Upmarket ready meals supplier Charlie Bigham’s has posted a £9.3m jump in annual sales in its most recent financial year, but investment in growing capacity sent the company into the red.

Newly filed accounts at Companies House show an 18.6% jump in annual sales to £59.3m during what CEO Patrick Cairns called a “transformational” year to 31 August 2018.

Revenue growth was primarily driven by increased sales of its core branded ready meals range, as a result of increased distribution within supermarkets and higher levels of consumption among existing customers. Underpinning growth has also been the opening of its new kitchen facility near Wells in Somerset.

Cairns said the kitchen had brought “much-needed capacity to the business” and is now responsible for producing the majority of its branded dishes.

However, the increased costs associated with opening a second site ate into the supplier’s margins during the period.

Gross margins plunged to 18% from 27% in the previous financial period, as these costs were exacerbated by “significant” cost pressures on raw materials.

This meant the company dropped from an operating profit of £4.6m to a loss of £1.4m. Its pre-tax loss was £1.8m compared to a pre-tax profit of £4m in the previous year.

This is the first pre-tax loss the company has returned since it began filing full accounts 15 years ago.

Cairns said the drop in profitability was “anticipated” and the increased turnover resulting from its investments will return the business to profitability next year.

“As always, our strategy continues to be to make the freshest and most delicious food possible; to make it efficiently; and for it to be shared and enjoyed by an increasing number of people.

“The outlook is very positive and we are well set up for the future. Since our August 2018 year-end the business has returned to profitability, and we see this improving as we maintain good levels of growth.”

The Grocer’s Britain’s Biggest Brand report found sales of Charlie Bigham’s were up by more than 20% in 2018, largely driven by vegetarian-focused NPD as well as a packaging redesign and marketing push.