Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • FEAnalytics.com
  • FEInvest.net
  • FETransmission.com
  • Investegate.co.uk
  • Trustnet.hk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

Hornby PLC (HRN)

  Print      Mail a friend       Annual reports

Friday 09 November, 2012

Hornby PLC

Half Yearly Report

RNS Number : 6906Q
Hornby PLC
09 November 2012
 



 

 

 

HORNBY RELEASES INTERIM RESULTS

 

Hornby Plc ("Hornby"), the international hobby products group, has today announced its interim results for the period ended 30 September 2012.  Hornby owns a number of model railway and slot car brands, Airfix models, Humbrol paints and Corgi die cast models.

 

Frank Martin, Chief Executive of Hornby, commented,

 

"  The business is undoubtedly facing short-term challenges. However we have a coherent strategy to continue to drive the business forward.

 

" I am pleased that Roger Canham is joining the group. I am sure that with his experience he will bring enthusiasm and drive that will strengthen the team."

 

-ends-

 

 

Date:  9 November 2012

For further information contact:

 

Hornby Plc            

City Profile

Frank Martin, Chief Executive

Andrew Morris, Finance Director

01843-233500

Simon Courtenay

Abigail Genis

020-7448-3244

 

 

 

  

 

 

INTERIM MANAGEMENT REPORT

 

 

The Group issued a trading update on 25 September 2012, which specified three major factors that would constrain Group performance in the current financial year: 

 

1) Very substantial disruption to supplies caused by a major rationalisation programme being implemented by one of our largest suppliers in China.

2) Disappointing sales of London 2012 merchandise.

3) General weakness in demand in our major markets - particularly the UK.

 

Our broad spread of categories and brands provide a solid basis from which to work through the current challenges and secure a long term future. However, as previously announced, the result for this financial year is likely to be approximately break-even, primarily due to the supply chain disruption mentioned above.

 

Financials

 

During the period, turnover was £27.0 million, a decrease of 5% compared to the corresponding period last year. Our European businesses were heavily constrained as a result of the supply chain disruption mentioned above, and sales fell by 30%. This was particularly frustrating as demand for our products in Europe continues to be encouraging. Sales in the UK business increased by 3% over the corresponding period last year, although this year sales benefitted from £3.5 million relating to London 2012 products. Stripping out London 2012 sales from both years, sales fell by 15% compared to the corresponding period last year.

 

Gross margins fell as a result of product and market mix as sales of model railway products in Europe decreased.  Lower margins were realised on sales of London 2012 products and we have made provisions against remaining London 2012 inventory. A pre-tax loss of £0.3 million was incurred (2011 - profit £1.2 million) before amortisation of intangibles and net foreign exchange adjustments on intercompany loans (hereafter referred to as underlying pre-tax losses). Statutory pre-tax loss was £0.5 million (2011-profit £1.0 million).

 

The Group has banking facilities of £16.0 million in the UK. These facilities comprise a £6.0 million term loan which expires in July 2014 and a £10.0 million Secured Money Market Loan which expires in August 2015. The Group also has additional facilities of £2.5 million in place in its European subsidiaries. Net debt as at 30 September 2012 was £6.5 million compared to £12.8 million as at September 2011. The significant reduction in net debt year on year reflects cash generated from a planned programme of working capital reduction. The Group is currently operating within its banking covenants. To ensure that management's expected borrowing requirements continue to deliver sufficient operating headroom within covenants for the duration of the current facilities, the Group has been offered amended UK facility terms by its principal banker Barclays Bank Plc, which the Board expects to approve shortly.

 

Dividend

 

The full year dividend for the year to 31 March 2012, due to be paid on 21 December 2012 will be paid as announced.

 

In view of the difficult trading outlook for the full year, the Board is not proposing to pay an interim dividend (2011-dividend paid 1.7p). It is the Board's intention that future dividend payments should be resumed as soon as trading performance allows.

 

 

Operating Review

 

UK

 

Turnover of £21.1 million was above the previous year (2011 - £20.5 million).  Underlying profit before tax of £0.6 million was below the previous year (2011 - £1.4 million) and included the provisions against London 2012 inventory referred to above. Whilst overall sales were above the previous year, the core business excluding London 2012 merchandise was down. A combination of continued reluctance amongst retailers to take in stocks ahead of demand, coupled with supply chain constraints in model railways, has resulted in reduced order intake from all channels of distribution. We are expecting that this pattern will continue through the Christmas period and we are therefore cautious in our expectations for the second half of the financial year. However we have been encouraged by the rate of sale of a number of our lower priced product ranges, recently introduced into mass market outlets as a result of the London 2012 legacy of gaining broader mass market distribution for our brands. In particular we are pleased with the rate of sale of our Airfix Starter Sets, retailing from £7.99 and also our Corgi "Toys" range retailing from £2 and upwards. The Corgi Toys range has recently won its third award this year. The "Toytalk" Awards named the Corgi Toys range the winner in "best new toy car" category for 2012.  

 

In Hornby model railway products sales were constrained to an extent by shortage of deliveries from China. However demand for model railways in the UK has been lower than in the previous year. We are continuing to develop locomotives and rolling stock to our revised "design clever" specification. This approach enables us to offer excellent value for money on products developed and priced at a slightly lower specification than our high detail products, whilst maintaining margins. This approach, already proven in the marketplace will enable us to accommodate, to an extent, the continuing trend of increased labour costs at our vendors in China.

 

Sales of Scalextric were slightly lower than last year and this trend is likely to continue into the second half. For 2013 we will be launching new ranges of Scalextric products offering improved play features at competitive prices. Sales of Airfix grew in the half, and we are expecting this brand, which is not constrained by supply issues, to demonstrate further growth in the second half. A combination of increased listings in major retailers for our Starter Set products, retailing at keen prices, coupled with a positive reaction from the markets to our continued introductions of new products aimed at the adult hobbyist give confidence that we will be able to continue to grow sales of Airfix.

 

Sales of Corgi products grew in the half and we expect this trend to continue, based on sales of our Corgi Toys range and continued introductions in the Collector ranges.

 

Our online and direct marketing sales continue to show encouraging growth. By Christmas this year we expect to have completed the redesign and relaunch of all our websites to provide cross-selling facilities and "single- basket" shopping across all our brands.

 

 

Continental Europe

 

Sales in our continental European subsidiaries were particularly badly affected by the model railway supply chain disruption, as the proportion of sales represented by model railways in our European subsidiaries is significantly higher than in the UK.  As a result of this, turnover was £4.8 million compared to £6.9 million last year. Underlying loss before tax of £0.8 million was adverse to the previous year (2011- £0.2 million loss). We expect the disruption to continue during the second half. However we continue to make good progress in bringing additional suppliers on stream in China and we expect to be able to work through the process of diversifying our supply base over the next 12 months. In doing so, we expect to be able to arrive at a more balanced supply base for the future.

 

 

USA

 

Turnover of £1.1 million was slightly above the £1.0 million achieved in the corresponding period last year. The underlying loss before tax was similar to last year. Our US subsidiary is exposed only to a small extent to the model railway market and therefore has been largely unaffected by the supply chain issues affecting other subsidiaries.

 

Current Trading

 

In the UK, as indicated above, sales in the second half are expected to be below the previous year. However, we are encouraged that sales to the consumer via our chain of in-store concessions continue at a higher level than last year. The retail landscape continues to undergo a period of significant change in the UK. The swing towards e-commerce sales of our products, via the sites of specialist on-line retailers as well as the e-commerce sites of our "bricks and mortar" retailers, continues. Our own e-commerce sites are trading well and we will continue to develop this channel of distribution. Trading in Continental Europe will continue to be adversely affected by product shortages. However demand for our products in Europe continues to be strong and we expect to be able to fulfil this demand in the future as our new sources of supply continue to increase output.

 

 

Board changes

 

The appointment of Roger Canham to the Board as a Non-Executive Director, was announced on 6 November 2012. Roger has extensive experience of innovation and profitable development of similar scale businesses to Hornby. He is well known and respected by a number of our major shareholders, and is keen to become fully engaged in the business. I have announced my intention to retire from the Board on 1 February 2013. On that date Roger Canham will succeed me as Chairman. We welcome Roger to the Board, and look forward to a long and mutually successful relationship.

 

 

Outlook

  

We enter the second half of the year focussed on managing the supply chain challenge that has now come to a head. For a number of years, Group performance has been periodically constrained as a result of problems with our largest supplier in China. Our dependence on that supplier has already been significantly reduced. This process will continue as our new suppliers increase their capacities and our largest supplier continues to work through its rationalisation process.

 

Against this background we have redoubled our efforts in innovation and product development, building on our core brand strengths and also extending our reach based on newly developed technologies. At the same time we are implementing a rigorous cost control regime in order to align overheads more closely with our future business.

 

In conclusion, whilst we face some significant short term challenges, we are working hard to address these and in doing so, establish a base from which the Group can grow more securely in the future.

 

 

 

Neil A Johnson

Chairman

 

9 November 2012

 

 

 

 

STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 September 2012

 

 

 

 

 

 


Six months to 30 September 2012 (unaudited)  

Six months to 30 September 2011 (unaudited)

Twelve months to 31 March  2012

 (audited)


Notes

£'000

£'000

£'000

 

REVENUE

 

 

4

 

26,962

 

28,353

 

64,447

Cost of Sales

 


(15,430)

_______

(14,543)

_______

(33,290)

_______

 

GROSS PROFIT

 


 

11,532

 

13,810

 

31,157

Distribution costs


(1,114)

(1,163)

(2,571)

Selling and marketing costs


(5,745)

(6,160)

(13,761)

Administrative expenses


(4,304)

(4,618)

(9,029)

Other operating expenses

 


(634)

_______

(526)

_______

(1,054)

_______

 

OPERATING (LOSS)/PROFIT

 


 

(265)

 

1,343

 

4,742

Finance income


4

21

26

Finance costs


(280)

(405)

(779)

 

(LOSS)/PROFIT BEFORE TAXATION

 

4

 

(541)

 

959

 

3,989

Analysed as:





Underlying (loss)/profit before taxation


(288)

1,201

4,526

Net foreign exchange impact on intercompany loans


(62)

(45)

(145)

Amortisation of intangible assets

 


(191)

_______

(197)

_______

(392)

_______

 

(LOSS)/PROFIT BEFORE TAXATION

 

4

 

(541)

 

959

 

3,989

 

Taxation

 

 

8

 

134

_______

 

(438)

_______

 

(825)

_______

(LOSS)/PROFIT FOR THE PERIOD AFTER TAXATION

 


 

(407)

_______

 

521

_______

 

3,164

_______

OTHER COMPREHENSIVE (LOSS)/INCOME





Cash flow hedges, net of tax


(90)

564

300

Currency translation differences

 


(19)

_______

2

_______

(16)

_______

 

OTHER COMPREHENSIVE (LOSS)/INCOME FOR

THE PERIOD, NET OF TAX

 

 

(109)

_______

 

566

_______

 

284

_______

 

TOTAL COMPREHENSIVE (LOSS)/INCOME FOR

THE PERIOD

 

 

 

(516)

 

=======

 

 

1,087

 

=======

 

 

3,448

 

=======

 

EARNINGS PER ORDINARY SHARE





Basic


(1.04)p

1.36p

8.19p

Diluted


(1.04)p

=======

1.34p

=======

8.12p

=======

 

All of the activities of the Group are continuing.

The notes form an integral part of this condensed consolidated half-yearly financial information.

 

BALANCE SHEET

As at 30 September 2012



30 September

               2012

    (unaudited)

30 September

2011

(unaudited)

31 March

2012

(audited)

 


Notes

£'000

£'000

£'000

ASSETS





NON-CURRENT ASSETS





Goodwill


12,837

13,228

13,059

Intangible assets


4,106

4,587

4,350

Property, plant and equipment


9,784

10,736

10,022

Deferred income tax assets


639

_______

109

_______

538

_______



27,366

_______

28,660

_______

27,969

_______

CURRENT ASSETS





Inventories


17,791

19,980

17,867

Trade and other receivables


14,993

17,934

13,169

Derivative financial investments


31

450

104

Current tax assets


276

303

61

Cash and cash equivalents


692

_______

375

_______

1,952

_______



33,783

_______

39,042

_______

33,153

_______

LIABILITIES





CURRENT LIABILITIES





Borrowings

 

7

(3,823)

(6,772)

(3,474)

Derivative financial instruments


(1,615)

(2,514)

(2,155)

Trade and other payables


(12,189)

(13,822)

(9,822)

Provisions


(359)

(449)

(324)

Current tax liabilities


(355)

_______

(502)

_______

(705)

_______



(18,341)

_______

(24,059)

_______

(16,480)

_______

NET CURRENT ASSETS


15,442

_______

14,983

_______

16,673

_______

NON-CURRENT LIABILITIES





Borrowings

 

7

(3,326)

(6,434)

(4,888)

Deferred tax liabilities


(610)

_______

(343)

_______

(573)

_______



(3,936)

_______

(6,777)

_______

(5,461)

_______






NET ASSETS


38,872

 

=======

36,866

 

=======

39,181

 

=======

SHAREHOLDERS' EQUITY





Share capital

 

6

392

385

392

Share premium


6,180

5,643

6,180

Capital redemption reserve


55

55

55

Translation reserve


(564)

(527)

(545)

Hedging reserve


(277)

77

(187)

Other reserves


1,688

1,688

1,688

Retained earnings


31,398

_______

29,545

_______

31,598

_______

 

TOTAL EQUITY


 

38,872

 

=======

 

36,866

 

=======

 

39,181

 

=======

 

The notes form an integral part of this condensed consolidated half-yearly financial information.

 

 

 

 

STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 September 2012

 

 


 

Share capital (unaudited)

 

Share premium (unaudited)

Capital redemption reserve (unaudited)

 

Translation reserve (unaudited)

 

Hedging reserve (unaudited)

 

Other reserves (unaudited)

 

Retained earnings* (unaudited)

 

Total equity (unaudited)

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

Balance at 1 April 2012

 

 

392

 

6,180

 

55

 

(545)

 

(187)

 

1,688

 

31,598

 

39,181

Exchange adjustment offset in reserves

 

-

 

-

 

-

 

(19)

 

-

 

-

 

-

 

(19)

Cash flow hedges

-

_______

-

_______

-

_______

-

_______

(90)

_______

-

_______

-

_______

(90)

_______

Net income recognised directly in reserves

 

-

 

-

 

-

 

(19)

 

(90)

 

-

 

-

 

(109)

Loss for the period

-

_______

-

_______

-

_______

-

_______

-

_______

-

_______

(407)

_______

(407)

_______

Total comprehensive loss for the period

 

-

_______

 

-

_______

 

-

_______

 

(19)

_______

 

(90)

_______

 

-

_______

 

 

(407)

_______

 

(516)

_______

 

Transactions with owners









Share-based payments

-

-

-

-

-

-

117

117

Shares vested from Short Term Incentive Plan

 

-

_______

 

 

-

_______

 

-

_______

 

-

_______

 

-

_______

 

-

_______

 

90

_______

 

90

_______


-

_______

 

-

_______

-

_______

-

_______

-

_______

-

_______

207

_______

207

_______

 

Balance at 30 September 2012

 

392

 

 

 

6,180

 

 

 

55

 

 

 

(564)

 

 

 

(277)

 

 

 

1,688

 

 

 

31,398

 

 

 

38,872

 

 

 

 

Balance at1 April 2011

 

 

385

 

5,643

 

55

 

(529)

 

(487)

 

1,688

 

30,014

 

36,769

Exchange adjustment offset in reserves

 

-

 

-

 

-

 

2

 

-

 

-

 

-

 

2

Cash flow hedges

-

_______

-

_______

-

_______

-

_______

564

_______

-

_______

-

_______

564

_______

Net income recognised directly in reserves

 

-

 

-

 

-

 

2

 

564

 

-

 

-

 

566

Profit for the period

-

_______

-

_______

-

_______

-

_______

-

_______

-

_______

521

_______

521

_______

Total comprehensive income for the period

 

-

_______

 

-

_______

 

-

_______

 

2

_______

 

564

_______

 

-

_______

 

 

521

_______

 

1,087

_______

 

Transactions with owners









Share-based payments

-

-

-

-

-

-

188

188

Shares vested from Short Term Incentive Plan

 

-

 

-

 

-

 

-

 

-

 

-

 

90

 

90   

Dividends

-

_______

-

_______

-

_______

-

_______

-

_______

-

_______

(1,268)

_______

(1,268)

_______


 

-

_______

 

 

-

_______

 

-

_______

 

-

_______

 

-

_______

 

-

_______

 

(990)

_______

 

(990)

_______

 

Balance at 30 September 2011

 

385

 

 

 

5,643

 

 

 

55

 

 

 

(527)

 

 

 

77

 

 

 

1,688

 

 

 

29,545

 

 

 

36,866

 

 

 

 

 

 

* Retained earnings includes amounts that are not distributable including £613,000 at 30 September 2012 (2011 - £630,000) that relates to a 1986     revaluation of land and buildings.

 

The notes form an integral part of this condensed consolidated half-yearly financial information.

 

 

STATEMENT OF CASH FLOWS

for the six months ended 30 September 2012

 


Six months

to 30 September 2012

(unaudited)

Six months

to 30 September 2011

(unaudited)

Twelve months

to 31 March

2012

(audited)

 


£'000

£'000

£'000

CASH FLOWS FROM OPERATING ACTIVITIES




Cash generated from/(utilised in) operations

1,850

(2,646)

5,856

Interest received

4

21

26

Interest paid

(280)

(405)

(779)

Tax paid

(495)

_______

(515)

_______

(656)

_______

 

Net cash generated from/(utilised in) operating activities

 

1,079

_______

 

(3,545)

_______

 

4,447

_______

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 



 

Proceeds from sale of property, plant and equipment

 

28

 

1

 

1

Purchase of property, plant and equipment

(1,543)

_______

(2,065)

_______

(3,787)

_______





Net cash generated from/(utilised in) investing activities

(1,515)

_______

(2,064)

_______

(3,786)

_______

CASH FLOWS FROM FINANCING ACTIVITIES




Proceeds from issuance of ordinary shares

-

-

544

Repayments of loans

(1,542)

(1,038)

(2,577)

Finance lease capital payments

(38)

(14)

(29)

Dividends paid to Company's shareholders

-

_______

(1,268)

_______

(1,932)

_______

 

Net cash utilised in financing activities

(1,580)

_______

(2,320)

_______

(3,994)

_______





Effect of exchange rate movements

389

_______

256

_______

527

_______

 

Net decrease in cash and cash equivalents

(1,627)

(7,673)

(2,806)

Cash, cash equivalents and bank overdrafts at beginning of period

 

1,591

_______

 

4,397

_______

 

4,397

_______





CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS AT END OF PERIOD

 

(36)

 

=======

 

(3,276)

 

=======

 

1,591

 

=======

CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS CONSIST OF:




Cash and cash equivalents

 

692

375

1,952

Bank overdrafts

(728)

_______

(3,651)

_______

(361)

_______

CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS AT END OF PERIOD

 

(36)

 

=======

 

(3,276)

 

=======

 

1,591

 

=======

 

 

The notes form an integral part of this condensed consolidated half-yearly financial information.

 

 

 

NOTE TO THE CASH FLOW STATEMENT

for the six months ended 30 September 2012

 

Cash flows from operating activities

 


Six months

to 30 September

 2012

(unaudited)

Six months

to 30 September

2011

(unaudited)

Twelve months

to 31 March

2012

(audited)


 

£'000

 

£'000

 

£'000

 

(Loss)/profit before taxation

(541)

959

3,989

Interest payable

280

405

779

Interest receivable

(4)

(21)

(26)

Amortisation of intangible assets

191

197

392

Depreciation

1,834

1,672

3,914

Share-based payments

117

188

262

Gain on financial derivatives

(19)

(116)

(18)

Increase/(decrease) in provisions

35

36

(89)

Decrease/(increase) in inventories

76

(3,767)

(1,654)

(Increase)/decrease in trade and other receivables

(1,824)

(4,272)

479

Increase/(decrease) in trade and other payables

1,705

_______

2,073

_______

(2,172)

_______





CASH GENERATED FROM/(UTILISED IN) OPERATIONS

 

1,850

=======

 

(2,646)

=======

 

5,856

=======

 

 

 

 

 

 

 

 

NOTES TO CONDENSED CONSOLIDATED HALF-YEARLY FINANCIAL REPORT

 

1.                 GENERAL INFORMATION

 

The Company is a public limited liability company incorporated and domiciled in the UK.  The address of the registered office is Westwood, Margate, Kent CT9 4JX.  The Group is principally engaged in the development, design, sourcing and distribution of hobby and interactive home entertainment products.

 

The Company has its primary listing on the London Stock Exchange and is registered in England No. 01547390.

 

This condensed consolidated half-yearly financial information has been reviewed, not audited, and was approved for issue on 9 November 2012.

 

This condensed consolidated half-yearly financial information does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 March 2012 were approved by the Board of Directors on 8 June 2012 and delivered to the Registrar of Companies.The Report of the Auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

 

Forward Looking Statements

Certain statements in this half-yearly report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct.  Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

 

We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

 

2.                 BASIS OF PREPARATION

 

This condensed consolidated half-yearly financial information for the half-year ended 30 September 2012 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union.  The half-yearly condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 31 March 2012 which have been prepared in accordance with IFRSs as adopted by the European Union.

 

Going Concern

 

The Group's forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group should be able to operate within its amended banking facilities. Accordingly the Directors believe it appropriate to prepare the financial statements of the Group on a going concern basis.



 

3.                 ACCOUNTING POLICIES

 

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 March 2012, as described in those annual financial statements with the exception of tax which is accrued using the tax rate that would be applicable to expected total annual earnings.

 

Estimates

 

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

In preparing this condensed consolidated half-yearly financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2012.      

 

Financial instruments

 

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

 

The interim condensed consolidated half-yearly financial report does not include all financial risk management information and disclosures required in the annual financial statements,  and should be read in conjunction with the Group's annual financial statements as at 31 March 2012.

 

There have been no changes in the risk management policies since year end.

 

The Group's financial instruments, measured at fair value, are all classed as level 2 in the fair value hierarchy, which is unchanged from 31 March 2012.

 

Adoption of new and revised standards

 

There are no standards, amendments to standards or interpretations that are both mandatory for the first time for the financial year ending 31 March 2013 that have a material impact on the Group's results.



 

 

4.                 SEGMENT INFORMATION

 

Management has determined the operating segments based on the reports reviewed by the Board (chief operating decision-maker) that are used to make strategic decisions.

 

The Board considers the business from a geographic perspective.  Geographically, management considers the performance in the UK, US, Spain, Italy and rest of Europe.

 

Although the US segment does not meet the quantitative thresholds required by IFRS 8, management has concluded that this segment should be reported, as it is closely monitored by the chief operating decision-maker.

 


 

 

UK

 

 

USA

 

 

Spain

 

 

Italy

 

Rest of

Europe

Total Reportable Segments

 


£'000

£'000

£'000

£'000

£'000

£'000

 

Six months ended 30 September 2012

 







Total revenue

22,570

1,051

3,319

1,568

2,121

30,629

Inter-segment revenue

(1,467)

_______

-

_______

(2,191)

_______

(9)

_______

-

_______

(3,667)

_______

 

Revenue (from external customers)

21,103

 

 

1,051

 

 

1,128

 

 

1,559

 

 

2,121

 

 

26,962

 

 

Underlying profit/(loss) before taxation

555

(60)

(477)

(113)

(193)

(288)

Foreign exchange on intercompany loans

including impact of foreign exchange collar

 

(62)

 

-

 

-

 

-

 

-

 

(62)

Amortisation of intangible assets

(131)

_______

-

_______

-

_______

(44)

_______

(16)

_______

(191)

_______

 

Profit/(loss) before taxation

 

362

 

 

 

(60)

 

 

 

 

(477)

 

 

 

(157)

 

 

 

(209)

 

 

 

(541)

 

 

Six months ended 30 September 2011

 







Total revenue

22,028

983

4,632

2,682

2,764

33,089

Inter-segment revenue

(1,562)

_______

-

_______

(3,159)

_______

(15)

_______

-

_______

(4,736)

_______

 

Revenue (from external customers)

20,466

 

 

983

 

 

1,473

 

 

2,667

 

 

2,764

 

 

28,353

 

 

Underlying profit/(loss) before taxation

1,424

(42)

(160)

44

(65)

1,201

Foreign exchange on intercompany loans

including impact of foreign exchange collar

 

(45)

 

-

 

-

 

-

 

-

 

(45)

Amortisation of intangible assets

(131)

_______

-

_______

-

_______

(49)

_______

(17)

_______

(197)

_______

 

Profit/(loss) before taxation

 

1,248

 

 

 

(42)

 

 

 

 

(160)

 

 

 

(5)

 

 

 

(82)

 

 

 

959

 

 















 

 

  

Hornby Hobbies Limited, the Group's UK trading subsidiary, has granted Euro denominated intercompany loans to sister subsidiary companies that are translated to Sterling at statutory period ends thereby creating exchange gains or losses. In order to mitigate the exchange exposure, Hornby Hobbies Limited has entered a foreign exchange collar contract to sell an equal number of Euros in October 2013 that will be revalued by an approximately similar but opposite Sterling value at each period end.

 

The foreign exchange collar is for a principal amount of Euro 16.0 million (2011 - Euro 16.5 million) and is in place to minimise exposure to Euro denominated intercompany loans.

 

The amount shown in the table above comprises losses on translation of intercompany loans of £600,000 (2011 - loss of £401,000), offset by a gain on marking to market the foreign exchange collar of £538,000 (2011 - gain of £356,000).

 

Beneficial cumulative profit impact of the collar from inception to 3 October 2013 is expected to be a minimum of £330,000 if the exchange rate exceeds the strike rate of €1.4300:£, increasing to a maximum of £676,000 at the participation cap rate of €1.3870:£ compared to the intercompany loans Sterling valuation at 31 March 2007 (€1.4734:£). 

 

As at 30 September 2012 the profit impact is a gain of £606,000.  Therefore in the period 1 October 2012 to 30 September 2013 there will be an adjustment to the Statement of Comprehensive Income between a £70,000 profit and £276,000 charge. 

 

The fluctuation of foreign exchange and resultant impact on intercompany loans and foreign exchange collar is set out below:

 

 

Date


 

Foreign exchange rate € : £

 

€16.5 million intercompany loan in Sterling

 

Gain

/(loss)

on loan

 

Fair value collar

 

 

Net gain

/(loss) in profit before tax




 

£'000

 

£'000

 

£'000

 

£'000

 

06 Aug 2007

Transaction

1.47

11,199

-

-

-

31 Mar 2008


1.25

13,156

1,957

(1,346)

611

31 Mar 2009


1.08

15,288

4,089

(3,270)

208

31 Mar 2010


1.12

14,722

3,523

(2,774)

      (70)

31 Mar 2011


1.13

14,606

3,407

(2,552)

106

31 Mar 2012


1.20

13,750

2,551

(1,821)

   (125)

30 Sep 2012


1.25

12,748

1,889

(1,283)

     (124)

   _____

 

Total gain to profit before tax



 

       606

 

=======

 

Prior to expiry in October 2013 Hornby Hobbies Limited intends to enter a new one year foreign exchange collar contract that will include the current collar mark to market valuation and have no cash impact.

 

 

 

5.         TANGIBLE, INTANGIBLE AND GOODWILL ASSETS

 

Six months ended 30 September 2012


Tangible, intangible and goodwill assets (unaudited)



£'000

 

Opening book amount 1 April 2012


27,431

Exchange adjustment


(407)

Additions


1,757

Disposals


(29)

Depreciation, amortisation and impairment


(2,025)

______

 

Closing net book amount 30 September 2012


 

26,727

 

=======

 

 

The additions relate to new product tooling (£1,677,000) and property, plant and equipment (£80,000).

 

 

Six months ended 30 September 2011


Tangible, intangible and goodwill assets (unaudited)



£'000

 

Opening book amount 1 April 2011


28,400

Exchange adjustment


(254)

Additions


2,275

Disposals


(1)

Depreciation, amortisation and impairment


(1,869)

______

 

Closing net book amount 30 September 2011


 

28,551

 

=======

 


 

     2012

(unaudited)

 

    2011

(unaudited)

CAPITAL COMMITMENTS

£'000

£'000

 

At 30 September commitments were:



Contracted for but not provided for

2,266

 

=======

1,442

 

      =======

 

The commitments relate to the acquisition of property, plant and equipment.

 

 

6.         SHARE CAPITAL

 

The Group has 39,164,100 ordinary 1p shares in issue with nominal value £391,641 at 31 March 2012 and 30 September 2012 (2011 - £384,641).

 

No employee share options were exercised during the first half to 30 September 2012 (2011 - nil share options).

 

 

 

7.         BORROWINGS


30 September 2012 (unaudited)

30 September 2011 (unaudited)

31March

 2012

(audited)

 


£'000

£'000

£'000

CURRENT:




Bank overdrafts

728

3,651

361

Bank loans

3,049

3,051

3,051

Finance lease obligations

46

_______

70

_______

62

_______


 

3,823

 

=======

 

6,772

 

=======

 

3,474

 

=======

 

 

NON-CURRENT:




Bank loans

3,311

6,390

4,851

Finance lease obligations

15

_______

44

_______

37

_______


 

3,326

 

=======

 

6,434

 

=======

 

4,888

 

=======

 

At 30 September 2012 the Group had a £10,000,000 revolving credit facility expiring August 2015 (2011 - £10,000,000) that attracts interest at 2.5% above Libor and a fixed term loan of £6,000,000 with payments scheduled to July 2014 (2011 - £11,000,000) that attracts interest at 3.6% above Libor.

 

In the period to 30 September 2012 loan repayments were £1,542,000 (2011 - £1,038,000).

 

The drawdown amount on the revolving credit facility amounted to £nil (2011 - £3,100,000) is included within bank overdrafts.

 

The bank loan and revolving credit facility are secured by a fixed charge over the Group's freehold property in Margate.

 

8.         TAXATION

 

 The tax expense is recognised based on management's latest estimate of the weighted average annual tax rate expected for the full financial year.

 

9.         EARNINGS PER SHARE

 

Earnings per share attributable to equity holders of the Company arise from continuing operations as follows:

 


30 September 2012 (unaudited)

30 September 2011 (unaudited)

31 March

2012

 (audited)

 

Earnings per share for profit from continuing operations attributable to the equity of the Company




- basic

(1.04)p

1.36p

8.19p

- diluted

(1.04)p

 

=======

1.34p

 

=======

8.12p

 

=======

 

 

 

10.       DIVIDENDS

 

The final dividend that related to the financial year ended 31 March 2012 amounted to £783,000 (2011 - £1,268,000) is to be paid on 21 December 2012.

 

No interim dividend (2011-1.7p) has been declared for the interim period ended 30 September 2012 (2011 - £654,000).

 

11.       CONTINGENT LIABILITIES

 

            The Company and its subsidiary undertakings are, from time to time, parties to legal proceedings and claims, which arise in the ordinary course of business.  The directors do not anticipate that the outcome of these proceedings and claims, either individually or in aggregate, will have a material adverse effect upon the Group's financial position.

 

            HMRC are currently performing a review of Hornby Hobbies Limited's previously agreed accelerated capital allowances for product tooling.  The review is ongoing, however were HMRC to overturn the previously agreed treatment there would as at 30 September 2012 be a maximum £1.1 million cash outflow.

 

12.       RELATED-PARTY TRANSACTIONS

 

            Key management compensation amounted to £1,067,000 for the six months to 30 September 2012 (2011 - £1,161,000).

 


30 September 2012 (unaudited)

 

30 September 2011

 (unaudited)

31 March

 2012

 (audited)


£'000

 

£'000

£'000

Salaries and other short-term benefits

1,067

1,161

2,002

Post-employment benefits

108

110

261

Share-based payments

117

_______

188

_______

244

_______


 

1,292

 

=======

 

 

1,459

 

=======

 

2,507

 

=======

 

There are no other related-party transactions.

 

13.       EVENTS OCCURING AFTER THE BALANCE SHEET DATE

 

There have been no significant events since the balance sheet date.

 

14.       RISKS AND UNCERTAINTIES

 

The Board has reviewed the principal risks and uncertainties and have concluded that the key risks continue to be UK market dependence, market conditions, exchange rates, supply chain, product compliance and liquidity. The disclosures on pages 17 and 18 of the Group's Annual report for the year ended 31 March 2012 provide a description of each risk along with the associated impact and mitigating actions. The issues surrounding supply chain, liquidity, market conditions and London 2012 are covered in more detail within the interim management report itself. The Board will continue to focus on risk mitigation plans to address these areas.

 

15.       SEASONALITY

 

Sales are subject to seasonal fluctuations, with peak demand in the October - December quarter.  For the six months ended 30 September 2012 sales represented 42% (2011 - 45%) of the annual sales for the year ended 31 March 2012.

 



 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The directors confirm that, to the best of their knowledge, this condensed consolidated half-yearly report has been prepared in accordance with IAS 34 as adopted by the European Union. The interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

●an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial years; and

 

●material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

 

The directors of Hornby Plc are listed in the Hornby Plc Annual Report for 31 March 2012.  A list of current directors is maintained on the Hornby Plc website:  www.hornby.com.

 

 

 

 

By order of the Board

 

 

 

Frank Martin

Chief Executive

 

9 November 2012

 

 

 

Andrew Morris

Finance Director

 

9 November 2012



INDEPENDENT REVIEW REPORT TO HORNBY PLC

 

 

INTRODUCTION

We have been engaged by the Company to review the condensed consolidated half-yearly financial information in the condensed consolidated half-yearly financial report for the six months ended 30 September 2012 which comprises the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows, the note to the statement of cash flows and related notes.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated half-yearly financial information.

 

DIRECTORS' RESPONSIBILITIES

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed consolidated half-yearly financial information included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

 

OUR RESPONSIBILITY

Our responsibility is to express to the Company a conclusion on the condensed consolidated half-yearly financial information in the half-yearly financial report based on our review.  This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose.  We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

SCOPE OF REVIEW

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

 

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated half-yearly financial information in the half-yearly financial report for the six months ended 30 September 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

Gatwick

9 November 2012

Notes:

(a)   The maintenance and integrity of the Hornby Plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the half-yearly financial information since it was initially presented on the website.

 

(b)   Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.


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