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Hornby PLC (HRN)

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Wednesday 31 March, 2004

Hornby PLC


Hornby PLC
31 March 2004

                        OF SPANISH FIRM ELECTROTREN S.A.

Hornby Plc ('Hornby'), the model and collectables group, is pleased to announce
that it has acquired the business and assets of Electrotren S.A. ('Electrotren')
for a cash consideration of EUR 7.9 million (seven million nine hundred thousand
Euros) or approximately £5.3 million* funded from cash reserves. The acquisition
will strengthen Hornby's position in its key European markets for model railways
and slot car racing products. Hornby's strategy is to enlarge its stable of
market leading hobby brands in the UK, Europe and the USA.

   •Electrotren, based near Madrid (Spain), is the brand leader in model
    railways in Spain.

   •Electrotren has been, for the past three years, the exclusive distributor
    of the Hornby 'Superslot' slot car racing system in Spain.

For the financial year to 31 December 2003, the declared turnover and profit
before taxation of Electrotren was EUR 3.0 million (£2.0 million*) and 
EUR 0.8 million (£0.5 million*) respectively. As at 31 December 2003, the net 
assets of Electrotren were EUR 1.9 million (£1.3 million*).

Electrotren was founded in 1951 and, until its acquisition by Hornby, has
remained under the ownership of the founding Gonzalez family. Electrotren has
specialised in the design and production of HO and N gauge model railway
locomotives, rolling stock and accessories. These products are marketed in Spain
and throughout mainland Europe. Following the acquisition, Pablo and Almudena
Gonzalez, the son and daughter of the founder, will continue to be responsible
for the day-to-day management of Electrotren.

In June 2001, Hornby appointed Electrotren as its exclusive distributor in Spain
for slot racing products. Spain is the only major market in the world where
Hornby does not possess the rights to market its slot racing products under the
'Scalextric' brand. Instead, the brand 'Superslot' is used. Since June 2001,
Electrotren has succeeded in trebling sales of 'Superslot' in Spain and has
recently completed the relocation of all model railway manufacturing to China.

The Spanish market for slot racing products is one of the largest in the world.
Spain also has a strong following for the MotoGP motorcycle race series. Hornby
has recently acquired worldwide exclusive rights to produce a range of slot
racing motorcycles based on MotoGP. It is expected that the MotoGP range will
provide a unique opportunity to increase sales of Superslot products in Spain.

Hornby's bankers have indicated that, following the acquisition of Electrotren,
they would be prepared to extend the necessary lines of credit in order for
Hornby to complete the acquisition of certain assets of Lima S.p.A announced on
8 March 2004, should the offer be accepted, subject to negotiating acceptable
facility agreements.

The Chief Executive of Hornby Plc, Frank Martin, commented:

' We are delighted to announce the acquisition of Electrotren. This will provide
a platform to increase our sales of slot racing products in Spain, spearheaded
by our recently launched MotoGP range. In addition, the market leading position
of Electrotren in the Spanish model railway market will provide a significant
platform for sales growth arising from the recently completed move of production
to China. In many ways Electrotren is in the same position as Hornby was 3 years
ago - the difficult decisions have been implemented, whilst the full benefits
have yet to be realised. We are also delighted to welcome Pablo and Almudena
Gonzalez to the Hornby team. They will continue to run Electrotren as Managing
Director and Operations Director respectively. Over the past 3 years we have
formed an excellent business relationship with them and we have every confidence
that they will continue to improve the performance of Electrotren over the
coming years. Their knowledge of the Spanish market and the wider European
market will also be of great help to us as we develop our model railway business
outside the UK.

' The proposed acquisition of certain assets of Lima S.p.A is also proceeding to
plan. If, as expected, we are able to complete the acquisition of the Lima
assets later this year, we will be in a position of brand leadership in model
railways in Spain (Electrotren), France (Jouef), Italy (Lima/Rivarossi) and of
course the UK (Hornby).

' Thus, Lima, when coupled with Hornby and Electrotren, will enhance further our
continental European presence. Whilst we expect Lima to take some months before
contributing positively to earnings post acquisition, we expect Electrotren to
contribute positively from the outset.

' We have demonstrated in the UK that a brand leading position in model
railways, coupled with a strong slot-racing business, provides an exceptionally
strong trading platform. We expect to be able to leverage similar positions in
the markets mentioned above.'

* Based on EUR/GBP exchange rate of EUR 1.4996/£ per the Financial Times, 
31 March 2004.


Date: 31 March 2004
For further information contact:

Hornby Plc                                     City Profile Group
Frank Martin, Chief Executive                  Simon Courtenay
John Stansfield, Finance Director              Chris Lane
01843-233500                                   020-7448-3244
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