Hornby Plc ("Hornby" or "the Company")
Interim Management Statement and Board Changes
Hornby Plc, the international models and collectibles group, is today updating shareholders on trading for the period from 1 October 2012 to date, which includes the important Christmas and January period.
Whilst the issues highlighted in the Interim Report have continued to impact the business, the actions taken to mitigate their effects have also continued to yield success. The supplier causing disruption to our model railway supplies is now expected to contribute less than 15% of total production in 2013. This is from a historical peak of 75% and 35% earlier in 2012. Equally, the remaining London 2012 merchandise has been discounted and the majority has now been sold. Despite general weakness in demand, sales of the Corgi and Airfix brands have held up well and shown positive year on year growth.
Although Group sales for the financial year to date remain below the same period last year, they are consistent with our expectations at the time of the Interim Report. The Company therefore continues to expect that underlying pre-tax profits in respect of the year to 31 March 2013 will be in line with current market expectations.
Net debt as at 31 December 2012 was £3.0 million, an improvement of £5.5 million from last year (30 September 2012 £6.5 million, 31 December 2011 £8.5 million). The Group continues to operate within its banking covenants, which were revised to provide more operational flexibility in December 2012.
The Board remains confident in the Group's strategy. We recognise that trading conditions in the UK and the rest of Europe continue to be challenging for the foreseeable future. This may constrain sales of our higher ticket Hornby and Scalextric items. However particularly in continental Europe, demand for our model railway products continues to be strong and improvements in the supply chain should result in improved sales performance. Progress in the last year in the Corgi and Airfix brands has been encouraging. We have also continued to take steps to broaden our portfolio of products, resulting in lower average price points.
At the London Toy Fair last week, we showcased our major product introductions for 2013. Our new category initiatives for 2013 include:
· The launch of the Quickbuild concept across both Airfix and Scalextric brands. This new development leverages our recognized skills in authentic model making and slot racing and also encourages creative play. We were delighted that the Scalextric Quickbuild Demolition Derby set was awarded the Editor's Choice Award as the best new Toy at the London Toy Fair. This was decided by more than 300 broadcast, national, consumer and trade journalists who highlighted their favourite toys from the show.
· Hornby E- Link - a revolutionary way to link a model railway layout with a home computer.
· The launch of a Railmaster app, allowing the user to control a complex model railway layout via iPad and Android tablets and mobile phones.
· Further extension of our Corgi Toys range, including a recent extension of our successful Eddie Stobart license to cover pocket money collectibles.
· The launch of a new range of collectible Corgi cars based on Formula 1 teams. The first products to launch will feature the Lotus and McLaren teams.
It has been previously announced that the current Chairman, Neil Johnson is to retire from the Board on 1 February 2013. On that date Roger Canham who was appointed to the Board on 6 November 2012 will succeed Neil as Chairman. In addition, Nick Stone will be appointed to the Board on that date as Group Finance Director in succession to Andrew Morris who will leave the Group for his new role during February.
Hornby will announce its preliminary results for the year ended 31 March 2013 in early June.
Incoming Chairman, Roger Canham commented:
'I would like to thank Neil for his contribution to the business and look forward to consolidating the transformation that the business has undergone during his tenure. I am confident that as I take over the chair, we are on the way to dealing with the headwinds highlighted in previous trading statements, not least the supply chain challenges. I visited our suppliers in China early in January and believe that the strategy being pursued by the business will result in a much more robust product pipeline as 2013 progresses. Despite weak consumer spending in our traditional markets, the continuing innovation amongst the core brands, such as the Quickbuild launch and Railmaster app, will place Hornby in a strong position compared to its peers in maintaining its relevance to the changing market dynamics.'
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Date: 30 January 2013
For further information contact:
Frank Martin, Chief Executive
Simon Courtenay/Abigail Genis
Nick Stone, Group Finance Director (Designate)