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Current Trading In the UK, as indicated above, sales in the second half are expected to be below the previous year. However, we are encouraged that sales to the consumer via our chain of in-store concessions continue at a higher level than last year. The retail landscape continues to undergo a period of significant change in the UK. The swing towards e-commerce sales of our products, via the sites of specialist on-line retailers as well as the e-commerce sites of our "bricks and mortar" retailers, continues. Our own e-commerce sites are trading well and we will continue to develop this channel of distribution. Trading in Continental Europe will continue to be adversely affected by product shortages. However demand for our products in Europe continues to be strong and we expect to be able to fulfil this demand in the future as our new sources of supply continue to increase output.
Financials During the period, turnover was £27.0 million, a decrease of 5% compared to the corresponding period last year. Our European businesses were heavily constrained as a result of the supply chain disruption mentioned above, and sales fell by 30%. This was particularly frustrating as demand for our products in Europe continues to be encouraging. Sales in the UK business increased by 3% over the corresponding period last year, although this year sales benefitted from £3.5 million relating to London 2012 products. Stripping out London 2012 sales from both years, sales fell by 15% compared to the corresponding period last year. Gross margins fell as a result of product and market mix as sales of model railway products in Europe decreased. Lower margins were realised on sales of London 2012 products and we have made provisions against remaining London 2012 inventory. A pre-tax loss of £0.3 million was incurred (2011 - profit £1.2 million) before amortisation of intangibles and net foreign exchange adjustments on intercompany loans (hereafter referred to as underlying pre-tax losses). Statutory pre-tax loss was £0.5 million (2011-profit £1.0 million). The Group has banking facilities of £16.0 million in the UK. These facilities comprise a £6.0 million term loan which expires in July 2014 and a £10.0 million Secured Money Market Loan which expires in August 2015. The Group also has additional facilities of £2.5 million in place in its European subsidiaries. Net debt as at 30 September 2012 was £6.5 million compared to £12.8 million as at September 2011. The significant reduction in net debt year on year reflects cash generated from a planned programme of working capital reduction. The Group is currently operating within its banking covenants. To ensure that management's expected borrowing requirements continue to deliver sufficient operating headroom within covenants for the duration of the current facilities, the Group has been offered amended UK facility terms by its principal banker Barclays Bank Plc, which the Board expects to approve shortly.
INTERIM MANAGEMENT REPORT The Group issued a trading update on 25 September 2012, which specified three major factors that would constrain Group performance in the current financial year: 1) Very substantial disruption to supplies caused by a major rationalisation programme being implemented by one of our largest suppliers in China. 2) Disappointing sales of London 2012 merchandise. 3) General weakness in demand in our major markets - particularly the UK. Our broad spread of categories and brands provide a solid basis from which to work through the current challenges and secure a long term future. However, as previously announced, the result for this financial year is likely to be approximately break-even, primarily due to the supply chain disruption mentioned above.
Yes I am in, I have also been in contact with the company to confirm the Divi is ok. They have confirmed that the divi is all ok, so no problem there. I was concerned in case they re thought it. So at this level with the Divi pending it is IMHO a no brainer. Regards & GLTA + DYOR ps sorry didnt see your post till just now - am not used to seeing anyone else on here - on here - on here.........
Agree on the dividend; changing it would only lower the sp further down. You in here or just on the radar for now?
Gl to all here, one day this will move up 20% when this drops been forgotten; patience is key here.
This from 27th Sept, HSBC Global know a good thing when they see it - which is why they have taken their holding to over 13% see RNS Link;- http://www.investegate.co.uk/Article.aspx?id=201209271048093145N I dont believe there has been any notification of changing the Divi so as of Nov they will be paying the 2p which will equate to 3.4% which is a good return in any ones money in the current market. We may get a few dips along the way but I would think we will be heading upwards shortly as the Divi gets closer. This all IMHO of course, so DYOR Regards & GLTA (had to post this, I was getting bored looking to see if any one else had bothered posting here and seeing my same last post.. Hello??)
Here is one from April Tue, 3rd Apr 2012 07:59 April 3 (Reuters) - Hornby PLC: * Wh Ireland starts Hornby with a buy I have had them on Radar for a while. They may not have had as good an olympics as they would have liked but Xmas is coming and there will be I am sure a lot more stuff bought influenced by the olympics than there was at the time. Just of course IMHO I think they will have a good xmas. Regards & GLTA
This is one of the "tips" I would have thought Fri, 8th Jun 2012 08:50 June 8 (Reuters) - Hornby PLC: * Numis raises Hornby to buy from add It certainly gives the idea they are worth looking at. I was looking and given the fact the yield is good was waiting for a good entry point and some spare funds at the same time. The drop did it for me! I am sure we will see a climb back up leading to the Divi in November. So IMHO think now will still be a good entry level, but of course dyor Regards and GLTA
I remember seeing this share being tipped in quite a few places before the big drop. GLA
Kingpinz, I found the Fundementals to indicate a sound ongoing business that has every chance of recovering after or of they overcome the present difficulties. Hence my interest. However, the directors seem to be exercising their share options at an agred price, say £X and immediately selling them at the current market price, £X + which leads me to suspect that they don't want to hang onto them, and that leads me to wonder why? Director buying is one indication of a sound business, direcots offloading shares at a profit the minute they buy them isn't that reassuring. Fundementals aren't always what they seem. Game Group for example had a declared asset per share price well above the SP yet when push came to shove they turned out to be skint. Creative accounting is alive and well and possibly at a business near you.
Directors lead by example i.e. from the top down. If they are selling, there will be a good enough reason for it I am sure. I'm curious, what are your findings on the fundamentals of the company? Does anything bold stand out? Cheers
I'd be interested in adding this to my portfolio based on the Fundementals and the inevitable short term bounce after all the sheep have fled. What is putting me off though are the Director's dealings. Any thoughts?
Hornby argues its product range still stands it in good stead; its Scalextric Star Wars set recently won one of three best new toy awards at the London Toy Fair, while the company continues to make good progress in growing sales in continental Europe. Against a challenging background, the firm said "we have redoubled our efforts in innovation and product development, building on our core brand strengths and also extending our reach based on newly developed technologies". However, it remains to be seen if the age of the train is here again.........
"Sales of London 2012 merchandise were lower than forecast. Whilst, prior to the Games, major account listings for our products were strong, and consumer purchases were encouraging, the major retailers had also purchased substantial quantities of London 2012 merchandise from other licensees," the group said in a statement. The market was essentially flooded and as soon as the Olympics were over the products that weren't sold became instantly worthless. Faced with lower than expected sales during the Games, the major retailers resorted to deep price discounting. "The consequence of this for Hornby was that retailers lost confidence in many categories of London 2012 merchandise, and repeat orders for our products were cancelled," the company said. Other travails were out Hornby's hands. As well as weaker than expected demand for London 2012 merchandise, business was damaged by disruptions in China when a supplier decided to shut down several factories. The result is Hornby expects results to come in below expectations, hoping to break-even for the financial year ending March 31st 2013, but this is the second profit warning of the year, raising questions about its place in the modern world.
t's difficult not to feel sorry for Hornby - and not just because its product lines are a gift to headline writers who gleefully declare it has 'gone off the rails' or is 'losing steam'. It is one of the companies that will forever remind people of a simpler time; when watching a miniature train endlessly circle an equally diminutive track was the height of entertainment. A time when 'play station' was two words rather than one. However, as is so often shown in business, a proud heritage does not necessarily translate into sales. If it did we'd still have Woolworth's, Kodak cameras, and considerably more music shops. Today Hornby, another great legacy brand, released a profit warning. Yet this venerable firm has not been resting on its laurels. The group recently produced a string of Olympic-themed toy train sets and a chrome finish model of the Olympic Velodrome, for example. However, while choosing to compete for a share of the Olympics pot of gold may have seemed an obvious thing to do, it turned out to be a mistake.
As a result Hornby beleives it will not achieve its forecasts for the current financial year and, therefore, anticipate results will be approximately break-even for the financial year ending 31st March 2013. The group warned that disruption to shipments from its major supplier in China will be substantial for the remainder of the financial year. Net debt at 31st August 2012 was £7.8m compared to £14.3m a year earlier.
Shares of toy train-set maker Hornby plunged after it warned it will not meet full year expectations and expects to only break even in the current financial year following disappointing sales of Olympics merchandise. The group, which produced a string of Olympic themed toy train sets and a chrome finish model of the Olympic Velodrome, said macro-economic factors continue to depress consumer spending and retailers continue to buy cautiously. "Sales of London 2012 merchandise were lower than forecast. Whilst, prior to the Games, major account listings for our products were strong, and consumer purchases were encouraging, the major retailers had also purchased substantial quantities of London 2012 merchandise from other licensees," the group said in a statement. "Faced with lower than expected sales, the major retailers resorted to deep price discounting. The consequence of this for Hornby was that retailers lost confidence in many categories of London 2012 merchandise, and repeat orders for our products were cancelled," it explained. As well as weaker than expected demand for London 2012 merchandise, business was also adversely impacted by supply disruptions.
The share price movements today indicate that this is in line for further substantial falls tomorrow before any levelling Clearly ignoring any structural industry problems the mangement seriously poohpood over the Olympics Nothing being said by management here to encourage any future changes for the better Only hope here is for a white knight
An obvious value trap.Bottom line is ' boys pastimes' have moved from the mechanical dimension onto online.I recall the optimism for London Olympics when they made their underperformance excuses last year,Time to realise they operate in a diminishing segmenette & shed the assets profitably,
Good post. I have been thinking about the prospects too and have come to the same conclusion but by a defferent method. When I was a boy (I was) every person in the class at school wanted to be a engine driver. My kids pigged out to on Thomas but today from about the age of 5 they all want to It experts. Railways do not feature much in childrens live because parents cart them everywhere in cars. Not for them a day at the seaside starting at the station. The salt air is bad for their tablets. So a few oldies still build huge layouts and enjoy the buzz of be fat controllers but they alone are not enough to keep this company afloat. I will give it a miss. Sadly I fear it will become a small niche business if it survives.
The cat has bounced i agree. I gave this the once over in terms of EV/EBITDA, profit trends etc. Last xmas was disaappointing, this xmas may well be bad too. I expect further bad news in the next trading update. Great buy if there was a recovery in profits on the horizon....but there is not. There will surely eb no dividend...the company are hoping to break even.
try to catch a falling knife or is this a train crash in the making???? Always wanted to hold a few of these as a talking point but now totally undecided. This recession is far from over from where I sit but there are those who say we have turned the corner... Tell that to the thousands of young people without any hope. Toy racing carts and train sets are the last things on their minds..