Hornby reports strong Christmas

Interim management statement for October 1st to present reports strong sales.
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In the interim report on the first half of the financial year to September 30th 2009, the firm indicated its UK retail customers had been cautious in taking on stock. This situation has improved significantly in the pre-Christmas period, resulting in a high level of shipments.

In addition, following good consumer sell-through, Hornby's retailers have ended the year with stocks at historically low levels. Demand has continued to be good in the early weeks of January and the firm is experiencing a correspondingly high level of order intake.

In mainland Europe, demand continued to be strong prior to Christmas and with a good pipeline of new introductions, we expect to finish the financial year with sales and profits significantly ahead of the previous year.

Looking forward, as purchases are now being made at more favourable Dollar exchange rates, Hornby expects to see a steady recovery in its margin performance in the UK.

Trading continues to be in line with market expectations and cash generation during the period has been strong. Net debt as at December 31st was £10.5 million (September 30th 2009 £14.7 million, December 31st 2008 £14.3 million).

Going forward, the firm has developed more competitive products to provide increased value for money and the Airfix, Humbrol and Corgi brands added in recent years continue to show encouraging growth.

Hornby has also continued its licensing programme, signing key deals which have performed well. Scalextric product associated with BBC Worldwide's Top Gear, Disney/Pixar's Cars and the Formula 1 Grand Prix teams have been among the firm's best sellers.

For 2010 Hornby has secured licences with Disney/Pixar for Hornby and Micro Scalextric brands inspired by Toy Story 3.

The firm has also launched the first products in the range associated with the London 2012 Olympic Games. Market feedback has been positive.

Chairman, Neil Johnson commented: "We have entered 2010 in a strong position. Sales were encouraging in the important pre Christmas period and indeed in the early weeks of 2010. This should ensure a positive final quarter to the financial year as retailers replenish their stocks. Our ranges for 2010 are focussed on value for money and impressive licenses which will continue to drive consumer interest in our products.

" The progress that has been made in resolving the previous supply chain issues, coupled with a more favourable Dollar/Sterling exchange rate will stand the Company in good stead during the next financial year. We are excited about the future prospects for the company and I look forward to updating investors on future progress."

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