Hartstone Share Discussion Threads

[currypata kai] 14/1/2004 08:05

bid has moved up a little.There was a largish trade of 1.25 mil yesterday

[currypata kai] 12/12/2003 12:41

thanks .well another 1.74 million looks a bit too much for me.

[tony14] 12/12/2003 12:17

Currypata, I gather there are circa 158 mil shares in circulation so 3% for a notifable interest ie 4.74mil. Not sure though about the procedure for notifying but will be interested to find out as well. Will re-read the accounts over the weekend in more detail, £1.5m market cap does some a bit daft with restructuring underway.

[currypata kai] 12/12/2003 09:41

Hi Tony.Well done.Ive lost quite a bit on RDN before so the rise was welcome.I've now got 3 mil hst so aquiring quite a percentage.I like the risk /reward altho I agree that it will need news .By the way do you know how many shares I would need to get before my holding has to be disclosed by rns.I hold the shares with a nominee broker so I suppose it wouldnt be my responsibility anyway.Could you confirm?..

[tony14] 12/12/2003 09:15

Curryapata, level 2,1 bid 4 offer, so will need some news/sustained buying to get it going. BTW well done on your recent RDN trade, banked just shy of £6K myself. HST has been on monitor for a while so may take a long position soon.

Regards

[currypata kai] 12/12/2003 09:05

do you have level 2 info for this share.

[alexicacon] 12/12/2003 07:59

"Operating profit before exceptionals - 129,000 stg vs loss 1.83 mln". Looks like good news to me, though we may have to wait six months to reap any reward. They definately aint going bust now and this is as cheap as they'll get IMHO.

[nod] 11/12/2003 19:14

It looks promising. Bank agreement on 23-Sep but not announced at the time.

"On 23 September 2003 the US business agreed with its lenders new banking
covenants and a new two year $20 million loan, reducing to $10 million by 31
March 2004. On 23 September 2003 the US business entered into a seven year
licensing agreement with the Bennett Footwear Group LLC.."


It looks as though HST will survive. As a preference shareholder the loan is good news (see HSTA thread for the pref sums and conversion date). Hambro hold 42% of pref shares and 15.6% ords:

"With cash transfers to the UK restricted by the US banks, the Group will not be in a position to pay the preference dividend on 2 January 2004, and the dividends will continue to be rolled up for future payment."

Note: "rolled up for future payment"

[currypata kai] 11/12/2003 09:59

any comments ?

[currypata kai] 11/12/2003 09:58

11 December 2003



11 December 2003
(for immediate release)


THE HARTSTONE GROUP PLC



Announcement of Unaudited Preliminary Results
for the six months ended 30 September 2003



* Operating profit before non-recurring and central costs, #0.1 million
(2002: loss of #1.8 million)


* Non- recurring costs of #2.1 million


* Loss before tax of #1.8 million (2002: loss of #2.2 million


* Footwear Licensing agreement with Bennett Footwear Group signed in
September


* Trading in shares transferred to AIM




Commenting on the announcement, Hartstone's Chairman, Shaun Dowling said:



"The new Footwear Licensing Agreement has reduced working capital and given us a licence
income, but we have forfeited the contribution which the footwear division previously made
to company overheads. Further overhead savings are being made."





PRESS ENQUIRIES

The Hartstone Group PLC Tel: [phone]
Shaun Dowling, Chairman






THE HARTSTONE GROUP PLC

Unaudited results

for the six months ended 30 September 2003





GROUP RESULTS

In the half year to 30 September 2003, The Hartstone Group PLC made an operating
profit of #0.1 million, (2002: loss of #1.8 million) before non-recurring costs
of #2.1million and central costs of #0.2 million. After net interest payable of
#0.3 million and other finance income of #0.6 million, there was a loss before
tax of #1.8 million (2002: loss of #2.2 million).



The non-recurring costs principally relate to the cost incurred in entering into
a new licensing agreement with Bennett Footwear Group LLC and also to the
closure of full price stores. The other income of #585,000 arose from winding
up a dormant subsidiary pension fund and the taxation charge of #267,000 mainly
relates to this income. There was a cash inflow of #3.7 million as stocks were
reduced in the USA. Debtors increased by #2.7 million, principally due to the
sale of stocks to Bennett Footwear by means of stage payments.



ETIENNE AIGNER

Etienne Aigner, the principal trading company contributing to group results, had
another dismal trading period, as the whole US retail clothing sector remained
depressed, particularly in the early months, and our major customers, the
department stores, continued to lose business to low price chain stores. Sales
in our wholesale footwear division were 22% down on the previous year and sales
in our retail stores in the outlet malls were down by 13%. However, our smaller
accessory business held up well with a 46% increase in sales, but this was not
enough to prevent total sales in US dollars decreasing by 12%. During the
period, four of our five full price stores were closed and the last store was
closed in October, incurring costs of $0.8 million in the current period.



In July I reported that we had been negotiating for several months with a
purchaser and his partners to divest the Aigner business and these negotiations
were aborted. This was followed immediately by negotiations to license our
wholesale footwear business to Bennett Footwear Group LLC which was successfully
accomplished on 23 September 2003.



DIVIDENDS

The group will not be in a position to pay the preference dividend on 2 January
2004 due to the restriction by the US banks on remittances to the UK.



AIM

The company transferred trading in its ordinary and preference shares from the
Official List of the UK Listing Authority to the Alternative Investment Market
of the London Stock Exchange ("AIM") on 10 September 2003. This is a more
appropriate and, in certain circumstances, a cheaper market in which to operate
for a company of our size.



DIRECTORS

Mr Christopher H B Mills was appointed as a non-executive group director of The
Hartstone Group PLC on 14 October 2003. He is Chief Investment Officer and
indirect shareholder of J O Hambro Capital Management Ltd which has a
non-beneficial interest in 15.6% of the company's ordinary shares and 42% of its
preference shares in issue.



FUTURE PROSPECTS

The new licensing agreement will obviously have an impact on the Aigner
business, and also therefore on The Hartstone Group. The principal change will
be a reduction in working capital and bank borrowing, which has enabled Aigner
to enter into a new bank agreement. Although Aigner has gained the benefit of a
monthly license fee from Bennett Footwear, it has forfeited the contribution
which the footwear division previously made to company overheads. As a result,
the management structure has been streamlined, staff have been reduced and
overhead savings have been made.





SHAUN DOWLING

Chairman

11December 2003







The Hartstone Group PLC

Unaudited group profit and loss account

for the six months ended 30 September 2003






6 months 6 months Year
30/09/03 30/09/02 31/03/03
#000 #000 #000

Turnover 33,124 40,075 75,080

Cost of sales (20,625) (27,147) (51,718)

Gross profit 12,499 12,928 23,362
Net operating expenses (14,614) (14,915) (29,939)

Operating profit / (loss) before non-recurring and central costs 129 (1,834) (5,491)
Non-recurring costs (Note 3) (2,088) - (725)
Central Costs (156) (153) (361)

Operating (loss) (2,115) (1,987) (6,577)

Net interest (payable)/receivable (Note 4) (318) (215) (464)
Other finance income 585 - -

(Loss) on ordinary activities before taxation (1,848) (2,202) (7,041)

Taxation (267) (50) 75

(Loss) after taxation (2,115) (2,252) (6,966)

Dividend on non-equity shares (Note 5) (400) (400) (800)

(Loss) for the period transferred from reserves (2,515) (2,652) (7,766)


(Loss) per ordinary share (Note 6)

Basic and diluted (loss) per ordinary share (1.6)p (1.7)p (4.9)p

Adjusted (loss) per ordinary share (0.3)p (1.7)p (4.4)p






The Hartstone Group PLC

Unaudited consolidated balance sheet

at 30 September 2003






Restated

See note 2

30/09/03 30/09/02 31/03/03
#000 #000 #000

Fixed assets
Intangible assets - 35 -
Tangible fixed assets 3,135 4,225 3,948
3,135 4,260 3,948

Current assets
Stocks 10,742 21,394 18,019
Debtors 11,240 11,238 9,000
Cash at bank and in hand 536 935 1,151
22,518 33,567 28,170

Current liabilities
Creditors: Amounts falling due within 1 year (6,354) (4,023) (16,428)

Net current assets 16,164 29,544 11,742

Total assets less current liabilities 19,299 33,804 15,690

Creditors: Amounts falling due after more than 1 year (7,659) (13,576) (876)
Provisions for liabilities and charges (32) (160) (31)

Net assets excluding pension liabilities 11,608 20,068 14,783
Pension liabilities (1,288) (1,719) (1,804)

Net assets including pension liabilities 10,320 18,349 12,979

Capital and reserves:
Share capital 2,584 2,584 2,584
Capital redemption reserve 329 329 329
Profit and loss account 7,407 15,436 10,066

Shareholders' funds 10,320 18,349 12,979

Shareholders' funds represent:
Equity interests 322 8,351 2,981
Non equity interests 9,998 9,998 9,998

10,320 18,349 12,979

The Hartstone Group PLC

Unaudited consolidated statement of cash flows

for the six months ended 30 September 2003


6 months 6 months Year
30/09/03 30/09/02 31/03/03
#000 #000 #000

Net cash flow from continuing operating activities:
Operating (loss) (2,115) (1,987) (6,577)
Depreciation charges 451 626 1,032
Amortisation and permanent diminution in value 22 14 59
Impairment of fixed assets - - 607
Other non-cash items (7) - 122
Working capital movement - decrease in stocks 6,624 1,499 4,766
- (increase) / decrease in (2,741) 1,302 3,219
debtors
- increase in creditors 1,170 371 775

Net cash inflow from operating activities 3,404 1,825 4,003

Returns on investments and servicing of finance 349 (574) (808)

Taxation (189) (148) 62

Capital expenditure and financial investment 164 (611) (1,208)

Cash inflow before financing 3,728 492 2,049
Financing - (decrease) in debt (4,318) (1,591) (2,813)

(Decrease) in cash in the period (590) (1,099) (764)


Reconciliation of net cash flow to movement in net debt:
6 months 6 months Year

30/09/03 30/09/02 31/03/03
#000
#000 #000

(Decrease) in cash in the period (590) (1,099) (764)
Cash outflow from decrease in debt 4,318 1,591 2,813

Change in net debt resulting from cash flows 3,728 492 2,049
Other non cash items - issue costs to be amortised (6) (6) (14)
Translation difference 424 1,333 1,301

Movement in net debt in the period 4,146 1,819 3,336
Opening net debt (10,418) (13,754) (13,754)

Closing net debt (6,272) (11,935) (10,418)


The Hartstone Group PLC

Unaudited interim results

for the six months ended 30 September 2003






Unaudited statement of total recognised gains and losses Restated

See note 2
6 months 6 months Year
30/09/03 30/09/02 31/03/03
#000 #000 #000

(Loss) on ordinary activities after taxation (2,115) (2,252) (6,966)
Exchange (losses) / gains (578) (2,021) (2,086)
Release of deferred tax on exchange gains / (losses) - 400 362
Gain / (loss) on pension assets 434 (926) (1,079)

Total recognised (losses)/ gains for the period (2,259) (4,799) (9,769)
Prior period adjustment - adoption of FRS 17 (523)
Total recognised (losses)/ gains since the last interim (5,322)
report


Unaudited reconciliation of movements in shareholders' funds Restated

See note 2
6 months 6 months Year
30/09/03 30/09/02 31/03/03
#000 #000 #000

Total recognised (losses) for the period (2,259) (4,799) (9,769)
Dividend on non-equity shares (400) (400) (800)
Net (decrease) in shareholders' funds (2,659) (5,199) (10,569)

Opening shareholders' funds (originally #24.1 million before
deducting prior period adjustment of #0.5 million)
12,979 23,548 23,548

Closing shareholders' funds 10,320 18,349 12,979







The Hartstone Group PLC

Notes



Note 1: Interim Report

This interim report was neither audited nor reviewed by the auditors. The
figures for the year to 31 March 2003 were derived from the statutory accounts
for that year. The statutory accounts for the year ended 31 March 2003 have
been delivered to the Registrar of Companies and received an audit report which
was unqualified and did not contain statements under s237 (2) or (3) of the
Companies Act 1985.



The interim report was approved by the Board on 9 December 2003.



The interim report has been prepared using accounting policies that are
consistent with those adopted in the statutory accounts for the year ended 31
March 2003, except for Retirement Benefits. The last actuarial liability
valuations were carried out as at 31 March 2003 and have not been updated as at
30 September 2003. Therefore, the net pension liabilities shown in the balance
sheet have only been adjusted for the movement in value of the UK and US plan
assets and payments made into each plan.



Going concern

In the statutory accounts for the year ended 31 March 2003 we brought to your
attention that the group's principal US operating subsidiary was in breach of
its banking covenants which were to be renegotiated and that the board was
assessing alternative options to maximise the return to shareholders in the
group including the sale and/or licensing of all or part of the US business.



On 23 September 2003 the US business agreed with its lenders new banking
covenants and a new two year $20 million loan, reducing to $10 million by 31
March 2004. On 23 September 2003 the US business entered into a seven year
licensing agreement with the Bennett Footwear Group LLC to license its branded
footwear business in return for a royalty fee and also entered into additional
supplementary agreements, for varying periods, for both parties to provide
additional related services to each other.



The directors consider that in preparing these interim accounts they have taken
into account all information that could be reasonably expected to be available
including forecasts incorporating the effects of the new trading arrangement and
they consider that it is appropriate to prepare these accounts on a going
concern basis, consistent with the basis of preparation in the statutory
accounts for the year ended 31 March 2003.



Note 2: Restatement of comparatives

The early adoption of FRS 17, Retirement Benefits, in the year ended 31 March
2003 required a change to the accounting treatment of pensions. As a result the
prior period results have been restated accordingly as follows:



Consolidated balance sheet


Creditors due
1 year Liabilities account

#000

#000 #000

As previously reported at 30 September 2002 (4,293) - 16,885
Adoption of FRS 17 at 30 September 2002 270 (1,719) (1,449)

30 September 2002 restated (4,023) (1,719) 15,436






The Hartstone Group PLC

Notes (continued)





The movement of #1.4 million in the profit and loss account in the period ended
to 30 September 2002, shown above, represented the movement in the pension plan
asset values at that date which have been reflected in the Statement of Total
Recognised Gains and Losses.



Under FRS 17, the difference between the market value of the assets of the
group's UK and US defined benefit pension funds and the present value of the
accrued pension liabilities is shown as a liability on the balance sheet.
Previously, the only balance sheet item recognised was a provision representing
the deficit between the market value of the assets and the present value of the
liabilities of the US pension scheme which was frozen in 1992. The movement on
this deficit has been charged to the profit and loss account in prior years.





Note 3: Non-recurring costs

Non-recurring costs principally comprise the costs associated with entering into
the agreement to license its branded wholesale footwear business amounting to
#1.5 million, transaction costs associated with the aborted sale of the US
business amounting to #0.1 million and costs associated with the closure of the
Full Price division amounting to #0.5 million.



In the year to 31 March 2003 non-recurring costs principally comprised the
impairment of the Full Price division fixed assets and certain other
professional fees.




Note 4: Net interest (payable) / receivable 6 months 30/ 6 months Year
09/03
30/09/02 31/03/03
#000
#000 #000
Net interest charge

- payable on loans and overdrafts (268) (278) (556)

- interest receivable 12 104 142

(256) (174) (414)

Foreign exchange losses (56) (35) (36)

Refinancing costs (6) (6) (14)

(318) (215) (464)











Note 5: Dividend 6 months 30 6 months Year
/09/03
30/09/02 31/03/03
#000
#000 #000


Non Equity Shares - preference dividend 4p per preference 400 400 800
share, 2 July 2003



With cash transfers to the UK restricted by the US banks, the Group will not be in a position to pay the
preference dividend on 2 January 2004, and the dividends will continue to be rolled up for future payment.












The Hartstone Group PLC

Notes (continued)






Note 6: (Loss) per ordinary share

Basic and diluted loss per ordinary share is calculated using a loss of #2.5 million (2002: loss of #2.7
million), after deducting preference dividends, and a weighted average number of ordinary shares in issue of
158,485,711 (2002: 158,484,612).



The cumulative, convertible preference shares are anti-dilutive.



The adjusted loss per ordinary share is calculated using the basic loss of #2.5 million (#2002: loss of #2.7
million), stated above, and adding back non-recurring costs of #2.1 million (2002: #nil) and using the
weighted average number of ordinary shares stated above. This measure shows the loss per share of the
underlying business excluding one-off charges for transaction fees, the costs of entering into the footwear
licensing agreement and the closure of the Full Price division.





Note 7: Analysis of cash and indebtedness 6 months 30 6 months Year
/09/03
30/09/02 31/03/03
#000
#000 #000


Secured US bank loans (6,808) (12,870) (11,569)

Cash and bank balances 536 935 1,151

(6,272) (11,935) (10,418)







Note 8: Taxation

The charge principally arises on the income received from the settlement of the David Dixon Pension Fund,
which is included in other finance income, and US State taxes.








This information is provided by RNS
The company news service from the London Stock Exchange
END

[maut too] 11/12/2003 09:54

CAS Hartstone Group : Sees further savings
11-Dec-2003 09:48
Hartstone Group said today that in the
six months ended Sep. 30 loss before
tax was #1.8m (2002: loss of #2.2m).
The new licensing agreement will
obviously have an impact on the Aigner
business, and also therefore on The
Hartstone Group.
The principal change will be a
reduction in working capital and bank
borrowing, which has enabled Aigner to
enter into a new bank agreement.
Although Aigner has gained the benefit
of a monthly license fee from Bennett
Footwear, it has forfeited the
contribution which the footwear
division previously made to company
overheads.
As a result, the management structure
has been streamlined, staff have been
reduced and overhead savings have been
made.
The new Footwear Licensing Agreement
has reduced working capital and given
us a licence income, but the company
has forfeited the contribution which
the footwear division previously made
to company overheads. Further overhead
savings are being made.

ICV Edited News from Dow Jones
0948 GMT Dec 11 2003

[currypata kai] 09/12/2003 13:52

just bought another 500k.Have 2,500,000.I reckon it is a good gamble.

[nod] 01/12/2003 00:36

I have no idea who HENK MARIS VAN HEYST are, but it's good that someone is prepared to invest a 88k.

[maut too] 28/11/2003 16:03

CAS Hartstone Group : Holding in company
28-Nov-2003 16:00

SHAREHOLDER HENK MARIS VAN HEYST
Class of security ORDINARY SHARES
Date company informed 27 NOVEMBER 2003
Total holding 10,000,000 (6.31%)

ICV Edited News from Dow Jones
1600 GMT Nov 28 2003

[sambuca] 14/11/2003 14:16

Preferential shares are up about 90% in the last 3 months what is the likelyhoood of the ordinaries following suit ????? not by 90% but surely a small rise should be on the cards.

All IMHO

Sam

[tony14] 14/11/2003 08:10

Slight tick up on Level 2 today, also noted the 2 block trades of 3,810,000 and 6,310,00 both @0.88p yesterday. Watching with interest.

Regards

[lombiff] 24/10/2003 14:37

Nod

Thanks for putting me right - just read the HSTA thread again - I had previously misread and didn't realise it was redemption at £1. If you can tie cash up for two years, it looks like the prefs are indeed a good bet, even if the 8% payments don't resume (which I presume they will once banking arrangements are settled).

I have gone long on ords for now (prepared to wait until next full set of results in July 04 if necessary). It's a gamble and I probably have enough exposure to HST, otherwise would consider some prefs as well.

[nod] 23/10/2003 09:32

Lombiff - you've still not quite got the maths right :)
It would need to be a lot more attractive than 8% for Shaun....
As washbrook calculates on HSTA thread - if pref shares are redeemed at par on 31.7.2005 then percentage increase, if you buy at 45p, is 175% (assuming payment of interest).

Dowling is already a significant holder of the ords - 6.5 million.
Question: would he risk this 108k if he wasn't very sure the prefs were a safe bet?

There's no guarantees in this world, but you can't get a stronger pointer to the pref shares than this purchase.

[lombiff] 23/10/2003 09:05

Nod - thanks for that - hadn't seen that thread. So with repayment at par in 2005, and with them now priced at par, this is basically a loan from Dowling on which he makes 8% pa. His purchase is a message that we're going to survive, though not necessarily to thrive.

Alexicacon - agree that the banks will like the guaranteed income, so going under is unlikely (IMHO) - it's all about how successful they can be in cutting costs.

[alexicacon] 22/10/2003 22:51

MINIMUM Guaranteed royalty payments of $2.5m per year (plus escalation) for seven years, which would make a minimum guaranteed royalty payment of about $3.5m a year after seven years. They have also contracted the use of EA warehousing and distribution for a further $7m over the next 3 years. With this Guaranteed income and a reasonable cutting of costs i can't see HST going under. To me they look under valued with lots of upside, but then what do i know?

[nod] 22/10/2003 22:06

Lombiff - have a read of the HSTA thread (short) - pref valuation and conversion date is explained. Pref divi payments are more pre-agreed interest payments than variable ord divi payments. Failure to pay pref payments is a breach of terms.
Dowlings purchase indicates pref payments will resume. Which was obvious - so long as they don't go bust.

[alexicacon] 21/10/2003 21:51

If you were aware of or lets say suspected that good news and some kind of recovery was on the way, which option would offer the greatest chance of making a nice bundle?

[nod] 21/10/2003 19:57

Lombiff - because the pref shares are dead cheap due to the perceived risk of default. Dowling knows that the dividend payment will soon be resumed (once bank arrangements are confirmed). Making pref gains a safer bet than ords.

[lombiff] 21/10/2003 09:40

Anyone who understands this kind of stuff care to speculate why Dowling bought preference shares and not ordinaries? I should have thought that the potential upside with ordinaries would have led him to buy these, and I would have been a lot more confident if he had done so. Nevertheless, it does show some confidence, at least in the company's survival as a going concern. But, if we do get wound up, the preference holders will at least get something back - the Ord holders will get squat.

This is extremely high risk - I am tempted to have a gamble - the Bennett deal seems to remove a lot of risk and cost from the US operation, but I have to wonder whether your average American, in a jobless recovery, will buy designer shoes, or if they'll stick with cross trainers from Foot Locker.

To gamble or not to gamble??