Net debt stood at £3 million in December, down from £5.5 million last year.
Hornby has seen its debt fall as it restructures its board.
Plus, the majority of its discounted branded Olympics products have now been sold.
Net debt as of December 31st, 2012, was £3 million, an improvement of £5.5 million from the year prior. On September 30th, 2012, it was £6.5 million, and on December 31st, 2011, it was £8.5 million.
During the period October 1st, 2012, to date, Hornby says its actions have yielded success.
"The supplier causing disruption to our model railway supplies is now expected to contribute less than 15 per cent of total production in 2013," read a statement.
"This is from a historical peak of 75 per cent and 35 per cent earlier in 2012. Despite general weakness in demand, sales of the Corgi and Airfix brands have held up well and shown positive year on year growth.
"Although Group sales for the financial year to date remain below the same period last year, they are consistent with our expectations at the time of the Interim Report. The Company therefore continues to expect that underlying pre-tax profits in respect of the year to March 31st, 2013, will be in line with current market expectations."
It says it has also continued to take steps to broaden its portfolio of products, resulting in lower average price points.
Chairman Neil Johnson is to retire from the Board on February 1st, 2013.
Roger Canham will succeed Neil as Chairman. In addition, Nick Stone will be appointed to the Board as Group Finance Director, in succession to Andrew Morris, who will leave the Group for his new role during February.
Incoming Chairman, Roger Canham, commented: "I would like to thank Neil for his contribution to the business and look forward to consolidating the transformation that the business has undergone during his tenure.
"I visited our suppliers in China early in January and believe that the strategy being pursued by the business will result in a much more robust product pipeline as 2013 progresses.
"Despite weak consumer spending in our traditional markets, the continuing innovation amongst the core brands, such as the Quickbuild launch and Railmaster app, will place Hornby in a strong position compared to its peers in maintaining its relevance to the changing market dynamics."
Hornby will announce its preliminary results for the year ending March 31st, 2013, in early June.
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