NEWS

Toymaster reacts to Trod’s stop notice

Published on: 23rd March 2016

As a result of Trod’s proposed administration, a sizeable provision has been made for potential losses on outstanding member balances.

Toymaster 480The 2015 calendar year was a year of significant growth for the UK toy market, with an overall increase in annual sales of 6% reported by NPD. Benefitting from this growth, Toymaster members had a successful year with 70% reporting sales at or above 2014 levels, demonstrating the continued relevance to the consumer of independently owned high street toy stores.

Despite this growth, Toymaster’s largest member, Trod Limited, has issued a notice of intent to appoint a proposed administrator.

Toymaster prides itself on paying suppliers all undisputed invoices on time, irrespective of whether Toymaster has been paid by the member. In the case of Trod, the majority of the debt had already been paid to suppliers by 31st January 2016 and the undisputed balance of the account due to suppliers after this date has already been or will be paid on the relevant due dates. These payments were all made within Toymaster’s existing financial headroom. Toymaster funds its operations using Confidential Invoice Discounting. The invoices applicable to Trod have never been included and therefore, despite the budgeted reduction in turnover in 2016, financial headroom will be unaffected.

Toymaster has revised its budget for 2016/2017. Whilst income is reduced following the loss of Trod , whose annual purchases in 2015 were £5.6m, with a budgeted turnover of £49m for 2016/2017 and a budgeted profit in excess of £0.5m the board of directors are satisfied with the long term viability of the group.

The table below shows the maximum, minimum and average level of debt with members pre and post the administration of Trod, demonstrating that Toymaster’s portfolio of risk is significantly reduced, thereby assisting in ensuring the long term viability of the group.

                                                        Post Trod Administration            Pre Trod Administration               Variance

                                                                                           £000                                            £000                  £000      %

Average member debt at peak (November)      119                                                157                       (38)     (24)

Average member debt at year-end                        60                                                 111                       (51)      (46)

Average member debt throughout the year      86                                                  129                      (43)     (33)

Maximum member debt at peak (November)  2,576                                             7,741                  (5,165) (67)

Maximum member debt at year-end                   901                                                 7,424                 (6,523) (88)

 

Shareholder’s funds remain positive at £ 1.7m.

The board over recent years has put in place policies to ensure the continued long term viability of the group. These include:

1) Refusal of membership to internet only retailers

2) An increased stringent financial criteria for potential new members

3) A restriction on financially weaker members expanding their store portfolios

4) The monitoring of members performance versus their sales and purchase budgets

5) The monitoring of members profitability year on year via their annual accounts

The board are confident these measures in conjunction with the long established and profitable modus operandi within the Northampton office will assist in ensuring the long term viability of the group.

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