RNS Number:6867H
Hartford Group PLC
24 January 2005
HARTFORD GROUP PLC
("Hartford" or "the Group")
Preliminary Results for the 52 weeks ended 25 September 2004
Hartford Group PLC ("Hartford" or "the Group"), the London focussed licensed
retailer, announces preliminary results for the 52 weeks ended 25 September
2004.
HIGHLIGHTS
* Like for like sales increased 1.3% for the core bars business but saw a
marginal decline of 0.7% for the Group as a whole
* Further improvement in gross margin to 74.1% (2003: 72.5%)
* Profit before tax (excluding exceptionals and amortisation of goodwill) of
#445k (2003: loss of #637k)
* Earnings per share 0.10p (2003: loss per share of 0.34p)
* Gearing has reduced to only 22% (2003: 25%)
* New extended banking facility in place to capitalize on expansion
opportunities
* Christmas trading period was strong with like for like sales up 8.4%,
ahead of the prior year's record performance
Stephen Thomas, Chairman of Hartford Group PLC, commented:
"These results demonstrate a strong performance from Hartford's core bar estate
and the Group has made good progress across a number of fronts. Hartford has
now firmly moved into profit and benefits from a solid balance sheet and a
strong portfolio of assets. We intend to continue to deliver improved
performance across the Group.
"Trading in the current year has started well and remains encouraging. Hartford
remains well placed to capitalize on expansion opportunities in the sector as
they present themselves."
24 January 2005
ENQUIRIES:
Hartford Group PLC Tel: 020 7269 6370
Stephen Thomas, Chairman
James Kowszun, Chief Executive
College Hill
Justine Warren Tel: 020 7457 2020
Tom Baldock
Chairman's Statement
Introduction
Hartford Group plc is pleased to announce its profit before tax for the 52 weeks
ending 25 September 2004 ("the Financial Year") of #70k (2003: loss of #1.8m).
This profit is achieved after incurring a #73k loss on the previously announced
disposal of Dakota Restaurant and #86k of costs incurred following the
acquisition and repositioning of three new trading sites over the summer months.
Excluding these one-off costs and amortisation of goodwill (#216k), the Group
made a profit before tax of #445k compared with a loss last year of #637k.
Total overall Group sales during the period under review were #12 million,
representing a 16% decline on the prior period due to the disposal of
loss-making sites. However, like for like sales were marginally below last year
at -0.7%, but were 1.3% up within the core bars and City bars business
divisions. After a strong first half, the like for like performance for the
year as a whole was affected by the sales at sites with outside trading areas
during the summer months. These sites faced tough comparisons due to their
strong performance in the previous year.
Profit after tax for the period under review was #570k, due to the recognition
of a one-off deferred tax credit in accordance with FRS19. The Group is not
expected to pay any tax in this financial year. The earnings per share (EPS) is
0.10p (2003: loss of 0.34p).
After two years of rationalisation and repositioning of the Group, these results
demonstrate strong progress in driving the performance of our core estate. At
the end of the financial year the Group had of 22 trading units.
Overall cash flow was positive during the year (+#109k), after investing #1.2m
on existing sites, the three site acquisitions and a company-wide IT
implementation. The sites were acquired for a total consideration of less than
#300k and are expected to contribute positively in the current financial year.
As a result, gearing at the end of the financial year was 22% (2003: 25%).
Added to this low level of financial gearing, Hartford has re-negotiated its
banking facilities, providing an increased total facility of #4.5m, with nearly
#3m un-drawn. This positions the Group well to capitalise on expansion
opportunities as they present themselves.
Financial Review
Sales performance has been encouraging for the continuing core business,
excluding Canyon restaurant, which were ahead by +1.3% like for like during the
year.
Gross margin continues to be strong across the Group and has improved by 1.6
percentage points to 74.1%.
The wage costs percentage for the continuing business was marginally up on last
year due to an increase in the minimum wage, employers' national insurance and
investment in our staff. Our overall administrative costs have continued tightly
controlled, reducing from 75.2% of sales last year to 72.1%.
The Group has incurred significant losses in previous years and the consequent
deferred tax had not previously been recognised in the Group's balance sheet.
Now that the Group's position has stabilized and it is expecting to generate
further profits in the future, the directors have recognised a one-off credit to
the profit and loss account of #500k, and in accordance with accounting
standards has resulted in a deferred tax asset in the balance sheet.
The earnings per share is 0.10p, compared with a loss per share of 0.34p last
year. The Board does not propose to pay a dividend this year.
The Group has spent #1.2m on capital expenditure and acquisitions this year.
This comprises refurbishments at Jamie's West Smithfield renamed Heads & Tails,
Jamies Bishopsgate, Jamies Canary Wharf and The Common Room, the acquisition of
three new sites and a company wide EPOS/IT installation. As previously
announced, we acquired three new trading sites in the latter part of the
financial year, for less than #300k. One site has been rebranded Jamie's Aldgate
while the other two have retained their original trading names of Hodgson's and
Willy's Wine Bar. These sites were all refurbished or repositioned in the
financial year, resulting in one-off charges to the profit and loss account of
#86k.
The Group generated earnings before interest, tax, depreciation and amortisation
(EBITDA) of #1m (2003: #414k), from its operating activities during the year.
After capital expenditure and acquisitions there was a net cash inflow of #109k.
Interest paid during the year was #129k.
Overall, at the year-end, Hartford had a net debt of #1.55m (2003: #1.66m),
representing gearing of 22% (2003: 25%) and the interest cover was 3.2 times.
Review of Operations
The operations of Hartford are organised into three sections, Bars, City Bars
and Restaurants and are reviewed below.
Bars
Our bar sites are located in central London, Wimbledon and Canary Wharf, with
future growth likely to be focused on suburban centres or "London Villages".
Location and atmosphere are critical to the success of these sites, with our
continued focus on staff quality and service levels the most important factors
in delivering a successful offer.
This has been a good year for this section of the business, both in terms of
sales growth and margin delivery. Overall sales increased by 5.5%, with
like-for-like sales 4.0% ahead. Both food and drink gross margins have improved
at every bar site. The introduction of draught beer into a number of sites has
had a positive effect. Gross margin is good for this style of business and we
anticipate current levels to be maintained rather than increased further. Wages
and controllable costs were below last year in percentage terms, again resulting
from tight operational discipline.
During the year, refurbishments were completed at The Common Room (Wimbledon)
and the Jamies sites at Bishopsgate and Canary Wharf and Heads and Tails. The
performance at both Bishopsgate and Canary Wharf has continued to improve at
both the sales and profit levels post refurbishment. Common Room has had another
solid year and produced a third successive year of sales growth. Heads and
Tails performance has improved since its refurbishment and Christmas trade met
with our expectations.
The market in which our bars compete continues to be extremely competitive, but
these results show that constantly focusing the business on the delivery of
quality product and excellent service can continue to improve both sales and
margins.
City Bars
Our City Bars, of which there are 12 in total, are focused entirely in the City
of London and trade from smaller sized operations than the Bars, with a more
personal feel and an increased focus on wine sales. We have an on-going
programme of wine-focused training for our staff in these sites to ensure that
they have the necessary skills and knowledge base. For many of our customers,
the limiting factor is frequently time, particularly at our core-trading period
of lunchtime and food menus are designed to enable speed of delivery, without
compromising on quality.
Trading within the Square Mile has a unique set of challenges and all of our
sites have micro-market issues to address, frequently down to the occupancy
levels of individual office blocks. Overall sales within this section were 2.1%
ahead of the previous year, driven by the acquisition of three new sites.
Like-for-like sales were 2.8% below the previous year, a marked improvement on
the previous financial year, but held back by two specific sites, Jamies Gresham
Street and The Orangery. Jamies Gresham Street has been sold and we are only
still in the site under a licence to occupy until mid-2005. The disappointing
sales performance at The Orangery was mostly as a result of localised empty
office space. However, the site continues to deliver strong cash flow. The
remaining 10 sites showed improvement in sales, with notable performances at The
Pavilion and Jamies Groveland Court.
Gross margin has improved once again, reflecting healthy stability in food
margin delivery and continued work on simplifying our supply chain. Wage
percentage to sales increased marginally during the year.
Acquisition of new City Bars
The three new acquisitions, Willy's Wine Bar (Fenchurch Street), Jamies Aldgate
and Hodgsons Wine Bar (Chancery Lane) will all be run as City Bars.
Hodgsons was bought in June 2004 and a refurbishment programme was completed by
the end of the financial year. Trading levels and the reputation of this site
had been slipping prior to acquisition. We have strengthened the team and
commenced a targeted marketing programme to rebuild sales levels. Willy's Wine
Bar has performed satisfactorily since it was acquired and we have completed
minor refurbishment work. Jamies Aldgate opened in September 2004 following a
refurbishment. Sales are currently three times higher than the site was
delivering before we acquired it.
The financial impact of acquiring, refurbishing and repositioning these sites
towards the end of the financial year was a loss of #86k. These sites are
expected to contribute positively in the current financial year.
If we acquire poorly performing sites, which require closure for refurbishment
and incur redundancy, these costs will be expended through the profit and loss
account. However, the Board believes that the attractive investment returns
available from selective acquisitions of this nature, can create significant
shareholder value.
Restaurants
Canyon at Richmond Riverside is our only remaining restaurant and its
performance is heavily skewed towards the summer months, due to its Thames-side
location. Sales in the financial year were 12% below the previous year - with
the majority of the shortfall coming in the June to September period, when the
comparative period was abnormally strong. However, we believe the site can
improve and have recruited a new general manager to focus on improving the
quality of the offer, both in terms of food and service standards.
Management and Employees
The recruitment, development and retention of staff remains as one of most
critical issues within the wider industry of licensed retailing. During the
year, we continued to invest in and develop our site management teams, with a
wide-ranging programme varying from basic wine skills training to Leadership and
Coaching skills development courses. We have also continued our policy of
promoting from within wherever possible
As previously announced, Chris Poil joined the Board in May 2004 as a Non-
Executive Director. Chris has a wealth of experience as a fund manager in the
City and his experience of the working of the financial markets is a welcome
strengthening of the Board.
Since 2000, the Group has had a share option scheme in place, (Hartford Group
PLC Option Plan 2000). Share options were granted to directors, executives and
key management, as an incentive. Due to the fact that the options granted under
the scheme were underwater for some time, the Remuneration Committee after
careful consideration and approval from a majority of the shareholders, asked
some of the option holders to surrender their existing options in favour of
being granted new ones. A formal resolution is included in the AGM notice for
all shareholders to vote on these proposals and includes full details of the re
granting of options.
As an additional incentive to improve future performance, the Group has also put
in place the Hartford Group Deferred Bonus Plan, for which the same approval
process was followed. The Hartford Group Deferred Bonus Plan requires
shareholder approval and a formal resolution is included in the AGM notice.
Property
As part of the on-going drive to improve the quality of our estate and to ensure
regulatory compliance, in addition to the regular process of risk-assessment
already present within the business, we have completed independent surveys to
assess our compliance with current and future environmental, health & safety and
disability access regulations. We have evaluated the output and are implementing
the necessary changes.
We have since the year-end disposed of Jamies, Kingsway, for a consideration
that will result in a small profit on disposal. Hartford is now actively looking
for new sites to acquire and has the financial and management resources in place
to achieve this.
Current Trading and Outlook
Trading in the new financial year has been encouraging, with the cost pressures
resulting from an increase to the minimum wage offset by a return to positive
like-for-like trading. In the 16 weeks to 15 January 2005, like-for-like sales
increased by 5.7%. This was helped by strong trading over the critical
Christmas period (six weeks to 1 January 2005), where comparable sales were 8.4%
ahead of what was a record performance in 2003. This improvement has been
derived from both seasonal function bookings, which were stronger than the
previous year, and better core trade throughout the business.
Summary
Hartford will continue to focus on improving the performance and composition of
its existing trading estate. The Group is now profitable with a solid balance
sheet, strong Board and management team.
It is now increasingly looking to expand the business through targeted
acquisitions, either of individual sites, or packages of sites, as and when the
opportunities present themselves. These acquisitions will be of sites, which
can deliver attractive sustainable returns, based on our proven trading formats.
Stephen Thomas
Chairman
Hartford Group plc
24 January 2005
Consolidated Profit & Loss Account
for the 52 weeks ended 25 September 2004
28 September 29 September
2003 to 25 2002 to 27
September 2004 September 2003
#'000 #'000
Turnover 12,026 14,294
Cost of Sales (3,111) (3,937)
______________ ______________
Gross Profit 8,915 10,357
Administrative expenses 8,675 10,746
excluding Exceptional expenses
Exceptional administrative expenses
Reorganisation - 108
Provision for impairment in value of tangible - 200
fixed assets
______________ ______________
Total Administrative expenses 8,675 11,054
______________ ______________
Operating Profit / (Loss) 240 (697)
Other Operating Income 26 30
______________ ______________
Operating Profit / (Loss) on ordinary activities 266 (667)
Loss on disposal (73) (991)
Interest receivable and similar income 6 18
Interest payable and similar charges (129) (204)
______________ ______________
Profit / (Loss) on ordinary activities before taxation 70 (1,844)
Taxation on profit / ( loss) on ordinary activities 500 0
______________ ______________
Profit / (Loss) for the financial period 570 (1,844)
Dividends 0 0
______________ ______________
Amounts transferred to / from reserves 570 (1,844)
============== ==============
Earnings / (Loss) per share
Basic and diluted 0.10 p (0.34) p
============== ==============
Consolidated Balance Sheet
As at 25 As at 27
September September
2004 2003
#000's #000's
FIXED ASSETS
Intangible 3,472 3,688
Tangible 6,364 5,912
______________ ______________
9,836 9,600
CURRENT ASSETS
Stocks 193 189
Deferred tax 500
Debtors 1,329 2,104
Cash 190 151
______________ ______________
2,212 2,444
CREDITORS: amounts falling due within
one year (3,770) (4,198)
______________ ______________
NET CURRENT ASSETS (1,558) (1,754)
______________ ______________
TOTAL ASSETS LESS CURRENT LIABILITIES 8,278 7,846
CREDITORS: amounts falling due after (1,132) (1,270)
more than one year ______________ ______________
7,146 6,576
______________ ______________
CAPITAL & RESERVES
Share capital 5,457 5,457
Share premium 8,104 8,104
Merger reserve 2,060 2,060
Capital redemption reserve 5,440 5,440
Other reserve (54) (54)
P&L account (13,861) (14,431)
______________ ______________
SHAREHOLDERS' FUNDS EQUITY 7,146 6,576
______________ ______________
Consolidated Cash Flow Statement for the Period ended 25 September 2004
52 Weeks ended 52 Weeks ended
25 September 2004 27 September 2003
Note #'000 #'000 #'000 #'000
Net cash inflow / (outflow) from operating 1 1,064 1,136
activities
Returns on investment & servicing of finance
Interest Received 6 18
Interest Paid (129) (204)
__________ __________
(123) (186)
Capital Expenditure & Financial Investment
Purchase of tangible fixed assets (1,184) (627)
Net Proceeds from sale tangible fixed assets 352 -
__________ __________
(832) (627)
__________ __________
Net cash inflow / (outflow) before management 109 323
of liquid resources
Financing
Repayment of long term borrowing (70) (540)
__________ __________
(70) (540)
__________ __________
Increase / (Decrease) in Cash 2 39 (217)
========== ==========
Notes
52 Weeks ended 52 Weeks ended
25 September 2004 27 September 2003
#'000 #'000
1 Reconciliation of operating profit/(loss) to net cash
outflow from operating activities
Operating Profit /(Loss) for period 266 (667)
Amortisation of Goodwill 216 216
Depreciation 516 667
Impairment of tangible fixed assets - 200
Increase / decrease in stock (4) 59
Increase in debtors 10 444
Increase in creditors 60 217
____________ ____________
Net cash inflow from operating activities 1,064 1,136
____________ ____________
#'000 #'000
2 Increase / (Decrease) in cash in the period 39 (217)
Cash outflow from repayment of loan 70 540
____________ ____________
Movement in net debt in the year 109 323
Net debt at start of period (1,659) (1,982)
____________ ____________
Net debt at end of period (1,550) (1,659)
____________ ____________
3 Analysis of net debt Non -cash
At 28 Sept Cash flow Movement At 25 Sept
2003 2004
#'000 #'000 #'000 #'000
Cash at bank and in hand 151 39 - 190
__________ __________ __________ __________
Loans due before one year (540) - (68) (608)
Loans due after one year (1,270) 70 68 (1,132)
__________ __________ __________ __________
Financing excluding share capital (1,810) 70 - (1,740)
__________ __________ __________ __________
Total (1,659) 109 - (1,550)
========== ========== ========== ==========
4 Nature of Preliminary Announcement
This preliminary results statement has been prepared on the basis of the
same accounting policies as those set in the financial statements for the
period ended 27 September 2003. The financial information contained in this
statement does not constitute accounts as defined section 240 of the
Companies Act 1985.
The summarised balance sheet at 25 September 2004 and the summarised profit
and loss account, summarised cash flow statement and associated notes for
the year ended have been extracted from the Group's 2004 financial
statements. Those financial statements have not yet been delivered to the
Registrar. The financial information for the period ended 27 September 2003
is an abridged version of the group's published financial statements for
the period which contained an unqualified audit report and which have been
filed with the Registrar of Companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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