Interim Results
Hornby PLC
15 November 2002
HORNBY REAPS BENEFITS OF NEW PRODUCT LAUNCHES
AS SALES INCREASE 32%
Hornby Plc ('Hornby'), the models and collectables Group, has today announced
its interim results for the six months to 30 September 2002. Hornby's two main
products are Hornby model railways and Scalextric slot car racing systems.
Highlights
• Pre-tax profits up by 108% to £1.7 million (2001: £794,000)
• Turnover up 32% to £14.0 million (2001: £10.6 million)
• Earnings per share up to 14.4p (2001: 7.2p)
• Concessions target exceeded - 52 in operation
• Successful launch of Scalextric 'Sport' range
• Hornby Railways delivering impressive performance
• Cash position improved to £1.6 million
• Interim dividend increased to 6.0p (2001: 2.0p)
Frank Martin, Chief Executive of Hornby, said,
' Hornby's strategy for growth is now firmly established. The improved
detailing, combined with the stream of new products, has resulted in the Hornby
and Scalextric ranges performing extremely well. We are experiencing excellent
sales growth, both in the independent model and hobby sector, as well as from
our concessions. Combined with our 'My First Hornby' and 'My First Scalextric'
products that appeal to younger children, Hornby customers now range in age from
4-80.
' In Scalextric, we have launched our Scalextric 'Sport' range, with a
completely new click-fit track design and super detail cars. Together with our
Race Management System, Scalextric has now become a hobby that appeals to all
ages. We now have a wide range of cars spanning Formula 1, World Rally, Touring
Cars, American Classics, GT Racing and NASCAR. This has recently been
complemented by our new Le Mans Classics including the famous Ford GT40 and our
Australian cars.
' Hornby railways has also achieved an excellent performance. We have introduced
a number of new products including the 'Black 5 locomotive', which have been
enthusiastically received by Hornby collectors.
' Looking to the future, the longer term prospects for the Group are excellent.
We are continuing to develop exciting and innovative products, many of which
will be launched during 2003.'
-ends-
Date: 15 November 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 15 November: 020-7448-3244 e-mail:simon.courtenay@city-profile.com
Web: www.hornby.com
or: www.scalextric.com
CHAIRMAN'S REVIEW
During the past six months, the Company has increased sales both of Hornby and
Scalextric products across all major market categories. I am pleased to report
that the half-year sales at £14.0m were 32% higher than for the same period last
year.
Profit before tax at £1.7m was 108% higher than for the same period last year
and diluted earnings per share rose from 7.2p to 14.4p.
Dividend
As indicated in the latest Annual Report and Accounts, your Board wishes to
increase the proportion of the dividend paid at the interim stage. I am
therefore pleased to announce an interim dividend of 6.0p (2001 - 2.0p) per
ordinary share payable on 24 January 2003 for those shareholders on the register
as at 31 December 2002.
Operating Review
The outstanding performance of the past six months reflects the ongoing success
of the product development and marketing strategies applied to both our major
brands.
In the UK, the independent model and hobby sector continues to record impressive
sales growth. This has been driven by the introduction of excellent new products
in Hornby Railways, notably the Black 5 locomotive, and the introduction of the
new Scalextric 'Sport' system with completely new click fit track design and
super detail cars.
Direct sales via our retail concessions were also higher. With 52 concessions in
operation we have already exceeded our goal of increasing the number of
concessions to at least 50 during the current financial year. In addition the
fact that these concessions are already operating means that we will derive full
benefit from the important pre-Christmas sales period.
In export markets, the Scalextric 'Sport' system has been well received.
Although our sales to export markets represent a small proportion of our overall
revenues, we are pleased to report an increase of 25%. We have also targeted
specific overseas markets by introducing Scalextric cars directly relevant to
individual markets. For example, in the USA we have launched the Ford Mustang
and Chevrolet Camaro 'Muscle cars' and the Ford GT40. In Australia, we have
recently introduced the Holden V8 and the Ford Falcon V8. These two models will
be sold as individual cars and also as part of the aptly-named 'Thunder Down
Under' race set.
Scalextric USA continues to make good progress. Sales in US dollars by
Scalextric USA increased by 18% compared to the same period last year. However
this increase is diluted when converted into Sterling at the appropriate current
exchange rate. We see significant potential in North America, and continue to
expand the distribution base.
The Company has benefited during the past 6 months from the effects of the
relative strength of Sterling against the Hong Kong dollar, the currency in
which the majority of our products are purchased. It is the Company's policy to
maintain a prudent level of forward currency purchases in order to insure
against short-term fluctuations in exchange rates. Forward purchases of Hong
Kong dollars are now sufficient to meet the Company's purchasing requirements to
the end of the current financial year.
The Company's cash position has improved by £1.4m compared to 30 September 2001,
notwithstanding an increase in working capital employed of £0.5m. This
favourable result underlines the cash generative nature of the Company's
business model. This allows us to continue to invest in the development of
exciting and innovative products and the use of technology to enhance our
product range.
Property
As indicated in the latest Annual Report and Accounts our planning applications
for a new Warehouse, Headquarters Offices and Hornby Heritage Centre have been
referred to the Secretary of State for adjudication. The public hearing is to be
held in January 2003. It is hoped that the result of the hearing should be known
around the end of the current financial year. If planning approval is granted
the series of transactions associated with the sale of the existing Margate site
and the construction of the new facilities detailed above, may require
shareholder approval. Details of these transactions will be circulated to
shareholders if appropriate before entering binding commitments.
Summary
Hornby has made an excellent start to the current financial year. Although the
prospects for the full year are positive, much will still depend on continued
strong demand for the Company's products between now and Christmas. In this
connection we should not expect to be immune from the effects of any major shift
in economic factors or consumer demand in the market generally.
Looking a little further ahead the Company continues to develop exciting and
innovative product ranges designed to maximise future performance.
Neil Johnson
Chairman
15 November 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2002
Six months Six months Year ended
to 30 September to 30 September 31-Mar
2002 2001 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
TURNOVER 14,018 10,629 28,489
Operating costs (12,395) (9,865) (24,815)
_______ _______ _______
OPERATING PROFIT 1,623 764 3,674
Net interest receivable 32 30 48
_______ _______ _______
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 1,655 794 3,722
Tax on profit on ordinary activities (589) (272) (1,329)
_______ _______ _______
PROFIT FOR THE PERIOD 1,066 522 2,393
Dividends (434) (145) (1,234)
_______ _______ _______
RETAINED PROFIT FOR THE PERIOD 632 377 1,159
_______ _______ _______
EARNINGS PER ORDINARY SHARE
Basic 14.66p 7.19p 32.97p
Diluted 14.43p 7.19p 32.56p
Dividend per ordinary share 6.0p 2.0p 17.0p
All the activities of the Group are continuing.
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
£'000 £'000 £'000
Profit for the financial period 1,066 522 2,393
Exchange adjustments offset in reserves (18) (10) -
_______ _______ _______
TOTAL RECOGNISED GAINS FOR THE PERIOD 1,048 512 2,393
_______ _______ _______
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 2002
30-Sep 30-Sep 31-March
2002 2001 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
FIXED ASSETS
Intangible assets 33 36 36
Tangible assets 3,543 3,679 3,625
Investments - Short Term Incentive Plan 192 - -
_______ _______ _______
3,768 3,715 3,661
CURRENT ASSETS
Stocks 7,989 6,873 5,535
Debtors 9,007 7,681 4,888
Cash at bank and in hand 1,576 136 6,477
_______ _______ _______
18,572 14,690 16,900
CREDITORS:
Amounts falling due within one year (7,804) (5,253) (6,755)
_______ _______ _______
NET CURRENT ASSETS 10,768 9,437 10,145
_______ _______ _______
TOTAL ASSETS LESS CURRENT LIABILITIES 14,536 13,152 13,806
CREDITORS:
Amounts falling due after more than one year (37) (65) 16)
PROVISIONS FOR LIABILITIES
AND CHARGES (673) (717) (628)
_______ _______ _______
NET ASSETS 13,826 12,370 13,162
_______ _______ _______
CAPITAL AND RESERVES
Share capital and reserves 7,464 7,431 7,422
Profit and loss account 6,362 4,939 5,740
_______ _______ _______
EQUITY SHAREHOLDERS' FUNDS 13,826 12,370 13,162
_______ _______ _______
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
30-Sep 30-Sep 31-Mar
2002 2001 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Profit for the financial period 1,066 522 2,393
Dividends (434) (145) (1,234)
Exchange (loss) on investment (18) (10) -
Shares issued 50 - -
_______ _______ _______
NET ADDITIONS TO SHAREHOLDERS' FUNDS 664 367 1,159
Opening shareholders' funds 13,162 12,003 12,003
_______ _______ _______
CLOSING SHAREHOLDERS' FUNDS 13,826 12,370 13,162
_______ _______ _______
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2002
Six months Six months Year ended
to 30 September to 30 September 31-March
2002 2001 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net cash (outflow)/inflow from operating activities (2,262) (3,486) 4,437
Returns on investments
and servicing of finance 32 30 48
Taxation (878) (291) (872)
Capital expenditure and financial investment
- purchase of fixed assets (506) (600) (1,440)
- sale of fixed assets 11 26 34
Purchase of own shares - Short Term Incentive Plan (192) - -
Payment of deferred consideration (49) - (38)
Equity dividends paid (1,086) (726) (871)
_______ _______ _______
Net cash (outflow)/inflow before financing (4,930) (5,047) 1,298
Financing
Issue of ordinary shares 50 - -
Capital element of finance lease payments (13) (27) (33)
_______ _______ _______
(Decrease)/increase in cash in the period (4,893) (5,074) 1,265
_______ _______ _______
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
£'000 £'000 £'000
(Decrease)/increase in cash in the period (4,893) (5,074) 1,265
Cash outflow from decrease in lease financing 13 27 33
_______ _______ _______
Change in net funds resulting from cash flows (4,880) (5,047) 1,298
New finance leases (28) - -
Exchange movements (8) (2) -
_______ _______ _______
Movement in net funds in the period (4,916) (5,049) 1,298
Net funds at 1 April 2002 6,446 5,148 5,148
_______ _______ _______
Net funds at 30 September 2002 1,530 99 6,446
_______ _______ _______
NOTES TO THE CASH FLOW STATEMENT
NET CASH FLOW FROM OPERATING ACTIVITIES
Six months Six months Year ended
to 30 September to 30 September 31-March
2002 2001 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating profit 1,623 764 3,674
Exchange adjustments offset in reserves (7) (8) -
Depreciation charges 650 573 1,468
Amortisation of goodwill 3 2 2
Profit on sale of tangible fixed assets (1) (4) (10)
(Increase) in stocks (2,454) (2,633) (1,295)
(Increase)/decrease in debtors (4,132) (2,729) 67
Increase in creditors 2,011 599 512
Increase/(decrease) in sales returns provision 45 (50) 19
_______ _______ _______
Net cash (outflow)/inflow from
operating activities (2,262) (3,486) 4,437
_______ _______ _______
GEOGRAPHICAL SEGMENT INFORMATION
Six months Six months Year ended
to 30 September to 30 September 31-March
2002 2001 2002
(unaudited) (unaudited) (audited)
BY ORIGIN £'000 £'000 £'000
TURNOVER
United Kingdom 12,997 9,717 25,746
United States of America 1,021 912 2,743
_______ _______ _______
Group 14,018 10,629 28,489
_______ _______ _______
£'000 £'000 £'000
PROFIT BEFORE TAX
United Kingdom 1,755 919 3,839
United States of America (100) (125) (117)
_______ _______ _______
Group 1,655 794 3,722
_______ _______ _______
£'000 £'000 £'000
NET ASSETS
United Kingdom 13,710 12,179 12,950
United States of America 116 191 212
_______ _______ _______
Group 13,826 12,370 13,162
_______ _______ _______
BY DESTINATION £'000 £'000 £'000
TURNOVER
United Kingdom 10,608 7,898 22,439
Rest of the world 3,410 2,731 6,050
_______ _______ _______
Group 14,018 10,629 28,489
_______ _______ _______
NOTES:
1. Basis of preparation
The interim financial information has been prepared on the basis of accounting
policies set out in the Report & Accounts for the year ended 31 March 2002. The
taxation charge for the six months ended 30 September 2002 has been calculated
on the basis of the estimated tax rate for the twelve months ending 31 March
2003.
2. Non statutory accounts
These statements do not constitute statutory financial statements within the
meaning of Section 240 of the Companies Act 1985. The comparative figures for
the year ended 31 March 2002 are an abridged statement of the full financial
statements for that period which have been delivered to the Registrar of
Companies and on which the auditors made an unqualified report. No financial
statements will be filed for the six months ended 30 September 2002.
3. Earnings per share
The calculation of earnings per ordinary share is based on the profits after
taxation for the period of £1,066,000 (six months ended 30 September 2001 -
£522,000) and the weighted average number of ordinary shares in issue during the
period of 7,272,621 (six months ended 30 September 2001 - 7,257,320).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, 7,385,577 (six months ended 30 September
2001 - 7,257,320).
4. Short Term Incentive Plan
46,584 ordinary shares to the value of £192,000 were acquired in June 2002 by
the Employee Benefit Trust in accordance with the incentive plan, details of
which were included in the 2002 Annual Report and Accounts.
The Trust waives its right to dividends.
5 Copies of this statement will be sent to all shareholders and are available
from the Company's registered office.
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Tuesday, 14th May 2024
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