CR Smith’s legal win brings £4m cash injection

Latest accounts for Fife-based double glazing and conservatory company CR Smith have shown the firm to have posted a healthy profit on the back of a seven-figure payout following a successful legal action stretching back more than a decade.

Accounts newly published at Companies House show the Dunfermline-based firm made a pre-tax profit of £2.65 million last year thanks in part to a one-off payment of £4.3m understood to come after a positive result in a protracted legal battle.

The payment has been described as commercially sensitive but it is thought to relate to a court case against an unnamed supplier in 2011/12 over allegedly faulty components in products made more than 12 years ago.

The case, in which the glazing firm had presented a claim for about £17.9m, was ruled in CR Smith’s favour but a determination as to the cause and damages was made at a later date.

The £4.3m payment has paved the way for heavy investment in the branding, product development and new staff.

The firm’s latest results show that without the payment, it would have made a loss of £1.6m.

The company said the year was marked by an exceptional one-off payment of £4.3m in respect of historic transactions that predated the current and preceding periods.

However, directors were eager to stress that should not detract from a successful year.

George Eadie, brother of owner Gerard, said the directors were pleased with the performance of the business and results for the year to February 2014.

“The results for the period and the investment decisions in the brand, product, people and capital expenditure over the year means the company is well placed to build on the enviable record of trading and delivering enhanced value and service to the CR Smith customer as market leader in Scotland,” he said.

Turnover was up 12.84 per cent at £19.57m supported by tight cost controls, and produced a six-fold increase in profit before tax of £2.65m.

This month the company will take delivery of a new £1m state-of-the-art smart window manufacturing machine for its factory in Cowdenbeath which reflects its commitment to the long-term future of the business.

Further analysis of the accounts showed a 38 per cent rise in distribution costs to £4.5m.

The firm said this reflected significant extra investment in the CR Smith brand through TV advertising, internet website development and the launch of the new Lorimer windows and doors.

The success of the increased investment in distribution costs had resulted in a year-end order book of £5m and a continuing trend of increased sales.

A 52 per cent increase in administrative expenses to £2.96m reflected increased expenditure and investment in staff with the average workforce rising to 360.

The payroll dropped from 335 to 290 with the transfer to CR Smith Manufacturing but has risen again.

The figures showed directors’ emoluments rose 59 per cent to £506,390, with the highest paid receiving an increase of 28 per cent at £197,625. Staff costs including the directors rose 3.8 per cent to £6.32m.

Speaking in his report, owner Gerard Eadie said that the company operates in an extremely competitive market in a difficult financial climate facing the national economy and the business sector.

The directors believe the company is well placed to manage its business risks successfully, he added.