RNS Number:2434F
Hartstone Group PLC
14 June 2001
THE HARTSTONE GROUP PLC
Announcement of Unaudited Preliminary Results
for the year ended 31 March 2001
* Strong recovery at Etienne Aigner
* Pre-tax group profit #5.9 million (2000: #0.1 million)
* Cash inflow from operating activities #5.2 million
(2000: #1.5 million)
* Forward orders ahead of last year
Commenting on the announcement, Hartstone's chairman, Shaun Dowling said:
"The changes in management made last year contributed to a significant
recovery at Etienne Aigner. This year, despite a worsening retail environment
in the US, our forward orders are holding up well."
PRESS ENQUIRIES
The Hartstone Group PLC Tel: 01494 787700
Shaun Dowling, Chairman
John De Morgan, Company Secretary
THE HARTSTONE GROUP PLC
UNAUDITED RESULTS
FOR THE YEAR ENDED 31 MARCH 2001
GROUP RESULTS
Group turnover of #97.4 million in continuing operations in the year ended 31
March 2001 was 18.2% higher than in the previous year (2000: #82.4 million) as
sales were increased at Etienne Aigner Inc. The operating profit of #6.1
million was #5.0 million higher than last year (2000: #1.1 million) and there
were no non-recurring costs. Central costs were lower at #0.7 million (2000: #
1.0 million) and net finance costs of #0.2 million (2000: #1.1 million)
benefited from #0.9 million exchange gains. The group therefore achieved a
profit before tax of #5.9 million (2000: #91,000). A provision has been made
for a tax charge of #0.8 million, principally related to US State taxes. There
was a net cash inflow from operating activities of #5.2 million (2000: #1.5
million), net debt increased by #1.9 million and net assets increased by #3.2
million to #23.6 million. Gearing was 54% (2000: 53%).
Comments on sales and profitability are given below under Etienne Aigner,
which is now the principal trading company contributing to group results.
ETIENNE AIGNER
I am pleased to report that the changes made at the beginning of last year
have lead to a much improved performance, although we still have some way to
go before reaching the profit levels achieved between 1994 and 1998. The new
organisation at our Edison head office has settled in well, staff morale is
much improved and relations with our principal customers are currently very
positive.
Turnover of $143.4 million was 8.6% higher than the previous year, despite
tough trading conditions. Operating profits recovered to $9.9 million (2000:
$5.1 million) and margins improved by 2.5%.
Sales of Etienne Aigner regular footwear showed a sharp increase, 13.1% , over
the previous year, as our footwear collections throughout 2000 were well
received by the trade. The latest collection for this coming Autumn, shown in
a new booth at Las Vegas in February, was also well received. However, our
easentials footwear business has gone through a complete metamorphosis as we
withdrew sales from those department stores which could not handle our wide
range of sizes and widths and we set up a separate sales force to sell to
Independents and catalogue houses. This has meant a drop in total sales of
easentials shoes, but a recovery in margins as we did not have to pay for
substantial mark downs and allowances required by the major department stores.
Sales of easentials shoes are now gradually building up again as we pick up
new Independent retail customers and increase our exposure in mail order
catalogues.
Sales of accessories were similar to the previous year. In my statement last
year, I mentioned that we were undertaking a major research project into the
design and branding of shoes and accessories. This has undoubtedly helped us
to reposition the Etienne Aigner brand and to introduce more updated products.
In sixteen focus groups undertaken last year, women reacted very favourably
when shown our current designs. However, sales of fashion accessories are
still relatively small and will take some time to build up, but there is a big
opportunity to develop this profitable business in the future. Meanwhile, our
advertising budget has been significantly increased, both in trade
publications and consumer magazines, such as Vogue, In-Style and Southern
Living. This will help to change consumer perceptions of the brand and start
to persuade the department stores to give us enough shelf space to display our
products properly.
In our retail division we opened four full price stores during the year, to
add to our one full price store at King of Prussia in Pennsylvania which was
opened in 1995. This was quite expensive in terms of launch costs, with only a
slow build up in sales, but it is important to develop our own full price
stores in key locations where we can provide a full display of our product
range. We also replaced some of the stores in the outlet malls leaving a total
of 67. Same store sales in our outlet malls increased by 3.0% over the
previous year and their operating profits increased by $1.3 million.
Our catalogue and internet business continues to grow from a small base, and
this complements sales to the retail trade.
SHARE BUY BACKS
Following approval from shareholders at the last annual general meeting, we
purchased a further 15.5 million ordinary shares at a cost of 5.5 pence each.
We have now purchased 49.5%, or nearly half of our ordinary shares, and 31.8%
of our preference shares. In July 2000, 451,000 preference shares were
converted into ordinary shares leaving 173.5 million ordinary shares and 10.2
million preference shares in issue. Meanwhile the directors are exploring
means to get proper value for the shareholders in a tax efficient form.
DIVIDENDS
The directors do not propose to recommend payment of a final dividend on the
ordinary shares this year.
PROSPECTS
You may recall that I wrote to you in December, saying that despite "a
satisfactory turn-round in our US business, we also need to be cautious about
the US economy which could have a harder landing next year (i.e. 2001) than
has been predicted." Events have shown this caution to be prudent, as we do
not know at this stage how the US economy will perform this year and how this
will affect our business. However, I do believe that the organisational
changes which I made last year have provided a strong foundation for the
future, and this should protect us in 2001, should trading become more
difficult.
SHAUN DOWLING
Chairman
14 June 2001
THE HARTSTONE GROUP PLC
Preliminary announcement of Unaudited results
Consolidated results for the year ended 31 March 2001
2001 2000
#'000 #'000
Turnover - continuing operations 97,360 82,375
Cost of sales (59,457) (52,429)
Gross profit 37,903 29,946
Net operating expenses (31,816) (28,805)
Operating profit before non-recurring and central costs 6,831 3,283
Non-recurring costs - (1,101)
Central costs (744) (1,041)
Operating profit 6,087 1,141
Profit on ordinary activities before finance charges 6,087 1,141
Net finance charges (199) (1,050)
Profit on ordinary activities before taxation 5,888 91
Tax on profit on ordinary activities (785) (779)
Profit (loss) on ordinary activities after taxation 5,103 (688)
Dividends on non-equity shares (827) (854)
Profit (loss) for the financial year transferred to 4,276 (1,542)
reserves
Basic earnings (loss) per ordinary share (note 1) 2.4p (0.8)p
Adjusted (loss) per ordinary share excluding - (0.2)p
non-recurring costs
Diluted earnings (loss) per ordinary share (note 1) 1.8p (0.2)p
THE HARTSTONE GROUP PLC
Preliminary announcement of unaudited results
Consolidated balance sheets at 31 March 2001
2001 2000
#'000 #'000
Fixed assets
Intangible assets 88 -
Tangible assets 5,068 3,646
5,156 3,646
Current assets
Stocks 24,106 20,143
Debtors 14,322 12,861
Cash at bank and in hand 2,756 3,611
41,184 36,615
Current liabilities
Creditors - amounts falling due within one year (19,819) (3,258)
Net current assets 21,365 33,357
Total assets less current liabilities 26,521 37,003
Creditors - amounts falling due after more than one year (825) (16,210)
Provisions for liabilities and charges (2,100) (383)
Net assets 23,596 20,410
Capital and reserves
Share capital 2,758 2,913
Capital redemption reserve 155 -
Profit and loss account 20,683 17,497
Shareholders' funds 23,596 20,410
Shareholders' funds represent :
Equity interests 13,369 9,732
Non equity interests 10,227 10,678
23,596 20,410
THE HARTSTONE GROUP PLC
Preliminary announcement of unaudited results
Consolidated statement of cash flows for the year ended 31 March 2001
2001 2000
#'000 #'000
Net cashflow from continuing operating activities:
Operating profit 6,087 1,141
Depreciation 1,441 1,236
Amortisation 42 -
Writedown of current asset investment - 134
Working capital movement:
- (increase) decrease in stocks (1,424) 245
- (increase) decrease in debtors (138) 982
- (decrease) in creditors (798) (2,266)
Net cash inflow from operating activities 5,210 1,472
Returns on investments and servicing of finance (1,904) (1,858)
Taxation (140) (18)
Capital expenditure and financial investments (2,510) (1,719)
Disposals - 1,276
Equity dividends paid - (922)
Cash inflow (outflow) before financing 656 (1,769)
Financing :
- purchase of own shares (858) -
- (decrease) increase in debt (703) 384
(Decrease) in cash in the year (905) (1,385)
Reconciliation of net cash flow to movement in net debt :
2001 2000
#'000 #'000
(Decrease) in cash in the year (905) (1,385)
Cash outflow (inflow) from movement in debt 703 (384)
Change in net debt resulting from cash flows (202) (1,769)
Debt transferred with disposed undertakings - 948
Other non cash items - issue costs to be amortised (42) (45)
Translation difference (1,640) (183)
Movement in net debt (1,884) (1,049)
Opening net debt (10,808) (9,759)
Closing net debt (12,692) (10,808)
THE HARTSTONE GROUP PLC
Preliminary announcement of unaudited results
Statement of total recognised gains and losses
for the year ended 31 March 2001
2001 2000
#'000 #'000
Profit (loss) on ordinary activities after taxation 5,103 (688)
Exchange gains on foreign currency investments 1,770 48
Deferred tax on exchange gains (2,002) -
Total recognised gains (losses) for the year 4,871 (640)
Reconciliation of movements in shareholders' funds
for the year ended 31 March 2001
2001 2000
#'000 #'000
Total recognised gains (losses) for the year 4,871 (640)
Dividends (827) (854)
4,044 (1,494)
Purchase of own shares (858) -
Net increase (decrease) in shareholders' funds 3,186 (1,494)
Opening shareholders' funds 20,410 21,904
Closing shareholders' funds 23,596 20,410
Note 1: Earnings per ordinary share
Basic earnings per ordinary share, is calculated after having deducted
preference dividends, based on a profit of #4.3 million (2000: loss #1.5
million) and with a weighted average number of ordinary shares in issue of
180,187,658 (2000: 184,471,940).
The diluted earnings per share is based on a dilution in the number of shares
by 102,273,100 (2000: 106,784,288) through the conversion of preference shares
giving a total of 282,460,758 (2000: 291,256,670) shares, and on a profit of #
5.1 million (2000: loss #0.7 million).
Note 2: Financial Information
This announcement will be available for collection for a period of 48 hours
from the Company Announcements Office at the Stock Exchange and at any time
from the registered office of the company at Masters House, 107 Hammersmith
Road, London W14 0QH.
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