stonesboy Posted June 13, 2019 Share Posted June 13, 2019 The latest set of figures for Hornby have been released. still negative but going in the right direction. For the year ended 31 March 2019, reported pre-tax losses dropped to £5.2m from £10.1m a year earlier, despite revenue falling to £32.8m from £35.7m. Overheads fell 15% to £18m boosting margins to 41% from 39% a year earlier. 3 1 1 8 Link to post Share on other sites More sharing options...
Ron Ron Ron Posted June 14, 2019 Share Posted June 14, 2019 Crikey, such news usually generates pages of armchair expertise from the captains of industry who reside on the forum. 24 hours and no other posts !!!!!!!! . 1 8 Link to post Share on other sites More sharing options...
Big James Posted June 14, 2019 Share Posted June 14, 2019 I think they are to busy tearing DJ models apart right now. Big james 4 4 9 Link to post Share on other sites More sharing options...
Ravenser Posted June 14, 2019 Share Posted June 14, 2019 Well, lets hope that Hornby can turn the corner this year. The range announced in January was strong - they need to sell well, fulfil the orders and we might hope that the company goes back into the black 3 Link to post Share on other sites More sharing options...
Black 5 Bear Posted June 14, 2019 Share Posted June 14, 2019 Good to see that Hornby is on the up and that this business is turning the corner, which I hope will continue in the future. They are producing some excellent products, but still need to focus on QC issues. Well done ! 2 1 Link to post Share on other sites More sharing options...
Clearwater Posted June 14, 2019 Share Posted June 14, 2019 When I get time, I’d like to understand how the H2 performance compares to H1. They lost money in H1 but how much has the rate slowed in H2 / have they actually turned a profit? 1 Link to post Share on other sites More sharing options...
Mike Storey Posted June 14, 2019 Share Posted June 14, 2019 Very informative statements by both the Chair and the CEO - better than previous years I think. A better year's results than the last two for sure. The reduction of overheads by £3m to c.£18m is good, but there is a warning that this is as low as it going to get, but has capacity to handle nearly double the turnover. So volume is going to be crucial from now on. If my fag packet sums are near enough right, allowing for increased variables (and assuming only minor, further improvements in margin), they need sales to breach £39 to £40 million (from £33.4m) to start making a post-tax profit? Interesting that average staff numbers have gone up but staff costs have gone down. Interesting that it is stated that distribution costs have fallen by £1m in the year, but the payment to the firm at Hersden (GFM) has gone down by only £0.2m. Apparently their Business Plan forecasts a return to profit in 2020/21, and not next year. Their funders deal provides for a loan facility up to 2023. So we should not expect a sudden turnaround. The share price has not moved. 4 1 Link to post Share on other sites More sharing options...
Ozexpatriate Posted June 14, 2019 Share Posted June 14, 2019 (edited) The trading statement made after the financial year end on April 9 presaged this (as is proper) so there is little 'news' other than in the detailed financial statements. The revenue trend is not unexpected but it is not very encouraging. Year over year: revenue down; cash position is now indebted; losses almost halved. Edited June 14, 2019 by Ozexpatriate 1 2 Link to post Share on other sites More sharing options...
Ron Ron Ron Posted June 14, 2019 Share Posted June 14, 2019 Interesting that year end inventory (unsold stock) has gone up quite a bit to 33% of sales. Year End Inventory as a Percentage of Sales 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 19% 17%. 19% 18% 21% 23%. 19% 26% 28% 24% 26% 21% 24% 20% 28% 33% . 1 1 1 Link to post Share on other sites More sharing options...
Ozexpatriate Posted June 14, 2019 Share Posted June 14, 2019 2 hours ago, Mike Storey said: The share price has not moved. Isn't there still just the one, majority, share-holder? 3 Link to post Share on other sites More sharing options...
Clearwater Posted June 14, 2019 Share Posted June 14, 2019 44 minutes ago, Ron Ron Ron said: Interesting that year end inventory (unsold stock) has gone up quite a bit to 33% of sales. Year End Inventory as a Percentage of Sales 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 19% 17%. 19% 18% 21% 23%. 19% 26% 28% 24% 26% 21% 24% 20% 28% 33% . In isolation, that could easily be misleading. Rising percentage could be a function of falling sales and equally a function of the end of deep discounting to shift stock. It can also be influenced by how the stock is valued. 1 6 Link to post Share on other sites More sharing options...
Mike Storey Posted June 15, 2019 Share Posted June 15, 2019 14 hours ago, Ron Ron Ron said: Interesting that year end inventory (unsold stock) has gone up quite a bit to 33% of sales. Year End Inventory as a Percentage of Sales 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 19% 17%. 19% 18% 21% 23%. 19% 26% 28% 24% 26% 21% 24% 20% 28% 33% . That is mentioned and explained in the commentary by the deliberate lack of discounting, even when stock is not moving. It is not unexpected, but I would guess it could become a problem if it continues at that level over many years. 1 2 Link to post Share on other sites More sharing options...
Mike Storey Posted June 15, 2019 Share Posted June 15, 2019 13 hours ago, Ozexpatriate said: Isn't there still just the one, majority, share-holder? Majority, yes, Pheonix, but not only. There are still a significant number of smaller shareholders, and relatively small numbers of transactions have affected the share price over time, if you look at the graphs in the RNS section. 1 Link to post Share on other sites More sharing options...
Ravenser Posted June 15, 2019 Share Posted June 15, 2019 4 minutes ago, Mike Storey said: That is mentioned and explained in the commentary by the deliberate lack of discounting, even when stock is not moving. It is not unexpected, but I would guess it could become a problem if it continues at that level over many years. However, if total sales have fallen - and the graph shows they've nearly halved , holding the same level of stock would result in a near doubling of stock as percentage of sales. It may well be that the old regime was chasing a stock target as a percentage of sales by means of online firesales, ever more aggressively as revenue levels fell. Historically inventory was a little below 20%. The stock problem emerges in 2011-12 (26%, 28%) when sales revenue was still over £60 million. Inventory is almost back on track in 2015, with a revenue spike. Then over the last 3 years sales revenue plummets - the 2017 inventory figure looks like a calculated attempt to get inventory down through online firesales, and the significant rise in inventory in the last few years a result of Lynton Davies stopping that policy If Hornby achieved £40 million sales revenue , then inventory would fall to 26-27% at the same level of stock-holding 1 Link to post Share on other sites More sharing options...
RMweb Premium jjb1970 Posted June 15, 2019 RMweb Premium Share Posted June 15, 2019 Hopefully things are movin in the right direction, it's always difficult to turn around a business that got into the deep hole Hornby were (are?) in. However, from an enthusiasts perspective they are making some excellent models and that side of things has been going in the right direction for quite a while after their design clever nadir. 4 Link to post Share on other sites More sharing options...
RMweb Gold The Stationmaster Posted June 15, 2019 RMweb Gold Share Posted June 15, 2019 1 hour ago, Ravenser said: However, if total sales have fallen - and the graph shows they've nearly halved , holding the same level of stock would result in a near doubling of stock as percentage of sales. It may well be that the old regime was chasing a stock target as a percentage of sales by means of online firesales, ever more aggressively as revenue levels fell. Historically inventory was a little below 20%. The stock problem emerges in 2011-12 (26%, 28%) when sales revenue was still over £60 million. Inventory is almost back on track in 2015, with a revenue spike. Then over the last 3 years sales revenue plummets - the 2017 inventory figure looks like a calculated attempt to get inventory down through online firesales, and the significant rise in inventory in the last few years a result of Lynton Davies stopping that policy If Hornby achieved £40 million sales revenue , then inventory would fall to 26-27% at the same level of stock-holding The previous regime was working very much on a cash chasing policy with the deep discounting clearout (aka firesale) towards year end in order to get cash in and reduce stock on hand. LCD very purposely scrapped that policy in order to both protect the brand and regain the trust of the retail trade. In theory, if the detail is available, that should show in the value of orders placed early in the calendar year because retailers now have teh confidence to odrder n knowing they will not be undersold by a warehouse clearance later in the year. The counter effect is unavoidably that if you are not producing items which sell quickly, or if you over-produce as a result of misjudging the market or you produce things the market doesn't want at all your year end inventory will increase. It would be interesting to know how the inventory divides between Year 1 models and Year 2/3 or second run models because that will show to some extent how good they are at judging the size of the market for new releases and how good they are at judging the repeat market (where they have often got it well wrong in the past). 2 2 Link to post Share on other sites More sharing options...
Ozexpatriate Posted June 16, 2019 Share Posted June 16, 2019 14 hours ago, Ravenser said: However, if total sales have fallen - and the graph shows they've nearly halved No, revenues are down only from £35.7m to £32.8m. (The green line in my graph.) The disturbing part is that this is the trend for four years now, but the report does go to some lengths to explain the current situation. It is a smaller year over year drop than the previous two. 2 Link to post Share on other sites More sharing options...
Ozexpatriate Posted June 16, 2019 Share Posted June 16, 2019 14 hours ago, Mike Storey said: There are still a significant number of smaller shareholders, and relatively small numbers of transactions have affected the share price over time, if you look at the graphs in the RNS section. Select the period from January 1, 2014 to present. I suspect that the smaller shareholders aren't moving the needle that much. Historically, it is dramatic company financial announcements that have the biggest impact. You note that this statement did not impact the price. There was nothing 'new' here financially since April's trading notice. 1 Link to post Share on other sites More sharing options...
Mike Storey Posted June 16, 2019 Share Posted June 16, 2019 8 hours ago, Ozexpatriate said: There was nothing 'new' here financially since April's trading notice. Not in the results numbers, I agree, but several of the statements were new stakes in the ground, such as profitability planned for 2020/21, and the admission that overheads are about as low as they will get now. So we have an improved idea about what figures to watch in future, which explains his "new" KPI's. 2 Link to post Share on other sites More sharing options...
Ravenser Posted June 16, 2019 Share Posted June 16, 2019 11 hours ago, Ozexpatriate said: No, revenues are down only from £35.7m to £32.8m. (The green line in my graph.) The disturbing part is that this is the trend for four years now, but the report does go to some lengths to explain the current situation. It is a smaller year over year drop than the previous two. They've fallen from £65 million in 2012 to £32.8 million now. Hold the same inventory as in 2012 and your percentage of sales will double.... 2 Link to post Share on other sites More sharing options...
37114 Posted June 16, 2019 Share Posted June 16, 2019 3 hours ago, Ravenser said: They've fallen from £65 million in 2012 to £32.8 million now. Hold the same inventory as in 2012 and your percentage of sales will double.... As one esteemed Supply chain director said to me, stock is like putting on weight, it doesn't take long and it is easy to increase your stock but it is a lot harder and takes a long time to get rid of it. 4 Link to post Share on other sites More sharing options...
RMweb Gold adb968008 Posted June 16, 2019 RMweb Gold Share Posted June 16, 2019 (edited) Hmm, I wonder if the 71/k1/j50 are still a liability or no longer significant in the stock figure ? I recall that those loan guarantees required a certain % stock level, and most stuff recently made seems to sell out, maybe if there is reasonable stock of them, that they have an important job to play in the accounts ? Edited June 16, 2019 by adb968008 Link to post Share on other sites More sharing options...
Gordon Connell Posted June 21, 2019 Share Posted June 21, 2019 (edited) Some thoughts from Lyndon Davies on Hornby's position. https://www.bbc.co.uk/news/business-48716918 Edited June 21, 2019 by Gordon Connell 1 5 Link to post Share on other sites More sharing options...
Mike Storey Posted June 21, 2019 Share Posted June 21, 2019 9 hours ago, Gordon Connell said: Some thoughts from Lyndon Davies on Hornby's position. https://www.bbc.co.uk/news/business-48716918 Quite damning about the previous team. New person(s), new broom, so all will be fine now? Quite heroic to be that bold about it. I do hope he is right, though! 1 1 Link to post Share on other sites More sharing options...
RMweb Premium Andy Hayter Posted June 21, 2019 RMweb Premium Share Posted June 21, 2019 (edited) Increasing stock cost is difficult to interpret without more detail. If we go back perhaps only a couple of years the traders were complaining of having little or no track on stock and no promise date. If some of the increase in stock cost is due to that then it is probably good for Hornby's longer term future, since traders will be able to supply customers rather than suggest competitor alternatives. Of course the extra stock may well not relate to model railways and may reflect a re-stocking of the Airfix range - for example. Edited June 21, 2019 by Andy Hayter Typo 1 Link to post Share on other sites More sharing options...
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