Hornby Regulatory News (HRN)

30 Jan 2006 07:00

Hornby PLC30 January 2006 HORNBY REPORTS PRE-CHRISTMAS TRADING IN LINE WITH EXPECTATIONS AND POSITIVE FORWARD OUTLOOK Hornby Plc ("Hornby" or "the Company") is today issuing an update on trading,including comment on sales performance in the pre-Christmas period. As advised at the time of the interim results in November 2005, the UK retailmarket experienced a more difficult pre-Christmas trading period in 2005 than inprevious years. This had the effect of depressing sales of both Scalextric andHornby sets. However sales of hobby accessories performed well, particularly inthe model railway sector. This demonstrates further the robust nature of themodel railway market. The beneficial impact of the acquired businesses in Spain, Italy and France isexpected to offset partially the effects of lower sales in the UK. As a resultof this, the Company expects to achieve full year profits prior to IFRSadjustments broadly in line with market expectations. The Company is continuing to make very good progress in re-establishing thebrands it acquired in Continental Europe. The process of transferring productionof the acquired Italian Lima Group ranges to China continues apace. Hornbyintroduced the first product ranges in Spain, Italy, France and Germany prior toChristmas and the market reaction was excellent. The model railway enthusiastsin Continental Europe are now beginning to benefit from improvements in qualityand detail of the products. This is a similar scenario to that which Hornbyencountered in the UK market five years ago. The Board remains confident thatthe Company will be able to rebuild the Lima brands in the same way as Hornby'sfortunes improved in the UK market. With the benefit of the large bank of toolsacquired, and the brand leading positions of Electrotren, Jouef, Rivarossi, Limaand Arnold in their respective markets, Hornby is in the process of establishingitself as a strong contender in all key European markets. This strategy oftargeting stable, collector markets across Europe will have the effect ofreducing permanently the Company's dependence on the UK market. Scalextric USA has continued its improvement over last year's performance, andthis bodes well for the full year result in that market. London Toy Fair The Company's new products launched at the London Toy Fair last week wereextremely well received. In particular the introduction of the Hornby Digital Control system is expectedto revolutionise the way model railway enthusiasts operate their layouts.Digital Control has been popular in the USA and Continental Europe for sometime. However the UK market has hitherto lacked a system dedicated to itsparticular requirements. The Hornby Digital Control system draws on the lessonslearnt from earlier systems marketed overseas and caters to the requirements ofthe UK model railway enthusiast. In Scalextric, the Company launched the first products based on its exclusivelicence to market slot racing products based on A1 Grand Prix , 'The World Cupof Motorsport'. Scalextric products featuring this licence are expected tobecome important contributors to Group sales. The Company is confident that thisrange will open up new markets as the series itself continues to gathermomentum. The Scalextric Digital and Sport World systems, have been supplementedby a number of new sets and accessories. Of particular note is the launch of theScalextric "Digital Ignition" set at a price point similar to the existinganalogue sets. This will bring Scalextric Digital into the mainstream of slotracing sets both in the UK and overseas. Note: IFRS adjustments in respect of share schemes and amortisation ofintangibles are currently expected to result in a charge of approximately£360,000. Chairman, Neil Johnson commented: " In spite of a background of difficult trading conditions in the UK, the modelenthusiast market remains robust and we expect to report a satisfactory resultfor the current financial year. " More importantly, we are making very good progress in building a profitablehobby business across Europe. There is excellent potential to re-establish thisbusiness and the initial market reaction has been extremely encouraging. We willalso be able to channel the technological developments recently launched in theUK into the revamped Lima product ranges. The actions we have taken in acquiringbrands and distribution businesses, coupled with the move of manufacturing ofthose brands into our Chinese sources lays the ground for future profit growth.The Board remains confident about the long term performance that Hornby willdeliver." -ends -Date: January 2006For further information contact: Hornby Plc cityPROFILENeil Johnson, Chairman Simon CourtenayFrank Martin, Chief Executive Lynn Mah01843-233500 020-7448-3244 Web: www.hornby.com---------------------- This information is provided by RNS The company news service from the London Stock Exchange