Hornby Annual Report 2023/4

[The Stationmaster]

2 hours ago, Harlequin said:

 

What is a "mitigation" in this context, Mike? The word seems to have a very specific meaning here.

 

Effectively - although it comes under the CFO's part of the report m-it is showing that they recognise various risks to their market/business (or financial performance) and the mitigation is their headline plan for dealing with that risk.  

 

However some of the risks,  and their mitigations, have sat in their Annual Report with very similar wording for quite a few years so one might draw one's own conc;usions about how effective the mitigations might be.

 

 

 

[Andy Hayter]

9 hours ago, adb968008 said:

 

 

TT…

8000 locos sold / 30000 coaches and wagons.. average 3.75 coaches or wagons per loco. (For coaches to me this feels right, for wagons feels low, combined feels very low.. remember this is new business not a mature market… no ones got much rolling stock in TT yet, so ramping up a rolling collection should be high imo).

 

4000 sets sold… combined above means an average of 3 locos and 6.75 pieces of rolling stock… one passenger train, one freight and a spare loco perhaps ?

 

but anyways, 3x orders on 4000 sets sold of two differing sets (pullman and mk1’s) suggest the production run sizes are in the hundreds, not thousands… but still keeping a consistent product catalog item has been a traditional Hornby challenge in the past and here it seems they have a hold on it.

 

A few lines stood out to me…

Evergreen ? - track, scenics, trainsets ?

Either way evergreen is what it says so holding it is low risk, and dumping wouldnt change anything (as side of robbing future sales for a low price now), and given evergreen keeps with inflation longer term means a better margin.

Having too much was the issue but its not a bad long term problem.

 

 

 

 

 

I think there is a danger that we apply 00 logistics and thought processes to 1:120.   Hornby themselves have said they are targeting  a different market - a market I suggest that has fewer resources and less physical room.   I sense within our broad group a sense of Schadenfreude and a desire to see Hornby fail with the new scale - and might even count myself loosely in that group in so far as I have no interest - except to say that a strong and successful Hornby is good for the serious side of the hobby as well as for the more trainset on the floor end of the market.  

[ColinB]

16 hours ago, Andy Hayter said:

 

 

I think there is a danger that we apply 00 logistics and thought processes to 1:120.   Hornby themselves have said they are targeting  a different market - a market I suggest that has fewer resources and less physical room.   I sense within our broad group a sense of Schadenfreude and a desire to see Hornby fail with the new scale - and might even count myself loosely in that group in so far as I have no interest - except to say that a strong and successful Hornby is good for the serious side of the hobby as well as for the more trainset on the floor end of the market.  

I must admit I find TT120 interesting and the models look quite sweet. I have too much invested in OO to even consider changing. I find the TT120 modellers seem to get very aggressive when you point out it is a unique gauge supported by one manufacturer who also offers very little support for its existing OO models in the form of spare parts. Does this new strategy also mean that we will see even more 20 plus year old models for sale, with eye watering prices. A lot of their Railroad models still don't have DCC sockets and the review Sam did of their pug was really amusing. For those of us that add dcc sockets to their locos know what a relatively easy job that is and even as a customer the cost is usually less than £5.00, so why don't they do it? Add firebox flicker and a DCC decoder and perhaps the customer might not notice the failings of the rest of the loco, many industries have used that technique to avoid a costly retool.

[GrumpyPenguin]

57 minutes ago, ColinB said:

 it is a unique gauge supported by one manufacturer

TT is & has been supported by several european manufactures, not just locomotives & rolling stock - there is a fair amount of buildings & lineside accessories available too.

 

Once UK/TT gets a foothold other manufactures may well jump in. Gaugemaster are already producing/supplying a range of ancilleries.

 

TBH, if I were starting again it would be with TT, but not depending on locomotives (especially) from Hornby.

[ColinB]

4 hours ago, GrumpyPenguin said:

TT is & has been supported by several european manufactures, not just locomotives & rolling stock - there is a fair amount of buildings & lineside accessories available too.

 

Once UK/TT gets a foothold other manufactures may well jump in. Gaugemaster are already producing/supplying a range of ancilleries.

 

TBH, if I were starting again it would be with TT, but not depending on locomotives (especially) from Hornby.

As I say currently the only UK locos you can buy in TT120 are Hornby. If you want a European layout then you are all set.

[GrumpyPenguin]

1 hour ago, ColinB said:

As I say currently the only UK locos you can buy in TT120 are Hornby. If you want a European layout then you are all set.

Ah, but you did not actually say that...........

[ColinB]

56 minutes ago, GrumpyPenguin said:

Ah, but you did not actually say that...........

No I didn't. Either way does it matter? As I said the TT120 guys are very protective, which you demonstrated exceedingly well. Unfortunately Hornby doesn't have the financial resources to fund both, so one must suffer.

[Ravel]

Hate to be the one banging that drum again but clearly little time is being spent on understanding what the market actually wants (or too late!).

 

Easy win multiple units avoided (think CAF 195/196/197), yes tooling is not cheap but these don't have all of the articulation complication that the Stadler units do, and where is this up to now?  Website says Winter 2024. Such a more straight forward design and the 195's etc will be going for at least another 30 years in various guises no doubt so plenty of time to re-run and milk the tools, and orders are still being placed (LNER new Trimodes). 

 

Then the Grand Central HST release, what's that all about!

 

Things like the TEA and TTA tanks evaporated very quickly, and the market for people "wanting" these must be growing with all the Type 5s being produced by everyone. Even the recent run of VTG tanks disappeared within a couple of months.

 

Imagine how well a BP or Murco TEA would sell? Bachmann are knocking them out for £70+ a pop. Licencing clearly isn't an issue as Hornby managed it with the TTA in various scales.

 

The younger end of the market can't buy what it can see stood on a platform, where Hornby have historically kept up with this - I can remember as a child being able to see at least 50% of "real life trains" in the latest Hornby brochures - seems they have faltered. 

 

I'm sure there's logical answer to my suggestions, no doubt next year we will see a chunk of 60s in various liveries.. 

[GrumpyPenguin]

12 hours ago, ColinB said:

No I didn't. Either way does it matter? As I said the TT120 guys are very protective, which you demonstrated exceedingly well. Unfortunately Hornby doesn't have the financial resources to fund both, so one must suffer.

IMHO the biggest problems for Hornby are largely historic & continue to this day - the enormous financial debts it always seems to be struggling with, to a lesser extent the constant changing of management & an even lesser extent poor quality control since the move to manufacturing in China.

Edited July 14 by GrumpyPenguin

[Legend]

16 hours ago, ColinB said:

As I say currently the only UK locos you can buy in TT120 are Hornby. If you want a European layout then you are all set.

I just had a look at the Tillig website . To be honest I didn’t realise they had such a large range in TT . I like the look of some of their DB electrics , especially the iconic DB 103 . However most of the items were listed as sold out . Am I missing something here or is the range actually quite small at the moment , with only recent releases available 

[jjb1970]

6 minutes ago, Legend said:

I just had a look at the Tillig website . To be honest I didn’t realise they had such a large range in TT . I like the look of some of their DB electrics , especially the iconic DB 103 . However most of the items were listed as sold out . Am I missing something here or is the range actually quite small at the moment , with only recent releases available 

 

I think it's a problem for the hobby, especially for new entrants as supplier websites seem to be divided into pre-order and sold out items.

[peterfgf]

12 minutes ago, Legend said:

I just had a look at the Tillig website . To be honest I didn’t realise they had such a large range in TT . I like the look of some of their DB electrics , especially the iconic DB 103 . However most of the items were listed as sold out . Am I missing something here or is the range actually quite small at the moment , with only recent releases available 

THere seems a reasonable range available at https://www.modellbahnshop-lippe.com/.

[Andy Hayter]

1 hour ago, peterfgf said:

THere seems a reasonable range available at https://www.modellbahnshop-lippe.com/.

 

 

Which is an example of the trader taking on the risk and cost of stock holding rather than the manufacturer.  Few traders do this in the UK or France and MBS-Lippe are to be applauded - but I doubt it can last forever.

[GrumpyPenguin]

MBS/Lippe are, in buyers terms huge & you have to accept that the European outline market is also huge.

 

European outline manufactures are often sold out at the factory shortly after release of new models so it's usually down to chasing models on the retailers/destributors shelves.

[The Stationmaster]

On 14/07/2024 at 08:36, GrumpyPenguin said:

IMHO the biggest problems for Hornby are largely historic & continue to this day - the enormous financial debts it always seems to be struggling with, to a lesser extent the constant changing of management & an even lesser extent poor quality control since the move to manufacturing in China.

Spot on although I think the quality control issue in China has changed, for the worse,  since they had to move to a multiplicity of factories .  

Looking through various past Hornby Annual Reports it at times feels as if words such as 'turnaround'. 'progress to profitability' and similar have become stuck in their corporate word processor and are regurgitated at various, sometimes close, intervals but with a different set of names in various Board and senior management positions.

 

As a hobby I think we have to be grateful to Phoenix for keeping the company on a continuing financial life-support system and having a degree of faith in it while searching for the right person to run it.  But overall, and measured in. real terms albeit with a few occasional 'blips' it has been a history of declining revenues, see-sawing costs (but frequently out of step with the revenue situation), and seemingly poor marketing failing often to understand where the market (with prices reflecting value for money) is going.  

 

I think that the latest management, aide by focusing on brand management, is developing some grip on understanding some of the markets they are trying to sell into and the impact of price points in such markets.  But they have a long way to go and at the same time their costs are rising faster than revenue.

[Pmorgancym]

On 12/07/2024 at 12:19, woodenhead said:

Hornby have to spend on sales and marketing, they sell much wider than traditional model shops so need to attract the attention of people who don't visit model shops or purchase modelling magazines.  Hornby also wants to continue to sell direct and that too means marketing to draw people in.

 

Heljan, Accurascale, Dapol, Bachmann etc are selling mainly to railway modellers, they don't need to advertise far and wide as they know where we are - forums, facebook and youtube.  Also we are more likely to peruse model shops where we will find their models and those model shops themselves market their products to attract our attention.

Do they sell to a much wider market though?  I you don't find, trains, slot cars or kits in Smyths, nor in the supermarkets, Xmas specials aside.

[JSpencer]

On holiday visiting many a charming preserved line in Wales. But - oh dear - only found a small range (akin to a 1 metre wide shelf space running top to bottom) of Bachmann items in one of the souvenir shops  and nothing at all in the other. And these shops were at least 1000 sq ft in floor space (I know some preserved lines have shops stocking items akin to a small model shop). 

 

IF preserved railway souvenir shops are starting to not sell model railways (hopefully a big IF), then I'm not sure what place could bring in new blood. But surely these make good targets for a TT starter set?

[The Stationmaster]

11 hours ago, JSpencer said:

On holiday visiting many a charming preserved line in Wales. But - oh dear - only found a small range (akin to a 1 metre wide shelf space running top to bottom) of Bachmann items in one of the souvenir shops  and nothing at all in the other. And these shops were at least 1000 sq ft in floor space (I know some preserved lines have shops stocking items akin to a small model shop). 

 

IF preserved railway souvenir shops are starting to not sell model railways (hopefully a big IF), then I'm not sure what place could bring in new blood. But surely these make good targets for a TT starter set?

Probably a reasonable idea for Hornby's Marketing and Sales folk to look at.  But the demographic of visitors to preserved/leisure lines and sites varies tremendously plus 'tied-in' models are probably more likely to sell rather than 'just anything'.  

 

And don't forget that at all the railways etc the sales side is a business that is there to create revenue for the railway and not necessarily hold slower moving, more expensive, items.  Having said that some railways do have quite extensive model railway stocks so presumably find them to be profitable.  But one line I know of makes most of its money selling refreshments (they need space too) and low priced items as souvenirs or things aimed at children.

[AY Mod]

Hornby share price jumps 35% today.

 

Quote

Hornby PLC’s CEO Oliver Raeburn has increased his stake in the company by purchasing 39,952 ordinary shares at 25 pence each, now holding 0.024% of Hornby’s issued share capital. This transaction took place on the London Stock Exchange’s AIM Market. Raeburn’s investment aligns his interests even more closely with the company’s performance, signaling confidence to current and potential investors.

 

[1andrew1]

1 hour ago, AY Mod said:

Hornby share price jumps 35% today.

 

 

I guess it could be seen as a great vote of confidence in the company or a personal attempt to lift the share price. I'm inclined to think the former as it's some way yet to the AGM.

[GrumpyPenguin]

22 hours ago, JSpencer said:

On holiday visiting many a charming preserved line in Wales. But - oh dear - only found a small range (akin to a 1 metre wide shelf space running top to bottom) of Bachmann items in one of the souvenir shops  and nothing at all in the other. And these shops were at least 1000 sq ft in floor space (I know some preserved lines have shops stocking items akin to a small model shop). 

 

IF preserved railway souvenir shops are starting to not sell model railways (hopefully a big IF), then I'm not sure what place could bring in new blood. But surely these make good targets for a TT starter set?

There is a huge difference between the profit margins on model railway items & gift shop "tat".

[The Stationmaster]

15 hours ago, AY Mod said:

Hornby share price jumps 35% today.

 

 

There is an error in the quote as according to RNS his purchase of 39,952 Ordinary Shares is his total Ordinary shareholding in the company.  Also, according to the Annual Financial Report,  at 31 March this year he held no shares in the company and there have been no other reports of him purchasing shares in the company.

 

It should be noted that his annual bonus is based solely on the market capitalisation of the company.   The share price has risen from 19p to 26p (so far) during this current week with a big leap towards the end of the week.

[georgeds]

£10k worth of shares is not exactly the biggest show of confidence!

 

It might be a lot of money in everyday life but it's peanuts in the world of private equity and executives.

[AY Mod]

16 minutes ago, georgeds said:

 

It might be a lot of money in everyday life

 

Just take it as an indication of confidence with a personal investment rather than rubbishing it; it's not an allocation as an employee benefit or a purchase at preferential price.

[The Stationmaster]

21 minutes ago, AY Mod said:

 

Just take it as an indication of confidence with a personal investment rather than rubbishing it; it's not an allocation as an employee benefit or a purchase at preferential price.

Exactly.  He bought on the open market at the prevailing market price and he has definitely not received any shares under the PSP scheme (in fact it is unclear if he would anyway be entitled to any from that source).  So his purchase is basically an expression of faith in the business because shares can go down, just as easily as they can go up, in price.

 

In terms of his income it might well be a small amount but as most folks' life styles tend to change to match increases in their income we simply do not know what percentage of his disposable income that might represent