Offer for Lima Assets

Hornby PLC
08 March 2004


                  HORNBY PLC OFFERS TO ACQUIRE CERTAIN ASSETS
                         OF LIMA S.P.A (IN LIQUIDATION)


Hornby Plc ('Hornby'), the model and collectables group, is pleased to announce
that it has made an offer of €8 million (eight million Euros) or approximately
£5.3 million (1) to acquire certain assets (the 'Assets') of Lima S.p.A (in
liquidation) ('Lima') (the 'Offer'). It is intended that the Offer will be
funded from cash reserves and, if necessary, bank debt.

Lima, based in Vicenza and Brescia (Italy), is one of the best-known model
railway companies in Europe. Its brands include Lima, Rivarossi, Jouef, Arnold
and Pocher:

  • Lima (HO gauge) features model railway subject matter from a variety of
    European countries but with a focus on Italy. In addition, the Lima product
    range includes OO gauge models based upon British and Australian locomotives
    and rolling stock.
  • Rivarossi (HO gauge) is a premium brand specialising in Italian and
    American subjects.
  • Jouef (HO gauge) is the best-known model railway brand in France
    specialising in French railway models.
  • Arnold (N gauge) focuses on subjects drawn from a number of European
    countries.
  • Pocher is a premium range of diecast automobile kits.

For the financial year to 31 December 2002, the turnover and loss before
taxation attributable to the Assets was €9.2 million (£6.1 million(1)) and €7.1
million (£4.7 million(1)), before exceptional income of €2.8 million (£1.8
million(1)), respectively. As at 14 July 2003, the net book value of those assets
that are the subject of the Offer was €6.9 million (£4.6 million(1)).

Prior to its liquidation Lima manufactured all of its products in Europe. If the
Offer is successful Hornby intends to transfer manufacturing to China as it has
transferred successfully the existing Hornby and Scalextric ranges.

Lima went into liquidation during summer 2003. Consequently, pursuant to Italian
law, the Offer is binding on Hornby while it remains possible that the competent
Italian Court may determine not to proceed with the Offer. In accordance with
due process, the current shareholders of Lima have on Friday, 5 March 2004 filed
before an Italian Court an application for a 'concordato preventivo'. The
admission by the competent Italian Court of such procedure requires, inter alia,
the approval by the creditors of Lima. The granting of such an arrangement would
ensure that Hornby is able to acquire only those assets that are the subject of
the Offer without taking on any current or contingent liabilities. The process
of approval of the 'concordato preventivo' may take up to 9 months from Friday,
5 March 2004. During this time the competent Italian Court may consider
alternative offers. Subject to approval of Lima's creditors and the competent
Italian Court and no other offers being accepted, Hornby is confident that the
Offer will be accepted and will be able to complete the purchase of the Assets
shortly after court approval is obtained.

Hornby will make further announcements as appropriate.

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

' We are delighted to announce this offer, which, if successful, would form the
platform for our expansion into key European markets and importantly increase
our rate of growth in the USA. Our existing Hornby railway product range is
largely restricted to sales in the UK.

' We have demonstrated with our Hornby and Scalextric brands in the UK that the
combination of a model railway brand leader and a strong international slot car
racing business can produce excellent returns for shareholders. The acquisition
of Lima will bring model railway brand leadership in France, Italy and a strong
position in the USA and other world markets.

' We believe that the primary reason for Lima's difficulties was its inability
to remain competitive, given its high-cost European manufacturing base. By
moving production to China we believe that we will be able to return the Lima
brands to profitability and generate similar margins in Lima product ranges to
those that we have experienced since Hornby moved its manufacturing to China.'


(1) Based on €/£ exchange rate of €1.503/£ per the Financial Times, 4 March 2004
   

                                  -ends-

Date: 8 March 2004
For further information contact:

Hornby Plc                                    City Profile Group
Frank Martin, Chief Executive                 Simon Courtenay
John Stansfield, Finance Director             020-7448-3244
01843-233500
Web: www.hornby.com or:
www.scalextric.com


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