Financial

From the Chairman's Report 2009-2010

Group Financial Performance

We are pleased to report that despite extremely tough economic conditions the group has had a successful year. The operating profits decreased to £714,064 (2009 - £784,477).

Sales decreased by 11.8% to £40,404,354 (2009- £45,844,894) but the group increased its gross profit margin by 2.2% to 23.18% (2009 – 20.98%). This improvement resulted in a minor drop in gross profit of £252,093 to £9,366,727 (2009 - £9,618,820).

The group’s improved operational systems have continued to be successful. Better controls through improved financial reporting procedures and key performance indicators and inventory management. The group reduced total inventory by 22% to £3,258,668 (2009 £4,224,972).

UK Branch Changes

Our focus during 2009/2010 has been one of improving profitability and improving underperforming branches. The Bristol branch was closed and the Newbury and Oxford units merged together. Our specialist Cable, Assembly and Fixings divisions continue to perform well. The diversity and specialisation that these businesses provide has been instrumental in bringing many new sales opportunities to the group outside of our traditional scope of supply. Our fixings division in particular continue to secure long term supply agreements with blue chip companies that will provide a good platform by which to continue to grow their business.

International Expansion

Internationally the group has again performed well. This business has grown with significant contracts awarded for projects in South America, Tunisia, and Kazakhstan. Our Export division has improved and the business has continued to expand its client base in addition to several new emerging markets.

The oil and gas sectors are still relatively buoyant. Our ties with our partner company in the United States have resulted in two successful joint venture contracts which will continue into 2011. We have also won a significant contract in Australia. We anticipate that through our existing and global activities that this specialist area of our business will grow substantially over the next 5 years.

Overseas we remain strongly committed to the Caspian region and have completed the first six months of a long term MRO contract covering the supply of capital equipment, operational spares and maintenance equipment to their expanding investments in the Caspian Sea region. In addition to our established business in Azerbaijan, we have had additional success in Kazakhstan that is helping to maintain and develop new and historical customers in this oil and gas rich region.

Our J/V Company in Dubai, R&M Wholesale Electric, had a quiet year due to the issues in the Middle East. It still retained a small profit and we expect this to improve significantly in 2011.

Financial Control

The group continues to manage its cash and borrowing requirements centrally to minimise interest expenses whilst ensuring that the Group has sufficient liquid resources to meet the operational needs of the business.

The group controls its exposure to credit risks by regularly reviewing customers’ accounts and limits and only granting terms to those whom are credit worthy. Credit references agencies are used and Credit insurance is used to insure domestic debts.

The group’s foreign currency exposure arises from the export of goods. Group policy allows for these exposures to be hedged naturally by buying and selling in the same currencies where possible. When this is not possible then forward option contracts are used.

The market is very competitive and the group is committed to maintaining its competitive pricing position and also keeping the very high standards of customer service. The group also continues to build upon its strong relationships with its suppliers.

R&M have continued to ensure that our operational costs remain at a sustainable level whilst not affecting our ability to service our customers. We believe that by taking these measures we are in a lean position to be able to react to any additional changes in the marketplace.

We continue to invest in Human Resources, Health and safety and our Quality departments in order to satisfy legislation and protect our employees. The group has good employee retention and the risk of losing key employees is reduced by offering good remuneration, training and a pleasant working environment.

Conclusion

In summary despite the economic outlook the group performed well. Our efforts will again be centred on improving on our existing sales operations with the focus on increasing sales and profitability; we have no additional plans to invest in any new ventures over the coming year.

Our focus is on improving the profitability of the group, we expect profits to increase in line with expectations in the coming year.