Hornby Regulatory News (HRN)

Hornby Plc ("Hornby" or "the Group")

Trading Update

Hornby Plc, the international models and collectibles Group, is today updating shareholders on trading for the period from 1 October 2014 to date, which includes the important Christmas and New Year period.

Business Performance 

Group sales for the third quarter showed steady year-on-year growth of 5%, with growth of 7% in the UK. As a result for the Group as a whole, cumulative sales for the year to date are 6% ahead of last year. On a constant currency basis the sales growth was 8%. In the UK this has been driven by increasing sales of Hornby model railway and Scalextric products and outside the UK by our other model railway brands, reflecting the gradual but consistent improvements in the performance of our supply chain. This trend has continued into January and we expect sales and profits for the year as a whole to be in line with the Board's expectations.

Net debt at the end of December 2014 was £7.9 million compared to £11.0 million at the end of September 2014 and £6.5 million at December 2013.

We have agreed on the next step towards rationalising the Group's main UK site in Margate in Kent, which is an outdated factory location and no longer fit for purpose. We have agreed in principle to move our office functions to a modern office building in Discovery Park in Sandwich. The site is 7 miles away from our current location and offers a more conducive environment for our current business needs. We expect the move to take place in the second quarter of this calendar year. We are evaluating a number of options for the future of our freehold site in Margate and will update shareholders in due course.

International Toy Fairs

At the London Toy Fair in January, we showcased our major product introductions for 2015 to the UK retail buyers, before moving to the Nuremberg and New York International toy fairs in February. The feedback on our new product range was encouraging and we were buoyed by the levels of interest.

Highlights included;

· Corgi's James Bond Aston Martin DB5 celebrating 50 years since it won the inaugural toy of the year award following the release of the James Bond movie, "Goldfinger". The toy was named as James May's "car that changed the world" at this year's inaugural London Classic Car Show

· Licensed Scalextric Sets for James Bond SPECTRE, McLaren F1 team, and the world champion Lewis Hamilton for Mercedes GP. The F1 sets will feature Scalextric ARC (App Race Control) to develop the gaming experience, and enhance the traditional race

· The developing range of Quickbuild will be advertised in 2015 and feature leading global Super Cars of McLaren P1, Bugatti Veyron, and the Lamborghini Aventador

· Airfix will also benefit from the 75th Anniversary of the Battle of Britain and the ongoing remembrance of World War I and II anniversaries

· Hornby's model railway focus at the fair was on key sets such as the Flying Scotsman and Virgin Pendolino to recruit entrants to the model railways hobby

Outlook

The Board remains focused on the continuing improvement of the supply chain as the key to underpinning sales and profit growth. To that end, we have brought forward the process of placing orders for the Group's 2016 range and will complete this process during the first half of 2015. This will allow for better production planning and investment in manufacturing capability.

The Board is also still in the process of reviewing the investment needed to implement the next phase of the Group's re-organisation. This will include the roll out of the new ERP system into the UK and the wider Group, the rationalisation of the Group's five warehouses in Europe and a widening of the new web platform's range and capability. In order to make these investments we will be reviewing our funding options together with consideration of the most appropriate market for our shares to be listed on. 

Hornby will announce its preliminary results for the year ended 31 March 2015 in June.

Chief Executive Officer, Richard Ames commented:

" We are pleased with the progress that Hornby is making. The move of our warehousing and logistics operations to the new premises in Hersden was completed smoothly during the last quarter of 2014. We are confident that it will provide the foundation from which we can drive the growth in sales that we are planning. We are now preparing for the next phase of our plan to move our offices to a modern facility at Discovery Park, a vibrant hub which was the former UK Pfizer headquarters building.

" Looking forward, we are encouraged by the interest we received at the recent International Toy Fairs. Our supply chain is delivering an improved performance and we are increasingly confident that we have set the business on the right track from which we can improve the Group's overall financial performance."

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Date: 10 February 2015

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