A sales boost from the Commonwealth Games and a decision by the taxman over the VAT treatment of its famous snowballs helped Thomas Tunnock enjoy a record financial performance last year.
The Uddingston-based firm, also famous for its caramel wafers and teacakes, saw sales rise by 7 per cent to £51.3 million in the the year to 28 February reflecting what the firm described as steady growth across its markets.
The company – which uses the Tunnock’s brandname – reported a sales surge after its teacakes had a starring role in the opening ceremony of the 2014 Commonwealth Games. The company had said that an extra 15 million teacakes were sold in the wake of the televised ceremony, forcing it to shift patterns for a period to keep up with rising demand. Pre-tax profits rose 17 per cent to £7.6m and the company said it had benefited from a decision that its snowball range of products be reclassified as not VAT-able.
During the year just over £3m was invested in plant and equipment which the firm said reflected its policy of continuing to invest in the latest technology.
“The results highlight the strength of our brand reflected in our quality products which reach a worldwide market. Thanks is given to all employees for their continued commitment,” said the company.
Tunnock’s – together with fellow Scottish confectionery firms Lees – were awarded tax rebates after judges ruled a snowball is a cake, not a biscuit. Tunnock’s and Lees had both been landed with a VAT bill on the popular marshmallow-filled sweets they make.
But HM Revenue & Customs was ordered to return tax already paid after judges agreed the treat should be exempt from the charge. Tunnock’s received £805,956 after theappeal.
The number of staff employed dipped slightly to 475 from 489 although staff costs rose by more than a £1m to £13.6m. The highest paid director received £146,544, up from £144,719 the previous year.
The firm exports to more than 30 countries, and its confectionery is particularly popular in the Middle East where it enjoys the advantage of a higher melting temperature than other chocolate-based products.
Dividends paid to the Tunnock family, headed by the firm’s owner Boyd, were just over £1m, exactly the same as the previous year. The Uddingston-based firm started life in a baker’s shop in 1890. Earlier this week it made a major donation to ensure a coastal community could replace its lifeboat lost after the RNLI closed a lifeboat station. The independent lifeboat will be based at St Abbs harbour, Berwickshire, which until September this year had a 104-year-long association with the RNLI.