RNS Number:2997G
Hartford Group PLC
17 January 2003
HARTFORD GROUP PLC
Results for the Period ended 28 September 2002
Hartford Group PLC ("Hartford" or "the Group"), which operates a portfolio of
restaurants and "style-led" bars within London and the Home Counties, announces
results for the 9 month period ended 28 September 2002.
HIGHLIGHTS
* Turnover was up 3% to #4.9 million (9 month period to September
2001: #4.7 million)
* Significant reduction in pre-tax loss to #728,000 in the 9 month
period to September 2002 (12 month period to December 2001:
#5.9 million loss)
* Disposal of non core assets now complete; reorganisation of the
Group into three divisions: Restaurants, Style Bars and City Bars
* Acquisition of Jamies Bars plc completed in September 2002
* Common Room continues to perform well with turnover up 46% and
trading at Borough Bar is consistently delivering ahead of expectation
* Integration of former Jamies Bars is progressing well
* Colin Lewin is appointed to the Board as Finance Director
* Trading in the current year has been satisfactory, with December
performance meeting our expectations
Stephen Thomas, Chairman of Hartford Group PLC, commented:
"Hartford has now successfully completed the rationalization of its non core
estate to focus on developing a portfolio of stylish, drink-led bars. The
integration of the former Jamies Bars is well underway and following an initial
period of capital investment, we anticipate there is potential for the enlarged
Group to deliver returns on capital in excess of our original expectations.
"However in view of the uncertain economic environment, the Board has decided to
steady its expansion plans in the short term and conserve cash which will reduce
debt significantly by the year end. Increased focus on the core estate will
ensure that both the asset base and operations are robust and well positioned
for growth when market conditions improve."
17 January 2003
ENQUIRIES:
Hartford Group PLC Tel: 020 7269 6370
Stephen Thomas, Chairman
James Kowszun, Chief Executive
College Hill
Justine Warren Tel: 020 7457 2020
Gareth David
Chairman's statement
Introduction
Hartford Group has made significant progress towards achieving the aims of its
2001 strategic review, appointing a new CEO in May 2002, successfully opening a
second high street bar and the acquisition of Jamies Bars plc ("Jamies") in
September 2002.
The year-end has been brought forward from December 2002 to the end of
September, following the acquisition, to allow Hartford to present the results
of the enlarged group for a full year to September 2003. The acquisition has
had no material impact on performance for the period with only 17 days trading
contribution from Jamies included in the consolidation. However, it materially
changes the outlook for the future of Hartford and is discussed in detail below.
The aim of the Board, following its strategic review in 2001, is to develop a
portfolio of stylish drink-led operations. Therefore, during 2002 Hartford
implemented action to rationalise its property portfolio, successfully disposing
of Idaho (Highgate), The Congress Club (Westminster), The Kings Head (Loughton)
and Montana (Fulham). Total disposal proceeds are #375,000, resulting in an
overall book loss on disposal of #34,000. The conversion of Utah (Wimbledon)
into The Common Room in October 2001 has been previously reported and the bar
continues to perform well. We opened a second high street bar unit, Borough Bar
and Dining (London Bridge), in August 2002, following the acquisition and
conversion of a previously licensed property. The initial build up of trade was
steady over the summer months and this site is now consistently performing ahead
of our investment criteria in terms of profitability and return on capital.
In September 2002, Hartford completed the share-for-share acquisition of Jamies
Bars plc, an AIM-listed licensed retailer, with 17 sites within the City and
West End of London. At the same time Hartford completed an equity placing and
open offer of #1.4m to finance the enlarged group.
The Acquisition of Jamies Bars plc
The acquisition of Jamies was both financially attractive and in line with the
Board's aim. It was justified from a financial perspective based on the synergy
potential from improving purchasing leverage and removing the overlap in central
overhead. In addition, the sites acquired fit Hartford's location criteria for
prime trading positions close to a significant number of target customers.
The Jamies business had experienced a prolonged period of uncertainty since
mid-2001, with profitability reducing significantly and a resultant restriction
of capital expenditure. By the time the acquisition was completed in September,
the business had become loss-making on a stand alone basis. To reverse this
decline, in addition to improved operational effectiveness, several sites will
need capital expenditure, both to rectify the effects of minimal expenditure on
the estate and to re-position them for today's increasingly discerning market.
Adopting a pragmatic approach to this work and utilising internal resources
wherever possible will result in the projects being completed both quickly and
cost-effectively. The total planned capital expenditure on the former Jamies
sites for the current financial year to September 2003 is in the order of
#600,000.
This decline in performance has increased the scale of the challenge and
therefore the timescale required to make the business a success. However, once
performance has been adequately addressed, we anticipate there is potential for
the enlarged group to deliver returns on capital in excess of our original
expectations.
Good progress has been made on integration since the year-end. The
administration centre was integrated within two weeks of completion, delivering
expected cost savings. Additional potential savings have since been identified
for implementation in 2003. New contracts have been negotiated both to improve
terms and to establish close relationships with a limited number of key
suppliers. This will deliver a continued improvement in gross margin in 2003.
Aldgate Barrs was the only Jamies site Hartford identified for disposal and this
was completed in September. The sale of the Gresham Street site which had
previously been announced by the Jamies Board will complete in early February
2003, with the receipt of #525,000, the balance of the total consideration of
#750,000. A refurbishment has begun on the Charlotte Street site which will
re-open, retaining the Jamies name, in March 2003. Refurbishments are also
planned in the first half of 2003 at West Smithfield and Canary Wharf, with
Bishopsgate and The Pavilion due before the year-end and Ludgate Hill and
Holborn planned for the first quarter of the next financial year.
As required by accounting standards, following the acquisition, a fair value
exercise was carried out on the Jamies balance sheet as at the completion date
in September 2002. The outcome of this exercise is that goodwill of #3.8m will
be recognised in the consolidated accounts. This will be amortised over an
estimated useful life of 18 years, representing the average remaining lease
length for the 15 acquired Jamies sites.
Financial Review
During the nine-month period under review, Hartford reduced its loss before tax
to #728,000 compared with a loss of #5.9m in the year to December 2001.
Excluding the impact of asset impairment/disposals and the Jamies acquisition,
the group delivered a loss of #622,000, compared with #1.5m in the year to
December 2001. The cash outflow from operations in the period was #148,000,
representing a significant reduction from the #1.5m outflow in the year to
December 2001.
For the nine months to September 2002, total sales were 3% higher than the
comparative period. Excluding the impact of Jamies trading, sales during the
period declined by 6.7%. This compares with the 9.2% decline announced for the
first six months of the year.
The effect of increased focus on our supply chain has continued since the
interims and has resulted in a further improvement in gross margin to 70.4% for
the nine month period (69.5% in 2001). Following the new supplier deals
implemented since the Jamies' acquisition, a further improvement is expected in
2003. The reduction in central administration costs and site wage levels
announced at the interim stage have continued, with central costs 30% below the
prior period and the percentage of wages to sales improved by three points.
As stated above, the financial position of the Jamies business had declined by
the time the acquisition completed and the 17 days trading included in the
consolidation delivered a loss before tax of #10,000.
Exceptional reorganisation costs of #62,000 relate to redundancy and severance
costs resulting from the Jamies acquisition. Further reorganisation costs will
be charged in 2003, but the total expenditure will not exceed the #300,000 set
out in the August 2002 Prospectus. The loss on disposal of fixed assets
represents the net costs of the property disposals outlined above.
At the balance sheet date (28 September 2002) the group had committed banking
facilities of approximately #4m from Barclays Bank plc, with debt outstanding of
#2.35m, offset by cash balances of #368,000, resulting in unused available funds
of #2m. This represents gearing of less than 25%.
Review of Operations
Following the acquisition of Jamies, Hartford is now managed as Restaurants,
Style Bars and City Bars. The Restaurants comprise Pharmacy, Canyon and Dakota,
although Dakota will be converted during 2003 as discussed below. Style Bars
includes the three original Hartford bar sites, Common Room, Borough and The
Wells in Ascot, together with seven of the acquired Jamies bars (Charlotte
Street, Poland Street, Bishopsgate, Canary Wharf, Ludgate Hill, West Smithfield
and Kingsway - all within London). These are the larger of the Jamies sites,
with an opportunity to modify their market positioning, either through changes
to the operational model, or in conjunction with capital refurbishment. City
Bars comprises the nine smaller Jamies sites, mostly individually named and all
located within the City of London. These are all small, well-located sites
close to a substantial business-focused customer base, and trade five days a
week.
Restaurants
Canyon has had continued success with a marginal sales decline (0.9%) during the
period being more than offset by a three point increase in EBITDA margin,
resulting in a 17% increase in profitability. Performance is skewed towards the
summer months, but Canyon has been able to draw custom throughout the winter due
to improving the food and level of service, backed up by effective local
marketing and the site now opening on Sunday nights.
Pharmacy has had a mixed performance, with overall sales 9% down during the
period, in continued difficult trading for restaurant businesses. However, this
decline masks the underlying picture, where sales in the restaurant declined
significantly, offset by an increase in bar sales. Following its refurbishment
in Autumn 2001, the bar is now a well-positioned business that continues to
deliver consistent, cash generative performance and sales during the period are
an impressive 29% ahead of the comparative period. However, the restaurant has
had another poor year, with inconsistent service delivery and no clearly defined
point of difference within its market place resulting in a 29% sales reduction
over last year. Following a review of all options for the site, since the year
end we have appointed a Michelin-starred chef, Hywel Jones, to substantially
improve quality and consistency without materially changing prices. Initial
signs are encouraging, with sales in the restaurant growing consistently since
the changes were implemented and resulting in sales for December 2002 being
higher than 2001.
Dakota has had a disappointing performance, with a number of new openings and
refurbishments in the Notting Hill area damaging sales performance, despite the
quality of food and service remaining high. The location remains good and will
be repositioned during 2003. This will involve a name change and an adjustment
to the offer in line with strategy, creating a more informal, relaxed eating and
drinking environment with similarities to other group operations.
Bars
The Common Room has performed well with sales during the nine month period 46%
ahead of the comparable period, when it was trading as Utah restaurant. At the
same time, EBITDA margin has improved by a significant 26 percentage points,
reflecting not only improved controls but also the benefits of running a
drink-led rather than food-led operation.
The Wells at Ascot had a good year from a financial perspective, with comparable
sales during the period under review 3% above the prior period, which, coupled
with a 14 point increase in EBITDA margin, has resulted in the site moving into
profit and cash generation. However, despite this encouraging performance, the
site remains a strategic challenge for Hartford, with a restrictive beer tie
within its lease and a marginal location on the outskirts of, rather than in the
centre of Ascot. As the rest of the group becomes more successful, its position
within the business will be reviewed.
A second high street bar, Borough, was opened close to London Bridge station in
August 2002. Sales performance in the first few weeks showed steady growth and
by the end of September the site had moved into profit. Since then, sales have
continued at a satisfactory level and the site is exceeding its investment
criteria.
Management and Employees
As previously announced, James Kowszun joined the Board in May 2002 as Chief
Executive Officer with Sheila McKenzie focusing on the positioning and design of
the group's portfolio. In addition, following completion of the acquisition of
Jamies Bars plc, Colin Lewin, formerly Finance Director of Jamies joined the
Board as Finance Director and we welcome the addition of his experience to the
Board. We are also looking for a third non-executive director and anticipate
making this appointment in the first quarter of 2003.
Current Trading and Outlook
Trading since the year-end has mirrored trends reported elsewhere in the
industry. October and November were difficult trading months, with sales
particularly depressed at our City Bars. However, we are delighted that sales
in December met our expectations, which, coupled with gross margin improvements
and other integration benefits flowing through, has enabled the company to stay
on track in terms of financial performance from the existing estate for this
financial year.
In particular, the former Jamies estate saw a poor start to the new financial
year, with the declining sales trend that became clear during the summer
continuing. Within these sites, sales were 14% down in the first eight weeks of
the financial year, this was due to challenging trading conditions in the City
and a prolonged period of uncertainty over the ownership of the business.
Immediate action taken by the operations team, in addition to improving control
and discipline, has focused on support for and re-motivation of the site
managers before Christmas. This is a key time for the former Jamies sites which
rely strongly on City Christmas party bookings to deliver required performance.
The reward for a great effort was that the sites delivered to internal
expectation in December 2002, albeit behind December 2001 which was a record
month for Jamies and the industry generally.
The original Hartford sites (excluding Borough) saw sales in the first eight
weeks decline by 6%, driven principally by declines at Pharmacy, Dakota and The
Wells. Following the re-positioning discussed above, Pharmacy returned to
growth in December, joining Common Room and Canyon in showing sales growth over
last year, together with Borough meeting expectations. The Wells traded below
last year, due in part to a week's closure for essential maintenance and
Dakota's performance continued to disappoint, with sales 22% below 2001.
Several factors have led the Board to review Hartford's short-term development
plans, including the uncertain economic environment; the increased challenges
and, indeed, opportunities presented by the Jamies acquisition; and a belief
that the property rental market may slow later in the year resulting in more
attractive expansion opportunities than are currently available.
The Board has consequently decided to conserve cash and not to spend capital on
opening the two new sites that had originally been planned for this year. This
reduction in the year's capital expenditure will help to reduce debt
significantly by the year-end. In addition, a period of focus on the core
estate will ensure that both the asset base and operations are robust and
well-positioned, resulting in a stronger core business and positioning Hartford
for growth when market conditions improve.
STEPHEN THOMAS
Chairman
17 January 2003
HARTFORD GROUP PLC
Consolidated profit and loss account for the nine month period ended 28
September 2002
Period ended Period ended Period ended Period ended
28 September 28 September 28 September 30 December
2002 2002 2002 2001
Continuing operations Total
Note Acquisition
#000 #000 #000 #000
Turnover 4,421 455 4,876 6,219
Cost of sales (1,308) (134) (1,442) (1,944)
----- ----- ----- -----
Gross Profit 3,113 321 3,434 4,275
----- ----- ----- -----
Administrative expenses excluding (3,770) (325) (4,095) (5,855)
exceptional expenses
Reorganisation costs (62) - (62) -
Exceptional provision for impairment in
value of tangible fixed assets and goodwill - - - (4,421)
----- ----- ----- -----
Total administrative expenses (3,832) (325) (4,157) (10,276)
----- ----- ----- -----
Other operating income 33 - 33 52
----- ----- ----- -----
Operating loss on ordinary activities (686) (4) (690) (5,949)
Loss on disposal of tangible fixed assets (34) - (34) -
Interest receivable and similar income 16 - 16 55
Interest payable and similar charges (14) (6) (20) (13)
----- ----- ----- -----
Loss on ordinary activities before taxation (718) (10) (728) (5,907)
Taxation on loss on ordinary activities - - - -
----- ----- ----- -----
Loss for the financial period (718) (10) (728) (5,907)
----- ----- ----- -----
Loss per share
Basic and diluted 2 (0.27)p (4.51)p
----- -----
All amounts relate to continuing operations and acquisitions.
All recognised gains and losses are included in the profit and loss account.
Consolidated balance sheet at 28 September 2002
As at As at
28 September 2002 30 December 2001
#000 #000
Fixed Assets
Intangible assets 3,904 -
Tangible assets 7,563 3,528
----- -----
11,467 3,528
----- -----
Current Assets
Stocks 248 146
Debtors 1,783 724
Cash at bank in hand 368 -
----- -----
2,399 870
Creditors: amounts falling due within one year (4,161) (1,606)
----- -----
Net current liabilities (1,762) (736)
----- -----
Total assets less current liabilities 9,705 2,792
Creditors: amounts falling due after more than one year (1,285) (17)
----- -----
8,420 2,775
----- -----
Capital and reserves
Called up share capital 3,306 1,310
Unissued share capital 3,766 -
Share premium account 6,489 5,878
Merger reserve 2,060 2,060
Capital redemption reserve 5,440 5,440
Other reserve (54) (54)
Profit and loss account (12,587) (11,859)
----- -----
Shareholders' funds 8,420 2,775
----- -----
All shareholders funds are equity.
Consolidated cash flow statement for the nine month period ended 28 September
2002
Period ended Period ended
28 September 2002 30 December 2001
#000 #000 #000 #000
Net cash outflow from operating activities (148) (1,463)
Return on investments and servicing of finance
Interest received 16 55
Interest paid (16) (2)
Interest element of finance lease rental
payments (4) (11)
----- -----
(4) 42
Taxation
UK corporation tax - -
Capital expenditure and financial investment
Purchase of tangible fixed assets (935) (1,448)
Sale of tangible fixed assets 166 -
----- -----
(769) (1,448)
Acquisition
Cash expenses of purchase of subsidiary
undertaking (958) -
Net overdraft acquired with subsidiary (186) -
----- -----
(1,144) -
----- -----
Cash outflow before management of liquid
resources and financing (2,065) (2,869)
Financing
Net proceeds of share issues 2,607 -
Capital element of finance lease rental payments (44) (63)
----- -----
2,563 (63)
----- -----
Increase / (decrease) in cash 498 (2,932)
----- -----
Notes for the period ended 28 September 2002
1 Publication of non statutory accounts
The financial information set out above does not constitute the company's
statutory accounts for the period 1 January 2002 to 28 September 2002, but is
derived from those accounts. Statutory accounts for 2002 will be delivered to
the Registrar of Companies following the company's annual general meeting.
Statutory accounts for the period ended 30 December 2001 have been delivered to
the Registrar of Companies. The auditors have reported on these accounts; their
report was unqualified and did not contain statements under s237(2) or (3)
Companies Act 1985.
2 Loss per share
Basic and diluted loss per ordinary share have been calculated using the
weighted average number of equity shares in issue during the period. The
weighted average number of equity shares in issue was 272,008,996 (December
2001: 130,959,140) and the earnings, being loss after tax are #728,000 (December
2001: loss #5,907,000).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFIFUMSDSESF
Harvard (LSE:HAR)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Harvard (LSE:HAR)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024
