Improving Hornby restores dividend

Collectables company Hornby is to pay a dividend to shareholders this summer after reporting a better-than-expected finish to its financial year.

The group, which owns brands including Airfix, Humbrol and Scalextric, did not pay a full-year dividend in 2009 due to the volatility of sterling against the Hong Kong dollar, the currency in which most of its purchases are made.

Despite issuing a trading statement less than a month ago, Hornby said yesterday that the year to March 31 had finished "even more strongly than we expected".

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It now expects profits in excess of market predictions and said it intended to recommend a resumption of dividend payments.

The company added: "For the new financial year there remains some uncertainty in respect of consumer confidence but order intake has continued strongly across all our brands."

The shares jumped following the update and closed up 16 per cent at 137p.

Numis Securities said it now expected profits of 5.7m in the year to the end of March, up from the 5m it previously forecast and compared with the 6.3m reported by the firm last year.

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The broker said it appeared that a greater proportion of the company's stock had benefited from more favourable currency fluctuations.

It also praised a strong pipeline of new products, with a line-up that includes Toy Story 3 merchandise deals for Hornby and Scalextric, new packaging and models for Airfix and an Olympic Games product for Corgi.

"We expect this innovation to drive sales growth across the board," Numis analyst Nick Coulter added.

Hornby's Scalextric business has also been boosted by tie-ins to make replica slot-cars featuring Formula One stars Jenson Button, Lewis Hamilton and Michael Schumacher.

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And the company will soon begin selling models of the Javelin high-speed trains which will ferry people to the Olympic Park in London from September.

Hornby's supply chain in China was disrupted by the takeover of its main supplier by Hong Kong toy firm Kader in 2008, but the company has since worked to reduce its exposure to a single firm.

It will announce its annual results in early June.