Updates

Hornby

January 2011

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Somewhat frustratingly Hornby's first half to 30 September was marred by supply chain issues, which meant turnover rose only 2% to Â£25.5m while pretax profit fell from Â£1m to Â£0.7m. While complete outsourcing of its manufacturing to China has meant it is far more cash generative, with net debt falling again from Â£14.7m to Â£10.8m, the loss of control brings its own risks as its main Chinese supplier suffered disruption from introducing a new IT system and although it is now functioning satisfactorily, it could only provide limited stock in H1. With priority given to the UK, this side enjoyed 12% sales growth to Â£19.8m with operating profit increasing 63% to Â£1.175m, with new budget products like Scalextric Start and M ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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