Losses widened at Hornby as the struggling model maker continued on a two-year turnaround plan.

The train-set manufacturer said it wanted to improve the performance of its Scalextric toy-car brand and grow its European and US businesses.

The Sandwich-based company increased underlying losses by 10% to £6.3 million in the year to the end of March and reported a 15% cut in revenues to £47.4 million, which it had expected.

It said the first stage of its turnaround plan had been completed, which included reducing the scale of the business and cutting stock by 29% as it streamlined its European operating model.

Last June, the company warned shareholders it could go out of business unless it could raise £8 million in new shares.

Earlier this year, its chairman Roger Canham held off calls for him to resign after a revolt by a group of its investors.

Its latest results show the company, which still has a visitor centre in Margate, reduced pre-tax losses by 30% to £9.5 million and has improved cashflow, with net cash of £1.5 million against net debt of £7.2 million last year.

A new “focus on profitable products” helped improve its gross profit margin to 40% in the second half of the year.

It received £3.3 million in proceeds from the sale of part of its site in Margate, selling some Spanish properties and restructuring the business.

Hornby chief executive Steve Cooke said: “Our results to March 2017 provide solid evidence of our delivery in phase one of our turnaround plan, notably in terms of cash flow performance and gross margin improvement during the year.

“We are determined to build on this progress as we move to the next phase of the turnaround plan.

“We have built a sound platform for growth over the last 18 months and we are now planning to deliver sustainable profit and net cash generation into the medium term. “The current financial year has started positively and we are well placed to achieve the board’s expectations for the year.”