Hornby, the model railways and Scalextric firm, has suffered a 32 per cent fall in full year pre-tax profits, to £6.1 million, because of problems with one of its key Chinese suppliers.

Hornby, which also owns the Airfix, Corgi and Humbrol hobby brands, also blamed the weakness of sterling, which pushed up its costs.

The company, which was also hit by some toy retailers pulling orders before Christmas last year, has decided, as a result, not to pay a final dividend.

Frank Martin, the chief executive, said that Hornby’s biggest Chinese supplier of model railways had faced “serious financial problems” during the year because of its debts.

He said that, in an attempt to maintain continuity of supplies, the company had tried to buy the supplier at one point — incurring some £221,000 of due diligence costs in the process — before the business was bought by a Hong Kong-based operator in January.

He added: “We continue to work closely with the new owners to improve our supply chain performance.”

Mr Martin said that, despite the difficulties in model railway supplies, Hornby’s sales rose by 11 per cent, to £61.6 million, on the back of higher Airfix sales and a first contribution from the Corgi business, which was bought in May last year for £7.6million.

He added: “We expect further strong growth from these brands in the current year.”

Mr Martin said that Hornby had just signed an exclusive worldwide license agreement with the Brawn GP Formula One team, which sweeping all before it this season.

The first ranges are due in the shops by Christmas this year.

He added: “Our work with the McLaren Formula One team continues and we wish both Lewis Hamilton and Jensen Button the very best for the rest of the season.

"Further, we have signed agreements with Disney Productions for the blockbuster movie series Cars. We have also agreed an extension of the James Bond 007 licence to cover our Corgi ranges.”

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