Warrens Bakery has seen EBITDA fall to minus levels in the full year to 30 June 2018, following the impact last summer’s hot weather coupled with increasing costs.

In its latest accounts filed at Companies House, the West Country-based business saw turnover increase from £16.3m to £17.3m, but EBITDA fell from £708k in 2017, to -£226k last year.

The company achieved retail growth of 2.7% during the year (compared to 32.1% growth in its trade and wholesale arm).

Turnover across its retail business was affected by the prolonged and extreme heat wave, it said, as well as a reduction in consumer activity on the high street, arising from a challenging Brexit environment.

Gross margin fell due to a significant increase in ingredients costs in addition to increases in the NLW and pensions contributions. “These costs were subsequently passed on by price increases towards the end of the year,” said Warrens.

Profits had also been impacted by start-up costs associated with “several new strategic retail stores”, but the business said that since the year-end, these stores had become profitable overall, and were now on target to achieve a turnover of than £1.4m in the coming year.

Since year end turnover has continued to growth and margins have improved it said. Actions taken to reduce the cost structure. “These targeted actions are resulting in sign improvements and a strong return to a positive EBITDA is forecast by June 2019,” it added.

It claimed that its sister business Warrens Bakery Franchise was currently the UK’s fastest growing food franchise brand, with several hundred stores in the pipeline over the next five years.

Parent company Provenance Brands said that the directors had taken steps to reduce the cost structure of the business and had been in active dialogue with the company’s bankers and other funders with regards to new and extended terms to facilities.

More than £500k was raised through a mix of individual investors and the issuing of B Ordinary shares in order that Warrens can continue to trade within its current bank facilities.

Warrens Bakery currently has c85 sites in the UK and recently opened its first concession site with TRG at Bristol Airport.