1st May 2008

Dear Customer,

Please see below a formal press release announcing some important changes to the Corgi business:

HORNBY STRENGTHENS PRODUCT RANGE WITH
£7.5M ACQUISITION OF CORGI

Hornby Plc ("Hornby"), the international models and collectibles group, has today announced that it has acquired the famous die-cast model business Corgi Classics (“Corgi”). Hornby has agreed to buy the brand, tooling, and intellectual property rights from NASDAQ quoted Corgi International Limited, for cash consideration of £7.5 million. Fixed assets at completion had a book value of c.£1.4 million. The balance of the consideration relates to Goodwill, Trademarks and Intellectual Property. In addition, existing inventory will be acquired for a consideration of c.£0.8 million, subject to a post-closing valuation. The cash consideration will be funded from Hornby’s banking facilities.

Corgi is one of the oldest manufacturers of collectible die-cast models of trucks, buses, cars and aeroplanes in the world. Corgi's famous model vehicles captured the imagination of millions of baby boomers and are now highly sought-after in the expanding collectibles market. Currently, its principal markets are the United Kingdom, the United States and Northern Europe.

Corgi was established by the Mettoy Company in Northampton, which first started to produce pressed metal toys in the 1930s. The Corgi brand for die-cast models was born in 1956 and at its height, was selling millions of toys a year, including the Batmobile, the Lotus John Player Special Formula 1 car and James Bond’s iconic Aston Martin DB5. More recently, production has been moved to lower cost plants in the Far East. Corgi enjoys an excellent reputation worldwide. Corgi sells a range of products based on aviation, commercial road transport and other vehicles.

In the year to 31 March 2008 the acquired assets generated sales of c £6.5 million. As Corgi formed part of Corgi International Limited it did not report profitability as a separate entity. However, performance in the year to 31 March 2008 was disrupted by a number of one-off items. Hornby will focus on managing the brand 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. The acquisition is expected to be earnings neutral in the current financial year.

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 complements 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. 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.”

Hornby means: get your money in savings. Because Hornby trains will cost you, so what happens to Corgi pricing?

Location: The Netherlands