Losses continued at model maker Hornby in the first half of its financial year, despite bosses hailing “good progress” on its turnaround plan.

The company – which also manufactures Scalextric, Airfix, Humbrol and Corgi products – saw revenues slip 2% to £21.9 million as it made a pre-tax deficit of £4.7 million, up 4%.

Shareholders were told they will have to wait longer for a dividend as bosses try to reduce the scale of the business to bring costs to a profitable level.

In July, the Sandwich-based company raised £8 million by releasing new shares on the Alternative Investment Market of the London Stock Exchange.

It had told shareholders in June it could go out of business if the turnaround plan was not approved, when it revealed losses of £13.7 million in its annual results.

Its interim report shows it managed to reduce net debt to £2.1 million for the six months to the end of September, compared to £5.7 million over the same period last year.

However, chief executive Steve Cooke warned shareholders revenues are expected to decline “significantly” for the second half of its financial year as cutbacks to product lines and some international brands take effect.

Annual turnover is expected to be down about a quarter, with sales for the seven weeks to November 20 down 22% on last year.

The company, which still has a visitor centre in Margate and runs its warehouse operations from Hersden, near Canterbury, also expressed fears revenues could be affected by exchange rate fluctuations after the Brexit vote.

It buys goods in US dollars and sells in sterling, which has weakened 16% against the dollar since the EU referendum.

Mr Cooke said: “We are making good progress with the Hornby turnaround. We are delivering the structural changes to reduce business scale and costs and to streamline the European operating model.

“We are currently focussed on the Christmas trading period as well as ongoing stock reduction initiatives.

“We have listened carefully to our core independent customers and responded positively to their concerns with new trading terms and a commitment to rebuild our relationship with them.

“We remain confident of meeting the board’s financial targets for this financial year.”