Three Muslim men from Derby have become the first people in Britain to be convicted of inciting hatred on the grounds of sexuality after they distributed leaflets calling for gay people to be killed.

In a landmark case, a jury at Derby crown court ruled that Ihjaz Ali, Kabir Ahmed and Razwan Javed had breached hate crime legislation by handing out the leaflets outside the Jama mosque, in Rosehill Street, Derby, in July 2010, as well as putting them through nearby letterboxes.

Sentencing was adjourned until 10 February. Two other men, Mehboob Hussain and Umar Javed, were found not guilty of the same charge.

One leaflet, entitled "Death Penalty?", showed an image of a mannequin hanging by the neck from a noose, accompanied by references to homosexual sex.

"The death sentence is the only way this immoral crime can be erased from corrupting society and act as a deterrent for any other ill person who is remotely inclined in this bent way," it said. The only dispute among "the classical authorities" of Islam was the method employed to carry out the death penalty, the leaflet claimed.

The men had admitted distributing the leaflets but pleaded not guilty to the charges. During the trial, the court heard that Ahmed had told police he did not believe that the views expressed in the Death Penalty? leaflet were wrong, but rather that they expressed what Islam says about homosexuality.

One witness told the jury he felt he was being targeted and feared he would "be burned".

After the verdicts, Sue Hemming, the head of the Crown Prosecution Service's special crime and counter-terrorism division, said: "Everyone has a right to be protected by the law and we regard homophobic crimes, along with all hate crimes, as particularly serious because they undermine people's right to feel safe.

"This case was not about curtailing people's religious views or preventing them from educating others about those views – it was that any such views should be expressed in a lawful manner and not incite others to hatred."

The Criminal Justice and Immigration Act 2008, which came into force in 2010, made it an offence to stir up hatred on the grounds of sexual orientation.

The CPS said it had had to establish not only that the leaflets were insulting and abusive, but also that they were threatening and had been distributed with intent to stir up hatred.

A second leaflet distributed by the men showed the word gay laid out as an acronym to read "God Abhors You". A third, called "Turn or Burn", showed an image of a person who appeared to be burning in a lake of fire, accompanied by the word homosexuals with a red line drawn through it.