Been a big follower of this company over the last few years they have excelent management and they have done very well but due to the nature of the recent markets they have fallen back to very cheap levels and now are worth a buy in my opinion. I know we have 3 historical threads on this one but they havent been used for many months. I like this report on the company today on the results its well worth a read.

Hemscott.

Hornby - Friday 3rd June 2005

It's all systems go at Hornby and another set of excellent results leaves us wondering why the shares have tailed off over the past six months. The UK market offers plenty of scope despite the consumer downturn and the model trains and racing sets maker is ready to cash in on great potential abroad, says Rodney Hobson.


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Hornby told investors at the end of January that Christmas trading, which is obviously a key time of year, had gone particularly well so it is no surprise that in the year to March turnover was up from 39m to 45m and pre-tax profits rose from 36.5m to 7.2m.

In line with the commendable policy of paying half of earnings per share out in dividends, the final divi of 5p takes the total to 7p, up from 6p (allowing for last year's five-for-one share split). Earnings per share rose from 12.2p to 14.78p excluding heavy amortisation of goodwill on the Lima acquisition in Italy, which took the figure down to 13.88p.

Chief executive Frank Martin stressed today that he remained confident despite the slowdown in consumer spending which, he claimed, was having less impact on the hobby market than on other sectors.

He pointed out that there had been solid growth at home and abroad before taking into account additional sales from acquisitions.


Martin said: 'Trading in our core UK market has remained robust during the year. Despite nervousness in the retail sector, our products have retained their popularity and sales have remained good. We are conscious that some retailers are reporting the impact of wider economic pressures but the hobby-based characteristics of our products lend resilience in such times and market feedback remains encouraging.'

During the year Hornby has pressed on with developing its network of concessions in other stores to 121 outlets. Sales in the concessions grew by 34% in the year and represented 15% of total UK sales. This does mean that Hornby is not heavily reliant on a few dominant retailers.

In any case, while Martin will not neglect the home market his eyes are on the acquisitions in Spain and Italy where enthusiasm for trains and racing cars is no less than here.

Hornby has exclusive rights to use images of Fernando Alonso, the Spanish Formula 1 star, and Sete Gibernau, well known to motorbike enthusiasts, on its Electrotren slot racing packaging in Spain, which apparently has more slot racing enthusiasts for size of population than any other country in the world.

In Italy, Hornby bought assets of model maker Lima from the liquidators and has shipped production out to China, where Hornby and Scalextric models are already produced. The first new Lima models will be in the shops in time for Christmas and more will be released in 2006.

It does mean that Lima will be incurring overheads before the sales revenue starts to flow. Although action has been taken to reduce costs by restructuring the Italian operation and holding down the headcount, interim profits will be depressed. Martin said, though, that profits for the year as a whole were unlikely to be affected.

The shares peaked at 280p late last year after a terrific run lasting nearly four years. We believed they were worth hanging on to at 241p after the January trading statement and we still think that was reasonable advice at the time, although they subsequently slipped further back to around 200p, where there seems to be solid support.

The recent weakness is an opportunity to buy in. The shares added 3.5p to 216p this morning.ENDS.

If you look at the figures you will see that the company is on a very low rating of P/E 14.6 which is very cheap for this company. At present I do not have a forward P/E but will try to get one.

Well worth a dabble.

Please DYOR.

cheers GF.

today's high % rise is actually nothing fantastic in monetary terms and may merely reflect bears banking profits

From what I've heard about these I would avoid.

Nobody plays with train set in this day and age... so dated

Yet another turnaround plan by Hornby (HRN) was greeted with a mute response with the shares down 0.6% to 31.79p. It also announced an intention to raise £8 million via a placing and open offer at 27p.

Stockwatch: Recovery reveals 60% upside