RNS Number:0522S
Hornby PLC
14 November 2003
HORNBY BOOSTED BY NEW PRODUCTS
AS INTERIM RESULTS SPARKLE
Hornby Plc ("Hornby"), the models and collectables Group, has today
announced its interim results for the six months to 30 September 2003.
Hornby's two main products are Hornby model railways and Scalextric slot car
racing systems.
* Pre-tax profits up by 33% to #2.2 million (2002: #1.7 million)
* Sales up by 13% to #15.8 million (2002: #14.0 million)
* Diluted earnings per share up to 19.5p (2002: 14.4p)
* Concessions increased from 52 to over 100 in operation
* Successful launch of Hornby 'Live Steam' range
* World-wide Licence secured for launch of Scalextric MotoGP motorcycle range
* Cash position improved by #1.6 million to #3.1 million
* Interim dividend increased to 8.0p (2002: 6.0p)
Frank Martin, Chief Executive of Hornby, said,
" I am delighted that Hornby has succeeded in re-discovering the magic that
has enchanted both children and adults for years. There is now a huge level
of interest among collectors and enthusiasts for our highly detailed
products. This, combined with the appetite of parents for traditional
'hands-on' toys, has continued to fuel the growth in sales across both
Hornby and Scalextric.
" This 'nostalgia' driven interest was demonstrated clearly at the launch of
our 'Live Steam' range of Hornby locomotives. We are confident that our
continued focus on building a healthy pipeline of new products will open up
new markets for us and continue the momentum in sales growth that we have
enjoyed over recent years.
" We have achieved excellent exposure for our products in time for the
important Christmas period. Retailers are recognising the commercial
opportunity represented by the Hornby and Scalextric ranges. We are
delighted that we have strengthened our distribution base in the High
Street. This, combined with the strength of our other retail customers and
the excellent performance delivered by the 100 concessions that we operate,
should ensure a strong pre-Christmas trading period."
-ends-
Date: 14 November 2003
For further information contact:
Hornby Plc City Profile Group
Frank Martin, Chief Executive Simon Courtenay
John Stansfield, Finance Director 020-7448-3244
01843-233500
On 14 November: 020-7448-3244
Web: www.hornby.com
or: www.scalextric.com
CHAIRMAN'S REVIEW
During the first half of the year sales have continued to grow for both
Scalextric and Hornby brands. I am pleased to report that half-year sales at
#15.8m were 13% higher than for the same period last year.
Profit before tax at #2.2m was 33% higher than for the same period last year and
diluted earnings per share rose from 14.4p to 19.5p.
Dividend
It is your Board's intention to pay roughly one third of the previous year's
full dividend at the half-year. Consistent with this policy, and given the
encouraging trading performance in the first half, I am therefore pleased to
announce an interim dividend of 8p (2002 - 6p) per ordinary share, payable on 30
January 2004 for those shareholders on the register as at 9 January 2004.
Operational Review
The encouraging performance of the past six months reflects some positive
developments within the business.
Sales of Hornby products increased again during the first six months,
notwithstanding the comparatively strong sales in the previous year which had
been supported by our Harry Potter products. This achievement therefore reflects
the success of our on-going product development programme in bringing highly
detailed and profitable new products to market. Sales of Pullman range coaches
have been particularly strong. During the second half of the current financial
year we expect to see the positive effects of the recently launched "Live Steam"
product, as well as a number of new locomotives including the "Q1 Ugly Duckling"
and the "Class 50" diesel.
Sales of individual Scalextric cars increased by 50% over the same period last
year. This has enabled our Scalextric business to build on the success of the
sport track system launched last year. We are committed to continuing to offer
the Scalextric enthusiast the highest standards of detail and performance across
a wide range of contemporary and classic models. A new and exciting innovation
for Scalextric was announced on 3 November, with the launch of the Scalextric
MotoGP motorcycle range scheduled for Spring 2004. We expect this two-wheeled
derivative to significantly enhance Scalextric appeal.
Overall sales growth in the UK during the first half of the year has come
primarily from major accounts and in-store concessions. A year ago we had 52
concessions in the UK but there are now over a hundred of these outlets in
operation. This impressive progress demonstrates a growing awareness amongst
progressive retailers of the commercial opportunity represented by the Hornby
and Scalextric ranges.
Export markets continue to achieve high growth as a direct consequence of our
strategy of producing Scalextric products relevant to individual markets. In
North America, Scalextric USA recorded dollar denominated growth of 45% over the
six-month period and made a positive contribution to group profit (loss 2002).
We believe that the North American market continues to represent a significant
opportunity to increase group sales and profitability in the medium term.
The Company has continued to benefit from the relative strength of Sterling
against the Hong Kong Dollar, the currency in which the majority of our products
are purchased. It is the Company's policy to maintain a prudent level of
forward-currency purchases in order to smooth the impact of short-term
fluctuations in exchange rates. Forward-purchases of Hong Kong Dollars are now
sufficient to meet the Company's purchasing requirements beyond the end of the
current financial year.
The Company's cash position, #3.1m as at 30 September 2003, has improved by
#1.6m compared to the previous year whilst working capital employed increased by
#0.7m. This clearly demonstrates the Company's continuing ability to generate
strong cash flow, even during a period of business growth which itself demands
increased expenditure on product development.
Property
As outlined in the 2002/2003 Annual Report and Accounts, our application to
redevelop our existing site at Margate was referred to the Secretary of State
for adjudication. We have so far received no further news in respect of this
application.
Summary
Your Company has made a strong start in the current financial year and the
prospects for the full year remain positive. As we enter the important period
before Christmas the benefits of wider distribution, both in the UK and export
markets, should ensure improved exposure for our products and result in
continued sales growth.
Looking a little further ahead we are confident that the exciting "Live Steam"
product range, together with the recently announced worldwide exclusive licence
for our Scalextric MotoGP motorcycle range, will provide the platform for future
growth. We continue to develop further innovative products, some of which will
be announced at the International Toy Fairs due to be held during the early part
of 2004.
Neil Johnson
14 November 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 30 September 2003
Six months Six months Year ended
to 30 September to 30 September 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
TURNOVER 15,793 14,018 34,142
Operating costs (13,632) (12,395) (28,786)
_______ _______ _______
OPERATING PROFIT 2,161 1,623 5,356
Net interest receivable 45 32 55
_______ _______ _______
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 2,206 1,655 5,411
Tax on profit on ordinary activities (707) (589) (1,519)
_______ _______ _______
PROFIT FOR THE PERIOD 1,499 1,066 3,892
Dividends (577) (434) (1,830)
_______ _______ _______
RETAINED PROFIT FOR THE PERIOD 922 632 2,062
_______ _______ _______
EARNINGS PER ORDINARY SHARE
Basic 20.39p 14.66p 53.32p
Diluted 19.54p 14.43p 52.00p
Dividend per ordinary share 8.0p 6.0p 25.0p
All the activities of the Group are continuing.
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
#'000 #'000 #'000
Profit for the financial period 1,499 1,066 3,892
Exchange adjustments offset in reserves (12) (18) (21)
_______ _______ _______
TOTAL RECOGNISED GAINS FOR THE PERIOD 1,487 1,048 3,871
_______ _______ _______
CONSOLIDATED BALANCE SHEET
as at 30 September 2003
30 September 30 September 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
FIXED ASSETS
Intangible assets 30 33 31
Tangible assets 3,502 3,543 3,569
Investments - Short Term Incentive Plan 416 192 192
_______ _______ _______
3,948 3,768 3,792
CURRENT ASSETS
Stocks 8,539 7,989 6,150
Debtors 9,573 9,007 5,222
Cash at bank and in hand 3,148 1,576 7,909
_______ _______ _______
21,260 18,572 19,281
CREDITORS: Amounts falling due
within one year (8,300) (7,804) (7,187)
_______ _______ _______
NET CURRENT ASSETS 12,960 10,768 12,094
_______ _______ _______
TOTAL ASSETS LESS
CURRENT LIABILITIES 16,908 14,536 15,886
CREDITORS: Amounts falling due
after more than one year (49) (37) (22)
PROVISIONS FOR LIABILITIES
AND CHARGES (538) (673) (486)
_______ _______ _______
NET ASSETS 16,321 13,826 15,378
_______ _______ _______
CAPITAL AND RESERVES
Share capital and reserves 7,605 7,464 7,580
Profit and loss account 8,716 6,362 7,798
_______ _______ _______
EQUITY SHAREHOLDERS' FUNDS 16,321 13,826 15,378
_______ _______ _______
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
30 September 30 September 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Profit for the financial period 1,499 1,066 3,892
Dividends (577) (434) (1,830)
Exchange (loss) on investment (12) (18) (21)
Shares issued 33 50 175
_______ _______ _______
NET ADDITIONS TO SHAREHOLDERS' FUNDS 943 664 2,216
Opening shareholders' funds 15,378 13,162 13,162
_______ _______ _______
CLOSING SHAREHOLDERS' FUNDS 16,321 13,826 15,378
_______ _______ _______
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2003
Six months Six months Year ended
to 30 September to 30 September 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash (outflow)/inflow from
operating activities (1,772) (2,262) 5,814
Returns on investments and
servicing of finance 45 32 55
Taxation (914) (878) (1,662)
Capital expenditure and financial investment
- purchase of fixed assets (546) (506) (1,219)
- sale of fixed assets 13 11 60
- purchase of own shares (224) (192) (192)
Payment of deferred consideration - (49) (49)
Equity dividends paid (1,383) (1,086) (1,524)
_______ _______ _______
Net cash (outflow)/inflow
before financing (4,781) (4,930) 1,283
Financing
Issue of ordinary shares 33 50 175
Capital element of finance lease payments (7) (13) (17)
_______ _______ _______
(Decrease)/increase in cash in the period (4,755) (4,893) 1,441
_______ _______ _______
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
#'000 #'000 #'000
(Decrease)/increase in cash in the period (4,755) (4,893) 1,441
Cash outflow from decrease in
lease financing 7 13 17
_______ _______ _______
Change in net funds
resulting from cash flows (4,748) (4,880) 1,458
New finance leases (38) (28) (28)
Exchange movements (6) (8) (9)
_______ _______ _______
Movement in net funds in the period (4,792) (4,916) 1,421
Net funds at 1 April 2003 7,867 6,446 6,446
_______ _______ _______
Net funds at 30 September 2003 3,075 1,530 7,867
_______ _______ _______
NOTES TO THE CASH FLOW STATEMENT
Net cash flow from operating activities
Six months Six months Year ended
to 30 September to 30 September 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Operating profit 2,161 1,623 5,356
Exchange adjustments offset in reserves (5) (7) (7)
Depreciation charges 679 650 1,266
Amortisation of goodwill 1 3 3
Profit on sale of tangible fixed assets (1) (1) (18)
(Increase) in stocks (2,389) (2,454) (615)
(Increase) in debtors (4,351) (4,132) (374)
Increase in creditors 2,092 2,011 348
Increase/(decrease) in sales
returns provision 41 45 (145)
_______ _______ _______
Net cash (outflow)/inflow from
operating activities (1,772) (2,262) 5,814
_______ _______ _______
GEOGRAPHICAL SEGMENT INFORMATION
Six months Six months Year ended
to 30 September to 30 September 31 March
2003 2002 2003
(unaudited) (unaudited) (audited)
BY ORIGIN #'000 #'000 #'000
TURNOVER
United Kingdom 14,415 12,997 30,680
United States of America 1,378 1,021 3,462
_______ _______ _______
Group 15,793 14,018 34,142
_______ _______ _______
#'000 #'000 #'000
PROFIT BEFORE TAX
United Kingdom 2,160 1,755 5,347
United States of America 46 (100) 64
_______ _______ _______
Group 2,206 1,655 5,411
_______ _______ _______
#'000 #'000 #'000
NET ASSETS
United Kingdom 16,067 13,710 15,143
United States of America 254 116 235
_______ _______ _______
Group 16,321 13,826 15,378
_______ _______ _______
BY DESTINATION #'000 #'000 #'000
TURNOVER
United Kingdom 11,517 10,608 26,473
Rest of the world 4,276 3,410 7,669
_______ _______ _______
Group 15,793 14,018 34,142
_______ _______ _______
NOTES:
1. Basis of preparation
The interim financial information has been prepared on the basis of
accounting policies set out in the Report & Accounts for the year ended
31 March 2003. The taxation charge for the six months ended 30 September
2003 has been calculated on the basis of the estimated tax rate for the
twelve months ending 31 March 2004.
2. Non statutory accounts
These statements do not constitute statutory financial statements within
the meaning of Section 240 of the Companies Act 1985. The comparative
figures for the year ended 31 March 2003 are an abridged statement of the
full financial statements for that period which have been delivered to the
Registrar of Companies and on which the auditors made an unqualified report.
No financial statements will be filed for the six months ended 30 September
2003.
3. Earnings per share
The calculation of earnings per ordinary share is based on the profits
after taxation for the period of #1,499,000 (six months ended 30 September
2002 - #1,066,000) and the weighted average number of ordinary shares in
issue during the period of 7,352,374 (six months ended 30 September 2002 -
7,272,621).
The calculation of diluted earnings per ordinary share is based on the
weighted average number of ordinary shares in issue as adjusted to assume
conversion of all dilutive potential ordinary shares, 7,671,637 (six months
ended 30 September 2002 - 7,385,577).
4. Short Term Incentive Plan
31,901 ordinary shares to the value of #224,000 were acquired in June 2003
by the Employee Benefit Trust in accordance with the incentive plan, details
of which were included in the 2003 Annual Report and Accounts.
The Trust waives its right to dividends.
5. Interim Statement
Copies of this statement will be sent to all shareholders and are available
from the Company's registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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