FINSBURY Food Group, which employs 1,100 people in its cake making business in Scotland, has highlighted the challenges posed by the fall in the pound since the Brexit vote after growing first half profits five per cent.

The London-listed firm made £7.9 million pre tax profit in the 26 weeks to 31 December, up from £7.5m in the same period in the preceding year.

Group revenues were constant at £156.6m.

Finsbury said the UK grocery market remains challenging in spite of the improvement in the wider economy.

It noted: “Increasing commodity prices, the adverse impact on USD and Euro exchange rates and the National Living wage means the Group is working hard to mitigate input cost inflation through continued operational efficiency, investment in automation and, inevitably, price increases.”

The cost increases compounded the challenges posed by the shrinkage of the UK grocery cake market by 4.8 per cent in volume terms during the period. Finsbury said it had followed the market, but added: “Celebration continues to perform.”

Finsbury describes the Hamilton-based Lightbody operation as the UK’s largest supplier of celebration cakes to the country’s retailers. It holds licences to produce themed cakes from big names of the movie industry such as Disney and makes own-label products for supermarkets.

The group’s operations include the Campbells Cake Company in Twechar, East Dunbartonshire.

Finsbury said the takeover of East Kilbride-based Johnstone’s Just Desserts in June 2015 reflected the board’s acquisition experience and capabilities.