Hornby's profits were all but wiped out last year through overstocking London 2012 souvenirs and poor supplies of model trains.
Despite selling almost £5 million of Olympics-based products, the firm had to discount prices heavily as shops failed to re-order models.
That led to a loss of £1.3 million on what executive chairman Roger Canham admitted had been a "disappointing venture into London 2012 branded products". At the same time, Chinese manufacturers failed to supply as much as 30 per cent of the model trains ordered for Hornby's continental markets. Canham said the group has taken measures to spread its orders more widely.
Headline profits fell £4.5 million to just £150,000. After a £2.7 million writedown on the value of its Italian business and £700,000 costs of a management shake-up the pre-tax loss was £3.4 million. The dividend has been scrapped.
But Canham is optimistic that its Airfix Quickbuild kits, the relaunch of the £500-a-time Pocher Lamborghini model, and improving supply chains, give "a robust platform for future growth".