6th Nov 2024 08:01
(Alliance News - Hornby PLC on Tuesday said it has agreed to dispose of subsidiary LCD Enterprises Ltd for around GBP1.4 million.
The Margate, England-based model railway maker and retailer backed said it will sell the business to EKD Enterprises Ltd, a company owned by Lyndon Davies, Hornby's former chair and current non-executive director.
Lyndon Davies is due to step down from the board of Hornby once the sale has been completed.
The disposal will release the Oxford Diecast brand from the company's portfolio. It was started in 1993 and is one of the world's largest manufacturers of 1:76 scale models.
Hornby said the sale was part of its efforts to streamline the business, enabling resources and investments to be focused on its core brands. The release of Oxford Diecast stock will reduce total inventory by 11%.
Oxford Diecast made a pretax loss of around GBP200,000 during the financial year that ended March 31.
Around GBP1.1 million of the consideration will be payable in cash over a five-year period, with GBP250,000 due to Hornby immediately after the sale is completed. The outstanding amount will then be paid in five equal instalments of around GBP170,000 every year around the anniversary of the sale, for the next five years.
Chair Neil Sachdev said: "Hornby and its family of brands remains world-renowned, and rationalising our portfolio in this way presents a more coherent offering to our customers. Through consistently adapting to change, we will ensure that we are best-placed to continue to support our existing customers whilst we create a new generation of hobbyists."
Shares in Hornby closed 2.8% higher at 18.50 pence each in London on Tuesday.
Mike Ashley, the founder and controlling shareholder of retailer Frasers Group PLC, back in March signed a consultancy agreement with Hornby. Ashley has a 9.1% stake.
By Emily Parsons, Alliance News reporter
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