HORNBY PLC
|
ANNUAL REPORT & ACCOUNTS 2004
YEAR ENDED 31 MARCH 2004
HORNBY PLC, WESTWOOD, MARGATE, KENT CT9 4JX
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004 1 Financial Highlights 
2 Chairman’s Statement
4 Chief Executive’s Report
6 Directors and Corporate Information
7 Report of the Directors
11 Corporate Governance
13 Statement of Directors’ Responsibilities
14 Remuneration Report 
20 Independent Auditors’ Report to the Members of Hornby Plc 
22 Consolidated Profit and Loss Account
23 Statement of Group Total Recognised Gains and Losses  
23 Note of Group Historical Cost Profits 
24 Consolidated Balance Sheet 
25 Company Balance Sheet  
26 Consolidated Cash Flow Statement 
28 Notes to the Financial Statements 
28 Accounting Policies
47 Notice of Annual General Meeting 
50 Five Y ear Summar y
51 Form of Proxy
Designed by White Design, printed by Dorling Print
SHAREHOLDERS’ INFORMATION SERVICE
HORNBY WELCOMES CONTACT WITH ITS SHAREHOLDERS.
IF YOU HAVE QUESTIONS OR ENQUIRIES ABOUT THE GROUP 
OR ITS PRODUCTS, PLEASE CONTACT:
J W STANSFIELD, FINANCE DIRECTOR
HORNBY PLC,WESTWOOD, MARGATE, KENT CT9 4JX HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
Financial Highlights
T urnover £’000
2003
2004
34,142
38,970
Operating profit £’000
2003
2004
5,356
6,363
Profit on ordinary activities before taxation £’000
2003
2004
5,411
6,469
Equity shareholders’ funds £’000
2003
2004
15,186
17,329
Cash £’000
2003
2004
7,909
5,806
Earnings per ordinary share Basic
2003
2004
53.32p
61.02p
Earnings per ordinary share Diluted
2003
2004
52.00p
58.20p
Dividends per ordinary share
2003
2004
25.0p
30.0p
Net assets per ordinary share
2003
2004
206.8p
234.4p
1 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
2
Chairman’s Statement
PROPOSED SHARE SPLIT
It is proposed to subdivide the Company’s existing
ordinary shares of 5p each (issued and unissued)
(“Existing Ordinary Shares”) into five new ordinary
shares of 1p each (“New Ordinary Shares”).The
share split is proposed because of the Board’s belief
that the share price of the Existing Ordinary Shares,
which has risen by over 600% since the beginning of
the calendar year 2001, is now at a level that might
impair their marketability and liquidity.The Directors
believe that by lowering the price at which the
Company’s securities are traded, shareholders will
benefit from their increased marketability and
liquidity. Accordingly the Company will be seeking
shareholder approval at the Annual General Meeting
to be held on 22 July 2004 to implement the
subdivision. Each shareholder’s percentage holding
will not be affected and, except for the change to
the nominal value, the New Ordinary Shares will
have the same rights as the Existing Ordinary Shares.
If approved by shareholders, the share split will
become effective at close of business on 30 July 2004.
DIVIDEND
Reflecting the continued strength of the Company’s
performance your Board is recommending a final
dividend of 22p per Existing Ordinary Share.This will
bring the total dividend for the year to 30p per Existing
Ordinary Share, an increase of 20% over the 25p
declared in the previous financial year.This dividend
is payable to all shareholders on the register as at 
30 July 2004 and will be paid on 20 August 2004.
BUSINESS REVIEW
All of the Company’s distribution channels, both in the
UK and internationally, again showed good year-on-
year sales growth across both Hornby and Scalextric
ranges, underlining the well-balanced nature of our
business. Growth in our in-store concessions, which
now total 111, has exceeded expectations.This high-
visibility presence throughout the year in major retail
outlets has helped to underpin our retail growth.
As predicted in last year’s report, the introduction of
exciting new products across both Hornby and
Scalextric ranges has continued to attract both
positive comment and, more importantly, new
business. First of the new products introduced in the
summer of last year, was Hornby Live Steam.This
exciting innovation, in both engineering and conceptual
terms, has proved highly successful. In January this year
the Company was awarded the British Association
of T oy Retailers Award for “Innovative T oy of 2003”;
a distinction for a model railway locomotive! Live
Steam was available in the market place for the
Christmas season 2003 and contributed to sales and
profitability in the financial year recently ended.
Other major innovations for the Scalextric ranges
included MotoGP , Scalextric Sport Digital and
Scalextric Sport World. Sales of these products will
contribute to the current year’s earnings.
In the United States it was again pleasing to see
sales grow by 9% to $5.4 million. Pre-tax profit was
also up over 25% on the previous year.This progress
was achieved against the background of a generally
weak US economy. Our commitment to developing
the US market continues and with the advent of Live
Steam a limited range of Hornby products will also
be marketed through our US distribution channels.
I am pleased to be able to report continued encouraging progress in the past 
12 months. In global markets which remained challenging, sales increased by 
14% to £39.0 million. Profit before tax at £6.5 million is 20% above last year’s
result (£5.4 million), and basic earnings per share are up by 14% to 61.0p. EUROPEAN ACQUISITIONS
The Company’s growth in recent years, across 
both Hornby and Scalextric ranges, has been
organic.The Board believes that there exist
substantial opportunities for further broadening of
both product ranges and to continue to grow
profitability within our core hobby business.
Having consolidated Hornby’s position in the UK over
the past 3 years, the Board believed it appropriate
to explore suitable acquisition opportunities. In the
collectibles/models sector, European markets tend to
be fragmented with highly specialised operators.The
opportunity to consolidate certain parts of the
market and to apply the lessons learned by Hornby
in the UK led to the announcements earlier this year
of Hornby’s intention to expand into both the
Spanish and Italian markets. Electrotren S.A., based in
Madrid, and acquired on 31 March 2004, is a leading
company servicing the European railway modelling
sector with particular emphasis on the Spanish and
trans-European railway markets. Since acquiring
Electrotren we continue to be impressed by the
incumbent management and by the opportunities
for future growth in the business. Similarly, in Italy,
your Board believes that the potential acquisition of
certain assets of Lima S.p.A (in liquidation) will
provide Hornby with the opportunity to re-invigorate
the Lima, Jouef and Rivarossi brands and the quality
of their products. Lima has a tradition of producing
desirable European product in the railway modelling
sector. Clearly, as both opportunities develop, your
Board will consider the marketing opportunities for
our other products in these markets.
PROPERTY 
In December last year the Secretary of State refused
permission for the development of our current Margate
site as a D.I.Y. superstore. However I am happy to be
able to report that the business is not constrained
by continuing to operate from the present facilities.
GLOBAL CONTEXT
At the time of the last Annual Report it appeared
that the two major issues affecting global confidence
were in the process of becoming resolved.
With our manufacturing base in China we were
naturally concerned about the potential impact of
the SARS virus.This matter happily appears now to
be under control and we do not anticipate any
significant related issues. Despite the speedy conclusion
of the war in Iraq in 2003 the world continues to
suffer the after-effects. In particular the impact on oil
prices is a concern to all trading operations.Your
Board continues to monitor these issues closely.
PRODUCT DEVELOPMENT
The past year has seen some significant developments
in both product ranges, as referred to earlier in this
report. Both brands continue to focus significant
resources on new product development and enhance-
ment of current product ranges.These initiatives will
continue to bear fruit during the coming year.We will
also, of course, focus on product improvement and
development in Electrotren and Lima (once acquired).
OUTLOOK
Sales growth momentum is now well established in
both the UK and our international target markets.
Trading in the new financial year has again started
well and we have a strong pipeline of new product
developments to ensure continued growth during
the current financial year and beyond. Our European
acquisitions will broaden the Company’s base of
operations and provide a platform from which to
sell more strongly in Continental European markets.
I should like once again to thank Frank Martin our chief
executive, our directors and all our staff for their
dedicated support and hard work.They can be satisfied
that their efforts have produced excellent results.
Neil Johnson
4 June 2004
3
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
4
Chief Executive’s Report
Basic underlying earnings per share rose to 61.0p, an
increase of 20% on underlying earnings reported in
2003 (2003 - 50.7p).
There was a net cash outflow during the year of
£2.1 million. Cash at 31 March 2004 was £5.8
million compared to £7.9 million for the previous
year.The reduction in the year-end cash position is
due to the acquisition of Electrotren S.A. for a cash
consideration of £5.3 million on 31 March 2004.
Adding back this amount shows a like for like cash
generation of over £3 million from continuing
operations in the year.
The Company manufactures all of its products in
China, via third party contract manufacturers.
However some packing operations remain in the UK
where this strategy provides greater flexibility in
meeting market needs. All purchases from our
Chinese suppliers are made either in US or Hong
Kong Dollars. It is the Company’s policy to make
forward currency purchases to match or exceed
purchase order commitments at any time.
The Company retains intellectual property rights in
its products and controls all sales of its products.
A 17% return before tax on sales (2003 - 16%) was
achieved despite a significant increase in product
development expenditure. In my report last year I
indicated that we would be revealing important new
product initiatives during the year.These initiatives,
principally Live Steam, MotoGP , Scalextric Sport Digital
and Scalextric Sport World have been successfully
launched, although during the year only Live Steam
has contributed to sales and profits.The benefit of
the Scalextric initiatives will be felt during the new
financial year. However we believe that the benefits
that will ultimately flow from Scalextric Sport World
will take some time to be fully appreciated.The
Sport World system is designed to foster a
worldwide community of Scalextric enthusiasts, able
to communicate via a dedicated website, and able to
take part in or simply spectate at online races, with
participants drawn from around the world.
All sectors of the Company's channels of
distribution, both in the UK and Internationally, once
again showed good year-on-year growth.We have
again enjoyed significant growth in our in-store
concessions.These numbered 111 as at 31 March
2004, compared to 65 a year earlier. In every
location where we have converted a 
OPERATIONAL AND FINANCIAL REVIEW
The Company’s principal business is the development and supply of Hobby and Toy products.
The Company’s two principal brands, Hornby and Scalextric, are distributed through a network
of specialist and multiple retailers throughout the UK and also overseas.
Consolidated turnover for the year to 31 March 2004 was £39.0 million, an increase of 14%
over the previous year’s £34.1 million.This follows two successive years of sales growth of 20%
and 16% in 2003 and 2002 respectively.
Profit before tax of £6.5 million was 20% above last year’s result of £5.4 million and represents
a four-fold increase over the profit before tax recorded for the year ended 31 March 2001. 5
conventional retail outlet to the Hornby/Scalextric
concession format, we have achieved a dramatic
increase in sales and profits both for Hornby and for
the individual retailer.Year-round availability of our
products, properly displayed and demonstrated in
prominent high-street locations is an important
factor in the continuing growth of both our 
hobby brands.
At Scalextric USA, sales in US Dollars grew by 9%
to $5.4 million in the year to 31 March 2004.This
growth was achieved against the background of a
generally weak US economy. A profit of  $128,000
was recorded, compared to $101,000 in the
previous year. Our commitment to building a larger
business in the USA continues. During the trading
year we have opened 101 new accounts in the USA,
taking the total as at 31 March 2004 to 519. From
the beginning of the new financial year, Scalextric
USA will also benefit from sales of the Hornby
range. Our decision to channel Hornby products
through our USA subsidiary has arisen in view of the
high level of interest shown in the Live Steam
product at various hobby exhibitions in the USA.
Both of our major brands, Hornby and Scalextric,
once more achieved significant sales growth during
the year.Within the brands, both Hornby
locomotives and Scalextric cars and accessories
showed particularly strong sales growth.This growth
continues to be driven by a steady stream of new
product introductions.We try to innovate with
every new product we introduce. For example the
recently launched Lister Storm car features a
removable underpan to enable users easily to
modify gear ratios, change motors and adapt their
cars in other ways for optimum performance.We
believe that this attention to the needs of the
hobbyist is helping to establish Hornby and
Scalextric as technically superior brands.
The year to 31 March 2004 saw much broader
distribution in retail channels that had not stocked
our products in recent years.This trend of expanding
distribution will continue in the new financial year, as
the growing opportunity represented by both our
major brands is recognised by further major retailers.
Our growth over the past few years has been
predominantly organic, and we believe that there
remains a substantial opportunity to continue to
build our core business. However, we have
demonstrated in our UK market that the
combination of strong brands in model railways and
slot car racing provides an exceptionally powerful
trading platform. Our acquisition of Electrotren S.A.
is the first step towards replicating this position in
other markets. Subject to the approval of the
competent Italian Court, our intended acquisition of
certain assets of Lima S.p.A. (in liquidation) will
extend our model railway business primarily into
Italy and France. However the Lima range will also
enable us to create a model railway presence in
most other European markets, as well as the USA.
The process of acquiring the Lima assets is
proceeding according to plan, and we hope to
complete this transaction before the end of 2004.
The new financial year has once again started
strongly and we remain confident about future
prospects.
Frank Martin
4 June 2004
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
6
Directors and Corporate Information
DIRECTORS
N A Johnson
Non-Executive Chairman
F Martin
Chief Executive
N J Cosh
Non-Executive Director
J W Stansfield
Finance Director
SECRETARY
J W Stansfield, FCMA
REGISTERED OFFICE
Westwood
Margate
Kent  CT9 4JX
COMPANY REGISTERED NUMBER
Registered in England No. 01547390
AUDITORS
PricewaterhouseCoopers LLP
First Point
Buckingham Gate
Gatwick
RH6 0PP
SOLICITORS
Berwin Leighton Paisner
Adelaide House
London Bridge
London  EC4R 9HA
PRINCIPAL BANKERS
Barclays Bank PLC
9 St George’s Street
Canterbury
Kent  CT1 2JX
FINANCIAL ADVISERS
AND BROKERS
Robert W. Baird Limited
Mint House
77 Mansell Street
London  E1 8AF
REGISTRARS AND
TRANSFER AGENTS
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent  BR3 4TU Report of the Directors
The directors submit their annual report together
with the audited financial statements for the year
ended 31 March 2004.
PRINCIPAL ACTIVITIES AND 
BUSINESS REVIEW
The Company is a holding company and has three
operating subsidiaries: Hornby Hobbies Limited in
the United Kingdom, Scalextric USA, Inc. in the USA
and Electrotren S.A. a former distributor in Spain
acquired on 31 March 2004 through a newly formed
Branch in Spain.
The Group is principally engaged in the development,
manufacture and distribution of hobby and interactive
home entertainment products.
The Group’s business review and future developments
are included in the Chairman’s Statement and Chief
Executive’s Report.
RESULTS AND DIVIDENDS
The results for the year ended 31 March 2004 are
set out in the Consolidated Profit and Loss Account
on page 22.Turnover for the year was £39.0 million
compared to £34.1 million last year.The profit on
ordinary activities after taxation for the year
amounted to £4.5 million (2003 - £3.9 million).
An interim dividend of 8.0p (2003 - 6.0p) per
ordinary share amounting to £584,827 (2003 -
£437,802) was paid on 30 January 2004.The
Group’s Short Term Incentive Plan Trust waived its
right to the interim dividend on 78,485 ordinary
shares (see notes 8 and 12).
The directors recommend an increased final
dividend of 22.0p (2003 - 19.0p) per ordinary share
amounting to £1,626,200 (2003 - £1,395,222)
payable on 20 August 2004 to those shareholders
on the Register at 30 July 2004.
INTERNATIONAL FINANCIAL 
REPORTING STANDARDS
The Board has, as part of its normal procedures,
reviewed its historic accounting policies to ensure that
the Group’s accounts not only show a true and fair
view of the state of the Group’s affairs, but also give
the most transparent and realistic view to stakeholders.
As a result of this review they are aware that, being
a UK listed group, Hornby Plc will be required to
produce all future financial statements and annual
reports for accounting periods starting after 
1 January 2005, in line with International Financial
Reporting Standards (“IFRS”).This will require an
opening balance sheet to be prepared under IFRS as
at 1 April 2004 and a full profit and loss account,
balance sheet, cash flow statement etc. for the year
ended 31 March 2005 for comparative purposes.
The Board has studied the IFRS, and is confident that
it will be able to report in line with IFRS when required.
RESEARCH & DEVELOPMENT
The Board considers that research and development
into new products continues to play an important
role in the Group’s success.
All costs incurred are charged to the Profit and Loss
Account as set out in note 3.
PROPERTY VALUES
In the opinion of the directors, and given current
planning use approvals, there is no significant
difference between the book value and the current
market value of interests in land and buildings.
CHARITABLE DONATIONS
During the year the Group made donations of
£2,180 (2003 - £1,291) for charitable purposes.
DIRECTORS
The persons who were directors during the year are
listed below:
Neil A Johnson, aged 55, was originally appointed
a non-executive director on 1 July 1998. On 
22 December 2000 Mr Johnson assumed the
responsibilities of Non-Executive Chairman.
Mr Johnson is currently Chairman of Motability
Finance Limited, CybIT PLC and Tenon Group Plc.
Mr Johnson retires by rotation under article 97 of
the Articles of Association and offers himself for 
re-election at the forthcoming Annual General Meeting.
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
7 Report of the Directors
continued
Frank Martin, aged 52, was appointed Chief
Executive on 3 January 2001. Mr Martin was
previously Chief Executive of Humbrol Limited, and
formerly Managing Director of Denby Pottery
Limited and Group Marketing Director of Hasbro
(UK) Limited. Mr Martin’s conditions of employment
include a notice period of one year to be given by
the Company and of six months to be given by 
Mr Martin. Mr Martin was appointed non-executive
director of John David Group PLC on 12 June 2003
and resigned on 25 March 2004 and retained fees 
of £25,000.
John W Stansfield, aged 49, has been employed by the
Group since April 1982. He was appointed Finance
Director and Company Secretary on 4 December 1996.
Mr Stansfield’s conditions of employment include a
notice period of one year to be given by the Company
and of six months to be given by Mr Stansfield.
Nicholas J Cosh, aged 57, was appointed a 
non-executive director on 21 June 1999. He is a
non-executive director of Bradford & Bingley plc,
ICAP plc and Computacenter plc. He was previously
finance director of J.I.B. Group plc and M.A.I. plc.
Mr Cosh retires by rotation under article 97 of 
the Articles of Association and offers himself for 
re-election at the forthcoming Annual General Meeting.
The interests of the directors in the shares of the
Company and in options granted over such shares
are disclosed in the Remuneration Report on pages
14 to 19.
SUBSTANTIAL SHAREHOLDINGS
The Company has been notified that on 28 May
2004 the following parties were interested in 3 
per cent or more of the Company’s ordinary  
share capital.
Shareholder Number of
Ordinary Percentage
Shares held
P J Wood Associates Limited 740,000 10.01
Electra Quoted Partners 604,030 8.17
Fidelity Investments 579,047 7.83
Scottish Widows Investment
Partnership Limited 420,768 5.69
J J Hosking 392,840 5.31
Insight Investment Professional Funds 366,307 4.96
Fleming Investment Management Ltd 320,782 4.34
Standard Life Investments 236,181 3.20
FINANCIAL INSTRUMENTS
The Group’s financial instruments, other than
derivatives, comprise borrowings, some cash and
liquid resources, and various items, such as trade
debtors, trade creditors, etc. that arise directly from
its operations.The Group’s financial liabilities
comprise borrowings, trade creditors, other
creditors and finance leases, the main purpose of
which is to raise finance for the Group’s operations.
The Group also has financial assets comprising cash,
trade and other debtors.
The Group also enters into derivatives transactions
(principally forward foreign currency contracts).The
purpose of such transactions is to manage the
currency risks arising from the Group’s operations.
It is, and has been throughout the period under
review, the Group’s policy that no trading in financial
instruments shall be undertaken.
The main risks arising from the Group’s financial
instruments are interest rate risk, liquidity risk and
foreign currency risk.The Board reviews and agrees
policies for managing each of these risks and they are
summarised below.These policies, established 1 April
2000, have been reviewed and remain unchanged.
Interest rate risk
The Group finances its operations through a mixture
of retained profits and bank borrowings.The Group
borrows, principally in sterling, at floating rates of
interest to meet short term funding requirements.
At the year end the Group had no borrowings other
than finance leases.
Liquidity risk
The Group only requires borrowings at certain times
of the year.The short term flexibility required is
achieved by overdraft facilities.
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
8 Foreign currency risk
The Group purchases a significant proportion of its
products from the Far East in HK and US dollars.
The Group’s policy is to reduce currency exposure
arising from its purchases and anticipated orders by
using forward foreign exchange contracts of up to
12 months. All sales and other purchases originating
in the UK are denominated in sterling.
The Company has subsidiaries in the USA and Spain.
At present the Company does not consider the
balance sheet translation exposure significant enough
to warrant matching the net currency assets with
currency borrowings.
ANNUAL GENERAL MEETING – SPECIAL
BUSINESS RESOLUTIONS
The notice of Annual General Meeting set out on
pages 47 to 49 includes an ordinary resolution to
sub-divided the share capital of the Company and
special resolutions to renew the directors’ authority
to allot equity securities and the Company’s
authority to purchase its own shares.
Resolution Number 7 is an ordinary resolution
which authorises, with effect from close of business
on 30 July 2004, the sub-division of each Existing
Ordinary Share of 5p each into five New Ordinary
Shares of 1p each.
Following the sub-division, each shareholder will hold
five New Ordinary Shares for every one Existing
Ordinary Share previously held by them.The New
Ordinary Shares will be subject to the same rights
and restrictions as the Existing Ordinary Shares. Each
shareholder will hold the same percentage interests
in the share capital of the Company immediately
after the sub-division becomes effective as that
shareholder held immediately before the sub-division
became effective.
Following the sub-division, appropriate adjustments
will be made to outstanding options granted in
respect of Existing Ordinary Shares. Confirmation
will be sought from the Company’s auditors as to
whether such adjustments to outstanding options
are fair and reasonable. In relation to Inland Revenue
approved options, approval of the Inland Revenue
will be obtained prior to any adjustments. Option-
holders will be written to separately notifying them
of adjustments in due course.
If approved by the shareholders, the sub-division will
be effective at close of business on 2 August 2004
when dealings in the Existing Ordinary Shares will
cease. Application will be made to the UK Listing
Authority for the New Ordinary Shares to be
admitted to the Official List and to the London
Stock Exchange plc for the New Ordinary Shares to
be admitted to trading. It is expected that admission
will take place and dealings will commence in the
New Ordinary Shares on 2 August 2004.
Where Existing Ordinary Shares are held in
certificated form, share certificates in respect of
Existing Ordinary Shares will no longer be valid from
close of business on 30 July 2004. Certificates in
respect of New Ordinary Shares will be posted, at
the risk of shareholders, by 9 August 2004.Transfers
between 30 July 2004 and the date of despatch of
such share certificates will be certified against the
register if required. Shareholders who hold their
Existing Ordinary Shares in uncertificated form,
through CREST, will have their CREST accounts
credited with the relevant entitlements to New
Ordinary Shares on 2 August 2004. Settlements
effected on or after 3 August 2004 of bargains made
before that date will be in New Ordinary Shares.
Resolution Number 8 is a special resolution
which would give the Board authority within the
meaning of Section 80 of the Companies Act 1985
to allot equity securities of the Company up to an
aggregate nominal value of £150,000 representing
40.6 per cent, of the Company’s issued share capital
as at 2 June 2004. If approved, the resolution will
entitle the Board to allot equity securities having an
aggregate nominal value of £18,000 for cash,
equivalent to 360,000 Existing Ordinary Shares
representing 4.9 per cent of the Company’s issued
share capital as at 2 June 2004, as if Section 89(1) of
the Act conferring pre-emption rights on
shareholders did not apply.This authority also allows
the directors, within the same aggregate limit, to sell
for cash, shares that may be held by the Company in
treasury. Allotments for cash in excess of this figure
on a non pre-emptive basis will require prior
shareholder approval except in the case of a rights
issue to existing shareholders.This Section 80
authority and Section 89 disapplication will last until
the end of the next Annual General Meeting of the
Company.The Directors do not have any present
intention of exercising the authority granted by 
this resolution.
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
9 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
10
Report of the Directors
continued
Resolution Number 9 is a special resolution
which would give the Board authority under Section
166 of the Companies Act 1985 to make one or
more market purchases (within the meaning of
Section 163(3) of that Act) of its own shares
representing less than 15 per cent of the issued
ordinary share capital of the Company at the date
of this resolution.The directors will exercise this
power only if they believe that the effect of such
purchases will be to increase earnings per share and
that to do so is in the best interests of the Company
and shareholders generally.The minimum price
which may be paid for an ordinary share is the par
value of such share, from time to time, exclusive of
expenses.The maximum price which may be paid
for an ordinary share shall be an amount equal to 
5 per cent above the average of the middle-market
quotations for an ordinary share as derived from the
London Stock Exchange Daily Official List for the
five dealing days immediately preceding the day on
which the purchase is made, exclusive of expenses.
The authority to make market purchases will also
last until the end of the next Annual General
Meeting of the Company. Shares purchased under
this authority will be cancelled, or, if the directors
consider appropriate, held in treasury.
PERSONNEL POLICIES
It is the policy of the Group to follow equal
opportunity employment practices and these include
the full consideration of employment prospects for
the disabled.
Applications for employment by disabled persons
are always fully considered, bearing in mind the
aptitudes of the applicant concerned. It is the policy
of the Group that the training, career development
and promotion of disabled persons should, as far as
possible, be identical with that of other employees.
Arrangements are made, wherever possible, for
retraining employees who become disabled, to
enable them to perform work identified as
appropriate to their aptitudes.
The Group places importance on the contributions
to be made by all employees to the progress of the
Group and aims to keep them informed by the use
of formal and informal meetings.
CREDITOR PAYMENT POLICY
The Group has agreed a variety of payment terms
with its suppliers. It is and will remain the general
policy of the Group that payments to a supplier are
made in accordance with the general conditions of
purchase agreed with that supplier, providing the
supplier complies with all relevant terms and
conditions and also that the invoice is presented in a
timely fashion.
The average creditor payment period for the main
trading subsidiary at 31 March 2004 was 28 days
(2003 - 23 days).The Company itself does not trade
and therefore has no external trade creditors.
AUDITORS
A resolution to re-appoint the auditors,
PricewaterhouseCoopers LLP , will be proposed at
the forthcoming Annual General Meeting.
By order of the Board
J W Stansfield
Secretary
Westwood 
Margate
Kent  CT9 4JX
4 June 2004  Corporate Governance
COMPLIANCE WITH THE COMBINED CODE 
The maintenance of effective corporate governance
remains a key priority for the Board and the statement
below describes how the directors have applied the
principles of corporate governance and complied
with Section 1 of the Combined Code throughout
the year subject to the exceptions mentioned below.
The Board
The Board has ultimate responsibility and accountability
for the Group’s operations.
During the year the Board comprised the non-executive
Chairman, Chief Executive, Finance Director and a
non-executive director. The Board believes the current
structure is appropriate for the scale of the business
and to enable the Group to be managed efficiently.
The Board has adopted a formal schedule of matters
specifically reserved to it for decisions including the
determination of strategy, the approval of business
plans, budgets, acquisitions and disposals, major capital
purchases, Board appointments, accounting policies
and treasury arrangements. The Board also delegates
specific responsibilities to committees as described
below. The Board meets monthly and monitors
progress against plan at each meeting.
The directors have the authority of the Board to
obtain external legal or other independent
professional advice in the furtherance of their duties
at the Company’s expense. All directors have access
to the advice and services of the Company Secretary,
who is responsible for ensuring Board procedures are
followed and applicable rules and regulations are
complied with. The executive directors have all
received appropriate training for their appointment
to the Board of a listed company. The non-executive
directors bring a broad expertise to the Board. N A
Johnson and N J Cosh are both experienced
company directors. Biographical details of each
director are shown on pages 7 and 8.
Chairman and Chief Executive
The roles of the Chairman and Chief Executive are
separate and there is a clear division of responsibility.
The Chairman is considered independent and
responsible for leading the Board and ensuring its
effectiveness. The Chairman and the Board are
satisfied that effective communication, principally by
the Chief Executive and Group Finance Director, is
undertaken with the shareholders.
The Chief Executive is responsible for running the
business and ensuring that accurate, timely and clear
information is presented at monthly Board meetings
or when appropriate.
Independent Non-Executive Directors
The Board considers both of the non-executive
directors who served during the year to be
independent of management and free from any
business or other relationship which could interfere
with the exercise of their independent judgement.
The Board believes that their interest in receiving fees
as directors and as being shareholders should not
prejudice their independence.
N J Cosh has been identified as the senior independent
non-executive director through whom concerns can
be conveyed to the Board.
Availability of Information
Executive management have a responsibility to
provide the Board with sufficient information in a
form and quality appropriate to enable it to discharge
its duties. The Board therefore expects to receive
timely information, circulated in advance, on all issues
scheduled to arise at Board meetings. On a regular
basis these will include management accounts
indicating the performance of the business against
budget together with financial forecasts that are
updated on a monthly and quarterly basis.
Appointments to the Board
Appointments to the Board require the Board’s
authorisation and are conducted by the Nominations
Committee comprising the Chairman, executive and
non-executive directors. The Chief Executive and
executive directors approve a job specification,
review comparative terms of remuneration and may
appoint an external consultant to prepare a short list
of potential candidates.
The potential candidates are interviewed by either
the Nominations Committee or a panel appointed by
that Committee. An appointment requires final
approval by the Board prior to an offer being forwarded.
The Company’s Articles of Association currently
require one third of the directors to retire by rotation
at each Annual General Meeting.
Remuneration Committee
The Remuneration Committee comprises the 
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
11 12
Corporate Governance
continued
non-executive directors. The current members of the
committee are N A Johnson (Chairman) and N J Cosh.
The composition is in compliance with the Combined
Code provision B.2.2 which states that the Committee
should consist exclusively of non-executive directors,
and provision B.1.7 which requires setting notice or
contract periods at, or reducing them to, one year or less.
Details of directors’ contracts are provided in the
Remuneration Report.
The Committee is responsible for establishing formal
and transparent procedures for determining policy on
executive remuneration and advising the Board on
executive remuneration and in particular for ensuring
that executive remuneration packages are sufficient
to attract, retain and motivate executive directors of
the required quality whilst avoiding paying more than
necessary. It also endeavours to establish performance
related elements of remuneration which align the
interests of the directors with those of the shareholders.
No director is involved in deciding his own remuneration.
Relations with Shareholders
The Company communicates regularly with its institutional
shareholders and encourages communication with
private investors through the Annual General Meeting.
The executive directors update major shareholders at
institutional visits and analyst presentations immediately
after the interim and final announcements. The
Chairman attends a selection of these meetings. The
meetings facilitate open discussion and direct face-to-
face contact and the views of shareholders are
reported to the Board by the Chief Executive.
The senior independent non-executive director also
welcomes direct discussions with shareholders.
The Board uses the Annual General Meeting as an
occasion for communication with its shareholders. All
proxy votes are counted by the Company's registrars
and the voting on each resolution is made available to the
meeting. Directors of the Company and the UK subsidiary
attend the meeting to respond to specific questions.
Audit Committee
The Audit Committee comprises the non-executive
directors. The current members of the Committee
are N J Cosh (Chairman) and N A Johnson.
The Committee has written terms of reference,
which set out clearly its authority and duties. These
include the following:
•review of the interim and full year results and the
Annual Report and Accounts
•review the scope and results of the audit and its
cost effectiveness
•review the independence and objectivity of 
the auditors 
• review the appropriateness and effectiveness of the
Group’s internal controls, policies and procedures
The Committee meets at least twice a year and the
meetings are usually attended by the Chief Executive,
Finance Director and the Group’s auditors.
INTERNAL CONTROL
The directors have overall responsibility for the
Group's system of internal control. Although no
system of internal control can provide absolute
assurance against material misstatement or loss, the
system is designed to provide the directors with
reasonable assurance that problems are identified on
a timely basis and are dealt with appropriately.
The key elements of the Group's system of internal
control are as follows:
Control environment
The Board has put in place an organisational structure
with clearly defined and understood lines of responsibility
and delegation of authority. The Board promotes a
strong control environment with a strong ethical climate.
Identification of business risks
The Board has the primary responsibility for identifying
the major business risks facing the Group and developing
appropriate policies to manage those risks. The
Board has completed a risk assessment programme
in order to identify the major business risks and has
reviewed and determined the key control objectives.
Major corporate information systems
The Group operates a comprehensive annual
planning and budgeting system in conjunction with a
three year business plan which is regularly updated to
reflect changing circumstances. The annual plans and
budgets are approved by the Board. The Board reviews
the management accounts at its monthly meetings
and financial forecasts are updated monthly and
quarterly. Performance against budget is monitored
and where any significant deviations are identified
appropriate action is taken.
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004 13
Main control procedures
Management establishes control procedures in
response to each of the key risks identified. Standard
control procedures operate to ensure the integrity of
the Group's financial statements.
Monitoring system used by the Board
The Board as a whole monitors the operation of the
system of internal control through management
reviews and reviews the effectiveness of the system
of internal control each year. The Board has adopted
a schedule of matters which are required to be
brought to it for decision in order to ensure that it
maintains full and effective control over appropriate
strategic, financial, organisational and compliance
issues, including procedures for seeking and obtaining
approval for major transactions and capital purchases.
The Board reviewed the effectiveness of the system
of internal controls in April 2004 and considered
them appropriate for the size of the Group.
Compliance with the provisions of the
Combined Code
The Company has complied throughout the year
with the Code provisions set out in Section 1 of the
Combined Code apart from Section D.3.1, which
requires the Board and the Audit Committee to
comprise at least three non-executive directors.
The Combined Code requires that the directors
review the effectiveness of the Group’s system of
internal control. In September 1999 the Institute of
Chartered Accountants in England and Wales
(ICAEW) published guidance for directors on the
scope, extent, nature and review of internal control.
The Board confirms that an on-going process for
identifying, evaluating and managing the Group’s
significant risks has operated throughout the year, and
up to the date of approval of the Annual Report.
Corporate Social Responsibility
The Board considers the social, environmental and
ethical matters pertinent to the Group, and will
review items of significance where appropriate. The
risk assessment procedures in place are designed to
highlight any key areas of concern including health
and safety considerations, employee recruitment and
retention and environmental issues, and controls put
in place as necessary.
The Group commissions independent external audits
of Far Eastern suppliers annually to ensure their 
compliance with the International Council of T oy
Industries (ICTI) Code of Business Practices to include
child and forced labour, working conditions, hours of
work,pay, non-discrimination and health and safety.
GOING CONCERN
After making appropriate enquiries, the directors
have a reasonable expectation that the Group and
the Company have adequate resources to continue in
operational existence for the foreseeable future. For
this reason they continue to adopt the going concern
basis in preparing the Group's financial statements.
STATEMENT OF DIRECTORS'
RESPONSIBILITIES
Company law requires the directors to prepare
financial statements for each financial year that give a
true and fair view of the state of affairs of the
Company and the Group and of the profit or loss of
the Group for that year. The directors are required to
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The directors confirm that suitable accounting policies
have been used and applied consistently. They also
confirm that reasonable and prudent judgements and
estimates have been made in preparing the financial
statements for the year ended 31 March 2004 and
that applicable accounting standards have been followed.
The directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the
Company and the Group and to enable them to ensure
that the financial statements comply with the Companies
Act 1985. They are also responsible for safeguarding
the assets of the Company and the Group and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance
and integrity of the Company’s website. Information
published on the internet is accessible in many countries
with different legal requirements. Legislation in the
United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
By order of the Board
J W Stansfield
Secretary
4 June 2004
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004 Remuneration Report
for the Year Ended 31 March 2004
This part of the Remuneration Report is unaudited.
The Remuneration Committee is chaired by the
non-executive Chairman and comprises the 
non-executive directors.The current members of
the Committee are N A Johnson (Chairman) and 
N J Cosh.
Director’s service contracts and the Short Term
Incentive Plan (STIP) were established through
consultation with the Group’s lawyers, Berwin
Leighton Paisner.
REMUNERATION POLICY
The Remuneration Committee is responsible for
devising and implementing a remuneration policy for
executive directors which complies with the principles
set out in Section 1 of the Combined Code.The
Committee’s policy is to ensure that executive
remuneration packages are sufficient to attract, retain
and motivate executive directors of the required
quality whilst avoiding paying more than is necessary.
It also endeavours to establish performance related
elements of remuneration which align the interest of
the directors with those of the shareholders.
The Committee achieves its objectives through
remuneration packages of executive directors and
senior management that comprise the following:
• Salary and benefits
Salaries are reviewed regularly and these salaries 
are changed at the time of the Group’s annual 
salary review. Policies concerning other benefits 
together with the Group’s company car policy are 
reviewed periodically.
• Share options
The Group currently has a part approved and 
part unapproved executive share option scheme 
and details of options held by directors are set 
out on page 17.
The options are 100% exercisable subject to the
achievement of certain performance criteria. In
respect of awards made up to and including
January 1999 the target criteria were based on
earnings per share and thereafter the target criteria
were based on profit before interest and tax. No
award vests unless target criteria have been met.
•Pensions
The executive directors and senior managers are
members of defined contribution pension schemes
and annual contributions are calculated by reference
to basic salaries with neither annual bonuses nor
awards under the share incentive schemes taken
into account in calculating the amounts due.
•Performance-related bonus scheme
In addition to salaries executive directors and
senior management participate in a discretionary
performance-related bonus scheme. Performance
targets are designed to both stretch and encourage
individuals whilst aligning their interests with that
of the Group.The bonuses available are divided
between a capped range of targets established for
Group profit before tax and personal objectives.
Bonuses relating to personal objectives are only
realised if Group profit exceeds minimum targets.
• Short T erm Incentive Plan
The Company has introduced a Short Term
Incentive Plan (STIP) to reward the performance
of executive directors and senior management. A
participating employee is entitled to a conditional
award of shares (Basic Award) equal in value to
and in substitution for part of their cash bonus
which would otherwise have been payable.
Where a participant so elects the Company 
will also provide an equivalent matching award
(Matching Award) of the same number of shares.
Both the Basic and Matching Awards will usually
only be vested in the participant in equal amounts
on the second, third and fourth anniversaries of
the award date subject to the participant
continuing to be employed within the Group.
Shares to satisfy both the Basic and Matching
Awards are purchased in the market by an
employee benefit trust established and funded 
by the Company.
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
14 Set out below is a Performance Graph that
compares the total shareholder return performance
of Hornby with the FTSE Small Cap index, selected
because it includes UK quoted companies of a
similar size to Hornby.
The total shareholder return for the 5 year period
of 539% compares to the total return of the 
FTSE Small Cap of 25%.
The targeted composition of each director's remuneration for the forthcoming year is as follows:
Non-performance Performance
Director Position Related Related
N A Johnson Non-executive Chairman 100% Nil
F Martin Chief Executive 46% 54%
J W Stansfield Finance Director 63% 37%
N J Cosh Non-executive director 100% Nil
In accordance with the Articles of Association the Board determines the remuneration of the 
non-executive directors.
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
15
Total Shareholder Return 1/4/1999 to 31/3/2004
50
150
250
350
450
750
850
550
650
Jul 03 Oct 03 Jan 04 Apr 99 Jul 99 Oct 99 Jan 00 Apr 00 Jul 00 Oct 00 Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03
FTSE Small Cap
Source: Datastream Remuneration Report
continued
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
16
Executive Directors’ Contracts
The executive directors do not have fixed 
period contracts.
Frank Martin, the Chief Executive, receives a salary
of £150,000 per annum effective 1 April 2003.
Mr Martin's service contract dated 26 February
2001 includes a notice period of one year to be
given by the Company and of six months to be
given by Mr Martin. In lieu of giving notice the
Company may terminate the agreement on payment
of a lump sum (subject to tax and national
insurance) equal to the salary and other benefits to
which he is entitled under this agreement.
John Stansfield, the Finance Director and Secretary,
receives a salary of £100,000 per annum effective 
1 April 2004. Mr Stansfield's service contract dated
16 July 1999 includes a notice period of one year to
be given by the Company and of six months to be
given by Mr Stansfield. In lieu of giving notice the
Company may terminate the agreement on payment
of a lump sum (subject to tax and national
insurance) equal to the salary and other benefits to
which he is entitled under this agreement.
In respect of the year ended 31 March 2004 each of
the executive directors was entitled to an award of
bonus, details of which appear in the table of
directors’ emoluments.
Non-Executive Directors’ Contracts
The remuneration of the non-executive directors is
determined by the Board based on the level of fees
paid to non-executive directors of similar companies
and by considering independent external advice.
Neil Johnson, was appointed non-executive
Chairman on 22 December 2000 having initially
joined the Board on 1 July 1998. Non-executive
directors fees for his services to the Company of
£80,000 per annum effective 1 April 2003 are paid
to a third party consultancy company. Mr Johnson's
service contract dated 1 July 1998 is subject to
termination on three months notice to be given by
either the Company or Mr Johnson. In lieu of giving
notice the Company may terminate the agreement
on payment of a lump sum (subject to tax and
national insurance) equal to the salary to which he is
entitled under this agreement.
Nicholas Cosh, non-executive director, was
appointed to the Board on 21 June 1999, and
receives non-executive directors fees for his services
to the Company of £30,000 per annum effective 
1 September 2002. Mr Cosh's service contract
dated on appointment is subject to termination on
three months notice to be given by either the
Company or Mr Cosh. In lieu of giving notice the
Company may terminate the agreement on payment
of a lump sum (subject to tax and national
insurance) equal to the salary to which he is entitled
under this agreement.
None of the non-executive directors receives any
pension or discretionary bonus from the Company
nor do they participate in the executive share
option scheme. DIRECTORS’ INTERESTS
Interests in shares
The interests of the directors in the shares of the Company at 31 March were:
Number of ordinary shares of 5p
2004 2003
N A Johnson 60,000 60,000
N J Cosh 15,000 15,000
JWStansfield 8,000 2,156
All the interests detailed above are beneficial. Apart from the interests disclosed above no directors were
interested at any time in the year in the share capital of any other group company.
There has been no change in the interests set out above between 31 March 2004 and 28 May 2004.
This part of the Remuneration Report is auditable information.
Interests in share options
Details of options held by directors at 31 March are set out below:
Number of options Date from
Date 5p ordinary shares Exercise which Expiry
of grant 2004 2003 price exercisable date
F Martin 12/03/2001 29,662 29,662 147.5p 12/03/2004 12/03/2008
12/03/2001 20,338 20,338 147.5p 12/03/2004 12/03/2011
28/03/2002 200,000 200,000 384.0p 28/03/2005 28/03/2009
J W Stansfield 09/07/1997 - 15,844 223.0p 09/07/2000 09/07/2004
27/01/1999 30,000 30,000 163.5p 27/01/2002 27/01/2006
19/06/2002 50,000 50,000 417.0p 19/06/2005 19/06/2009
F Martin's options granted March 2001 and March 2002 satisfied the performance criteria for exercise upon
profit before interest and tax exceeding £2.2m and £4.0m respectively in the year ended 31 March 2003.
J W Stansfield's options granted July 1997 and January 1999 satisfied the performance criteria for exercise
upon earnings per share exceeding 23p in the year ended 31 March 2002. Options granted June 2002
satisfied the performance criteria for exercise upon profit before interest and tax exceeding £4.0m in the 
year ended 31 March 2003.
J W Stansfield exercised 15,844 share options during the year at 223p, the market price being 1100p, realising
a gain of £138,952.
The market price of the Company’s shares at 31 March 2004 was 1050p and the range during the year
ended 31 March 2004 was 511p to 1235p.
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
17 Remuneration Report
continued
Directors’ detailed emoluments
Details of individual directors’ emoluments charged in the year are as follows:
Salary Pension 2004 2003
& fees Bonus STIP Benefits contri- Total Total*
butions
££ £ £ £ £ £
Chairman:
N A Johnson 80,000 - - - - 80,000 50,000
Executive:
F Martin 151,000 62,500 100,000 10,517 30,000 354,017 323,479
J W Stansfield 86,000 28,417 42,500 8,858 17,200 182,975 182,584
Non-executive:
N J Cosh 30,000 - - - - 30,000 25,833
347,000 90,917 142,500 19,375 47,200 646,992 581,896
* The 2003 total column includes pension contributions.
Salary and fees shown above includes fees paid in respect of duties as directors. Neither annual bonuses nor
benefits in kind are pensionable.
STIP includes individual Basic and Matching Awards to the Short Term Incentive Plan for the year ended 
31 March 2004.
Benefits include motor cars and healthcare.
Two directors accrue benefit from payments to defined contribution pension schemes (2003 - two).
No director waived emoluments in respect of the year ended 31 March 2004 (2003 - nil).
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
18 Short T erm Incentive Plan
At 31 March 2004, outstanding awards to directors under the Short Term Incentive Plan were as follows:
Market Value of Value of
Award Vesting Price at Number of entitlement entitlement
Director Date Dates Award Date shares 31 March 2004 31 March 2003
No. £’000 £’000
F Martin June 2002 June 2004/5/6 412p 14,062 148 72
June 2003 June 2005/6/7 702p 9,444 99 66
June 2004 June 2006/7/8 * * 100 -
347 138
JWStansfield June 2002 June 2004/5/6 412p 8,704 91 44
June 2003 June 2005/6/7 702p 5,260 55 37
June 2004 June 2006/7/8 * * 43 -
189 81
* 2004 awards have been charged to the profit and loss account in the year and the STIP Trust will purchase
shares in the Company following the preliminary announcement at the prevailing market price.
Value of entitlement at 31 March 2004 is based on the closing market price of the Company's shares 
of 1050p (2003 - 511p).
N A Johnson
Chairman
4 June 2004
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
19 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
20
Independent Auditors’ Report to the Members of Hornby Plc
We have audited the financial statements which
comprise the consolidated profit and loss account,
the consolidated and Company balance sheets, the
consolidated cash flow statement, the statement of
Group total recognised gains and losses and the
related notes.We have also audited the disclosures
required by Part 3 of Schedule 7A to the
Companies Act 1985 contained in the directors’
remuneration report (“the auditable part”).
Respective responsibilities of directors 
and auditors
The directors’ responsibilities for preparing the
annual report and the financial statements in
accordance with applicable United Kingdom law 
and accounting standards are set out in the
statement of directors’ responsibilities.The directors
are also responsible for preparing the directors’
remuneration report.
Our responsibility is to audit the financial statements
and the auditable part of the directors’
remuneration report in accordance with relevant
legal and regulatory requirements and United
Kingdom Auditing Standards issued by the Auditing
Practices Board.This report, including the opinion,
has been prepared for and only for the Company’s
members as a body in accordance with Section 235
of the Companies Act 1985 and for no other
purpose.We do not, in giving this opinion, accept or
assume responsibility for any other purpose or to
any other person to whom this report is shown or
into whose hands it may come save where expressly
agreed by our prior consent in writing.
We report to you our opinion as to whether the
financial statements give a true and fair view and
whether the financial statements and the auditable
part of the directors’ remuneration report have
been properly prepared in accordance with the
Companies Act 1985.We also report to you if, in
our opinion, the directors’ report is not consistent
with the financial statements, if the Company has not
kept proper accounting records, if we have not
received all the information and explanations we
require for our audit, or if information specified by
law regarding directors’ remuneration and
transactions is not disclosed.
We read the other information contained in the
annual report and consider the implications for our
report if we become aware of any apparent
misstatements or material inconsistencies with the
financial statements.The other information
comprises only the directors’ report, the unaudited
part of the directors’ remuneration report, the
chairman’s statement, the chief executive’s report
and the corporate governance statement.
We review whether the corporate governance
statement reflects the Company’s compliance with
the seven provisions of the Combined Code
specified for our review by the Listing Rules of the
Financial Services Authority, and we report if it does
not.We are not required to consider whether the
board’s statements on internal control cover all risks
and controls, or to form an opinion on the
effectiveness of the Company’s or Group’s
corporate governance procedures or its risk and
control procedures. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
21
Basis of audit opinion
We conducted our audit in accordance with
auditing standards issued by the Auditing Practices
Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures
in the financial statements and the auditable part of
the directors’ remuneration report. It also includes
an assessment of the significant estimates and
judgements made by the directors in the
preparation of the financial statements, and of
whether the accounting policies are appropriate to
the Company’s circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to
obtain all the information and explanations which
we considered necessary in order to provide us
with sufficient evidence to give reasonable 
assurance that the financial statements and the
auditable part of the directors’ remuneration report
are free from material misstatement, whether
caused by fraud or other irregularity or error. In
forming our opinion we also evaluated the overall
adequacy of the presentation of information in the
financial statements.
Opinion
In our opinion:
•the financial statements give a true and fair view 
of the state of affairs of the Company and the
Group at 31 March 2004 and of the profit and
cash flows of the Group for the year then ended;
•the financial statements have been properly 
prepared in accordance with the Companies Act
1985; and
•those parts of the directors’ remuneration report 
required by Part 3 of Schedule 7A to the
Companies Act 1985 have been properly
prepared in accordance with the Companies 
Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Gatwick
4 June 2004 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
Consolidated Profit and Loss Account
for the Year Ended 31 March 2004
2004 2003
Notes £’000 £’000
TURNOVER 2 38,970 34,142
Cost of sales (20,083) (18,369)
GROSS PROFIT 18,887 15,773
Net operating expenses 3 (12,524) (10,417)
OPERATING PROFIT 6,363 5,356
Net interest receivable 4 106 55
PROFIT ON ORDINARY ACTIVITIES
BEFORE T AXA TION 5 6,469 5,411
Tax on profit on ordinary activities 7 (1,974) (1,519)
PROFIT ON ORDINARY ACTIVITIES
AFTER T AXA TION 4,495 3,892
Dividends 8 (2,199) (1,830) 
RETAINED PROFIT
FOR THE FINANCIAL YEAR 18 2,296 2,062
A TTRIBUTED TO:
The Company (30) (45)
Subsidiary undertakings 2,326 2,107
2,296 2,062
EARNINGS PER ORDINARY SHARE 9
Basic 61.02p 53.32p
Diluted 58.20p 52.00p
All of the activities of the Group are continuing.
22 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
2004 2003
£’000 £’000
Profit for the financial year 4,495 3,892
Exchange adjustments offset in reserves (33) (21)
Total recognised gains for the year 4,462 3,871
Statement of Group Total Recognised Gains and Losses
for the Year Ended 31 March 2004
2004 2003
£’000 £’000
REPORTED PROFIT ON ORDINARY 
ACTIVITIES BEFORE TAXATION 6,469 5,411
Difference between the historical cost
depreciation charge and the actual depreciation
charge calculated on the revalued amount 17 17
Historical cost profit on ordinary activities
before taxation 6,486 5,428
HISTORICAL COST PROFIT FOR THE YEAR
RETAINED AFTER TAXATION AND DIVIDENDS 2,313 2,079
Note of Group Historical Cost Profits
for the Year Ended 31 March 2004
23 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
24
Consolidated Balance Sheet
at 31 March 2004
2004 2003
Notes £’000 £’000
As restated
FIXED ASSETS
Intangible assets 10 4,017 31
Tangible assets 11 4,436 3,569
8,453 3,600
CURRENT ASSETS
Stocks 13 7,369 6,150
Debtors 14 6,217 5,222
Cash at bank and in hand 5,806 7,909
19,392 19,281
CREDITORS: Amounts falling due 
within one year 15 (9,886) (7,187)
NET CURRENT ASSETS 9,506 12,094
TOTAL ASSETS LESS CURRENT LIABILITIES 17,959 15,694
CREDITORS: Amounts falling due after 
more than one year 15 (103) (22)
PROVISIONS FOR LIABILITIES AND CHARGES 16 (527) (486)
NET ASSETS 17,329 15,186
CAPITAL AND RESERVES
Called up share capital 17 370 367
Capital redemption reserve 18 55 55
Share premium account 18 4,797 4,696
Revaluation reserve 18 757 774
Other reserves 18 1,688 1,688
Profit and loss account 18 9,662 7,606
EQUITY SHAREHOLDERS’ FUNDS 18 17,329 15,186
The financial statements which comprise the consolidated profit and loss account, the consolidated and
Company balance sheets, the consolidated cash flow statement, the statement of Group total recognised gains
and losses and the related notes were approved by the Board of directors on 4 June 2004 and were signed on 
its behalf by:
F Martin
Director HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
25
Company Balance Sheet
at 31 March 2004
2004 2003
Notes £’000 £’000
FIXED ASSETS
Tangible assets 11 1,600 1,643
Investments 12 21,952 14,054
23,552 15,697
CURRENT ASSETS
Debtors 14 1,705 1,407
Cash at bank and in hand 68 -
CREDITORS:Amounts falling due 
within one year 15 (2,209) (1,717)
NET CURRENT LIABILITIES (436) (310)
TOTAL ASSETS LESS CURRENT LIABILITIES 23,116 15,387
CREDITORS:Amounts falling due 
within one year 15 (5,371) -
PROVISIONS FOR LIABILITIES AND CHARGES            16 - (9)
NET ASSETS 17,745 15,378
CAPITAL AND RESERVES
Called up share capital 17 370 367
Capital redemption reserve 18 55 55
Share premium account 18 4,797 4,696
Other reserves 18 16,103 13,810
Profit and loss account 18 (3,580) (3,550)
EQUITY SHAREHOLDERS’ FUNDS 17,745 15,378
The financial statements which comprise the consolidated profit and loss account, the consolidated and
Company balance sheets, the consolidated cash flow statement, the statement of Group total recognised gains
and losses and the related notes were approved by the Board of directors on 4 June 2004 and were signed on 
its behalf by:
F Martin
Director HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
26
Consolidated Cash Flow Statement
for the Year Ended 31 March 2004
Notes £’000 £’000 £’000 £’000
Net cash inflow from 
operating activities I 8,210 5,814
Returns on investments and 
servicing of finance - net interest received 106 55
Taxation (1,864) (1,662)
Capital expenditure and 
financial investment
- purchase of fixed assets (1,370) (1,219)
- sale of fixed assets 27 60
- purchase of own shares (224) (192)
(1,567) (1,351)
Acquisitions
- purchase of subsidiary undertakings (5,303) -
- cash held upon acquisition 222 -
- payment of deferred consideration - (49)
(5,081) (49)
Equity dividends paid (1,968) (1,524)
Net cash (outflow)/inflow before financing (2,164) 1,283
Financing
Issue of ordinary shares 104 175
Capital element of finance lease payments (26) (17)
(Decrease)/increase in cash in the year (2,086) 1,441
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2004 2003
Notes £’000 £’000
(Decrease)/increase in cash in the year (2,086) 1,441
Cash outflow from decrease in lease financing 26 17
Change in net funds resulting from cash flows (2,060) 1,458
New finance leases (105) (28)
New finance leases upon acquisition (12) -
Exchange movements (17) (9)
Movement in net funds in the year (2,194) 1,421
Net funds at 1 April 2003 7,867 6,446
Net funds at 31 March 2004 II 5,673 7,867
2004 2003 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
27
Notes to the Cash Flow Statement
NOTE I – NET CASH FLOW FROM OPERATING ACTIVITIES
2004 2003
£’000 £’000
Operating profit 6,363 5,356
Depreciation charges 1,364 1,266
Amortisation of goodwill 3 3
Loss /(profit) on sale of tangible fixed assets 2 (18)
(Increase) in stocks (830) (615)
(Increase) in debtors (401) (374)
Increase in creditors 1,659 341
Increase/(decrease) in sales returns provision 50 (145)
Net cash inflow from operating activities 8,210 5,814
NOTE II – ANALYSIS OF NET FUNDS
Other
1 April Cash non-cash 31 March
2003 flow changes 2004
£’000 £’000 £’000 £’000
Cash at bank and in hand 7,909 (2,086) (17) 5,806
Finance leases (42) 26 (117) (133)
Net funds 7,867 (2,060) (134) 5,673
Analysed in Balance Sheet
Cash at bank and in hand 7,909 5,806
Finance leases
within one year (20) (30)
after one year (22) (103)
Net funds 7,867 5,673 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
28
Notes to the Financial Statements
1   ACCOUNTING POLICIES
The financial statements have been prepared in accordance with applicable Accounting Standards in the 
United Kingdom. A summary of the more important accounting policies, which have been applied consistently,
except where noted, is set out below.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention, as modified by the revaluation
of certain fixed assets.
BASIS OF CONSOLIDATION
The Group financial statements consolidate the financial statements of the Company and all its subsidiaries made
up to 31 March 2004. The results of subsidiaries acquired are included in the consolidated profit and loss account
from the date control passes. Intra group sales and profits are eliminated on consolidation. Any goodwill arising on
consolidation (representing the excess of the fair value of the consideration given over the fair value of the
separable net assets acquired) is capitalised and amortised over its expected useful economic life.
The Company has taken advantage of the exemption provided by Section 230 of the Companies Act 1985 not to
present its own profit and loss account.
RESEARCH AND DEVELOPMENT
Expenditure on research and development is written off as incurred.
TANGIBLE FIXED ASSETS
Land and buildings are shown at cost or valuation less accumulated depreciation. Assets revalued prior to the issue
of FRS15 are retained at their book amounts as though they were the historical cost amounts. Other fixed assets
are shown at cost less accumulated depreciation.
Depreciation is provided at rates calculated to write off the cost or valuation, less any estimated residual value, of
each asset on a straight-line basis (with the exception of tools and moulds) over its expected useful life, as follows:
Freehold buildings - 30 to 50 years
Plant and equipment - 5 to 10 years
Motor vehicles - 4 years
Residual value is calculated on prices prevailing at the date of acquisition or revaluation where this has taken place.
Tools and moulds are depreciated at varying rates in line with the related estimated product sales on an 
item-by-item basis up to a maximum of 4 years.
FIXED ASSET INVESTMENTS
In the Company’s financial statements investments in subsidiary undertakings are stated using the equity method of
valuation. Accordingly, subsequent increases and reductions in the value of these investments are set against other
reserves in the financial statements of the Company.The directors consider that this policy more fairly represents
the Company’s investments than carrying them at cost.
SHORT TERM INCENTIVE PLAN - PRIOR YEAR ADJUSTMENT
The Short Term Incentive Plan set up in the prior year was accounted for in accordance with UTIF Abstract 13
“Accounting for ESOP Trusts” and recognised as a fixed asset investment.This abstract has now been withdrawn
and replaced by UTIF Abstract 38 “Accounting for ESOP Trusts” which requires the amount in this trust to be
shown as a deduction from the profit and loss reserve disclosed in the notes to the accounts, with a prior year  HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
29
adjustment in the year adopted. UTIF 38 has been adopted this year and as a result the comparatives have been
restated accordingly. £192,000 previously shown as an investment has been restated and shown as a deduction
from the profit and loss account reserve.A further £224,000 has been used to purchase shares as part of this plan
in the current year and shown as a deduction from the profit and loss account reserve. See note 18.
STOCKS
Stocks are stated at the lower of cost and net realisable value.
Cost incurred in bringing each product to its present location and condition is based on:
Raw materials and consumables - actual purchase cost on a first in first out basis including freight and duty
where applicable.
Work in progress and finished goods - cost of actual direct materials and labour plus a proportion of manufacturing
overheads based on the normal level of activity.
Net realisable value is based on anticipated selling price less further costs expected to be incurred to completion
and disposal. Provisions are made against those stocks considered to be obsolete or excess to requirements on 
an item-by-item basis.
There are no significant differences between balance sheet and replacement cost values. For these purposes
replacement cost is based upon latest invoice prices before the balance sheet date.
REVALUATION RESERVE
The surplus arising on the revaluation of freehold land and buildings is credited to the revaluation reserve, which is
not distributable. Where depreciation charges are increased following a revaluation, an amount equal to such
increase is transferred annually from this reserve to the profit and loss account.
TAXATION
Corporation tax, where payable, is provided on taxable profits at the current rate.
The taxation liabilities of certain group undertakings are reduced wholly or in part by the surrender of losses by
fellow group undertakings.The tax benefits arising from group relief are recognised in the financial statements of
the surrendering and recipient undertakings.
Full provision is made for the tax liability on all timing differences in accordance with FRS19. Deferred tax balances
have not been subject to discounting.
PROVISIONS
The Group provides for liabilities when it has a legal or constructive obligation due to a past event.
PENSION COSTS
During the year the Group operated a defined contribution money purchase pension scheme under which it pays
contributions based upon a percentage of the members’ basic salary. The scheme is administered by trustees 
either appointed by the Company or elected by the members (to constitute one third minimum).
The amount charged to the profit and loss account in respect of the scheme is the contribution payable in the year.
Further information on pensions costs is provided in note 23. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
30
Notes to the Financial Statements
continued
FINANCIAL INSTRUMENTS
Foreign currency forward contracts are used to hedge significant commitments or anticipated transactions.
Gains and losses arising from these contracts are recognised when the hedged transaction occurs.
FOREIGN CURRENCY
Transactions and investments denominated in foreign currencies are recorded in sterling at the exchange rates
ruling at the date of the transaction. The assets, liabilities and results of foreign subsidiaries are translated into sterling
at the rates of exchange ruling at the balance sheet date. Monetary assets and liabilities denominated in foreign
currencies at the year end are reported at the rate of exchange prevailing at that date. Any gain or loss arising from
a change in exchange rates subsequent to the date of the transaction is reported in the profit and loss account as
an exchange gain or loss, with the exception of gains and losses on the retranslation of opening net foreign currency
investments in subsidiaries which are taken to reserves and recognised in the statement of total recognised gains
and losses.
TURNOVER
Group turnover is recorded at the date of despatch and comprises the invoiced value of sales (excluding VAT, sales
between group companies and trade discounts) of goods and services in the normal course of business.
LEASES
The Group enters into operating and finance leases.
Assets held under finance leases are initially reported at the fair value of the asset with an equivalent liability
categorised as appropriate under creditors due within or after one year. The assets are depreciated over the 
shorter of the lease term and their useful economic lives. Finance charges are allocated to accounting periods over
the period of the lease to produce a constant rate of return on the outstanding balance. Rentals are apportioned
between finance charges and the reduction of the liability, and allocated to net interest.
Rentals under operating leases are charged on a straight-line basis over the lease term.
2 SEGMENTAL INFORMATION
The directors consider there to be one class of business, being the development, manufacture and distribution of
model products.
BY ORIGIN Turnover Profit before tax Net assets
2004 2003 2004 2003 2004 2003
£’000 £’000 £’000 £’000 £’000 £’000
As restated
United Kingdom 36,028 30,680 6,399 5,347 15,762 14,951
United States of America 2,942 3,462 70 64 254 235
Spain - - - - 1,313 -
Group 38,970 34,142 6,469 5,411 17,329 15,186
TURNOVER BY DESTINATION 2004 2003
£’000 £’000
United Kingdom 30,961 26,473
Rest of World 8,009 7,669
Group 38,970 34,142 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
31
3NET OPERATING EXPENSES
2004 2003
£’000 £’000
Distribution costs 1,097 1,027
Selling and marketing costs 7,203 5,979
Research and development costs 1,107 711
Administrative costs 3,117 2,700
12,524 10,417
4 NET INTEREST RECEIVABLE
2004 2003
£’000 £’000
Interest receivable and similar income:
-  bank interest receivable 187 138
Interest payable and similar charges:
-  on overdrafts (74) (79)
-  on finance leases (7) (4) 
106 55
5   PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
2004 2003
£’000 £’000
Profit on ordinary activities before taxation is stated after charging/(crediting):
Depreciation of tangible fixed assets
- owned 1,355 1,257
- held under finance leases 9 9
Amortisation of goodwill 3 3
Operating lease rentals 59 66
Hire of plant and machinery 32 40
Loss/(profit) on sale of fixed assets 2 (18)
Auditors’ remuneration
- audit fees         (Company £14,000 ; 2003 - £14,000) 65 57
- non audit fees (Company £151,000 ; 2003 - £2,000) 160 16
Staff costs (see note 6 below) 4,363 4,019
Non audit fees relate to tax services and acquisition due diligence and legal services. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
32
Notes to the Financial Statements
continued
6   DIRECTORS AND EMPLOYEES
2004 2003
£’000 £’000
STAFF COSTS (including executive directors)
Wages and salaries 3,719 3,508
Social security costs 406 315
Other pension costs 228 196
Redundancy and compensation for loss of office 10 -
4,363 4,019
AVERAGE MONTHLY NUMBER OF EMPLOYEES 2004 2003
Number Number
The average monthly number of employees, including
executive directors, in the Group during the year was:
Operations 80 78
Sales, marketing and distribution 55 52
Administration 19 16
154 146
DIRECTORS’ EMOLUMENTS
A detailed numerical analysis of directors’ remuneration and share options, showing the highest paid director and the
number of directors accruing benefits under money purchase pension schemes, is included in the Remuneration
Report on pages 14 to 19 and forms part of these financial statements.
JW Stansfield exercised 15,844 share options during the year at 223p, the market price being 1100p, realising a gain
of £138,952. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
33
7   TAXATION
(a) Analysis of tax charge in the year 2004 2003
£’000 £’000
The taxation charge is based on the profit for the year and comprises:
Current tax
UK Corporation taxation at 30% (2003 - 30%) 2,054 1,685
Adjustments in respect of prior years 150 (189)
Foreign T ax
Overseas taxation 19 16
Adjustments in respect of prior years - 4
Total current tax (Note 7b) 2,223 1,516
Deferred tax
Current year (92) 3
Adjustments in respect of prior years (157) -
Total deferred tax (Note 16) (249) 3
Tax on profit on ordinary activities 1,974 1,519
(b) Factors affecting tax charge for the year
The tax charge for the year is higher than the standard rate of Corporation Tax in the United Kingdom (30%).
The differences are explained below:
2004 2003
£’000 £’000
Profit on ordinary activities before tax 6,469 5,411
Tax on profit on ordinary activities at the standard
rate of Corporation Tax of 30% (2003 - 30%) 1,941 1,623
Effects of:
Expenses not deductible for tax purposes 56 43
Differences between capital allowances and depreciation 14 39
Other timing differences 62 -
Adjustments to tax charge in respect of prior years 150 (189)
Current tax charge for the year (Note 7a) 2,223 1,516 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
34
Notes to the Financial Statements
continued
8   DIVIDENDS
2004 2003
£’000 £’000
Ordinary:
- interim paid: 8p per share (2003 - 6p per share) 585 438
- final proposed: 22p per share (2003 - 19p per share) 1,626 1,395
- adjustments (see below) (12) (3)
2,199 1,830
The adjustments relate to dividends that were waived relating to the prior year of £15,000 (2003 - £7,000) and
dividends paid on options exercised of £3,000 (2003 - £4,000).
9   EARNINGS PER SHARE
The calculation of basic earnings per ordinary share is based on the profit attributable to ordinary shareholders for
the financial year of £4,495,000 (2003 - £3,892,000) and the weighted average number of ordinary shares in issue
during the year of 7,366,417 (2003 - 7,299,894).
2004 2003
Earnings Earnings
Earnings per share Earnings per share
£’000 pence £’000 pence
Earnings per share
Basic 4,495 61.02 3,892 53.32
Diluted 58.20 52.00
The following table shows a reconciliation of the weighted average number of shares used for calculating the basic
and diluted earnings per share.
2004 2003
Number Number
of shares of shares
Used for calculating basic earnings per share 7,366,417 7,299,894
Dilution due to share option schemes 356,362 185,147
Used for calculating diluted earnings per share 7,722,779 7,485,041 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
35
10   INTANGIBLE FIXED ASSETS
Group
2004
£’000
GOODWILL
COST
At 1 April 2003 41
Exchange adjustment (1)
Additions 3,990
At 31 March 2004 4,030
AGGREGATE AMORTISATION
At 1 April 2003 10
Charge for the year 3
At 31 March 2004 13
NET BOOK AMOUNT
At 31 March 2004 4,017
At 31 March 2003 31
The goodwill arising on the acquisition of the assets of A Day at the Races Inc. is being amortised on a 
straight-line basis over fifteen years, being the directors’ estimate of its expected useful life.
On 31 March 2004 the acquisition of Electrotren S.A., Spain created £3,990,000 of goodwill (see note 20). HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
36
Notes to the Financial Statements
continued
11   TANGIBLE FIXED ASSETS - GROUP
Freehold Plant
land and and Motor Tools &
buildings equipment vehicles moulds T otal
£’000 £’000 £’000 £’000 £’000
COST OR VALUATION
At 1 April 2003 2,377 4,420 234 18,419 25,450
Additions - 101 105 1,306 1,512
Acquisitions 427 345 7 395 1,174
Exchange adjustment - (6) (2) - (8)
Disposals - (73) (58) - (131)
At 31 March 2004 2,804 4,787 286 20,120 27,997
DEPRECIATION
At 1 April 2003 734 4,195 156 16,796 21,881
Charge for the year 43 108 27 1,186 1,364
Acquisitions 34 186 6 197 423
Exchange adjustment - (3) (2) - (5)
Disposals - (68) (34) - (102)
At 31 March 2004 811 4,418 153 18,179 23,561
NET BOOK AMOUNT
At 31 March 2004 1,993 369 133 1,941 4,436
At 31 March 2003 1,643 225 78 1,623 3,569
Opening depreciation includes a £4,000 reclassification from motor vehicles to plant and equipment.
Freehold land amounting to £786,000 (2003 - £620,000) has not been depreciated.
The net book amount of tangible fixed assets includes £178,000 (2003 - £39,000) in respect of assets acquired under
finance leases, which relate to plant and motor vehicles.
The amount of freehold land and buildings at 31 March is represented by:
2004 2003
£’000 £’000
Valuation in 1986 2,360 2,360
Cost 17 17
Acquisitions 427 -
2,804 2,377
Other tangible fixed assets are stated at cost. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
37
TANGIBLE FIXED ASSETS - COMPANY
The fixed assets for the Company comprise solely of freehold land and buildings included in the table above and
are as follows:
2004 2003
£’000 £’000
Opening net book amount 1,643 1,687
Depreciation charge for the year (43) (44) 
Closing net book amount 1,600 1,643
The original cost and aggregate depreciation, based on cost of land and buildings included at valuation, are as follows:
2004 2003
£’000 £’000
Original cost 412 412
Depreciation based on cost (183) (175) 
229 237
12   INVESTMENTS
GROUP - SHORT TERM INCENTIVE PLAN
(See note 18) Short T erm
Incentive Plan
£’000
At 1 April 2003 192
Shares acquired in Company 224
At 31 March 2004 416
31,901 existing ordinary shares to the value of £224,000 were acquired in June 2003 by the Employee Benefit
Trust in accordance with the incentive plan. At 31 March 2004, a total of 78,485 existing ordinary shares have
been acquired by the Trust and allotted to the directors and senior management under the plan with a nominal
value of £3,924 and a market value of £824,093. The costs of the plan are borne by Hornby Plc. The Trust has
waived its right to dividends. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
38
Notes to the Financial Statements
continued
COMPANY
The movements in the net book value of interests in subsidiary undertakings are as follows:
Interests in Loans to
subsidiary subsidiary
undertakings undertakings
at valuation at cost T otal
£’000 £’000 £’000
At 1 April 2003 13,398 656 14,054
Acquisitions (see note 20) 5,303 - 5,303
Retained profit for the year 2,293 - 2,293
Other movements - 302 302
At 31 March 2004 20,994 958 21,952
PRINCIPAL GROUP SUBSIDIARY UNDERTAKINGS
Details of the principal subsidiary undertakings of the Company, which are included in the consolidated financial
statements, are set out below. Hornby Hobbies Limited and Electrotren S.A. are engaged in the development,
manufacture and distribution of models. Scalextric USA, Inc. is a distributor of models.
Country of Description of Proportion of nominal 
incorporation shares held value of issued shares held:
Group Company
%%
Hornby Hobbies Limited Great Britain Ordinary £1 shares 100 100
Scalextric USA, Inc. USA Ordinary shares 100 100
Electrotren S.A. Spain Ordinary shares 100 100
13   STOCKS
Group
2004 2003
£’000 £’000
Raw materials and consumables 609 567
Work in progress 1,386 1,135
Finished goods and goods for sale 5,374 4,448
7,369 6,150 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
39
14   DEBTORS
Group Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Trade debtors 5,326 4,482 - -
Dividends receivable from subsidiary undertakings - - 1,626 1,395
Prepayments 573 578 9 12
VAT recoverable - 67 - -
Other debtors 78 95 - -
5,977 5,222 1,635 1,407
AMOUNTS FALLING DUE AFTER
MORE THAN ONE YEAR:
Deferred tax asset (see note 16) 240 - 70 -
6,217 5,222 1,705 1,407
15   CREDITORS
Group Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Finance lease obligations 30 20 - -
Trade creditors 2,503 1,675 - -
UK Corporation tax payable 1,291 935 119 36
Overseas Corporation tax payable 152 15 - -
VAT payable 123 - - -
PAYE and Social Security 98 69 - -
Dividends proposed 1,626 1,395 1,626 1,395
Accruals 2,047 1,889 464 286
Other creditors 2,016 1,189 - -
9,886 7,187 2,209 1,717
AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR:
Finance lease obligations 103 22 - -
Loan from subsidiary undertakings - - 5,371 -
9,989 7,209 7,580 1,717
Finance leases are repayable as follows (excluding finance charges):
Within 1 year 30 20 - -
Between 1 - 2 years 23 5 - -
Between 2 - 5 years 80 17 - -
133 42 - -
Aggregate finance lease obligations exclude future finance charges amounting to £18,000 (2003 - £4,000). HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
40
Notes to the Financial Statements
continued
16   PROVISIONS FOR LIABILITIES AND CHARGES
Group 2004 2003
£’000 £’000
Sales returns
At 1 April 477 622
Charged to profit and loss account 939 749
Utilised in year (889) (894)
At 31 March 527 477
Deferred tax
At 1 April 9 6
Transfer (to)/from profit and loss account (249) 3
At 31 March (240) 9
Total provisions at 31 March 527 486
The deferred tax asset of £240,000 at 31 March 2004 has been disclosed within debtors (see note 14).
Group
2004 2003
Not Not
Provided provided Provided provided
£’000 £’000 £’000 £’000
Provision for deferred tax comprises:
Accelerated capital allowances 11 (9) 93
Other timing differences (251) (25) - (20)
(240) (34) 9 (17)
No deferred tax has been provided in relation to the revaluation of certain land and buildings as no liability would
arise on a sale at the revalued amount. No provision is made for tax liabilities which would arise on the distribution
of profits retained by subsidiaries because there is currently no intention that such profits will be remitted.
Company
2004 2003
Not Not
Provided provided Provided provided
£’000 £’000 £’000 £’000
Provision for deferred tax comprises:
Accelerated capital allowances 11 - 9-
Other timing differences (81) - --
(70) - 9-
The deferred tax asset of £70,000 at 31 March 2004 has been disclosed within debtors (see note 14). HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
41
17   CALLED UP SHARE CAPITAL
2004 2003
£’000 £’000
Authorised:
10,000,000 (2003 - 10,000,000) ordinary shares of 5p each 500 500
Allotted, called up and fully paid:
7,391,820 (2003 - 7,343,276) ordinary shares of 5p each 370 367
Shares issued in the year are set out below:
Date issued Number of shares Exercise price
12 June 2003 15,000 223.0p
20 November 2003 6,152 163.5p
27 November 2003 22,392 223.0p
8 January 2004 5,000 223.0p
48,544
At 31 March 2004 options granted under the Company’s share option schemes were outstanding as follows:
Date granted Number of options Exercise price Period of option
2004 2003
9 July 1997 1,548 31,284 223.0p July 2000 - July 2004
9 July 1997 13,452 26,108 223.0p July 2000 - July 2007
27 January 1999 80,500 86,652 163.5p January 2002 - January 2006
12 March 2001 29,662 29,662 147.5p March 2004 - March 2008
12 March 2001 20,338 20,338 147.5p March 2004 - March 2011
28 March 2002 200,000 200,000 384.0p March 2005 - March 2009
19 June 2002 185,000 185,000 417.0p June 2005 - June 2009
530,500 579,044 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
42
Notes to the Financial Statements
continued
18   RESERVES
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
GROUP 2004 2003
£’000 £’000
As restated
Profit for the financial year 4,495 3,892
Dividends (2,199) (1,830)
Exchange adjustments offset in reserves (33) (21)
Shares issued 104 175
Investments - Short Term Incentive Plan (see note 12) (224) (192)
Net additions to shareholders’ funds 2,143 2,024
Opening shareholders’ funds - as restated 15,186 13,162
Closing shareholders’ funds 17,329 15,186
MOVEMENTS IN RESERVES
Share Capital Profit
premium redemption Revaluation Other and loss
account reserve reserve reserves account
GROUP £’000 £’000 £’000 £’000 £’000
At 1 April 2003 - as previously reported 4,696 55 774 1,688 7,798
Prior year adjustment ---- (192)
At 1 April 2003, as restated 4,696 55 774 1,688 7,606
Retained profit for the year ---- 2,296
Amortisation of revaluation surplus - - (17) - 17
Exchange adjustment offset in reserves ---- (33)
Shares issued 101 ----
Shares purchased ---- (224)
At 31 March 2004 4,797 55 757 1,688 9,662
The prior year adjustment is explained in note 1.
Share Capital Profit
premium redemption Other and loss
account reserve reserves account
COMPANY £’000 £’000 £’000 £’000
At 1 April 2003 4,696 55 13,810 (3,550)
Profit/(loss) for the year - - - (30)
Increase in underlying net assets of subsidiary undertakings - - 2,293 -
Shares issued 101 - - -
At 31 March 2004 4,797 55 16,103 (3,580) HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
43
The net deficit carried forward on the Company's profit and loss account arises as a result of a provision for the
diminution in the value of the investment in Hornby Industries Limited. Relying on Section 275(1) of the Companies
Act 1985, the provision for diminution in value of the investment in Hornby Industries Limited is not treated for
distribution purposes as a realised loss. In the directors' opinion therefore, at the end of the year £199,000 (2003 -
£229,000) may be considered to be distributable.
19  FINANCIAL INSTRUMENTS
The Group’s policies and strategies in relation to risk and financial instruments are explained in the Directors’ Report.
Accounting policies used to account for financial instruments are detailed in note 1. Financial assets and liabilities
included in this note, other than currency disclosures, exclude provisions for liabilities and charges, short term
debtors and creditors other than finance lease obligations.
(a) Financial assets
The interest rate and currency profiles of the Group’s financial assets comprising cash at bank and in hand at 
31 March 2004 were:
Currency Floating Fixed 2004 2003
rate rate T otal Total
£’000 £’000 £’000 £’000
Sterling 4,619 - 4,619 7,004
US dollar 802 - 802 623
HK dollar 22 - 22 205
Euro 352 - 352 63
Other 11 - 11 14
5,806 - 5,806 7,909
Sterling and cash deposits are placed in a liquidity fund with daily access. Currency cash deposits are placed on
the money market at floating bank deposit interest rates for periods of up to three months. Normally Hong
Kong and US dollars are placed on short term fixed rate deposits usually less than one month. Floating rate
financial assets attract interest at rates based on relevant national LIBOR equivalents.
(b) Financial liabilities
The Group had at 31 March 2004 fixed rate sterling and euro finance leases, the maturity profile of which is set
out in note 15 to the financial statements.
(c) Fair values of financial assets and financial liabilities
Set out below is a comparison by category of book values and fair values of the Group’s financial assets and
liabilities at 31 March 2004.
2004 2003
Book values Fair values Book values Fair values
£’000 £’000 £’000 £’000
Cash and deposits 5,806 5,806 7,909 7,909
Forward foreign currency contracts -(437) - (14)
Finance leases (133) (133) (42) (42)
The fair values of forward foreign currency contracts have been determined with reference to prices available
from the market.
The directors believe that the fair value of finance leases are not significantly different to their book values. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
44
Notes to the Financial Statements
continued
(d) Currency exposures
After taking account of the effects of forward foreign exchange contracts the Group’s currency exposures were
as follows:
Monetary liabilities
Sterling
2004 2003
£’000 £’000
Functional currency of group operation
US Dollar (713) (957)
(e) Borrowing facilities
The Group has undrawn committed borrowing facilities. The facilities available at 31 March 2004, in respect of
which all conditions precedent had been met, were as follows:
2004 2003
£’000 £’000
Expiring in one year or less 4,000 4,000
When utilised, the Group’s overdraft facilities attract interest at 1.125% above Barclays Bank base rate.
(f) Gains and losses on hedges
The Group enters into forward foreign currency contracts to eliminate the currency exposures that arise on
purchases denominated in foreign currencies immediately these purchases have been transacted. Changes in the
fair values of instruments used as hedges are not recognised in the financial statements  until the hedge position
matures. An analysis of these unrecognised gains and losses is as follows:
Gains Losses T otal
£’000 £’000 £’000
Unrecognised gains and losses on
hedges at 1 April 2003 9 (23) (14)
Gains and losses arising:
in previous year recognised in 2003/2004 (9) 23 14
before 1 April 2003 not recognised in 2003/2004 - - -
in 2003/2004 not recognised in 2003/2004 - (437) (437)
Unrecognised gains and losses
on hedges at 31 March 2004 -(437) (437)
All the unrecognised gains and losses at 31 March 2004 are expected to be recognised in the year to 31 March 2005. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
45
20   ACQUISITIONS
With effect from 4 March 2004 the Company formed a Spanish branch, Hornby Plc Sucursal en España. The
Company then injected €2,000,000 (£1,340,000) of equity capital into the branch. On 31 March 2004 Hornby Plc
Sucursal en España then entered into an agreement to acquire the equity of Electrotren S.A. the Company’s former
Spanish distributor, for cash amounting to €7,900,000. Stamp duty of €20,000 was incurred by the Company.
Acquisition expenses of £90,000 for due diligence, tax and legal advice have been expensed to profit.
In its last financial year to 31 December 2003, Electrotren S.A. made a profit before tax of €800,000. For the period
since that date to the date of acquisition, Electrotren management accounts show:
€’000
Turnover 463
Operating profit 32
Profit before taxation 30
Taxation (7)
Profit attributable to shareholders 23
The Company had no recognised gains and losses other than the profit above and therefore no separate statement
of total recognised gains and losses has been presented.
With the completion of the Electrotren acquisition being so close to the year-end a full review of the fair values of
the assets and liabilities acquired was not possible and accordingly the assets and liabilities of Electrotren have been
consolidated at provisional book values and the prevailing exchange rate and these values will be reviewed during
the year ending 31 March 2005.
€’000 £’000
Tangible fixed assets 1,123 751
Stocks 581 389
Debtors 511 341
Cash 332 222
Creditors (583) (390)
Net assets acquired 1,964 1,313
Goodwill 5,956 3,990
Consideration 7,920 5,303
Consideration satisfied by:
Cash 7,900 5,290
Acquisition costs 20 13
7,920 5,303 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
46
Notes to the Financial Statements
continued
21   GUARANTEES AND OTHER FINANCIAL COMMITMENTS
CAPITAL COMMITMENTS
Group
2004 2003
£’000 £’000
At 31 March commitments were:
Contracted for but not provided for 785 413
CONTINGENT LIABILITIES
The Company and its subsidiary undertakings are, from time to time, parties to legal proceedings and claims, which
arise in the ordinary course of business.The directors do not anticipate that the outcome of these proceedings and
claims, either individually or in aggregate, will have a material adverse effect upon the Group's financial position.
22   OPERATING LEASE COMMITMENTS
At 31 March 2004 the Group had lease agreements in respect of plant and vehicles, for which the payments extend
over a number of years.
2004 2003
£’000 £’000
Annual commitments under non-cancellable
operating leases expiring:
Within one year 20 -
Within 2 to 5 years 60 54
80 54
23   PENSION ARRANGEMENTS
On 1 January 1992 the Group's defined benefit pension scheme was converted to a Group defined contribution
contracted-out money purchase scheme.With effect from 5 April 2003 the scheme ceased to be contracted-out.
The scheme is open to all permanent salaried employees aged twenty years or over employed by UK companies.
The assets of the previous final salary scheme were converted into cash and the total proceeds were allocated to
individual members by the scheme's actuaries on the basis of the value of the members' accrued benefits under the
previous scheme. The amounts allocated to the individual members were invested in either a managed fund
investment, an insured with profits insurance contract or in a building society deposit account, according to the
wishes of individual members.The level of contributions to the money purchase scheme for current members is
fixed by the Company.
The pension cost for the year was £228,000 (2003 - £196,000) representing the actual contributions payable in the
year and certain scheme administration costs.
24   RELATED PARTY DISCLOSURES
There were no contracts with the Company or any of its subsidiaries subsisting during or at the end of the 
financial year in which a director of the Company was materially interested.The Company has taken advantage of 
the exemption available to parent companies under Financial Reporting Standard number 8 (“Related Party
Disclosures”) not to disclose transactions and balances with Group entities which have been eliminated on
consolidation.
In the year ended 31 March 2004, Hornby Hobbies Limited made sales of £358,297 to Electrotren S.A. (2003 -
£210,357). HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
47
Notice of Annual General Meeting
Notice is hereby given that the twenty-third Annual General Meeting of Hornby Plc will be held at Berwin Leighton
Paisner,Adelaide House, London Bridge, London EC4R 9HA on Thursday 22 July 2004 at 11.00am for the following
purposes:
1. To receive the report of the directors and the audited financial statements for the year ended 31 March 2004.
2. To approve the directors’ remuneration report, as set out on pages 14 to 19 of the annual accounts.
3. To declare a final dividend of 22p per ordinary share payable to the shareholders on the register at close of 
business on 30 July 2004.
4. To re-elect Mr N A Johnson a director of the Company.
5. To re-elect Mr N J Cosh a director of the Company.
6. T o re-appoint PricewaterhouseCoopers LLP , the retiring auditors, to hold office until the conclusion of the next 
general meeting at which accounts are laid before the Company and that their remuneration be fixed by 
the directors.
SPECIAL BUSINESS
7. To consider and if though fit to pass the following resolution which will be proposed as an ordinary resolution.
THAT with effect from close of business on 30 July 2004 each of the issued ordinary shares of 5p each in the
capital of the Company and each of the unissued ordinary shares of 5p each in the capital of the Company be
sub-divided into 5 ordinary shares of 1p each in the capital of the Company having the rights and being subject
to the restrictions set out in the Articles of Association of the Company for the time being.
8. To consider and if thought fit to pass the following resolution which will be proposed as a special resolution:
THAT (a) the directors be generally and unconditionally authorised for the purposes of Section 80 of the
Companies Act 1985 (the "Act") to exercise all the powers of the Company to allot relevant
securities (as defined in that Section) up to a maximum nominal amount of £150,000 provided that
such authority (unless previously revoked, varied or renewed) shall expire at the conclusion of the
Annual General Meeting of the Company next following the date of the passing of this resolution
(save that the Company may before such expiry make an offer or agreement which would or might
require relevant securities to be allotted after such expiry and the directors may allot relevant
securities in pursuance of such offer or agreement as if the authority conferred hereby had not
expired) and shall be in substitution for any and all authorities previously conferred upon the
directors for the purposes of Section 80 of the Act;
(b) the directors be empowered pursuant to Section 95 of the Act to allot equity securities within the
meaning of (Section 94(2) to Section 94(3A) of the Act) for cash pursuant to the authority referred
to in paragraph (a) above as if Section 89(1) of the Act did not apply to any such allotment, such
power to expire at the conclusion of the Annual General Meeting of the Company next following
the date of the passing of this resolution (save that the Company may before such expiry make an
offer or agreement which would or might require equity securities to be allotted after such expiry
and the directors may allot equity securities in pursuance of such offer or agreement as if the power
conferred hereby had not expired) and to be limited to: HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
48
Notice of Annual General Meeting
continued
(i) the allotment of equity securities in connection with an offer of securities open for acceptance
for a period fixed by the directors or (where applicable) in accordance with the rights for the
time being attached to such shares (but subject to such exclusions or other arrangements as
the directors may deem necessary or expedient to deal with legal or practical problems under
the laws of any territory or the requirements of any regulatory body or any stock exchange in
any territory or in connection with fractional entitlements or otherwise);
(ii) the allotment (otherwise than pursuant to sub-paragraph (i) above) of equity securities for cash
up to an aggregate nominal amount of £18,000.
This power shall apply in relation to a sale of shares which is an allotment of equity securities
by virtue of Section 94(3A) of the Act in the paragraph (b) as if the words "pursuant to the
authority referred to in paragraph (a) above" were omitted.
9. To consider and if thought fit to pass the following resolution which will be proposed as a special resolution:
THAT the Company be generally and unconditionally authorised pursuant to Section 166 of the Companies
Act 1985 (the "Act") to make one or more market purchases (within the meaning of Section 163(3) of the Act)
of ordinary shares of 5p each in the capital of the Company ("ordinary shares") provided that:
(a) the maximum aggregate number of ordinary shares authorised to be purchased is less than 15 per cent of
the issued share capital of the Company at the date of this resolution;
(b) the minimum price which may be paid for an ordinary share is the par value of such share, from time to
time, exclusive of expenses;
(c) the maximum price which may be paid for an ordinary share shall be an amount equal to 5 per cent above
the average of the middle-market quotations for the ordinary shares as derived from the London Stock
Exchange Daily Official List for the five dealing days immediately preceding the day on which the purchase
is made, exclusive of expenses;
(d) subject as provided in paragraph (e) below, unless previously revoked, varied or renewed, the authority
hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company next
following the date of the passing of this resolution or within eighteen months from the date of the passing
of this resolution, whichever shall be the earlier; and
(e) the Company may contract to purchase ordinary shares under the authority hereby conferred before the
expiry of such authority, which will or may be completed wholly or partly after the expiry of such authority,
and may purchase ordinary shares pursuant to any such contract as if such authority had not expired.
By order of the Board
J W Stansfield
Secretary
4 June 2004 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
49
NOTES
1. A member is entitled to appoint a Proxy, who need not be a Member of the Company, to attend and vote
instead of him. A form of proxy is enclosed.To be valid a form of proxy and the authority (if any) under which
it is signed must be lodged with the Company’s registrars not later than 48 hours before the time of the meeting
or adjourned meeting. Completion of a form of proxy will not preclude a member from attending and voting
at the meeting in person.
2. Under Regulation 41 of the Uncertified Securities Regulations 2001, only those shareholders whose names are
on the register of members of the Company no later than 11am on 20 July 2004 or, if the meeting is adjourned,
shareholders entered on the Company’s register of members not later than 48 hours before the time fixed for
the adjourned meeting are entitled to attend and vote at the meeting in respect of the shares registered in their
names at that time. Subsequent changes to the register shall be disregarded in determining the rights of any
person to attend or vote at the meeting.
3. There will be available for inspection at the Registered Office of the Company during usual business hours
(Saturdays excepted), from the date of this Notice, until the date of the Annual General Meeting, a copy of each
contract of service open to inspection under Section 318 of the Companies Act 1985, whereunder the
directors are employed.These documents will also be available for inspection at the Annual General Meeting
and for fifteen minutes prior thereto. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2004
50
Five Y ear Summary
2004 2003 2002 2001 2000
£’000 £’000 £’000 £’000 £’000
Turnover 38,970 34,142 28,489 24,604 21,477
Profit after interest before
exceptional items 6,469 5,411 3,722 2,292 1,402
Exceptional items - -- (797) (195)
Profit on ordinary
activities before taxation 6,469 5,411 3,722 1,495 1,207
Taxation (1,974) (1,519) (1,329) (520) (398)
Profit on ordinary
activities after taxation 4,495 3,892 2,393 975 809
Assets employed:
Fixed assets 8,453 3,600 3,661 3,739 4,518
Net current assets 9,506 12,094 10,145 9,122 9,932
Creditors due after more
than one year (103) (22) (16) (96) (148)
Provisions for liabilities
and charges (527) (486) (628) (762) (806)
Net assets 17,329 15,186* 13,162 12,003 13,496
Total capital employed 17,329 15,186* 13,162 12,003 13,496
Earnings per share
- basic 61.0p 53.3p 33.0p 11.7p 9.7p
-diluted 58.2p 52.0p 32.6p 11.7p 9.7p
Dividend per share (net) 30.0p 25.0p 17.0p 12.0p 7.0p
Net assets per share 234.4p 206.8p* 181.4p 165.4p 161.5p
* As set out in note 1 the Short Term Incentive Plan has been restated as a deduction from the profit and loss 
account reserves, rather than shown as a fixed asset investment, in accordance with UITF Abstract 38. HORNBY Plc
FORM OF PROXY
To be used for the Annual General Meeting of the Company to be held on Thursday 22 July 2004.
I/We (block capitals)
of
being a Member of Hornby Plc hereby appoint the Chairman of the Meeting or failing him
as my/our proxy to attend and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at
Berwin Leighton Paisner,Adelaide House, London Bridge, London EC4R 9HA on Thursday 22 July 2004 at 11.00am and at any
adjournment thereof on the resolutions set forth in the Notice of Meeting as follows:
No 1 To receive the report of the directors and the audited accounts
for the year ended 31 March 2004.
No 2 To approve the directors’ remuneration report.
No 3 To declare a final dividend.
No 4 To re-elect Mr N A Johnson a director of the Company.
No 5 To re-elect Mr N J Cosh a director of the Company.
No 6 To re-appoint PricewaterhouseCoopers LLP, the retiring auditors,
to hold office until the conclusion of the next General Meeting at
which the accounts are laid before the Company and to authorise
the directors to fix their remuneration.
Special Business:
No 7 That each of the issued ordinary shares of 5p each in the capital of
the Company and each of the unissued ordinary shares of 5p each
in the capital of the Company be sub-divided into 5 ordinary shares
of 1p each in the capital of the Company having the rights and being
subject to the restrictions set out in the Articles of Association of
the Company for the time being.
No 8 To authorise the directors to allot shares pursuant to Section 80
and to disapply Section 89(1) of the Companies Act 1985 with
respect to certain allotments of shares.
No 9 To authorise the directors to make one or more market purchases
of ordinary shares pursuant to Section 166 of the Companies Act 1985.
RESOLUTION FOR AGAINST
VOTE
WITHHELD
DISCRETIONARY
Notes
1. Please indicate by a cross in the appropriate box opposite each resolution how you wish your proxy to vote. The “vote withheld” option is provided to enable you
to abstain on any particular resolution. A “vote withheld” is not a vote in law and will not be counted in the calculation of the proportion of the votes “For” and
“Against” a resolution. Subject to any voting directions so given the proxy will exercise his discretion as how to vote, or whether to abstain from voting on the
above resolutions, to adjourn the meeting and on any other business that may properly come before the meeting.
2. Delete “the Chairman of the Meeting” if it is desired to appoint any other person and insert the name and address of your proxy.
3. To be valid this form of proxy must be received by the Company’s Registrar (Capita Registrars,The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU) not
later than 11.00am on Tuesday 20 July 2004.
4. In the case of a Corporation the form of proxy should be under its Common Seal or under the hand of an Officer or Attorney duly authorised in writing. The
Power of Attorney or a duly certified copy thereof must be deposited with the form of proxy with the Company’s Registrar within the period stated above.
5. In the case of a joint holding, any one of several joint holders may sign. The vote of the senior who tenders a vote, whether in person or by proxy, shall be 
accepted to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the
Register of Members.
6. Under Regulation 41 of the Uncertified Securities Regulations 2001, only those shareholders whose names are on the register of members of the Company no later
than 11.00am on 20 July 2004 or, if the meeting is adjourned, shareholders entered on the Company's register of members not later than 48 hours before the time
fixed for the adjourned meeting are entitled to attend and vote at the meeting in respect of the shares registered in their names at that time. Subsequent changes
to the register shall be disregarded in determining the rights of any person to attend or vote at the meeting.
Dated this ............................................ day of ..................................................... ....2004 Signature ............................................................................................................................................................... Liverpool Street
Bank
Moorgate
Cannon Street
Fenchurch Street
Monument
London Bridge
Adelaide House
ANNUAL GENERAL MEETING
Thursday 22 July 2004 at 11.00am.
The twenty-third Annual General Meeting of Hornby Plc
will be held at:
Berwin Leighton Paisner
Adelaide House, London Bridge
London EC4R 9HA
BY UNDERGROUND
The nearest tube station is Monument (Circle and District Lines) although Bank 
(Northern and Central Lines) and London Bridge (Northern and Jubilee Lines) are also
close. In addition, the Docklands Light Railway connects with the Bank/Monument complex.
BY TRAIN
The City is well served by mainline stations, all within walking distance of Adelaide House:
Liverpool Street (with services from Cambridgeshire and East Anglia) 
Fenchurch Street (from Essex)
Moorgate (Thameslink services from Hertfordshire)
Cannon Street (from Kent and the South East)
London Bridge (from Sussex and the South Coast).
BY CAR
An NCP car park is situated in Swan Lane, off Upper Thames Street.There are a small
number of parking meters available in the area surrounding the Monument.Also many taxis
cross the bridge, in both directions, during the day.
BY BUS
Various buses pass over London Bridge during the week, including numbers 17, 21, 35, 40,
43, 47, 48, 133 and 149. Bus stops are situated in front of Adelaide House.
How to reach Adelaide House BUSINESS REPLY SERVICE
Licence No. MB122
Capita Registrars
(Proxy’s)
P.O. Box 25
Beckenham
Kent
BR3 4BR
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