REG - Hornby PLC - Half-year Report
30/11/2021 10:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211130:nRSd0193Ua&default-theme=true
RNS Number : 0193U Hornby PLC 30 November 2021
30 November 2021
HORNBY ANNOUNCES INTERIM RESULTS
Hornby Plc ("Hornby"), the international hobby products Group, today announces
its unaudited interim results for the six months ended 30 September 2021.
Interim Results Highlights
· Group revenue of £21.8 million (2020: £21.1 million) an
increase of 3% on prior year
· Operating Group loss before tax* of £0.3 million (2020: profit
of £0.2 million)
· Statutory loss before taxation for the period of £0.7 million
(2020: profit of £17,000)
· Net cash £0.2 million (2020: Net cash £4.0 million)
* Stated before exceptional items.
Lyndon Davies, Hornby Chief Executive, commented:
"Revenues have marginally increased in the first half, despite being held back
by supply disruption. Container shipping costs have soared, requiring us to
raise our selling prices in August to cover this. Shipping times from our
overseas factories have nearly doubled to circa 70 days, whereas pre-covid
this was around 35-40 days. We have now taken the pain for those lost sales.
Demand for our products is higher than ever, therefore it is disappointing to
have experienced the supply chain problems which seem to be easing but remain
volatile. We are heading into our key Christmas trading period and right now
it is hard to tell what the outcome will be for the full year results.
However, we are as well placed as we can be with our order book 35% higher
than it was a year ago."
-ends-
30 November 2021
Enquiries:
Hornby plc
Lyndon Davies, CEO
01843 233 500
Kirstie Gould, CFO
Liberum
Andrew Godber
020 3100 2222
Edward Thomas
Hornby Plc ("Hornby" or "the Group")
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021
CEO Statement
This has been a challenging time with COVID-19's economic fallout impacting
our supply chain costs. For the first six months of our financial year we have
an operating loss of £0.3 million on a marginally higher turnover of £21.8
million. To mitigate the higher costs as we move forward, we increased our
prices in August 2021.
I shall cover the following points:
Brexit
Impact on early part of this financial year
Supply Chain
The challenges we have faced
Routes to Market
How they have changed and continue to change
Product Designs
Our business cycle
Outlook
Brexit
We continued to experience delays/difficulties in shipments to the EU during
the first quarter of our financial year. This then stabilised as the systems
and processes improved, I am sure there will be challenges ahead, but nothing
like we experienced in the first months of this year.
Supply Chain
Hornby is reliant on factories outside of the UK for the production of the
majority of its products.
Recent supply chain disruption has been well reported and like others we have
been impacted by delays in shipments of finished products to our UK and USA
warehouses.
· Empty container supplies are now better, but unstable, so
affecting shipment plans.
· Delays of processing containers.
o Insufficient time for loading due to container availability
o Delays in containers returning to dock
o Extra cost for containers being kept in holding area with vessel
changes/delays
o Delayed documents
· Our suppliers have faced several issues
o Labour shortage
o Power cuts, factories getting maximum of only 70-80% of normal during the
last few months,
although this appears to be improving
o Material price increases
o Material lead times
· We are working with all suppliers to plan the best schedules from
now until CNY (1(st) February).
· We have received 119 containers in this period with an additional
shipping cost of £10,000-£12,000 each.
Routes To Market
We will be adding to our regular statements percentages of sales by brand sold
through the different routes to market.
Half Year Sales 2019 H1 2020 H1 2021 H1
Brand Channel % UK Sales % Global Sales % UK Sales % Global Sales % UK Sales % Global Sales
Hornby Direct To Consumer 12% 11% 17% 15% 15% 14%
UK Non Direct Sales 88% 77% 83% 73% 85% 77%
UK Total 100% 88% 100% 88% 100% 92%
International Sales 12% 12% 8%
Hornby Total 100% 100% 100%
Scalextric Direct To Consumer 15% 8% 16% 10% 17% 11%
UK Non Direct Sales 85% 47% 84% 54% 83% 54%
UK Total 100% 55% 100% 64% 100% 65%
International Sales 45% 36% 35%
Scalextric Total 100% 100% 100%
Airfix Direct To Consumer 13% 9% 20% 15% 20% 15%
UK Non Direct Sales 87% 60% 80% 63% 80% 61%
UK Total 100% 69% 100% 78% 100% 76%
International Sales 31% 22% 24%
Airfix Total 100% 100% 100%
Corgi Direct To Consumer 35% 31% 29% 24% 35% 32%
UK Non Direct Sales 65% 57% 71% 59% 65% 58%
UK Total 100% 88% 100% 83% 100% 89%
International Sales 12% 17% 11%
Corgi Total 100% 100% 100%
Humbrol Direct To Consumer 8% 6% 28% 20% 16% 12%
UK Non Direct Sales 92% 67% 72% 53% 84% 61%
UK Total 100% 73% 100% 74% 100% 72%
International Sales 27% 26% 28%
Humbrol Total 100% 100% 100%
Other Direct To Consumer 71% 15% 67% 10% 78% 7%
UK Non Direct Sales 29% 6% 33% 5% 22% 2%
UK Total 100% 21% 100% 15% 100% 9%
International Sales 79% 85% 91%
Other Total 100% 100% 100%
Direct To Consumer Hornby Retail/Concession/Internet/Direct Premiums
UK Non Direct Sales Independents/National
Product Designs
The engine of the company that designs our product continues to improve.
Designs and product range visions across all of our brands are at the most
advanced stage that they have been, since I started at Hornby. The importance
of this should not be underestimated as we begin a process of migrating
production to different countries.
Outlook
Demand for our products is higher than ever, therefore it is disappointing to
have experienced the supply chain problems which seem to be easing but remain
volatile. We are heading into our key Christmas trading period and right now
it is hard to tell what the outcome will be for the full year results.
However, we are as well placed as we can be with our order book 35% higher
than it was a year ago.
I will provide a more comprehensive analysis of the year and our KPIs in our
final results announcement next year.
Financial review
Performance
Group revenue for the six months to September 2021 of £21.8 million was 3%
higher than the prior year (2020: £21.1 million). The gross margin for the
period was 46% (2020: 47%), a slight reduction reflecting the increase cost of
moving goods in and out of the UK.
Underlying overheads increased year-on-year from £9.5 million to £10.3
million, or by 9%, reflecting an increase in investment in high calibre staff,
Brexit related cost increases and increased focus on direct selling routes.
The operating loss before exceptional costs (including IFRS 16) for the six
months to September 2021 was £0.3 million compared to a profit of £0.2
million for the same period last year. This due to the shortage of supply of
containers and freight drivers.
Exceptional costs during the first half year were £0.2 million (2020: £0.1
million) and these comprised of one off costs relating to the writing off of
share of profits of associate upon acquiring the remaining 51% of LCD on 30
July 2021 plus some restructuring costs.
Group loss before tax was £0.7 million (2020: profit of £0.02 million). The
basic loss per share was 0.45p (2020: profit per share of 0.14p).
Segmental analysis
Third party revenue for the UK business decreased by 4% in the period and
generated a loss before taxation of £0.5 million compared to £0.2 million
profit last year. Revenue for the first half of 2021 has decreased slightly
compared with the same period last year due to the issues with getting goods
out of China and into the UK.
The International segment revenue increased by 25% in the period and generated
an underlying loss of £0.2 million (2020: £0.2 million loss). The increase
in revenue is a result of developing a product range suitable for the relevant
markets and employing good people in these markets.
Balance sheet
Group inventories increased during the period by 16% from £15.1 million at
March 2021 to £17.6 million at September 2021, due to a seasonal build-up of
stocks in the lead-up to the busy Christmas trading period and the acquisition
of stock from LCD (see note 5).
Trade & other receivables and trade & other payables are higher than
the start of the year due to seasonality of the business. Trade receivables
are higher than prior year due to August and September sales being higher in
2021 than 2020.
Investment in new tooling, new computer software and other capital expenditure
was £2.3 million (2020: £3.1 million) reflecting the reduction in new
website spend since the website was completed in early 2021.
Capital structure
There was a decrease in net cash compared to 31 March 2021. The September
period end net cash balance stood at £1.2 million, from £4.7 million of net
cash at the end of the last financial year. This is due to spending on stocks
and tooling ahead of Christmas trading and the acquisition of the remaining
51% of LCD (see Note 5), as budgeted.
Going concern
The Group has in place a £12.0 million Asset Based Lending (ABL) facility
with PNC Credit Limited through to June 2023. The PNC Covenants are customary
operational covenants applied on a monthly basis. In addition, the Group has a
committed £9.0 million loan facility with Phoenix Asset Management Partners
Limited (the Group's largest shareholder) if it should be required which is a
three-year rolling facility. The Group also now carries a Covid Business
Interruption Loan (CBIL) liability as a result of the acquisition of LCD
Enterprises Limited on 30 July 2021.
The Group has prepared trading and cash flow forecasts for a period of three
years, which have been reviewed and approved by the Board. On the basis of
these forecasts, and after a detailed review of trading, financial position
and cash flow models (taking COVID-19 and China power issues into account),
the Directors have a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the foreseeable
future. For these reasons, they continue to adopt the going concern basis of
accounting in preparing the financial statements.
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 September 2021
Six months to Six months to Year to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
REVENUE 4 21,845 21,138 48,549
Cost of Sales (11,720) (11,276) (26,795)
GROSS PROFIT 10,125 9,862 21,754
Distribution costs (3,137) (3,133) (6,798)
Selling and marketing costs (4,151) (3,682) (7,804)
Administrative expenses (2,999) (2,657) (6,133)
Other operating expenses (160) (151) (241)
OPERATING (LOSS)/PROFIT BEFORE EXCEPTIONAL 4 (322) 239 778
Exceptional Items 5 (241) (76) (211)
OPERATING (LOSS)/PROFIT (563) 163 567
Finance income 10 2 3
Finance costs (172) (162) (334)
Net finance costs (162) (160) (331)
Share of profit of investments accounted for using the equity method (20) 14 109
(LOSS)/PROFIT BEFORE TAXATION (745) 17 345
Taxation 11 - 38 1,018
(LOSS)/PROFIT FOR THE PERIOD AFTER TAXATION (745) 55 1,363
OTHER COMPREHENSIVE INCOME/(LOSS)
(Items that may be classified subsequently to profit and loss)
Cash flow hedges, net of tax 582 (193) (597)
Currency translation differences 102 (111) (187)
OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE PERIOD, NET OF TAX 684 (304) (784)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (61) (249) 579
(LOSS)/PROFIT PER ORDINARY SHARE
Basic (0.45)p 0.14p 0.82p
Diluted (0.45)p 0.14p 0.80p
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 2021
Six months to Six months to Year to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Goodwill 7 4,562 4,565 4,561
Intangible assets 7 3,211 3,032 3,017
Property, Plant and equipment 7 9,602 5,894 6,680
Right of Use Lease Asset 8 2,724 2,432 2,690
Investments - 1,744 1,839
Deferred income tax assets 2,956 2,030 2,956
23,055 19,697 21,743
CURRENT ASSETS
Inventories 17,563 16,891 15,152
Trade and other receivables 9,060 6,968 7,247
Derivative financial instruments 12 270 97 32
Cash and cash equivalents 1,174 3,998 4,685
28,067 27,954 27,116
LIABILITIES
CURRENT LIABILITIES
Borrowings 11 (741) - -
Derivative financial instruments 12 (32) (174) (513)
Trade and other payables (8,576) (8,048) (7,131)
Lease Liabilities 9 (437) (363) (365)
(9,786) (8,585) (8,009)
NET CURRENT ASSETS 18,281 19,369 19,107
NON-CURRENT LIABILITIES
Borrowings 11 (192) - -
Lease Liabilities 9 (2,427) (2,160) (2,443)
Deferred tax liabilities (384) (150) (150)
(3,003) (2,310) (2,593)
NET ASSETS 38,333 36,756 38,257
SHAREHOLDERS' EQUITY
Share capital 10 1,669 1,669 1,669
Share premium 52,857 52,857 52,857
Capital redemption reserve 55 55 55
Translation reserve (1,887) (1,913) (1,989)
Hedging reserve 238 (77) (481)
Other reserves 1,688 1,688 1,688
Retained earnings (16,287) (17,523) (15,542)
38,333 36,756 38,257
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 2021
Capital
Share Share redemption Translation Hedging Other Retained Total
capital premium reserve reserve reserve reserves earnings equity
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2021 1,669 52,857 55 (1,989) (481) 1,688 (15,542) 38,257
Loss for the period - - - - - - (745) (745)
Other comprehensive
income for the - - - 102 719 - - 821
period
Total comprehensive - - - 102 719 - (745) 76
income/(expense) for the period
Balance at 30 September 1,669 52,857 55 (1,887) 238 1,688 (16,287) 38,333
2021
Balance at 1 April 2020 1,669 52,857 55 (1,802) 116 1,688 (17,578) 37,005
Profit for the period - - - - - - 55 55
Other comprehensive
(expense)/income for the - - - (111) (193) - - (304)
period
Total comprehensive - - - (111) (193) - 55 (249)
(expense)/income for the period
Balance at 30 September 1,669 52,857 55 (1,913) (77) 1,688 (17,523) 36,756
2020
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 2021
Six months to Six months to Year to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash (utilised in)/generated from operations (413) 1,767 4,372
Interest paid (89) (176) (75)
Interest element of lease payments (83) (77) (165)
Tax received - - 90
Net cash (utilised in)/generated from operating activities (585) 1,514 4,222
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of subsidiary net of cash acquired (1,015) - -
Purchase of property, plant and equipment (1,865) (2,581) (4,249)
Purchase of intangible assets (451) (532) (726)
Interest received 10 1 3
Net cash utilised in investing activities (3,321) (3,112) (4,972)
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of loan (8)
Proceeds from ABL facility 691 - -
Payment of lease liability (299) (304) (462)
Net cash generated/(used in) from financing activities 384 (304) (462)
Net decrease in cash and cash equivalents (3,522) (1,902) (1,212)
Cash, cash equivalents and bank overdrafts at
beginning of period 4,685 5,921 5,921
Effect of exchange rate movements 11 (21) (24)
CASH, CASH EQUIVALENTS AND BANK
OVERDRAFTS AT END OF PERIOD 1,174 3,998 4,685
CASH, CASH EQUIVALENTS AND BANK
OVERDRAFTS CONSIST OF:
Cash and cash equivalents 1,174 3,998 4,685
CASH, CASH EQUIVALENTS AND BANK
OVERDRAFTS AT END OF PERIOD 1,174 3,998 4,685
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 2021
Cash flows from operating activities
Six months to Six months to Year to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
(Loss)/profit before taxation (745) 55 345
Interest payable 89 176 169
Interest paid on Lease liabilities 83 77 165
Interest receivable (10) (1) (3)
Share of profit of associate 240 (14) (109)
Amortisation of intangible assets 268 324 533
Depreciation 1,008 870 1,721
Depreciation on Right of Use Asset 239 252 528
Share-based payments - non cash - - 673
(Increase)/decrease in inventories (261) (2,778) (1,223)
(Increase)/decrease in trade (1,549) 3,208 (764)
and other receivables
Increase/(decrease) in trade and other
payables 225 (402) 2,372
CASH (UTILISED IN)/GENERATED FROM OPERATIONS (413) 1,767 4,371
NOTES TO CONDENSED CONSOLIDATED HALF-YEARLY FINANCIAL REPORT
1. 1. GENERAL INFORMATION
The Company is a public limited liability company incorporated and domiciled
in the UK. The address of the registered office is Enterprise Road, Westwood
Industrial Estate, Margate, 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 Alternative Investment Market and
is registered in England No. 01547390.
This condensed consolidated half-yearly financial information was approved for
issue on 29 November 2021.
This condensed consolidated half-yearly financial information does not
comprise statutory accounts within the meaning of Section 434 of the Companies
Act 2006 and is unaudited. Statutory accounts for the year ended 31 March
2021 were approved by the Board of Directors on 9 June 2021 and delivered to
the Registrar of Companies. The Report of the Auditors on those accounts was
unqualified 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
The financial statements are presented in sterling, which is the Parent's
functional currency and the Group's presentation currency. The figures shown
in the financial statements are rounded to the nearest thousand pounds.
This condensed consolidated half-yearly financial information for the
half-year ended 30 September 2021 has been prepared in accordance with IAS 34
'Interim Financial Reporting'. The half-yearly condensed consolidated
financial report should be read in conjunction with the annual financial
statements for the year ended 31 March 2021 which have been prepared in
accordance with UK-adopted international accounting standards. The
consolidated Group financial statements have been prepared on a going concern
basis and under the historical cost convention, as modified by the revaluation
of certain financial assets and liabilities (including derivative instruments)
at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
3. ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 March 2021, 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.
Judgements and 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 2021.
Financial Instruments
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, cash flow interest rate risk and price risk), credit
risk and liquidity risk.
The 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 2021.
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 2021.
Further details of the Group's financial instruments are set out within note
11 of this half-yearly report as required by IFRS 13.
4. SEGMENT INFORMATION AND EXCEPTIONAL ITEMS
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of the
Company that makes strategic decisions.
Operating profit of each reporting segment includes revenue and expenses
directly attributable to or able to be allocated on a reasonable basis.
Segment assets and liabilities are those operating assets and liabilities
directly attributable to or that can be allocated on a reasonable basis.
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, USA, Spain,
Italy and rest of Europe. Although these segments do not meet the quantitative
thresholds required by IFRS 8, management has concluded that these segments
should be reported, as it is closely monitored by the chief operating
decision-maker.
UK USA Spain Italy Rest of Europe Intra Group Total Reportable Segments
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 30 September 2021 (unaudited)
Revenue - External 15,185 1,680 888 1,275 2,817 - 21,845
Inter-segment revenue 1,466 - - - - (1,466) -
Operating (Loss)/Profit (505) (311) 37 31 185 - (563)
Finance income - external 10 - - - - - 10
Finance income - other segments 237 - - - - (237) -
Finance costs - external (161) (7) (1) (1) (2) - (172)
Finance costs - other segments (87) - (106) (8) (36) 237 -
Share of profit of investments accounted for using the equity method (20) - - - - - (20)
(Loss)/Profit before taxation (526) (318) (70) 22 147 - (745)
Taxation - - - - - - -
Profit/(Loss) after taxation (526) (318) (70) 22 147 - (745)
5. EXCEPTIONAL ITEMS
Six months to Six months to Year to
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Exceptional items comprise:
Restructuring costs (21) (1) (136)
Refinancing - - -
Relocation - (75) (75)
Legal costs - - -
Write off of share of profit of minority holdings (220) - -
(241) (76) (211)
The exceptional items totalling £241,000 (2020: £76,000) include
restructuring costs related to redundancy costs and £220,000 write off upon
acquiring the remaining 51% of LCD Enterprises Limited and changing from
equity accounting for a minority holding to full subsidiary.
6. BUSINESS COMBINATIONS
On 30 July 2021 the Company acquired the remaining 51 per cent. of the issued
share capital of LCD Enterprises Limited ("LCD") which it did not already
hold from Lyndon Davies, CEO of the Company, and his wife Catherine Davies,
who together owned this remaining stake.
LCD owns the Oxford Diecast Group, which supplies diecast model vehicles and
railway products to the collector, gift and hobby markets in the UK, Hong
Kong and North America
Summary of the Acquisition
On 8 December 2017 the Company completed the acquisition of 49 per cent. of
the issued ordinary share capital of LCD, for a consideration of £1.6
million payable in cash pursuant to the LCD SPA.
The Company acquired the remaining 51% per cent. of the issued share capital
of LCD, for a total cash consideration of £1.3 million.
A provisional purchase price allocation exercise has been completed which
identified £0.3 million of acquired intangible assets relating to the Oxford
Diecast brand.
The provisional fair value of the assets acquired at completion and the
consideration payable:
Book cost Fair Vaue Adj Fair value
£'000 £'000 £'000
Intangible assets - 330 330
Property, plant and equipment 2,064 180 2,244
Inventories 2,200 - 2,200
Trade and other receivables 299 - 299
Cash and cash equivalents 285 - 285
Trade and other payables (2,015) (180) (2,195)
Deferred tax liability - (63) (63)
Income tax (263) - (263)
Net assets 2,570 267 2,837
Cash consideration (2,900)
Goodwill 63
Acquisition related costs
Acquisition related costs of £nil are included in operating expenses in the
income statement.
Revenue and profit contribution
The acquired business contributed revenues of £552,000 and net profit of
£69,000 to the Group for the period 1 August to 30 September 2021. If the
acquisition had completed 1(st) April 2021 the contribution would have been
revenue of £1,343,000 and net profit of £73,000
7. TANGIBLE AND INTANGIBLE ASSETS AND GOODWILL
The additions comprise new product tooling (£1,775,000), property, plant and
equipment (£90,000) and intangible assets - computer software (£121,000).
Acquired from LCD is £2,064,000 of tooling and property, plant and equipment
and £330,000 of intangibles at fair value.
The Group has again performed impairment reviews as at 30 September 2021 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 2021
have remained constant with the impairment reviews conducted in March 2021.
Tangible and intangible assets and goodwill (unaudited) Six months ended 30 September 2021 Six months ended 30 September 2020
£'000 £'000
Opening net book amount 1 April 2021 and 1 April 2020 14,258 11,553
Exchange adjustment 12 19
Additions 1,986 3,113
Acquired from LCD 2,394 -
Depreciation, amortisation and impairment (1,275) (1,194)
Closing net book amount 30 September 2021 and 30 September 2020 17,375 13,491
2021 2020
CAPITAL COMMITMENTS (unaudited) (unaudited)
£'000 £'000
At 30 September commitments were:
Contracted for but not provided for 1,889 2,163
The commitments relate to the acquisition of tooling as part of property,
plant and equipment.
8. RIGHT OF USE ASSETS
GROUP Property Motor Fixtures, Fittings and Equipment Total
Vehicles
£'000
£'000 £'000 £'000
COST
At 1 April 2021 3,376 317 17 3,710
Additions at cost 69 13 1 83
Acquired from LCD 171 16 3 190
At 30 September 2021 3,616 346 21 3,983
ACCUMULATED DEPRECIATION
At 1 April 2021 851 156 13 1,020
Charge 199 37 3 239
At 30 September 2021 1,050 193 16 1,259
Net book amount at 30 September 2021 2,566 153 5 2,724
9. RIGHT OF USE LEASE LIABILITIES
The movement in the right of use lease liability over the period was as
follows:
2021
£'000
As at 1 April 2021 2,808
New leases 92
Acquired leases 180
Interest payable 83
Repayment of lease liabilities (299)
As at 30 September 2021 2,864
Lease liability less than one year 437
Lease liability greater than one year and less than five years 736
Lease liability greater than five years 1,691
Total Liability 2,864
Maturity analysis of contracted undiscounted cashflows is as follows:
30 September 2021
£'000
Lease liability less than one year 585
Lease liability greater than one year and less than five years 1,199
Lease liability greater than five years 2,402
Total Liability 4,186
Finance charges included above (1,316)
2,864
10. SHARE CAPITAL
At 31 March 2021 and 30 September 2021 the Group had 166,927,838 ordinary 1p
shares in issue with nominal value £1,669,278 (2020: £1,669,278).
No employee share options were exercised during the first half to 30 September
2021 (2020: £nil). One employee share option scheme was in place between 1
April and 30 September 2021 and is detailed in Note 16.
11. BORROWINGS
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
SECURED BORROWING AT AMORTISED COST
Asset Based Lending facility (691) - -
Coronavirus Business Interruption Loan (CBIL) (242) - -
(933) - -
Total borrowings
Amount due for settlement within 12 months (741) - -
Amount due for settlement after 12 months (192) - -
(933) - -
At 30 September 2021 the Group has in place a £12.0 million Asset Based
Lending (ABL) facility with PNC Credit Limited through to June 2023. The PNC
Covenants are customary operational covenants applied on a monthly basis. The
Group also has a CBIL loan with Barclays, acquired as part of the LCD
acquisition. The CBIL payback commenced in August 2021 and finishes July 2026.
In addition, the Group has a committed £9.0 million loan facility with
Phoenix Asset Management Partners Limited (the Group's largest shareholder) if
it should be required which is a three-year rolling facility.
In the period to 30 September 2021 loan repayments were £8,334 (2020: £nil).
12. FINANCIAL INSTRUMENTS
The following tables present the Group's assets and liabilities that are
measured at fair value at 30 September 2021 and 31 March 2021. 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 - 270 - 270
Total assets as at 30 September 2021 - 270 - 270
Liabilities
Derivatives used for hedging - (32) - (32)
Total liabilities at 30 September 2021 - (32) - (32)
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets
Derivatives used for hedging - 32 - 32
Total assets at 31 March 2021 - 32 - 32
Liabilities
Derivatives used for hedging - (513) - (513)
Total liabilities at 31 March 2021 - (513) - (513)
13. TAXATION
The Group has elected not to recognise a deferred tax movement on the half
year profit at this time and there is no tax credit associated with this in
the profit and loss. The Group has significant brought forward trading losses
which can be utilised.
14. EARNINGS/(LOSS) PER SHARE
Earnings/(loss) per share attributable to equity holders of the Company arises
from continuing operations as follows:
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Earnings/(loss) per share from continuing operations
attributable to the equity of the Company
- basic (0.45)p 0.14p 0.82p
- diluted (0.45)p 0.14p 0.80p
15. DIVIDENDS
No interim dividend has been declared for the interim period ended 30
September 2021 (2020: £nil).
16. 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.
17. PERFORMANCE SHARE PLANS AWARDS
At 30 September 2021, outstanding awards to Directors under the PSP were as
follows:
Director Award date Vesting date Market price at award date At 1 April 2021 Awarded during the year As at 30 September 2021
Lyndon Davies Nov 2020 June 2022 54p 2,670,846 - 2,670,846
Kirstie Gould Nov 2020 June 2022 54p 2,670,846 - 2,670,846
18. RELATED-PARTY TRANSACTIONS
Key management compensation amounted to £507,000 for
the six months to 30 September 2021 (2020: £457,000). Key management include
directors and senior management. For the period to 30 September 2021:
30 September 2020 (unaudited) 30 September 2020 (unaudited) 31 March 2021 (audited)
£'000 £'000 £'000
Salaries and other short-term benefits 488 439 853
Share-based payments - - 673
Other pension costs 19 18 36
507 457 1,562
Hornby Hobbies Limited purchased £104,771 of inventory and tooling from
Oxford Diecast Limited, a company which is wholly owned by LCD Enterprises
Limited, a Company in which L Davies owns a controlling 51% share in the
period ended 30 July 2021. Hornby PLC purchased the remaining 51% of LCD
Enterprises Limited on 30 July 2021 as detailed in Note 5.
Phoenix Asset Management Partners who own the majority shareholding in Hornby
PLC have also provided a funding facility to the Group. During the period
non-utilisation fees of £45,123 were accrued and remain unpaid at 30
September
2021.
Hornby Hobbies Limited purchased services totalling £460,087 from Rawnet
Limited which is 100% owned by Phoenix Asset Management, the controlling party
of the Group. At 30 September 2021 £549,128 was owing to Rawnet Limited for
services rendered.
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.
19. 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 and
for the foreseeable future Brexit and COVID-19. The disclosures on pages 12
and 13 of the Group's Annual report for the year ended 31 March 2021 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.
20. SEASONALITY
Sales are subject to seasonal fluctuations, with peak demand in the October -
December quarter. For the six months ended 30 September 2021 sales
represented 45 per cent of the annual sales for the year ended 31 March 2021
(2020: 56 per cent of the annual sales for the year ended 31 March 2020).
21. SUBSEQUENT EVENTS
No other significant events have occurred between the end of the reporting
period and the date of signature of the Annual Report and Accounts.
By order of the Board
Lyndon Davies
Kirstie Gould
Chief
Executive
Chief Finance Officer
30 November 2021
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR GIBDBUGXDGBGRecent news on Hornby
See all newsREG - Hornby PLC - Directorate Change
AnnouncementREG - Hornby PLC - Trading Statement
AnnouncementREG - Hornby PLC Frasers Group PLC - Holding(s) in Company
AnnouncementREG - Hornby PLC - Mike Ashley and Hornby PLC
AnnouncementREG - Hornby PLC - Hornby PLC Acquires The Corgi Model Club
Announcement