Hornby, a company known for its scale models, has recently announced the sale of its subsidiary, Oxford Diecast, in an effort to address financial losses. The decision to sell off the subsidiary came as part of a strategy to improve profitability within the business, which is backed by Mike Ashley.
The Margate-based company revealed that it has entered into a conditional agreement to sell its LCD Enterprises business to EKD Enterprises for £1.38 million. EKD Enterprises is owned by Lyndon Davies, a former chairman and current non-executive director of Hornby. This deal will result in EKD taking control of the Oxford Diecast brand, one of the largest manufacturers of 1:76 scale models in the world.
Oxford Diecast reported a pre-tax loss of approximately £200,000 for the year ending on March 31. Despite this loss, the brand has a net book value of nearly £3 million on Hornby’s balance sheet. Following the completion of the sale, Mr. Davies will be stepping down from the board of Hornby.
The decision to sell off Oxford Diecast is part of Hornby’s efforts to streamline its portfolio and make the business more efficient. In March of this year, retail tycoon Mike Ashley announced that he would be offering advice to Hornby after acquiring a stake in the company. This move was seen as a step towards a financial turnaround for the model train specialist.
Neil Sachdev, the non-executive chairman of Hornby, expressed gratitude towards Mr. Davies for his dedication and support to the company over the past seven years. He acknowledged Mr. Davies’ passion as a board member and wished him success in his future endeavors with Oxford Diecast.
Following the announcement of the sale, shares in Hornby experienced an 8.3% increase, reaching 19.5p on Tuesday morning. This positive response from the market indicates confidence in the company’s strategic decision-making and potential for financial improvement in the future.
