Hornby's financial updates to the Stock Market

[Grovenor]

 

Hi. Not being in the Bachmann Collectors Club I could not make use of the lounge so could not talk to anybody

There were plenty of Bachmann staff on the public side of their stand, busy talking to people and showing off various products, no need to go in the lounge to talk to them.

Regards

[Legend]

There were plenty of Bachmann staff on the public side of their stand, busy talking to people and showing off various products, no need to go in the lounge to talk to them.

Regards

What's the point of the lounge then? So you have to be a member to see latest developments. Isn't that a bit like preaching to the converted? Edited March 20, 2016 by Legend

[Grovenor]

 

What's the point of the lounge then?

I would assume that it is there to make members feel they are getting benefits for their subscription, and encourage others to join.

Regards

[robmcg]

...

I had a quick conversation with one of the Hornby guys which was quite high level however seemed to suggest that we shouldn't expect much new stuff in 2017 given timeframes on tooling. My personal view is as follows

- items announced and in tooling such as q6 (samples on stand) and b12 (earlier stage samples) will appear roughly as scheduled. On a marginal cost to complete basis, the projected return must look strong and with money already spent, substantially deriske

- announced but earlier stage - eg MN. Sample was still the 3D print but not that prominently displayed. Suspect will be delayed

- 2017. Catalogue based largely on reliveries of existing tools. Big emphasis of maximising profitable lines rather than introducing new stuff.

- some reliveries trumpeted a la Gresley collection to get a premium

- some promise of 'jam' tomorrow

 

David

 

 

 

I think given the known financial woes of Hornby that is a perfectly reasonable expectation.

 

I hadn't realised the MN was at or about only the tooling stage. I presume the tooling is quite expensive.

[JSpencer]

I agree with the comments about the differences between the stands when I visited earlier. I quite liked the lounge. Having seen how Bachmann set up previously, I suspect that what is used as the lounge was previously dead space (or used for retail storage). They gave us a bottle of water and were kind to my son, who was a bit tired at that point. Made a nice break from the outside. Plus got a good look at the thonpson EPs which are closely coupled and look superb.

The Hornby stall is, by contrast smaller (and probably cheaper). It does look tired. Biggest difference to me is in the staffing. The Bachmann staff all wear easy to read name tags and, when i went through, was manned by the previous and current MD. in contrast, H staff, whilst knowledgeable didn't have name tags and I doubt were as senior as the Bachmann staff

I had a quick conversation with one of the Hornby guys which was quite high level however seemed to suggest that we shouldn't expect much new stuff in 2017 given timeframes on tooling. My personal view is as follows

- items announced and in tooling such as q6 (samples on stand) and b12 (earlier stage samples) will appear roughly as scheduled. On a marginal cost to complete basis, the projected return must look strong and with money already spent, substantially deriske

- announced but earlier stage - eg MN. Sample was still the 3D print but not that prominently displayed. Suspect will be delayed

- 2017. Catalogue based largely on reliveries of existing tools. Big emphasis of maximising profitable lines rather than introducing new stuff.

- some reliveries trumpeted a la Gresley collection to get a premium

- some promise of 'jam' tomorrow

David

Edit: as an aside I've never been that impressed with BA's champagne...

If then are doing re liveried models then Maunsells with low windows and BR colours would do a treat. Can,t think why they never appeared as such. Bullied cattle wagons in BR colours. What about the 2-HAL in 1950s condition? (BR green, whistle fitted).

 

The S15 as 847 preserved. Can't figure out how they missed that obvious money maker.... The Q1 as the NRM survivor, this tooling has been around off how many years and never done?

City of Wells in 1950s Golden Arrow condition... Iron Duke in a Golden arrow condition... Give then both TTS sound too...

 

A rebuilt Battle of Britian with TTS....

 

Oh, TTS upgrade packs for existing models?

[andyram]

I must admit I have been surprised that Hornby have not jumped on the saleability of models of preserved locomotives more often. Amazing that the K1 has never been released as 62005 whilst the Black 5 also does not appear as preserved very often. The first releases of other new locos also seem to miss that chance too.

Bachmann always market an as preserved example amongst their new releases, thinking of Stanier Mogul and E4 in particular.

[Ozexpatriate]

What's the point of the lounge then? So you have to be a member to see latest developments. Isn't that a bit like preaching to the converted?

I would assume that it is there to make members feel they are getting benefits for their subscription, and encourage others to join.

Yes, much like all loyalty clubs (I'm particularly thinking of airlines) they want customers who invest in a relationship with them to feel somehow 'special'.

 

There is a material cost to Bachmann Branch-Line to do this, in terms of the rental of the space, weekend staffing and other miscellaneous expenses. Plus they continue to struggle to release long announced items. Why not invest in reassuring people who are most likely some of their best customers? Everyone can opt in as a club member - for a nominal fee of course.

[Legend]

I am a member . Mainly for the very good magazine and excellent Calendar every year. I'm just puzzled given the lack of any really great progress that they see the need to split their clientele in two. But I get your point on loyalty suites and making people feel special. Really not sure that works in Model Railways though

[The Stationmaster]

 

 

I hadn't realised the MN was at or about only the tooling stage. I presume the tooling is quite expensive.

 

I strongly suspect that a 'proper' EP of the MN (as opposed to a 3D print) will be about in the upcoming months.

[Dunsignalling]

 Bullied cattle wagons in BR colours.

As I understand it, the plan is to release the Maunsell wagon in BR and the Bulleid version in SR livery this year (each with two running numbers) with the liveries reversed for 2017.

 

John

[Oldddudders]

As I understand it, the plan is to release the Maunsell wagon in BR and the Bulleid version in SR livery this year (each with two running numbers) with the liveries reversed for 2017.

 

John

ISTR the lauch of a new model by Ford some years back, with lots of bread-and-butter versions immediately available, but the super-dooper boy-racer version only shown in the brochure, with delivery some way off. When asked why this was, the Ford man replied that they didn't want to let all their fireworks off at once.

 

Hornby and others do well to think the same way - at least all the time they have some tenure of manufacturing slots in future, so this year we buy the model that isn't exactly in the config we wanted, and next year we buy a new version that is.

[ruggedpeak]

There were plenty of Bachmann staff on the public side of their stand, busy talking to people and showing off various products, no need to go in the lounge to talk to them.

Regards

Indeed, I liked the Woodland Scenics demo and then spent time talking to one of their staff on the retail parts and ended up getting a mountain of landscaping materials for £25 (5 starter packs). As someone who's modelling has historically focused on rolling stock and vehicles rather than scenery it was a good way to get started with some new-to-me materials. I am guessing Scenics is an area they are looking to push given the chap doing the demo was had a north american accent, as did the very helpful lady I spoke to about the kits.

 

I also liked the new models being in cases at eye level, well lit and clearly visible. I found the Hornby stand a little underwhelming. However it is not a complaint as I am only too well aware of how much stand space can cost and the amount of effort required attending them. I liked seeing the 71's up close, but didn't like having to bend down to do it!!

[Crichel Down]

I take an interest in the business side of Hornby - purely academically I hurry to say - (as well as being a late arrival but avid model trains collector) The fact is that the latest company news just isn't very encouraging - although, admittedly, that news is very sparse. If they cocked up their ERP sytem so much (as well as having p-ssed off their customers and distributors so badly and wrecked their own cash flow) the average banker would be distinctly unimpressed. Naturally we don't know the terms of the Barclays Banking covenant, but bankers are under pressure themselves, and given the sprawling nature of the whole Hornby group (and the absurd price it paid for Corgi - admittedly under previous management) as well as the dire history of so many of the best model rail brands (all shuffled around between various owners over the years who eventually go bust and pass the brands on to someone else) I wouldn't be surprised if Barclays didn't want (or might be under pressure to) to break it up. But that depends whether Hornby are pulling themselves round. How the shares are behaving would be a pointer to that, but after their plunge six weeks ago, there are few clues there at the moment.

But given that some on this thread seem to know something of Hornby's distribution thread, I thought they might get hints of what might be happening. And I think my point is a valid one. Bachmann has a history of gobbling up other trains manufacturers if only to rationalise its own manufacturing base at Kader. I'm not bashing for the sake of it. I'm genuinely concerned that, after doing so much in the last two decades or so to bring British model train manufacturing standards up to scratch, Hornby might lose it all.

 

At last!  Someone actually on-thread, instead of all the irrelevant waffling that has gone on this past few weeks.

 

There is only one question we need answered.  Have Hornby breached (or are they about to breach) their banking covenant with Barclays?  It was feared that they were going to do so this month, and they would not necessarily have to wait to their year end before they and Barclays would know if this has happened.

 

If the banking covenenant is breached, the next question is - What are Barclays going to do about it?  Basically it comes down to either re-scheduling the debt (with all sorts of strings attached, which might include selling off some brands or other assets, further management changes, etc.), or deciding that the time has finally come to pull the plug on the whole sorry mess, in which case  Barclays will then have to take steps to protect and (so far as practicable) realise their security, which would probably involve receivership and a more fundamental splitting up and sale of the company's assets.

 

There's just over a week left to the end of March, so there may possibly be some news soon.  However, if not, then the old saying that 'no news is good news' could suggest that Hornby may finally have managed to draw back from the brink (at least for the time being).

 

Meanwhile the uncertainty continues, and none of the irrelevant waffle that has been posted on this thread over recent weeks will make a blind bit of difference to what actually happens. 

[Trains&armour]

Meanwhile the uncertainty continues, and none of the irrelevant waffle that has been posted on this thread over recent weeks will make a blind bit of difference to what actually happens. 

 

True, but it has been very amusing from time to time...

 

 

(Edit: Tongue firmly in cheek. Not all the waffle was irrelevant!)

Edited March 21, 2016 by Trains&armour

[Guest]

ISTR the lauch of a new model by Ford some years back, with lots of bread-and-butter versions immediately available, but the super-dooper boy-racer version only shown in the brochure, with delivery some way off. When asked why this was, the Ford man replied that they didn't want to let all their fireworks off at once.

More likely fleet-friendly models get priority.

[Trains4U]

 

Meanwhile the uncertainty continues, and none of the irrelevant waffle that has been posted on this thread over recent weeks will make a blind bit of difference to what actually happens. 

 

 

True, but it has been very amusing from time to time...

I disagree.

 

Many of the issues raised here are now being addressed, and in communications to the trade at least, the reasons for change are practically an admission of the things that have been stated as going wrong by members of this forum.

 

You may not seem to think so, but this forum is immensely powerful - it is read by the manufacturers (I know, I've been in the same room whilst they do it) and they DO respond to what they see and read (And it is possibly a slightly more reliable communication tool for some things than direct contact!)

 

Additionally, it seems as though conversation on here has been referenced (though not credited) in the press.

 

Yes, in days of yore the rep may have been leaving shops with a flea in his ear, and word may have gone back to HQ, but in this day of instant news and comment, those messages are getting right to the top very very quickly.  Hornby might have identified some of what is going wrong, but don't feel that we (rmWeb and it's members) haven't had an influence.   After all, none of us want Hornby to fail, and much of the criticism is constructive.      

 

I'm pleased to say that Hornby appear to be closing off the issues as quickly as it would seem practical.

 

I don't just own a model shop - I also work with senior figures of tier 1 retail companies - I know they use forums like these regularly as it is often a very reliable gauge of opinion, and they are very experienced at picking the diamonds of information from the "waffle"

Edited March 21, 2016 by Trains4U

[adb968008]

I must admit I have been surprised that Hornby have not jumped on the saleability of models of preserved locomotives more often. Amazing that the K1 has never been released as 62005 whilst the Black 5 also does not appear as preserved very often. The first releases of other new locos also seem to miss that chance too.

Bachmann always market an as preserved example amongst their new releases, thinking of Stanier Mogul and E4 in particular.

 

My guess would be to maximise money.

 

I know if I were Hornby, the most desirable number wouldnt be in the first releases.. after all many people will buy a first release no matter what number you put on it..

then when sales slow, you can release a magic number and get a 2nd bite at the cherry.

Obviously exceptions apply.. 71000 etc.. I'm actually impressed at how much mileage they have had in this tooling, especially as the real thing bowed out at the same time, and P2 2001.. I'm guessing 2016 has to be the last year 2001 and then it's turn for another number or streamlined version.

 

If you did this in the inverse and produce the magic number first, everyone gets "the chosen one" and no need to buy any more unless there really was a desire.

 

However if I was a smaller manufacturer with limited income... Id be tempted to get everything I can as soon as I can to recoup the outlays and offer every version possible in a shorter timescale as possible.

 

Horses for courses, thats how I would do it.

 

However us modellers are all fickle..

 

Before the prices went up.. I bought like a fisherman.. then sorted my catch, now I tend to be a whale hunter and do the long trip then feast on "the one" for some time.

 

I know in my own collection I tried to avoid duplicate numbers, so Hornby doing 35028 in original form is actually off putting for me as I have it "as is", the other BR option is with sound (35023) (and I don't do DCC) so that is off putting for me too.. the others are Southern Green so interest will only depend on the intersection of the "wow" hitting me with the right price, when released.. so for that reason nil points from me an no pre-order for the first batch... Had this release been £100.. I'd have bought both, carried them for a year and dumped 35028 with the sound from 35023 and awaited the blue one... unfortunately my fishing boat can't support two £160 whales at a  time and allow me to gut one and dump it for buying a 3rd later... so I'm fishing in the Gobi Desert on this one right now... having spoke to a few people it seems there's a few fisherman in the Gobi when it comes to this model.

Edited March 21, 2016 by adb968008

[Ozexpatriate]

There's just over a week left to the end of March, so there may possibly be some news soon.  However, if not, then the old saying that 'no news is good news' could suggest that Hornby may finally have managed to draw back from the brink (at least for the time being).

I'd say that 'no news is good news' and 'bad news travels fast' works well here.

 

Last year, after the close of their financial year on March 31, Hornby plc issued a trading statement on May 1. (Last year, like this year, there was a trading statement in advance of the year end on February 10.) I'm not expecting any news for at least a month.

 

In the meantime people will talk about all sorts of things.

Edited March 21, 2016 by Ozexpatriate

[Clearwater]

@crichel down

Whilst the thread has, in true rmweb style wandered at times, the position of Honrby's finances and the likely bank reactions debated (many pages back). Main comment is that with their limited financial disclosures, none of us really know what is profitable, where their problems really are and the status of the loan docs will depend on the specific provisions which, as is common, will be confidential to the bank and borrower. We do get a feel on some issues from our own experiences, both professionally when facing similar situations and personally as Hornby consumers, and those of experienced retailers such as trains4u.

 

One thing I would just add, having worked in corporate finance for many years, is to state the obvious. Hornby is a listed company. Any disclosure they make about their position with their bank is highly price sensitive information. They will, and their broker will be telling them, have a clear communication plan in place about when and how they update the market on their numbers and negotiations with Barclays. They have previously made a specific statement (available earlier and via the investor relations link on the bottom of their website) about their covenant position. I'd expect them to update the market as soon as practical after their year end and when they have a settled position with Barclays.

 

In terms of liqudation, I'd see that as an absolute last resort for the lender. They'll only do that if there is no business plan that sees them repaid and Hornby operating as a viable concern. At the risk of repeating myself and others, we do not know if that viable Hornby includes uk outline trains as we do not know if they are a profitable line

 

David

[jjb1970]

I think that there are times when it is best to recognise that talk is essentially just speculation and as such not take it too seriously. In which case a few diversions in a thread and exploring other things is no bad thing. In all of this it is worth remembering that most of us are just talking about a hobby, there are people out there for whom this discussion is about a lot more than that, peoples livelihoods are at risk.

I think there are some positives for Hornby evident on this thread. One is that the great majority of modellers and collectors do appear to want Hornby to survive and to thrive and there is still a lot of goodwill for the company. A second positive is that if they can restore management and financial order the quality of their products is well regarded and their problems are not down to a poor product (and not just Hornby trains, Airfix and Corgi have also been doing some cracking stuff).

What will happen will happen but I think the banks will try and avoid the most severe outcomes as for no other reason the nuclear option of pulling the plug is at this stage unlikely to be the one that offers them the best outcome. Although I may be wrong. That said, the collapse in market cap means that their finance costs will have gone up as will their risk profile and I think it is unavoidable that this will impact their short - medium term investment plans even if they achieve a relatively positive outcome over the next few weeks and months.

[40F]

Oh I dunno  ! If Hornby Group goes under (and it is definitely on the cards|) it might be the only way that Hornby Trains can survive. Bachmann UK would benefit from extra scale, and could afford to build on the best models of either. But in the process some would have to be rationalised into oblivion. In which case forums like this might have a say !

 

 

Bachmann would be fools to take over Hornby. They would put themselves in jepody . The model railway market ain`t growing why do you think Bachmann bought Pocketbond ? 

[Joseph_Pestell]

Bachmann would be fools to take over Hornby. They would put themselves in jepody . The model railway market ain`t growing why do you think Bachmann bought Pocketbond ? 

 

If Bachmann were to take over the company, that might indeed put them at risk. But what I think was being suggested was that they would just buy the trains brand and tooling. I can't see that as putting them in any jeopardy so long as they do not pay too much.

 

But I can think of happier outcomes.

[Ron Ron Ron]

After several weeks of bobbing along near the bottom, I see the share price is now slowly sliding downwards (towards the abyss?).

 

What chance of recapitalising through a further rights issue, considering the company have p***ed away the £15 million raised through last summers share issue?

 

 

 

 

.

[The Stationmaster]

After several weeks of bobbing along near the bottom, I see the share price is now slowly sliding downwards (towards the abyss?).

 

What chance of recapitalising through a further rights issue, considering the company have p***ed away the £15 million raised through last summers share issue?

 

 

 

 

.

 

I suspect the share price is being influenced by the approach of the end of March and the likelihood of a statement shortly after that.  Certainly it doesn't reflect the positive attitude which is coming from inside the company where, for example, models are being signed off for production (i.e. spending money) although that in turn might not be indicating the way things are going at any high level financial discussions.

 

But - as ever we don't know where the weaknesses and strengths are across the various brands and product groups so positive news from one area might not mean the same for other areas.

[JSpencer]

On the other side of the coin, a change spending and budget within a company never happens overnight. Changing those things are quickly locked in internal political debate. Its a bit trying to change the direction of a convoy only you will have the captains of a lot of ships debating it first before seeing at as an order.

I think we can only really review things in a couple or a few months.