RNS Number:1431X
Hartford Group PLC
19 January 2006
HARTFORD GROUP PLC
("Hartford" or "the Group" or "the Company")
Preliminary Results for the 52 weeks ended 24 September 2005
Hartford Group PLC, the London focussed licensed retailer, announces preliminary
results for the 52 weeks ended 24 September 2005.
HIGHLIGHTS
* Turnover increased 10.4% to #13.3m (2004: #12.0m) with like for like sales
up 3.7%
* Gross margin maintained at 74.3% (2004: 74.1%)
* Profit before tax (excluding amortisation of goodwill and reorganisation
costs) grew by 40.2% to #401k (2004: #286k)
* Acquisition of Henry J Bean's Group Limited, the American bar and grill
concept, on 24 September 2005 for consideration of #5.8m, funded entirely by
new banking facilities
* Integration of Henry J Bean's successfully completed, and trading is in
line with expectations
* Trading for the first 16 weeks of the new financial year has been good,
with revenue 36.1% ahead of last year and like for like sales up 2.9%
* Christmas trading was good with like-for-like sales 3.3% ahead of last
year's record performance for the five weeks to 31 December 2005
Stephen Thomas, Chairman of Hartford Group PLC, commented:
"These results demonstrate another solid performance from Hartford. The core
estate has seen improvement in both sales and margins and the integration of the
Henry J Bean's has been completed".
"The current year has begun well, with positive trading trends continuing.
Hartford is now in a strong position to move forward and accelerate the
expansion of the Group."
19 January 2006
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
The financial year ended 24th September 2005 was a significant one for Hartford,
with another solid year's trading brought to a close with the successful
acquisition of Henry J Bean's Group Limited and the exciting growth
opportunities that this will bring. Earlier in the year we acquired two
profitable units trading as Brodies and successfully disposed of three
under-performing sites. Overall, we have improved profit before tax (excluding
amortisation of goodwill and reorganisation costs) by 40.2% to #401k, with the
positive trading trends continuing into the new financial year. The Financial
and Operational reviews below set out the details of how this has been achieved
through a combination of consumer-focused outlets and robust financial
management. This puts Hartford in a strong position to accelerate the pace of
its expansion in the future.
To recognise the conclusion of a period of extensive reorganisation and
turnaround, and to enable the Group to deliver improved benefits for
shareholders in the future, we are announcing a number of corporate initiatives.
These changes include accelerating our reporting timetable, changing our Company
name to The Food & Drink Group plc and reconstructing both the reserves in our
balance sheet and the number of shares in issue. Simplifying the reserves
position and removing the historic deficit on the Profit and Loss account
reserve will increase the options available to the Company in the future to
enhance shareholder value. All of the proposed changes will be explained in
detail in a circular to be issued in the near future and will be put before
shareholders for approval at the Annual General Meeting.
Financial Review
Sales for the Group as a whole grew by 10.4%, generated by an encouraging
like-for-like sales increase of 3.7% and supplemented by the impact of
acquisitions. This growth in sales has been achieved and at the same time gross
margins have moved ahead of last year to 74.3% (2004: 74.1%).
Despite further increases in the minimum wage, total wage costs reduced by half
a percentage point, measured as a percentage of sales, resulting primarily from
better recruitment and lower staff turnover. Site costs showed a modest
increase as a percentage of sales, both as a result of increased utility costs
and as we invested in key areas of maintenance.
Following the acquisition of Henry J Bean's Group Limited on the last day of the
financial year, we have taken a reorganisation charge of #200k. This charge
covers expected redundancy costs and the integration of the administration
centres. The acquisitions of Brodies and Henry J Bean's have given rise to
goodwill on consolidation. This has had no material impact on the amortisation
charge in the financial year under review, which has increased marginally from
#216k in 2004 to #220k in 2005, but the annual goodwill charge for amortisation
in future will be #450k.
There is a small loss on disposal of #12k, resulting from the disposal of two of
the smaller City Bars and a Bar towards the end of the financial year.
Interest paid in the financial year was #194k (2004: #129k).
Excluding the costs of reorganisation, the Group increased profit before tax and
amortisation of goodwill by 40.2% to #401k compared with #286k in 2004.
There is no corporation tax charge in the current year and no adjustment to the
deferred tax position announced last year.
Earnings per share are nil compared to 0.10p last year. This is distorted by two
material but one-off exceptional items, the reorganisation charge this year
(#200k) and the creation of a deferred tax asset (#500k) in the prior year. If
we add back the reorganisation costs this year earnings per share rise to 0.03p
and if we add back the deferred tax asset in the prior year earnings per share
(in full) were 0.01p last year. These adjustments show the underlying earnings
per share of the Group.
The Board does not propose to pay a dividend this year.
The Group has spent #1.0m on capital expenditure and #7.7m on acquisitions,
including costs, this year. The capital expenditure is described in detail in
the Property section below, but in summary, comprised two major refurbishments,
together with the relocation of our administration centre and continued support
as required by the estate.
The EBITDA (earnings before interest, tax, depreciation, amortisation of
goodwill and reorganisation charge) has increased by 16.4% to #1.2m from #1.0m
last year, with the EBITDA margin also improved by half a percentage point.
Following capital expenditure and acquisitions, there was a net cash outflow of
#7.7m. Both acquisitions were financed out of new banking facilities provided
by Barclays Bank plc. At the year end, net debt was #9.2m, with total
facilities of #10.3m. Since the year end we have put interest rate hedging in
place, purchasing a three year interest rate cap.
The Group will be adopting International Financial Reporting Standards in line
with the approved timetable for AIM listed companies. The first set of accounts
to comply with the new reporting standards will be for the year ending September
2008.
Review of Operations
Henry J Bean's
As has been previously announced, we acquired Henry J Bean's Group Limited on
24th September 2005 for a net consideration of #5.8m. This acquisition
delivered six UK managed operations (five Henry J Bean's and the award winning
Apartment 195), together with the global franchise rights to the Henry J Bean's
brand. At the date of the acquisition there were 4 UK franchises and 13
international franchise operations. Since the year end a new overseas franchise
agreement has been signed and a number of others are in the pipeline.
The integration of all central administrative and operational functions has been
successfully completed and with purchasing and supply chain discussions
substantially complete, focus has moved to the acquired operating units. We are
looking to retain and build upon all the key elements that have made Henry J
Bean's a successful brand, as well as implementing improvement programmes across
the entire operation.
We are now actively looking to expand both the franchise business and the UK
managed sites and I hope to be able to report positively about both of these
areas in the near future.
This acquisition is extremely exciting for Hartford, because not only is it
immediately earnings enhancing, but it also gives us two highly attractive
growth opportunities - UK managed operations and international franchising.
Bars
The Bars division of the business, which comprises ten sites, had another good
year, with the sale of the Jamies Holborn offset by the acquisition in July 2005
of two Brodies sites in Paternoster Square (adjacent to St Paul's Cathedral) and
Canary Wharf. Like-for-like sales grew by 3.8%, with EBITDA margin improving by
1.6% points, principally through improved wage and variable cost control. The
operations have continued to evolve, with increased focus on the individuality
of each site, under-pinned by strong and consistent company-wide controls and
support processes. This search for individuality has resulted in a number of
differing approaches, from the introduction of innovative cocktail lists through
to the targeted use of live entertainment and the use of the bars for specific
events, such as a particularly successful evening with the All Blacks last year
at Heads and Tails.
The market in which our bars operate continues to be competitive, but these
results show that by constantly focusing the business on the delivery of quality
product and excellent service we can continue to improve both sales and margins.
The two Brodies sites were acquired in July 2005 for #1.4m. Following an
initial review, we have decided to maintain both sites under the Brodies name
for the foreseeable future. They occupy a marginally different market position
to the Jamies sites, with a slightly younger customer profile and a stronger
evening business. Both sites are performing well and contributing to profits.
We have successfully extended licensing hours at eight of our sites, following
licensing reform in November 2005. These additional hours will be used
selectively, principally in response to the needs of private functions.
City Bars
Sales within the City Bars division, which comprises of nine sites, were 22.2%
up on last year, with the impact of last year's acquisitions contributing a full
year's sales. Like-for-like sales were marginally positive at +0.7% and the
EBITDA margin remains higher in this section of the business than the rest of
the Group. These sites tend to have a loyal and regular customer base that
represents a significant proportion of total business. It is therefore one of
our key priorities to ensure that this group of customers is well catered for.
This is achieved by a continuous focus on both service and product quality with
particular attention given to both the wine list, rightly regarded as one of the
best in the City, and the on-going education of our front-of-house teams.
Licensing reform has been a relatively painless experience in the City of
London, with all of the sites achieving extensions to their licensed hours.
However, it is not our intention to change the trading format for these bars,
rather to maintain the flexibility they have always enjoyed catering to our
customers' needs, particularly with respect to private functions.
Restaurants
The performance of the only remaining restaurant in the Group's portfolio,
Canyon at Richmond Riverside was encouraging, with an 8.0% improvement in sales
and a 2.8% point improvement in the EBITDA margin. This trend is continuing
into the new financial year.
Management and Employees
The acquisition of Henry J Bean's Group at the end of the financial year has
triggered a reorganisation of the senior management team at Hartford, allowing
us to refocus resources to continue to drive the business forwards. To this
end, the role of Operations Director has become redundant and Jeremy Spencer
left the company at the end of 2005. Jeremy has been with Hartford for five
years, and his drive, commitment and skill have played a major part in the
fundamental restructuring that has resulted in the profitable, focused company
that it is today. On behalf of the Board, I would like to thank Jeremy and wish
him well in his future career.
The restructuring has created a number of new opportunities at Hartford,
particularly for internal progression, but we are also delighted to announce the
appointment of Mark Crowther as Trading Director. Mark was formerly a
divisional Managing Director of Brakes Foodservice Limited and has significant
previous experience in the licensed retail sector. His appointment will allow
management to increase its focus on expansion opportunities and further
underpins our commitment to build Hartford into a substantial business within
the wider licensed retailing arena, both in the UK, and internationally, through
the franchising of Henry J Bean's.
The recruitment, development and retention of top quality site staff and
management continues to be one of our highest priorities. We have implemented
an improved screening programme for new recruits this year, assessing aptitude
for working in our industry, in addition to a more traditional skills
assessment. This has had a marked effect, with staff turnover within their
first six months declining significantly. Our staffs training programmes
continue to develop, with an increased focus on performance management, both
from the centre and with the tools we have given our site managers.
Property
We continue to proactively manage our property portfolio, identifying potential
opportunities and developing plans to address them. During the year we
completed a major refurbishment at Jamies Poland Street, Soho and re-branded it
as Polka. The consumer response to the repositioning has been encouraging with
sales showing good improvement and the site has been nominated for an industry
award. We also refurbished Jamies Ludgate Hill, and performance since re-opening
has been good. In addition, we invested in minor capital projects at eleven
other sites continuing our policy of recent years of completing smaller, but
more frequent refurbishments to enable sites to evolve and remain competitive.
We have sold two of the smaller City Bars, Betjemans and Jamies Aldgate. These
sites made no material contribution to profits and the sale resulted in a loss
on disposal of #12k. At the end of the financial year we also moved the Group's
administration centre, exiting an unattractive lease and instead occupying
under-utilised space within the existing business.
Current Trading and Outlook
Trading in the new financial year has been encouraging, with total revenue 36.1%
ahead of last year and the trend of positive like-for-like sales set last year
continuing. In the first 16 weeks of the new financial year, comparable sales
are up by 2.9%. In addition, the acquired Henry J Bean's outlets are performing
to expectation - specifically, the flagship site on the Kings Road in London is
showing sales growth of 2.9% against last year. The improvement in top line
sales across the Group has been achieved whilst also maintaining both margins
and cost controls.
Trading over Christmas continued the trend of recent years, with the level of
bookings better than last year, resulting in like-for-like sales for the five
weeks ending 31 December 2005 increasing by 3.3% ahead of last year. We have
principally use extended licensing hours in previous years to satisfy our
function business, and the new licensing regime has allowed us to continue to do
this for the current year. The impact of licensing reform on the business has
therefore been broadly neutral.
Corporate Reorganisation
Hartford has successfully come through a period of extensive repositioning,
reorganisation and turnaround with the business transformed, in terms of
strategy, operational focus and financial performance. The acquisition of Henry
J Bean's now adds impetus to our future growth opportunities. To reflect the
future prospects for Hartford we intend to implement a number of corporate
changes for the benefit of the Company and its shareholders.
Share Structure
It is impractical and administratively expensive for the Company to have over
545 million shares in issue. We therefore intend to reduce the number of shares
in issue to 4 million, a consolidation of some 136 times. The relevant company
resolutions will be issued in a circular shortly and then put to shareholders at
our Annual General Meeting later on in the year.
Group Balance Sheet Reconstruction
The historic performance of the Group prior to adoption of its new strategy in
2000 has resulted in a number of unnecessary merger reserves in the group
balance sheet, together with a deficit to the Profit and Loss Reserve. We
intend to commence the process required to simplify and reconstruct the reserves
held on the balance sheet and remove the deficit. The process will be explained
in detail in a circular to be posted shortly and will be put to shareholders for
approval at our AGM.
Company Name
To recognise the extent of the transformation that has occurred at Hartford, it
is intended to change the name of the group to The Food & Drink Group plc. This
change will be implemented once the change has been approved by shareholders at
the AGM.
Reporting of Financial Performance
We intend to accelerate the future timing of our reporting to shareholders. We
will aim to announce interim results within six weeks of the relevant financial
period ending and preliminary results for the full financial year within ten
weeks of the period end.
Summary
The coming twelve months will be exciting times for Hartford. We will seek to
improve the performance and composition of the existing trading estate, along
with the commencement of the Henry J Bean's site expansion and the exploitation
of franchise opportunities. The Group is now in a strong position to move
forward and with the further strengthening of management team we can look
forward to accelerating its expansion.
Stephen Thomas
Chairman
Hartford Group plc
19 January 2006
Hartford Group PLC
Consolidated Profit & Loss Account
for the 52 weeks ended 24 September 2005
52 weeks 24 52 weeks 25
September September
2005 2004
#'000 #'000
Turnover 13,273 12,026
Cost of Sales (3,407) (3,111)
Gross Profit 9,866 8,915
Administrative expenses (9,519) (8,675)
excluding Exceptional expenses
Exceptional administrative expenses
Reorganisation (200) 0
Total Administrative expenses (9,719) (8,675)
Operating Profit 147 240
Other Operating Income 35 26
Operating Profit on ordinary activities 182 266
before interest and taxation
Loss on disposal (12) (73)
Interest receivable and similar income 5 6
Interest payable and similar charges (194) (129)
(Loss) / Profit on ordinary activities before tax (19) 70
Taxation on loss on ordinary activities 0 500
(Loss) / Profit for the financial period (19) 570
Dividends 0 0
Amounts transferred (from) / to reserves (19) 570
Profit/(loss) per share
Basic and diluted (0.00) p 0.10 p
Hartford Group PLC
Consolidated Balance Sheet As at 24 As at 25
September September
2005 2004
#000's #000's
FIXED ASSETS
Intangible assets 7,941 3,472
Tangible assets 10,703 6,364
18,644 9,836
CURRENT ASSETS
Stocks 303 193
Deferred Tax 234 500
Debtors 2,322 1,329
Cash at bank and in hand 540 190
3,399 2,212
CREDITORS:amounts falling due within (6,666) (3,770)
one year
NET CURRENT LIABILITIES (3,267) (1,558)
TOTAL ASSETS LESS CURRENT LIABILITIES 15,377 8,278
CREDITORS:amounts falling due after (8,250) (1,132)
more than one year
7,127 7,146
CAPITAL & RESERVES
Called up share capital 5,457 5,457
Share premium account 8,104 8,104
Merger reserve 2,060 2,060
Capital redemption reserve 5,440 5,440
Other reserve (54) (54)
Profit and Loss account (13,880) (13,861)
EQUITY SHAREHOLDERS' FUNDS 7,127 7,146
Hartford Group PLC
Consolidated Cash Flow Statement for the Period ended 24 September 2005
52 Weeks ended 52 Weeks ended
24 September 2005 25 September 2004
Note #'000 #'000 #'000 #'000
Net cash inflow from operating activities 1 1,046 1,064
Returns on investment & servicing of finance
Interest Received 5 6
Interest Paid (194) (129)
(189) (123)
Capital Expenditure & Financial Investment
Acquisition of Fixed Assets (1,036) (1,184)
Net Proceeds from sale of tangible fixed assets 182 352
Purchase of subsidiary undertakings (7,828)
Cash acquired with subsidiary 165
Net cash outflow from capital expenditure and financial (8,517) (832)
investment
Net cash (outflow) / inflow before management of liquid (7,660) 109
resources
Financing
New short term borrowing 1,500 0
Repayment of short term borrowing (608) 0
New long term borrowing 8,250 0
Repayment of long term borrowing (1,132) (70)
8,010 (70)
Increase in Cash 2 350 39
HARTFORD GROUP PLC
NOTES As at As at
24 25
September September
2005 2004
Net cash inflow from operating activities #'000 #'000
1 Operating profit for period 182 266
Amortisation of Goodwill 220 216
Depreciation 560 516
(Increase)/decrease in stock (39) (4)
(Increase)/decrease in debtors (692) 10
(Decrease)/increase in creditors 815 60
Net cash inflow from operating activities 1,046 1,064
Reconciliation of net cash flow to movement in net debt #'000 #'000
2 Increase in cash in the period 350 39
Net cash (inflow)/outflow from repayment of loan (8,010) 70
Movement in net debt in the year (7,660) 109
Net funds at start of period (1,550) (1,659)
Net debt at end of period (9,210) (1,550)
3 Analysis of changes in net debt At 26 Cash At 24
Sept flow Sept
2004 2005
#'000 #'000 #'000
Cash at bank and in hand 190 350 540
Loans due before one year (608) (892) (1,500)
Loans due after one year (1,132) (7,118) (8,250)
Total net debt (1,550) (7,660) (9,210)
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 25 September 2004, The financial information contained in this statement
does not constitute accounts as defined in section 240 of the Companies Act
1985.
The summarised balance sheet at 24 September 2005 and the summarised profit and
loss account, summarised cashflow statement and associated notes for the year
ended have been extracted from the Group's 2005 financial statements. Those
financial statements have not yet been delivered to the Registrar of Companies.
The financial information for the period 25 September 2004 is an abridged
version of the Group's 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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