Hornby's financial updates to the Stock Market

[Robin Brasher]

My nearest model shop is at Swanage Station.  Here the shop has stopped stocking Hornby due to the problems the shop has had with Hornby in the past.

 

Now all they stock is 00 gauge Bachmann and Peco so the blue boxes are winning here. The shop has had no problems with Peco which is probably made in Britain. There have been delivery delays with Bachmann.

 

Railway Modellers can run a complete service using Bachmann and Peco products so there is little point in stocking Hornby. if modellers want a couple of Hornby items like the Adams Radial and a southern cattle wagon they can obtain them by mail order from Hornby or from mail order shops like Hattons or Rails.

I have just seen the manager of the Swanage station shop and she has told me that the shop is still selling Hornby items. The reason that there are no Hornby items is that Hornby have not delivered any.  This is unfortunate as the Santa specials have started, the trains are full and they are unable to buy items like the new SR cattle wagons. She was disappointed that Hornby did not supply any Manstons. Manston is one of the flagship locomotives on the Swanage Railway and the station shop would be the best place to sell them as a souvenir.

[Coryton]

Last Friday the Reading Modelzone also had 25% of Bachmann, however there was not a great range in stock and sadly nothing that I wanted.

 

Looking at the Cardiff Modelzone, I can't convince myself this is anything other than the end of the Smiths Modelzone experiment.

 

Just before Christmas seems to me an odd time to do this, rather than wait until January.

 

I presume that with Hornby ending the Modelzone concessions, Smiths don't want to carry the stock themselves and without Hornby the whole thing is unviable, hence the need to rid themselves of the non Hornby stock.

 

As discussed above, the question of what happens to all the Hornby stock is an interesting one.

[The Stationmaster]

I have just seen the manager of the Swanage station shop and she has told me that the shop is still selling Hornby items. The reason that there are no Hornby items is that Hornby have not delivered any.  This is unfortunate as the Santa specials have started, the trains are full and they are unable to buy items like the new SR cattle wagons. She was disappointed that Hornby did not supply any Manstons. Manston is one of the flagship locomotives on the Swanage Railway and the station shop would be the best place to sell them as a souvenir.

 

Presumably she ordered all these things in good time?

[Robin Brasher]

Presumably she ordered all these things in good time?

Hornby would not supply Manston unless the shop joined the Hornby Collector's club. I also did not want to join the Hornby Collector's club to buy the one model I was interested in because I did not want to pay £15 extra and I have hardly got room in my flat for Manston let alone a club welcome pack and three club magazines and one winter edition. All I wanted was a model of Manston and I finally obtained one from Rails.

 

Hornby are making some lovely models, the shops want to sell them and the customer wants to buy them. Sometimes the management of Hornby are the only obstacle to providing what the consumer wants.

[Legend]

Looking at the Cardiff Modelzone, I can't convince myself this is anything other than the end of the Smiths Modelzone experiment.

 

Just before Christmas seems to me an odd time to do this, rather than wait until January.

 

I presume that with Hornby ending the Modelzone concessions, Smiths don't want to carry the stock themselves and without Hornby the whole thing is unviable, hence the need to rid themselves of the non Hornby stock.

 

As discussed above, the question of what happens to all the Hornby stock is an interesting one.

Do we know they are pulling out of Modelzone concessions. As I've said based on Glasgow I wouldn't be surprised, but it's worth noting it's not just Hornby in the equation but Airfix , Scalextric and Corgi as well. They do have other concessions that maybe are more likely to close, the aforementioned garden shops and Hawkins Bazaar as examples Edited November 29, 2016 by Legend

[Coryton]

Do we know they are pulling out of Modelzone concessions. As I've said based on Glasgow I wouldn't be surprised, but it's worth noting it's not just Hornby in the equation but Airfix , Scalextric and Corgi as well. They do have other concessions that maybe are more likely to close, the aforementioned garden shops and Hawkins Bazaar as examples

 

I thought I'd read here that Hornby was gradually pulling out of all its concessions.

 

I assumed that meant Hornby the company and applied to all their brands.

[Clearwater]

I've had a read of Horny's Interims, some comments and observations:

1) It's a bit poor to have to reissue a statement because there are errors in the first one.  Particularly given on my not particularly careful read, I've found at least one other material typo.  In the "Note to the Cash Flow Statement" towards the bottom of page 7, the reconciliation of loss before taxation to Cash utilised in operations has both the first two columns headed Six months to 30/9/16 (unaudited).  I'm sorry to start on a negative but for any company, this sort of error is careless in the extreme.

2) I've read Andy Y's excellent post on improved communications to the hobby,  Obviously I welcome that.  However, as I've commented before, most other companies, irrespective of size, produce user friendly powerpoint style presentations that are discussed with investors.  As an Investor, through a nominee account, I would like to see similar presentations that explain the strategy and set out some of the more informative information about business trends.  When I've helped companies write such presentations, I'd have looked to help show some of the colour on the underlying position

3) For example, there is a small reduction in group revenue and a larger reduction in margin.  This is stated as being due to selling off stock at a lower margin / loss diluting from the 41% to 36% margin .  Given the company is still making a cash loss (the proceeds of the equity raise went c£5m to repay the bank and about £2.5m to fund the operating loss).  What I'd want to understand is what the effect of stripping out the "planned sale of excess stock".  Also, what does "adverse sales mix" mean?  Is it a one-off? Will it happen in future years.  I think there's more detail they could give to help form an accurate picture of whether they are going to generate cash.  Presumably the 25% reduction in year on year revenue is after adjusting for the sale of excess stock.

 

If we take a 25% reduction in year on year sales, you get annual sales of £41m.  Using the 39%, you would get adjusted H1 sales of c£16m suggesting that there  was c£6m of revenues from the stock sell off/lines that will be discontinued by 2017. 

 

On a similar vein, I'd be tempted to break out the stock position between the legacy position and the new strategy. "bad Hornby / good Hornby" like banks split between good bank and bad bank.  THat way investors can see how the legacy excess stock is being managed down and can form a view on the amortisation of that stock from a P&L/cash perspective.  I'd suspect some of this overstocking drove the 2015 working capital outflow whereas that seems to be slightly cash positive this half year.

 

4) It is implied by the phrasing that whilst they have realised annualised savings of £2m (£1.2m in their European business and £0.8m in the UK), these figures are not reflected in the H1 figures.  Question is how much of the £1m (for half year) could you add back to the loss for this year?  Do these savings include the 3% overhead reduction?  Something more around the expectations of the turnaround plan perhaps setting out how much has been achieved and what more there still is to do would be helpful.  I've seen many presentations that say "£xm identified; target to achieve £ym over 5 years" etc

5) Capex -there is some unhelpful phrasing saying there has been £1.5m of capital investment compared to £4.6m in 2016 and £1.2m into new product tooling,  Is that £1.2m a 2015 figure? Is it part of the £1.5m? How much was spent on tooling in 2015?  As a customer, I want to know that the figure is comparable to see what investment there is - I think some of the £4.6m relates to IT - if so, it would be helpful to break it out.  In the Cash Flow statement, purchase of property plan and equipment is £945k - why is it less than the £1.2m quoted for tooling?  Presumably some tooling cost is sitting as operating expenditure?  Indeed Note 5 states new tooling as a £890k addition.

6) Obviously good news operating cash flow from operations improved by £7m.  (£2.5m outflow compared to £9.5m outflow)

7) the seasonality comment at 15 is helpful.  I'd assume that costs are less seasonal (at least from a cash perspective)

8) I presume the £1.069m held as a current asset for sale relates to the Margate site sale.

 

To me, the key is the "Cash flwo from Operating Activities" - that has got to become a positive figure.  There may be some boost from seasonality in H2 and some annualised savings to work through.

David

[Mike Storey]

I've had a read of Horny's Interims, some comments and observations:

1) It's a bit poor to have to reissue a statement because there are errors in the first one.  Particularly given on my not particularly careful read, I've found at least one other material typo.  In the "Note to the Cash Flow Statement" towards the bottom of page 7, the reconciliation of loss before taxation to Cash utilised in operations has both the first two columns headed Six months to 30/9/16 (unaudited).  I'm sorry to start on a negative but for any company, this sort of error is careless in the extreme.

2) I've read Andy Y's excellent post on improved communications to the hobby,  Obviously I welcome that.  However, as I've commented before, most other companies, irrespective of size, produce user friendly powerpoint style presentations that are discussed with investors.  As an Investor, through a nominee account, I would like to see similar presentations that explain the strategy and set out some of the more informative information about business trends.  When I've helped companies write such presentations, I'd have looked to help show some of the colour on the underlying position

3) For example, there is a small reduction in group revenue and a larger reduction in margin.  This is stated as being due to selling off stock at a lower margin / loss diluting from the 41% to 36% margin .  Given the company is still making a cash loss (the proceeds of the equity raise went c£5m to repay the bank and about £2.5m to fund the operating loss).  What I'd want to understand is what the effect of stripping out the "planned sale of excess stock".  Also, what does "adverse sales mix" mean?  Is it a one-off? Will it happen in future years.  I think there's more detail they could give to help form an accurate picture of whether they are going to generate cash.  Presumably the 25% reduction in year on year revenue is after adjusting for the sale of excess stock.

 

If we take a 25% reduction in year on year sales, you get annual sales of £41m.  Using the 39%, you would get adjusted H1 sales of c£16m suggesting that there  was c£6m of revenues from the stock sell off/lines that will be discontinued by 2017. 

 

On a similar vein, I'd be tempted to break out the stock position between the legacy position and the new strategy. "bad Hornby / good Hornby" like banks split between good bank and bad bank.  THat way investors can see how the legacy excess stock is being managed down and can form a view on the amortisation of that stock from a P&L/cash perspective.  I'd suspect some of this overstocking drove the 2015 working capital outflow whereas that seems to be slightly cash positive this half year.

 

4) It is implied by the phrasing that whilst they have realised annualised savings of £2m (£1.2m in their European business and £0.8m in the UK), these figures are not reflected in the H1 figures.  Question is how much of the £1m (for half year) could you add back to the loss for this year?  Do these savings include the 3% overhead reduction?  Something more around the expectations of the turnaround plan perhaps setting out how much has been achieved and what more there still is to do would be helpful.  I've seen many presentations that say "£xm identified; target to achieve £ym over 5 years" etc

5) Capex -there is some unhelpful phrasing saying there has been £1.5m of capital investment compared to £4.6m in 2016 and £1.2m into new product tooling,  Is that £1.2m a 2015 figure? Is it part of the £1.5m? How much was spent on tooling in 2015?  As a customer, I want to know that the figure is comparable to see what investment there is - I think some of the £4.6m relates to IT - if so, it would be helpful to break it out.  In the Cash Flow statement, purchase of property plan and equipment is £945k - why is it less than the £1.2m quoted for tooling?  Presumably some tooling cost is sitting as operating expenditure?  Indeed Note 5 states new tooling as a £890k addition.

6) Obviously good news operating cash flow from operations improved by £7m.  (£2.5m outflow compared to £9.5m outflow)

7) the seasonality comment at 15 is helpful.  I'd assume that costs are less seasonal (at least from a cash perspective)

8) I presume the £1.069m held as a current asset for sale relates to the Margate site sale.

 

To me, the key is the "Cash flwo from Operating Activities" - that has got to become a positive figure.  There may be some boost from seasonality in H2 and some annualised savings to work through.

David

 

I am not entirely sure what much of that means, but I think you have points 4 and 5 completely wrong. The narrative and consequent figures are abundantly clear in the long-form report, to my simple mind. They have declared savings achieved in the half year and identified savings likely in the full year, for overheads, and they have clearly declared £1.5m will be spent on capital, of which £1.2m has already been committed, compared to £4.6m for the whole of 2015/16. Or have I missed a nuance?

 

The one element I find a little concerning, is that the planned relocation of the Visitor Centre to Ramsgate Harbour (to release the remaining factory area for sale) is not mentioned anymore. I was looking forward to that, as it would have ameliorated my regular visits there, in order to visit my mother-in-law in her nursing home, bless her and all who live in her fertile imagination....

[Clearwater]

I am not entirely sure what much of that means, but I think you have points 4 and 5 completely wrong. The narrative and consequent figures are abundantly clear in the long-form report, to my simple mind. They have declared savings achieved in the half year and identified savings likely in the full year, for overheads, and they have clearly declared £1.5m will be spent on capital, of which £1.2m has already been committed, compared to £4.6m for the whole of 2015/16. Or have I missed a nuance?

 

The one element I find a little concerning, is that the planned relocation of the Visitor Centre to Ramsgate Harbour (to release the remaining factory area for sale) is not mentioned anymore. I was looking forward to that, as it would have ameliorated my regular visits there, in order to visit my mother-in-law in her nursing home, bless her and all who live in her fertile imagination....

Mike

 

On the savings, I read it as they have made savings that are equivalent to £2m per annum however my take is that they have not realised the full benefit of that within the current 6m. To illustrate, if the £2m saving relates to a loss of 50 jobs, if those people were all made redundant on the 15th of September, the full cost of those people would be in the accounts for the 6months ending 30th September but they could still say they've made the saving. ie all other things being equal, we could expect the cash loss on operations to be cut to £1.5m. If those people had been off the pay roll on 1st April, then their position is worse than I outline as the £2.5m cash loss would be after those savings meaning they have another £2.5m to find to get to break even on operating profit.

 

On capex, my concerns were the potential discrepancy in the narrative and the accounts and the consequence for us as consumers if capex has been cut by two thirds. Does that mean two thirds less new models? I think not but I found the wording unclear.

 

David

[RJS1977]

Last Friday the Reading Modelzone also had 25% of Bachmann, however there was not a great range in stock and sadly nothing that I wanted.

 

I've noticed that the floor/shelf space taken up by ModelZone in Reading is gradually diminishing, suggesting Smiths aren't too happy with the arrangement. Though I can't help wondering if Smiths got things wrong by stocking too few/the wrong lines. Most modellers aren't going to buy locos at RRP from Smiths if they can order them at discount prices from Hattons. What modellers are more likely to buy from a local shop these days are the lower ticket items (point motors, backscenes, cardboard kits, Wills scenics etc) which aren't cost-effective to buy mail order. Not saying they shouldn't stock locos & rolling stock at all, just that the range seemed to be skewed towards the more expensive items.

[Robin Brasher]

I've noticed that the floor/shelf space taken up by ModelZone in Reading is gradually diminishing, suggesting Smiths aren't too happy with the arrangement. Though I can't help wondering if Smiths got things wrong by stocking too few/the wrong lines. Most modellers aren't going to buy locos at RRP from Smiths if they can order them at discount prices from Hattons. What modellers are more likely to buy from a local shop these days are the lower ticket items (point motors, backscenes, cardboard kits, Wills scenics etc) which aren't cost-effective to buy mail order. Not saying they shouldn't stock locos & rolling stock at all, just that the range seemed to be skewed towards the more expensive items.

A lot of model shops are offering discounts to match Hattons now and Hattons is no longer offering much of a discount on many items.

[The Stationmaster]

I've noticed that the floor/shelf space taken up by ModelZone in Reading is gradually diminishing, suggesting Smiths aren't too happy with the arrangement. Though I can't help wondering if Smiths got things wrong by stocking too few/the wrong lines. Most modellers aren't going to buy locos at RRP from Smiths if they can order them at discount prices from Hattons. What modellers are more likely to buy from a local shop these days are the lower ticket items (point motors, backscenes, cardboard kits, Wills scenics etc) which aren't cost-effective to buy mail order. Not saying they shouldn't stock locos & rolling stock at all, just that the range seemed to be skewed towards the more expensive items.

 

Don't forget that Hornby concession sites stock what Hornby sends to that site and charges what Hornby directs them to charge.  That, in my view is a major problem with concessions - especially small sites like WHS in Reading - where the marketing is effectively being managed by remote control without knowledge of local market conditions other than by turnover.  It no doubt worked better in the old arrangement with Modelzone retail premises as there was a possibility of 'educated' feedback and I bet the situation at Locomotion is completely different as they are obviously far more attuned to what their market expects.

[Mike Storey]

Mike

 

On the savings, I read it as they have made savings that are equivalent to £2m per annum however my take is that they have not realised the full benefit of that within the current 6m. To illustrate, if the £2m saving relates to a loss of 50 jobs, if those people were all made redundant on the 15th of September, the full cost of those people would be in the accounts for the 6months ending 30th September but they could still say they've made the saving. ie all other things being equal, we could expect the cash loss on operations to be cut to £1.5m. If those people had been off the pay roll on 1st April, then their position is worse than I outline as the £2.5m cash loss would be after those savings meaning they have another £2.5m to find to get to break even on operating profit.

 

On capex, my concerns were the potential discrepancy in the narrative and the accounts and the consequence for us as consumers if capex has been cut by two thirds. Does that mean two thirds less new models? I think not but I found the wording unclear.

 

David

 

Thanks David

 

I see what you mean with the operational savings now. On capex, they say elsewhere that there will be a 40% reduction in product lines, but project only a 25% reduction in turnover, improving margin therefore. I guess that must mean a reduction in new models and prolongation of existing tooling for longer than perhaps we might like, assuming new tooling is the bulk of the capex reduction, aside from EPS etc. But, if they are right, that is surely the sensible way ahead financially, at least until they are in a position to take greater risk one day?

 

Mike

[NickC]

From what I understood from earlier statements, the 40% reduction in product lines is across all product line, not just model railway items and is the items that don't sell well and/or have a low profit margin (or even a loss). Given Hornby produces a large range of products not exclusively model railway products the reduction is model railway products could be less than 40% if model railway products are [relatively] good sellers with the higher profit margins. Alternatively it could be more than 40%, we won't know for sure until we see the full 2017 range in January.

Edited December 1, 2016 by NickC

[Clearwater]

Duplicate

Edited December 1, 2016 by Clearwater

[Clearwater]

As ever, we don't have enough info to see which lines are being cut and what their margins are. Logically, if they are cutting c£11m of revenue, they should be taking out £11m+ of cost to get to a positive operating position and I agree implies an increase in margins from 42% to something higher. Albeit that margin may be impacted by the sales of the stock mountain at lower margins.

 

I think it does imply more from existing tooling although I don't think that excludes new fully priced products (see the new duchess rrp!). I would perhaps expect a lower rate of newly tooled items and for them to be at the 'safer' end of investment

 

David

[The Stationmaster]

As ever, we don't have enough info to see which lines are being cut and what their margins are. Logically, if they are cutting c£11m of revenue, they should be taking out £11m+ of cost to get to a positive operating position and I agree implies an increase in margins from 42% to something higher. Albeit that margin may be impacted by the sales of the stock mountain at lower margins.

 

I think it does imply more from existing tooling although I don't think that excludes new fully priced products (see the new duchess rrp!). I would perhaps expect a lower rate of newly tooled items and for them to be at the 'safer' end of investment

 

David

 

I suspect that in reality it won't work entirely like that.  They have no choice but to keep feeding a market hooked on novelty (i.e. newly tooled or revised livery) items but it has to be real novelty and not just a re-run of something which is no different from its previous iteration.  An obvious first area to tackle with some items in the railway range is to drop Year 3 production because they are being sold into a sated market unless they can be sufficiently varied to grab that 'novelty' feel - so for example probably no Year 3 issue of the 'King'.  But a varied Year 3 would probably still work for something like the Peckett (loads of liveries on the list) and would definitely work for the Merchant Navy as there will still be variants to grab.

 

Now dropping Year 3 for some models will inevitably mean a reduction if you simply roll forward with new models every year but in theory it will probably lead to price increases in order to get the return in more positively in Years 1 & 2 (assuming they bother with Year 2 of course).  The marketing trick is obviously identifying things which might sustain a Year 3 run and those which won't because the alternative is, as you've said, to reduce the number of new introductions - which loses the 'novelty' purchasers.

 

Clearly greater care would also be needed in subsequent re-runs of older models - just fancy trying to work out when to bring the 2-BIL back.  But the steady sellers will undoubtedly remain, we might get hacked off with numerous issues of A4s but if they sell, and especially if they sell at a premium due to some sort of special event or anniversary you'd be a mug not to exploit the tooling until it dissolves into scrap.

 

So it will be interesting to see how they play things but if you go back to their tooling investment number against what has so far been announced for 2017 plus factor in too any reliveries which also mean a tooling cost on the railway side alone there has been some healthy investment over the past year and the fact that the have announced various new models suggests that expenditure will continue into the next financial year as those new models will still be needing investment money for some time to come.

[RJS1977]

 

 

Now dropping Year 3 for some models will inevitably mean a reduction if you simply roll forward with new models every year but in theory it will probably lead to price increases in order to get the return in more positively in Years 1 & 2 (assuming they bother with Year 2 of course). 

 

The trouble with this is that the shorter run and higher prices could lead to fewer people being able to afford the item, so Hornby still end up with as many left over...

[ruggedpeak]

I agree with Nick, I think they are dropping poor sellers and low margin items ie the duds.

 

Tooling is a red herring, now the people who didn't understand the market, customers or seemingly much else are gone they can focus on products the market wants. I don't believe the market is hooked on novelty.

 

Pecketts aren't 'novelty', they are an brilliantly executed model that sits perfectly with the current modelling 'zeitgeist' of small shunting planks, micro layouts. And they are just beautiful.

 

I think Hornby will still tool plenty of new models, they'll just be much better at making sure they are ones that sell. It is clear the 'right' models sell well. Hornby's ability to pick the right ones will be critical.

[Ron Ron Ron]

I agree with Nick, I think they are dropping poor sellers and low margin items ie the duds.,,,,,

 

This is exactly what Hornby have said they are doing, in the 2016 Annual Report.

 

 

"The Board now intends to reduce the number of individual product lines by approximately 40%. during the 2016 calendar year, focusing on products which generate higher gross margins."

 

".....approximately 50% of the business’ product lines contributed approximately 90% of

the gross margin."

 

 

The duds and poor sellers have gone, or are going, almost certainly never to be seen again.

There are plenty of perennials in the railway model side of the business, to contribute their share to this reduction effort.

 

 

.

Edited December 1, 2016 by Ron Ron Ron

[Mike Storey]

I agree with Nick, I think they are dropping poor sellers and low margin items ie the duds. Tooling is a red herring, now the people who didn't understand the market, customers or seemingly much else are gone they can focus on products the market wants. I don't believe the market is hooked on novelty. Pecketts aren't 'novelty', they are an brilliantly executed model that sits perfectly with the current modelling 'zeitgeist' of small shunting planks, micro layouts. And they are just beautiful. I think Hornby will still tool plenty of new models, they'll just be much better at making sure they are ones that sell. It is clear the 'right' models sell well. Hornby's ability to pick the right ones will be critical.

 

Maybe but the red herring is being cut by two thirds this current FY.

[159220]

Curiosity has killed the cat, what are these 'dud' models in specific terms for some one who buys modern?

I have watch for a few years now adventures focused on steam and BR, thus I do not hold interest in these and hence why I ask.

[Ozexpatriate]

I don't believe the market is hooked on novelty. Pecketts aren't 'novelty', they are an brilliantly executed model that sits perfectly with the current modelling 'zeitgeist' of small shunting planks, micro layouts. And they are just beautiful.

I agree with you on all your latter points, but regarding novelty, during their first release, (as the first Peckett 0-4-0ST made in 00) they are indisputably novel.

 

The first issues will sell vastly better than new liveries in future years. I agree with the thought that there will continue to be a demand for such "really useful engines" but more people will buy the first batch for the 'novelty factor'.

[Ozexpatriate]

...

3) ... there is a small reduction in group revenue and a larger reduction in margin.  ...

4) It is implied by the phrasing that whilst they have realised annualised savings of £2m (£1.2m in their European business and £0.8m in the UK), these figures are not reflected in the H1 figures.  ...

5) Capex -there is some unhelpful phrasing saying there has been £1.5m of capital investment compared to £4.6m in 2016 and £1.2m into new product tooling,  ...

 

7) the seasonality comment at 15 is helpful.  I'd assume that costs are less seasonal (at least from a cash perspective)

 ...

To me, the key is the "Cash flwo from Operating Activities" - that has got to become a positive figure.

I found the executive summary and the actual financials in the statement very difficult to reconcile and did not find that any of the material finances squared with the positive tone that there is 'good progress with the turnaround plan".

 

Yes, these are early days with the turnaround plan. "Rome wasn't built in a day" etc.

 

Debt is reduced and the bankers will be pleased, but we have decreased revenues, increased underlying loss and increased statutory loss (compared with the same period in 2015). These are not fundamentals that signify that a 'turnaround'. Of course part of the problem is that these are figures for the first half and don't show the full picture for the year.

 

8) I presume the £1.069m held as a current asset for sale relates to the Margate site sale.

Presumably. The figure below is (I believe) the sale of the (Electrotren) building in Spain.

 

Proceeds from sale of property, plant and equipment 1,022 (£'000)

Edited December 2, 2016 by Ozexpatriate

[Clearwater]

@ozezpatriate

 

Yes - I read that c£1m as the receipt as relating to Spain. On the bankers, I don't know if they will be happy. Depends on what they have been told. Of the £8m raised, £5m went on debt reduction, £2.5m on cash losses and balance on fees. Therefore, other than redrawing the overdraft, increasing debt, Hornby have to improve their cash operating postion otherwise they will be back where they were in April last year. as sir Alex ferguson put it "squeaky bum time"