John Poulter, chief executive, said reversing Burnfield's previous policy of capitalising its research and development expenditure and the cost of servicing higher-than-expected debts within the company would affect trading profits this year.
Fairey benefited from a string of acquisitions last year, of which the hostile tilt at Burnfield was the latest. These transformed flat underlying operating profits into a 29 per cent profits before tax increase for the year to December. Mr Poulter said the companies it bought in 1996 had settled in well and would strengthen Fairey this year.
Burnfield's two trading businesses, Malvern and Beta, were still intrinsically good businesses, according to Mr Poulter. "We have not been at all disappointed with what we found," he said.
Profits before tax jumped 29 per cent to pounds 44m (pounds 34.2m) on sales 26 per cent higher at pounds 246.6m after contributions totalling almost pounds 10m from two electronics division acquisitions, Particle Measuring Systems and Fusion, disguised slow growth from existing operations.
After a 17 per cent rise in earnings per share to 32p, a final dividend of 6.15p made a total for the year of 9p.