A manufacturing company headed by one of the region’s best-known industrialists and deal-makers has defied the recession by posting profits of nearly £3m.

Specialist engineering company Key Technologies PLC – headed by David Grove – demonstrated that some UK manufacturing businesses are still prospering by posting a 26.4 per cent growth in underlying pre-tax profit to £2.9m and by paying its first dividend.

In its preliminary results announcement yesterday the company reported revenue during the year ended June 30 2009 of £20.7m, 10.7 per cent ahead of the previous year. Underlying operating profit of £3.0m has trebled over the last five years. Underlying earnings per share were 9.1 per cent up at 30.0p and cash flow was strong with £3.3m being generated from trading operations in the year. The company is proposing to pay a dividend to its shareholders for the first time of 1.2p.

This positive financial news has come within a month of the firm becoming the first UK company in its product sector to be accredited for Nadcap, the leading global quality assurance standard for the aerospace industry.

Key Technologies PLC, the shares in which are traded on the West Midlands share trading platform Investbx, was known until last year as STS International Ltd. At the time of the listing, November 2008, the company raised £1.8m net of expenses to finance future growth, including acquisitions.

In its two major businesses, the group supplies high-tech products for the defence and rail markets and it also manufactures switchgear. It has operations in Cradley Heath in the West Midlands, Gosport in Hampshire and Wimborne in Dorset. The company employs 245 people, 110 of whom are based in the West Midlands.

Key Technologies is a contract manufacturer in the defence industry, operating as STS Defence, supplying equipment to the UK Ministry of Defence amongst others. Through its STS Rail division, the group is also a leading supplier of specialist and approved signalling and communications products in the railway industry.

Mr Grove, non-executive chairman, said: “The trend in 2008/9 was very positive and the new financial year has also started very well, with a particularly strong order book in our defence business.

“We have continued to benefit from organic growth and our investment in new products, technology, productivity and efficiency improvements. We will continue to grow the business in this way but our strong balance sheet will help us to make earnings-enhancing acquisitions in the defence, security and rail sectors. We expect to make further progress in the current financial year.”

David Miller, group chief executive, said: “STS Defence has demonstrated particularly strong growth, and the Nadcap accreditation is both a great achievement and an incredible door-opener for us. It will enable us to extend our customer base and win new contracts in the UK and for export customers.

“During the year, we increased our output to meet the requirements of the Ministry of Defence and other major customers and the prospects are there for strong future growth. Our rail business made steady progress with additional revenues on repeating contracts, and further capital investment was committed to enhance operating efficiencies and enhance our quality rating.”