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Hornby acquire remaining Oxford shares.


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19 minutes ago, G-BOAF said:

 

Which model was this...?

Is it a model that was made for Hornby by Oxford, or dropped because Hornby made their own version? What's the story?

The known facts are that it wasn't designed at Hornby nor was any research for it done there - it just suddenly appeared in a very advanced state with some typically Oxford crankpin nuts.

 

Obviously Hornby would - in the whole circumstances of what went on with the Terrier and trying to upstage Rails - never say anything about where it came from but Oxford is the logical conclusion when it didn't come out of Hornby.  Don't forget it was said that it was developed very quickly which immediately suggests,  against normal R&D timescales, that it was well on the way to a toolable state before it got anywhere near Hornby.

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On 02/08/2021 at 10:35, G-BOAF said:

What about Rapido - their videos imply they own (or operate) at least two factories (the Rapido and the LRC factories) in different parts of China, including being very involved in the move of one of the factories to a new location.

 

I suspect it is more along the lines of a partnership between Rapido and the Chinese business owner, with Rapido being the main customer.

 

(and Rapido is now up to using 5 factories in China, though the number can be misleading given it doesn't account for size).

Edited by mdvle
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14 hours ago, adb968008 said:

***Rumour*** (ive seen it suggested elsewhere a number of times) that the Terrier was an Oxford model project, moved to Hornby. Ive not seen it confirmed anywhere by anyone in power to actually confirm it.

 

13 hours ago, The Stationmaster said:

The known facts are that it wasn't designed at Hornby nor was any research for it done there - it just suddenly appeared in a very advanced state with some typically Oxford crankpin nuts.

 

Interesting to see who 'Agreed' with those two comments . . . . . . . . . 

.

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For me, the timeline doesn't tie in. Oxford, from it's previous history  has not been able to produce products in a short timescale. If Oxford had been developing this model, with no interest from Hornby, they would have announced it at an early stage of development, so it would have been identified before the Rails announcement, which is when it's suggested Hornby decided to take over the project.

 Oxford don't do secret development, based on already announced and produced models.

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9 hours ago, rembrow said:

Oxford don't do secret development, based on already announced and produced models

There’s a difference between ‘secret’ development and ‘unannounced’ development @rembrow 

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On 03/08/2021 at 17:11, adb968008 said:

Opportunistic timing for the Oxford brands owners though ?

year 3 Hornby business plan, Hornby just turned a profit..

good time to cash out ?

 

Is Hornby on the ascent or is it at a peak ?..


Time will tell, but the Dean Goods is done, J27 is done, Radial is done.. N7 probably has more mileage.. wagons look a winner though… things like Motorails, Tanks, warwells, ICI hoppers probably have some mileage..

I was told some time ago by someone at the Hatton's shop that they own and have all the tooling for the ICI hoppers...

 

Often wondered what happened between H and OR for two very similar models of the Warwell to be produced within a few months of the other model.

 

I for one would love to see some more hoppers made given some of the prices they go for online (£83.06 for 2 the other day on hebay).

 

Cheers Paul

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7 minutes ago, pharrc20 said:

I was told some time ago by someone at the Hatton's shop that they own and have all the tooling for the ICI hoppers...

 

Often wondered what happened between H and OR for two very similar models of the Warwell to be produced within a few months of the other model.

 

I for one would love to see some more hoppers made given some of the prices they go for online (£83.06 for 2 the other day on hebay).

 

Cheers Paul

I noticed the last few PHVs went when I got my 3. I don't have the layout space for any more at the moment, but one day....

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2 minutes ago, 97406 said:

I noticed the last few PHVs went when I got my 3. I don't have the layout space for any more at the moment, but one day....

Yes the version 6 models without letters took quite a while to shift, perhaps not as popular as the others.

Cheers Paul 

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On 02/08/2021 at 12:09, Nearholmer said:


Looks like he just used Hornby money to buy his old business from himself and wife, thereby paying-back to himself a £600k loan that he’d made to his company.

 

One can only hope it makes as much commercial sense to the Hornby enterprise as it would look to do to him as an individual.

 


Quite but a ‘related party’ transaction for Hornby and a clear conflict of interest for the CEO.

 

not clear,  but this may have been anticipated at the point Hornby appointed LCD and took c50% of his business. For the rest of the shares to transact from the CEO to Hornby, he must be pretty confident in Hornby’s trading and profitability. However, Hornby trades at a greater EV/EBITDA multiple than they’ve just paid for Oxford.  As such, if the H shares maintain their multiple, he’ll have created value.  Creating a small synergy on design teams has the same effect though I doubt we’re talking more than £250k pa?

I  appreciate that the money he’s taken off the table here through the share sale and the loan repayment is a lot of money by ordinary standards and, to a certain extent, derisks him as even if he makes not a single incremental penny from Hornby, he can be set for life.  But, if he has an aggressive remuneration scheme, he could make a multiple (10x) of that as CEO either through shares, share options or cash bonuses linked to the share price.  From LCD’s perspective, a bet worth making IF he’s confident of taking Hornby to £10m+EBITDA. And this acquisition is a material step  towards that target.

 

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Interesting move....I think we all saw that coming eventually!

Quite a lot of items from the Oxford Rail range will give Hornby's range a much needed boost....
- Mk3 coaches
- BR Pilchard wagon
- Janus 0-6-0
- GWR Dean Goods
- LNER J26
- LNER J27
- LNER N7
- 7-plank coke wagons
- 12T tank wagon
- GWR/BR 6-wheel brake van
- NE/BR cattle van
- GER 10T covered van
- GER banana van
- BR carflat
- Class A tank
- Class B tank
- Warwell
- Cowans Sheldon 15T crane
Hornby's steam obsession will get a boost with atleast 4 different steam locos and a whole range of wagons from the steam era. The Mk3s (if they do come under the Hornby brand) will be a welcome addition. Hopefully they will do the HST trailers also. The 0-6-0 Janus is already being sold via the Hornby website.

 

I'm sure the Hornby will retain their own tooling for the Adams Radial, detail wise the Hornby one is more refined. I don't see Hornby keeping the tooling from Oxford's plank wagons as Hornby themselves updated their plank wagons a few years ago.

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3 hours ago, MGR Hooper! said:

Quite a lot of items from the Oxford Rail range will give Hornby's range a much needed boost....

 

Except that we've been told the ranges will continue to be run separately. Unless you know different of course.

 

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11 hours ago, Clearwater said:


Quite but a ‘related party’ transaction for Hornby and a clear conflict of interest for the CEO.

 

not clear,  but this may have been anticipated at the point Hornby appointed LCD and took c50% of his business. For the rest of the shares to transact from the CEO to Hornby, he must be pretty confident in Hornby’s trading and profitability. However, Hornby trades at a greater EV/EBITDA multiple than they’ve just paid for Oxford.  As such, if the H shares maintain their multiple, he’ll have created value.  Creating a small synergy on design teams has the same effect though I doubt we’re talking more than £250k pa?

I  appreciate that the money he’s taken off the table here through the share sale and the loan repayment is a lot of money by ordinary standards and, to a certain extent, derisks him as even if he makes not a single incremental penny from Hornby, he can be set for life.  But, if he has an aggressive remuneration scheme, he could make a multiple (10x) of that as CEO either through shares, share options or cash bonuses linked to the share price.  From LCD’s perspective, a bet worth making IF he’s confident of taking Hornby to £10m+EBITDA. And this acquisition is a material step  towards that target.

 

 .  

The most recent Hornby 'incentive scheme' share options arrangement is shown here -

 

https://polaris.brighterir.com/public/Hornby/news/rns/story/rn8nzpr

 

All previous share options taken up are in the public arena and can therefore be fairly easily traced on the 'net.   The purchase prices can be found as well so if anyone has a mind to do so they can find out exactly what sort of gross profit (or losses) those involved have made from taking up their share options

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15 hours ago, Clearwater said:

Quite but a ‘related party’ transaction for Hornby and a clear conflict of interest for the CEO.

 

In this case, unlikely.

 

15 hours ago, Clearwater said:

not clear,  but this may have been anticipated at the point Hornby appointed LCD and took c50% of his business.

 

I'm pretty sure it was - I'm not about to go back and look but I recall this potential move being covered in at least one of the previous financial statements.

 

But the key point to remember is that Phoenix owns 75% of Hornby - they are the ones controlling things, they are the ones that brought LCD in to turn around the business, and they are the ones that in essence financed (through the money they poured into Hornby to keep it going) the purchase of Oxford in 2 steps.  This was done with their knowledge, and as the majority shareholder that is all that mattered.

 

It even likely makes sense for Hornby - now that they have made a profit the profits from Oxford will help them work to stay in the black.

 

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7 hours ago, MGR Hooper! said:

Interesting move....I think we all saw that coming eventually!

Quite a lot of items from the Oxford Rail range will give Hornby's range a much needed boost....
- Mk3 coaches
 The Mk3s (if they do come under the Hornby brand) will be a welcome addition. Hopefully they will do the HST trailers also.

 

As noted, current plans are for Oxford things to remain Oxford - which makes sense.

 

Which means, at a guess, that the Oxford Mk3 tooling will be put on shelf and left unused given that it directly competes with a Hornby offering.

 

7 hours ago, MGR Hooper! said:

I'm sure the Hornby will retain their own tooling for the Adams Radial, detail wise the Hornby one is more refined. I don't see Hornby keeping the tooling from Oxford's plank wagons as Hornby themselves updated their plank wagons a few years ago.

 

They will obviously keep all of the tooling, but what they use will depend on circumstances. 

 

For example the plank wagons, if one is cheaper to make and either will sell equally well then the one with better profit would seem to be the better choice to use.

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4 hours ago, Phil Parker said:

 

Except that we've been told the ranges will continue to be run separately. Unless you know different of course.

 


But if Hornby now own Oxford Rail and Oxford Diecast, then can actually plan their ranges that compliment each other???

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14 minutes ago, mdvle said:

 

As noted, current plans are for Oxford things to remain Oxford - which makes sense.

 

Which means, at a guess, that the Oxford Mk3 tooling will be put on shelf and left unused given that it directly competes with a Hornby offering.

 

 

They will obviously keep all of the tooling, but what they use will depend on circumstances. 

 

For example the plank wagons, if one is cheaper to make and either will sell equally well then the one with better profit would seem to be the better choice to use.


As I stated above, if Hornby now own Oxford and can now produce better complimentary products, then whose to say they won't use Oxford Rail models to grow their range. Or they'd atleast plan to produce something that compliments each other ranges.

 

As per the last part of your post, it's hard to say, case in point - Class 92s. Hornby acquired Lima and therefore inherited their Class 92 tooling. The Class 92 from Lima was superior in almost every respect. They still decided to dump it and the invest money many years later into their own Class 92 tooling to update the motorised bogies, couplings and DCC compatibility directional lighting.

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I do wonder whether Hornby will end up going private, owned by LCD?  A reverse takeover as it were.  Not sure whether Phoenix are really in it for the long term.  How much of a loss they are currently looking at on their Hornby investment though...

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5 hours ago, MGR Hooper! said:

As I stated above, if Hornby now own Oxford and can now produce better complimentary products, then whose to say they won't use Oxford Rail models to grow their range. Or they'd atleast plan to produce something that compliments each other ranges.

 

They potentially can, though it will be interesting to see how this actually plays out - and part of that will be knowing who exactly was the market for Oxford Rail beyond the "I need X and only Oxford makes it" crowd.

 

Because the flip side is that trying to juggle 3 ranges - Oxford, Railroad, and Hornby - can get confusing not just for customers and retailers but for Hornby itself.

 

5 hours ago, MGR Hooper! said:

As per the last part of your post, it's hard to say, case in point - Class 92s. Hornby acquired Lima and therefore inherited their Class 92 tooling. The Class 92 from Lima was superior in almost every respect. They still decided to dump it and the invest money many years later into their own Class 92 tooling to update the motorised bogies, couplings and DCC compatibility directional lighting.

 

The Mk3 sort of falls into this, except there is no clear superior tooling if we ignore the sliding door units (which Hornby tooled up new, though not at a high end model).

 

The existing Hornby Mk3 models have issues, most notable is the lack of the Mk3a, but the Oxford tooling also has issues.  So with no clear winner, my guess is that Hornby will stick with what retailers and customers know.

 

The unknown in this is whether Hornby has/had plans with the sliding door tooling to also produce regular Mk3 and/or Mk3a models.

 

The wildcard is I think someone will tool a new high end HST - but that given the reputation (fair or otherwise) of Hornby they will do what Bachmann just did with the Class 47 and wait to go public until the first run is ready to leave the factory.

 

(if we are getting new high end versions of all the major 70s/80s prototypes it would be strange for the HST to be ignored)

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4 hours ago, 87004 said:

I do wonder whether Hornby will end up going private, owned by LCD?  A reverse takeover as it were.  Not sure whether Phoenix are really in it for the long term.  How much of a loss they are currently looking at on their Hornby investment though...

Not sure..

 

the role of CEO is to sell the company’s value. So the correct action is to raise the share price. As mentioned above, Oxford acquisition could do that.

The conflict of the CEOs role with Oxford is removed, he can focus solely on the job of raising Hornbys game.

 

I’d imagine Phoenix will seek to lower its stake in Hornby, but not divest itself of it, its 5 years since the hostile takeover in 2017 when share price was in the 35p range, its now in the 45p range but thats hardly earth shattering, I think theres a few years solid performance needed yet to convince potential investors.

 

I wonder though, if Hornby will copy Phoenix’s other well known hobby business Stanley Gibbons, who recently made a purchase of an ultra rare stamp and intends to sell fractional ownership of it to collectors, whilst keeping it as centrepiece display in store and brand ambassador…

https://www.1c-magenta.com

Imagine if Hornby bought something like the blue/grey ex LNER HST, sold fractional ownership to collectors, and ran it as both a Hornby brand ambassador and for railtours….its market appeal would be quite wider and more unique to non-hardcore enthusiast public… i’d imagine it would cost a lot less than an £8.3m stamp to do !

 

 

 

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4 hours ago, 87004 said:

I do wonder whether Hornby will end up going private, owned by LCD?  A reverse takeover as it were.  Not sure whether Phoenix are really in it for the long term.  How much of a loss they are currently looking at on their Hornby investment though...


As our American cousins would say, do the math.  Phoenix has put way more into Hornby than I’ll wager they first intended. I’d suspect that the current carrying value, at traded share price, is below their net cash investment.  To sell, they’ll want a certain minimum amount of cash when they sell.  First gate is cash breakeven, second is cash investment plus cost of carry.  Ideally, they’ll want 15% annualised.  The curve ball is how this investment sits in their fund and when that fund matures.  Sometimes, asset managers hold investments in time limited investment funds. Whilst those can be extended, there may come a point where they want/need to sell to release their own economics of the whole fund.  That could lead to a lower price particularly if some other assets have performed extremely well.

 

as of today, Hornby’s market capitalisation, ie the value of the shares, is £75m.  Let’s say they want a 30% premium to that( (equaivalent to 60p a share) so valuing the company at c£100m.  That’s a lot of cash for a private individual to raise even if they finance with debt. As such, I’d be surprised if LCD would lead a buy out.  If he got new equity backing, then it would need to be with the tacit consent of Phoenix.  However, that’s probably not offering value to them - better to sell to market with a management team in place. 

 

I think LCD is early / mid 60s?  My feeling is that he sees a large pay off for him in line with him realising the value to Phoenix.  Perhaps 18m transition for him at that point.  However, if he’s say banking mid single digit millions at that point, it would have to be a very big carrot to stay on.  If he thinks there is more value, why wouldn’t Phoenix incentive him to deliver it?

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I think that just like the Corgi brand the Oxford diecast will continue.  They have a good customer base in N, HO, OO and O scales.  Prices are good for what you get.  Many of the guys in USA say that the HO models that are produced are a good way to populate your highways.  The brands will remain as in future they might want to sell the Oxford range or keep it like the Airfix range.

 

Over the years the Corgi OOC model bus range seems to have dwindled away from the heady days where there used to be say 4 models a month at the time when EFE were doing 5.

 

Oxford Diecast brand is well known and respected for the road vehicles and as others say I think that the OR will be blended into Hornby.

 

Many of the road museums sell OD products but can't imagine they would want to stock rail related items.

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There's no reason why one set of tooling shouldn't be used to produce models for both brands.

 

The obvious place to start would be for Oxford's rather decent 9'wb RCH 1923 7-planks to finally despatch Hornby's fanciful ex-Airfix 10' wb monstrosities to history where they belong....

 

A possible marketing ploy might be for the Oxford range to lead on the quirkier stuff that appeals to customers with broader, more eclectic prototype knowledge, e.g. pre-grouping and industrials.

 

Perhaps a swap of brands for Oxford's Mk3s going to Hornby and Hornby's 4/6 wheel generics going the other way might make both ranges more coherent? 

 

As the highly delighted owner of four Hornby Radials and a disappointed ex-owner of one Oxford example, I have no doubts whatever which of those should prevail.... 

 

John

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