Chairman's Statement

I am pleased to report, in this my first statement as Chairman, that the Group improved its underlying operating profit (continuing operations before exceptional items) in the year to £3.7m (2009: £3.5m), on slightly increased sales of £86.4m (2009: £83.8m). Underlying earnings per share (continuing operations before exceptional items and net financing income/expense on pension scheme balances) amounted to 13.9p (2009: 11.3p). Basic earnings per share amounted to 15.3p (2009: 5.8p). The Group ended 2010 with net funds of £9.0m (2009: £5.0m), with particularly strong levels of customer receipts in the final part of the year.

Demand in the Tobacco Machinery division was lower than expected at the beginning of last year, with strong competition taking place for all prospective machine orders, which led to further reorganisation in that division. The Packaging Machinery division performed much more strongly, particularly in Europe, and the Scientific Services division continued to perform well.

PENSION SCHEMES

The accounting valuation of the Group’s UK pension scheme shows a surplus at the year end of £9.9m, a considerable improvement from the position at the end of 2009 (£11.4m deficit). The Group also has three smaller pension funds in the USA with a combined deficit of £3.7m. In line with many other pension schemes, the trustee of the UK scheme has decided that it is appropriate to use the CPI measure of inflation for certain future pension increases and this has been taken into account in the valuation. The Company commenced paying monthly instalments of £0.1m to the scheme in respect of deficit funding in July 2010, as agreed following the June 2009 funding valuation.

BOARD

Jonathan Azis decided to relinquish his role as non-executive director and Chairman in October 2010 to allow him to spend time on other activities, which led to my appointment in the same month. Andrew Cripps left the Board in January 2011, as did John Allkins in March 2011. I would like to thank them all for their contribution to the Group. I am pleased to welcome to the Board two new non-executive directors. John Davies joined in January 2011 and is Chair of the Remuneration Committee, and Phil Moorhouse joined in March 2011 and is the new Senior Independent Director and Chair of the Audit Committee.

EMPLOYEES

I would like to thank all employees for their contribution to the performance of the Group during the year.

OUTLOOK AND DIVIDENDS

The economic environment remains uncertain and market conditions are still challenging. However, against this backdrop, the Group traded quite strongly towards the end of the year and entered 2011 with an order book only slightly lower than that of the year before, with satisfactory levels of prospective projects under discussion. Given the size of orders in some of the businesses, the timing of orders considerably influences the level of activity across the Group and can have a major impact on the timing of sales and profits, and such timing may be influenced by political instability in some countries in which the Group trades. As in previous years, performance is likely to be significantly second half weighted. We remain cautiously optimistic about the future performance of the Group.

The Board is recommending maintaining the final dividend at 2.5p, making a total of 5.0p for the year (2009: 5.0p).

AVRIL PALMER-BAUNACK

CHAIRMAN
1 March 2011