Final Results

RNS Number : 1208W
Hornby PLC
06 June 2008
 






 

HORNBY CONTINUES MOMENTUM AS AIRFIX  

PROVES MODEL ACQUISITION


Hornby Plc ('Hornby', or 'the Group'), the international hobby products group, has today announced its full year results for the year ended 31st March 2008.


  • Turnover up 19% to £55.7m (2007: £46.8m)

  • Pre-tax profits up 17% to £9.0m (2007: £7.7m)

  • Underlying pre-tax profits increased to £8.4m (2007: £8.1m)

  • Earnings per share up 10% to 16.15p (2007: 14.64p)

  • Airfix and Humbrol fully integrated and performing well ahead of expectations

  • European subsidiaries delivering growth in sales and profits

  • Corgi acquisition announced post year end

  • Digital Technology Systems in Hornby and Scalextric proving extremely popular

  • New licence announced with James Bond 

  • Full year dividend of 8.5p, up 5% (2007: 8.1p)


Frank Martin, Chief Executive of Hornby, commented:


' This has been another excellent year of growth for Hornby. Since buying Airfix in November 2006, we have carried out our detailed plan to re-invigorate the business. Airfix is now well and truly back on its feet. We are delighted that it has delivered a performance that is well ahead of our expectations.  


' Our strategy to build a broader base of exciting product ranges selling in more countries is well on target. We have acquired a series of well known hobby brands that have responded well to our fresh investment and active management. Our team has the experience, innovative approach and track record to re-invigorate famous hobby brands successfully.  


' In a further move, we are delighted to have acquired Corgi, the iconic die-cast model brand. Our plans to re-launch the business are already well advanced. Corgi retailers and collectors are delighted that Hornby has taken over. We are confident that we will quickly rebuild sales, profits and market share.


' The Group is very well placed to deliver further growth. We have a fantastic portfolio of brands and an exceptional team to drive forward their potential. Our broad range of products together with our growing geographical presence, gives us a solid base to enter Hornby's next phase of growth. 


' Looking to the future, we have an exciting pipeline of products, including James Bond themed Scalextric sets. We continue to keep a close eye on the market for other brands that could strengthen our portfolio in the international hobby market. Despite the challenging market conditions, the Group is confident that it will continue to deliver further growth.'


-ends-


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Date: 6th June 2008

For further information contact:


Hornby Plc    

City Profile

Frank Martin, Chief Executive

Simon Courtenay  07958-754273

Andrew Morris, Finance Director

William Attwell  07973-281650

01843-233500    

020-7448-3244 

Web: www.hornby.com 


CHAIRMAN'S STATEMENT

Year ended 31 March 2008 


Introduction


I am pleased to report a strong performance for the year.  As we reported at the time of the Interim results, we experienced good demand for our products in all subsidiaries during the first half of the financial year.  This high demand continued throughout the Christmas period, and I am particularly delighted that sales of Airfix and Humbrol, acquired in November 2006, exceeded our expectations at the time of the acquisition.  This not only gives us confidence that sales of these acquired ranges will continue to grow, but also confirms our ability to integrate and grow acquired businesses.  


Sales in all of our European subsidiaries grew significantly during the year, resulting in Group sales ahead 19% to £55.7 million. Pre-tax profit before amortisation of intangibles and foreign exchange translation adjustments on intercompany loans (hereafter referred to as underlying pre-tax profits) increased to £8.4 million (2007 - £8.1 million) (see note 4).  Basic earnings per share before the effect of amortisation of intangibles and foreign exchange translation adjustments on intercompany loans (hereafter referred to as underlying basic earnings per share)both non-cash itemswere 15.13p (2007 - 15.58p).  Statutory pre-tax profits were £9.0 million (2007 - £7.7 million).  Statutory basic earnings per share were 16.15p (2007 - 14.64p).


Underlying basic earnings per share and statutory basic earnings per share were adversely affected by a higher tax charge of 32.6% (2007 - 28.0%).  This increased charge arose as a result of the tax treatment of the Company's employee share schemes.  The company receives a future tax deduction based on the market value of shares less the option price (if any) at the date of exercise of the share option by the employee.  The fall in the company's share price during the year has resulted in a decrease in the deferred tax asset in relation to the employee share schemes. 


Gross Margins in the second half of the year improved to 55.4% (49.5% in the first half - restated), as anticipated at the time of the interim report. Full year gross margin was 52.8% (2007 - 56.5% restated) The lower margin in the full year is due to higher charges for tooling amortisation, a change in customer and product mix towards set sales in major retail accounts, and a reduced effect of releases and exchange rate treatment compared to the previous year.  


Dividend


The Board is recommending an increase in the final dividend to 5.8p per ordinary share. This will be paid on 15 August 2008 to shareholders on the register at 11 July 2008.


Taken together with the interim dividend of 2.7p, this gives a total dividend for the year of 8.5p, an increase of 4.9% over the dividend of 8.1in respect of the previous financial year. This marks the eighth consecutive year of dividend growth.  The Board continues to believe that a progressive dividend policy is appropriate given the inherently cash-generative properties of the business. 


Review of the Business


After the strong first half of the financial year, in which sales compared to the previous year increased  by 37%, sales in the second half increased by 7% against a much stronger comparative period.  Airfix and Scalextric sales continued to show good growth, however sales of model railway products in the final quarter of the financial year were constrained to an extent by delays in new product supplies to our European subsidiaries.  Steps have been taken to ensure that the engineering capacity available to us is matched more closely to our new product introduction programme.


Underpinning these results the Group has continued to make excellent progress in establishing itself as a broadly based global supplier to the Hobby market.  Against a background of increased competition from electronic toys and games, demand for our products has continued to grow.  We have ensured that our ranges are at the cutting edge of applicable technology with the Hornby and Scalextric digital systems, both of which have proven very popular.  We are also able to position our products at the forefront of media awareness due partly to powerful licensing arrangements with partners such as McLaren and more recently the James Bond agreement with Eon Productions. 


Sales of the Scalextric Sport Digital System (SSD) showed strong year on year growth as the market continues to migrate towards our superior digital racing format.

  The Hornby Digital Control System for model railways gained further market share during the year, and our digital Virgin Trains Pendolino set generated the highest revenue amongst our model railway set range.  We expect the market, as with Scalextric, to continue to migrate to our superior digital format. In addition, during the year we introduced the entry level range -'Hornby Railroad'.  This range is designed to encourage younger enthusiasts to build their Hornby collections at lower price points than the fully detailed and more expensive main Hornby range.  This range has been well received by the younger market and we will be extending the scope of 'Railroad' over the coming years. 


Sales in the principal UK operating companies grew by 17% to £40.4 million, and underlying profit before tax increased to £7.7 million (2007 - £7.6 million). This result includes export sales to third parties of £5.6 million (2007 - £4.3 million).


International Subsidiaries


Our subsidiaries in mainland Europe have made good progress and have increased their market share.  They contributed profits before tax of £617,000 to the Group result on sales of £12.6 million, compared with £419,000 in the previous year on sales of £9.7 million. This result would have been better if not for the delays in product introductions already mentioned.  However the infrastructure is now in place to continue to increase sales and profits in Europe and we expect further significant improvements in performance in the future. 


Sales in Hornby America were slightly down at $5.4 million (2007 - $5.6 million), producing a profit before tax of $32,000 (2007 - $82,000) Upon translation into Sterling, due to the continuing weakness in the US dollar, sales were £2.7 million (2007 - £2.8 million) with profit before tax of £16,000 (2007 - £42,000).  However, Hornby Hobbies in the UK benefits from a gross margin contribution of £450,000 generated on sales made to Hornby America, which has the effect of increasing significantly the overall contribution to Group profit of our US operation. 


Product Development


Our product development programme continues to be a key driver of our business and we have increased further our resources in this area, to cope with the additional demands of our subsidiaries and the increase in product categories.  We have also increased our product development resources to reduce our design dependence on external sources.  In so doing we expect to gain a greater degree of control over the timing of new product introductions, particularly for our European markets.


Acquisition of Corgi


On 30 April 2008, we acquired the principal assets of the Corgi die cast business from Corgi Inc.  Following the sale of these assets, Corgi Inc. will change its name and has no continuing rights in the name Corgi.  We have long recognised Corgi as a logical fit with our existing business.  Synergies in product development, licensing, sourcing, operations, distribution and marketing are expected to result in the Corgi assets becoming a significant contributor to Group profit over the coming years.  We are already making good progress with the integration programme and we are confident that we will reinvigorate the Corgi business.


Board changes


During the year there have been a number of significant developments at Group Board level Andrew Morris has joined us as Group Financial Director and we welcome his input and experience.  At the same time John Stansfield has stepped down from the Board but his enormous depth of experience remains available to us as he continues in his role as Company Secretary and as Finance Director of Hornby Hobbies Limited.


At Non-executive level we welcome Nigel Carrington and Mark Rolfe to the Board.  They both bring excellent and relevant experience to our activities.  Nick Cosh has decided to leave the Board after nine years' outstanding service, contributing to strategic development and also Chairing the Audit Committee.  I should like to express my thanks to Nick on behalf of the Board, and our best wishes for the future.


  Outlook


Our strategy of building a broadly based model and hobby group with strong defensive attributes has been further strengthened by the successful and profitable integration of the Airfix and Humbrol business.  The acquisition of the Corgi assets now allows us to take further advantage of our distribution network and product development skills. 


Notwithstanding the general economic downturn in many of the markets in which we operate, we are anticipating another year of good progress.  We will continue to build sales of the Humbrol and Airfix brands and we expect demand for our model railway and slot-racing brands to continue to increase.  We now also have the added opportunity to restore sales of Corgi to their historically high levels.  The outlook across the Group, both geographically and by product sector is positive, and we look forward with confidence.


Finally I should like to thank our Chief Executive Frank Martin and through him all our staff, for their continuing dedication to growing the business, improving profitability and ensuring a strong future.





Neil Johnson

Chairman


6 June 2008

  


GROUP INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008




2008

2007


(unaudited)

(restated*)


£'000

£'000




REVENUE

55,692

46,849

Cost of sales

(26,297)

(20,356)


_______

_______

GROSS PROFIT

29,395

26,493







Distribution costs

(2,138)

(1,678)

Selling and marketing costs

(11,551)

(10,128)

Administrative expenses

(6,268)

(5,158)

Other operating expenses

(52)

(1,650)


_______

_______

OPERATING PROFIT

9,386

7,879

Finance income

5

7

Finance costs

(374)

(224)


_______

_______

PROFIT BEFORE TAXATION

9,017

7,662



Analysed as -

Underlying profit before taxation                                                                         8,400      8,118

Net foreign exchange impact on intercompany loans                                                780     (342)

Amortisation of intangibles                                                                                    (163)    (114)

    _____    ____

PROFIT BEFORE TAXATION                                                                          9,017    7,662


Taxation

(2,940)

(2,149)


_______

_______

PROFIT FOR THE YEAR ATTRIBUTABLE



TO EQUITY HOLDERS

6,077

5,513


_______

_______




EARNINGS PER ORDINARY SHARE



Basic

16.15p

14.64p

Diluted

15.62p

14.11p



All of the activities of the Group are continuing.  



* See note 3.

  



GROUP BALANCE SHEET

AT 31 MARCH 2008



Groups

    


2008

2007


(unaudited)



£'000

£'000

ASSETS



NON-CURRENT ASSETS



Goodwill

9,925

9,206

Intangible assets

2,404

2,321

Property, plant and equipment

8,360

7,458

Deferred tax assets

123

421


_______

_______


20,812

19,406


_______

_______

CURRENT ASSETS



Inventories

11,890

8,441

Trade and other receivables

10,851

10,087

Cash and cash equivalents

940

329


_______

_______


23,681

18,857


_______

_______

LIABILITIES



CURRENT LIABILITIES



Borrowings

(2,220)

(1,005)

Derivative financial instruments

(1,350)

(202)

Trade and other payables

(6,851)

(7,216)

Provisions

(500)

(293)

Current tax liabilities

(1,723)

(1,291)


_______

_______


(12,644)

(10,007)


_______

_______




NET CURRENT ASSETS

11,037

8,850


_______

_______

NON-CURRENT LIABILITIES



Borrowings

(41)

(53)

Deferred tax liabilities 

(346)

(358)


_______

_______


(387)

(411)


_______

_______




NET ASSETS

31,462

27,845


_______

_______

SHAREHOLDERS' EQUITY



Share capital

380

378

Share premium

5,278

5,236

Capital redemption reserve

55

55

Translation reserve

(197)

(77)

Hedging reserve

133

(133)

Other reserves

1,688

1,740

Retained earnings

24,125

20,646


_______

_______

TOTAL EQUITY

31,462

27,845


  ______


_______



  

GROUP STATEMENT OF CHANGES IN EQUITY 

for the years ended 31 March 2008 (unaudited) and 31 March 2007


    




Capital







Share

Share

redemption

Translation

Hedging

Other

Retained

Total


capital

premium

reserve

reserve

reserve

reserves

earnings

equity

GROUP

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










Balance at 1 April 2006

376

5,050

55

(85)

-

1,688

17,779

24,863










Exchange adjustment offset in reserves









recognised directly in equity

-

-

-

8

-

-

-

8

Cash flow hedges

-

-

-

-

(133)

-

-

(133)


____

______

____

______

____

______

______

____

Net expense recognised directly in reserves

-

-

-

8

(133)

-

-

(125)










Profit for the year

-

-

-

-

-

-

5,513

5,513


____

______

____

______

____

______

______

____

Total recognised income for the year

-

-

-

8

(133)

-

5,513

5,388


____

______

____

______

____

______

______

____



















Issue of shares

2

186

-

-

-

-

-

188

Share-based payments

-

-

-

-

-

-

237

237

Deferred tax on share-based payments

-

-

-

-

-

52

-

52

Purchase of own shares for EBT

-

-

-

-

-

-

(177)

(177)

Shares vested from EBT

-

-

-

-

 -

231

231

Dividends

-

-

-

-

-

-

(2,937)

(2,937)


____

______

____

______

____

______

______

____


2

186

-

-

-

52

(2,646)

(2,406)


____

______

____

______

____

______

______

____










Balance at 31 March 2007

378

5,236

55

(77)

-133

1,740

20,646

27,845


____

______

____

______

____

______

______


Exchange adjustment offset in reserves

-

-

-

(120)

-

-

-

(120)

Cash flow hedges

-

-

-

-

266

-

-

266


____

______

____

______

____

______

______

______

Net expense recognised directly in reserves

-

-

-

(120)

266

-

-

146

Profit for the year

-

-

-

-

-

-

6,077

6,077


____

______

____

______

____

______

______

______

Total recognised income for the year

-

-

-

(120)

266

-

6,077

6,223


____

______

____

______

____

______

______

____










Issue of shares

2

42

-

-

-

-

-

44

Share-based payments

-

-

-

-

-

-

225

225

Deferred tax on share-based payments

-

-

-

-

-

(52)

-

(52)

Shares vested from EBT

-

-

-

-

-

-

295

295

Dividends

-

-

-

-

-

-

(3,118)

(3,118)


____

______

____

______

____

______

______

____


2

42

-

-

-

(52)

(2,598)

(2,606)


____

______

____

______

____

______

______

____










Balance at 31 March 2008

380

5,278

55

(197)

133

1,688

24,125

31,462


____

______

____

______

____

______

______

____



Retained earnings includes £689,000 at 31 March 2008 (2007 - £706,000) which is not distributable and relates to a 1986 revaluation of land and buildings. 


  GROUP CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008


    


Group



2008

2007


(unaudited)



£'000

£'000

CASH FLOWS FROM OPERATING ACTIVITIES



Cash generated from operations

10,007

10,372

Interest received

5

7

Interest paid

(374)

(224)

Tax paid

(2,385)

(2,213)


_______

______

Net cash generated from operating activities

7,253

7,942


_______

______

CASH FLOWS FROM INVESTING ACTIVITIES



Purchase of trade assets and related costs

-

(2,653)

Proceeds from sale of property, plant and equipment

71

33

Purchase of property, plant and equipment

(3,485)

(3,657)


_______

______

Net cash utilised in investing activities

(3,414)

(6,277)


_______

______

CASH FLOWS FROM FINANCING ACTIVITIES



Proceeds from issuance of ordinary shares

44

188

Repayment of loans

(13)

(192)

Purchase of own shares by Short Term Incentive Plan

-

(177)

Finance lease capital payments

(49)

(47)

Dividends paid to Company's shareholders

(3,118)

(2,937)


_______

______

Net cash utilised in financing activities

(3,136)

(3,165)


_______

______




Effect of exchange rate movements

(1,344)

127


_______

______




Net decrease in cash and cash equivalents

(641)

(1,373)

Cash, cash equivalents and bank overdrafts



at beginning of the year

(627)

746


_______

______

CASH, CASH EQUIVALENTS AND 



BANK OVERDRAFTS AT END OF YEAR

(1,268)

(627)


_______

______




CASH, CASH EQUIVALENTS AND 



BANK OVERDRAFTS CONSIST OF -



Cash and cash equivalents

940

329

Bank overdrafts

(2,208)

(956)


_______

______

CASH, CASH EQUIVALENTS AND 



BANK OVERDRAFTS AT END OF YEAR

(1,268)

(627)


_______

______



  NOTES TO THE CASH FLOW STATEMENT


CASH FLOW FROM OPERATING ACTIVITIES


    


Group



2008

2007


(unaudited)



£'000

£'000




Profit before taxation

9,017

7,662

Interest payable

374

224

Interest receivable

(5)

(7)

Amortisation of intangible assets

163

114

Depreciation

2,908

2,114

(Profit)/loss on disposal of tangible fixed assets

(7)

21

Share-based payments

225

237

(Gain)/loss on financial derivatives

(65)

69

Increase/(decrease) in provisions

207

(7)

(Increase)/decease in inventories

(3,449)

184

Increase in trade and other receivables

(551)

(814)

Increase in trade and other payables

1,190

575


_______

_______

CASH GENERATED FROM OPERATIONS

10,007

10,372


_______

_______

    



  SEGMENTAL REPORTING


The primary reporting format for segmental purposes is geographic, as this is the basis on which the Group is organised and managed. Transactions with and balances to the other segments have been identified below and eliminated.


Hornby's secondary reporting format is business and as the Group operates on a single business segment, further analysis is not required here.


Year ended 31 March 2008 (unaudited)





Rest

Total







of

Reportable

Intra




UK

USA

Europe

Segment

Group

Group



£'000

£'000

£'000

£'000

£'000

£'000









Revenue

- External

40,420

2,696

12,576

55,692

-

55,692


- Other segments

3,067

-

2,601

5,668

(5,668)

-









Operating profit


7,915

34

1,437

9,386

-

9,386









Interest expense

- External

(301)

-

(73)

(374)

-

(374)


- Other segments

(109)

(22)

(748)

(879)

879

-

Interest income

- External

-

4

1

5

-

5


- Other segments

879

-

-

879

(879)

-



______

______

______

______

______

______

Profit before tax


8,384

16

617

9,017

-

9,017

Taxation


(2,524)

-

(416)

(2,940)

-

(2,940)



______

______

______

______

______

______

Profit for the year


5,860

16

201

6,077

-

6,077



______

______

______

______

______

______

















Segment assets


41,074

1,021

20,892

62,987

(18,494)

44,493

Less intercompany receivables


(17,582)

(1)

(911)

(18,494)

18,494

-



______

______

______

______

______

______

Total assets


23,492

1,020

19,981

44,493

-

44,493



______

______

______

______

______

______









Segment liabilities


10,201

1,004

20,320

31,525

(18,494)

13,031

Less intercompany payables


(21)

(962)

(17,511)

(18,494)

18,494

-



______

______

______

______

______

______

Total liabilities


10,180

42

2,809

13,031

-

13,031



______

______

______

______

______

______









Other segment items








Capital expenditure


1,960

23

1,632

3,615

-

3,615

(including acquisitions)








Depreciation


1,970

8

930

2,908

-

2,908

Net foreign exchange on inter company loans


(780)

-

-

(780)

-

(780)

Amortisation of intangible assets


57

-

106

163

-

163

Short Term Incentive Plan








- charge to Income Statement 


225

-

-

225

-

225



______

______

______

______

______

______


All transactions between Group companies are on normal commercial terms and an arm's length basis.

  Year ended 31 March 2007 (restated *)

        





Rest

Total







of

Reportable

Intra




UK

USA

Europe

Segment

Group

Group



£'000

£'000

£'000

£'000

£'000

£'000









Revenue

- External

34,337

2,829

9,683

46,849

-

46,849


- Other segments

2,964

-

2,046

5,010

(5,010)

-

















Operating profit


6,694

70

1,115

7,879

-

7,879









Interest expense

- External

(190)

-

(34)

(224)

-

(224)


- Other segments

(79)

(29)

(667)

(775)

775

-

Interest income

- External

1

1

5

7

-

7


- Other segments

775

-

-

775

(775)

-



______

______

______

______

______

______

Profit before tax


7,201

42

419

7,662

-

7,662

Taxation


(1,822)

(8)

(319)

(2,149)

-

(2,149)



______

______

______

______

______

______

Profit for the year


5,379

34

100

5,513

-

5,513



______

______

______

______

______

______









Segment assets


35,434

1,037

16,982

53,453

(15,113)

38,340

Less intercompany receivables


(14,397)

-

(716)

(15,113)

15,113

-



______

______

______

______

______

______

Total assets


21,037

1,037

16,266

38,340

-

38,340



______

______

______

______

______

______









Segment liabilities


7,949

977

16,722

25,648

(15,153)

10,495

Less intercompany payables


(34)

(954)

(14,165)

(15,153)

15,153

-



______

______

______

______

______

______

Total liabilities


7,915

23

2,557

10,495

-

10,495



______

______

______

______

______

______









Other segment items








Capital expenditure


2,725

2

1,403

4,130

-

4,130

(including acquisitions)








Depreciation


1,578

11

518

2,107

-

2,107

Net foreign exchange on intercompany loans


342

-

-

342

-

342

Amortisation of intangible assets


14

-

100

114

-

114

Short Term Incentive Plan - charge to Income Statement


232

-

-

232

-

232



______

______

______

______

______

______












* See note 3.

  NOTES

1.    Basis of preparation

    The financial information for the year ended 31 March 2008 has been prepared in accordance with International Accounting Standards ('IAS') and International Financial Reporting Standards ('IFRS') as adopted by the European Union ('EU') and also as issued by the International Accounting Standards Board, International Financial Reporting Interpretations Committee interpretations and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS.  It is also prepared in accordance with the Group's accounting policies which have been consistently applied as set out in the 2007 financial statements (except as set out below).  This information does not constitute statutory accounts and has not been audited.


2.    Non-statutory accounts

    These statements do not constitute statutory financial statements within the meaning of Section 240 of the Companies Act 1985.  The financial statements for the year ended 31 March 2007 were prepared in accordance with IFRS and have been delivered to the Registrar of Companies and on which the auditors made an unqualified report.  


3.    2007 Restatement

    The directors are constantly reviewing accounting policies and classification for appropriateness and believe that export commissions (£62,000) should offset revenue and overseas tooling amortisation (£474,000) and royalties (£96,000) should be included in cost of sales. In 2007 these costs were included in operating expenses. Operations overheads (£1,652,000), included in cost of sales in 2007, have been reclassified to administrative costs. In addition, year end foreign exchange translation adjustments of intercompany currency loans (£342,000) are more appropriately shown within operating expenses. In 2007 these were included in finance costs. The restatement is summarised in the table below -



2007

Export

Tooling

Royalties

Exchange

Operations

2007


Reported

commission

amortisation


i'c loans

overheads

Restated


£'000

£'000

£'000

£'000

£'000

£'000

£'000









Revenue

46,911

(62)

-

-

-

-

46,849

Cost of Sales

(21,438)

-

(474)

(96)

-

1,652

(20,356)


______

______

______

______

______

______

______

Gross Profit

25,473

(62)

(474)

(96)

-

1,652

26,493

Distribution costs

(1,678)

-

-

-

-

-

(1,678)

Selling and Marketing costs

(10,760)

62

474

96

-

-

(10,128)

Administrative costs

(3,506)

-

-

-

-

(1,652)

(5,158)

Foreign exchange losses

(888)

-

-

-

(342)

-

(1,230)

Other operating expenses

(420)

-

-

-

-

-

(420)


______

______

______

______

______

______

______

Operating profit

8,221

-

-

-

(342)

-

7,879

Finance income

7

-

-

-

-

-

7

Finance costs

(566)

-

-

-

342

-

(224)


______

______

______

______

______

______

______

Profit before tax

7,662

-

-

-

-

-

7,662


______

______

______

______

______

______

______



    There is no change to the profit before tax as a consequence of these re-classifications.

  4.    Reconciliation of statutory information to non-statutory information used in the preliminary announcement


            



Group


    


2008

2007


£'000

£'000




Profit before taxation

9,017

7,662







Foreign exchange on inter company loans



including impact of foreign exchange collar*

(780)

342

Amortisation of intangibles (note 4)

163

114


______

______

Adjusted profit before taxation

8,400

8,118


______

______



    * The foreign exchange collar is for a principal amount of Euro 16.5 million and is in place to minimise exposure to Euro denominated intercompany loans.


    The amount shown above comprises gains on translation of intercompany loans of £2,126,000 (2007 - loss of £342,000), offset by a loss on marking to market the foreign exchange collar of £1,346,000 (2007 - nil).


5.    Earnings per share

    The calculation of earnings per ordinary share is based on the profits after taxation for the period of £6,077,000 (year ended 31 March 2007 - £5,513,000) and the weighted average number of ordinary shares in issue during the period of 37,637,184 (year ended 31 March 2007 - 37,647,278).


    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, 38,914,255 (year ended 31 March 2007 - 39,065,431).


    The calculation of adjusted earnings per ordinary share is based on profit after tax adjusted for amortisation of intangibles of £163,000 (year ended 31 March 2007 - £114,000) and foreign exchange translational adjustments on intercompany loans after tax of £(546,000) gain (year ended 31 March 2007 - £239,400 loss).


6.    Short Term Incentive Plan

    No ordinary shares were acquired by the Employee Benefit Trust in the year in accordance with the incentive plan, details of which were included in the 2007 Annual Report and Accounts.


    The Trust waives its right to dividends.


7.    Post Balance Sheet Event

    On 1 May 2008, the Group announced it had acquired the die-cast model business 'Corgi Classics'. Hornby purchased the brand, tooling and intellectual property rights from Corgi International Limited for a cash consideration of £7.5 million excluding professional fees. Fixed assets at completion had a book value of c. £1.4 million. The balance of the consideration relates to goodwill, trademarks and intellectual property but it is currently considered too early to attribute specific values, to each intangible asset. In addition inventory has been acquired for a consideration c. £0.8 million.


    As the acquisition took place on 30 April 2008, the Directors consider it impracticable to provide the disclosures required by IFRS 3 (Business Combinations) and have therefore used the exemption available which permits non-disclosure in such instances. Further disclosures will be provided in the 2008/9 interim announcement.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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