OATCAKE maker Nairn's has reported a record turnover and soaring profits as it received a boost from growing sales of gluten free ranges.

That comes as a further £600,000 is being invested at its factory in Edinburgh this year to improve productivity.

A new £100,000 case conveyor to transport products around the main factory, which produces the core oatcake range, already installed and a major packaging upgrade on one of its production lines has been pencilled in for Christmas when the site traditionally shuts down for a period.

Accounts recently lodged at Companies House for Nairn's Oatcakes show the business saw revenue surge 19 per cent from £18.6 million to £22.13m in the 12 months to May 31, 2014.

More than 60 per cent of the sales uplift was put down to its gluten free ranges which include biscuits, oatcakes and porridge oats.

There was also growth seen in the core oatcakes range while a number of new products, including a biscuit targeted at children, have been introduced.

Profits increased from £1.7m to almost £2.5m in spite of around £600,000 of investment in its gluten free factory during the financial year and an increase in average staff numbers from 155 to 180. Total employee costs rose from £4.9m to more than £5.3m.

Martyn Gray, managing director, said: "We are seeing with gluten free almost exponential growth. We are well positioned to take advantage of that."

The profits were helped by a number of long serving directors deciding to take a step back from day to day operations and take up non-executive posts, with a corresponding reduction in salaries.

Those included major shareholder Mark Laing, who led the deal to buy the company from United Biscuits in 1996, becoming chairman while technical director Gavin Love and John Holroyd have also scaled back their duties.

The changes saw overall directors' emoluments and pension contributions drop from £1.01m to £541,057. The highest paid individual received £180,934, down from the £226, 581 paid out the previous year.

A dividend of £1.35m was paid during the year, up from £1.05m.

The business ended the year with £1.1m of net funds, an improvement from the net debt of almost £162,000 recorded in the prior year.

Commodity pricing was said to have been relatively stable during the year. The company is now taking out longer term contracts where prices are hedged on many of its biggest ingredients.

Mr Gray described the supermarket sector, where Nairn's supplies all the major groups, as "competitive" and said the business was trying to respond to trends for more convenience and online shopping.

That has included producing smaller packet sizes for snack type products.

Nairn's, which can trace its roots back to 1896, exports to around 40 countries with the United States its biggest single market outside of the UK.

Mr Gray, formerly an executive at drinks group Scottish & Newcastle, said the company also does well in Ireland along with other English speaking ex-pat communities such as Canada and Australia.

However he pointed out a growing level of sales in the Middle East and Cyprus although admitting South Africa has been tougher because of the rise in value of the rand.

Mr Gray said sales in the current trading year were going well but the business did have higher costs through investing in people and its brand.

The workforce has grown since the accounts were complied and is now around 200.

He said: "We are well up on last year again in terms of sales but we are finding pressure in terms of costs.

"[A £3.5m rise] was a good year and it will be tough to match that.

"When introducing new products you have to give them the right level of support. You actually over invest in them to start with to get them established and that is what we are doing with all these [new] products."