PROFITS AT the UK arm of Irish grocery wholesaler BWG declined last year by just more than £1 million as the company invested in a new distribution facility for chilled and frozen food products.

Latest accounts for Appleby Westward Group Ltd show that its operating profit declined to £1.85 million in the 12 months to the end of December 2010 compared with £2.87 million in the previous year.

Its turnover was flat at just under £136 million.

“This represents a satisfactory performance in a challenging retail environment,” the directors’ report states.

The report added that it was the company’s intention to “continue to invest in the core activities of the business”.

No comment was available from BWG yesterday but it is understood that the investment relates to a new distribution facility near Plymouth, in the south of England.

This had the effect of increasing the company’s net operating expenses to £11.8 million last year from £9.7 million in 2009.

This increase offset a £1.4 million reduction in the cost of sales and resulted in the company’s profitability declining.

The accounts show that Appleby Westward made a loss of £249,000 from the sale of a tangible asset and earned £128,000 in interest received.

This left the company with a profit for the year of £1.7 million.

The company did not pay any corporation tax in the UK during the year due to the availability of certain group reliefs.

Appleby Westward closed the year with shareholder funds of £17.1 million.

It employed 305 staff last year and its total employee costs amounted to £6.1 million.

Appleby Westward supplies Spar and Eurospar convenience stores and supermarkets in the southwest of England. It was acquired by BWG in the late 1990s.

These accounts provide the only window into trading at BWG, as the company in Ireland is unlimited and so does not have to publish its financial information.