RNS Number:8575V
Hartstone Group PLC
15 December 2000
THE HARTSTONE GROUP PLC ("Hartstone")
HIGHLIGHTS
Announcement of unaudited interim results for the six months ended
30 September 2000
Operating Profit #3.2 million 1999: #0.1 million loss)
Pretax profit #2.7 million (1999: #0.6 million loss)
Commenting on the half year results, Shaun Dowling, chairman of Hartstone
said:
"Following major management changes and detailed market research to reposition
the brand, we have made steady progress at Etienne Aigner, our principal
subsidiary company. We need to build on this recovery."
PRESS ENQUIRIES
The Hartstone Group PLC 01494 787700
Shaun Dowling, Chairman
John De Morgan, Company Secretary
Unaudited results
for the six months ended 30 September 2000
GROUP RESULTS
In the half year to 30 September 2000, The Hartstone Group PLC made an
operating profit of #3.2 million (1999: #0.1 million loss). After net interest
of #0.5 million, the Group made a profit before tax of #2.7 million (1999:
#0.6 million loss). The tax charge has increased from #139,000 to #570,000.
The basic earnings per share in the period were 0.9p (1999: loss of 0.6p).
Shareholders' funds have increased from #20.5 million at the year end to #22.0
million at the half year. There was a cash outflow of #0.5 million during the
period (1999: #1.3 million outflow) which is largely cyclical.
ETIENNE AIGNER
Etienne Aigner, the principal trading company now contributing to group
results, achieved an operating profit of US$4.6 million in the first half
(1999: US$1.7 million). Net sales increased from US$63.1 million in 1999 to
US$69.7 million during the period and margins improved from 35.9% to 38.5%.
The management changes to which I referred at the year end have made a
significant impact on the business.
Sales of regular footwear have recovered strongly, with more fashionable
designs well received by the market. The comfort footwear range, under the
Easentials brand, is still finding business difficult as we have withdrawn
sales from major retailers unable to handle 69 sizes per style, per colour.
However, we have formed a specialist sales force to handle this line
concentrating on independent retailers, catalogue houses and select retail
chains who have the capability to service this range, and sales are slowly
picking up. Our accessories business is doing slightly better than last year,
but we still have a challenge to convert what is largely a strong regional
business in the south east into a nationally accepted brand.
Our own retail shops in outlet malls have done well during a period in which
outlet sales generally have decreased over the previous year. Our same store
sales were up by 5.6%. In addition, we have opened four new full price shops,
adding to our single store in Pennsylvania. Our marketing operations have also
been considerably strengthened with advertising in Vogue, Southern Living and
all the trade press, whilst we have undertaken a great deal of consumer
research, enabling us to re-position our brand, up-date our fashion and
compete more effectively.
FUTURE PROSPECTS
Whilst there has been a satisfactory turn-round in the business, we still need
to improve our performance at Etienne Aigner. A number of initiatives are
currently being planned which could meet this objective. We also need to be
cautious about the US economy which could have a harder landing next year than
has been predicted.
SHAUN DOWLING
Chairman
15 December 2000
The Hartstone Group PLC
Unaudited group profit and loss account
for the six months ended 30 September 2000
6 months 6 months Year
30/09/00 30/09/99 31/03/00
#000 #000 #000
Turnover 46,312 39,258 82,375
Cost of sales (28,391) (25,008) (52,429)
Gross profit 17,921 14,250 29,946
Net operating expenses (14,716) (14,305) (28,805)
Operating profit before
non-recurring and central costs 3,558 918 3,283
Central costs (353) (466) (1,101)
Non-recurring costs - (507) (1,041)
Operating profit (loss) 3,205 (55) 1,141
Net finance costs:
Net interest charge (520) (489) (1,005)
Refinancing costs - (45) (45)
Profit (loss) on ordinary activities
before taxation 2,685 (589) 91
Taxation (570) (139) (779)
Profit (loss) after taxation 2,115 (728) (688)
Dividends (Note 1) (418) (427) (854)
Retained profit (loss) for the period 1,697 (1,155) (1,542)
Earnings (loss) per ordinary share (Note 2)
Basic 0.9p (0.6)p (0.8)p
Fully diluted 0.7p - -
The Hartstone Group PLC
Unaudited consolidated balance sheet
at 30 September 2000
30/09/00 30/09/99 31/03/00
#000 #000 #000
Fixed assets
Tangible fixed assets 4,488 3,666 3,646
Current assets
Stocks 20,583 19,640 20,143
Debtors 13,609 13,761 12,861
Cash at bank and in hand 3,191 3,666 3,611
37,383 37,067 36,615
Current liabilities
Creditors: Amounts falling due
within 1 year (17,258) (18,300) (3,258)
Net current assets 20,125 18,767 33,357
Total assets less current liabilities 24,613 22,433 37,003
Creditors: Amounts falling due after
more than 1 year (1,288) (1,166) (16,210)
Provisions for liabilities and charges (1,391) (800) (383)
Net assets 21,934 20,467 20,410
Capital and reserves:
Share capital 2,913 2,913 2,913
Profit and loss account 19,021 17,554 17,497
Shareholders' funds 21,934 20,467 20,410
Shareholders' funds represent:
Equity interests 11,704 19,398 9,732
Non equity interests 10,230 1,069 10,678
21,934 20,467 20,410
The Hartstone Group PLC
Unaudited consolidated statement of cash flows
for the six months ended 30 September 2000
6 months 6 months Year
30/09/00 30/09/99 31/03/00
#000 #000 #000
Net cash flow from continuing
operating activities
Operating profit (loss) 3,205 (55) 1,141
Depreciation charges 756 581 1,236
Write down of investment - 134 134
Working capital movement
- decrease in stocks 1,142 113 245
- decrease in debtors 68 566 982
- (decrease) in creditors (3) (2,116) (2,266)
Exchange movement (388) - -
Net cash inflow (outflow)
from operating activities 4,780 (777) 1,472
Returns on investments and
servicing of finance (948) (961) (1,858)
Taxation (110) (38) (18)
Capital expenditure and financial
investment (1,320) (877) (1,719)
Disposals - 1,276 1,276
Equity dividends paid - (922) (922)
Cash inflow (outflow) before use of
liquid resources 2,402 (2,299) (1,769)
Financing - (decrease) increase in debt (2,884) 1,030 384
(Decrease) in cash in the period (482) (1,269) (1,385)
Reconciliation of net cash flow
to movement in net debt: 6 months 6 months Year
30/09/00 30/09/99 31/03/00
#000 #000 #000
(Decrease) in cash in the period (482) (1,269) (1,385)
Cash outflow (inflow) from decrease
increase in debt 2,884 (1,030) (384)
Change in net debt resulting from cash flows 2,402 (2,299) (1,769)
Debt transferred with disposed undertakings - 948 948
Other non cash items - issue costs
to be amortised - - (45)
Translation difference (1,015) 266 (183)
Movement in net debt in the period 1,387 (1,085) (1,049)
Opening net debt (10,808) (9,759) (9,759)
Closing net debt (9,421) (10,844) (10,808)
The Hartstone Group PLC
Unaudited interim results
for the six months ended 30 September 2000
Unaudited statement of total recognised gains and losses
6 months 6 months Year
30/09/00 30/09/99 31/03/00
#000 #000 #000
Profit (loss) on ordinary activities
after taxation 2,115 (728) (688)
Exchange differences on foreign currency
net investments in subsidiary undertakings 1,053 (282) 48
Deferred tax effect on exchange
differences on foreign currency
net investments (1,226) - -
Total recognised gains and losses for
the period 1,942 (1,010) (640)
Unaudited reconciliation of movements in shareholders' funds
6 months 6 months Year
30/09/00 30/09/99 1/03/00
#000 #000 #000
Total recognised gains and losses for
the period 1,942 (1,010) (640)
Dividends (418) (427) (854)
Net increase (decrease) in shareholders' funds 1,524 (1,437) (1,494)
Opening shareholders' funds 20,410 21,904 21,904
Closing shareholders' funds 21,934 20,467 20,410
The Hartstone Group PLC
Notes
Note 1: Dividend 6 months 6 months Year
30/09/00 30/09/99 31/03/00
#000 #000 #000
Non Equity Shares - preference dividend
4p per preference share 418 427 854
Note 2: Earnings/loss per ordinary share
Basic earnings/loss per ordinary share is calculated using a profit of
#1,697,000 (1999: loss of #1,155,000), after deducting preference dividends,
and a weighted average number of ordinary shares in issue of 186,034,474
(1999: 184,413,285).
Earnings per ordinary share on the fully diluted basis for the six months to
30 September 2000 is calculated using a profit of #2,115,000 after adjusting
for the post tax effect of preference shares, and a fully diluted number of
ordinary shares of 288,307,564.
Note 3: Analysis of cash and indebtedness 6 months 6 months Year
30/09/00 30/09/99 31/03/00
#000 #000 #000
Secured US bank loans (12,612) (14,510) (14,419)
Cash and bank balances 3,191 3,666 3,611
(9,421) (10,844) (10,808)
Note 4: Taxation
The tax charge arises from taxation on profits earned by overseas subsidiary
undertakings for which no tax losses brought forward are available.
Independent review report to the board of directors
of The Hartstone Group PLC
Introduction
We have been instructed by the company to review the financial information set
out on pages 3 to 8 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements
or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the
Listing Rules of the Financial Services Authority and applicable United
Kingdom accounting standards. The Listing Rules require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued in the United Kingdom by the Auditing Practices Board and with
our profession's ethical guidance. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on the
financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2000.
ARTHUR ANDERSEN
Chartered Accountants
Nottingham
15 December 2000
The financial information set out above is unaudited and does not comprise
full statutory accounts within the meaning of section 240 of the Companies Act
1985. Full statutory accounts for the year ended 31 March 2000, on which the
auditors have given an unqualified report, have been delivered to the
Registrar of companies.
This announcement is being sent to shareholders and 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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