Hornby's financial updates to the Stock Market

[autocoach]

This may be old news, but the Hornby Rivarossi/Hornby America line appears to be winding down.  It would have taken a lot of investment and marketing to bring it back to the 1970's and 1980's when Rivarossi was a manor RTR US player.

[Ozexpatriate]

This may be old news, but the Hornby Rivarossi/Hornby America line appears to be winding down.

Ken, what makes you say that?

 

Their web page is a bit of a mess, but they have introduced new models, including new box car tooling. There's four pages of coaches and box cars in inventory here. (They are relatively inexpensive.)

 

There's also a number of GE diesels in their 'new arrivals' page.

 

It's certainly not like the old days but they did re-issue the Heisler and the skeleton log cars not too long ago.

 

I would not be surprised to see the Rivarossi line culled during Hornby's long march to return to profitability.

Edited January 24, 2017 by Ozexpatriate

[autocoach]

Ken, what makes you say that?

 

Their web page is a bit of a mess, but they have introduced new models, including new box car tooling. There's four pages of coaches and box cars in inventory here. (They are relatively inexpensive.)

 

There's also a number of GE diesels in their 'new arrivals' page.

 

It's certainly not like the old days but they did re-issue the Heisler and the skeleton log cars not too long ago.

 

I would not be surprised to see the Rivarossi line culled during Hornby's long march to return to profitability.

According to a US forum, several distributors have been told the new box car will be the last item from Hornby/Rivarossi USA.

[jjb1970]

I just recieved a Rivarossi HO model of an FS E444R in XMPR livery for £97 (new) including shipping from Italy. The model is excellent, it is finely detailed, excellently finished and a very sweet runner, fully comparable with the ACME and Roco models of the E444R. For the price it's a steal. I just hope Rivarossi are doing OK with Italian outline as for purely selfish reasons it'd be a tragedy for Italian enthusiasts if they were a victim of the Hornby turnaround plan.

[Ron Ron Ron]

Hornby's 2017 continental ranges are on display at the Nuremberg Toy Fair this week.

No shortage of what look like very nice models.

(Select HD)

 

[jjb1970]

Thanks for that link, although there is lots of stuff there a lot of it seems to be existing tooling and even releases which have been on sale for quite a while. I have the twin pack of Lima Expert FS Gran Comfort coaches in XMPR, they're wonderful models but they've been out for quite a while. There doesn't seem to be much in the way of new models there. There've been rumours for a while that Hornby International has been one of their problem areas (perhaps not helped by a dreadful website and not really bothering to try and sell the models here) and maybe the seeming lack of new tooling development next to the pretty ambitious new program in the OO range confirms this? Either way, there's certainly nothing wrong with Rivarossi or Lima Expert in terms of the product, they make some wonderful models.

[Mike Storey]

In my monthly luxury purchase, the mag Loco-Revue, which costs about the same as decent sized paperback novel in the UK, but lasts about one quarter of the time (I am a slow reader), it is notable that HI products still loom large, both in paid advertising and in copy. Once they have finished frothing about LR Models (available to minor millionaires everywhere), they do give great praise to HI output, along with a continuing preference for Peco. Any reduction or withdrawal from the European market here will be very sorely felt. Perhaps another argument to be used... no, I will not go there.

[jjb1970]

Although European HO is a niche interest in the UK it is not an insignificant niche. Gaugemaster appear to do very well out of European HO (amongst a lot of other overseas lines) and carry huge stocks. There are quite a few UK retailers who seem to have enough customers wanting European HO models to make it worth their while to carry good stocks. Given thatHornby are a UK based company it is almost inexplicable that they make almost no effort to market their international products here and that it is much easier to buy Fleischmann, Roco, Marklin, Trix, ACME, LS etc etc than it is Hornby International.

[The Stationmaster]

Although European HO is a niche interest in the UK it is not an insignificant niche. Gaugemaster appear to do very well out of European HO (amongst a lot of other overseas lines) and carry huge stocks. There are quite a few UK retailers who seem to have enough customers wanting European HO models to make it worth their while to carry good stocks. Given thatHornby are a UK based company it is almost inexplicable that they make almost no effort to market their international products here and that it is much easier to buy Fleischmann, Roco, Marklin, Trix, ACME, LS etc etc than it is Hornby International.

 

While there might not be any (many?) stockists they do appear to sell their continental range by mail order through their website (although perhaps not the complete ranges and only selected items?)  -

 

http://www.Hornby.com/uk-en/shop/brands/rivarossi-h0-1-87.html

 

http://www.Hornby.com/uk-en/shop/brands/jouef-h0-1-87.html

 

http://www.Hornby.com/uk-en/shop/brands/electrotren-h0-1-87.html

 

http://www.Hornby.com/uk-en/shop/brands/arnold-n-1-160.html

Edited February 6, 2017 by The Stationmaster

[Mike at C&M]

While there might not be any (many?) stockists they do appear to sell their continental range by mail order through their website (although perhaps not the complete ranges and only selected items?)  -

 

http://www.Hornby.com/uk-en/shop/brands/rivarossi-h0-1-87.html

 

http://www.Hornby.com/uk-en/shop/brands/jouef-h0-1-87.html

 

http://www.Hornby.com/uk-en/shop/brands/electrotren-h0-1-87.html

 

http://www.Hornby.com/uk-en/shop/brands/arnold-n-1-160.html

 

Despite repeated requests about how we can stock these ranges, since distribution within the UK was wrenched back from OnTracks, the silence has been deafening.

 

I, along with others, have moved on to other ranges - another source of income lost to them.

Edited February 6, 2017 by 87029

[jjb1970]

Hornby offer a sample of their international range via the UK website. When it launched I hoped it'd be the start of a wider effort to market those ranges in the UK but since the initial launch it all seems to have stayed pretty static. They don'toffer a comprehensive range, and offer the extremely well done ETR450 Pendolino four car packs but not the additional cars to make up a full train. In a sense you might argue that it doesn't really matter as it is easy enough to order directly from other EU countries (I've found a few Italian shops offering fantastic service and very reasonable international delivery) but it would be nice to be able to buy from UK dealers in the same way that we can buy Roco, Fleischmann, LS, ACME etc.

[Mel_H]

Hornby issued a trading update at 0700 this morning. It is copied as pasted below as delivered. Note that the bold text is as supplied to the Stock Market from Hornby. Please note that this covers all Hornby's activities, not just railways:

 

7 February 2017

TURNAROUND PLAN ON TRACK AND ROBUST CURRENT TRADING

 

Hornby Plc, the international hobby products group, provides an update to shareholders on progress made in its turnaround plan and trading for the period from 25 November 2016 to 5 February 2017.  

 

Turnaround plan on track

 

The Group's turnaround plan is progressing as expected. The structural changes to the UK business are complete. We are at an advanced stage in transferring key European operations to the UK and we expect this to be completed by the end of the financial year. The rationalisation of the product range and associated reduction in capital expenditure were delivered in line with our plans.  New catalogues for the 2017 product range have been launched and were received positively by our customers and consumers. The closure of the concession channel is proceeding as planned and we have continued to steadily reduce group stock levels while taking care not to disrupt core sales through existing channels.   At 31 December 2016 stocks were £11.2 million (2015: £15.5 million) and net debt was £2.7 million (2015: £6.4 million).

 

Current trading robust

 

As previously announced, revenue is expected to decline by around 20-25% this financial year due to the rationalisation of the business. Group revenue reduced by 25% year on year during the Christmas period and UK revenue was down by 21%, in line with expectations. Underlying Christmas trading was healthy and we have enjoyed a solid January sales period. All sales channels have performed in line with or better than our expectations. In particular, sales to Independent Retailers were robust with positive growth of 4% year on year during the period as we continued to strengthen partnerships with these important customers. 

 

Margate site sale

 

On 6 February 2017 the Group exchanged contracts for the sale of its site at Margate for a consideration of £2.25 million, which will complete on 28 February 2017. The expected profit on sale of approximately £0.9m will be treated as an exceptional item. The Group will leaseback part of the site for the Hornby Visitors Centre and retail outlet. 

 

Outlook

 

As previously announced the current financial year is a period of transition as we reshape and streamline the business.  This will result in full year revenue reducing significantly year on year and the Group will be loss-making during this transition year. However, we remain confident of meeting the Board's expectations.

 

Steve Cooke, Chief Executive of Hornby commented,

 

"We are in the midst of a transformational year and our turnaround plan is proceeding as expected. The restructuring of our UK operations is complete and we are well advanced with our initiatives in Europe. Our improved financial position is evidence of the success of the first stage of the turnaround.  Hornby is well positioned to continue its transition to profitability and higher cash generation."

 

Edited February 7, 2017 by Mel_H

[Coryton]

Hornby issued a trading update at 0700 this morning. It is copied as pasted below as delivered. Note that the bold text is as supplied to the stock market from Hornby. Please note that this covers all Hornby's activities, not just railways:

 

7 February 2017

TURNAROUND PLAN ON TRACK AND ROBUST CURRENT TRADING

 

Hornby Plc, the international hobby products group, provides an update to shareholders on progress made in its turnaround plan and trading for the period from 25 November 2016 to 5 February 2017.  

 

Turnaround plan on track

 

The Group's turnaround plan is progressing as expected. The structural changes to the UK business are complete. We are at an advanced stage in transferring key European operations to the UK and we expect this to be completed by the end of the financial year. The rationalisation of the product range and associated reduction in capital expenditure were delivered in line with our plans.  New catalogues for the 2017 product range have been launched and were received positively by our customers and consumers. The closure of the concession channel is proceeding as planned and we have continued to steadily reduce group stock levels while taking care not to disrupt core sales through existing channels.   At 31 December 2016 stocks were £11.2 million (2015: £15.5 million) and net debt was £2.7 million (2015: £6.4 million).

 

Current trading robust

 

As previously announced, revenue is expected to decline by around 20-25% this financial year due to the rationalisation of the business. Group revenue reduced by 25% year on year during the Christmas period and UK revenue was down by 21%, in line with expectations. Underlying Christmas trading was healthy and we have enjoyed a solid January sales period. All sales channels have performed in line with or better than our expectations. In particular, sales to Independent Retailers were robust with positive growth of 4% year on year during the period as we continued to strengthen partnerships with these important customers. 

 

Margate site sale

 

On 6 February 2017 the Group exchanged contracts for the sale of its site at Margate for a consideration of £2.25 million, which will complete on 28 February 2017. The expected profit on sale of approximately £0.9m will be treated as an exceptional item. The Group will leaseback part of the site for the Hornby Visitors Centre and retail outlet. 

 

Outlook

 

As previously announced the current financial year is a period of transition as we reshape and streamline the business.  This will result in full year revenue reducing significantly year on year and the Group will be loss-making during this transition year. However, we remain confident of meeting the Board's expectations.

 

Steve Cooke, Chief Executive of Hornby commented,

 

"We are in the midst of a transformational year and our turnaround plan is proceeding as expected. The restructuring of our UK operations is complete and we are well advanced with our initiatives in Europe. Our improved financial position is evidence of the success of the first stage of the turnaround.  Hornby is well positioned to continue its transition to profitability and higher cash generation."

 

 

Particularly interesting: "we have continued to steadily reduce group stock levels while taking care not to disrupt core sales through existing channels"

[it's-er]

Many thanks for this, Mel H. It is reassuring that Hornby state they are on track and that current trading is robust - good. The important point to note is that net debt has fallen to £2.7 million, from £6.4 million a year earlier.

 

But Hornby raised, or at least planned to raise (June 2016), additional equity funding of £8m during the year. Here's a link to their last statement on 22 June.

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/HRN/12863150.html

 

I'm sure one of our accountant RMwebber friends will be able to comment more knowledgeably.

 

John Storey

Edited February 7, 2017 by it's-er

[40F]

Despite repeated requests about how we can stock these ranges, since distribution within the UK was wrenched back from OnTracks, the silence has been deafening.

 

I, along with others, have moved on to other ranges - another source of income lost to them.

 

 

Order through your rep. Stock quantities appear on the weekly stock lists under HA HJ HR etc. I have ordered off of these lists and have always had them delivered 

[Mike Storey]

Good news generally. But I am disappointed to read that the Hornby Visitor Centre will stay where it is. I was looking forward to seeing it in Ramsgate harbour, getting more exposure generally. I have not seen any reasons published as to why that did not happen - anyone know?

[Fireline]

Good news generally. But I am disappointed to read that the Hornby Visitor Centre will stay where it is. I was looking forward to seeing it in Ramsgate harbour, getting more exposure generally. I have not seen any reasons published as to why that did not happen - anyone know?

 

I think if you have to build a new building, from scratch, that usually involves rather a lot of money..... Never done it myself, but it seems likely....

[Mike Storey]

I think if you have to build a new building, from scratch, that usually involves rather a lot of money..... Never done it myself, but it seems likely....

 

It was not going to be a new building but conversion of an existing but disused one, already earmarked and plans for which had been prepared (according to the Thanet Gazette about a year ago maybe). I suspect the issue was capital, as you say, and also the original aspiration to sell the Margate site for housing, since refused, which would have required re-location. I guess the new owner can accommodate the Visitor Centre without trouble. But my question was as to whether anyone had seen Hornby's explanation, as I have learned that one or two on here have much better local knowledge than I do!

[Roy Langridge]

It was not going to be a new building but conversion of an existing but disused one, already earmarked and plans for which had been prepared (according to the Thanet Gazette about a year ago maybe). I suspect the issue was capital, as you say, and also the original aspiration to sell the Margate site for housing, since refused, which would have required re-location. I guess the new owner can accommodate the Visitor Centre without trouble. But my question was as to whether anyone had seen Hornby's explanation, as I have learned that one or two on here have much better local knowledge than I do!

Not professing to have any knowledge here, but I do note that it does not say how long they will lease the Margate site, so perhaps this is an interim solution?

 

Roy

[Pacific231G]

Good news generally. But I am disappointed to read that the Hornby Visitor Centre will stay where it is. I was looking forward to seeing it in Ramsgate harbour, getting more exposure generally. I have not seen any reasons published as to why that did not happen - anyone know?

I hope you mean beside Ramsgate Harbour Mike In the harbour would imply rather excessive exposure to sea water.

Seriously, were they planning a sort of Hornby version of Pecorama?

 

Loco Revue did a survey of RTL H0 flextracks last July and gave them realism (in representing French  track of course) ratings of A-G, none did better than a C as no mass market track represents the fixing of flat bottom rail by fang bolts commonly used in France (and elsewhere in Europe) but the six out of sixteen that did rate C, included all four flavours of Peco code 75. This seemed to be because the rail fixings though still different are less obviously Germanic than the others. This was of course before the appearance of Peco Bullhead.   Of Loco-Revue's featured layouts over the past few years I'd say a majority used Peco though a surprising number also used SMP BH despite the sleepers being too wide in H0.

 

I think Peco use a different distribution model outside the UK from that used here and there's no reason why Hornby International couldn't do the same without competing with their own suppliers. There seems to be a far larger proportion of modellers in Britain modelling non-native railways than in most other countries so the UK market for their H0 Jouef, Rivarossi, Lima, Electrotren and N gauge Arnold brands should be potentially profitable.

Edited February 7, 2017 by Pacific231G

[Ozexpatriate]

It is reassuring that Hornby state they are on track and that current trading is robust - good. The important point to note is that net debt has fallen to £2.7 million, from £6.4 million a year earlier.

Debt reduction is clearly an important goal - but not the only one.

 

But Hornby raised, or at least planned to raise (June 2016), additional equity funding of £8m during the year.

Only detailed accounting such as you will find in the annual shareholders' report will help explain the answer to your implied question of where the money went besides funding the debt, operations, new product development, expenses for various employment termination payments and so on.

Hornby will close their books at the end of March. Sometime after that (June?) they will issue a preliminary statement of their accounts for the year prior to publication of the annual report.

 

It is interesting that £0.9M profit will result from consideration of £2.25M for the Margate site. Doubtless there are many expenses related to this old industrial site and it makes me wonder if there are regulatory environmental concerns.

 

It is encouraging that there are no surprises, but a decline of 25% is a difficult number to spin.

[Coryton]

I hope you mean beside Ramsgate Harbour Mike In would involve considerable exposure to sea water.

 

I knew someone was going to say it...

[Clearwater]

@ozexpatriate

 

I'd expect another trading update on or around 31/3 with full financials in June.

 

On a specific point, I read the £0.9m profit as being the excess of what they hold the asset at in their balance sheet. That, of course, does not exclude the reasons you list as impairing the value.

 

To me, the key figure will be the operating cash flow. That needs to be a positive figure (it's been negative the last couple of years). They've funded the cash loss through debt (drawdown on the revolver) and equity proceeds.

 

If they get to no operating cash loss, insolvency fears will subside although the equity still might not be worth much!

 

David

[Coryton]

On a specific point, I read the £0.9m profit as being the excess of what they hold the asset at in their balance sheet. That, of course, does not exclude the reasons you list as impairing the value.

 

 

Quite - if you sell an asset for £2.25M you only make £2.25M profit if it had zero value on the balance sheet.

 

And you don't depreciate the value of land in the accounts.

[Widnes Model Centre]

Order through your rep. Stock quantities appear on the weekly stock lists under HA HJ HR etc. I have ordered off of these lists and have always had them delivered 

Hi 40F, just like 87029, we have been asking to have access to Hornby International and have not had any luck. As for weekly stock lists, never seen one. Didn't even know they existed. Would be interested to know what part of the country you are in as different areas have been receiving different information. This is a complaint that we have brought to Hornby's attention. It remains unsolved. This evening we have received an email again from Hornby re the  Doncaster Show that a shop in the South West had told me about earlier in the day. I had queried this with Hornby earlier.

 

Then late this afternoon Hornby Trade sent an email stating "We would also like to inform you that products from our international brands are now available to order in the UK." It reads like this is something new but not from what you have experienced.