Turnover for the year ending March 2010 was £156m, up from £153m the same time a year earlier. However, the pre-tax figure for 2010 was a loss of £900,000, compared with a profit of £1.6m in 2009.

Despite the loss, the Scottish group posted a £9.7m increase in net positive funds, which rose to £15m during the year.

Group chief executive Chris Parr said the business had made excellent progress in the delivery of its long-term strategic aims.

This included the expansion of its global footprint within Asia, building brands and starting work on a biomass energy plant in Scotland.

Parr said: "The first half of the year was characterised by reduced sales volumes although, encouragingly, these recovered strongly during the second half.

"We also took positive actions to deal with the most rapid and severe increase in pulp raw material costs that our industry has witnessed in more than a generation."

In May, the business was granted planning consent to build a £1m environmental education centre at its plant in Markinch, Scotland.

Last year, it signed a £200m deal with energy operator RWE Npower Renewables to supply heat and electricity to the Scottish paper mill from its new biomass-fuelled co-generation plant.

Parr said the company remained "cautiously optimistic" that its trading position would improve significantly next year, despite the continuing difficult economic climate.

"We have now completed our response to the dramatic raw material cost increases experienced last year," he added.

"Our pricing disciplines have been strengthened and we have successfully implemented a group-wide efficiency improvement programme."