VMA131Marine Posted November 18, 2017 Share Posted November 18, 2017 I'll state things more simply. Hornby cash flow could be positive, but the lost value of depreciating assets could result in a net loss on paper. The nature of the business is that they have to create tooling for new products (assets) every year. It appears that the sustained losses have crimped Hornby's ability to create more new tooling. Link to comment Share on other sites More sharing options...
bhouse Posted November 18, 2017 Share Posted November 18, 2017 Those results are a fairly depressing read. Still, it's good news for whoever owns Oxford Diecast. 1 Link to comment Share on other sites More sharing options...
Work In Progress Posted November 18, 2017 Share Posted November 18, 2017 6 hours ago, VMA131Marine said: One thing to consider when looking at the seemingly unsustainable loss numbers is how much of that is a 'paper' loss due to things like depreciation of capital equipment (eg molds for plastic models) All the Hornby companies have put a lot of investment in new products over that last few years so depreciation of those assets would be significant and the overall loss may not be reflective of Hornby's cash flow situation. In fact, we have to assume it's not because I don’t see how the company could have otherwise survived. If you read the first-half accounts, they are strongly cashflow-negative and they are making heavy losses purely at the operating level, i.e. before depreciation and amortisation. Pages 6 and 7 of this statement are the proof of that. http://otp.investis.com/Utilities/PDFDownload.aspx?Newsid=951012 1 Link to comment Share on other sites More sharing options...
Plasto Posted November 18, 2017 Share Posted November 18, 2017 Aye 20+% negative on sales is not sustainable for any company. Link to comment Share on other sites More sharing options...
Chimpion Posted November 18, 2017 Share Posted November 18, 2017 They give average gross margins of 36%. This should be enough to be profitable after overheads and tax. The problem seems to be that the overhead structure is set up for a much higher turnover than they currently have. They need to grow sales to get economies of scale, but their market is limited in the amount of growth that is available. Getting kids to buy more kits and trains is the answer - can they achieve it? Link to comment Share on other sites More sharing options...
Paul A H Posted November 18, 2017 Share Posted November 18, 2017 + how many bricks and mortar stores are selling Airfix kits compared to 7-8 years ago? With Modelzone gone, there are far fewer outlets to catch the eye of the casual buyer. I don't think it's a coincidence that the decline at Horby started around the time of Modelzone's collapse. It's like the business has been cut off at the knees and all of the problems that could be safely ignored while sales were good have been magnified by the fact that it is getting more difficult to shift boxes Link to comment Share on other sites More sharing options...
Gary C Posted November 18, 2017 Share Posted November 18, 2017 Hornbys troubles long predate MZs collapse. 10 years ago their shares were trading at around £3, they're now 10% of that. At the start of 2011 they were blaming weak performance on the cold winter weather. At the end of 2012 it was the fault of the olympics. Supplier problems, computer upgrades, warehouse moves and so on. It's been a litany of excuses for as long as I can remember culminating in the shotgun to the foot that was the 2015 Black Friday sale. Assuming the current plan gets the go ahead then that will be £35M the company has swallowed in the last 3 years just to stay afloat. At the bottom of it all the reality is a declining market, the business, in the UK at least, just doesn't seem to be there anymore. I don't see kids picking up model trains in the numbers required. European sales aren't likely to save the day, Revell and Italeri appear to be slowing down at best (lots of reissues and new tools being pushed further and further back). Add in the dark brexit shaped clouds and things look pretty bleak I'm afraid. Link to comment Share on other sites More sharing options...
lasermonkey Posted November 18, 2017 Share Posted November 18, 2017 I can only speak for myself, but over the past few years the prices have increased several times to the point where many of the kits are simply beyond my very meagre budget. I think I have bought a single Airfix kit this year, which was a Swift that I got brand-new for £11 posted in a flash sale. While I am genuinely very pleased for those who will be getting what looks to be an amazing Wellington next year, at thirty one quid, I won't be one of them. 2 Link to comment Share on other sites More sharing options...
old thumper Posted November 18, 2017 Author Share Posted November 18, 2017 What Hornby has suffered from and is suffering from is the British disease, bad management. This is what happens when brown nosers and yes men take over, common sense and organisation has become a foreign language in this country. 3 Link to comment Share on other sites More sharing options...
Head in the clouds. Posted November 18, 2017 Share Posted November 18, 2017 I was talking to a trader about this issue and on the subject of model railways he said that the cost of a simple set now is way beyond what most would pay for what is essentially a toy, with additional engines costing up to £150 or more. To just push your pricing towards the grey haired gang who have a generally good disposable income leaves behind your core market....kids. And to be fair even the older (golden) generation are probably baulking at paying those prices for sets and extra engines/rolling stock now. It has to appeal to everyone and if Airfix keep moving prices up then it may be the beginning of what has happened with Hornby Trains. Or look at it another way...and do not shoot me for saying this, but, are we now seeing kits being sold for realistic prices that more reflects the true production costs in these uncertain times. If you like the kits and want the parent company to survive then price increases are here to stay, considering the general quality of the kits and the subject matters I think they are,on the whole, competitive and to compare, lets say a Revell Victor to an Airfix Victor on price alone cannot be a correct measure. One was a product 0f the 80s/90s with and priced accordingly and the Airfix kit is a product a full 30 years on. I do not pretend to know how to resolve the issues with Hornby/Airfix but after looking at the Walrus and the latest Wellington kits they are getting one thing right, the detail and quality of there kits ( alright, that's 2 but who's counting?). That has to be a good foundation to get back to profit. 1 Link to comment Share on other sites More sharing options...
Albeback52 Posted November 18, 2017 Share Posted November 18, 2017 1 hour ago, lasermonkey said: I can only speak for myself, but over the past few years the prices have increased several times to the point where many of the kits are simply beyond my very meagre budget. I think I have bought a single Airfix kit this year, which was a Swift that I got brand-new for £11 posted in a flash sale. While I am genuinely very pleased for those who will be getting what looks to be an amazing Wellington next year, at thirty one quid, I won't be one of them You and me both. I am in a similar situation and, regardless of how good it looks, I am loathe to pay more for a twin engined medium bomber( Whitley, Wellington, Heinkel) than I did for the Airfix Lancasters and, Revell Halifaxes..If I can get the Airfix Wellington for less, that's a different matter!😁😁 1 Link to comment Share on other sites More sharing options...
Denford Posted November 18, 2017 Share Posted November 18, 2017 10 hours ago, Thomas V. said: Everything in Hornby except Airfix is generating constant loss for over half a decade..... How do you know that ? I've never seen any separate accounts for different entities within Hornby Hobbies. Link to comment Share on other sites More sharing options...
Albeback52 Posted November 18, 2017 Share Posted November 18, 2017 41 minutes ago, Head in the clouds. said: I was talking to a trader about this issue and on the subject of model railways he said that the cost of a simple set now is way beyond what most would pay for what is essentially a toy, with additional engines costing up to £150 or more. To just push your pricing towards the grey haired gang who have a generally good disposable income leaves behind your core market....kids. And to be fair even the older (golden) generation are probably baulking at paying those prices for sets and extra engines/rolling stock now. It has to appeal to everyone and if Airfix keep moving prices up then it may be the beginning of what has happened with Hornby Trains. Or look at it another way...and do not shoot me for saying this, but, are we now seeing kits being sold for realistic prices that more reflects the true production costs in these uncertain times. If you like the kits and want the parent company to survive then price increases are here to stay, considering the general quality of the kits and the subject matters I think they are,on the whole, competitive and to compare, lets say a Revell Victor to an Airfix Victor on price alone cannot be a correct measure. One was a product 0f the 80s/90s with and priced accordingly and the Airfix kit is a product a full 30 years on. I do not pretend to know how to resolve the issues with Hornby/Airfix but after looking at the Walrus and the latest Wellington kits they are getting one thing right, the detail and quality of there kits ( alright, that's 2 but who's counting?). That has to be a good foundation to get back to profit. The prices may be competitive and realistic from a business point of view and, I have no doubt that they are set a level sufficient to (hopefully) ;recover costs and turn a profit. However, if we, as customers decide the price is too high then the issue becomes moot surely? If the price level restricts sales to a point that the kit makes a loss then I would think all those reasonable estimates and calculations go out the window. I like Airfix kits and,I want them to continue. However, I have to face my own financial realities.I just cannot afford the prices for some of the latest Airfix kits. I have to either do without or, seek a cheaper alternative. Allan 3 Link to comment Share on other sites More sharing options...
Head in the clouds. Posted November 18, 2017 Share Posted November 18, 2017 1 minute ago, Albeback52 said: However, if we, as customers decide the price is too high then the issue becomes moot surely? If the price level restricts sales to a point that the kit makes a loss then I would think all those reasonable estimates and calculations go out the window. I like Airfix kits and,I want them to continue. However, I have to face my own financial realities.I just cannot afford the prices for some of the latest Airfix kits. I have to either do without or, seek a cheaper altern Fair comment Alan and I have no doubt you are not alone in this respect. This is where cold business acumen is apparent on one side and consumer power on the other, it is just a shame that these kits could not be offered in a package that covers all budgets in a similar way Eduard do with some of their kits. As with everything now days nothing is straight forward, where did it go wrong when as a kid I could get a nice kit with my pocket money Link to comment Share on other sites More sharing options...
Dave Fleming Posted November 18, 2017 Share Posted November 18, 2017 8 hours ago, bhouse said: Those results are a fairly during read. Still, it's good news for whoever owns Oxford Diecast. You mean the new Airfix CEO.... 1 1 Link to comment Share on other sites More sharing options...
bhouse Posted November 18, 2017 Share Posted November 18, 2017 20 minutes ago, Dave Fleming said: You mean the new Airfix CEO... Oh yes! What a coincidence! 20 minutes ago, Dave Fleming said: 1 Link to comment Share on other sites More sharing options...
Plasto Posted November 18, 2017 Share Posted November 18, 2017 3 hours ago, Head in the clouds. said: As with everything now days nothing is straight forward, where did it go wrong when as a kid I could get a nice kit with my pocket money What happened is we all grew up and became more conscious and demanding in what we wanted. Airfix directly caters to us the enthusiast buyer predominantly. Those pocket money kits of yore simply don’t generally compare to what we demand in terms of accuracy, fit, detail. What we used to add in ourselves in terms of extra detail we now want in the kit and when we get it we often dump it and add aftermarket bits. To satisfy what we want and demand costs a developer more to deliver. If I have to send my R+D guys off to Norway to LIDAR a He111 for a week (or pay a sub contractor to do it). Rather than working off a set of scale plans for my CAD model that’s a cost that directly correlates to customer satisfaction. The reality is younger modellers generally are not overly concerned with the same things that get us all excited and sticking red lines on pre release CAD images. A kit that satisfies our current demands is increasingly less ideal for young folk and entrants to the hobby. What we want are beautifully detailed, accurate, easy to assemble with perfect parts fit kits with a low level of complexity with lavish Decal sheets representing interesting but not mainstream ‘obvious’ subjects all for a 60’s-70’s pocket money price in our preferrred scale with numerous new releases per year of subjects that are interesting or where there is no existing kit in the market or the new kit is ‘better’ than the current market incumbents. We ask a lot and it costs to deliver that. 11 Link to comment Share on other sites More sharing options...
Cammer625 Posted November 18, 2017 Share Posted November 18, 2017 I've may have the income to spend on a Shack or Wimpy or Victor, but that doesn't mean I will get one. They're not pocket money kits. The 1/72 Spitfire mki has more doubled in price at my LHS since 2011. I can now get an Eduard one for a similar price online. As said elsewhere, they are no longer at the bottom of the pile for quality, engineering etc and you pay more for that, but the price increases has put some of their less detailed offerings up against some very awesome kits. What I don't get is the level of detail that, I'm assuming, can't be seen inside those big dark interiors of those big planes. Don't get me wrong it looks great, but that has to come at a cost (research, tooling, production). Are they too detailed for the market? No kit is perfect but Airfix was hitting the mark for reasonable detail, engineering, 'buildability' at a reasonable price - that MKI got me back into the game. Subjects I like I will buy. But, sadly, the days of spare change impulse buys have stopped (above mentioned Victor is a $100 buy down under). And I wanna become a CEO. Of anything. Then I can buy anything! 1 Link to comment Share on other sites More sharing options...
Rumblestripe Posted November 19, 2017 Share Posted November 19, 2017 In the sixties, when I was growing up, Airfix series 1 kits were "pocket money" purchases. Most kids my age would buy a 109 or a Spit then clag them together, daub them with a bit of paint (sometimes) and re-enact dogfights until our "models" fell foul of some evil Boche ace (or a Spit in the sun). They were disposable. I guess they sold in their thousands? These days very few yoofs would think to spend some time gluing together a model. That's just a simple fact. There are other distractions/attractions. So model kits no longer sell in anything like the volumes of yore. Consequently the financial model is entirely different. I think modern Airfix releases are comparable with the best models you can buy (Tamiya, Hasegawa, etc.) Quality costs. It's that simple. 2 Link to comment Share on other sites More sharing options...
Plasto Posted November 20, 2017 Share Posted November 20, 2017 This article from the FT makes for interesting if grim reading... https://www.ft.com/content/3423b762-b74f-34ad-8ef9-fd8aab41cc17 Link to comment Share on other sites More sharing options...
Max Headroom Posted November 20, 2017 Share Posted November 20, 2017 7 minutes ago, Plasto said: This article from the FT makes for interesting if grim reading... https://www.ft.com/content/3423b762-b74f-34ad-8ef9-fd8aab41cc17 Only readable with a subscription. Bare bones - how bad? Trevor Link to comment Share on other sites More sharing options...
Plasto Posted November 20, 2017 Share Posted November 20, 2017 Sorry about the link I read The article gratis by googling for it I think the FT puts up s paywall on hotlinks. The gist is 3rd time to the markets in 3 years for equity. Only 350k if head room left with existing banking covenant. poor sales performance. I personally think it would be hard to run a business the size of Hornby with only 350k of facility left. Any how draw draw your own conclusions. But there are quite a few market signs things are not well at all... 2 Link to comment Share on other sites More sharing options...
Max Headroom Posted November 21, 2017 Share Posted November 21, 2017 I couldn’t really give you a ‘thanks’ for that post so gave you a sad face instead. Trevor Link to comment Share on other sites More sharing options...
Plasto Posted November 21, 2017 Share Posted November 21, 2017 I know what you mean... Still things could sort themselves out if they raise the 12m they need 1.5m for 49pc of oxford diecasts and pay off a bit of debt then who knows what might happen they also want to invest 1m in r+d stuff.. They are are looking to raise 10m from a fixed offer of shares to investors and the other 2m from general investors. I personally don’t understand the logic of the Oxford diecasts purchase maybe it offers some value and sense to the need to raise equity from the market. still it’ll pan out one way or another. Link to comment Share on other sites More sharing options...
Robert Posted November 21, 2017 Share Posted November 21, 2017 Reading those reports on page 31 does not leave me with much confidence, but that's business l suppose. Robert Link to comment Share on other sites More sharing options...
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