HORNBY PLC
|
ANNUAL REPORT & ACCOUNTS 2005
YEAR ENDED 31 MARCH 2005
HORNBY PLC, WESTWOOD, MARGATE, KENT CT9 4JX
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005 1 Financial Highlights 
2 Chairman’s Statement
6 Chief Executive’s Report
9 Directors and Corporate Information
10 Report of the Directors
14 Corporate Governance
17 Statement of Directors’ Responsibilities
18 Remuneration Report 
24 Independent Auditors’ Report to the Members of Hornby Plc 
26 Consolidated Profit and Loss Account
27 Statement of Group Total Recognised Gains and Losses  
27 Note of Group Historical Cost Profits 
28 Consolidated Balance Sheet 
29 Company Balance Sheet  
30 Consolidated Cash Flow Statement 
31 Notes to the Cash Flow Statement
32 Notes to the Financial Statements 
32 Accounting Policies
51 Notice of Annual General Meeting 
54 Five Y ear Summar y
55 Form of Proxy
Designed by White Design
SHAREHOLDERS’ INFORMATION SERVICE
HORNBY WELCOMES CONTACT WITH ITS SHAREHOLDERS.
IF YOU HAVE QUESTIONS OR ENQUIRIES ABOUT THE GROUP 
OR ITS PRODUCTS, PLEASE CONTACT:
J W STANSFIELD, FINANCE DIRECTOR
HORNBY PLC,WESTWOOD, MARGATE, KENT CT9 4JX 1
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Financial Highlights
Turnover £’000
2004
2005
38.970
45,006
Operating profit before goodwill amortisation £’000
2004
2005
6,366
7,663
Operating profit after goodwill amortisation £’000
2004
2005
6,363
7,331
Profit on ordinary activities before taxation £’000
2004
2005
6,469
7,202
Equity shareholders’ funds £’000
2004
2005
17,329
19,821
Cash at bank and in hand £’000
2004
2005
5,806
1,860
Earnings per ordinary share Basic - adjusted
*
2004
2005
12.21p
14.78p
Earnings per ordinary share Diluted
2004
2005
11.64p
13.26p
Earnings per ordinary share Diluted - adjusted
*
2004
2005
11.65p
14.11p
Earnings per ordinary share Basic
2004
2005
12.20p
13.88p
Dividends per ordinary share
2004
2005
6.0p
7.0p
Net assets per ordinary share
2004
2005
46.9p
53.1p
1
* Adjusted earnings per share before amortisation of goodwill. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
2
Chairman’s Statement
DIVIDEND
Reflecting the Group’s continued progress, the Board
is recommending a final dividend of 5.0p per ordinary
share.This will be paid on 19 August 2005 to those
shareholders on the register at 29 July 2005.
Taken together with the interim dividend, this gives 
a total dividend for the year of 7.0p, an increase of
17% over the dividend of 6.0p declared in the
previous financial year (adjusted for the share split
which took place last year).The Company policy
continues to be to reward our shareholders with a
dividend of approximately 50% of earnings per share
in the absence of unforeseen circumstances.
Statutory profit and earnings per share were reduced
in the year by £332,000 and 0.90p respectively, in
accordance with UK accounting standards, relating to
the amortisation of goodwill in respect of the
acquisition of Electrotren and the Lima assets.
BUSINESS REVIEW
We were encouraged that once again we have
achieved solid growth in the UK and in international
markets, before taking into account the additional
sales of the acquired overseas subsidiaries. For the
future, we are targeting significantly increased activity
and revenues from our international subsidiaries.
Trading in our core UK market has remained robust
during the year. Despite nervousness in the retail
sector, our products have retained their popularity
and sales have remained good.We are conscious
that some retailers are reporting the impact of
wider economic pressures but the hobby-based
characteristics of our products lend resilience in such
times and market feedback remains encouraging.
During the year, we have made good progress in
developing our network of concessions and have
extended our portfolio to 121 outlets. Sales in our
concessions grew by 34% in the year and represented
15% of our total UK sales.
I am delighted once again to report a most encouraging performance for the year.
Sales increased by 15% to £45.0 million, and pre-tax profit before goodwill
amortisation at £7.5 million is 16% above last year’s result (£6.5 million). Basic
earnings per share before goodwill amortisation rose by 21% to 14.78p. Statutory
pre-tax profit was £7.2 million and basic statutory earnings per share were 13.88p.
The Group has made excellent progress in its strategy to create a broader base
to its hobby activities.The recent acquisitions of Electrotren in Spain and the
assets of the Lima Group in Italy offer significant additional potential to enable
us to grow market share worldwide. 3
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
In Hornby model railways, the newly tooled “A4”
class locomotives and the Gresley coaches – in both
teak and British Rail liveries, set new standards of
performance, detail and authenticity.
The launch of Scalextric Sport Digital (SSD) has
opened a new chapter in slot racing.We believe that
the appeal of racing up to six cars on a single track,
the challenge of overtaking manoeuvres and team
tactics will generate significant new interest in the
hobby.We are honoured that the importance of this
development was recently recognised in the choice
of Scalextric Sport Digital for the prestigious
“Best new product design award” by the British Toy
and Hobby Association. In designing SSD we were
also conscious of the need for compatibility with 
our existing track and cars. An additional benefit of
this compatibility is that we have been able to 
enter technology sharing agreements with other
international manufacturers of slot cars. Under these
agreements, the third party manufacturers will be
able to market their cars as compatible with SSD. In
this way we believe the worldwide slot car market
will come to acknowledge SSD as the industry
standard for digital slot car racing.
Exploiting the potential from new licences remains a
very important part of our business.This year we
have secured licences to produce products related
to the new Harry Potter film – Harry Potter and the
Goblet of Fire and the new Batman Begins movie. In
addition we have retained the worldwide exclusive
licence to produce Scalextric cars based on the
highly successful Renault F1 cars and we have also
secured a licence to produce models based on both
classic and current Ferrari F1 and street cars.
OVERSEAS SUBSIDIARIES
During the year, we completed the acquisition of
certain assets of Lima S.p.A from the Liquidators.
This brings into Hornby ownership the iconic model
railway brands of Lima, Rivarossi, Jouef and Arnold;
and Pocher, the well-known automobile kit brand.
With these assets we have acquired a mould tool
bank of approximately 10,000 tools. Already around
1,000 of these tools have been shipped to China to
commence production of the first ranges, which will
be available prior to Christmas this year.We are
already making further shipments of tools to China
to facilitate further product introductions in 2006.
The Lima operation in Italy has been completely
restructured to match the needs of the ongoing
distribution business.The old premises have been
vacated and a new warehouse and administration
facility is now occupied. Staff numbers have been
aligned with the ongoing needs of the business.We
have every confidence that over the coming years
the combination of the acquired brands, Hornby’s
existing design and marketing expertise, and the
enthusiastic co-operation of our principal suppliers
in China, will enable us to grow significantly our
international model railway business.The Lima
subsidiary is also now marketing and distributing our
Scalextric range in Italy. As we have demonstrated in
the UK, the combination of a market leading model
railway brand and a strong slot racing presence
provides an exceptionally powerful trading platform
from which to build sales across all major channels
of distribution.
Our Spanish operation Electrotren has made
excellent progress since its acquisition in March
2004.We have accelerated our plans for improving
both the marketing and sales distribution network. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
4
Chairman’s Statement continued
We are delighted to announce that we have
acquired the rights to use images of Spanish Renault
F1 driver Fernando Alonso on our slot car racing
packaging in Spain.This, and our presence on the
ground through Electrotren has given us an excellent
platform to grow our market share of the largest
per capita slot racing market in the world.The
MotoGP bikes have proved to be a very popular
addition to the product range and we have also
negotiated the image rights for MotoGP rider Sete
Gibernau for use on our MotoGP packaging in
Spain.We believe that these personal endorsements,
together with a renewed marketing and promotional
campaign in Spain, will ensure that we achieve
significant growth in this important slot racing market
this year.
As is well known, trading in the USA has been under
pressure during the past 12 months and results in
Scalextric USA were therefore less encouraging.
Sales were down by 13% at $4.7 million. Profit
before tax of $128,000 in the previous year has
deteriorated and the operation reported a loss
before tax of $(141,000). Whereas all other parts 
of the Hornby Group have benefited from the
sustained weakness of the US dollar, Scalextric USA
has seen its sales and margins eroded. Scalextric
USA acts as distributor for a number of European
slot car manufacturers in addition to Hornby.The
relative strength of the Euro and of Sterling has
forced up prices and depressed sales. However it
should be borne in mind that as a result of margins
generated in Hornby Hobbies Limited on sales
made to Scalextric USA, the US subsidiary remains
an overall net contributor to Group profit. Entering
the new financial year, action has been taken to
reduce overheads and increase sales efforts.
PRODUCT DEVELOPMENT
The lifeblood of our business remains the product
pipeline. During the year under review, we have
made great strides in developing our digital
technology. Scalextric Sport Digital looks set to
become the system of choice for the industry going
forward.The Hornby Digital control system for
model railways is at an advanced stage of
development and will be launched early in 2006.
Following the successful launch of the Live Steam
range in 2003, we will shortly commence deliveries
of the Live Steam “Flying Scotsman” set, which 
will provide a further boost to this unique new
product category.
Our development programme for Hornby and
Scalextric models is as comprehensive and exciting
as ever. Electrotren continues to innovate in
European model railways and we are currently
finalising plans for new tooling projects to underpin
the reinvigoration of the acquired Lima brands.
OUTLOOK
We believe the Group is at a pivotal point in its
development. Having revitalised our UK market, we
now have the opportunity to repeat this exercise in
other major world markets.We have been able to
attract first class management for our international
subsidiaries.This will ensure that, whilst the UK
Company continues to provide support where
necessary, there will be no loss of focus on the core
UK market.
Trading in the new financial year has started well,
despite a widely reported slowdown in discretionary
consumer spending.We recognise that we may face
a wider economic slowdown, but we expect to be 5
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
less affected than other sectors as interest amongst
our core customer base of hobbyists remains strong.
In the UK our mix of distribution channels means
that we are not reliant on a few dominant retailers
and we are able to retain our pricing power.
However it should be borne in mind that during the
first half of the new financial year the Lima business
will be incurring overheads, prior to sales revenues
starting to flow in the autumn.Therefore as
anticipated it is likely that Group profit before tax
will be depressed in the half-year to 30 September
2005, although not for the year as a whole.
Finally I would like to take this opportunity to thank
the entire Hornby team for their efforts in delivering
another successful performance during the year. It is
testament to their efforts that we have made
considerable progress on positioning Hornby for the
next important phase of its growth.
Neil Johnson
3 June 2005
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
6
Chief Executive’s Report
Basic underlying earnings per share, before amortisation
of goodwill, rose to 14.78p, an increase of 21%
(2004 – 12.21p) (adjusted for the five for one share
split which took place last year).
There was a net cash outflow during the year 
of £3.97 million. Cash at 31 March 2005 was £1.86
million compared to £5.81 million for the previous
year. The reduction in the year-end cash position is
due to the acquisition of certain assets of Lima S.p.A 
in Liquidation on 15 December 2004.These assets
were acquired by a newly formed, wholly owned
subsidiary of Hornby Plc, Hornby Italia s.r.l. Adding
back this amount, together with costs incurred in the
restructuring of the acquired operations shows a
like-for-like cash generation of over £2.0 million from
continuing operations in the year.
The Group manufactures all of its products in China,
via third party contract manufacturers. However some
packing operations remain in the UK where this
strategy provides greater flexibility in meeting market
needs. All purchases from our Chinese suppliers are
made either in US or Hong Kong Dollars. It is the
Company’s policy to enter into forward currency
contracts in anticipation of future purchases.The
Company retains intellectual property rights in its
products and controls all sales of its products.
A 17% return on sales (2004 – 17%) was achieved
despite an increase in fixed overheads as a result of
the acquisition of Electrotren, and costs incurred in
the acquisition of the Lima assets, together with
ongoing costs in Hornby Italia during the period
since the acquisition.
The Group’s main channels of distribution, both in
the UK and Internationally, once again showed good
year-on-year growth.We have continued to build our
portfolio of in-store concessions.These numbered
121 as at 31 March 2005, compared to 111 a year
earlier. Y ear-round availability of our products, properly
displayed and demonstrated in prominent high-street
locations is an important factor in the continuing
growth of both our hobby brands. Concessions sales
exceeded £5.0 million, compared to £3.7 million in
the previous year. At 121 outlets, it is now our intention
to focus on building year-round sales through these
outlets in the UK, whilst exploring the scope for the
extension of this successful formula into other
markets in the future.
OPERATIONAL AND FINANCIAL REVIEW
The Group’s principal business is the development and supply of Hobby and Toy products.
The Group’s two principal brands, Hornby and Scalextric, are distributed through a network 
of specialist and multiple retailers throughout the UK and overseas.
Consolidated turnover for the year to 31 March 2005 was £45.0 million, an increase of 15%
over the previous year’s £39.0 million.This follows two successive years of sales growth of 14%
and 20% in 2004 and 2003 respectively.
Profit before tax of £7.5 million, before amortisation of goodwill, was 16% above last year’s
result of £6.5 million. 7
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Scalextric USA faced a difficult trading climate during
the year. The pressures of a weak US Dollar, coupled
with generally depressed consumer demand resulted
in a reduction in sales to $4.7 million in the year to
31 March 2005 (2004– $5.4 million). A loss before tax
of $(141,000) was recorded, compared to a profit of
$128,000 in the previous year. The result in both
years was achieved after management charges from
Hornby Hobbies Limited. It should also be noted
that in addition to the result generated in the USA 
a contribution of £575,000 arose on sales from
Hornby Hobbies Limited to Scalextric USA, thus
making Scalextric USA a net contributor to Group
profit. In the year to 31 March 2005 costs were also
incurred in the establishment and initial running
costs of our first retail store in the USA. This store,
established in a shopping mall between Seattle and
Tacoma, commenced trading in late November
2004, in time for the Thanksgiving holiday. In recent
years we have recognised that awareness of slot
racing in the USA has been limited to dedicated
hobby fans, purchasing through specialist retail
outlets.We therefore determined that, in order to
increase demand for Scalextric products we needed
to increase the exposure of Scalextric to the general
public.The mall store, trading under the name
“Scalextric RaceWorld” has made an encouraging
start. We are expecting the store to be profitable in
the current financial year.
Trading in Electrotren during its first year under
Hornby ownership was encouraging. Sales were up
by 26% to €4.0 million and a profit before interest
and tax of €822,000 was recorded.The acquisition
of Electrotren has not only brought ownership of the
Spanish brand leader in model railways, it has also
created a solid base from which to grow our share
of the Spanish slot-racing market. Most shareholders
will be aware that in Spain our slot-racing products 
are sold under the brand Superslot. For the new
financial year we have significantly increased our
marketing and sales activity in this important market.
The signing of licences to use the images of
Fernando Alonso and Sete Gibernau, the leading
Spanish driver/rider in Formula One and MotoGP
respectively on our Superslot packaging has raised the
appeal of Superslot significantly.We are targeting a
substantial increase in sales and profits to be generated
as a result of our focus on the Spanish market.
Since the acquisition of certain assets of Lima S.p.A
in Liquidation, good progress has been made in
restructuring the business to match our ongoing
needs.The response from the key markets of Italy,
France, Germany and USA has been very encouraging.
Prior to commencing production in China all the
products are undergoing a thorough engineering
review aimed at improving performance, appearance
and authenticity. In this way we are confident that we
will be able to reinvigorate the acquired brands by
delighting model railway enthusiasts with outstanding
products which represent great value for money.
Both of our existing major brands, Hornby and
Scalextric, once more achieved significant sales
growth during the year.Within the brands, Hornby
has continued to raise the bar in terms of quality
and detail, facilitating higher price points and higher
margins. In Scalextric, we believe the Sport Digital
System (SSD) will shift the market dynamics in
favour of digitally controlled racing. In doing so, as a
result of the total compatibility of SSD with other
manufacturers’ cars, we believe we will create for
Scalextric a unique and powerful market advantage
over the competition. Supporting this position, initial
deliveries of Sport World - the Internet based 
online racing system - are expected to commence 
in July 2005. The year to 31 March 2005 saw a continuation of
the broader distribution in retail channels that had
not stocked our products in recent years.This trend
of expanding distribution will once again continue in
the new financial year, as the growing opportunity
represented by both our major brands is recognised
by further major retailers.
Following 4 years of strong, predominantly UK
organic growth, our focus now turns more directly
to the expansion of our international business.The
acquisitions of Electrotren and the Lima brands and
assets, coupled with a clear strategy to grow
awareness and sales in the USA, provide a strong
platform to continue the development of Hornby Plc
into a dominant position in the world hobby market.
The new financial year has started well, and although
this should be tempered by the possibility of wider
economic pressures, the entire management and
staff of the Group is excited and enthused by the
task on hand.We have made a good start towards
achieving our objectives in this new financial year,
and we remain confident about future prospects.
Frank Martin
3 June 2005
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
8
Chief Executive’s Report continued 9
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Directors and Corporate Information
DIRECTORS
N A Johnson
Chairman
F Martin
Chief Executive
J W Stansfield
Finance Director
N J Cosh
Non-Executive Director
SECRETARY
J W Stansfield, FCMA
REGISTERED OFFICE
Westwood
Margate
Kent  CT9 4JX
COMPANY REGISTERED NUMBER
Registered in England No. 01547390
AUDITORS
PricewaterhouseCoopers LLP
First Point
Buckingham Gate
Gatwick
RH6 0PP
SOLICITORS
Berwin Leighton Paisner
Adelaide House
London Bridge
London  EC4R 9HA
PRINCIPAL BANKERS
Barclays Bank PLC
9 St George’s Street
Canterbury
Kent  CT1 2JX
FINANCIAL ADVISERS
AND BROKERS
Robert W. Baird Limited
Mint House
77 Mansell Street
London  E1 8AF
REGISTRARS AND
TRANSFER AGENTS
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent  BR3 4TU HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
10
Report of the Directors
The directors submit their annual report together
with the audited financial statements for the year
ended 31 March 2005.
PRINCIPAL ACTIVITIES AND 
BUSINESS REVIEW
The Company is a holding company and has 
4 operating subsidiaries: Hornby Hobbies Limited in
the United Kingdom, Scalextric USA, Inc. in the USA,
Electrotren S.A in Spain and Hornby Italia s.r.l. in Italy,
a company established to acquire certain assets of
Lima S.p.A. in Liquidation.
The Group is principally engaged in the development,
manufacture and distribution of hobby and interactive
home entertainment products.
The Group’s business review and future developments
are included in the Chairman’s Statement and 
Chief Executive’s Report.
RESULTS AND DIVIDENDS
The results for the year ended 31 March 2005 are
set out in the Consolidated Profit and Loss Account
on page 26.Turnover for the year was £45.0 million
compared to £39.0 million last year.The profit on
ordinary activities after taxation for the year
amounted to £5.2 million (2004 – £4.5 million).
An interim dividend of 2.0p (2004 – 1.6p) per ordinary
share amounting to £737,293 (2004 – £584,827)
was paid on 28 January 2005.The Group’s Short
Term Incentive Plan Trust waived its right to the
interim dividend on 443,900 ordinary shares 
(see notes 8 and 12).
The directors recommend an increased final dividend
of 5.0p (2004 – 4.4p) per ordinary share amounting
to £1,865,426 (2004 – £1,626,200) payable on 
19 August 2005 to those shareholders on the
Register at 29 July 2005.
INTERNATIONAL FINANCIAL 
REPORTING STANDARDS
The Board has, as part of its normal procedures,
reviewed its historic accounting policies to ensure
that the Group's accounts not only show a true 
and fair view of the state of the Group's affairs, but
also give the most transparent and realistic view 
to stakeholders.
As a result of this review they are aware that, being
a UK listed group, Hornby Plc will be required to
produce all future financial statements and annual
reports for accounting periods starting after 
1 January 2005, in line with International Financial
Reporting Standards (“IFRS”).This will require an
opening balance sheet to be prepared under IFRS as
at 1 April 2004 and a full profit and loss account,
balance sheet, cash flow statement etc. for the year
ended 31 March 2005 for comparative purposes.
All existing standards have been reviewed to assess
the impact on reported numbers.There will be five
major areas relevant to the Group’s results:
-segmental analysis
- goodwill amortisation and impairment reviews
- accounting for share based payments
- accounting for financial instruments
- accounting for dividends
The Board has studied IFRS and is confident that it
will be able to report in line with IFRS when required.
RESEARCH & DEVELOPMENT
The Board considers that research and development
into new products continues to play an important
role in the Group’s success.
All costs incurred are charged to the Profit and Loss
Account as set out in note 3.
PROPERTY VALUES
In the opinion of the directors, and given current
planning use approvals, there is no significant
difference between the book value and the current
market value of interests in land and buildings.
CHARITABLE DONATIONS
During the year the Group made donations of
£14,343 (2004 – £2,180) for charitable purposes.
DIRECTORS
The persons who were directors during the year are
listed below:
Neil A Johnson, aged 56, was originally appointed 
a non-executive director on 1 July 1998.
On 22 December 2000 Mr Johnson assumed the
responsibilities of Chairman. 11
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Mr Johnson is currently Chairman of Motability
Finance Limited, CybIT PLC and Tenon Group Plc.
Frank Martin, aged 53, was appointed Chief Executive
on 3 January 2001. Mr Martin was previously 
Chief Executive of Humbrol Limited, and formerly
Managing Director of Denby Pottery Limited and
Group Marketing Director of Hasbro (UK) Limited.
Mr Martin’s conditions of employment include a
notice period of one year to be given by the
Company and of six months to be given by 
Mr Martin. Mr Martin retires by rotation under
article 97 of the Articles of Association and offers
himself for re-election at the forthcoming Annual
General Meeting.
John W Stansfield, aged 50, has been employed by
the Group since April 1982. He was appointed
Finance Director and Company Secretary on 
4 December 1996. Mr Stansfield’s conditions of
employment include a notice period of one year to
be given by the Company and of six months to be
given by Mr Stansfield. Mr Stansfield retires by
rotation under article 97 of the Articles of
Association and offers himself for re-election at 
the forthcoming Annual General Meeting.
Nicholas J Cosh, aged 58, was appointed a 
non-executive director on 21 June 1999. He is
Chairman of Kiln plc and a non-executive director 
of Bradford & Bingley plc, ICAP plc and
Computacenter plc. He was previously finance
director of J.I.B. Group plc and M.A.I. plc.
The interests of the directors in the shares of the
Company and in options granted over such shares
are disclosed in the Remuneration Report on pages
18 to 23.
SUBSTANTIAL SHAREHOLDINGS
The Company has been notified that at close of
business on 27 May 2005 the following parties were
interested in 3 per cent or more of the Company’s
ordinary share capital.
Shareholder Number of
Ordinary Percentage
Shares held
P J Wood Associates Limited 4,012,500 10.75
Electra Quoted Partners 2,995,150 8.03
Standard Life Investments 2,893,429 7.76
J J Hosking 1,664,200 4.46
Deutsche Bank Frankfurt 1,600,000 4.29
Insight Investment Professional Funds 1,553,872 4.16
J M Finn Nominees Limited 1,292,918 3.47
Fidelity Investments 1,268,088 3.40
FINANCIAL INSTRUMENTS
The Group’s financial instruments, other than
derivatives, comprise borrowings, some cash and
liquid resources, and various items, such as trade
debtors, trade creditors, etc. that arise directly 
from its operations.The Group’s financial liabilities
comprise borrowings, trade creditors, other
creditors and finance leases, the main purpose of
which is to raise finance for the Group’s operations.
The Group also has financial assets comprising cash,
trade and other debtors.
The Group also enters into derivatives transactions
(principally forward foreign currency contracts).The
purpose of such transactions is to manage the
currency risks arising from the Group’s operations.
It is, and has been throughout the period under
review, the Group’s policy that no trading in financial
instruments shall be undertaken.
The main risks arising from the Group’s financial
instruments are interest rate risk, liquidity risk and
foreign currency risk.The Board reviews and agrees
policies for managing each of these risks and they
are summarised below.These policies, established 
1 April 2000, have been reviewed and remain
unchanged.
Interest rate risk
The Group finances its operations through a mixture
of retained profits and bank borrowings. The Group
borrows, principally in sterling, at floating rates of
interest to meet short term funding requirements.
At the year end the Group had no borrowings
other than finance leases. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
12
Report of the Directors
continued
Liquidity risk
The Group only requires borrowings at certain times
of the year. The short term flexibility required is
achieved by overdraft facilities.
Foreign currency risk
The Group purchases a significant proportion of its
products from the Far East in HK and US dollars.
The Group’s policy is to reduce currency exposure
arising from its purchases and anticipated orders by
using forward foreign exchange contracts of up to
12 months. All sales and other purchases originating
in the UK are denominated in sterling.
The Company has subsidiaries in the USA, Spain and
Italy. At present the Company does not consider the
balance sheet translation exposure significant enough
to warrant matching the net currency assets with
currency borrowings.
ANNUAL GENERAL MEETING – SPECIAL
BUSINESS RESOLUTIONS
The notice of Annual General Meeting set out on
pages 51 and 53 includes special resolutions to
renew the directors’ authority to allot equity
securities and the Company’s authority to purchase
its own shares.
Resolution Number 8 is a special resolution which
would give the Board authority within the meaning
of Section 80 of the Companies Act 1985 to allot
equity securities of the Company up to an aggregate
nominal value of £150,000 representing 40.2 per cent,
of the Company’s issued share capital as at 3 June 2005.
If approved, the resolution will entitle the Board to
allot equity securities having an aggregate nominal
value of £18,000 for cash, equivalent to 1,800,000
Ordinary Shares representing 4.8 per cent of the
Company’s issued share capital as at 3 June 2005, as
if Section 89(1) of the Act conferring pre-emption
rights on shareholders did not apply.This authority
also allows the directors, within the same aggregate
limit, to sell for cash, shares that may be held by the
Company in treasury. Allotments for cash in excess
of this figure on a non pre-emptive basis will require
prior shareholder approval except in the case of a
rights issue to existing shareholders.This Section 80
authority and Section 89 disapplication will last until
the end of the next Annual General Meeting of the
Company.The Directors do not have any present
intention of exercising the authority granted by 
this resolution.
Resolution Number 9 is a special resolution
which would give the Board authority under Section
166 of the Companies Act 1985 to make one or
more market purchases (within the meaning of
Section 163(3) of that Act) of its own shares
representing less than 15 per cent of the issued
ordinary share capital of the Company at the date
of this resolution.The directors will exercise this
power only if they believe that the effect of such
purchases will be to increase earnings per share and
that to do so is in the best interests of the Company
and shareholders generally.The minimum price
which may be paid for an ordinary share is the par
value of such share, from time to time, exclusive of
expenses.The maximum price which may be paid
for an ordinary share shall be an amount equal to 
5 per cent above the average of the middle-market
quotations for an ordinary share as derived from 
the London Stock Exchange Daily Official List for the
five dealing days immediately preceding the day on
which the purchase is made, exclusive of expenses.
The authority to make market purchases will also
last until the end of the next Annual General
Meeting of the Company. Shares purchased under
this authority will be cancelled, or, if the directors
consider appropriate, held in treasury.
PERSONNEL POLICIES
It is the policy of the Group to follow equal
opportunity employment practices and these include
the full consideration of employment prospects for
the disabled.
Applications for employment by disabled persons are
always fully considered, bearing in mind the aptitudes
of the applicant concerned. It is the policy of the Group
that the training, career development and promotion
of disabled persons should, as far as possible, be
identical with that of other employees. Arrangements
are made, wherever possible, for retraining employees
who become disabled, to enable them to perform
work identified as appropriate to their aptitudes.
The Group places importance on the contributions
to be made by all employees to the progress of the
Group and aims to keep them informed by the use
of formal and informal meetings. 13
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
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 2005 was 31 days
(2004 – 28 days).The Company itself does not
trade and therefore has no external trade creditors.
AUDITORS
A resolution to re-appoint the auditors,
PricewaterhouseCoopers LLP , will be proposed at
the forthcoming Annual General Meeting.
By order of the Board
J W Stansfield
Secretary
Westwood 
Margate
Kent  CT9 4JX
3 June 2005  HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
14
Corporate Governance
COMPLIANCE WITH THE COMBINED CODE 
In July 2003 a new code,The Combined Code on
Corporate Governance, was issued by the Financial
Reporting Council (the 2003 FRC Combined Code).
The 2003 FRC Combined Code applies for reporting
years beginning on or after 1 November 2003.
The maintenance of effective corporate governance
remains a key priority for the Board and the
statement below describes how the directors have
applied the principles of corporate governance and
complied with Section 1 of the Combined Code
throughout the year subject to the exceptions
mentioned below.
The Board
The Board has ultimate responsibility and accountability
for the Group’s operations.
During the year the Board comprised the Chairman,
Chief Executive, Finance Director and a non-executive
director.
During the year 12 Board meetings were held. The
directors attended as follows:
Board of Directors Attendance
NA Johnson 12
F Martin 12
J W Stansfield 11
N J Cosh 12
The Board believes the current structure is appropriate
for the scale of the business and to enable the Group
to be managed efficiently.
The Board has adopted a formal schedule of matters
specifically reserved to it for decisions including the
determination of strategy, the approval of business
plans, budgets, acquisitions and disposals, major capital
purchases, Board appointments, accounting policies
and treasury arrangements.The Board also delegates
specific responsibilities to committees as described
below.The Board meets monthly and monitors
progress against plan at each meeting.
The directors have the authority of the Board to
obtain external legal or other independent
professional advice in the furtherance of their duties
at the Company’s expense.All directors have access
to the advice and services of the Company Secretary,
who is responsible for ensuring Board procedures are 
followed and applicable rules and regulations are
complied with.The executive directors have all
received appropriate training for their appointment
to the Board of a listed company.The non-executive
directors bring a broad expertise to the Board.
N A Johnson and N J Cosh are both experienced
company directors. Biographical details of each
director are shown on pages 10 to 11.
The Board has formal and informal procedures to
monitor its performance both as individuals at annual
appraisals and as a Board.
Chairman and Chief Executive
The roles of the Chairman and Chief Executive are
separate and there is a clear division of responsibility.
The Chairman is considered independent and
responsible for leading the Board and ensuring its
effectiveness.The Chairman and the Board are
satisfied that effective communication, principally by
the Chief Executive and Group Finance Director, is
undertaken with the shareholders.
The Chief Executive is responsible for running the
business and ensuring that accurate, timely and clear
information is presented at monthly Board meetings
or when appropriate.
Independent Non-Executive Directors
The Board considers both of the non-executive
directors who served during the year to be
independent of management and free from any
business or other relationship which could interfere
with the exercise of their independent judgement.
The Board believes that their interest in receiving fees
as directors and as being shareholders does not
prejudice their independence.
N J Cosh has been identified as the senior
independent non-executive director through whom
shareholder and stakeholder concerns can be
conveyed to the Board.
Availability of Information
Executive management have a responsibility to
provide the Board with sufficient information in a
form and quality appropriate to enable it to discharge
its duties.The Board therefore expects to receive
timely information, circulated in advance, on all issues
scheduled to arise at Board meetings. On a regular
basis these will include management accounts  15
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
indicating the performance of the business against
budget together with financial forecasts that are
updated on a monthly and quarterly basis.
Nominations Committee
Appointments to the Board require the Board’s
authorisation and are conducted by the Nominations
Committee comprising the Chairman, executive and
non-executive directors.
The Nominations Committee held no meetings in
the year as no appointments were necessary.The
Board believes it is appropriate that all directors are
members of the Nomination Committee and although
non-executives do not constitute a majority the
Chairman has the casting vote.The non-executives
not forming a majority of the Nominations Committee
is an area where the requirements of the 2003 FRC
Combined Code are not met.
The Chief Executive and executive directors approve
a job specification, review comparative terms of
remuneration and may appoint an external consultant
to prepare a short list of potential candidates.
The potential candidates are interviewed by either
the Nominations Committee or a panel appointed 
by that Committee.An appointment requires final
approval by the Board prior to an offer being
forwarded.
The Company’s Articles of Association currently
require one third of the directors to retire by rotation
at each Annual General Meeting.
Remuneration Committee
The Remuneration Committee comprises the 
non-executive directors. The current members of the
committee are N A Johnson (Chairman) and N J Cosh.
The Committee normally meets twice per annum but
more frequently if required.
During the year two Remuneration Committee
meetings were held. The Committee members
attended as follows:
Remuneration Committee Attendance
NA Johnson 2
N J Cosh 2
The composition is in compliance with the 2003 FRC
Combined Code provision B.2.1 which states that the
Committee should consist exclusively of independent
non-executive directors, and provision B.1.6 which
requires setting notice or contract periods at, or
reducing them to, one year or less.
Details of directors’ contracts are provided in the
Remuneration Report.
The Committee is responsible for establishing formal
and transparent procedures for determining policy on
executive remuneration and advising the Board on
executive remuneration and in particular for ensuring
that executive remuneration packages are sufficient
to attract, retain and motivate executive directors of
the required quality whilst avoiding paying more than
necessary. It also endeavours to establish performance
related elements of remuneration which align the
interests of the directors with those of the
shareholders. No director is involved in deciding his
own remuneration.
Relations with Shareholders
The Company communicates regularly with its
institutional shareholders and encourages
communication with private investors through the
Annual General Meeting.
The executive directors update major shareholders at
institutional visits and analyst presentations immediately
after the interim and final announcements. The
Chairman attends a selection of these meetings.
The meetings facilitate open discussion and direct
face-to-face contact and the views of shareholders
are reported to the Board by the Chairman and
Chief Executive.
The senior independent non-executive director also
welcomes direct discussions with shareholders.
The Board uses the Annual General Meeting as an
occasion for communication with its shareholders.
All proxy votes are counted by the Company's
registrars and the voting on each resolution is made
available to the meeting. Directors of the Company
and the UK subsidiary attend the meeting to respond
to specific questions. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
16
Audit Committee
The Audit Committee comprises the non-executive
directors. The current members of the Committee
are N J Cosh (Chairman) and N A Johnson.The
Board considers that N J Cosh and N A Johnson have
recent and relevant experience. During the year two
Audit Committee meetings were held. The Committee
members attended as follows:
Audit Committee Attendance
N J Cosh 2
NA Johnson 2
The Committee has written terms of reference,
which set out clearly its authority and duties. These
include the following:
•review of the interim and full year results and the
Annual Report and Accounts
•review the scope and results of the audit and its
cost effectiveness
• review the external auditor’s appointment
including remuneration and terms of engagement
•review the independence and objectivity of 
the auditors 
• review the appropriateness and effectiveness of the
Group’s internal controls, policies and procedures
The Committee considered the requirement of an
internal audit function but believed it would be
inappropriate for the Group at this stage given its size.
The position is reviewed annually.
The Committee meets at least twice a year and the
meetings are usually attended by the Chief Executive,
Finance Director and the Group’s auditors.
On occasions the auditors provide non-audit services
particularly in regard to potential acquisitions.The
Board considers alternative providers if practical and
seek assurances regarding independence and ensure
alternative personnel to the audit team are involved.
Informal arrangements exist for staff of the Group to
raise concerns in confidence, about possible
improprieties in matters of financial reporting or
other matters. During the year, the Audit Committee
reviewed these arrangements and deemed them
adequate given the size of the Group.
INTERNAL CONTROL
The directors have overall responsibility for the Group’s
system of internal control.Although no system of
internal control can provide absolute assurance
against material misstatement or loss, the system is
designed to provide the directors with reasonable
assurance that problems are identified on a timely
basis and are dealt with appropriately.
The key elements of the Group’s system of internal
control are as follows:
Control environment
The Board has put in place an organisational structure
with clearly defined and understood lines of
responsibility and delegation of authority. The Board
promotes a strong control environment with a strong
ethical climate.
Identification of business risks
The Board has the primary responsibility for
identifying the major business risks facing the Group
and developing appropriate policies to manage those
risks. The Board has completed a risk assessment
programme in order to identify the major business
risks and has reviewed and determined the key
control objectives.
Major corporate information systems
The Group operates a comprehensive annual
planning and budgeting system in conjunction with a
three year business plan which is regularly updated to
reflect changing circumstances.The annual plans and
budgets are approved by the Board.The Board
reviews the management accounts at its monthly
meetings and financial forecasts are updated monthly
and quarterly. Performance against budget is
monitored and where any significant deviations are
identified appropriate action is taken.
Main control procedures
Management establishes control procedures in
response to each of the key risks identified. Standard
control procedures operate to ensure the integrity of
the Group's financial statements.
Corporate Governance
continued 17
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Monitoring system used by the Board
The Board as a whole monitors the operation of the
system of internal control through management
reviews and reviews the effectiveness of the system
of internal control each year.The Board has adopted
a schedule of matters which are required to be
brought to it for decision in order to ensure that it
maintains full and effective control over appropriate
strategic, financial, organisational and compliance
issues, including procedures for seeking and obtaining
approval for major transactions and capital purchases.
The Board reviewed the effectiveness of the system
of internal controls in April 2005 and considered it
appropriate for the size of the Group.
Compliance with the provisions of the
Combined Code
The 2003 FRC Combined Code requires that the
directors review the effectiveness of the Group’s
system of internal controls. In September 1999 the
Institute of Chartered Accountants in England and
Wales (ICAEW) published guidance for directors on
the scope, extent, nature and review of internal
control.The Board confirms that an on-going process
for identifying, evaluating and managing the Group’s
significant risks has operated throughout the year and
up to the date of approval of the Annual Report.
Corporate Social Responsibility
The Board considers the social, environmental and
ethical matters pertinent to the Group, and will
review items of significance where appropriate.The
risk assessment procedures in place are designed to
highlight any key areas of concern including health
and safety considerations, employee recruitment and
retention and environmental issues, and controls put
in place as necessary.
The Group commissions independent external audits
of Far Eastern suppliers annually to ensure their
compliance with the International Council of T oy
Industries (ICTI) Code of Business Practices to include
child and forced labour, working conditions, hours of
work,pay, non-discrimination and health and safety.
GOING CONCERN
After making appropriate enquiries, the directors
have a reasonable expectation that the Group and
the Company have adequate resources to continue
in operational existence for the foreseeable future.
For this reason they continue to adopt the going
concern basis in preparing the Group's financial
statements.
STATEMENT OF DIRECTORS'
RESPONSIBILITIES
Company law requires the directors to prepare
financial statements for each financial year that give a
true and fair view of the state of affairs of the Company
and the Group and of the profit or loss of the Group
for that year.The directors are required to prepare
the financial statements on the going concern basis
unless it is inappropriate to presume that the
Company will continue in business.
The directors confirm that suitable accounting policies
have been used and applied consistently.They also
confirm that reasonable and prudent judgements and
estimates have been made in preparing the financial
statements for the year ended 31 March 2005 
and that applicable accounting standards have 
been followed.
The directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the
Company and the Group and to enable them to
ensure that the financial statements comply with the
Companies Act 1985.They are also responsible for
safeguarding the assets of the Company and the
Group and hence for taking reasonable steps for 
the prevention and detection of fraud and other
irregularities.
The directors are responsible for the maintenance
and integrity of the Company’s website. Information
published on the internet is accessible in many
countries with different legal requirements.
Legislation in the United Kingdom governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
By order of the Board
J W Stansfield
Secretary
3 June 2005 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
18
Remuneration Report
for the Year Ended 31 March 2005
This part of the Remuneration Report is unaudited.
The Remuneration Committee is chaired by the
Chairman and comprises the non-executive
directors.The current members of the Committee
are N A Johnson (Chairman) and N J Cosh.
Directors’ service contracts and the Short Term
Incentive Plan (STIP) were established through
consultation with the Group’s lawyers, Berwin
Leighton Paisner.
REMUNERATION POLICY
The Remuneration Committee is responsible for
devising and implementing a remuneration policy 
for executive directors which complies with the
principles set out in Section 1 of the 2003 FRC
Combined Code.The Committee’s policy is to
ensure that executive remuneration packages are
sufficient to attract, retain and motivate executive
directors of the required quality whilst avoiding
paying more than is necessary. It also endeavours 
to establish performance related elements of
remuneration which align the interest of the
directors with those of the shareholders.
The Committee achieves its objectives through
remuneration packages of executive directors and
senior management that comprise the following:
• Salary and benefits
Salaries are reviewed regularly and these salaries
are changed at the time of the Group’s annual
salary review. Policies concerning other benefits
together with the Group’s company car policy are
reviewed periodically.
• Share options
The Group currently has a part approved and
part unapproved executive share option scheme
and details of options held by directors are set
out on page 21.
The options are 100% exercisable subject to the
achievement of certain performance criteria.
In respect of awards made up to and including
January 1999 the target criteria were based on
earnings per share and thereafter the target
criteria were based on profit before interest and
tax. No award vests unless target criteria have
been met.
•Pensions
The executive directors and senior managers are
members of defined contribution pension schemes
and annual contributions are calculated by
reference to basic salaries with neither annual
bonuses nor awards under the share incentive
schemes taken into account in calculating the
amounts due.
•Performance-related bonus scheme
In addition to salaries, executive directors and
senior management participate in a discretionary
performance-related bonus scheme. Performance
targets are designed to both stretch and
encourage individuals whilst aligning their interests
with that of the Group.The total bonuses available
are divided between a capped range of targets
established for Group profit before tax (four fifths)
and personal objectives (one fifth). Bonuses
relating to personal objectives are only realised if
Group profit exceeds minimum targets.
• Short T erm Incentive Plan
The Company has introduced a Short Term
Incentive Plan (STIP) to reward the performance
of executive directors and senior management. A
participating employee is entitled to a conditional
award of shares (Basic Award) equal in value to
and in substitution for part of their cash bonus
which would otherwise have been payable.
Where a participant so elects the Company will
also provide an equivalent matching award
(Matching Award) of the same number of shares.
Both the Basic and Matching Awards will usually
only be vested in the participant in equal amounts
on the second, third and fourth anniversaries of
the award date subject to the participant
continuing to be employed within the Group.
Shares to satisfy both the Basic and Matching
Awards are purchased in the market by an
employee benefit trust established and funded by
the Company. 19
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Set out below is a Performance Graph that
compares the total shareholder return performance
of Hornby with the FTSE Small Cap index, selected
because it includes UK quoted companies of a
similar size to Hornby.
The total shareholder return for the 5 year period
of 708% compares to the total return of the 
FTSE Small Cap of (13)%.
The targeted composition of each director's remuneration for the forthcoming year is as follows:
Non-performance Performance
Director Position Related Related
N A Johnson Chairman 100% Nil
F Martin Chief Executive 46% 54%
J W Stansfield Finance Director 63% 37%
N J Cosh Non-executive Director 100% Nil
In accordance with the Articles of Association the Board determines the remuneration of the 
non-executive directors.
Total Shareholder Return 1/4/2000 to 31/3/2005
0
100
200
300
400
500
600
900
800
700
1000
Jul 04 Oct 04 Jan 05 Apr 00 Jul 00 Oct 00 Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04
FTSE Small Cap
Source: Datastream HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
20
Remuneration Report
continued
Executive Directors’ Contracts
The executive directors do not have fixed 
period contracts.
Frank Martin, the Chief Executive, receives a salary
of £200,000 per annum effective 1 April 2005 and
participates in the Company’s performance-related
bonus scheme. Mr Martin is entitled to a bonus up
to a maximum of 100% of base salary; four fifths is
determined upon the achievement of a target Group
profit before tax and one fifth is divided between
several personal objectives. As a participant in the
Company’s STIP , Mr Martin can waive up to 50% of
eligible bonus and the Company matches the waived
amount to purchase shares as described earlier.
Mr Martin’s service contract dated 26 February 2001
includes a notice period of one year to be given by
the Company and of six months to be given by 
Mr Martin. In lieu of giving notice the Company may
terminate the agreement on payment of a lump sum
(subject to tax and national insurance) equal to the
salary and other benefits to which he is entitled
under this agreement.
John Stansfield, the Finance Director and Secretary,
receives a salary of £125,000 per annum effective 
1 April 2005 and participates in the Company’s
performance-related bonus scheme. Mr Stansfield is
entitled to a bonus up to a maximum of 50% of
base salary; four fifths is determined upon the
achievement of a target Group profit before tax 
and one fifth is divided between several personal
objectives. As a participant in the Company’s STIP ,
Mr Stansfield can waive up to 50% of eligible bonus
and the Company matches the waived amount to
purchase shares as described earlier. Mr Stansfield’s
service contract dated 16 July 1999 includes a notice
period of one year to be given by the Company and
of six months to be given by Mr Stansfield. In lieu of
giving notice the Company may terminate the
agreement on payment of a lump sum (subject to
tax and national insurance) equal to the salary and
other benefits to which he is entitled under this
agreement.
In respect of the year ended 31 March 2005 each of
the executive directors was entitled to an award of
bonus, details of which appear in the table of
directors’ emoluments.
Non-Executive Directors’ Contracts
The remuneration of the non-executive directors is
determined by the Board based on the level of fees
paid to non-executive directors of similar companies
and by considering independent external advice.
Neil Johnson, was appointed Chairman on 
22 December 2000 having initially joined the Board
on 1 July 1998. Non-executive directors fees for his
services to the Company of £80,000 per annum
effective 1 April 2003 are paid to a third party
consultancy company. Mr Johnson’s service contract
dated 1 July 1998 is subject to termination on three
months notice to be given by either the Company
or Mr Johnson. In lieu of giving notice the Company
may terminate the agreement on payment of a lump
sum (subject to tax and national insurance) equal to
the salary to which he is entitled under this agreement.
Nicholas Cosh, non-executive director, was
appointed to the Board on 21 June 1999, and
receives non-executive directors fees for his services
to the Company of £30,000 per annum effective 
1 September 2002. Mr Cosh’s service contract dated
on appointment is subject to termination on three
months notice to be given by either the Company
or Mr Cosh. In lieu of giving notice the Company
may terminate the agreement on payment of a lump
sum (subject to tax and national insurance) equal to
the salary to which he is entitled under this agreement.
None of the non-executive directors receives any
pension or discretionary bonus from the Company
nor do they participate in the executive share
option scheme. 21
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
DIRECTORS’ INTERESTS
Interests in shares
The interests of the directors in the shares of the Company in the year were:
Number of 1p ordinary shares
At 1 April 2004 Options exercised STIP vested Disposals At 31 March 2005
N A Johnson 300,000 - - (250,000)
*
50,000
F Martin - 101,690 23,435 (50,000) 75,125
JWStansfield 40,000 100,000 14,505 (89,505) 65,000
N J Cosh 75,000 - - - 75,000
*
As disclosed on 1 March 2005 N A Johnson transferred 250,000 ordinary shares to a family trust for the
benefit of his adult children.
All the interests detailed above are beneficial. Apart from the interests disclosed above no directors were
interested at any time in the year in the share capital of any other group company.
There has been no change in the interests set out above between 31 March 2005 and 27 May 2005.
This part of the Remuneration Report is auditable information.
Interests in share options
Details of options held by directors at 31 March are set out below:
Number of options Date from
Date 1p ordinary shares Exercise which Expiry
of grant 2005 2004 price exercisable date
F Martin 12/03/2001 148,310 148,310 29.5p 12/03/2004 12/03/2008
12/03/2001 - 101,690 29.5p 12/03/2004 12/03/2011
28/03/2002 1,000,000 1,000,000 76.8p 28/03/2005 28/03/2009
J W Stansfield 27/01/1999 50,000 150,000 32.7p 27/01/2002 27/01/2006
19/06/2002 250,000 250,000 83.4p 19/06/2005 19/06/2009
F Martin's options granted March 2001 and March 2002 satisfied the performance criteria for exercise upon
profit before interest and tax exceeding £2.2m and £4.0m respectively in the year ended 31 March 2003.
F Martin exercised 101,690 share options during the year at 29.5p, the market price being 215.5p, realising a
gain of £189,143.
J W Stansfield's options granted January 1999 satisfied the performance criteria for exercise upon earnings
per share exceeding 23p in the year ended 31 March 2002. Options granted June 2002 satisfied the
performance criteria for exercise upon profit before interest and tax exceeding £4.0m in the year ended 
31 March 2003.
J W Stansfield exercised 100,000 share options during the year at 32.7p, the market price being 271.0p,
realising a gain of £238,300.
The market price of the Company’s shares at 31 March 2005 was 236.0p and the range during the year
ended 31 March 2005 was 201.5p to 284.0p. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
22
Remuneration Report
continued
Directors’ detailed emoluments
Details of individual directors’ emoluments charged in the year are as follows:
Salary Pension 2005 2004
& fees Bonus STIP Benefits contri- Total Total*
butions
££ £ £ £ £ £
Chairman:
N A Johnson 80,000 - - - - 80,000 80,000
Executive:
F Martin 151,000 80,250 138,000 10,810 30,000 410,060 354,017
J W Stansfield 100,000 32,500 50,000 9,543 20,000 212,043 182,975
Non-executive:
N J Cosh 30,000 - - - - 30,000 30,000
361,000 112,750 188,000 20,353 50,000 732,103 646,992
* The 2004 total column includes pension contributions which were £30,000 for F Martin and £17,200 for
J W Stansfield.
Salary and fees shown above includes fees paid in respect of duties as directors. Neither annual bonuses nor
benefits in kind are pensionable.
STIP includes individual Basic and Matching Awards to the Short Term Incentive Plan for the year ended 
31 March 2005.
Benefits include motor cars and healthcare.
Two directors accrue benefit from payments to defined contribution pension schemes (2004 - two).
No director waived emoluments in respect of the year ended 31 March 2005 (2004 - nil). 23
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Short T erm Incentive Plan
At 31 March 2005, outstanding awards to directors under the Short Term Incentive Plan were as follows:
Market Value of Value of
Award Vesting Price at Number of entitlement entitlement
Director Date Dates Award Date shares 31 March 2005 31 March 2004
No. £’000 £’000
F Martin June 2002 June 2005/6 82.4p 46,875 111 148
June 2003 June 2005/6/7 140.4p 47,220 111 99
June 2004 June 2006/7/8 215.5p 46,395 109 100
June 2005 June 2007/8/9 * * 138 -
469 347
JWStansfield June 2002 June 2005/6 82.4p 29,015 69 91
June 2003 June 2005/6/7 140.4p 26,300 62 55
June 2004 June 2006/7/8 215.5p 19,950 47 43
June 2005 June 2007/8/9 * * 50 -
228 189
* 2005 awards have been charged to the profit and loss account in the year and the STIP Trust will purchase
shares in the Company following the preliminary announcement at the prevailing market price.
On 21 June 2004, 23,435 shares of the 2002 Award were vested to F Martin.
On 21 June 2004, 14,505 shares of the 2002 Award were vested to J W Stansfield.
Value of entitlement at 31 March 2005 is based on the closing market price of the Company's shares of 236.0p
(2004 - 210.0p).
N A Johnson
Chairman
3 June 2005 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
24
Independent Auditors’ Report to the Members of Hornby Plc
We have audited the financial statements which
comprise the consolidated profit and loss account,
the consolidated and Company balance sheets, the
consolidated cash flow statement, the statement of
Group total recognised gains and losses, the note of
Group historical profits and the related notes.We
have also audited the disclosures required by Part 3
of Schedule 7A to the Companies Act 1985
contained in the directors’ remuneration report
(“the auditable part”).
Respective responsibilities of directors 
and auditors
The directors’ responsibilities for preparing the annual
report and the financial statements in accordance
with applicable United Kingdom law and accounting
standards are set out in the statement of directors’
responsibilities.The directors are also responsible for
preparing the directors’ remuneration report.
Our responsibility is to audit the financial statements
and the auditable part of the directors’ remuneration
report in accordance with relevant legal and
regulatory requirements and United Kingdom
Auditing Standards issued by the Auditing Practices
Board.This report, including the opinion, has been
prepared for and only for the Company’s members
as a body in accordance with Section 235 of the
Companies Act 1985 and for no other purpose.
We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other
person to whom this report is shown or into whose
hands it may come save where expressly agreed by
our prior consent in writing.
We report to you our opinion as to whether the
financial statements give a true and fair view and
whether the financial statements and the auditable
part of the directors’ remuneration report have
been properly prepared in accordance with the
Companies Act 1985.We also report to you if, in
our opinion, the directors’ report is not consistent
with the financial statements, if the Company has not
kept proper accounting records, if we have not
received all the information and explanations we
require for our audit, or if information specified by
law regarding directors’ remuneration and
transactions is not disclosed.
We read the other information contained in the
annual report and consider the implications for our
report if we become aware of any apparent
misstatements or material inconsistencies with the
financial statements.The other information
comprises only the report of the directors, the
unaudited part of the directors’ remuneration
report, the chairman’s statement, the chief
executive’s report and the corporate governance
statement.
We review whether the corporate governance
statement reflects the Company’s compliance with
the nine provisions of the 2003 FRC Combined
Code specified for our review by the Listing Rules of
the Financial Services Authority, and we report if it
does not.We are not required to consider whether
the board’s statements on internal control cover all
risks and controls, or to form an opinion on the
effectiveness of the Group’s corporate governance
procedures or its risk and control procedures. 25
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Basis of audit opinion
We conducted our audit in accordance with
auditing standards issued by the Auditing Practices
Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures
in the financial statements and the auditable part of
the directors’ remuneration report. It also includes
an assessment of the significant estimates and
judgements made by the directors in the
preparation of the financial statements, and of
whether the accounting policies are appropriate to
the Company’s circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain
all the information and explanations which we
considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that
the financial statements and the auditable part of the
directors’ remuneration report are free from material
misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation
of information in the financial statements.
Opinion
In our opinion:
•the financial statements give a true and fair view 
of the state of affairs of the Company and the
Group at 31 March 2005 and of the profit and
cash flows of the Group for the year then ended;
•the financial statements have been properly 
prepared in accordance with the Companies Act
1985; and
•those parts of the directors’ remuneration report 
required by Part 3 of Schedule 7A to the
Companies Act 1985 have been properly
prepared in accordance with the Companies 
Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Gatwick
3 June 2005 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
26
Consolidated Profit and Loss Account
for the Year Ended 31 March 2005
2005 2004
Before
goodwill Goodwill
amortisation amortisation Total Total
Notes £’000 £’000 £’000 £’000
TURNOVER 2 45,006 - 45,006 38,970
Cost of sales (22,613) - (22,613) (20,083)
GROSS PROFIT 22,393 - 22,393 18,887
Net operating expenses 3 (14,730) (332) (15,062) (12,524)
GROUP OPERATING PROFIT 7,663 (332) 7,331 6,363
Net interest (payable)/receivable 4 (129) - (129) 106
PROFIT ON ORDINARY ACTIVITIES
BEFORE T AXA TION 5 7,534 (332) 7,202 6,469
Tax on profit on ordinary activities 7 (2,046) - (2,046) (1,974)
PROFIT ON ORDINARY ACTIVITIES
AFTER T AXA TION 5,488 (332) 5,156 4,495
Dividends 8 (2,588) - (2,588) (2,199) 
RETAINED PROFIT
FOR THE FINANCIAL YEAR 18 2,900 (332) 2,568 2,296
A TTRIBUTED TO:
The Company 162 (30)
Subsidiary undertakings 2,406 2,326
2,568 2,296
EARNINGS PER ORDINARY SHARE 9
Basic - adjusted * 14.78p 12.21p
Diluted - adjusted * 14.11p 11.65p
Basic 13.88p 12.20p
Diluted 13.26p 11.64p
*  Adjusted earnings per share before amortisation of goodwill.
All of the activities of the Group are continuing.The results of the acquisition of Lima S.p.A.'s assets during the
year are set out in the segmental information in the notes. 27
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
2005 2004
£’000 £’000
Profit for the financial year 5,156 4,495
Exchange adjustments offset in reserves 26 (33)
Total recognised gains for the year 5,182 4,462
Statement of Group Total Recognised Gains and Losses
for the Year Ended 31 March 2005
2005 2004
£’000 £’000
REPORTED PROFIT ON ORDINARY 
ACTIVITIES BEFORE TAXATION 7,202 6,469
Difference between the historical cost
depreciation charge and the actual depreciation
charge calculated on the revalued amount 17 17
Historical cost profit on ordinary activities
before taxation 7,219 6,486
HISTORICAL COST PROFIT FOR THE YEAR
RETAINED AFTER TAXATION AND DIVIDENDS 2,585 2,313
Note of Group Historical Cost Profits
for the Year Ended 31 March 2005 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
28
Consolidated Balance Sheet
at 31 March 2005
2005 2004
Notes £’000 £’000
FIXED ASSETS
Intangible assets 10 8,870 4,017
Tangible assets 11 5,096 4,436
13,966 8,453
CURRENT ASSETS
Stocks 13 7,526 7,369
Debtors 14 7,543 6,217
Cash at bank and in hand 1,860 5,806
16,929 19,392
CREDITORS: Amounts falling due 
within one year 15 (10,625) (9,886)
NET CURRENT ASSETS 6,304 9,506
TOTAL ASSETS LESS CURRENT LIABILITIES 20,270 17,959
CREDITORS: Amounts falling due after 
more than one year 15 (80) (103)
PROVISIONS FOR LIABILITIES AND CHARGES 16 (369) (527)
NET ASSETS 19,821 17,329
CAPITAL AND RESERVES
Called up share capital 17 373 370
Capital redemption reserve 18 55 55
Share premium account 18 4,906 4,797
Revaluation reserve 18 740 757
Other reserves 18 1,688 1,688
Profit and loss account 18 12,059 9,662
EQUITY SHAREHOLDERS’ FUNDS 18 19,821 17,329
The financial statements which comprise the consolidated profit and loss account, the consolidated and
Company balance sheets, the consolidated cash flow statement, the statement of Group total recognised gains
and losses, the note of Group historical profits and the related notes were approved by the Board of directors
on 3 June 2005 and were signed on its behalf by:
F Martin
Director 29
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Company Balance Sheet
at 31 March 2005
2005 2004
Notes £’000 £’000
FIXED ASSETS
Tangible assets 11 1,558 1,600
Investments 12 30,143 21,952
31,701 23,552
CURRENT ASSETS
Debtors 14 2,057 1,705
Cash at bank and in hand 35 68
2,092 1,773
CREDITORS:Amounts falling due 
within one year 15 (2,307) (2,209)
NET CURRENT LIABILITIES (215) (436)
TOTAL ASSETS LESS CURRENT LIABILITIES 31,486 23,116
CREDITORS:Amounts falling due after 
more than one year 15 (11,242) (5,371)
NET ASSETS 20,244 17,745
CAPITAL AND RESERVES
Called up share capital 17 373 370
Capital redemption reserve 18 55 55
Share premium account 18 4,906 4,797
Other reserves 18 18,323 16,103
Profit and loss account 18 (3,413) (3,580)
EQUITY SHAREHOLDERS’ FUNDS 20,244 17,745
The financial statements which comprise the consolidated profit and loss account, the consolidated and
Company balance sheets, the consolidated cash flow statement, the statement of Group total recognised gains
and losses, the note of Group historical profits and the related notes were approved by the Board of directors
on 3 June 2005 and were signed on its behalf by:
F Martin
Director HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
30
Consolidated Cash Flow Statement
for the Year Ended 31 March 2005
Notes £’000 £’000 £’000 £’000
Net cash inflow from 
operating activities I 9,222 8,210
Returns on investments and servicing
of finance - net interest (paid)/received (129) 106
Taxation (2,557) (1,864)
Capital expenditure and 
financial investment
- purchase of fixed assets (2,220) (1,370)
- sale of fixed assets 227 27
- purchase of own shares
for Short Term Incentive Plan (278) (224)
(2,271) (1,567)
Acquisitions
- purchase of subsidiary undertakings - (5,303)
- cash held upon acquisition - 222
- purchase of trade and assets and related costs (5,971) -
(5,971) (5,081)
Equity dividends paid (2,349) (1,968)
Net cash outflow before financing (4,055) (2,164)
Financing
- issue of ordinary shares 112 104
- capital element of finance lease payments (30) (26)
82 78
Decrease in cash in the year (3,973) (2,086)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2005 2004
Notes £’000 £’000
Decrease in cash in the year (3,973) (2,086)
Cash outflow from decrease in lease financing 30 26
Change in net funds resulting from cash flows (3,943) (2,060)
New finance leases - (105)
New finance leases upon acquisition - (12)
Exchange movements 27 (17)
Movement in net funds in the year (3,916) (2,194)
Net funds at 1 April 2004 5,673 7,867
Net funds at 31 March 2005 II 1,757 5,673
2005 2004 31
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Notes to the Cash Flow Statement
NOTE I – NET CASH FLOW FROM OPERATING ACTIVITIES
2005 2004
£’000 £’000
Operating profit 7,331 6,363
Depreciation charges 1,850 1,364
Amortisation of goodwill 332 3
(Profit)/loss on sale of tangible fixed assets (29) 2
Decrease/(increase) in stocks 258 (830)
(Increase) in debtors (1,171) (401)
Increase in creditors 809 1,659
(Decrease)/increase in sales returns provision (158) 50
Net cash inflow from operating activities 9,222 8,210
NOTE II –ANALYSIS OF NET FUNDS
Other
1 April Cash non-cash 31 March
2004 flow changes 2005
£’000 £’000 £’000 £’000
Cash at bank and in hand 5,806 (3,973) 27 1,860
Finance leases (133) 30 - (103)
Net funds 5,673 (3,943) 27 1,757
Analysed in Balance Sheet
Cash at bank and in hand 5,806 1,860
Finance leases
within one year (30) (23)
after one year (103) (80)
Net funds 5,673 1,757 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
32
Notes to the Financial Statements
1   ACCOUNTING POLICIES
The financial statements have been prepared in accordance with applicable Accounting Standards in the United
Kingdom and the Companies Act 1985. A summary of the more important accounting policies, which have been
applied consistently, is set out below.
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention, as modified by the revaluation
of certain fixed assets.
BASIS OF CONSOLIDATION
The Group financial statements consolidate the financial statements of the Company and all its subsidiaries made
up to 31 March 2005.The results of subsidiaries acquired are included in the consolidated profit and loss account
from the date control passes. Intra group sales and profits are eliminated on consolidation. Any goodwill arising on
consolidation (representing the excess of the fair value of the consideration given over the fair value of the
separable net assets acquired) is capitalised and amortised over its expected useful economic life.
The Company has taken advantage of the exemption provided by Section 230 of the Companies Act 1985 not to
present its own profit and loss account.
RESEARCH AND DEVELOPMENT
Expenditure on research and development is written off as incurred.
INTANGIBLE FIXED ASSETS
Goodwill arising on acquisition represents the excess of the fair vale of the consideration given over the fair value
of the identifiable net assets acquired. Goodwill is capitalised and amortised over its useful economic life.The
directors have determined that goodwill arising has a useful life of between 10 and 20 years.
TANGIBLE FIXED ASSETS
Land and buildings are shown at cost or valuation less accumulated depreciation. Assets revalued prior to the issue
of FRS15 are retained at their book amounts as though they were the historical cost amounts. Other fixed assets
are shown at cost less accumulated depreciation.
Depreciation is provided at rates calculated to write off the cost or valuation, less any estimated residual value, of
each asset on a straight-line basis (with the exception of tools and moulds) over its expected useful life, as follows:
Freehold buildings - 30 to 50 years
Plant and equipment - 5 to 10 years
Motor vehicles - 4 years
Freehold land is not depreciated.
Residual value is calculated on prices prevailing at the date of acquisition or revaluation where this has taken place.
T ools 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.
SHORT TERM INCENTIVE PLAN
The Short T erm Incentive Plan investment is carried at the cost of the shares acquired less the cost of shares vested.
It is shown as a deduction from the profit and loss account reserves for disclosure purposes. 33
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
FIXED ASSET INVESTMENTS
In the Company’s financial statements investments in subsidiary undertakings are stated using the equity method of
valuation. Accordingly, subsequent increases and reductions in the value of these investments are set against other
reserves in the financial statements of the Company.The directors consider that this policy more fairly represents
the Company’s investments than carrying them at cost.
STOCKS
Stocks are stated at the lower of cost and net realisable value.
Cost incurred in bringing each product to its present location and condition is based on:
Raw materials and consumables - actual purchase cost on a first in first out basis including freight and duty
where applicable.
Work in progress and finished goods - cost of actual direct materials and labour plus a proportion of manufacturing
overheads based on the normal level of activity.
Net realisable value is based on anticipated selling price less further costs expected to be incurred to completion
and disposal. Provisions are made against those stocks considered to be obsolete or excess to requirements on an
item-by-item basis.
There are no significant differences between balance sheet and replacement cost values. For these purposes
replacement cost is based upon latest invoice prices before the balance sheet date.
REVALUATION RESERVE
The surplus arising on the revaluation of freehold land and buildings is credited to the revaluation reserve, which is
not distributable. Where depreciation charges are increased following a revaluation, an amount equal to such
increase is transferred annually from this reserve to the profit and loss account.
TAXATION
Corporation tax, where payable, is provided on taxable profits at the current rate.
The taxation liabilities of certain group undertakings are reduced wholly or in part by the surrender of losses by
fellow group undertakings.
Full provision is made for the tax liability on all timing differences in accordance with FRS19. Deferred tax balances
have not been subject to discounting.
PROVISIONS
The Group provides for liabilities when it has a legal or constructive obligation due to a past event.
PENSION COSTS
During the year the Group operated a defined contribution money purchase pension scheme under which it pays
contributions based upon a percentage of the members’ basic salary.The scheme is administered by trustees either
appointed by the Company or elected by the members (to constitute one third minimum).
The amount charged to the profit and loss account in respect of the scheme is the contribution payable in the year.
Further information on pensions costs and the scheme arrangements is provided in note 23. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
34
Notes to the Financial Statements
continued
FINANCIAL INSTRUMENTS
Foreign currency forward contracts are used to hedge significant commitments or anticipated transactions. Gains
and losses arising from these contracts are recognised when the hedged transaction occurs.
FOREIGN CURRENCY
Transactions and investments denominated in foreign currencies are recorded in sterling at the exchange rates ruling
at the date of the transaction.The assets, liabilities and results of foreign subsidiaries are translated into sterling at the
rates of exchange ruling at the balance sheet date. Monetary assets and liabilities denominated in foreign currencies
at the year end are reported at the rate of exchange prevailing at that date.Any gain or loss arising from a change in
exchange rates subsequent to the date of the transaction is reported in the profit and loss account as an exchange
gain or loss, with the exception of gains and losses on the retranslation of opening net foreign currency investments
in subsidiaries which are taken to reserves and recognised in the statement of total recognised gains and losses.
TURNOVER
Group turnover is recorded at the date of despatch and comprises the invoiced value of sales (excluding VAT, sales
between group companies and trade discounts) of goods and services in the normal course of business.
LEASES
The Group enters into operating and finance leases.
Assets held under finance leases are initially reported at the fair value of the asset with an equivalent liability
categorised as appropriate under creditors due within or after one year.The assets are depreciated over the shorter
of the lease term and their useful economic lives. Finance charges are allocated to accounting periods over the
period of the lease to produce a constant rate of return on the outstanding balance. Rentals are apportioned
between finance charges and the reduction of the liability, and allocated to net interest.
Rentals under operating leases are charged on a straight-line basis over the lease term. 35
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
2 SEGMENTAL INFORMATION
The directors consider there to be one class of business, being the development, manufacture and distribution of
model products.
BY ORIGIN Turnover Profit before tax Net assets
2005 2004 2005 2004 2005 2004
£’000 £’000 £’000 £’000 £’000 £’000
United Kingdom 39,572 36,028 7,115 6,399 16,930 15,762
United States of America 2,488 2,942 (74) 70 192 254
Spain 2,743 - 547 - 1,710 1,313
Italy 203 - (386) - 989 -
Group 45,006 38,970 7,202 6,469 19,821 17,329
On 31 March 2004 the Spanish branch of Hornby Plc acquired the equity of Electrotren S.A.The results of this prior
year acquisition are set out under Spain in the table above. On 15 December 2004 a newly formed subsidiary of
Hornby Plc, Hornby Italia s.r.l., acquired certain assets of Lima S.p.A.The results of this acquisition are set out under
Italy in the table above.The operating loss of Hornby Italia s.r.l. for the period is £307,000.
TURNOVER BY DESTINATION 2005 2004
£’000 £’000
United Kingdom 33,928 30,961
Rest of World 11,078 8,009
Group 45,006 38,970
3NET OPERATING EXPENSES
2005 2004
£’000 £’000
Distribution costs 1,312 1,097
Selling and marketing costs 8,604 7,203
Research and development costs 904 1,107
Administrative expenses - other 3,910 3,114
- goodwill amortisation 332 3
- total 4,242 3,117
15,062 12,524
4 NET INTEREST (PAYABLE)/RECEIVABLE
2005 2004
£’000 £’000
Interest receivable and similar income:
-  bank interest receivable 47 187
Interest payable and similar charges:
-  on overdrafts (165) (74)
-  on finance leases (11) (7) 
(129) 106 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
36
Notes to the Financial Statements
continued
5   PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
2005 2004
£’000 £’000
Profit on ordinary activities before taxation is stated after charging/(crediting):
Depreciation of tangible fixed assets
- owned 1,830 1,355
- held under finance leases 20 9
Amortisation of goodwill 332 3
Other operating lease rentals 70 59
Hire of plant and machinery 42 32
(Profit)/loss on sale of fixed assets (29) 2
Auditors’ remuneration
- audit fees         (Company £20,000 ; 2004 - £14,000) 83 65
- non audit fees (Company £57,000 ; 2004 - £151,000) 129 160
Staff costs (see note 6 below) 5,476 4,363
Audit fees relate to statutory audit services. Non audit fees of £35,000 (2004 - £10,000) relate to tax advisory
services and £94,000 (2004 - £150,000) relate to acquisition due diligence and legal services.
6   DIRECTORS AND EMPLOYEES
2005 2004
£’000 £’000
STAFF COSTS (including executive directors)
Wages and salaries 4,449 3,719
Social security costs 751 406
Other pension costs 246 228
Redundancy and compensation for loss of office 30 10
5,476 4,363
AVERAGE MONTHLY NUMBER OF EMPLOYEES 2005 2004
Number Number
The average monthly number of employees, including
executive directors, in the Group during the year was:
Operations 82 80
Sales, marketing and distribution 65 55
Administration 24 19
171 154
DIRECTORS’ EMOLUMENTS
A detailed numerical analysis of directors’ remuneration and share options, showing the highest paid director and the
number of directors accruing benefits under money purchase pension schemes, is included in the Remuneration Report
on pages 18 to 23 and forms part of these financial statements. 37
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
7   TAXATION
(a) Analysis of tax charge in the year 2005 2004
£’000 £’000
The taxation charge is based on the profit for the year and comprises:
Current tax
UK Corporation taxation at 30% (2004 - 30%) 2,104 2,054
Adjustments in respect of prior years (76) 150
Foreign T ax
Overseas taxation 122 19
Total current tax (Note 7b) 2,150 2,223
Deferred tax
Current year (97) (92)
Adjustments in respect of prior years (7) (157)
Total deferred tax (Note 16) (104) (249)
Tax on profit on ordinary activities 2,046 1,974
(b) Factors affecting tax charge for the year
The tax charge for the year is higher than the standard rate of Corporation Tax in the United Kingdom (30%).
The differences are explained below:
2005 2004
£’000 £’000
Profit on ordinary activities before tax 7,202 6,469
Tax on profit on ordinary activities at the standard
rate of Corporation Tax of 30% (2004 - 30%) 2,160 1,941
Effects of:
Expenses (deductible)/not deductible for tax purposes (212) 56
Differences between capital allowances and depreciation 4 14
Other timing differences 88 62
Effect of losses not recognsied 116 -
Differences between the UK tax rate and overseas tax rates 70 -
Adjustments to tax charge in respect of prior years (76) 150
Current tax charge for the year (Note 7a) 2,150 2,223
Net expenses deductible for tax purposes include a tax benefit arising on the unapproved share options exercised
in the year. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
38
Notes to the Financial Statements
continued
8   DIVIDENDS
2005 2004
£’000 £’000
Ordinary (equity):
- interim paid: 2.0p per share (2004 - 1.6p per share) 737 585
- final proposed: 5.0p per share (2004 - 4.4p per share) 1,865 1,626
- adjustments (see below) (14) (12)
2,588 2,199
The adjustments relate to dividends that were waived relating to the prior year of £19,000 (2004 - £15,000) and
dividends paid on options exercised of £5,000 (2004 - £3,000).
9   EARNINGS PER SHARE
The calculation of basic earnings per ordinary share is based on the profit attributable to ordinary shareholders for
the financial year of £5,156,000 (2004 - £4,495,000) and the weighted average number of ordinary shares in issue
during the year of 37,141,538 (2004 - 36,832,085).
2005 2004
Earnings Earnings
Earnings per share Earnings per share
£’000 pence £’000 pence
Earnings per share
Basic - adjusted* 5,488 14.78 4,498 12.21
Diluted - adjusted* 5,488 14.11 4,498 11.65
Basic 5,156 13.88 4,495 12.20
Diluted 5,156 13.26 4,495 11.64
* Adjusted earnings per share before amortisation of goodwill of £332,000 (2004 - £3,000).
The following table shows a reconciliation of the weighted average number of shares used for calculating the basic
and diluted earnings per share.
2005 2004
Number Number
of shares of shares
Used for calculating basic earnings per share 37,141,538 36,832,085
Dilution due to share option schemes 1,746,783 1,781,810
Used for calculating diluted earnings per share 38,888,321 38,613,895 39
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
10   INTANGIBLE FIXED ASSETS - GROUP
Goodwill
2005
£’000
COST
At 1 April 2004 4,030
Exchange adjustment (25)
Additions 5,210
At 31 March 2005 9,215
AGGREGATE AMORTISATION
At 1 April 2004 13
Charge for the year 332
At 31 March 2005 345
NET BOOK AMOUNT
At 31 March 2005 8,870
At 31 March 2004 4,017
The goodwill arising on the acquisition of the assets of A Day at the Races Inc. is being amortised on a straight-line
basis over fifteen years, being the directors’ estimate of its expected useful life.
On 31 March 2004 the acquisition of Electrotren S.A., Spain created £3,990,000 of goodwill and is being amortised
on a straight-line basis over twenty years, being the directors' estimate of its expected useful life.The directors have
re-assessed, a year after the acquisition, the fair values of the tangible net assets acquired and do not believe any
adjustment is necessary.
On 15 December 2004 the purchase of certain assets from Lima S.p.A. in Liquidation created £5,210,000 of goodwill
and is being amortised on a straight-line basis over ten years, being the directors' estimate of its expected useful life
(see note 20). HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
40
Notes to the Financial Statements
continued
11   TANGIBLE FIXED ASSETS - GROUP
Freehold Plant
land and and Motor Tools &
buildings equipment vehicles moulds T otal
£’000 £’000 £’000 £’000 £’000
COST OR VALUATION
At 1 April 2004 2,804 4,787 286 20,120 27,997
Adjustment - 25 - - 25
Additions - 279 40 2,023 2,342
Acquisitions - 173 - 173 346
Exchange adjustment 12 9 - 11 32
Disposals - (356) (38) - (394)
At 31 March 2005 2,816 4,917 288 22,327 30,348
DEPRECIATION
At 1 April 2004 811 4,418 153 18,179 23,561
Adjustment - 25 - - 25
Charge for the year 54 156 34 1,606 1,850
Exchange adjustment 1 6 - 5 12
Disposals - (166) (30) - (196)
At 31 March 2005 866 4,439 157 19,790 25,252
NET BOOK AMOUNT
At 31 March 2005 1,950 478 131 2,537 5,096
At 31 March 2004 1,993 369 133 1,941 4,436
The adjustment relates to the inclusion of a full depreciated asset in Electrotren S.A.
Freehold land amounting to £786,000 (2004 - £786,000) has not been depreciated.
The net book amount of tangible fixed assets includes £102,000 (2004 - £178,000) in respect of assets acquired
under finance leases, which relate to plant and motor vehicles.
The amount of freehold land and buildings at 31 March is represented by:
2005 2004
£’000 £’000
Valuation in 1986 2,360 2,360
Cost 17 17
Acquisitions 427 427
Exchange adjustment 12 -
2,816 2,804
Other tangible fixed assets are stated at cost. 41
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
TANGIBLE FIXED ASSETS - COMPANY
The fixed assets for the Company brought forward comprise primarily of freehold land and buildings included in
the table above and are as follows:
2005 2004
£’000 £’000
Opening net book amount 1,600 1,643
Additions 2 -
Depreciation charge for the year (44) (43) 
Closing net book amount 1,558 1,600
The £2,000 additions in the year comprise plant and equipment acquired by the Spanish branch.
The original cost and aggregate depreciation, based on cost of land and buildings included at valuation, are as follows:
2005 2004
£’000 £’000
Original cost 412 412
Depreciation based on cost (191) (183) 
221 229
12   INVESTMENTS
GROUP - SHORT TERM INCENTIVE PLAN
(See note 18) Short T erm
Incentive Plan
£’000
At 1 April 2004 416
Shares acquired in Company 278
Shares vested (64)
At 31 March 2005 630
Details of the Short Term Incentive Plan are given in the Directors’ Remuneration Report on pages 18 to 23.
129,110 ordinary shares to the value of £278,000 were acquired in June 2004 by the Employee Benefit Trust in
accordance with the incentive plan.
On 21 June 2004, the first third of the 2002 allocation (77,635 ordinary shares) were vested.
At 31 March 2005, a total of 443,900 (2004 - 392,425) ordinary shares are held by the Trust and allotted to the
directors and senior management under the plan with a nominal value of £4,439 and a market value of £1,047,604.
The costs of the plan are borne by Hornby Plc.The Trust has waived its right to dividends. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
42
Notes to the Financial Statements
continued
COMPANY
The movements in the net book value of interests in subsidiary undertakings are as follows:
Interests in Loans to
subsidiary subsidiary
undertakings undertakings
at valuation at cost T otal
£’000 £’000 £’000
At 1 April 2004 20,994 958 21,952
Acquisitions (see note 20) 5,971 - 5,971
Retained profit for the year 2,220 - 2,220
At 31 March 2005 29,185 958 30,143
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, Electrotren S.A. and Hornby Italia s.r.l. are engaged in the
development, manufacture and distribution of models. Scalextric USA, Inc. is a distributor of models.
Country of Description of Proportion of nominal 
incorporation shares held value of issued shares held
Group Company
%%
Hornby Hobbies Limited Great Britain Ordinary £1 shares 100 100
Scalextric USA, Inc. USA Ordinary shares 100 100
Electrotren S.A. Spain Ordinary shares 100 100
Hornby Italia s.r.l. Italy Ordinary shares 100 100
13   STOCKS
Group
2005 2004
£’000 £’000
Raw materials and consumables 438 609
Work in progress 864 1,386
Finished goods and goods for sale 6,224 5,374
7,526 7,369 43
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
14   DEBTORS
Group Company
2005 2004 2005 2004
£’000 £’000 £’000 £’000
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Trade debtors 6,368 5,326 - -
Overseas Corporation tax recoverable 64 - 44 -
Dividends receivable from subsidiary undertakings - - 1,865 1,626
Prepayments 659 573 35 9
Other debtors 108 78 - -
7,199 5,977 1,944 1,635
AMOUNTS FALLING DUE AFTER
MORE THAN ONE YEAR:
Deferred tax asset (see note 16) 344 240 113 70
7,543 6,217 2,057 1,705
15   CREDITORS
Group Company
2005 2004 2005 2004
£’000 £’000 £’000 £’000
AMOUNTS FALLING DUE WITHIN ONE YEAR:
Finance lease obligations 23 30 - -
Trade creditors 3,120 2,503 1 -
UK Corporation tax payable 963 1,291 57 119
Overseas Corporation tax payable 137 152 - -
VAT payable 140 123 4 -
PAYE and Social Security 155 98 6 -
Dividends proposed 1,865 1,626 1,865 1,626
Accruals 1,902 2,047 374 464
Other creditors 2,320 2,016 - -
10,625 9,886 2,307 2,209
AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR:
Finance lease obligations 80 103 - -
Loan from subsidiary undertakings - - 11,242 5,371
10,705 9,989 13,549 7,580
Finance leases are repayable as follows (excluding finance charges):
Within 1 year 23 30 - -
Between 1 - 2 years 41 23 - -
Between 2 - 5 years 39 80 - -
103 133 - -
Aggregate finance lease obligations exclude future finance charges amounting to £8,000 (2004 - £18,000). HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
44
Notes to the Financial Statements
continued
16   PROVISIONS FOR LIABILITIES AND CHARGES
Group 2005 2004
£’000 £’000
Sales returns
At 1 April 527 477
Charged to profit and loss account 1,086 939
Utilised in year (1,244) (889)
At 31 March 369 527
Deferred tax
At 1 April (240) 9
Transfer (to) profit and loss account (104) (249)
At 31 March (344) (240)
Total provisions at 31 March 369 527
Provision is made for sales returns based upon historic patterns of returns for each calendar year less actual
returns in the first calendar quarter of the year.
The deferred tax asset of £344,000 at 31 March 2005 has been disclosed within debtors (see note 14).
Group
2005 2004
Not Not
Recognised recognised Recognised recognsied
£’000 £’000 £’000 £’000
Deferred tax comprises:
Accelerated capital allowances 13 (63) 11 (9)
Other timing differences (357) (25) (251) (25)
(344) (88) (240) (34)
No deferred tax has been provided in relation to the revaluation of certain land and buildings as no liability would
arise on a sale at the revalued amount. No provision is made for tax liabilities which would arise on the distribution
of profits retained by subsidiaries because there is currently no intention that such profits will be remitted.
Company
2005 2004
Not Not
Recognised recognised Recognised recognsied
£’000 £’000 £’000 £’000
Deferred tax comprises:
Accelerated capital allowances 13 - 11 -
Other timing differences (126) - (81) -
(113) - (70) -
The deferred tax asset of £113,000 at 31 March 2005 (2004 - £70,000) has been disclosed within debtors (see note 14). 45
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
17   CALLED UP SHARE CAPITAL
2005 2004
£’000 £’000
Authorised:
50,000,000 (2004 - 50,000,000) ordinary shares of 1p each 500 500
Allotted, called up and fully paid:
37,308,530 (2004 - 36,959,100) ordinary shares of 1p each 373 370
Shares issued in the year for cash are set out below:
Date issued Number of shares Exercise price
14 June 2004 101,690 29.5p
21 June 2004 7,740 44.6p
08 September 2004 100,000 32.7p
12 November 2004 40,000 32.7p
04 January 2005 100,000 32.7p
349,430
At 31 March 2005 options granted under the Company’s share option schemes were outstanding as follows:
Date granted Number of options Exercise price Period of option
2005 2004
09 July 1997 - 7,740 44.6p July 2000 - July 2004
09 July 1997 67,260 67,260 44.6p July 2000 - July 2007
27 January 1999 162,500 402,500 32.7p January 2002 - January 2006
12 March 2001 148,310 148,310 29.5p March 2004 - March 2008
12 March 2001 - 101,690 29.5p March 2004 - March 2011
28 March 2002 1,000,000 1,000,000 76.8p March 2005 - March 2009
19 June 2002 925,000 925,000 83.4p June 2005 - June 2009
09 June 2004 250,000 - 218.0p June 2007 - June 2011
2,553,070 2,652,500 HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
46
Notes to the Financial Statements
continued
18   RESERVES
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
GROUP 2005 2004
£’000 £’000
Profit for the financial year 5,156 4,495
Dividends (2,588) (2,199)
Exchange adjustments offset in reserves 26 (33)
Shares issued 112 104
Investments - Short Term Incentive Plan (see note 12) (214) (224)
Net additions to shareholders’ funds 2,492 2,143
Opening shareholders’ funds 17,329 15,186
Closing shareholders’ funds 19,821 17,329
MOVEMENTS IN RESERVES AND SHARE PREMIUM ACCOUNT
Share Capital Profit
premium redemption Revaluation Other and loss
account reserve reserve reserves account
GROUP £’000 £’000 £’000 £’000 £’000
At 1 April 2004 4,797 55 757 1,688 9,662
Retained profit for the year ---- 2,568
Amortisation of revaluation surplus - - (17) - 17
Exchange adjustment offset in reserves ---- 26
Shares issued 109 ----
Shares purchased ---- (278)
Shares vested ---- 64
At 31 March 2005 4,906 55 740 1,688 12,059
Share Capital Profit
premium redemption Other and loss
account reserve reserves account
COMPANY £’000 £’000 £’000 £’000
At 1 April 2004 4,797 55 16,103 (3,580)
Retained profit for the year - - - 162
Increase in underlying net assets of subsidiary undertakings - - 2,220 -
Exchange adjustment offset in reserves - - - 5
Shares issued 109 - - -
At 31 March 2005 4,906 55 18,323 (3,413) 47
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
The net deficit carried forward on the Company's profit and loss account arises as a result of a provision for the diminution
in the value of the investment in Hornby Industries Limited. Relying on Section 275(1) of the Companies Act 1985,
the provision for diminution in value of the investment in Hornby Industries Limited is not treated for distribution
purposes as a realised loss. In the directors' opinion therefore, at the end of the year £361,000 (2004 - £199,000)
may be considered to be distributable.The Company’s profit for the financial year is £2,750,000 (2004 - £2,169,000).
19  FINANCIAL INSTRUMENTS
The Group’s policies and strategies in relation to risk and financial instruments are explained in the Directors’ Report.
Accounting policies used to account for financial instruments are detailed in note 1. Financial assets and liabilities
included in this note, other than currency disclosures, exclude provisions for liabilities and charges, short term
debtors and creditors other than finance lease obligations.
(a) Financial assets
The interest rate and currency profiles of the Group’s financial assets comprising cash at bank and in hand at 
31 March 2005 were:
Currency Floating Fixed 2005 2004
rate rate T otal Total
£’000 £’000 £’000 £’000
Sterling 230 - 230 4,619
US dollar 541 - 541 802
HK dollar 65 - 65 22
Euro 1,010 - 1,010 352
Other 14 - 14 11
1,860 - 1,860 5,806
Sterling and cash deposits are placed in a liquidity fund with daily access. Currency cash deposits are placed on
the money market at floating bank deposit interest rates for periods of up to three months. Normally Hong
Kong and US dollars are placed on short term fixed rate deposits usually less than one month. Floating rate
financial assets attract interest at rates based on relevant national LIBOR equivalents.
(b) Financial liabilities
The Group had at 31 March 2005 fixed rate sterling and euro finance leases, the maturity profile of which is set
out in note 15 to the financial statements.
(c) Fair values of financial assets and financial liabilities
Set out below is a comparison by category of book values and fair values of the Group’s financial assets and
liabilities at 31 March 2005.
2005 2004
Book values Fair values Book values Fair values
£’000 £’000 £’000 £’000
Cash and deposits 1,860 1,860 5,806 5,806
Forward foreign currency contracts -(38) -(437)
Finance leases (102) (102) (133) (133)
The fair values of forward foreign currency contracts have been determined with reference to prices available
from the market.
The directors believe that the fair value of finance leases are not significantly different to their book values. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
48
Notes to the Financial Statements
continued
(d) Currency exposures
After taking account of the effects of forward foreign exchange contracts the Group’s currency exposures were
as follows:
Monetary liabilities
Sterling
2005 2004
£’000 £’000
Functional currency of group operation
US Dollar (956) (713)
Euro (4,942) -
(5,898) (713)
(e) Borrowing facilities
The Group has undrawn committed borrowing facilities. The facilities available at 31 March 2005, in respect of
which all conditions precedent had been met, were as follows:
2005 2004
£’000 £’000
Expiring in one year or less 5,000 4,000
Our principal bankers have authorised an increased facility to £9 million between August and December 2005.
When utilised, the Group’s overdraft facilities attract interest at 1% above Barclays Bank base rate.
(f) Gains and losses on hedges
The Group enters into forward foreign currency contracts to eliminate the currency exposures that arise on
purchases denominated in foreign currencies immediately these purchases have been transacted. Changes in the
fair values of instruments used as hedges are not recognised in the financial statements until the hedge position
matures. An analysis of these unrecognised gains and losses is as follows:
Gains Losses T otal
£’000 £’000 £’000
Unrecognised gains and losses on
hedges at 1 April 2004 - (437) (437)
Gains and losses arising:
in previous year recognised in 2004/2005 - 437 437
before 1 April 2004 not recognised in 2004/2005 - - -
in 2004/2005 not recognised in 2004/2005 4 (42) (38)
Unrecognised gains and losses
on hedges at 31 March 2005 4(42) (38)
All the unrecognised gains and losses at 31 March 2005 are expected to be recognised in the year to 31 March 2006. 49
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
20   ACQUISITIONS
With effect from 26 November 2004 the Company incorporated a new Italian company, Hornby Italia s.r.l.The
Company then injected €2,000,000 (£1,382,000) of equity capital into the new company. On 15 December 2004
Hornby Italia then entered into an agreement to acquire certain assets from Lima S.p.A. in Liquidation for cash
amounting to €8,000,000. Stamp duty, notary fees, legal fees and employee compensation of €642,000 were
incurred by Hornby Italia and capitalised. Acquisition expenses of £94,000 for due diligence, tax advice and legal
advice have been expensed to profit.
Hornby Italia had no recognised gains and losses and therefore no separate statement of total recognised gains and
losses has been presented.
With the purchase of the Lima assets being on 15 December 2005, a full review of the fair values of the assets and
liabilities acquired has not yet been possible and accordingly the assets and liabilities of Hornby Italia have been
consolidated at provisional values and will be fully reviewed during the year ending 31 March 2006.
€’000 £’000
Tangible fixed assets 500 346
Stocks 600 415
Net assets acquired 1,100 761
Goodwill 7,542 5,210
Consideration 8,642 5,971
Consideration satisfied by:
Cash 8,000 5,527
Acquisition costs 642 444
8,642 5,971
TheGroup purchased certain assets and trade of Lima which had been in liquidation for 18 months. As such no
recent meaningful comparative financial information is available.
21   FINANCIAL COMMITMENTS
CAPITAL COMMITMENTS
Group
2005 2004
£’000 £’000
At 31 March commitments were:
Contracted for but not provided for 801 785
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. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
50
Notes to the Financial Statements
continued
22   OPERATING LEASE COMMITMENTS
At 31 March 2005 the Group had lease agreements in respect of plant and vehicles, for which the payments extend
over a number of years.
2005 2004
£’000 £’000
Annual commitments under non-cancellable
operating leases expiring:
Within one year 16 20
Within 2 to 5 years 66 60
Over 5 years 87 -
169 80
23   PENSION ARRANGEMENTS
The Group operates a defined contribution money purchase pension scheme. Following a review of the Company
Pension Scheme, the Company and Trustees decided it would be more appropriate to provide future employee
pension benefits by way of a Group Personal Pension Plan. Contributions to the existing Scheme therefore ceased
at 31 March 2005 and on 1 April 2005 a replacement Stakeholder Group Personal Pension Plan was set up through
the Friends Provident Insurance Group.
Alexander Forbes Financial Services Limited were appointed as Independent Financial Advisers to work in liaison
with both the Principal Employer and the Trustees in putting in place the new Plan and making arrangement for the
existing Scheme to be wound up.
Members of the old scheme can choose to place contributions to date in a Buyout or to transfer funds and future
contributions into a selection to funds managed by Friends Provident.
The contribution basis for both employees and the Company in the new Plan remain the same as in the existing scheme.
The level of contributions to the Group Personnel Pension Plan for current members is fixed by the Company.
The pension cost for the year was £246,000 (2004 – £228,000) representing the actual contributions payable in the
year and certain scheme administration costs.
24   RELATED PARTY DISCLOSURES
There were no contracts with the Company or any of its subsidiaries subsisting during or at the end of the financial
year in which a director of the Company was materially interested. The Company has taken advantage of the
exemption available to parent companies under Financial Reporting Standard number 8 (“Related Party Disclosures”)
not to disclose transactions and balances with Group entities which have been eliminated on consolidation. 51
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
Notice of Annual General Meeting
Notice is hereby given that the twenty-fourth Annual General Meeting of Hornby Plc will be held at Berwin
Leighton Paisner, St Magnus House, 3 Lower Thames Street, London EC3R 6HA on Thursday 21 July 2005 at 11.00am
for the following purposes:
1. To receive the report of the directors and the audited financial statements for the year ended 31 March 2005.
2. To approve the directors' remuneration report, as set out on pages 18 to 23 of the annual accounts.
3. To declare a final dividend of 5p per ordinary share payable to the shareholders on the register at close of 
business on 29 July 2005.
4. To re-elect Mr F Martin a director of the Company who retires by rotation.
5. To re-elect Mr J W Stansfield a director of the Company who retires by rotation.
6. T o re-appoint PricewaterhouseCoopers LLP , the retiring auditors, to hold office until the conclusion of the next 
general meeting at which accounts are laid before the Company.
7. To authorise the directors to agree the auditors' remuneration.
SPECIAL BUSINESS
8. To consider and if thought fit to pass the following resolution which will be proposed as a special resolution:
THAT (a) the directors be generally and unconditionally authorised for the purposes of Section 80 of the
Companies Act 1985 (the "Act") to exercise all the powers of the Company to allot relevant
securities (as defined in that Section) up to a maximum nominal amount of £150,000 provided that
such authority (unless previously revoked, varied or renewed) shall expire at the conclusion of the
Annual General Meeting of the Company next following the date of the passing of this resolution
(save that the Company may before such expiry make an offer or agreement which would or might
require relevant securities to be allotted after such expiry and the directors may allot relevant
securities in pursuance of such offer or agreement as if the authority conferred hereby had not
expired) and shall be in substitution for any and all authorities previously conferred upon the
directors for the purposes of Section 80 of the Act;
(b) the directors be empowered pursuant to Section 95 of the Act to allot equity securities within the
meaning of (Section 94(2) to Section 94(3A) of the Act) for cash pursuant to the authority referred
to in paragraph (a) above as if Section 89(1) of the Act did not apply to any such allotment, such
power to expire at the conclusion of the Annual General Meeting of the Company next following
the date of the passing of this resolution (save that the Company may before such expiry make an
offer or agreement which would or might require equity securities to be allotted after such expiry
and the directors may allot equity securities in pursuance of such offer or agreement as if the power
conferred hereby had not expired) and to be limited to:
(i) the allotment of equity securities in connection with an offer of securities open for acceptance
for a period fixed by the directors or (where applicable) in accordance with the rights for the
time being attached to such shares (but subject to such exclusions or other arrangements as
the directors may deem necessary or expedient to deal with legal or practical problems under
the laws of any territory or the requirements of any regulatory body or any stock exchange in
any territory or in connection with fractional entitlements or otherwise); HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
52
Notice of Annual General Meeting
continued
(ii) the allotment (otherwise than pursuant to sub-paragraph (i) above) of equity securities for cash
up to an aggregate nominal amount of £18,000.
This power shall apply in relation to a sale of shares which is an allotment of equity securities
by virtue of Section 94(3A) of the Act in the paragraph (b) as if the words "pursuant to the
authority referred to in paragraph (a) above" were omitted.
9. To consider and if thought fit to pass the following resolution which will be proposed as a special resolution:
THAT  the Company be generally and unconditionally authorised pursuant to Section 166 of the Companies
Act 1985 (the "Act") to make one or more market purchases (within the meaning of Section 163(3) of the Act)
of ordinary shares of 1p each in the capital of the Company ("ordinary shares") provided that:
(a) the maximum aggregate number of ordinary shares authorised to be purchased is less than 15 per cent of
the issued share capital of the Company at the date of this resolution;
(b) the minimum price which may be paid for an ordinary share is the par value of such share, from time to
time, exclusive of expenses;
(c) the maximum price which may be paid for an ordinary share shall be an amount equal to 5 per cent above
the average of the middle-market quotations for the ordinary shares as derived from the London Stock
Exchange Daily Official List for the five dealing days immediately preceding the day on which the purchase
is made, exclusive of expenses;
(d) subject as provided in paragraph (e) below, unless previously revoked, varied or renewed, the authority
hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company next
following the date of the passing of this resolution or within eighteen months from the date of the passing
of this resolution, whichever shall be the earlier; and
(e) the Company may contract to purchase ordinary shares under the authority hereby conferred before the
expiry of such authority, which will or may be completed wholly or partly after the expiry of such authority,
and may purchase ordinary shares pursuant to any such contract as if such authority had not expired.
By order of the Board
J W Stansfield
Secretary
3 June 2005 53
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
NOTES
1. A member is entitled to appoint a Proxy, who need not be a Member of the Company, to attend and vote
instead of him. A form of proxy is enclosed.To be valid a form of proxy and the authority (if any) under which
it is signed must be lodged with the Company’s registrars not later than 48 hours before the time of the meeting
or adjourned meeting. Completion of a form of proxy will not preclude a member from attending and voting
at the meeting in person.
2. Under Regulation 41 of the Uncertified Securities Regulations 2001, only those shareholders whose names are
on the register of members of the Company no later than 11am on 19 July 2005 or, if the meeting is adjourned,
shareholders entered on the Company’s register of members not later than 48 hours before the time fixed for
the adjourned meeting are entitled to attend and vote at the meeting in respect of the shares registered in their
names at that time. Subsequent changes to the register shall be disregarded in determining the rights of any
person to attend or vote at the meeting.
3. There will be available for inspection at the Registered Office of the Company during usual business hours
(Saturdays excepted), from the date of this Notice, until the date of the Annual General Meeting, a copy of each
contract of service open to inspection under Section 318 of the Companies Act 1985, whereunder the
directors are employed.These documents will also be available for inspection at the Annual General Meeting
and for fifteen minutes prior thereto. HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005
54
Five Y ear Summary
2005 2004 2003 2002 2001
£’000 £’000 £’000 £’000 £’000
Turnover 45,006 38,970 34,142 28,489 24,604
Profit after interest before goodwill
amortisation and exceptional items 7,534 6,472 5,414 3,724 2,295
Amortisation of goodwill (332) (3) (3) (2) (3)
Profit after interest before
exceptional items 7,202 6,469 5,411 3,722 2,292
Exceptional items - --- (797)
Profit on ordinary
activities before taxation 7,202 6,469 5,411 3,722 1,495
Taxation (2,046) (1,974) (1,519) (1,329) (520)
Profit on ordinary
activities after taxation 5,156 4,495 3,892 2,393 975
Assets employed:
Fixed assets 13,966 8,453 3,600 3,661 3,739
Net current assets 6,304 9,506 12,094 10,145 9,122
Creditors due after more
than one year (80) (103) (22) (16) (96)
Provisions for liabilities
and charges (369) (527) (486) (628) (762)
Net assets 19,821 17,329 15,186 13,162 12,003
Total capital employed 19,821 17,329 15,186 13,162 12,003
Earnings per share
- basic - adjusted* 14.8p 12.2p 10.7p 6.6p 2.4p
-diluted - adjusted* 14.1p 11.6p 10.4p 6.5p 2.4p
- basic 13.9p 12.2p 10.7p 6.6p 2.3p
-diluted 13.3p 11.6p 10.4p 6.5p 2.3p
Dividend per share (net) 7.0p 6.0p 5.0p 3.4p 2.4p
Net assets per share 53.1p 46.9p 41.4p 36.3p 33.1p
*Adjusted earnings per share before amortisation of goodwill. HORNBY Plc
FORM OF PROXY
To be used for the Annual General Meeting of the Company to be held on Thursday 21 July 2005.
I/We (block capitals)
of
being a Member of Hornby Plc hereby appoint the Chairman of the Meeting or failing him
as my/our proxy to attend and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at
Berwin Leighton Paisner, St Magnus House, 3 Lower Thames Street, London EC3R 6HA on Thursday 21 July 2005 at 11.00am
and at any adjournment thereof on the resolutions set forth in the Notice of Meeting as follows:
No 1 To receive the report of the directors and the audited accounts
for the year ended 31 March 2005.
No 2 To approve the directors’ remuneration report.
No 3 To declare a final dividend.
No 4 To re-elect Mr F Martin a director of the Company.
No 5 To re-elect Mr J W Stansfield a director of the Company.
No 6 To re-appoint PricewaterhouseCoopers LLP, the retiring auditors,
to hold office until the conclusion of the next General Meeting at
which the accounts are laid before the Company.
No 7 To authorise the directors to agree the auditors’ remuneration.
Special Business:
No 8 To authorise the directors to allot shares pursuant to Section 80
and to disapply Section 89(1) of the Companies Act 1985 with
respect to certain allotments of shares.
No 9 To authorise the directors to make one or more market purchases
of ordinary shares pursuant to Section 166 of the Companies Act 1985.
RESOLUTION FOR AGAINST
VOTE
WITHHELD
DISCRETIONARY
Notes
1. Please indicate by a cross in the appropriate box opposite each resolution how you wish your proxy to vote.The “vote withheld” option is provided to enable you
to abstain on any particular resolution.A “vote withheld” is not a vote in law and will not be counted in the calculation of the proportion of the votes “For” and
“Against” a resolution. Subject to any voting directions so given the proxy will exercise his discretion as how to vote, or whether to abstain from voting on the
above resolutions, to adjourn the meeting and on any other business that may properly come before the meeting.
2. Delete “the Chairman of the Meeting” if it is desired to appoint any other person and insert the name and address of your proxy.
3. To be valid this form of proxy must be received by the Company’s Registrar (Capita Registrars,The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU) not
later than 11.00am on Tuesday 19 July 2005.
4. In the case of a Corporation the form of proxy should be under its Common Seal or under the hand of an Officer or Attorney duly authorised in writing.The Power
of Attorney or a duly certified copy thereof must be deposited with the form of proxy with the Company’s Registrar within the period stated above.
5. In the case of a joint holding, any one of several joint holders may sign.The vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted
to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which the names stand in the Register
of Members.
6. Under Regulation 41 of the Uncertified Securities Regulations 2001, only those shareholders whose names are on the register of members of the Company no later
than 11.00am on 19 July 2005 or, if the meeting is adjourned, shareholders entered on the Company’s register of members not later than 48 hours before the time
fixed for the adjourned meeting are entitled to attend and vote at the meeting in respect of the shares registered in their names at that time. Subsequent changes
to the register shall be disregarded in determining the rights of any person to attend or vote at the meeting.
Dated this ............................................ day of ..........................................................2005 Signature ............................................................................................................................................................... Liverpool Street
Bank
Moorgate
Cannon Street
Fenchurch Street
Monument
London Bridge
St Magnus House
ANNUAL GENERAL MEETING
Thursday 21 July 2005 at 11.00am.
The twenty-fourth Annual General Meeting of Hornby Plc
will be held at:
Berwin Leighton Paisner
St Magnus House, 3 Lower Thames Street
London EC3R 6HA
How to reach St Magnus House
BY UNDERGROUND
The nearest tube station is Monument (Circle and District Lines) although Bank 
(Northern and Central Lines) and London Bridge (Northern and Jubilee Lines) are also
close. In addition, the Docklands Light Railway connects with the Bank/Monument complex.
Leave tube station by exit signposted ‘Fish Street Hill / The Monument’.T urn right and 
walk down Fish Street Hill. Cross Lower Thames Street at the pedestrian crossing.
St Magnus House will be on your left, next to St Magnus Church.
BY TRAIN
The City is well served by mainline stations, all within walking distance of St Magnus House:
Liverpool Street (with services from Cambridgeshire and East Anglia) 
Fenchurch Street (from Essex)
Moorgate (Thameslink services from Hertfordshire)
Cannon Street (from Kent and the South East)
London Bridge (from Sussex and the South Coast).
BY CAR
An NCP car park is situated in Swan Lane, off Upper Thames Street.There are a small
number of parking meters available in the area surrounding the Monument.Also many taxis
cross the bridge, in both directions, during the day.
BY BUS
Various buses pass over London Bridge during the week, including 
numbers 17, 21, 35, 40, 43, 47, 48, 133 and 149. BUSINESS REPLY SERVICE
Licence No. MB122
Capita Registrars
(Proxy’s)
P.O. Box 25
Beckenham
Kent
BR3 4BR
FOLD HERE
FOLD HERE
FOLD HERE
FOLD HERE 1 Financial Highlights 
2 Chairman’s Statement
6 Chief Executive’s Report
9 Directors and Corporate Information
10 Report of the Directors
14 Corporate Governance
17 Statement of Directors’ Responsibilities
18 Remuneration Report 
24 Independent Auditors’ Report to the Members of Hornby Plc 
26 Consolidated Profit and Loss Account
27 Statement of Group Total Recognised Gains and Losses  
27 Note of Group Historical Cost Profits 
28 Consolidated Balance Sheet 
29 Company Balance Sheet  
30 Consolidated Cash Flow Statement 
31 Notes to the Cash Flow Statement
32 Notes to the Financial Statements 
32 Accounting Policies
51 Notice of Annual General Meeting 
54 Five Y ear Summar y
55 Form of Proxy
Designed by White Design
SHAREHOLDERS’ INFORMATION SERVICE
HORNBY WELCOMES CONTACT WITH ITS SHAREHOLDERS.
IF YOU HAVE QUESTIONS OR ENQUIRIES ABOUT THE GROUP 
OR ITS PRODUCTS, PLEASE CONTACT:
J W STANSFIELD, FINANCE DIRECTOR
HORNBY PLC,WESTWOOD, MARGATE, KENT CT9 4JX HORNBY PLC
|
ANNUAL REPORT & ACCOUNTS 2005
YEAR ENDED 31 MARCH 2005
HORNBY PLC, WESTWOOD, MARGATE, KENT CT9 4JX
HORNBY PLC | ANNUAL REPORT & ACCOUNTS 2005