributed sales major retail customers. period last year of £11.3m, which of £4.8m in the first half year. Of this, included £9.5m of finance leases. thORntOnS DIRect £2.6m was due to sales in Thorntons The non‑finance lease element of Sales to consumers, either through stores and £2.2m to commercial net debt falls well within the Group’s our call centre or website, continue sales. Similarly, our new tablet bars, facilities of £50.0m, which are to perform well, driven in particular launched in September in our own committed until July 2010. by our customer‑friendly website stores, contributed nearly £0.8m where sales are up 26% versus in the three months to Christmas. last year. Thorntons PLC Interim Report 2009 01 Interim management report continued Taxation the 2008 Annual Report are still Lysanne, Hannah and Sarah have The total tax charge of £5.1m applicable. In the current economic already made a significant contribution includes a one‑time deferred tax climate we are also devoting more in their new roles and I am delighted charge of £2.9m, which is required resources to managing the Group’s to have them as members of the to implement the change in tax law credit risk whether from financial Executive Team. which phases out industrial buildings institutions, customers or suppliers. Outlook allowances. The underlying tax charge Board changes Thorntons is continuing to amounts to 30.9% of profit before tax In August 2008 Dominic Prendergast, make progress despite the current and is higher than the statutory rate Retail Director, stepped down from market conditions. of 28.0% due mainly to depreciation the Board and left the Company to on assets for which the Group receives Our focus on customer service pursue other interests. In December, no tax allowances and the effect on the combined with our strong operational Martin Davey resigned as a current year tax charge of the phasing platform and cost initiatives position us Non‑Executive Director due to out of industrial buildings allowances. well to take advantage of opportunities increasing commitments elsewhere. to improve performance in the Pension scheme The Board expresses its thanks to second half of the financial year. The Group is currently in the process both Dominic and Martin for their These include a three week longer of consulting with its employees on contributions and wishes them every selling season due to a late Easter, changing the defined benefit final success in the future. Paul Wilkinson increased selling opportunities following salary pension scheme to a career was appointed as the Company’s the closure of Woolworths and average (or CARE) defined benefit Senior Independent Director following improved manufacturing productivity scheme by the end of the current Martin Davey’s resignation and versus last year when we incurred higher financial year. If such a change were Diana Houghton joined the Board as costs due to the early Easter. to be implemented there would be a an independent Non‑Executive Director one‑time credit to the income statement and will take over as Chair of the In the longer term we also expect this year of approximately £1.8m based Audit Committee. Diana is a corporate to see benefits arising from improved on the discount and inflation rate development and strategy specialist deals in the property market at the assumptions used to calculate the who has broad experience of the time of lease renewals. IAS 19 retirement benefit obligation consumer goods and leisure retail With prudent cost management, as at 10 January 2009. Clearly, any sectors and extensive corporate product innovation and keeping change in those assumptions at the finance expertise. customers at the forefront of our time of implementing the change Management changes thinking, I am confident that we will to CARE will affect the amount Lysanne McCallion, formerly Head emerge from the current conditions of the one‑time credit. of Thorntons Direct, was promoted a stronger, more profitable business. Principal risks and uncertainties to succeed Dominic Prendergast as Our 2008 Annual Report (pages 22 Director of Retail and Hannah Legg, and 23) outlines our assessment of previously Head of Commercial Sales, the principal risks and uncertainties succeeded Lysanne as Head of facing the business together with Thorntons Direct. Mike Davies the processes which are in place Sarah Riley joined Thorntons as Director Chief Executive to monitor and mitigate those risks of HR in August 2008 having spent 17 February 2009 where possible. Looking forward the previous 14 years at Scottish and to the second half of the current Newcastle where she was most recently financial year, we believe that the Head of HR for Group Operations. risks and processes identified in 02 Thorntons PLC Interim Report 2009 Consolidated income statement 28 weeks ended 10 January 2009 Unaudited Unaudited Audited 28 weeks 28 weeks 52 weeks ended ended ended 10 January 12 January 28 June 2009 2008 2008 Note £’000 £’000 £’000 Revenue 128,363 126,671 208,122 Cost of sales (65,147) (61,388) (103,017) Gross profit 63,216 65,283 105,105 Operating expenses (55,421) (52,690) (95,918) Other operating income 697 512 1,139 Operating profit 8,492 13,105 10,326 Finance income 8 22 45 Finance costs (1,216) (1,189) (1,901) Profit before taxation 7,284 11,938 8,470 Taxation 5 (5,104) (3,630) (2,402) Profit attributable to equity shareholders 2,180 8,308 6,068 Earnings per share Underlying* 6 7.5p 12.5p 9.1p Basic 6 3.3p 12.5p 9.1p Diluted 6 3.3p 12.3p 9.0p * Underlying earnings per share excludes the impact of the one‑off deferred tax charge described in note 5. All activities in both the current and previous year relate to continuing operations. Thorntons PLC Interim Report 2009 03 Consolidated statement of recognised income and expense 28 weeks ended 10 January 2009 Unaudited Unaudited Audited 28 weeks 28 weeks 52 weeks ended ended ended 10 January 12 January 28 June 2009 2008 2008 £’000 £’000 £’000 Actuarial (loss)/gain recognised in the defined benefit pension scheme (93) 1,679 (2,148) Movement of deferred tax on pension liability 28 (470) 601 Profit attributable to equity shareholders 2,180 8,308 6,068 Total recognised income and expense for the financial period 2,115 9,517 4,521 The notes on pages 7 to 14 form an integral part of this condensed set of financial statements. 04 Thorntons PLC Interim Report 2009 Consolidated balance sheet 28 weeks ended 10 January 2009 Unaudited Unaudited Audited as at as at as at 10 January 12 January 28 June 2009 2008 2008 Note £’000 £’000 £’000 Assets Non‑current assets Intangible assets 8 5,487 5,192 4,786 Property, plant and equipment 9 64,754 65,740 64,084 70,241 70,932 68,870 Current assets Inventories 24,732 19,047 24,307 Trade and other receivables 19,111 19,723 15,155 Cash and cash equivalents 13 5,412 2,088 1,088 49,255 40,858 40,550 Liabilities Current liabilities Trade and other payables (36,017) (33,633) (22,014) Borrowings 13 (15,999) (7,087) (24,057) Current tax liabilities (2,344) (3,215) (984) Provisions for liabilities (192) (160) (122) (54,552) (44,095) (47,177) Net current liabilities (5,297) (3,237) (6,627) Non‑current liabilities Borrowings 13 (5,716) (6,317) (5,295) Deferred tax liabilities (5,840) (4,158) (2,750) Retirement benefit obligations 10 (15,852) (12,993) (15,965) Other non‑current liabilities (2,980) (2,368) (2,612) Provisions for liabilities (532) (567) (586) (30,920) (26,403) (27,208) Net assets 34,024 41,292 35,035 Shareholders’ equity Ordinary shares 11 6,835 6,830 6,835 Share premium 11 13,752 13,707 13,750 Retained earnings 11 13,437 20,755 14,450 Total equity attributable to parent’s equity holders 34,024 41,292 35,035 The notes on pages 7 to 14 form an integral part of this condensed set of financial statements. Thorntons PLC Interim Report 2009 05 Consolidated cash flow statement 28 weeks ended 10 January 2009 Unaudited Unaudited Audited 28 weeks 28 weeks 52 weeks ended ended ended 10 January 12 January 28 June 2009 2008 2008 Note £’000 £’000 £’000 Cash flows from operating activities 12a 23,729 23,752 11,481 Cash flows from investing activities Proceeds from sale of property, plant and equipment 45 275 262 Purchase of property, plant and equipment (4,675) (3,318) (5,680) Net cash used in investing activities (4,630) (3,043) (5,418) Cash flows from financing activities Net proceeds from issue of ordinary shares 2 175 223 Net interest paid (1,233) (1,157) (1,794) Capital element of finance lease repayments (1,811) (2,210) (3,712) Borrowings (repaid)/advanced (8,496) (17,000) 2,000 Dividends paid (3,237) (3,235) (4,550) Net cash used in financing activities (14,775) (23,427) (7,833) Net (decrease)/increase in cash and cash equivalents 4,324 (2,718) (1,770) Cash and cash equivalents at beginning of period 1,088 2,858 2,858 Cash and cash equivalents at end of period 12b 5,412 140 1,088 The notes on pages 7 to 14 form an integral part of this condensed set of financial statements. 06 Thorntons PLC Interim Report 2009 Notes to the interim financial statements 1 General information The Company is a limited liability company incorporated and domiciled in the UK. The address of its registered office is Thornton Park, Somercotes, Alfreton, Derbyshire DE55 4XJ. The Company is listed on the London Stock Exchange. The condensed set of financial statements for the 28 weeks ended 10 January 2009 were approved by the Directors on 17 February 2009. These condensed financial statements do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information contained in this condensed set of financial statements in respect of the 52 weeks ended 28 June 2008 has been extracted from the Annual Report and Accounts, which were approved by the Board of Directors on 9 September 2008 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 237 of the Companies Act 1985. 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 10 January 2009 and their report is set out on page 16. 2 Basis of preparation This condensed set of financial statements for the 28 weeks ended 10 January 2009 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. This condensed set of financial statements should be read in conjunction with the annual financial statements for the year ended 28 June 2008, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. 3 Accounting policies The accounting policies adopted are consistent with those of the annual financial statements for the year ended 28 June 2008, 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 27 June 2009: IFRIC 11 ‘IFRS 2 – Group and treasury share transactions’. This is not expected to have a significant impact on the Group; and IFRIC 12 ‘Service concession arrangements’. This is not expected to have a significant impact on the Group. The following new standards, amendments to standards and interpretations have been issued, but are not effective for the year ending 27 June 2009 and have not been early adopted: IFRS 8 ‘Operating segments, basis of organisation, types of products’. This standard replaces IAS 14. The new standard uses a “management approach”, under which segment information is presented on the same basis as that used for internal reporting purposes. Work is currently being undertaken to understand how this standard will affect the Group; and IAS 1 (Amendment) ‘Presentation of financial statements’. This will affect the Group by means of presentation of the primary statements only. Thorntons PLC Interim Report 2009 07 Notes to the interim financial statements continued 3 Accounting policies continued The following new standards, amendments to standards and interpretations have been issued but are not effective for the year ending 27 June 2009, have not been early adopted and are not expected to have a significant impact on the Group: IFRS 3 (Amendment) ‘Business combinations’; IAS 23 (Amendment) ‘Borrowing costs’; IAS 27 (Amendment) ‘Consolidated and separate financial statements’; IAS 32 (Amendment) ‘Financial instruments: Presentation’ and IAS1 (Amendment) ‘Presentation of financial statements’; IFRIC 13 ‘ Customer loyalty programmes relating to IAS 18, Revenue’; IFRIC 14 ‘The limit on a defined benefit asset, minimum funding requirements and their interaction’; IFRIC 15 ‘Agreements for the construction of real estate’; IFRIC 16 ‘Hedges of a net investment in a foreign operation’; IFRIC 17 ‘Distributions of non‑cash assets to owners’; and IFRIC 18 ‘Transfers of assets from customers’. 4 Segmental reporting The Group’s operations consist of the vertically integrated manufacture, distribution and retail of confectionery products. Given this level of integration, the Directors consider that there is only one business segment and therefore the disclosures are given in the primary financial statements or related notes. Revenue arises from UK operations and therefore no separate reporting for geographical segments is required. 5 Taxation The tax charge including deferred tax for the 28 weeks ended 10 January 2009 is based on a full year overall expected tax rate of 70.1% (full year 2008: 30.4%), this increase being due to the one off charge of £2.9m to deferred tax recognised in the year as a result of the withdrawal of industrial buildings allowances. Effective £’000 tax rate Tax charge on profit on ordinary activities before taxation 2,251 30.9% Deferred tax charge resulting from withdrawal of industrial buildings allowances 2,853 39.2% Total tax charge for the 28 weeks ended 10 January 2009 5,104 70.1% The current year rate has been calculated by reference to the projected charge for the full year ending 27 June 2009 and reflects the mainstream corporation tax rate of 28%. The current year’s forecast current tax charge also reflects the changes to capital allowances legislation effective from 1 April 2008. 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. 08 Thorntons PLC Interim Report 2009 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 10 January 2009 12 January 2008 28 June 2008 Basic Diluted Basic Diluted Basic Diluted earnings earnings earnings earnings earnings earnings Earnings per per Earnings per per Earnings per per £’000 share share £’000 share share £’000 share share Profit before the deferred tax change arising from the withdrawal of industrial buildings allowances 5,033 7.5p* 7.5p* 8,308 12.5p 12.3p 6,068 9.1p 9.0p Deferred tax arising from the withdrawal of industrial buildings allowances (2,853) (4.2p) (4.2p) — — — — — — Profit attributable to equity shareholders 2,180 3.3p 3.3p 8,308 12.5p 12.3p 6,068 9.1p 9.0p * Underlying earnings per share. Unaudited Unaudited Audited 28 weeks 28 weeks 52 weeks ended ended ended 10 January 12 January 28 June 2009 2008 2008 Weighted average number of ordinary shares 66,938,628 66,705,674 66,810,143 Dilutive effect from share options 45,834 627,242 456,486 Fully diluted weighted average number of ordinary shares 66,984,462 67,332,916 67,266,629 Thorntons PLC Interim Report 2009 09 Notes to the interim financial statements continued 7 Ordinary dividends Unaudited Unaudited Audited 28 weeks 28 weeks 52 weeks ended ended ended 10 January 12 January 28 June 2009 2008 2008 £’000 £’000 £’000 Final dividend paid for the 52 weeks ended 28 June 2008 of 4.85p (53 weeks ended 30 June 2007: 4.85p) 3,237 3,235 3,235 Interim dividend paid in respect of the 52 weeks ended 28 June 2008 of 1.95p — — 1,315 Amounts recognised as distributions to equity holders 3,237 3,235 4,550 The Directors have approved an interim dividend of 1.2p per share in respect of the 28 weeks ended 10 January 2009. This will be paid on 30 April 2009 to shareholders who are on the register of members on 27 March 2009. The shares will be quoted ex‑dividend on 25 March 2009. 8 Intangible assets (unaudited) Computer software £’000 Cost At 28 June 2008 23,570 Additions at cost 1,845 Reclassifications to tangible assets (2) Disposals (100) At 10 January 2009 25,313 Accumulated depreciation and amortisation At 28 June 2008 18,784 Charge for the period 1,142 Disposals (100) At 10 January 2009 19,826 Net book amount at 10 January 2009 5,487 Net book amount at 28 June 2008 4,786 10 Thorntons PLC Interim Report 2009 9 Tangible assets (unaudited) Property, plant and equipment £’000 Cost At 28 June 2008 178,340 Additions at cost 5,677 Reclassifications from intangible assets 2 Disposals (4,331) At 10 January 2009 179,688 Accumulated depreciation and amortisation At 28 June 2008 114,256 Charge for the period 4,994 Disposals (4,316) At 10 January 2009 114,934 Net book amount at 10 January 2009 64,754 Net book amount at 28 June 2008 64,084 10 Retirement benefit obligations The valuation of the Thorntons’ Pension and Life Assurance Scheme at 28 June 2008 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 2009. This has led to a decrease in the net deficit of £0.1m from 28 June 2008. Thorntons PLC Interim Report 2009 11 Notes to the interim financial statements continued 11 Statement of changes in shareholders’ equity (unaudited) Share Share Retained capital premium earnings Total £’000 £’000 £’000 £’000 At 30 June 2007 6,811 13,551 14,524 34,886 Total recognised income and expense — — 9,517 9,517 Cash flow hedges — — (8) (8) New share capital issued 19 156 — 175 Share‑based payment credit — — 223 223 Effect of tax on share option movement — — (284) (284) Movement in investment in own shares — — 18 18 Dividends — — (3,235) (3,235) At 12 January 2008 6,830 13,707 20,755 41,292 At 28 June 2008 6,835 13,750 14,450 35,035 Total recognised income and expense — — 2,115 2,115 New share capital issued — 2 — 2 Share‑based payment credit — — 286 286 Effect of tax on share option movement — — (177) (177) Dividends — — (3,237) (3,237) At 10 January 2009 6,835 13,752 13,437 34,024 12 Thorntons PLC Interim Report 2009 12 Cash flow from operating activities a caSh geneRateD FROm OpeRatIOnS Unaudited Unaudited Audited 28 weeks 28 weeks 52 weeks ended ended ended 10 January 12 January 28 June 2009 2008 2008 £’000 £’000 £’000 Continuing operations Operating profit 8,492 13,105 10,326 Adjustments for: Depreciation and amortisation 6,136 5,880 11,246 Amortisation of Government grants received — — (21) Profit on disposal of property, plant and equipment (30) (180) (143) Share‑based payment charge 286 223 447 Operating cash flow before working capital movements 14,884 19,028 21,855 Changes in working capital Increase in inventories (425) (845) (6,105) Increase in trade and other receivables (3,800) (7,091) (2,520) Increase in payables 14,063 14,278 2,309 Increase in provisions 16 68 49 Decrease in post‑employment benefits (206) (745) (1,600) Cash generated from operations before taxation 24,532 24,693 13,988 Corporate taxation (803) (941) (2,507) Cash flows from operating activities 23,729 23,752 11,481 b caSh anD caSh equIvalentS FOR the caSh FlOw Statement Unaudited Unaudited Audited 28 weeks 28 weeks 52 weeks ended ended ended 10 January 12 January 28 June 2009 2008 2008 £’000 £’000 £’000 Cash and cash equivalents 5,412 2,088 1,088 Bank overdraft — (1,948) — Net position 5,412 140 1,088 Thorntons PLC Interim Report 2009 13 Notes to the interim financial statements continued 13 Reconciliation of movement in net debt Unaudited Unaudited Audited 28 weeks 28 weeks 52 weeks ended ended ended 10 January 12 January 28 June 2009 2008 2008 £’000 £’000 £’000 Increase/(decrease) in cash and cash equivalents 4,324 (2,718) (1,770) Cash flows from decrease in debt 10,307 19,210 1,712 Change in net debt resulting from cash flow 14,631 16,492 (58) Inception of new finance leases (2,670) (1,397) (1,795) Movement in net debt in the period 11,961 15,095 (1,853) Net debt at beginning of period (28,264) (26,411) (26,411) Net debt at end of period (16,303) (11,316) (28,264) 14 Related party transactions There are no related party transactions requiring disclosure in the condensed set of financial statements. 15 Seasonality Sales are subject to seasonal fluctuations, with peak Christmas demand in the second quarter of the year. In the year ended 28 June 2008, the 28 weeks to 12 January 2008 represented 61% of annual sales. 14 Thorntons PLC Interim Report 2009 Responsibility statement The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, 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. On behalf of the Board Mike Davies John Wall Chief Executive Finance Director 17 February 2009 Thorntons PLC Interim Report 2009 15 Auditors’ report on review of condensed 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 10 January 2009, which comprises the consolidated income statement, consolidated statement of recognised income and expense, consolidated balance sheet as at 10 January 2009, consolidated cash flow statement and the related 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. As disclosed in note 2, the annual financial statements of Thorntons PLC 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 10 January 2009 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 and Registered Auditors Leeds 17 February 2009 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. 16 Thorntons PLC Interim Report 2009 Board of Directors and principal advisors Chairman Registrars JOhn vOn SpReckelSen capIta RegIStRaRS Northern House Executive Directors Woodsome Park mIke DavIeS Fenay Bridge chIeF executIve Huddersfield HD8 0LA BaRRy BlOOmeR Tel: 0870 1623131 OpeRatIOnS DIRectOR Fax: 01484 600911 JOhn wall www.capitaregistrars.com FInance DIRectOR peteR wRIght Principal bankers maRketIng DIRectOR BaRclayS Bank plc FORtIS Bank Sa/nv uk BRanch Non‑Executive Directors hSBc plc maRtIn Davey (ReSIgneD 5 DecemBeR 2008) llOyDS tSB Bank plc paul wIlkInSOn DIana hOughtOn (appOInteD 5 DecemBeR 2008) Financial advisors and corporate brokers DReSDneR kleInwORt Secretary and registered office maRk R. henSOn FcIS Financial PR advisors Thornton Park caRDew gROup lImIteD Somercotes Derbyshire DE55 4XJ Tel: 0845 075 7565 www.thorntons.co.uk Registered No. 174706 Independent auditors pRIcewateRhOuSecOOpeRS llp Chartered Accountants and Registered Auditors Leeds Thorntons’ commitment to environmental issues is reflected in this Interim Report which has been printed on Satimatt Green, comprising 50% recycled fibre and 50% virgin fibre certified by the FSC and produced at mills with ISO 14001 environmental management systems. This document was printed by APG using soya‑based inks and water‑soluble lacquers and all production processes used make the minimum demand on the environment and produce the minimum amount of waste. Both the printer and the paper mill are registered to ISO 14001 and FSC approved. Thorntons PLC Thorntons Direct For information on thornton park tel: 0845 121 1911 Investor Relations visit Somercotes www.thorntons.co.uk www.thorntons.co.uk alfreton Derbyshire De55 4xJ tel: 0845 075 7565 www.thorntons.co.uk