Hornby 2023 annual results

[Ravenser]

2 hours ago, PMP said:

It’s worth pointing out that’s not anything like factually correct, even as a generalisation.

Here’s two classic kits. A Parkside LMS brake van vs a classic Airfix HS125. I was shocked how poor the HS125 detail and fit is, on opening the box fond memories rapidly grounded! The example here is nowhere near ready for paint, and took many many hours to get to this state. Frustratingly enjoyable. 
The LMS brake van by contrast far quicker and easier if more complex, including getting the chassis square. Similar injection molded products like early Cambrian, Kirk, Ratio and Coopercraft have been easier to get a clean build from than this Vintage Classic HS125. 

 

 

 

My standards of comparison were the Trevithick 1803 loco, a 1/72 Fairey Battle, and a 1/76 Cromwell tank . All far tighter cleaner fits than Kirk, Coopercraft or even Parkside, even if filling and filing was needed to sort out the fit at the base of the Battle

 

Leaving aside the desperate brutal bare-knuckle fight that was the early Cambrian Walrus, even after I discarded the bogies as unbuildable (if you ever see one second hand - walk away), Kirk and Coopercraft coaches are fairly basic. The Coopercraft Tourist BTO was a pretty rough kit, and the roof had to be replaced with aluminium section from Wizard to get something that would fit (all builds written up in detail at the time on my workbench blog)

Edited June 24, 2023 by Ravenser

[Widnes Model Centre]

I don’t recall there ever being a ‘Fire sale’ of Airfix products, nor for that matter, Corgi. We have experienced shortages of kits, especially for new releases.

 

Has made me wonder why there is a general shortage of Humbrol products? Certain lines have been out of stock for some considerable time.

 

Again, left me wondering just how much the Humbrol enamels,  ‘illegal to sell’, return for disposal free of charge.? Followed by a month or so later, ‘it’s legal to sell in the UK’ saga actually cost Hornby? We were holding around £5,000 of Humbrol enamels and as we had bought them from a wholesaler we stood to lose the whole lot. That’s just one shop, if Humbrol ditched all their stock, that’s a lot of money, to then go and pay for replacement would have been a financial disaster. That was the end of March 2022.

 

[Ron Ron Ron]

1 hour ago, spamcan61 said:

I'd say at the end of the day toy trains are a very mature market, and nobody is making huge piles of cash from them. We're not going to see Google/Apple style ivory palaces inhabited by toy train manufacturers.

 

Don't forget, Hornby left Margate in 2015 and relocated to swish, modern offices in sandwich, Kent.

Indeed a shiny glass, modern day ivory palace.

It's only after Lyndon Davies took over, to rescue them from their dire financial position, that Hornby returned to their shabby old  spiritual home in Margate, in 2019, to save on the rental costs.

Luckily, the Margate site hadn't been bought up and bulldozed for redevelopment.

 

.

[Phil Parker]

1 hour ago, Ravenser said:

Its obvious from Hornby : A Model World that Airfix  is the number 2 brand at Margate . The rest barely seem to feature.

 

Presses the "Don't believe everything you see on TV" button.

 

Airfix is much more televisual than Humbrol, and to be honest, Corgi. Scalextric got a look in. but I suspect there were just less interesting stories to tell about it. However, I really don't recommend taking telly as a guide to anything other than telly.

 

1 hour ago, Ravenser said:

How do Hornby off-load slow-selling plastic kits? If they have few options for doing so, then there is a risk of a slow build-up of remnants of stock.

 

Other than warehouse space, how much are they really costing them? The materials tied up in a plastic kit amount to a few pence. The cardboard box probably costs as much. And they won't deteriorate if kept dry. Unless the kit is superseded, it's still going to have a value and sell in the long tail eventually.

[andyman7]

4 hours ago, PMP said:

It’s worth pointing out that’s not anything like factually correct, even as a generalisation.

Here’s two classic kits. A Parkside LMS brake van vs a classic Airfix HS125. I was shocked how poor the HS125 detail and fit is, on opening the box fond memories rapidly grounded! The example here is nowhere near ready for paint, and took many many hours to get to this state. Frustratingly enjoyable. 
The LMS brake van by contrast far quicker and easier if more complex, including getting the chassis square. Similar injection molded products like early Cambrian, Kirk, Ratio and Coopercraft have been easier to get a clean build from than this Vintage Classic HS125. 

 

 

 

1 hour ago, Ravenser said:

 

My standards of comparison were the Trevithick 1803 loco, a 1/72 Fairey Battle, and a 1/76 Cromwell tank . All far tighter cleaner fits than Kirk, Coopercraft or even Parkside, even if filling and filing was needed to sort out the fit at the base of the Battle

 

Leaving aside the desperate brutal bare-knuckle fight that was the early Cambrian Walrus, even after I discarded the bogies as unbuildable (if you ever see one second hand - walk away), Kirk and Coopercraft coaches are fairly basic. The Coopercraft Tourist BTO was a pretty rough kit, and the roof had to be replaced with aluminium section from Wizard to get something that would fit (all builds written up in detail at the time on my workbench blog)

My observation is that the Airfix HS125 tolling will have produced many thousands more kits than the Cambrian one. The 'classic' tools produced absolutely vast numbers of kits, many times what the market is for adult injection moulded models. One of the reasons for the 'warning' about the extra work the Vintage Classics need is because they are from such well-used tools. It is for this reason that there is still a market to build (not collect) early examples of kits, because you get the parts with much less flash, fewer sinkholes etc. - but it costs money; the Vintage Classics provide an accessible avenue to build these models.

As regards the more cottage-industry end of the plastic kit industry, quality will vary considerably depending on the quality of design, injection moulding tools, plastics used etc. 

[PhilH]

17 minutes ago, Phil Parker said:

 

 

 

Other than warehouse space, how much are they really costing them? The materials tied up in a plastic kit amount to a few pence. The cardboard box probably costs as much. And they won't deteriorate if kept dry. Unless the kit is superseded, it's still going to have a value and sell in the long tail eventually.

They do seem to discount stock quite regularly….my local model shop (shameless plug, AC models in Eastleigh, superb shop) have a shelf of discounted Airfix kits at bargain prices. This is a purchase from there from a while back, add to that my 10% discount for being a member of a local model club the prices become even more attractive!

[Neil]

3 hours ago, spamcan61 said:

I'd say at the end of the day toy trains are a very mature market, and nobody is making huge piles of cash from them. We're not going to see Google/Apple style ivory palaces inhabited by toy train manufacturers.

 

You're right that we shouldn't expect the full corporate glitz that comes with a multinational organisation (oh hang on, don't Hornby have international brands as well)  but I doubt it would break the bank to have a bit of a tidy up and provide some neutral room dividers, particularly if you're showing your wares on the telly.

[Ravenser]

2 hours ago, Widnes Model Centre said:

I don’t recall there ever being a ‘Fire sale’ of Airfix products, nor for that matter, Corgi. We have experienced shortages of kits, especially for new releases.

 

Has made me wonder why there is a general shortage of Humbrol products? Certain lines have been out of stock for some considerable time.

 

Again, left me wondering just how much the Humbrol enamels,  ‘illegal to sell’, return for disposal free of charge.? Followed by a month or so later, ‘it’s legal to sell in the UK’ saga actually cost Hornby? We were holding around £5,000 of Humbrol enamels and as we had bought them from a wholesaler we stood to lose the whole lot. That’s just one shop, if Humbrol ditched all their stock, that’s a lot of money, to then go and pay for replacement would have been a financial disaster. That was the end of March 2022.

 

 

 

I did wonder if one of the "slower selling lines of stock" ordered in Q3 might have been reformulated Humbrol enamels

[Phil Parker]

20 minutes ago, Neil said:

 

You're right that we shouldn't expect the full corporate glitz that comes with a multinational organisation (oh hang on, don't Hornby have international brands as well)  but I doubt it would break the bank to have a bit of a tidy up and provide some neutral room dividers, particularly if you're showing your wares on the telly.

 

The offices are perfectly nice and modern (Cue moans that the prices are high because the staff won't sit on old orange boxes). The old factory area has a leaky roof and is scruffy, but I'm not sure if they actually own that part. Anyway, it has "character" 😉

[The Stationmaster]

4 hours ago, AY Mod said:

 

Possibly making it free of encumbrance? ;)

In a way possibly.  It is explained why it has been done a long way down in the detail in the accounts  and it could be said that it is now considered to be overvalued in present financial and market conditions -

 

 

 

[The Stationmaster]

1 hour ago, Phil Parker said:

 

The offices are perfectly nice and modern (Cue moans that the prices are high because the staff won't sit on old orange boxes). The old factory area has a leaky roof and is scruffy, but I'm not sure if they actually own that part. Anyway, it has "character" 😉

Hornby don't own any of it - the area they use is rented, but at a lower cost than the offices they moved back from.

 

3 hours ago, Phil Parker said:

 

Presses the "Don't believe everything you see on TV" button.

 

Airfix is much more televisual than Humbrol, and to be honest, Corgi. Scalextric got a look in. but I suspect there were just less interesting stories to tell about it. However, I really don't recommend taking telly as a guide to anything other than telly.

 

 

Other than warehouse space, how much are they really costing them? The materials tied up in a plastic kit amount to a few pence. The cardboard box probably costs as much. And they won't deteriorate if kept dry. Unless the kit is superseded, it's still going to have a value and sell in the long tail eventually.

I agree - the tv programmes are no guide at all and neither are their accounts because they don't break down anything by brand in terms of sales, cst and so.

 

Inventory is an interesting are as although it is technically an asset it is also a consifderable (the impairment on inventory in their FY ended 2022 was just over £ half a million and they wrote off £211,000 worth of inventory. Plus the warehousing of it costs money and it is effectively dead investment not out there earning a return.

 

The auditors seem to take quite an interest in it but the one thing I can't find having looked through last year's Annual Report and this year's Financial Annual Report is what it is based on.  The usual figures used are either what it cost the company to buy in or - I think more commonly - the sale value of the stock (and in that case there might also  be a revaluation as stock ages and is not written off).  But however they arrive at the value it is a problem and it is also, particularly this year. an immediate reflection of  a potentially poor management decision during the year.  But - as usual - none of the reports give us any idea of what it is although some clues are occasionally founfd in older Hornby items which appear from retailers at greatly reduced prices (although prices vary a lot for some of these). 

Edited June 24, 2023 by The Stationmaster

[Ravenser]

26 minutes ago, The Stationmaster said:

 

Inventory is an interesting are as although it is technically an asset it is also a consifderable (the impairment on inventory in their FY ended 2022 was just over £ half a million and they wrote off £211,000 worth of inventory. Plus the warehousing of it costs money and it is effectively dead investment not out there earning a return.

 

 

there is a suspicion Hornby may have had an issue with Humbrol enamel - Widnes Model Centre reckons they might have written off stocks and that must have been costly... Is that the 

Quote

£211,000 worth of inventory.

the accounts say they wrote off? 200K tins of Humbrol paint at a pound a go , wholesale ? (Someone will correct my guess at the wholesale price, but I paid Squires £1.85 for a tin of Humbrol RAF Blue last Saturday)

 

There are clearly residual stocks of eLink . Hornby have moved on from that one to HM7000 - is eLink and TTS part of the inventory write-down? Steam-punk?

 

Another one that slips under the radar is resin buildings . Bachmann have been bulking out their N gauge range with Scenecraft - I was slightly tempted by several until I saw the eyewatering prices . An old hand assured me I just need to wait till they are being flogged off at half-price next year. On the reasonable assumption that Skaledale won't do much better than Scenecraft is that another area we should be looking at for slow movng stock?

 

As a pointer , almost all the resin TT:120 buildings are still available on the Hornby website, even though the TT:120 train-sets sold out again almost as fast as they arrived (The main missing item is regular platform sections). This looks like more "slower-moving stock" from Q3

 

 

[adb968008]

On 22/06/2023 at 17:23, The Stationmaster said:

 

 

But at the same time they say they were unable to meet initial demand for TT120. sets.  So with various 00 locos forever slipping back in production schedules what on earth was the huge pile of stock they purchased in anticipation of 3rd quarter sales growth? 

 

 

 

just look at the website might give a clue…

 

Hornby has more coaches than I have ever seen.

Many coaches has nothing to pull it, (ie sold out Power cars etc).

Everything from Rocket coaches, through Generics with nothing to pull, to Mk1 buffets in liveries nothings ever pulled them,  plus Loram mk 2’s few people have ever even seen.

 

They have it all.. mk1, mk2, mk3, mk4….

RCS charter sets only ever used 1 summer, to HST coaches only ever used the year after.

Repeats of LNER, FGW, Dynamic lines etc…

 

Some were ill recieved too… transfer printed FGW, Dynamic lines, overprinted lines in Blue and Grey..

 

other issues like WCML destinations on LNER azumas.

There is a variety of APT trailers (with big capacitors) available.

 

I obviously have no idea how many of each coach they have in stock, but variety alone is 266 different coaches in stock…

https://uk.Hornby.com/catalogue/train-sets-rolling-stock/coaches-coach-packs?encoded=TdBNS8QwEAbgv9JTbituXYQeBsEiHjxsQfSyhDCbzLah2aRMErD_3rBqzW3eZz4O8-TQjwOmCabA_rzu8iwu1iXieLJexRT0LCFxpo2vxRe2miTc_yN-_WH7eLjruq0zMO2ObIglbPbM6E2V3zU6qvLHW_PCWMEr5rEe6B1huaFru5abmAKv6kfUeZWnhYPJOimNicbSk9AH1BPFRjS3qhlQz1EsOJKyBh72nYiBU1mG9qbQ7oX1S06f6DL1U_kXGfid-QY

 

if that splays out to locos and kits in stock, it soon adds up.
 

maybe they were hoping everyone buying a 91, would buy 10 coaches in each livery to go with it ?, same for the HST and go all in an 6 different 9 car HST rakes, same again on APT, Azuma etc..?

 

I still remember Simons eyes glowing on TV when talking about the Midland Pullman HST saying “Were going to sell a lot of these”… one year after release, a 10% price premium and 20% price rise later… they are still in stock, albeit it says power cars are low (but it doesn't say that about the 9 coaches) that makes up the £780 set… I shook my head then, I still shake it now.

What hope the coaches, if the power car (with wrong horn grill) sells out ?

 

Hornby seems to have a problem quantifying winners, but equally become too tempted to spin the wheel again hoping for a second lottery win,that all to often falls flat.

 

thats my guess, but on Hornbys website theres no shortage of things to buy, but as a consumer theres definitely reasons why you might not want to buy it… (Quality, Price, Interest, Accuracy, Relevence, Competition etc).

 

Edited June 24, 2023 by adb968008

[Ravenser]

The clearance section has a lot of coaches. Not much in the way of locos though. They seem to have off-loaded the last malachite Channel Packets and SECR Thomas. A garter blue W1 with skirts is the main offering

 

For whatever reason Mk4s in InterCity are a drug in the market. A lot of brakes feature, but some of the generics are marked as Last Few

 

KFA in Tourax is available, but that seems to be the only wagon.

 

Since Airfix don't do clearance, we can't see what is the slow movers on that side. Their weapon is clearly the "mystery bundle"

[Widnes Model Centre]

1 hour ago, Ravenser said:Is that the 

the accounts say they wrote off? 200K tins of Humbrol paint at a pound a go , wholesale ? (Someone will correct my guess at the wholesale price, but I paid Squires £1.85 for a tin of Humbrol RAF Blue last Saturday)

 

 

 

The RRP for enamel tinlets is £2.69. Humbrol RAF Blue is now discontinued possibly why you paid £1.85? Haven’t a clue as to what the cost of a tinlet would be to Hornby.

[The Stationmaster]

They write off some inventory in most years year and the £211,000 was in the 2021-22 accounts so not in late 2022 at the time of the Humbrol problems.  we won't know teh full inventory accounting details until the annual Report comes out in September.  

 

Following the prcices clue plus what was around last year coaches have definitely been sold off cheap to some retailers.  But some of them are not offering big reductions which suggests they are either being hopeful or they still haven't shifted their original stock.  But it is difficult to tell what has so fa been sold at large reductions in calendar 2023 as some of what is beng advertised was definitely offfered at clear put prices last year.

 

As usual it comes bav ck to poor marketing and there are a few indications of the old Year 2 malaise still hanging around in recent times judging by what is afvertised and indeed by something I bought at a substantial reduction last year.   But when it comes down to it while we can identify a few things (2021's catalogue was also a good guide as it happens) we really don't know what is there or how long some of it has been hanging around.

[BachelorBoy]

One thing worth remembering ...

 

New chief executives often try to make results look as bad as possible at first when they take control

 

This helps to motivate staff to work better and embrace change ... as it produces a mild sense of threat.

 

And a low base makes the any improvement under the chief executive look even better, percentage wise.

 

 

[adb968008]

5 hours ago, BachelorBoy said:

One thing worth remembering ...

 

New chief executives often try to make results look as bad as possible at first when they take control

 

This helps to motivate staff to work better and embrace change ... as it produces a mild sense of threat.

 

And a low base makes the any improvement under the chief executive look even better, percentage wise.

 

 

Indeed, first lesson in MBA.. applies to every business and just about every managerial position..

 

1. blame it all on the last guy.

2. build a turnaround

3. milk it

4/5.. do well or get out.

 

A bit like sales,

the best ones leave or get promoted in 1-2 years as they get bored.

the worst ones are usually gone in the first months (revolving door).

average ones hang for years.

 

Edited June 25, 2023 by adb968008

[The Stationmaster]

3 hours ago, adb968008 said:

Indeed, first lesson in MBA.. applies to every business and just about every managerial position..

 

1. blame it all on the last guy.

2. build a turnaround

3. milk it

4/5.. do well or get out.

 

A bit like sales,

the best ones leave or get promoted in 1-2 years as they get bored.

the worst ones are usually gone in the first months (revolving door).

average ones hang for years.

 

Simples in many respects.  The Corgi related £2.9 million is a one off and won't be in next year's accounts.  So we then come back to the top lines and the loss of £1.487 million on sales.  That can be dealt with in several ways and the obvious one is to increase the level of sales without increasing the cost of sales and a useful point there would be reducing inventory to help reduce the cost of sales (apart from actually selling more).    Hence the emphasis on sales with price identfied as a decider in some markets particularly it appears mail order and department stores stocking up for Christmas

 

There are also presumably fully, or near fully, developed hi-fi models with an order book against them which could pass forward to production and increase sales - it strikes me as more logocal to buy in goods you know you have orders for rather than buy in goods you think you might sell 

 

Another area where sales cost and profitability could be tackled in the USA which seems to produce consistently poor numbers in the accounts.  Maybe it would be better to have a franchised importer plus a some ad coverage and nothing else?

 

There might be other things going on down towards the bottom line and i suspect development costs are a target although that won't become clear until January and next year's range being announced (if there is still a January announcement).

Edited June 25, 2023 by The Stationmaster
typos

[AY Mod]

24 minutes ago, The Stationmaster said:

Maube it would be better to have a franchised importer plus a some ad coverage and nothing else?

 

It works for them for the Aus market, I'd think they would be similar size markets.

[1andrew1]

Definitely agree on the need to solve the US issue. To me it's a far easier management move than launching the TT:120 range or HM 7000 and pays off more quickly.

 

Given the state of Hornby's finances and the UK economy, other things I would consider doing are:

- Selling Oxford Diecast and possibly licensing/selling Corgi to the new owners. Maybe Lyndon Davies's family will be interested? Writing down the value of Corgi  has meant that if it is disposed of in the future, there will be no loss and the stock market should react positively.  

- Selling Scalextric. This is really more in the toy market than Airfix and Hornby although I acknowledge Airfix and Hornby do dip their toes into the toy market. Perhaps the Chinese OEM manufacturer might be interested or the Spanish Scalextric company? 

[Graham_Muz]

15 hours ago, Ravenser said:

The clearance section has a lot of coaches. Not much in the way of locos though. They seem to have off-loaded the last malachite Channel Packets

The R3434 21c1 Channel Packet was not an off load as your unsubstantiated statement implied, but a second production run released

this year, and like the first batch hasn't exactly hung around long. 

Edited June 25, 2023 by Graham_Muz

[andyman7]

3 minutes ago, 1andrew1 said:

- Selling Scalextric. This is really more in the toy market than Airfix and Hornby although I acknowledge Airfix and Hornby do dip their toes into the toy market. Perhaps the Chinese OEM manufacturer might be interested or the Spanish Scalextric company? 

The high end models are not 'toys'- well, no more 'toys' than detailed scale model railway engines. It's not massively different to Hornby's train range, a proportion is toy/hobby/boys toys market and a a proportion is for scale models of individual racing cars in period correct liveries with the right details. 

A sale only makes sense if the range is a drag on the bottom line which is not necessarily the case. Tecnitoys is the current owner of the Spanish Scalextric/SCX range, having acquired it in 1997 when Tyco (the previous owner) was bought by Mattel. Tyco had acquired it in 1992 when the original Exin company sold out, Exin had been the original licensees from Triang Minimodels; it was back in 1992 that the Scalextric trademark got split between territories. A future in that direction would be better than ending up anywhere else, were it to be sold.

[adb968008]

2 hours ago, The Stationmaster said:

Simples in many respects.  The Corgi related £2.9 million is a one off and won't be in next year's accounts.  So we then come back to the top lines and the loss of £1.487 million on sales.  That can be dealt with in several ways and the obvious one is to increase the level of sales without increasing the cost of sales and a useful point there would be reducing inventory to help reduce the cost of sales (apart from actually selling more).    Hence the emphasis on sales with price identfied as a decider in some markets particularly it appears mail order and department stores stocking up for Christmas

 

There are also presumably fully, or near fully, developed hi-fi models with an order book against them which could pass forward to production and increase sales - it strikes me as more logocal to buy in goods you know you have orders for rather than buy in goods you think you might sell 

 

Another area where sales cost and profitability could be tackled in the USA which seems to produce consistently poor numbers in the accounts.  Maybe it would be better to have a franchised importer plus a some ad coverage and nothing else?

 

There might be other things going on down towards the bottom line and i suspect development costs are a target although that won't become clear until January and next year's range being announced (if there is still a January announcement).

Agree

 

there must also be stock lines that have predictable sales volumes and patterns.

managing inventory, orders to customer orders shouldnt be that hard with planning.

(time over we have heard retailers complain of some key lines being out of stock for long periods).

 

The tried and tested approach of taking trade orders in January would be a good leading indicator of expected sales volume too. Other manufacturers dont seem to have the same issues with pre-sales and a cut off date.

 

regarding the “one off” shocks in the report… its becoming an annual event to have one of those.

it may be prudent to bake that into the planning.

 

i would imagine interest rates being exceptional in the current FY, planning now saves excuses in next years numbers.

 

As for missing the £60mn target, by c£5mn, I bet I could name 3 outlets, that would be the difference between hitting that target or not… And Tiers may dampen sales too… as the margin is 49% that may have beaten the £1.5mn loss too.

 

 

Edited June 25, 2023 by adb968008

[1andrew1]

42 minutes ago, andyman7 said:

The high end models are not 'toys'- well, no more 'toys' than detailed scale model railway engines. It's not massively different to Hornby's train range, a proportion is toy/hobby/boys toys market and a a proportion is for scale models of individual racing cars in period correct liveries with the right details. 

A sale only makes sense if the range is a drag on the bottom line which is not necessarily the case. Tecnitoys is the current owner of the Spanish Scalextric/SCX range, having acquired it in 1997 when Tyco (the previous owner) was bought by Mattel. Tyco had acquired it in 1992 when the original Exin company sold out, Exin had been the original licensees from Triang Minimodels; it was back in 1992 that the Scalextric trademark got split between territories. A future in that direction would be better than ending up anywhere else, were it to be sold.

Good points.

All I would add is that Tecnitoys went bankrupt in 2012. The brand in Spain is now owned by  Amro Invest and licensed to Scale Competition Xtreme based in Madrid, formed in 2017. 

See: https://www.slotcar-today.com/en/notices/2018/05/entrevista-l.-m.-arnau-scx-en-el-2019-habra-grandes-sorpresas-7264.php

Edited June 25, 2023 by 1andrew1
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