Shareholders: Read Annual Reports Properly, says Hobson

THE WEEK: Morningstar columnist Rodney Hobson diagnoses problems at Hornby, gives easyJet a ticking off and says that Britain's Budget is no laughing matter

Rodney Hobson 24 November, 2017 | 11:21AM
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It is very frustrating when you have products but no customers, but at least there are measures you can take to alleviate the situation: cut production, reduce prices or find new customers. How much more frustrating it is to have customers and no products. Your disappointed customers will look elsewhere for alternatives and will be reluctant to return because they consider you to be unreliable.

That was the position that Hornby (HRN) got into when it outsourced production to China and lost control of the supply chain. The model trains maker never recovered from being caught short, the shares collapsed, profit warnings were issued, losses mounted, and now last year’s rights issue has been followed by a placing and open offer. The shares, relegated from the main market to AIM to save money, are at a new low.

I hope history does not repeat itself at digital inkjet specialist Xaar (XAR). Shareholders tolerated a flat first half on the assurance in July, repeated in September, that revenue from new products this year would be weighted towards the second half.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
easyJet PLC969.40 GBX-0.43Rating
Hornby PLC49.00 GBX0.00
Ryanair Holdings PLC16.62 EUR1.47Rating
Xaar PLC191.00 GBX2.80

About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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