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HARTSTONE GROUP REPORTS RESULTS FOR THE SIX MONTHS ENDED SEPT. 30, 1992

 OXFORDSHIRE, England, Nov. 25 ~PRNewswire~ -- The Hartstone Group Plc (London Stock Exchange: HSTL), the international manufacturer and distributor of branded hosiery and leathergoods, today announced its unaudited results for the six months ended Sept. 30, 1992.
 Key Points
 -- Pre-tax profits of 10.5 million pounds sterling (1991: 8.2 million pounds)
 -- Earnings per share of 6.7 pence (1991: 7.7 pence as adjusted)
 -- Dividend per share increased by 50 percent to 2.8 pence
 -- Turnover of 162.1 million pounds (1991: 92.8 million pounds)
 -- Increased market share in both divisions, despite a severe worldwide recession
 -- Significant cost savings in raw materials and improved manufacturing efficiencies in hosiery division
 -- Stephen Barker, chairman, said:
 "This performance reflects our leading positions in the marketplace and the quality and depth of our management and demonstrates the resilience of our businesses, given the deep recession. The reduction in earnings per share reflects the more pronounced bias of our profits towards the second half following the acquisitions of Cogetex and Aznar and the equity funding in December 1991."
 The chairman's statement continued as follows:
 Hartstone's performance has been achieved during a recession in all major markets with market volume growth declining. U.K. and U.S. retail trading in particular continued at low levels. Despite pressures on margins and over-capacity in the hosiery industry, like-for-like sales in both our leathergoods and hosiery businesses have increased and we have gained market share.
 We have strengthened our central and divisional management teams. These divisional teams are now motivated to provide continued organic growth, building on our leading market positions.
 Results and Dividend
 There is a significant bias in our business towards the second half of our financial year. The board has declared an increase of 50 percent in the interim dividend to 2.8 pence which reflects continued confidence in our overall progress. The dividend will be paid on Jan. 22, 1993, to shareholders on the company's register on Dec. 10, 1992. The board is again giving shareholders the opportunity of taking their dividend in Hartstone shares instead of cash.
 The decrease in earnings per share follows the issue of equity in December 1991 to part fund the acquisitions of Cogetex and Aznar, which substantially strengthened the hosiery division. Their sales occur predominantly in the winter months, the second half of the group's financial year.
 Finance
 Our approach to financing continues to be prudent. Gearing at Sept. 30, 1992, was approximately 80 percent on net tangible assets of 83 million pounds and is on target to fall below the previous year end figure of 51 percent. The company's businesses remain strongly cash generative and gearing at September reflects stock building for our seasonal peak and continued investment in plant and machinery. Interest cover for the half year remains strong at over four times.
 The integration of Cogetex and Aznar into the hosiery division has progressed as planned. The provisions set up at the time of acquisition are proving to be accurate. Approximately 2.0 million pounds of these provisions have been utilized against specific costs incurred during the period and further re-organization costs, not connected with acquisitions, of approximately 0.5 million pounds have been charged against operating profit during the period.
 Trading has benefited from the recent movements in exchange rates. This has been offset by some pressure on margins as a result of the recession.
 Leathergoods
 This division performed well overall, contributing operating profits of 9.3 million pounds (1991: 8.5 million pounds) on sales 12 percent ahead of the comparable period.
 --North America:
 Michael Stevens is one of North America's leading suppliers of quality leathergoods to the mass market. It has continued the strong performance achieved in 1991, with sales 16 percent ahead of the comparable period. This has been achieved by developing and selling new product ranges into Michael Stevens' existing distribution channels. Sales of ladies' small leathergoods should reach $15 million in their first full year. The Sereta range, a more fashion oriented handbag line. was relaunched and is on target for sales in excess of $13 million in its first year.
 Etienne Aigner also performed well with sales 13 percent ahead of the firs six months in 1991. A new showroom was opened on Fifth Avenue, New York, in August 1992. This coincided with the relaunch of the Etienne Aigner brand, building on its heritage as a brand recognized for classic style and design. Etienne Aigner has continued to open retail outlet stores and currently has 35, with plans to have 38 stores by March 31, 1993. This development has extended the awareness of the brand and its geographical coverage without eroding its existing distribution channels.
 The management of both companies has been significantly strengthened. In particular, Robert Chavez, previously with Macy's, joined Etienne Aigner in August 1992 as chief executive officer, the final key appointment in their management team. Both companies are now well positioned to deliver long term growth.
 -- Europe:
 Our U.K. leathergoods business is now organized into four sectors -- brands, accessories, small leathergoods, and luggage -- and all now trade as Hartstone Leathergoods.
 Trading conditions during the period have been extremely difficult in the whole of Europe with a consequent pressure on margins. Performance has varied from business to business although overall we have increased market share. Following a record year in 1991, the Triad product range has continued to increase market share.
 Hosiery
 Operating profits of the division were 4.5 million pounds compared with 0.8 million pounds in the comparable period. As a result of the acquisitions of Cogetex and Aznar in December 1991, the proportion of hosiery sales occurring in the second half of the group's financial year has increased.
 The integration of Cogetex (Well) and Aznar (Marie Claire) into the hosiery division continued during the period under review. Our French hypermarket brand "Well" is building a position in the lycra sector in France, supported by new marketing and advertising campaigns, and has been introduced into Spain, Belgium, Holland, Portugal, Denmark and Italy.
 In Spain, "Marie Claire" has expanded its share of the higher price ladies' hosiery market sector from 18 percent to 23 percent. Aznar's raw materials facilities are now virtually at full capacity, with yarn texturizing output up by 34 percent and finished output ahead by 29 percent since we acquired the company.
 The U.K. market continued to be extremely difficult, with retailers entering into more promotional lines and consumers trading down, with a consequent impact on margins. Against this background, Bear Brand has increased market share and strengthened its distribution in the grocery multiples sector.
 The European hosiery board now directs marketing and product development, finance and capital expenditure on a divisional basis. In due course this will lead to significant reduction in working capital and greater efficiency in production within the division.
 Pamplemousse, our casualwear business, continued to extend its product portfolio into menswear and childrenswear and performed exceptionally well against a deep recession in the high street. Sales were 37 percent ahead of 1991. It has widened its sourcing base from Portugal to include Turkey, Greece, Mauritius and Sri Lanka. Retailers' requirements for even shorter lead times have had an impact on distribution costs.
 Future Strategy and Prospects
 Our leading positions in hosiery and leathergoods have been consolidated and strengthened during the period. Our strategy is to grow these businesses by product extension and by geographical expansion, maximizing our valuable consumer brands.
 We plan to exercise the option to acquire Aznar Industrial SA in January 1993, which will extend the group's product range into mass market lingerie and underwear. We will utilize their manufacturing expertise and local design knowledge to expand our lingerie and underwear business throughout Europe using our existing brands and distribution channels.
 The current business climate in Europe and the United States remains uncertain and is a very difficult one in which to operate. Hartstone is continuing to demonstrate that its vigorous management, clear and aggressive business objectives and record of consistently providing customers with reliability, quality and value for money will enhance its market share, thus providing improved return for shareholders.
 The board is confident of future sustained progress.
 ~end of chairman's statement~
 THE HARTSTONE GROUP PLC
 Interim Profit Statement
 The unaudited results for the six months ended Sept. 30, 1992, and Sept. 30, 1991, together with the audited results for the year ended March 31, 1992, are as follows:
 Six months to Year to
 9~30~92 9~30~91 3~31~92
 (Pounds in thousands)
 Turnover(A) 162,133 92,802 237,790
 Operating profit(A) 13,760 9,303 25,490
 Interest 3,299 1,132 3,426
 Profit before taxation 10,461 8,171 22,064
 Taxation(B) 3,661 2,778 6,843
 Profit after taxation 6,800 5,393 15,221
 Dividends 2,876 1,281 4,260
 Retained profit 3,924 4,112 10,961
 Earnings per share(C) 6.7p 7.7p 21.1p
 Dividend per share (net) 2.8p 1.875p 4.875p
 Notes:
 (A) -- Analysis of Turnover and Operating Profit
 Set out below are the unaudited results for the six months ended Sept. 30, 1992, together with the unaudited results for the six months ended Sept. 30, 1991.
 Six months to Sept. 30
 1992 1991
 Turnover Operating Turnover Operating
 Profit Profit
 (Pounds in thousands)
 Leathergoods 82,223 9,275 72,987 8,474
 Hosiery 79,910 4,485 19,815 829
 Total 162,133 13,760 92,802 9,303
 Europe 101,088 6,642 38,915 2,913
 North America 61,047 7,118 53,887 6,390
 Total 162,133 13,760 92,802 9,303
 (B) -- Taxation
 The taxation charge for the period is a proportion of the anticipated charge for the full year ending March 31, 1993.
 (C) -- Earnings Per Share
 Earnings per share has been calculated by reference to earnings of 6.8 million pounds (1991: 5.4 million pounds) and a weighted average number of ordinary shares in issue of 102,122,054 (1991: 70,149,892). Earnings per share for the six months ended Sept. 30, 1991, has been adjusted to reflect the rights issue in December 1991.
 The financial information set out above does not comprise full financial statements within the meaning of the Companies Act 1985. Full accounts for the year ended March 31, 1992, on which the auditors have given an unqualified report, have been delivered to the Registrar of Companies.
 Copies of this announcement will be available (for collection only) for a period of 48 hours from the Company Announcements Office at The Stock Exchange and at any time from the registered office of the company at 1 Saint Andrew's Court, Thame, Oxfordshire, OX9 3GG.
 -0- 11~25~92
 ~CONTACT: Stephen Barker, chairman, or David Gratton, finance director of the Hartstone Group, 071-489-1441; or Richard Oldworth of Buchanan Communications, 071-489-1441, for the Hartstone Group, all in the U.K.~
 (HSTL)


CO: The Hartstone Group Plc ST: IN: SU: ERN

GK-TO -- NY007 -- 3872 11~25~92 10:06 EST
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