CREDITON Dairy Limited, of Church Lane, Crediton, one of the UK’s leading dairy drinks businesses, has published its report and accounts for the year ending December 31, 2014.

<7 point>Against the backdrop of very challenging dairy markets, the business reported a solid performance driven in particular by growth in its extended shelf life flavoured milk business, increased sales of its branded milk drinks and better than expected sales of long life milk.

Financial highlights for the year included:

• Turnover of £63.0 million (turnover in the 2013 five month accounting period: £28.1 million)

• Profit on ordinary activities before tax of £3.6 million reflecting a profit margin of 5.7 per cent (2013: 6.6 per cent)

• Capital investment of £4.1 million

• Total debt at December 31, 2014 was £4.2 million (2013: £5.5m)

From a commercial perspective the key markets which Crediton Dairy supply had a year of contrasting fortunes.

Crediton Dairy’s extended shelf flavoured milks witnessed strong growth in both retail own label and brand licence volumes.

In January, distribution of "Moo" flavoured milk was extended further with its successful launch in Aldi.

In December, the business commenced the supply of a range of own label flavoured milks to Sainsbury’s.

In the Autumn, a "GU" branded range of hot chocolate ready to drink milks was launched and they are now stocked by leading retailers nationwide.

Sales of long life cream in the food service sector grew with the launch of an ambient offering to complement the existing chilled range.

However, the long life milk market continued to be a challenging one with overall UK sales declining.

Despite this, although Crediton Dairy’s sales dropped in the first quarter (partly as a result of on-going aggressive pricing of fresh liquid milk in the retail sector), the business witnessed volume growth across the rest of the year as a result of new business gains in the UK and overseas.

During 2014 Crediton Dairy undertook significant capital expenditure of £4.1 million to improve manufacturing capabilities and efficiencies.

Activity was focused on increasing the capacity and capability of the extended shelf life business and the dairy’s ability to handle increased volumes of directly supplied raw milk flexibly and efficiently.

The business made strong progress in recruiting its own dedicated group of local dairy farmer suppliers who have been attracted by Crediton’s competitive milk price (which is consistently in the upper quartile of milk price league tables) and a simple, clear and transparent milk price schedule and contract.

By the year end, 50 farmers (the vast majority of which farm within a 25 mile radius of the dairy) had been signed up to supply the dairy, producing some 70 million litres of milk annually.

This has grown further to 60 farmers supplying c80 million litres in the intervening period.

Commenting on the results, Tim Smiddy, managing director of Crediton Dairy said: “I am pleased to be able to report that the business performed solidly at a financial, operational and commercial level despite very challenging market conditions.

"We continue to make good progress in putting in place the necessary strategic developments to ensure the future growth of Crediton Dairy and I would like to take this opportunity to recognise and thank our staff, customers, farmers, suppliers and our bankers Lloyds for their on-going support.”