Steve Cooke’s call to arms is highly likely to get a positive response, City sources said, after the company’s former finance director unveiled a turnaround plan seeking to raise £8 million. The Times reports that Banks have agreed a new loan deal on the assumption that investors buy into the scheme.
The maker of model railways, Scalextric racing sets and Corgi cars, valued on the Alternative Investment Market at only £17 million, will place new shares at 27p, well below the 32p they were at on Tuesday night. Yesterday they fell another 2p to 30p in light of the share placing and full-year results that, not for the first time, disappointed.
In the year to March, as sales fell by 4 per cent to £55.8 million, Hornby plunged to a loss of £13.5 million, far worse than the £200,000 lost last time.
Hornby is to cut its lines by 40 per cent to focus on bestselling toys but will still have 1,400 products after the shake-up
The company has struggled for years as its niche market has shrunk ever smaller, wilting under the advance of computer games. Nevertheless, Roger Canham, Hornby’s executive chairman, said that there was a “clear plan to turn around the business and to move it back to a position of sustainable profit”.
That will include cutting Hornby’s product line by 40 per cent to focus on its bestselling toys, although it will still have 1,400 products after the shake-up. Mr Canham, 51, said that the overhaul would result in a “smaller, more focused business” based on its core British brands, but he warned that revenues were likely to fall by about a quarter as a result. “I expect to see the impact of the plan from early 2017,” he added.
Mr Cooke, 50, who stepped up as chief executive in April, said: “We were pleased with the progress made in modernising many of our systems and processes, but much of the change last year resulted in substantial unplanned disruption.”
Hornby can trace its roots to 1901 and the birth of what would become Meccano, the mechanical assembly toy. Its trains followed nearly two decades later, first clockwork and then electric-powered.
