The chairman of Fife technical textiles firm Scott & Fyfe has branded a return to the red last year as a “totally unsatisfactory performance.”
New accounts posted at Companies House show the 150-year-old Tayport-based business posted a £678,000 pre-tax loss in 2013, a slump of more than £1 million from the £353,000 return from 2012.
The filings cover a period in which the company moved to an employee ownership structure following a £5 million deal in late 2012 that saw it taken out of private hands for the first time in its history.
“The financial performance has been extremely disappointing, the consequence of poor trading but also redundancy costs of £184,000 incurred during the year,” Chairman Nick Kuennsberg said in his statement for the year to December 31.
“Sales at £9,288,000 were 11% below last year, a result of further structural decline in key markets, customer deferral of significant developments in the irrigation market, the time required for other new products to achieve customer acceptance and continued sluggish sales in Europe.
“This sales revenue shortfall also mean that overheads were higher than the level of demand could justify which, together with the enhanced productivity derived from the impact of employee ownership, led to the regrettable need for a reduction in the workforce: redundancies were implemented at management, staff and factory levels.
“The overall result of this was a loss of £628,000, a totally unsatisfactory performance.
“Because of the loss there was no profit participation and no payment in respect of management bonuses for the year, an unfortunate position for staff but a position that was well understood.”
However, despite the downbeat financials, the chairman said in the accounts that he expected a “substantial pipeline of new products” would start to make an impact in 2014.
Speaking exclusively to The Courier yesterday, Mr Kuennsberg said the firm had started to see an improvement in trading conditions.
“This year’s results will be significantly better than last year and I would anticipate getting on to a bit of a roll in 2015,” he said.
The company is currently targeting new business within the automotive and pipelining markets and the chairman said the new products had applications in the sewage, oil and gas and chemicals sectors.
“This is a totally new maret for us but we believe we have got something serious to contribute and we have had both European and American customers very interested.”
Under the new employee ownership structure each staff member received an initial allocation of 2,750 free shares – worth approximately £500 – and were given the option to open a savings account with the company worth up to £1,500 per year.
Mr Kueensberg said the arrangement ensured staff were full engaged with the company and had a personal interest in turning the business back to profit.
“With our employee ownership we have a monthly session with everybody so they all know exactly what the situation is,” he said.
“We don’t hide anything from them and they know exactly what needs to be done. we have been doing a bit of recruiting so our employee numbers are up.”
The firm’s flooring business lead Richard Tough – a member of the family which had owned Scott & Fyfe – retired from the business in May and has been replaced by an internal appointee.
Development director David Tough – who with Richard subscribed for £3.89 million of redeemable preference shares in the firm following the employee takeover deal – remains on the board.