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Vosper Thornycroft (VSP)

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Tuesday 15 May, 2001

Vosper Thornycroft

Final Results

Vosper Thornycroft Holdings PLC
15 May 2001

                       Vosper Thornycroft Holdings plc

             Preliminary Results for the Year Ended 31 March 2001

Vosper Thornycroft Holdings plc ('VT'), the support services, shipbuilding and
marine products group, announces preliminary results for the year ended 31
March 2001.

Financial Highlights                                             2001      2000

Turnover up 38% to                                              £379m     £274m

Profit before taxation and goodwill up 2% to                   £36.3m    £35.5m

Cash balances of                                                £115m     £155m

Earnings per share up 0.3% to                                   73.7p     73.5p

Dividend per share up 8% to                                    36.25p     33.5p

  * Diversification strategy successful: 55% of operating profits from
    non-shipbuilding activities

  * Largest acquisition to date achieved

  * Strong growth maintained : Organic growth 20%

  * Support Services now over 50% of turnover

  * Order book of £1.1 billion

Commenting on the results, Martin Jay, Chief Executive, said:

             'Our diversification strategy has proved highly successful with
        over 55% of operating profits now coming from our non-shipbuilding
        related business. With a strong order book and significant prospects
        across all divisions, we are well placed to continue to benefit from
        this strategy.'

                                   - Ends -

For further enquiries:

Vosper Thornycroft Holdings plc

Martin Jay (Chief Executive)        020 7860 3591/3590

Chris Cundy (Finance Director)      Until12.15 and

Philip Rood, (Public Relations)     023 8042 6000 thereafter

Notes to Editors

Vosper Thornycroft is a leading defence and civil contractor focusing on
technical and other related support services, shipbuilding and marine
products. Together, these activities employ 7,500 people in a global network
covering the UK, Europe, United States and the Middle East.

Support Services account for 50 per cent of turnover and consist of
military and civil activities. Military support is tri-service and includes
training, platform and equipment maintenance and facilities management, while
civil support focuses on training and education, careers guidance, and
specialist engineering.

VT is one of the world's leading designers and builders of naval ships, both
for the Royal Navy and overseas customers. Products include destroyers,
frigates, patrol vessels, attack craft, minehunters and smaller boats for the
paramilitary and commercial market. Building is in steel, aluminium or fibre
reinforced plastic.

VT Marine Products is an electronic/electrical systems business concentrated
on the marine, offshore and power industries.


I am delighted to announce another set of solid results for Vosper Thornycroft
at the end of what has been a challenging year.

Turnover has increased by 38% compared with last year to £379M (2000 : £274M).
Before the amortisation of goodwill, profit before tax was up by 2% to £36.3M
(2000 : £35.5M). During the year the reduction in our Shipbuilding profits
have been more than compensated by the growth in Support Services and Marine

This performance has enabled the Board to recommend a final dividend of
25.75p, giving a total dividend of 36.25p per share, an increase of 8% over
last year.

Our position in Military Support Services has been strengthened by the
acquisition from Bombardier Defence Services of its largely aerospace support
services activities. The acquisition establishes VT as the only truly
tri-service training provider in the UK. This positions us well for further

We have successfully transferred our proven skills and experience in both the
Technical Services and Training markets from our Military Support Services to
our Civil Support Service business. We have signed a contract to construct and
operate the fire training school for Somerset, Avon and Gloucester Fire
Brigades. In April 2001 we acquired Hospitality Plus which will provide our
South East based vocational training business with a national network of
offices, and extend the scope of our engineering and residential care business
into hotel and catering.

With the launch of the final vessel in the highly successful minehunter
programme, our Shipbuilding Division has maintained its record of delivering
quality products to programme and cost. The Shipbuilding business has
benefited from the award of key contracts for the Royal Navy, notably two new
Survey Vessels and, in particular, an innovative charter and support
management contract to supply three new Future Offshore Patrol Vessels. This
contract bridges the gap in work until the anticipated start of production of
the Type 45 destroyer.

The recovery in the world oil industry and the problems of US power generation
have provided the growth opportunity we were anticipating in our Marine
Products Division. We have been a supplier to these markets for a number of
years and are now anticipating significant activity in the first half of next
year as further contracts are awarded.

In March 2001 Mr Alan Staff resigned from the Board after 30 years with the
Group. Before his appointment as a non-executive director, Mr Staff served as
Commercial Director and played a significant role in securing the Oman and
Qatar ship contracts in the early 1990's. After 30 years of service we offer
Alan our warmest thanks and wish him well in his retirement.

I am also sad to report that, having reached the age of 70, Mr Norman Baldock
has decided to retire from the Board at the end of the Annual General Meeting
this year. A merchant banker, he joined the Board in June 1987 and was
instrumental in the privatisation of the company from British Shipbuilders and
its subsequent flotation as a public company in 1988. His wise counsel,
particularly on City matters, will be greatly missed by his board colleagues
and I am sure all past and present directors will join me in wishing him well
for the future.

This year's results again underlined the value of the Group's diversification
strategy over the last 10 years. We have demonstrated that we are able to
adapt our skills to new business areas. It also reflects the positive attitude
and contribution of our employees for which we are, as always, most grateful.

I am confident that, with the opportunities available to us, the Group will be
able to continue to grow at the same rate as has been achieved during the last
decade. We will continue to broaden the scope for our products and services
and to open new markets, thereby delivering enhanced value to shareholders.



For the year ended 31 March 2001 

                                                            2001         2000 
                                               £000         £000         £000 

  Turnover: Group and share of joint                     378,523      274,043 
  Less: share of joint ventures'                        (55,105)     (53,393) 
  Continuing operations                                                       
  Ongoing                                   275,626                   220,650 
  Acquisitions                               47,792                         - 

  Group turnover                                         323,418      220,650 
  Cost of sales                                        (275,116)    (176,177) 

  Gross profit                                            48,302       44,473 
  Administrative expenses                               (25,936)     (19,334) 

  Group operating profit                                                      

  Continuing operations                                                       
  Ongoing                                    22,685                    26,253 
  Acquisitions                                2,280                         - 
  Amortisation of goodwill                  (2,599)                   (1,114) 

                                                          22,366       25,139 

  Share of operating profit in joint                       4,863        3,238 

  Profit on ordinary activities before                    27,229       28,377 
  Net interest receivable - group             5,826                     5,814 
  - joint ventures                              670                       167 

                                                           6,496        5,981 

  Profit on ordinary activities before                    33,725       34,358 
  Tax on profit on ordinary activities -    (9,214)                   (9,448) 
  - joint ventures                          (1,715)                   (1,046) 

                                                        (10,929)     (10,494) 

  Profit on ordinary activities after                     22,796       23,864 
  Equity minority interest                                 (996)        (840) 

  Profit for the financial year                           21,800       23,024 
  Dividends                                             (12,029)     (11,026) 

  Retained profit for the group and its                    9,771       11,998 
  share of joint ventures                                                     

  Earnings per share                                                          

  Basic - before amortisation of                           73.7p        73.5p 
  Basic - after amortisation of goodwill                   65.9p        70.1p 
  Diluted - after amortisation of                          65.2p        69.6p 
At 31 March 2001 

                                                          2001         2000  
                                                          £000         £000 
    Fixed assets                                                            
    Intangible assets                                                       
    Goodwill                                            53,845       22,848 

    Tangible assets                                     47,944       44,830 

    Investments in subsidiary undertakings                   -            - 
    Investments in joint ventures                                           
    Share of gross assets                               27,404       17,395 
    Share of gross liabilities                        (22,940)     (14,676) 

                                                         4,464        2,719 

                                                       106,253       70,397 

    Current assets                                                          
    Stocks                                              17,350       13,868 
    Debtors                                             64,570       37,098 
    Cash at bank and in hand                           115,518      155,553 
                                                       197,438      206,519 

    Creditors -                                                             

    Amounts falling due within one year              (123,858)    (118,818) 

    Net current assets                                  73,580       87,701 

    Total assets less current liabilities              179,833      158,098 
    Creditors -                                                             
    Amounts falling due after more than one year      (17,868)     (16,806) 
    Provisions for liabilities and charges            (21,086)     (12,155) 

    Net assets                                         140,879      129,137 

    Capital and reserves                                                    

    Called up share capital                              8,279        8,241 
    Share premium account                                9,276        8,160 
    Revaluation reserve                                      -            - 
    Profit and loss account                            119,989      109,788 

    Equity shareholders' funds                         137,544      126,189 
    Equity minority interest                             3,335        2,948 

                                                       140,879      129,137 
For the year ended 31 March 2001 

                                                             2001        2000 
                                                             £000        £000 

  Cash flow from operating activities                       5,997      56,567 

  Dividends received from joint ventures                    3,384         593 

  Returns on investments and servicing of finance           5,280       6,111 

  Taxation                                               (10,017)    (12,641) 

  Capital expenditure                                     (6,511)    (19,100) 

  Acquisitions                                           (30,097)    (10,210) 

  Equity dividends paid                                  (11,318)    (10,406) 

  Cash flow before use of liquid resources and           (43,282)      10,914 

  Management of liquid resources                           78,386    (25,157) 

  Financing                                                 3,247      15,781 

  Increase in cash in year                                 38,351       1,538 

                                                             2001        2000 
                                                             £000        £000 

  Increase in cash in year                                 38,351       1,538 

  Cash (inflow)/outflow from decrease in liquid          (78,386)      25,157 

  Movement in cash balances                              (40,035)      26,695 

  Cash inflow from increase in debt                       (2,317)     (3,911) 

  Change in net funds resulting from cash flows          (42,352)      22,784 

  Loan notes issued                                             -    (12,296) 

  Movement in net funds in the year                      (42,352)      10,488 

  Net funds at 1 April                                    128,351     117,863 

  Net funds at 31 March                                    85,999     128,351 


                                                               2001      2000 
                                                               £000      £000 

  Profit for the financial year                              21,800    23,024 

  Currency translation difference on foreign currency net       654        52 

  Total recognised gains and losses relating to the          22,454    23,076 
  financial year                                                              

                                                             2001        2000 
  Group                                                      £000        £000 

  Profit for the financial year                            21,800      23,024 

  Dividends                                              (12,029)    (11,026) 

  Retained profit for the year                              9,771      11,998 

  Other recognised gains and losses relating to the           654          52 
  year (net)                                                                  

  New share capital subscribed                                930       1,975 

  Net addition to shareholders' funds                      11,355      14,025 

  Opening shareholders' funds                             126,189     112,164 

  Closing shareholders' funds                             137,544     126,189 

                                                      2001        2000 
          Company                                     £000        £000
          Profit for the financial year             12,354      11,041 

          Dividends                               (12,029)    (11,026) 

          Retained profit for the year                 325          15 

          New share capital subscribed                 930       1,975 

          Net addition to shareholders' funds        1,255       1,990 

          Opening shareholders' funds               39,295      37,305 

          Closing shareholders' funds               40,550      39,295 
Analysis of business segments 

              Support Services  Shipbuilding  Marine Products       Group  
                2001    2000    2001   2000    2001    2000     2001     2000 
                £000    £000    £000   £000    £000    £000     £000     £000 

  Sales to                                                                    
  third parties                                                                 
  Group      136,235  78,101 127,506 90,393  59,677  52,156  323,418  220,650
  Share of    55,105  53,393       -      -       -       -   55,105   53,393 
  joint ventures                                                                
             191,340 131,494 127,506  90,393 59,677  52,156  378,523  274,043
  Operating profit                                                              
  Group        8,182   4,622  11,828  18,499  4,039   3,132   24,049   26,253 
  Share of     4,863   3,238       -       -      -       -    4,863    3,238 
  joint ventures                                                                
              13,045   7,860  11,828  18,499  4,039   3,132   28,912   29,491 
  Goodwill    (1,961)   (465)     (8)     (8)  (630)   (641)  (2,599)  (1,114)

              11,084   7,395  11,820   18,491 3,409   2,491   26,313   28,377 
  Property                                                       916        - 
                                                              27,229   28,377 
  Net                                                          6,496    5,981 

  Profit                                                      33,725   34,358 
  before taxation                                                               
  Net assets                                                                  

  Segment      11,899 10,907  98,637   91,568 25,879  23,943 136,415  126,418
  net assets                                                               

  Group         4,464   2,719       -       -       -       -    4,464    2,719 
  share of                                                                    
  the net                                                                     
  assets of                                                                   
  joint ventures                                                                
  Total net    16,363  13,626   98,637  91,568  25,879  23,943  140,879  129,137

    Shipbuilding operating profit is stated after charging £2,033,000 relating
    to redundancy costs.

    Property services represents income relating to the disposal of
    non-operational properties which cannot be directly allocated to business

    Shipbuilding includes all activities in respect of designing and/or
    building ships and the equipping and/or supporting of company designed
    warships. Support Services includes all activities connected with
    facilities management, training and education. Marine Products' activities
    includes the design and supply of electronic control systems, steering
    gear, stabilisers, bow thrusters, water jets, ride control equipment and
    the manufacture of engineering products.

    Support Services' and Marine Products' activities are not dependent on the
    group winning major ship orders.


VT's strategy of building on its shipbuilding experience to expand and
diversify into new markets continues to bear fruit. For the first time the
growth in non-shipbuilding related businesses means that they are contributing
more than 55 % of the Group's operating profits and have an order book in
excess of £800M.

We continue to apply our expertise to new markets and to expand our capability
in existing markets. Increasingly our customers want a fresh approach to the
challenges they face. Traditionally we sold ships; today we are also selling
knowledge and integrated business solutions. Our key skills are innovative
design, efficient manufacture and procurement, and comprehensive and
integrated after sales support.

In Support Services we continue to develop in each of the Military and Civil
sectors, both organically and by strategic acquisition. Over the last 4 years
we have seen annual compound turnover growth of 40%. We expect to continue
this trend into the future on the basis of current opportunities available to
us. In Military Support, our strategy of developing an integrated tri-service
approach - that responds to the wishes of the MoD customers - was established
with the creation of VT Aerospace following the successful integration of
Bombardier Defence Services. We now have a substantial list of prospects
across all three armed services. In particular a significant opportunity
exists from the signature of a Memorandum of Understanding with the MoD in
January 2001 for a 10 year extension of Fleet Support's contract at Portsmouth
Naval Base. This offers the opportunity to provide throughlife support across
all classes of surface warships.

In Civil Support we are now a leading private sector provider of careers
guidance, education, training and technical services. We have successfully
transferred our skills gained in the military training market to this area and
hope to grow this division further through increased penetration into the
training and education markets in response to government initiatives.

The tough trading conditions experienced by our Marine Products business has
until recently held back growth but we are now seeing signs of recovery.
Orders are being placed by the oil sector and we expect this trend to continue
in the coming year, particularly in the Gulf of Mexico. We are increasingly
active in the US power market which is likely to provide a number of
opportunities in the next year. Our Motion Control business has a significant
share in the luxury yacht and fast ferry market and our R & D programme is
designed to widen the range of products we offer in this area.

Shipbuilding has gone through an uncertain period but has a bright future. The
Government has continued to indicate that it favours a competitive procurement
strategy for warships. It has announced a substantial future construction
programme for more than 30 major warships over the next 25 years. VT expects
to play a significant role in delivering this programme. This would transform
the Group's shipbuilding business and require investment in new facilities at
Portsmouth. This investment would be implemented only following the conclusion
of appropriate commercial arrangements. In our existing export markets
increased oil prices are replenishing the budgets available for defence
equipment. We intend to maintain our position as the UK's premier exporter of

Overall the financial performance of the Group has meant this has been another
successful year. Our operational capabilities, together with the market
opportunities available to us, lead me to believe that the Group should
continue to perform strongly across all its business sectors.


Support Services

VT's strategy of growing support services has proved highly successful with
turnover achieved of £191M, over 50% of the group total. Operating profits are
£13.0m, 43% of group operating profits before goodwill amortisation.

The restructuring of the division into Military and Civil has been completed,
with each now having a dedicated team to effectively develop the businesses.
We believe that the historic trend of 40% annual growth can be maintained
through strategic acquisition and organic growth.

The acquisition of the support services activities of Bombardier Defence
Service in May 2000 has confirmed Military Support as the premier supplier of
tri-service support offering a complete service across all three armed forces.
This acquisition has enabled VT to expand its capabilities in the UK and in
the Middle East.

Flagship Training has extended the range of services it provides under its
existing Royal Navy contract and, as part of a consortium, has been declared
as preferred bidder for the Astute Class Submarine Training System, including
the provision of a Training Simulator under PFI. In addition, the Group's
first PFI project for Fire Fighting Training Units, financed and constructed
by VT, was completed 3 months early and Flagship commenced training with the
Royal Navy in January 2001.

Fleet Support has also performed strongly and in January 2001 signed a
Memorandum of Understanding in preparation for the extension to its existing
contract of a further 10 years. Negotiations are expected to be completed by
October 2001.

In the Marine Services area, a number of new contracts have been won,
including the through-life support for the survey vessels HMS Echo and HMS
Enterprise, interim support to the existing five Island Class Patrol Vessels
until the new ships from VT come into service and five year support to the
three Future Offshore Patrol Vessels. In addition, contracts with the
Environmental Agency, the MoD for Small Craft Maintenance, and the Sandquay
maintenance facility at Dartmouth Naval College have been extended.

Civil Support Services is the largest provider of careers services in England
and delivers a growing range of education and training services. To build on
our existing vocational training business VT acquired Hospitality Plus in
April 2001. This positions the Group as a leading provider of vocational
training and will enable us to expand our capabilities in this market both
geographically and in terms of the range of training we provide.

VT's broad range of government funded careers, education and training services
placed the group in a good position to benefit from Government initiatives to
improve the education and training provided to young people. This provides a
number of opportunities to expand and, by acquisition and organic growth, we
plan to increase our range of services.

During the year Civil Support Services signed the contract to finance,
construct and operate the fire training school for Somerset Avon and
Gloucester Fire Brigades. This PFI project builds on the Group's success with
the Royal Navy Fire Fighting Training Units and work will start in earnest
once arrangements for the site have been finalised.

The Government's aim for a more comprehensive education and training service
offers VT a number of opportunities to expand and, by acquisition and organic
growth, we plan to provide a full range of services.


The last year has been one of uncertainty for the Shipbuilding Division. A
strong order book, of three Fast Attack Craft for the Greek Navy (under build
in Greece) and two Survey Vessels for the Royal Navy (under build at
Appledore), has not alleviated the shortage of production work at Woolston.

However, the position has now improved significantly following the signature
of a contract to provide three Future Offshore Patrol Vessels for the Royal
Navy. Under this innovative proposal, VT will finance the construction of the
three vessels and then charter them to the Royal Navy for an initial 5 year
period, together with a complete integrated logistic support package.
Construction will commence immediately with the first vessel scheduled for
delivery in September 2002 and the last in September 2003.

From this platform of a solid workload in both design and production VT is
well positioned to participate in the substantial warship building programme
planned by the MoD over the next 25 years. Programmes for the Type 45
Destroyer, the Future Surface Combatant and the Future Aircraft Carrier are
expected to generate orders for UK yards in excess of 30 major warships.

Collaboration between VT and BAE Marine on designing the Type 45 is working
well. In relation to the shipbuilding sub-contract, the BAE Systems Prime
Contract Office (PCO) is now working to a target of September for a commitment
to Vosper Thornycroft.

In January 2001 VT signed a Memorandum of Understanding with the MoD for an
option to lease an area within Portsmouth Naval Base for the relocation of its
Shipbuilding business. Investment in new facilities at the Base would allow VT
to be an effective competitor for RN programmes for destroyers, frigates and
other vessels. These modern production facilities and a location next to the
major customer would both provide significant benefits. The timing of any
investment decision will be dependant upon the confirmation by MoD of the
existing procurement strategy for the Type 45 destroyer programme and the
completion of satisfactory commercial arrangements. However, even without the
investment we will continue to have good prospects in our traditional markets,
particularly overseas.

On our existing programmes, RV Triton - which is embarking this month on a
visit to the important US market - was delivered to programme, as were the
first 6 Single Role Minehunters to date under our 7 ship contract. Indeed the
penultimate ship HMS Blyth, was accepted in April 2001 with zero defects. The
final ship HMS Shoreham will be offered for acceptance in November 2001.

Our expertise in prime contracting complex naval programmes is shown by the
fact that the contracts to supply two Survey Vessels to the MoD and the five
year contract to supply three Fast Attack Craft to the Greek Navy are both
running to programme.

Progress in our export markets has been slow in recent years but higher oil
prices offer the prospect of significant improvement.

Marine Products

2001 was a year of recovery for the Marine Products division. The division is
focused on three core areas - Motion Control, Industrial Controls and General

Growth has until recently been held back by tough trading conditions caused by
lack of confidence, resulting from low and volatile oil prices. This has meant
there has been lack of investment in new products and other capital
expenditure. We are now seeing signs of recovery across the division's markets
and there are real prospects for future growth.

In Motion Control the year has been mixed. The Fast Ferry market has been
stable with no increase in demand. By contrast the luxury yacht stabiliser
market has remained buoyant with sales 30% ahead of target.

We are the leading supplier of ride control systems across the world. Our
businesses remain at the forefront of this technology, with innovative
developments such as lifting foils for a high speed passenger trimaran.

We are also extending our range of products by extensive research and
development to provide solutions for customers in the areas of light weight
retractable fins, integrated steering and roll control, and lifting foils.

Our Industrial Controls business has recently benefited from an upsurge in
investment by the world oil sector. However, significant contracts have been
received over the past quarter and our Houston office has shown a marked
increase in activity. This has necessitated a 50% increase in staff numbers as
the major oil companies refocus their investment activity from the North Sea
to the Gulf of Mexico.

As part of our product diversification, and to leverage off the core skills
within the rest of the group, we are now following up a number of enquiries
from the US power industry. These are from long-standing customers for our
electrical control products and we are bidding to construct a number of small
peak load generating plants under engineer, procure and construct contracts.
Gas turbines, either industrial or aero derivative, can be used to provide
50mw peaker blocks. We have 20 years experience in the US power market, we
understand the technology and we have experience in managing large capital
projects. By way of comparison a typical power plant would be similar in
capacity in terms of power output to that generated on a Type 45 destroyer.

By responding to customer needs, and concentrating on niche areas for which we
have proven skills, we are confident that the Marine Products division can
demonstrate significant growth over the next few years.


a d v e r t i s e m e n t