Defence business boosts Key Technologies
WEST Midlands based specialist engineering company Key Technologies has seen the trading profit of its core defence business rise by 31% compared with the previous year.
In its preliminary results announcement, the Cradley Heath group as a whole reported that sales revenues during the year ended June 30, 2010 were £20.9m (2009: £20.7m).
Underlying profit before taxation fell slightly to £2.7m compared with £2.9m last year, the reduction due to a 32% decline in revenue in its non-core switchgear business.
The group said its defence division made a “quantum leap” in June with the acquisition of Lincoln-based Primetake Ltd, for an initial consideration of £10.5m. Primetake, a supplier of special purpose ammunition and equipment, has now been successfully integrated within the group, leading to expansion into the robust homeland security markets. Annual sales are running at around £11m, of which approximately 70% are exports.
The acquisition was the second major advance for the group’s defence business during the year following the recognition of STS Defence as the first UK supplier in its product sector, circuit card assemblies, to be accredited for Nadcap (National Aerospace Defence Contractors’ Accreditation Programme) – the aerospace industry’s global quality assurance standard.
As a result of lower demand in the UK, the group’s rail business, which supplies signalling and communications solutions, reported a 6% fall in trading profits. However, the year saw the division’s first significant export contract of £0.8m from the Far East. More overseas orders were likely to follow.
The group’s non-core STS Switchgear division struggled due to the recession in the construction industry. Revenues fell 32%, resulting in a trading loss of £0.16m compared with a trading profit of £0.65m last year.
David Miller, group chief executive, said: “STS Defence has demonstrated strong growth, and the Primetake acquisition in particular will have a positive impact going forward.”
David Grove, non-executive chairman, said the group was developing in line with strategic plans.
“The current year has started in line with our expectations and our order book in the defence and homeland security division, including Primetake, is building up healthily. As a result of the anticipated timing of contracts, the revenues for the current year will be more biased towards the second half of the year than has been the case historically.
“We now have a robust and well financed platform from which to make further earnings enhancing acquisitions.”
In addition to its Black Country HQ, where it employs around 100 people, the group also has operations in Gosport in Hampshire, Wimborne in Dorset and Lincoln. Altogether it employs around 300 people.
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