Hornby's financial updates to the Stock Market

[Ian Hargrave]

The 5MT does need a few tweaks to make it truly Southern though

And some extra weight to improve adhesion.Not the best of performers.

[stewartingram]

That's an awful big finger and thumb in the picture, then!

Look at the cab number?

 

Stewart

[gismorail]

Well this mornings news that  Mr. Ames has departed was no surprise in the great scheme of things, to be honest it was strange appointment in the first place given the guy's track record. I would suspect that he was on a hiding to nothing when he took over and has done the job that he was hired for that being a 'hatch man.' Following his failures in previous appointments he was in no position to be considered for a top job in his line of work where results are essential along with a proven track record. He more than likely considered it as a last chance to prove his worth. Unfortunately not all business's are the same and the guy has misjudged the industry to his cost. 

Where will he turn up next we wonder ?????

Lets hope that some sensible management now takes place and the people in charge at Hornby take a long hard look at their business a realise that something has to give in order to make the company profitable. 

[toboldlygo]

Agreed, but the various Class 4s and the 3MT tank do the trick as is.

 

John

 

Class 4's need tweaks as well (missing those pesky lamp irons) and the last one I had my grubby hands on needed a complete rebuild! Can benefit from being Hornby-fied

 

And some extra weight to improve adhesion.Not the best of performers.

 

Early 5MT's definitely..

Edited February 15, 2016 by toboldlygo

[Grovenor]

 

Well this mornings news that  Mr. Ames has departed was no surprise in the great scheme of things, to be honest it was strange appointment in the first place given the guy's track record.

Yet the person who appointed him in the first place and presumably approved the 'failed' strategy remains in post and even appoints himself to take over!

Should he not share in the blame?

Regards

[Clearwater]

Yet the person who appointed him in the first place and presumably approved the 'failed' strategy remains in post and even appoints himself to take over!

Should he not share in the blame?

Regards

Agreed however we don't know the deal with shareholders. Could well be Ames has to go now and you the chairman later but shareholders recognise that to kick out both chairman and ceo simultaneously would be even more destabilising

 

David

[Phil Parker]

And, my question about plastic kits and tins of paint is simply: can you make money out of them? Volumes sold are probably no longer huge (it isn't the sixties or seventies any more), and the cost of production and distribution are such as to push sale prices up to levels that make them un-appealing as "pocket money" toys.

 

 

A couple of years ago, I went to a talk by a recently retired senior Airfix designer. He said that the high-end kits were the most profitable for the company. That seems to be proven by the fact thay keep releasing them.

 

My local Airfix retailer has no problem selling kits at a profit too.

 

So how do you work out that they don't make any money?

[gismorail]

Yet the person who appointed him in the first place and presumably approved the 'failed' strategy remains in post and even appoints himself to take over!

Should he not share in the blame?

Regards

Totally agree with you on that point, it would appear to be one of the strange failings of most higher management structures not only in this country but in many others worldwide. I would however hope that there is a very tense situation within the board of directors at Hornby which is why I made the comment about 'taking a long hard look' at their position. 

[Hroth]

Looks like the infamous class 21/29 hybrid in 00 to me.

 

Stewart

If it wasn't for the detail and the headcode box, sizewise it might be taken for the Playcraft/Jouef HO "model", but no, its a Hornby R2122 (D6130) with the two tone green livery, produced  1999-2000.  Must be someone with big hands!

 

Or it might be R2122A, D6119 (2000-2001).  Squinting at the photo, the cabside number might end in 9!

Edited February 15, 2016 by Hroth

[Nearholmer]

Nth Degree

 

We're all speculating, unless we have lots of Hornby's internal cost and income figures, by division or product-line, in front of us, which is why I used the word "maybe" and why I professed bafflement about how to make money out of plastic kits and tins of paint.

 

I expanded upon my bafflement in a subsequent posting -I really don't understand how, in a market that self-evidently has a limited appetite for these things, anything beyond a modest business can be built upon them (doubtless someone at Tamiya could answer the question, but they do seem to be in a different league).

 

And, I genuinely don't understand where the market for "toy trains" beyond Brio-style and Thomas is to come from ....... How many children and adolescents in the UK actually want to buy, or have bought for them, these things?

 

So, I don't mind my statements being called ignorant. And, disagreement is what discussion is all about.

 

But, I am a bit rankled by being accused of bias.

 

What is it that you perceive I am biased in favour of, or against?

 

Kevin

[The Nth Degree]

What is it that you perceive I am biased in favour of, or against?

 

Kevin

In favour of model railways, of course.

 

Because you don't specifically know of any other Hornby PLC product or market does not mean they are the reason for Hornby PLCs misfortune. As I've been saying, the PLC and the limited company are two entirely different entities which focus on two entirely different tasks. They are being mixed freely by most people.

 

Have a look at the kit modelling forms – they are saying exactly the opposite to what you are saying. They are equally biased and equally ignorant of the company as they focus only on one product line. Or how about the die-cast vehicle collectors – they are saying something similar, too.

[The Stationmaster]

Nth Degree

 

We're all speculating, unless we have lots of Hornby's internal cost and income figures, by division or product-line, in front of us, which is why I used the word "maybe" and why I professed bafflement about how to make money out of plastic kits and tins of paint.

 

I expanded upon my bafflement in a subsequent posting -I really don't understand how, in a market that self-evidently has a limited appetite for these things, anything beyond a modest business can be built upon them (doubtless someone at Tamiya could answer the question, but they do seem to be in a different league).

 

And, I genuinely don't understand where the market for "toy trains" beyond Brio-style and Thomas is to come from ....... How many children and adolescents in the UK actually want to buy, or have bought for them, these things?

 

So, I don't mind my statements being called ignorant. And, disagreement is what discussion is all about.

 

But, I am a bit rankled by being accused of bias.

 

What is it that you perceive I am biased in favour of, or against?

 

Kevin

Kevin I think the simple answer is that for most of what has been suggested about products being wrong we haven't really got a clue except in respect of the things we buy or the things we read reviews of.  Equally we haven't got a  clue about what is or isn't offering high levels of profit in relation to selling price.  In some areas we can make some reasonably well informed guesses but they are still guesses.  Similarly although various stories float around the grapevine we haven't got a clue about how many of each model is made on the first rune but logically the high end stuff is unlikely to exceed 5,000 units in total in this day and age because that is the economical number to buy from Chinese factories (as already mentioned in this thread).

 

Hornby Group offer a wide range of products and equally we don't know which of those product groups have done well or badly and in what circumstances/for what reasons.  Some people know a little more but they're unable to say so in public anyway so we're still in guesswork land and your guesses are possibly as good as mine or maybe better or possibly worse - but that's no need for either of us not to speculate or display certain bias in our thoughts; that is what a forum is about.

 

What I know is that of late the high end of Hornby's model railway range has been seeing the introduction of stuff which is getting a  good reception and judging by its usually rapid disappearance for generally marketed items is being produced in commercially realistic quantities (which are hopefully covering development costs on that first run.  I for one would hate to see Hornby go out of that market area and this year my mouth and money are in firm alignment with over £400 worth of pre-orders in.   Last year most of my r-t-r spend went to Bachmann, this year very little will (in fact subject to deliveries being made more will go on DJM commissions than Bachmann branded products.  That is how a diverse market works and I would hate to see part of that diversity lost when it appears to be heading in the right direction  (for the part of the market where I am).

 

I hope Hornby come through this, I hope they sort out their management problems, I hope they wish they would take a more positive attitude to the retail trade,  I hope the less successful parts of their ranges can be re-thought to produce results which match the more successful, I hope they get to properly understand and manage the consequences of their supply chain situation instead of just looking for quick cash, I hope they'll wish they would stop under-selling (look where that has helped get them), and I hope they continue to serve the high end of the model railway market as they're getting back into their stride at doing so.

[peterfgf]

Richard Ames is not the only director who appears to have little or no experience in the hobbies market.

It is difficult to make out what experience or qualifications any of the directors bring to the company, see http://www.Hornby.plc.uk/director-information/

 

Peterfgf

[highpeakman]

Perhaps Ames opened the "Third Envelope"!

 

For those not familiar with the old story:

 

A fellow had just been hired as the new CEO of a large corporation. The current CEO was stepping down and met with the new hire privately in his office, where he handed him three numbered envelopes.

"Open these if you run up against a problem you don't think you can solve," the outgoing CEO said.

Things went along pretty smoothly for the first six month, but then sales took a downturn and the new CEO began catching a lot of heat. He went to his drawer and took out and opened the first envelope. The message read, "Blame your predecessor."

The new CEO called a press conference and tactfully laid the blame at the feet of the previous CEO. Sales began to pick up and the problem was soon behind him.

About a year later, the company was again experiencing a slight dip in sales, combined with serious product malfunctions. Having learned from his previous experience, the CEO opened the second envelope. The message read, "Reorganize." This he did, and the company quickly rebounded.

After several consecutive profitable quarters, the company once again fell on hard times. The CEO went to his office, closed the door and opened the third envelope.

The message said, "Prepare three envelopes."

[papagolfjuliet]

 

Where will he turn up next we wonder ?????

 

 

I'd say that with his record he's a shoo-in for a senior leadership role in higher education or local government.

[Clearwater]

Richard Ames is not the only director who appears to have little or no experience in the hobbies market.

It is difficult to make out what experience or qualifications any of the directors bring to the company, see http://www.Hornby.plc.uk/director-information/

 

Peterfgf

Noticeable one of them is firmly in the toy / licensing market.

[lochlongside]

The football club analogy works well. Do the shareholders actually have any real understanding of the market (game)? Is it the CEO's (Manager's) fault really or is he being forced to do things that he knows are wrong? He may have "failed" but gets a nice big payout anyway.

Head above parapet here !! (and before anyone says it I have no connection with Hornby except as a buyer of stuff and I am certainly not a shareholder even at second hand.)

Joseph - not aimed at you here but just want to present a St Jude (look it up) view of some of the  comments on this subject

I think you will find principal shareholders been a lot more patient than football fans/owners -The investment houses own around 55% of shares and one of the less opaque -Phoenix Asset Management has the stated aim of investing longterm in businesses that have significant potential (!). These investors have seen the share price steadily decline over 4 years , the shareholders in total then subscribed £15m to a right issue six months ago at around £0.95 a share and the shares have now fallen off the cliff(75%), and in all these 4 years these “profit-driven” shareholders have taken no dividend at all. That is more patience than any football club (except perhaps Arsenal-2nd tin hat on !) and certainly more than has been shown by many people on this web-site, waiting for their favourite loco from the raft of specialist forward looking, innovative manufacturers all so capable of stepping into Hornby's shoes. I still have unfulfilled orders from 2011 and 2012 from two of these innovative suppliers and they're not Hornby.

Interestingly Phoenix also has one Mr R Canham as a director and the chairman of Hornby is also Mr Canham and the chairman's job is to look after  shareholders interests (on £300k p.a I believe.). I think 4 years is long enough - you could argue that Mr Ames is (once again?) taking the rap for for someone higher up - he left Ladbrokes as an IT director on remuneration of around £370K (see Guardian) with the Guardian saying he carried the can for Ladbrokes (IT) failures. He walked into Hornby around two years ago on a basic of around £287k (see annual return) where a major IT project was taking off and  and in his just under two years has been found wanting - in the last 6 months the undertakings given by the coy are in danger of breaching the financial covenant, there is a large  and significant hole in the value of the held stock, and to my mind some query over the performance/progress of the IT project (not sure of the latter - may be reading too much into iill-informed press comment). As CEO he has actually accepted the responsibility/blame - that strikes me as an honourable thing to do - unlike so many in the public/political sector who's fingers have to prised one by one off the doorframe and then pushed out with a massive press boot up the backside, a wafting of tax-payers pound notes and an alternative job offer on the other side. (PS his pension pot is not millions - according to annual report = £56k p.a for 2 years = £112k total - but I have got to admit do not know severance details - but unlikely to be millions based on these figures).

However of more immediate relevance to all of us is No profit = no new models (and no tax for governments to spend for our(their?) benefit, and without the various SR locos I, like "DunSignalling", would have precious few SR locos on my S&DJR/SR layout. If it was not for Hornby what would be pulling my Pines Express or my Royal Wessex (a Dapol A4 at 4x the price - now there's a thought ). The disruption of any re-alignment/sell off of the  Hornby businesses could well result in major delays worse than those 2-3 years ago and goodness knows what we would end up with, and finally as far as quality is concerned compare the relative merits of the three current O class freight locos I know which is the best as I have got at least one of each - the Hornby one is excellent the others ... they're ok.(don't ask where the O classes fit in on the S&DJR - rule 1 applies - a belated Exchange perhaps!!). Just though I would offer an alternative view!.

[Nearholmer]

Nth Degree

 

I now understand the charge, and, as I'm sure you would expect, I plead firmly "Not Guilty".

 

In my defence, I would point you towards my positive statements about Scalextric, which I can see has sustainable market appeal, and my negative statements about "toy trains", which seem to me to have very restricted, and probably shrinking, market appeal.

 

Getting back to plastic kits and little tins of paint, Phil sort of makes my point for me, by suggesting that it is the "top end" kits that do well, and a quick scad of the Airfix website suggests that is the direction they might be headed-in. In short, a bit like model trains, it suggests a move in the direction of low-volume, high price per item, products.

 

So, forecast "future state":

 

- a modest plastic kit business, serving mainly adult hobbyists, with nice but pricey things;

 

- a modest model railway business, serving mainly adult hobbyists, with nice but pricey things;

 

- Scalextric, selling well in toy stores, and to some degree to adult slot-racing aficionados;

 

- a limited "toy train" range selling through toy stores, hinging around the Thomas branding, but exploiting written-down tooling to go a little way beyond that too.

 

The first two look to have very different sales outlets from one another, and from the final two. Are the supply chains for the four similar? What, other than overhead costs, does having them grouped bring? Does that suggest that perhaps they will spin out to be several totally separate businesses?

 

What do you think will happen?

 

Kevin

[RJS1977]

Ultimately the question is - what's best for the hobby? More of a move to nice-but-pricey items, which chases an ever-decreasing market as older customers die off and others are priced out, or cheaper,less-well detailed models with the intention of getting as many people (particularly the young) into this hobby as possible? 

[Ian Hargrave]

I'd say that with his record he's a shoo-in for a senior leadership role in higher education or local government.

Is your spelling error Freudian or just fat finger syndrome ? It might even be prophetic .Our secretary of state for education is reported to be sourcing the USA for a successor to Sir Michael W. as Chief Inspector of schools........

[Clearwater]

Fwiw, if, and it's a big if, Hornby disappears, that would present a bigger opportunity for the commissioners and small independents to produce more of the o2, 14xx, beyer Garretts, Atlantic singles etc that a lot of us here like but aren't necessarily in the train set market.

 

David

[papagolfjuliet]

Is your spelling error Freudian or just fat finger syndrome ? It might even be prophetic .Our secretary of state for education is reported to be sourcing the USA for a successor to Sir Michael W. as Chief Inspector of schools........

 

Apparently it really is 'shoo-in'. Until today I'd always thought that it was 'shoe-in'. 'Shoo', it turns out, is an American term for the moment in a fixed race when the leading horses would fall back and allow the fixer's chosen horse to take the lead. Every day's a school day.

Edited February 15, 2016 by papagolfjuliet

[JSpencer]

The bulk of this statement is based on disappointing January sales to retailers...

 

When I worked for the Signal box 20+ years ago, the chances of placing an order and getting stock in January was remote.

 

Moving forwards in time, Hornby's past few years have seen a lot of items missing Christmas and coming out in January which probably inflated figures in previous years. This year saw most out before Xmas, an exception being the Radial which still has not appeared yet.

 

Overall though, December should have compensated January, the fact it did not says there is revenue leakage problem somewhere.

[The Stationmaster]

Fwiw, if, and it's a big if, Hornby disappears, that would present a bigger opportunity for the commissioners and small independents to produce more of the o2, 14xx, beyer Garretts, Atlantic singles etc that a lot of us here like but aren't necessarily in the train set market.

 

David

But who is going to make the coaches and wagons for them to pull?  Don't forget Hornby do a range of things - many of the commisioners don't.

 

Incidentally reading in a previous post that the CEO was on a basic of £287,000 pa and the Chairman reputedly on £300,000 I am left seriously wondering how Hornby Group - a toy & model manufacturer with limited market impact and size of sales could actually start to be able to meet salaries that big (plus no doubt the fringe benefits and pension contributions).  The figures seem to be somewhat out of kilter with the size and profit generating capabilities of such a company.

[papagolfjuliet]

On the subject of inaccurate press reporting, here's a Guardian article which is accompanied by a photo of a mail order catalogue set from the early Seventies.

 

http://www.theguardian.com/lifeandstyle/shortcuts/2016/feb/15/lego-up-and-Hornby-down-whats-what-in-the-world-of-toys