Final Results

Hornby PLC 11 June 2002 HORNBY DELIVERS STRONG PERFORMANCE DRIVEN BY RENAISSANCE OF SCALEXTRIC AND HORNBY RAILWAYS Hornby Plc, ('Hornby') the models and collectables Group, has today announced its preliminary results for the year ended 31st March 2002. Hornby's two main products are Hornby model railways and Scalextric slot car racing systems. Highlights • Pre-tax profits up 62% to £3.7 million (2001: £2.3 million) • Turnover up 16% to £28.5 million (2001: £24.6 million) • Earnings per share up to 33p (2001: 18.5p*) * before exceptional items • Cash position at 31 March 2002 improved to £6.5 million (31 March 2001: £5.2 million) • Final dividend of 15.0p declared - Total dividend up 42% to 17.0p (2001: 12.0p) Frank Martin, Chief Executive of Hornby, said, ' The Hornby team has delivered an excellent performance, which we believe is sustainable. We have two strong brands, which appeal to new and existing customers across all age groups. Consumer interest in both Hornby and Scalextric continues to grow, as we feed the market with increasingly detailed and authentic models. ' There is a genuine resurgence in interest in our hobby ranges amongst adult collectors and enthusiasts. The growing community of Hornby 'hobbyists' is evidenced by a 30% increase in membership of the Hornby Collectors Club in the year. ' The demographic pattern of the post war 'baby boomers' entering their 40's and 50's with more time and disposable income than ever before gives real confidence that the current favourable market conditions will be sustainable for the foreseeable future. At the same time we continue actively to address the children's market with product innovations and the use of character licenses where appropriate.' -ends- Date: 11 June 2002 For further information contact: Hornby Plc City Profile Group Frank Martin, Chief Executive Simon Courtenay John Stansfield, Finance Director Ed Senior 01843-233500 020-7448-3244 or 07958-754273 On 11 June: 020-7448-3244 e-mail: simon.courtenay@city-profile.com Web: www.hornby.com or: www.scalextric.com CHAIRMAN'S STATEMENT I am pleased to be able to report another successful year of significantly improved performance across the Company for the year ended 31 March 2002. Notwithstanding global uncertainty in both financial and consumer markets following the events of September 11th, Hornby has demonstrated once again that a well-managed business with strong brands and innovative products can achieve sustained progress. Turnover increased by 16% to £28.5 million (2001 - £24.6 million) and profit before tax was up 62% to £3.7 million (2001 - £2.3 million after adjusting for exceptional items). Dividend Given the outstanding results for the year ended 31 March 2002, your Board believes that the Company's current trading position and prospects for the future enable us to propose a final dividend of 15p per share. This will bring the total dividend for the year to 17p, an increase of 42% over the previous year's dividend of 12p. The final dividend will be payable on 16 August 2002 to those shareholders on the Register as at 26 July 2002. As indicated in the Interim Statement, subject to performance, it is the Board's intention to increase the proportion of dividend paid at the interim stage during the coming financial year. Business Review I should like to take this opportunity to highlight some important performance indicators and developments within the business. There has been strong and consistent sales growth across the product ranges, in both the UK and export markets. The UK independents market for both Scalextric sets and Hornby locomotives has been particularly strong. Among our many successes of last year, the Harry Potter Hogwarts Express train set was very well received. We are delighted to be producing another train set based on the much-anticipated second film, 'Harry Potter and the Chamber of Secrets'. Similarly, the launch of the Scalextric Sport System earlier this year was extremely successful. Consequently we have high expectations for growth in Scalextric sales. Other exciting developments and innovations have been equally encouraging. The success of the first version of the Hornby Virtual Railway has given us great confidence for the launch of further developed product in 2003. The continuing success of the Hornby 'Super detail' locomotives is a direct result of moving production to China and is a real achievement for all involved. Quality and attention to detail are pre-requisites of the Hornby brand and it is particularly pleasing to note high levels of customer satisfaction. Whilst difficulties in the North American market were anticipated following the events of last September and our earlier objectives for growth were not met, we nevertheless increased sales and maintained momentum in this important market for the future development and strength of the Company. Property Throughout the past financial year we have continued to develop plans for site rationalisation at Margate. Planning applications for the new warehouse, headquarters offices and potential Hornby Heritage Centre, have been referred to the Secretary of State for adjudication. The outcome of this referral should be known before the end of the current financial year and, subject to a positive outcome, we expect to start work on the new building early in 2003. We are all very enthusiastic about this project, which, if approved, will provide an appropriate long-term future for Hornby in its traditional home town of Margate. It should also provide us with the opportunity to develop a Heritage Centre, displaying the best of our past alongside the successes of the present and an opportunity to show a glimpse of the future. Our two great brands enjoy such a strong worldwide following that we are confident of the commercial success of such a venture. Product Development In addition to the innovations and developments highlighted above, there has been continued focus across both brands together with a positive response to customer research, resulting in new product introductions and continued investment in our traditional markets. Most notably, an all-new track system for Scalextric has been introduced meeting the requirements of the modern marketplace whilst allowing compatibility with existing enthusiasts' track stock. Further development of our Scalextric Race Management System will continue to add realism and enjoyment to the hobby of slot car racing. New 'Super detail' cars have been added to the Scalextric range and in North America, a new range of product specifically designed for the market has been successfully introduced. The introduction of high-quality locomotives in the Hornby range continues to attract new entrants to the hobby of model railways whilst satisfying the ever more sophisticated requirements of our many thousands of collectors and enthusiasts worldwide. Financial Advisers In May, the Board announced that it had appointed Robert W. Baird Limited as financial advisers and brokers to the Company. Together we shall continue in our efforts to broaden the shareholder base of the Company. Outlook The past 12 months have demonstrated the resilience of your Company within sometimes difficult global markets. We have two strong brands which appeal to new and existing customers across all age groups. We also have a loyal and dedicated staff and management team ably led and professionally directed by our Chief Executive Frank Martin. I thank them all on your behalf for their continued efforts. Your Board believes that there are significant opportunities to grow our business organically through a steady programme of new product introductions and the innovative use of technology. There is also potential to enter into strategic partnerships where Hornby's critical skill base is capable of improving joint operations. The past 12 months have built on already-substantial success and we have made a most encouraging start to the current year. Neil Johnson 11 June 2002 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2002 2002 2001 £'000 £'000 TURNOVER 28,489 24,604 Cost of sales (16,206) (14,792) _______ _______ GROSS PROFIT 12,283 9,812 Net operating expenses - exceptional - (797) - other (8,609) (7,601) _______ _______ (8,609) (8,398) _______ _______ OPERATING PROFIT 3,674 1,414 Net interest receivable 48 81 _______ _______ PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 3,722 1,495 Tax on profit on ordinary activities (1,329) (520) _______ _______ PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 2,393 975 Dividends (1,234) (893) _______ _______ RETAINED PROFIT FOR THE FINANCIAL YEAR 1,159 82 _______ _______ ATTRIBUTED TO: The Company (41) (46) Subsidiary undertakings 1,200 128 _______ _______ 1,159 82 _______ _______ EARNINGS PER ORDINARY SHARE Basic 32.97p 11.74p Diluted 32.56p 11.74p Basic before exceptional items 32.97p 18.46p All of the activities of the Group are continuing. STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH 2002 2002 2001 £'000 £'000 Profit for the financial year 2,393 975 Exchange adjustments offset in reserves - 20 _______ _______ Total recognised gains for the year 2,393 995 _______ _______ CONSOLIDATED BALANCE SHEET AT 31 MARCH 2002 2002 2001 £'000 £'000 FIXED ASSETS Intangible assets 36 38 Tangible assets 3,625 3,701 _______ _______ 3,661 3,739 _______ _______ CURRENT ASSETS Stocks 5,535 4,240 Debtors 4,888 4,915 Cash at bank and in hand 6,477 5,212 _______ _______ 16,900 14,367 CREDITORS: Amounts falling due within one year (6,755) (5,245) _______ _______ NET CURRENT ASSETS 10,145 9,122 _______ _______ TOTAL ASSETS LESS CURRENT LIABILITIES 13,806 12,861 CREDITORS: Amounts falling due after more than one year (16) (96) PROVISIONS FOR LIABILITIES AND CHARGES (628) (762) _______ _______ NET ASSETS 13,162 12,003 _______ _______ CAPITAL AND RESERVES Called up share capital 363 363 Capital redemption reserve 55 55 Share premium account 4,525 4,525 Revaluation reserve 791 808 Other reserves 1,688 1,688 Profit and loss account 5,740 4,564 _______ _______ EQUITY SHAREHOLDERS' FUNDS 13,162 12,003 _______ _______ CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2002 2002 2001 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 4,437 5,162 Returns on investments and servicing of finance 48 81 Taxation (872) (499) Capital expenditure and financial investment - purchase of fixed assets (1,440) (1,034) - sale of fixed assets 34 160 ______ ______ (1,406) (874) Payment of deferred consideration (38) (26) Equity dividends paid (871) (585) ______ ______ Net cash inflow before financing 1,298 3,259 Financing Capital element of finance lease payments (33) (23) Purchase of own shares - (1,595) ______ ______ Increase in cash in the year 1,265 1,641 ______ ______ RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2002 2001 £'000 £'000 Increase in cash in the yea 1,265 1,641 Cash outflow from decrease in lease financing 33 23 _______ _______ Change in net funds resulting from cash flows 1,298 1,664 Exchange movements - 6 _______ _______ Movement in net funds in the year 1,298 1,670 Net funds at 1 April 2001 5,148 3,478 _______ _______ Net funds at 31 March 2002 6,446 5,148 _______ _______ NOTES TO THE CASH FLOW STATEMENT NET CASH FLOW FROM OPERATING ACTIVITIES 2002 2001 £'000 £'000 Operating profit 3,674 1,414 Exchange adjustments offset in reserves - 12 Depreciation charges 1,468 1,734 Amortisation of goodwill 2 3 Profit on sale of tangible fixed assets (10) (87) (Increase)/decrease in stocks (1,295) 1,843 Decrease in debtors 67 29 Increase in creditors 512 133 Increase in sales returns provision 19 81 _______ _______ Net cash inflow from operating activities 4,437 5,162 _______ _______ SEGMENTAL INFORMATION The directors consider there to be one class of business, being the development, manufacture and distribution of model products. BY ORIGIN Turnover Profit/(loss) before tax Net assets 2002 2001 2002 2001 2002 2001 £'000 £'000 £'000 £'000 £'000 £'000 United Kingdom 25,746 22,224 3,839 1,352 12,950 11,714 United States of America 2,743 2,380 (117) 143 212 289 ______ ______ ______ ______ ______ ______ Group 28,489 24,604 3,722 1,495 13,162 12,003 ______ ______ ______ ______ ______ ______ TURNOVER BY DESTINATION 2002 2001 £'000 £'000 United Kingdom 22,439 19,159 Rest of World 6,050 5,445 ______ ______ Group 28,489 24,604 ______ ______ NOTES 1. The basic earnings per ordinary share for the year ended 31 March 2002 is based on the profit after taxation of £2,393,000 (2001 - £975,000) and the weighted average number of ordinary shares in issue during the year of 7,257,320 (2001 - 8,306,087). The calculation of earnings per share before exceptional items is based on the profit before exceptional items (net of taxation) of £2,393,000 (2001 - £1,533,000). It is included as it provides a better understanding of the underlying performance of the Group. Therefore an adjusted earnings per share is presented as follows: 2002 2001 Earnings Earnings Earnings per share Earnings per share £'000 pence £'000 pence Earnings per share 2,393 32.97 975 11.74 Exceptional items: Redundancy and compensation for loss of office - - 797 9.60 Taxation arising on exceptional items at 30% (2001 - 30%) - - (239) (2.88) ______ ______ ______ ______ Adjusted earnings per share 2,393 32.97 1,533 18.46 ______ ______ ______ ______ Basic 32.97 11.74 Diluted 32.56 11.74 Basic before exceptional items 32.97 18.46 The following table shows a reconciliation of the weighted average number of shares used for calculating the basic and diluted earnings per share. 2002 2001 Number Number of shares of shares Used for calculating basic earnings per share 7,257,320 8,306,087 Dilution due to share option schemes 91,356 - _________ _________ Used for calculating diluted earnings per share 7,348,676 8,306,087 _________ _________ 2. The proposed dividend will be paid on 16 August 2002 to members on the register as at 26 July 2002. The ex-dividend date will be 24 July 2002. 3. The profit and loss account, statement of group total recognised gains and losses and balance sheet set out above for the year ended 31 March 2002 are not statutory accounts and are abridged and audited. Full audited accounts will be filed with the Registrar of Companies in due course. Full audited accounts for the year ended 31 March 2001 containing an unqualified audit report have been filed with the Registrar of Companies. 4. The preliminary financial information has been prepared on the basis of accounting policies set out in the Report & Accounts for the year ended 31 March 2001. Two new Accounting Standards issued in the year, Financial Reporting Standard (FRS) 18 - Accounting Policies and FRS 19 - Deferred Tax have had no change on opening reserves following the implementation of these Accounting Standards. 5. This preliminary announcement was approved by the Board on 10 June 2002. 6. Copies of this preliminary announcement are available from J W Stansfield, Finance Director, Hornby Plc, Westwood, Margate, Kent, CT9 4JX. This information is provided by RNS The company news service from the London Stock Exchange

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