Scott Group, the acquisitive pallet specialist, achieved a big increase in profits in 2006 after completing what had been its biggest purchase to date during the year.

Accounts for the group filed at Companies House show the group increased operating profits by 5%, to £2.5m, in the year, during which it bought Cambridgeshire-based Crofton Pallets in a deal that significantly extended its reach.

The price was not disclosed.

The deal allowed Scott, which is the UK's biggest pallet manufacturer, to grow turnover by £15m on an annualised basis. This helped compensate for a decline in revenues from continuing operations during 2006, when total turnover increased to £58.3m from £57.9m.

However, as the previous period covered the 17 months from August 1, 2004, to December 31, 2005, the improvement in trading was much more pronounced than the headline figures suggest.

In a report to the accounts, chairman John Scott, who owns the business with his brother, Norman, said the acquisitive strategy had delivered improved trading.

After successfully integrating firms bought in the year, operating margins widened from 4.17% to 4.36%.

During the current year Scott has underlined his faith in acquisitions. Last month the group bought Airdrie-based Marlaw Pallets in a multi-million-pound deal, which a spokesman for Scott confirmed was bigger than the Crofton purchase.

The takeover was the 27th since 1990 by Scott, which is headquartered at Rosyth, in Fife. The group expects annual turnover to increase from £95m to £123m as a result of the purchase.

In September, Scott bought Manchester-based rival Henry Sutcliffe.

The accounts for calendar 2006 show the group increased pre-tax profits to £1,588,000, from £1,563,000 in the preceding 17 months.

The highest-paid director, assumed to be John Scott, received emoluments of £188,443, down from £233,750. The firm paid dividends totalling £118,000, compared with £111,000 in the preceding period.