To reflect more closely the activities of this business area, we have re-named it Hydronic Controls. Hydronics describes a system of heating or cooling by means of the forced circulation of liquids or vapours through a set of pipes.

The success of our strategy of concentrating on products with higher added value and growth potential and leveraging such sales through our extensive European distributor network brought rewards in a year of low market growth.

We achieved record profits, cash flow and margins in 1998 despite the impact of historically low copper prices and scrap shortages on our refinery operations. We also bore the costs associated with expanding our Eastern European operations which now cover ten countries.

The reduction in sales in the table above is a reflection of the low copper price and the disposal of our waterheating activities.

The broad spread of our product offering is proving a key advantage in developing our business in Eastern Europe. We expect to achieve further growth as our new marketing and distribution bases in the region become fully operational.

Our strong market presence in hydronic heating controls was consolidated as both Heimeier and TA Hydronics continued their international development.

Raimund Fahle, performing optical hardness tests at Heimeier, Germany.

TA Hydronics supplied a wide range of commissioning and shut-off valves to the new Royal Armouries Museum in Leeds, England

Heimeier’s continued progress in 1998 was helped by further efficiency improvements and developing export sales, especially in Eastern Europe. Together these more than offset the impact of lower demand in Germany in the second half.

TA Hydronics made a good contribution driven by progress in export sales from a sluggish Swedish home market. New product launches improved the range and were well received in the market. Integration with the Hydronic Controls group and cost reduction initiatives proceeded to plan. TA Hydronics and Heimeier combined their market and distribution activities in Germany and the promotion of the joint product range to the wider customer base will bring benefits.

In plumbing fittings, volumes declined as construction activity in Germany and the UK softened in the second half. Elsewhere in Europe, and especially in France and Spain, demand improved from 1997 levels. Overall, profit was close to the excellent result of the previous year. Our Australian fittings operation kept pace with last year with demand showing a welcome improvement in the second half.

Market conditions continued to be unhelpful for our refinery and copper tube activities where further cost reduction measures will be necessary. The refinery was hit by the depressed copper price and there was a world shortage of scrap for most of the year; some improvement in scrap availability started to show through towards the end of the year. Copper tube maintained its market share and, despite heavy competition and sterling’s strength, it improved margins which, combined with ongoing plant improvements, led to an improvement in profitability.

The Tectite range of push-fit plumbing and heating fittings, developed and manufatured by IMI Yorkshire Fittings.

IMI Yorkshire Copper Tube manufactures millions of metres of tube each year for use in gas, water and sanitation applications all around the world.

Although sales at Air Conditioning were dented by poor summer weather, further efficiency improvements resulted in profit being ahead of last year.

In terms of improving the strategic profile of Hydronic Controls, we disposed of the UK waterheating activities, which did not offer international growth potential. We also closed the small Wolverhampton Metal business when essential additional capital investment made continuing operations untenable.

	A range of Heimeier products is specified in the Frieburg, Germany, solar house.