An iconic toy company based in Kent has reported losses of more than £1 million in the past year.
Hornby have said they remain positive about the future of the company despite the rising debt.
The company's troubles stem from supply chain problems from their railway manufacturer in China and foreign exchange losses.
Excluding the impact of the foreign exchange, Hornby have broken even in the year on the 31st March.
Former Ladbrokes and Dixons director Richard Ames is due to join the group as its new chief executive later this month.
A statement by Hornby said: "The group's plans for the new financial year are well advanced and with the main obstacle to an improved and efficient supply chain out of the way, we expect a gradual improvement in its reliability and quality. As a result we look forward to improved trading next year."
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