Hornby hopes to seal new financing package as profits disappoint
The troubled toymaker said a new strategy will require more cash.
Troubled toymaker Hornby has opened talks with its lenders over a new financing package as the firm warned that profits would be lower this year.
The Scalextric-to-Airfix business, which is attempting to turn itself around, said its strategy will require more cash and it is in the final stages of discussions with new lenders for a financing facility.
It is expected to be in place by June and, in the meantime, Hornby has agreed a covenant waiver with Barclays.
Hornby said: “The board has now refined its strategy to enable the business to return to profitability.
“The investment needed to support this strategy will require a larger facility than the one currently available to the group.
“Hornby is in the final stages of discussions regarding a new financing facility with new lenders.”
The firm, which in late 2017 said it would raise £12 million through a fresh equity placing, added that, while there was an improvement in sales at the end of last year, annual revenues and profits will come in lower.
Shares were down 6% to 23p following the update.
Hornby’s half-year results showed a 22% drop in group revenue from £21.9 million to £17 million and a further widening of its statutory loss from £4.7 million to £5.7 million.
Interim chairman and chief executive Lyndon Davies said: “As the dust settles on the changes to the strategy and we start to put together the line plans for 2019 and beyond, morale is starting to build in our hard-working staff and some trust is coming back with our retailers and customers, both in the UK and abroad.
“Whilst we have managed to make a lot of progress in the first few months, there is still much more to do in terms of reducing costs, streamlining processes and adding routes to market.”