CHAIRMAN’S STATEMENT

As anticipated in my comments at the Annual General Meeting (“AGM”), the second quarter of our financial year proved stronger than expected. Although sales in the first half fell £0.9m to £7.7m (2007: £8.6m), a profit before tax of £173,000 (2007: £193,000) was achieved.

These results would have been significantly better but for trading issues at Haswell Engineers, our sheet metal forming business, which has an exposure to the new housing market through the manufacture of boiler parts. After a good 2007, and a strong start to this financial year, orders from this sector dried up, reducing Haswell’s output by 21% and causing a loss in the period. Remedial action has been taken, with costs reduced and management strengthened.

Basic earnings per share amounted to 1.13p (2007: 1.40p), while diluted earnings per share were 1.13p (2007: 1.39p). Net cash generated from operating activities was very strong in the first half, amounting to £1.1m (2007: £94k) and net debt remains significantly better than expectation.

As a reflection of its confidence in future prospects, the Board is declaring an interim dividend of 0.25p (2007 0.20p), payable on 26 September 2008 to shareholders registered at the close of business on 5 September 2008.

At the AGM I announced that the Board hoped to be able to mark 2008, the Group’s Centenary year, in a tangible way for the benefit of shareholders. The Board is therefore proposing an additional Special Interim Dividend of 0.25p per share, to be paid with the normal interim dividend on 26 September to shareholders on the register at close of business on 5 September 2008.

Apart from Haswell, all business units are trading in line with, or ahead of expectations, a pattern which has continued in to the third quarter. Routine orders have continued to be strong and these should underpin performance in the second half. Other long term projects should start to contribute during the final quarter of the calendar year. The Group continues to develop its low-cost country sourcing, which has become an essential part of our overall offering.

The Group has continued to make progress in the supply of electronic and electromechanical equipment for transportation markets at home and abroad, although the gestation period for some of these contracts runs to many months, if not years. I am pleased to announce that one such contract has finally come to fruition, for the provision of electrical shore supply equipment, for both Sub Surface Lines and Victoria Line Upgrade for London Underground, and worth a total of £0.8m.

We also welcome the news that the Department for Transport has issued a notice to proceed in relation to the acquisition of extra coaches for the West Coast Main Line. The Group was much involved in the supply of equipment for the original coaches.

Much effort has been expended in developing the strategy for dealing with the Group’s property in Saffron Walden and relocation opportunities. I will keep shareholders informed of progress. The current hiatus in the housing market will be taken into account in the process.

We expect steady progress over the rest of this year and a quickening of pace during next year, as the long term orders already on hand start to enter production. These, together with other prospects where the Group has been selected, give the Board considerable confidence for the future.

MICHAEL RUSCH

Chairman

30 June 2008