Final Results
Hornby PLC
05 June 2003
HORNBY DELIVERS SPARKLING PERFORMANCE
Hornby Plc, ('Hornby') the models and collectables Group, has today announced
its preliminary results for the year ended 31 March 2003. Hornby's two main
products are Hornby model railways and Scalextric slot car racing systems.
• Pre-tax profits up 45% to £5.4 million (2002: £3.7 million)
• Turnover up 20% to £34.1 million (2002: £28.5 million)
• Earnings per share up 62% to 53.32p (2002: 32.97p)
• Cash position at 31 March 2003 at £7.9 million (31 March 2002: £6.5
million)
• Final dividend of 19p declared - Total dividend up 47% to 25p (2002: 17p)
Frank Martin, Chief Executive of Hornby, said,
' Hornby has again delivered an excellent financial performance. Sales of both
the Hornby and Scalextric product ranges are exceeding our expectations. We are
seeing a real resurgence of interest in both Hornby and Scalextric products
across all ages, driven by the improved detailing and authenticity.
' The growth of Hornby Railways has been mainly UK based, whilst Scalextric has
also been growing strongly overseas, especially as the appeal for Motorsport
becomes ever more global. One particular success was the launch of a range of
American 'Muscle Cars' based on the 1970s Ford Mustang and Chevrolet Camaro.
' An important aspect of new product design is winning licences to create
products associated with popular titles such as Harry Potter and the Simpsons TV
characters. We have recently been awarded the licence to sell Scalextric sets
and accessories based on the new 'Italian Job' movie. Licensing will be an
important aspect of the Company's future growth.
' The Board is confident that the recent sales growth is sustainable and, indeed
very robust. There is a new generation of young hobbyists and enthusiasts
becoming committed to our products, which we will be able to build upon in the
future. The momentum is continuing to gather pace as we open more in-store
concessions and our pipeline of new products offers excellent potential for
future sales growth.'
-ends-
Date: 5 June 2003
For further information contact:
Hornby Plc City Profile Group
Frank Martin, Chief Executive Simon Courtenay
John Stansfield, Finance Director
01843-233500 020-7448-3244 or 07958-754273
On 5 June: 020-7448-3244
Web: www.hornby.com or:
www.scalextric.com
High resolution images are available for the media to view and download
free of charge from: www.vismedia.co.uk
CHAIRMAN'S STATEMENT
It is pleasing, once again, to be able to report 12 months of sustained progress
in your Company. Sales, in generally challenging global trading conditions, have
increased 20% to £34.1m. Profit before tax at £5.4m is 45% above last year's
result (£3.7m), and earnings per share are up by 62% to 53.3p.
In March of this year the Company's progress was recognised at the UK PLC Awards
2002 when it won the 'Company of the Year' award. This was a strong endorsement
of the strategies that we continue to implement and was a wonderful boost to
morale for everyone in the business.
Dividend
The Board is recommending a final dividend of 19p. This will bring the total
dividend for the year to 25p, an increase of 47% over 17p in the previous year.
This dividend is payable to all shareholders on the register at Friday 25 July
2003 and will be paid on Friday 15 August 2003.
Business Review
All of the Company's distribution channels, both in the UK and Internationally,
showed good year on year sales growth across both the Hornby and Scalextric
ranges highlighting a well-balanced business across our two brands. Growth in
the Hornby range has come primarily from the independent retail sector in the
United Kingdom and a particularly strong performance in Scalextric was achieved
through International sales. It is also pleasing to report that our in-store
concessions numbered 65 as at 31 March 2003, compared to 28 a year earlier.
These outlets now account for an important part of the Company's sales and
profits. The maintenance of a year round display presence in these stores also
helps to underpin the collectable hobby nature of both Hornby and Scalextric
brands.
The Harry Potter franchise makes a continuing contribution to Hornby sales. The
success we have enjoyed with licensed merchandise encourages us to establish
other relationships and product licences for the future. At the 2003
International Toy Fairs, held in the first quarter of 2003, we launched a new
Micro Scalextric range based on 'The Simpsons' TV characters, which we expect to
provide good prospects for future growth. We have also secured a licence to
produce Scalextric sets and accessories based on the 'Italian Job' film release.
This film has recently been released in the USA and is due for release in Europe
this autumn, which will coincide with the first deliveries of our Scalextric
sets.
Further development of the already successful CD-Rom based 'Hornby Virtual
Railway' has continued and an all-new version will be released during the first
half of this financial year. Innovation in this fast-growing area for
technology-related products and improved on-screen graphics have enabled us to
deliver far greater functionality and interactivity which bodes well for further
development of the hobby.
In the United States, despite a generally difficult trading environment, it is
pleasing to see Scalextric USA back in profit. During the year the management
team has been re-structured in order to meet the demands of this
rapidly-expanding business. Our strategy of producing products with an American
focus, including the Ford Mustang, Chevrolet Camaro and Ford GT40 models, has
improved significantly both our product appeal and sales performance. On the
back of this success we have been able to attract new retailers to our brands;
during the trading year we have opened 134 active new accounts, taking the total
as at 31 March 2003 to 455.
Property
As outlined in last year's report we still hope to be in a position to develop a
new UK headquarters for Hornby, including a 'Hornby Heritage Centre' on a site
near our current Margate facility. Our application to redevelop our existing
site was referred to the Secretary of State last year, and the planning inquiry
took place in January. We hope to learn the final outcome of this inquiry by the
autumn of 2003.
Global Context
Since the end of the financial year two major issues have dominated global
confidence; Iraq and the SARS virus. Uncertainties surrounding the hostilities
in Iraq drew to a speedy conclusion and despite our outsourced production
facilities being located in the People's Republic of China, the SARS virus is
having no impact on production levels or our current or projected trading. Our
Chinese production facilities are both modern and efficient and management there
have taken all reasonable steps to ensure that their business and staff are
protected.
Product Development
The past year has seen further development in the success and sophistication of
our product offerings across both Hornby and Scalextric ranges. Whilst
continuing to exploit the potential of the adult collector's market in both
sectors, we have continued to develop new products for the younger age groups
who are likely to be the Hornby and Scalextric collectors of the future. 'Bash '
n Crash' was the biggest selling Scalextric set in the United Kingdom in the
run-up to Christmas 2002. This was a most encouraging performance.
In the future it remains your Company's strategy to develop further products
targeted at both adult and toy markets across both ranges. We will continue to
ensure that the adult enthusiast's market is satisfied with high quality,
authentic detail products whilst at the same time developing new entry points to
both the Hornby and Scalextric ranges for the younger age groups. This balance
is fundamental to our business philosophy.
As part of the programme of re-enforcing Scalextric as the 'home motorsport' for
enthusiasts, we have announced recently a strategic relationship with another
household name in motorsport, Goodwood. Both Hornby and particularly Scalextric
products will feature at this year's Festival of Speed to be held on 11 - 13
July, and later in the year on 5 - 7 September when Scalextric will again
feature prominently at the Goodwood Revival Motorsport meeting. I am confident
that this will further raise the profile of our motoring heritage.
Outlook
Finally, I am pleased to be able to report that, following a most successful
performance in the year to 31 March 2003 our sales growth momentum is now well
established in both the UK and our international target markets. I am delighted
to report that the new financial year has started well. A strong pipeline of new
product developments should ensure the continued organic growth of the Company
during the current financial year and beyond.
I should like to thank Frank Martin our chief executive, our directors and all
our staff working on both Hornby and Scalextric ranges for their dedicated
support and hard work. Without them, none of this would have been possible.
Neil Johnson
5 June 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2003
2003 2002
£'000 £'000
TURNOVER 34,142 28,489
Cost of sales (18,369) (16,206)
_______ _______
GROSS PROFIT 15,773 12,283
Net operating expenses (10,417) (8,609)
_______ _______
OPERATING PROFIT 5,356 3,674
Net interest receivable 55 48
_______ _______
PROFIT ON ORDINARY ACTIVITIES
BEFORE TAXATION 5,411 3,722
Tax on profit on ordinary activities (1,519) (1,329)
_______ _______
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 3,892 2,393
Dividends (1,830) (1,234)
_______ _______
RETAINED PROFIT
FOR THE FINANCIAL YEAR 2,062 1,159
_______ _______
ATTRIBUTED TO:
The Company (45) (41)
Subsidiary undertakings 2,107 1,200
_______ _______
2,062 1,159
_______ _______
EARNINGS PER ORDINARY SHARE 53.32p 32.97p
Basic 52.00p 32.56p
Diluted
All of the activities of the Group are continuing.
STATEMENT OF GROUP TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 MARCH 2003
2003 2002
£'000 £'000
Profit for the financial year 3,892 2,393
Exchange adjustments offset in reserves (21) -
_______ _______
Total recognised gains for the year 3,871 2,393
_______ _______
CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2003
2003 2002
£'000 £'000
FIXED ASSETS
Intangible assets 31 36
Tangible assets 3,569 3,625
Investments - Short Term Incentive Plan 192 -
_______ _______
3,792 3,661
_______ _______
CURRENT ASSETS
Stocks 6,150 5,535
Debtors 5,222 4,888
Cash at bank and in hand 7,909 6,477
_______ _______
19,281 16,900
CREDITORS: Amounts falling due
within one year (7,187) (6,755)
_______ _______
NET CURRENT ASSETS 12,094 10,145
_______ _______
TOTAL ASSETS LESS CURRENT LIABILITIES 15,886 13,806
CREDITORS: Amounts falling due after
more than one year (22) (16)
PROVISIONS FOR LIABILITIES
AND CHARGES (486) (628)
_______ _______
NET ASSETS 15,378 13,162
_______ _______
CAPITAL AND RESERVES
Called up share capital 367 363
Capital redemption reserve 55 55
Share premium account 4,696 4,525
Revaluation reserve 774 791
Other reserves 1,688 1,688
Profit and loss account 7,798 5,740
_______ _______
EQUITY SHAREHOLDERS' FUNDS 15,378 13,162
_______ _______
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2003
2003 2002
£'000 £'000 £'000 £'000
Net cash inflow from
operating activities 5,814 4,437
Returns on investments and
servicing of finance 55 48
Taxation (1,662) (872)
Capital expenditure and
financial investment
- purchase of fixed assets (1,219) (1,440)
- sale of fixed assets 60 34
______ ______
(1,159) (1,406)
Purchase of own shares
- Short Term Incentive Plan (192) -
Payment of deferred consideration (49) (38)
Equity dividends paid (1,524) (871)
______ ______
Net cash inflow before financing 1,283 1,298
Financing
Issue of ordinary shares 175 -
Capital element of finance lease payments (17) (33)
______ ______
Increase in cash in the year 1,441 1,265
______ ______
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2003 2002
£'000 £'000
Increase in cash in the year 1,441 1,265
Cash outflow from decrease in lease financing 17 33
_______ _______
Change in net funds resulting from cash flows 1,458 1,298
New finance leases (28) -
Exchange movements (9) -
_______ _______
Movement in net funds in the year 1,421 1,298
Net funds at 1 April 2002 6,446 5,148
_______ _______
Net funds at 31 March 2003 7,867 6,446
_______ _______
NOTES TO THE CASH FLOW STATEMENT
NET CASH FLOW FROM OPERATING ACTIVITIES
2003 2002
£'000 £'000
Operating profit 5,356 3,674
Exchange adjustments offset in reserves (7) -
Depreciation charges 1,266 1,468
Amortisation of goodwill 3 2
Profit on sale of tangible fixed assets (18) (10)
(Increase) in stocks (615) (1,295)
(Increase)/decrease in debtors (374) 67
Increase in creditors 348 512
(Decrease)/increase in sales returns provision (145) 19
_______ _______
Net cash inflow from operating activities 5,814 4,437
_______ _______
SEGMENTAL INFORMATION
The directors consider there to be one class of business, being the development,
manufacture and distribution of model products.
BY ORIGIN Turnover Profit/(loss) before tax Net assets
2003 2002 2003 2002 2003 2002
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 30,680 25,746 5,347 3,839 15,143 12,950
United States of America 3,462 2,743 64 (117) 235 212
______ ______ ______ ______ ______ ______
Group 34,142 28,489 5,411 3,722 15,378 13,162
______ ______ ______ ______ ______ ______
TURNOVER BY DESTINATION
2003 2002
£'000 £'000
United Kingdom 26,473 22,439
Rest of World 7,669 6,050
______ ______
Group 34,142 28,489
______ ______
NOTES
1. The calculation of basic earnings per ordinary share is based on the profit
attributable to ordinary shareholders for the financial year of £3,892,000
(2002 - £2,393,000) and the weighted average number of ordinary shares in
issue during the year of 7,299,894 (2002 - 7,257,320).
2003 2002
Earnings Earnings
Earnings per share Earnings per share
£'000 pence £'000 pence
Earnings per share
Basic 3,892 53.32p 2,393 32.97
Diluted 52.00p 32.56
The following table shows a reconciliation of the weighted average number of
shares used for calculating the basic and diluted earnings per share.
2003 2002
Number Number
of shares of shares
Used for calculating basic earnings per share 7,299,894 7,257,320
Dilution due to share option schemes 185,147 91,356
_________ _________
Used for calculating diluted earnings per share 7,485,041 7,348,676
_________ _________
2. The proposed dividend will be paid on 15 August 2003 to members on
the register as at 25 July 2003. The ex-dividend date will be 23 July 2003.
3. The profit and loss account, statement of group total recognised
gains and losses and balance sheet set out above for the year ended 31 March
2003 are not statutory accounts and are abridged and audited. Full audited
accounts will be filed with the Registrar of Companies in due course. Full
audited accounts for the year ended 31 March 2002 containing an unqualified
audit report have been filed with the Registrar of Companies.
4. The preliminary financial information has been prepared on the basis
of accounting policies set out in the Report & Accounts for the year ended
31 March 2002.
5. This preliminary announcement was approved by the Board on 5 June
2003.
6. Copies of this preliminary announcement are available from J W
Stansfield, Finance Director, Hornby Plc, Westwood, Margate, Kent, CT9 4JX.
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