Hornby Share Discussion Threads

[my retirement fund] 10/5/2016 16:02

The FD will have been waved through by the bank. He is there to ensure the bank collects all its fees and in the (likely) event of bankruptcy they dont lose a penny. Imo

[roper] 06/5/2016 11:28

Looking very smelly today....hmmm

[holts] 26/4/2016 21:43

Finance director appointed ceo , I hope he has the sense to find some people who know how to sell their products and what too and what not to produce , as an example , if you have had to sell off items previously at reduced prices it surely makes no sense to then produce more of the same at a higher price and try selling them again about six months later.

[oakville] 20/4/2016 17:46

Still on the station but at least the fire is burning, just need to get the wheels oiled up !

[oakville] 01/4/2016 07:46

If they sort out the near term problems these are cheap as chips at 32p.

[ignoble] 31/3/2016 21:06

Must admit , Thomas the Tank Engine is still massive , guess we all take the love of steam engines to later life ...
My teenage boy watched Thomas the other morning and still enjoyed it !
(but don't tell anyone)

Maybe the smell of "Steam" stays with us from the Thomas days out

[bridgecottagedancer] 31/3/2016 18:29

Is it full steam ahead?

[oakville] 31/3/2016 16:54

Just read up on this company as like most kids I had a train set, and it's still big business here in Canada.
Are we at the bottom here as long as they sort their finances out?

[spendalot] 29/3/2016 16:19

re 77,
you would be surprised, a lot of kids interested in trains, was at a heritage line yesterday (Easter Monday) and the place was packed with them, my grandson was yelling to see them ,so I think when they age a little bit, they will be yelling for a trainset come Christmas or birthdays, so the death of trainsets in my opinion is a long way off.

[diku] 18/3/2016 22:26

Today's young generation is into tech/computers/mobiles....not in trains...

[ignoble] 16/3/2016 17:56

Like stamps ,are "Model Engines" becoming collectables rather than toys for the masses.
Make less product thus making it more desirable due to its rarity

Just a thought

[anony mous] 16/3/2016 17:17

Soon be a penny share.Shame on management.

[tyranosaurus] 16/3/2016 10:21

Have people stopped buying train sets ?
Is this a dying hobby, similar to stamp collecting.
Parallels can be drawn between Hornby and Stanley Gibbons.
Both are in the sh.t

[oakville] 09/3/2016 18:56

Is this the end?

[holts] 22/2/2016 19:51

He is a bit behind the curve in some areas , they have got the supply chain sorted , a supplier of quality has been found and are now delivering on time .

The difficulty has been their approach to sales , thinking they could sell direct themselves and effectively starting to dismantle their trade base on the main brand . I would suggest various other strategic decisions have caused advance orders to collapse , as for the warehouse write offs some of this may be covering some ledger problems with new accounts systems.

It ain't no toy company and the sooner they see the difference the sooner they can start to sort out the problem , they have forgotten the simple techniques of selling .

[spob] 17/2/2016 20:38

Paul Scott wrote on Feb 10 ....


Hornby (LON:HRN)

Share price: 39.6p (down 51.1% today)
No. shares: 55.0m
Market cap: £21.8m

Just a bit of catch-up first;

I reported here on 18 Jun 2015 about Hornby's £15m equity fundraising at 95p, and how amazed I was that it had been possible to raise fresh funding in what was effectively a rescue refinancing, to get the bank off the hook. Sure enough, the investors who backed that 95p fundraising are looking unwise now, and indeed looked unwise at the time too.

In my report of 12 Aug 2015 I noted the non-specific but generally positive-sounding trading update, and the move from the main listing, to AIM (a sensible move for a company of this size, in my view), concluding that the shares (at 107.7p) were too high, given that the turnaround was not cemented yet. Risk:reward was all wrong at that price - with shareholders being asked to pay up-front for what was then only a tentative turnaround.

Interim results on 8 Dec 2015 look pretty awful, I didn't report on them at the time, but am just looking at them now. It was clear from the interim numbers that the turnaround plan was not working, and once again Hornby slipped into losses - £3.4m for H1, and that's before adjustments, exceptionals, etc. Once again however, management peppered the narrative with optimistic noises about the outlook.

Profit warning - here we are today, and it's clear the wheels are coming off. Clearly a serious profit warning, to have triggered a fall in share price of over 50% today, on top of the drift downwards in price since Aug 2015.

UK sales performance seems to have fallen off a cliff in Jan 2016, which looks very strange to me;

In the UK the Group saw a strong sales performance in the key November and December period as sales opportunities were maximised in the run up to Christmas. Like for like sales in this period were up 17% overall year on year, though this masks some volatility within the period. However, subsequent trading since the start of the New Year has been in stark contrast, with a disappointing response to January product promotions combined with poor underlying sales resulting in negative year on year revenue growth and sales for the month being substantially below expectations. While we are expecting performance in February and March to improve on January, it will not reach previously anticipated levels.

Something just doesn't stack up here, to my mind. I can't recall ever coming across a company that is achieving +17% LFL sales, and then suddenly plunges into negative sales the following month. One explanation might be if some exceptional one-off sales were achieved in Nov-Dec. I think the company needs to elaborate on this, because it looks very odd indeed to me - there must be some other factor to cause such a plunge in sales, which is not being disclosed (yet).

International trading has also had continued disruption, although they are trying to make it sound as if the worst is behind them (reassurances which we've heard quite a lot in the past too);

As disclosed at our interims, there has been a significant reorganisation of the management and distribution operations of the European subsidiaries. The impact of this has been that trading in the international businesses was disrupted last autumn as the restructuring took place. Hornby is now through the main period of major disruption. Improved sales in the last two months have reflected the changes that have been made to the logistics, stock handling and distribution operations and like-for-like sales across December and January combined were up 5%. Despite this being the first positive like for like sales performance this financial year, this is still significantly behind the Board's previous expectations.

The key sentence above is the last one.

Guidance on loss for this year - helpfully the company does give some figures to enable shareholders assess the damage;

In total the Group is now expecting to report an underlying loss before tax in the range of £5.5m - £6.0m, which represents a substantial setback in our recovery plan for the business.

With a £3.4m H1 underlying loss, this means that H2 is also loss-making, to the tune of £2.1m to £2.6m. Plus there will be all sorts of exceptionals on top of that. Looks pretty grim to me. As an aside, I think companies that make a great song & dance about having a turnaround plan, and give it a silly name, as if it were some kind of separate entity, often seem to come unstuck. When actually, turning a business around is all about starting to manage it well, instead of badly.

Bank covenants - these are under pressure again, despite the £15m equity fundraising in Jun 2015. With one failed attempt at turning the company around already in place, I imagine that the conversations with the bank will probably have a much harder edge this time.

As a result the Directors consider there to be a risk that the Group will breach a covenant of their banking facility in March 2016. The Group has enjoyed a long and supportive relationship with its lender, with whom it is currently in discussions.

Having a long and supportive relationship with a bank means precisely nothing. It only takes someone at regional office to get a fright on, and over-rule (and replace) the friendly local manager, and all of a sudden your banking relationship has gone out of the window. I've experienced that situation personally whilst an FD in the 1990s, so ever since have never relied on any banking relationship.

Outlook - this sounds like a management team who are not in control of the business, and don't really know what's going on (which reinforces what I already thought);

The Directors are continuing to execute the Group's turnaround strategy. At the same time, the Board is now analysing the causes and consequences arising from this poor start to the new calendar year. We will update the market on the Board's progress and our revised expectations for the financial outlook for the business in due course.

My opinion - if I held shares in this, I'd have sold with the lousy interim results in Dec 2015, at over double the current price. If I'd somehow missed the obvious need to sell in Dec 15, then I would definitely sell this morning.

Bank covenants in danger of being breached just 7 months after a substantial rescue fundraising, is a complete disaster. I know it's easy to criticise, but management really don't seem to know what they're doing, and don't seem to have basic control over the business, and its supply chain.

It's still heavily loss-making, has problem bank debt, and no doubt a shareholder register who must be asking themselves whether it's time to just pull out, rather than throwing more good money after bad?

As things stand right now, I'd say this share is uninvestable, so it's gone onto the Bargepole List, as being too high risk. The trouble is, after making positive noises for some time now, about the turnaround, yet delivering dismal results (and publicly saying that they don't really know why current trading is so poor!), then who would have confidence in management to continue their attempts to turn around the business?

So the danger is that the next fundraising could be at a massive discount, hence diluting away existing holders. Even if I did think the turnaround looks promising (which I don't), then I would wait for someone else to refinance the company first, and only invest once the banking covenants were sorted, etc. Why take the risk of being heavily diluted in the next fundraising? It wouldn't surprise me if the next equity fundraising has to be done at say 10-15p. Or below, who knows? When a company runs out of money, and has its bank breathing down its neck, then you could argue that the existing equity has nil value. The company will only survive if new finance is raised, and it's then up to the new financiers to name their price (which if they have any sense, will be as low as possible).


- See more at:

[arthur_lame_stocks] 12/2/2016 21:59

I reckon shareholders here a facing a wipeout, someone will want the business and brands though.

[williemanjaro] 12/2/2016 10:38

chucky Egg :^)--Lets just say the 80's & 90's were my sort of markets---you could be a complete idiot and still make great monies -still hoping Hornby will invent a Time Machine and take me back there!

Hornby---a very interesting case study--there's a book right there--from fading brand to resurrection to double puncture. The old old argument of Train Sets/Scalelectric verses Computer games----that didn't remotely prevent Hornby going from 29p to over £10---we were there---we have the T-Shirt. However for all the innovations; (Digital Scalelectric--Real Steam and Limited Editions) a real spark has always been missing from management. Looking backwards and overspending on Airfix and Corgi, probably not the way to go. Holts is the expert---But china eventually screwed them with Hornby continually missing key manufacturing deadlines. Empty shelves at Christmas--a major no-no. Scalextric appears to have completely stalled and become a poor under performer. HRN never remotely cracked North America. Europe continuarly weak despite more spending; this time Italian and French model train brands.

Recall there was a interesting moment, a new appointment- some chap arrived from the George Lucas organisation-Ex Star Wars marketing chap--he lasted two months....I think he took one look at Hornby and ran a mile.

All best.

[steved] 11/2/2016 20:11

Williemanjaro

Chucky Egg here - long time no see (probably way back in the early 2000's when we last met) - thought I say hello. What a shame Hornby have finished up in such a dire situation. A big change from all the excitement when we used to meet at the toy fair. Hope your investments on balance have been good to you in the intervening years and you're keeping well. Very best wishes.

[bozzy_s] 11/2/2016 16:38

They need to ditch old stock, at almost any price, to pay off the banks. Reckon even a loss of 50% on current inventory would be better value than issuing new equity at rock bottom prices.

As they haven't done anything right so far, I'm not holding my breath on that.

A good brand name, historically a great brand, a popular brand. It'll probably survive - it ought to with only £6.2m debt vs £17m of inventory, £14m of trade receivables, but it is uninvestable under this management.

A change in management, a fire sale of old stock to repay debt, and return to traditional supply model and these should recover.

[anony mous] 11/2/2016 16:02

Woah.So glad I sold at over a quid.Did warn and say numbers were not good.Hope most of you sold out higher.Not worth buying now. Will be sub 5p soon for sure or if banks swaps then 0p.

[king goofus] 11/2/2016 15:51

I may buy some at 0.25p for fun.


VI VERI VENIVERSUM VIVUS VICI

[rubberbullets] 11/2/2016 15:06

pre pack coming