HORNBY PLC Hornby PLC
The Group's principal business is the development, production and supply of toy and hobby products for a global market, through a series of heritage brands. The Group distributes its products through a network of hobby specialists, multiple retailers and its own website in the UK and overseas.
CONTENTS
01 Highlights 2022
- Executive Chairman's Report
- Section 172 Statement
08 Operating and Financial Review of the Year
- Our Key Performance Indicators ('KPIs')
- Corporate Governance Report
- Audit Committee Report
18 Remuneration and Nomination Committee Report
- Directors and Corporate Information
- Directors' Report
26 Independent Auditors' Report to the Members of Hornby PLC
- Group and Company Statements of Comprehensive Income
- Group and Company Statements of Financial Position
- Group and Company statements of Changes in Equity
- Group and Company Cash Flow Statements
- Notes to the Financial Statements
- Shareholders' Information Service
Hornby PLCAnnual Report and Accounts 2022
Highlights 2022
"Our sales increased despite difficulties in the supply chain. The Company has ambitious plans for the future, it is an exciting time to be at Hornby."
Lyndon Davies, Executive Chairman
Revenue | Operating profit | Reported profit before taxation |
(2021: £48.5m) | (2021: £0.6m) | (2021: £0.3m) |
£53.7m | £1.0m | £0.6m |
Underlying1 profit before taxation | Reported profit after taxation | Reported profit per share |
(2021: £1.5m) | (2021: £1.4m) | (2021: 0.82p) |
£3.2m | £1.5m | 0.89p |
Underlying2 basic profit per share | Net cash | |
(2021: 1.36p) | (2021: 4.7m) (see Note 29) | |
2.18p | £3.8m |
- Underlying profit before taxation is before amortisation of intangibles (brand names and customer lists), and net unrealised foreign exchange movements on intercompany loans, exceptional items and shared-based payments (see page 8).
- Underlying basic profit per share is before amortisation of intangibles (brand names and customer lists), and net unrealised foreign exchange movements on intercompany loans, exceptional items and shared-based payments (see note 7).
Overview
Report Strategic
Governance
Statements Financial
Hornby PLCAnnual Report and Accounts 2022 | 01 |
Executive Chairman's Report
INTRODUCTION
Revenue for the year increased to £53.7 million (2021: £48.5million), up over 10% from the previous year. Underlying profit before tax was £3.2 million (2021: £1.5 million). Reported profit before tax was £0.6 million (2021: £0.3 million). We continue to make good progress.
Sales continue on an upward trend, though delays in shipping and in the supply chain have held them back as well as increasing our costs. We were particularly impacted in the case of Hornby and Scalextric sets, many of which arrived after the Christmas season.
The points I will cover in my statements are as follows:
KEY PERFORMANCE INDICATORS ('KPIs')
Key Performance Indicators ('KPIs')
Variable costs, fixed costs, gross profit and operating profit.
Key Performance Indicator 1: Costs
How and why our cost levels are what they are.
Key Performance Indicator 2: Capital Expenditure Productivity
Gross profit in relation to essential capital expenditure.
Key Performance Indicator 3: Inventory
The importance of the inventory balance in relation to sales.
Key Performance Indicator 4: The Digital Change
We are behind schedule, but we are gaining momentum.
Supply Chain
The issues we faced and our medium- term plan.
Brexit, Covid-19 and World Events
Where Hornby is in this context.
Staff Profit Share Scheme
Return to profit means that our employees benefit.
New CEO
Current Trading & Outlook
Governance
In 2022, we again generated enough gross profit to cover our fixed costs. By improving our KPIs we will ensure that this is sustainable and growing.
2022 | 2021 | 2020 | 2019 | 2018 | |
(£'000) | (£'000) | (£'000) | (£'000) | (£'000) | |
Sales | 53,739 | 48,549 | 37,842 | 32,759 | 35,651 |
Variable Costs | (28,023) | (26,795) | (21,140) | (19,348) | (21,900) |
Gross Profit | 25,716 | 21,754 | 16,702 | 13,411 | 13,751 |
Fixed Costs | (24,632) | (20,976) | (19,444) | (18,041) | (21,309) |
Operating Profit/(Loss) | 1,085 | 778 | (2,742) | (4,630) | (7,578) |
Underlying Operating Profit/(Loss) | 3,246 | 1,456 | (3,241) | (4,401) | (7,574) |
02 | Hornby PLCAnnual Report and Accounts 2022 |
Overview
KPI No. 1 Costs
Variable Costs
These have reduced further in proportion to sales. Our long-term target is for these to be below 40% of sales, and there was a point during this financial year when it appeared that we were closing in on 50%.
Further automation took place at the warehouse with the introduction of robots to improve our efficiency in fulfilling orders and in recent months we have increased our operating hours in order to despatch products more quickly.
This graph shows our variable costs as a percentage of sales since 2001. After a period of all-time high variable costs, we are now getting | |||||||||||||||||||||
closer to our all-time low. | Strategic | ||||||||||||||||||||
Variable Costs as a Percentage of Sales | |||||||||||||||||||||
65% | |||||||||||||||||||||
Report | |||||||||||||||||||||
60% | |||||||||||||||||||||
55% | |||||||||||||||||||||
50% | |||||||||||||||||||||
45% | |||||||||||||||||||||
40% | 2022 | ||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
Fixed Costs | ||
In the last Annual Report, I reported that our current fixed cost base could service a business bringing in £50 million to £55 million of sales. | ||
Our fixed costs have now risen, as they must, if they are to support sales of £60 million to £70 million. These increases in fixed costs are in | ||
several parts of the business, but mainly in our Digital Team and the support that they require. This started to bring rewards in the second half | ||
of the 2021/22 financial year. | Governance | |
We are investing today for the future. I expect this percentage to be closer to 40% for the 2022/23 financial year. | ||
This graph shows how our fixed costs have varied as a percentage of sales since 2001: |
Fixed Costs as a Percentage of Sales | |||||||||||||||||||||||
65% | |||||||||||||||||||||||
60% | 59% | ||||||||||||||||||||||
55% | |||||||||||||||||||||||
55% | 54% | 52% | |||||||||||||||||||||
51% | |||||||||||||||||||||||
50% | |||||||||||||||||||||||
46% | 46% | ||||||||||||||||||||||
45% | 43% | 44% | 44% | ||||||||||||||||||||
40% | 36% | 39% | 38% | 38% | 39% | ||||||||||||||||||
35% | 33% | 34% | 34% | ||||||||||||||||||||
32% | |||||||||||||||||||||||
30% | |||||||||||||||||||||||
30% | |||||||||||||||||||||||
25% | |||||||||||||||||||||||
25% | 24% | Financial | |||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | ||
20% | |||||||||||||||||||||||
Statements |
Hornby PLCAnnual Report and Accounts 2022 | 03 |
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Disclaimer
Hornby plc published this content on 26 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 August 2022 10:24:09 UTC.
