Chairman's Report

I have pleasure in being able to report that the Group results for the year 1970, when viewed against the background of industrial unrest and continued credit restrictions, are not unsatisfactory. Group profits before tax of £ 4, 664, 000.00 show an improvement of £ 840, 000.00, and the after tax profit is £ 2, 825, 000.00, compared with £ 2, 103, 000.00 in the previous year. Your directors are asking you to approve a final dividend of 4 1/2 per cent, from which income tax will be deducted at the standard rate of 4 1/2 per cent and accounted for to the Inland Revenue. This final dividend, together with the interim paid earlier in the year, makes the total dividend 8 per cent in respect of 1970 as compared with 7 1/2 per cent last year.
As you have been reminded in the Annual Report, 1970 marked the 50th anniversary of our Organisation, and it seems fitting that at the conclusion of our first half-century I should be able to report a more than usually eventful year.
The results for our Group mining interests were particularly gratifying, and should be further enhanced by the opening of the Clay River and Carrington mines, which were successfully brought into production on schedule. As a result of unforeseen complications with flooding, Carrington mine did not contribute to profits, but I have no doubt that when this teething trouble has been successfully resolved the mine will come fully up to expectation as a significant source of profit along with that at Red River, which continues to make encouraging progress.
In the Engineering Division, our new foundry at Gateshead commenced production, and the profits from that quarter are an outstanding tribute to efforts to reduce unit manufacturing and marketing costs. Output was maintained at predicted levels despite a series of strikes, and costs were well contained in the teeth of the continuing pressures of inflation. Further economies are being planned in the handling section, and it is anticipated that these, together with still further streamlining of marketing operations, will offset any increased costs of production which may be incurred.
Our transport activities were marked by the acquisition of a new fleet of heavy goods vehicles, now operating from the Fawley Centre. Broadly speaking, the volume of freight handled increased, despite setbacks in some of the specialist areas, and this may be taken as indicative of future prospects. These, however, depend upon the extent to which we are successful in absorbing the recent cost increases attributable to last month's pay settlement with the Drivers' and Loaders' Union. We are continuing to extend operations from the Fawley centre in the expectation that there will be no undue rise in freight rates.
In all, it may be said that the aim of Group companies to improve profitability has been reasonably met. But progress in this direction will, nevertheless, not continue automatically: it must be the outcome of careful investment, wise forward planning, and — above all — of hard work by everyone employed within the companies of the Group. We must remember that our total force of employees is our most important resource, and 1 should like on behalf of shareholders to recognise the selfless efforts of many of the Group's servants in working towards the achievement of our aims.
You would like me, I am sure, to comment upon our future prospects. In view of present economic conditions this is not an easy task. Any material degree of industrial recession at home would necessarily have its effect upon Group profitability, which could also be adversely affected by circumstances beyond our control, both at home and overseas. Although it is not at the moment possible to assess such considerations with any degree of accuracy, their importance must be borne in mind. Subject to these reservations, however, there seems no immediate reason to suppose that in the current year Group results will prove to be less favourable than in the past.