TIDMHRN
RNS Number : 4866D
Hornby PLC
22 June 2023
22 June 2023
HORNBY PLC
HORNBY ANNOUNCES ANNUAL RESULTS
Hornby Plc ("Hornby" or the "Group"), the international models
and collectibles group, today announces its results for the year
ended 31 March 2023
Highlights 2023
Revenue (2022: GBP53.7m)
GBP55.1m
Operating loss (2022: GBP0.9m profit)
(GBP5.0m)
Reported loss before taxation (2022: GBP0.6m profit)
(GBP5.9m)
Underlying1 loss before taxation (2022: GBP3.2m profit)
(GBP1.1m)
Reported loss after taxation (2022: GBP1.5m profit)
(GBP5.9m)
Reported loss per share (2022: 0.89p profit)
(3.50p)
Underlying2 basic loss per share (2022: 2.18p)
(1.22p)
Net funds (2022: GBP3.8m) (see Note 27)
(GBP5.5m)
1 Underlying profit before taxation is before amortisation of
intangibles (brand names and customer lists), and net unrealised
foreign exchange movements on intercompany loans, exceptional items
and shared-based payments (see page 11).
2 Underlying basic profit per share is before amortisation of
intangibles (brand names and customer lists), and net unrealised
foreign exchange movements on intercompany loans, exceptional items
and shared-based payments (see note 7).
Hornby Plc
Olly Raeburn, CEO
Kirstie Gould, CFO
01843 233500
Web: www.hornby.plc.uk
Liberum Capital Limited (Nominated Advisor & Broker)
Andrew Godber
Edward Thomas
Miquela Bezuidenhoudt
020 3100 2222
Non-Executive Chairman's Report
The Strategic Report comprises the Non-Executive Chairman's
report, the Chief Executive's Report, the Operating and Financial
Review of the year and our Key Performance Indicators ('KPIs')
Revenue in the year of GBP55.1 million (2022: GBP53.7 million)
was 2.5% above the previous year. Underlying loss before tax was
(GBP1.1) million (2022: GBP3.2 million profit). Reported loss was
(GBP5.9) million (2022: GBP0.6 million profit)
The year started well, but in the most important trading period
October- December the sales were very disappointing and did not hit
the levels that had been forecasted just a few months earlier.
The UK economy struggled in 2022, with growth slowing and
inflation rising. The war in Ukraine caused energy prices to rise
sharply, which put a squeeze on households who were facing higher
costs and uncertainty. Our own prices rose as factory costs
increased, these were passed on to our customers. Against this
background, our manufacturing was at its highest level ever, we
closed the year with stocks of GBP21.3 million an increase of 29%
(2022: GBP16.5 million). These increased stocks put a squeeze on
cash.
New Product Development
In late 2022 we announced the new HM7000 system to control
trains. It completely replaces the traditional systems of train
control, instead it uses a Bluetooth(R) equipped phone or tablet.
Key parts of the new system are patented, it is 'backwards
compatible', and it works in all the main scales worldwide; 1:87,
1:76. N scale and Hornby's newly-launched TT scale. Importantly,
this new system doesn't just work with Hornby model trains, it will
also control trains made by competitors. Decoders will no longer be
unique to a specific train; sounds and locomotive characteristics
will in future be downloadable direct from the Hornby website. The
latest Bluetooth(R) mesh technology will permit thousands of trains
to be controlled over the largest model railway.
CEO
In January 2022 we announced that we had started a search for a
new CEO. In January 2023 Olly Raeburn was appointed and he is
evaluating all parts of the business and developing the strategy to
move us forwards. I am very supportive of him during this process
as he get to grips with our many brands and the short-term
challenges that he faces.
Governance
Good corporate governance provides a framework for delivering
the objectives of the Company and is fundamental to a sound
decision making process. It supports the executive management to
control and achieve the maximum performance of the Company. I am
pleased to report that the Board believes it applies the ten
principles of the Quoted Companies Alliance Code ('QCA'). In the
current uncertain economic and political period, management of
risks remains a key focus for the Board. The Board has in place a
robust process for identifying the major risks facing the business
and for developing appropriate polices to manage those risks. The
Board reviews those risks on an annual basis carrying out regular
reviews and annual updates on our compliance with the QCA Code.
I am delighted that once again this year, we will be hosting our
Annual General Meeting at the Hornby headquarters in Margate on
Wednesday 13 September 2023. This will be an excellent opportunity
for shareholders to see the new products for themselves and to
understand the progress that the Company is making. Personally I am
looking forward to welcoming as many shareholders as possible that
are able to attend.
Lyndon Davies
Non Executive Chairman
21 June 2023
CEO Report
Having only taken up my position as CEO in January 2023, in my
first report on the business I will be reviewing performance over
the last 12 months, before highlighting some of the challenges and
opportunities that lie ahead.
Whilst it's too soon to lay out a definitive strategy for the
future, I will talk to the progress that is being made and the key
building blocks that will inevitably define that strategy as it
continues to take shape over the coming months.
With that in mind, this report will address:
1. Headlines and financial overview
-- Revenue growth of 2.5%, improved gross margin and D2C growth of 49%
-- A shortfall versus management expectations at the top line
2. Key initiatives and continuous improvement
-- Successful launches for TT:120 and Hobby Rewards, and
meaningful improvements in digital metrics
-- Opportunities to further scale through ongoing focus on execution
3. A focus on the next 12 months
-- Brand and product development, pricing initiatives and evolution of customer experience
-- An outline of a few of the primary building blocks for the year ahead
4. A return to profitable growth
-- Our key focus for the future and the route to sustainable growth
-- Indicative performance expectations for the year ahead
1. Headlines and financial overview
We saw a modest improvement in sales at the top line, growing
2.5% and representing a fourth consecutive year of growth.
However, GBP55.1million of revenue was c10% behind management
expectations.
H1 revenues were in line with budget, and a strong Q4 was ahead
of plan, but this was not sufficient to mitigate disappointing
revenues in the crucial third quarter. This Q3 underperformance was
due to a mixture of overestimating demand based on trajectory and a
weakening consumer environment.
Gross margin grew from 48% to 49% and gross profit lifted by
8.5% to GBP26.9 million. An increase in fixed costs of c14%, ahead
of anticipated revenue growth resulted in the posting of a small
underlying operating loss.
This growth in fixed costs was due to a combination of inflation
in certain cost lines (warehousing, utilities and insurance), and
discretionary increases in operating costs in regard to both
digital resource and digital marketing. These investments in
operating costs equated to GBP1.9 million, which was 57% of the
total GBP3.4 million increase in the year.
Digital performance was one of the highlights of the year,
delivering a 49% revenue uplift from GBP5.7 million to GBP8.5
million.
The significant increase in gross debt from GBP0.3 million to
GBP6.9m was in part due to an over-commitment to stock derived from
an expectation that the top line revenue growth trajectory would
have continued to follow that of recent years. As a result,
inventory has risen by 30%. In the year ahead, we will seek to
lower our inventory in a measured way without impacting long-term
brand equity.
Managing this inventory position and improving the way our key
growth-driving initiatives affect the top line, some of which are
outlined in the following sections of this report, are fundamental
building blocks in our return to profitability.
In the coming year we expect to deliver high single digit / low
double digit percentage growth in revenues at the top line and see
a further improvement in gross margins.
Sales and margins are in line with budget for the first two
months of the current year.
Key figures and KPI's:
2023 2022
Sales 55,105 53,739
--------- ---------
Growth 2.5% 10.7%
--------- ---------
Variable Costs (28,165) (28,023)
--------- ---------
Gross Profit 26,940 25,716
--------- ---------
Margin % 49% 48%
--------- ---------
Fixed Costs (28,009) (24,631)
--------- ---------
Operating Profit (1,069) 1,085
--------- ---------
Operating margin
% (1.5)% 2.0%
--------- ---------
Underlying Operating
Profit (309) 3,246
--------- ---------
Underlying margin
% (0.6%) 6.0%
--------- ---------
KPI's
--------- ---------
Digital sales 8,501 5,704
--------- ---------
Growth 49.0% 15.4%
--------- ---------
Capex 4,640 3,348
--------- ---------
Gross profit per
capex (PY capex) GBP8.24 GBP6.27
--------- ---------
Net debt 6,867 327
--------- ---------
Gross cash 1,337 4,139
--------- ---------
Inventory 21,505 16,462
--------- ---------
% of sales 39% 31%
--------- ---------
2. Key initiatives and continuous improvement
The last 12 months have seen encouraging developments in a
number of areas. It is important that this initial momentum is
maintained and built upon over the coming year.
TT:120 Launch
November 2022 saw the launch of TT:120, arguably the first major
development in model railway systems in the UK for decades. TT:120
revenues to date are cGBP1.5 million.
The TT ('Table Top') system, leverages all of our existing
intellectual property, but is at 1:120 scale, just over 35% smaller
than the standard 00 gauge which is 1:76 scale.
The relative sizes of 00 and TT can be seen in the image
below;
TT:120 was conceived to both create additional growth from
existing enthusiasts and to open up the hobby to a new customer
group, for whom the space required for the current OO gauge was
perhaps too much of a barrier to entry.
TT:120 was initially launched as a web exclusive, driving
interest through our direct to consumer ('D2C') channel. The first
wave of sets all but sold out in a matter of weeks, demonstrating a
real appetite for the new system and the effectiveness of our new
digital platform.
This early success, driven by the anticipation created
pre-launch through D2C marketing activities, created some
challenges. It meant, for example, that the quicker than
anticipated uptake left us in a position where stock availability
of the crucial entry level sets was very limited.
Sales momentum was maintained, however, through creation of
bundles of available stock.
Regular deliveries of further volumes of sets between August
2023 and January 2024, along with additional locos, coaches and
system products will drive a second significant uplift in growth of
TT:120 throughout the coming year.
Hobby Rewards
Launched in November 2022, Hobby Rewards is a loyalty currency
that will allow us to create value in the relationships with our
customers, vertically, within each of our brands, and horizontally
across the portfolio.
36,000 customers have signed up since launch and on average,
spend from Hobby Rewards members is c2.5 times greater than that of
non-members.
Our efforts since launch have been focused on converting
customers to the programme, with an emphasis on earning rewards and
accumulating value. Next steps will see us focusing on increasing
engagement and driving redemption of rewards. With these customers
signed up to a loyalty programme we can now further grow their
value over time, in a targeted and controlled way.
The opportunity for the future lies in using the data we glean
from Hobby Rewards transactions to allow us to segment and evolve
customer relationships over time. This analysis and segmentation
will form the basis of an ongoing and effective CRM programme over
the coming months and years.
Digital platform
One of the largest potential drivers of value for the group is
increasing the scale and value of our direct-to-consumer business
through ongoing development in the digital channel. We started
investing, with purpose, for this future with our website
re-platforming c18 months ago and continued to develop our
relationship with Rawnet, our digital development partners,
throughout this time.
This investment enabled a 49% increase in digital revenues last
year. Whilst D2C sales were only c15.5% of total sales,
representing c8% of volume, this clearly highlights the potential
for future growth.
Traffic to the site increased by +5% year on year and
transaction volumes grew by +37%, driven by a +29% improvement on
conversion, up to c2% across the year.
Building on this growth through engaging with existing customers
and growing our addressable market efficiently, we are expecting to
increase D2C revenues by over 20% in the current year.
D2C represents multiple benefits including higher average sales
prices, higher gross margins and full control over pricing.
We are still at the tip of the iceberg of the potential here and
it has scope to transform the Group's profitability as we continue
to both scale up and improve execution.
The three initiatives outlined above took varying lengths of
time, and varying levels of investment, to bring to fruition and
they are all still at relatively early stages in their lifecycles.
Each of them will continue to be the subject of significant and
constant energy and focus through the coming year and will begin to
make a more meaningful impact on overall performance over time.
3. A focus on the next 12 months
I have said that it's too soon to lay out the details of a full
and rounded strategy at this stage. It is, however, clear that
there are number of foundational activities that need focus,
attention and energy over the coming months as they will provide
some of the building blocks for growth into the future.
Brand Vision and Proposition Development
Building solid foundations for future growth requires a
purposeful strategy, based on a clear understanding of each of our
portfolio of brands, how they relate to each other and how they are
differentiated.
Hornby Hobbies is in a privileged position of owning a portfolio
of 13 brands, representing an unrivalled opportunity to create
distinctive propositions, tones of voice and communications
plans.
The four largest revenue contributors, and best known, of these
brands are AIRFIX, CORGI, HORNBY and SCALEXTRIC. Working with a
collection of such rich, recognisable, heritage brands and defining
distinctive propositions for each, is a foundational piece of work
that will form the basis of marketing planning and investment in
the coming months and years.
Developing these distinctive and authentic visions for each of
the brands will help us clearly define existing and target
customers, and how we will meet their needs most appropriately.
We have already completed the work that defines the vision and
proposition for the Hornby Hobbies umbrella brand, concluding that
BUILDING HAPPINESS is the emotional thread that runs through all of
our brands, underpinned by five key values and guiding
principles.
We are now working through the portfolio brands, building a
clear and distinctive proposition for each of them that represents
the ways in which they feed the overall proposition of BUILDING
HAPPINESS.
Product development and merchandising
The current inventory position clearly points to an
over-commitment of stock ahead of increased sales, but part of the
story also relates to the specifics of product development.
In some instances, like the TT:120 launch highlighted earlier,
we were not ambitious enough in our initial commitments, and in
other cases we find ourselves over-stocked on slower moving
lines.
We need to improve the effectiveness of the linear relationship
between analysis of product performance, resultant product
development, ranging, inventory management and merchandising. This
will have a positive impact on our inventory position, working
capital and top line performance.
Feeding the outputs of the brand work, indicated above, through
the product development process will also go some way to ensure
that we are developing product and ranges, across all brands, in a
purposeful and informed way into the future.
This brand-led, customer-led, structured, approach to product
selection is something that has not had enough focus in recent
years and is a contributor to the current Inventory position.
An increase in emphasis on commercial analysis of performance of
specific product categories, and subject matter, will improve the
quality of our decision-making moving forwards.
Entry level product and pricing
The nature of our development process, our high standards and
the complexity of some of our products, has seen our pricing create
challenges in certain scenarios.
In the domestic market, the National retailers are demanding
better value and lower prices at all times, and our pricing has
also limited some of our opportunities to grow our distribution in
certain International markets.
We are, therefore, starting the process of reengineering a
capsule range that allows us to present entry level products,
across some of our key brands, at prices that are more attractive
to some domestic partners and to new markets and distributors.
Bringing new customers to our brands in an affordable way is
critical to future growth.
This capsule of entry level product is likely to include
re-engineered versions of products from the Airfix, Scalextric and
Hornby ranges.
Data, Loyalty and Segmentation
Our existing customer data represents a rich source of insight
for developing more targeted communications to clearly defined
customer groups, segmented by value, frequency and product
choice.
We have 5 years of transaction history from our D2C channel but
have not taken full advantage of that information to develop
relationships and drive purposeful growth.
Analysing all existing customer data and building an effective
and workable customer segmentation, by brand, is a priority this
year.
This segmentation work will drive our customer relationship
management ('CRM') activities moving forward, with Hobby Rewards as
a currency and key tool for establishing and growing those
relationships.
We will continue to build on the initial segmentation as we
gather more data and insights from CRM campaigns over time; these
insights will, in turn, drive our decision making and resultant
actions.
An effective segmentation and CRM programme are two of the
fundamental building blocks that will drive the D2C growth that
represents such a powerful opportunity for the future.
Customer Experience and Retail Development
Bringing our brands to life in a meaningful way in both physical
and virtual touchpoints will deepen engagement and drive growth as
a result. Projects that improve our online experience on our
websites, as well as through social and email channels are underway
and will be completed well within the current financial year.
Furthermore, we have been experimenting with the development of
a retail format. The fact that we own a set of established,
complementary, yet differentiated brands, that can be combined in a
physical format that is powerful and experiential, presents a great
opportunity to reach, and appeal to, a wide demographic of new
customers.
We have spent time and money developing a solution and speaking
to potential partners who have cited interest in helping us roll
out the format. The first expression of the retail experience will
be opened in Margate, on the site of the current Hornby Visitor
Centre, with the ambition of opening further sites in a more
traditional retail environment, in 2024 and beyond.
Given that the group currently has no direct retail presence,
outside of the Hornby Visitor Centre, we are confident that this
can be a significant future growth opportunity.
The above list is by no means exhaustive, but is indicative of
the areas of focus in the short and mid-term. Equally, it should be
evident that there is a common underlying theme across all of them
that points to a greater emphasis on better understanding, and
servicing, the needs of our customers.
4. A return to profitable growth
A swing from an underlying operating profit of GBP3.3m to a loss
of (GBP310K) in 12 months is obviously disappointing to have to
report, and I have already highlighted some of the factors that
have resulted in this outcome.
Addressing the top line sales miss of c10% vs management
expectations, the year on year growth in the level of Net Debt and
the high Inventory position are, clearly, all priority KPIs for the
year ahead.
This will be achieved through a combination of continued effort
on the various initiatives outlined in this report, most notably
TT:120, Hobby Rewards and overall Digital Improvements, and the
upweighting of resource in our sales function. A new Head of Export
Sales joins the business in July and we are well advanced in the
recruitment of a new Group Sales Director.
Successfully navigating these initiatives will naturally build
profitability, allowing us to invest more in product development,
creating a cycle where the growth delivered will continually build
on itself.
The business, and its current cost base, can support a
materially higher level of revenue than the level achieved in the
last 12 months and we are targeting high single digit / low double
digit revenue growth in the year ahead. Gross margins have risen,
and they can rise further with increased D2C penetration. Operating
leverage should support a strong improvement in profitability.
Joining an organisation with such a rich heritage is a real
privilege, but it's the opportunity of leading the business into
the future, and back into profitable growth, that fills me with
most excitement.
I look forward with great enthusiasm to leading the business
through this next stage of its evolution as we continue on the
journey towards becoming a truly effective, omni-channel
organisation, for the 21(st) century.
Olly Raeburn
CEO
21 June 2023
Section 172 Statement and Stakeholder Engagement
As required by Section 172 of the Companies Act, a director of a
company must act in the way he or she considers, in good faith,
would likely promote the success of the company for the benefit of
the shareholders. In doing so, the director must have regard,
amongst other matters, to the following issues:
-- likely consequences of any decisions in the long term;
-- interests of the company's employees;
-- need to foster the company's business relationships with suppliers/customers and others;
-- impact of the company's operations on the community and environment;
-- the company's reputation for high standards of business conduct; and
-- need to act fairly between members of the company.
Culture
Our values and leadership behaviours are a vital part of our
culture to ensure that through good governance, our conduct and
decision making we do the right thing for the business and our
stakeholders. The Board acknowledges that every decision it makes
will not necessarily result in a positive short-term outcome for
all of the Group's stakeholders. We believe in creating solid
foundations for the future, so there is a balance between short
term success and longer-term prosperity.
Shareholders
The Board values the views of our shareholders and recognises
their interest in our strategy and performance. We endeavour to
update shareholders on the Board's expectations for the outlook of
the business and as and when this changes. As much as possible, we
try to provide information that is relevant to our shareholders on
our corporate website; in our annual report and accounts; and
through regulatory news announcements throughout the year.
We also believe in knowing and understanding our shareholders.
We encourage our shareholders to attend our Annual General Meetings
(AGMs) and we welcome questions from them. At our AGMs, we provide
the platform for robust discussions with our shareholders, during
which the participants, both Directors and shareholders alike, are
engaged with the proceedings. We believe this reflects the
connection to the business which we have cultivated and continue to
cultivate in our shareholders. In addition, the review of investor
relations activity and analysis of our shareholder register is a
standing item at each Board meeting. Our corporate website
http://www.hornby.plc.uk/ also includes the outcomes of shareholder
votes cast at the AGMs, as well as Annual and Interim Reports from
previous years.
The primary mechanism for engaging with our shareholders is
through the Company's AGM and also through the publication of the
Group's financial results for the half year and full year. Further
information is disclosed in the Corporate Governance Statement on
pages 13 to 16. The Board reviews feedback received from
institutional investors following publication of our financial
results. At the AGM we encourage our shareholders to ask questions
and participate in debate about our performance and products.
Customers
Understanding our customers and what matters to them is key to
the future success of Hornby. We listen and talk to them using all
of the tools at our disposal. Our customers operate in a global,
but niche market, we interact with them either directly, or via our
retailers, wholesalers and distributors.
Suppliers
We have long-standing close relationships with our suppliers
overseas, who we would normally visit on a regular basis. During
the pandemic we have communicated via video conferencing, working
together with a common goal, giving them visibility, sharing our
plans allowing them to plan their factories capacity well into the
future. We are planning to reintroduce regular visits this year as
the COVID restrictions in China are lifted.
Employees
A key to the Group's future success is an engaged workforce. The
Group's Directors, alongside our executive management teams, work
hard to provide a positive working environment. As a well-respected
local employer within each of the communities we operate, it is
important for us to provide opportunities for all of our staff to
allow them to grow and achieve their potential.
Community and environment
We are proud to employ people in the communities that we
operate. The strength of our brands allows us to promote both local
and national charitable causes. We have product standards, policies
and guidance covering the products we make to help ensure that they
are manufactured safely, legally and to the required quality
standards and is an environmentally friendly way as possible.
Operating and Financial Review of the Year
Financial Review
2023 2022
----------------------------------- --------- --------
Revenue GBP55.1m GBP53.7m
Gross profit GBP26.9m GBP25.7m
Gross profit margin 49.3% 47.9%
Overheads GBP28.0m GBP24.6m
Exceptionals GBP4.0m GBP0.1m
Reported (loss)/profit before tax (GBP5.9m) GBP0.6m
Underlying (loss)/profit before
tax* (GBP1.1m) GBP3.26m
Reported (loss)/profit after tax (GBP5.9m) GBP1.5m
Basic (loss)/profit per share (3.50p) 0.93p
Underlying basic (loss)/profit per
share* (1.23p) 2.19p
Net (debt)/funds (GBP5.5m) GBP3.8m
Undrawn Facilities GBP11.7m GBP12.6m
* Stated before amortisation of intangibles (brands and customer
lists), net unrealised foreign exchange movements on intercompany
loans, goodwill impairments and exceptional items.
Performance on a statutory basis
Consolidated revenue for the year ended 31 March 2023 was
GBP55.1 million, an increase of 2.5% compared to the previous
year's GBP53.7 million due to a very strong fourth quarter. The
revenue in the second half of the year of GBP32.7 million was ahead
of previous year which was GBP31.9 million. Gross profit margin was
higher, at 49.3% (2022: 47.9%).
Overheads increased year-on-year by 13.7% from GBP24.6 million
to GBP28.0 million. UK distribution costs were higher than prior
year due to increased head count to speed up dispatch and the
increased variable cost of B2C shipments. Sales and marketing costs
increased by GBP2.6 million year-on-year due to ongoing investment
in direct relationships with our customers. Administration costs
were GBP0.8 million lower due to lower PSP costs of GBP0.5 million
(2022: GBP2.3 million) offset by increased insurance and utility
costs. Other operating expenses in the year of GBP0.7 million
(2022: GBP0.03 million) includes foreign exchange losses and
amortization of brand names.
Exceptional costs totalling GBP4 million (2022: GBP0.01 million)
are predominantly Corgi goodwill impairment of GBP2.9 million, a
write off of GBP0.91 million of Hornby World costs and refinancing
costs of GBP0.1 million.
We have spent the last year developing plans to launch a
multi-brand retail experience, bringing our key brands to life in a
meaningful way. The aim of this work was to explore routes for
creating and testing concepts that customers love and that can be
subsequently rolled out across multiple sites, if successful. We
have learned a great deal from the development process and, in
January 2023 concluded that creating the first iteration of a new
retail experience should be done on site in Margate, by reimagining
and redeveloping the current Hornby Visitors' Centre. Whilst this
decision undoubtedly means we will be able to test and learn more
effectively, helping us get to the best solution in a controlled
way, it's fair to say that the need to pivot our approach only
became clear once we had carried out a substantial amount of
development work. Consequently, we're required to write down the
value of any capitalised costs related to the development work
carried out over the last 12 months, although we have taken many
learnings from decisions made during the development of the project
so far, into the proposed scheme.
Performance on an underlying basis
The underlying profit before taxation is shown to present a
clearer view of the trading performance of the business. Management
identified the following items, whose inclusion in performance
distorts underlying trading performance: shared-based payments and
the amortisation of intangibles which result from historical
acquisitions. Additionally, exceptional items including refinance,
relocation and restructuring costs are one off items and therefore
have also been added back in calculating the underlying profit
before taxation.
Group
==================
2023 2022
GBP'000 GBP'000
------------------------------------- -------- --------
Statutory loss before taxation (5,875) 583
------------------------------------- -------- --------
Adjustments:
------------------------------------- -------- --------
Amortisation of intangibles - brands 227 194
------------------------------------- -------- --------
Share-based payments 532 2,341
------------------------------------- -------- --------
Exceptional items:
------------------------------------- -------- --------
Restructuring costs - 88
------------------------------------- -------- --------
Costs relating to Hornby World 910 -
------------------------------------- -------- --------
Goodwill impairment 2,915 -
------------------------------------- -------- --------
Refinancing 149 -
------------------------------------- -------- --------
LCD Acquisition - 219
------------------------------------- -------- --------
Relocation costs - 9
------------------------------------- -------- --------
Amortisation adjustment - (177)
------------------------------------- -------- --------
Underlying profit before taxation (1,142) 3,257
------------------------------------- -------- --------
Segmental analysis
Third party sales by the UK business of GBP40 million increased
by 5% in the year as a result a significant increase in direct
sales via the website. The loss before taxation of GBP2.7 million
compared to GBP0.6 million profit last year reflects the increased
overheads as a result of investment in direct sales and a
significant increase in the cost of finance (as a result of base
rate increases).
Sales by the European businesses of GBP10.6 million decreased by
7% in the year as a result of supply chain delays. The profit
before tax was GBP0.7 million compares to GBP0.8 million profit
last year.
Sales in the US business of GBP4.9 million increased by 7%. The
trading loss of GBP0.6 million compares to GBP0.7 million loss in
last year. We expect sales to increase in this key market in the
longer term and overheads to reduce.
Statement of Financial Position
Property, plant and equipment increased year-on-year by GBP2
million to GBP12 million as a result of increased expenditure in
tooling for new products and technologies. Group inventories
increased from GBP16.5 million to GBP21.3 million due to a weak Q3.
Trade and other receivables increased by GBP0.4 million or 4%
largely due the increase in sales compared to prior year in fourth
quarter. Trade and other payables are GBP0.7 million higher than
previous year due to timing of supplier payments falling due.
Overall investment in new tooling, new intangible computer software
and other capital expenditure was GBP5.1 million (2022: GBP4.0 mil
lion).
Dividend
The Group is still in the turnaround phase and there will not be
a dividend payment this year (2022: GBPnil). The Board continues to
keep the dividend policy under review.
Financing
At 31 March 2023 the UK had a GBP12 million Asset Based Lending
facility with Secure Trust Bank Limited ("STB") and a GBP9 million
loan facility with Phoenix Asset Management Partners.
The facility with STB is a floating facility based on the
current asset position capped at GBP12 million ends October 2024
and carries a margin of 2.5 -- 3% over base rate. The STB Facility
has a fixed and floating charge on the assets of the Group. The
Company provides customary operational covenants to STB on a
monthly basis.
The Phoenix Facility is a GBP9 million facility which attracts
interest at a margin of 5% over SONIA on funds drawn. Undrawn funds
attract a non -- utilisation fee of the higher of 1% or SONIA. This
facility is currently due to expire December 2023.
Borrowings in the year ended 31 March 2023 were GBP6,867,000
(2022: 327,000). This consists of a CBIL loan with GBP167,000
outstanding (acquired with LCD), amounts owing to STB of
GBP4,590,000 and GBP2,110,000 shareholder loan drawdown.
Net debt at 31 March 2023 was GBP5.5 million compared with net
cash of GBP3.8 million at 31 March 2022.
Our Key Performance Indicators ('KPIs')
The Directors are of the opinion that the financial KPIs are
revenues, gross margins, underlying operating profit, capex
productivity, Inventory, Digital Change, Variable and Fixed Costs
the information for which is available in these financial
statements and summarised on the financial highlights section
earlier in this report. We provide current and historical analysis
in the CEO's Report on pages 3 to 7 and will continue to report in
future Annual Reports. The Board monitors progress against plan on
a regular basis adjusting future objectives annually in line with
current circumstances.
Identification of principal risks and uncertainties
The Board has the primary responsibility for identifying the
major risks facing the Group and developing appropriate policies to
manage those risks. The Board completes an annual risk assessment
programme to identify the major risks and has reviewed and
determined any mitigating actions required as set out below. The
risk assessment has been completed in the context of the overall
strategic objectives and the Business Plan of the Group.
Principal risks and uncertainties
Risk Description Impact/Sensitivity Mitigation/Comment
================== ============================ ============================ ===================================
Market competition The Group has competition The Group performance In many of our markets
in the model railway, is impacted by the the Group still enjoys
slot racing, model actions of competitors a strong market position
kits, die cast and and changes in the due to the continued development
paint markets. Loss wider retail landscape. of our brands. We will
of market share to strive to further improve
increased competitor the strength of our brands.
activity or alternative Production of high-quality
hobbies would have products which customers
a negative impact want is a key mitigating
on the Group's results. factor.
Failure to evolve
and innovate products
may lead to brands
becoming less relevant
in the marketplace.
================== ============================ ============================ ===================================
The Business The Business Plan The increase in business The Group has developed
Plan may not fully achieve scale and reduction clear targets and has
the aims of returning of costs and the cost saving contingencies
the Group to positive increase in direct in the plan being actioned
cash generation in sales currently anticipated to put the necessary resources
2023/24. is not achieved and in place to deliver the
the Group does not aims of the plan.
achieve sustainable
profit and cash generation.
================== ============================ ============================ ===================================
Hobby market Overall decline in Failing interest In many of our markets
the hobby market in traditional hobbies the Group enjoys a strong
could lead to greater may impact our core market position due to
levels of competition Independent and National the continued development
in the medium term, retailers and have of our brands. Brands
which could have a consequent impact are extremely important
a negative impact upon the Group's in the model sector with
on the Group's results. performance. market entry costs being
prohibitive. In the short-term
there is an opportunity
to regain market share
lost through previous
underperformance. We have
also implemented tiering
and only allowing certain
percentage of our goods
to go wholesale with balance
only being available on
our website.
================== ============================ ============================ ===================================
Exchange The Group purchases Significant fluctuations The Group continues to
rates goods in US Dollars in exchange rates hedge short-term exposures
and sells in Pounds to which the Group by establishing forward
Sterling, Euros and is exposed could currency purchases using
US Dollars and is have a material adverse fixed rate and participating
therefore exposed effect on the Group's forward contracts up to
to exchange rate future results. In twelve months ahead. It
fluctuations. particular the negative is deemed impractical
impact on Sterling to hedge exchange rate
of Brexit and the movements beyond that
continuing uncertainties period.
could make the US In particular the negative
Dollar purchase of impact on sterling of
its goods more expensive. Brexit and the continuing
uncertainties world wide
will make the US Dollar
purchase of its goods
more expensive.
------------------ ---------------------------- ---------------------------- -----------------------------------
Supply chain The Group's products The Group does not The Group is continuing
are manufactured have exclusive arrangements to develop and review
by artisan labour with its suppliers its vendor portfolio and
in China, India and and there is a risk has started diversifying
Vietnam. Risk that that competition the supplier base. A 26-step
capacity is lost for manufacturing critical path analysis
which could lead capacity could lead tool has been developed
to delays in production. to delays in introducing to monitor the whole manufacturing
new products or servicing process to identify and
existing demand. deal with issues as they
arise. The Group has its
own storage facilities
in China where its tooling
is secured and managed.
The Group manages the
supply chain forecasts
continuously and communicates
regularly with suppliers
and customers in turn.
The Group maintains significant
stock levels in the UK
at any time and therefore
this allows additional
time to plan for stock
output variances from
overseas suppliers in
time for the peak season.
================== ============================ ============================ ===================================
Capital New tooling is important The risk is that The business plan includes
allocation to support the production the Group has insufficient significant capital expenditure
of new products. capital to fund new to fund suitable products
tooling or invests to underpin the implementation
ineffectively in of the business plan strategy
the wrong products. of the Group. This process
will be underpinned by
a robust capital allocation
process aligned to brand
strategies and brand delivery
targets.
================== ============================ ============================ ===================================
Product The Group's products Failure to comply Robust internal processes
compliance are subject to compliance could lead to a product and procedures, active
with toy safety legislation recall resulting monitoring of proposed
around the world. in damage to Company legislation and involvement
and brand reputation in policy debate and lobbying
along with an adverse of the relevant authorities.
impact on the Group's
results.
================== ============================ ============================ ===================================
Liquidity Insufficient financing Without the appropriate The Group has a GBP12.0
to meet the needs level of financing, million ABL facility with
of the business. it would be increasingly Secure Trust Bank (STB)
difficult to execute and a GBP9.0 million revolving
the Group's business loan facility with Phoenix
plans. Asset Management Partners.
The Group's policy on
liquidity risk is to maintain
adequate facilities to
meet the future needs
of the business.
================== ============================ ============================ ===================================
System and The Group continues This exposes the The Group has invested
cyber risk to invest in the business to greater significant time and cost
development of its risk of financial in the new website and
website and ERP systems. loss, disruption ERP system in the last
or damage to the three years. The Group
reputation of an has dedicated web and
organisation from ERP teams to monitor and
a failure of its maintain the Group's systems
information technology and holds appropriate
systems. insurance policies to
minimise material risk.
A new website went live
in January 2021 which
has even higher security
than the previous system.
We are also working on
upgrading the current
ERP system.
================== ============================ ============================ ===================================
Talent and Recruitment, development The Group fails to Management team to encourage
skills and retention of retain the necessary and empower employees.
talented people are skills and talent Key lost talent has been
the key to the success to deliver the Group's reacquired and brought
of any business. plans. back into the Company.
All employees (after 12
months service) participate
in profits of the Group.
================== ============================ ============================ ===================================
Economic Further cost of living The further increase The ongoing situation
climate increases could impact could inhibit sales is being monitored and
our sales as less residual we are ensuring that our
income. products are priced competitively.
================== ============================ ============================ ===================================
Main control procedures
Management establishes control policies and procedures in
response to each of the key risks identified. Control procedures
operate to ensure the integrity of the Group's financial statements
and are designed to meet the Group's requirements and both
financial and operational risks identified in each area of the
business. Control procedures are documented where appropriate and
reviewed by management and the Board on an ongoing basis to ensure
control weaknesses are mitigated.
The Group operates a comprehensive annual planning and budgeting
system. The annual plans and budgets are approved by the Board. The
Board reviews the management accounts at its monthly meetings and
financial forecasts are updated monthly. Performance against budget
is monitored and where any significant deviations are identified
appropriate action is taken.
The Strategic Report incorporates the statements on pages 3 to
12 and has been signed on behalf of the Board.
Kirstie Gould
Chief Finance Officer
21 June 2023
Corporate Governance Report
Corporate Governance
For the year ended 31 March 2023, and up to the date of this
report, the Company has applied the main principles of the QCA
Corporate Governance Code ("the Code") and complied with its
detailed provisions throughout the period under review. Full
details of our approach to governance are set out below and, as a
Board, we continue to be committed to good standards in governance
practices and will continue to review the governance structures in
place, to ensure that the current practices are appropriate for our
current shareholder base and that, where necessary, changes are
made.
The key governance principles and practices are described in the
statement below, together with the Audit and Nomination and
Remuneration Committees' reports on pages 17 to 21 and the
Directors report on pages 23 to 28.
Board of Directors
John Stansfield Lyndon Davies Kirstie Daniel Henry de Oliver Raeburn
- - aged 62 Gould - Carter Zoete - - aged 52
aged 68 Non-Executive aged 50 - aged 41 Chief Executive
Independent Chairman Chief Finance aged 28 Independent Officer
Non-Executive Officer Independent Non-Executive
Director & Non-Executive Director
Company Director
Secretary
John Stansfield Lyndon joined Kirstie Daniel Henry de Oliver Raeburn
was the Board Gould was Carter Zoete was was appointed
Non-Executive as Chief appointed was appointed appointed as CEO on
Chairman Executive as Chief as a as a 23 January
in August in October Finance Non-Executive Non-Executive 2023.
2018 to 2017 and Officer Director Director
February was appointed of the Company in July in January A psychology
2022. Prior to Executive in January 2020. 2022 graduate of
to that, Chairman 2018 after the University
he had been in February spending Daniel Henry de of Leicester,
a non-executive 2022. over 2 years is an Investment Zoete is Olly's career
Director with Hornby Analyst an entrepreneur started out
of the Company, He is a as a consultant at Phoenix and alumnus in advertising,
having been highly-experienced in the finance Asset Management of renowned including
appointed model and department. which controls Silicon a 9 year stint
in January hobby professional Kirstie the funds Valley start-up as owner /
2018. with 45 years' also acts that own accelerator manager of
experience as Company 73.38% Y Combinator. a London
John is in the industry. Secretary. of the agency.
a Fellow He has built ordinary Henry has A move into
of the Oxford Diecast Kirstie shares previously the corporate
Chartered into a successful is a Fellow of Hornby served on world saw
Institute international of the Institute Plc. the Board Olly spend
of Management business of Chartered of grassroots the next 6
Accountants over the Accountants Daniel campaigning years as
and spent past two in England studied organisation Marketing
31 years decades, and Wales, Economics 38 Degrees Director at
with the focusing qualifying at The (2015-2018) Coral and
Group, 12 on Diecast with University and was subsequently
years of vehicles, PricewaterhouseCoopers of Bath. a Special Brand Director
which he aircraft in 1997 Adviser for Ladbrokes
was Group and, more and has Daniel in the and Coral
Finance recently, since held is Chair Department in the newly
Director. rail-based senior management of the of Education formed
products. and directorship Remuneration (2010-2014). Ladbrokes
He re-joined roles across and Nomination Henry is Coral PLC.
the Company, Lyndon is a number Committee currently Two years
after having also Chairman of high and a member an angel as Chief
left in of Oxford growth SME of the investor Marketing
2013. Diecast firms including Audit Committee. in tech Officer at
("Oxford"), Affini Technology start-ups Rank PLC were
John helped a business Limited and a followed by
to deliver founded in (part of Non-Executive a move to
some of 1993. He the TTG Board Member Paperchase
the Group's was the majority Group) and of the Cabinet as CMO in
most profitable shareholder Gamma Communications Office. 2019. Having
years and of LCD Enterprises plc. been promoted
has a wealth Limited, Henry is to CEO in
of experience the ultimate a member 2020 he guided
in the toy owner of of the the company
and hobby the Oxford Remuneration through an
sectors. Diecast brands and Nomination administration
until July Committee process during
John is 2021 when and the the Covid
also Chair Hornby acquired Audit Committee. pandemic,
of the Audit the remaining followed by
Committee stake. a turnaround
and a member process,
of the refinancing
Remuneration and sale of
and Nomination the business
Committee. in August
2022.
------------------- ----------------------- ----------------- ----------------- ----------------
Our Board and Committees Membership
Director Board Audit Remuneration
& Nomination
John Stansfield Member Chair Member
------- ------- --------------
Lyndon Davies Chair Member Member
------- ------- --------------
Kirstie Gould Member
------- ------- --------------
Daniel Carter Member Member Chair
------- ------- --------------
Henry De Zoete Member Member Member
------- ------- --------------
Oliver Raeburn Member
------- ------- --------------
Composition and independence of the Board
The Board is comprised of two executive directors and four
non-executive directors. During the year, the Board is of the
opinion that the composition of the Board, continues to represent
an appropriate balance between executive and non-executive
directors, given our size and our operations. John Stansfield is
considered independent due to the time elapsed since his employment
with the Group originally. Daniel Carter is considered independent
as he has no control over the voting shares of Phoenix Asset
Management. Henry de Zoete is considered independent. Lyndon is not
considered independent due to the time elapsed since his employment
and his shareholding.
The Board members collectively have skills and expertise
embracing a range of areas including finance, auditing, e-commerce,
engineering, manufacturing, design, general management, sales and
innovation. The Non-executive Chairman and John Stansfield in
particular, have extensive, directly applicable experience of
working within the toy and hobby products industry. We do however
intend to carry out periodic reviews of the composition of the
Board to ensure that its skillset and experience are appropriate
for the effective leadership and long-term success of the business
as it develops. These reviews will give due consideration to having
more diversity on the Board, as well as to other priorities.
Details of each Directors' background and experience are set out
in the table above.
Appointments to the Board and re-election
The Board takes decisions regarding the appointment of new
directors as a whole following the recommendations of its
Remuneration and Nomination Committee. The task of searching for
appropriate candidates and assessing potential candidates' skills
and suitability for the role has been delegated to the Remuneration
and Nomination Committee. Further information on the roles of the
Remuneration and Nomination Committee and also the Audit Committee
of the Board can be found on pages 17 to 21.
The Company's Articles of Association require that one-third of
directors (excluding any directors who have been appointed since
the last Annual General Meeting (AGM)), retire by rotation at each
AGM. In accordance with best practice in corporate governance, all
the Directors will offer themselves for re-election.
Division of responsibilities
There is a formal schedule of matters reserved for the Board
which is set out in detail on the Hornby Plc corporate website at
http://www.hornby.plc.uk/ and summarised further on in this
report.
The Board is responsible for the formulating of the overall
business strategy and the Executive team is responsible for the
managing of the business to realise this strategy. The
Non-executive Chairman is responsible for overseeing the Board and
the implementation of the Company's strategy and its operational
performance.
Executive Directors
The Executive Directors, as with the Non-Executive Directors,
are encouraged to use their independent judgement in the
discharging of their duties. They are responsible for the
day-to-day management of the business, including its trading,
financial and operational performance. Issues and progress made are
reported to the Board by the CEO.
Executive Directors are full-time employees of the Company and
have entered into service agreements with the Company. Directors'
contracts are available for inspection at the Company's registered
office and at the Annual General Meeting.
Non-Executive Directors
The Board considers the Non-Executive Directors to be
sufficiently competent. They provide objectivity and substantial
input to the activities of the Board, from their various areas of
expertise.
Non-Executive Directors are contracted to work no less than 15
days per year.
Succession Planning
During the year, the Remuneration and Nomination Committee was
delegated with the task of formulating succession plans for the
business, identifying areas where there is a skills shortage, as a
result a new CEO was recruited.
The Board also recognises that diversity is a key element in
strengthening the contribution made to Board deliberations and in
the course of our search for suitable candidates, due regard is
given to this in addition to the skills and experience a potential
candidate brings.
How the Board operates
The Board retains control of certain key decisions through the
Schedule of Matters reserved for the Board. Other matters,
responsibilities and authorities have been delegated to its Audit
and Remuneration and Nomination Committees and these are documented
in the terms of reference of each of those committees, which can be
found on the Company's corporate website at
http://www.hornby.plc.uk/ .
The Board is responsible for:
-overall management of the business;
-developing the Company's strategy, business planning, budgeting
and risk management;
-monitoring performance against agreed objectives;
-setting the business' values, standards and culture;
-internal control and risk management;
-remuneration;
-membership and chairmanship of Board and Board Committees;
-relationships with shareholders and other stakeholders;
-determining the financial and corporate structure of the
business;
-major investment and divestment decisions;
-the Company's compliance with relevant legislations and
regulations; and
-other ad hoc matters such as the approval of the Company's
principal advisors.
The Board met eleven times during the year. All directors
attended all eleven meetings apart from Henry and John attended 10
board meetings and Oliver who attended 3 as he started late in the
year.
The main activities of the Board during the year
Key Board activities this year included:
-- recruitment of a new CEO
-- discussing strategic priorities
-- reviewing feedback from our institutional shareholders
following our full and half year results; and
-- input into implementing the next phase of the Turnaround Plan.
-- approving revised borrowing and credit facilities.
The Board Committees
The Board delegates authority to two committees: the Audit and
the Remuneration and Nomination Committees, to assist in meeting
its business objectives. The Committees meet independently of Board
meetings.
Each committee has terms of reference setting out their
responsibilities, which were reviewed and approved by the Board
during the year. These are available on the Company's corporate
website http://www.hornby.plc.uk/
We have made some improvements in our governance arrangements
including introducing reporting by the Remuneration and Nomination
Committee as well as the Audit Committee in our Annual Report and
Accounts. These reports can be found on pages 21 to 27.
The Audit Committee comprises the independent non-executive
directors of the Company and met three times during the year. The
Chief Executive Officer, Chief Finance Officer and other managers
attend by invitation. The external auditors attend meetings and
have direct access to the Committee.
The Remuneration and Nomination Committee meet at least once a
year with all members being present. The members are all
non-executive directors. The Committee is responsible for
establishing and reporting to the Board, procedures for determining
policy on executive remuneration and also the performance-related
elements of remuneration, which align the interest of the directors
with those of the shareholders.
Its remit also includes matters of nomination and succession
planning for Directors and senior key executives, with the final
approval for appointments resting with the Board. Directors excuse
themselves from meetings where the matter under discussion is their
own succession when appropriate.
External Advisors
The Board makes use of the expertise of external advisors where
necessary, to enhance knowledge or gain access to particular skills
or capabilities. Areas where external advisors are used include and
are not limited to: diligence work on major contracts; recruitment;
and Company secretarial and corporate governance. The list of
external advisors is set out on page 22.
Directors' Induction, Development, Information and Support
The Board considers all Directors to be effective and committed
to their roles.
All Directors receive regular and timely information on the
business' operational and financial performance. Ahead of the Board
and Committee meetings, papers are circulated to all Directors to
ensure that they are fully informed and can participate fully in
discussions.
Directors keep their skillset up to date through a combination
of attendance at industry events, individual professional
development and experience gained from other Board roles. The
Company Secretary ensures that the Board is aware of any applicable
regulatory changes and updates as and when relevant. The Board is
also given an annual refresher in AIM Rules and this was last
provided in October 2022 by its Nominated Advisors, Liberum Capital
Limited. This refresher is designed to enable Directors to keep
abreast of corporate governance developments.
Directors are also able to take independent professional advice
in the furtherance of their duties, if necessary, at the Company's
expense. Directors also have direct access to the advice and
services of the Company Secretary. The Company Secretary supports
the Non-Executive Chairman in ensuring that the Board receives the
information and support it needs to carry out its roles.
Conflicts of Interest
Outside interests and commitments of Directors, and changes to
these commitments are reported to and agreed by the Board. In
addition, no one member of the Board has unfettered powers to make
decisions.
Performance Evaluation
The Non-Executive Chairman considers the operation of the Board
and performance of the Directors on an ongoing basis as part of his
duties and will bring any areas of improvement he considers are
needed to the attention of the Board. However, the Board recognises
the need to put in place an annual formal evaluation process for
the Board, its Committees and individual directors.
The effectiveness of the Board, its Committees and Directors
will be reviewed on an annual basis.
Accountability
Although the Board delegates authority to its committees and
also the day-to-day management of the business to the Executive
Directors, it is accountable for the overall leadership, strategy
and control of the business in order to achieve its strategic aims
in accordance with good corporate governance principles.
Risk Management and Internal Control
Mitigating the risks that a Company faces as it seeks to create
long-term value for its shareholders, is the positive by-product of
applying good corporate governance. At Hornby, all employees are
responsible for identifying and monitoring risks across their
areas. However, the Board sets the overall risk strategy for the
business. The business maintains a Risk Register and a Fraud
Register, which are presented and considered at the Audit Committee
meetings.
Financial and Business Reporting
In our half-year, final and any other ad hoc reports and other
information provided by the Company, the Board seeks to present a
fair, balanced and understandable assessment of the business'
position and prospects. The Board receives a number of reports,
including those from the Audit Committee, to enable it to monitor
and clearly understand the business' financial position.
The Board considers that this Annual Report and financial
statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Company's performance, business model and strategy.
Business Ethics
Our commitment to our customers and having a people-oriented
ethos is central to the success of achieving our strategy. We value
the skills of our employees and it is through the efforts of these
dedicated people that we are able to grow our customer base.
We endeavour to conduct our business affairs in a way that
reflects our values. Our suppliers are audited to ensure that their
policies and procedures comply with the Modern Slavery and Human
Trafficking Act, which ensures that workplace and conditions of
employment for their employees are of an acceptable standard. We
reinforce our expectations to achieve and maintain these standards.
Our Statement on Modern Slavery and Human Trafficking can be found
on our corporate website http://www.hornby.plc.uk/ .
Whistleblowing
The business has procedures in place for detecting fraud and for
whistleblowing to ensure that arrangements are in place for all
employees to raise concerns in confidence, about possible
irregularities and non-compliance in matters of financial reporting
or other matters. These procedures and policies are reviewed by the
Audit Committee.
Audit Committee Report
As Chair of the Audit Committee ("the Committee"), I am pleased
to present our Audit Committee Report for the year ended 31 March
2023.
Membership
The Audit Committee comprises three members, Daniel Carter,
Henry de Zoete and myself, John Stansfield. All of us are
independent Non-Executive Directors of the Company. I am the member
of the Committee, who with the background as a chartered management
accountant has significant, recent and relevant financial
experience. Our biographies are set out on page 13.
Meetings and attendance
The Committee met three times during the year ended 31 March
2023. All members of the Committee at the time of each meeting were
present at the meetings. At least one of these meetings was with
the external auditor, without the executive Board members present.
Lyndon Davies and Kirstie Gould also attended meetings by
invitation.
Duties:
The full list of the Committee's responsibilities is set out in
its Terms of Reference, which is available on the Company's website
at http://www.hornby.plc.uk/ and is summarised below as
follows:
- External Audit;
- Financial Reporting;
- Internal Control and Risk Management;
- Internal Audit; and
- Reporting on activities of the Committee.
The terms of reference for the Committee are reviewed annually
and approved by the Board.
The main items of business considered by the Committee during
the year included:
- a review of the year-end external audit plan, consideration of
the scope of the audit and the external auditor's fees;
- consideration and approval of the external audit report and
management representation letter;
- a review of the Annual Report and financial statements,
including consideration of the significant accounting issues
relating to the financial statements, the consistency in the
application of accounting policies and the going concern
review;
- a review and approval of the internal financial statement;
External Auditor
The Committee has the primary responsibility for recommending
the appointment of the external auditor and reviewing the findings
of the auditor's work. The Company's external auditor is Crowe U.K.
LLP. There will be ongoing dialogue between the Committee and the
auditor on actions to improve the effectiveness of the external
audit process.
Having reviewed the auditor's independence and performance to
date, the Committee has recommended to the Board that they be
reappointed for the 2024 audit. A resolution to reappoint Crowe U.K
LLP as the Company's auditor is to be proposed at the forthcoming
Annual General Meeting (AGM) in September 2023.
Non-audit services
In addition to the audit services they provide, Crowe U.K. LLP
also provide tax compliance services. These fees are within the 1:1
ratio of audit services.
Audit process
The external auditor prepares an audit plan setting out how the
auditor will review the interim and audit the full-year financial
statements. The audit plan is reviewed, agreed in advance and
overseen by the Committee. The plan includes the proposed scope of
the work, the approach to be taken with the audit and also
describes the auditor's assessment of the principal risks facing
the business.
Prior to approval of the financial statements, the external
auditor presents its findings to the Committee, highlighting areas
of significant financial judgement for discussion.
Internal Audit
The Audit Committee has considered the need for an internal
audit function during the year and is of the view that, given the
size and nature of the Company's operations and finance team, there
is no current requirement to establish a separate internal audit
function.
Risk Management and Internal Controls
Through the work of the Committee, the Board carries out an
annual risk assessment programme to identify the principal risks to
the business and these include:
- UK market dependence and conditions;
- the New Business Plan;
- the status of the model/hobby market;
- exchange rates;
- the supply chain function;
- capital allocation;
- product compliance;
- liquidity;
- systems and cyber risks;
- talent and skills; and
- Brexit
The Committee also reviews the effectiveness of control policies
and procedures in place to deal with the risks mentioned. Further
details on the business risks identified and the actions being
taken are set out on pages 11 to 12 of the Operating and Financial
Review Report.
The process of risk management in the business is continually
reviewed.
John Stansfield
Chairman of the Audit Committee
21 June 2023
Remuneration and Nomination Committee Report
As Chairman of the Remuneration and Nomination Committee ("the
Committee"), I am pleased to present our report for the year ended
31 March 2023 which sets out details of the composition, structure
and activities of the Committee and remuneration paid to Directors
during the year.
The Board has taken the decision to expand the schedule of
matters it has delegated to its Remuneration Committee, to include
matters which are typically within the remit of a nomination
committee. Its terms of reference were revised accordingly and the
Committee was renamed the Remuneration and Nomination
Committee.
Membership
The Committee currently comprises three independent
Non-Executive Directors, John Stansfield, Henry de Zoete and
myself, Daniel Carter, whose biographies are set out on page
13.
Meetings and attendance
The Committee meets at least once a year and at such other times
during the year as is necessary to discharge its duties. During the
year, the Committee met twice. Only members of the Committee have
the right to attend meetings, although other individuals, such as
the CEO and external advisers, may be invited to attend for all or
part of any meeting.
Duties
The Committee works closely with the Board to formulate
remuneration policy and consider succession plans and possible
internal candidates for future Board roles, having regard to the
views of shareholders. The main duties of the Committee are set out
in its Terms of Reference, which are available on the Company's
website ( http://www.hornby.plc.uk/ ) and include the following key
responsibilities:
Remuneration
-set remuneration policy for all Executive Directors (including
pension rights and any compensation payments), and in the process,
review and give due consideration to pay and employment conditions
throughout the Company, especially when determining annual salary
increases;
-approve the design of, and determine targets for any
performance-related pay schemes operated by the Company;
-recommend and monitor the level and structure of remuneration
for senior management; and
-review the design of all share incentive plans for approval by
the Board and shareholders.
Nomination
-regularly review the structure, size and composition,
(including the skills, experience, knowledge and diversity) of the
Board and make recommendations to the Board as to any changes
necessary;
-give full consideration to succession planning for directors
and other senior executives in the course of its work, taking into
account the challenges and opportunities facing the Company and the
skills and expertise needed on the Board in the future;
-lead the process for all potential appointments to the Board
and making recommendations to the Board in relation to them;
-evaluate the balance of skills, experience, independence and
knowledge on the Board; and following any evaluation, identify and
nominate for approval by the Board, potential candidates to fill
Board vacancies as and when they arise.
Principal activities during the year
The Committee considered:
-- Executive Directors' bonuses and salaries;
-- Succession planning and the search for and appointment of a new CEO
-- succession planning and the search for an additional Non-Executive director;
-- election and re-election of directors at the AGM;
-- a review of the Committee's terms of reference.
The Committee considers business' strategy when recommending the
appointment of directors and setting and reviewing
remuneration.
Diversity
It is the Board's view and commitment that recruitment,
promotion and any other selection exercises are conducted on the
basis of merit against objective criteria that avoid
discrimination. No individual should be discriminated against on
the ground of race, colour, ethnicity, religious belief, political
affiliation, gender, age or disability, and this extends to Board
appointments.
The Board recognises the benefits of diversity, including gender
diversity, on the Board, although it believes that all appointments
should be made on merit, while ensuring there is an appropriate
balance of skills and experience within the Board. The Board
currently consists of 17% (one) female and 83% (five) male Board
members. The Board's age demographic ranges from 28 to 68. The
business consists of 65% male employees and 35% female
employees.
Remuneration policy
The objective of the remuneration policy is to promote the
long-term success of the Company, giving due regard to the views of
shareholders and stakeholders. In formulating remuneration policy
for the Executive Directors, the Committee:
-considers Directors' experience and the nature and complexity
of their work in order to pay a competitive salary, (in line with
comparable companies), that attracts and retains directors of the
highest quality;
-considers pay and employment conditions within the Company and
salary levels within listed companies of a similar size;
-considers Directors' personal performance; and
-links individual remuneration packages to the business'
long-term performance and continued success of the business through
the award of annual bonuses and share-based incentive schemes.
Executive Directors
Base salary
Executive Directors' base salaries are reviewed annually by the
Committee, taking into account the responsibilities, skills and
experience of each individual, pay and employment conditions within
the Company and the salary levels within listed companies of a
similar size.
Annual bonus
The CEO receives an annual bonus based on performance criteria.
There is also a new bonus scheme for the CEO based on the increase
in the share price over the next three years. Management have taken
an accounting policy choice to only recognise the cost when a
liability actually arises which is at the date the share price is
met and the bonus determined.
Long-term Incentive Plan
The existing LTIP scheme completes this year based on operating
Profit for the year ended 31 March 2022. The Remuneration committee
will review and consider a suitable scheme for the future.
Other benefits
Policies concerning benefits are reviewed periodically.
Currently taxable benefits comprise Company car allowance or a
travel allowance and private health cover. The Committee also
retains the discretion to offer additional benefits as
appropriate.
The Executive Directors and senior managers are members of
defined contribution pension schemes and annual contributions are
calculated by reference to base salaries, with neither annual
bonuses nor awards under the share incentive schemes taken into
account in calculating the amounts due.
Service agreements and termination payments
Details of the Executive Directors' service agreements are set
out below.
Director Date of Contract Unexpired Notice period Notice period
Term by Company by Director
Oliver Raeburn 23 January 2023 Rolling contract 3 months 3 months
----------------- ----------------- -------------- --------------
Kirstie Gould 21 December Rolling contract 9 months 6 months
2017
----------------- ----------------- -------------- --------------
Compensation for loss of office is based on the base salary of
the Director.
Employees' pay
Employees' pay and conditions throughout the business are
considered when reviewing remuneration policy for Executive
Directors.
A profit share scheme exists for all employees (excluding
Executive Directors), and 15% of operating profit is shared among
employees proportionately. This is a mechanism aimed at addressing
issues of motivation of employees below Board level. It is also to
ensure that the Company attracts and retains the best talent and
that their interests align with that of shareholders.
Non-Executive Directors
The remuneration payable to Non-Executive Directors is decided
by the Non-executive Chairman and Non-Executive Directors (but
excluded from discussing their personal fees). The remuneration
payable to the Non-exec Chairman is decided by the other Board
members.
Fees are designed to ensure the Company attracts and retains
high calibre individuals. They are reviewed on an annual basis and
account is taken of the level of fees paid by other companies of a
similar size and complexity. Non-Executive Directors do not
participate in any annual bonus, share options or pension
arrangements. The Company repays the reasonable expenses that
Non-Executive Directors incur in carrying out their duties as
Directors.
Terms of appointment
Each of the Non-Executive Directors signed a letter of
appointment for an initial period of two years which can be
terminated by either party giving to the other prior written notice
of three months. John Stansfield signed a letter on 2 January 2018,
Daniel Carter signed his on 16 July 2020 and Henry de Zoete signed
his on 4 January 2022. The contract continues as long as the
Non-Executive Directors are re-elected at the AGM. All
non-executive directors will stand for re-election at the next AGM
in September 2023 with the exception of Henry de Zoete who is
standing down 30 June 2023.
Daniel Carter
Chairman of the Remuneration and Nomination Committee
21 June 2023
Directors and Corporate Information
Directors Independent Auditors
The full details of all directors Crowe U.K. LLP
who served in the year ended
31 March 2023 can be found
below.
Lyndon Davies Riverside House
Non-Executive Chairman 40-46 High Street
Oliver Raeburn Maidstone
Chief Executive Officer Kent ME14 1JH
Kirstie Gould
Chief Finance Officer Solicitors
Daniel Carter Taylor Wessing LLP
Non-Executive Director 5 New Street Square
John Stansfield London EC4A 3TW
Non-Executive Director Principal Bankers
Henry de Zoete Barclays Bank PLC
Non-Executive Director 9 St George's Street
Kirstie Gould Canterbury
Company Secretary Kent CT1 2JX
Nominated Advisor and Brokers
Registered office Liberum Capital Limited
Enterprise Road Ropemaker Place
Westwood Industrial Estate 25 Ropemaker Street
Margate, Kent CT9 4JX London EC2Y 9LY
Registrars and Transfer Agents
Company Registered Number Link Asset Services
Registered in England Number: The Registry
01547390
34 Beckenham Road
Beckenham
Kent BR3 4TU
Directors' Report
The Directors present their Annual Report together with the
audited consolidated and Company financial statements for the year
ended 31 March 2023.
STATUTORY INFORMATION CONTAINED ELSEWHERE IN THE ANNUAL
REPORT
Information required to be part of the Directors' Report can be
found elsewhere in this document, as indicated, and is incorporated
into this report by reference:
The Group's business review is set out in the Strategic Report
on pages 9 to 10.
The Corporate Governance statement on page 13 to 16.
Details of the Directors who served during the year including
their salaries, bonuses, benefits and share interests are on pages
26 to 27.
Directors' responsibility statements on page 25.
Likely future events are disclosed within the CEO report on page
7.
Post balance sheet events are set out in note 30.
Principal activities
The Company is a holding Company, limited by shares, registered
(and domiciled) in England Reg. No. 01547390 with a Spanish branch
and has seven operating subsidiaries: Hornby Hobbies Limited and
Hornby World Limited in the United Kingdom with a branch in Hong
Kong, Hornby America Inc. in the US, Hornby España S.A. in Spain,
Hornby Italia s.r.l. in Italy, Hornby France S.A.S. in France,
Hornby Deutschland GmbH in Germany and LCD Enterprises Limited in
the United Kingdom. Hornby PLC is a public limited Company which is
a member of AIM and incorporated and operating in the United
Kingdom. Hornby Hobbies India Private Limited was established post
year end but is yet to trade.
The Group is principally engaged in the development, design,
sourcing and distribution of hobby and interactive products.
Results and dividends
The results for the year ended 31 March 2023 are set out in the
Group Statement of Comprehensive Income. Revenue for the year was
GBP55.1 million compared to GBP53.7 million last year. The loss for
the year attributable to equity holders amounted to GBP5.9 million
(2022: GBP0.6 million). The position of the Group and Company is
set out in the Group and Company Statements of Financial Position.
Future developments are set out within the CEO Statement.
No interim dividend was declared in the year (2022: GBPnil) and
the Directors do not recommend a final dividend (2022: GBPnil).
GOING CONCERN
The Group has in place a GBP12.0 million Asset Based Lending
(ABL) facility with Secure Trust Bank PLC ("STB") through to
October 2024. The Covenants are customary operational covenants
applied on a monthly basis. In addition, the Group has a committed
GBP9.0 million loan facility with Phoenix Asset Management Partners
Limited (the Group's largest shareholder) if it should be required
currently expires December 2023.
The Group has prepared trading and cash flow forecasts for a
period of three years, which have been reviewed and approved by the
Board. On the basis of these forecasts, the facilities with STB and
Phoenix and after a detailed review of trading, financial position
and cash flow models (taking COVID-19 into account), the Directors
have a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the
foreseeable future. The Company has received a letter of support
from Phoenix Asset Management confirming their intention to provide
funds to support the Company's business plan for a minimum of
twelve months from the date of signing the financial statements.
For these reasons, the Directors continue to adopt the going
concern basis of accounting in preparing the annual financial
statements.
Research and development
The Board considers that research and development into products
continues to play an important role in the Group's success. R&D
costs of GBP1.7 million (see Note 4) incurred in the year have been
charged to the Statement of Comprehensive Income as these costs all
relate to research activities.
Directors' indemnities
The Company maintained liability insurance for its Directors and
officers during the financial year and up to the date of approval
of the Annual Report and Accounts. The Company has also provided an
indemnity for its Directors and the secretary, which is a
qualifying third party indemnity provision for the purposes of the
Companies Act 2006.
STREAMLINED ENERGY AND CARBON REPORTING (SECR)
Streamlined Energy and Carbon Reporting (SECR) is the UK
Government's name for energy and carbon reporting and taxation.
As a largely office-based business, the Group has a relatively
low carbon presence. Under the SECR requirements we are reporting
energy use and business mileage for all our UK operations.
2023 2023 2022 2022
Scope Activity Consumption Consumption Consumption Consumption
kWh (tCO2e) kWh (tCO2e)
------- ----------------------- ---------------------- ------------ ------------ ------------
Scope
1 Business Mileage 112,748 28.3 112,647 27.3
Scope
2 Purchased Electricity 529,956 112.5 548,850 128.0
Purchased Gas 199,449 40.6 343,019 69.0
------------------------------- ---------------------- ------------ ------------ ------------
842,153 181.4 1,004,516 224.3
Intensity metric
An intensity metric of tCO2e per GBPm revenue
has been applied for the annual total consumption
2023 2022
tCO2e/GBPm Revenue 3.29 3.68
-------------------------------- ---------------------- ------------
During the reporting year the gas and electricity consumption
has fallen due to proactive efforts to reduce our consumption at
Head Office.
Substantial shareholdings
The Company has been notified that at close of business on 19
June 2023 the following parties were interested in 3% or more of
the Company's ordinary share capital.
Number of
ordinary Percentage
Shareholder shares held
============================== ----------- ----------
Phoenix Asset Management 124,634,330 73.38
------------------------------ ----------- ----------
Artemis Fund Managers Limited 27,551,350 16.50
------------------------------ ----------- ----------
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group and Company financial statements in
accordance with UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006. Under
Company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and Company and of the profit or
loss of the Group and Company for that period. In preparing the
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable UK-adopted international accounting
standards in conformity with the Companies Act 2006 have been
followed, subject to any material departures disclosed and
explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The directors are also responsible for safeguarding the assets
of the Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Group and Company and enable
them to ensure that the financial statements comply with the
Companies Act 2006.
The directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' confirmations
The directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group and
Company's position and performance, business model and
strategy.
In the case of each director in office at the date the
Directors' Report is approved:
-- so far as the director is aware, there is no relevant audit
information of which the Group and Company's auditors are unaware;
and
-- they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any relevant
audit information and to establish that the Group and Company's
auditors are aware of that information .
Financial instruments
The Group's financial instruments, other than derivatives,
comprise borrowings, cash and liquid resources, and various items,
such as trade receivables, trade payables, etc. that arise directly
from its operations. The Group's financial liabilities comprise
borrowings, trade payables, other payables and finance leases. The
main purpose of the Group's borrowings is to provide finance for
the Group's operations. The Group has financial assets comprising
cash and trade and other receivables.
The Group also enters into derivatives transactions (principally
forward foreign currency contracts). The purpose of such
transactions is to manage the currency risks arising from the
Group's operations. It is, and has been throughout the period under
review, the Group's policy that no speculative trading in financial
instruments shall be undertaken.
FINANCIAL RISK MANAGEMENT
The financial risk is managed by the Group and more information
on this can be found within the Notes to the financial
statements.
Personnel policies
Hornby is committed to eliminating discrimination and
encouraging diversity amongst our workforce. Our aim is that our
workforce will be truly representative of all sections of society
and each employee feels respected and able to give of their
best.
To that end the purpose of personnel policies are to provide
equality and fairness for all in our employment and not to
discriminate on grounds of gender, marital status, race, ethnic
origin, colour, nationality, national origin, disability, sexual
orientation, religion or age. We oppose all forms of unlawful and
unfair discrimination.
All employees, whether part time, full time or temporary, are
treated fairly and with respect. Selection for employment,
promotion, training or any other benefit is on the basis of
aptitude and ability. All employees are helped and encouraged to
develop their full potential and the talents and resources of the
workforce are fully utilised to maximise the efficiency of the
organisation.
Our commitments are:
-- To create an environment in which individual differences and
the contributions of all our staff are recognised and valued;
-- Every employee is entitled to a working environment that
promotes dignity and respect to all. No form of intimidation,
bullying or harassment is tolerated;
-- Training, development and progression opportunities are available to all staff;
-- Equality in the workplace is good management practice and makes sound business sense;
-- To regularly review all our employment practices and procedures to ensure fairness;
-- Breaches of our equality policy are regarded as misconduct
and may lead to disciplinary proceedings; and
-- These policies will be monitored and reviewed on a regular basis.
The Group places importance on the contributions made by all
employees to the progress of the Group and aims to keep them
informed via formal and informal meetings.
ARTICLES OF ASSOCIATION
The rules governing the appointment and replacement of Directors
are set out in the Company's Articles of Association. The Articles
of Association may be amended by a special resolution of the
Company's shareholders.
Share capital
The share capital of the Company comprises ordinary shares of 1p
each. Each share carries the right to one vote at general meetings
of the Company. The issued share capital of the Company, together
with movements in the Company's issued share capital is shown in
Note 21. Ordinary shareholders are entitled to receive notice and
to attend and speak at general meetings.
Each shareholder present in person or by proxy (or by duly
authorised corporate representatives) has, on a show of hands, one
vote. On a poll, each shareholder present in person or by proxy has
one vote for each share held.
Other than the general provisions of the Articles (and
prevailing legislation) there are no specific restrictions of the
size of a holding or on the transfer of the ordinary shares.
The Directors are not aware of any agreements between holders of
the Company's shares that may result in the restriction of the
transfer of securities or on voting rights. No shareholder holds
securities carrying any special rights or control over the
Company's share capital.
Authority to purchase own shares
The Company was authorised by shareholder resolution at the 2022
Annual General Meeting to purchase up to 10% of its issued share
capital. A resolution will be proposed at the forthcoming Annual
General Meeting and authority sought to purchase up to 10% of its
issued share capital. Under this authority, any shares purchased
must be held as treasury shares or, otherwise, cancelled resulting
in a reduction of the Company's issued share capital.
No shares were purchased by the Company during the year.
Change of control - significant agreements
There are a number of agreements that may take effect, alter or
terminate on a change of control of the Company. None of these are
considered to be significant in their likely impact on the business
as a whole.
POLITICAL DONATIONS
The Company has made no political donations during the year.
Independent auditor
A resolution to reappoint the auditor Crowe U.K. LLP, will be
proposed at the forthcoming Annual General Meeting.
Annual General Meeting
The Annual General Meeting is to be scheduled for 13 September
2023. A notice of the Annual General Meeting will be sent out to
shareholders separately to this Annual Report and Accounts.
DIRECTORS' REMUNERATION
Executive Directors' base salaries are reviewed annually by the
Remuneration and Nomination Committee taking into account the
responsibilities, skills and experience of each individual, pay and
employment conditions within the Company and salary levels within
listed companies of a similar size.
The following table summarises the total salary and pension
contributions received by Directors for 2022/23 and 2021/22 in line
with the Companies Act 2006 requirement:
AUDITED Year ended 31 March 2023 Year ended 31 March
2022
Basic Pension LTIP LTIP Total Basic Pension Total
salary salary
& fees contributions - shares - cash & fees contributions
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------------- ----------- ---------- -------- -------- ---------------- -----------
L Davies
(Appointed
5 October 2017) 247 6 186 178 617 241 - 241
========== ================ =========== ========== ======== ======== ================ ===========
O Raeburn
(Appointed
23 January
2023) 51 2 - - 53 - - -
========== ================ =========== ========== ======== ======== ================ ===========
K Gould
(Appointed
4 January 2018) 191 36 186 178 591 158 29 187
========== ================ =========== ========== ======== ======== ================ ===========
D Carter - - - - - - - -
(Appointed
16 July 2020)
========== ================ =========== ========== ======== ======== ================ ===========
J Stansfield
(Appointed
4 January 2018) 51 - - - 51 71 - 71
========== ================ =========== ========== ======== ======== ================ ===========
H De Zoete
(appointed
5 January 2022) 45 - - - 45 11 - 11
========== ================ =========== ========== ======== ======== ================ ===========
Total 585 44 372 356 1,357 481 29 510
---------- ---------------- ----------- ---------- -------- -------- ---------------- -----------
Performance Share Plan awards outstanding (Audited)
At 31 March 2023, outstanding awards to Directors under the PSP
were as follows:
Director Award Vesting Market At 1 Exercised As at
date date price April during 31 March
at award 2022 the year 2023
date
--------------- -------- --------- ---------- ---------- ------------ ----------
Lyndon Davies Nov-20 Jun-22 54p 1,682,633 (1,682,633) -
Kirstie Gould Nov-20 Jun-22 54p 1,682,633 (1,682,633) -
--------------- -------- --------- ---------- ---------- ------------ ----------
Under the terms of the LTIP, awards are subject to strict
vesting criteria. These are linked to the Company's performance in
the year ended 31 March 2022.
The level of vesting is determined by the level of Operating
Profit announced in the 2021/22 Group results. 63% of the target
was achieved and 63% of the total share options on offer were
granted.
Benefits and Pension (Unaudited)
Policies concerning benefits, including the Group's Company car
policy, are reviewed periodically. Currently, benefits in kind
comprise motor cars or a travel allowance and private health cover,
both of which are non-performance related. The Executive Directors
and senior managers are members of defined contribution pension
schemes and annual contributions are calculated by reference to
base salaries, with neither annual bonuses nor awards under the
share incentive schemes taken into account in calculating the
amounts due.
Executive Directors' service contracts (Unaudited)
Executive Directors do not have fixed period contracts.
Payments to Past Directors, policy on payment of loss of office
and termination payments (Audited)
There were no payments to past directors made during the year.
Notice periods are set under individual service contracts but the
Company has a policy for Executive directors of a notice period of
nine months to be given by the Company and of six months to be
given by the individual. The compensation for loss of office is
based upon the respective service contracts and the components are
based on the base salary of the director.
DIRECTORS' INTERESTS
Interests in shares
Interests of the Directors in the shares of the Company at 31
March 2023 and 31 March 2022 were:
At At
31 March 31 March
2023 2022
number number
------------------------ --------- ---------
Executive Directors
------------------------ --------- ---------
O Raeburn - -
------------------------ --------- ---------
K Gould 786,489 55,006
------------------------ --------- ---------
Non-Executive Directors
------------------------ --------- ---------
L Davies 1,526,627 795,144
------------------------ --------- ---------
H De Zoete - -
------------------------ --------- ---------
D Carter - -
------------------------ --------- ---------
J Stansfield 85,358 85,358
------------------------ --------- ---------
Apart from the interests disclosed above no Directors were
interested at any time in the year in the share capital of any
other Group Company. Daniel Carter is also an employee at Phoenix
Asset Management Partners Limited who hold a substantial
shareholding in Hornby PLC.
On behalf of the Board
Kirstie Gould
Chief Finance Officer
Westwood
Margate
CT9 4JX
XX June 2023
Independent auditor's report to the members of Hornby PLC
Opinion
We have audited the financial statements of Hornby Plc (the
"Parent Company") and its subsidiaries (the "Group") for the year
ended 31 March 2023, which comprise:
-- the Group statement of comprehensive income for the year ended 31 March 2023;
-- the Group and Parent Company statements of financial position as at 31 March 2023;
-- the Group and Parent Company statements of changes in equity for the year then ended;
-- the Group and Parent Company statements of cash flows for the year then ended; and
--
-- the notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
UK-adopted international accounting standards.
In our opinion the financial statements :
-- give a true and fair view of the state of the Group's and of
the Parent Company's affairs as at 31 March 2023 and of the Group's
loss for the period then ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards;
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
and the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the Group's and Parent
Company's ability to continue to adopt the going concern basis of
accounting included:
-- reviewing the cash flow model provided by management and challenging the assumptions made;
-- reviewing management's forecasts which show continued growth
in revenue and a return to profitability;
-- considering whether the forecasts will be feasible in light
of past losses and recent economic conditions;
-- considering whether the group will continue to comply with
existing covenants in respect of its facilities;
-- considering the accuracy of past budgeting since the new
management team took over, as well as a review of the April
management accounts compared to forecast;
-- consideration of the support provided by Phoenix Asset Management;
-- considering the cash position of the business along with
current facilities available for drawdown; and
-- considering the appropriateness of the related disclosures
against the requirements of the accounting standards.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's and Parent Company's ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the Group financial statements as a whole to be
GBP250,000 (2022 GBP250,000), based on turnover but while
considering the underlying profitability of the business. We
consider these to be the key performance metric reported by
management to shareholders to assess the performance of the
business. Materiality represents approximately less than 0.5% of
turnover and 9% of loss before tax (2022: 0.5% of turnover and 17%
of profit before tax).
Overall Parent Company materiality was set at GBP200,000 (2022:
GBP200,000) based on net assets, restricted so as not to exceed
Group materiality.
We use a different level of materiality ('performance
materiality') to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment.
Performance materiality was set at GBP175,000 (2022: GBP175,000)
for the Group and GBP140,000 (2022: GBP140,000) for the Parent
Company.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for related party transactions
and directors' remuneration.
We agreed with the Audit Committee to report to it all
identified errors in excess of GBP10,000 (2022: GBP10,000). Errors
below that threshold would also be reported to it if, in our
opinion as auditor, disclosure was required on qualitative
grounds.
Overview of the scope of our audit
We performed an audit of the financial information of four full
scope components, Hornby Plc, Hornby Hobbies Limited, LCD
Enterprises Limited, Oxford Diecast Limited and Hornby World
Limited. The European sales offices and US trading subsidiary were
audited using a component materiality level of GBP200,000 for the
purposes of the consolidation only.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
We considered going concern to be a key audit matter. Our
observations on this area are set out in the Conclusions relation
to Going Concern section of the auditors' report.
This is not a complete list of all risks identified by our
audit.
Key audit matter How the scope of our audit addressed
the key audit matter
================================= ===============================================
Carrying value of goodwill We obtained an understanding of the
and intangibles and investments design and tested the implementation
- Notes 8, 9 and 11 of controls over the valuation of these
The Group holds goodwill assets.
at a carrying value of GBP1.7m We tested management's impairment review
and brand relations at a which includes impairment reviews for
carrying value of GBP1.5m. investments and intercompany debt in
The Parent Company also the parent and goodwill and intangible
holds significant investments assets at group level.
and debtor balances with The audit work was directed at obtaining
Group companies. evidence on the accuracy of the forecasts
Recovery of these assets of future cash flows which were based
is dependent upon future on board approved forecasts. We challenged
cash flows which are required management on the assumptions made,
to be discounted. There including the forecast growth rate,
is a risk that forecasts profitability, terminal growth rates
for these future cash flows applied and discount rate applied.
are not met or that the This work was conducted utilising the
cash flows have not been expertise of our valuations team. As
discounted at an appropriate part of our testing we benchmarked
rate. If the cash flows assumptions such as the terminal growth
do not meet expectations rate and inputs into the calculation
the assets may become impaired of the cost of capital (discount rate).
For investments and intercompany balances
were considered the fair value of the
group with reference to market capitalisation
of the group.
We ensured that the impairment recorded
had been determined in accordance with
IAS 36.
================================= ===============================================
Inventory provisioning We obtained an understanding of how
- Note 13 the inventory provision was determined
The Group was holding GBP21.3m and considered whether it was a reasonable
of inventory at the year basis for making such a provision.
end. The inventory balance We obtained the aged inventory reports
increased by GBP4.8m (29%) and tested the accuracy of the reports
over the previous year with and then recalculated the provision.
a risk that older inventory We compared the assumptions used to
is difficult to sell and those used in the prior year and challenged
there is inadequate provision. management where assumptions had either
changed or no longer appeared appropriate.
We compared the aging of inventory
year on year to consider whether the
inventory was correctly valued at the
lower of cost and net realisable value.
We considered whether the increase
in inventory during the year resulted
in an overstatement of inventory and
challenged management to consider whether
an additional provision was required
in respect of older inventory.
For a sample of inventory items, we
reviewed sales post year end to consider
if any items were being sold below
cost.
For a sample of older inventory items
we obtained an inventory movement report
and tested the report for accuracy.
We considered the time it will take
for the inventory to sell through based
upon the current run rate and whether
management's sales plans would be achievable.
Based on the audit work performed we
made a significant judgement about
whether the inventory provision was
appropriate.
================================= ===============================================
Our audit procedures in relation to these matters were designed
in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on these matters
individually and we express no such opinion.
Other information
The directors are responsible for the other information
contained within the annual report. The other information comprises
the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this
regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our
audit
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the
Parent Company and their environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of the directors for the financial
statements
As explained more fully in the directors' responsibilities
statement set out on page 25, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and Parent Company's ability
to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit is capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We identified and assessed the risks of
material misstatement of the financial statements from
irregularities, whether due to fraud or error, and discussed these
between our audit team members. We then designed and performed
audit procedures responsive to those risks, including obtaining
audit evidence sufficient and appropriate to provide a basis for
our opinion.
We obtained an understanding of the legal and regulatory
frameworks within which the company operates, focusing on those
laws and regulations that have a direct effect on the determination
of material amounts and disclosures in the financial statements.
The laws and regulations we considered in this context were the
Companies Act 2006 and Taxation legislation.
Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry
of the Directors and other management and inspection of regulatory
and legal correspondence, if any.
We identified the greatest risk of material impact on the
financial statements from irregularities, including fraud, to be
the override of controls by management and the recognition of
revenue. Our audit procedures to respond to these risks
included:
-- enquiry of management about the Group's policies, procedures
and related controls regarding compliance with laws and regulations
and if there are any known instances of non-compliance of laws and
regulations and as regards fraud;
-- examining supporting documents for all material balances,
transactions and disclosures;
-- review of the board meeting minutes;
-- enquiry of management and review and inspection of relevant
correspondence with any legal firms;
-- detailed testing of a sample of sales made during the year
and around the year and agreeing these through to invoices and
despatch records.
-- testing the appropriateness of a sample of significant
journal entries recorded in the general ledger and other
adjustments made in the preparation of the financial statements;
and
-- review of accounting estimates for biases.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. We are not responsible for preventing
non-compliance and cannot be expected to detect non-compliance with
all laws and regulations.
A further description of our responsibilities is available on
the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Mark Sisson (Senior Statutory Auditor
for and on behalf of
Crowe U.K. LLP
Riverside House
40-46 High Street
Maidstone
Kent ME14 1JH
21 June 2023
Group Statement of Comprehensive Income
for the Year Ended 31 March 2023
Group
-------------------------------------------- ------------- ==================
2023 2022
Note GBP'000 GBP'000
-------------------------------------------- ------------- -------- --------
Revenue 2 55,105 53,739
-------------------------------------------- ------------- -------- --------
Cost of sales (28,166) (28,023)
-------------------------------------------- ------------- -------- --------
Gross profit 26,939 25,716
-------------------------------------------- ------------- -------- --------
Distribution costs (8,196) (6,991)
-------------------------------------------- ------------- -------- --------
Selling and marketing costs (11,448) (8,832)
-------------------------------------------- ------------- -------- --------
Administrative expenses (7,712) (8,514)
-------------------------------------------- ------------- -------- --------
Other operating expenses 4 (653) (294)
-------------------------------------------- ------------- -------- --------
Operating (loss)/profit before Exceptional
items 4 (1,070) 1,085
-------------------------------------------- ------------- -------- --------
Exceptional items 4 (3,974) (139)
-------------------------------------------- ------------- -------- --------
Operating (loss)/profit 2 (5,044) 946
-------------------------------------------- ------------- -------- --------
Finance income 3 11 15
-------------------------------------------- ------------- -------- --------
Finance costs 3 (843) (358)
-------------------------------------------- ------------- -------- --------
Net finance expense 3 (832) (343)
-------------------------------------------- ------------- -------- --------
Share of loss of investments using the
equity method 11 - (20)
-------------------------------------------- ------------- -------- --------
(Loss)/Profit before taxation 4 (5,876) 583
-------------------------------------------- ------------- -------- --------
Income tax credit 5 (46) 896
-------------------------------------------- ------------- -------- --------
(Loss)/Profit for the year after taxation (5,922) 1,479
-------------------------------------------- ------------- -------- --------
Other comprehensive income
-------------------------------------------- ------------- -------- --------
Items that may be subsequently reclassified
to profit or loss:
-------------------------------------------- ------------- -------- --------
Cash flow hedges, net of tax (932) 858
-------------------------------------------- ------------- -------- --------
Currency translation gains/(losses) 161 175
-------------------------------------------- ------------- -------- --------
Other comprehensive (loss)/income for
the year, net of tax (771) 1,033
-------------------------------------------- ------------- -------- --------
Total comprehensive (loss)/income for
the year (6,693) 2,512
-------------------------------------------- ------------- -------- --------
Comprehensive income attributable to:
-------------------------------------------- ------------- -------- --------
Equity holders of the Company (6,676) 2,500
-------------------------------------------- ------------- -------- --------
Non-controlling interests (17) 12
-------------------------------------------- ------------- -------- --------
(Loss)/Profit per ordinary share
-------------------------------------------- ------------- -------- --------
Basic 7 (3.50p) 0.89p
-------------------------------------------- ------------- -------- --------
Diluted 7 (3.50p) 0.85p
-------------------------------------------- ------------- -------- --------
All results relate to continuing operations.
The notes on pages 37 to 69 form part of these accounts .
Group and Company Statements of Financial
Position as at 31 March 2023 Group Company
================== ==================
2023 2022 2023 2022
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ---- -------- -------- -------- --------
Assets
------------------------------------------- ---- -------- -------- -------- --------
Non-current assets
------------------------------------------- ---- -------- -------- -------- --------
Goodwill 8 1,732 4,644 - -
------------------------------------------- ---- -------- -------- -------- --------
Intangible assets 9 2,986 3,187 - -
------------------------------------------- ---- -------- -------- -------- --------
Property, plant and equipment 10 12,041 10,057 - -
------------------------------------------- ---- -------- -------- -------- --------
Investments 11 - - 25,509 26,092
------------------------------------------- ---- -------- -------- -------- --------
Right of Use Assets 12 2,087 2,584 - -
------------------------------------------- ---- -------- -------- -------- --------
Deferred tax assets 20 3,571 3,425 -
------------------------------------------- ---- -------- -------- -------- --------
22,417 23,897 25,509 26,092
------------------------------------------- ---- -------- -------- -------- --------
Current assets
------------------------------------------- ---- -------- -------- -------- --------
Inventories 13 21,282 16,462 - -
------------------------------------------- ---- -------- -------- -------- --------
Trade and other receivables 14 9,181 8,786 14,978 47,410
------------------------------------------- ---- -------- -------- -------- --------
Derivative financial instruments 19 2 504 - -
------------------------------------------- ---- -------- -------- -------- --------
Cash and cash equivalents 15 1,337 4,139 1 2
------------------------------------------- ---- -------- -------- -------- --------
31,802 29,891 14,979 47,412
------------------------------------------- ---- -------- -------- -------- --------
Liabilities
------------------------------------------- ---- -------- -------- -------- --------
Current liabilities
------------------------------------------- ---- -------- -------- -------- --------
Borrowings 18 (6,750) (50) - -
------------------------------------------- ---- -------- -------- -------- --------
Trade and other payables 16 (8,067) (7,372) (11,065) (6,958)
------------------------------------------- ---- -------- -------- -------- --------
Lease liabilities 17 (409) (433) - -
------------------------------------------- ---- -------- -------- -------- --------
Derivative financial instruments 19 (557) - - -
------------------------------------------- ---- -------- -------- -------- --------
(15,783) (7,855) (11,065) (6,958)
------------------------------------------- ---- -------- -------- -------- --------
Net current assets 16,019 22,036 3,914 40,454
------------------------------------------- ---- -------- -------- -------- --------
Non-current liabilities
------------------------------------------- ---- -------- -------- -------- --------
(117
Borrowings 18 ) (277) (5,871) (5,643)
------------------------------------------- ---- -------- -------- -------- --------
Lease liabilities 17 (2,047) (2,313) - -
------------------------------------------- ---- -------- -------- -------- --------
Deferred tax liabilities 20 (233) (233) - -
------------------------------------------- ---- -------- -------- -------- --------
(2,397) (2,823) (5,871) (5,643)
------------------------------------------- ---- -------- -------- -------- --------
Net assets 36,039 43,110 23,552 60,903
------------------------------------------- ---- -------- -------- -------- --------
Group and Company Statements of Financial Position as at 31
March 2023
Group Company
Note 2023 2022 2023 2022
-----
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ----- --------- --------- --------- ---------
Equity attributable to owners
of the parent
----------------------------------------- ----- --------- --------- --------- ---------
Share capital 21 1,699 1,669 1,699 1,669
----------------------------------------- ----- --------- --------- --------- ---------
Share premium 52,857 52,857 52,857 52,857
----------------------------------------- ----- --------- --------- --------- ---------
Capital redemption reserve 55 55 55 55
----------------------------------------- ----- --------- --------- --------- ---------
Translation reserve 23 (1,653) (1,814) (1,232) (963)
----------------------------------------- ----- --------- --------- --------- ---------
Hedging reserve 23 (555) 377 - -
----------------------------------------- ----- --------- --------- --------- ---------
Other reserves 23 1,688 1,688 19,145 19,145
----------------------------------------- ----- --------- --------- --------- ---------
Accumulated losses 23 (18,047) (11,734) (48,972) (11,860)
----------------------------------------- ----- --------- --------- --------- ---------
Equity attributable to PLC shareholders 36,044 43,098 23,552 60,903
----------------------------------------- ----- --------- --------- --------- ---------
Non-controlling interests (5) 12
----------------------------------------- ----- --------- --------- --------- ---------
Total equity 36,039 43,110
----------------------------------------- ----- --------- --------- --------- ---------
The Company made a loss after tax of GBP36,704,000 (2022:
GBP1,460,000).
The notes on page 38 to 69 form part of these accounts. The
financial statements on pages 33 to 68 were approved by the Board
of Directors on 15 June 2023 and were signed on its behalf by:
K Gould, Director, Registered Company Number: 01547390
Group and Company Statements of Changes in Equity
For the Year Ended 31 March 2023
GROUP Share Share Capital Translation Hedging Other Non-controlling Retained Total
capital premium redemption reserve reserve reserves interests earnings equity
reserve
------------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Balance
at 31 March
and 1 April
2021 1,669 52,857 55 (1,989) (481) 1,688 - (15,542) 38,257
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Profit for
the year - - - - - - 12 1,467 1,479
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Other
comprehensive
(expense)/income
for the
year - - - 175 858 - - - 1,033
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Total
comprehensive
(loss)/income
for the
year - - - 175 858 - 12 1,467 2,512
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Transactions
with owners
------------------ -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Share-based
payments
(Note 22) - - - - - - 2,341 2,341
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Total transactions
with owners - - - - - - 2,341 2,341
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Balance
at 31 March
2022 and
1 April
2022 1,669 52,857 55 (1,814) 377 1,688 12 (11,734) 43,110
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Loss for
the year - - - - - - (17) (5,905) (5,922)
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Other
comprehensive
(expense)/income
for the
year - - - 161 (932) - - - (771)
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Total
comprehensive
(loss)/income
for the
year - - - 161 (932) - (17) (5,905) (6,693)
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Transactions
with owners
------------------ -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Share-based
payments
- cash (Note
22) 30 - - - - - - (940) (910)
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Share-based
payments
- noncash
(Note 22) - - - - - - - 532 532
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Total transactions
with owners 30 - - - - - - (408) (378)
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
Balance
at 31 March
2023 1,699 52,857 55 (1,653) (555) 1,688 (5) (18,047) 36,039
------------------- -------- -------- ----------- ------------ -------- --------- ---------------- --------- --------
COMPANY Share Share Capital Translation Other Retained Total
Capital premium redemption reserve reserves earnings equity
reserve
---------------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Balance at
31 March and
1 April 2021 1,669 52,857 55 (1,016) 19,145 (12,741) 59,969
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Loss for the
year - - - - - (1,460) (1,460)
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Other comprehensive
expense for
the year - - - 53 - - 53
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Total comprehensive
income/(expense)
for the year - - - 53 - (1,460) (1,407)
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Transactions
with owners
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Share-based
payments (Note
22) - - - - - 2,341 2,341
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Total transactions
with owners - - - - - 2,341 2,341
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Balance at
31 March and
1 April 2022 1,669 52,857 55 (963) 19,145 (11,860) 60,903
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Loss for the
year - - - - - (36,704) (36,704)
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Other comprehensive
expense for
the year - - - (269) - - (269)
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Total comprehensive
income/(expense)
for the year - - - (269) - (36,704) (36,973)
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Transactions
with owners
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Share-based
payments (Note
22) 30 - - - - (408) (378)
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Total transactions
with owners 30 - - - - (408) (378)
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
Balance at
31 March 2023 1,699 52,857 55 (1,232) 19,145 (48,972) 23,552
--------------------- --------- --------- ------------ ------------ ---------- ---------- ---------
The notes on page 37 to 69 form part of these accounts.
Group and Company Cash Flow Statements
for the Year Ended 31 March 2023
Group Company
Note 2023 2022 2023 2022
-------------------------------------------- -----
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ----- -------- -------- --------- --------
Loss before taxation (5,875) 583 (36,704) (1,460)
Interest payable 322 192 212 209
-------------------------------------------- ----- -------- -------- --------- --------
Interest paid on Lease liabilities 153 166 - -
Interest receivable (11) (15) (175) (175)
-------------------------------------------- ----- -------- -------- --------- --------
Share of profit of Minority Interest - 20 - 240
Disposal of equity interest - 219 - -
-------------------------------------------- ----- -------- -------- --------- --------
Amortisation of intangible assets 553 308 - -
Impairment of goodwill/intercompany
balances 2,915 - 33,389 -
-------------------------------------------- ----- -------- -------- --------- --------
Depreciation 2,762 2,239 - -
Depreciation on right of use assets 528 490 - -
-------------------------------------------- ----- -------- -------- --------- --------
Share-based payments (non cash) 532 2,341 266 1,171
-------------------------------------------- ----- -------- -------- --------- --------
Share-based payments (cash) (940) - - -
-------------------------------------------- ----- -------- -------- --------- --------
Decrease / (increase) in inventories (4,680) 994 - -
-------------------------------------------- ----- -------- -------- --------- --------
Decrease / (increase) in trade and
other receivables (373) (1,150) (870) -
-------------------------------------------- ----- -------- -------- --------- --------
(Decrease) / increase in trade and
other payables 733 (1,525) 3,851 15
-------------------------------------------- ----- -------- -------- --------- --------
Cash flows from operating activities (3,381) 4,862 (31) -
-------------------------------------------- ----- -------- -------- --------- --------
Interest paid (322) (192) - -
-------------------------------------------- ----- -------- -------- --------- --------
Interest element of ROU lease payments (153) (166) - -
-------------------------------------------- ----- -------- -------- --------- --------
Net cash (used in)/generated from
operating activities (3,856) 4,504 - -
-------------------------------------------- ----- -------- -------- --------- --------
Cash flows from investing activities
-------------------------------------------- ----- -------- -------- --------- --------
Purchase of business (net of cash
acquired) 11 - (1,015) - -
-------------------------------------------- ----- -------- -------- --------- --------
Purchase of property, plant and equipment 10 (4,744) (3,551) - -
-------------------------------------------- ----- -------- -------- --------- --------
Purchase of intangible assets 9 (351) (149) - -
-------------------------------------------- ----- -------- -------- --------- --------
Interest received 11 15 - -
-------------------------------------------- ----- -------- -------- --------- --------
Net cash (used in)/generated from
investing activities (5,084) (4,700) - -
-------------------------------------------- ----- -------- -------- --------- --------
Cash flows from financing activities
-------------------------------------------- ----- -------- -------- --------- --------
Proceeds from issuance of ordinary
shares 30 - 30 -
-------------------------------------------- ----- -------- -------- --------- --------
Repayment of CBIL loan (50) (25) - -
-------------------------------------------- ----- -------- -------- --------- --------
Proceeds from Asset Based Lending 4,590 - - -
Facility
-------------------------------------------- ----- -------- -------- --------- --------
Shareholder Loan 2,000 110 - -
-------------------------------------------- ----- -------- -------- --------- --------
Payment of lease liabilities (460) (446) - -
-------------------------------------------- ----- -------- -------- --------- --------
Net cash generated from/(used in)
financing activities 6,110 (361) 30 -
-------------------------------------------- ----- -------- -------- --------- --------
Net (decrease)/increase in cash
and cash equivalents (2,830) (557) (1) -
-------------------------------------------- ----- -------- -------- --------- --------
Cash, cash equivalents and bank overdrafts
at beginning of the year 4,139 4,685 2 2
-------------------------------------------- ----- -------- -------- --------- --------
Effect of exchange rate movements 28 11 - -
-------------------------------------------- ----- -------- -------- --------- --------
Cash, cash equivalents and bank
overdrafts at end of year 1,337 4,139 1 2
-------------------------------------------- ----- -------- -------- --------- --------
Cash, cash equivalents and bank
overdrafts consist of:
-------------------------------------------- ----- -------- -------- --------- --------
Cash and cash equivalents 15 1,337 4,139 1 2
-------------------------------------------- ----- -------- -------- --------- --------
Cash, cash equivalents and bank
overdrafts at end of year 1,337 4,139 1 2
-------------------------------------------- ----- -------- -------- --------- --------
Notes to the Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Accounting policies for the year ended 31 March 2023
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
BASIS OF PREPARATION
The financial statements are presented in sterling, which is the
Parent's functional currency and the Group's presentation currency.
The figures shown in the financial statements are rounded to the
nearest thousand pounds.
The financial information for the year ended 31 March 2023 has
been prepared in accordance with UK-adopted international
accounting standards. The consolidated Group and Parent Company
financial statements have been prepared on a going concern basis
and under the historical cost convention, as modified by the
revaluation of certain financial assets and liabilities (including
derivative instruments) at fair value through profit or loss. Under
section 408 of the Companies Act 2006 the Company is exempt from
the requirement to present its own income statement or statement of
comprehensive income.
The preparation of financial statements in conformity with
UK-adopted IAS requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Although these estimates
are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those
estimates.
GOING CONCERN
The Group has in place a GBP12.0 million Asset Based Lending
(ABL) facility with Secure Trust Bank PLC ("STB") through to
October 2024. The Covenants are customary operational covenants
applied on a monthly basis. In addition, the Group has a committed
GBP9.0 million loan facility with Phoenix Asset Management Partners
Limited (the Group's largest shareholder) if it should be required.
This facility currently expires December 2023.
The Group has prepared trading and cash flow forecasts for a
period of three years, which have been reviewed and approved by the
Board. On the basis of these forecasts, the facilities with STB and
Phoenix and after a detailed review of trading, financial position
and cash flow models, the Directors have a reasonable expectation
that the Group and Company have adequate resources to continue in
operational existence for the foreseeable future. The Company has
received a letter of support from Phoenix Asset Management
confirming their intention to provide funds to support the
Company's business plan for a minimum of twelve months from the
date of signing the financial statements. For these reasons, they
continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
BASIS OF CONSOLIDATION
Subsidiaries are all entities over which the Group has control.
The Group controls an entity where the Group is exposed to, or has
the rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to
the Group. They are deconsolidated from the date that control
ceases.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued, liabilities incurred or assumed at the
date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired, and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date,
irrespective of the extent of any non-controlling interest. The
excess of the cost of acquisition over the fair value of the
Group's share of the identifiable net assets acquired is recorded
as goodwill.
Intercompany transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated but considered an impairment indicator
of the asset concerned. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the
policies adopted by the Group.
ADOPTION OF NEW AND REVISED STANDARDS
The following standards and interpretations relevant to the
Group are in issue but are not yet effective and have not been
applied in the historical financial information. In some cases
these standards and guidance have not been endorsed for use.
-- IAS 1 Presentation of liabilities as current or non-current
-- IAS 1 Disclosure of accounting policies
-- IAS 8 definition of accounting estimates
Adoption of these standards is not expected to have a material
impact on the group.
REVENUE RECOGNITION
The Group's revenue is mostly from product sales and is
recognised as follows:
(a) Sale of goods
Sales of goods are recognised when a Group entity has delivered
products to the customer. The customer is either a trade customer
or the consumer when sold through Hornby concessions in various
retail outlets, or via the internet.
(b) Royalty income
Royalty income is recognised when the performance obligation is
satisfied depending on the terms of the contract and the amount of
revenue can be measured reliably.
(c) Sales returns
The Group establishes a refund liability (included in trade and
other payables) at the period end that reduces revenue in
anticipation of customer returns of goods sold in the period.
Accumulated experience is used to estimate such returns at the time
of sale at a portfolio level (expected value method). Goods to be
returned are not recognised as assets until they are returned and
have been inspected.
(d) Hornby Visitor Centre
Revenue is generated from the ticket and product sales at our
Visitor Centre in Margate and recognised at the point of sale.
Dividend income in the Company is recognised upon receipt.
Revenue from management services are recognised in the accounting
period in which the services are rendered.
EXCEPTIONAL ITEMS
Where items of income and expense included in the statement of
comprehensive income are considered to be material and exceptional
in nature, separate disclosure of their nature and amount is
provided in the financial statements. These items are classified as
exceptional items. The Group considers the size and nature of an
item both individually and when aggregated with similar items when
considering whether it is material, for example impairment of
intangible assets or restructuring costs.
OPERATING SEGMENTS
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of the Company that
makes strategic decisions.
Operating profit of each reporting segment includes revenue and
expenses directly attributable to or able to be allocated on a
reasonable basis. Segment assets and liabilities are those
operating assets and liabilities directly attributable to or that
can be allocated on a reasonable basis.
BUSINESS COMBINATIONS
Goodwill arising on a business combination, is not subject to
amortisation but tested for impairment on an annual basis.
Intangible assets, excluding goodwill, arising on a business
combination are separately identified and valued, and subject to
amortisation over their estimated economic lives.
GOODWILL
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the net identifiable
assets of the acquired subsidiary at the date of acquisition.
Goodwill is tested annually for impairment and carried at cost
less accumulated impairment losses. Impairment losses on goodwill
are not reversed. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity
sold. Goodwill is allocated to cash-generating units for the
purpose of impairment testing. The allocation is made to those
cash-generating units or Groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose identified according to operating segment. Goodwill
is recorded in the currency of the cash generating unit to which it
is allocated.
INTANGIBLES
Other intangibles include brands, customer lists and computer
software. They are recognised initially at fair value determined in
accordance with appropriate valuation methodologies and subjected
to amortisation and annual impairment reviews, as follows:
(a) Brand names
Brand names, acquired as part of a business combination, are
capitalised at fair value as at the date of acquisition. They are
carried at their fair value less accumulated amortisation and any
accumulated impairment losses. Amortisation is calculated using the
straight-line method to allocate the fair value of brand names over
their estimated economic life of 15-20 years.
(b) Customer lists
Customer lists, acquired as part of a business combination, are
capitalised at fair value as at the date of acquisition. They are
carried at their fair value less accumulated amortisation and any
accumulated impairment losses. Amortisation is calculated using the
straight-line method to allocate the fair value of customer
relationships over their estimated economic life of ten years.
Customer lists have been valued according to discounted incremental
operating profit expected to be generated from each of them over
their useful lives of 10 years.
(c ) Computer software and website costs
Computer software and website expenditure is capitalised at the
value at the date of acquisition and depreciated over a useful
economic life of 4-6 years.
PROPERTY, PLANT AND EQUIPMENT
Land and buildings are shown at cost less accumulated
depreciation. Assets revalued prior to the transition to IFRS use
this valuation as deemed cost at this date. Other property, plant
and equipment are shown at historical cost less accumulated
depreciation. Cost includes the original purchase price of the
asset and the costs attributable to bringing the asset to its
working condition for its intended use.
Depreciation is provided at rates calculated to write off the
cost or valuation of each asset, on a straight-line basis (with the
exception of tools and moulds) over its expected useful life to its
residual value, as follows:
Plant and equipment - 5 to 10 years
Motor vehicles - 4 years
Tools and moulds are depreciated at varying rates in line with
the related product production on an item-by-item basis up to a
maximum of four years . Tools and moulds purchased but not ready
for production are not depreciated.
IMPAIRMENT OF NON-CURRENT ASSETS
Assets that have an indefinite useful life, for example
goodwill, are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are
reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable. An
impairment loss is recognised for the amount by which the asset's
carrying value exceeds its recoverable amount, which is considered
to be the higher of its value in use and fair value less costs to
sell. In order to assess impairment, assets are grouped into the
lowest levels for which there are separately identifiable cash
flows (cash-generating units). Cash flows used to assess impairment
are discounted using appropriate rates taking into account the cost
of equity and any risks relevant to those assets.
INVESTMENTS
In the Company's financial statements, investments in subsidiary
undertakings are stated at cost less any impairment. Investments in
associates are recognised using the equity method of accounting,
where the investments are initially recognised at cost and adjusted
thereafter to recognise the Group's share of the profits or losses
of the investee. Dividend income is shown separately in the
Statement of Comprehensive Income.
INVENTORIES
Inventories are stated at the lower of cost and net realisable
value. Cost is predominantly determined using the first-in,
first-out ('FIFO') method. Alternative methods may be used when
proven to generate no material difference. The cost of finished
goods comprise item cost, freight and any product specific
development costs.
Net realisable value is based on anticipated selling price less
further costs expected to be incurred to completion and disposal.
Provisions are made against those stocks considered to be obsolete
or excess to requirements on an item-by-item basis.
The replacement cost, based upon latest invoice prices before
the reporting date, is considered to be higher than the balance
sheet value of inventories at the year end due to price rises and
exchange fluctuations. It is not considered practicable to provide
an accurate estimate of the difference at the year end date.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised in the
Group and Company's statements of financial position when the Group
or Company becomes a party to the contractual provisions of the
instrument.
TRADE RECEIVABLES
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost less provision for
impairment. To establish the provision for impairment, the Group
applies IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade
receivable.
To measure the expected credit losses, trade receivables have
been grouped based on shared credit risk characteristics and the
days past due. The expected loss rates are based on the payment
profiles of sales over a period of twelve months before 31 March
2023 and the corresponding historical credit losses experienced
within this period.
FINANCIAL LIABILITIES AND EQUITY
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into.
An equity instrument is any contract that evidences a residual
interest in the assets of the Group and Company after deducting all
of its liabilities. Equity instruments issued by the Group and
Company are recorded at the proceeds received, net of direct issue
costs.
REFUND LIABILITY
Provisions for sales returns are recognised for the products
expected to be returned. Accumulated experience is used to estimate
such returns at the time of sale at a portfolio level (expected
value method).
CUSTOMER LOYALTY LIABILITY
Loyalty points issued by Hornby when a customer purchases goods
from the website are a separate performance obligation providing a
material right to a future discount. The amount allocated to
loyalty points is deferred as a contract liability within trade and
other payables. Revenue is recognised as the points are redeemed by
the customer.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purpose of the cash flow
statement includes cash in hand, deposits at banks, other liquid
investments with original maturities of three months or less and
bank overdrafts. Bank overdrafts or loans where there is no right
of set off are shown within borrowings in current or non-current
liabilities on the statement of financial position as
appropriate.
BORROWING COSTS
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
Statement of Comprehensive Income over the period of the borrowings
using the effective interest method.
Fees paid on the establishment of loan facilities are recognised
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs and subsequently
amortised over the life of the facility. To the extent that there
is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalised as a prepayment for
liquidity services and amortised over the period of the facility to
which it relates.
TRADE PAYABLES
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
TAXATION INCLUDING DEFERRED TAX
Corporation tax, where payable, is provided on taxable profits
at the current rate.
The taxation liabilities of certain Group undertakings are
reduced wholly or in part by the surrender of losses by fellow
Group undertakings.
Deferred tax is provided on all temporary differences at the
statement of financial position date between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred tax assets are recognised for all deductible temporary
differences, carry-forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences,
and the carry-forward of unused tax assets and unused tax losses
can be utilised. The carrying amount of deferred income tax assets
is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred income tax asset
to be utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities, and when the deferred income tax assets
and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
balance sheet date. Tax relating to items recognised directly in
equity is recognised in equity and not in the Statement of
Comprehensive Income.
EMPLOYEE BENEFIT COSTS
During the year the Group operated a defined contribution money
purchase pension scheme under which it pays contributions based
upon a percentage of the members' basic salary. The scheme is
administered by trustees either appointed by the Company or elected
by the members (to constitute one third minimum).
Contributions to defined contribution pension schemes are
charged to the Statement of Comprehensive Income according to the
year in which they are payable.
Further information on pension costs and the scheme arrangements
is provided in Note 25.
The Group has a profit share scheme for all employees below
Executive level. This scheme commenced in 2020/21 with a 5% bonus
for all when the Group broke even. Thereafter, 15% of all Group
operating profit will be shared between the employees every
year.
There is a new bonus scheme for the CEO based on the increase in
the share price over the next three years. Management have taken
and accounting policy choice to only recognise the cost when a
liability actually arises which is at the date the share price is
met and the bonus determined.
R&D COSTS
Research and development expenditure that does not meet the
criteria for capitalisation under IAS 36 is expensed as
incurred.
SHARE CAPITAL AND SHARE PREMIUM
Ordinary shares issued are shown as share capital at nominal
value. The premium received on the sale of shares in excess of the
nominal value is shown as share premium within total equity.
SHARE BASED PAYMENTS
The Group has issued share options to executive directors. The
fair value of the award granted is recognised as an employee
expense within the Income Statement with a corresponding increase
in equity. The fair value is measured at the grant date and
allocated over the vesting period based on the best available
estimate of the number of share options expected to vest. Estimates
are subsequently revised if there is any indication that the number
of share options expected to vest differs from previous estimates.
The fair value of the grants is measured using the Black-Scholes
model.
FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group's operations expose it to a variety of financial risks
that include the effects of changes in foreign currency exchange
rates, market interest rates, credit risk and its liquidity
position. The Group has in place a risk management programme that
seeks to limit adverse effects on the financial performance of the
Group by using foreign currency financial instruments.
(a) Foreign exchange risk
The Group is exposed to foreign exchange risks against Sterling
primarily on transactions in US Dollars. It enters into forward
currency contracts to hedge the cash flows of its product sourcing
operation (i.e. it buys US Dollars forwards in exchange for
Sterling) and looks forward six-twelve months on a rolling basis at
forecasted purchase volumes. The policy framework requires hedging
between 70% and 100% of anticipated import purchases that are
denominated in US Dollars.
The Company has granted Euro denominated intercompany loans to
subsidiary companies that are translated to Sterling at statutory
period ends thereby creating exchange gains or losses. The loans to
the subsidiaries, Hornby Deutschland GmbH, Hornby Italia s.r.l. and
Hornby France S.A.S. are classified as long-term loans and
therefore the exchange gains and losses on consolidation are
reclassified to the translation reserve in Other Comprehensive
Income as per IAS 21. The loan to the branch in Spain is classified
as a long-term loan however repayable on a shorter timescale than
those of the other subsidiaries and therefore the exchange gains or
losses are taken to Statement of Comprehensive Income.
(b) Interest rate risk
The Group finances its operations through a mixture of Asset
Based lending facilities and shareholder loans. The Group borrows,
principally in Sterling, at floating rates of interest to meet
short-term funding requirements. At the year end the Group's
borrowings were GBP6,867,000.
(c) Credit risk
The Group manages its credit risk through a combination of
internal credit management policies and procedures.
(d) Liquidity risk
At 31 March 2023 the UK had a GBP12 million Asset Based Lending
facility with Secure Trust Bank PLC and a GBP9 million loan
facility with Phoenix Asset Management Partners. The funding needs
are determined by monitoring forecast and actual cash flows. The
Group regularly monitors its performance against its banking
covenants to ensure compliance.
DERIVATIVE FINANCIAL INSTRUMENTS
To manage exposure to foreign currency risk, the Group uses
foreign currency forward contracts, also known as derivative
financial instruments.
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently remeasured
at their fair value at the end of each reporting period. The Group
documents at the inception of the transaction the relationship
between hedging instruments and hedged items, as well as its risk
management objective and strategy for undertaking various hedge
transactions. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging
instrument and, if so the nature of the item being hedged.
(a) Cash flow hedge
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow hedges are
recognised in the hedging reserve within equity and through the
Statement of Comprehensive Income within Other Comprehensive
Income. The gain or loss relating to the ineffective portion is
recognised immediately in the Statement of Comprehensive Income
within operating expenses.
Amounts accumulated in Other Comprehensive Income are recycled
in the Statement of Comprehensive Income in the periods when the
hedged item affects profit or loss (for instance when the forecast
purchase that is hedged takes place). The gain or loss relating to
the effective portion of forward foreign exchange contracts hedging
import purchases is recognised in the Statement of Comprehensive
Income within 'cost of sales'. However, when the forecast
transaction that is hedged results in the recognition of a
non-financial asset (for example, inventory) the gains and losses
previously deferred in Other Comprehensive Income are transferred
from Other Comprehensive Income and included in the initial
measurement of the cost of the asset. The deferred amounts are
ultimately recognised in cost of goods sold in the case of
inventory.
When a hedging instrument expires or is sold, or when a hedge no
longer meets the criteria for hedge accounting, any cumulative gain
or loss existing in equity at that time remains in equity and is
recognised in income when the forecast transaction is ultimately
recognised in the Statement of Comprehensive Income. When a
forecast transaction is no longer expected to occur, the cumulative
gain or loss is immediately transferred to the Statement of
Comprehensive Income.
(b) Derivatives that do not qualify for hedge accounting
Non derivative financial instruments comprise trade and other
receivables, cash and cash equivalents, loans and borrowings, and
trade and other payables. Unless otherwise indicated, the carrying
amounts of the Group's and the Company's financial assets and
liabilities are a reasonable approximation of their fair
values.
FAIR VALUE ESTIMATION
The fair values of short-term deposits, loans and overdrafts
with a maturity of less than one year are assumed to approximate to
their book values.
The fair values of the derivative financial instruments used for
hedging purposes are disclosed in Note 19.
FOREIGN CURRENCY
Transactions denominated in foreign currencies are recorded in
the relevant functional currency at the exchange rates ruling at
the date of the transaction. Foreign exchange gains and losses
resulting from such transactions are recognised in the Statement of
Comprehensive Income, except when deferred and disclosed in Other
Comprehensive Income as qualifying cash flow hedges. Monetary
assets and liabilities denominated in foreign currencies are
translated at the exchange rates ruling at the balance sheet date
and any exchange differences are taken to the Statement of
Comprehensive Income.
Foreign exchange gains/losses recognised in the Statement of
Comprehensive Income relating to foreign currency loans and other
foreign exchange adjustments are included within operating
profit.
On consolidation, the Statement of Comprehensive Income and cash
flows of foreign subsidiaries are translated into Sterling using
average rates that existed during the accounting period. The
balance sheets of foreign subsidiaries are translated into Sterling
at the rates of exchange ruling at the balance sheet date. Gains or
losses arising on the translation of opening and closing net assets
are recognised in Other Comprehensive Income.
DIVID DISTRIBUTION
Final dividends are recorded in the Statement of Changes in
Equity in the period in which they are approved by the Company's
shareholders. Interim dividends are recorded in the period in which
they are approved and paid.
CRITICAL ESTIMATES AND JUDGEMENTS IN APPLYING THE ACCOUNTING
POLICIES
The Group's estimates and judgements are continually evaluated
and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
Critical accounting estimates and assumptions:
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are addressed below.
(a) Impairment of goodwill, intangibles and investments
The Group tests annually whether any goodwill, investment or
intangible asset has suffered any impairment. The recoverable
amounts of cash-generating units (CGUs) have been determined based
on value-in-use calculations. The critical areas of estimation
applied within the impairment reviews conducted include the
weighted average cost of capital used in discounting the cash flows
of the cash generating units, the forecast margin growth rate, the
growth rate in perpetuity of the cash flows and the forecast
operating profits of the cash generating units. The judgements used
within this assessment are set out within Note 8.
Other estimates and assumptions:
(a ) Inventory provision
Whenever there is a substantiated risk that an item of stock's
sellable value may be lower than its actual stock value, a
provision for the difference between the two values is made.
Management review the stock holdings on a regular basis and
consider where a provision for excess or obsolete stock should be
made based on expected demand for the stock and its condition.
(b) Receivables provision
The Group reviews the amount of credit loss associated with its
trade receivables, intercompany receivables and other receivables
based on forward looking estimates that consider current and
forecast credit conditions as opposed to relying on past historical
default rates.
(c) Fair value of derivatives
The fair value of the financial derivatives is determined by the
mark to market value at the year end date with any movement in fair
value going through Other Comprehensive Income.
(d) Refund liability
The refund liability is based on accumulated experience of
returns at the time of sale at a portfolio level (expected value
method). Because the number of products returned has been steady
for years, it is highly probable that a significant reversal in the
cumulative revenue recognised will not occur. The validity of this
assumption and the estimated amount of returns are reassessed at
each reporting date. The right to the returned goods is measured by
reference to the carrying amount of the goods.
(e) IFRS 16 Estimates
The Group makes judgement to estimate the incremental borrowing
rate used to measure lease liabilities based on expected third
party financing costs when the interest rate implicit in the lease
cannot be readily determined. This is explained further in the
Leases accounting policy. Where leases include break dates the
management make decisions as to whether the lease is likely to be
broken and calculations are based on this judgement.
Critical judgements in applying the Group's accounting
policies:
(a) Recognition of deferred tax on losses
Deferred tax assets are recognised for deductible temporary
differences, carry-forward of unused tax assets and unused tax
losses, to the extent that it is probable that the taxable profit
will be available against which the deductible temporary
differences, and the carry-forward of unused tax assets and unused
tax losses can be utilised. The carrying amount of deferred tax
assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred income tax
asset to be utilised.
(b) Going concern
The directors apply judgement to assess whether it is
appropriate for the Group to be reported as a going concern by
considering the business activities and the Group's principal risks
and uncertainties. Details of the consideration made are included
within the Directors report (page 23) and the basis of preparation
(page 42).
A number of assumptions and estimates are involved in arriving
at this judgement including management's projections of future
trading performance and expectations of the external economic
environment.
2. SEGMENTAL REPORTING
Management has determined the operating segments based on the
reports reviewed by the Board (chief operating decision-maker) that
are used to make strategic decisions.
The Board considers the business from a geographic perspective.
Geographically, management considers the performance in the UK,
USA, Spain, Italy and the rest of Europe.
Although the USA segment does not meet the quantitative
thresholds required by IFRS 8, management has concluded that this
segment should be reported, as it is closely monitored by the Board
as it is outside Europe.
The Company is a holding Company operating in the UK with its
results given in the Company Statement of Comprehensive Income on
page 33 and its assets and liabilities given in the Company
Statement of Financial Position on page 34. Other Company
information is provided in the other notes to the accounts.
Year ended 31 March 2023
UK USA Spain Italy Rest Total Intra Group
of Reportable
-------------------
Europe Segments Group GBP'000
-------------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Revenue
- External 39,617 4,875 1,464 3,494 5,655 55,105 - 55,105
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
- Other
segments 3,193 - - - - 3,193 (3,193) -
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Operating
(Loss)/Profit
before
exceptional
items (1.467) (598) 21 371 603 (1.070) - (1,070)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Exceptional
items (3,974) - - - - (3,974) - (3,974)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Operating
Profit/(Loss) (5,441) (598) 21 371 603 (5,044) - (5,044)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Finance
income
- External 11 - - - - 11 - 11
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
- Other
segments 473 - - - - 473 (473) -
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Finance
costs
- External (825) (12) (1) (2) (3) (843) - (843)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
- Other
segments (174) - (212) (15) (72) (473) 473 -
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Profit/(Loss)
before
taxation (5,956) (610) (192) 354 528 (5,876) - (5,876)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Taxation (21) - - (25) - (46) - (46)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Profit/(Loss)
for the
year (5,977) (610) (192) 329 528 (5,922) - (5,922)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Segment
assets 65,951 2,307 6,222 198 5,401 80,079 - 80,079
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Less intercompany
receivables (18,215) - (6,136) (424) (4,657) (29,432) - (29,432)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Add tax
assets 3,637 - - (65) 3,572 - 3,572
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Total
assets 51,373 2,307 86 (291) 744 54,219 - 54,219
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Segment
liabilities (33,244) (7,611) (5,852) (442) (6,756) (53,905) - (53,905)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Less intercompany
payables 15,523 7,537 5,760 127 6,545 35,492 - 35,492
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Add tax
liabilities 233 - - - - 233 - 233
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Total
liabilities (17,488) (74) (92) (315) (211) (18,180) - (18,180)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Other
segment
items
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Capital
expenditure 4,721 16 - 7 - 4,744 - 4,744
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Depreciation 2,739 17 2 4 - 2,762 - 2,762
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Net foreign
exchange
on intercompany
loans (313) - - - - (313) - (313)
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Amortisation
of intangible
assets 553 - - - - 553 - 553
------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Year ended 31 March 2022
UK USA Spain Italy Rest Total Intra Group
of Reportable
Europe Segments Group GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Revenue - External 37,748 4,551 2,181 3,401 5,858 53,739 - 53,739
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
- Other segments 2,791 - - - - 2,791 (2,791) -
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Operating Profit/(Loss) 489 (655) 125 337 649 945 - 945
Finance income
- External 15 - - - - 15 - 15
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
- Other segments 471 - - - - 471 (471) -
Finance costs
- External (339) (12) (1) (2) (4) (358) - (358)
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
- Other segments (175) (209) (16) (71) (471) 471 -
Share of profit
of investments
accounted for
using the equity
method (20) - - - - (20) - (20)
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Profit/(Loss)
before taxation 440 (667) (85) 319 575 582 - 582
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Taxation 911 - - (15) - 896 - 896
Profit/(Loss)
for the year 1,351 (667) (85) 304 575 1,478 - 1,478
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Segment assets 63,951 2,663 6,639 269 4,743 78,265 - 78,265
Less intercompany
receivables (17,572) - (5,876) (497) (3,957) (27,902) - (27,902)
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Add tax assets 3,488 - - (63) 3,425 - 3,425
Total assets 49,867 2,663 763 (291) 786 53,788 - 53,788
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Segment liabilities (25,098) (6,968) (5,399) (897) (6,540) (44,902) - (44,902)
Less intercompany
payables 14,917 6,872 5,322 520 6,340 33,971 - 33,971
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Add tax liabilities 238 - - 15 - 253 - 253
Total liabilities (9,943) (96) (77) (362) (200) (10,678) - (10,678)
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Other segment
items
Capital expenditure 6,086 2 2 4 - 6,094 - 6,094
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
Depreciation 2,217 15 3 4 - 2,239 - 2,239
Amortisation of
intangible assets 485 - - - - 485 - 485
------------------------- --------- --------- -------- -------- -------- ------------ -------- ---------
3. NET FINANCE EXPENSE
Group
==================
2023 2022
GBP'000 GBP'000
---------------------------------------- -------- --------
Finance costs:
---------------------------------------- -------- --------
Interest expense on bank borrowings (322) (100)
---------------------------------------- -------- --------
Interest expense on shareholder loan (368) (92)
---------------------------------------- -------- --------
Interest element of lease payments made (153) (166)
---------------------------------------- -------- --------
(843) (358)
---------------------------------------- -------- --------
Finance income:
---------------------------------------- -------- --------
Bank interest 11 15
---------------------------------------- -------- --------
Interest income on intercompany loans - -
---------------------------------------- -------- --------
11 15
---------------------------------------- -------- --------
Net finance costs (832) (343)
---------------------------------------- -------- --------
4. PROFIT/(LOSS) BEFORE TAXATION
Group
2023 2022
--------------------------------------------
GBP'000 GBP'000
-------------------------------------------- -------- --------
The following items have been included
in arriving at loss before taxation:
-------------------------------------------- -------- --------
Staff costs 10,315 11,761
-------------------------------------------- -------- --------
Inventories:
-------------------------------------------- -------- --------
- Cost of inventories recognised
as an expense (included in cost
of sales) 22,754 22,982
-------------------------------------------- -------- --------
- Stock provision 29 263
-------------------------------------------- -------- --------
Depreciation of property, plant
and equipment:
-------------------------------------------- -------- --------
- Owned assets 2,763 2,239
-------------------------------------------- -------- --------
- Leased assets 492 489
-------------------------------------------- -------- --------
Repairs and maintenance expenditure
on property, plant and equipment 65 55
-------------------------------------------- -------- --------
Research and development expenditure 1,719 1,501
-------------------------------------------- -------- --------
Impairment of trade receivables (31) (61)
-------------------------------------------- -------- --------
Share-based payment charge 532 2,341
-------------------------------------------- -------- --------
Goodwill impairment 2,915 -
-------------------------------------------- -------- --------
Other operating expenses/(income):
-------------------------------------------- -------- --------
- Foreign exchange on trading transactions 426 101
-------------------------------------------- -------- --------
- Amortisation of intangible brand
assets and customer lists 227 194
-------------------------------------------- -------- --------
Group
==================
2023 2022
GBP'000 GBP'000
--------------------------------- -------- --------
Exceptional items comprise:
--------------------------------- -------- --------
* Refinancing costs 149 -
--------------------------------- -------- --------
* Hornby World Experience 910 -
--------------------------------- -------- --------
* Goodwill impairment 2,915
--------------------------------- -------- --------
* Restructuring costs - 88
--------------------------------- -------- --------
- Relocation - 9
--------------------------------- -------- --------
* Adjustment on Acquisition - 219
--------------------------------- -------- --------
* Amortisation adjustment - (177)
--------------------------------- -------- --------
3,974 139
--------------------------------- -------- --------
The group exceptional items totalling GBP3,974,000 (2022:
GBP139,000) are refinance costs relating to the take on fees for
moving to Secure Trust Bank Plc, GBP2,915,000 relating to Corgi
goodwill impairment and costs relating to the Hornby World customer
experience. These are classified as exceptional as they are one
off, non-recurring costs. Further detail can be found on Page
10.
Services provided by the Company's auditors and network
firms
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditors and
network firms as detailed below:
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- -------- -------- --------
Fees payable to the Company's auditors for
the audit of Parent Company and consolidated
accounts 36 33 12 11
------------------------------------------------- -------- -------- -------- --------
Fees payable to the Company's auditors and
its associates for other services:
------------------------------------------------- -------- -------- -------- --------
* The auditing of accounts of the Company's
subsidiaries 98 54 - -
------------------------------------------------- -------- -------- -------- --------
- -
* Audit-related assurance services - -
------------------------------------------------- -------- -------- -------- --------
* Tax services 8 7 - -
------------------------------------------------- -------- -------- -------- --------
142 94 12 11
------------------------------------------------- -------- -------- -------- --------
In the prior financial year the level of non-audit fees were
GBP8k and related to tax services and was within the 1:1 ratio to
audit fees as per Audit Committee policy.
5. INCOME TAX (CREDIT)/CHARGE
Analysis of tax (credit)/charge in the year
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- -------- -------- -------- --------
Current tax - - - -
--------------------------------------------------- -------- -------- -------- --------
UK Taxation:
--------------------------------------------------- -------- -------- -------- --------
* Current - 5 - -
--------------------------------------------------- -------- -------- -------- --------
* Adjustments in respect of prior years (32) (87) - -
--------------------------------------------------- -------- -------- -------- --------
Overseas taxation 97 15 - -
--------------------------------------------------- -------- -------- -------- --------
Deferred tax (Note 20) - - - -
--------------------------------------------------- -------- -------- -------- --------
Origination and reversal of temporary differences (19) 57 - -
--------------------------------------------------- -------- -------- -------- --------
Effect of tax rate change on opening balance - (886) - -
--------------------------------------------------- -------- -------- -------- --------
Total tax credit to the loss before tax 46 (896) - -
--------------------------------------------------- -------- -------- -------- --------
The tax for the year differs to the standard rate of corporation
tax in the UK of 19%. Any differences are explained below:
Group
==================
2023 2022
GBP'000 GBP'000
----------------------------------------------- -------- --------
Profit/(Loss)before taxation (5,876) 582
----------------------------------------------- -------- --------
Loss on ordinary activities multiplied by rate
of
----------------------------------------------- -------- --------
Corporation tax in UK of 19% (2022: 19%) (1,116) 111
----------------------------------------------- -------- --------
Effects of:
----------------------------------------------- -------- --------
Adjustments to tax in respect of prior years (32) (87)
----------------------------------------------- -------- --------
Permanent differences (35) 259
----------------------------------------------- -------- --------
Non taxable income - -
----------------------------------------------- -------- --------
Plant and machinery super-deduction (265) (207)
----------------------------------------------- -------- --------
Difference on overseas rates of tax 57 66
----------------------------------------------- -------- --------
Deferred tax not recognised 1,437 (152)
----------------------------------------------- -------- --------
Effect of tax rate change - (886)
----------------------------------------------- -------- --------
Total taxation 46 (896)
----------------------------------------------- -------- --------
The Company's profits for this accounting year are taxed at an
effective rate of 19% (2022: 19%)
UK deferred tax balances have been carried forward at a rate of
25% (2022: 25%)
The current rate of tax is 19%. The new rate of corporation tax
of 25% comes into effect on 1 April 2023. Therefore timing
differences expected to reverse after this rate are recognised for
Deferred Tax purposes at 25%.
Unrecognised deferred tax relates to UK and overseas
subsidiaries and is not recognised, except to the extent of the
prior year movement in the change in tax rate noted above. This is
due to the directors taking the view that deferred tax should only
be recognised to the extent significant taxable profits are likely
to be achieved in the short term. More detail can be found in Note
20.
6. DIVIDS
No interim or final dividends were paid in relation to the year
ended 31 March 2022 and no interim dividend has been paid in
relation to the year ended 31 March 2023. The Directors are not
proposing a final dividend in respect of the financial year ended
31 March 2023.
7. LOSS PER SHARE
Basic profit per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
For diluted profit per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares that have satisfied the
appropriate performance criteria at 31 March 2023.
The underlying profit per share is shown to present a clearer
view of the trading performance of the business. Management
identified the following items, whose inclusion in performance
distorts underlying trading performance: net foreign exchange
(gains)/losses on intercompany loans which are dependent on
exchange rate fluctuations and can be volatile, and the
amortisation of intangibles which results from historical
acquisitions. Additionally, share-based payments and exceptional
items including refinance and R&D World development costs are
one off items and therefore have also been added back in
calculating underlying profit/(loss) per share.
Reconciliations of the profit and weighted average number of
shares used in the calculations are set out below.
2023 2022
(Loss) / earnings Weighted Per-share (Loss) Weighted Per-share
average amount / earnings average amount
number number
of shares of shares
-----------------------
GBP'000 '000s pence GBP'000 '000s pence
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
REPORTED
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Basic (loss)/profit
per share
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
(Loss)/Profit
attributable
to ordinary
shareholders (5,904) 168,812 (3.50) 1,479 166,929 0.89
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Effect of dilutive - - - - 6,731 -
share options
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Diluted (loss)/profit
per share (5,904) 168,812 (3.50) 1,479 173,660 0.85
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
UNDERLYING
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
(Loss)/Profit
attributable
to ordinary
shareholders (5,904) 168,812 (3.50) 1,479 166,929 0.89
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Share-based
payments 431 - 0.26 1,896 - 1.14
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Amortisation
of intangibles 180 - 0.11 157 - 0.09
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Refinance costs 121 - 0.07 - - -
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Hornby World
costs 737 - 0.44 - - -
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Goodwill impairment 2,361 - 1.40
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Restructuring
costs - - 0.00 71 - 0.04
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Amortisation
adjustment - - 0.00 (143) - (0.09)
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Relocation - - 0.00 7 - -
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Acquisition
adjustment - - 0.00 177 - 0.11
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
Underlying
basic (loss)/profit
/EPS (2,074) 168,812 (1.22) 3,644 166,929 2.18
----------------------- ------------------ ----------- ---------- ------------ ----------- ----------
The above numbers used to calculate the EPS for the year ended
31 March 2023 and 31 March 2022 have been tax effected at the rate
of 19% .
8. GOODWILL
GROUP GBP'000
---------------------------------- -----------------
COST
---------------------------------- -----------------
At 1 April 2022 13,135
---------------------------------- -----------------
Exchange adjustments 3
---------------------------------- -----------------
At 31 March 2023 13,138
---------------------------------- -----------------
AGGREGATE IMPAIRMENT
---------------------------------- -----------------
At 1 April 2022 8,491
---------------------------------- -----------------
Impairment charge in the year 2,915
---------------------------------- -----------------
At 31 March 2023 11,406
---------------------------------- -----------------
Net book amount at 31 March 2023 1,732
---------------------------------- -----------------
Net book amount at 31 March 2022 4,644
---------------------------------- -----------------
The Company has no goodwill.
The goodwill impairment in the year relates to goodwill on
Corgi, acquired in 2008. The Directors have taken the approach of
no longer recognising this goodwill due to an increase in the
discount rate and a more prudent forecast over the next couple of
years. Details of valuation method are detailed below in impairment
tests for goodwill. The impairment charge for the year has been
included with exceptional items (see note 4).
The goodwill has been allocated to cash-generating units and a
summary of carrying amounts of goodwill by geographical segment
(representing cash-generating units) at 31 March 2023 and 31 March
2022 is as follows:
UK France Germany USA Total
GROUP GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- -------- -------- --------
At 31 March 2023 1,160 365 197 10 1,732
----------------- -------- -------- -------- -------- --------
At 31 March 2022 4,075 364 196 9 4,644
----------------- -------- -------- -------- -------- --------
Goodwill allocated to the above cash-generating units of the
Group has been measured based on benefits each geographical segment
is expected to gain from the business combination.
Impairment tests for goodwill
Management reviews the business performance based on geography.
Budgeted revenue was based on expected levels of activity given
results to date, together with expected economic and market
conditions. Budgeted operating profit was calculated based upon
management's expectation of operating costs appropriate to the
business as reflected in the business plan.
The relative risk adjusted (or 'beta') discount rate applied
reflects the risk inherent in hobby-based product companies. The 31
March 2023 forecasts are based on a 4 year business plan for the
years ending 31 March 2024 to 31 March 2027. Cash flows beyond
these years are extrapolated using an estimated 2 .0% year on year
growth rate. The cash flows were discounted using a pre-tax
discount rate of 15.5% (2022: 11.6%) which management believes is
appropriate for all territories.
The key assumptions used for value-in-use calculations for the
year ended 31 March 2023 and 2022 are as follows:
2023
GROUP UK UK France Germany
------------------------------
(Corgi) (Airfix
& Humbrol)
------------------------------ -------- ------------ ------- --------
Gross Margin(1) 61.38% 65.60% 60.40% 66.90%
------------------------------ -------- ------------ ------- --------
Growth rate to perpetuity(2) 2.00% 2.00% 2.00% 2.00%
------------------------------ -------- ------------ ------- --------
1. Average of the variable yearly gross margins used over
the period 22'23 to 29'30.
2. Weighted average growth rate used to extrapolate cash
flows beyond the budget period reflecting the long term future
growth rate of the economy.
2022
GROUP UK UK France Germany
------------------------------------- ----------- --------
(Corgi) (Airfix
& Humbrol)
------- ---------------------------- -------- ------------ ----------- --------
Gross Margin(1) 59.2% 63.7% 59.1% 59.0%
------------------------------------- -------- ------------ ----------- --------
Growth rate to perpetuity(2) 2.0% 2.0% 2.0% 2.0%
------------------------------------- -------- ------------ ----------- --------
1. Average of the variable yearly gross margins used over the
period 22'23 to 29'30.
2. Weighted average growth rate used to extrapolate cash flows
beyond the budget period.
These assumptions have been used for the analysis of each CGU
within the operating segments.
For the UK CGU, the recoverable amount calculated based on value
in use exceeded carrying value by GBP3.1 million. A reduction of
the average gross margin to 61.0% for Airfix / Humbrol, or a rise
in discount rate to respectively 29.4% for Airfix / Humbrol would
remove the remaining headroom.
For the France CGU, the recoverable amount calculated based on
value in use exceeded carrying value by GBP9.9 million. A reduction
of the average gross margin to 9.6%, or a rise in discount rate to
154.0% would remove the remaining headroom.
For the Germany CGU, the recoverable amount calculated based on
value in use exceeded carrying value by GBP10.4 million. A
reduction of the average gross margin to 14.2%, or a rise in
discount rate to 155.1% would remove the remaining headroom.
9. INTANGIBLE ASSETS
Computer
Brand Customer Software
names lists and Website Total
GROUP GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- ------------ --------
COST
--------------------------------- -------- -------- ------------ --------
At 1 April 2022 5,200 1,459 4,325 10,984
--------------------------------- -------- -------- ------------ --------
Additions - - 351 351
--------------------------------- -------- -------- ------------ --------
At 31 March 2023 5,200 1,459 4,676 11,335
--------------------------------- -------- -------- ------------ --------
ACCUMULATED AMORTISATION
--------------------------------- -------- -------- ------------ --------
At 1 April 2023 3,456 1,415 2,925 7,796
--------------------------------- -------- -------- ------------ --------
Charge for the year 223 4 326 553
--------------------------------- -------- -------- ------------ --------
At 31 March 2023 3,679 1,419 3,251 8,349
--------------------------------- -------- -------- ------------ --------
Net book amount at 31 March 2023 1,521 40 1,425 2,986
--------------------------------- -------- -------- ------------ --------
Computer
Brand Customer Software
names lists and Website Total
GROUP GBP'000 GBP'000 GBP'000s GBP'000
---------------------------------- -------- -------- ------------ --------
COST
---------------------------------- -------- -------- ------------ --------
At 1 April 2021 4,914 1,415 4,176 10,505
---------------------------------- -------- -------- ------------ --------
Additions 286 44 149 479
---------------------------------- -------- -------- ------------ --------
At 31 March 2022 5,200 1,459 4,325 10,984
---------------------------------- -------- -------- ------------ --------
ACCUMULATED AMORTISATION
---------------------------------- -------- -------- ------------ --------
At 1 April 2022 3,439 1,415 2,634 7,488
---------------------------------- -------- -------- ------------ --------
Charge for the year 194 - 291 485
---------------------------------- -------- -------- ------------ --------
Adjustment related to prior years (177) - - (177)
---------------------------------- -------- -------- ------------ --------
At 31 March 2022 3,456 1,415 2,925 7,796
---------------------------------- -------- -------- ------------ --------
Net book amount at 31 March 2022 1,744 44 1,399 3,187
---------------------------------- -------- -------- ------------ --------
All amortisation charges in the year relating to brand names and
customer lists have been charged in other operating expenses.
Amortisation in relation to computer software and website is
withing admin costs. The Group holds intangible computer software
and website assets that are fully amortised but still in use and
therefore the cost is still included.
The Company held no intangible assets.
10. PROPERTY, PLANT AND EQUIPMENT
GROUP Plant and Motor Tools Total
equipment Vehicles and moulds
GBP'000
----------------------------- -----------
GBP'000 GBP'000 GBP'000
----------------------------- ----------- ---------- ------------ --------
COST
----------------------------- ----------- ---------- ------------ --------
At 1 April 2022 1,706 55 77,013 78,774
------------------------------ ----------- ---------- ------------ --------
Exchange adjustments 31 1 - 32
------------------------------ ----------- ---------- ------------ --------
Additions at cost 104 - 4,640 4,744
------------------------------ ----------- ---------- ------------ --------
Disposals (80) (3) - (83)
------------------------------ ----------- ---------- ------------ --------
At 31 March 2023 1,761 53 81,653 83,467
------------------------------ ----------- ---------- ------------ --------
ACCUMULATED DEPRECIATION
----------------------------- ----------- ---------- ------------ --------
At 1 April 2022 1,320 50 67,347 68,717
------------------------------ ----------- ---------- ------------ --------
Exchange adjustments 26 1 - 27
------------------------------ ----------- ---------- ------------ --------
Charge for the year 150 4 2,609 2,763
------------------------------ ----------- ---------- ------------ --------
Disposals (79) (2) - (81)
------------------------------ ----------- ---------- ------------ --------
At 31 March 2023 1,417 53 69,956 71,426
------------------------------ ----------- ---------- ------------ --------
Net book amount at 31 March
2023 344 - 11,697 12,041
------------------------------ ----------- ---------- ------------ --------
Depreciation is charged in the Group's statement of
comprehensive income within Administrative expenses.
GROUP Plant and Motor Tools Total
equipment Vehicles and moulds
GBP'000
------------------------------------ -----------
GBP'000 GBP'000 GBP'000
------------------------------------ ----------- ---------- ------------ --------
COST
------------------------------------ ----------- ---------- ------------ --------
At 1 April 2021 1,525 54 71,601 73,180
------------------------------------- ----------- ---------- ------------ --------
Exchange adjustments 6 1 - 7
------------------------------------- ----------- ---------- ------------ --------
Additions at cost 203 - 3,348 3,551
------------------------------------- ----------- ---------- ------------ --------
Acquired from business combination - - 2,064 2,064
------------------------------------- ----------- ---------- ------------ --------
Disposals (28) - - (28)
------------------------------------- ----------- ---------- ------------ --------
At 31 March 2022 1,706 55 77,013 78,774
------------------------------------- ----------- ---------- ------------ --------
ACCUMULATED DEPRECIATION
------------------------------------ ----------- ---------- ------------ --------
At 1 April 2021 1,251 45 65,204 66,500
------------------------------------- ----------- ---------- ------------ --------
Exchange adjustments 5 1 - 6
------------------------------------- ----------- ---------- ------------ --------
Charge for the year 92 4 2,143 2,239
------------------------------------- ----------- ---------- ------------ --------
Disposals (28) - - (28)
------------------------------------- ----------- ---------- ------------ --------
At 31 March 2022 1,320 50 67,347 68,717
------------------------------------- ----------- ---------- ------------ --------
Net Book Value at 31 March 2022 386 5 9,666 10,057
------------------------------------- ----------- ---------- ------------ --------
The Company does not hold any property, plant and equipment.
11. INVESTMENTS
COMPANY
The movements in the net book value of interests in subsidiary
and associated undertakings are as follows:
Interests Interests Loans Total
in subsidiary in associate to subsidiary
undertakings undertakings undertakings
GBP'000 GBP'000
---------------------------------------------- --------------- --------------
GBP'000 GBP'000
---------------------------------------------- --------------- -------------- --------------- --------
At 1 April 2022 21,743 - 4,349 26,092
---------------------------------------------- --------------- -------------- --------------- --------
Capital contribution relating to share-based
payment 266 - - 266
---------------------------------------------- --------------- -------------- --------------- --------
Options granted (849) - - (849)
---------------------------------------------- --------------- -------------- --------------- --------
At 31 March 2023 21,160 - 4,349 25,509
---------------------------------------------- --------------- -------------- --------------- --------
At 1 April 2021 17,672 1,839 4,349 23,860
---------------------------------------------- --------------- -------------- --------------- --------
Share of profit of investments accounted
for using the equity - (20) - (20)
---------------------------------------------- --------------- -------------- --------------- --------
LCD Acquisition 2,900 (1,819) - 1,081
---------------------------------------------- --------------- -------------- --------------- --------
Capital contribution relating to share-based
payment 1,171 - - 1,171
---------------------------------------------- --------------- -------------- --------------- --------
At 31 March 2022 21,743 - 4,349 26,092
---------------------------------------------- --------------- -------------- --------------- --------
Interest was charged on loans to subsidiary undertakings at
Sterling three-month SONIA + 3.6%.
Loans are unsecured and exceed five years' maturity.
GROUP SUBSIDIARY UNDERTAKINGS
Details of the subsidiaries of the Group are set out below.
Hornby Hobbies Limited is engaged in the development, design,
sourcing and distribution of models. Hornby America Inc., Hornby
Italia s.r.l., Hornby France S.A.S., Hornby España S.A., Hornby
Deutschland GmbH, Hornby Hobbies India Private Limited, Hornby LCD
Enterprises Limited and Oxford Diecast Limited are distributors of
models. Hornby World Limited is a retail and consumer experience
business. Hornby Industries Limited and H&M (Systems) Limited
are dormant companies. All subsidiaries are held directly by Hornby
PLC with the exception of Oxford Diecast Limited which is held by
LCD Enterprises Limited and Hornby Hobbies India Private Limited
with 1% ownership by Hornby Hobbies Limited.
Proportion
of nominal
value of issued
shares held
==================
Description of Group Company
Registered office shares held % %
----------------------------- --------------------------- ---------------- ------- ---------
Westwood, Margate,
Kent CT9 4JX,
Hornby Hobbies Limited UK Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
3900 Industry
Dr E, Fife, WA
Hornby America Inc. 98424, USA Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
C/Federico Chueca,
S/N, E28806 ALCALA
Hornby España S.A DE HENARES Spain Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
Viale dei Caduti,
52/A6 25030 Castel
Mella (Brescia),
Hornby Italia s.r.l. Italy Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
31 Bis rue des
Longs Pres, 92100
Boulogne, Billancourt,
Hornby France S.A.S. France Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
Oeslauer StraBe
36, 96472, Rodental,
Hornby Deutschland GmbH Germany Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
Westwood, Margate,
Kent CT9 4JX,
Hornby Industries Limited UK Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
Westwood, Margate,
Kent CT9 4JX,
H&M (Systems) Limited UK Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
Westwood, Margate,
Kent CT9 4JX,
Hornby World Limited UK Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
205, 2nd Floor,
Plot 67, Hem
Bldg Hatkesh
Society, N S
Road No. 8, JVPD
Hornby Hobbies India Private Scheme, Vileparle
Limited West, Juhu, Mumbai-400049 Ordinary shares 100 99
----------------------------- --------------------------- ---------------- ------- ---------
Unit 6 119 Ystrad
Road, Fforestfach,
Swansea, Wales,
LCD Enterprises Limited SA5 4JB Ordinary shares 100 100
----------------------------- --------------------------- ---------------- ------- ---------
Unit 6 119 Ystrad
Road, Fforestfach,
Swansea, Wales,
Oxford Diecast Limited SA5 4JB Ordinary shares 91 91
----------------------------- --------------------------- ---------------- ------- ---------
12. RIGHT OF USE ASSETS
GROUP Property Motor Fixtures, Total
Vehicles Fittings
and Equipment
GBP'000
----------------------------- ---------
GBP'000 GBP'000 GBP'000
----------------------------- --------- ---------- --------------- --------
COST
----------------------------- --------- ---------- --------------- --------
At 1 April 2022 3,726 346 22 4,094
------------------------------ --------- ---------- --------------- --------
Additions at cost 207 - - 207
------------------------------ --------- ---------- --------------- --------
Adjustment (176) - - (176)
------------------------------ --------- ---------- --------------- --------
Disposal - (36) - (36)
------------------------------ --------- ---------- --------------- --------
At 31 March 2023 3,757 310 22 4,089
------------------------------ --------- ---------- --------------- --------
ACCUMULATED DEPRECIATION
----------------------------- --------- ---------- --------------- --------
At 1 April 2022 1,266 226 18 1,510
------------------------------ --------- ---------- --------------- --------
Charge for the year 431 61 - 492
------------------------------ --------- ---------- --------------- --------
At 31 March 2023 1,697 287 18 2,002
------------------------------ --------- ---------- --------------- --------
Net book amount at 31 March
2023 2,060 23 4 2,087
------------------------------ --------- ---------- --------------- --------
GROUP Property Motor Fixtures, Total
Vehicles Fittings
and Equipment
GBP'000
------------------------------------ ------ -----------
GBP'000 GBP'000 GBP'000
------------------------------------ ------ ----------- ---------- --------------- ----------
COST
------------------------------------ ------ ----------- ---------- --------------- ----------
At 1 April 2021 3,376 317 17 3,710
-------------------------------------------- ----------- ---------- --------------- ----------
Additions at cost 189 13 2 204
-------------------------------------------- ----------- ---------- --------------- ----------
Acquired from business combination 161 16 3 180
-------------------------------------------- ----------- ---------- --------------- ----------
At 31 March 2022 3,726 346 22 4,094
-------------------------------------------- ----------- ---------- --------------- ----------
ACCUMULATED DEPRECIATION
------------------------------------ ------ ----------- ---------- --------------- ----------
At 1 April 2021 851 156 13 1,020
-------------------------------------------- ----------- ---------- --------------- ----------
Charge for the year 415 70 5 490
-------------------------------------------- ----------- ---------- --------------- ----------
At 31 March 2022 1,266 226 18 1,510
-------------------------------------------- ----------- ---------- --------------- ----------
Net book amount at 31 March
2022 2,460 120 4 2,584
-------------------------------------------- ----------- ---------- ------------------- ------
The adjustment in the year relates to a lease incentive
previously classified under accruals.
13. INVENTORIES
Group Company
====================== ====================
2023 2022 2023 20212
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------------- -------- ------------ ---------- --------
Finished goods 21,282 16,462 - -
--------------------------------------------------------- -------- ------------ ---------- --------
21,282 16,462 - -
--------------------------------------------------------- -------- ------------ ---------- --------
Movements on the Group provision for impairment of inventory
is as follows:
2023 2022
---------------------------------
GBP'000 GBP'000
--------------------------------- ---------------------- --------------- -------------
At 1 April 2,428 1,205
--------------------------------------------------------- --------------- -------------
Provision for inventory
impairment 29 (56)
--------------------------------------------------------- --------------- -------------
Inventory written-off during
the year - (211)
--------------------------------------------------------- --------------- -------------
Acquired from LCD - 1,486
--------------------------------------------------------- --------------- -------------
Exchange adjustments (4) 4
--------------------------------------------------------- --------------- -------------
At 31 March 2,453 2,428
--------------------------------------------------------- --------------- -------------
14. TRADE AND OTHER RECEIVABLES
Group Company
2023 2022 2023 2022
----------------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- -------- -------- -------- --------
CURRENT:
---------------------------------------- -------- -------- -------- --------
Trade receivables 7,425 6,208 - -
---------------------------------------- -------- -------- -------- --------
Less: loss allowance for receivables (777) (789) - -
---------------------------------------- -------- -------- -------- --------
Trade receivables - net 6,648 5,419 - -
---------------------------------------- -------- -------- -------- --------
Other receivables 543 1,724 - -
---------------------------------------- -------- -------- -------- --------
Prepayments 1,990 1,643 58 87
---------------------------------------- -------- -------- -------- --------
Amounts owed by subsidiary undertaking - - 14,920 47,322
---------------------------------------- -------- -------- -------- --------
9,181 8,786 14,978 47,409
---------------------------------------- -------- -------- -------- --------
We initially recognise trade and other receivables at fair
value, which is usually the original invoiced amount. They are
subsequently carried at amortised cost using the effective interest
method. The carrying amount of these balances approximates to fair
value due to the short maturity of amounts receivable.
We provide goods to business customers mainly on credit terms.
We know that certain debts due to us will not be paid through the
default of a small number of customers. Because of this, we
recognise an allowance for doubtful debts on initial recognition of
receivables, which is deducted from the gross carrying amount of
the receivable. The allowance is calculated by reference to credit
losses expected to be incurred over the lifetime of the receivable.
In estimating a loss allowance we consider historical experience
and informed credit assessment alongside other factors such as the
current state of the economy and particular industry issues. We
consider reasonable and supportive information that is relevant and
available without undue cost.
Once recognised, trade receivables are continuously monitored
and updated. Allowances are based on our historical loss
experiences for the relevant aged category as well as
forward-looking information and general economic conditions.
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 loss allowance for trade receivables is
deemed adequate. Other receivables include deposits paid to
suppliers for tooling.
Gross trade receivables can be analysed as follows:
2023 2022
GBP'000 GBP'000
------------------ -------- --------
Fully performing 6,426 4,470
------------------ -------- --------
Past due 222 949
------------------ -------- --------
Fully impaired 777 789
------------------ -------- --------
Trade receivables 7,425 6,208
------------------ -------- --------
As of 31 March 2023 trade receivables of GBP222,000 (2022:
GBP949,000) were past due but not impaired. These relate to a
number of independent customers for whom there is no recent history
of default.
As of 31 March 2023, trade receivables of GBP777,000 (2022:
GBP789,000) were impaired and provided for in full.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables.
Movements on the Group loss allowance for trade receivables is
as follows:
2023 2022
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
At 1 April 789 853
--------------------------------------------------------- -------- --------
(Decrease)/increase in loss allowance (31) (61)
--------------------------------------------------------- -------- --------
Receivables written-off during the year as uncollectible - -
--------------------------------------------------------- -------- --------
Exchange adjustments 19 (3)
--------------------------------------------------------- -------- --------
At 31 March 777 789
--------------------------------------------------------- -------- --------
The decrease in loss allowance has been included in
'administrative expenses' in the Statement of Comprehensive
Income.
Amounts owed to the Company by subsidiary undertakings are
repayable on demand, unsecured and interest bearing. Recoverability
review is performed annually and balances impaired if not
considered recoverable. In the year the Company has provided for an
impairment on the intercompany balances of GBP33,389,000 which is
included within exceptional items. The fair value of the business
was used to calculate the impairment and was determined with
reference to the company's market capitalisation and share price at
31 March 2023 but adjusted based on management's understanding of
the business.
The carrying amounts of the Group and Company trade and other
receivables except prepayments and Amounts owed by subsidiary
undertaking are denominated in the following currencies:
Group Company
2023 2022 2023 2022
-----------------------
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- -------- -------- --------
Sterling Intercompany - - 14,978 47,322
----------------------- -------- -------- -------- --------
Sterling 3,103 3,188 - -
----------------------- -------- -------- -------- --------
Euro 2,657 2,657 - -
----------------------- -------- -------- -------- --------
US Dollar 1,318 1,318 - -
----------------------- -------- -------- -------- --------
7,078 7,163 14,978 47,322
----------------------- -------- -------- -------- --------
15. CASH AND CASH EQUIVALENTS
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- -------- -------- -------- --------
Cash at bank and in hand 1,337 4,139 1 2
-------------------------------------------- -------- -------- -------- ----------
Cash at bank of GBP1,337,000 (2021: GBP4,139,000) is with
financial institutions with a credit rating of A3 per Moody's
rating agency.
16. TRADE AND OTHER PAYABLES
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- -------- -------- --------
CURRENT:
-------------------------------------- -------- -------- -------- --------
Trade payables 4,194 3,919 - -
-------------------------------------- -------- -------- -------- --------
Other taxes and social security 913 730 36 32
-------------------------------------- -------- -------- -------- --------
Other payables 1,034 578 1,124 856
-------------------------------------- -------- -------- -------- --------
Refund liability 260 252 - -
-------------------------------------- -------- -------- -------- --------
Accruals and contract liabilities 1,666 1,893 47 50
-------------------------------------- -------- -------- -------- --------
Group receivables guarantee (note 28) - - 9,858 6,020
-------------------------------------- -------- -------- -------- --------
8,067 7,372 11,065 6,958
-------------------------------------- -------- -------- -------- --------
Contract liabilities relate to payments of GBP320,461 (2022:
GBP178,777) received upfront for products where delivery is yet to
take place. Delivery is expected to take place over the next 3
months. Revenue of GBP178,777, deferred in 2022, was recognised as
income in the year ended 31 March 2023.
Hornby Plc have provided a guarantee of GBP9.858 million against
intercompany receivables in Hornby Hobbies. This guarantee is
included in liabilities
17. RIGHT OF USE LEASE LIABILITIES
The movement in the right of use lease liability over the year
was as follows:
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- -------- -------- --------
As at 1 April 2,746 2,808 - -
----------------------------------------------- -------- -------- -------- --------
New leases 206 192 - -
----------------------------------------------- -------- -------- -------- --------
Disposals (36)
----------------------------------------------- -------- -------- -------- --------
Acquired from business combination - 190 - -
----------------------------------------------- -------- -------- -------- --------
Interest payable 153 166 - -
----------------------------------------------- -------- -------- -------- --------
Repayment of lease liabilities (613) (610) - -
----------------------------------------------- -------- -------- -------- --------
As at 31 March 2,456 2,746 - -
----------------------------------------------- -------- -------- -------- --------
Lease liability less than one year 409 433 - -
----------------------------------------------- -------- -------- -------- --------
Lease liability greater than one year and less
than five years 677 664 - -
----------------------------------------------- -------- -------- -------- --------
Lease liability greater than five years 1,370 1,649 - -
----------------------------------------------- -------- -------- -------- --------
Total Liability 2,456 2,746 - -
----------------------------------------------- -------- -------- -------- --------
Maturity analysis of contracted undiscounted cashflows is as
follows:
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- -------- -------- --------
Lease liability less than one year 544 575 - -
----------------------------------------------- -------- -------- -------- --------
Lease liability greater than one year and less
than five years 1,191 1,134 - -
----------------------------------------------- -------- -------- -------- --------
Lease liability greater than five years 1,836 2,299 - -
----------------------------------------------- -------- -------- -------- --------
Total Liability 3,571 4,008 - -
----------------------------------------------- -------- -------- -------- --------
Finance charges included above (1,115) (1,262) - -
----------------------------------------------- -------- -------- -------- --------
2,456 2,746 - -
----------------------------------------------- -------- -------- -------- --------
18. BORROWINGS
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------- -------- --------
Secured borrowing at amortised cost
------------------------------------------- -------- -------- -------- --------
CBIL Bank Loan 167 217 - -
------------------------------------------- -------- -------- -------- --------
Asset Based Lending Facility 4,590 - - -
------------------------------------------- -------- -------- -------- --------
Shareholder Loan 2,110 110 - -
------------------------------------------- -------- -------- -------- --------
Loan from subsidiary undertakings - - 5,871 5,643
------------------------------------------- -------- -------- -------- --------
6,867 327 5,871 5,643
------------------------------------------- -------- -------- -------- --------
Total borrowings
------------------------------------------- -------- -------- -------- --------
Amount due for settlement within 12 months 6,750 50 - -
------------------------------------------- -------- -------- -------- --------
Amount due for settlement after 12 months 117 277 5,871 5,643
------------------------------------------- -------- -------- -------- --------
6,867 327 5,643 5,643
------------------------------------------- -------- -------- -------- --------
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.
The principal features of the Group's borrowings are as
follows:
At 31 March 2023 the UK had a GBP12 million Asset Based Lending
facility with Secure Trust Bank PLC (STB)) and a GBP9 million loan
facility with Phoenix Asset Management Partners.
The GBP12 million facility with STB extends until October 2024
and carries a margin of 2.5 -- 3% over base rate. The STB Facility
has a fixed and floating charge on the assets of the Group. The
Company is expected to provide customary operational covenants to
STB on a monthly basis.
The Phoenix Facility is a GBP9 million facility with a current
expiration date of December 2023 and attracts interest at a margin
of 5% over SONIA on funds drawn. Undrawn funds attract a non --
utilisation fee of the higher of 1% or SONIA.
LCD Enterprises Limited has a CBIL loan of GBP167,000 being
repaid at GBP4,167 per month. This should be repaid by August
2026.
Undrawn borrowing facilities
At 31 March 2023, the Group had available GBP11,742,338 (2022:
GBP12,611,165) of undrawn committed borrowing facilities in respect
of which all conditions precedent had been met. The facility from
Secure Trust Bank PLC has limits based on the Group's asset
position at any one time .
19. FINANCIAL INSTRUMENTS
CLASSIFICATION AND MEASUREMENT
Under IFRS 9 the Group classifies and measures its financial
instruments as follows:
-- Derivative financial instruments: classified and measured at
fair value through profit or loss;
-- All other financial assets: classified as receivables and
measured at amortised cost; and
-- All other financial liabilities: classified as other
liabilities and measured at amortised cost.
CARRYING VALUE AND FAIR VALUE OF FINANCIAL ASSETS
AND LIABILITIES
Amortised Cost Held at
Fair Value
Financial Financial Cash flow Carrying
Assets Liabilities hedges value Fair value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2023
Trade and other receivables 7,191 - - 7,191 7,191
Trade and other payables - (5,228) - (5,228) (5,228)
Derivative Financial instruments - - (555) (555) (555)
Cash and cash equivalents 1,337 - - 1,337 1,337
Lease liabilities - (2,456) - (2,456) (2,456)
---------- ------------- ------------ --------- -----------
Amortised Cost Held at
Fair Value
Financial Financial Cash flow Carrying
Assets Liabilities hedges value Fair value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31 March 2022
Trade and other receivables 7,143 - - 7,143 7,143
Trade and other payables - (4,496) - (4,496) (4,496)
Derivative Financial instruments - - 504 504 504
Cash and cash equivalents 4,139 - - 4,139 4,139
Lease liabilities - (2,746) - (2,746) (2,746)
---------- ------------- ------------ --------- -----------
The Group's policies and strategies in relation to risk and
financial instruments are detailed in note 1.
Assets Liabilities
=================== ==================
2023 2022 2023 2022
GROUP GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------- --------- -------- -------- --------
Carrying values of derivative financial instruments
---------------------------------------------------- --------- -------- -------- --------
Forward foreign currency contracts - cash flow
hedges 2 504 (557) -
---------------------------------------------------- --------- -------- -------- --------
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 2023 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 2023 and 31 March 2022, the gross value of forward
currency contracts was as follows:
2023 2022
'000s '000s
---------- ------ ------
US Dollar 18,750 20,025
---------- ------ ------
The contracts are expected to be used at various dates within
the next twelve months. The average rate for the outstanding
contracts is 1.20.
The fair value for the forward foreign currency contracts is an
asset of GBP2,000 (2022: GBP504,000 asset) and a liability of
GBP557,000 (2022: GBPnil) of which GBP555,000 net liability
(GBP504,000 net asset) represents an effective hedge at 31 March
2023 and has therefore been credited to Other Comprehensive Income.
During the year hedge ineffectiveness was not considered material
and therefore no amount has been expensed.
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.
Maturity of financial liabilities
GROUP 2023 2022
-----------------------------------
GBP'000s GBP'000s
----------------------------------- --------- ---------
Less than one year 7,743 3,730
----------------------------------- --------- ---------
Between one and five years 117 1,134
----------------------------------- --------- ---------
More than five years 2,299
----------------------------------- --------- ---------
7,860 7,163
----------------------------------- --------- ---------
2023 2022
Intercompany Intercompany
Debt Debt
COMPANY GBP'000 GBP'000
------------------------------- ------------- -------------
More than five years (Note 18) 5,871 5,643
------------------------------- ------------- -------------
HIERARCHY OF FINANCIAL INSTRUMENTS
The following tables present the Group's assets and liabilities
that are measured at fair value at 31 March 2023 and 31 March 2022.
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 year. 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 Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Assets
----------------------------------- -------- -------- -------- --------
Derivatives used for hedging - 2 - 2
----------------------------------- -------- -------- -------- --------
Total assets as at 31 March 2023 - 2 - 2
----------------------------------- -------- -------- -------- --------
Liabilities
----------------------------------- -------- -------- -------- --------
Derivatives used for hedging - (557) - (557)
----------------------------------- -------- -------- -------- --------
Total liabilities at 31 March 2023 - (557) - (557)
----------------------------------- -------- -------- -------- --------
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- -------- -------- -------- --------
Assets
----------------------------------- -------- -------- -------- --------
Derivatives used for hedging - 504 - 504
----------------------------------- -------- -------- -------- --------
Total assets as at 31 March 2022 - 504 - 504
----------------------------------- -------- -------- -------- --------
Liabilities
----------------------------------- -------- -------- -------- --------
Derivatives used for hedging - - - -
----------------------------------- -------- -------- -------- --------
Total liabilities at 31 March 2022 - - - -
----------------------------------- -------- -------- -------- --------
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% increase in interest
rates is GBP41,000 (2022: GBP17,000) before tax. A 1% fall in
interest rates gives the same but opposite effect.
Foreign currency sensitivity in respect of financial
instruments
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
=====================
2023 2022
GBP'000 GBP'000
----------- ---------- ---------
US dollars 714 1,559
----------- ---------- ---------
Euros 120 660
----------- ---------- ---------
834 2,219
----------- ---------- ---------
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 (cash)/debt divided by total
capital. Net debt is calculated as total borrowings as shown in the
Statement of Financial Position less cash and cash equivalents.
Total capital is calculated as 'equity' as shown in the Statement
of Financial Position plus net debt.
2023 2022
GBP'000 GBP'000
------------------------------------------ -------- --------
Total borrowings (Note 18) 6,867 327
------------------------------------------ -------- --------
Less:
------------------------------------------ -------- --------
Total cash and cash equivalents (Note 15) (1,337) (4,139)
------------------------------------------ -------- --------
Net debt (cash) 5,530 (3,812)
------------------------------------------ -------- --------
Total equity 36,040 43,110
------------------------------------------ -------- --------
Total capital 41,570 39,298
------------------------------------------ -------- --------
Gearing (13%) (10%)
------------------------------------------ -------- --------
20. DEFERRED TAX
Deferred tax is calculated in full on temporary differences
under the liability method.
Deferred tax assets have been recognised in respect of certain
UK timing differences only. 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.
Acquisition Fixed Total
intangibles Asset
& Other
UK temporary
timing
differences
Deferred tax liabilities GBP'000 GBP'000 GBP'000
--------------------------------------- ------------- -------------- --------
At 1 April 2022 233 485 718
--------------------------------------- ------------- -------------- --------
Charge to Statement of Comprehensive
Income - (19) (19)
----------------------------------------- ------------- -------------- --------
Charge to Other Comprehensive Income - (127) (127)
----------------------------------------- ------------- -------------- --------
At 31 March 2023 233 339 572
--------------------------------------- ------------- -------------- --------
At 1 April 2021 150 - 150
--------------------------------------- ------------- -------------- --------
Acquired on business combination 83 294 377
--------------------------------------- ------------- -------------- --------
Charge to Statement of Comprehensive
Income - 64 64
----------------------------------------- ------------- -------------- --------
Charge to Other Comprehensive Income - 127 127
----------------------------------------- ------------- -------------- --------
At 31 March 2022 233 485 718
--------------------------------------- ------------- -------------- --------
Group Company
Acquisition Fixed Asset Total Short-term Total
intangibles and other incentive
UK temporary plan
timing differences
--------------------------------------
Deferred tax assets GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
At 1 April 2022 - 3,910 3,910 - -
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
At 31 March 2023 - 3,910 3,910 - -
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
At 1 April 2021 - 2,956 2,956 - -
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
Acquired on acquisition of LCD
Enterprises Limited - 61 61 - -
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
Charge to Statement of Comprehensive
Income 893 893
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
At 31 March 2022 - 3,910 3,910 - -
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
Net deferred tax (liability)/asset
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
At 31 March 2023 (233) 3,571 3,338 - -
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
At 31 March 2022 (233) 3,425 3,192 - -
-------------------------------------- ------------- -------------------- -------- ----------- ---------------
Management consider the deferred tax asset t be recoverable
based on forecasts to support the asset and a history of profits in
the last two years.
2023 2022
GROUP Recognised Not recognised Recognised Not recognised
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------------- ----------- ---------------
Deferred tax comprises:
-------------------------------- ----------- --------------- ----------- ---------------
Depreciation in excess of
capital allowances 3,338 249 2,032 -
-------------------------------- ----------- --------------- ----------- ---------------
Losses and other temporary
differences - UK - 5,513 1,159 4,557
-------------------------------- ----------- --------------- ----------- ---------------
Losses and other temporary
differences - Overseas - 2,212 - 2,912
-------------------------------- ----------- --------------- ----------- ---------------
Deferred tax asset 3,338 7,974 3,191 7,469
-------------------------------- ----------- --------------- ----------- ---------------
2023 2022
COMPANY Recognised Not recognised Recognised Not recognised
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- --------------- ----------- ---------------
Deferred tax comprises:
-------------------------------- ----------- --------------- ----------- ---------------
Other timing differences - (206) - (589)
-------------------------------- ----------- --------------- ----------- ---------------
Deferred tax (asset)/liability - (206) - (589)
-------------------------------- ----------- --------------- ----------- ---------------
The UK deferred tax asset not recognised of GBP5,762,000
primarily relates to unrecognised losses in Hornby Hobbies Limited
of GBP19,044,000 (potential deferred tax asset of GBP4,761,000) and
Hornby Plc of GBP824,000 (potential deferred tax asset of
GBP206,000). It also relates to an unrecognised gross temporary
difference of GBP795,000 related to timing difference on the
provision for unrealised profit.
The deferred tax asset not recognised in respect of overseas
losses carried forward of GBP2,212,000 relates to losses carried
forward of GBP1,418,000 in respect of Hornby Espana SA (potential
deferred tax asset of GBP355,000), GBP1,173,000 in respect of
Hornby France SAS (potential deferred tax asset of GBP353,000),
GBP1,176,000 in respect of Hornby Deutschland GmbH (potential
deferred tax asset of GBP353,000), GBP3,324,000 in respect of
Hornby Italia srl (potential deferred tax asset of GBP798,000) and
GBP3,364,000 in respect of Hornby America Inc (potential deferred
tax asset of GBP706,000).
No further deferred tax has been recognised at this point as
management prefer to be prudent.
21. SHARE CAPITAL
GROUP AND COMPANY
Allotted, issued and fully paid:
2023 2022
---------------------------- ---------------- ------- ---------------- -------
Number of shares GBP'000 Number of shares GBP'000
---------------------------- ---------------- ------- ---------------- -------
Ordinary shares of 1p each:
---------------------------- ---------------- ------- ---------------- -------
At 1 April and 31 March 169,853,770 1,699 166,927,838 1,669
---------------------------- ---------------- ------- ---------------- -------
22. SHARE-BASED PAYMENTS ('PSP')
The 2020 awards vested in part in June 2022 and were exercised.
63% achievement was awarded through a mixture of shares and cash.
The cash amount totalled the employees tax liabilities on exercise
of the options.
There are no Performance Share Plan ('PSP') awards outstanding
at 31 March 2023.
23. RESERVES
GROUP
Capital Redemption Reserve
This reserve records the nominal value of shares repurchased by
the Company.
Share Premium reserve
Share premium represents the excess of the fair value of
consideration received for the equity shares, net of expenses of
the share issue, over the nominal value of the equity shares.
Accumulated losses
This reserve represents accumulated gains and losses less
distributions to the shareholders.
Translation Reserve
The translation reserve represents the foreign exchange
movements arising from the translation of financial statements in
foreign currencies.
Hedging Reserve
The hedging reserve comprises the effective portion of changes
in the fair value of forward foreign exchange contracts that have
not yet occurred.
Other Reserves
This reserve represents historic negative goodwill arising prior
to the transition to IFRS.
Share-based payment reserve
The share-based payment reserve arises from the requirement to
value share options in existence at the fair value at the date they
are granted.
COMPANY
Capital Redemption Reserve
This reserve records the nominal value of shares repurchased by
the Company.
Translation Reserve
The translation reserve represents the foreign exchange
movements arising from the translation of financial statements in
foreign currencies.
Other Reserves
This reserve represents the revaluation of investments in
subsidiaries as allowable under previous UK GAAP. The reserve was
frozen on transition to IFRS in 2006.
Accumulated losses
This reserve represents accumulated gains and losses less
distributions to the shareholders.
24. EMPLOYEES AND DIRECTORS
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------- -------- -------- -------- --------
Staff costs for the year:
----------------------------------------------- -------- -------- -------- --------
Wages and salaries 8,301 7,940 585 482
----------------------------------------------- -------- -------- -------- --------
Furlough scheme - (1) - -
----------------------------------------------- -------- -------- -------- --------
Share-based payment (Note 22 532 2,341 266 1,171
----------------------------------------------- -------- -------- -------- --------
Social security costs 963 869 82 69
----------------------------------------------- -------- -------- -------- --------
Other pension costs (Note 25) 520 478 44 29
----------------------------------------------- -------- -------- -------- --------
Redundancy and compensation for loss of office - 134 - -
----------------------------------------------- -------- -------- -------- --------
10,316 11,761 977 1,751
----------------------------------------------- -------- -------- -------- --------
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
========== ==========
2023 2022 2023 2022
---------------------------------- ---- ---- ---- ----
Operations 80 83 - -
---------------------------------- ---- ---- ---- ----
Sales, marketing and distribution 98 92 - -
---------------------------------- ---- ---- ---- ----
Administration 34 35 4 4
---------------------------------- ---- ---- ---- ----
212 210 4 4
---------------------------------- ---- ---- ---- ----
Key management compensation:
Group Company
================== ==================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- -------- -------- --------
Salaries and short-term employee benefits 1,022 900 585 482
------------------------------------------ -------- -------- -------- --------
Share-based payments 532 2,341 266 1,171
------------------------------------------ -------- -------- -------- --------
Other pension costs 47 38 44 29
------------------------------------------ -------- -------- -------- --------
1,601 3,279 895 1,682
------------------------------------------ -------- -------- -------- --------
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 25 to 28 and forms
part of these financial statements.
25. 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 Group.
The level of contributions to the Group Personal Pension Plan
for current members is fixed by the Group.
The Group pension cost for the year was GBP520,000 (2022:
GBP478,000) representing the actual contributions payable in the
year and certain scheme administration costs. The Company pension
cost for the year was GBP38,000 (2022: GBP29,000). No contributions
were outstanding at the year end of 31 March 2023.
26. FINANCIAL COMMITMENTS
2023 2022
GROUP GBP'000 GBP'000
-------------------------------------- -------- --------
At 31 March capital commitments were:
-------------------------------------- -------- --------
Contracted for but not provided 2,757 1,967
-------------------------------------- -------- --------
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.
27. NET FUNDS RECONCILIATION
2023 2022
----------------------------------------
GBP'000 GBP'000
---------------------------------------- -------- --------
Cash and cash equivalents 1,337 4,139
---------------------------------------- -------- --------
Borrowings - repayable within one year (6,750) (50)
---------------------------------------- -------- --------
Borrowings - repayable after one year (117) (277)
---------------------------------------- -------- --------
Net Funds (5,530) 3,812
---------------------------------------- -------- --------
Cash and liquid investments 1,337 4,139
---------------------------------------- -------- --------
Gross debt - variable interest rates (6,867) (327)
---------------------------------------- -------- --------
Net Funds (5,530) 3,812
---------------------------------------- -------- --------
Maturity of financial liabilities
GROUP Borrowings Leases Total
GBP'000s GBP'000s GBP'000s
At 31 March 2021 - 2,808 2,808
----------------------------------- ----------- --------- ---------
New leases - 192 192
-----------
Cash flows 110 (610) (500)
----------------------------------- ----------- --------- ---------
Interest - 166 166
-----------
Aquired as part of acquisition 217 190 407
----------------------------------- ----------- --------- ---------
At 31 March 2022 327 2,746 3,073
New leases - 206 206
----------------------------------- ----------- --------- ---------
Cash flows 6,540 (613) 5,927
Interest - 153 153
----------------------------------- ----------- --------- ---------
Disposal - (36) (36)
-----------
Balance at 31 March 2023 6,867 2,456 9,323
----------------------------------- ----------- --------- ---------
28. RELATED PARTY DISCLOSURES
Hornby Hobbies Limited purchased services from a company called
Rawnet Limited which is 100% owned by Phoenix Asset Management, the
controlling party of the Group.
Therefore transactions between the parties are related party
transactions and disclosed below:
Transactions Balance
at year
end
Company GBP'000 GBP'000
---------------- ------------- ---------
Rawnet Limited 1,201 72
---------------- ------------- ---------
Phoenix Asset Management Partners who own the majority
shareholding in Hornby PLC have also provided a funding facility to
the Group (see note 18).
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
interested. There are no other related-party transactions.
The Company received management fees from subsidiaries of
GBP2,188,000 (2022: GBP1,071,000), interest of GBP175,000 (2022:
GBP175,000) and incurred interest of GBP212,000 (2022: GBP209,000)
on intercompany borrowings.
Hornby Plc have provided a guarantee of GBP9,858,000 (2022:
GBP6,020,000) against intercompany receivables in Hornby Hobbies.
This guarantee is included in liabilities.
29. ULTIMATE PARENT UNDERTAKING AND CONTROLLING PARTY
The Group is 73.38% owned by Phoenix Asset Management. Artemis
Fund Managers Limited hold 16.28%. The remaining 10.34% of the
shares are widely held. As a result of these arrangements, there is
no ultimate parent undertaking, and the funds managed by Phoenix
Asset Management are therefore the controlling party.
30. EVENTS AFTER THE END OF THE REPORTING PERIOD
No significant events have occurred between the end of the
reporting period and the date of the signature of the Annual
Report.
Shareholders' Information Service
Hornby welcomes contact with its shareholders.
If you have questions or enquiries about the Group or its
products, please contact:
K Gould, Chief Finance officer
Hornby PLC
Westwood
Margate
Kent CT9 4JX
www.hornby.com
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(END) Dow Jones Newswires
June 22, 2023 02:00 ET (06:00 GMT)
Hornby (LSE:HRN)
過去 株価チャート
から 11 2024 まで 12 2024
Hornby (LSE:HRN)
過去 株価チャート
から 12 2023 まで 12 2024
