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
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
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
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
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