Hornby Regulatory News (HRN)

30 July 2021

Hornby plc

("Hornby plc", "the Company" or "the Group")

Acquisition of Remaining 51% of LCD and Related Party Transaction

Hornby PLC, the international models and collectibles group, announces that it has acquired the remaining 51 per cent. of the issued share capital of LCD Enterprises Limited ("LCD") which it does not already hold (the "Acquisition") from Lyndon Davies, CEO of the Company, and his wife Catherine Davies, who together own this remaining stake.

LCD holds majority interests in the Oxford Diecast Group, which supplies diecast model vehicles and railway products to the collector, gift and hobby markets in the UK, Hong Kong and North America

Summary of the Acquisition

On 8 December 2017 the Company completed the acquisition of 49 per cent. of the issued ordinary share capital of LCD, for a consideration of £1.6 million payable in cash pursuant to the LCD SPA.

LCD holds majority interests in the Oxford Diecast Group, which supplies diecast model vehicles and railway products to the collector, gift and hobby markets globally

On 20 February 2020, the Company entered into the Amendment and Restatement Agreement, a conditional agreement pursuant to which the LCD SPA was amended and restated such that the end of the Lock-In Period relating to certain rights of the Company and Lyndon Davies and Catherine Davies, was extended to 8 December 2023, being the sixth anniversary of completion of the LCD SPA

Hornby plc has agreed to acquire the remaining 51% per cent. of the issued share capital of LCD, for a total cash consideration of £1.3 million, to be funded by the Company from cash in the bank.

For the financial year ended 31 December 2020 LCD reported a net profit after tax of approximately £0.2 million. At the time of completion of the Acquisition, LCD is expected to have total assets of c.£5.1 million, and liabilities of c.£2.4 million resulting in (unaudited) net assets of £2.7 million.

Pursuant to the Acquisition, the Group will acquire LCD's inventories and other assets, as well as liabilities which include an outstanding loan amount owed to Lyndon Davies totalling £600,000. Upon the Acquisition, the Group will settle this £600,000 loan (the "Loan Repayment").

Strategic Rationale

The Company believes that the Oxford Diecast Group's portfolio of brands and industry knowledge are complimentary to its existing brand portfolio and that opportunities exist for the two businesses to work collaboratively together to grow both businesses.

The Group is well placed to leverage the value of the LCD inventory and to further develop the brand's intellectual property, which includes a range of scale models that complement the Hornby product ranges.

Related Party Transaction

The Acquisition and Loan Repayment constitute related party transactions pursuant to Rule 13 of the AIM Rules for Companies (the "AIM Rules"). The Acquisition and the Loan Repayment also constitute substantial transactions pursuant to Rule 12 of the AIM Rules.

The independent Directors of the Company, which excludes Lyndon Davies who is considered a related party to LCD, consider, having consulted with the Company's nominated adviser, the terms of the Acquisition and the Loan Repayment to be fair and reasonable insofar as the Company's shareholders are concerned.

Hornby Plc

Lyndon Davies, CEO

Kirstie Gould, CFO

01843 233500

Web: www.hornby.plc.uk

Liberum Capital Limited (Nominated Advisor & Broker)

Andrew Godber

Edward Thomas

020 3100 2222