SCOTTISH Leather Group has seen turnover stretch in the year to March 31 as it secured several high-profile contracts in the airline and hospitality sectors.
In accounts filed with Companies House, the leather manufacturer posted pre-tax profit on ordinary activities of £4.5 million in the year, broadly flat year on year.
Group turnover grew to £136.2m, from £115.5m in the prior year, with the Bridge of Weir-headquartered business noting the boost provided by higher automotive leather and wet blue hide sales.
"These factors resulted in an increase in the group's working capital requirements impacting the year-end cash position," secretary Ronald W Brown wrote in the filing.
The privately owned company, the largest manufacturer of leather in the UK, reported that net funds at the end of the year dropped from £9.7m to £5.3m.
Looking at group operating profit, this increased to £4.8m from £4.3m, while net cash outflow from operating activities amounted to £125,000 as opposed to an inflow of £9.1m in the prior year.
Return on capital was 8.6 per cent compared to 8.8 per cent in 2013.
Group shareholders' funds hit £52.8m at March 31, from £50.9m one year previously, and the company said it is recommending a dividend of 10 pence per share.
The group is formed of subsidiaries including Glasgow-based Andrew Muirhead & Son, which in the 12-month period secured several new contracts, including several to supply leather to airlines.
In October 2013, for example, the firm was hired to provide covers for thousands of seats across 130 British Airways jets.
It had first been contracted by the airline 15 years previously to provide leather for its European fleet's cabins.
Other airlines to land deals during the year with the world's biggest supplier of leather to the global aviation sector included Thomson Airways, Virgin Atlantic and Singapore Airlines.
The company was also contracted during the year to supply leather for furniture in the cafe at the Edinburgh International Conference Centre (EICC).
Another unit of the group, Bridge of Weir Leather Company, said in April 2013 that it had been recruited to provide leather for refitting at the Royal Yacht Britannia, having been a supplier to the vessel's original furnishing in 1953.
The group also comprises W J and W Lang in Paisley, plus NCT Leather and SLG Technology, both based in Bridge of Weir.
Turning to costs, Scottish Leather Group said raw hide prices grew by 16 per cent on average in the year "to a record high, putting even greater pressure on operating margins".
Group cost of sales hit £117.1m in the year, up from £97.8m, and staff costs grew slightly to £18.7m from £18.1m, although the average number of staff during the year fell by three to hit 561. Sales per employee rose by £38,000 year on year to reach £243,000.
Looking ahead, the group said new products are being developed for current and developing markets and industry sectors.
Mr Brown highlighted the key focuses of global competitiveness, environmental sustainability and innovation, and said that in spite of the "challenging" business backdrop of the previous 12 months, "the group remains in an enviably strong position in terms of its balance sheet, its products and its people."
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