The new Live Steam locomotives have proved popular

The company - which also makes the Scalextric slot-car racing game - reported pre-tax profits of �6.5m, up from �5.4m last year.

Turnover was up 14% to �39m, helped by innovations such as model trains powered by live steam.

"We have proved our extended ranges of Hornby and Scalextric appeal across the generations," Hornby said.

Sales were also lifted by an increasing number of in-store concessions.

Chief executive Frank Martin said trading in the current financial year had "started well" and he was upbeat about future prospects thanks to "a strong pipeline of new product developments".

Trans Europe Express

The firm said that while its recent growth has been organic, it is now targeting expansion in Europe through acquisitions.

It has already bought Electrotren in Spain and has made an offer for parts of Lima, an Italian model train firm which is currently in liquidation.

"Our European acquisitions will broaden the company's base of operations and provide a platform from which to sell more strongly in Continental European markets," Mr Martin said.