1andrew1

I think this is where getting the supply chain resolved is key. Hornby's trading statement said Not the vast majority, just the majority. So, up to 49% of Hornby's requirements may have been un met. With a strong product range and the ability to meet demand then demand should hold up or even increase. Some of those lockdown newcomers to the hobby will be looking to expand their layouts and stock and this will benefit other manufacturers too, not just Hornby.

Many private equity firms operate to a five-year invest and sell timescale but Phoenix has said it's a far longer-term owner of Hornby. Longer term, a merger with an expanding company like the Simba Dickie Group (which includes Marjorette, Tamiya Germany, plus Marklin, Trix and LGB) might make sense.

Whilst the heady days of market growth may be over, Hornby must hope to gain market share here through the increased investment in new tooling. Initiatives like its autumn TV show may grow the model railway market slightly in the UK too. Hornby does need to increase sales in the US and EU to be profitable in these markets so I would expect to see more of an effort being made in these regions.

It shouldn't impact the profit and loss account too much. In accounting terms, you're just exchanging one asset (cash in the bank) for another asset (tooling), The costs occur when you depreciate that tooling each year. (Obviously, there is a cost in paying a company and people to create that tooling but it won't be millions.)

I agree it's an imperfect comparison but no other stock-exchange quoted companies in the sector come to mind. It's interesting that Kader are blaming Covid for a drop in sales whilst Hornby say it's responsible for an increase in sales.

Margins vary bewteen industries. Supermarkets can be a few per cent, electricity distribution is a staggering 42%, https://www.ibisworld.com/united-kingdom/industry-trends/industries-highest-profit-margin/

Agreed. That's why they need to increase sales to about £60m and keep fixed costs as they are. That's when you will start to get a profit of 5%+ of turnover. The EU and US operations are currently loss-making so they definitely need to sell more in these territories to make them profitable.

What's impressive about Hornby's results is their sales growth in contrast to Kader/Bachmann's sales decline. That company still remains loss-making but I appreciate it also has manufacturing and small property arms. https://www.kader.com.hk/investor_relations/financial_reports.html On another note, tucked away in Section 11 of Hornby's results is a snippett about the results from 49%-owned associate company LCD (Oxford Diecast incl Oxford Rail). It shows revenues for year ending 31 March 2021 fell 27%to £2.2m from £3.0m whilst profit after tax rose more than 200% to £223k from £70k. https://polaris.brighterir.com/public/Hornby/news/rns/story/w047m8x

The Hornby Group do dabble in the US market in a very small way ,from time to time. They'll be releasing a Heisler Steam locomotive and log cars this October. https://uk.rivarossi.com/catalogue/coming-soon?spring=true&summer=true&autumn=true&winter=true&page=1

The Tri-ang brand was sold to Barclay Securities who took over the Tri-ang toy factories in South Wimbledon and Merthyr Tydfil. (Barclay Securities was owned by the Barclay Brothers who became famous for their ownership of The Ritz, The Telegraph and online shopping brands including Very and Littlewoods.)

At one stage Hornby had an in-house team digital team in London's trendy Shoreditch district, but I assume that did not last many years.

You never know when this information might become useful!

Bachmann introduced its first Thomas range in 2001 when Thomas was owned by the British company Gullane Entertainment, formerly known as Britt Allcroft. Of course, the owners of Thomas have more leverage with an existing Thomas licence-holder like Bachmann than a previous one like Hornby. To prevent Hornby using its own moulds for non-Thomas products could look like a restraint of trade. To ask Bachmann not to use its own moulds in the UK market to compete against its then licence holder Hornby there looks sensible. (Thomas has been owned by US toy company Mattel since 2012. Between 2002 and 2012 it was owned by the British company HiT Entertainment.)

Hornby's last N-gauge train was under the Arnold brand so they could use this again if they wanted to. But they probably don't want to encourage UK outline modellers to move to a scale where they would have low market share.

Agreed with you on pensioners being better off. It's those who are between jobs (c5%), those who have taken lower-paid jobs through necessity and those with job insecurities who will be holding back on spending. Some of these will have more time on their hands for modelling though.

You were ahead of the curve You're right, there's probably more of an opportunity for magazines and YouTubers here.

Agreed on the figures. A potential scenario is: 1) A smaller market in 2021 than in 2020. 2) A rally in the economy in the second half of 2021 but this but will probably have a social leisure focus on holidays, eating-out, etc and less on modelling. 3) 2022 would be a return to the new normality and once people have got their holidays, theatre visits in etc they will return to modelling . We'll enjoy some great layouts at exhibitions that people have been working on throughtout 2020 and 2021. 4) Potential for growth in the market with more people working from home although both model railways and home offices could fight for the same house space. Perhaps an opportunity for Hornby to provide a layout that fits around a home office!

That's all true but we shouldn't forget the high unemployment rate and those with job insecurities. Luxuries like new model locomotives are the first things you cut back when money is tight or your job is looking uncertain. Hornby will be aware of this.

Might be in the 2021 range!

Seller's location to me just says United Kingdom, I presume I'm missing something?

Apparently, Bachmann US did but dropped it in favour of Thomas. I guess Thomas is a way of widening distribution and getting over the lower brand name recognition in the UK.

Not if they had no choice and were outbid by Bachmann. Which Bachmann could afford to do as ithey have a far stronger presence in the larger US market Hornby.

I wonder if Hornby could take on Bachmann and licence Mighty Express? (Though not as popular as Thomas in the UK and maybe not realistic enough?) https://www.mightyexpress.com/en_us

As we know, Hornby need all the sales they can get, they wouldn't do it they didn't have to. I can't see any publicity benefits here I'm afraid.

Yes, I've got the same feeling. Maybe I'm conditioned to seeing blue, grey and yellow together.