CJ Lang keeps up profits despite fall in turnover

PROFITS have been maintained at CJ Lang & Son, the Dundee-based food distributor and owner of the Spar brand in Scotland, despite a fall in turnover as the recession hit home.

Accounts filed at Companies House showed that the family-owned company posted an operating profit of 5.5 million in the year to 30 April, up from 5.4m in the previous 12 months.

The surplus came despite turnover falling by 1.8 per cent to 257m amid a "challenging" year caused by the "depressed economic climate".

Margins also came under pressure but CJ Lang combated the downturn by making its distribution arm more efficient and cutting its administration costs by 1.5 per cent.

The company declined to comment yesterday. But, writing in the accounts, managing director Scott Malcolm highlighted the risks coming from supermarket chains moving into the convenience store market. "We believe that our group, through its association with Spar, is well placed to grow its own market share over the long term," Malcolm added. There are about 380 Spar shops in Scotland, with CJ Lang owning about 95 of them and supplying goods to the others. The group claims Spar accounts for about 45 per cent of the Scottish convenience store market.

As well as the Spar fascias, the group supplies a small number of shops that use the VG brand, which is its "entry-level" format.

The group's headcount dipped from 2,168 to 2,125, with staffing costs falling from 28.4m to 27.7m. The total pay for directors dropped from 2m to 1.7m, although the highest-paid director's package rose slightly from 791,000 to 795,000.

Pre-tax profits rose from 4.7m to 4.9m but the 2009 total was restated following a change to the company's accounting procedures, which resulted in a 1m reduction in the value of its fixed assets. The accounting change was brought about to better reflect the "significant recent investment" in the firm's warehouses.

Dividends of 572,600 were paid out of the course of the year to chairman Joan Scott-Adie and a further 533,120 to other family directors.

Scott-Adie owns 51.1 per cent of the firm's shares, while other members of her family control the remainder of the stock.

In November - following the year-end in the 2010 accounts - CJ Lang sold its cash and carry and food services division to Yorkshire-based Batleys for an undisclosed sum. At the time, the company said the sale would allow investment in its Spar network of convenience stores.

Malcolm said: "Whilst the division has always been a good profit and cash generator, it had contracted in scale in recent years, thus becoming non-core."

The group was founded in 1919 when Charles Lang bought a Dundee-based food trading business that had been running since 1880.He became known for importing cheese from the Netherlands.

His son later joined the firm, which went on to become a member of the Vivo trading group in 1960. Vivo merged with Spar in the UK in 1975.

The group began franchising out Spar stores in 1986 and become the sole master franchise holder in 1993.

The Spar brand itself was founded in the Netherlands in 1932.