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Below is a note issued today about Hornby's half yearly trading results. Particular points of interest are 1) Lima 2) Electrotren 3) live steam. The information on this page is updated via a feed from the London Stock Exchange's Regulatory News Service. Hornby PLC - Interim Results RNS Number:1508F Hornby PLC 12 November 2004 HORNBY PROFITS UP 20% AS EUROPEAN ACQUISITION BOOSTS SALES Hornby Plc ("Hornby"), the models and collectables Group, has today announced its interim results for the six months to 30 September 2004. Hornby's two main products are model railways and Scalextric slot car racing systems. Highlights * Pre-tax profits up by 20% to £2.6 million (2003: £2.2 million) * Sales up by 20% to £19.0 million (2003: £15.8 million) * Diluted earnings per share to 4.55p (2003: 3.91p) * 121 concession outlets in operation - sales growth of 60% over the last 12 months * Acquisition of Spanish model rail group Electrotren completed * Italian court ruling in favour of Lima acquisition * Successful launch of new Scalextric Digital track system * New Ferrari Scalextric license agreed * Interim dividend up 25% to 2.0p (2003: 1.6p) Frank Martin, Chief Executive of Hornby, said, " We continue to make encouraging progress. The group is now augmenting its organic growth with acquisitions. We have completed the acquisition of Spanish model train specialist Electrotren and we are delighted with how it has bedded down and its subsequent performance. " We have launched a number of new products which have been well received. Our Scalextric Digital track takes slot-car racing to a new level of authenticity and allows for real-life overtaking manoeuvres. Together with new ranges of both classic and contemporary racing cars, the pipeline of new products is looking good. We are also delighted to have secured a new licensing deal with Ferrari, which we are confident will be well received by the market. " Our model railway business is also making excellent progress. Live steam is continuing to capture the imagination of a new sector of model-train enthusiasts and we are expanding the range of locomotives featuring this technology. " Looking to the future, we are optimistic that our products will continue their appeal across a wide range of age groups. We have an exciting product development programme and we are hopeful that subject to our successful detailed due diligence, the acquisition of Lima will be completed before the end of the financial year. We are confident that we will continue to drive the Group's performance forward." -ends- Date: 12 November 2004 For further information contact: Hornby Plc City Profile Group Frank Martin, Chief Executive Simon Courtenay John Stansfield, Finance Director James Cooper 01843-233500 020-7448-3244 On 12 November: 020-7448-3244 Web: www.hornby.com or: www.scalextric.com CHAIRMAN'S REVIEW The Group continues to make encouraging progress. During the first half of the year sales have again increased for both Hornby and Scalextric brands. I am pleased to report that half-year sales at £19.0m were 20% higher than for the same period last year. Profit before tax at £2.6m was 20% higher than for the same period last year. Diluted earnings per share rose from 3.91p to 4.55p (adjusted for 5 for 1 share split. See note 3). Dividend Your Board is continuing its policy of paying one third of the previous year's full dividend at the half-year. Consistent with this policy, and given the encouraging trading performance in the first half, I am therefore pleased to announce an interim dividend of 2.0p (2003 - 1.6p) per ordinary share, payable on 28 January 2005 for those shareholders on the register as at 7 January 2005. Operating Review The encouraging performance of the past six months reflects positive developments within the business. On 31 March 2004 we acquired Electrotren S.A., the market leader for model railway products in Spain. We are pleased with the performance of Electrotren and it has bedded down well as part of the Group. This subsidiary therefore contributes to results for the first time at this interim. Group like-for-like sales and profit before tax each increased by 14% in the first half. Sales of Hornby railway products increased again during the first six months, buoyed by an enlarged range of Live Steam locomotives and additional liveries of our Q1 and Class 50 locomotives. During the second half of the current financial year we expect to see strong sales of the retooled A4 locomotive and the new range of "Teak" coaches. Scalextric sales also increased, supported by the introduction of the MotoGP motorbikes and sets. During the second half of the current financial year we expect to experience strong demand for the newly introduced Scalextric Digital system. I am also delighted to announce that a number of new licences have been agreed which we believe will underpin further growth in Scalextric sales in future financial years. Most notable amongst these licences are the rights to produce Scalextric models based on Ferrari road and competition cars, including Formula 1. Sales growth in the UK during the first half of the year has come from all our channels of distribution. In particular, in-store concessions in the UK have shown impressive sales growth of 60%. Between 30 September 2003 and 30 September 2004, the number of these outlets grew from 70 to 121. Export markets continue to offer significant scope for growth, although some markets, notably North America, have experienced difficult trading conditions during the past six months. Nevertheless International sales have also increased during this period. The Company has continued to benefit from the relative strength of Sterling against the Hong Kong Dollar, the currency in which the majority of our products are purchased. It is the Company's policy to maintain a prudent level of forward currency purchases in order to smooth the impact of fluctuations in exchange rates. Forward purchases of Hong Kong Dollars are now sufficient to meet the Company's purchasing requirements beyond the end of the current financial year. The Company's net cash position, £0.1m overdraft as at 30 September 2004, has reduced by £3.3m compared to the previous year. However this position is after payment for Electrotren of £5.3m. The Company therefore continues to demonstrate its ability to generate significant positive cash flow from its operations. Acquisitions The Company continues in its negotiations to acquire certain assets of Lima S.p.A. (In liquidation), and expects to complete this transaction by the end of the current financial year. Current Trading Your Company has again made a strong start in the current financial year and the prospects for the full year remain positive. However, as always, the pre-Christmas trading period is the key part of the year's trading. Improved distribution and exciting new product introductions should ensure continued growth during the second half of the financial year. Neil A Johnson 12 November 2004
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