Hornby PLC Trading Update (1671W)

TIDMHRN

RNS Number : 1671W

Hornby PLC

07 February 2017

Hornby plc

("Hornby" or "the Group")

7 February 2017

TURNAROUND PLAN ON TRACK AND ROBUST CURRENT TRADING

Hornby Plc, the international hobby products group, provides an update to shareholders on progress made in its turnaround plan and trading for the period from 25 November 2016 to 5 February 2017.

Turnaround plan on track

The Group's turnaround plan is progressing as expected. The structural changes to the UK business are complete. We are at an advanced stage in transferring key European operations to the UK and we expect this to be completed by the end of the financial year. The rationalisation of the product range and associated reduction in capital expenditure were delivered in line with our plans. New catalogues for the 2017 product range have been launched and were received positively by our customers and consumers. The closure of the concession channel is proceeding as planned and we have continued to steadily reduce group stock levels while taking care not to disrupt core sales through existing channels. At 31 December 2016 stocks were GBP11.2 million (2015: GBP15.5 million) and net debt was GBP2.7 million (2015: GBP6.4 million).

Current trading robust

As previously announced, revenue is expected to decline by around 20-25% this financial year due to the rationalisation of the business. Group revenue reduced by 25% year on year during the Christmas period and UK revenue was down by 21%, in line with expectations. Underlying Christmas trading was healthy and we have enjoyed a solid January sales period. All sales channels have performed in line with or better than our expectations. In particular, sales to Independent Retailers were robust with positive growth of 4% year on year during the period as we continued to strengthen partnerships with these important customers.

Margate site sale

On 6 February 2017 the Group exchanged contracts for the sale of its site at Margate for a consideration of GBP2.25 million, which will complete on 28 February 2017. The expected profit on sale of approximately GBP0.9m will be treated as an exceptional item. The Group will leaseback part of the site for the Hornby Visitors Centre and retail outlet.

Outlook

As previously announced the current financial year is a period of transition as we reshape and streamline the business. This will result in full year revenue reducing significantly year on year and the Group will be loss-making during this transition year. However, we remain confident of meeting the Board's expectations.

Steve Cooke, Chief Executive of Hornby commented,

"We are in the midst of a transformational year and our turnaround plan is proceeding as expected. The restructuring of our UK operations is complete and we are well advanced with our initiatives in Europe. Our improved financial position is evidence of the success of the first stage of the turnaround. Hornby is well positioned to continue its transition to profitability and higher cash generation."

-ends-

Date: 7 February 2017

For further information, contact:

 
 Hornby Plc                  01843 233500 
 Steve Cooke, Chief 
  Executive 
 David Mulligan, Group 
  Finance Director 
 www.hornby.com 
 
 Capital Access Group        020 3763 3400 
 Scott Fulton 
  Jessica Bradford 
 
 Numis Securities Limited    020 7260 1000 
 Oliver Cardigan (Nomad) 
  Paul Gillam 
 Tom Ballard 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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February 07, 2017 02:00 ET (07:00 GMT)