RNS Number:0477F
Hartstone Group PLC
13 December 2002
13 December 2002
(for immediate release)
THE HARTSTONE GROUP PLC
Announcement of Unaudited Preliminary Results
for the six months ended 30 September 2002
* Continued downturn in profitability as retail sector in the US very
depressed
* Department stores, our main customers, losing business to low price
chain stores
* Pretax group loss #2.2 million (2001: profit #0.1 million)
* Overheads, stocks and bank debt reduced
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 six months ended 30 September 2002
GROUP RESULTS
In the half year to 30 September 2002, The Hartstone Group PLC incurred an
operating loss of #2.0 million, (2001: profit #0.9 million) following the severe
downturn in US trading. After net finance costs of #0.2 million, the loss before
tax was #2.2 million (2001: profit #0.1 million).
Shareholders' funds reduced from #24.1 million at the year end to #19.8 million
at the half year due to the loss referred to above and adverse foreign
exchange differences of #1.6 million. There was, however, a cash inflow of #1.8
million as stocks and trade debtors were reduced in the USA.
ETIENNE AIGNER
Etienne Aigner, the principal trading company contributing to group results, had
a very difficult time in the first half year, as the whole retail clothing
sector in the US was depressed and our major customers, the department stores,
lost business to low price chain stores. Sales of our regular footwear were
17.2% lower than the same period in the previous year but, more damaging still,
allowances to department stores for stock write-downs were 27% higher than last
year. However, there was some small consolation as our new range of footwear, E/
A by Etienne Aigner, targeted at the lower priced chains, increased sales
significantly.
Sales of accessories were hit this year by the temporary loss of our largest
customer, QVC, as they went through a major de-stocking exercise, although sales
to all our other customers were slightly up on last year. We believe that QVC
will be back to normal trading next year. Same stores sales in our retail shops
were also 4.7% lower than last year, with those retail outlets in destination
resorts suffering the most.
Management has responded by cutting back on overheads, down 12% over last year,
and reducing stocks by US$8.4 million since 30 September last year.
FUNDS FLOW TO THE UK
Due to lower profits, Etienne Aigner breached its interest cover banking
covenant in September which triggered a halt on payment of group interest to the
UK parent company. Whilst we are negotiating for a release of funds from the US,
we will not have sufficient funds available in the UK to pay the preference
dividend on 2 January 2003, and the dividend will be rolled up for future
payment.
FUTURE PROSPECTS
The retail downturn and decline in department store business will continue to
affect us until at least Spring next year. At this stage, footwear orders for
next Spring are 3.9% in value below the same period last year, but we have no
assurance that order cancellations and additional allowances will not continue
to affect our footwear business. Sales of accessories are expected to stay in
line with last year, but sales in our retail outlets will probably stay slightly
down, as they have so far this year.
Economic prospects both globally and in the US remain unpredictable. No forecast
can be made with any certainty, but we will continue to monitor closely both our
cost levels and our business strategy in order to match the market conditions in
which we operate.
SHAUN DOWLING
Chairman
12 December 2002
The Hartstone Group PLC
Unaudited group profit and loss account
for the six months ended 30 September 2002
6 months 6 months Year
30/09/02 30/09/01 31/03/02
#000 #000 #000
Turnover 40,075 50,067 99,588
Cost of sales (27,147) (31,301) (62,742)
Gross profit 12,928 18,766 36,846
Net operating expenses (14,915) (17,819) (35,059)
Operating (loss) profit before non-recurring and central costs (1,834) 1,399 2,997
Non-recurring costs - - (526)
Central Costs (153) (452) (684)
Operating (loss) profit (1,987) 947 1,787
Net finance costs (Note 1) (215) (806) (1,079)
(Loss) profit on ordinary activities before taxation (2,202) 141 708
Taxation (50) (100) 703
(Loss) profit after taxation (2,252) 41 1,411
Dividend (Note 2) (400) (409) (818)
Retained (loss) profit for the period (2,652) (368) 593
(Loss) earnings per ordinary share (Note 3)
Basic and diluted (1.7)p (0.2)p 0.4p
Adjusted to exclude non-recurring costs (1.7)p (0.2)p 0.7p
The Hartstone Group PLC
Unaudited consolidated balance sheet
at 30 September 2002
30/09/02 30/09/01 31/03/02
#000 #000 #000
Fixed assets
Intangible assets 35 79 59
Tangible fixed assets 4,225 4,717 4,683
4,260 4,796 4,742
Current assets
Stocks 21,394 28,593 25,230
Debtors 11,238 14,928 13,500
Cash at bank and in hand 935 2,509 2,144
33,567 46,030 40,874
Current liabilities
Creditors: Amounts falling due within 1 year (4,293) (25,133) (4,075)
Net current assets 29,274 20,897 36,799
Total assets less current liabilities 33,534 25,693 41,541
Creditors: Amounts falling due after more than 1 year (13,576) (854) (16,910)
Provisions for liabilities and charges (160) (1,600) (560)
Net assets 19,798 23,239 24,071
Capital and reserves:
Share capital 2,584 2,758 2,584
Capital redemption reserve 329 155 329
Profit and loss account 16,885 20,326 21,158
Shareholders' funds 19,798 23,239 24,071
Shareholders' funds represent:
Equity interests 9,800 13,016 14,073
Non equity interests 9,998 10,223 9,998
19,798 23,239 24,071
The Hartstone Group PLC
Unaudited consolidated statement of cash flows
for the six months ended 30 September 2002
6 months 6 months Year
30/09/02 30/09/01 31/03/02
#000 #000 #000
Net cash flow from continuing operating activities:
Operating (loss) profit (1,987) 947 1,787
Depreciation charges 626 666 1,216
Amortisation 14 - 29
Working capital movement -decrease (increase) in stocks 1,499 (5,426) (1,159)
-decrease (increase) in debtors 1,302 (1,070) 796
-increase in creditors 371 937 26
Net cash inflow (outflow) from operating activities 1,825 (3,946) 2,695
Returns on investments and servicing of finance (574) (958) (1,745)
Taxation (148) (231) (298)
Capital expenditure and financial investment (611) (475) (841)
Cash inflow (outflow) before financing 492 (5,610) (189)
Financing - purchase of own shares - - (886)
- increase (decrease) in debt (1,591) 5,396 473
(Decrease) in cash in the period (1,099) (214) (602)
Reconciliation of net cash flow to movement in net debt:
6 months 6 months Year
30/09/02 30/09/01 31/03/02
#000 #000 #000
(Decrease) in cash in the period (1,099) (214) (602)
Cash outflow (inflow) from decrease/increase in debt 1,591 (5,396) (473)
Change in net debt resulting from cash flows 492 (5,610) (1,075)
Other non cash items - issue costs to be amortised (6) (10) (10)
Translation difference 1,333 628 23
Movement in net debt in the period 1,819 (4,992) (1,062)
Opening net debt (13,754) (12,692) (12,692)
Closing net debt (11,935) (17,684) (13,754)
The Hartstone Group PLC
Unaudited interim results
for the six months ended 30 September 2002
Unaudited statement of total recognised gains and losses
6 months 6 months Year
30/09/02 30/09/01 31/03/02
#000 #000 #000
(Loss) profit on ordinary activities after taxation (2,252) 41 1,411
Exchange differences on foreign currency
net investments in subsidiary undertakings (2,021) (550) 119
Deferred tax effect on exchange differences on foreign
currency net investments 400 561 649
Total recognised (losses) gains for the period (3,873) 52 2,179
Unaudited reconciliation of movements in shareholders' funds
6 months 6 months Year
30/09/02 30/09/01 31/03/02
#000 #000 #000
Total recognised (losses) gains for the period (3,873) 52 2,179
Dividends (400) (409) (818)
(4,273) (357) 1,361
Purchase of own shares - - (886)
Net (decrease) increase in shareholders' funds (4,273) (357) 475
Opening shareholders' funds 24,071 23,596 23,596
Closing shareholders' funds 19,798 23,239 24,071
The Hartstone Group PLC
Notes
Note 1: Net finance costs 6 months 6 months Year
30/09/02 30/09/01 31/03/02
#000 #000 #000
Net interest charge
- payable on loans and overdrafts 278 591 993
- interest receivable (104) (42) (66)
174 549 927
Foreign exchange losses 35 247 142
Refinancing costs 6 10 10
215 806 1,079
Note 2: Dividend 6 months 6 months Year
30/09/02 30/09/01 31/03/02
#000 #000 #000
Non Equity Shares - preference dividend 4p per preference 400 409 818
share, 2 July 2002
With cash transfers to the UK restricted by the US banks, the Group will not be in a position to pay the preference
dividend on 2 January 2003, and the dividend will be rolled up for future payment.
Note 3: (Loss) earnings per ordinary share
Basic and diluted (loss) earnings per ordinary share is calculated using a loss of #2,652,000 (2001: loss of #368,000),
after deducting preference dividends, and a weighted average number of ordinary shares in issue of 158,484,612 (2001:
173,554,439).
The cumulative and convertible preference dividend is anti-dilutive.
The Hartstone Group PLC
Notes (continued)
Note 4: Analysis of cash and indebtedness 6 months 6 months Year
30/09/02 30/09/01 31/03/02
#000 #000 #000
Secured US bank loans (12,870) (20,193) (15,898)
Cash and bank balances 935 2,509 2,144
(11,935) (17,684) (13,754)
Note 5: Taxation
The charge arises from US State taxes despite losses being suffered in the US.
Note 6: Interim Report
This interim report was neither audited nor reviewed by the auditors. It was
approved by the Board on 12 December 2002. It has been prepared using accounting
policies that are consistent with those adopted in the statutory accounts for
the year ended 31 March 2002.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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