Essay on Procter and Gamble

Interim Results Presentation
3 March 2014

Agenda

Jonathan Hart, Chief Executive

Mike Killick, Finance Director

Jonathan Hart

Barry Bloomer, Managing Director FMCG Division

Jonathan Hart
1

Overview
Further good progress in transforming
Thorntons
Overall sales increased by 4.5% to £139.7m
Both operating divisions performing well
-

FMCG divisional sales increased by 14.5%
Retail like-for-like increased by 2.1%

Profit before tax and exceptional items up
47.3% to £7.2m
Pre-exceptional EBIT margin increased to 6.2%

Our strategy continues to deliver and maintains momentum

2

Mike Killick
Finance Director

3

Key financials

H1 FY14
£m

H1 FY13*
£m

Change

139.7

133.7

+4.5%

8.6

6.5

+32.4%

6.2%

4.9%

+1.3%pts

Pre-exceptional PBT

7.2

4.9

+47.3%

Pre-exceptional EBITDA

13.1

11.3

+15.7%

Basic EPS

7.8p

4.5p

+73.3%

Cash Generated From Operations

13.0

15.0

(13.3)%

Net Debt (borrowings & finance leases)

19.8

17.5

(13.0)%

Net Assets

20.8

14.7

+31.8%

95.2%

119.1%

+23.9%pts

Revenue
Pre-exceptional Operating Profit/EBIT
Pre-exceptional Operating Profit/EBIT Margin

Gearing Ratio

* The adoption of IAS19 (revised) is now mandatory and as a result 2013 numbers have been restated.

4

Profit & loss account (i)

H1 FY14
£m

H1 FY13*
£m

Change
£m

Revenue

139.7

133.7

+6.0

Cost of Sales

(81.7)

(78.0)

(3.7)

Gross Profit

58.0

55.7

+2.3

Gross Profit

41.5%

41.6%

(0.1%pts)

Post-exceptional Operating Expenses

(51.1)

(50.6)

(0.5)

Other Operating Income

0.7

0.7

0.0

Reported Operating Profit/EBIT

7.6

5.8

+1.8

Operating Profit/EBIT %

5.5%

4.3%

+1.2%

Add Back Exceptional Items

1.0

0.7

+0.3

Pre-exceptional Operating Profit/EBIT

8.6

6.5

+2.1

Pre-exceptional Operating Profit/EBIT%

6.2%

4.9%

+1.3%

* The adoption of IAS19 (revised) is now mandatory and as a result 2013 numbers have been restated.

5

Profit & loss account (ii)

H1 FY14
£m

H1 FY13*
£m

Change
£m

Reported Operating Profit/EBIT

7.6

5.8

+1.8

Net Finance Costs

(1.4)

(1.6)

+0.2

Reported PBT

6.2

4.2

+2.0

Taxation

(1.0)

(1.2)

+0.2

Retained Profit

5.2

3.0

+2.2

Lower interest cost burden
Lower tax rate
Increased earnings for third consecutive half

* The adoption of IAS19 (revised) is now mandatory and as a result 2013 numbers have been restated.

6

Divisional revenue participation

H1 FY14

H1 FY14

H1 FY13*

H1 FY13*

H1 FY12*

H1 FY12

% mix

46.1%

£m
48.3

% mix

50.5%

£m
61.6

% mix

FMCG Revenue

£m
70.6

Retail Revenue

69.1

49.5%

72.1

53.9%

81.7

62.8%

Total Revenue

139.7

100%

133.7

100%

130.0

100%

37.2%

As previously guided, FMCG now largest division by statutory revenues
This will also be the case for full year FY14

* The adoption of IAS19 (revised) is now mandatory and as a result 2013 numbers have been restated.

7

Operating profit (i)

H1 FY14
£m

H1 FY14
%

H1 FY13*
£m

H1 FY13
%

FMCG Divisional Margin

12.8

18.1%

9.8

15.9%

Retail Divisional Margin

5.0

7.2%

5.6

7.8%

Total Divisional Margin

17.8

12.7%

15.4

11.5.%

Indirect Costs

(9.2)

(6.6)%

(8.9)

(6.7)%

Pre-exceptional EBIT

8.6

6.2%

6.5

4.9%

Revenues refocused into higher margin division

Blended divisional margin improved
Indirect cost margin improved
All contributing to improved EBIT margin (£ and %)

* The adoption of IAS19 (revised) is now mandatory and as a result 2013 numbers have been restated.

8

Operating profit (ii)

Half on
Half
Pre-exceptional Operating Profit Rate This Half Last Year (H1 FY13*)

4.9%

Impact of Gross Margins –

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