The operating profit before goodwill amortisation and exceptional costs on continuing operations was £5.1m. (1999 – £3.2m.) while at pre-tax level profits were £20.4m. (1999 – £0.7m.) including the net gain on sale of operations. This gain was attributable to the highly successful disposal of our Information Systems business in January 2000 which enabled us to deliver value to our shareholders through the special dividend of £1 per share. The remainder of the proceeds has helped us to fund the expansion of our activities in our target growth areas. As you will be aware, since disposal of Information Systems, trading conditions for that sector have been difficult with consequent falls in value and profitability. The gain on sale does not include the £12m. of deferred loan notes which we will recognise in future years when repayment is assured.

Following the sale of Information Systems progress was made during the year on the transition towards industry focused business units from the previous divisional operating structure. The year’s trading has been reported in the new segments of Aerospace, Energy and Utilities, Engineering Services and Nuclear.

I believe this presentation gives a clearer picture of the group’s operations and underlines the growing contribution being made from our newer activities.

Aerospace continued its growth pattern both in turnover and profitability and investment was made in new plant and upgrading facilities at Motherwell. Considerable effort has been expended on developing long-term relationships with major customers in this industry and prospects for continuing growth are most encouraging.

Trading in the Energy and Utilities businesses significantly improved with a healthy increase in profit contribution from a broad base of activities particularly our project engineering group which successfully completed a number of major overseas contracts. The handling systems and plastics businesses in the U.K. also achieved satisfactory profit growth. Engineering Services, which has been a most profitable operation over recent years, encountered difficult trading conditions and incurred a loss for the year. There was a decline in demand for our traditional mechanical maintenance services provided to the oil, gas, petrochemical and steel industries. This necessitated cost reductions and our three site construction activities were consolidated into one operation.

The consequence was a significant redundancy programme and these costs are highlighted as exceptional. In addition, the railtrack maintenance activities achieved rapid turnover growth but unfortunately incurred losses in newly developed regional operations. Remedial action has been taken and our plan is to develop this activity in a controlled manner.

The Nuclear activity was significantly increased through the acquisition in April of Faber Design Consultancy which I reported in my half-year statement. Faber has met our profit expectations. Its skill base greatly enhances our capabilities in this sector which offers considerable growth opportunities.

Health and safety is of the utmost importance to us and we always look to improve our health and safety management training and reporting systems. I am glad to be able to report that we continue to improve our safety record which was already ahead of industry standards. Various group businesses have won safety awards over the years and last year a number of them received awards from the British Safety Council and the Royal Society for the Prevention of Accidents including a ROSPA Gold Medal.

In summary, I believe that the year was one of good progress towards achieving a better balance to our activities against a background of difficult trading conditions in the manufacturing and construction industries. I therefore consider that the group now has a good platform on which to build its future.

I will be retiring at the annual general meeting and I am very pleased to advise that Malcolm Gourlay, who joined the board as a non- executive director in September 2000, has agreed to take over as chairman. Malcolm has considerable experience in industry in both executive and non-executive capacities and I am confident that he will successfully lead the company in its future development.

I would like to thank Duncan MacLeod, who now retires as a non-executive director, for his long and valued service. Also Malcolm Phillips retires at this time after more than 30 years of service to the group in various capacities and I would like to express my appreciation of the very considerable contribution which he has made to the group’s success over this long period of time.

We are recommending a final ordinary dividend of 5.35 pence per share making a total of 7.35 pence per share (1999 – 7.35 pence per share).

I. M. H. Preston,
Chairman 23 March 2023