RNS Number:5773A
Hartford Group PLC
16 March 2001
HARTFORD GROUP PLC
Preliminary Results for the Year ended 31 December 2000
Hartford Group PLC ("Hartford"), the quoted restaurant operator, announces
Preliminary results for the year ended 31 December 2000.
HIGHLIGHTS
* Turnover was #7.3 million (1999: #6.9 million)
* Operating loss was #3.2 million (1999: #1.6 million), after exceptional
items of #1.5 million (1999: #0.5 million) relating to an impairment
provision
* Successful completion of fundraising to raise #3.6 million (December
2000)
* Appointment of new management team of Stephen Thomas as non-executive
Chairman and Sheila McKenzie as Chief Executive to plc Board. Jeremy
Spencer, Operations Director and Frances Gillespie, HR Director joined the
executive board.
* Strategic review of the Group's existing operations undertaken. A plan
is now in place to improve performance across the Group.
* The review of the Group's strategy an ongoing process. Next progress
report at interim stage.
* Trial of new pub format in Ascot, second pub site to open at Loughton in
April.
* Capital investment programme in place to improve performance across the
estate
* #2.8m cash balance at year end
Stephen Thomas, Chairman of Hartford Group PLC, commented:
"This has been a year of reconstruction for Hartford. Following the completion
of the strategic review of the existing estate, we now have a strategy in
place for the future growth of the Group. The Board continues to review
opportunities, either start-up or existing operations, in the hospitality and
leisure sector."
16 March 2001
ENQUIRIES:
Hartford Group PLC Tel: 020 7457 2020 (Today)
Sheila McKenzie, Chief Executive Tel: 020 7654 3010 (Thereafter)
College Hill Tel: 020 7457 2020
Justine Warren
Gareth David
HARTFORD GROUP PLC
Preliminary Results for the year ended 31 December 2000
CHAIRMAN'S STATEMENT
The past year has been a period of enormous change for Hartford Group
("Hartford"), culminating in the successful #3.6 million fund raising in
December, the appointment of a new Board and a comprehensive review of the
Group's previous strategy.
The previous strategy - to operate neighbourhood, high quality, fine dining
restaurants - was unsuccessful and the expenditure on acquiring and developing
these properties was too high. As stated in the November 2000 Prospectus, the
new Board of Hartford conducted a strategic review of the business. Each of
the Group's restaurant operations was assessed and a number of steps have been
taken to improve performance across the Group.
The main aims of the new Board remain to secure the stability of the Group,
improve performance of the existing operations and, in the medium term, seek
to invest in start-up or development opportunities in the hospitality and
leisure sector.
We strongly believe that the future of the Group will be secured through the
adoption of a less elitist approach to the eating and drinking market, coupled
with a more rigorous, commercial approach to the operation of the existing
restaurants. The business will also benefit from the introduction of a more
simple style of trading that concentrates on offering good value, quality,
service and atmosphere to customers at the right price. In some of the
restaurants that approach dictates a relaxation of the current concept with
the introduction of menus designed to generate business in quieter trading
periods and larger bar areas.
In undertaking the review, the Board set out to make the best use of existing
assets. That commitment - together with the strategy to adopt a less elitist
approach - has led to the development and trial of a new pub format in Ascot,
with a second trial site due to open in Loughton in the next few weeks. The
Ascot trading format was conceived and built in less than six weeks in order
to fulfil an obligation to the landlord to open by early 2001. There was no
such commitment on the Loughton site therefore more time has been available
for further development of the concept. Provided initial trading in both sites
is favourable, this format will be developed further.
Results
The Group made an operating loss in the period to 31 December 2000 of #3.2
million (1999: #1.6 million loss) after exceptional items of #1.5 million on
turnover of #7.3 million (1999: #6.9 million). The exceptional items
principally relate to impairments on tangible fixed assets. Following the
strategic review, additional provisions have been made against two of the
properties over and above those made earlier in the year. In the case of
Loughton, the Board has confirmed its statement in the November 2000
Prospectus that the carrying value of this property was high. In the light of
this strategic review and the reassessment of the potential for improvement in
Utah's performance, provisions have been made against its carrying value.
These units are expected to make a small cash contribution to the business
this year. However, these contributions would not be sufficient to justify
their high carrying values.
HARTFORD GROUP PLC
Preliminary Results for the year ended 31 December 2000
CHAIRMAN'S STATEMENT (cont'd)
The directors do not propose to recommend the payment of a final dividend.
Review of Operations
During the past year, the Group's operations have comprised six restaurants in
London.
Following the decision to focus on widening the appeal of any concept
undertaken by the Group, a review of each existing trading style plus location
commenced in the last two weeks of the year.
Restaurants
The majority of the properties are located in secondary trading areas. The
restaurant locations are well placed to benefit from trade from affluent,
residential populations at evenings and weekends but there is limited
opportunity for substantial daytime trade.
However, the strategic review concluded that The Pharmacy Bar and Restaurant
benefits from a fundamentally good location and is a good cash flow generator.
There has been no investment in Pharmacy since it first opened in January
1998. It has been decided to proceed with the refurbishment of this location
in the second half of 2001. The expenditure will focus on improving the layout
and "flow" of the operation and on enhancing the ground floor bar business.
After reviewing the remainder of the restaurants, and taking into account the
lack of interest when Utah and Idaho were put on the open market, the Board
has decided to retain Utah - which despite poor performance to date boasts a
favourable location in Wimbledon Village - and Idaho, within the portfolio. A
number of changes are planned, however, which we believe will improve
operating performance at all the locations.
In certain cases - Utah, Montana, Idaho - some capital expenditure is required
to bring about these changes. The bulk of this expense will be dedicated to
increasing those areas that can be used by customers and, in some cases,
increasing the size of the bar. Our total capital expenditure budget for
existing sites this year is #500,000.
HARTFORD GROUP PLC
Preliminary Results for the year ended 31 December 2000
CHAIRMAN'S STATEMENT (cont'd)
New Concepts
As a result of the review it was decided to retain the Group's two public
house properties in Ascot (The Wells) and Loughton (The King's Head) and trial
a new, informal pub format for the Group. There were time constraints on the
development programme for Ascot and the prototype for the concept opened
shortly after the decision to proceed was taken in mid February. The Wells
property is situated on a main road leading into Ascot. It retains much of the
original public house look and layout with a central bar dividing the drinking
and dining areas on either side.
The Wells offers an informal and relaxed environment with equal emphasis on
eating, drinking and socialising, across a range of age and social groups. The
concept also boasts an innovative approach to wine retailing, where customers
are able to buy wine at off-licence prices, with a fixed corkage charge
payable for wines consumed on the premises. In addition, wine can be purchased
at off-licence prices to take home. Initially the term "gastro pub" was used
to describe the business but as that term is most accurately used to describe
one-off operations, often run as chef-owner-operator businesses, it does not
seem appropriate in the longer term. A suitable description beyond "new style
pub" is yet to be found.
The Ascot offer has been well received by customers although initial
indications are that the concept will require larger premises - or in the case
of Ascot an extension - to reach optimum trading levels. Initial levels of
draught beer sales would also dictate a future requirement for free of tie
leases (both Ascot and Loughton are tied).
Total development expenditure on the project was #200,000 against the previous
management's estimate of #800,000.
The second trial site, at Loughton in Essex, is due to open in mid April. Once
there is sufficient trading information available to assess the viability of
the concept, we will decide whether to develop it further and look to secure
further existing public house sites.
HARTFORD GROUP PLC
Preliminary Results for the year ended 31 December 2000
CHAIRMAN'S STATEMENT (cont'd)
Management and Employees
Again seeking to make the best use of assets, in October 2000, the management
vacated the head office at Ledbury Mews North (Notting Hill Gate). This
produced a saving on rent of #65,000 pa. The offices were moved to cheaper and
more cost effective premises, which were already owned, in Westminster. At the
beginning of 2000, the administration team numbered 19; there are now eight in
the team.
Following the Board changes made after the fund raising in December, two key
appointments were made to strengthen the Executive Board in January 2001.
Jeremy Spencer joined as Operations Director and Frances Gillespie joined as
HR Director. Although Sheila McKenzie and I remain the sole plc Board
directors, we expect to make further non-executive appointments to the Board
during the course of this year.
In the course of the strategic review it became clear that there was a lack of
ability and experience in parts of the business. Frances is in the process of
reviewing and strengthening the experience and skills level within the Group.
The Group's management aims to attract and retain the best staff from within
the industry. To aid this process, the Group is in the process of introducing
bonus and share option schemes for staff to encourage greater commitment,
responsibility and interest in Company performance.
Current Trading and Prospects
Trading since the year end has been disappointing. However the business has
been through a considerable period of upheaval and this has undoubtedly taken
its toll in recent months. Comprehensive change and disruption had to take
place before progress could be made. The business now is focused on achieving
the challenging targets in place for the year ahead with an urgent requirement
to bring costs in line with sales and to develop a professional and motivated
management team.
We aim to make this a business with which shareholders, employees and
customers are proud to be associated; we will begin to do this by fulfilling
our aims for this year:
* To secure stability of the Group through improving our trading position
* To identify and start exploiting sustainable opportunities in the
hospitality and leisure sector
We will report our progress to you in detail at our interim results in the
autumn.
STEPHEN THOMAS
Chairman
16 March 2001
HARTFORD GROUP PLC
Consolidated profit and loss account for the period ended 31 December 2000
Period Period to
to 2 January
31 (as
December restated)
2000 2000
#000 #000
Turnover 7,253 6,915
Cost of sales (2,152) (2,136)
----- -----
Gross Profit 5,101 4,779
----- -----
Administrative expenses excluding (6,740) (5,844)
exceptional expenses
Exceptional provision for impairment
in value of tangible fixed assets (1,536) (532)
----- -----
Total administrative expenses (8,276) (6,376)
----- -----
Operating loss before merger costs (3,175) (1,597)
Merger costs (67) (674)
----- -----
(3,242) (2,271)
Interest receivable and similar 13 14
income
Interest payable and similar charges (37) (48)
----- -----
Loss on ordinary activities before (3,266) (2,305)
taxation
Taxation on loss on ordinary - -
activities
----- -----
Loss for the financial period (3,266) (2,305)
----- -----
Loss per share
Basic and diluted (6.48)p (5.83)p
All amounts relate to continuing operations.
HARTFORD GROUP PLC
Consolidated balance sheet at 31 December 2000
As at As at
31 2 January
December 2000
2000 (as
restated)
#000 #000
Fixed Assets
Intangible assets 2,277 2,395
Tangible assets 4,805 5,670
----- -----
7,082 8,065
Current Assets
Stocks 127 143
Debtors 584 671
Cash at bank in hand 2,802 1,701
----- -----
3,513 2,515
Creditors: amounts falling due within one (1,897) (2,383)
year
----- -----
Net current assets 1,616 132
----- -----
Total assets less current liabilities 8,698 8,197
Creditors: amounts falling due after more (16) (84)
than one year
----- -----
Net assets 8,682 8,113
Capital and reserves
Called up share capital 6,750 5,846
Share premium account 5,878 3,014
Merger reserve 2,060 2,060
Other reserve (54) (54)
Profit and loss account (5,952) (2,753)
----- -----
Shareholders' funds 8,682 8,113
All shareholders funds are equity except #5,440,000 in respect of deferred
share capital (1999: #nil).
HARTFORD GROUP PLC
Consolidated cash flow statement for the period ended 31 December 2000
Period to Year ended
31 December 2 January
2000 2000
(as restated)
#000 #000 #000 #000
Net cash outflow from operating activities (303) (1,771)
Return on investments and servicing of
finance
Interest received 13 14
Interest paid (25) (38)
Interest element of finance lease rental (12) (10)
payments
----- -----
(24) (34)
Taxation
UK corporation tax - -
Capital expenditure and financial investment
Acquisition of fixed assets (1,192) (2,275)
----- -----
Cash outflow before management of liquid (1,519) (4,080)
resources and financing
Management of liquid resources
Decrease in short-term deposits - 500
Financing
Net proceeds of share issues 3,835 3,426
Net proceeds of share issue by group - 1,308
undertakings
Payment for purchase of deferred shares - (488)
including costs
New loans - 438
Repayment of loans (438) -
Capital element of finance lease rental (91) (67)
payments
----- -----
3,306 4,617
----- -----
Increase in cash 1,787 1,037
The notes on pages 7 to 23 form part of these financial statements.
NOTES
1. Publication of non-statutory accounts
The financial information set out above does not constitute the
company's statutory accounts for the period from 3 January 2000 to 31
December 2000, but is derived from those accounts. Statutory accounts
for 2000 will be delivered to the Registrar of Companies following the
company's annual general meeting. The auditors have reported on these
accounts; their reports were unqualified and did not contain
statements under s237(2) or (3) Companies Act 1985.
2. Basic and diluted loss per share
Basic and diluted earnings per ordinary share have been calculated
using the weighted average number of shares in issue during the
period. The weighted average number of equity shares in issue was
50,408,414 (January 2000: 39,522,604) and the earnings, being loss
after tax are #3,266,000(January 2000: loss #2,305,000).
3.Prior year adjustment
The accounting policy has been amended in respect of pre-opening costs
to write off such costs as incurred, in accordance with UITF24.
Previously these were charged to the profit and loss account over a
period of one year, commencing three months after the opening of new
units. This change in policy has resulted in a reduction in
administrative costs of #130,000 during the period ended 31 December
2000, a reduction of #38,000 in balance sheet pre-opening costs at 31
December 2000, and a similar reduction of #168,000 at 2 January 2000.
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