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LONDON (Alliance News) - Hornby PLC Thursday raised GBP15 million in a share placing to repay part of its bank debt and proposed to move its shares from the main market of the London Stock Exchange to AIM, as it posted a narrowed pretax loss in its recently ended financial year.
The models and collectibles company posted a group pretax loss of GBP184,000 for the year to end-March, narrowed from a pretax loss of GBP4.6 million in the previous year, as revenue rose 13% to GBP58.1 million from GBP51.6 million, although this was partly offset by a rise in distribution, selling and marketing costs.
Revenue growth was hit by the strength of sterling, and at constant currency revenue growth would have been 15%.
Hornby said its distribution costs were increased as a result of transitioning to a third-party managed warehouse, along with the costs of the move and close down of its old warehouse, and sales and marketing costs increased partly as a result of its investment in its e-commerce team.
In its current year, the company said its UK business continues to show steady growth across its Hornby, Scalextric and Airfix segments. Its European businesses have been hit by a slow start to model rail production in China since March 2015.
Despite challenges in specific locations, the company expects to deliver sales in its first quarter ahead of the previous year, and expressed confidence in its turnaround plan and for meeting market expectations for the year as a whole.
"I am pleased to announce that, after a year of hard work and numerous challenges, Hornby has returned to an underlying profit. We are improving product deliveries and quality from our supply chain, and I remain confident that the turnaround plan will continue to deliver further improvements," said Chief Executive Officer Richard Ames in a statement.
Hornby has raised GBP15 million through the placing of 15.8 million shares at 95 pence each. Shares in the company were trading down 5.9% at 93.30 pence late Thursday morning.
The company has agreed with Barclays PLC to extend its revolving credit facility for four years, but with a reduced commitment of GBP10 million.
The placing and move to AIM is subject to shareholder approval, and the board of Hornby cautioned that should the resolutions not be passed, whilst it would have sufficient working capital to trade, its ability to implement its new strategic plan would be delayed or suspended. Without the placing proceeds, Hornby said it does not have the ability to repay part of its existing bank debt that comes up for renewal in December.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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