Hornby Regulatory News (HRN)

Hornby plc

("Hornby" or "the Group")

7 April 2017

SOLID PROGRESS ON TURNAROUND PLAN CREATING SOUND PLATFORM FOR FUTURE GROWTH

Pre-close statement

Hornby Plc, the international hobby products group, provides an update to shareholders on progress made in its turnaround plan and on Group trading for the period from 6 February 2017 to the end of the financial year, 31 March 2017.

First stage of turnaround successfully completed

The first stage of Hornby's turnaround is now completed and has progressed in-line with the Board's plan. The Group has restructured its UK and European operations, resulting in structural improvements to the cost base, and has re-engaged with its core independent retailer base as part of a re-positioned sales channel strategy. The product range has been rationalised and re-focused which has allowed Hornby to reduce capital expenditure and improve working capital.

The business is focused strongly on improving cash flow and at 31 March 2017 net cash on the balance sheet was £1.1m (31 March 2016 net debt £7.2m) which was ahead of management's expectations. This has resulted from sound underlying trading combined with a carefully managed programme of stock reduction and the successful sale of the Group's Margate site. 

Current trading

As the Group has previously stated, the year ended 31 March 2017 has been one of transition and, as a result, Hornby was loss making during this period in line with the Board's expectations. Revenue performance for the full year was slightly ahead of our plan, with the fourth quarter showing an improving trend.

Outlook

With the first phase of the turnaround plan now largely complete, Hornby is confident in the business' underlying trading momentum as it embarks on the next phase of its turnaround plan. Having placed the Group on a solid financial footing, Hornby's focus is now on realising the full potential of its iconic brands.

Commenting on the trading performance, Steve Cooke, CEO of Hornby, said:

"I am pleased to report that the first stage of our turnaround plan has been successful and this provides a strong base from which Hornby can build. It has been a challenging time for all of Hornby's employees and I would like to thank them for their dedication, commitment and hard work over the past year. Improving our customer focus has been a key part of the plan and I am particularly pleased that we have now begun to restore our leading position with our core hobby retail customers. Coupled with the considerable improvement in our financial position, I am confident that we have set the Group on the right course to generate value for all our stakeholders.

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Date: 7 April 2017

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