Model rail firm Hornby given reprieve by lender
Troubled model rail firm Hornby has been given a reprieve by its lender after widening losses left it at risk of breaching the terms of its bank loans.
The group - whose brands also include Scalextric, Airfix and Corgi - saw shares surge by 14% after revealing Barclays had agreed to a waiver this month and added they remained in "constructive" talks.
Hornby has seen its stock market value plunge by more than 70% over the past six months after warning over results three times.
The Kent-based group said in February that the scale of losses it was expecting after dire new year sales could see the firm breach its banking agreements in March.
Chief executive Richard Ames stood down last month, shortly after the most recent profit warning, with chairman Roger Canham taking the helm.
But in its latest trading update, the company reassured that trading since January has been "encouraging", with UK sales up 4% in the second half to March, although wider group sales fell 2% overall.
Hornby said: "The group welcomes the continued support from its lender, Barclays.
"Recent trading has been encouraging and the board is pleased with the positive like-for-like growth that our core UK business is delivering.
"We will update shareholders on the continued progress that we are making when we announce our results for the year in June."
Hornby warned last month that it expected to post "substantially" wider underlying pre-tax losses for the full year, at between £5.5 million to £6 million, and revealed a £1 million write-off after reviewing its stock and balance sheet.
The group had said UK trading was far worse than expected in January as its new year promotions failed to boost flagging sales.
The firm admitted at the time that the new year woes marked a "substantial setback in our recovery plan", as it had hoped to turn the corner after a tough few years that have seen the firm beset by troubles.
It suffered major disruption from new computer and stock management systems, while European trading was also impacted by troubles with suppliers in China.