HRC WORLD PLC
NASDAQ FIRST NORTH, COPENHAGEN TICKER : HRC ISIN: GB00BZ3CDY20
23 JULY 2018
FINANCIAL RESULTS TO 31 MARCH 2018
HRC World Plc ("HRC" or the "Company" or the "Group"), a company establishing Hard Rock Cafés across China, presents its results for the fifteen months ended 31 March 2018. The audited financial statements are appended to this announcement.
Chairman's Statement
"It is my pleasure to present you HRC World's Annual Report for the period ended 31 March 2018. We have successfully completed our admission to trading of Ordinary Shares on Nasdaq First North, Copenhagen, Denmark (Admission) on the 6 February 2018 . At the same time, the Group was formed through the acquisition by the Company of the subsidiaries, namely HRC Asia Ltd, HRCL (CC) Ltd, Ada Holdings Limited and its Wholly Foreign Owned Enterprises (WFOEs) in China, representing Hard Rock Café in Shanghai, Hangzhou, Chengdu as well as a project management company based in Shanghai.
The Group has already established 2 Hard Rock Cafés, namely, Hard Rock Café Shanghai and Hard Rock Café Hangzhou, with a 3rd Café in Chengdu expected to open in Q3'2018. On 15 February 2018, Mr Alex George was appointed as the CEO cum Executive Director of the Group."
Strategy and Objectives
The Group's business strategy is to open the first 3 restaurants in Shanghai, Hangzhou and Chengdu - first two having been in operations for more than one and a half years now while the third one, in Chengdu is expected to open in few months' time. Thereafter the Group plans to embark on an aggressive expansion plan that will see opening of one additional restaurant per month until at least 30 restaurants are running. The Group is of the opinion that having any lesser number of operating restaurants will not give it the desired economies of scale to implement China country-wide marketing strategies - which is important in an emerging market like China.
Accordingly, the Group has been in discussion with the franchisor and subsequently has procured rights or first rights of refusal to open Hard Rock Café restaurants ("Restaurants") and Rock Shop merchandise outlets across most major cities in China. It is also in discussion to procure further rights to operate in Taiwan.
Since Hard Rock Café is renowned for its casual American dining coupled with live-band entertainment, the Group plan to further capitalise on the concept by rotating the bands playing at each of the Group's restaurants such that there is always a new band playing and thus encouraging more frequent visits by patrons. The Group also plans to organise in-house music competitions as well as global Hard Rock band competitions to gain stronger visibility of the brand in China as well as globally.
Financial Overview
The Group generated a total of USD 7.42 mil (2016: USD 0.42 mil) in revenue from the operations with Cost of Sales of USD 6.13 mil (2016: USD 0.39 mil), resulting in Gross Profit of USD 1.29 mil (2016: USD 0.03 mil). However, after deducting all expenses and considering that the Group is still in business expansion stage, it recorded a loss of USD 6.20 mil (compared to FY 2016 loss of USD 4.09 mil).
The Group has total non-current assets amounting to USD 4.10 mil at 31 March 2018 compared to USD 3.57 mil at 31 December 2016. Total equity stood at USD 6.03 mil for the current period compared to liabilities of USD 3.43 mil for the FY ending 31 Dec 2016.
The consolidated net loss per share for the 15 months period ended 31 March 2018 was US$ 0.175 per share and 150,000,000 shares were outstanding at the close of the financial period ended 31 March 2018.
During the 15-month period ended 31 March 2018 the Group raised new capital from investors and underwent a reconstruction under which shareholder loans were capitalised, thereby strengthening the Company's capital base. The Company is still in a relatively early stage of development as its existing restaurants and stores become established in each new location and as new sites are identified. The expansion and development will need to continue before profitability is achieved.
Whereas the Group's consolidated net assets were positive at 31 March 2018, as a result of the issue of new shares and a debt conversion during the period under review, the early stage nature of the Group's activities mean that the underlying business is still loss making and a fund-raise is expected by the Company within the next 12 months.
Going Concern
The financial statements have been prepared on a going concern basis. Whereas the Group's consolidated net assets were positive at 31 March 2018, as a result of the issue of new shares and a debt conversion during the period under review, the early stage nature of the Group's activities mean that the underlying business is still loss making. In order to achieve its business plan the Group will need to finance its capital expenditure and working capital requirements from its existing resources, from future revenues generated by the restaurants as they become established and from external sources of finance as required. Accordingly, the Group is planning to raise further funds within the next 12 months.
After making due enquiries, the Directors have a reasonable expectation that the Group has adequate resources, supplemented by the additional funds to be raised, to continue as a going concern for the foreseeable future and that the carrying values of intangible assets are not impaired. Thus, they continue to adopt the going concern basis of accounting in preparing these financial statements.
Future Developments
The Group is fully focused on maximising its brand equity and business expansion in China. It is currently in process of completing the Hard Rock Café in Chengdu, which is estimated to take another 2 or 3 months to complete. In addition, the Group has started exploring feasibility in establishing Hard Rock Cafés in other cities such as Guangzhou, Wuhan and Shenzhen in the immediate future. Apart from existing Hard Rock Café franchise, the Group is also in talks with other food and beverage chains that have similar aspirations as the Group in expanding businesses in tandem with music and pop culture infusion.
The Company has been well received by both investors and customers alike and this further propels the Group in seeking business expansion beyond Hard Rock Café franchise. We remain committed to managing our cash resources and exposure to risk carefully whilst reviewing opportunities that add long term shareholder value. Each and every day, our team will continue to work tirelessly for each and every stakeholder.
THE DIRECTORS OF HRC WORLD PLC ACCEPT RESPONSIBILITY FOR THIS ANNOUNCEMENT
About HRC World Plc HRC World Plc is an England & Wales incorporated public company with registration number 10829936 and is quoted on Nasdaq First North (Copenhagen). HRC World through its subsidiaries owns franchise rights for establishment of Hard Rock Cafés across China.
Further information may be found at the Company's website: www.hrcplc.co.uk
Company contact details HRC World Plc +603 7786 0500 info@hrcplc.co.uk
Certified Adviser Keswick Global AG info@keswickglobal.com +43 1 740 408045
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