REG - Hornby PLC - PRELIMINARY RESULTS AND TURNAROUND PLAN <Origin Href="QuoteRef">HRN.L</Origin> - Part 4
22/06/2016 07:05
- Part 4: For the preceding part double click ID:nRSV8892Bc
non-current assets 1,418 - 1,240 -
Disposals (139) - (139) -
At 31 March 2016 1,279 - 1,101 -
Net book amount at 31 March 2016 1,462 - 1,069 -
Net book amount at 31 March 2015 - - - -
11. INVESTMENTS
COMPANY
The movements in the net book value of interests in subsidiary undertakings are as follows:
At 1 April 2015 33,155 4,171 37,326
Capital contribution relating to share-based payment (48) - (48)
Net increase in loans to subsidiary undertaking - 663 663
Impairment of investment in subsidiary undertakings (9,543) - (9,543)
At 31 March 2016 23,564 4,834 28,398
At 1 April 2014 33,053 4,171 37,224
Capital contribution relating to share-based payment 102 - 102
At 31 March 2015 33,155 4,171 37,326
At 31 March 2015
33,155
4,171
37,326
Interest was charged on loans to subsidiary undertakings at Sterling three-month Libor + 3.6%.
Loans are unsecured and exceed five years' maturity.
The impairment of investments in the year relates to a write down to the investments held in Italy, France Spain and UK.
GROUP SUBSIDIARY UNDERTAKINGS
Details of the undertakings whose results or financial position affected the figures shown in the Company's annual
accounts, are set out below. Hornby Hobbies Limited and Hornby España S.A. are engaged in the development, design, sourcing
and distribution of models. Hornby America Inc., Hornby Italia s.r.l., Hornby France S.A.S. and Hornby Deutschland GmbH are
distributors of models. Hornby Industries Limited and H&M (Systems) Limited are dormant companies.
Proportion of nominal value of issued shares held
Country of incorporation Description of shares held Group% Company %
Hornby Hobbies Limited United Kingdom Ordinary shares 100 100
Hornby America Inc. USA Ordinary shares 100 100
Hornby España S.A Spain Ordinary shares 100 100
Hornby Italia s.r.l. Italy Ordinary shares 100 100
Hornby France S.A.S. France Ordinary shares 100 100
Hornby Deutschland GmbH Germany Ordinary shares 100 100
Hornby Industries Limited United Kingdom Ordinary shares 100 100
H&M (Systems) Limited United Kingdom Ordinary shares 100 100
100
12. INVENTORIES
Group Company
2016 £'000 2015£'000 2016 £'000 2015£'000
Raw materials - 917 - -
Work in progress 57 101 - -
Finished goods 13,580 11,451 - -
13,637 12,469 - -
-
13. TRADE AND OTHER RECEIVABLES
CURRENT:
Trade receivables 12,303 9,569 - -
Less: provision for impairment of receivables (540) (375) - -
Trade receivables - net 11,763 9,194 - -
Other receivables 103 681 - -
Prepayments 1,326 569 74 12
Amounts owed by subsidiary undertaking - - 15,255 971
13,192 10,444 15,329 983
-
-
15,255
971
13,192
10,444
15,329
983
Concentrations of credit risk with respect to trade receivables are limited due to the Group's customer base being large
and unrelated and therefore the provision for receivables impairments are deemed adequate. Credit insurance policies are in
place in Hornby España S.A., Hornby Italia s.r.l., Hornby France S.A.S. and Hornby Deutschland GmbH covering trade
receivables at 31 March 2016 to the value of £1.4 million (2015: £2.3 million).
Gross trade receivables can be analysed as follows:
2016 £'000 2015£'000
Fully performing 9,939 7,096
Past due 1,824 2,098
Fully impaired 540 375
Trade receivables 12,303 9,569
As of 31 March 2016, trade receivables of £1,824,000 (2015: £2,098,000) were past due but not impaired. These relate to a
number of independent customers for whom there is no recent history of default. The ageing analysis of these trade
receivables is as follows:
2016 £'000 2015£'000
1 - 120 days 1,451 1,928
>120 days 373 170
1,824 2,098
As of 31 March 2016, trade receivables of £540,000 (2015: £375,000) were impaired and provided for. The amount of provision
was £540,000 (2015: £375,000) as of 31 March 2016.
Significant financial difficulties of the customer, probability that the customer will enter bankruptcy or financial
reorganisation are considered indications that the trade receivable is impaired.
The ageing of these receivables is as follows:
2016 £'000 2015£'000
1 - 120 days 57 23
> 120 days 483 352
540 375
Movements on the Group provision for impairment of trade receivables are as follows:
2016 £'000 2015£'000
At 1 April 375 377
Provision for receivables impairment 163 40
Receivables written-off during the year as uncollectible (23) (22)
Exchange adjustments 25 (20)
At 31 March 540 375
The charge relating to the increase in provision has been included in 'administrative expenses' in the Statement of
Comprehensive Income.
The carrying amounts of the Group and Company trade and other receivables are denominated in the following currencies:
Group Company
2016 £'000 2015£'000 2016 £'000 2015£'000
Sterling Intercompany - - 15,255 971
Sterling 7,648 5,617 - 12
Euro 3,907 4,307 - -
US Dollar 311 465 - -
HK Dollar - 55 - -
11,866 10,444 15,255 983
983
14. CASH AND CASH EQUIVALENTS
Cash at bank and in hand 677 451 1 1
2016 £'000
2015£'000
2016 £'000
2015£'000
Cash at bank and in hand
677
451
1
1
15. TRADE AND OTHER PAYABLES
Group Company
2016 £'000 2015£'000 2016 £'000 2015£'000
CURRENT:
Trade payables 5,306 5,114 - -
Other taxes and social security 797 950 14 19
Other payables 564 1,041 - -
Accruals 696 1,962 80 -
7,363 9,067 94 19
19
16. PROVISIONS
Sales returns
At 1 April 255 238 - -
Charge to Statement of Comprehensive Income 784 597 - -
Utilised in the year (593) (580) - -
At 31 March 446 255 - -
(593)
(580)
-
-
At 31 March
446
255
-
-
Provision is made for future sales returns based on historical trends. The provision is expected to be utilised within one
year from the balance sheet date.
17. CURRENT TAX ASSETS AND LIABILITIES
Group Company
2016 £'000 2015£'000 2016£'000 2015£'000
Current tax assets
UK Corporation tax recoverable 168 371 - 50
Overseas Corporation tax recoverable 45 48 - 31
213 419 - 81
Current tax liabilities
UK Corporation tax liability - - 39 -
Overseas Corporation tax liability - 53 - -
- 53 39 -
-
18. BORROWINGS
Group Company
2016 £'000 2015£'000 2016 £'000 2015£'000
Secured borrowing at amortised cost
Bank overdrafts 7,706 7,698 - -
Bank loan 177 212 - -
Loan from subsidiary undertakings - - 4,902 4,511
7,883 7,910 4,902 4,511
Total borrowings
Amount due for settlement within 12 months 7,883 7,747 - 116
Amount due for settlement after 12 months - 163 4,902 4,395
7,883 7,910 4,902 4,511
4,511
The Group obtained a covenant reset in the year for the following covenants:
The December 2015 and March 2016 quarterly covenant of the ratio of consolidated gross borrowings less consolidated total
cash to consolidated EBITDA as well as the annual covenant requirement to clear down the borrowing facility to nil for 10
clear days.
The Company borrowings are denominated in Sterling. All intercompany borrowings are formalised by way of loan agreements.
The loans can be repaid at any time however the Company has received confirmation from its subsidiary that they will not
require payment within the next twelve months.
Analysis of borrowings by currency:
GROUP Sterling£'000 Euros£'000 Total £'000
31 March 2016
Bank overdrafts 7,704 2 7,706
Bank loan - 177 177
7,704 179 7,883
31 March 2015
Bank overdrafts 6,039 1,659 7,698
Bank loan - 212 212
6,039 1,871 7,910
The other principal features of the Group's borrowings are as follows:
At 31 March 2016 the Group had a revolving credit facility of £10 million expiring August 2019 and the future interest
rates on this facility are Libor + 2.9%.
The average effective interest rate on bank overdrafts approximated 3.4% (2015: 4.07%) per annum and is determined based on
2.9% (2015: 3.6%) above three-month Libor.
Cash at bank and bank overdrafts of £7.0 million (2015: £7.2 million) are with financial institutions with a credit rating
of A2 per Moody's rating agency.
Undrawn borrowing facilities
At 31 March 2016, the Group had available £3 million (2015: £9.2 million) of undrawn committed borrowing facilities in
respect of which all conditions precedent had been met. Included within this the European subsidiaries had available £0.2
million (2015: £2.3 million) of undrawn import credit line facilities that could be obtained with security being given
against trade receivables. The Group has recently renegotiated its banking facilities for the next three-and-a-half years,
conditional on the completion of an additional equity raise of £8 million, details of which can be found within note 29
Post balance sheet events.
19. FINANCIAL INSTRUMENTS
The Group's policies and strategies in relation to risk and financial instruments are detailed in note 1.
Assets Liabilities
GROUP 2016 £'000 2015£'000 2016 £'000 2015£'000
Carrying values of derivative financial instruments
Forward foreign currency contracts - cash flow hedges 394 519 (12) (24)
(24)
The hedged forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12
months. Gains and losses recognised in reserves on forward foreign exchange contracts as of 31 March 2016 are recognised in
the Statement of Comprehensive Income first in the period or periods during which the hedged forecast transaction affects
the Statement of Comprehensive Income, which is within twelve months from the balance sheet date.
At 31 March 2016 the gross value of forward currency contracts was as follows:
2016 '000s 2015'000s
US Dollar 11,800 21,862
The total net fair value above for forward foreign currency contracts comprises £382,000 asset (2015: £495,000 asset) of
which £382,000 net asset (2015: £362,000 asset) represents an effective hedge at 31 March 2016 and therefore credited to
Other Comprehensive Income in accordance with IAS 39. The balance of £nil (2015: £136,000 asset) was the ineffective
portion and was included within operating expenses.
In accordance with IAS 39, the Group has reviewed all contracts for embedded derivatives that are required to be separately
accounted for if they do not meet certain requirements set out in the standard. No embedded derivatives have been
identified.
The Company has no derivative financial instruments.
Fair values of non-derivative financial assets and liabilities
For the Group and the Company, as at 31 March 2016 and 31 March 2015, there is no difference between the carrying amount
and fair value of each of the following classes of financial assets and liabilities, principally due to their short
maturity: trade and other receivables, cash at bank and in hand, trade and other payables and current borrowings. Bank
deposits attract interest within 1.0% of the ruling market rate. There is no significant difference between the fair value
and carrying amount of non-current borrowings as the impact of discounting is not significant.
Maturity of financial liabilities
GROUP Bank loan£'000 Overdraft facilities £'000s Accounts payable and accruals £'000s 2016 Total £'000
Less than one year 177 7,706 7,363 15,246
Between one and two years - - - -
Between two and five years - - - -
More than five years - - - -
177 7,706 7,363 15,246
Bank loan£'000 Overdraft facilities £'000s Accounts payable and accruals £'000s 2015Total£'000
Less than one year 49 7,698 8,967 16,714
Between one and two years 49 - - 49
Between two and five years 114 - - 114
More than five years - - - -
212 7,698 8,967 16,877
COMPANY 2016 Intercompany Debt £'000 2015 Intercompany Debt £'000
More than five years (note 18) 4,902 4,395
HIERARCHY OF FINANCIAL INSTRUMENTS
The following tables present the Group's assets and liabilities that are measured at fair value at 31 March 2016 and 31
March 2015. 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 have been fair valued using forward exchange rates that are quoted in an active market. The
effects of discounting are generally insignificant for Level 2 derivatives.
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 (excluding bank overdrafts), trade and other
payables.
Financial Instruments
Level 1 £'000 Level 2 £'000 Level 3 £'000 Total £'000
Assets
Trading derivatives - - - -
Derivatives used for hedging - 394 - 394
Available-for-sale financial assets - - - -
Total assets as at 31 March 2016 - 394 - 394
Liabilities
Interest rate swap - - - -
Derivatives used for hedging - (12) - (12)
Total liabilities at 31 March 2016 - (12) - (12)
Level 1£'000 Level 2£'000 Level 3£'000 Total£'000
Assets
Trading derivatives - - - -
Derivatives used for hedging - 519 - 519
Available-for-sale financial assets - - - -
Total assets as at 31 March 2015 - 519 - 519
Liabilities
Interest rate swap - - - -
Derivatives used for hedging - (24) - (24)
Total liabilities at 31 March 2015 - (24) - (24)
Interest rate sensitivity
The Group is exposed to interest rate risk as the Group borrows funds at both fixed and floating interest rates. The
exposure to these borrowings varies during the year due to the seasonal nature of cash flows relating to sales.
In order to measure risk, floating rate borrowings and the expected interest costs are forecast on a monthly basis and
compared to budget using management's expectations of a reasonably possible change in interest rates.
The effect on both income and equity based on exposure to borrowings at the balance sheet date for a 1.0% increase in
interest rates is £83,000 (2015: £99,000) before tax. A 1% fall in interest rates gives the same but opposite effect. 1% is
considered an appropriate benchmark given the minimum level of movement in the UK interest rate over recent years and
expectation over the next financial year.
Foreign currency sensitivity
The Group is primarily exposed to fluctuations in US Dollars, and the Euro. The following table details how the Group's
income and equity would increase on a before tax basis, given a 10% revaluation in the respective currencies against
Sterling and in accordance with IFRS 7 all other variables remaining constant. A 10% devaluation in the value of Sterling
would have the opposite effect. The 10% change represents a reasonably possible change in the specified foreign exchange
rates in relation to Sterling.
Comprehensive Income and Equity Sensitivity
2016 £'000 2015£'000
US dollars 995 60
Euros 1,067 845
2,062 905
905
Capital risk management
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total capital.
Net debt is calculated as total borrowings as shown in the consolidated balance sheet less cash and cash equivalents. Total
capital is calculated as 'equity' as shown in the balance sheet plus net debt.
2016 £'000 2015£'000
Total borrowings (note 18) 7,883 7,910
Less:
Total cash and cash equivalents (note 14) (677) (451)
Net debt 7,206 7,459
Total equity 32,136 31,756
Total capital 39,342 39,215
Gearing 18% 19%
20. DEFERRED TAX
Deferred tax is calculated in full on temporary differences under the liability method.
The movement on the deferred tax account is as shown below:
Group Company
2016 £'000 2015£'000 2016£'000 2015£'000
At 1 April (1,968) (1,722) 121 126
Charge/(credit) to Statement of Comprehensive Income (note 5) - origination and reversal of temporary differences 233 (298) (21) (5)
Exchange adjustments (45) 52 - -
At 31 March (1,780) (1,968) 100 121
121
Deferred tax assets have been recognised in respect of tax losses in the UK only. Other temporary differences giving rise
to deferred tax assets have been recognised in the UK where it is probable that those assets will be recovered.
No deferred tax is provided for tax liabilities which would arise on the distribution of profits retained by overseas
subsidiaries because there is currently no intention that such profits will be remitted.
The movements in deferred tax assets and liabilities during the year are shown below.
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset.
Group Company
Deferred tax liabilities Revaluation £'000 Accelerated capital allowances £'000 Acquisition intangibles £'000 Other £'000 Total £'000 Revaluation £'000 Accelerated capital allowances £'000 Total £'000
At 1 April 2015 114 7 - 10 131 114 7 121
(Credit)/charge to Statement of Comprehensive Income (14) (7) - (10) (31) (14) (7) (21)
Transferred from deferred tax assets - - 111 - 111 - - -
At 31 March 2016 100 - 111 - 211 100 - 100
At 1 April 2014 117 9 - 10 136 117 9 126
(Credit)/charge to Statement of Comprehensive Income (3) (2) - - (5) (3) (2) (5)
At 31 March 2015 114 7 - 10 131 114 7 121
Group Company
Deferred tax assets Short-term incentive plan £'000 Acquisition intangibles £'000 Other £'000 Total £'000 Short-term incentive plan £'000 Total £'000
At 1 April 2015 - (161) (1,938) (2,099) - -
(Credit)/Charge to Statement of Comprehensive Income - 272 (8) 264 - -
Foreign exchange - - (45) (45) - -
Transferred to deferred tax liabilities - (111) - (111) - -
At 31 March 2016 - - (1,991) (1,991) - -
At 1 April 2014 - (142) (1,716) (1,858) - -
(Credit)/Charge to Statement of Comprehensive Income - (19) (274) (293) - -
Foreign exchange - - 52 52 - -
At 31 March 2015 - (161) (1,938) (2,099) - -
Net deferred tax (asset)/liability
At 31 March 2016 (1,780) 100
At 31 March 2015 (1,968) 121
121
2016 2015
GROUP Recognised £'000 Not recognised £'000 Recognised £'000 Not recognised £'000
Deferred tax comprises:
Depreciation in excess of capital allowances (1,404) - (1,054) -
Other temporary differences - UK (376) - (546) -
Other temporary differences - overseas - (2,644) (368) (934)
Deferred tax (asset)/liability (1,780) (2,644) (1,968) (934)
(934)
The net deferred tax asset not recognised of £2,644,000 represents the unrecognised losses in Hornby Deutschland GmbH of
£141,000 (2015: £67,000) and in Hornby Italia s.r.l of £1,361,000 (2015: £867,000), Hornby Espana S.A of £431,000 (2015:
nil) and Hornby France S.A.S of £711,000 (2015: nil).
2016 2015
COMPANY Recognised £'000 Not recognised £'000 Recognised £'000 Not recognised £'000
Deferred tax comprises:
Accelerated capital allowances - - 7 -
Other timing differences 100 - 114 -
Deferred tax liability 100 - 121 -
-
21. SHARE CAPITAL
GROUP AND COMPANY
Allotted, issued and fully paid:
2016 2015
Ordinary shares of 1p each Number of shares £'000 Number of shares £'000
At 31 March 39,164,100 392 39,164,100 392
Issue or ordinary shares 15,789,474 158 - -
At 1 April 54,953,574 550 39,164,100 392
392
On 12 August 2015 the Company issued 15,789,474 Ordinary 1 pence shares for 95 pence per share, totalling £15 million. At
31 March 2016 there were no options granted under the Company's share option schemes which remained outstanding.
22. SHARE-BASED PAYMENTS
Hornby Plc operates three share-based payment plans - Share Option Scheme ('SOS') and Performance Share Plan ('PSP').
SOS awards
The SOS awards are a reward of share options to Executive Directors and senior management that vest after three years and
must be exercised in a four or seven year exercise window.
The awards issued in previous years were subject to a performance measure of Profit before Interest and Tax ('PBIT') or
Profit before Tax ('PBT') as disclosed by the Group's accounts for any of the years ended 31 March 2006, 31 March 2007, 31
March 2008, 31 March 2009 or 31 March 2010 excluding (i) any profit or loss in relation to property transactions, (ii) any
restructuring and abortive due diligence costs and (iii) any profits or losses arising from businesses acquired by the
Group after the date of grant of the Option. Some awards are subject to achieving a PBIT that is equal to or greater than
£8 million, or to PBT being equal to or greater than £9 million or aggregate PBT for three years ending 31 March 2008, 2009
and 2010 being equal to or greater than £32.7 million. The awards are equity settled.
Activity relating to share options for the years ended 31 March 2016 and 31 March 2015 was as follows:
2016 2015
Number Weighted average exercise price Number Weighted average exercise price
Outstanding at 1 April 150,000 201.0p 365,809 201.0p
Exercised - - - -
Lapsed (150,000) 201.0p (215,809) 201.0p
Outstanding at 31 March - - 150,000 201.0p
201.0p
No options were exercised within the financial year (2015: nil).
Performance Share Plan
All Performance Share Plan ('PSP') awards outstanding at 31 March 2016 vest only if performance conditions are met. Awards
granted under the PSP must be exercised within one year of the relevant award vesting date.
The Group operates the PSP for Executive Directors and senior executives. Awards under the scheme are granted in the form
of a nil-priced option, and are satisfied using market-purchased shares. The awards vest in full or in part dependent on
the satisfaction of specified performance targets. 40% of the award vests dependent on TSR performance over a three-year
performance period, relative to the constituents of the FTSE Small Cap Index (excluding investment trusts) from the time of
grant, and the remaining 60% vests dependent on performance against earnings per share targets.
All plans are subject to continued employment. To the extent that such shares in the above plans are awarded to employees
below fair value, a charge calculated in accordance with IFRS 2 'Share-based payment' is included within other operating
expenses in the Statement of Comprehensive Income. This charge for the Group amounts to £18,000 and the credit for the
Company amounted to £47,000 in the year ended 31 March 2016 (2015: £205,000 charge for the Group amount and the charge for
the Company amounted to £102,000).
The following table summarises the key assumptions used for grants during the year:
2016 PSP1 2015 PSP1
Fair value (p) 68.61p 46.14p
Options pricing model used Black Scholes (Stochastic) Black Scholes (Stochastic)
Share price at grant date (p) 68.0p 71.0p
Exercise price (p) nil nil
Expected volatility (%) 32.4% 34.2%
Risk-free rate (%) n/a n/a
Expected option term (years) 3 3
Expected dividends (per year, %) 0% 0%
1Assumptions for TSR component only.
Assumptions on expected volatility and expected option term have been made on the basis of historical data, wherever
available, for the period corresponding with the vesting period of the option. Best estimates have been used where
historical data is not available in this respect.
23. EMPLOYEES AND DIRECTORS
Group Company
2016 £'000 2015£'000 2016 £'000 2015£'000
Staff costs for the year:
Wages and salaries 8,559 8,444 834 855
Share-based payments (note 22) 18 205 (48) 103
Social security costs 1,090 1,131 121 110
Other pension costs (note 24) 555 414 107 92
Redundancy and compensation for loss of office 788 16 133 -
11,010 10,210 1,147 1,160
1,160
The redundancy costs form part of the restructuring costs in the year classified as exceptional items.
Average monthly number of people (including Executive Directors) employed by the Group:
Group Company
2016 Number 2015Number 2016 Number 2015Number
Operations 47 65 1 2
Sales, marketing and distribution 139 140 1 -
Administration 44 47 5 3
230 252 7 5
5
Key management compensation:
Group Company
2016 £'000 2015£'000 2016£'000 2015£'000
Salaries and short-term employee benefits 1,780 1,799 839 855
Share-based payments 18 205 (48) 103
Other pension costs 172 171 107 92
Redundancy and compensation for loss of office 544 - 133 -
2,514 2,175 1,031 1,050
1,050
Key management comprise the individuals involved in major strategic decision making and includes all Group and subsidiary
Directors.
A detailed numerical analysis of Directors' remuneration and share options showing the highest paid Director, number of
Directors accruing benefits under money purchase pension schemes, is included in the Directors' Report on pages 13 to 18
and forms part of these financial statements.
24. PENSION COMMITMENTS
The Group operates a defined contribution pension scheme by way of a Stakeholder Group Personal Pension Plan set up through
the Friends Provident Insurance Group.
Alexander Forbes International is appointed as Independent Financial Adviser to work in liaison with the Company.
The level of contributions to the Group Personal Pension Plan for current members is fixed by the Company.
The Group pension cost for the year was £555,000 (2015: £414,000) representing the actual contributions payable in the year
and certain scheme administration costs. The Company pension cost for the year was £107,000 (2015: £92,000). No
contributions were outstanding at the year end of 31 March 2016.
25. FINANCIAL COMMITMENTS
GROUP 2016 £'000 2015£'000
At 31 March capital commitments were:
Contracted for but not provided 414 1,706
The commitments relate to the acquisition of property, plant and equipment.
The Company does not have any capital commitments.
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.
26. OPERATING LEASE COMMITMENTS
The total of future minimum lease payments in respect of non-cancellable property, plant and motor vehicle operating leases
falling due are as follows:
GROUP 2016 £'000 2015£'000
Not later than one year 472 494
Later than one year but not more than five years 1,087 536
More than five years 259 -
1,818 1,030
The distribution arm of the business continues to be outsourced to a third party company, DS Logistics. The initial
agreement with DS Logistics was for 5 years from August 2014 and approximate costs under the contract if it were to be
terminated early are approximately £1 million a year for the remainder of the term.
27. GROUP AND COMPANY Cash Flows from Operating Activities
Group Company
2016 £'000 2015£'000 2016 £'000 2015£'000
(Loss) / profit before taxation (13,532) (184) (9,017) 337
Interest payable 429 506 181 192
Interest receivable (21) (1) (174) (174)
Amortisation of intangible assets 723 377 - -
Impairment of Goodwill 3,990 - - -
Impairment of Investment - - 9,543 -
Depreciation 3,705 3,749 19 34
Impairment of tooling 1,158 - - -
(Gain) / loss on disposal of property, plant and equipment (193) (5) (223) -
Share-based payments 18 205 (48) 103
Loss / (gain) on financial derivatives 135 (102) - -
Increase in provisions 191 17 - -
(Increase) / decrease in inventories (650) 166 - -
Increase in trade and other receivables (2,351) (1,883) (62) (643)
(Decrease) / increase in trade and other payables (3,212) 1,685 75 (43)
(Decrease) / increase in derivative financial instruments (22) 798 - -
Cash(used in) / generated fromoperations (9,632) 5,328 294 (194)
(194)
28. 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 £176,000 in relation to these services in the year. No payments remained
outstanding to 28One as at 31 March 2016. Hornby Hobbies Limited continues to use these services on an ongoing basis.
Additionally, in Hornby France S.A.S the Group leased its French warehouse and office from Mr and Mrs Lanter who were both
general managers and statutory directors of Hornby France S.A.S until January 2016 for approx. E10,000 a month. The Group
has since terminated this lease.
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 materially interested. There are no other
related-party transactions.
The Company received management fees from subsidiaries of £1,316,000 (2015: £1,346,000), interest of £174,000 (2015:
£174,000) and dividends from subsidiaries of £nil (2015: £ nil) and incurred interest of £181,000 (2015: £192,000) on
intercompany borrowings. It also received a rental income of £450,000 (2015: £450,000).
29. POST BALANCE SHEET EVENTS
Group Refinancing
The announcement today of a proposed £8 million equity placing will allow us to reduce reliance on debt facilities and we
have signed a new revolving credit facility of £10 million with our main UK bankers Barclays. This facility is conditional
on the additional equity raise being approved by shareholders and is expected to allow sufficient headroom for trading
working capital and capital expenditure needs up to December 2019.
Board Changes
On 26 April 2016, we announced that Group Finance Director, Steve Cooke, was appointed Chief Executive. Steve joined the
business in June 2015 and has been making a significant contribution as we continue to make progress with our strategy to
drive the Group's turnaround.
On 26 May 2016, the Company announced that David Mulligan had been appointed Interim Group Finance Director. David was
formerly Group Finance Director at construction and regeneration company Morgan Sindall Group plc and has a successful
track record of working with companies undergoing change.
Sale of Property, Plant and Equipment
On 13 June 2016 the Group disposed of its building in Hornby Espana S.A for a consideration of E1.3 million.
Shareholders' Information Service
Hornby welcomes contact with its shareholders.
If you have questions or enquiries about the Group or its products, please contact:
D Mulligan, Finance Director
Hornby Plc
3rd Floor, The Gateway
Innovation Way
Discovery Park
Sandwich
Kent CT13 9FF
www.hornby.com
This information is provided by RNS
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