RNS Number:7965K
Hartford Group PLC
28 September 2001
HARTFORD GROUP PLC
Interim Results for the 28 Week Period ended 15 July 2001
Hartford Group PLC ("Hartford"), which operates a total of eight restaurants
and bars within London and the Home Counties, announces Interim Results for
the 28 week period ended 15 July 2001.
HIGHLIGHTS
* Turnover was #3.6 million (2000: #3.9 million)
* Losses substantially reduced. Loss of #607,000, which includes
one-off costs of #117,000, (2000: loss of #1.67m, including
exceptionals of # 897,000)
* Two new units opened in Ascot and Loughton. Food-led pub concept
has encouraging potential
* Cost control performance improved
* Significant refurbishment programme well underway
* Test pilot of new bar-led trading concept, The Common Room, in
Wimbledon (formerly Utah fine-dining restaurant)
Stephen Thomas, Chairman of Hartford Group PLC, commented:
"The last few months have been a challenging time for the Group as we have
undergone a significant period of restructuring and improvement to our
internal systems, cost control and service standards across the business.
"We approach the second half with a firm strategy in place for the future and
have both the ambition and a platform from which to build a substantial
business going forward."
28 September 2001
ENQUIRIES:
Hartford Group PLC Tel: 020 7654 3010
Sheila McKenzie, Chief Executive
College Hill
Justine Warren Tel: 020 7457 2020
Gareth David
CHAIRMAN'S STATEMENT
Introduction
The period under review has seen some of the impact of changes, which were
made as a result of the strategic review of the Group that was undertaken at
the end of last year.
Along with many of our fellow industry operators, the last few months have
proved to be a challenging trading period. However, good progress has been
made during the first half of 2001. During the period, management has
concentrated on establishing and implementing a strategy for each unit,
controlling costs and improving standards across the business.
The aim of the Board remains to continue to secure the stability of the Group,
improve performance of the existing operations and to seek out opportunities
in our sector. The future of the Group is in the development of a simple
trading format that concentrates on offering good value, quality, service and
atmosphere to customers.
Financial Review
The period under review covers the 28 weeks to 15 July 2001. Trading has been
mixed across the period. The Group made a loss of #607,000, which includes
one-off costs amounting to #117,000 relating principally to restructuring and
the termination of certain executive appointments, (2000: loss of #1.67m
including exceptionals of #897,000). Turnover was #3.6m (2000: #3.9m).
The Directors have made a concentrated effort to cut costs across the business
and these measures have meant that losses have been reduced considerably.
This momentum should continue into the second half and improve the Group's
financial position going forward.
Review of Operations
During the period, the Group's operations comprised six restaurants in London
and a total of 36 weeks trading contribution from the two pub sites opened in
Ascot (The Wells) in February and Loughton (The King's Head) in April.
It is the Group's intention to move towards a more balanced estate with less
emphasis on food-led operations and a greater element of bar-led business.
The management has now undertaken a thorough review of the capabilities of the
existing unit management teams. Experienced and skilled staff are now in
place in all sites and training programmes have been, and continue to be,
implemented to ensure consistency of service across the Group's operations. A
more standardised approach to working practices has been introduced and better
control systems are now in place. A new back-of-house and Epos system has been
selected and will be installed throughout the business as refurbishments take
place. In addition, health and safety standards have improved through the
setting of more rigorous requirements and by implementing an ongoing
maintenance and repair programme. Overall labour costs were reduced by 9% and
variable costs reduced by 26% resulting in a net improvement in the Group's
overall financial position.
Developments and Changes
To maximise value from our assets, a number of changes have been made to
operating formats across the Group.
Dakota, the Group's neighbourhood restaurant in Notting Hill Gate, continues
to trade well and benefits from a loyal and consistent level of local custom.
In March 2001, a small basement bar with its own entrance was opened and
canopies were installed over the outside terrace to ensure tables could be
used in all but the most adverse summer weather. These changes to the
original trading format have been well received.
Similar improvements have been made to the outside trading area at Canyon
which is situated on Richmond riverside. To capitalise on the large number of
visitors to the waterfront in Richmond during high summer, the liquor license
was changed at this location to benefit from off-sales trade.
Elsewhere across the estate, a number of the restaurants are undergoing
refurbishment. Since the half year end, The Pharmacy in Notting Hill Gate,
Montana in Fulham and Utah in Wimbledon have had closure periods for
refurbishment, which will result in a total loss of 25 trading weeks.
At The Pharmacy, improvements have been made to the kitchen and back-of-house
areas and a new design and layout introduced to the ground floor bar, aimed at
improving the "flow" of this operation and increasing the capacity of the bar.
The Pharmacy reopened last week and features a number of new installations
from Damian Hirst, the renowned artist and one of the original investors in
this restaurant. The total investment in The Pharmacy refurbishment will be #
450,000.
At Montana, a new bar and informal seating area is being installed that will
increase the capacity for drinks sales. This unit is due to reopen next month.
Utah, located in Wimbledon, has had a disappointing trading history in spite
of its favourable location in Wimbledon village. It was decided to adapt this
location to a new trading style named 'The Common Room' due to open in
October. This is a test concept for a bar-led operation, targeting the 20-35
year old age group.
By February 2001, the Group had opened the first of the empty public house
sites that had been in the Hartford portfolio since 2000 - The Wells, Ascot -
as a trial site for a food pub concept. A second pub site was subsequently
opened in Loughton, Essex, in April 2001. The pubs offer an informal and
relaxed environment in which to eat, drink and socialise, for a range of age
and social groups. The concept features an innovative approach to wine
retailing where bottles can be purchased at off-licence prices to take home
and at those same prices with a fixed corkage charge for wines drunk on the
premises.
The trading style of Ascot has been well received by customers and the
Directors believe there is scope to develop this concept. Sales at The Wells
have increased substantially since opening in February 2001. We are evaluating
a development model and property specification using the experience gained
from this project before embarking on further pub projects. Any future
locations for this format would require trading areas of approximately 2,700
sq. ft., located in town/suburban locations within the M25 and London areas.
A slower start at Loughton has led us to make some changes to the concept in
this location, reducing the emphasis on dining. Although it is too early to
evaluate the effect of these changes, business is now building.
Management and Employees
In February 2001, Jeremy Spencer (Operations Director) and Frances Gillespie
(HR Director) joined the executive management team. Jeremy Spencer was
subsequently appointed to the Hartford board in June 2001. It is the Group's
intention to appoint an additional two non-executive directors to the PLC
board by the end of the year. These appointments will reflect the Group's
ambition to strengthen our expertise in all areas.
We aim to attract and retain the best staff. Bonus and share option schemes
have been implemented for staff to encourage greater commitment to and
responsibility for Company performance.
Current Trading and Prospects
Current trading continues to be variable and the trade during the second half
will be disrupted to a considerable degree by the refurbishment programme. The
Group will experience approximately 25 weeks of closed units and the
subsequent loss of trade. However, following this period of disruption, the
Group will be well placed to expand its custom and increase sales.
At the beginning of the year the Group set out to develop our strategy, to
bring costs in line with sales and to develop a professional and motivated
management team. We have made good progress in all these areas. We continue to
believe the future of Hartford lies in developing a simple style of trading
that offers good value, quality, service and atmosphere to our customers. The
Board will assess new opportunities in the market as they arise. We approach
the second half with a firm strategy in place for the future and have both the
ambition and a platform from which to build a substantial business going
forward.
STEPHEN THOMAS
Chairman
28 September 2001
Unaudited Consolidated Profit &
Loss Account
for the period from 1 January
2001 to 15 July 2001
unaudited unaudited audited
1 January 3 January to 16 3 January to
to July 2000
31 December
15 July 2000
2001
#'000 #'000 #'000
Turnover 3,555 3,943 7,253
Cost of Sales 1,089 1,143 2,152
Gross Profit 2,466 2,800 5,101
Administrative expenses 3,135 3,565 6,740
excluding Exceptional
expenses
Exceptional administrative
expenses
Provision for impairment in
value of Tangible
fixed - 897 1,536
assets
Total Administrative 3,135 4,462 8,276
expenses
Other Operating Income 26 - -
Operating Loss before merger (643) (1,662) (3,175)
costs
Merger costs - - (67)
(643) (1,662) (3,242)
Interest receivable and 45 2 13
similar income
Interest payable and similar (9) (13) (37)
charges
Loss on ordinary activities (607) (1,673) (3,266)
before taxation
Taxation on loss on ordinary - - -
activities
Loss for the financial (607) (1,673) (3,266)
period
Dividends - - -
Amounts transferred from (607) (1,673) (3,266)
reserves
Loss per share
Basic and (0.46)p (3.58)p (6.48)p
diluted
Unaudited consolidated Balance Sheet
unaudited unaudited audited
15 July 2001 16 July 2000 31 December 2000
#'000 #'000 #'000 #'000 #'000 #'000
Fixed Assets
Intangible 2,207 2,336 2,277
Tangible 5,386 5,011 4,805
7,593 7,347 7,082
Current Assets
Stocks 150 132 127
Debtors and
Prepayments 795 686 584
Cash 1,008 143 2,802
1,953 961 3,513
Creditors: amounts
falling due within
one year (1,469) (1,847) (1,897)
Net Current Assets 484 (886) 1,616
/ (Liabilities)
Total Assets less 8,077 6,461 8,698
Current Liabilities
Creditors: amounts
falling due after
more than one year (2) (21) (16)
8,075 6,440 8,682
Capital and
Reserves
Share capital 1,310 5,846 6,750
Share premium 5,878 3,014 5,878
Merger reserve 2,060 2,060 2,060
Capital 5,440 - -
redemption
reserve
Other reserve (54) (54) (54)
P&L account (6,559) (4,426) (5,952)
Shareholders' 8,075 6,440 8,682
Funds
All Shareholders' funds are equity except #5,440,000 in respect of deferred
share capital at 31 December 2000.
Unaudited Consolidated Cash Flow
Statement
For the Period ended 15 July 2001
Period ended Period ended Period ended
15 July 2001 16 July 2000 31 December
2000
Note #'000 #'000 #'000 #'000 #'000 #'000
Net cash outflow 1 (955) (77) (303)
from operating
activities
Returns on
investment &
servicing of finance
Interest Received 45 2 13
Interest Paid (2) (5) (25)
Interest element of (7) (8) (12)
finance lease rental
payment
36 (11) (24)
Taxation
UK corporation tax - - -
- - -
Capital Investment &
Financial Investment
Acquisition of Fixed (842) (535) (1,192)
Assets
(842) (535) (1,192)
Cash outflow before (1,761) (623) (1,519)
management of Liquid
resources and
financing
Financing
Net proceeds of - - 3,835
share issue
Repayment of loans - (438) (438)
Capital element of (33) (38) (91)
finance lease rental
payments
(33) (476) 3,306
Increase / 2 (1,794) (1,099) 1,787
(Decrease) in Cash
Notes to the unaudited cash flow
statement
For the period ended 15 July 2001
Period Period Period
ended ended ended
15 July 16 July 31 December
2001 2000 2000
1. Reconciliation of operating loss #'000 #'000 #'000
to net cash outflow
from operating activities
Operating Loss for period (643) (1,662) (3,175)
Amortisation of Goodwill 70 69 118
Non cash movement - (10) -
Merger Costs - - (67)
Depreciation including 261 1,238 2,057
impairment
(Increase) / Decrease in (23) 11 16
stocks
(Increase)/ Decrease in (211) (15) 87
debtors
(Decrease)/ Increase in (409) 292 661
creditors
Net cash outflow from (955) (77) (303)
operating activities
2. Decrease in cash in the (1,794) (1,099) 1,787
period
Cash outflow from decrease
in
debt and lease 33 476 529
financing
Decrease in net funds in (1,761) (623) 2,316
the period
Net funds at start of 2,722 406 406
period
Net funds/ (debt) at end 961 (217) 2,722
of period
3. Analysis of net funds / At 1 Cashflow At 15 July
(debt) January
2001 2001
Cash at bank and in hand 2,802 (1,794) 1,008
Finance leases (80) 33 (47)
Total 2,722 (1,761) 961
HARTFORD GROUP PLC
Interim Results for the 28 Week Period ended 15 July 2001
Notes to the Interim Results
1. The interim statements have been prepared under the same accounting
policies as the statutory accounts for the period ending 31 December 2000.
The Group recognises property acquisitions on completion.
2. Based upon the results of the Group there is no tax charge / (credit)
for the period.
3. The calculation of basic and diluted earnings per share is based upon
a loss after taxation for the period of #607,000 (2000: loss #1,673,000; Year
to 31 December 2000: #3,266,000) and the weighted number of ordinary shares in
issue during the period was 130,953,032 (2000: 46,767,117; Year to 31
December 2000: 50,408,414).
4. No interim dividend is proposed.
5. The financial information is unaudited and does not amount to full
accounts, within the meaning of Section 240 of the Companies Act, 1985.
Accounts for Hartford Group plc for the period to 2 January 2000, have been
filed with the Registrar of Companies, and received an unqualified audit
report.
6. The reduction in share capital relates to the company's purchase of
its own deferred shares for a total consideration of 1p.
INDEPENDENT REVIEW REPORT TO HARTFORD GROUP PLC
Introduction
We have been instructed by the company to review the financial information for
the period from 1 January 2001 to 15 July 2001 on pages 5 to 9. 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 ensuring 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 by the Auditing Practices Board for use in the United Kingdom. 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 United Kingdom 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 period from 1
January 2001 to 15 July 2001.
BDO Stoy Hayward
Chartered Accountants
London
28 September 2001
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