StockMarketWire.com - Models and collectibles group Hornby said although sales for the financial year to date remain below the same period last year, they are consistent with expectations.

The company continues to expect that underlying pre-tax profits in respect of the year to 31st March 2013 will be in line with current market expectations.

Whilst the issues highlighted in the last Interim Report have continued to impact the business, the actions taken to mitigate their effects have also continued to yield success. The supplier causing disruption to the model railway supplies is now expected to contribute less than 15% of total production in 2013. This is from a historical peak of 75% and 35% earlier in 2012. Equally, the remaining London 2012 merchandise has been discounted and the majority has now been sold. Despite general weakness in demand, sales of the Corgi and Airfix brands have held up well and shown positive year on year growth.

Net debt as at 31st December 2012 was £3.0 million, an improvement of £5.5 million from last year (30th September 2012 £6.5 million, 31st December 2011 £8.5 million). The Group continues to operate within its banking covenants, which were revised to provide more operational flexibility in December 2012.

Trading conditions in the UK and the rest of Europe will continue to be challenging for the foreseeable future. This may constrain sales of higher ticket Hornby and Scalextric items. However particularly in continental Europe, demand for model railway products continues to be strong and improvements in the supply chain should result in improved sales performance. Progress in the last year in the Corgi and Airfix brands has been encouraging.

At the London Toy Fair last week, Hornby showcased major product introductions for 2013. New category initiatives for 2013 include:

· The launch of the Quickbuild concept across both Airfix and Scalextric brands. This new development leverages our recognized skills in authentic model making and slot racing and also encourages creative play. We were delighted that the Scalextric Quickbuild Demolition Derby set was awarded the Editor's Choice Award as the best new Toy at the London Toy Fair. This was decided by more than 300 broadcast, national, consumer and trade journalists who highlighted their favourite toys from the show.

· Hornby E- Link - a revolutionary way to link a model railway layout with a home computer.

· The launch of a Railmaster app, allowing the user to control a complex model railway layout via iPad and Android tablets and mobile phones.

· Further extension of our Corgi Toys range, including a recent extension of our successful Eddie Stobart license to cover pocket money collectibles.

· The launch of a new range of collectible Corgi cars based on Formula 1 teams. The first products to launch will feature the Lotus and McLaren teams.

Hornby will announce its preliminary results for the year ended 31st March 2013 in early June.



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