Hornby PLC
Annual Report & Accounts
YEAR ENDED 31 MARCH 2012 
Hornby PLC
Westwood,
Margate,
Kent
CT9 4JX
www.hornby.com 
The Group’s principal business is the development, production 
and supply of hobby and toy products. The Group distributes its products 
through a network of specialist and multiple retailers throughout the 
UK and overseas.
Hornby PLC Annual Report & Accounts 2012
Dividend per Share 
3.7p (26%)
2011: 5.0p
 2008 2009 2010 2011 2012
Underlying operating profit £’000
 2008 2009 2010 2011 2012
Divdend per share £’000
Financial Highlights
Revenue  
£64.5m +2%
2011: £63.4m
Underlying Operating Profit  
£5.3m +2%
2011: £5.2m
 2008 2009 2010 2011 2012
Revenue £’000
2   Hornby > Annual Report and Accounts 2012 >   Hornby > Annual Report and Accounts 2012 > Financial Highlights 3
Underlying
Profit before taxation
£4.5m +2%
2011: £4.4m
Reported
Profit before taxation
£4.0m (3%)
2011: £4.1m
 
Profit after taxation
£3.7m +15%
2011: £3.2m
 
Profit after taxation
£3.2m +11%
2011: £2.9m
 
Basic earnings per share
9.5p +14%
2011: 8.3p
 
Basic earnings per share
8.2p +9%
2011: 7.5p
Financial Highlights 2
Chairman’s Statement 4
Chief Executive’s Report 5
Directors and Corporate  
Information 8
Directors’ Report 9
Corporate Governance Report 12
Directors’ Remuneration Report 20
Statement of Directors 
Responsibilities 26
Independent Auditors’ Report   
to the Members of Hornby PLC 27
Group and Company 
Statement of Comprehensive  
Income 29
Group and Company 
Balance Sheet 30
Group and Company 
Statement of Changes in Equity 31
Group and Company  
Cash Flow Statement 32
Cash Flow from Operating Activities 33
Notes to the Financial Statements 34
Notice of Annual General Meeting 68
Five Year Summary 72
Contents
Frank Martin, Chief Executive of Hornby, commented,
“Despite the  backdrop of a challenging market, Hornby is making encouraging progress.  Our ability to broaden 
our product and distribution base will enable us to mitigate to some extent any short term weakness in our 
traditional hobby sectors. We are pleased that sales of our London 2012 merchandise are gathering momentum.  
We expect this unique license opportunity to contribute positively to profits in the short term and, through the 
increased distribution that we gain as a result of our involvement with London 2012, to provide an ongoing legacy 
benefit in substantially increasing our presence in mass market retail outlets.“ Chairman’s Statement
4   Hornby > Annual Report and Accounts 2012 > Chairman’s Statement
Overview
The management team has continued to 
focus on delivering a long term business 
strategy for the Group. The aim is to be 
the most successful model, hobby and 
collectable toy company in the world. The 
year under review has not been without 
its challenges but our strategy to diversify 
our business both by product sector and 
geographical market has stood us in good 
stead. In the UK, challenging market 
conditions have constrained our sales, whilst 
in mainland Europe we have seen our sales 
grow considerably as we consolidate our 
position as an important supplier to the 
model railway markets in Continental Europe.
The Group is well positioned to benefit from 
the incremental sales that will be generated 
in the UK by the London 2012 Games and 
also to continue to grow our mainland 
European businesses. 
Corporate Governance
Good corporate governance provides a 
framework for delivering the objectives 
of the company and is fundamental to a 
sound decision making process. It supports 
executive management in achieving the 
maximum performance for the business. 
The Board will continue to focus on 
strengthening governance and compliance 
procedures. We welcomed the introduction 
of the Financial Reporting Council’s UK 
Corporate Governance Code (the Code) 
and the Corporate Governance Report this 
year is structured so that we can report our 
corporate governance arrangements and 
practice against its five sections. Maintaining 
good corporate governance is a key priority 
and I am pleased to introduce our Corporate 
Governance Report setting out how we 
complied with the Code during the year. 
There have been no changes to the 
composition of the Board during the year. 
The annual evaluation of the Board has 
considered the balance of skills, experience, 
independence, knowledge of the Company, 
its diversity, including gender, how the Board 
interacts together as a unit, and considers 
that the present structure and composition 
of the Board to be effective for the size of the 
organisation.
All non-executive directors are advised of 
the likely time commitments at appointment. 
The ability of individual directors to allocate 
sufficient time to the discharge of their 
responsibilities is considered as part of the 
directors’ annual evaluation and development 
process overseen by the Chairman. The 
Board has formal and informal procedures to 
monitor its performance both as individuals 
and as a Board.
In the current uncertain economic 
environment, management of risk remains 
a key focus for the Board. The Board has 
in place a robust process for identifying 
the major risks facing the business and for 
developing appropriate policies to manage 
those risks. The Board reviews the major 
risks and any mitigating actions required on a 
bi-annual basis.
Through the Board and the Audit Committee 
we retain good visibility of the issues and 
challenges faced by management and the 
work to address them. In the year to March 
2012, for example, we have completed a 
thorough review of the Group’s policies and 
procedures to ensure compliance with the 
2010 UK Bribery Act. 
I was appointed Chairman of Hornby just 
before Christmas 2000. At that time, 
we were an overwhelmingly UK focused 
business, and although we had started to 
build supplier relationships in China, we 
still retained manufacturing activities in 
the UK. Eleven years later, Hornby has 
become a truly international company, with 
supplier operations in China and India, and 
a collection of World and European brands 
which have substantially broadened the base 
of our operations and reduced the short-
term risks associated with over reliance on a 
single market. This year, 2012, marks another 
potentially game-changing development of 
our brand ‘reach’ as Hornby products feature 
strongly in the ‘collectables’ ranges of the 
London 2012 Games.
I have much enjoyed being part of this 
transformation, particularly working with my 
Board colleagues and the talented executive 
team who have actually delivered major 
success and change. That said, I consider 
that it is now time to hand-over the Chair 
to a new pair of eyes and hands capable 
of consolidating this transformation and 
steering the business to ever greater success 
in the future. It is therefore my intention to 
stand-down from the Board not later than 
next year’s AGM. This will leave sufficient 
time for us to find a suitable successor and 
arrange the necessary transitions. In the 
coming months I will be consulting with 
major shareholders and, together with my 
Board colleagues, managing a professional 
and comprehensive selection process. I will, 
of course, keep all shareholders informed of 
any major developments in this process.
Finally, I would like to thank our Chief 
Executive Frank Martin and through him, all 
our staff, for their commitment to growing 
the business, and ensuring that future return 
to shareholders is maximised. 
Neil Johnson 
Chairman
8 June 2012 Chief Executive’s Report
Hornby > Annual Report and Accounts 2012 > Chief Executive’s Report 5
Financial Review
 2012 2011
Revenue £64.4m £63.4m
Underlying profit before 
tax * £4.5m £4.4m
Gross profit margin 48.3% 46.2%
Underlying profit before 
tax margin * 7.0% 7.0%
Reported profit before 
tax margin 6.2% 6.5%
Underlying basic 
earnings per share * 9.48p 8.34p
Statutory basic earnings 
per share 8.19p 7.50p
Net debt £6.3m £6.1m
*  Stated before amortisation of intangibles and net foreign 
exchange adjustments on intercompany loans
Consolidated revenue for the year ended 
31 March 2012 was £64.4 million, an 
increase of 2% compared to the previous 
year’s £63.4 million. 
Full year gross profit margin was 48.3% 
(2011 – 46.2%). The increase in gross profit 
margin was primarily a result of changes 
in the product mix of sales in favour of 
higher margin model railway products. This 
reflected improvements in the performance 
of our supply chain. Overheads increased 
year on year, due primarily to the effect of 
variable selling costs increasing in our UK 
concessions and European subsidiaries as 
a result of higher levels of sales, and with 
incremental promotional activity associated 
with the London 2012 Games. 
Pre-tax profit before amortisation of 
intangibles and net foreign exchange 
adjustments on intercompany loans 
(hereafter referred to as underlying 
pre-tax profits) was £4.5 million (2011 – 
£4.4 million) (see note 1). Basic earnings 
per share calculated on underlying pre-tax 
profit (hereafter referred to as underlying 
basic earnings per share) were 9.48p 
(2011 – 8.34p). Statutory pre-tax profit 
was £4.0 million (2011 – £4.1 million) and 
statutory basic earnings per share were 8.19p 
(2011 – 7.50p).
Taxation at £0.8 million (2011 – £1.3 million) 
was 21% of reported profit before tax 
(2011 – 31%). This included a prior year 
deferred tax adjustment of £0.3 million, 
relating to the provision for unrealised profit 
in stock. The taxation figure excluding this 
adjustment was 27%. 
Core Group inventories reduced during the 
year. However, at the year end we were 
carrying stocks of London 2012 merchandise 
valued at £3.3 million in order to service 
the sales to be made in the run-up to and 
during the Games. This resulted in an overall 
increase in stocks at the year end. We expect 
this position to unwind as the London 2012 
inventory is sold. Net debt as at 31 March 
2012 was £6.3 million (2011 – £6.1 million).
Dividend
This has been another year in which 
trading has been challenging. Last year the 
dividend payment was maintained at the 
level of the previous year, notwithstanding 
a reduction in earnings per share. The Board 
recommends that the total dividend for the 
current year be re-aligned to the Group’s 
long term policy of paying 50% of earnings. 
The total dividend has been calculated after 
excluding the impact of the prior year tax 
benefit referred to above and results in a 
recommended dividend of 3.7p per ordinary 
share (2011 – 5.0p). An interim dividend of 
1.7p has already been paid, so the proposed 
final dividend will be 2.0p. In line with the 
notification made in last year’s Report and 
Accounts to this effect, payment of the final 
dividend will be made after the Group’s peak 
working capital requirement for the year has 
passed. The final dividend will therefore be 
paid on 21 December 2012 to shareholders 
on the register at 23 November 2012.
Banking Facilities
The Group has banking facilities of 
£17.5 million in the UK. These facilities 
comprise a £7.5 million amortising Term 
Loan which expires in July 2014 and a 
£10 million Secured Money Market Loan 
which expires in August 2015. The Group 
also has additional facilities of £2.5 million in 
place in its European subsidiaries. Borrowings 
in the year ended 31 March 2012 peaked 
at £15.6 million. The Group remained 
comfortably within all of its covenants during 
the year. 
Business Overview
This has been a further year of challenging 
economic conditions. However we have 
made good progress in a number of key 
areas. In mainland Europe improved supply 
chain performance enabled our European 
business to report increased sales and a 
satisfactory profit. Trading conditions in our 
The Group’s principal business is the design, development, production and 
supply of hobby and toy products. The Group distributes its products through 
a network of specialist and multiple retailers throughout the UK and overseas. 
The Group markets its products under a number of strong brands well known in 
their respective markets. These brands include Hornby, Scalextric, Electrotren, 
Lima, Jouef, Rivarossi, Arnold, Airfix, Humbrol and Corgi.  6   Hornby > Annual Report and Accounts 2012 > Chief Executive’s Report
Chief Executive’s Report  (continued)
UK home market continued to be difficult. 
We are now in the run-up to the London 
2012 Games and demand for our London 
2012 merchandise is growing strongly. 
We are expecting good sales performance 
over the coming months, and the expanded 
distribution base that we have opened up as 
a result of London 2012 will stand us in good 
stead to continue to develop sales beyond 
the Games. The development of the new 
Corgi “Toys” range and the launch of a range 
of products based on the rapidly growing 
license “Olly the Little White Van” will help 
to underpin our mass-market distribution 
beyond 2012.
Hornby sources the majority of its products 
in China and India, via third-party contract 
manufacturers. During the year supplies 
from the Group’s largest supplier in China 
improved considerably and additional 
sources were brought on stream. We 
continue to work closely with our largest 
supplier and expect that this relationship will 
continue to the benefit of both parties for 
many years to come.
All purchases from our Chinese suppliers are 
either in US or Hong Kong Dollars. It is the 
Group’s policy to enter into forward currency 
contracts in anticipation of purchases for up 
to 12 months in the future. The Group retains 
intellectual property rights in its products and 
controls all sales of its products.
United Kingdom
The challenging trading conditions in the 
UK resulted in full-year sales in our UK 
subsidiary being 4% below the previous 
year at £45.5 million (2011 – £47.3 million). 
Against this difficult background, underlying 
profit before tax fell to £3.4 million 
compared to £4.5 million the previous year. 
Reported profit before tax was £3.0 million 
(2011 – £4.3 million). This result includes 
export sales to third parties of £6.4 million 
(2011 – £6.5 million). 
Sales via all our channels of distribution were 
below the previous year, with the exception 
of our concessions chain and our direct 
marketing channel. The reduction in sales 
reflects weak consumer confidence generally 
and caution on the part of retailers in respect 
of inventory purchases.
Sales of Hornby model railways were broadly 
similar to the previous year. However we 
had some notable successes in terms of new 
product introductions. In particular our newly 
tooled Brighton Belle five car set launched to 
critical acclaim. In addition, our new Flying 
Scotsman locomotive followed the success in 
the previous year of the Tornado locomotive. 
Both these locomotives are built to a high 
standard of authenticity whilst achieving a 
competitive price point. We will continue 
to develop this new market sector which is 
attuned to the more challenging economic 
conditions which we face.
Sales of Scalextric were below the previous 
year as a result of lower consumer demand 
and cautious buying behaviour amongst our 
retailers. However, with the launch this year 
of our Star Wars based Scalextric range and 
the introduction of a number of products 
celebrating the 50th anniversary of the 
James Bond franchise we are confident that 
we can rebuild our Scalextric volumes. 
Sales of Airfix were slightly below the 
previous year after a number of years of good 
growth. Our Airfix product development 
programme continues apace and we expect 
our recently announced 1:48 scale military 
range to provide a strong platform for Airfix 
sales. 
Corgi sales benefitted from the London 2012 
programme and were ahead of the previous 
year. In particular, the London 2012 branded 
bus and taxi ranges were very successful and 
we expect sales of these and similar items to 
continue to grow during the current financial 
year. 
Continental Europe
Our subsidiaries in mainland Europe together 
made good progress, benefitting directly 
from the improved performance of our supply 
chain. Sales via our European subsidiaries 
in total were 21% above the previous year 
at £16.2 million (2011 – £13.4 million). Our 
subsidiaries in mainland Europe contributed 
an underlying profit before tax of £1.1 million 
compared with an underlying loss before tax 
of £42,000 in the previous year. Reported 
profit before tax was £1.0 million (2011 – loss 
£0.2 million). All our European subsidiaries 
returned a profit in the year and we are 
particularly pleased with the progress that 
has been made in Germany. 
Our strong European brands continue to 
attract increasing support from the model 
railway communities in each of our key 
territories. Across Europe in 2011/12 we 
won no less than ten separate ‘model of the 
year’ awards, receiving at least one award 
in each territory where we have a subsidiary 
company. This is an important third party 
endorsement of our strategy to build our 
presence in these markets. 
The current macro economic issues 
surrounding the euro zone continue to be a 
cause for concern. Continued weakness in 
the Euro will have a negative impact on the 
level of profit of the European business. 
America 
Sales in Hornby America were higher at 
$4.4 million (2011 – $4.2 million), producing 
a profit before tax of $83,000 (2011 – loss 
$69,000). Upon translation into Sterling, 
sales were £2.7 million (2011 – £2.7 million) 
with a profit before tax of £52,000 (2011 – 
loss £44,000). In addition Hornby Hobbies 
in the UK benefitted from a gross margin 
contribution of £411,000 (2011 – £397,000) 
generated on sales made to Hornby 
America, which has the effect of increasing 
significantly the overall contribution to Group  Hornby > Annual Report and Accounts 2012 > Chief Executive’s Report 7
profit of our US operation. Further good 
progress was made during the year in Hornby 
America in reducing working capital and 
overheads. 
Product Development
Our product development programme 
continues to be a key driver of our business. 
We continue to increase our resources in 
this area in order to cope with the additional 
demands of our subsidiaries and the increase 
in product categories. We were delighted 
that at the London toy fair in January 2012 
we were awarded three separate “Best 
New Toy” awards, for our Corgi toys range, 
our Scalextric Star Wars products and 
our London 2012 Pictogram figurines. No 
other company received as many awards. 
In addition to the ongoing development 
of our traditional hobby-based ranges we 
are working for the future on a number 
of technology based initiatives which if 
successfully executed will broaden further 
our appeal and market reach. 
Outlook
Consumer confidence in all our major 
markets continues to be weak. We will 
continue to review our overhead base in 
order where possible to align costs with 
the current environment. Our ability to 
broaden our product and distribution base 
will enable us to mitigate to some extent 
any short term weakness in our traditional 
hobby sectors. The sales of our London 2012 
merchandise are gathering momentum and 
we expect this unique license opportunity to 
contribute positively to profits in the short 
term and, through the increased distribution 
that we gain as a result of our involvement 
with London 2012, to provide an ongoing 
legacy benefit in substantially increasing our 
presence in mass market retail outlets. In 
order to benefit from this increased presence 
following London 2012 we have developed 
a number of new ranges with entry-level 
price points ranging from £2 to £9.99. The 
first of these ranges is a series of collectable 
pin-badges based on the Moshi Monsters 
license. This development arises directly from 
our experience of distributing the London 
2012 collectable pin badges. By applying this 
knowledge to the hugely successful Moshi 
Monsters license we are leveraging our 
product development expertise and securing 
continued mass market distribution. We also 
have high expectations of success for our 
range of Corgi “Toys”. This range is designed 
around the everyday vehicles that use the 
roads of the UK and indeed mainland Europe. 
There is currently a gap in the market for 
this type of collectable series and we have 
received a very positive response from our 
retail customers. First deliveries of this range 
will be in-store in September. Other ranges 
soon to reach the market include “Olly the 
Little White Van”, which is currently the 
highest rating children’s TV series on CITV. 
There is no doubt that there will continue 
to be pressure on consumer confidence for 
some time to come. However we continue 
to innovate and to seek new commercial 
opportunities in order to counter the effects 
of the macro-economic climate in which we 
are operating. 
Frank Martin 
Chief Executive
8 June 2012 Directors and Corporate Information 
8   Hornby > Annual Report and Accounts 2012 > Directors and Corporate Information 
DIRECTORS AUDITORS
N A Johnson PricewaterhouseCoopers LLP 
Chartered Accountants and Statutory Auditors 
First Point 
Buckingham Gate 
Gatwick RH6 0PP
Non-Executive Chairman
F Martin
Chief Executive
A J Morris
Finance Director
SOLICITORS 
Berwin Leighton Paisner LLP 
Adelaide House
N M Carrington
Non-Executive Director
London Bridge
M E Rolfe London EC4R 9HA
Non-Executive Director
COMPANY SECRETARY PRINCIPAL BANKERS
J W Stansfield Barclays Bank PLC 
9 St George’s Street 
Canterbury 
Kent CT1 2JX
REGISTERED OFFICE FINANCIAL ADVISERS AND BROKERS
Westwood 
Margate 
Kent CT9 4JX
Numis Securities Limited 
The London Stock Exchange Building 
10 Paternoster Square 
London EC4M 7LT
COMPANY REGISTERED NUMBER REGISTRARS AND TRANSFER AGENTS
Registered in England No. 01547390 Capita Registrars Limited 
The Registry 
34 Beckenham Road 
Beckenham 
Kent BR3 4TU Directors’ Report
Hornby > Annual Report and Accounts 2012 > Directors’ Report 9
The directors submit their Annual Report together with the audited 
consolidated financial statements for the year ended 31 March 2012.
PRINCIPAL ACTIVITIES
The Company is a holding company registered in England No. 
01547390 with a Spanish branch and has six operating subsidiaries: 
Hornby Hobbies Limited in the United Kingdom, Hornby America Inc. 
in the USA, Hornby España S.A. in Spain, Hornby Italia s.r.l. in Italy, 
Hornby France S.A.S. in France and Hornby Deutschland GmbH in 
Germany. Hornby Plc is a public limited company incorporated and 
operating in the United Kingdom. Its registered office is set out on 
page 8.
The Group is principally engaged in the development, design, 
sourcing and distribution of hobby and interactive home 
entertainment products.
BUSINESS REVIEW
The Group’s business review along with future developments are 
included in the Chief Executive’s Report.
The principal risks and uncertainties facing the Group and the 
Group’s Corporate Governance Statement are set out in the 
Corporate Governance Report on pages 17 and 18.
RESULTS AND DIVIDENDS
The results for the year ended 31 March 2012 are set out in the 
Group and Company Statement of Comprehensive Income on 
page 29. Revenue for the year was £64.4 million compared to 
£63.4 million last year. The profit for the year attributable to equity 
holders amounted to £3.2 million (2011 – £2.9 million). The position 
of the Group is set out in the Group and Company Balance Sheet on 
page 30.
An interim dividend was declared in the year of 1.7p per ordinary 
share amounting to £0.7 million (2011 – £0.7 million).
The directors recommend a final dividend of 2.0p (2011 – 3.3p) 
per ordinary share amounting to £0.8 million (2011 – £1.3 million) 
payable on 21 December 2012 to those shareholders on the Register 
at 23 November 2012.
This represents a total dividend paid in respect of the year ended 31 
March 2012 of 3.7p per ordinary share (2011 – 5.0p).
KEY PERFORMANCE INDICATORS (KPIs)
The directors are of the opinion that the KPIs are revenues, gross 
margins, underlying profit before tax, earnings per share and cash 
generation, the information for which is available in these financial 
statements and summarised on the financial highlights section at 
the beginning of this report. The Group maintains a robust planning 
system with individual targets for subsidiaries in terms of growth 
and profits. The Board monitors progress against plan on a regular 
basis adjusting future objectives annually in line with current 
circumstances.
RESEARCH & DEVELOPMENT
The Board considers that research and development into new 
products continues to play an important role in the Group’s success.
All R&D costs incurred in the year have been charged to the 
Statement of Comprehensive Income and are as set out in note 4. 
PROPERTY VALUES
In the opinion of the directors, and given current planning use 
approvals, there is no significant difference between the book amount 
and the current market value of interests in land and buildings.
Land and buildings are valued according to the provisions of IAS 16’s 
cost model. Assets are carried at cost less accumulated depreciation 
and impairment. 
CHARITABLE DONATIONS
During the year the Group made donations of £14,232 (2011 – 
£21,250) for charitable purposes to include the Theatre Royal 
Margate (£10,000). There were no political donations in the year 
(2011 – £nil).
DIRECTORS
The persons who were directors during the year are listed below:
Neil A Johnson, aged 63, was originally appointed a non-executive 
director on 1 July 1998. On 22 December 2000 he assumed the 
responsibilities of Chairman. He served for five years as a member 
of a Prime Minister’s Advisory Panel and is currently a member of a 
Ministry of Defence Advisory Board. He sits on a number of private 
company Boards and Trusts, is Chairman of Motability Operations 
Group Plc, Umeco Plc and Yule Catto & Co Plc.
Frank Martin, aged 60, was appointed Chief Executive on 3 January 
2001. Frank was previously Chief Executive of Humbrol Limited, 
and formerly Managing Director of Denby Pottery Limited and 
Group Marketing Director of Hasbro (UK) Limited. His conditions of 
employment include a notice period of one year to be given by the 
Company and of six months to be given by him.
Andrew J Morris, aged 49, was appointed Group Finance Director 
on 26 November 2007. Andrew was previously CFO of Speedo 
International and formerly Finance Director, Africa Glaxo Smithkline 
plc. His conditions of employment include a notice period of one year 
to be given by the Company and of six months to be given by him. 
Nigel M Carrington, aged 56, was appointed a non-executive 
director on 1 December 2007. Nigel is currently Rector and Chief 
Executive of University of the Arts London and a member of the  10   Hornby > Annual Report and Accounts 2012 > Directors’ Report
Directors’ Report (continued)
board of a number of charities. He was formerly a corporate lawyer 
and Managing Partner at Baker & McKenzie and Managing Director 
and Deputy Chairman of McLaren Group Limited.
Mark E Rolfe, aged 53, was appointed a non-executive director on 
1 January 2008. After qualifying as a chartered accountant with 
Coopers and Lybrand, Mark joined Gallaher Group plc in 1986, where 
he was Finance Director for seven years retiring in 2007. He is a non-
executive director of The Sage Group Plc, Barratt Developments Plc 
and Debenhams Plc, and Chairman of Lane Clark & Peacock LLP.
The interests of the directors in the shares of the Company and in 
options granted over such shares are disclosed in the Directors’ 
Remuneration Report on pages 23 and 24.
The number of Board meetings held during the year and attendance 
by the directors is set out on page 12.
DIRECTORS’ INDEMNITIES
The Company maintains liability insurance for its directors and 
officers during the financial year and up to the date of approval of 
the Annual Report and Accounts. The Company has also provided 
an indemnity for its directors and the secretary, which is a qualifying 
third party indemnity provision for the purposes of the Companies 
Act 2006.
SUBSTANTIAL SHAREHOLDINGS
The Company has been notified that at close of business on 25 May 
2012 the following parties were interested in three per cent or more 
of the Company’s ordinary share capital.
Number of
Ordinary Percentage
Shareholder Shares held
Phoenix Asset Management Partners 
Limited 4,027,573 10.28
Electra Quoted Partners 2,995,150 7.65
P J Wood 2,821,500 7.20
New Landfinance Holdings Limited, BVI 1,815,514 4.64
J J Hosking 1,711,434 4.37
Aberdeen Asset Management 1,198,140 3.06
FINANCIAL INSTRUMENTS
The Group’s financial instruments, other than derivatives, comprise 
borrowings, some cash and liquid resources, and various items, such 
as trade receivables, trade payables, etc. that arise directly from its 
operations. The Group’s financial liabilities comprise borrowings, 
trade payables, other payables 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 receivables.
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. The Group has a foreign exchange (FX) collar in place 
to minimise risk on translation of Euro denominated intercompany 
loans.
It is, and has been throughout the period under review, the Group’s 
policy that no speculative trading in financial instruments shall be 
undertaken.
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 2012 was 39 days (2011 – 40 days). The Company itself 
does not trade and therefore has no external trade payables.
SHARE CAPITAL
The share capital of the Company comprises ordinary shares of 1p 
each, each share carries the right to one vote at general meetings 
of the Company. The authorised and issued share capital of the 
Company, together with movements in the Company’s issued share 
capital is shown in note 21.
INDEPENDENT AUDITORS
A resolution to re-appoint the auditors, PricewaterhouseCoopers LLP, 
will be proposed at the forthcoming Annual General Meeting.  Hornby > Annual Report and Accounts 2012 > Directors’ Report 11
ANNUAL GENERAL MEETING
The notice of Annual General Meeting is important and requires your 
immediate attention. If you are in any doubt as to what action to 
take in relation to the Annual General Meeting, you should consult 
appropriate independent advisers.
The notice of the Annual General Meeting is set out on pages 68 to 
71 .
Resolution 3
A final dividend can only be paid after the shareholders at a general 
meeting have approved it. A final dividend of 2.0 pence per ordinary 
share of 1 pence each in the capital in the Company is recommended 
by the directors for payment to shareholders who are on the register 
at the close of business on 23 November 2012.
Resolution 10
Under section 551 of the Companies Act 2006 (the “Act”), the 
directors may allot unissued shares or grant rights over such shares 
only if authorised to do so by shareholders. This resolution will give 
the directors authority to allot new ordinary shares in the capital of 
the Company or grant rights to subscribe for, or convert any security 
into, shares in the Company, up to an aggregate nominal amount of 
£130,000, which represents approximately 33% of the Company’s 
issued ordinary capital as at 7 June 2012 (being the latest practicable 
date prior to the publication of this notice). This authority renews 
that given at last year’s Annual General Meeting and will expire 
at 11 a.m. on 25 July 2017. The directors do not have any present 
intention of exercising the authority granted by this resolution except 
in connection with the Company’s share schemes. However, it is 
considered prudent to maintain the flexibility that this authority 
provides.
Under the guidelines of the Association of British Insurers on 
authority to allot shares companies may seek basic authority to allot 
new shares in an amount of up to one-third of the existing issued 
share capital and this request will be regarded as routine under 
guidelines.
Resolution 11
It is proposed to renew the authority to the directors to allot equity 
securities for cash without first being required to offer such securities 
to existing members. This will include the sale for cash on a non pre-
emptive basis of any shares which the Company holds in treasury. 
The authority will be limited to the issue of shares for cash up to an 
aggregate nominal amount of £19,000 representing approximately 
5% of the issued ordinary share capital of the Company as at 7 June 
2012 (being the latest practicable date prior to the publication of this 
notice). The authority sought at the Annual General Meeting will 
expire at the conclusion of the next Annual General Meeting of the 
Company.
The directors do not intend to issue more than 7.5% of the issued 
ordinary share capital of the Company in any rolling three year 
period without prior consultation with the Institutional Investment 
Committee. Members will note that this resolution also relates to the 
sale of treasury shares.
Resolution 12
The Company is seeking authority to purchase up to approximately 
10% of the Company’s issued ordinary share capital at, or between, 
the minimum and maximum prices specified in this resolution. As at 
7 June 2012 (being the latest practicable date prior to the publication 
of this notice), the total number of options to subscribe for shares in 
the Company was 847,500 (approximately 2.2% of the Company’s 
issued ordinary share capital and approximately 2.4% of the 
Company’s issued ordinary share capital if the full authority proposed 
by resolution 12 was used and the shares purchased were cancelled). 
This power would be used only after careful consideration by the 
directors, having taken into account market conditions prevailing at 
that time, the investment needs of the Company, its opportunities 
for expansion and its overall financial position. The directors would 
exercise the authority to purchase ordinary shares only if they 
considered it to be in the best interest of the members and they 
believe that the effect of such purchases will be to increase earnings 
per share.
The Company (Acquisition of Own Shares) (Treasury Shares) 
Regulations 2003 came into force on 1 December 2003. These 
regulations allow shares repurchased by the Company to be held as 
treasury shares rather than being cancelled. Treasury shares may be 
cancelled, resold for cash or used for the purpose of employee share 
schemes but all rights attaching to them, including voting rights and 
any right to receive dividends, are suspended whilst they are held in 
treasury. The authority to be sought by this resolution is intended 
to apply equally to shares to be held by the Company as treasury 
shares. The Company currently holds no treasury shares.
The authority sought at the Annual General Meeting will expire at 
the earlier of the date which falls eighteen months from the date this 
resolution is passed and the conclusion of the next annual general 
meeting of the Company. 
 
Signed on behalf of the Board
A J Morris 
Finance Director 
Westwood  
Margate 
Kent CT9 4JX
8 June 2012 Corporate Governance Report
12   Hornby > Annual Report and Accounts 2012 > Corporate Governance Report
UK Corporate Governance Code
The Company welcomes the introduction of the new UK Corporate 
Governance Code published in 2010 with this report being structured 
to report corporate governance arrangements and practices against 
the requirements of the Code. 
Throughout the year ended 31 March 2012, the Company has been in 
compliance with the Code provisions.
LEADERSHIP
The Board is responsible for the long term success of the Company 
and is responsible to shareholders for ensuring that the Group is 
appropriately managed and achieves its objectives. The Board is also 
responsible for the system of corporate governance, strategy, risk 
management and financial performance. The Company’s governance 
structure is consistent with the leadership principles set out in the 
Code.
Neil Johnson has led the Board since December 2000. 
The Board believes its current structure is appropriate for the scale of 
the business and to enable the Group to be managed efficiently. 
During the year the Board comprised the Chairman, Chief Executive, 
Finance Director and two non-executive directors. 
Chairman and Chief Executive
The roles of Chairman and Chief Executive are separate and there 
is a clear division of responsibility. The Chairman is 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.
Senior Independent Director
The Board has appointed N M Carrington to the role of Senior 
Independent Director. This role provides a point of contact to those 
shareholders who wish to raise issues with the Board, other than 
through the Chairman. 
The Board monitors the performance of the Group as a whole by;
•	 Engaging at Board meetings with, and challenging the CEO and 
Group Finance Director, as appropriate, on the financial and 
operating performance of the Group and external issues material 
to the Group’s prospects.
•	 Evaluating progress towards the achievement of the Group’s 
financial and business objectives and plans.
•	 Monitoring the significant risks facing the Group.
EFFECTIVENESS
Board composition 
The Board contains a range of complementary skills, experience 
and knowledge that is considered appropriate for the scale of the 
business. The biographical details of all Board members are provided 
on pages 9 and 10. 
The Board considers 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. Code provision B.1.2 requires non 
FTSE 350 companies to have at least two independent non-executive 
directors.
N A Johnson has served on the Board for more than thirteen 
years and has been its Chairman for eleven years. In line with the 
Combined Code the Senior Independent Director, N M Carrington, 
has undertaken a rigorous review of the effectiveness of the 
performance of the Chairman as well as a review of his contribution 
to the Board, based on a questionnaire and discussion with other 
members of the Board, and has concluded that the Chairman 
continues to operate effectively and to execute commitment to the 
role.
During the year ten Board meetings were held. All directors attended 
all meetings.
The Board has adopted a formal schedule of matters specifically 
reserved to it for decisions including the determination of the 
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, N M Carrington and M E Rolfe are all 
experienced company directors. 
Appointments to the Board
Nominations Committee
There have been no appointments to the Board during the year 
ended 31 March 2012. Appointments to the Board require the Board’s  Hornby > Annual Report and Accounts 2012 > Corporate Governance Report 13
authorisation and are conducted by the Nominations Committee. 
The Nominations Committee comprises the Chairman, executive and 
non-executive directors. 
The duties of the Nominations Committee are available from the 
terms of reference and include regularly reviewing the structure, size 
and composition required of the Board and making recommendations 
to the Board with regard to any changes, giving full consideration 
to succession planning for directors and other senior executives, 
identifying and nominating candidates to fill board vacancies and 
evaluating the balance of skills, knowledge and experience on the 
Board before an appointment is made. The terms of reference are 
available on the Company’s website, covering the authority delegated 
to it by the Board
The potential candidates are interviewed by either the Nominations 
Committee or a panel appointed by that Committee. An appointment 
requires the final approval of the Board prior to an offer being 
forwarded.
Information and professional development
The Chief Executive is responsible for ensuring that directors 
receive accurate, timely and clear information. Management has 
an obligation to provide such information but directors should seek 
clarification or amplification where necessary.
The Chairman is responsible for ensuring that directors continually 
update their skills and the knowledge and familiarity with the 
Company required to fulfil their role. Resources are available 
on request to develop and update the directors’ knowledge and 
capabilities.
Performance Evaluation
During the year a performance evaluation of the Board and its 
committees has taken place by way of a performance evaluation 
questionnaire. The results of this questionnaire were summarised in a 
report which was presented to the Board. 
In the year under review the report identified no areas of concern.
Re-election
N A Johnson, having served for more than thirteen years, will retire 
and offer himself for re-election at the Annual General Meeting and 
annually thereafter in accordance with the Combined Code.
The Company’s Articles of Association currently require one third of 
the directors to retire by rotation at each Annual General Meeting. 
Thereby M E Rolfe and A J Morris offer themselves for re-election 
at the forthcoming Annual General Meeting. In accordance with 
the Combined Code, the non-retiring directors have conducted a 
review of M E Rolfe and A J Morris’s contribution to the Board and 
the Chairman can confirm that they continue to be effective directors 
and to execute commitment to the role.
Audit Committee and Auditors
The Audit Committee comprises N M Carrington and M E Rolfe. 
M E Rolfe became Chairman of the Audit Committee on 28 July 
2008. He is a Fellow of the Institute of Chartered Accountants 
in England and Wales and is considered by the Board to have 
recent and relevant financial experience, as required by the Code. 
N M Carrington has a wide range of business experience, which is 
evidenced by his biography set out in the Directors’ Report.
The Committee meets at least three times a year and the Chairman, 
Chief Executive, Finance Director, Company Secretary and other 
managers attend by invitation. The Group’s Auditors attend meetings 
and have direct access to the Committee. The terms of reference are 
available on the Company’s website, covering the authority delegated 
to it by the Board.
The Audit Committee’s terms of reference include all matters 
indicated by the Combined Code. The terms of reference are 
considered annually by the Audit Committee and are then referred to 
the Board for approval. 
The main duties of the Committee, set out in its terms of reference, 
are to:
•	 Make recommendations on the appointment and remuneration 
of the external auditors and monitor their performance. 
•	 Review the nature and scope of the work to be performed 
by the external auditors, the results of their audit work and 
management’s responses.
•	 Monitor the independence of the external auditors and 
recommend policy for any non-audit services they provide to 
ensure that their independence is not compromised.
•	 Review and advise the Board on the Company’s interim and 
annual financial statements and related announcements, its 
accounting policies and on the control and mitigation of its 
financial and business risks.
•	 Review and advise the Board on the effectiveness of the 
Company’s internal control environment, including its 
procedures for detecting fraud and ‘whistle blowing’ and for the 
prevention of bribery.
Activity during the year
During the year, three Audit Committee meetings were held. All 
members attended all meetings. The Committee met privately 
with the external auditors without executives present, and with the 
Finance Director.
The Committee reviewed the Company’s interim and annual financial 
statements and related announcements, along with a report from the 
external auditors setting out the findings from their audit work.  Corporate Governance Report (continued)
14   Hornby > Annual Report and Accounts 2012 > Corporate Governance Report
The Committee has adopted a specific policy on auditor 
independence, setting out restrictions on specific non-audit activities 
such as bookkeeping, payroll services and advocacy, and procedures 
and authority levels for audit and non-audit fees. The authority levels 
beyond which prior approval from the Audit Committee is required 
are set as 1:1 for the audit/non audit fee ratio. Hornby believes that 
it receives particular benefit from the external auditors’ advice on 
potential acquisitions and the tax consequences thereof, given its 
auditors’ detailed knowledge of the Group. The Board considers 
alternative providers if practical and seeks confirmation prior to 
engaging services that independence will not be compromised. 
In the current financial year the audit fee was £123,000 and the non-
audit fee (principally tax services) was £69,000, well within the 1:1 
ratio. 
To assess the effectiveness of the external auditors, the Committee 
reviewed their fulfilment of the agreed audit plan; the robustness and 
perceptiveness of the auditors in their handling of key accounting 
and audit judgements, the content of their letter to management 
on control matters and adherence to service standards set out in 
Hornby’s Audit Charter policy. There are no contractual restrictions 
on the choice of the Committee as to external audit and, having 
considered the services provided by the current external auditors, 
PricewaterhouseCoopers LLP, their independence and knowledge 
of the Group, the Committee has recommended to the Board the 
reappointment of the auditors at the Annual General Meeting in July 
2012. In reaching this decision the Committee has taken into account 
the tenure of the auditors and considered whether there should be a 
full tender process. The Committee also had regard to the likelihood 
of a withdrawal of the auditor from the market.
The Committee considered reports from Group financial 
management on the operation of, and issues arising from the 
Group’s internal control procedures. The Committee monitored 
the effectiveness of the Group’s risk management process, which 
considered the key risks, both financial and non-financial, facing the 
Group and the effectiveness of the Group’s controls to manage and 
reduce the impact of those risks. 
The Committee considers annually the need for an internal audit 
function, but currently believes that this is not justified given the size, 
nature of the Group and a programme of visits to Hornby locations 
carried out by senior Group financial management. 
Arrangements exist for staff of the Group to raise concerns, in 
confidence, about possible improprieties in matters of financial 
reporting or other matters. The Group has a code of conduct 
outlining the business standards to which all Company personnel 
must adhere which further reinforces existing whistle-blowing policy 
and procedures. 
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.
REMUNERATION
The Remuneration Committee comprises N M Carrington and 
M E Rolfe. N M Carrington is the Chairman of the Remuneration 
Committee.
The Committee met three times during the year with all members 
being present. 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 and the Board itself determines the remuneration of 
the non-executive directors. The terms of reference are available on 
the Company’s website, covering the authority delegated to it by the 
Board.
Further detail of directors’ remuneration is provided in the Directors’ 
Remuneration Report.
ACCOUNTABILITY
The Board is committed to providing shareholders with a clear 
assessment of the Company’s financial position and prospects. This 
is achieved through the Annual Report and Accounts and through 
other periodic financial statements and announcements.
Internal Control and Risk Management
The Board is responsible for the operation and effectiveness of the 
Group’s system of internal controls and risk management. There is 
a continuous process for identifying, evaluating and managing the 
significant risks the Group faces. This process has been in place 
throughout the year under review and up to the date of approval of 
the annual report and accounts, and complies fully with the Turnbull 
guidance.
The Audit Committee considered reports from Group financial 
management on the operation of, and issues arising from the Group’s 
internal control procedures. The Audit Committee monitored the 
effectiveness of the Group’s risk management process, which 
considered the key risks, both financial and non-financial, facing the 
Group and the effectiveness of the Group’s controls to manage and 
reduce the impact of those risks. Hornby > Annual Report and Accounts 2012 > Corporate Governance Report 15
The Board regularly reviews the effectiveness of the Group’s system 
of internal control. The Board’s monitoring covers all controls, 
including financial, operational and compliance controls and risk 
management. It is based principally on reviewing reports from 
management to consider whether significant risks are identified, 
evaluated, managed and controlled and whether any significant 
weaknesses are promptly remedied and indicate a need for more 
extensive monitoring.
The internal control systems are designed to meet the Group’s 
particular needs and the risks to which it is exposed and by their 
nature can only provide reasonable but not absolute assurance 
against misstatement or loss. During the year, the Group continued 
to take action to enhance these control systems, based upon its own 
process improvement initiatives and auditors’ recommendations. 
The Audit Committee reviews and reports to the Board on the 
effectiveness of the Group’s systems of internal control on an on-
going basis during the year and no significant weaknesses have been 
identified. 
RELATIONS WITH SHAREHOLDERS
The Company communicates regularly with its institutional 
shareholders and encourages communication with private investors 
through the Annual General Meeting.
N M Carrington is the senior independent non-executive director. 
The senior independent non-executive director welcomes direct 
discussion with shareholders.
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 Chairman and Chief Executive.
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. Corporate Governance Report (continued)
16   Hornby > Annual Report and Accounts 2012 > Corporate Governance Report
BUSINESS MODEL AND STRATEGY
The Group comprises a number of high quality premium brands spread across different product categories within the hobby and collectable 
toy market. The Group has the opportunity to develop a number of new license properties within the existing brand structure (e.g. ‘Olly the 
Little White Van’, Moshi Monsters, ‘Star Wars’) as well as developing other distribution opportunities (e.g. Breyer horses). We are also 
continuing to grow the European train brands and to explore opportunities in developing markets. The nature of the model railway business 
worldwide is that products are largely country-specific. This requires high levels of knowledge and expertise in each individual market. This 
represents a significant barrier to entry. However, the Group has this infra-structure in place and is therefore in a strong competitive position. 
Production of model railway items is a labour intensive process. The Group sources all of its model railway products from China. Although 
labour rates in China are increasing, the Group continues to operate at a cost advantage to competitors producing in higher cost regions such 
as Europe.
Company Mission and Strategic Objectives
Vision/Mission To be the most successful model, hobby and collectables toy company in the world. 
Strategic objectives •	 To develop high margin branded product.
•	 To develop complimentary product categories for organic development.
•	 To broaden global reach through additional markets and products.
•	 To add complimentary distribution lines to accelerate growth.
Business Model
Internally developed branded intellectual property 
Product categories Model Trains Slot car racing Kits/Paints Die-cast 
Brands Hornby
Electrotren
Lima
Rivarossi
Jouef
Arnold
Scalextric
Superslot
Airfix
Humbrol
Corgi
% share of revenue 48% (2011 - 45%) 26% (2011 - 30%) 14% (2011 - 15%) 12% (2011 - 10%)
Supply source China China India/UK China
Product development 
Internal
UK/Spain UK UK UK
Licensing strategy To utilise appropriate third party licenses to enhance the consumer proposition.
Distribution Subsidiaries :
UK
Spain
Italy
France
Germany
USA
3rd party distributors :
Rest of the world
Routes to market Independent toy/model stores
Key accounts/Major retailers
3rd party internet retailers
Concession stores (UK only)
Direct to consumer
3rd party branded intellectual property distributed by Hornby
Brands Breyer ( Model Horses) Territory : UK
Slot-it (Slot car racing) Territory : USA
% share of revenue This currently represents less than 1% of revenue. Hornby > Annual Report and Accounts 2012 > Corporate Governance Report 17
Strategy
The continued diversification of our product categories, the legacy distribution opportunities coming out of the London 2012 games, and the 
opportunities to continue to grow our international business, provide a strong platform for future growth. In addition, we continue to extend 
our brand reach into complimentary categories such as the Moshi Monsters pin badge range. Our spread of brands/categories and our wide 
geographic reach provide a broad and stable base from which to trade during difficult economic times and as the opportunities arise, to 
continue to grow our business. 
IDENTIFICATION OF PRINCIPAL RISKS AND UNCERTAINTIES
The Board has the primary responsibility for identifying the major 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 risks and has reviewed and determined any 
mitigating actions required as set out below. The risk assessment has been completed in the context of the overall strategic objectives and the 
business model of the Group which has been set out above.
Principal risks and uncertainties
Risk Description Impact/Sensitivity Mitigation/Comment
UK market dependence The UK market represents a 
significant part of Group revenue; 
61% in 2012 (2011 - 64%). 
The Group is exposed to a 
downturn in the performance of the 
brands in the UK as well as to a 
downturn in the UK economy.
The Board’s strategy continues 
to be to expand overseas sales. 
The acquisitions of the brands 
Airfix, Humbrol, Corgi, Electrotren, 
Rivarossi, Lima, Arnold and Jouef 
have provided the Group with 
a significant share of the model 
railway, model and die-cast 
markets in continental Europe, with 
the objective of facilitating further 
growth. 
Market conditions The Group’s products are sold in 
the main to its retail customers. 
The performance of the market is 
affected by the general economic 
climate, overall consumer and 
retailer confidence, and the 
changing retail landscape.
The Group performance is 
impacted by the global macro-
economic environment and 
changes in the wider retail 
landscape.
In reviewing the future forecasts 
for the business the directors 
consider reasonable changes in 
macro-economic and associated 
market conditions recognising the 
potential for a negative impact on 
the Group’s results. The Group has 
credit insurance in place to mitigate 
against any specific retail customer 
default. The Group formulates its 
business strategy, including the 
website and direct to consumer 
channels, based on the changing 
retail dynamics.
The Group has competition in the 
model railway, slot racing, model 
kits, die cast and paint markets.
Loss of market share to increased 
competitor activity would have a 
negative impact on the Group’s 
results.
In many of our markets the Group 
enjoys a strong market position 
due to the continued development 
of our brands. Brands are 
extremely important in the model 
sector with market entry costs 
being prohibitive.
Exchange rates The Group purchases goods in 
Hong Kong dollars and US dollars 
and sells in £ sterling, Euros 
and US dollars and is therefore 
exposed to exchange rate 
fluctuations. 
Significant fluctuations in exchange 
rates to which the Group is 
exposed could have a material 
adverse effect on the Group’s 
future results.
The Group continues to hedge 
short term exposures by 
establishing forward currency 
purchases using fixed rate and 
participating forward contracts 
up to twelve months ahead. It 
is deemed impractical to hedge 
exchange rate movements beyond 
that period. Transaction risk on 
intercompany loans is managed 
through a foreign exchange collar. Corporate Governance Report (continued)
18   Hornby > Annual Report and Accounts 2012 > Corporate Governance Report
Risk Description Impact/Sensitivity Mitigation/Comment
Supply Chain The Group purchases goods, in 
the main, from third party Chinese 
suppliers due to the significant 
cost advantage when compared to 
products manufactured in Europe. 
The principal supplier to the Group, 
Sanda Kan, is owned by Kader 
Holdings Company Limited a 
Hong Kong based company with 
interests in the model rail sectors in 
Europe/US. 
The Group does not have exclusive 
arrangements with its suppliers 
and there is a risk that competition 
for manufacturing capacity could 
lead to delays in introducing new 
products or servicing existing 
demand. 
Input cost escalation in China 
could reduce or remove the 
Group’s pricing advantage and 
impact margins.
The Group is continuing to develop 
and diversify its supplier portfolio, 
which includes a supplier in India, 
and closely monitors production 
through an increased number of 
locally based employees (who also 
ensure the maintenance of quality 
standards). 
Product compliance The Group’s products are subject 
to compliance with toy safety 
legislation around the world.
Failure to comply could lead to a 
product recall resulting in damage 
to Company and brand reputation 
along with an adverse impact on 
the Group’s results.
Robust internal processes and 
procedures, active monitoring 
of proposed legislation and 
involvement in policy debate and 
lobbying of the relevant authorities.
Liquidity Insufficient financing to meet the 
needs of the business.
Without the appropriate level of 
financing it would be increasingly 
difficult to execute the Group’s 
business plans.
The Group has a fixed term loan 
agreement expiring in July 2014 
(£7.5 million at 31 March 2012) 
and a revolving credit facility (£10 
million expiring August 2015). The 
Group’s policy on liquidity risk is to 
maintain adequate facilities to meet 
the future needs of the business. 
Main control procedures
Management establishes control policies and procedures in response 
to each of the key risks identified. Control procedures operate to 
ensure the integrity of the Group’s financial statements, designed to 
meet the Group’s requirements and risks identified in each area of 
the business. Control procedures are documented where appropriate 
and reviewed by management and the Board on an on-going basis to 
ensure control weaknesses are mitigated.
The Group operates a comprehensive annual planning and budgeting 
system. 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.
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, with controls put in place as necessary.
The Group is pro-active in working with all suppliers to ensure 
compliance with the International Council of Toy Industries (ICTI) 
Code of Business Practices to include child and forced labour, 
working conditions, hours of work, pay, non-discrimination and 
health and safety. Compliance is managed through an annual audit 
process.
Environmental Responsibility
The Group believes that protection of the environment is an 
integral part of good practice and that it satisfies itself that all of 
its operations are conducted with reasonable proper regard for the 
environment. It is committed to maintaining, and wherever possible 
improving, the quality of this environment both for the people who 
work in the Group, and for the wider community now and in the 
future. The Group seeks to make the most effective and efficient use 
of all resources, encouraging all members of the Group to develop an 
ecologically sound approach to their work. 
Share Capital
Details of our Share Capital structure can be found on page 10 of the 
Directors report and in Note 21. Hornby > Annual Report and Accounts 2012 > Corporate Governance Report 19
Going Concern
A review of Group business activities and future outlook are set out 
on pages 5 to 7 of the Chief Executive’s Report. The financial position 
of the Group, its cash flows and liquidity position are shown in the 
balance sheet, cash flow statement and accompanying notes to the 
financial statements. The principal business risks associated with the 
business are shown on pages 17 and 18, whilst the risks arising from 
the Group’s financial instruments are covered on page 10. 
The directors, in their consideration of going concern, have reviewed 
the Group’s future cash flow forecasts and revenue projections, 
which they believe are based on a realistic assessment of future 
business performance.
The Group’s forecasts and projections, taking account of reasonable 
possible changes in trading performance, show that the Group 
should be able to operate within the levels of its agreed facilities. 
Accordingly the directors believe it appropriate to prepare the 
financial statements of the Group on a going concern basis.
Takeovers Directive
Pursuant to S992 of the Companies Act 2006, which implements the 
EU Takeovers Directive, the Company is required to disclose certain 
additional information. The following gives those disclosures which 
are not covered elsewhere in this Annual Report.
The Company’s Articles of Association (the ‘Articles’) give the Board 
power to appoint directors, but also require directors to retire and 
submit themselves for election at the first Annual General Meeting 
following their appointment. A director who retires in this way is 
eligible for election but is not taken into account when deciding 
how many directors should retire by rotation at the Annual General 
Meeting. The Articles themselves may be amended by special 
resolution of the shareholders.
Pursuant to the Articles, at every Annual General Meeting, one third 
of the current directors must retire by rotation.
The Board of Directors is responsible for the management of the 
business of the Company and may exercise all the powers of the 
Company subject to the provisions of the Company’s Memorandum 
of Association and the Articles.
The Articles contain specific provisions and restrictions regarding 
the Company’s power to borrow money. Powers relating to the 
issuing and buying back of shares are also included in the Articles 
and shareholders are asked to renew such authorities each year at 
the AGM. A copy of the Articles is available on request from the 
Company Secretary.
There are a number of agreements that take effect, alter or terminate 
upon a change of control of the Company following a takeover, 
such as commercial contracts, bank agreements, property lease 
arrangements and employees’ share plans. None of these are deemed 
to be significant in terms of their potential impact on the business of 
the Group as a whole. Directors’ Remuneration Report
for the Year Ended 31 March 2012
20   Hornby > Annual Report and Accounts 2012 > Directors’ Remuneration Report
Introduction
This report has been prepared in accordance with the Companies Act 
2006 and Schedule 8 of the Large and Medium Sized Companies and 
Groups (Accounts and Reports) Regulations 2008. The report also 
meets the relevant requirements of the Listing Rules of the Financial 
Services Authority and describes how the Board has applied the 
principles relating to directors’ remuneration in the UK Corporate 
Governance Code (2010). A resolution to approve the report will be 
proposed at the Annual General Meeting of the Company at which 
the financial statements will be approved.
The report has been divided into separate sections for audited and 
unaudited information.
UNAUDITED INFORMATION
Remuneration Committee
The Company has established a Remuneration Committee 
(the ‘Committee’) which is constituted in accordance with the 
recommendations of the Combined Code. The Committee is 
comprised of independent non-executive directors. The current 
members of the Committee are N M Carrington (Committee 
Chairman) and M E Rolfe, both of whom served throughout the 
financial year. 
The Committee meets regularly but more frequently if required. 
During the year three Remuneration Committee meetings were held, 
with both members present at each meeting.
Neither of the Committee members has any personal financial 
interest (other than as shareholders), conflicts of interests arising 
from cross-directorships or day-to-day involvement in running the 
business. The Committee makes recommendations to the Board. No 
director plays a part in any discussion about their remuneration. The 
terms of reference of the Committee are available on the Company 
website.
In determining the directors’ remuneration for the year, the 
Committee consulted F Martin (Chief Executive) about its proposals. 
New Bridge Street (‘NBS’), a trading name of Aon Corporation, is 
the Committee’s appointed remuneration adviser and continues to 
provide advice to the Committee. Neither NBS nor Aon Corporation 
provides any other services to the Company. 
Remuneration policy for the Executive Directors
General policy
Executive remuneration packages are designed to attract, motivate 
and retain directors of the high calibre needed to maintain the 
Group’s position as a market leader and to reward them for 
enhancing value to shareholders. The performance measurement 
of the executive directors is undertaken by the Committee. The 
Committee is sensitive to pay and conditions in the workforce when 
determining executive remuneration policy and base salary increases 
in particular. 
The Committee is also aware of the potential risk to the business 
of executive pay structures and is satisfied that the current policy is 
compatible with risk policies and systems.
There are five main elements of the remuneration package for 
executive directors and senior management:
•	 Base salary
•	 Benefits-in-kind
•	 Pension arrangements
•	 Performance-related annual bonus
•	 Performance Share Plan
The Company’s policy is that a substantial proportion of the 
remuneration of the executive directors should be performance 
related. At a target level of performance, approximately 40%-45% of 
the total remuneration package is performance-related.
Salary and benefits
Executive directors’ base salaries are reviewed annually by the 
Committee taking into account the responsibilities, skills and 
experience of each individual, pay and employment conditions within 
the Company and salary levels within listed companies of a similar 
size. Base salary levels as at 1 April 2011 and 2012 are as follows:
Salary at Salary at
Director Role 1 April 2012 1 April 2011
F Martin Chief Executive £267,909 £262,656
A J Morris Finance Director £176,802 £173,353
Base salary levels were reviewed during the first quarter of 2012 and, 
consistent with the average increase awarded across the Group, 
increased by 2.0% from 1 April 2012.
Policies concerning benefits, including the Group’s company car 
policy, are reviewed periodically. Currently, benefits in kind comprise 
motor cars and private health cover.
Pension
The executive directors and senior managers are members of 
defined contribution pension schemes and annual contributions are 
calculated by reference to base salaries, with neither annual bonuses 
nor awards under the share incentive schemes taken into account in 
calculating the amounts due. The contribution level continues to be 
20% of base salary for executive directors. For F Martin the balance 
of pension in excess of the HMRC Approved limit of £50,000 is paid 
by way of a salary supplement included in taxable benefits in the 
emoluments table. Hornby > Annual Report and Accounts 2012 > Directors’ Remuneration Report 21
Performance-related annual bonus
Executive directors participate in a performance-related bonus 
scheme. The maximum bonus continues to be capped at 100% of 
base salary for the Chief Executive and 75% of salary for the Finance 
Director. 
Performance targets are designed both to stretch and encourage 
individuals whilst aligning their interests with those of the Group. The 
performance conditions are divided 80:20 between Group underlying 
profit before tax and personal objectives. For the Group underlying 
profit before tax condition, a sliding scale range is set around a target 
level (designed to be stretching but realistically achievable). The 
personal objectives are set at the start of the year and are designed 
to be as objective and measurable as possible. This mix of targets is 
considered to provide a good link to the business strategy.
With effect from 2011, a provision was incorporated into the Annual 
Bonus Plan to enable the Company to claw back overpayments in the 
event of financial misstatement or gross misconduct.
In respect of the year ended 31 March 2012 neither of the executive 
directors were entitled to a bonus.
Performance Share Plan
The Performance Share Plan (‘PSP’), which was approved by 
shareholders at the 2008 AGM, was introduced as the Company’s 
primary long-term incentive plan to replace the short-term incentive 
plan (‘STIP’). No further awards will be made under the STIP although 
legacy awards continue to vest on their original terms.
Under the PSP, awards are made to executive directors and selected 
other executives on the following basis: 
•	 The maximum award level is 150% of base salary per annum 
although awards up to 200% of base salary may be granted 
to an individual in exceptional circumstances (e.g. recruitment 
or retention). The current policy is to grant awards over shares 
worth 100% of salary. 
•	 Performance conditions are reviewed annually, so as to ensure 
they remain appropriately pitched in relation to the strategy and 
business cycle, and provide an optimal alignment between the 
interests of executives and shareholders.
•	 For 2012, an award will be subject to a total shareholder return 
(‘TSR’) condition and a range of normalised underlying earnings 
per share (‘EPS’) growth targets, each of the TSR and EPS 
elements apply to a separate 50% of an award and measured 
over a period of three financial years. 
•	 The TSR condition is based on the Company’s underlying 
performance against the constituents of the FTSE Small Cap 
(excluding investment trusts) as at the date of grant. 25% of 
this part of the award will vest if the Company’s TSR is equal to 
the TSR of the median company, with full vesting for top quartile 
performance. A sliding scale operates between these points.
•	 For the EPS part of the award, 25% vests for average annual 
underlying EPS growth of RPI+3% p.a., with full vesting for 
average annual EPS growth of RPI+12% p.a. A sliding scale 
operates between these points.
•	 The Committee is comfortable that the blend of TSR and 
EPS targets continues to provide a good balance between 
incentivising and rewarding strong financial performance on the 
one hand whilst, on the other hand, providing a strong and direct 
alignment with the interests of institutional shareholders by 
rewarding stock market outperformance. 
•	 Performance conditions are calculated by independent advisers 
and verified by the Committee.
•	 Executives benefit, in the form of additional cash or shares, from 
the value of dividends paid over the vesting period, to the extent 
that awards vest.
•	 It is currently intended that market purchased shares are used to 
satisfy awards although there is flexibility to use new issue and 
treasury shares within institutional shareholder dilution limits. 
•	 Similar to the bonus plan, with effect from 2011 awards, a 
provision was incorporated into the PSP to enable the Company 
to claw back overpayments in the event of misstatement or 
gross misconduct.
Shareholding guidelines
A policy for share ownership guidelines is operated for the executive 
directors and senior executives. For the executive directors, the 
required threshold of share ownership is 100% of base salary. Until 
such time as this level of shareholding is achieved, 50% of the net 
of tax value of awards which vest under the PSP are required to be 
retained. 
Executive Directors’ Service Contracts
The executive directors do not have fixed period contracts.
Frank 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 F 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.
Andrew J Morris’s service contract dated 23 November 2007 
includes a notice period of one year to be given by the Company and 
of six months to be given by A J Morris. 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. Directors’ Remuneration Report (continued)
for the Year Ended 31 March 2012
22   Hornby > Annual Report and Accounts 2012 > Directors’ Remuneration Report
Non-Executive Directors’ Contracts
The remuneration of the non-executive directors is determined by 
the Board (except the Company Chairman’s fee, which is set and 
reviewed by the Remuneration Committee) based on the level of 
fees paid to non-executive directors of similar companies and by 
considering independent external advice.
Neil A Johnson was appointed non-executive Chairman on 22 
December 2000 having initially joined the Board on 1 July 1998 and 
receives salary and fees for his services to the Company of £95,000 
per annum effective 1 April 2012. 80% is paid to a third-party 
consultancy company and 20% treated as earnings. N A Johnson’s 
service contract dated 13 February 2006, amended March 2007, is 
subject to termination on six months notice to be given by either the 
Company or N A 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 and fee to which he is 
entitled under this agreement.
Nigel M Carrington, non-executive director, was appointed to 
the Board on 1 December 2007, and receives fees for his services 
to the Company of £40,000 per annum effective 1 April 2012. 
N M Carrington’s service contract dated 3 November 2007 is 
subject to termination on six months notice to be given by either the 
Company or N M Carrington. 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 fee to which he is entitled 
under this agreement.
Mark E Rolfe, non-executive director, was appointed to the Board on 
1 January 2008, and receives fees for his services to the Company 
of £40,000 per annum effective 1 April 2012. M E Rolfe’s service 
contract dated 22 November 2007 is subject to termination on six 
months notice to be given by either the Company or M E Rolfe. 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 fee to which he is entitled under this agreement.
None of the non-executive directors receives any pension or 
performance-related pay from the Company.  Hornby > Annual Report and Accounts 2012 > Directors’ Remuneration Report 23
AUDITED INFORMATION
DIRECTORS’ INTERESTS
Interests in shares
The interests of the directors in the shares of the Company in the year were:
At
31 March 
2012
At
31 March
2011 
 number number
N A Johnson 100,000 50,000
F Martin 388,282 354,092
A J Morris 8,404 6,702
N M Carrington 18,000 10,000
M E Rolfe 10,000 10,000
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 have been no other changes in the interests set out above between 31 March 2012 and 8 June 2012.
Aggregate Directors’ remuneration
The total amount for directors’ remuneration was as follows:
2012 2011
 £’000 £’000
Emoluments 635 675
Money purchase pension contributions 86 86
 721 761
Directors’ detailed emoluments
The emoluments of the directors were as follows:
 
Salary &
Fees
£
Bonus
1
£
Taxable
Benefits
2
£
Pension 
Contribution
£
2012
Total
£
2011
Total
3
£
Chairman:
N A Johnson 95,000 - - - 95,000 90,000
Executive:
F Martin 262,656 - 14,085 50,000 326,741 365,131
A J Morris 173,353 - 10,030 35,628 219,011 236,235
Non-executive
N M Carrington 40,000 - - - 40,000 35,000
M E Rolfe 40,000 - - - 40,000 35,000
 611,009 - 24,115 85,628 720,752 761,366
1.  The Directors bonus award is based on performance targets. The targets are based on Group underlying profit before tax (80%) and personal objectives 
(20%). Both executive directors achieved nil% (out of a maximum 100%) for the profit before tax element and nil% (out of a maximum 100%) for the 
personal objectives element. The Remuneration Committee took the view that profit delivery in 2011/12 did not support the payment of bonuses for personal 
objectives.
2.  Taxable benefits relate to the provision of a company car, health assurance and F Martin pension supplement. 
3. The 2011 total column includes pension contributions which were F Martin (£51,250) and A J Morris (£34,691). Directors’ Remuneration Report (continued)
for the Year Ended 31 March 2012
24   Hornby > Annual Report and Accounts 2012 > Directors’ Remuneration Report
Performance Share Plan
At 31 March 2012, outstanding awards to directors under the Performance Share Plan were as follows:
Director
Award
date
Vesting
date
Market
price at
Award
date
At 
1 April 2011
Awarded
during
year
Lapsed
during 
year
Vested
during
year
At 
31 March
2012
F Martin July 2008 July 2011 149.6p 167,112 - (167,112) - -
July 2009 July 2012 136.0p 183,824 - - - 183,824
June 2010 June 2013 139.5p 183,692 - - - 183,692
June 2011 June 2014 136.4p - 192,591 - - 192,591
A J Morris July 2008 July 2011 149.6p 110,924 - (110,924) - -
July 2009 July 2012 136.0p 121,324 - - - 121,324
June 2010 June 2013 139.5p 121,237 - - - 127,237
June 2011 June 2014 136.4p - 127,110 - - 127,110
For the awards granted to date, 50% of an award is subject to a TSR condition and 50% is subject to an EPS performance condition, both of 
which are measured over a period of three financial years. For the TSR condition, 25% of this part of the award will vest if Hornby’s TSR is equal 
to the TSR of the median company of the constituents of the FTSE Small Cap (struck at the date of grant), with full vesting for top quartile 
performance, with a sliding scale operating between these points. For the EPS part of the award, 25% vests for average annual underlying EPS 
growth of RPI+3% p.a., with full vesting for average annual EPS growth of RPI+12% p.a. with a sliding scale operating between these points. 
Interests in share options
Details of options held by directors at 31 March 2012 are set out below:
Director
Date 
of Grant
Options
held at
1 April 2011
Options
granted
during
the year
Options
exercised
during
the year
Options
lapsed
during
the year
Options
held at
31 March
2012
Exercise 
price Exercise period
F Martin 28 Mar 2002 600,000 - (600,000) - - 76.8p 28 Mar 2005 – 28 Mar 2012
F Martin exercised 600,000 share options during the year at 76.8p, the market price at the date of exercise was 120.0p, realising a gain of 
£259,200 (2011 – £324,800 gain).
The market price of the Company’s shares at 31 March 2012 was 95.0p and the range during the year ended 31 March 2012 was 94.3p to 
145.0p.
Short Term Incentive Plan
At 31 March 2012, outstanding awards to directors under the Short Term Incentive Plan were as follows:
Director
Award
date
Vesting
dates
Market
price at
Award
date
Number
 of shares
Value of
entitlement
31 March 2012
£’000
Value of
entitlement
31 March 2011
£’000
F Martin June 2008 June 2012 156.1p 27,191 26 59
A J Morris June 2008 June 2012 156.1p 1,702 2 4
On 17 June 2011, 27,190 shares of the 2008 Award were vested to F Martin. The share price on this date was 136.3p.
On 17 June 2011, 1,702 shares of the 2008 Award were vested to A J Morris. The share price on this date was 136.3p.
Value of entitlement at 31 March 2012 is based on the closing market price of the Company’s shares of 95.0p (2011 – 108.0p). Hornby > Annual Report and Accounts 2012 > Directors’ Remuneration Report 25
Performance graph (unaudited information)
The following graph shows the Company’s total shareholder return compared to the TSR of the FTSE Small Cap (excluding investment trusts) 
over the five year period to 31 March 2012. This index has been selected given that the Company is a constituent of the FTSE Small Cap.
N M Carrington
Remuneration Committee Chairman
8 June 2012 26   Hornby > Annual Report and Accounts 2012 > Statement of Directors’ responsibiIities
Statement of Directors’ responsibiIities
The directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in accordance 
with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the 
Group and Parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the 
European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and 
fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group and Company for that period. In preparing 
these financial statements, the directors are required to:
•	 select suitable accounting policies and then apply them consistently;
•	 make judgements and accounting estimates that are reasonable and prudent;
•	 state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and 
explained in the financial statements.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions 
and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the 
financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial 
statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and the Company 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. Legislation in the United Kingdom governing the 
preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 
Each of the directors, whose names and functions are listed in the Directors and Corporate Information section, confirm that, to the best of 
their knowledge:
•	 the Group and Company financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and 
fair view of the assets, liabilities, financial position and profit of the Group and Company; and
•	 the Chief Executive’s Report and Corporate Governance Statement include a fair review of the development and performance of the 
business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.
So far as the directors are aware, there is no relevant audit information of which the Company’s auditors are unaware; and each director has 
taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to 
establish that the Company’s auditors are aware of that information.
By order of the Board
J W Stansfield 
Company Secretary
8 June 2012 Hornby > Annual Report and Accounts 2012 > Independent Auditors’ Report to the Members of Hornby Plc 27
Independent Auditors’ Report to the Members of Hornby Plc
We have audited the financial statements of Hornby Plc for the year ended 31 March 2012 which comprise the Group and Company Statement 
of Comprehensive Income, the Group and Company Balance Sheet, the Group and Company Statement of Changes in Equity, the Group and 
Company Cash Flow Statement, the Group and Company Cash Flow from Operating Activities and the related notes. The financial reporting 
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by 
the European Union.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 26, the directors are responsible for the preparation of 
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the 
financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us 
to comply with the Auditing Practices Board’s Ethical Standards for Auditors. 
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of 
Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, 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.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance 
that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether 
the accounting policies are appropriate to the Group’s and the Parent Company’s circumstances and have been consistently applied and 
adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the 
financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies 
with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the 
implications for our report.
Opinion on financial statements
In our opinion the financial statements: 
•	 give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2012 and of the Group and Parent 
Company’s profit and cash flows for the year then ended;
•	 have been properly prepared in accordance with IFRSs as adopted by the European Union; 
•	 have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, 
Article 4 of the lAS Regulation. 
Opinion on other matters prescribed by the Companies Act 2006
In our opinion: 
•	 the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006;
•	 the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the 
financial statements; and
•	 the information given in the Corporate Governance Statement set out on pages 12 to 19 with respect to internal control and risk 
management systems and about share capital structures is consistent with the financial statements. 28   Hornby > Annual Report and Accounts 2012 > Independent Auditors’ Report to the Members of Hornby Plc
Independent Auditors’ Report to the Members of Hornby Plc 
(continued)
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion: 
•	 adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from 
branches not visited by us; or 
•	 the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the 
accounting records and returns; or 
•	 certain disclosures of directors’ remuneration specified by law are not made; or 
•	 we have not received all the information and explanations we require for our audit; or
•	 a corporate governance statement has not been prepared by the Parent Company. 
Under the Listing Rules we are required to review: 
•	 the directors’ statement, set out on page 19, in relation to going concern;
•	 the parts of the Corporate Governance Statement relating to the company’s compliance with the nine provisions of the UK Corporate 
Governance Code specified for our review; and
•	 certain elements of the report to shareholders by the Board on directors’ remuneration.
Rosemary Shapland (Senior Statutory Auditor) 
for and on behalf of PricewaterhouseCoopers LLP 
Chartered Accountants and Statutory Auditors 
Gatwick
8 June 2012 Hornby > Annual Report and Accounts 2012 > Financial Statements 29
Group and Company Statement of Comprehensive Income
for the year ended 31 March 2012
Group Company
 Note 
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
REVENUE 2 64,447 63,372 1,278 1,251
Cost of sales  (33,290) (34,095) - -
GROSS PROFIT 31,157 29,277 1,278 1,251
Distribution costs (2,571) (2,579) - -
Selling and marketing costs (13,761) (12,882) - -
Administrative expenses (9,029) (8,406) (808) (795)
Other operating expenses  (1,054) (519) (144) (166)
OPERATING PROFIT 2 4,742 4,891 326 290
Income from shares in Group undertakings - - 1,932 3,681
Finance income 3 26 64 175 174
Finance costs 3 (779) (826) (234) (228)
PROFIT BEFORE TAXATION 4 3,989 4,129 2,199 3,917
Analysed as:
Underlying profit before taxation 4,526 4,423 2,199 3,917
Net foreign exchange impact on intercompany loans (145) 96 - -
Amortisation of intangibles  (392) (390) - -
PROFIT BEFORE TAXATION 3,989 4,129 2,199 3,917
Taxation 5 (825) (1,274) 22 (135)
PROFIT FOR THE YEAR AFTER TAXATION 3,164 2,855 2,221 3,782
OTHER COMPREHENSIVE INCOME
Cash flow hedges, net of tax 300 (655) - -
Currency translation differences  (16) (15) 305 79
OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR, 
NET OF TAX  284 (670) 305 79
TOTAL COMPREHENSIVE INCOME FOR THE YEAR  3,448 2,185 2,526 3,861
EARNINGS PER ORDINARY SHARE
Basic 7 8.19p 7.50p
Diluted 7 8.12p 7.43p
All operations relate to continuing operations. 30   Hornby > Annual Report and Accounts 2012 > Financial Statements
Group and Company Balance Sheet
at 31 March 2012
Group Company
 Note 
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
ASSETS
NON-CURRENT ASSETS
Goodwill 8 13,059 13,372 - -
Intangible assets 9 4,350 4,820 - -
Property, plant and equipment 10 10,022 10,208 1,309 1,344
Investments 11 - - 36,601 35,172
Deferred tax assets 20 538 109 7 16
   27,969 28,509 37,917 36,532
CURRENT ASSETS
Inventories 12 17,867 16,213 - -
Trade and other receivables 13 13,169 13,648 33 38
Derivative financial investments 19 104 93 - -
Current tax assets 17 61 282 9 130
Cash and cash equivalents 14 1,952 4,952 2 11
33,153 35,188 44 179
LIABILITIES 
CURRENT LIABILITIES
Borrowings 18 (3,474) (3,136) - -
Derivative financial instruments 19 (2,155) (3,193) - -
Trade and other payables 15 (9,822) (11,259) (88) (132)
Provisions 16 (324) (413) - -
Current tax liabilities 17 (705) (564) (245) (20)
   (16,480) (18,565) (333) (152)
NET CURRENT ASSETS/(LIABILITIES)  16,673 16,623 (289) 27
NON-CURRENT LIABILITIES 
Borrowings 18 (4,888) (8,026) (5,018) (5,331)
Deferred tax liabilities 20 (573) (337) (159) (177)
   (5,461) (8,363) (5,177) (5,508)
NET ASSETS  39,181 36,769 32,451 31,051
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT
Share capital 21 392 385 392 385
Share premium 6,180 5,643 6,180 5,643
Capital redemption reserve 55 55 55 55
Translation reserve (545) (529) (985) (1,290)
Hedging reserve (187) (487) - -
Other reserves 1,688 1,688 19,145 19,145
Retained earnings  31,598 30,014 7,664 7,113
TOTAL EQUITY  39,181 36,769 32,451 31,051
The financial statements on pages 29 to 33 were approved by the Board of directors on 8 June 2012 and were signed on its behalf by:
F Martin
Director Hornby > Annual Report and Accounts 2012 > Financial Statements 31
Group and Company Statement of Changes in Equity
year ended 31 March 2012 and 31 March 2011
GROUP
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Translation
reserve
£’000
Hedging
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 April 2010 380 5,340 55 (514) 168 1,688 29,511 36,628
Total comprehensive income for the year - - - (15) (655) - 2,855 2,185
Transactions with owners
Issue of shares 5 303 - - - - - 308
Share-based payments - - - - - - 51 51
Shares vested from employee benefit trust - - - - - - 146 146
Dividends - - - - - - (2,549) (2,549)
 5 303 - - - - (2,352) (2,044)
Balance at 31 March 2011 385 5,643 55 (529) (487) 1,688 30,014 36,769
Total comprehensive income for the year - - - (16) 300 - 3,164 3,448
Transactions with owners
Issue of shares 7 537 - - - - - 544
Share-based payments - - - - - - 262 262
Shares vested from employee benefit trust - - - - - - 90 90
Dividends - - - - - - (1,932) (1,932)
 7 537 - - - - (1,580) (1,036)
Balance at 31 March 2012 392 6,180 55 (545) (187) 1,688 31,598 39,181
Retained earnings includes £621,000 at 31 March 2012 (2011 - £638,000) which is not distributable and relates to a 1986 revaluation of 
land and buildings. 
COMPANY
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Translation
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 April 2010 380 5,340 55 (1,369) 19,145 5,829 29,380
Total comprehensive income for the year - - - 79 - 3,782 3,861
Transactions with owners
Issue of shares 5 303 - - - - 308
Share-based payments - - - - - 51 51
Dividends - - - - - (2,549) (2,549)
 5 303 - - - (2,498) (2,190)
Balance at 31 March 2011 385 5,643 55 (1,290) 19,145 7,113 31,051
Total comprehensive income for the year - - - 305 - 2,221 2,526
Transactions with owners
Issue of shares 7 537 - - - - 544
Share-based payments - - - - - 262 262
Dividends - - - - - (1,932) (1,932)
 7 537 - - - (1,670) (1,126)
Balance at 31 March 2012 392 6,180 55 (985) 19,145 7,664 32,451 32   Hornby > Annual Report and Accounts 2012 > Financial Statements
Group and Company Cash Flow Statement
for the year ended 31 March 2012
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 5,856 6,072 466 325
Interest received 26 64 175 174
Interest paid (779) (826) (234) (228)
Tax (paid)/repaid (656) (1,750) 62 (253)
Net cash generated from operating activities 4,447 3,560 469 18
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment 1 181 - -
Purchase of property, plant and equipment (3,787) (4,499) - -
Dividends received - - 1,932 3,681
Net cash (used in)/generated from investing activities (3,786) (4,318) 1,932 3,681
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares 544 308 544 308
Repayments of issue of loans (2,577) (1,554) - -
Finance lease capital payments (29) (54) - -
Dividends paid to Company’s shareholders (1,932) (2,549) (1,932) (2,549)
Loans to subsidiary undertakings - - (1,014) (1,529)
Net cash used in financing activities (3,994) (3,849) (2,402) (3,770)
Effect of exchange rate movements 527 125 (8) 37
Net decrease in cash and cash equivalents (2,806) (4,482) (9) (34)
Cash, cash equivalents and bank overdrafts at beginning of the year 4,397 8,879 11 45
CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS  
AT END OF YEAR 1,591 4,397 2 11
CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS CONSIST OF:
Cash and cash equivalents 1,952 4,952 2 11
Bank overdrafts (361) (555) - -
CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS  
AT END OF YEAR 1,591 4,397 2 11 Hornby > Annual Report and Accounts 2012 > Financial Statements 33
Group and Company Cash Flow from Operating Activities
For the year ended 31 March 2012
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Profit before taxation 3,989 4,129 2,199 3,917
Interest payable 779 826 234 228
Interest receivable (26) (64) (175) (174)
Dividend income - - (1,932) (3,681)
Amortisation of intangible assets 392 390 - -
Depreciation 3,914 4,060 35 43
Profit on disposal of property, plant and equipment - (2) - -
Share-based payments 262 51 144 166
(Gain)/loss on financial derivatives (18) 75 - -
(Decrease)/increase in provisions (89) 22 - -
Increase in inventories (1,654) (3,940) - -
Decrease/(increase) in trade and other receivables 479 (349) 5 6
(Decrease)/increase in trade and other payables (2,172) 874 (44) (180)
CASH GENERATED FROM OPERATIONS 5,856 6,072 466 325 34   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements
for the year ended 31 March 2012
1. SIGNIFICANT ACCOUNTING POLICIES
Accounting policies for the year ended 31 March 2012
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been 
consistently applied to all the years presented, unless otherwise stated.
BASIS OF PREPARATION
The financial information for the year ended 31 March 2012 has been prepared in accordance with International Financial Reporting 
Standards (‘IFRS’) as adopted by the European Union (‘EU’), IFRS Interpretations Committee (‘IFRIC’) interpretations and with those parts 
of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated and Parent Company financial statements 
have been prepared on a going concern basis and under the historical cost convention, as modified by the revaluation of certain financial 
assets and liabilities (including derivative instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported 
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the 
reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results 
ultimately may differ from those estimates.
BASIS OF CONSOLIDATION
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a 
shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to 
the Group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is 
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus 
costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business 
combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess 
of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses 
are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed 
where necessary to ensure consistency with the policies adopted by the Group.
ADOPTION OF NEW AND REVISED STANDARDS
Interpretations effective in the current year
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 April 2011 that 
would be expected to have a material impact on the Group.
Interpretations effective in the current year but not relevant
The following interpretations to published standards are mandatory for accounting periods beginning on or after 1 April 2011 but are not 
relevant to the Group’s operations in the current year:
IAS 24 (revised),   ‘Related party disclosures’ 
IFRIC 14 amendment  ‘Prepayments of a minimum funding arrangement’ 
IFRIC 19   ‘Extinguishing financial liabilities with equity investments’ 
Annual Improvements Project 2010
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the 
Group
The following standards and amendments to existing standards have been published and are mandatory for the Group’s accounting 
periods beginning on or after 1 April 2012 or later periods, but the Group has not early adopted them:
Amendment to IFRS 7 ‘Financial instruments: Disclosures’ the amendment will promote transparency in the reporting of transfer 
transactions and improve understanding of risk exposures relating to transfers of financial instruments. The Group is yet to assess the 
IFRS 7 amendment’s full impact and intends to adopt the amendment no later than the accounting period beginning on 1 April 2012.
Amendment to IAS 1 ‘Financial statement presentation’ the amendment is a requirement for entities to group items presented in other 
comprehensive income (‘OCI’) on the basis of whether they are potentially reclassifiable to profit or loss. The Group is yet to assess the IAS 
1 amendment’s full impact and intends to adopt the amendment no later than the accounting period beginning on 1 April 2013. Hornby > Annual Report and Accounts 2012 > Financial Statements 35
For the year ended 31 March 2012
IFRS 9 ‘Financial Instruments’ addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 
9 was issued in November 2009 and October 2010. It replaces the parts of IAS 39 that relate to the classification and measurement of 
financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value 
and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity’s business 
model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the 
standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial 
liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the 
income statement, unless this creates an accounting mismatch. The Group is yet to assess IFRS 9’s full impact and intends to adopt IFRS 
9 no later than the accounting period beginning on 1 April 2013.
IFRS 10 ‘Consolidated financial statements’ builds on existing principles by identifying the concept of control as the determining factor in 
whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional 
guidance to assist in the determination of control where this is difficult to assess. The Group is yet to assess IFRS 10’s full impact and 
intends to adopt IFRS 10 no later than the accounting period beginning on 1 April 2013.
IFRS 12 ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other entities, including 
joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The Group is yet to assess IFRS 12’s full 
impact and intends to adopt IFRS 12 no later than the accounting period beginning on 1 April 2013.
IFRS 13 ‘Fair value measurement’ aims to improve consistency and reduce complexity by providing a precise definition of fair value and 
a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned 
between IFRSs, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already 
required or permitted by other standards within IFRSs. The Group is yet to assess IFRS 13’s full impact and intends to adopt IFRS 13 no 
later than the accounting period beginning on 1 April 2012.
IAS 27 ‘Separate financial statements’ (revised) includes the provisions on separate financial statements that are left after the control 
provisions of IAS 27 have been included in IFRS 10. The Group is yet to assess IAS 27 (revised) full impact and intends to adopt IAS 27 
(revised) no later than the accounting period beginning on 1 April 2013.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.
RECONCILIATION OF STATUTORY TO NON STATUTORY INFORMATION IN THE CHAIRMAN’S STATEMENT AND CHIEF 
EXECUTIVE’S REPORT
Underlying profit before taxation is shown to present a clearer view of the trading performance of the business. Management has identified 
the following non-trivial adjustments, whose inclusion in earnings could distort underlying trading performance: net foreign exchange gains/
losses on intercompany loans which are dependent on exchange rates from time to time and can be volatile and amortisation of intangibles 
which result from historic acquisitions and restructuring.
Group
  
2012
£’000
2011
£’000
Profit before taxation 3,989 4,129
Foreign exchange on intercompany loans
 including impact of foreign exchange collar 145 (96)
Amortisation of intangibles (note 9) 392 390
Underlying profit before taxation 4,526 4,423 36   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
The Statement of Comprehensive Income discloses foreign exchange movements and amortisation of intangibles in other operating 
expenses.
Group
  
2012
£’000
2011
£’000
Reconciliation of net debt:
Cash 1,952 4,952
Total borrowings excluding finance leases (note 18) (8,263) (11,034)
Net debt (6,311) (6,082)
Hornby Hobbies Limited, the Group’s UK trading subsidiary, has granted Euro denominated intercompany loans to sister subsidiary 
companies that are translated into Sterling at statutory period ends thereby creating exchange gains or losses. In order to mitigate the 
exchange exposure Hornby Hobbies Limited has entered a foreign exchange collar contract to sell an equal number of Euros in October 
2012 that will be revalued by an approximately similar but opposite Sterling value at each period end.
The foreign exchange collar is for a principal amount of Euro 16.5 million and is in place to minimise exposure to Euro denominated 
intercompany loans.
The amount shown above comprises losses on translation of intercompany loans of £875,000 (2011 - loss of £127,000), offset by a gain 
on marking to market the foreign exchange collar of £730,000 (2011 - gain of £223,000).
Beneficial impact of the collar as at 3 October 2012 is expected to be a minimum of £340,000 if the exchange rate exceeds the strike 
rate of 1.4300 t:£, increasing to a maximum of £767,000 at the participation cap rate of 1.3790 t:£ compared to the intercompany loans 
Sterling valuation at 31 March 2007 (1.4734 t:£).
As at 31 March 2012 the cumulative profit impact is a gain of £730,000. Therefore in the period 1 April 2012 to 30 September 2012 there 
will be an adjustment to the Statement of Comprehensive Income between a £37,000 profit and £390,000 charge.
The fluctuation of foreign exchange and resultant impact on intercompany loans and foreign exchange collar is set out below:
 
Foreign
exchange
rate
€:£
€16.5 million
 intercompany
 loan
in Sterling
£’000
Gain
/(loss)
on loan
£’000
Fair
value
collar
£’000
Net gain/(loss)
in Profit
before tax
£’000
06 Aug 2007 Transaction 1.47 11,199 - - -
31 Mar 2008 1.25 13,156 1,957 (1,346) 611
31 Mar 2009 1.08 15,288 4,089 (3,270) 208
31 Mar 2010 1.12 14,722 3,523 (2,774) (70)
31 Mar 2011 1.13 14,606 3,407 (2,552) 106
31 Mar 2012 1.20 13,750 2,551 (1,821) (125)
Total cumulative gain/(loss) to profit before tax    730
Prior to expiry in October 2012 the Company intends to enter a new one year foreign exchange collar contract that will include the current 
collar mark to market valuation and have no cash impact.
REVENUE RECOGNITION
Revenue comprises the fair value of the sale of goods net of value added tax, rebates and discounts, royalty income and after eliminating 
sales within the Group.
Revenue is recognised as follows:
(a)  Sales of goods
Sales of goods are recognised when a Group entity has despatched products to the customer. The customer is either a trade customer 
or the consumer when sold through Hornby concessions in various retail outlets, or via the internet. Hornby > Annual Report and Accounts 2012 > Financial Statements 37
(b) Royalty income
Royalty income is recognised on an accruals basis in accordance with the substance of the relevant agreements.
(c) Sales returns
The Group establishes a sales returns provision at the period end that reduces income in anticipation of customer returns of goods sold 
in the period.
(d) Hornby Visitor Centre
Revenue is generated from the ticket and product sales at our Visitor Centre in Margate.
Dividend income in the Company is recognised upon receipt.
Management fees are recognised in the Company on an accruals basis in relation to costs incurred on behalf of subsidiary companies.
OPERATING SEGMENTS
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The 
chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has 
been identified as the Board of the Group that makes strategic decisions.
Operating profit of each reporting segment includes revenue and expenses directly attributable to or able to be allocated on a reasonable 
basis. Segment assets and liabilities are those operating assets and liabilities directly attributable to or that can be allocated on a reasonable 
basis.
BUSINESS COMBINATIONS
Goodwill arising on a business combination before 1 April 2004, the date of transition to IFRS, is not subject to amortisation but tested for 
impairment on an annual basis. Intangible assets, excluding goodwill, arising on a business combination subsequent to 1 April 2004, are 
separately identified and valued, and subject to amortisation over their estimated economic lives.
GOODWILL
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the 
acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment 
losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of 
goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating 
units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified 
according to operating segment.
INTANGIBLES
(a) Brand names
Brand names are capitalised at fair value as at the date of acquisition. They are carried at their fair value less accumulated amortisation 
and any accumulated impairment losses. Amortisation is calculated using the straight-line method to allocate the fair value of brand names 
over their estimated economic life of 15-20 years. Brand names have been valued on a “relief from royalty” basis.
(b) Customer lists
Customer lists are capitalised at fair value as at the date of acquisition. They are carried at their fair value less accumulated amortisation 
and any accumulated impairment losses. Amortisation is calculated using the straight-line method to allocate the fair value of customer 
relationships over their estimated economic life of 10 years. Customer lists have been valued according to discounted incremental operating 
profit expected to be generated from each of them over their useful lives.
(c) Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing 
of new products) are recognised as intangible assets when it is probable that the project will be a success, considering its commercial and 
technological feasibility, and costs can be measured reliably. Other development expenditures are recognised as an expense as incurred. 38   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
PROPERTY, PLANT AND EQUIPMENT
Land and buildings are shown at cost less accumulated depreciation. Assets revalued prior to the transition to IFRS use this valuation as 
deemed cost at this date. Other property, plant and equipment are shown at historical cost less accumulated depreciation. Cost includes 
the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Depreciation is provided at rates calculated to write off the cost or valuation of each asset, on a straight-line basis (with the exception of 
tools and moulds) over its expected useful life to its residual value, as follows:
Freehold buildings – 30 to 50 years
Plant and equipment – 5 to 10 years
Motor vehicles – 4 years
Freehold land is not depreciated.
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.
IMPAIRMENT OF NON-CURRENT ASSETS
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. 
Assets that are subject to amortisation are reviewed for impairment when events or changes in circumstances indicate that the carrying 
value may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying value exceeds its recoverable 
amount, which is considered to be the higher of its value in use and fair value less costs to sell. In order to assess impairment, assets are 
grouped into the lowest levels for which there are separately identifiable cash flows (cash-generating units). Cash flows used to assess 
impairment are discounted using appropriate rates taking into account the cost of equity and any risks relevant to those assets.
INVESTMENTS
In the Company’s financial statements, investments in subsidiary undertakings are stated at cost less any impairment. Investments revalued 
using the equity method of valuation prior to the transition to IFRS use this valuation as deemed cost at this date. In previous years dividend 
income was presented in finance income. This has now been shown separately in the Statement of Comprehensive Income.
INVENTORIES
Inventories are stated at the lower of cost and net realisable value. Cost is predominantly determined using the first-in, first-out (FIFO) 
method. Alternative methods may be used when proven to generate no material difference. The cost of finished goods and work in progress 
comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity).
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.
The replacement cost, based upon latest invoice prices before the balance sheet date, is considered to be higher than the balance sheet 
value of inventories at the year end due to price rises and exchange fluctuations. It is not considered practicable to provide an accurate 
estimate of the difference at the year end date.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the contractual 
provisions of the instrument.
FINANCIAL LIABILITIES AND EQUITY
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity 
instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
SALES RETURNS PROVISIONS
Provision for sales returns are recognised when the Group has a constructive obligation as a result of a past event. Provision for sales 
returns are measured at the present value of the expenditure expected to be required to settle the obligation. Hornby > Annual Report and Accounts 2012 > Financial Statements 39
TRADE RECEIVABLES
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. A 
provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according 
to the original terms of receivables. The amount of the provision is recognised in the Statement of Comprehensive Income.
TRADE PAYABLES
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
TAXATION INCLUDING DEFERRED TAX
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.
Deferred tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their 
carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to 
the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward 
of unused tax assets and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each 
balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part 
of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax 
liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the 
taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the 
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Tax relating 
to items recognised directly in equity is recognised in equity and not in the Statement of Comprehensive Income.
Deferred tax assets and liabilities have not been discounted.
CRITICAL JUDGEMENTS IN APPLYING THE ACCOUNTING POLICIES
The Group makes estimates and assumptions concerning the future, none of which are regarded as critical. The resulting accounting 
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that may have an element of risk causing 
an adjustment to the carrying amounts of assets and liabilities within the next financial year include provisions for stock obsolescence, 
customer returns, doubtful debts, impairment reviews, fair values of share-based payments, fair values of derivatives and recoverability of 
deferred tax assets. All of the above are estimated with reference to historical data, expectation of future events and reviewed regularly.
Further details in relation to impairment reviews are in note 8 and in relation to share-based payments in note 22.
Liabilities and provisions are recognised when the Group has a present legal or constructive obligation as a result of past events and it is 
more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. The 
expense relating to any liability or provision is presented in the Statement of Comprehensive Income net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation 
at the balance sheet date. If material, provisions are determined by discounting the expected future cash flows of the Group at rates that 
reflect current market assessments of the time value of money.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purpose of the cash flow statement includes cash in hand, deposits at all banks, other liquid investments 
with original maturities of three months or less and bank overdrafts. Bank overdrafts or loans where there is no right of set off are shown 
within borrowings in current or non-current liabilities on the balance sheet as appropriate.
SHARE-BASED PAYMENT
Hornby Plc operates three share-based payment plans:
– Share Option Scheme
– Short Term Incentive Plan
– Performance Share Plan 40   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair 
value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the 
equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares 
that will eventually vest and adjusted for the effect of non market-based vesting conditions.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as 
a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over 
the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.
Share Option Scheme
Fair value is measured by use of the Black Scholes model. The expected life used in the models has been adjusted, based on management’s 
best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Short Term Incentive Plan
The Short Term Incentive Plan (STIP) investment is carried at the cost of the shares held. This investment in own shares is presented as 
a deduction from shareholders’ funds.
The matched element of the STIP which has a condition of employment attached to it is recorded at fair value and spread over the vesting 
period of the shares and recognised in the Statement of Comprehensive Income over this period.
Performance Share Plan
Awards are granted to executive directors in shares worth 100% of salary, with lower levels of grant for less senior executives.
The Performance Share Plan (PSP) incorporates two 3-year performance conditions
– Total Shareholder Return (TSR)
– Earnings per share (EPS) growth targets
each applying to a separate 50% of the award and vest on the 3rd anniversary of grant as appropriate.
The TSR fair value and the projected EPS award fair value are spread over the vesting period of the shares and recognised in the Statement 
of Comprehensive Income in the appropriate year.
EMPLOYEE BENEFIT 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).
Contributions to defined contribution pension schemes are charged to the Statement of Comprehensive Income according to the year in 
which they are payable.
Further information on pension costs and the scheme arrangements is provided in note 24.
SHARE CAPITAL AND SHARE PREMIUM
Ordinary shares issued are shown as share capital at nominal value. The premium received on the sale of shares in excess of the nominal 
value is shown as share premium within total equity.
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 current and non-current payables. 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.
Assets under operating leases are charged on a straight-line basis to the Statement of Comprehensive Income over the lease term. Hornby > Annual Report and Accounts 2012 > Financial Statements 41
BORROWING COSTS
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; 
any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Statement of Comprehensive 
Income over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some 
or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs and subsequently amortised over the 
life of the facility. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is 
capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group’s operations expose it to a variety of financial risks that include the effects of changes in foreign currency exchange rates, 
market interest rates, credit risk and its liquidity position. The Group has in place a risk management programme that seeks to limit adverse 
effects on the financial performance of the Group by using foreign currency financial instruments. In addition, other instruments are used 
to manage the Group’s interest rate exposure.
(a) Foreign exchange risk
The Group is exposed to foreign exchange risks against Sterling primarily on transactions in Hong Kong Dollars and US Dollars. It enters 
into forward currency contracts to hedge the cash flows of its product sourcing operation (i.e. it buys HK Dollars forward in exchange 
for Sterling) and looks forward 6-12 months on a rolling basis at forecasted purchase volumes. The policy framework requires hedging 
between 80 per cent and 100 per cent of anticipated import purchases that are denominated in HK Dollars.
The Group has granted Euro denominated intercompany loans to subsidiary companies that are translated to Sterling at statutory period 
ends thereby creating exchange gains or losses. In order to mitigate the exchange exposure the Group has entered a foreign exchange 
collar contract to sell an equal number of Euros in October 2012 that will be revalued by an approximately similar but opposite Sterling 
value at each period end.
(b) 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’s only borrowings were finance leases, a 
revolving credit facility, bank overdrafts and a fixed term loan agreement. An interest rate hedge is in place to protect the Group against 
future interest rate rises.
(c) Credit risk
The Group manages its credit risk through a combination of internal credit management policies and procedures and external credit 
insurance.
(d) Liquidity risk
The Group has borrowings comprising a revolving credit facility (£10 million – expiring August 2015) and a fixed-term loan agreement (£7.5 
million – expiring July 2014). The Group’s policy on liquidity risk is to ensure that sufficient cash is available to fund future operations. The 
peak level of net debt in the year to 31 March 2012 was £15.6 million. Those needs are determined by monitoring forecast and actual cash 
flows. The Group regularly monitors its performance against its banking covenants to ensure compliance.
DERIVATIVE FINANCIAL INSTRUMENTS
To manage exposure to foreign currency risk, the Group uses foreign currency forward contracts and a foreign exchange collar, and to 
manage interest rate risk, the Group uses an interest rate swap, also known as derivative financial instruments.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their 
fair value. The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as 
well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, 
both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in 
offsetting changes in fair values of the hedged items. 42   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
(a) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. 
The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Comprehensive Income within operating 
expenses.
Amounts accumulated in equity are recycled in the Statement of Comprehensive Income in the periods when the hedged item affects profit 
or loss (for instance when the forecast purchase that is hedged takes place). The gain or loss relating to the effective portion of forward 
foreign exchange contracts hedging import purchases is recognised in the Statement of Comprehensive Income within ‘cost of sales’. 
However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) the gains 
and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The 
deferred amounts are ultimately recognised in cost of goods sold in the case of inventory.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain 
or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the 
Statement of Comprehensive Income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was 
reported in equity is immediately transferred to the Statement of Comprehensive Income.
(b) Derivatives that do not qualify for hedge accounting
Certain derivative instruments including the foreign exchange collar are not considered effective and do not qualify for hedge accounting. 
Such derivatives are classified as at fair value through the Statement of Comprehensive Income, and changes in the fair value of derivative 
instruments that do not qualify for hedge accounting are recognised immediately in the Statement of Comprehensive Income.
FAIR VALUE ESTIMATION
The fair values of short-term deposits, loans and overdrafts with a maturity of less than one year are assumed to be approximate to their 
book values.
The fair values of the derivative financial instruments used for hedging purposes are disclosed in note 19.
FOREIGN CURRENCY
Transactions denominated in foreign currencies are recorded in Sterling at the exchange rates ruling at the date of the transaction. Foreign 
exchange gains and losses resulting from such transactions are recognised in the Statement of Comprehensive Income, except when 
deferred in equity as qualifying cash flow hedges. Monetary assets and liabilities denominated in foreign currencies are translated at the 
exchange rates ruling at the balance sheet date and any exchange differences are taken to the Statement of Comprehensive Income.
Foreign exchange gains/losses relating to foreign currency loans and other foreign exchange adjustments are included within operating 
profit and shown separately as part of other operating expenses.
On consolidation, the Statement of Comprehensive Income and cash flows of foreign subsidiaries are translated into Sterling using 
average rates that existed during the accounting period. The balance sheets of foreign subsidiaries are translated into Sterling at the rates 
of exchange ruling at the balance sheet date. Gains or losses arising on the translation of opening and closing net assets are recognised 
in the Statement of Changes in Equity.
DIVIDEND DISTRIBUTION
Final dividends are recorded in the Statement of Changes in Equity in the period in which they are approved by the Company’s shareholders. 
Interim dividends are recorded in the period in which they are approved and paid.
2. SEGMENTAL REPORTING
Management has determined the operating segments based on the reports reviewed by the Board (chief operating decision-maker) that 
are used to make strategic decisions.
The Board considers the business from a geographic perspective. Geographically, management considers the performance in the UK, 
US, Spain, Italy and the rest of Europe.
Although the US segment does not meet the quantitative thresholds required by IFRS 8, management has concluded that this segment 
should be reported, as it is closely monitored by the Board as it is outside Europe.
The Company is a holding company operating in the UK with its results given in the Company Statement of Comprehensive Income on 
page 29 and its assets and liabilities given in the Company Balance Sheet on page 30. Other Company information is provided in the other 
notes to the accounts. Hornby > Annual Report and Accounts 2012 > Financial Statements 43
Year ended 31 March 2012
 
UK
£’000
USA
£’000
Spain
£’000
Italy
£’000
Rest
of
Europe
£’000
Total
Reportable
Segments
£’000
Intra
Group
£’000
Group
£’000
Revenue – External 45,484 2,729 3,693 4,911 7,630 64,447 - 64,447
– Other segments 3,053 - 6,910 48 - 10,011 (10,011) -
Operating profit 2,950 58 845 605 284 4,742 - 4,742
Finance cost – External (675) - (73) (6) (25) (779) - (779)
– Other segments - (6) (234) (312) (111) (663) 663 -
Finance income – External 24 - 1 1 - 26 - 26
 – Other segments 663 - - - - 663 (663) -
Profit before taxation 2,962 52 539 288 148 3,989 - 3,989
Analysed as:
Underlying profit before taxation 3,371 52 539 384 180 4,526 - 4,526
Net foreign exchange impact
on intercompany loans (145) - - - - (145) - (145)
Amortisation of intangibles (264) - - (96) (32) (392) - (392)
Profit before taxation 2,962 52 539 288 148 3,989 - 3,989
Taxation (468) - (428) (142) (48) (1,086) - (1,086)
Profit for the year 2,494 52 111 146 100 2,903 - 2,903
Segment assets 53,178 1,318 11,961 10,669 3,771 80,897 (20,374) 60,523
Less intercompany receivables (17,448) (1) (2,464) (453) (8) (20,374) 20,374 -
Add tax assets 538 - 9 17 35 599 - 599
Total assets 36,268 1,317 9,506 10,233 3,798 61,122 - 61,122
Segment liabilities 17,451 1,303 9,530 7,757 4,991 41,032 (20,374) 20,658
Less intercompany payables (211) (1,175) (8,092) (7,196) (3,700) (20,374) 20,374 -
Add tax liabilities 648 - 382 242 11 1,283 - 1,283
Total liabilities 17,888 128 1,820 803 1,302 21,941 - 21,941
Other segment items
Capital expenditure 2,820 6 977 25 53 3,881 - 3,881
Depreciation 2,846 16 787 237 28 3,914 - 3,914
Net foreign exchange on  
intercompany loans 145 - - - - 145 - 145
Amortisation of intangible assets 264 - - 96 32 392 - 392
Share-based payment – charge to 
Statement of Comprehensive Income 
(note 22) 262 - - - - 262 - 262
All transactions between Group companies are on normal commercial terms and an arm’s length basis. 44   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
Year ended 31 March 2011
 
UK
£’000
USA
£’000
Spain
£’000
Italy
£’000
Rest
of
Europe
£’000
Total
Reportable
Segments
£’000
Intra
Group
£’000
Group
£’000
Revenue – External 47,273 2,667 3,260 4,628 5,544 63,372 - 63,372
– Other segments 3,526 - 3,823 347 - 7,696 (7,696) -
Operating profit/(loss) 4,416 (35) (160) 690 (20) 4,891 - 4,891
Finance cost – External (763) - (45) (2) (16) (826) - (826)
– Other segments - (9) (221) (295) (104) (629) 629 -
Finance income – External 60 - - 4 - 64 - 64
 – Other segments 629 - - - - 629 (629) -
Profit/(loss) before taxation 4,342 (44) (426) 397 (140) 4,129 - 4,129
Analysed as:
Underlying profit before taxation 4,509 (44) (426) 491 (107) 4,423 - 4,423
Net foreign exchange impact
on intercompany loans 96 - - - - 96 - 96
Amortisation of intangibles (263) - - (94) (33) (390) - (390)
Profit/(loss) before taxation 4,342 (44) (426) 397 (140) 4,129 - 4,129
Taxation (1,062) - (134) (54) (24) (1,274) - (1,274)
Profit/(loss) for the year 3,280 (44) (560) 343 (164) 2,855 - 2,855
Segment assets 56,472 1,317 11,014 11,479 3,454 83,736 (20,430) 63,306
Less intercompany receivables (18,064) (2) (1,696) (658) (10) (20,430) 20,430 -
Add tax assets 109 - 130 107 45 391 - 391
Total assets 38,517 1,315 9,448 10,928 3,489 63,697 - 63,697
Segment liabilities 21,685 1,380 10,510 8,379 4,503 46,457 (20,430) 26,027
Less intercompany payables (100) (1,259) (7,873) (7,669) (3,529) (20,430) 20,430 -
Add tax liabilities 813 - 65 23 - 901 - 901
Total liabilities 22,398 121 2,702 733 974 26,928 - 26,928
Other segment items
Capital expenditure 3,147 7 1,228 110 14 4,506 - 4,506
Depreciation 2,833 15 670 526 16 4,060 - 4,060
Net foreign exchange on  
intercompany loans (96) - - - - (96) - (96)
Amortisation of intangible assets 263 - - 94 33 390 - 390
Share-based payment – charge to 
Statement of Comprehensive Income 
(note 22) 51 - - - - 51 - 51
All transactions between Group companies are on normal commercial terms and an arm’s length basis. Hornby > Annual Report and Accounts 2012 > Financial Statements 45
3. FINANCE (COSTS)/INCOME
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Finance costs:
Interest expense on bank borrowings (774) (818) - (7)
Interest expense on intercompany borrowings - - (234) (221)
Interest expense on finance leases (5) (8) - -
  (779) (826) (234) (228)
Finance income:
Bank interest 26 64 - -
Interest income on intercompany loans - - 175 174
  26 64 175 174
Net finance (costs)/income (753) (762) (59) (54)
4. PROFIT BEFORE TAXATION
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
The following items have been included in arriving at profit before taxation:
Staff costs (note 23) 10,276 9,643 923 928
Inventories:
– Cost of inventories recognised as an expense (included in cost of sales) 27,704 28,468 - -
– Write down release/(charge) 25 (102) - -
Depreciation of property, plant and equipment:
– Owned assets 3,889 4,036 35 43
– Under finance leases 25 24 - -
Profit on disposal of assets - (2) - -
Other operating lease rentals payable:
– Plant and machinery 169 183 - -
– Property 395 362 - -
Repairs and maintenance expenditure on property, plant and equipment 214 198 - -
Research and development expenditure 1,635 1,738 - -
Foreign exchange losses:
– On trading transactions and ineffective hedges 255 174 - -
Impairment of trade receivables 187 52 - -
Other operating expenses/(income):
– Foreign exchange on trading transactions 273 99 - -
– Net impact of foreign exchange on intercompany loans 145 (96) - -
– Movement on fair value of ineffective hedge (18) 75 - -
– Share-based payment charge 262 51 144 166
– Amortisation of intangible assets 392 390 - -
  1,054 519 144 166 46   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
Services provided by the Company’s auditors and network firms
During the year the Group (including its overseas subsidiaries) obtained the following services from the Company’s auditors and network 
firms as detailed below:
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Fees payable to the Company’s auditors for the audit of parent company and 
consolidated accounts 87 90 15 12
Fees payable to the Company’s auditors and its Associates for other 
services:
–  The auditing of accounts of subsidiaries of the Company pursuant to 
legislation 36 50 - -
– Other services pursuant to legislation 39 19 26 19
 Services relating to taxation 30 34 5 10
   192 193 46 41
In the current financial year the level of non audit fees was well within the 1:1 ratio to audit fees as per Audit Committee policy.
5. TAXATION
Analysis of tax charge in the year
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Current tax
–  UK taxation 643 1,014 36 20
   adjustments in respect of prior years (30) 7 (3) 7
– overseas taxation 491 1 (46) (52)
   adjustments in respect of prior years - 165 - 165
1,104 1,187 (13) 140
Deferred tax (note 20)
– current year (145) 41 (9) (5)
– overseas taxation 127 46 - -
– adjustments in respect of prior years (261) - - -
  (279) 87 (9) (5)
Total tax charge to the profit before tax 825 1,274 (22) 135 Hornby > Annual Report and Accounts 2012 > Financial Statements 47
The tax for the year differs to the standard rate of corporation tax in the UK (26%). Any differences are explained below:
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Profit before taxation 3,989 4,129 2,199 3,917
Profit on ordinary activities multiplied by rate of Corporation tax in UK of 26% 
(2011 - 28%) 1,037 1,156 572 1,097
Effects of:
Adjustments to tax in respect of prior years 231 172 (3) 172
Income not taxable - - (502) (1,031)
Difference on overseas rates of tax 2 20 10 4
Impact of overseas losses not recognised - 65 - -
Re-measurement of deferred tax – change in UK tax rate to 24% (18) (15) 13 (12)
Other 95 (124) (112) (95)
Total taxation 825 1,274 (22) 135
In addition to the change in rates of corporation tax to 26% from 1 April 2011 disclosed above a number of further changes to the UK 
corporation tax system were announced in the March 2012 UK Budget Statement. Legislation to reduce the main rate of corporation tax 
from 26% to 24% from 1 April 2012 is expected to be included in the Finance Act 2012. Further reductions to the main rate are proposed 
to reduce the rate by 1% per annum to 22% by 1 April 2014. These further changes have not been substantively enacted at the balance 
sheet date and, therefore, are not included in these financial statements.
6. DIVIDENDS
 Group and Company
  
2012
£’000
2011
£’000
3.3p final paid per share in relation to year ended 31 March 2011 (2011 - 5.0p paid in relation to year 
ended 31 March 2010) 1,267 1,897
1.7p interim paid per share in relation to year ended 31 March 2012 (2011 - 1.7p paid in relation to year 
ended 31 March 2011) 665 652
  1,932 2,549
In addition, the directors are proposing a final dividend in respect of the financial year ended 31 March 2012 of 2.0p per share which will 
absorb £783,282 of shareholders’ funds to be paid on 21 December 2012 to shareholders who are on the register of members on 23 
November 2012. 48   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of 
ordinary shares outstanding during the year, excluding those held in the employee share trust (note 22) which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive 
potential ordinary shares that have satisfied the appropriate performance criteria at 31 March 2012.
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
  
Earnings
£’000 
2012
Weighted
average
number of
shares
000’s 
Per-share
amount
pence
Earnings
£’000
2011
Weighted
average
number of
shares
000’s
Per-share
amount
pence
REPORTED
Basic EPS 
Earnings attributable to ordinary shareholders 3,164 38,626 8.19 2,855 38,071 7.50
Effect of dilutive securities
Options - 328 (0.07) - 373 (0.07)
Diluted EPS 3,164 38,954 8.12 2,855 38,444 7.43
UNDERLYING
Earnings attributable to shareholders 3,164 38,626 8.19 2,855 38,071 7.50
Amortisation of intangibles 392 - 1.01 390 - 1.02
Net foreign exchange translation adjustments 
net of tax  107 - 0.28 (69) - (0.18)
Underlying basic EPS  3,663 38,626 9.48 3,176 38,071 8.34
Underlying diluted EPS 3,663 38,954 9.40 3,176 38,444 8.26 Hornby > Annual Report and Accounts 2012 > Financial Statements 49
8. GOODWILL
GROUP £’000
COST
At 1 April 2011 13,372
Exchange adjustments (313)
At 31 March 2012 13,059
AGGREGATE IMPAIRMENT
At 1 April 2011 and 31 March 2012 -
Net book amount at 31 March 2012 13,059
GROUP £’000
COST
At 1 April 2010 13,416
Exchange adjustments (44)
At 31 March 2011 13,372
AGGREGATE IMPAIRMENT
At 1 April 2010 and 31 March 2011 -
Net book amount at 31 March 2011 13,372
Annual impairment reviews performed have not identified any impairment of goodwill.
The goodwill has been allocated to cash-generating units and a summary of carrying amounts of goodwill by geographical segments 
(representing cash-generating units) at 31 March 2012 is as follows:
GROUP
UK
£’000
USA
£’000
Spain
£’000
Italy
£’000
Rest of
Europe
£’000
Total
£’000
At 31 March 2012 3,992 8 3,990 4,526 543 13,059
At 31 March 2011 3,992 8 3,990 4,807 575 13,372
Goodwill allocated to the above cash-generating units of the Group has been measured based on synergies each geographical segment 
is expected to gain from the business combination.
The key assumptions in the value in use calculations:
–  Budgeted revenue growth was based on expected levels of activity given results to date, together with growth based upon internal 
improvements, marketing initiatives, and expected economic and market conditions.
–  Budgeted operating profit was calculated based upon management’s expectation of operating costs appropriate to the growing 
business.
–  The relative risk adjusted (or ‘beta’) discount rates applied to reflect the risk inherent in hobby based product companies. In determining 
the risk adjusted discount rate, management has applied an adjustment for risk of such companies in the industry on average 
determined using the betas of comparable hobby based product companies.
The forecasts are based on approved budgets for the year ending 31 March 2013. Subsequent cash flows have been increased in line 
with historic local territory gross domestic product. For cash flows after 5 years, growth is no higher than long-term growth rate for each 
country. The cash flows were discounted using a pre-tax discount rate of 11% (2011 - 12%) which management believes is appropriate 
for all territories. The Italian business is expected to grow strongly in the year March 2013, but if revenue growth were limited to 8% in that 
year, the recoverable amount would be equal to its carrying amount. 50   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
9.  INTANGIBLE ASSETS
Brand
names
Customer
lists
Rent free
period Total
GROUP £,000 £’000 £’000 £’000
ACQUIRED INTANGIBLE ASSETS
COST
At 1 April 2011 5,001 1,452 36 6,489
Exchange adjustments (102) (26) (3) (131)
Disposals - - (33) (33)
At 31 March 2012 4,899 1,426 - 6,325
ACCUMULATED AMORTISATION
At 1 April 2011 1,057 576 36 1,669
Charge for the year 248 144 - 392
Exchange adjustments (34) (16) (3) (53)
Disposals - - (33) (33)
At 31 March 2012 1,271 704 - 1,975
Net book amount at 31 March 2012 3,628 722 - 4,350
COST
At 1 April 2010 5,015 1,455 36 6,506
Exchange adjustments (14) (3) - (17)
At 31 March 2011 5,001 1,452 36 6,489
ACCUMULATED AMORTISATION
At 1 April 2010 811 432 36 1,279
Charge for the year 246 144 - 390
Exchange adjustments - - - -
At 31 March 2011 1,057 576 36 1,669
Net book amount at 31 March 2011 3,944 876 - 4,820
Net book amount at 31 March 2010 4,204 1,023 - 5,227
All amortisation charges in the year have been charged through other operating expenses. Hornby > Annual Report and Accounts 2012 > Financial Statements 51
10. PROPERTY, PLANT AND EQUIPMENT
GROUP
Freehold
land and
buildings
£’000
Plant
and
equipment
£’000
Motor
vehicles
£’000
Tools and
moulds
£’000
Total
£’000
COST
At 1 April 2011 3,068 5,518 417 44,122 53,125
Exchange adjustments (38) (54) (4) (495) (591)
Additions at cost - 548 - 3,333 3,881
Disposals - (4) (12) - (16)
At 31 March 2012 3,030 6,008 401 46,960 56,399
ACCUMULATED DEPRECIATION
At 1 April 2011 1,210 3,688 235 37,784 42,917
Exchange adjustments (7) (40) (3) (389) (439)
Charge for the year 49 478 50 3,337 3,914
Disposals - (3) (12) - (15)
At 31 March 2012 1,252 4,123 270 40,732 46,377
Net book amount at 31 March 2012 1,778 1,885 131 6,228 10,022
GROUP
Freehold
land and
buildings
£’000
Plant
and
equipment
£’000
Motor
vehicles
£’000
Tools and
moulds
£’000
Total
£’000
COST
At 1 April 2010 3,033 4,925 418 40,602 48,978
Exchange adjustments (4) (16) (1) (60) (81)
Additions at cost 39 616 96 3,755 4,506
Disposals - (7) (96) (175) (278)
At 31 March 2011 3,068 5,518 417 44,122 53,125
ACCUMULATED DEPRECIATION
At 1 April 2010 1,152 3,293 251 34,262 38,958
Exchange adjustments - (5) - 3 (2)
Charge for the year 58 407 50 3,545 4,060
Disposals - (7) (66) (26) (99)
At 31 March 2011 1,210 3,688 235 37,784 42,917
Net book amount at 31 March 2011 1,858 1,830 182 6,338 10,208
Freehold land amounting to £786,000 (2011 - £786,000) has not been depreciated. 52   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
Assets held by the Group under finance leases have the following net book amount:
  
2012
£’000
2011
£’000
COST 167 167
Aggregate depreciation (71) (46)
Net book amount 96 121
Assets held by the Group under finance leases are motor vehicles.
The Group has taken advantage of the exemption under IFRS 1 to use the valuation of certain land and buildings at the date of transition 
to IFRS as deemed cost. All other assets are stated at cost.
All depreciation charges in the year have been charged through other operating expenses.
COMPANY
Freehold
land and
buildings
£’000
Plant
and
equipment
£’000
Total
£’000
COST
At 1 April 2011 2,428 4 2,432
Additions - - -
At 31 March 2012 2,428 4 2,432
ACCUMULATED DEPRECIATION
At 1 April 2011 1,084 4 1,088
Charge for the year 35 - 35
At 31 March 2012 1,119 4 1,123
Net book amount at 31 March 2012 1,309 - 1,309
COMPANY
Freehold
land and
buildings
£’000
Plant
and
equipment
£’000
Total
£’000
COST
At 1 April 2010 2,428 4 2,432
Additions - - -
At 31 March 2011 2,428 4 2,432
ACCUMULATED DEPRECIATION
At 1 April 2010 1,041 4 1,045
Charge for the year 43 - 43
At 31 March 2011 1,084 4 1,088
Net book amount at 31 March 2011 1,344 - 1,344
Net book amount at 31 March 2010 1,387 - 1,387
The Company does not hold any assets under finance leases. Hornby > Annual Report and Accounts 2012 > Financial Statements 53
11. INVESTMENTS
COMPANY
The movements in the net book value of interests in subsidiary undertakings are as follows:
 
Interests in
subsidiary
undertakings
at valuation
£’000
Loans to
subsidiary
undertakings
at cost
£’000
Total
£’000
At 1 April 2011 27,993 7,179 35,172
Capital contribution relating to share-based payment 118 - 118
Net increase in loans to subsidiary undertakings - 1,311 1,311
At 31 March 2012 28,111 8,490 36,601
At 1 April 2010 28,108 5,650 33,758
Capital contribution relating to share-based payment (115) - (115)
Net increase in loans to subsidiary undertakings - 1,529 1,529
At 31 March 2011 27,993 7,179 35,172
Interest was charged on loans to subsidiary undertakings at Sterling 3-month Libor + 3.6%.
Loans are unsecured and exceed five years maturity.
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 Hornby España S.A. are engaged in the development, design, sourcing and distribution of models. 
Hornby America Inc., Hornby Italia s.r.l., Hornby France S.A.S. and Hornby Deutschland GmbH are distributors of models.
 
Country of
incorporation
Description of
shares held
                                Proportion of nominal
                                value of issued shares held
Group Company
% %
Hornby Hobbies Limited United Kingdom Ordinary shares 100 100
Hornby America Inc. USA Ordinary shares 100 100
Hornby España S.A Spain Ordinary shares 100 100
Hornby Italia s.r.l. Italy Ordinary shares 100 100
Hornby France S.A.S. France Ordinary shares 100 100
Hornby Deutschland GmbH Germany Ordinary shares 100 100
12. INVENTORIES
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Raw materials 354 270 - -
Work in progress 39 58 - -
Finished goods 17,474 15,885 - -
  17,867 16,213 - - 54   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
13. TRADE AND OTHER RECEIVABLES
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
CURRENT:
Trade receivables 11,608 11,996 - -
Less: provision for impairment of receivables (230) (195) - -
Trade receivables – net 11,378 11,801 - -
Other receivables 400 511 - -
Prepayments 1,391 1,336 33 38
  13,169 13,648 33 38
Concentrations of credit risk with respect to trade receivables are limited due to the Group’s customer base being large and unrelated and 
deemed adequate. Credit insurance policies are in place in Hornby Hobbies Limited, Hornby America Inc., Hornby España S.A., Hornby 
Italia s.r.l., Hornby France S.A.S. and Hornby Deutschland GmbH covering trade receivables at 31 March 2012 to the value of £8.9 million 
(2011 - £9.2 million).
Gross trade receivables can be analysed as follows:
  
2012
£’000
2011
£’000
Fully performing 9,252 10,288
Past due 2,078 1,480
Impaired 278 228
Trade receivables 11,608 11,996
As of 31 March 2012, trade receivables of £2,078,000 (2011 - £1,480,000) were past due but not impaired. These relate to a number of 
independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:
  
2012
£’000
2011
£’000
1 – 120 days 1,946 1,412
>120 days 132 68
  2,078 1,480
As of 31 March 2012, trade receivables of £278,000 (2011 - £228,000) were impaired and provided for. The amount of provision was 
£230,000 (2011 - £195,000) as of 31 March 2012.
Significant financial difficulties of the customer, probability that the customer will enter bankruptcy or financial reorganisation are considered 
indications that the trade receivable is impaired.
The ageing of these receivables is as follows:
  
2012
£’000
2011
£’000
1 – 120 days 37 12
> 120 days 241 216
  278 228 Hornby > Annual Report and Accounts 2012 > Financial Statements 55
Movements on the Group provision for impairment of trade receivables are as follows:
  
2012
£’000
2011
£’000
At 1 April 195 284
Provision for receivables impairment 187 52
Receivables written off during the year as uncollectible (145) (138)
Exchange adjustments (7) (3)
At 31 March 230 195
The charge relating to the increase in provision has been included in ‘administrative expenses’ in the Statement of Comprehensive Income.
The carrying amounts of the Group and Company trade and other receivables are denominated in the following currencies:
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Sterling 7,206 7,875 33 38
Euro 5,174 5,113 - -
US dollar 570 512 - -
HK dollar 219 148 - -
  13,169 13,648 33 38
14. CASH AND EQUIVALENTS
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Cash at bank and in hand 1,952 4,952 2 11
15. TRADE AND OTHER PAYABLES
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
CURRENT:
Trade payables 5,047 6,590 - -
Other taxes and social security 1,198 1,018 18 18
Other payables 2,332 2,127 - -
Accruals 1,245 1,524 70 114
  9,822 11,259 88 132 56   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
16. PROVISIONS
 Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Sales returns       
At 1 April 413 391 - -
Charge to Statement of Comprehensive Income 649 933 - -
Utilised in the year (738) (911) - -
At 31 March 324 413 - -
Provision is made for future sales returns based on historical trends. The provision is expected to be utilised within one year from the 
balance sheet date.
17. CURRENT TAX ASSETS & LIABILITIES
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Current tax assets
Corporation tax recoverable – Overseas 61 282 9 130
Current tax liabilities
UK Corporation tax liability 324 512 36 20
Overseas Corporation tax liability 381 52 209 -
  705 564 245 20
18.  BORROWINGS
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Secured borrowing at amortised cost
Bank overdrafts 361 555 - -
Bank loan 7,902 10,479 - -
Finance leases 99 128 - -
Loan from subsidiary undertakings - - 5,018 5,331
  8,362 11,162 5,018 5,331
Total borrowings
Amount due for settlement within 12 months 3,474 3,136 - -
Amount due for settlement after 12 months 4,888 8,026 5,018 5,331
  8,362 11,162 5,018 5,331
The Group complied with all loan covenants during the year. The Company borrowings are denominated in Sterling. Hornby > Annual Report and Accounts 2012 > Financial Statements 57
Analysis of borrowings by currency:
Group
Sterling
£’000
Euros
£’000  
Total
£’000
31 March 2012
Bank overdrafts - 361 361
Bank loan 7,500 402 7,902
Finance leases 99 - 99
 7,599 763 8,362
31 March 2011
Bank overdrafts - 555 555
Bank loan 10,000 479 10,479
Finance leases 128 - 128
 10,128 1,034 11,162
The other principal features of the Group’s borrowings are as follows:
At 31 March 2012 the Group had a revolving credit facility of £10 million expiring August 2015 and a 5-year fixed term loan agreement of 
£12 million with repayments scheduled to July 2014 (£7.5 million as at 31 March 2012). The future interest rates of these facilities are Libor 
+ 2.5% for the revolving credit facility and Libor + 3.6% for the fixed term loan.
The average effective interest rate on bank overdrafts approximated to 3.63% (2011 - 3.85%) per annum and is determined based on 
1.0% above 3-month Libor.
Undrawn borrowing facilities
At 31 March 2012, the Group had available £10.6 million (2011 - £10.4 million) of undrawn committed borrowing facilities in respect of 
which all conditions precedent had been met. In addition, European subsidiaries had available £1.6 million (2011 - £1.4 million) of undrawn 
import credit line facilities that could be obtained with security being given against trade receivables.
19. FINANCIAL INSTRUMENTS
The Group’s policies and strategies in relation to risk and financial instruments are detailed in note 1.
Assets Liabilities
Group 
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Carrying values of derivative financial instruments
Foreign exchange collar - - (1,821) (2,552)
Forward foreign currency contracts – cash flow hedges 104 93 (120) (299)
Interest rate swap  – cash flow hedge - - (214) (342)
  104 93 (2,155) (3,193)
The hedged forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12 months. 
Gains and losses recognised in reserves on forward foreign exchange contracts as of 31 March 2012 are recognised in the Statement of 
Changes in Equity in the period or periods during which the hedged forecast transaction affects the Statement of Comprehensive Income, 
which is within 12 months from the balance sheet date. 58   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
At 31 March 2012 outstanding forward currency contracts were as follows:
  
2012
000’s
2011
000’s
Hong Kong $ 156,776 167,676
US$ 6,732 4,473
Euros - 908
The notional principal amount of the outstanding interest rate swap contract at 31 March 2012 was £3.0 million (2011 - £4.0 million). 
At 31 March 2012, the interest rate swap fixes the interest rate on £3.0 million of the bank loan disclosed in note 18 to 6.22%. The loss 
recognised in the interest rate swap included in the hedging reserve as of 31 March 2012 will be continuously released to the Statement of 
Comprehensive Income until the maturity of the swap. The £4.5 million (2011 - £6.0 million) remainder of the bank loan disclosed in note 
18 incurs interest based on 3-month Libor established quarterly in advance.
The total fair value above for forward foreign currency contracts and the interest rate swap comprises £230,000 liability (2011 - £637,000 
liability) of which £187,000 liability (2011 - £168,000 liability) has been effectively hedged at 31 March 2012 and therefore charged to 
reserves in accordance with IAS 39. The liability balance of £43,000 (2011 - £61,000 liability) was the ineffective hedged portion and was 
included within operating expenses.
In accordance with IAS 39, the Group has reviewed all contracts for embedded derivatives that are required to be separately accounted 
for if they do not meet certain requirements set out in the standard. No embedded derivatives have been identified.
All derivative financial investments are Level 2 in the Fair Value Hierarchy.
Fair values of non-derivative financial assets and liabilities
For the Group and the Company, as at 31 March 2012 and 31 March 2011, there is no difference between the carrying amount and fair 
value of each of the following classes of financial assets and liabilities, principally due to their short maturity: trade and other receivables, 
cash at bank and in hand, trade and other payables and current borrowings. Bank deposits attract interest within 0.5% of the ruling market 
rate. There is no significant difference between the fair value and carrying amount of non-current borrowings as the impact of discounting 
is not significant.
The Company has no derivative financial instruments. Hornby > Annual Report and Accounts 2012 > Financial Statements 59
Maturity of non-current financial liabilities
GROUP
Bank
loan
£’000
Finance
leases
£’000 
2012
Total
£’000
Between one and two years 3,053 25 3,078
Between two and five years 1,669 12 1,681
More than five years 129 - 129
 4,851 37 4,888
 
Bank
loan
£’000
Finance
leases
£’000 
2011
Total
£’000
Between one and two years 3,054 62 3,116
Between two and five years 4,674 37 4,711
More than five years 199 - 199
 7,927 99 8,026
COMPANY 
2012
Debt
£’000
2011
Debt
£’000
More than five years (note 18) 5,018 5,331
The minimum lease payments under finance leases fall due as follows:
GROUP 
2012
£’000
2011
£’000
Not later than one year 63 34
Later than one year but not more than five 38 101
101 135
Future finance charges on finance leases (2) (7)
Present value of finance lease liabilities 99 128 60   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
Financial Instruments
Interest rate sensitivity
The Group is exposed to interest rate risk as the Group borrows funds at both fixed and floating interest rates. The exposure to these 
borrowings varies during the year due to the seasonal nature of cash flows relating to sales.
In order to measure risk, floating rate borrowings and the expected interest costs are forecast on a monthly basis and compared to budget 
using management’s expectations of a reasonably possible change in interest rates.
The effect on both income and equity based on exposure to borrowings at the balance sheet date for a 1% increase in interest rates is 
£106,000 (2011 - £110,000) before tax. A 1% fall in interest rates give the same but opposite effect.
Foreign currency sensitivity
The Group is primarily exposed to US Dollars, Hong Kong Dollars and the Euro. The following table details how the Group’s income and 
equity would increase on a before tax basis, given a 10% revaluation in the respective currencies against Sterling and in accordance with 
IFRS 7 all other variables remaining constant. A 10% devaluation in the value of Sterling would have the opposite effect.
The 10% change represents a reasonably possible change in the specified foreign exchange rates in relation to Sterling.
 Income and Equity Sensitivity
  
2012
£’000
2011
£’000
US and HK dollars 815 768
Euros 148 128
  963 896
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide 
returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to 
shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio. The ratio is calculated as net debt divided by total capital. Net debt is 
calculated as total borrowings as shown in the consolidated balance sheet less cash and cash equivalents. Total capital is calculated as 
‘equity’ as shown in the balance sheet plus net debt.
  
2012
£’000
2011
£’000
Total borrowings (note 18) 8,362 11,162
Less:
Total cash and cash equivalents (note 14) (1,952) (4,952)
Net debt 6,410 6,210
Total equity 39,181 36,769
Total Capital 45,591 42,979
Gearing 14% 14% Hornby > Annual Report and Accounts 2012 > Financial Statements 61
20. DEFERRED TAX
Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 24% (2011 - 26%).
The movement on the deferred tax account is as shown below:
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
At 1 April 228 141 161 166
Charge/(credit) to Statement of Comprehensive Income (note 5)  
– origination and reversal of temporary differences (279) 87 (9) (5)
Exchange adjustments (2) - - -
Utilisation of trading losses against other tax payable 88 - - -
At 31 March 35 228 152 161
Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to deferred tax assets 
because it is probable that those assets will be recovered.
No deferred tax is provided for tax liabilities which would arise on the distribution of profits retained by overseas subsidiaries because there 
is currently no intention that such profits will be remitted.
The movements in deferred tax assets and liabilities during the year are shown below.
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset.
Group Company
Deferred tax liabilities
Revaluation
£’000
Accelerated
capital
allowances
£’000
Other
£’000 
Total
£’000
Revaluation
£’000
Accelerated
capital
allowances
£’000 
Total
£’000
At 1 April 2011 166 135 36 337 166 11 177
(Credit)/charge to Statement of
Comprehensive Income (17) 40 213 236 (17) (1) (18)
At 31 March 2012 149 175 249 573 149 10 159
At 1 April 2010 183 84 14 281 183 13 196
(Credit)/charge to Statement of
Comprehensive Income (17) 51 22 56 (17) (2) (19)
At 31 March 2011 166 135 36 337 166 11 177 62   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
Of the total deferred tax liability of £573,000, £5,000 was due within one year for the Group (2011 - £5,000) and £5,000 for the Company 
(2011 - £5,000).
Group Company
Deferred tax assets
Short-term
incentive
plan
£’000
Acquisition
intangibles
£’000
Other
£’000 
Total
£’000
Short-term
incentive
plan
£’000
At 1 April 2011 (35) (74) - (109) (16)
Charge/(credit) to Statement of Comprehensive Income 20 (25) (424) (429) 9
At 31 March 2012 (15) (99) (424) (538) (7)
At 1 April 2010 (68) (48) (24) (140) (30)
Charge/(credit) to Statement of Comprehensive Income 33 (26) 24 31 14
At 31 March 2011 (35) (74) - (109) (16)
Net deferred tax liability
At 31 March 2012    35 152
At 31 March 2011    228 161
The deferred tax liability arising on the revaluation of freehold land and buildings in 1986 cannot be offset against deferred tax assets. 
Therefore, the deferred tax asset and deferred tax liability at 31 March 2012 and 31 March 2011 have been recognised separately.
2012 2011
GROUP 
Recognised
£’000 
Not
recognised
£’000
Recognised
£’000
Not
recognised
£’000
Deferred tax comprises:
Accelerated capital allowances 175 - 135 -
Other temporary differences (389) - 57 -
Overseas taxation 249 - 36 -
Deferred tax liability 35 - 228 -
2012 2011
COMPANY 
Recognised
£’000 
Not
recognised
£’000
Recognised
£’000
Not
recognised
£’000
Deferred tax comprises:
Accelerated capital allowances 10 - 11 -
Other timing differences 142 - 150 -
Deferred tax liability 152 - 161 - Hornby > Annual Report and Accounts 2012 > Financial Statements 63
21. SHARE CAPITAL
GROUP AND COMPANY
Allotted, issued and fully paid:
2012 2011
Ordinary shares of 1p each 
Number of
shares £’000
Number of
shares £’000
At 1 April 38,464,100 385 38,064,100 381
Allotted under share option schemes 700,000 7 400,000 4
  39,164,100 392 38,464,100 385
At 31 March 2012 options granted under the Company’s share option schemes were outstanding as follows:
Number of options Exercise price Period of option
Date granted  2012 2011  
28 March 2002 - 600,000 76.8p March 2005 – March 2012
19 June 2002 447,500 547,500 83.4p June 2005 – June 2012
09 June 2005 400,000 400,000 201.0p June 2008 – June 2012
  847,500 1,547,500  
The total number of options outstanding as at the date of this document represent approximately 2.2% (2011 - 4.0%) of the issued share 
capital of the Company.
If Resolution 12 is passed at the Annual General Meeting and the Company were to exercise the full authority to buy-back approximately 
10% of the issued ordinary shares of the Company, such options would represent 2.4% (2011 - 4.5%) of the issued share capital of the 
Company.
22. SHARE-BASED PAYMENTS
Hornby Plc operates three share-based plans – Share Option Scheme (‘SOS’), Short Term Incentive Plan (‘STIP’) and Performance Share 
Plan (‘PSP’).
SOS awards
The SOS awards are a reward of share options to executive directors and senior management that vest after 3 years and must be 
exercised in a 4 or 7 year exercise window.
The awards are subject to a performance measure of Profits before Interest and Tax (‘PBIT’) or Profit before Tax (‘PBT’) as disclosed by 
the Group’s accounts for any of the years ended 31 March 2006, 31 March 2007, 31 March 2008, 31 March 2009 or 31 March 2010 
excluding (i) any profit or loss in relation to property transactions, (ii) any restructuring and abortive due diligence costs and (iii) any profits 
or losses arising from businesses acquired by the Group after the date of grant of the Option. Some awards are subject to achieving a 
PBIT that is equal to or greater than £8 million, or to PBT being equal to or greater than £9 million or aggregate PBT for 3 years ending 31 
March 2008, 2009 and 2010 being equal to or greater than £32.7 million. The awards are equity settled.
Activity relating to share options for the year ended 31 March 2012 and 31 March 2011 was as follows:
2012 2011
 
 
Number
Weighted
average
exercise price Number
Weighted
average
exercise price
Outstanding at 1 April 1,547,500
111.2p
77.7p
 
2,176,467 119.7p
Exercised (700,000) (400,000) 76.8p
Lapsed - (228,967) 252.0p
Outstanding at 31 March 847,500 138.9p 1,547,500 111.2p 64   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
Options were exercised on 2 December 2011. The weighted average share price during the year was 125.5p (2011 - 138.5p).
The following table summarises information relating to the number of shares under option (SOS awards) and those which were exercisable 
at 31 March 2012.
Range of exercise prices
Total shares
under option
Number
Weighted
average
remaining
contractual
life
Months 
Options
exercisable
at 31 March
2012
Number
Options
exercisable
at 31 March
2011
Number
Exercisable
weighted
average
exercise
price for
options
exercisable
at 31 March
2012
£0.70 – £0.80 - - - 600,000 76.8p
£0.80 – £0.90 447,500 3 447,500 547,500 83.4p
£2.00 – £2.10 400,000 3 400,000 400,000 201.0p
 847,500  847,500 1,547,500 138.9p
Performance Share Plan
All Performance Share Plan (PSP) awards outstanding at 31 March 2012 vest only if performance conditions are met. Awards granted 
under the PSP must be exercised within one year of the relevant award vesting date.
The Group operates the PSP for executive directors and senior executives. Awards under the scheme are granted in the form of a nil-
priced option, and are satisfied using market-purchased shares. The awards vest in full or in part dependent on the satisfaction of specified 
performance targets. 50% of the award vests dependent on TSR performance over a three year performance period, relative to the 
constituents of the FTSE Small Cap Index (excluding investment trusts) from the time of grant, and the remaining 50% vests dependent 
on performance against earnings per share targets.
All plans are subject to continued employment. To the extent that such shares in the above plans are awarded to employees below fair 
value, a charge calculated in accordance with IFRS 2 ‘Share-based payment’ is included within other operating expenses in the Statement 
of Comprehensive Income. This charge for the Group and Company amounted to £262,000 in the year ended 31 March 2012 (2011 - 
£51,000).
The following table summarises the key assumptions used for grants during the year:
  SOS 
2012
STIP PSP* SOS
2011
STIP PSP*
Fair value (p) - - 102.25p - - 102.5p
Options pricing model used - - Stochastic - - Stochastic
Share price at grant date (p) - - 136.4p - - 139.5p
Exercise price (p) - - n/a - - n/a
Expected volatility (%) - - 48.0% - - 47.0%
Risk-free rate (%) - - n/a - - n/a
Expected option term (years) - - 3 - - 3
Expected dividends (per year, %) - - 0% - - 0%
*Assumptions for TSR component only.
Assumptions on expected volatility and expected option term have been made on the basis of historical data, wherever available, for the 
period corresponding with the vesting period of the option. Best estimates have been used where historical data is not available in this 
respect. Hornby > Annual Report and Accounts 2012 > Financial Statements 65
STIP awards
The STIP is a reward of shares to executive directors and senior management.
Vesting of the awards occurs in equal amounts on the second, third and fourth anniversaries of the award date provided that the 
participant remains employed by the Group. These awards are not subject to any performance conditions. The awards are equity settled.
  
2012
£’000
2011
£’000
At 1 April 180 326
Shares acquired in Company - -
Shares vested (90) (146)
At 31 March 90 180
Details of the Short Term Incentive Plan are given in the Directors’ Remuneration Report on pages 20 to 25.
The Employee Benefit Trust acquired no ordinary shares in the year.
On 17 June 2011, the second third of the 2008 allocation (57,766 ordinary shares) were vested.
At 31 March 2012, a total of 57,766 (2011 - 115,532) ordinary shares are held by the Trust and allotted to the directors and senior 
management under the plan with a nominal value of £578 (2011 - £1,155) and a market value of £54,878 (2011 - £124,775). The costs of 
the plan are borne by Hornby Plc. The Trust has waived its right to dividends.
23. EMPLOYEES AND DIRECTORS
Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Staff costs for the Group during the year:
Wages and salaries 8,171 7,797 628 613
Share-based payments (note 22) 262 51 144 166
Social security costs 1,081 1,047 93 90
Other pension costs (note 24) 669 723 58 59
Redundancy and compensation for loss of office 93 25 - -
  10,276 9,643 923 928
Average monthly number of people (including executive directors) employed by the Group:
Group Company
  
2012
Number
2011
Number 
2012
Number
2011
Number
Operations 99 104 1 1
Sales, marketing and distribution 107 106 1 1
Administration 40 39 3 3
  246 249 5 5 66   Hornby > Annual Report and Accounts 2012 > Financial Statements
Notes to the Financial Statements (continued)
Key management compensation:
  Group Company
  
2012
£’000
2011
£’000 
2012
£’000
2011
£’000
Salaries and short term employee benefits 2,002 1,893 469 488
Share-based payments 261 100 144 166
Post-employment benefits 244 199 58 59
  2,507 2,192 671 713
Key management comprise the individuals involved in major strategic decision making and includes all Group and subsidiary directors.
A detailed numerical analysis of directors’ remuneration and share options showing the highest paid director, number of directors 
accruing benefit under money purchase pension schemes and gains realised on the exercise of share options, is included in the Directors’ 
Remuneration Report on pages 20 to 25 and forms part of these financial statements.
24. PENSION COMMITMENTS
The Group operates a defined contribution pension scheme by way of a Stakeholder Group Personal Pension Plan set up through the 
Friends Provident Insurance Group.
Alexander Forbes Financial Services Limited is appointed as Independent Financial Adviser to work in liaison with the Company.
The level of contributions to the Group Personal Pension Plan for current members is fixed by the Company.
The Group pension cost for the year was £669,000 (2011 - £723,000) representing the actual contributions payable in the year and certain 
scheme administration costs. The Company pension cost for the year was £58,000 (2011 - £59,000).
25. FINANCIAL COMMITMENTS
  Group
  
2012
£’000
2011
£’000
At 31 March capital commitments were:
Contracted for but not provided for 1,879 1,439
The commitments relate to the acquisition of property, plant and equipment.
The Company does not have any capital commitments.
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.
HMRC are currently performing a review of Hornby Hobbies Limited’s previously agreed accelerated capital allowances for product tooling. 
The review is ongoing, however were HMRC to overturn the previously agreed treatment there would as at 31 March 2012 be a maximum 
£1.1 million cash outflow. Hornby > Annual Report and Accounts 2012 > Financial Statements 67
26. OPERATING LEASE COMMITMENTS
The total of future minimum lease payments in respect of non-cancellable plant and motor vehicle operating leases falling due are as 
follows:
GROUP 
2012
£’000
2011
£’000
Not later than one year 417 489
Later than one year but not more than five years 794 967
More than five years - 106
  1,211 1,562
27. RELATED PARTY DISCLOSURES
There were no contracts with the Company or any of its subsidiaries existing during or at the end of the financial year in which a director 
of the Company was materially interested.
The Company received management fees from subsidiaries of £1,278,000 (2011 - £1,251,000), interest of £175,000 (2011 - £174,000) 
and dividends from subsidiaries of £1,932,000 (2011 - £3,681,000) and incurs interest of £234,000 (2011 - £221,000) on intercompany 
borrowings. Notice of Annual General Meeting
68   Hornby > Annual Report and Accounts 2012 > Notice of Annual General Meeting
If you have sold or otherwise transferred all of your ordinary shares in Hornby Plc, please forward this document as soon as possible to the 
purchaser or transferee, or to the stockbroker, bank or other agent through or to whom the sale or transfer was effected for transmission 
to the purchaser or transferee of your ordinary shares.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the thirty first Annual General Meeting of Hornby Plc (the “Company”) will be held at the offices of Berwin 
Leighton Paisner LLP, Adelaide House, London Bridge, London EC4R 9HA on Thursday 26 July 2012 at 11.00 a.m. for the following 
purposes:
To consider and, if thought fit, to pass the following resolutions, of which numbers 1 to 10 (inclusive) will be proposed as ordinary 
resolutions and numbers 11 and 12 as special resolutions.
ORDINARY RESOLUTIONS
1.  To receive and adopt the Company’s Annual Report and Accounts for the financial year ended 31 March 2012 together with the 
Report of the Directors and Auditors.
2.  To approve the Directors’ Remuneration Report, as set out on pages 20 to 25 of the Company’s Annual Report and Accounts, for the 
financial year ended 31 March 2012.
3.  To declare a final dividend of 2.0 pence per ordinary share of 1 pence each in the capital of the Company (the “Ordinary Shares”) 
payable to holders of Ordinary Shares on the register at the close of business on 23 November 2012.
4. To re-elect N A Johnson as a Director.
5. To re-elect A J Morris, who retires by rotation, as a Director.
6. To re-elect M E Rolfe, who retires by rotation, as a Director.
7.  To re-appoint PricewaterhouseCoopers LLP, the retiring auditors, as auditors of the Company to hold office from conclusion of the 
Annual General Meeting to the conclusion of the next meeting at which accounts are laid before the Company.
8. To authorise the Directors to agree the auditors’ remuneration.
9.  That, in accordance with section 366 of the Companies Act 2006 (the “Act”), the Company and all companies that are its subsidiaries 
at any time during the period for which this resolution has effect be authorised to:
 (a) make political donations to political parties and/or independent election candidates, not exceeding £10,000 in total;
 (b) make political donations to political organisations, other than political parties, not exceeding £10,000 in total; and
 (c) incur political expenditure, not exceeding £10,000 in total,
  provided that the aggregate amount of any such donations and expenditure shall not exceed £15,000 during the period beginning 
with the date of the passing of this resolution and ending on the date of the Company’s next Annual General Meeting.
  For the purpose of this resolution, the terms ‘political donations’, ‘political expenditure’, ‘independent election candidates’, ‘political 
parties’ and ‘political organisations’ shall have the meaning given to them by Part 14 of the Act.
10.  THAT, in place of the equivalent authority given to the Directors at the last Annual General Meeting (but without prejudice to the 
continuing authority of the Directors to allot shares pursuant to an offer or agreement made by the Company before the expiry of 
the authority pursuant to which such offer or agreement was made), the Directors be generally and unconditionally authorised in 
accordance with section 551 of the Act to allot shares in the Company or grant rights to subscribe for or to convert any security into 
shares in the Company up to a maximum aggregate nominal amount of £130,000, provided that this authority shall expire on 25 
July 2017 but so that the Company may, before the expiry of such period, make an offer or agreement which would or might require 
shares to be allotted or rights to subscribe for or convert securities into shares to be granted after the expiry of such period and the 
Directors may allot shares or grant rights to subscribe for or convert securities into shares pursuant to such an offer or agreement as 
if this authority had not expired. Notice of Annual General Meeting
Hornby > Annual Report and Accounts 2012 > Notice of Annual General Meeting 69
SPECIAL RESOLUTIONS
11.  THAT, subject to and conditional on the passing of resolution 10, the Directors be empowered, pursuant to section 570 of the Act, 
to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority conferred by resolution 10 
as if section 561(1) of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity 
securities:
 (a) in connection with an offer of such securities by way of Rights Issue (defined below); and
 (b)  otherwise than pursuant to resolution 10 above up to an aggregate nominal amount of £19,000,
  and that this authority shall expire at the conclusion of the Company’s next Annual General Meeting following the date of the passing 
of the 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 any such offer or agreement as 
if this power had not expired.
  This power applies in relation to a sale of treasury shares as if all references in this resolution to an allotment included any such sale 
and in the first paragraph of the resolution the words “pursuant to the authority conferred by resolution 10” were omitted in relation to 
such sale.
  In this resolution, “Rights Issue” means an offer of equity securities open for acceptance for a period fixed by the Directors to holders 
of Ordinary Shares in the capital of the Company on the register on a record date fixed by the Directors in proportion as nearly as may 
be to the respective numbers of Ordinary Shares held by them, but subject to such exclusions or other arrangements as the Directors 
may deem necessary or expedient to deal with any treasury shares, fractional entitlements or legal or practical issues arising under the 
laws of, or the requirements of any recognised regulatory body or any stock exchange in any territory or any other matter.
12.  THAT, subject to and in accordance with Article 9 of the Company’s articles of association, the Company be generally and 
unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Act) of Ordinary Shares on such 
terms as the Directors think fit, and where such shares are held as treasury shares, the Company may use them for the purposes set 
out in section 727 of the Act, including for the purpose of its employee share schemes, provided that:
 (a)  the maximum number of Ordinary Shares hereby authorised to be purchased is 3,900,000 being an amount equal to approximately 
10% of the Ordinary Shares in issue as at 7 June 2012 (being the latest practicable date prior to the publication of this notice);
 (b) the minimum price, exclusive of any expenses, which may be paid for an Ordinary Share is 1 pence;
 (c) the maximum price, exclusive of any expenses, which may be paid for each Ordinary Share is an amount equal to the higher of:
  (i)  105 per cent, of the average of the middle market quotations for an Ordinary Share, as derived from the London Stock 
Exchange Daily Official List, for the five business days immediately preceding the day on which the Ordinary Share is 
contracted to be purchased; and
  (ii)  the amount stipulated by Article 5(1) of the Buy-back and Stabilisation Regulation 2003; and
 (d)  the authority hereby conferred shall, unless previously revoked or varied, expire at the conclusion of the Company’s next Annual 
General Meeting following the date of the passing of this resolution, or, if earlier, on the expiry of 18 months from the date of the 
passing of this resolution (except in relation to the purchase of Ordinary Shares, the contract for which was concluded before the 
expiry of this authority and which will or may be executed wholly or partly after such expiry).
By order of the Board
John Stansfield 
Company Secretary
Dated: 8 June 2012 
Registered office: Westwood, Margate, Kent CT9 4JX 
Registered in England and Wales with number 01547390 Notice of Annual General Meeting (continued)
70   Hornby > Annual Report and Accounts 2012 > Notice of Annual General Meeting
NOTES
1.  This notice is being sent to all members and to any person nominated by a member of the Company under section 146 of the 
Companies Act 2006 to enjoy information rights.
2.  Only holders of Ordinary Shares, or their duly appointed representatives, are entitled to attend, vote and speak at the AGM. A member 
so entitled may appoint (a) proxy/(ies), who need not be (a) member(s), to attend, speak and vote on his/her behalf. A member may 
appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to a different share or shares held 
by him/her. A form of proxy is enclosed with this Notice and instructions for its completion are set out on the form.
3.  Proxies may only be appointed by completing and returning the form of proxy enclosed with this Notice to the Company’s Registrars, 
Capita Registrars Limited PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
4.  To be valid a proxy appointment and any power of attorney or other authority, if any, under which it is signed or a duly certified copy of 
such power of attorney must reach the office of the Company’s Registrars not less than 48 hours (excluding any part of a day which 
is not a working day) before the time fixed for the AGM or any adjournment thereof. Therefore, the form of proxy must be received by 
the Company’s Registrars by 11 a.m. on 24 July 2012.
5.  Return of the form of proxy will not preclude a member from attending the AGM and voting in person. A vote withheld option is 
provided on the form of proxy to enable you to instruct your proxy to abstain on any particular resolution. However, it should be noted 
that a “vote withheld” is not a vote in law and will not be counted in the calculation of the proportion of votes “For” and “Against” a 
resolution. If you select “Discretionary” or fail to select any of the options, your proxy can vote as he or she chooses or can decide 
not to vote. Your proxy can also do this on any other resolution that is put to the AGM. A shareholder must inform the Company’s 
registrars in writing of any termination of the authority of a proxy.
6.  The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have been 
nominated to receive communications from the Company in accordance with section 146 of the Companies Act 2006 (“Nominated 
Persons”). The rights of shareholders in relation to the appointment of proxies can only be exercised by registered shareholders of the 
Company. Nominated Persons may have a right under an agreement with the registered shareholder who hold shares on their behalf 
to be appointed (or to have someone else appointed) as a proxy. Alternatively, if Nominated Persons do not have such a right, or do 
not wish to exercise it, they may have a right under such an agreement to give instructions to the person holding the shares as to the 
exercise of voting rights.
7.  The Company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those shareholders 
on the register of members of the Company as at 11 a.m. on 24 July 2012 (or, if the AGM is adjourned, shareholders on the register 
of members not later than 48 hours (excluding any part of a day which is not a working day) before the time fixed for the adjourned 
meeting) are entitled to attend and/or vote at the AGM (or any adjournment thereof) in respect of the number of shares registered in 
their name at that time. Subsequent changes to the register of securities shall be disregarded in determining the rights of any person 
to attend and vote at the AGM (or any adjournment thereof).
8.  Copies of contracts of service and letters of appointment between the Directors and the Company will be available for inspection at 
the registered offices of the Company and the offices of Berwin Leighton Paisner LLP at Adelaide House, London Bridge, EC4R 9HA 
during normal business hours on any weekday (Saturdays, Sundays and public holidays excluded) from the date of this Notice until 
the conclusion of the AGM, and at the place of the AGM for at least 15 minutes prior to the AGM until its conclusion.
9.  Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers 
as a member provided that they do not do so in relation to the same shares.
10.  In order to facilitate voting by corporate representatives at the AGM, arrangements will be put in place at the meeting so that (i) if 
a corporate member has appointed the Chairman of the meeting as its corporate representative with instructions to vote on a poll 
in accordance with the directions of all of the other corporate representatives for that member at the meeting, then on a poll those 
corporate representatives will give voting directions to the Chairman and the Chairman will vote (or withhold a vote) as corporate 
representative in accordance with those directions; and (ii) if more than one corporate representative for the same corporate member 
attends the meeting but the corporate member has not appointed the Chairman of the meeting as its corporate representative, a 
designated corporate representative will be nominated, from those corporate representatives who attend, who will vote on a poll and 
the other corporate representatives will give voting directions to that designated corporate representative. Corporate members are 
referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporate representatives 
– http://www.icsa.org.uk/- for further details of this procedure. The guidance includes a sample form of representation letter if the 
Chairman is being appointed as described in (i) above.
11.  Under section 527 Companies Act 2006 members meeting the threshold requirements set out in that section have the right to 
require the Company to publish on its website a statement setting out any matter relating to: (i) the audit of the Company’s accounts 
(including the auditor’s report and the conduct of the audit) that are to be laid before the AGM; or (ii) any circumstances connected  Notice of Annual General Meeting
Hornby > Annual Report and Accounts 2012 > Notice of Annual General Meeting 71
with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid 
in accordance with section 437 Companies Act 2006. The Company may not require the members requesting any such website 
publication to pay its expenses in complying with sections 527 or 528 Companies Act 2006. Where the Company is required to place 
a statement on a website under section 527 Companies Act 2006, it must forward the statement to the Company’s auditor not later 
than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any 
statement that the Company has been required under section 527 Companies Act 2006 to publish on a website.
12.  A copy of this Notice, and other information regarding the meeting, as required by section 311A Companies Act 2006, is available 
from www.hornby.com.
13.  You may not use any electronic address provided in this Notice or in any related documents (including the form of proxy) to communicate 
with the Company for any purposes other than those expressly stated.
14.  Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question 
relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly with the 
preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in 
the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the 
question be answered.
15.  As at 7 June 2012 (being the latest practicable date prior to the publication of this Notice), the Company’s issued share capital 
consists of 39,164,100 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 8 June 2012 
are 39,164,100. Five Year Summary
72   Hornby > Annual Report and Accounts 2012 > Five Year Summary
  
2012
£’000
2011
£’000
2010
£’000
2009
£’000
2008
£’000
Turnover 64,447 63,372 63,863 60,803 54,949
Profit on ordinary activities before taxation 3,989 4,129 5,215 6,121 9,017
Taxation (825) (1,274) (1,530) (1,909) (2,940)
Profit on ordinary activities after taxation 3,164 2,855 3,685 4,212 6,077
Assets employed:
Non-current assets 27,969 28,509 28,803 29,903 20,812
Net current assets 16,673 16,623 18,653 9,133 11,037
Non-current borrowings (4,888) (8,026) (10,547) (7,181) (41)
Deferred tax liabilities (573) (337) (281) (301) (346)
Net assets  39,181 36,769 36,628 31,554 31,462
Total capital employed 39,181 36,769 36,628 31,554 31,462
Earnings per share
– basic 8.2p 7.5p 9.8p 11.2p 16.2p
– diluted 8.1p 7.4p 9.6p 11.0p 15.6p
Dividend per share (net) 3.7p 5.0p 5.0p 2.7p 8.5p
Net assets per share 100.0p 95.7p 96.2p 83.1p 82.8p
SHAREHOLDERS’ 
INFORMATION 
SERVICE
HORNBY WELCOMES CONTACT 
WITH ITS SHAREHOLDERS. 
IF YOU HAVE QUESTIONS OR 
ENQUIRIES ABOUT THE GROUP OR 
ITS PRODUCTS, PLEASE CONTACT:
A J MORRIS, FINANCE DIRECTOR 
HORNBY PLC 
WESTWOOD 
MARGATE 
KENT CT9 4JX 
The Group’s principal business is the development, production 
and supply of hobby and toy products. The Group distributes its products 
through a network of specialist and multiple retailers throughout the 
UK and overseas.
Hornby PLC Annual Report & Accounts 2012
Dividend per Share 
3.7p (26%)
2011: 5.0p
 2008 2009 2010 2011 2012
Underlying operating profit £’000
 2008 2009 2010 2011 2012
Divdend per share £’000
Financial Highlights
Revenue  
£64.5m +2%
2011: £63.4m
Underlying Operating Profit  
£5.3m +2%
2011: £5.2m
 2008 2009 2010 2011 2012
Revenue £’000
2   Hornby > Annual Report and Accounts 2012 >   Hornby PLC
Annual Report & Accounts
YEAR ENDED 31 MARCH 2012 
Hornby PLC
Westwood,
Margate,
Kent
CT9 4JX
www.hornby.com