A TROUBLED bid to build a 600-home village took a bite out of profits at a major player in the Scottish food sector, results show.

A “strong increase” in year-on-year sales took turnover at Graham’s to £104.1 million in the year to March.

But despite the 4% rise, reported pre-tax profit was just £0.4m.

Announcing the result, the Stirlingshire firm said one “exceptional cost item” was to blame, reducing the sum from £1.3m.

The family-owned group wants to build a new community, including a school and public park, at Airthrey Kerse in Bridge of Allan, along with a new processing plant.

However, a planning application was refused by Scottish ministers in June. An appeal is currently before Scotland’s highest civil court. The process cost the group almost £900,000.

In a statement, Graham’s said: “The group has taken a prudent view to write these costs off this year, despite an appeal which has been made in respect of this decision to the Court of Session and the outcome is awaited.”

Investment in plant, equipment and vehicles for distribution cost Graham’s £2m during the period, which was also marked by the launch of the company’s new Icelandic-style skyr product, a cultured yoghurt which hit shelves in early 2018.

A new Protein 40 milk entered supermarkets in October.

Managing director Robert Graham said the business will dig into its near-80-year history to retain its position as Scotland’s “number one food brand”.

He commented: “Graham’s the Family Dairy is a family business at heart and our core values of farming, family, quality, heritage and provenance always ring true in whatever we do.

“We continue to grow our business partnerships with major retailers and more than half of the Scottish population now buys Graham’s products. Going forward, we will constantly innovate to expand our award-winning product range both within the UK and beyond.”

Graham added: “Despite the challenging backdrop of balancing supply, demand and raw milk prices and the exceptional item of £0.86m, we have made significant progress throughout the year in relation to key elements of our strategy.

“We are well positioned to take advantage of upcoming opportunities in the market place whilst at the same time looking to improve efficiency and profitability.

“While we are extremely disappointed with the final decision to dismiss a planning appeal that, if successful, would have resulted in significant investment in a new dairy facility, we will continue to endeavour to innovate and deliver great Scottish dairy products for the benefit of our customers, employees and our farming partners.”

The Airthrey Kerse scheme attracted more than 400 letters objection and fewer than 100 expressions of support.

Graham’s, who partnered with housebuilder Mactaggart & Mickel Homes on the development, planned to use it to finance a new facility in Stirling.