12 April 2012
Elektron Technology plc
Full year results for the year ended 31 January 2012
Elektron Technology plc (AIM: EKT, "Elektron" or the "Group"), the developer of fast moving engineered products with market leading positions in connectivity, instrumentation and monitoring and control markets, announces its full year results for the year ended 31 January 2012.
Highlights
- Revenue: £64.3 million (2011: £50.0 million) up 29%, including a full year's contribution from Hartest (acquired September 2010)
- Operating profit before non-recurring or special items ("trading profit"): £5.0 million (2011: £5.3 million)
· Non-recurring or special items, largely relating to UK streamlining: £2.2 million (2011: £1.5 million)
- Reported operating profit of £2.8 million (2011: £3.8 million)
- Basic earnings per share ("Basic EPS"): 1.82p (2011: 3.00p); earnings per share before non-recurring and special items ("Adjusted EPS"): 3.33p (2011: 4.20p)
- Proposed final dividend of 0.56p per share making a total of 0.83p for the year, a 3.8% increase
· Eighth consecutive year of dividend growth
- Resilient revenue performance against backdrop of challenging trading conditions
- Completed management reorganisation to exploit scale and expertise Rationalisation of UK sites continues
John Wilson, Chief Executive of Elektron, commented,
"This year has been one of transformation for Elektron as we focus on developing our core technologies and global reach. Our performance in challenging markets demonstrates that our strategy of geographical and product diversification is an encouraging basis for future growth.
"The reorganisation of the business places us in a strong position to provide more customers than ever with key solutions for today's connected world."
Enquiries:
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Elektron Technology www.elektron-technology.com |
+44 (0)1223 371 000 |
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John Wilson - Chief Executive Officer |
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Noah Franklin - Chief Financial Officer |
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finnCap |
+44 (0)20 7220 0500 |
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Ed Frisby/ Rose Herbert - Corporate Finance |
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Simon Starr/Victoria Bates - Corporate Broking |
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College Hill |
+44 (0)20 7457 2020 |
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Jon Davies/Rozi Morris |
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Notes to Editors
Elektron Technology is a global designer and manufacturer of fast moving engineered products, the precision engineered components that enable two of the most important technology areas of the always-on, networked economy: Connectivity and Instrumentation, and Monitoring & Control (IMC).
The Group has a broad portfolio of products that are recognised leaders in their markets, playing a critical role in many industries from underwater construction to food preparation, semiconductor manufacture to emergency vehicle systems. They result from a commercially focused, customer-led new product development process centred on the Group's Technology Centre based in Cambridge. The Group's products are sold worldwide to over 7,000 customers, around 100,000 end-users, and used in all seven continents and in space.
Elektron Technology is headquartered in Cambridge and traded on the AIM market of the London Stock Exchange.
The results for the year ended 31 January 2012 demonstrate a resilient sales performance against a backdrop of protracted economic slowdown and the on-going European debt crisis that made trading conditions particularly challenging in the second half of the year. The Group has however been less severely impacted than in earlier economic downturns, which is attributed to efforts to broaden the business both geographically and in terms of product range and particularly the acquisition in the prior year of Hartest Holdings plc ("Hartest"). Whilst the results fell short of the Group's original expectations, progress in the Americas was strong and results are second only to last year's record outturn with sales, operating profit before non-recurring or special items ("trading profit"), operating cash flow and adjusted earnings per share all exceeding any year prior to the Hartest acquisition in 2010.
Organisational Change
Once again this has been a transformative year in which we have continued to build foundations which will enable us to move to the next level.
Elektron has grown over a number of years through numerous largely UK based acquisitions. The Group has made significant progress with its programme of streamlining the enlarged organisation as it moves from a group of subscale, siloed manufacturing businesses to a single organisation focused on technology, new product development and global sales and marketing.
The Group now employs a matrix structure that provides its global sales organisation with expert functional support. The sales effort is organised into three separate regions (Americas, Asia Pacific and Europe, Middle East and Africa) that are better able to promote our range of products, creating channels for further growth.
The Group now has the infrastructure in place to support the business as it grows, with centralised marketing, technology and operational expertise and also strong HR, IT and finance functions. The impact of this is already being seen in increased efficiency and operational visibility. The Group also successfully implemented the first stages of a move to a new Enterprise Resource Planning system during the year. This roll-out, along with the adoption of a Group-wide Customer Relationship Management system will be completed during 2012-13.
The Group has also closed its former head office in Romford, announced the closure of the legacy manufacturing sites at West Molesey and Redhill and moved to a new head office and Technology Centre in Cambridge.
Product Development and Marketing
The Group's integrated management organisation is already making an impact on New Product Development ("NPD"). Market driven NPD is key to the Group's future success and the right foundations are now in place.
The Group's marketing team is addressing the previously fragmented nature of Group branding and messaging, with the first results of a progressive brand overhaul visible on our corporate web site. Changes to 26 other web sites will follow. It is expected that this will not only create a distinct, unified identity for the Group, but will also deliver a basis for increased cross selling across its portfolio of brands.
People
The Group has hired several experienced professionals for key leadership roles during the year. For technical and marketing roles, the move to Cambridge has proved particularly successful, giving the Group access to a much larger pool of qualified people with experience of fast-growing companies.
The Board has put in place incentive plans, which have been designed to keep the Group competitive with the market place and to reward the building of value aligned to shareholder interests. Elektron values its people and recognises the need to look after them, including those times when the Group's plans have meant disruption for some people. The commitment of many Elektron people throughout the world in a challenging environment has been remarkable and deserves recognition.
Operational review
Elektron designs Fast Moving Engineered Products ("FMEP") and has market leading positions in connectivity, instrumentation and monitoring and control markets. The majority of the business delivers key building blocks for today's connected world. These products are managed in two segments - Connectivity and Instrumentation, Monitoring & Control ("IMC").
Connectivity serves the need for delivery of data and power in the most demanding situations in today's always-on, networked world. Examples include the Buccaneer power and data connectors for wired and wireless communications. In 2011-12 this segment delivered revenues of £29.2 million (2011: £29.7 million) and trading profit of £2.4 million (2011: £3.7 million).
IMC includes technologies that measure and monitor environments, materials and processes and increasingly can capture, process and act on data to automate decision making and improve business performance. Examples include the Kyros wireless temperature-monitoring system and Genisys vehicle power management products. In 2011-12 this segment delivered revenues of £28.7 million (2011: £14.5 million) and trading profit of £2.4 million (2011: £1.5 million).
The Group also operate a further small specialist FMEP segment focused on Materials. This serves specialised markets in the manufacture of tungsten carbide and the creation of tungsten carbide router cutter tools.
Elektron goes to market globally and its products are sold worldwide to over 7,000 customers and around 100,000 end-users, and used in all seven continents, as well as in space.
Strategy & progress
Elektron's strategy is based on the significant opportunity to grow revenue by accelerating the pace of innovation, unlocking the significant potential of marketing the product portfolio to more international customers and exploiting the efficiency that the improved organisational structure provides.
Building global sales
The Group has a wide geographic reach for an organisation of its size, and has already successfully demonstrated its ability to take its products to worldwide markets. However, there remains considerable further opportunity for growth on a global basis. For example, the Asia Pacific region is approximately 40% of the Group's market but currently only 19% of sales, while the Americas account for only 13% of sales. The Group's strategy is to use its international sales capability to realise this potential and achieve a geographic balance more closely matching the scale of the underlying markets.
During 2011-12 the Group made important organisational changes and investments to pave the way for further advances in 2012-13. Cross selling of products to existing customers has also been under-exploited in the past, and this is being addressed.
The Group now operates with three regional sales and support organisations that are charged with driving direct and indirect channels across all ranges. This represents a move to a more scalable model for some of the recently acquired instrumentation product lines that previously relied on EMEA based expertise to service global markets. To support this agenda, the Group's investment in sales resources has more than doubled to nearly £8 million in three years, including increased training for the global sales force.
Investing in NPD
One of the Group's key developing assets is its NPD capability, based in the Technology Centre in Cambridge. It forms the hub of a multi-disciplinary team that works together using Elektron's development process - Innovation Resource Planning. The Technology Centre allows the Group to coordinate activities, apply best practice and high quality engineering talent to new and existing products. All projects start with a marketing-led justification and are subject to rigorous technical and financial evaluation before significant development funds are committed. The Group now has multiple developments in progress, aimed at:
- Upgrading current product lines, especially where there has been under-investment in recent years;
- Expanding the addressable market for the Group's current product ranges. Examples include using new materials for the popular connector ranges or simplifying some instruments so that they are suitable for use by a less skilled user population; and
- Developing new propositions that combine instrumentation and measurement with networks and computing. The latter is particularly promising, given the growth in machine to machine (M2M) communications, leading to increased demand for measurement devices and opportunities to develop smart solutions and services where Elektron's domain knowledge and technology will be highly valuable.
Current developments in the NPD pipeline include:
- Major extensions to the key Buccaneer connector ranges to meet emerging customer requirements for end-use and expand the addressable market;
- Environment sensing software, hardware and networks for specific vertical markets to automate essential routine tasks, reduce risk and assist with compliance;
- Extensions to the ophthalmological instruments range to expand addressable markets to different skill levels and professional user groups;
- A new generation of controllers and positioners / sensors for the nanopositioning range to extend the relevance of the Group's offering to new areas such as scanning probe microscopy, interferometry, x-ray imaging, confocal microscopy and aerospace; and
- Upgrades to viscometry instruments to increase their utility to existing customers and open up new sectors.
Business transformation
The initial phase of restructuring the business is now largely complete. Elektron is now a matrixed organisation that has created centres of excellence in key functions of marketing, technology and production, and has ensured more scalable global operations for sales. This has also included a move to a Cambridge head office and the establishment of the Technology Centre there.
The second phase of this process is the rationalisation of the Group's operational footprint in the UK, closing and consolidating three major leased sites. The office in Romford is now closed and its activities have transferred to Cambridge, Torquay and Stansted. The existing factory in Torquay will become the Group's new UK centre for high tech manufacturing. Activities at the Redhill and West Molesey factories will relocate to Torquay over the next 12 - 18 months, as the leases on those sites expire. When complete, this programme is expected to deliver savings in excess of £2 million per annum.
Regional performance
In the Americas (Sales £8.3 million; 2011: £6.6 million) there has been a particularly good performance in the Connectivity segment, with continuing strong sales growth and a record forward order book. This is a result of considerable effort in strengthening the sales infrastructure and distributor organisation in the region. Signing agreements with strategic national distributors allowed Connectivity to flourish this year. Other existing distributors started selling the Arcolectric line for the first time which should result in increased sales.
The next challenges are to expand sales in South America and to generate growth for the IMC product lines. In both areas 2012-13 will be a period of establishing Elektron's presence and initial sales. Several key hires have been made to support this initiative during 2011-12, and the Group has also increased its investment in marketing in this region.
In the Asia Pacific Region (Sales £12.5 million; 2011: £9.1 million), sales growth is largely attributable to the full year of contribution from Hartest and underlying growth was less than anticipated. As the majority of current Chinese sales are to Original Equipment Manufacturers ("OEMs") whose products are exported, mainly to Europe, there was impact from the downturn on demand. The Group has however invested in developing its organisation to support improved growth, focusing on China, South Korea, Japan and India. A new regional head office has been created in Singapore and a sales office opened in Shanghai. The Group is seeing growing opportunities in India and a new, enlarged office in New Delhi is expected to be opened in the coming year. The Group has also expanded its sales force in South Asia and India to take advantage of significant untapped opportunities in those areas.
In EMEA (Sales £43.5 million; 2011: £34.3 million) the Group continues to increase the emphasis on developing sales outside the UK. Sales to key growth areas in Germany and Eastern Europe increased by over 10% year on year, but there has been weaker demand and increased uncertainty from customers elsewhere, especially in southern Europe. The Group has therefore rebalanced its focus, with more resource being applied to the North and East of Europe. Elektron continues to see potential for the Sheen and Ophthalmic product ranges in the Middle East.
Segmental performance
Connectivity
Elektron's Connectivity segment (Sales £29.2 million, trading profit £2.4 million; 2011: £29.7 million, £3.7 million)
saw a softening of demand in APAC and parts of EMEA, in particular in Italy, historically the largest revenue-generator for Connectivity in Europe outside the UK (but now overtaken by Germany). There were encouraging levels of success in the Americas, where sales of connectivity products have increased by more than 50% over the last two years.
In terms of industries served, there was some impact from a slowdown in demand for connectors from the solar power market related to changes in government subsidies in several key markets, offset by successes in the power grid and telecoms industries.
In 2011-12 the Group continued to increase its focus on direct sales to OEMs to ensure that it is not over-dependent on distributors, while also ensuring that it is working with the highest quality distributors, leading to the developments noted above.
The Bulgin brand, and in particular Buccaneer connectors, continued to perform well, confirming its ability to command a strong competitive position in products with a large engineered content. Several new product lines are being prepared for release in this category which are expected to suit a considerably larger set of end user applications, increasing the total addressable market.
Arcolectric switches continued to make a strong contribution but face strong price competition from larger scale manufacturers. The Group continues to review its cost base and supply chain in response, as well as seeking opportunities for innovation: for example, during 2011 Elektron introduced a range of switches that incorporate anti-microbial properties, aimed at hygiene-sensitive OEM applications such as food preparation and medical devices.
Due to unprecedented increases in raw material prices throughout the year, margins were adversely impacted. However, this was partially offset by implementing price increases during the year.
Instrumentation, Monitoring and Control
IMC (Sales £28.7 million, trading profit £2.4 million; 2011: £14.5 million, £1.5 million) experienced additional weakening of demand due to reduced government funding of national metrology laboratories and, in the UK, reductions in NHS capital spending which particularly impacted the QADOS products.
The Group is actively refocusing Queensgate's nanopositioning products, at present a small percentage of group sales, to capitalise on increased opportunities in the sector. The Group is also involved in an important collaborative R&D programme funded by the UK government's Technology Strategy Board in this area. The results from this project, when combined with the Group's existing laboratory supplies (Agar) and metrology (ASL) brands, are expected to enable Elektron to serve the scientific laboratory market more effectively.
During the year there was positive growth for the Sheen and Wallace ranges, with customers and applications across various industries such as automotive, aerospace and rubber production. There are a number of new product developments underway to further enhance the product range, which will not only give greater appeal and scope in existing sectors but also offer expansion possibilities in areas such as plastics, pharmaceuticals, cosmetics and FMCG testing.
The year has also seen growth for the ophthalmic instruments product line as well as a number of new regional distribution deals. NPD activity is in train to build on these trends.
Particularly strong performance came from the Tinsley instrumentation range in India. This business is now providing a springboard to increase the range of products marketed in India and to create stronger local presence.
Carnation Designs continued to perform well in the specialist vehicle automation system market, with its products used in 95% of the UK's frontline ambulances. Highlights included a £1 million-plus order for use in UK prisoner transport vehicles and the supply of a solution for a large Japanese corporation's outside broadcast vehicles to use in China. The Group is investing to develop the profile of Carnation Designs globally, starting with selected priority markets.
Materials
The small Materials business (Sales £6.4 million, trading profit £0.2 million; 2011: £5.8 million, £0.1 million)
showed 10% revenue growth in the year, but continued to deliver lower profitability than the rest of the Group. A 40% increase in tungsten carbide prices was offset by price increases but with an adverse effect on overall margins. The Group is now focusing on developing new production processes to increase efficiency. Titman Tip Tools won some important new contracts in 2011-12, which are now beginning to generate increased volumes, and the Group is currently evaluating the potential of recent new product developments in connection with cutter technologies.
Financial review
During 2011-12, revenues increased from £50.0m to £64.3m, largely as a result of a full year of contribution from the Hartest businesses which were acquired on 1 September 2010, but trading profit was slightly lower at £5.0m (2011: £5.3m). Whilst these results did not meet the Group's original expectations, they demonstrate that the Group is able to remain profitable and resilient even in uncertain times and has an encouraging basis for future growth.
Underlying sales performance was affected by the weakening global economic climate in the second half of the year and, adjusted for the acquisition and currency movements, was little changed from the prior year.
Trading margins were 7.8%, down from 10.6% in 2010-11, largely as a result of the lower than expected sales. Margins were also affected by:
- Increases in commodity prices, notably for metals and plastics, which particularly affected the Connectivity and Materials segments. The average market price per kilo of the Group's net basket of metals increased by some 75% compared with the previous year.
- A full year of contribution from the traditionally lower margin Hartest business, also had an impact. However, the profitability of the Hartest businesses was substantially improved compared with the preceding 12 months.
Despite these factors, trading profit reached £5 million for the second consecutive year.
Apart from driving sales, the Group is taking steps on many fronts to improve profitability, including the programme to streamline operations. The cost of streamlining the business in the UK is expected to total £4.3 million over a two year period. This includes £3.5 million of exceptional charges, of which £1.9 million was recorded in 2011-12, and approximately £0.8 million of capital expenditure. Savings in occupancy costs from the site closures are expected to exceed £0.8 million per annum and when complete, the streamlining programme is expected to yield savings in excess of £2 million per annum. The recent announcement that most of the Group's UK operations will trade as a single legal entity with effect from the current financial year, should bring a further reduction in costs.
Other non-recurring or special items include £0.1 million of costs incurred in exploring an abandoned potential acquisition, and £0.2 million amortisation of intangible assets arising from past acquisitions. The costs of share-based incentive plans, comprising share options and the Joint Share Ownership Plan, are also included in non-recurring and special items, but amount to less than £0.1 million.
The consolidated net interest charge of £0.3 million is covered 15 times by trading profit.
The Group's effective tax rate has increased from 18% to 24%, as brought forward tax losses have been substantially utilised. It is expected that the Group's tax rate will remain fairly stable at this new level, as the scheduled decline in the UK rate of corporation tax from 26% to 22% over the next two years should offset the use of the Group's last remaining tax losses and anticipated growth in profits from overseas markets including the USA and India, which are subject to higher rates of tax than profits earned in the UK.
Group pre-tax profit before non-recurring or special items was £4.7 million (2011: £5.0 million). Reported pre-tax profit was £2.2 million (2011: £3.5 million).
The average number of ordinary shares in issue during the year was 106.4 million, compared with 97.2 million in the prior year, so Basic EPS and Adjusted EPS were 1.82p and 3.33p (2011: 3.00p and 4.20p). If the tax rate had remained unchanged from 2011, Adjusted EPS would have been 3.69p.
It is estimated that approximately 2.0p of Adjusted EPS is attributable to the "old" Elektron business. The Hartest acquisition has significantly enhanced earnings during the year, contributing approximately 1.3p to the Group's Adjusted EPS.
The Board is continuing its progressive dividend policy, recommending a final dividend of 0.56p (2011: 0.55p) making a total dividend for the year of 0.83p (2011: 0.80p). This represents an increase of 3.8% and is the eighth year running that the board has been able to recommend an increased dividend. The dividend is expected to be paid on 17 August 2012 to shareholders on the register at the close of business on 4 May 2012.
The Board is proposing a scrip issue alternative subject to a resolution being passed at the Annual General Meeting allowing the Directors to issue shares other than pro rata to existing shareholders. Full details will be contained in the documentation convening the AGM.
The Group's financial position remains strong, with net debt of £4.4 million (2011: £4.3 million) and net gearing (net debt divided by total equity) of only 28% (2011 29%), both virtually unchanged from prior year. This is pleasing after a year where the dividend payments have increased by 60% and capital investment has more than doubled to £2.2 million, including £0.8 million related to the development and supply of new products. Capital investment is expected to increase again in 2012/13, when major projects will include the investment in the new high tech manufacturing facility in Torquay, the completion of the global Enterprise Resource Planning system and further acceleration of the new product development programme.
Since the end of the year, the Group has refreshed its financing arrangements via a new four year £6.8m revolving credit facility, replacing the £1.6 million term loan that was taken out to fund the Hartest acquisition. This new facility provides financial stability for the medium term. It is on slightly improved terms compared with the previous term loan and no capital repayments are due in the first 12 months. As the Group grows its international operations, the facility also allows us to finance certain overseas assets with local currency borrowings, effectively mitigating exchange rate risks.
Current trading and outlook
Trading in the early months of the year has given the Group no reason to change its outlook. In the current uncertain economic climate Elektron retains its cautious stance.
At a more fundamental level however, the prospects for Elektron are strong. The Group is putting in place measures to reduce its exposure to the economic cycle and is in a good position to help its customers as they become more connected whether by creating physical power and data links, or by measuring, monitoring and controlling key physical processes. The Group's brands already provide proven, sector-leading products in specific geographies, with considerable potential to expand into further territories. Elektron will continue to invest in its portfolio of market leading products as it increases the pace of NPD and expands its international network.
Consolidated statement of comprehensive income
Year ended 31 January 2012
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|
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2012 |
2011 |
|||
|
|
Notes |
£ million |
£ million |
|||
|
Revenue |
|
64.3 |
50.0 |
|||
|
Cost of sales |
|
(38.3) |
(28.9) |
|||
|
Gross profit |
|
26.0 |
21.1 |
|||
|
Operating expenses |
|
|
|
|||
|
Operating expenses (excluding non-recurring or special items) |
|
(21.0) |
(15.8) |
|||
|
Operating profit before non-recurring or special items |
3 |
5.0 |
5.3 |
|||
|
Non-recurring or special items |
4 |
(2.2) |
(1.5) |
|||
|
Total operating expenses |
|
(23.2) |
(17.3) |
|||
|
Operating profit |
|
2.8 |
3.8 |
|||
|
Finance costs |
|
(0.3) |
(0.3) |
|||
|
Profit before taxation |
|
2.5 |
3.5 |
|||
|
Taxation |
|
(0.6) |
(0.6) |
|||
|
Profit for the year attributable to equity shareholders |
|
1.9 |
2.9 |
|||
|
Other comprehensive income |
|
|
|
|||
|
Available-for-sale financial assets - gains arising during the year |
|
- |
0.4 |
|||
|
Total other comprehensive income |
|
- |
0.4 |
|||
|
Total comprehensive income for the financial year attributable to equity shareholders |
|
1.9 |
3.3 |
|||
|
Earnings per share |
- basic |
5 |
1.82p |
3.00p |
||
|
|
- basic, before non-recurring or special items |
5 |
3.33p |
4.20p |
||
|
|
- diluted |
5 |
1.82p |
2.98p |
||
|
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- diluted, before non-recurring or special items |
5 |
3.32p |
4.17p |
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All activities derive from continuing operations
Consolidated balance sheet
As at 31 January 2012
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2012 |
2011 |
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£ million |
£ million |
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Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill |
|
1.3 |
1.3 |
|
Other intangible assets |
|
3.4 |
3.5 |
|
Property, plant and equipment |
|
5.0 |
4.2 |
|
Deferred tax |
|
0.3 |
0.2 |
|
Total non-current assets |
|
10.0 |
9.2 |
|
Current assets |
|
|
|
|
Inventories |
|
9.5 |
9.2 |
|
Trade and other receivables |
|
11.9 |
11.8 |
|
Cash and cash equivalents |
|
0.8 |
1.2 |
|
Total current assets |
|
22.2 |
22.2 |
|
Total assets |
|
32.2 |
31.4 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
|
9.2 |
9.4 |
|
Borrowings |
|
2.6 |
1.9 |
|
Current portion of long-term borrowings |
|
1.3 |
1.6 |
|
Current tax payable |
|
0.2 |
1.0 |
|
Provisions |
|
1.0 |
0.5 |
|
Total current liabilities |
|
14.3 |
14.4 |
|
Non-current liabilities |
|
|
|
|
Long-term borrowings |
|
1.3 |
2.0 |
|
Accruals and deferred income |
|
0.1 |
0.1 |
|
Long-term provisions |
|
0.7 |
0.3 |
|
Total non-current liabilities |
|
2.1 |
2.4 |
|
Total liabilities |
|
16.4 |
16.8 |
|
Net assets |
|
15.8 |
14.6 |
|
|
|
|
|
|
Equity attributable to equity holders of the parent |
|
|
|
|
Called-up share capital |
|
6.0 |
5.3 |
|
Share premium |
|
5.4 |
2.9 |
|
Merger reserve |
|
1.1 |
1.1 |
|
Capital redemption reserve |
|
0.2 |
0.2 |
|
Own shares |
|
(3.0) |
- |
|
Other reserves |
|
0.1 |
0.1 |
|
Retained earnings |
|
6.0 |
5.0 |
|
Total equity |
|
15.8 |
14.6 |
Consolidated statement of changes in equity
Year ended 31 January 2012
|
|
|
|
|
Capital |
|
|
|
|
|
|
Share |
Share |
Merger |
redemption |
Own |
Other |
Retained |
|
|
|
capital |
premium |
reserve |
reserve |
shares |
reserves |
earnings |
Total |
|
|
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
£ million |
|
At 1 February 2010 |
4.4 |
0.1 |
1.1 |
0.2 |
- |
0.1 |
2.6 |
8.5 |
|
Total comprehensive income for the year |
- |
- |
- |
- |
- |
- |
3.3 |
3.3 |
|
Share issues |
0.9 |
2.7 |
- |
- |
- |
- |
- |
3.6 |
|
Expenses incurred in share issue |
- |
(0.2) |
- |
- |
- |
- |
- |
(0.2) |
|
Adjustment for scrip dividend element in respect of prior year |
- |
0.2 |
- |
- |
- |
- |
(0.2) |
- |
|
Dividends paid on ordinary shares |
- |
- |
- |
- |
- |
- |
(0.7) |
(0.7) |
|
Adjustment for scrip dividend element |
- |
0.1 |
- |
- |
- |
- |
- |
0.1 |
|
At 31 January 2011 |
5.3 |
2.9 |
1.1 |
0.2 |
- |
0.1 |
5.0 |
14.6 |
|
Total comprehensive income for the year |
- |
- |
- |
- |
- |
- |
1.9 |
1.9 |
|
Share issues |
0.7 |
2.4 |
- |
- |
- |
- |
- |
3.1 |
|
Purchase of treasury shares * |
- |
- |
- |
- |
(3.0) |
- |
- |
(3.0) |
|
Dividends paid on ordinary shares |
- |
- |
- |
- |
- |
- |
(0.9) |
(0.9) |
|
Adjustment for scrip dividend element |
- |
0.1 |
- |
- |
- |
- |
- |
0.1 |
|
At 31 January 2012 |
6.0 |
5.4 |
1.1 |
0.2 |
(3.0) |
0.1 |
6.0 |
15.8 |
* The treasury shares are held by the Elektron Technology 2012 Employee Benefit Trust.
Consolidated statement of cash flows
Year ended 31 January 2012
|
|
|
2012 |
2011 |
|
|
|
£ million |
£ million |
|
Net cash inflow from operating activities |
|
2.7 |
3.1 |
|
Investing activities |
|
|
|
|
Purchase of property, plant and equipment |
|
(1.9) |
(0.7) |
|
Purchase of other intangible assets |
|
(0.3) |
(0.3) |
|
Proceeds of sale of property, plant and equipment |
|
0.1 |
0.1 |
|
Acquisition of subsidiary |
|
- |
(5.9) |
|
Net cash used in investing activities |
|
(2.1) |
(6.8) |
|
Financing activities |
|
|
|
|
Proceeds on issue of shares |
|
0.1 |
3.6 |
|
Expenses associated with share issues |
|
- |
(0.2) |
|
New bank loans raised |
|
- |
1.9 |
|
Repayment of borrowings |
|
(0.4) |
- |
|
New finance leases |
|
0.6 |
0.2 |
|
Payment of hire purchase and finance liabilities |
|
(0.5) |
(0.6) |
|
Dividends paid |
|
(0.8) |
(0.5) |
|
Net cash (used in) / generated from financing activities |
|
(1.0) |
4.4 |
|
Net (decrease) / increase in cash and cash equivalents |
|
(0.4) |
0.7 |
|
Cash and cash equivalents at the beginning of period |
|
1.2 |
0.5 |
|
Cash and cash equivalents at the end of period |
|
0.8 |
1.2 |
Notes to the Consolidated Financial Statements
Year ended 31 January 2012
1. Basis of Preparation
The financial information presented in this Preliminary Announcement is extracted from, and is consistent with, the Group's audited financial statements for the year ended 31 January 2012. The financial information contained in this announcement does not constitute statutory accounts within the meaning of Section 434(3) of the Companies Act 2006. The financial statements for the year ended 31 January 2012 will be delivered to the Registrar of Companies following the Company's Annual General Meeting to be held on 28 June 2012. The auditor's report on those financial statements is unqualified and does not contain any statement under Section 498 of the Companies Act 2006.
The Group's audited financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS"). The financial information included in this preliminary announcement does not itself contain sufficient information to comply with IFRS. The company will publish full financial statements in compliance with IFRS in May 2012.
2. Accounting policies
Full details of accounting policies will be included in the annual report for the year ended 31 January 2012. These are not expected to be materially different from those set out in the Group's Annual Report for the year ended 31 January 2011.
3. Segmental reporting
The Group has continued to adopt the provisions of IFRS 8 "Operating Segments" and historically shown summary information in respect of these segments. This segmentation is consistent with internal reports to the Chief Operating Decision Maker for use in assessing business performance and allocating Group resources. This segmentation reflects the new operating structure of the Group implemented during the year and is therefore different from the segmentation reported in the prior year. The Chief Operating Decision Maker is the Chief Executive Officer of the Group. The activity of each segment is explained in the Chief Executive Officer's Report.
|
|
Segment revenue |
|
Operating profit |
|
Operating profit |
|||
|
|
2012 |
2011 |
|
2012 |
2011 |
|
2012 |
2011 |
|
Segment revenues and results |
£ million |
£ million |
|
£ million |
£ million |
|
£ million |
£ million |
|
Connectivity |
29.2 |
29.7 |
|
2.4 |
3.7 |
|
1.4 |
2.7 |
|
Instrumentation, Monitoring and Control |
28.7 |
14.5 |
|
2.4 |
1.5 |
|
1.3 |
1.1 |
|
Materials |
6.4 |
5.8 |
|
0.2 |
0.1 |
|
0.1 |
- |
|
Total |
64.3 |
50.0 |
|
5.0 |
5.3 |
|
2.8 |
3.8 |
|
Finance costs (net) |
|
|
|
|
|
|
(0.3) |
(0.3) |
|
Profit before tax |
|
|
|
|
|
|
2.5 |
3.5 |
Revenue reported above represents revenue generated from external customers.
The accounting policies of the reportable segments are the same as the Group's accounting policies described in Note 2.
Segment profit represents the profit earned by each segment including a share of central administration costs, which are allocated on the basis of actual use or pro-rata to sales. This is the measure reported to the Chief Operating Decision Maker for the purposes of resource allocation and assessment of segment performance.
|
|
|
2012 |
2011 |
|
Segment assets |
|
£ million |
£ million |
|
Connectivity |
|
13.6 |
11.5 |
|
Instrumentation, Monitoring and Control |
|
13.3 |
15.0 |
|
Materials |
|
5.3 |
4.9 |
|
Consolidated assets |
|
32.2 |
31.4 |
|
|
|
2012 |
2011 |
|
Segment liabilities |
|
£ million |
£ million |
|
Connectivity |
|
5.6 |
4.6 |
|
Instrumentation, Monitoring and Control |
|
5.9 |
8.2 |
|
Materials |
|
4.9 |
4.0 |
|
Consolidated liabilities |
|
16.4 |
16.8 |
|
|
Depreciation and amortisation |
|
Additions to |
||
|
|
2012 |
2011 |
|
2012 |
2011 |
|
Other segment information |
£ million |
£ million |
|
£ million |
£ million |
|
Connectivity |
0.4 |
0.5 |
|
1.2 |
0.7 |
|
Instrumentation, Monitoring and Control |
0.6 |
0.4 |
|
0.5 |
0.2 |
|
Materials |
0.4 |
0.4 |
|
0.5 |
0.1 |
|
Total |
1.4 |
1.3 |
|
2.2 |
1.0 |
Geographical information
The Group considers its operations to be in the following geographical regions:
|
|
Revenue from |
|
Non-current assets |
||
|
|
2012 |
2011 |
|
2012 |
2011 |
|
|
£ million |
£ million |
|
£ million |
£ million |
|
United Kingdom |
27.9 |
21.3 |
|
8.7 |
8.1 |
|
Rest of Europe, Middle East and Africa |
15.6 |
13.0 |
|
0.2 |
0.2 |
|
Asia Pacific and China |
12.5 |
9.1 |
|
1.0 |
0.9 |
|
Americas |
8.3 |
6.6 |
|
0.1 |
- |
|
Total |
64.3 |
50.0 |
|
10.0 |
9.2 |
4. Non-recurring or special items
|
Non-recurring or special items: |
2012 £ million |
|
2011 £ million |
|
- restructuring costs |
1.9 |
|
0.9 |
|
- acquisition costs |
- |
|
0.3 |
|
- write down of Chinese assets |
- |
|
0.2 |
|
- aborted development costs |
- |
|
0.1 |
|
- other income |
- |
|
(0.1) |
|
- aborted acquisition costs |
0.1 |
|
- |
|
- amortisation of acquisition intangible assets |
0.2 |
|
0.1 |
|
|
2.2 |
|
1.5 |
The restructuring costs include amounts payable in respect of staff redundancies during the year due to the consolidation of operations in the UK and related factory closure costs. Non-recurring or special items also include share based payments of less than £0.1 million (2011: less than £0.1 million)
5. Earnings per share
The calculation of the basic earnings per share ("Basic EPS"), diluted earnings per share ("Diluted EPS") and earnings per share before non-recurring or special items ("Adjusted EPS") is based on the following data. Shares held in Treasury are excluded from the number of shares in issue for the purposes of earnings per share calculations. The calculation of the diluted earnings per share is based on the basic earnings per share adjusted to allow for the issue of shares on the assumed conversion of all dilutive options. However, in accordance with IAS 33 "Earnings Per Share", potential ordinary shares are only considered dilutive when their conversion would decrease the profit per share or increase the loss per share from continuing operations attributable to the equity shareholders. As at 31 January 2012 there were 275,000 potential ordinary shares which have been disregarded in the calculation of diluted earnings per share as they were considered non-dilutive at this date.
Earnings
|
|
2012 |
2011 |
|
|
£ million |
£ million |
|
Earnings for the purposes of the Basic and Diluted EPS being net profit attributable to the owners of the Company |
1.9 |
2.9 |
|
Adjustment in respect of non-recurring or special items net of taxation of £0.6m (2011: £0.3m) |
1.6 |
1.2 |
|
Earnings for the purposes of Adjusted EPS |
3.5 |
4.1 |
Number of shares
|
|
2012 |
2011 |
|
|
No. |
No. |
|
Weighted average number of ordinary shares for the purposes of Basic EPS |
106,444,780 |
97,153,164 |
|
Effect of dilutive potential ordinary shares: |
|
|
|
Share options |
275,000 |
693,904 |
|
Weighted average number of ordinary shares for the purposes of Diluted EPS |
106,719,780 |
97,847,068 |
Earnings per share
|
|
2012 |
2011 |
|
Basic EPS |
1.82p |
3.00p |
|
Diluted EPS |
1.82p |
2.98p |
|
Adjusted EPS |
3.33p |
4.20p |
|
Diluted Adjusted EPS |
3.32p |
4.17p |
6. Dividend / scrip alternative
The final dividend, if approved at the Annual General Meeting on 28 June 2012, will be paid on 17 August 2012 to shareholders on the register at 4 May 2012. Certificates for the scrip alternative if approved at the Annual General Meeting, will be posted to shareholders on 20 August 2012 to shareholders on the register at 4 May 2012. The first day of dealings in the new ordinary shares to be issued under the scrip alternative is expected to be 17 August 2012. As the dividend has not been approved it has not been reflected in the Group financial statements for the year ended 31 January 2012.
7. Other information
Audited financial statements will be sent to shareholders during May 2012. Copies of this announcement can be viewed on the Group's website at www.elektron-technology.comand are available free of charge from the Group's registered office at Broers Building, JJ Thomson Avenue, Cambridge, CB3 0FA for a period of one month from the date hereof and copies of the Annual Report will be available for at least 14 days from date of publication and to view on the Group's website.