HORNBY STRENGTHENS PRODUCT RANGE WITH £7.5M ACQUISITION OF CORGI

1 May 2008

Hornby has agreed to buy the brand, tooling, and intellectual property rights from NASDAQ listed Corgi International Limited, for a consideration of £7.5 million. In addition, existing inventory will be acquired for a consideration of c.£0.8 million.

Hornby will focus on managing the business for growth. Key existing marketing, sales and development personnel will be retained, whilst currently outsourced logistics will be integrated into the Hornby structure along with sales administration, finance and operations. It plans to strengthen the product range and improve the marketing and distribution support. In the first year after the acquisition, Corgi is expected to be earnings neutral.

The Corgi product range is highly complementary to Hornby’s existing hobby brands, which include Hornby, Lima, Jouef and Rivarossi in model railways, Scalextric slot car racing cars, Airfix models and Humbrol paints.

As part of the acquisition, Hornby is also acquiring Bassett-Lowke, an ‘O’ gauge model railway brand. Bassett-Lowke operates at the top end of the model railway market and will add another range of products that compliments Hornby’s existing model railway portfolio.

Frank Martin, Chief Executive of Hornby commented,

“We are delighted to announce the acquisition of Corgi. It is a fantastic brand and has a superb reputation worldwide. We intend to build on the brand’s super heritage and invest to build its premier position in the market. The strategic fit with our existing businesses could not be better. We are confident that we will grow the scale of the business rapidly and drive it forward.

“The team at Hornby has the expertise and a successful track record in managing a portfolio of famous hobby sector brands that have flourished under our stewardship. This team will be complemented by the expertise of the Corgi employees who will be transferring to Hornby. Together we have set in place a detailed integration plan to ensure that we improve Corgi’s performance rapidly. We will focus on product innovation, improving the distribution network and driving sales growth both in the UK and Internationally.

“This acquisition is an extension of the Group’s strategy to build an international hobby and collectibles business with a broad range of brands. Looking to the future, we are extremely excited by the potential growth that Corgi can deliver.”

Denis Horton – Corgi Managing Director said:

“Our objective is to become the industry’s leading Popular Culture company.

The sale of the Corgi die cast collector business will allow us to focus on our key licenses (Harry Potter, Nintendo, Beatles, James Bond, Disney, Star Trek, Halo) and two, strong Pop Culture brands (PopCo and Master Replicas) that concentrate on the younger consumer and retailers that cater for the younger gateway collector.

We felt it was the right time to ensure liquidity in a tough market period and to focus on the customer who is dedicated to POP Culture.

We believe that Corgi brand will be in good hands with Hornby and they will keep the rich tradition of the brand prospering."

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