22nd Jun 2016 06:36
LONDON (Alliance News) - Models and collectibles retailer Hornby PLC on Wednesday tabled a turnaround plan and a placing to refinance the business, as it reported a significantly wider pretax loss for the year to the end of March.
Hornby said its turnaround plan will reduce the scale of the business and its cost base whilst maintaining its key brands and more keenly focusing its product range. Hornby will refine its channel strategy and exit concession operations under the new plans, in addition to streamlining its European operating model and working to leverage its central infrastructure to cut costs and complexity.
The turnaround plans were accompanied by an GBP8.0 million equity financing plan. The company will issue 29.6 million shares at 27.00 pence per share, a discount to its 32.00p closing price on Tuesday.
In addition to the placing, the refinancing includes an amended three-and-a-half-year revolving credit facility of GBP10.0 million that the company has agreed with lender Barclays.
Hornby said the funds will be used to strengthen its balance sheet, provide working capital and to back the investments required under its turnaround plan.
Hornby tabled the plans as it said it reported a pretax loss of GBP13.5 million in the financial year to the end of March, much wider than the GBP200,000 loss made a year earlier. It booked GBP7.9 million in exceptional items over the course of the year as it restructured its operations to cope in a tough environment.
Revenue was lower, down 4.0% year-on-year to GBP55.8 million from GBP58.1 million. The year was disrupted by the implementation of new IT systems. Hornby said that while it benefited from a strong Christmas sales period, this deteriorated sharply thereafter.
"Last year was difficult and disappointing as we faced significant challenges during the continued turnaround and improvement of the business. We were pleased with the progress made in modernising many of our systems and processes, but much of the change last year resulted in substantial unplanned disruption which had a significant adverse impact on trading performance," said Steve Cooke, Hornby's chief executive.
"The board has now completed a thorough review, which has identified that many core parts of the group are stable, profitable and cash generative, driven by iconic brands with strong market positions. The review has also identified areas that require fundamental change. The turnaround plan is intended to return the business to sustainable profitability and cash generation," he added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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