Zonal Retail Data Systems, the leading maker of electronic tills for the hospitality sector, has reported continuing top-line growth but a second successive sharp fall in profits as the family-owned business invests in staff and technology to keep pace with global rivals.
After racking up pre-tax profits totalling a combined £5.3 million in 2010 and 2011, Zonal saw them fall to £158,667 in the year to June 2013 from £1m in 2012, according to accounts just posted at Companies House.
In notes included in the accounts, the directors however cited "our policy of continued high investment in research and development with a spend in excess of £4m".
The fiercely independent Edinburgh-based company, which has four McLean brothers on the board but has also imported top-level outside management, was created in 1979 when the family invented an electronic point of sale system to stop stock shrinkage at its one Midlothian hotel.
It now supplies 6500 pubs, hotels, restaurants and other leisure venues with hardware produced in Livingston, where it opened a new £1m manufacturing, warehouse and logistics facility in 2012.
The same year it opened an 'innovation centre' sales showroom in Oxford, while last year it bought digital marketing agency TXD.
Customers include the likes of JD Wetherspoon and Mitchells and Butler.
Turnover at Zonal has trebled since 2009 to £41.3m, including a £5.1m rise last year.
The company increased its headcount again, from 231 to 260, including an addition of six in research and development, adding more than £1m to staff costs.
That helped push administrative expenses from £13.8m to £16m.
Net funds at the debt-free group reduced from £3.9m to £2.2m in the year, but shareholder funds eased only slightly from £10m to £9.9m.
The directors' pay bill was steady at £1m and the highest-paid director, assumed to be managing director Stuart McLean, rose from £264,807 to £297,000.
The dividend to the McLean Family Trust was unchanged at £221,000.
Writing in the annual report, the directors say the year to June 2013 was a "truly transformational year".
They say the continuing investment has been needed to deliver for the hospitality industry "a market-leading innovative and broad product range" which positively impacts their customers' businesses.
New contracts had been secured during the year with regional brewers, small and medium-sized pub companies, restaurant chains, bowling alleys and theatres.
Zonal said the most notable agreement it made in the period was with Mitchells and Butlers, the UK's biggest managed restaurant and pub retailer.
"Our market share in all of the sectors we operate in has increased and the board is delighted in the progress made," the directors said.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article