REG - Hornby PLC - Half-year Report and Strategy Update - Replacement <Origin Href="QuoteRef">HRN.L</Origin> - Part 2
17/11/2017 14:00
- Part 2: For the preceding part double click ID:nRSQ8590Wa
(5,714)
Six months ended 30 September 2016 (unaudited)
Total revenue 20,477 1,406 911 751 2,080 25,625
Inter-segment revenue (3,642) - (77) - - (3,719)
Revenue (from external customers) 16,835 1,406 834 751 2,080 21,906
Operating (loss)/profit before exceptionals (2,472) 47 (87) (406) (379) (3,297)
Exceptional costs (1,986) - 588 (37) - (1,435)
(Loss)/profit before taxation (4,458) 47 501 (443) (379) (4,732)
Six months to 30 September 2017 (unaudited) Six months to 30 September 2016 (unaudited) Year to 31 March 2017 (audited)
£'000 £'000 £'000
Exceptional items comprise:
Restructuring costs 817 1,356 3,889
Refinancing - 679 944
Profit on disposal of property - (600) (1,530)
EGM and Mandatory Offer 309 - -
Legal Provision - - -
1,126 1,435 3,303
5. TANGIBLE AND INTANGIBLE ASSETS AND GOODWILL
The additions comprise new product tooling (£705,000), property, plant and equipment (£20,000) and intangible assets - computer software (£99,000). The Group has again performed impairment reviews as at 30 September 2017 and consider the carrying value of the assets held to be recoverable. The discount rates and key assumptions used within the updated models at 30 September 2017 have remained constant with the impairment reviews conducted in
March 2017.
Tangible and intangible assets and goodwill (unaudited) Six months ended 30 September 2017 Six months ended 30 September 2016
£'000 £'000
Opening net book amount 1 April 2017 and 1 April 2016 14,451 16,485
Exchange adjustment 10 279
Additions 825 985
Disposals - (51)
Depreciation, amortisation and impairment (1,767) (2,053)
Closing net book amount 30 September 2017 and 30 September 2016 13,519 15,645
2017 2016
CAPITAL COMMITMENTS (unaudited) (unaudited)
£'000 £'000
At 30 September commitments were:
Contracted for but not provided for 420 549
The commitments relate to the acquisition of tooling as part of property,
plant and equipment.
6. SHARE CAPITAL
At 31 March 2017 and 30 September 2017, the Group had 84,583,204 ordinary 1p
shares in issue with nominal value £845,832 (2016 - £549,535).
The following employee share options were exercised during the first half to
30 September 2017 (2016 - £nil).
Number of Employees Number of shares in relation to which the LTIP award vested Cash settlement amount determined by reference to 32.375 pence per share (plus National Insurance)
4 352,508 £136,430
7. BORROWINGS
30 September 2017 (unaudited) 30 September 2016 (unaudited) 31 March 2017 (audited)
£'000 £'000 £'000
CURRENT:
Bank overdrafts (5,158) 3,026 82
Bank loans - -
(5,158) 3,026 82
At 30 September 2017 the UK had a £7,750,000 revolving credit facility
expiring December 2019 (2016 - £10,000,000) that attracts interest at 3.5 per
cent above Libor. (2016 - 3.5 per cent above LIBOR).
In the period to 30 September 2017 loan repayments were £nil (2016 -
£167,000).
The drawdown amount on the revolving credit facility amounted to £7,400,000
(2016 - £5,500,000) and is included within net bank overdrafts above.
8. FINANCIAL INSTRUMENTS
The following tables present the Group's assets and liabilities that are
measured at fair value at 30 September 2017 and 31 March 2017. The table
analyses financial instruments carried at fair value, by valuation method. The
different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1).
- Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (Level 3).
There were no transfers or reclassifications between levels within the period.
Level 2 hedging derivatives comprise forward foreign exchange contracts and an
interest rate swap and have been fair valued using forward exchange rates that
are quoted in an active market. The fair value of the following financial
assets and liabilities approximate their carrying amount: Trade and other
receivables, other current financial assets, cash and cash equivalents, trade
and other payables and bank overdrafts and borrowings.
Fair values are determined by a process involving discussions between the
Group finance team and the Audit Committee which occur at least once every 6
months in line with the Group's reporting dates.
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets
Derivatives used for hedging - - - -
Total assets as at 30 September 2017 - - - -
Liabilities
Derivatives used for hedging - (284) - (284)
Total liabilities at 30 September 2017 - (284) - (284)
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets
Derivatives used for hedging - 120 - 120
Total assets at 31 March 2017 - 120 - 120
Liabilities
Derivatives used for hedging - (190) - (190)
Total liabilities at 31 March 2017 - (190) - (190)
9. TAXATION
The tax expense is recognised based on management's latest estimate of the
estimated full year forecast effective tax rate determined for each territory.
Due to the expected incidence of profits in the second half of the year in
each entity, the rate for the full year is expected to be in line with the
interim rate.
10. (LOSS)/EARNINGS PER SHARE
(Loss)/earnings per share attributable to equity holders of the Company arises
from continuing operations as follows:
30 September 2017 (unaudited) 30 September 2016 (unaudited) 31 March 2017 (audited)
(Loss)/earnings per share from continuing operations attributable to the equity of the Company
- basic (6.76)p (6.89)p (12.65)p
- diluted (6.76)p======= (6.89)p======= (12.65)p=======
11. DIVIDENDS
No interim dividend has been declared for the interim period ended 30
September 2017 (2016 - £nil).
12. 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.
13. RELATED-PARTY TRANSACTIONS
Key management compensation amounted to £1,296,000 for the six months to 30
September 2017 (2016 - £1,266,000). Key management include directors and
senior management. For the period to 30 September 2017 there was an underlying
decrease compared to the same period last year because of the changes and
restructuring of the UK business.
Key management and related party 30 September 2017 (unaudited) 30 September 2016 (unaudited) 31 March 2017 (audited)
£'000 £'000 £'000
Salaries and other short-term benefits 888 1,234 1,688
Other pension costs 62 61 118
Share-based payments 71 (29) 110
Redundancy and compensation for loss of office 275 - 241
1,296 1,266 2,157
Before appointment as Managing Director of Asia and a director of Hornby
Hobbies Limited, a subsidiary of Hornby PLC, Bharat Ahir provided consultancy
services to the Group. 28One Limited, not to be confused with companies of a
similar name, which is owned by Bharat continues to support the business in
relation to providing ongoing support to manage product delivery and Hornby
Hobbies has paid £89,330 (2016 - £99,798) in relation to these services to
28One Limited since 1 April 2017. No outstanding payments remained payable to
28One Limited as at 30 September 2017 (2016 - nil). Hornby Hobbies Limited
continues to use these services on an ongoing basis.
There are no other related-party transactions during the period.
Subsequent to the period end a significant related party transaction is
announced today as detailed in Note 16 below.
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 2017 provide a description of each risk along with the
associated impact and mitigating actions. The issues surrounding supply chain,
liquidity, and market conditions 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 2017 sales
represented 36 per cent of the annual sales for the year ended 31 March 2017
(2016 - 39 per cent of the annual sales for the year ended 31 March 2016).
16. SUBSEQUENT EVENTS
Lyndon Davies was appointed as CEO on 3 October 2017 replacing Steve Cooke.
In addition to the appointment of Mr Davies, the Group plans to acquire 49 per
cent. of the share capital of LCD, the holding company of Oxford Diecast
Limited, which is owned by Mr Davies. The acquisition is subject to
shareholder approval.
The Group is proposing to undertake an equity fundraising of £12.0 million, by
way of a placing and open offer, to support delivery of the Group's strategic
objectives, to fund the acquisition of shares in LCD and to provide additional
working capital. The placing and open offer is subject to shareholder
approval.
By order of the Board
Lyndon Davies
David Mulligan
Chief Executive
Group Finance Director
17 November 2017
This information is provided by RNS
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