Final Results

RNS Number : 4194T
Hornby PLC
05 June 2009
 





HORNBY PLC 


PRELIMINARY RESULTS


YEAR TO 31 MARCH 2009








HORNBY CONTINUES GROWTH AS BRANDS GATHER MOMENTUM


Hornby Plc ('Hornby', or 'the Group'), the international hobby products group, has today announced its full year results for the year ended 31st March 2009.


  • Turnover up 11% to £61.6 million (2008: £55.7 million)

  • Pre-tax profits £6.1 million (2008: £9.0 million)

  • Underlying pre-tax profits £6.3 million (2008£8.4 million)*

  • Earnings per share 11.17p (200816.15p)

  • No final dividend declared (20085.8p) due to Sterling volatility and the need to retain strong balance sheet 

  • Total dividend for year 2.7p (2008: 8.5p)

  • Corgi fully integrated and performing well

  • Consumer demand strengthened in final quarter of financial year and has continued strongly since then

  • Results constrained by supply chain issues

  • New licence announced with the Brawn GP Formula One team


Frank Martin, Chief Executive of Hornby, commented:


' This has been a challenging year for Hornby. As a result of the weak pound and continuing supply chain issues, our profits and margins have come under pressure. As a result, the Board thinks it prudent not to pay a final dividend. This is a decision that will enable us to strengthen an already healthy balance sheet. Our supply chain issues are a source of frustration but we remain committed to and are making progress towards the implementation of a satisfactory solution. 


The diversity of our products across the Group continues to impress and attract customers. We are a broadly based hobby business and the continued demand for our products proves our resilience in times of recession. 


We continue to explore new and exciting ways of extending our product offering. Recently, for example, we have signed an exclusive worldwide license agreement with the Brawn GP Formula One team. Our work with the McLaren Formula One team continues and we wish both Lewis Hamilton and Jensen Button the very best for the rest of the season. Further, we have signed agreements with Disney Productions for the blockbuster movie series 'Cars'. We have also agreed an extension of the James Bond 007 licence to cover our Corgi ranges. 


We are also extending our existing online activities by further site development and links to social networking sites. Our websites attract over 65,000 unique visitors per week. Online represents an exciting opportunity for Hornby. The results of our work so far have been very encouraging and highlight our innovative approach to maximising our brand strengths. 


In Hornby, Airfix, Scalextric, Corgi and Humbrol, we have some of the best known global hobby brandsWe have built a robust platform for the Group to deliver longer term success and added value for our shareholders. This is an excellent business and we are fully prepared to meet the challenges facing us.'  


* Pre tax profit before amortisation of intangibles, net foreign exchange adjustments on inter-company loans, restructuring costs and abortive due diligence costs.


-ends-


High resolution images are available for the media to view and download free of charge from www.vismedia.co.uk


Date: 5th June 2009

For further information contact:


Hornby Plc    

City Profile

Frank Martin, Chief Executive

Simon Courtenay  07958-754273

Andrew Morris, Finance Director

William Attwell     07973-281650

01843-233500    

020-7448-3244 

Web: www.hornby.com 


 

 

 

CHAIRMAN'S STATEMENT

Year ended 31 March 2009 


Introduction


This has been a challenging year for the Group.  Consumer demand for our products has strengthened in the period since Christmas and continues to be strong, although a combination of de-stocking by large retailers, increased product costs from China and continuing disruption in our supply chain during the year, has impacted negatively both on sales and margins. 


The most significant challenge has been to maintain continuity of supplies from our largest vendor in China.  During the year this supplier faced serious financial problems arising from the debt burden it had carried since its heavily leveraged purchase by a venture capital investor in 2004. We maintained close contact with all interested parties during the greatest period of difficulty between July and November 2008. During this period, in order to ensure that our ongoing supplies would be protected, we incurred due diligence costs in a process that may have led to Hornby acquiring this supplier. These costs are identified separately in note 3. In the event, the supplier was acquired in January 2009 by a well resourced Hong Kong company which is a well established supplier to the toy and model railway industries. We continue to work closely with the new owners to improve our supply chain performance.


Despite the difficulties in model railway supplies, overall Group sales grew by 11% to £61.6 million mainly as a result of increased Airfix sales and the first time contribution of the Corgi business acquired in May 2008. We expect further strong growth from these brands in the current year.


Pre-tax profit before amortisation of intangibles, net foreign exchange adjustments on intercompany loans, restructuring costs and abortive due diligence (hereafter referred to as underlying pre-tax profits) was £6.3 million (2008 - £8.4 million) (see note 3). Basic earnings per share calculated on underlying pre-tax profit (hereafter referred to as underlying basic earnings per share) were 11.92p (2008 - 15.13p). Statutory pre-tax profit was £6.1 million (2008 - £9.0 million). Statutory basic earnings per share were 11.17p (2008 - 16.15p).


Dividend


In view of the challenging economic environment and in particular the current volatility of Sterling against the Hong Kong Dollar, the currency in which most of our purchases are made, the Board has determined that the primary focus of the business should be on maintaining a strong balance sheet. Accordingly the Board is recommending that no final dividend be paid.


The interim dividend of 2.7p, paid in January 2009, therefore becomes the total dividend for the year to 31 March 2009


Review of the Business


After a flat sales performance in the first half of the financial year, in which sales fell by 1% compared to the previous corresponding period, sales in the second half increased by 20% against a much stronger comparative period. Airfix and Humbrol sales continued to show good growth and the bulk of Corgi sales were made in the second half. Supply chain issues during the year related to our largest supplier once again constrained sales of model railways, mainly in Continental Europe.  This supplier was purchased by a well-resourced Hong Kong based company in January 2009 and since this time we have established a positive relationship with the new owners and continue to work closely with them to resolve these supply issues. In addition, for a number of years we have been building relationships with potential alternative suppliers of model railway products and we are now in a position to transfer a substantial proportion of our requirements away from Sanda Kan, should this become necessary.


One of the most encouraging aspects of the year is the fact that demand for our model railway products remains robust in the UK and is continuing to grow in Continental Europe despite the difficult economic environment. 


Our Scalextric range continues to attract media attention due to powerful licensing arrangements with partners such as McLaren. The Scalextric products based on the James Bond agreement with Eon Productions were particularly successful and we have recently entered into license agreements with Disney to produce Scalextric products based on the 'Cars' movie series. We are also delighted that we have recently secured the rights to the highly successful Brawn GP Formula One team. 


It is becoming increasingly apparent that the breadth of our product and brand portfolio now makes Hornby the primary candidate worldwide for media and other Intellectual Property owners to engage with in awarding licenses for our product sectors. We will continue to leverage this strength in acquiring relevant licenses to promote our products. 


UK Subsidiaries


Sales in the principal UK operating companies grew by 8% to £43.5 million (2008 - £40.4 million), and underlying profit before tax was £5.9 million (2008 - £7.7 million).  Reported profit before tax was £5.9m (2008 - £8.4m). This result includes export sales to third parties of £5.2 million (2008 - £5.6 million).


International Subsidiaries


Our subsidiaries in mainland Europe bore the brunt of product supply difficulties and were unable to fulfil their true sales potential. Accordingly underlying profit before tax was lower than the year before at £414,000 on sales of £14.8 million, compared with £723,000 in the previous year on sales of £12.6 million. Reported profit before tax was £255,000 (2008 - £617,000). However our strong European brands continue to attract increasing support from the model railway communities in each of our key territories. Improvements in our supply chain will result in an improved performance in Europe.  


Sales in Hornby America were slightly higher at $5.6 million (2008 - $5.4 million), producing a profit before tax of $13,000 (2008 - $32,000). Upon translation into Sterling, due to the stronger US dollar, sales were £3.3 million (2008 - £2.7 million) with profit before tax of £8,000 (2008 - £16,000). However, Hornby Hobbies in the UK benefits from a gross margin contribution of £565,000 (2008 - £450,000) generated on sales made to Hornby America, which has the effect of increasing significantly the overall contribution to Group profit of our US operation. The potential for sales of Corgi in the US is significantly greater than we had envisaged at the time of the acquisition, and this will help to improve the future performance of our US operations


Banking Facilities


The Group has improved the security of its banking facilities. A formal offer from the Group's principal bankers, Barclays, has been received and agreed subject to contract. The revised arrangements comprise a combination of a Term Loan over 5 years and a Secured Money Market Loan over 3 years. 


Product Development


Our product development programme continues to be a key driver of our business and we continue to increase further our resources in this area in order to cope with the additional demands of our subsidiaries and the increase in product categories.  


Outlook


Our strategy of building a broadly based model and hobby group with strong defensive attributes has been further strengthened by the successful and profitable integration of the Corgi business.


The broader product and geographical spread that this and earlier acquisitions gives the Group is clearly assisting in maintaining sales growth against the challenging economic environment in all our key markets.  Consumer demand for our products has strengthened in the period since Christmas and continues to be strong despite the current economic downturn and is proof yet again of the resilience of our business.


Without doubt the key focus for management is to ensure that our supply chain issues are resolved on a sustainable basis in order to allow our model railway businesses to reach their true potential.


Finally I should like to thank our Chief Executive Frank Martin and through him all our staff, for their continuing commitment to growing the business, and ensuring that future return to shareholders is maximised.



Neil Johnson

Chairman

5 June 2009

  

 

 

 

GROUP INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2009








2009

2008



(unaudited)




£'000

£'000





REVENUE


61,569

55,692

Cost of sales


(32,168)

(26,297)



_______

_______

GROSS PROFIT


29,401

29,395









Distribution costs


(2,454)

(2,138)

Selling and marketing costs


(13,641)

(11,551)

Administrative expenses


(7,976)

(6,268)

Other operating income/(expenses)


1,569

(52)



_______

_______

OPERATING PROFIT


6,899

9,386

Finance income


27

5

Finance costs


(805)

 ( 374)



_______

_______

PROFIT BEFORE TAXATION


6,121

9,017





Analysed as:




Underlying profit before taxation


6,331

8,400

Net foreign exchange impact on intercompany loans


535

780

Amortisation of intangibles


(370)

(163)

Restructuring and abortive due diligence costs


(375)

-



_______

_______

PROFIT BEFORE TAXATION


6,121

9,017





Taxation


(1,909)

(2,940)



_______

_______

PROFIT FOR THE YEAR ATTRIBUTABLE




TO EQUITY HOLDERS


4,212

6,077



_______

_______





EARNINGS PER ORDINARY SHARE




Basic


11.17p

16.15p

Diluted


10.98p

15.62p



All of the activities of the Group are continuing.  

  GROUP BALANCE SHEET

AT 31 MARCH 2009



2009

2008


(unaudited)



£'000

£'000

ASSETS



NON-CURRENT ASSETS



Goodwill

13,624

9,925

Intangible assets

5,689

2,404

Property, plant and equipment

10,523

8,360

Deferred tax assets

67

123


_______

_______


29,903

20,812


_______

_______

CURRENT ASSETS



Inventories

14,368

11,890

Trade and other receivables

13,119

10,699

Current tax assets

124

152

Cash and cash equivalents

427

940


_______

_______


28,038

23,681


_______

_______

LIABILITIES



CURRENT LIABILITIES



Borrowings

(5,138)

(2,220)

Derivative financial instruments

(3,529)

(1,350)

Trade and other payables

(8,270)

(6,851)

Provisions

(538)

(500)

Current tax liabilities

(999)

(1,723)


_______

_______


(18,474)

(12,644)


_______

_______




NET CURRENT ASSETS

9,564

11,037


_______

_______

NON-CURRENT LIABILITIES



Borrowings

(7,181)

(41)

Deferred tax liabilities 

(301)

(346)


_______

_______


(7,482)

(387)


_______

_______




NET ASSETS

31,985

31,462


_______

_______

SHAREHOLDERS' EQUITY



Share capital

380

380

Share premium

5,278

5,278

Capital redemption reserve

55

55

Translation reserve

(533)

(197)

Hedging reserve

(249)

133

Other reserves

1,688

1,688

Retained earnings

25,366

24,125


_______

_______

TOTAL EQUITY

31,985

31,462


_______

_______


  GROUP STATEMENT OF CHANGES IN EQUITY

Years ended 31 March 2009 (unaudited) and 31 March 2008






Capital







Share

Share

redemption

Translation

Hedging

Other

Retained

Total


capital

premium

reserve

reserve

reserve

reserves

earnings

equity

GROUP

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Balance at 1 April 2007

378

5,236

55

(77)

(133)

1,740

20,646

27,845










Exchange adjustment offset in reserves

-

-

-

(120)

-

-

-

(120)

Cash flow hedges

-

-

-

-

266

-

-

266


____

_____

____

______

____

______

______

______










Net expense recognised directly in reserves

-

-

-

(120)

266

-

-

146

Profit for the year

-

-

-

-

-

-

6,077

6,077


____

_____

____

______

____

______

______

______










Total recognised income for the year

-

-

-

(120)

266

-

6,077

6,223


____

_____

____

______

____

______

______

______



















Issue of shares

2

42

-

-

-

-

-

44

Share-based payments

-

-

-

-

-

-

225

225

Deferred tax on share-based payments

-

-

-

-

-

(52)

-

(52)

Shares vested from EBT

-

-

-

-

-

-

295

295

Dividends

-

-

-

-

-

-

(3,118)

(3,118)


____

_____

____

______

____

______

______

______


2

42

-

-

-

(52)

(2,598)

(2,606)


____

_____

____

______

____

______

______

______



















Balance at 31 March 2008

380

5,278

55

(197)

133

1,688

24,125

31,462


____

_____

____

______

____

______

______

______










Exchange adjustment offset in reserves

-

-

-

(336)

-

-

-

(336)

Cash flow hedges

-

-

-

-

(382)

-

-

(382)


____

_____

____

______

____

______

______

______










Net expense recognised directly in reserves

-

-

-

(336)

(382)

-

-

(718)

Profit for the year

-

-

-

-

-

-

4,212

4,212


____

_____

____

______

____

______

______

______










Total recognised income for the year

-

-

-

(336)

(382)

-

4,212

3,494


____

_____

____

______

____

______

______

______










Share-based payments

-

-

-

-

-

-

224

224

Purchase of own shares for EBT

-

-

-

-

-

-

(284)

(284)

Shares vested from EBT

-

-

-

-

-

-

294

294

Dividends

-

-

-

-

-

-

(3,205)

(3,205)


____

_____

____

______

____

______

______

______


-

-

-

-

-

-

(2,971)

(2,971)











____

_____

____

______

____

______

______

______



















Balance at 31 March 2009

380

5,278

55

(533)

(249)

1,688

25,366

31,985


____

____

_____

____

______

____

______

______


Retained earnings includes £672,000 at 31 March 2009 (2008 - £689,000) which is not distributable and relates to a 1986 revaluation of land and buildings. 

  GROUP CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2009


        



2009

2008



(unaudited)




£'000

£'000

CASH FLOWS FROM OPERATING ACTIVITIES




Cash generated from operations


11,377

10,007

Interest received


27

5

Interest paid


(805)

(374)

Tax paid


(2,594)

(2,385)



_______

_______

Net cash generated from operating activities


8,005

7,253



_______

_______

CASH FLOWS FROM INVESTING ACTIVITIES




Purchase of trade assets and related costs


(8,495)

-

Proceeds from sale of property,




plant and equipment


2

71

Purchase of property, plant and equipment


(4,763)

(3,485)



_______

_______

Net cash utilised in investing activities


(13,256)

(3,414)



_______

_______

CASH FLOWS FROM FINANCING ACTIVITIES




Proceeds from issuance of ordinary shares


-

44

Proceeds from issue/(repayment) of loans


8,684

(13)

Purchase of own shares by Short Term Incentive Plan


(284)

-

Finance lease capital payments


(19)

(49)

Dividends paid to Company's shareholders


(3,205)

(3,118)



_______

_______

Net cash generated from/(utilised in) financing activities


5,176

(3,136)



_______

_______





Effect of exchange rate movements


(1,717)

(1,344)



_______

_______





Net decrease in cash and cash equivalents


(1,792)

(641)

Cash, cash equivalents and bank overdrafts




at beginning of the year


(1,268)

(627)



_______

_______

CASH, CASH EQUIVALENTS AND 




BANK OVERDRAFTS AT END OF YEAR


(3,060)

(1,268)



_______

_______





CASH, CASH EQUIVALENTS AND 




BANK OVERDRAFTS CONSIST OF:




Cash and cash equivalents


427

940

Bank overdrafts


(3,487)

(2,208)



_______

_______

CASH, CASH EQUIVALENTS AND 




BANK OVERDRAFTS AT END OF YEAR


(3,060)

(1,268)



_______

_______



  NOTES TO THE CASH FLOW STATEMENT


CASH FLOW FROM OPERATING ACTIVITIES



2009

2008


(unaudited)



£'000

£'000




Profit before taxation

6,121

9,017

Interest payable

805

374

Interest receivable

(27)   

(5) 

Amortisation of intangible assets

370

163

Depreciation

4,315

2,908

Loss/(profit) on disposal of tangible fixed assets

25

(7)

Share-based payments

224

225

Loss/(gain) on financial derivatives

6

(65)

Increase in provisions

38

207

Increase in inventories

(1,735)

(3,449)

Increase in trade and other receivables

(2,535)

(551)

Increase in trade and other payables

3,770

1,190


_______

_______

CASH GENERATED FROM OPERATIONS

11,377

10,007


_______

_______




 


SEGMENTAL REPORTING


The primary reporting format for segmental purposes is geographic, as this is the basis on which the Group is organised and managed. Transactions with and balances to the other segments have been identified below and eliminated.


Hornby's secondary reporting format is business and as the Group operates on a single business segment, further analysis is not required here.

    

Year ended 31 March 2009 (unaudited)










Rest

Total







of

Reportable

Intra




UK

USA

Europe

Segments

Group

Group



£'000

£'000

£'000

£'000

£'000

£'000









Revenue

- External

43,497

3,253

14,819

61,569

-

61,569


- Other segments

3,582

-

3,329

6,911

(6,911)

-









Operating profit


5,773

21

1,105

6,899

-

6,899









Interest expense

- External

(749)

-

(56)

(805)

-

(805)


- Other segments

(230)

(16)

(796)

(1,042)

1,042

-

Interest income

- External

22

3

2

27

-

27


- Other segments

1,042

-

-

1,042

   (1,042)

-



______

______

______

______

______

______

Profit before tax


5,858

8

255

6,121

-

6,121

Taxation


(1,694)

(4)

(211)

(1,909)

-

(1,909)



______

______

______

______

______

______

Profit for the year


4,164

4

44

4,212

-

4,212



______

______

______

______

______

______









Segment assets


53,004

2,061

25,530

80,595

(22,845)

57,750

Less intercompany receivables


(21,045)

(2)

(1,798)

(22,845)

22,845

-

Add tax assets


67

-

124

191

-

191



______

______

______

______

______

______

Total assets


32,026

2,059

23,856

57,941

-

57,941



______

______

______

______

______

______









Segment liabilities


22,160

2,252

23,089

47,501

(22,845)

24,656

Less intercompany payables


(367)

(2,198)

(20,280)

(22,845)

22,845

-

Add tax liabilities


1,189

1

110

1,300

-

1,300



______

______

______

______

______

______

Total liabilities


22,982

55

2,919

25,956

-

25,956



______

______

______

______

______

______









Other segment items








Capital expenditure


4,422

23

1,713

6,158

-

6,158

(including acquisitions)








Depreciation


2,839

11

1,465

4,315

-

4,315

Net foreign exchange on








intercompany loans

   

(535)

-

-

(535)

-

(535)

Amortisation of intangible assets


247

-

123

370

-

370

Share-based payment








- charge to Income Statement


224

-

-

224

-

224



______

______

______

______

______

______

    

All transactions between Group companies are on normal commercial terms and an arm's length basis.

      Year ended 31 March 2008






Rest

Total







of

Reportable

Intra




UK

USA

Europe

Segments

Group

Group



£'000

£'000

£'000

£'000

£'000

£'000









Revenue

- External

40,420

2,696

12,576

55,692

-

55,692


- Other segments

3,067

-

2,601

5,668

(5,668)

-

















Operating profit


7,915

34

1,437

9,386

-

9,386









Interest expense

- External

(301)

-

(73)

(374)

-

(374)


- Other segments

(109)

(22)

(748)

(879)

879

-

Interest income

- External

-

4

1

5

-

5


- Other segments

879

-

-

879

(879)

-



______

______

______

______

______

______

Profit before tax


8,384

16

617

9,017

-

9,017

Taxation


(2,524)

-

(416)

(2,940)

-

(2,940)



______

______

______

______

______

______

Profit for the year


5,860

16

201

6,077

-

6,077



______

______

______

______

______

______









Segment assets


40,830

1,021

20,861

62,712

(18,494)

44,218

Less intercompany receivables


(17,582)

(1)

(911)

(18,494)

18,494

-

Add tax assets


244

-

31

275

-

275



______

______

______

______

______

______

Total assets


23,492

1,020

19,981

44,493

-

44,493



______

______

______

______

______

______









Segment liabilities


8,597

1,004

19,855

29,456

(18,494)

10,962

Less intercompany payables


(21)

(962)

(17,511)

(18,494)

18,494

-

Add tax liabilities


1,604

-

465

2,069

-

2,069



______

______

______

______

______

______

Total liabilities


10,180

42

2,809

13,031

-

13,031



______

______

______

______

______

______









Other segment items








Capital expenditure


1,960

23

1,632

3,615

-

3,615

(including acquisitions)








Depreciation


1,970

8

930

2,908

-

2,908

Net foreign exchange on








  Intercompany loans


(780)

-

-

(780)

-

(780)

Amortisation of intangible assets


57

-

106

163

-

163

Share-based payment








- charge to Income Statement 


225

-

-

225

-

225



______

______

______

______

______

______









    

All transactions between Group companies are on normal commercial terms and an arm's length basis.


  NOTES

1.  Basis of preparation

The financial information for the year ended 31 March 2009 has been prepared in accordance with International Accounting Standards ('IAS') and International Financial Reporting Standards ('IFRS') as adopted by the European Union ('EU') and also as issued by the International Accounting Standards Board, International Financial Reporting Interpretations Committee interpretations and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. It is also prepared in accordance with the Group's accounting policies which have been consistently applied as set out in the 2008 financial statements. This information does not constitute statutory accounts and has not been audited.


The Group's banking facilities are renewable from time to time.  In respect of this renewal, the Group has received an offer to provide continued banking facilities from the Group's existing bankers.  The Directors are satisfied that these facilities provide adequate funding for the Group's ongoing operations and acceptance of these facilities has been approved by the Group's Board.  Accordingly the Directors are satisfied that the accounts should be prepared on a going concern basis.


2.   Non-statutory accounts

 These statements do not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985. The financial statements for the year ended 31 March 2008 were prepared in accordance with IFRS and have been delivered to the Registrar of Companies and on which the auditors made an unqualified report.  


3.   Reconciliation of statutory information to non-statutory information used in the preliminary
      announcement



2009

2008


£'000

£'000




Profit before taxation

6,121

9,017







Foreign exchange on intercompany loans



including impact of foreign exchange collar*

(535)

(780)

Amortisation of intangibles

370

163

Restructuring costs

154

        -

Abortive due diligence costs

221

-


_______

_______

Underlying/adjusted profit before taxation

6,331

8,400


_______

_______


The Income Statement disclosed restructuring and aborted due diligence costs in administrative expenses. Foreign exchange movements and amortisation of intangibles were disclosed in other operating income/(expenses).


* The foreign exchange collar is for a principal amount of Euro 16.5 million and is in place to minimise exposure to Euro denominated intercompany loans.


The amount shown above comprises gains on translation of intercompany loans of £2,459,000 (2008 - gain of £2,126,000), offset by a loss on marking to market the foreign exchange collar of £1,924,000 (2008 - loss of £1,346,000).


Underlying/adjusted profit before taxation is shown to present a clearer view of the trading performance of the business. Management has identified the following non-trivial adjustments, whose inclusion in earnings could distort underlying trading performance restructuring and abortive due diligence costs which are not expected to recur, net foreign exchange gains/losses on intercompany loans which are dependent on exchange rates from time to time and can be volatile and amortisation of intangibles which result from historic acquisitions.

 

4.  Earnings per share

The calculation of earnings per ordinary share is based on the profits after taxation for the period of £4,212,000 (year ended 31 March 2008 - £6,077,000) and the weighted average number of ordinary shares in issue during the period of 37,723,891 (year ended 31 March 2008 - 37,637,184).


The calculation of diluted earnings per ordinary share is based on the weighted average number of ordinary shares in issue as adjusted to assume conversion of all dilutive potential ordinary shares, 38,350,904 (year ended 31 March 2008 - 38,914,255).


The calculation of adjusted earnings per ordinary share is based on profit after tax adjusted for amortisation of intangibles of £370,000 (year ended 31 March 2008 - £163,000), foreign exchange translational adjustments on intercompany loans after tax of £385,000 gain (year ended 31 March 2008 - £546,000 gain), restructuring costs of £111,000 (year ended 31 March 2008 - £nil) and abortive due diligence costs of £190,000 (year ended 31 March 2008 - £nil).

 

5.  Short Term Incentive Plan

182,096 ordinary shares to the value of £284,195 were acquired by the Employee Benefit Trust in June 2008 in accordance with the incentive plan, details of which were included in the 2008 Annual Report and Accounts.


The Trust waives its right to dividends.

 

6.  CORGI ACQUISITION


On 1 May 2008 Hornby Hobbies Limited acquired the Corgi brand and related tooling and intellectual property rights from Corgi International Limited for £7,589,000 and inventories for £743,000. Legal and due diligence fees of £163,000 were incurred by Hornby Plc.


The table below sets out the Group's assessment of the fair values of the assets acquired.




Acquirer's

Fair value



carrying

to the 



amount

Group



£'000

£'000

Intangible assets:




- customer lists


-

729

- brand names


-

2,676





Property, plant and equipment


1,432

1,432

Inventories


743

743



______

______

Net assets acquired


2,175

5,580

Goodwill



2,915




______

Consideration



8,495




______





Consideration




- satisfied by cash



8,332

- direct costs relating to acquisition



163




______




8,495




______


  Goodwill is attributable to significant synergies arising post-acquisition due to Hornby's existing presence in the hobby sector and its extensive customer base.


 Goodwill arising on the acquisition of Corgi is expected to be deductible for tax purposes.


Hornby Hobbies Limited acquired a part of the Corgi International Limited assets and therefore historical trading performance is not available in relation to the assets acquired. The Corgi assets have been fully integrated into Hornby Hobbies Limited and it is not possible to extract meaningful trading results of the assets since acquisition to 31 March 2009 other than £5.5 million sales of Corgi product in the period would have been approximately £5.8 million had the Corgi brands been included in the Group from the start of the financial year.




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