Losses widen as Hornby proposes placement of 40m new shares
Hobbyist business Hornby was on track to implement a new strategy aimed at reinvigorating its key brands as losses widened over the first half of the group's trading year.
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Group revenue slid 22% to £17m in the six months leading to 30 September, resulting in a total pre-tax loss of £4.6m compared to the £3.3m it had lost twelve months prior.
With net debt growing from £2.1m to £4.7m over the year, and just £350,000 of its £7.75m UK revolving credit facility left to be drawn down upon, Hornby announced on Friday it would be issuing more than 40m new ordinary shares to finance the group's strategic objectives, strengthen its balance sheet and fund the acquisition of Pennsylvanian company LCD Enterprises.
The acquisition of the 49% stake in LCD Enterprises, the holding company of Oxford Diecast Group, was said to be for a cash consideration, with Hornby was looking to raise as much as £12m via the placement and open offer.
David Adams, Hornby's interim chairman, said, "Lyndon Davies and his team has identified the need for further investment in the company's brands. This will come in the form of direct capital expenditure and the acquisition of the stake in LCD Enterprises.
"The new funds will also strengthen the balance sheet, allowing Hornby to fully exploit the benefits of its investment," he added.
Also discussing the results, Lyndon Davies, Hornby's chief executive, said, "By simplifying and improving basic business process, together with better selection and delivery of the highest quality products, we will re-establish the value of our brands in the eyes of consumers and collectors alike."
As of 1345 GMT, shares had gained 3.59% to sit at 30.56p.