Review of performance for 2022

This was another complex financial period for BMT during which we managed inflation-driven cost pressures and invested in the future, while still maintaining profits and rewarding our employee members with a £5.2m profit distribution. Continuing operations – profit In terms of continuing operations, BMT recorded operating profit from continuing operations of £9.0m during the reporting year, in line with the previous year’s total of £9.2m. The headline picture of rising turnover and flat profits was caused in part by cost inflation, especially in relation to wages, where a shortage of science and engineering skills, plus an industry-wide pick-up in activity after the pandemic, intensified a ‘war’ for talent. In addition, delays in existing project approvals and the need to bid for future projects meant we had a short term over capacity in terms of headcount in certain areas such as naval architecture. While we introduced cost savings where appropriate, we decided to maintain resources in order to deliver work when projects resumed or bids were successful. The announcement in early 2023 that the UK Ministry of Defence (MoD) has selected BMT to help design and build new supply vessels for the UK’s aircraft carriers suggests that our decision to retain capacity was the correct one. The future Fleet Solid Support ships (FSS) contract for the Royal Navy is the biggest in our Financial performance history and its delivery will span 10 years, with a significant positive impact on both our finances and profile in the sector. Discontinued operations On these pages, the focus is on the progress made by our continuing business. The complexities around the exceptional items and discontinued business are reflected in the summary financial statements on pages 30 and 31. Discontinued operations primarily include the results of BMT Designers and Planners Inc, whose independent Board, filed for Chapter 7 of the US Bankruptcy Code on 1 February 2022. The prior year results also include the costs of selling several under performing entities which are not part of the strategic plan in Brazil, India and Indonesia. Business environment The UK defence and security sector is the group’s largest market and, after a period of stasis as a result of the pandemic and economic uncertainty, we saw greater activity during the latter part of the reporting year, enabling us to grow revenue from that market. The US and Canadian markets also offered growth opportunities, with a strong defence sector being complemented by continuing recovery in the offshore energy sector, driven by higher energy prices. In Australia, our strong customer relationships and skill sets saw us win new projects in the defence and maritime environmental markets, as well as grow revenues from existing work, despite continued pressure on price and margin. In commercial shipping, while the war in Ukraine and the related economic uncertainty slowed growth in the luxury yacht market, demand for our specialist vessel expertise, primarily in the design of offshore wind farm support vessels and fast ferries, remained strong. Margin With revenues rising and profits remaining flat, we inevitably experienced margin dilution over the reporting period. However, we expect this to be short-lived due to our investment in the innovation and expertise that can drive higher margins in the years ahead. Our major FSS win demonstrates the validity of that approach. Revenues from continuing operations rose to £157.0m in the reporting period, up 14.4% compared to the previous year. ‘The US and Canadian markets also offered growth opportunities, with a strong defence sector being complemented by continuing recovery in the offshore energy sector, driven by higher energy prices.’ BMT Group | A platform for growth 28