Andy Y Posted February 10, 2015 Share Posted February 10, 2015 Hornby Plc ("Hornby" or "the Group") Trading Update Hornby Plc, the international models and collectibles Group, is today updating shareholders on trading for the period from 1 October 2014 to date, which includes the important Christmas and New Year period. Business Performance Group sales for the third quarter showed steady year-on-year growth of 5%, with growth of 7% in the UK. As a result for the Group as a whole, cumulative sales for the year to date are 6% ahead of last year. On a constant currency basis the sales growth was 8%. In the UK this has been driven by increasing sales of Hornby model railway and Scalextric products and outside the UK by our other model railway brands, reflecting the gradual but consistent improvements in the performance of our supply chain. This trend has continued into January and we expect sales and profits for the year as a whole to be in line with the Board's expectations. Net debt at the end of December 2014 was £7.9 million compared to £11.0 million at the end of September 2014 and £6.5 million at December 2013. We have agreed on the next step towards rationalising the Group's main UK site in Margate in Kent, which is an outdated factory location and no longer fit for purpose. We have agreed in principle to move our office functions to a modern office building in Discovery Park in Sandwich. The site is 7 miles away from our current location and offers a more conducive environment for our current business needs. We expect the move to take place in the second quarter of this calendar year. We are evaluating a number of options for the future of our freehold site in Margate and will update shareholders in due course. International Toy Fairs At the London Toy Fair in January, we showcased our major product introductions for 2015 to the UK retail buyers, before moving to the Nuremberg and New York International toy fairs in February. The feedback on our new product range was encouraging and we were buoyed by the levels of interest. Highlights included; · Corgi's James Bond Aston Martin DB5 celebrating 50 years since it won the inaugural toy of the year award following the release of the James Bond movie, "Goldfinger". The toy was named as James May's "car that changed the world" at this year's inaugural London Classic Car Show · Licensed Scalextric Sets for James Bond SPECTRE, McLaren F1 team, and the world champion Lewis Hamilton for Mercedes GP. The F1 sets will feature Scalextric ARC (App Race Control) to develop the gaming experience, and enhance the traditional race · The developing range of Quickbuild will be advertised in 2015 and feature leading global Super Cars of McLaren P1, Bugatti Veyron, and the Lamborghini Aventador · Airfix will also benefit from the 75th Anniversary of the Battle of Britain and the ongoing remembrance of World War I and II anniversaries · Hornby's model railway focus at the fair was on key sets such as the Flying Scotsman and Virgin Pendolino to recruit entrants to the model railways hobby Outlook The Board remains focused on the continuing improvement of the supply chain as the key to underpinning sales and profit growth. To that end, we have brought forward the process of placing orders for the Group's 2016 range and will complete this process during the first half of 2015. This will allow for better production planning and investment in manufacturing capability. The Board is also still in the process of reviewing the investment needed to implement the next phase of the Group's re-organisation. This will include the roll out of the new ERP system into the UK and the wider Group, the rationalisation of the Group's five warehouses in Europe and a widening of the new web platform's range and capability. In order to make these investments we will be reviewing our funding options together with consideration of the most appropriate market for our shares to be listed on. Hornby will announce its preliminary results for the year ended 31 March 2015 in June. Chief Executive Officer, Richard Ames commented: " We are pleased with the progress that Hornby is making. The move of our warehousing and logistics operations to the new premises in Hersden was completed smoothly during the last quarter of 2014. We are confident that it will provide the foundation from which we can drive the growth in sales that we are planning. We are now preparing for the next phase of our plan to move our offices to a modern facility at Discovery Park, a vibrant hub which was the former UK Pfizer headquarters building. " Looking forward, we are encouraged by the interest we received at the recent International Toy Fairs. Our supply chain is delivering an improved performance and we are increasingly confident that we have set the business on the right track from which we can improve the Group's overall financial performance." Link to post Share on other sites More sharing options...
Multiple identity account Posted February 10, 2015 Share Posted February 10, 2015 Thanks for posting that Andy. Link to post Share on other sites More sharing options...
RMweb Premium brushman47544 Posted February 10, 2015 RMweb Premium Share Posted February 10, 2015 Thanks Andy. Good news that Hornby model railway sales have seen an improvement, even if perhaps only down to increased availability of models. It will be interesting to see, when the supply chain really is back to normal with the backlog of previous years' models cleared, whether demand remains high, or if current prices suppress demand. Also interesting that Hornby is focusing on Train Sets to encourage entrants to the hobby. This seems sensible but needs to be accompanied by a more consistent approach to where products are placed in the range (Railroad vs hi-fi in particular) and the prices charged for them as a result. P.S. So what's in a Hornby Sandwich? Bread and butter models? Link to post Share on other sites More sharing options...
mow Posted February 10, 2015 Share Posted February 10, 2015 Taking over part of the former Pfizer site. http://www.kentnews.co.uk/news/hornby_makes_move_to_discovery_park_1_3949593 Link to post Share on other sites More sharing options...
RMweb Premium Gwiwer Posted February 10, 2015 RMweb Premium Share Posted February 10, 2015 http://www.insidermedia.com/insider/south-east/133190-full-steam-ahead-Hornby-move Confirming the above. Margate is closing. They are moving down the road. Link to post Share on other sites More sharing options...
RMweb Gold Oldddudders Posted February 10, 2015 RMweb Gold Share Posted February 10, 2015 mow, on 10 Feb 2015 - 10:22, said: Taking over part of the former Pfizer site. http://www.kentnews.co.uk/news/hornby_makes_move_to_discovery_park_1_3949593 So, he is Mr Stone from Hornby, she is Ms Stone from Discovery. A coincidence of surnames, inaccurate reporting or they are an item? Link to post Share on other sites More sharing options...
RMweb Gold Dunsignalling Posted February 10, 2015 RMweb Gold Share Posted February 10, 2015 The reduction in net debt from £11m to £7.9m in a few months is quite striking (despite it rising dramatically before that) so there must be money coming in. John Link to post Share on other sites More sharing options...
Multiple identity account Posted February 10, 2015 Share Posted February 10, 2015 P.S. So what's in a Hornby Sandwich? Bread and butter models? And a well a slice of decoder or two? With TTS maybe Link to post Share on other sites More sharing options...
mow Posted February 10, 2015 Share Posted February 10, 2015 BBC coverage. http://www.bbc.co.uk/news/uk-england-kent-31315278 Link to post Share on other sites More sharing options...
knapper Posted February 10, 2015 Share Posted February 10, 2015 Also interesting that Hornby is focusing on Train Sets to encourage entrants to the hobby. There's nothing new in this, don't most people start off with a train set, traditionally a Hornby one? This outlines what Hornby were doing at trade fairs for general retailers, where they say they focused on two key sets, I don't think there is much else to read into this. Link to post Share on other sites More sharing options...
knapper Posted February 10, 2015 Share Posted February 10, 2015 The thing I found most interesting is the fact orders for the 2016 range are already being placed. By coincidence in the last few days I was thinking it would be nice if manufactures stopped announcing products until they had actually got somewhere with them, even if this meant rolling announcements throughout the year. Maybe this means development the 2016 range might be well advanced by the time it's announced. Edit: I should add obviously it's not going to be until the 2016 announcements that we'll know either way. Link to post Share on other sites More sharing options...
RMweb Gold The Stationmaster Posted February 10, 2015 RMweb Gold Share Posted February 10, 2015 The interesting thing about the Interim Report is that it brings back to prominence the importance of sales of model railway and Scalextric product. I think perhaps the new management might be further getting the message that if they do it right and get their product coming to market steadily and in a timely manner things could look better for the company. Also we can but hope that due to its place in those figures the importance of models to the level of the K1 is being appreciated and will continue as part of overall strategy. Link to post Share on other sites More sharing options...
Nimbus Posted February 10, 2015 Share Posted February 10, 2015 Discovery Park, a vibrant hub which was the former UK Pfizer headquarters building. Little blue sweeties in the vending machines? The Nim. Link to post Share on other sites More sharing options...
Andy Y Posted February 10, 2015 Author Share Posted February 10, 2015 Little blue sweeties in the vending machines? The Nim. Lets hope they don't do any crossover products - http://www.Hornby.com/the-original-chocolate-machine-money-box.html Mind you there's some excitable sorts that exhibit vascular expansion at the mere sight of a red box. Link to post Share on other sites More sharing options...
Fat Controller Posted February 10, 2015 Share Posted February 10, 2015 That would be the 'vibrant hub' I passed about an hour ago? Funny; the car park looked very empty.. I stopped briefly outside Westwood a few minutes earlier, just before it opened for business. There were people stacking pallet-racking outside; I remembered doing similar jobs 30+ years back. Link to post Share on other sites More sharing options...
RMweb Premium jjb1970 Posted February 10, 2015 RMweb Premium Share Posted February 10, 2015 We've seen a steady improvement in Hornby product reaching the shops and product quality has rebounded, this seems to show that this is being reflected in their business performance. Hopefully their recovery has taken deep root and continue to build momentum, it has been a big turnaround compared to 12-18 months ago and that can only be good for the hobby. Link to post Share on other sites More sharing options...
Fat Controller Posted February 10, 2015 Share Posted February 10, 2015 BTW, there was a sign advertising a 'Factory Shop' this Saturday/Sunday (14th/15th) outside when I passed. Link to post Share on other sites More sharing options...
RMweb Premium brushman47544 Posted February 10, 2015 RMweb Premium Share Posted February 10, 2015 Lets hope they don't do any crossover products - http://www.Hornby.com/the-original-chocolate-machine-money-box.html Mind you there's some excitable sorts that exhibit vascular expansion at the mere sight of a red box. Has Hornby missed at trick? Sales of the money box - and perhaps even the Olympics stuff - might be/have been much better if each item had an R number. Link to post Share on other sites More sharing options...
locoholic Posted February 10, 2015 Share Posted February 10, 2015 All the new releases I've bought in the last few months have been Hornby, with the exception of a couple of overpriced wagons from Bachmann. Total reversal of the pattern from a year or two previously, so well done Hornby Link to post Share on other sites More sharing options...
Ozexpatriate Posted February 10, 2015 Share Posted February 10, 2015 Don't get too carried away, debt year on year over 12 months has actually increased... Debt £3.0 mn Dec 2012 £6.5 mn Dec 2013 £7.9 mn Dec 2014 Hornby's debt picture is more complex than year over year comparisons at a single point in the year. Each year over the past four years (FY13/14 excepted) there is a downward trend toward the year end - presumably as sales offset borrowing to finance manufacturing. Sep'11: £12.8M ... Dec'11: £8.5M ... Mar'12: £6.3M Sep'12: £6.5M ..... Dec'12: £3.0M ... Mar'13: £2.1M Sep'13: £8.0M ..... Dec'13: £6.5M ... Mar'14: £7.3M Sep'14: £11.0M ... Dec'14: £7.9M ... Mar'15: N/A While I agree with you that the trend over the last three years is generally up, I think we have to reserve judgement until they close the books on FY14/15 to see if the recent year-end upward trend continues or whether they are managing that number down. Based on trends I would extrapolate a debt level at year-end in March that is lower than last year, which I see as positive. Debt below £7 at the close of the year would be very impressive. The decision to move their offices will certainly incur costs and write-downs even if they successfully sell the Margate facility to a developer. A more complete reading of the balance sheet will be required to determine if, operationally, they are returning to profitability. Link to post Share on other sites More sharing options...
Ozexpatriate Posted February 10, 2015 Share Posted February 10, 2015 £57 mn 2015 (Forecast, on target, given we know of the 20% wholesale price increase, this hasn't added 20% to the bottom line (as to be expected, and predictably price increases has resulted in lowering sales), this suggests the new pricing effect is a 11% increase in revenue, therefore in reality a 9% drop in sales (if you baselined at 0% growth) and therefore negative growth).. one therefore has to hope the 11% increase in revenue brings an 11% improvement in profit..which could still be a loss.... I understand where you are heading here, but on what do you base the 20% wholesale price increase? Even then, wholesale price increase can't be expected to add the same amount to the bottom line if costs are increasing, which we know is true - both in terms of manufacturing cost and the cost of currency (6% realized revenue growth versus 8% at constant currency). Link to post Share on other sites More sharing options...
Ozexpatriate Posted February 10, 2015 Share Posted February 10, 2015 Also we can but hope that due to its place in those figures the importance of models to the level of the K1 is being appreciated and will continue as part of overall strategy. Apparently three J15s and the first K1 arrive this week. That's very good news for the Hornby accountants with the lunar new year looming next week (February 19). Link to post Share on other sites More sharing options...
bennyboy Posted February 10, 2015 Share Posted February 10, 2015 Little blue sweeties in the vending machines? The Nim. Perhaps instead of the usual "steaming ahead" or "on track" clichés that we always get in news reports on Hornby's financial position, we'll be getting phrases like "Hornby thrusting ahead, with a big rise in sales against stiff opposition" etc... Link to post Share on other sites More sharing options...
RMweb Gold The Stationmaster Posted February 10, 2015 RMweb Gold Share Posted February 10, 2015 Apparently three J15s and the first K1 arrive this week. That's very good news for the Hornby accountants with the lunar new year looming next week (February 19). What seems to be happening at present (according to some retailers) is that there is a small - in relative terms - initial delivery followed later by the balance, or at least a larger quantity. Whether this is down to airfreighting or whether it is a function of the way distribution now works is unknown but it strikes me as quite a good idea as at least it shows that product is on its way even if your isn't in the first batch. I understand that current delivery patterns from Hornby, in total, are now getting quite good so clearly benefits of multi-sourcing are at last filtering through (and I understand that somemfactories in China are still crying out for work - as long as they get paid for it!) Link to post Share on other sites More sharing options...
RMweb Premium Andy Hayter Posted February 10, 2015 RMweb Premium Share Posted February 10, 2015 Don't get too carried away, debt year on year over 12 months has actually increased... £57 mn 2015 (Forecast, on target, given we know of the 20% wholesale price increase, this hasn't added 20% to the bottom line (as to be expected, and predictably price increases has resulted in lowering sales), this suggests the new pricing effect is a 11% increase in revenue, therefore in reality a 9% drop in sales (if you baselined at 0% growth) and therefore negative growth).. one therefore has to hope the 11% increase in revenue brings an 11% improvement in profit..which could still be a loss.... Sorry to be another one to criticise this analysis, but it seems to be based on the Railways part of the Hornby business which (according to recent company reports) amounts to 60% or maybe a bit less. The 20% hike - which has already been pointed out is not wholesale price but labour cost - therefore applies to Railways. I am not a Corgi or Scalectrix fan so cannot say whether it applies to those as well, but I feel fairly confident that it will not apply to Airfix or Humbrol. Your extrapolations are therefore somewhat suspect. I do however agree that it may be too soon to assume that everything is now hunky dory. Link to post Share on other sites More sharing options...
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