Hornby Regulatory News (HRN)

Hornby PLC

("Hornby" or the "Group")

25th January 2018

Trading Update

Hornby Plc, the international hobby products group, provides an update to shareholders on the progress of the new strategy.

Current Trading

As announced on 17 October 2017, the Board has determined that to maximise the value of its brands over the long term, the Group will no longer offer for sale large quantities of stock at a discount. There has been overwhelming support for this change, especially in our largest channel, the independent retailers. However, rebuilding the trust in the pricing architecture takes time and some of our retail partners are taking longer than others to accept the new approach.

As a result of the reduction in discounting and a continuation of late product deliveries in the international segment; the sales performance over the key Christmas trading period was below management expectations. Both of these factors had an equal impact up on the under performance of the business.

We now have some visibility into the outcome for the full year and because of the revenue shortfall, the underlying loss after tax is likely to be larger than the board's expectations.

Cost Savings

The new management team have made a significant impact on the ongoing cost base. They have reduced the fixed overheads by £1.7m since joining and the Board believes that there are further procurement efficiencies to come as we reorganise our supply chain towards mutually beneficial partnerships.

Lyndon Davies, Interim Chairman and CEO, commented:

"We remain committed to the strategy that was outlined in the half year results. We are already starting to see evidence of positive momentum in the pre-orders for our new product ranges that were announced at the beginning of the year as well as old retail partners re-engaging following the end of the discount-era.

The design and production cycles are long in this business and whilst we are excited about the products we have in the pipeline, it will take time for the new products to come through and for the trust with our customers to be fully rebuilt.

The change in strategy has meant that the Christmas trading period was tough and there is likely to be some more volatility as we find out how off-peak trading performs for the first time in years without discounting. Despite this, we are determined to weather the storm and come out the other side with stronger brands, loyal customers, a leaner cost base and a better foundation from which to build a profitable and growing business."

The board intends to provide a more comprehensive review of the year in the final results in June.

Enquiries:

Hornby plc 01843 233500

Lyndon Davies, Interim Chairman and CEO

Liberum 020 3100 2222

Neil Elliot

Neil Patel

Capital Access Group 020 3763 3400

Scott Fulton

Note:

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain. If you have any queries on this, then please contact Lyndon Davies, CEO of the Company (responsible for arranging release of this announcement) on 01843 233 500.