Interactive Q & A

The past year has been fairly positive but it would be wrong to imply that everything in the garden was rosy. We increased revenue by 21% and pre-tax profit by 19% while maintaining the improvement in cash flow. We also increased our share of the European maritime all weather beacon market. Of course, we want investors to note our strengths. But our future success will come not just from playing to our strengths, but also by addressing our weaknesses.

We see excellent future growth opportunities for innovative, efficient businesses in our main markets.

In All Weather Beacons, demand for private boats continues to grow. As a result, we forecast our North American sales growth to remain at 9% per annum, whilst in Europe where demographic trends are less favourable sales growth will slow to 2% by 2010. New technology is opening up new opportunities and we’re currently developing a device for the retrofit market – estimated to be about twice the size of the OEM market – for launch in 2010.

In positioning systems, we’re very much a challenger brand – but with rapidly growing sales and market share. Our GPS division maintains a leading position in the accessibly priced end of the market, a growing sector that we forecast to nearly double in size by 2010.

Our strategy in these markets aims to create shareholder value by increasing market competitiveness and delivering operational excellence. As such, we’ve been seeking to increase market competitiveness by meeting our customers’ expectations, an area of weakness in the past, and developing next-generation products.

I’m delighted by the progress we’ve made to identify and remove impediments to further success through our Fast Forward programme. This is designed to support both elements of our strategy by delivering improvements in quality and delivery while reducing operating costs.

Our strategic progress over the last 12 months has particularly focused on the quality issues that had previously weakened our position in the huge North American market. We’ve also invested in new technology and new product development – for instance, acquiring Innovsea – to sustain market competitiveness, create new market opportunities and reduce our dependence on the maritime all weather beacon market. Meanwhile, we’re driving down costs so that we can reverse falling margins while also pricing competitively. The benefits are already becoming evident in this year’s trading. You can find out more about these issues by exploring our Strategy in action section.

Back in July we bought Innovsea for £4m and have already integrated it into our All Weather Beacons division. It was a fairly small business, employing just 40 people, but it’s developed a technology that will be invaluable for miniaturising our next generation of our products and, potentially, our GPS products. The technology is protected by several patents that should secure us some significant competitive advantage.

In essence, it’s given us exciting new technology to exploit. As a result, we’re developing new all weather beacon models that will make us more competitive on price and have the potential to take us into new markets – including jet skis and skidoos, mountain biking, climbing and hiking.

Well we have a very clear ambition. We’re not content to be number 2 in our key markets: market leadership in maritime all weather beacons offers significant marketing and credibility benefits that we can use to support other business streams, particularly our GPS business. We’re just one percentage point behind the all weather beacons leader in Europe, and two points behind in North America. In both markets, leadership is within our grasp if we stay focused on our strategic objectives. In the newer positioning systems market we’re very much a challenger brand, but with rapidly growing sales and market share.