Hornby's financial updates to the Stock Market

[melmerby]

Actually, this company has nothing at all to do with Frank Hornby and his family firm (Meccano Limited).  They were bought out by the Lines Brothers group in 1964 (when Meccano Limited was already in terminal decline).  It transpired that Lines Brothers really only wanted the "Hornby" brand name, and closed down the prodcution of Hornby-Dublo toy trains in Liverpool fairly promptly after the takeover.

 

Hornby Dublo was actually passed to another associated company of Lines Bros, namely "Wrenn" which carried on production under the "Triang-Wrenn" banner for some time.

The later history of Wrenn post Tri-ang can be found online.

 

Keith

[JSpencer]

there was a posting today saying the md of Hornby plc has gone, and the shares have gone up. The question is where does this leave Hornby and how will it effect its relationship with the people who it owes monies to and those who hold the purse strings on hornbys monies to continue trading.

 

How on earth that is supposed to influence share price is beyond me. It's a bit like a rat leaving a sinking ship. People who believe the ship will suddenly stop sinking following that are gravly mistaken.

I would understand if there was a set of damage control measures annouced consisting of pumping, counter flooding and in some cases, such as when there is a high risk of a magazine going boom, the sacrifice of mens lives!

[Downer]

So long as the remainder of the bow-enders hit the shelves, who cares..... 

 

Those of us waiting for the B12. 

[TerrySVR]

If the markets view is the MD wasn't particularly effective then share price will climb on his departure, sustains growth will depend on quality of his replacement and their track record.

 

Hopefully it will survive and get back into profit.

[Oldddudders]

It is true that Hornby supplies much more than locos, which is why I have something over 50 Maunsells, in three liveries. By contrast I have precisely 1 Bachmann Bulleid, despite having plenty of excuses for far more. But then I also have a BSL/Phoenix Bulleid painted by Coachmann, and that tends to be my vehicle of choice for the Halwill - Torrington service.

 

I think Mr Ames arrived after 'Design Clever' had been signed off as the way forward, but he seems to leave the company with that concept well and truly binned. There are positives about his period of tenure.

[Richard E]

The departure of Richard Ames a couple of days ago (it was announced on Monday) will affect Stock Market sentiment since it demonstrates that the company is taking matters seriously, is likely to consider changing its strategy from the one that has lost them money/credibility and is therefore trying to address its problems. If there is a credible plan to turn the company around then that may just be enough to persuade the company bankers to continue to offer lines of credit but, as with all thing, there can come a point where they just say enough is enough.

 

I've done that in the past with overdrawn bank customers and had my staff on the point of calling the police since they thought the customer was going to take a swing at me. Got criticised by senior management until I pointed out I was doing what they wanted and refusing to lend more money in a hopeless situation since they had only been told about the upset customer, not why they were so upset.

 

Incidentally I see today that a Holdings disclosure has been made on behalf of a Stockbroking firm (I won't say who but the announcement is quite clear in that matter) who have reduced their holding to below 5% (the movement was a sale of some 459,000 share approximately or 16% of their holding). The shares were held for discretionary clients including a large Investment Management group (again they are named in the announcement).

 

As at the time of writing the shares stand at 34p a share down 2.5p (15 minute delay approx. on pricing information). This is just part of the normal daily 'grind' of the markets.

Edited February 17, 2016 by Richard E

[Clearwater]

The stock price represents a variety of things depending on your perspective. Corporate finance theory suggests it is the net present value of future dividends net of cash injection/ etc how ever it also reflects supply and demand in the market. If you are a fundamental investor, you'll buy when below your view on value and vice versa. However, with the share price cash some traders will have thought "this stock is oversold; I'll buy now and sell if it recovers by say 10p". However to do that trade, you still need to have a view on valuation above the trading price low. I suspect the current smallish fall is as a result of people who brought at c20p cashing out. Nice little profit if you did that, congratulations!

 

David

[Joseph_Pestell]

The departure of Richard Ames a couple of days ago (it was announced on Monday) will affect Stock Market sentiment since it demonstrates that the company is taking matters seriously, is likely to consider changing its strategy from the one that has lost them money/credibility and is therefore trying to address its problems. If there is a credible plan to turn the company around then that may just be enough to persuade the company bankers to continue to offer lines of credit but, as with all thing, there can come a point where they just say enough is enough.

 

I've done that in the past with overdrawn bank customers and had my staff on the point of calling the police since they thought the customer was going to take a swing at me. Got criticised by senior management until I pointed out I was doing what they wanted and refusing to lend more money in a hopeless situation since they had only been told about the upset customer, not why they were so upset.

 

Incidentally I see today that a Holdings disclosure has been made on behalf of a Stockbroking firm (I won't say who but the announcement is quite clear in that matter) who have reduced their holding to below 5% (the movement was a sale of some 459,000 share approximately or 16% of their holding). The shares were held for discretionary clients including a large Investment Management group (again they are named in the announcement).

 

As at the time of writing the shares stand at 34p a share down 2.5p (15 minute delay approx. on pricing information). This is just part of the normal daily 'grind' of the markets.

 

Interesting info there as it shows that a significant number of shares (although still only 1% approx) have been sold. Sometimes, particularly in the smaller companies, share price can be very volatile despite only a small percentage of the shares being traded.

[The Stationmaster]

The departure of Richard Ames a couple of days ago (it was announced on Monday) will affect Stock Market sentiment since it demonstrates that the company is taking matters seriously, is likely to consider changing its strategy from the one that has lost them money/credibility and is therefore trying to address its problems. If there is a credible plan to turn the company around then that may just be enough to persuade the company bankers to continue to offer lines of credit but, as with all thing, there can come a point where they just say enough is enough.

 

I've done that in the past with overdrawn bank customers and had my staff on the point of calling the police since they thought the customer was going to take a swing at me. Got criticised by senior management until I pointed out I was doing what they wanted and refusing to lend more money in a hopeless situation since they had only been told about the upset customer, not why they were so upset.

 

Incidentally I see today that a Holdings disclosure has been made on behalf of a Stockbroking firm (I won't say who but the announcement is quite clear in that matter) who have reduced their holding to below 5% (the movement was a sale of some 459,000 share approximately or 16% of their holding). The shares were held for discretionary clients including a large Investment Management group (again they are named in the announcement).

 

As at the time of writing the shares stand at 34p a share down 2.5p (15 minute delay approx. on pricing information). This is just part of the normal daily 'grind' of the markets.

For anyone who is interested the names of groups etc involved in the major transactions which affect voting rights are freely available on Hornby's website although the final name behind the deal might not be quite so clear.

[Joseph_Pestell]

The stock price represents a variety of things depending on your perspective. Corporate finance theory suggests it is the net present value of future dividends net of cash injection/ etc how ever it also reflects supply and demand in the market. If you are a fundamental investor, you'll buy when below your view on value and vice versa. However, with the share price cash some traders will have thought "this stock is oversold; I'll buy now and sell if it recovers by say 10p". However to do that trade, you still need to have a view on valuation above the trading price low. I suspect the current smallish fall is as a result of people who brought at c20p cashing out. Nice little profit if you did that, congratulations!

 

David

 

I'm not up-to-speed with where we are in the trading/settlements calendar. But entirely possible that they have "sold" at a profit without even paying out for any shares.

 

That is (IMHO) what is wrong with the Stock Market. There are artificial incentives to trade which don't take proper account of the business' situation.

[Clearwater]

I'm not up-to-speed with where we are in the trading/settlements calendar. But entirely possible that they have "sold" at a profit without even paying out for any shares.

 

That is (IMHO) what is wrong with the Stock Market. There are artificial incentives to trade which don't take proper account of the business' situation.

Quite possibly - beyond my knowledge I'm afraid!

 

I don't agree with you second statement though. It's a market. Whether they are able to close out a trade without ever paying for the shares is irrelevant. It's the same as a speed bet. Hornby got the cash long ago from the share issue so not their issue per se.

 

The investment fund has a made a decision to buy. They have to have the capital to pay for the shares they have brought. The trade has used both their financial and intellectual capital. They've worked out what the stock should be worth, taken advantage of some panic selling and made a profit. Fair enough to get paid for that.

 

David

[Pandora]

Prior to Hornby ,  Ames directed  Ladbrokes, a company  who slipped up with their  IT and online gambling strategy,  see below:  How much of he Hornby £6m loss is due to IT strategy shortcomings?  I have heard that retailers ceased ordering from Hornby and actually  returned stock back to the logistics centre.  One retailer had stock turn up which they had never ordered and they sent it back after much fighting,  possibly a manipulative effort  to improve the figures,  is this known as "churning" in accountancy circles?

 

"

The news that Richard Ames, product director, has left the firm will sink confidence in Britain’s second largest bookmaker, which is set to announce further costly delays to its beleaguered technology platform this week.

The company has already issued a profit warning about its technology division. But Thursday’s half-year results will show delays have eaten even further into the £15m of profits expected from digital - which are less than half the £31m achieved in the same period last year.

Richard Glynn, Ladbrokes’ chief executive, has overseen a series of management changes since joining the firm in April 2010. Insiders say morale has fallen to an all-time low, with very little hope of devising a winning strategy that can compete with William Hill, the UK’s leading bookmaker. Last week, William Hill was able to ramp up pressure on its long-time rival by announcing a 23pc increase in online operating profits to £68.9m.

Ladbrokes decided to spend £50m developing its own in-house digital technology, a move many in the industry say was its undoing. Almost all other traditional bookmakers teamed up with newer generation technology experts, such as the deal between William Hill and Playtech.  "

[Andy Y]

Someone's sent me a link to this piece - http://www.independent.co.uk/news/business/analysis-and-features/can-Hornby-get-back-on-track-after-the-departure-of-its-boss-a6876371.html

 

A few comments in there which makes me think the journalist spoke to someone who's been within the company. A shame they use an image with a Bachmann loco but that's what happens when freelance photographers take pictures at shows and make them available through media agencies.

[Mike Storey]

 

Prior to Hornby ,  Ames directed  Ladbrokes, a company  who slipped up with their  IT and online gambling strategy,  see below:  How much of he Hornby £6m loss is due to IT strategy shortcomings?  I have heard that retailers ceased ordering from Hornby and actually  returned stock back to the logistics centre.  One retailer had stock turn up which they had never ordered and they sent it back after much fighting,  possibly a manipulative effort  to improve the figures,  is this known as "churning" in accountancy circles?

 

"

The news that Richard Ames, product director, has left the firm will sink confidence in Britain’s second largest bookmaker, which is set to announce further costly delays to its beleaguered technology platform this week.

The company has already issued a profit warning about its technology division. But Thursday’s half-year results will show delays have eaten even further into the £15m of profits expected from digital - which are less than half the £31m achieved in the same period last year.

Richard Glynn, Ladbrokes’ chief executive, has overseen a series of management changes since joining the firm in April 2010. Insiders say morale has fallen to an all-time low, with very little hope of devising a winning strategy that can compete with William Hill, the UK’s leading bookmaker. Last week, William Hill was able to ramp up pressure on its long-time rival by announcing a 23pc increase in online operating profits to £68.9m.

Ladbrokes decided to spend £50m developing its own in-house digital technology, a move many in the industry say was its undoing. Almost all other traditional bookmakers teamed up with newer generation technology experts, such as the deal between William Hill and Playtech.  "

 

 

Whatever the other issues are, Hornby did not make the same mistake as Ladbrokes with their IT. Hornby have used a standard Microsoft ax ERP, and not the bloodcurdingly expensive-to-change SAP version or an in-house system. Whether its implementation has been mis-managed is another matter, but they are now absorbing the H International businesses into the same system, to significantly reduce overheads.

[MarkSG]

Someone's sent me a link to this piece - http://www.independent.co.uk/news/business/analysis-and-features/can-Hornby-get-back-on-track-after-the-departure-of-its-boss-a6876371.html

 

 

From that article:

 

On message forums, model train enthusiasts complain that many independent retailers no longer stock Hornby products because the company beats them on price by selling directly through its website. Others point out that many models are just too expensive – a side effect of increasing wage demands in China which mean that many sets now cost upwards of £150.

 

 

Looks like we've got a mole on RMweb

[Ian Hargrave]

From that article:

 

 

Looks like we've got a mole on RMweb

George Smiley has been assigned to root out the culprit.

[Porcy Mane]

A few comments in there which makes me think the journalist spoke to someone who's been within the company. 

 

Or read a few of the Hornby threads on RMweb.

 

P

[Ian Hargrave]

Those of us waiting for the B12.

 

And an awful lot more......looming in the distance are the airsmoothed MN's.

[Andy Y]

Or read a few of the Hornby threads on RMweb.

 

 

We've not spoken about the turning circle of artics or half-empty containers (just about everything else though), that seems very specific.

[Pandora]

Quite possibly - beyond my knowledge I'm afraid!

 

I don't agree with you second statement though. It's a market. Whether they are able to close out a trade without ever paying for the shares is irrelevant. It's the same as a speed bet. Hornby got the cash long ago from the share issue so not their issue per se.

 

The investment fund has a made a decision to buy. They have to have the capital to pay for the shares they have brought. The trade has used both their financial and intellectual capital. They've worked out what the stock should be worth, taken advantage of some panic selling and made a profit. Fair enough to get paid for that.

 

David

 

 

Hmm, how about this scenario: As a City Institution  hold  shares in XYZ Co at £ 1 and hold a million,  they agree to  sell XYZ x 1 million  block for £1m, then spread doom and gloom about XYZ , shares fall to 50p, buy back XYZ shares at 50p,  RESULT: they still have the shares which will rise back to £1 and therefore £1m , they keep the £500k  leeched  plus two lots of commission on the transaction,   best fact of this , they  did not actually SELL the shares in real money,  only AGREEING to sell,  (real  money never changed hands).  Leeches,Leeches Leeches!

Edited February 17, 2016 by Pandora

[Pandora]

Someone's sent me a link to this piece - http://www.independent.co.uk/news/business/analysis-and-features/can-Hornby-get-back-on-track-after-the-departure-of-its-boss-a6876371.html

 

A few comments in there which makes me think the journalist spoke to someone who's been within the company. A shame they use an image with a Bachmann loco but that's what happens when freelance photographers take pictures at shows and make them available through media agencies.

Or,  perhaps  the journalist is dropping a hint that Bachmann are looking into Hornby!!

Edited February 17, 2016 by Pandora

[Forester]

Someone's sent me a link to this piece - http://www.independent.co.uk/news/business/analysis-and-features/can-Hornby-get-back-on-track-after-the-departure-of-its-boss-a6876371.html

 

A few comments in there which makes me think the journalist spoke to someone who's been within the company. A shame they use an image with a Bachmann loco but that's what happens when freelance photographers take pictures at shows and make them available through media agencies.

 

Ignoring the obvious minor errors, it seems to me to be a plausible piece by Simon Neville. It gets to the roots of the problem without being distracted by minor issues.

 

The deciding factor now is whether Barclays will see it as a group with a credible plan worth investing further funds in or as a chaotic no-hope group best left to die.

 

I would put money on Hornby being given another chance by the bankers. Probably the CEO's head was the price of a new deal.  He was an IT man and at least the IT is now up and running. The production lines are working, albeit not yet smoothly. The products are selling, albeit in an erratic manner. The retailers are upset but that could be improved. Much of what is difficult has been done. What is left is mostly tidying, better pricing, better PR.

I would give them a chance. Let's see if Barclays agrees.

 

 

Edited to complete the post 

Edited February 17, 2016 by Forester

[Phil Parker]

Ignoring the obvious minor errors, it seems to me to be a plausible piece by Simon Neville. It gets to the roots of the problem without being distracted by minor issues.

 

 

I'd agree. Interesting to see that the author has looked at forums to see what people are talking about too.

 

The point about adult colouring books harking back to simpler hobbies is well made and something we could think about when trying to entice people into model railways. While I don't think the average etched kit falls into the "simpler" category how about card buildings? I still enjoy assembling just for the fun of it them and wonder how many others feel like this?

[Clearwater]

 

 

 

Hmm, how about this scenario: As a City Institution  hold  shares in XYZ Co at £ 1 and hold a million,  they agree to  sell XYZ x 1 million  block for £1m, then spread doom and gloom about XYZ , shares fall to 50p, buy back XYZ shares at 50p,  RESULT: they still have the shares which will rise back to £1 and therefore £1m , they keep the £500k  leeched  plus two lots of commission on the transaction,   best fact of this , they  did not actually SELL the shares in real money,  only AGREEING to sell,  (real  money never changed hands).  Leeches,Leeches Leeches!

 

The FCA would likely investigate the scenario you describe. Basically, that's market abuse and carries some pretty hefty penalties. When I was in banking, we had pretty frequent training courses on that sort of thing. Spreading false rumours to cause a price crash would fall into that category

 

David

[Porcy Mane]

Maybe the turning circle point explains the one angled loading bay that is visible on Google earth.

I've no doubt half empty containers have also turned up at the factory but suspect that management knew they would be arriving loaded to only 50%. A problem arises when no one informs the "bread & butter" employees that are unloading the container why it is half empty. That's where the rumours start and staff start thinking the inevitable.

 

I do hope they survive the current situation they find themselves in but they do seem to have been a company that drifted from crises to crises since I started playing with trains. (about 1965)

 

Maybe the ghost of Lord Westwood has become more active of late and is prowling the corridors of the Margate premises. He certainly seems to be back wandering about the inside of St James Park having a detrimental effect on that football team.

 

P