Teddy bear designer Keel Toys suffered a 42% fall in pre-tax profits to £1.4m.

Turnover slipped 5% to £15.7 million and operating profits were down 39% to £1.5m in the year to the end of March 2016, its latest accounts show.

The third-generation family business, founded in 1947, designs cuddly toys which are manufactured in the Far East and then sold to blue chip clients from its distribution centre in Ashford.

In his report, director Richard Keel said the company’s performance accorded with expectations.

Its wage bill increased 46% to nearly £2.5m, although staff numbers were up just five on average through the year to about 60 people.

Mr Keel said: “The key business risk and uncertainties are considered to relate to competition from established competitors, the support of our suppliers, the state of the UK and global economies and the volatility of exchange rates.”