RNS Number:1709X
Hartstone Group PLC
13 June 2002
THE HARTSTONE GROUP PLC
Announcement of Unaudited Preliminary Results
for the year ended 31 March 2002
• Market conditions in US extremely difficult
• Etienne Aigner operating profit $4.4 million (2001: $9.9 million)
• Net finance charge £1.1 million (2001: £0.2 million)
• Pre-tax group profit £0.7 million (2001: £5.9 million)
Commenting on the announcement, Hartstone's chairman, Shaun Dowling said:
"After such a sharp downturn in the USA, it is hard to judge the
prospects for 2002/03. However, on balance, I would expect this year to
be better than last, but still not up to the levels achieved in earlier
years."
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 2002
GROUP RESULTS
Group turnover of £99.6 million in the year ended 31 March 2002 was slightly
higher than in the previous year (2001: £97.4 million) partly due to a
strengthening in the dollar-sterling exchange rate. The operating profit of £3.0
million before central costs and non recurring items was significantly lower
than in the previous year (2001: £6.8 million) for reasons explained below under
Etienne Aigner, the principal trading company contributing to group results.
There was a charge for £0.5 million non-recurring costs, related principally to
the discontinuance of one of the Etienne Aigner product lines and to costs
incurred during an aborted management buy out. Central costs of £0.7 million
were slightly below last year and there was a net finance charge of £1.1
million, (2001: £0.2 million) which, unlike last year, did not benefit from
exchange gains. This left a profit before tax of £0.7 million (2001: £5.9
million), but there was a tax credit of £0.7 million (2001: tax charge of £0.8
million) arising from the release of a deferred tax provision.
There was a net cash outflow before financing of £0.2 million (2001: net cash
inflow of £0.7 million), whilst net assets rose by £0.5 million to £24.1
million. The gearing rose by 3% to 57%.
ETIENNE AIGNER
A downturn in the US market for what is known as "better" women's footwear, an
economic recession, a mild winter for the sale of boots, and the repercussions
of the attack on September 11 all had an impact on sales, allowances, returns
and margins, and the market is still not back to normal. it is small comfort
that we generally held market share in our own sectors and saw some of our
competitors suffering more severely.
Net sales in Etienne Aigner Inc in the year under review fell by 1.2% to $141.7
million (2001: $143.4 million). Sales of footwear were flat against last year,
but accessories achieved an increase of 12.3%. Sales in our retail outlets fell
by 3.4% to $53.1 million.
Two significant changes were made in the Footwear Division. I reported last year
that we had to withdraw sales of easentials comfort shoes from department stores
which could not handle our extensive range of styles, colours, sizes, and
widths. Unfortunately, we did not achieve enough Easentials business from
Independents to keep this range going and we incurred a cost of $600,000 in
closing down the line. During the year, we also launched a new range of shoes
called "E/A by Etienne Aigner" at lower price points. As women are switching
their purchasing from department stores to chain stores, like J C Penny and
Kohls, we decided to enter this market sector in addition to our traditional
range. These shoes are made in China at lower costs.
In our Retail Division, those outlets located in what are classed as destination
resorts suffered the sharpest decrease in sales. From 11 September the number of
passengers flying to those resorts and shopping in those malls has dropped back
significantly.
Our four new full price stores, mentioned in my statement last year, managed to
increase their sales, but it may take three years to achieve a break-even.
Our main customers, the Department stores, reacted to all the changes in the
market with continuous sales and heavy discounts, most of which they expect
their vendors to pay for. Otherwise they threaten to de-list the vendors in the
following season. A combination of allowances to these department stores,
together with non-recurring losses in Easentials and full price stores, reduced
the operating profit from $9.9 million in 2001 to $4.4 million in the year under
review.
SHARE BUY BACKS
Following approval from shareholders at the last Annual General Meeting, we
purchased a further 15.1 million ordinary shares and 225,000 preference shares
in January and February this year. In July 2001, 4,136 preference shares were
converted into ordinary shares, leaving 158.5 million ordinary shares and 10
million preference shares in issue.
DIVIDENDS
The directors do not propose to recommend payment of a dividend on the ordinary
shares this year. However, the directors continue to try and find a means of
getting proper value for the shareholder in a tax efficient form.
PROSPECTS
After such a sharp and unexpected downturn in the USA last year, it is hard to
judge the prospects for 2002/03. Assuming no further attacks or significant war
involvement, we would expect the US economy gradually to recover and with it, an
increase in consumer spending. Whether that increase is funnelled into housing,
consumer durables or clothing, and whether women shoppers revert to buying in
department stores are still open questions. In summary, I would expect this year
to be better than last, but still not up to the levels achieved in earlier
years.
SHAUN DOWLING
Chairman
13 June 2002
THE HARTSTONE GROUP PLC
Preliminary announcement of unaudited results
Consolidated results for the year ended 31 March 2002
2002 2001
£000 £000
Turnover - continuing operations 99,588 97,360
Cost of sales (62,742) (59,457)
Gross profit 36,846 37,903
Net operating expenses (35,059) (31,816)
Operating profit before non-recurring and central costs 2,997 6,831
Non-recurring costs (526) -
Central costs (684) (744)
Operating profit 1,787 6,087
Profit on ordinary activities before finance charges 1,787 6,087
Net finance charges (1,079) (199)
Profit on ordinary activities before taxation 708 5,888
Tax credit (charge) on profit on ordinary activities 703 (785)
Profit on ordinary activities after taxation 1,411 5,103
Dividends on non-equity shares (818) (827)
Profit for the financial year transferred to reserves 593 4,276
Basic earnings per ordinary share (note 1) 0.4p 2.4p
Adjusted earnings per ordinary share excluding non-recurring costs 0.7p -
Diluted earnings per ordinary share (note 1) 0.5p 1.8p
THE HARTSTONE GROUP PLC
Preliminary announcement of unaudited results
Consolidated balance sheets at 31 March 2002
2002 2001
£000 £000
Fixed assets
Intangible assets 59 88
Tangible assets 4,683 5,068
Investments - -
4,742 5,156
Current assets
Stocks 25,231 24,106
Debtors 13,500 14,322
Cash at bank and in hand 2,143 2,756
40,874 41,184
Current liabilities
Creditors - amounts falling due within one year (4,075) (19,819)
Net current assets 36,799 21,365
Total assets less current liabilities 41,541 26,521
Creditors - amounts falling due after more than one year (16,910) (825)
Provisions for liabilities and charges (560) (2,100)
Net assets 24,071 23,596
Capital and reserves
Share capital 2,584 2,758
Capital redemption reserve 329 155
Profit and loss account 21,158 20,683
Shareholders' funds 24,071 23,596
Shareholders' funds represent:
Equity interests 14,073 13,369
Non equity interests 9,998 10,227
24,071 23,596
THE HARTSTONE GROUP PLC
Preliminary announcement of unaudited results
Consolidated statement of cash flows for the year ended 31 March 2002
2002 2001
£000 £000
Net cashflow from operating activities:
Operating profit 1,787 6,087
Depreciation 1,216 1,441
Amortisation 29 42
Working capital movement:
- (increase) in stocks (1,159) (1,424)
- decrease (increase) in debtors 796 (138)
- increase (decrease) in creditors 26 (798)
Net cash inflow from operating activities 2,695 5,210
Returns on investments and servicing of finance (1,745) (1,904)
Taxation (298) (140)
Capital expenditure and financial investments (841) (2,510)
Cash (outflow) inflow before financing (189) 656
Financing:
- purchase of own shares (886) (858)
- increase (decrease) in debt 473 (703)
(Decrease) in cash in the year (602) (905)
Reconciliation of net cash flow to movement in net debt:
2002 2001
£000 £000
(Decrease) in cash in the year (602) (905)
Cash (inflow) outflow from movement in debt (473) 703
Change in net debt resulting from cash flows (1,075) (202)
Other non cash changes - issue costs to be amortised (10) (42)
Translation difference 23 (1,640)
Movement in net debt (1,062) (1,884)
Opening net debt (12,692) (10,808)
Closing net debt (13,754) (12,692)
THE HARTSTONE GROUP PLC
Preliminary announcement of unaudited results
Statement of total recognised gains and losses
for the year ended 31 March 2002
2002 2001
£000 £000
Profit on ordinary activities after taxation 1,411 5,103
Exchange gains on foreign currency investments 119 1,770
Deferred tax credit (charge) on exchange gains 649 (2,002)
Total recognised gains for the year 2,179 4,871
Reconciliation of movements in shareholders' funds
for the year ended 31 March 2002
2002 2001
£000 £000
Total recognised gains for the year 2,179 4,871
Dividends (818) (827)
1,361 4,044
Purchase of own shares (886) (858)
Net increase in shareholders' funds 475 3,186
Opening shareholders' funds 23,596 20,410
Closing shareholders' funds 24,071 23,596
Note 1: Earnings per ordinary share
Basic earnings per ordinary share is calculated, after having deducted
preference dividends, on a profit of £0.6 million (2001: £4.3 million) and using
a weighted average number of ordinary shares in issue of 168,001,305 (2001:
180,187,658).
The diluted earnings per share is based on a dilution in the number of shares by
99,981,730 (2001: 102,273,100) through the conversion of preference shares
giving a total of 267,983,035 (2001: 282,460,758) shares, and on a profit of
£1.4 million (2001: £5.1 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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