REG - Hornby PLC - Final Results <Origin Href="QuoteRef">HRN.L</Origin> - Part 2

HornbyAnnouncement

21/06/2017 07:05

- Part 2: For the preceding part double click  ID:nRSU6549Ia 

       14,243    149      510       388      625      15,915    -         15,915    
 Other segment items                                                                                                      
 Capital expenditure                         3,393     13       1,113     39       4        4,562     _         4,562     
 Depreciation                                2,447     21       1,059     162      16       3,705     -         3,705     
 Net foreign exchange on intercompany loans  389       -        -         -        -        389       -         389       
 Amortisation of intangible assets           603       -        -         71       49       723       -         723       
 Impairment of goodwill                      -         -        3,990     -        -        3,990     -         3,990     
 Share-based payment                         18        -        -         -        -        18        -         18        
 
 
Share-based payment 
 
18 
 
- 
 
- 
 
- 
 
- 
 
18 
 
- 
 
18 
 
All transactions between Group companies are on normal commercial terms. 
 
3. LOSS BEFORE TAXATION 
 
 The following items have been included in arriving at loss before taxation:                  
 Staff costs                                                                  10,587  11,010  
 Inventories:                                                                                 
 - Cost of inventories recognised as an expense (included in cost of sales)   23,339  26,808  
 - Stock provision                                                            (646)   (895)   
 Depreciation of property, plant and equipment:                                               
 - Owned assets                                                               3,036   3,705   
 Profit on disposal of fixed assets                                           1,439   193     
 Other operating lease rentals payable:                                                       
 - Plant and machinery                                                        92      125     
 - Property                                                                   719     1,058   
 Repairs and maintenance expenditure on property, plant and equipment         86      171     
 Research and development expenditure                                         1,154   1,760   
 Foreign exchange (gains)/losses:                                                             
 - On trading transactions and ineffective hedges                             -       (135)   
 Impairment of trade receivables                                              486     163     
 Share-based payment charge                                                   110     18      
 Other operating expenses/(income):                                                           
 - Foreign exchange on trading transactions                                   (292)   (822)   
 - Net impact of foreign exchange on intercompany loans                       (410)   (389)   
 - Movement on fair value of ineffective hedge                                -       135     
 - Amortisation of intangible assets - brands                                 344     384     
                                                                                              
 
 
- Amortisation of intangible assets - brands 
 
344 
 
384 
 
 Exceptional items comprise:                                    
 - Restructuring costs                          3,889    993    
 - Implementation of ERP system                 -        1,174  
 - Refinancing                                  944      762    
 - Profit on disposal of property               (1,530)  (223)  
 - Impairment of property, plant and equipment  -        1,158  
 - Impairment of goodwill                       -        3,990  
 - Impairment of investment                     -        -      
                                                3,303    7,854  
 
 
- Impairment of investment 
 
- 
 
- 
 
3,303 
 
7,854 
 
The exceptional items totalling £3,303,000 (2016: £7,854,000) include
restructuring costs (£3,889,000) relating to the streamlining of the European
operations, redundancy costs, professional fees, reorganisation in the UK and
the costs of running the Margate site, costs relating to the 2016 equity issue
and bank refinancing (£944,000) less the profit on the sale of the Margate and
Spanish properties (£1,530,000). 
 
4. DIVIDENDS 
 
No interim or final dividends were paid in relation to the year ended 31 March
2016 and no interim dividend has been paid in relation to the year ended 31
March 2017. The Directors are not proposing a final dividend in respect of the
financial year ended 31 March 2017. 
 
5. LOSS PER SHARE 
 
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year, excluding those held in the employee share trust
(note 22) which are treated as cancelled. 
 
For diluted loss per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all dilutive potential ordinary
shares that have satisfied the appropriate performance criteria at 31 March
2017. For the year ended 31 March 2017, there was no difference in the
weighted average number of shares used for basic and diluted net loss per
ordinary because their inclusion would be anti-dilutive. 
 
Reconciliations of the loss and weighted average number of shares used in the
calculations are set out below. 
 
 REPORTED                                                                                           
 Basic loss per share                                                                               
 Loss attributable to ordinary shareholders    (9,666)  76,384  (12.65)  (13,714)  49,200  (27.87)  
 Effect of dilutive securities                                                                      
 Options                                       -        -       -        -         -       -        
 Diluted loss per share                        (9,666)  76,384  (12.65)  (13,714)  49,200  (27.87)  
 UNDERLYING                                                                                         
 Loss attributable to ordinary shareholders    (9,666)  76,384  (12.65)  (13,714)  49,200  (27.87)  
 Amortisation of intangibles                   275      -       0.36     307       -       0.62     
 Restructuring costs                           3,111    -       4.07     794       -       1.61     
 Implementation of new ERP system              -        -       -        939       -       1.91     
 Refinancing                                   755      -       0.99     610       -       1.24     
 Profit on disposal of Property                (1,223)  -       (1.6)    (178)     -       (0.36)   
 Impairment of PPE - tooling                   -        -       -        1,158     -       2.36     
 Impairment of goodwill                        -        -       -        3,990     -       8.11     
 Net foreign exchange translation adjustments  (328)    -       (0.43)   (311)     -       (0.64)   
 Underlying basic loss /EPS                    (7,076)  76,384  (9.26)   (6,405)   49,200  (13.02)  
 Underlying diluted loss /EPS                  (7,076)  76,384  (9.26)   (6,405)   49,200  (13.02)  
 
 
(9.26) 
 
(6,405) 
 
49,200 
 
(13.02) 
 
Underlying diluted loss /EPS 
 
(7,076) 
 
76,384 
 
(9.26) 
 
(6,405) 
 
49,200 
 
(13.02) 
 
The above numbers used to calculate the EPS for the year ended 31 March 2017
and 31 March 2016 have been tax effected at the rate of 20% respectively with
the exception of Hornby Spain where the net deferred tax asset associated with
the impairment in 2016 has not been recognised. 
 
6. GROUP Cash Flows from Operating Activities 
 
                                                       Group       
                                                       2017 £'000  2016£'000  
 Loss before taxation                                  (9,509)     (13,532)   
 Interest payable                                      326         429        
 Interest receivable                                   (5)         (21)       
 Amortisation of intangible assets                     816         723        
 Impairment of Goodwill                                -           3,990      
 Depreciation                                          3,036       3,705      
 Impairment of tooling                                 -           1,158      
 Profit on disposal of property, plant and equipment   (1,439)     (193)      
 Share-based payments                                  94          18         
 Loss on financial derivatives                         -           135        
 (Decrease) / increase in provisions                   (250)       191        
 Decrease / (increase) in inventories                  4,311       (650)      
 Decrease / (increase) in trade and other receivables  4,335       (2,351)    
 Decrease in trade and other payables                  (1,624)     (3,212)    
 Decrease in derivative financial instruments          -           (22)       
 Cash generated from/ (used in) operations             91          (9,632)    
 
 
(9,632) 
 
7. BORROWINGS 
 
                                             Group       
                                             2017 £'000  2016£'000  
 Secured borrowing at amortised cost                                
 Bank overdrafts                             82          7,706      
 Bank loan                                   -           177        
                                             82          7,883      
 Total borrowings                                                   
 Amount due for settlement within 12 months  82          7,883      
                                             82          7,883      
 
 
7,883 
 
Analysis of borrowings by currency: 
 
 GROUP            Sterling£'000  Euros£'000  Total £'000  
 31 March 2017                                            
 Bank overdrafts  82             -           82           
                  82             -           82           
 31 March 2016                                            
 Bank overdrafts  7,704          2           7,706        
 Bank loan        -              177         177          
                  7,704          179         7,883        
 
 
The principal features of the Group's borrowings are as follows: 
 
At 31 March 2017 the Group had a revolving credit facility of £7,750,000
expiring December 2019 and the future interest rates on this facility are
Libor + 3.5% 
 
The average effective interest rate on bank overdrafts approximated 3.95%
(2016: 3.4%) per annum and is determined based on 3.5% (2016: 2.9%) above
three-month Libor. 
 
Net cash at bank and bank overdrafts of £1,498,000 (2016: £7,206,000) are with
financial institutions with a credit rating of A2 per Moody's rating agency. 
 
Undrawn borrowing facilities 
 
At 31 March 2017, the Group had available £7,668,000 (2016: £2,971,000) of
undrawn committed borrowing facilities in respect of which all conditions
precedent had been met. 
 
8. RELATED PARTY DISCLOSURES 
 
B Ahir is our Managing Director of Hornby Hobbies Asia and a Director of
Hornby Hobbies Limited, a subsidiary of Hornby Plc. 28One, not to be confused
with companies of a similar name, owned by B Ahir has provided ongoing support
to manage product delivery for which Hornby Hobbies has paid £206,000 (2016:
£176,000) in relation to these services in the year. No payments remained
outstanding to 28One as at 31 March 2017. Hornby Hobbies Limited continues to
use these services on an ongoing basis. 
 
There were no other contracts with the Company or any of its subsidiaries
existing during or at the end of the financial year in which a Director of the
Company or any of its subsidiaries was interested. There are no other
related-party transactions. 
 
The Company received management fees from subsidiaries of £1,369,000 (2016:
£1,316,000), interest of £175,000 (2016: £174,000) and dividends from
subsidiaries of £nil (2016: £ nil) and incurred interest of £205,000 (2016:
£181,000) on intercompany borrowings. It also received a rental income of £nil
(2016: £450,000). 
 
9. EVENTS AFTER THE END OF THE REPORTING PERIOD 
 
No significant events have occurred between the date of the Statement of
Financial Position and the date of signing of these accounts. 
 
10. DIRECTORS' RESPONSIBILITY STATEMENT 
 
The Directors confirm that, to the best of their knowledge, the extracts from
the consolidated financial statements included in this report, which has been
prepared in accordance with International Financial Reporting Standards, as
adopted by the European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group taken as a
whole, and that the management report contained in this report includes a fair
view of the development and performance of the business. 
 
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