Shares in Havelock Europa plunged in early trading despite the Fife furniture group reporting a return to profit.
The preliminary results show the group generated an operating profit after exceptional costs of £357,000 in 2016.
The figure compares to a £2.4m loss for the prior year period.
Stock in the Kirkcaldy based group took a double digit tumble as investors reacted to news of a higher pension deficit and delays in some public sector contracts that means the full year reuslt for 2017 will be heavily weighted towards the second half of the year.
Havelock secured revenues of £60.8 million in 2016, almost £12.3m lower than achieved in 2015.
The disparity reflected the decision by Lloyds – Havelock’s single largest customer – to cut its multi-million annual spend with the company in late 2015.
Havelock has since reviewed and restructured its operations and the business is now focused on three distinct markets – retail and lifestyle, corporate services and the public sector.
The company said it had made “strong progress” in broadening its customer base during 2016 but conceded it had been a difficult year.
“2016 was a challenging year due to the significant reduction in revenue,” Havelock Europa chairman Ian Godden – who has made a second £300,000 investment in the business – said.
“Nevertheless we have made considerable progress in realising the benefits from the restructuring of the business with a substantial improvement in margins and a return to profitability.
“The business continues to concentrate on simplifying its structure and processes and on improving its commercial skills to make it more agile and to generate more operating profit and cash flow.”
The group’s own key performance indicators showed a mixed picture with revenue per employee growing during 2016 but the opening order book being £3m lower at £22m.
The firm also held net debt of £2.7m at year end, having been in a £1.1m cash positiove position a year earlier.
Chief executive David Ritchie said Havelock had secured a number of new national contracts in 2016 and was building a stronger pipeline of work for 2017.
“We continue to pursue opportunities that will include new sector activity,” Mr Ritchie said.
“We are now targeting these opportunities to build on the new customers that we have successfully secured within the year and we are working towards converting these opportunities to secure this year’s revenue.
“We remain cautiously optimistic for the full year and I appreciate the efforts made by colleagues to move the company forward in continuing challenging times.”
In addition to the results it was announced that outgoing finance director Ciaran Kennedy – who is joiing Clancy Docwra as director for Scotland – has been replaced by Donald Borland.
Shares in Havelock closed the trading session down 12.5% at 13.12 pence.