Preliminary results for the year to 31 March 2007

FURTHER STRONG ORGANIC GROWTH AND EXPANSION THROUGH ACQUISITIONS AND INVESTMENT

Umeco plc, an international provider of supply chain and repair & overhaul services and advanced composite materials primarily to the aerospace & defence and automotive industries, announces its preliminary results for the year to 31 March 2007.

Financial highlights - adjusted IFRS basis:

· Revenue increased by 13.9 per cent to £333.9 million (2006: £293.2 million);

· Operating profits increased by 19.5 per cent to £25.7 million (2006: £21.5 million) with margins improving to 7.7 per cent (2006: 7.3 per cent)

· Profit before tax increased by 24.3 per cent to £22.5 million (2006: £18.1 million);

· Earnings per share increased to 32.2 pence (2006: 30.9 pence);

· Recommended increased final dividend of 10.0 pence per share (2006: 9.5 pence), resulting in a total dividend of 15.5 pence per share (2006: 14.5 pence), up 6.9 per cent.

Operational highlights:

· Continued strong growth in civil aerospace market;

· Global demand for advanced composite materials increasing at a high rate;

· Opening of enlarged UK advanced composites technology and manufacturing centre;

· Implementation of major new Goodrich Actuation Systems contract;

· Significant new supply chain contracts won with Thales and Turbomeca;

· Site acquired for much enlarged Supply Chain facility in UK to support growing relationships with Rolls-Royce plc and Goodrich;

· Acquisitions completed during the year were:

- Aerodyne Advanced Composites, based in South Africa (June 2006);

- Antavia, a French-based Repair & Overhaul company (October 2006);

- US Airmotive, a distributor of aerospace chemicals (November 2006);

· Current year has started with record order book of £168.1 million and healthy level of new business activity.

Clive Snowdon, Chief Executive of Umeco plc, commented:

"2007 has been another successful year for Umeco, with significant progress across both the Composites and Supply Chain business streams.

"Throughout the year we have continued to invest in our core infrastructure, opening the new technology centre and manufacturing facility at ACG, securing the site for the new Supply Chain facility in Derby and expanding in China. We have also concentrated on finding and executing strategic acquisitions across the Group. All of these investments and acquisitions will further strengthen our market position and will help us to better serve existing and potential customers.

"We continue to see rising global demand for advanced composite materials, as build rates in the civil aircraft, wind energy and high end automotive markets continue to increase. The record order books of Airbus and Boeing in particular should continue to generate demand for our value added supply chain services.

"In summary, we are looking forward to another successful year. Our financial position is strong and the markets in which we operate are buoyant. Our management team continues to drive for high rates of organic growth and to seek additional acquisition opportunities which match our strict investment criteria."

There will be a meeting for analysts at 09.00 this morning at UBS, 1 Finsbury Avenue, EC2M 2PP. Should you wish to attend please contact Barnaby Fry or Charlie Field on 020 7645 3970.
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Note on adjusted profit and earnings per share measures:

Umeco uses adjusted figures as key performance indicators. Adjusted figures are stated before amortisation and impairment charges relating to intangible assets, significant items, the revaluation of financial instruments based on their market values, associated taxation effects and the taxation effects of goodwill amortisation in overseas jurisdictions. The differences between the adjusted and unadjusted measures of operating profit, profit before tax and profit attributable to equity holders of the parent are reconciled in note 4 to this announcement. The narrative in this announcement is based on the adjusted measures of operating profit, profit before tax and earnings per share. These provide a more consistent measure of operating performance. The table below sets out a comparison of adjusted and unadjusted values:

Preliminary results for the year to 31 March 2007

Results and dividend

2007 has been another successful year for Umeco, with significant progress across both the Composites and Supply Chain business streams. Indeed, were it not for certain external factors, including the delay in the launch of the A380 and adverse exchange rate movements, our overall performance would have been stronger still.

Revenue in the year to 31 March 2007 was £333.9 million (2006: £293.2 million), an increase of £40.7 million of which £5.7 million relates to acquisitions. The underlying increase in revenue was 7.7 per cent or 8.9 per cent at constant exchange rates.

Operating profits in the period rose by 19.5 per cent to £25.7 million (2006: £21.5 million) with margins improving to 7.7 per cent (2006: 7.3 per cent).

Net financial expense, excluding revaluations of financial instruments, was £3.2 million (2006: £3.4 million).

Profit before tax was £22.5 million (2006: £18.1 million) an increase of 24.3 per cent. Earnings per share were 32.2 pence (2006: 30.9 pence) and reflect the higher number of shares in issue following the rights issue in December 2005.

The Directors are proposing an increased final dividend of 10.0 pence (2006: 9.5 pence), making a total for the year of 15.5 pence per ordinary share (2006: 14.5 pence) an increase of 6.9 per cent. The final dividend is payable on 3 August 2007 to shareholders on the register on 6 July 2007.

Strategic developments in the year

Contracts

Umeco Components, now renamed Umeco Supply Chain, was successful in winning two major new contracts in the second half of the year, with Thales Aerospace and Turbomeca. Management are now fully engaged in the implementation of both programmes following the recent opening of a new facility close to Paris Charles de Gaulle airport.

Acquisitions

During the year the Group made three bolt-on acquisitions. In June 2006, Advanced Composites Group ('ACG') acquired Aerodyne Advanced Composites, based in Cape Town, South Africa. Aerodyne, which now trades under the ACG brand, has a long term contract to manufacture chassis parts for the Mercedes McLaren SLR super car, utilising composite materials exclusively supplied by Umeco.

In October 2006, Antavia, a Toulouse based repair & overhaul company, was acquired and has been successfully integrated into the Group's Repair & Overhaul division.

In November 2006, Aeropia, a Umeco Composites company, acquired the assets and business of US Airmotive, a Miami-based distributor of aerospace chemicals, and has subsequently merged it with its US subsidiary.

Capital investments

In September 2006, ACG opened its new UK technology centre, manufacturing and warehousing facility to much acclaim by customers, suppliers and employees. At a capital cost of £7.0 million this investment places ACG at the forefront of its industry and adds much needed capacity for the medium term.

Later in the year, Umeco Supply Chain signed contracts to acquire a freehold site and build a new, much larger facility in Derby to further support the Group's long term contracts and in particular our growing relationships with Rolls-Royce plc and Goodrich Actuation Systems. This new facility is scheduled to come on stream in the autumn of 2007.

Operations

Revenue for the year was £333.9 million (2006: £293.2 million) an increase of 13.9 per cent. Excluding the impact of acquisitions completed during the year, the underlying rate of growth was 7.7 per cent (2006: 14.2 per cent). These acquisitions accounted for additional revenue of £5.7 million. At constant exchange rates, underlying growth was 8.9 per cent.

Growth has again been achieved across all of our business streams. This reflects the strong civil aerospace market, additional volumes on existing and new supply chain contracts, and the on-going high level of demand for our composite materials.

Operating profit of £25.7 million increased by 19.5 per cent (2006: £21.5 million), and by 5.6 per cent on an underlying basis (2006: 22.6 per cent). Our operating margin rose to 7.7 per cent (2006: 7.3 per cent). This reflects the good margins of the businesses recently acquired and the operational gearing effect of increased volumes. As was the case last year, there have been some significant increases in certain raw material prices, but these have largely been passed on to customers.

Umeco Composites

Umeco Composites provides a broad range of advanced composite materials and specialist chemical products principally to the aerospace, motor sport & automotive and wind energy markets. A full range of value-added outsourcing services is provided to major customers.

Revenues increased in the year by 15.8 per cent, or by 13.0 per cent on an underlying basis.

Operating profits rose by 17.4 per cent on an underlying basis, resulting in an improvement in margin from 9.1 per cent to 9.6 per cent.

This further significant rise in revenue and profits reflects the growing use of advanced composite materials in a number of markets and the acquisition of Aerodyne in June 2006. In particular, revenue from the wind energy industry rose by 95 per cent compared with the prior year.

ACG continues to trade successfully and quickly integrated the newly acquired business in South Africa into its operating structure. This new business is the exclusive supplier of composite chassis parts for the Mercedes McLaren SLR super car and made a good contribution to profits in the year. ACG in the UK opened its new state-of-the-art technology centre and enlarged composite materials manufacturing facility in September 2006 and should greatly benefit from this significant investment in the coming years.

Aerovac and Richmond had a tremendous year delivering significant growth in revenue and profits, despite the impact of the delay in the A380 programme. Richmond is working closely with Boeing and its partners on the B787 programme and leased a further two bays in its Los Angeles facility to extend its vacuum bag kitting production capability. The global wind energy market, which is growing at a massive rate, is now a key market segment for the business and capital investments are planned in the current year to provide additional capacity and new products.

GRP gained market share in Europe following its successful acquisition of Ashland's Scandinavian distribution businesses in the prior year. This additional revenue and more favourable market conditions produced a further lift to profits in the year.

Aeropia, Umeco Composites' largest aerospace chemical distribution business, acquired the assets of US Airmotive in December 2006 and has already integrated the operation into its existing subsidiary in Miami. The business moved into larger, more suitable premises by the year end. RD Taylor and Med-Lab both continued to trade well.

Umeco Supply Chain

Umeco Components was renamed Umeco Supply Chain at the start of the new financial year to reflect the broader range of services now provided to our customer base. As part of this process all Umeco Supply Chain companies will trade globally under the well recognised Pattonair brand.

Umeco Supply Chain is a leading international provider of distribution and supply chain outsourcing services primarily to OEM customers in the aerospace & defence markets. With its specialisation in the supply of small and medium sized components and its sophisticated IT systems, it creates and delivers opportunities for significant operational, cost and working capital benefits to its growing global customer base.

Revenue increased in the year by 11.5 per cent, or by 5.3 per cent on an underlying basis. The rise in revenue was held back by a slower than expected build-up on the new contract with Goodrich Actuation Systems and by the impact of delays in US defence spending on our distribution businesses in North America.

Operating profits increased in the period by 16.7 per cent, or 1.9 per cent on an underlying basis. Overall profitability was enhanced by a full year contribution from Pattonair Italy, formerly Provest, and robust performances in the majority of our businesses. The rate of profit growth, however, was held back by losses within the UK electronic components activity, which was closed in December 2006, and by a disappointing performance at Pattonair USA.

In Europe, the business units in the UK, France and Italy delivered a high level of growth in revenue and profitability reflecting positive market conditions and new contract wins. The impact of the unexpected and high level of raw material price increases in the early part of the year was largely mitigated by the year end. Pattonair France was successful in securing major new contracts with Thales Aerospace and Turbomeca and these, together with a strong order book, bode well for the current financial year.

Ulogistics, now Pattonair Derby, had another very successful year despite the delayed implementation of the contract with Goodrich Actuation Systems. Pattonair Derby's long term contract with Rolls-Royce plc goes from strength to strength with additional products and services being supplied to a broader internal and external customer base. In November 2006, contracts were signed to acquire a five acre freehold plot in Derby for a major new facility to house Pattonair Derby's rapidly growing operations. The total cost of this project is expected to be £7.5 million, the majority of which falls in the current financial year; this will be partially offset by the subsequent sale of the existing premises.

Pattonair in Canada has recently signed a new contract with Rolls-Royce Canada, and continues actively to pursue new customer opportunities. Bombardier Aerospace has recently served notice of its intention to terminate its relationship with Pattonair. The timing and basis of termination has yet to be finalised but, based on historic levels of profit generated by the contract and on the likely costs associated with the exit, the impact is not expected to be material.

Trading levels at Pattonair USA were impacted by delays in American defence spending on certain projects. Order intake considerably improved during the second half, but this came too late to have a major impact on the results for the year. Paul Fanelli joined the business as President in January 2007 and has already strengthened the senior management team.

Umeco Supply Chain opened a new facility in Xi'an, China during the year and has started to generate incremental business for both Pattonair and Aeropia. Additional sales staff are to be recruited in the current financial year.

Umeco Repair & Overhaul

Umeco Repair & Overhaul now comprises three businesses; AEM, one of the largest independent component repair & overhaul facilities in Europe, Avionics Mobile Services ('AMS'), which installs and overhauls avionic equipment, and Antavia which was acquired in October 2006. Antavia, based in Toulouse, is a provider of similar services to those of AEM, but has a complementary capability and customer base. Aviation Windings and Aeromedic Innovations, businesses acquired in the previous financial year, were fully integrated into AEM during the year and were both moved to a new freehold facility at Luton airport.

Revenue increased in the year by 18.1 per cent, but fell by 7.7 per cent on an underlying basis. Operating profits rose by 12.5 per cent but fell by 31.1 per cent on an underlying basis.

The fall in underlying revenue and profits reflects a decision made by AEM during the year to reduce business levels with one significant overseas customer for commercial reasons. In addition AMS had a disappointing first half year but, following a senior management change, enjoyed a better second half.

AEM was successful in broadening its customer base and won a number of new contracts during the year including the supply of first aid kits to British Airways. The business goes into the new financial year with a record order book.

AMS also secured some larger contracts late in the financial year, positioning it well for a better start to the 2008 financial year. With a reduced cost base, a much higher level of profitability is now expected.

Antavia achieved the profit contribution expected at the time of the acquisition and is now working closely with the other businesses in the division to achieve some identified revenue synergies.

Directors

At the AGM in July 2006 John Harper retired as a non-executive Director after over nine years' valuable service to Umeco. To replace John, Stephen Bird, a divisional director of the Weir Group, was appointed in November 2006.

Michael Harper is standing down as a non-executive Director at the 2007 Annual General Meeting due to his other business commitments. The Board thanks Michael for his contribution since becoming a non-executive Director in 2002.

The Board is very pleased that Chris Hole, who was Director of Procurement at Rolls-Royce plc and retired in December 2006, will be joining the Board as a non-executive Director on 25 July 2007.

Group strategy

Over the past ten years, since Brian McGowan and Clive Snowdon were appointed Chairman and Chief Executive respectively, the Board has developed and implemented a focussed strategy. This has established Umeco as a leading international provider of supply chain and repair & overhaul services and advanced composite materials primarily to the aerospace, automotive and wind energy markets. Evidence of the successful execution of this strategy can be seen in the:

· winning of major long term supply chain contracts, principally with leading aerospace OEMs and airlines, and the subsequent extension of these relationships through the addition of a broader range of products and services;

· carefully targeted acquisitions which have extended both our geographic coverage and our product and service offerings;

· investment in our businesses to ensure they have the capacity and operating efficiency to provide the highest levels of customer service; and

· focus on product and service innovation so that, within our selected market segments, we retain a clear competitive edge.

Over the last decade Umeco has achieved compound annual growth in revenue of 23.8 per cent, 21.3 per cent in operating profits and 11.9 per cent in earnings per share. The Board strongly believes that, by continuing with this strategy, Umeco is capable of delivering further sustained value for shareholders.

Prospects

In the year under review the Group enjoyed a high level of underlying growth in revenue and profits, despite the impact of a number of external factors including the production delay of the A380 and a weakening US dollar.

Looking forward, the principal market in which Umeco operates, civil aerospace, looks robust with Airbus and Boeing entering 2007 with record order books. Airbus has indicated that A380 production will restart during our second half year and Boeing's development of the B787 appears to be on schedule, with a first flight expected this Autumn and initial deliveries due in mid-2008. Both of these significant programmes are anticipated to generate a high level of incremental revenue for the Group, and Umeco expects the civil market to be strong for the foreseeable future.

With ever-rising energy prices and industry's increasing appetite for more environmentally sustainable solutions, demand for the Group's advanced composite materials, from a growing number of industries, is expected to continue to increase at a high rate in the coming years. Umeco Composites continues to work closely with major customers to ensure that the on-going development of our products and services meets their requirements and obtain the necessary product approvals.

In the current year, the Group is planning to expand further its geographic footprint and has now established Umeco Asia as a trading company in Singapore, replacing a representative office in that important region.

These factors, coupled with recent acquisitions and contract wins, place Umeco on track for another year of strong performance. Umeco has the management team and financial resources in place to support the Group's ambitious plans and the resolve to work through the external factors that arise from time to time.

In summary, Umeco goes into in the new financial year with a record order book, rising demand from the markets in which it operates and a much enhanced infrastructure, following the major investments made over the last three years. The Board is therefore looking forward to another successful year for the Group.

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