Elektron Technology plc

(AIM: EKT, "Elektron", the "Company" or the "Group")

Review of operations

As previously detailed in our half year results announcement on 22 September 2016, five Elektron Group businesses have been prioritised for investment, namely: Bulgin (connectors and switches), Checkit (Internet of Things), Elektron Eye Technology (eye testing instruments), Queensgate (nano-positioning) and Sheen (materials testing instruments). These businesses have all developed new product development roadmaps with future launches planned during the current and next financial years. 

The remaining  businesses are deemed non-core to the Group's future growth strategy and, following the sales of Agar Scientific (announced on 23 May 2016), Carnation Designs (announced on 30 September 2016) and Wallace Instruments (announced on 2 December 2016), which have raised over £2.8m in net proceeds, the Board is seeking buyers for Digitron and Titman Tip Tools.

In light of the completed and proposed disposals, the Group has reviewed the number of operational sites and office locations it requires. During the year the Group's sales office in China has been closed whilst retaining a direct sales presence in the region. The Board has completed its review of its UK sites and is now proposing to exit its Torquay site, when the lease expires in August 2017.

The Group is proposing to relocate the majority of the business and support functions carried out in Torquay to existing sites at West Molesey, Cambridge or Stansted excluding the Digitron and Queensgate operations.

Once the disposal of all of the non-core businesses has been completed, the Board estimates that Group revenues will be reduced by approximately 20%. The proposed exit from the Torquay site is expected to generate savings in excess of the lost contribution from the brands that have or will have been disposed of. The Board estimates that this proposed reorganisation would have a cash cost of approximately £0.8m, generating savings (net of lost contribution) of approximately £0.3m per annum.

In light of the proposals to exit from the Torquay site, the Group is now entering into a period of consultation with affected employees and appropriate employee representatives to discuss the proposals in more detail, the likely impact that relocation would have on them and ways of avoiding or reducing the number of redundancy dismissals, including possible alternatives to redundancy.

Further updates will be provided in due course.

John Wilson, Chief Executive Officer of Elektron, said:

"Optimisation of the Group's manufacturing footprint is critical to the simplification of the Group and to allow maximum management focus on generating growth from the businesses that the Board have prioritised for investment.  This is obviously an unsettling time for those colleagues affected by this proposal, and the Board thanks them for the professionalism demonstrated during this period."

For further information:

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

Notes to Editors

Note to Editors:

Elektron conceives designs and markets innovative engineered products and services for businesses that connect, monitor and control. We have a multi skilled team of engineers, software and product line specialists based in Cambridge focused on the opportunities created by global trends in the following areas:

Demand for ubiquitous power and data: Bulgin

New waves of "aware" business applications: Checkit

The effect of ageing on sight: Elektron Eye Technology

Growth in high precision manufacture: Queensgate

Instrumentation for test and measurement: Sheen