A specialist engineering firm headed by one of the region’s top industrialists has maintained its positive run of results by posting a further increase in half-year profits.

Key Technologies, chaired by the man who led the recovery of manufacturer Hill & Smith, David Grove OBE, posted a 9.4 per cent growth in underlying pre-tax profit to £1.37 million in the six-month period ended December 31, 2009, the first half of its financial year.

Revenue rose to £11.8 million, an increase of 15.7 per cent compared with the £10.2 million reported for the same period in 2008.

The company, whose shares are traded on West Midlands share trading platform Investbx, also announced an interim dividend of 1.8p.

David Grove’s Grove Industries investment firm has a controlling interest in the firm and Pertemps entrepreneur Tim Watts is also a major investor in Key Technologies.

Mr Grove, who is a former winner of the Birmingham Post’s Deal of the Year competition, said the firm had benefited from investment in new products, technology, productivity and efficiency improvements.

“Our strategy of developing the defence and rail businesses both organically, and by acquiring selective, earnings enhancing bolt-on businesses remains in place,” he said.

“The second half of the current financial year has started well and trading is in line with our expectations.”

The group’s prospects were boosted by the announcement in September 2009 that its defence business STS Defence had become the first UK company in its product sector to be accredited for the leading global quality assurance standard for the aerospace industry Nadcap.

STS is a contract manufacturer in the defence industry, supplying the UK Ministry of Defence among other customers in the UK and overseas.

Apart from supplying high-tech products to defence customers, the group is also a supplier of specialist signalling and communications products to the rail market in the UK and overseas through its STS Rail division.

Key Technologies also supplies low voltage switchgear and motor control centres through its switchgear division.

With operations in Cradley Heath in the West Midlands, Gosport in Hampshire and Wimborne in Dorset, the group employs around 240 people, 110 of whom are based in the West Midlands.

David Miller, group chief executive, said: “The Nadcap accreditation has helped our defence business significantly.

“Our rail business has recently won its first significant export orders and we expect this to lead to additional export business in the future.”

Shares in Key Technologies, previously known as STS International, are showing a gain of 18 per cent to £2 since they were first listed on the West Midlands online share trading platform Investbx following its successful fund raising in November 2008.

Prior to the Investbx listing all of its shares were owned by the directors of Grove Industries and the management team, who have each retained major stakes.

When it was listed on Investbx the company said the ultimate goal was for a listing on the London-based Alternative Investment Market within the next three years.

Key Technologies is one of three companies listed on Investbx alongside Teamworks Karting Group and Early Equity.