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Sunday 24 June 2018

Hornby hopes to seal new financing package as profits disappoint

The troubled toymaker said a new strategy will require more cash.

Hornby to announce final results
Hornby to announce final results

By Ravender Sembhy, Press Association City Editor

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.”

Press Association

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