TWI Annual Review - July 2008

In 2007 the pace of change in the markets that we serve continued to increase in both the public and private sectors. Overall, the TWI Group again performed well, with growth outcomes in many areas of our activity. More importantly, the investments we made this year in staff, facilities and business development effort have left us in a good position to plan for further progress in 2008 and beyond, with corresponding increased benefits for our Members.

Highlights include significant growth in Membership, Training & Examinations and Innovations much of which has arisen internationally with good progress in most of our target growth markets. However, late starts on a number of large projects and increased staff recruitment caused a shortfall against our planned productivity levels, especially in the area of contract income, resulting in our 2007 cash generation from operation falling a little short of the plan at £3.6m. To put this result in context, we have doubled our investments in pensions since 2005 to £3.8m per annum whilst simultaneously holding our charge rates for contract work over the past five years. Both of these strategic decisions have greatly benefited the value we deliver to our Members and customers.

TWI has continued to expand its operations globally. New TWI facilities have been established in the Middle East (Dubai and Bahrain) and more recently in Houston, USA. Many of TWI's services are now available more locally for our many overseas Members. These developments run in parallel with the provision of continued services from our headquarters in the UK and our subsidiaries in the UK Regions and other parts of the World.

A further outstanding achievement in 2007 arose because, as a result of recent court cases, we successfully recovered over £4.2m in VAT from HMRC. We have taken the whole of this amount as additional profit for the year and written it all to development resources for future investments that will accelerate the rate of progress of our business.

The outlook for most of our key industry sectors remains strong in spite of the recent turbulence in financial markets. Together with the expected shift in demographics as the 'baby boom' generation in our customer base retires over the next five years, the demand for our high-level services is expected to rise, particularly as we continue to expand the range and quality of our services.

The challenge for us is, therefore, to continue to invest in the development of our people, facilities and technologies and to maintain the necessary financial performance and drive to enable growth in productivity and customer service developments. Through 2007 the Finance & General Purposes Committee and Council supported the Executive Board in the development of a 'balanced scorecard' for assessing the progress of our Institute. In 2008 the scorecard will also be used as a primary measure for our new 'Share in Success' scheme which is designed to recognise the importance of our staff to benefits gained by our Members.

Bob John

My personal thanks are due to John Beadsmoore who retired as Chairman of Council in 2007, and all staff and Members for their contribution to our success.