Scottish food industry stalwart Lees Foods has revealed that it enjoyed a boom in sales amid ‘unprecedented’ trading conditions before the multi-million pound takeover of the firm by a London-listed group earlier this year.
The Lanarkshire-based company grew turnover by around 30 per cent, to £20.9 million in the year to December 31 from £16.4m in the preceding period, accounts filed at Companies House show.
The results cover the last full year of trading before Lees was bought by Finsbury Food Group, in a £5.7 million cash deal in January.
The takeover may have put former chief executive Clive Miquel in line for a hefty payout. Mr Miquel led a management buyout of Lees in 2012 and had shares in the firm. He resigned from the Lees Foods board following the takeover by Finsbury.
Finsbury said the acquisition would allow it to consolidate its position in the sweet treats sector and grow its manufacturing presence in Scotland.
Finsbury also owns the Hamilton-based Lightbody celebration cakes business.
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The accounts for Lees indicate the business has capitalised on retailers’ desire to build their positions in a big market.
Demand for affordable treats such as cakes and confectionery products has remained strong despite pressure on consumer spending and lifestyle changes. Big supermarkets have won business from smaller independents.
In February Finsbury noted “the number of households buying cake remains high, at 94%”.
The products Lees makes in its Coatbridge plant include snowballs, teacakes and meringues. It has been operating in the town since 1931.
In the accounts for the latest financial year, directors state: “During the second quarter in 2022, Lees launched a new range of products with a leading retailer, which drove volume and revenue growth. These new listings have been extended during the latter part of 2022.”
The accounts do not identify the retailer concerned. On its website Lees notes its customers include Asda, Tesco, Morrisons and Coop.
The directors report in the accounts is dated June 21.
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The growth in sales in 2022 will reinforce confidence in the prospects of a business that is a significant employer in Coatbridge, with more than 230 workers.
Sales in the preceding year were impacted by Covid lockdowns, which also caused supply chain complications.
However, the accounts note that Lees has faced big pressures on the cost front amid the surge in inflation that started amid the recovery from the pandemic, and which accelerated after Russia launched its full-scale invasion of Ukraine in February last year.
Directors said Lees achieved a resilient performance “in what was an unprecedented year in terms of input cost increases on raw materials, packaging, transport and energy, and inflationary pressures pushing up the cost of labour, alongside supply chain disruption.”
They noted: “The business has been able to mitigate much of the impact through revised pricing and commercial arrangements and supply chain initiatives.”
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The company achieved an operating profit of £1,723 after losing £267,593 on that measure in the preceding year.
It cut pre-tax losses to £16,761 from £348,070.
The company produces own label products for retailers as well as supplying branded goods.
Lees was bought by Northumbrian Fine Foods in 1991 after posting record losses the preceding year but returned to Scottish ownership in 1993.
The company floated on the Aim market in 2005. It delisted in 2012 following the management buyout led by Clive Miquel.
Mr Miquel took over as chief executive of Lees in 2009. The business was formerly led by his father, Raymond, who spent years running whisky group Arthur Bell & Sons.
Finsbury group’s head office is in Cardiff.
It acquired the Lightbody cakes business in 2007. Lightbody employs over 1,100 people in Scotland.
A spokesperson for Finsbury group declined to comment on recent trading at Lees Foods. Finsbury will issue a scheduled trading update on Wednesday July 19.
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