As the announcement just days before Christmas of renewed Covid restrictions brings a daunting sense of déjà vu to the close of 2021, it’s understandable that some will struggle to summon much positive sentiment about the current business environment. The past 12 months have in some ways been a marginal improvement on 2020, but in terms of baseline comparisons the bar was set quite low.
A number firms did manage impressive performances despite a range of difficult circumstances that kicked off with lockdown restrictions from the start of the year. These only began to ease at the end of April when the country moved from tier 4 to 3 on Scotland’s “Levels” system, with the move to what First Minister Nicola Sturgeon then described as “almost complete normality” coming on August 9.
However it was around that time when labour shortages, scarcity of materials, soaring fuel prices and supply chain disruptions took hold, hampering what many had hoped would be a sharp rebound from the pandemic-induced recession. It remains to see how these factors – not to mention Covid’s advance – will play out.
Against that backdrop, here’s a sample of some of the Scottish companies that fared well in 2021, along with others that found the going particularly tough.
Seemingly insatiable demand for increased and improved mobile connectivity has put Linlithgow-based Calnex at the crest of the telecommunications wave. Headed by founder Tommy Cook, the company provides telecommunications testing equipment to many of the world’s largest network operators and equipment suppliers, all of whom are in the throes of the transition to 5G networks.
Reporting its first set of full-year figures as a publicly listed company in May, Calnex beat market expectations with a 31 per cent increase in revenues and a 22% rise in profits. It then shook off concerns about global semiconductor shortages to issue a profit upgrade in October, and followed through in November with a maiden interim dividend payment on a further double-digit rise in turnover.
The Glasgow-based packaging group suffered the passing of its founder Lord Macfarlane in November but has otherwise enjoyed a bumper year as it reaped the benefits of its position in the rapidly-expanding e-commerce sector.
In February the group posted a near-10% increase in 2020 profits to £13m, driven by a rise in sales at its dominant packaging distribution arm. Shrugging off concerns about material shortages and rising input costs, Macfarlane raised its full-year guidance following a 120% surge in profits during the first half of the current year, then issued a further upgrade in November despite “demanding” conditions posed by inflation, supply constraints and staffing challenges.
Scottish Mortgage Investment Trust
Jointly managed by James Anderson and Tom Slater of Edinburgh-based partnership Baillie Gifford, the £21 billion Scottish Mortgage Investment Trust reported a 16% total return on net asset value for the six months to September 30 driven by its sizable holding in Covid-19 vaccine developer Moderna. That took the return for the 10-year period to 1,072%, soundly beating the 275% return on the FTSE All-World index during the same period.
The Elgin-based housebuilder got off to a solid start in February when it reported an increase in revenues and profits for the six months to November of last year, and continued to build on that throughout 2021 as lockdown restrictions boosted demand for more spacious properties with gardens and green space.
A hefty profit upgrade in early June presaged confirmation of a record-setting performance for the year to the end of May, with turnover breaking through the £200m barrier for the first time and profits up more than 81% at £18.5m. That results announcement in September was followed about seven weeks later by the acquisition of Highlands rival Tulloch Homes in a £56.4m all-cash deal that will significantly enhance earnings.
Arguably one of Scotland’s most adroit PR machines, the brewer and pub operator hit the headlines for all the wrong reasons in June when former and current employees issued an open letter accusing the craft beer specialist, headquartered in Ellon in Aberdeenshire, of fostering a “toxic” workplace culture.
The lengthy letter from “Punks with Purpose” generated a social media storm, prompting apologies from BrewDog chief executive James Watt and the appointment of consultants in July to conduct a full independent review. Responding last week to the findings from that review, recently-appointed chairman Allan Leighton attempted to draw a line under the affair by conceding that though mistakes were made, many of those management issues were in the past.
Alva-headquartered Omega got off to a flying start in the first quarter of this year following confirmation it was selected as one of two UK firms to produce Covid antigen tests for the UK Government. The hugely promising agreement to manufacture up to 200 million rapid tests could have been worth up to £374m over the lifetime of the contract.
However, the AIM-listed firm’s share price subsequently struggled as the Government repeatedly delayed the decision on selecting a test for manufacture, culminating in November’s confirmation that the contract would not proceed into “Phase 2” of production.
Adding insult to injury, Omega was hit earlier this month with a £2.5m bill for repayment of money provided by the Government to help gear up for high volume production of the tests it no longer wants. Based on legal advice received, chief executive Colin King has said the board of directors do not believe Omega is liable to return the money.
Joining the Alternative Investment Market at the end of March, Edinburgh-based Parsley Box looked firmly in the sweet spot of serving an ageing demographic with home-delivered ready meals at a time when many were forced to limit outside excursions.
But by September it was warning it would have to lift prices on “selected” product lines to offset higher costs. The situation deteriorated further just a few weeks later when the company said in an unscheduled trading update that its available stock had been cut by half, forcing it to halt active recruitment of new customers in a bid to ensure it could meet demand from existing users.
The shares lost more than a third of their value that day, though chief executive Kevin Dorren insisted the long-term growth prospects for Parsley Box remain “unchanged”.
Siccar Point Energy
The North Sea operator said in May that its losses in 2020 had more than doubled to £189m as global activity ground to a near-halt amid lockdown restrictions, with oil prices pummelled as a result.
That however paled in comparison to the storm of controversy unleashed in June when the Aberdeen-based minnow said it had applied for permission to develop the massive Cambo field with Royal Dutch Shell. First discovered in 2002, Cambo is thought to hold up to 800 million of barrels of oil but poses challenges as it is located in stormy waters around 75 miles north-west of Shetland.
The development was a lightening rod in the run-up to, during, and after COP26, with pressure from environmental activists forcing Shell to withdraw at the beginning of December. Siccar Point has officially put its plans on hold, with industry sources saying the firm will struggle to find a new partner to replace Shell.