Embargoed release: 07.00 hrs Thursday 12 May 2011

 

ELEKTRON Plc

("Elektron" or "the Group")

 

Preliminary Results

 

Elektron Plc (AIM: EKT), the global technology based provider of engineered solutions, is pleased to announce its preliminary results for the year ended 31 January 2011.

 

Highlights

 

-      Revenue £50.0 million (2010: £29.9 million)

 

-      Operating Profit (before non-recurring and special items largely relating to the acquisition of Hartest Holdings) of £5.3 million (2010: £1.8 million)

 

-      Profit Before Taxation (before non-recurring and special items) of £5.1 million (2010: £1.6 million)

 

-      Profit Before Taxation for year £3.6 million (2010: £0.2 million)

 

-      EPS (before non-recurring and special items) 4.20p (2010: 1.50p); basic 3.00p (2010: 0.34p)

 

-      Proposed final dividend of 0.55p, bringing total dividend payable for 2011 to 0.80p (2010: 0.50p), representing a 60% total increase year on year.

 

-      Strong performance continues

 

-      Proposed change of name at forthcoming AGM to Elektron Technology plc

 

Keith Daley, Chairman of Elektron plc commented: "Elektron has begun trading strongly this year and the integration of Hartest Holdings is nearing completion.  The Group is well positioned to continue on its growth curve and we look forward to another successful year.

 

2010 proved to be an excellent year for Elektron, not just in terms of financial performance but also in establishing a platform for driving further growth. The acquisition of Hartest provided us with greater critical mass as well as further high quality, technology driven brands which complement our existing portfolio.

 

Our focus remains on innovation in high margin, niche markets and we are currently implementing a centralised operational structure that will enable all of our brands to take full advantage of their opportunities. We remain committed to growing the Group both organically and through further acquisitions, thereby maximising shareholder value, and continue to view the future with confidence."

 

 

For further information:

Elektron PLC	Tel. +44 (0) 1708 336 300
Keith Daley - Chairman
finnCap	Tel. +44 (0)20 7600 1658
Ed Frisby/ Rose Herbert - Corporate Finance
Simon Starr - Corporate Broking
Threadneedle Communications	Tel. +44 (0)20 7653 9850
Josh Royston
Hilary Millar

 

 

 

Chairman's Statement

 

We can look back on the last financial year with considerable pride, having achieved record sales, profits and earnings per share. In the middle of the year we made our largest acquisition, Hartest Holdings Plc ("Hartest"), and this group of companies is already making a valuable contribution to the Group and our financial performance.  During the year we successfully raised £3.3 million (net) by placing new shares and we have a number of new institutional shareholders.

 

The task for the current financial year is to lay the foundations for a step change in the scale of the Group. We are designing an organisational structure for growth.

 

Innovation

 

One of Elektron's key strengths is its diversity of brands and technologies within the fast moving engineered products sector. The management of these valuable intangibles with an emphasis on innovation harmonises the Group into one unified structure.

 

We have stressed the importance of innovation in the past couple of years after a period in which the Group had reduced its focus on new product development ("NPD"). In the year ended 31 January 2011 we increased the amount spent on Research and Development and the benefits of this will begin to be felt towards the end of the current year. Technology is the single investment proposition that binds all Elektron companies, and we are now undertaking a fundamental reorganisation of the Group, placing even greater focus on NPD.  We are in the process of setting up a Technology Centre at our new head office in Cambridge. A main focus of the Group will be the process of innovation itself, encompassing not only the generation of ideas for high margin new products but a detailed analysis of potential demand and careful mapping of the path to market which is necessary before development work is carried out.

 

In recognition of the changes that are being made, the Directors propose to change the name of the Group to Elektron Technology Plc and an appropriate resolution will be brought forward at the forthcoming AGM.

 

Acquisition

 

In 2010 we acquired Hartest, our largest transaction to date. I am pleased to say that this acquisition is being successfully integrated into our Group and Hartest now brings us a degree of critical mass.  The Group in its present form has been built up from a number of acquisitions and is quite fragmented. Great attention is now being paid to ensure that all our business units derive the maximum possible benefit from being part of a larger Group. Our new size means that we can now afford to set up specialised central functions which can attract professionals with expertise. We are already benefiting from central Human Resources and IT functions and will shortly build up a central Marketing function. This will provide vital support to the NPD effort.

 

The core focus of the management team remains to grow the business to create an even greater stable of technology driven brands, operating in high margin niche markets and providing them with the necessary infrastructure, expertise and knowledge network to thrive. As such we will continue to seek acquisitions to complement our organic growth aspirations, thereby increasing the size of the Group, creating greater economies of scale and cross-selling opportunities and ultimately maximising shareholder value.

 

In the current financial year we shall be renewing our search for acquisitions that will enhance the Group and we are now widening our search to include further businesses based overseas.

 

People

 

Elektron is increasingly being seen as a vibrant Group to work for. We are paying great attention to the recruitment and development of talent throughout the organisation. We are building up our expertise in various key areas and we have established regional boards in the Asia Pacific region and the Americas. It is an exciting time for our people. I should like to thank them all for their hard work over the past year.

 

Thanks are due to Geoff Spink who is leaving the Group later this year. Geoff worked for Hartest for some years as CEO and also as Group Finance Director on its acquisition by Elektron. A successor will be announced shortly.

 

Dividends

 

Further to the maiden 0.25p interim dividend paid in December 2010, the Board is continuing to increase dividends and proposes to pay a final dividend of 0.55p per share (2010: 0.50p) on 16 August 2011. This represents a 60% total increase year on year. 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 Board will continue to maintain a progressive dividend policy.

 

Outlook

 

Our current financial year will once again be a year of transition. We wish to lay the foundations that will enable the Group to grow to the next level. Last year we invested heavily in technical, sales and marketing resource.  This reflected the sales growth that we hoped to achieve in our markets. We were not disappointed.  The process will continue in 2011. To support this, the Group is budgeting some £9.3 million of sales and marketing costs. 

 

Elektron has begun trading strongly this year and the integration of Hartest is nearing completion.  The Group is well positioned to continue on its growth curve and we look forward to another successful year.

 

 

Keith Daley

Chairman

 

 

 

 

Chief Executive Officer's Review

 

Overview

 

Elektron's results demonstrate substantial growth, both in revenue and earnings, over prior years.  Revenue increased 67% with a corresponding increase in operating profit before non-recurring and special items of 200%. The increase was a result of both organic growth and the acquisition in September of Hartest. These results highlight the leap that Elektron has undertaken over the past few years.  Indeed, when comparisons are drawn with the pre-recession results of 2009, core operating profit has increased 300%. The Finance Director's Report provides greater detail.

 

Strategy

 

Elektron now owns a portfolio of fifteen valuable brands. It has a manufacturing footprint in three continents, a direct sales presence in six continents and a distribution network in more than 125 countries. We do not define ourselves solely in terms of the products we design and produce; rather Elektron's unifying proposition is its approach to the management of its technologies.  All of our brands are positioned in the fast moving engineered products sector. They offer technological benefits and competitive advantage to us and our industrial customers.

 

We consider our core competences to include:

 

·     Monitoring and control of temperature/pressure and environmental systems

·     Harsh environment connectivity and sealing, indication and illumination

·     Precision instrumentation and measurement systems

·     Electronic management systems and power conservation

·     Calibration and metrology equipment

·     Bespoke design & manufacture solutions for specific customer needs

 

We have placed new product development ("NPD") at the core of our Group. The NPD process for all of our products is identical and in order to give the utmost priority to NPD we have recently opened a Technology Centre in Cambridge, UK. This will be the head office of the Group, and the foundation for our R&D activity.  Cambridge is sometimes designated 'Silicon Fen', a major venture capital market which is home to numerous high tech companies. Many have ties to the University of Cambridge.  As a result there is in the area a significant pool of engineers with multi-disciplinary backgrounds.

 

The Group has a diverse range of technologies offering tremendous scope for collaboration.  The creation of the Technology Centre will maximise the efficiency of the R&D output and accelerate time to market for new products.  This will enable Elektron to offer to its business units unparalleled levels of development capability.

 

The Group focus over the past three years has transitioned from that of manufacturing legacy products to development and exploitation of core technologies.  We intend to accelerate this evolution. We have implemented a proprietary development process that captures all requirements, reduces the likelihood of change of scope and monitors and controls spend through project management principles to ensure on-time, on-budget delivery.  Twelve months on from conception of Elektron's largest ever product development (budgeted at £1.3 million) under the Bulgin brand, development remains on track and is testament to the robustness of our process.

 

Functional Specialisation

 

With the acquisition of Hartest in September 2010, 'critical mass' has been achieved which allows us to set up key functional departments.  This has led to the previous divisionalised structure being dismantled. The Group is currently undergoing a transformational 'defragmentation' programme to provide senior management with a suite of tools to allow them to manage their businesses with greater efficiency. These include:

 

 - A Marketing function to complement the creative talents of our research and development team. We are in the process of appointing a Group Head of Marketing.  With an unparalleled, diverse, customer network for an organisation of our size, we need to monitor market and technology trends to ensure we are at the forefront of technological product offerings. This will ensure a focus on areas where barriers to competitors are high and margins may be protected. Our aim should be not only to achieve 'best in class' but also first to market.

 

 - A Human Resources function to ensure that we attract, train and retain the best people. Elektron recognises the value of our people. They are the foundation upon which the successful transformation of Elektron has been built. Early successes here include the Management Development Programme and the Graduate Recruitment Programme where graduates will benefit from a tailored two year training programme. 

 

 - An IT function which is implementing a Group wide computer system that will eventually provide a much greater range of information to managers to enable them to run their businesses more efficiently.

 

 - A Global Operations function to ensure we make the best use of our manufacturing footprint. New products can be manufactured close to the intended geographic market, reducing transportation time and cost and reducing lead time to customers.  Overseen by our newly appointed Group Head of Operations, all sites are moving towards a standardised programme of continuous improvement.  Our vertical integration programmes aim to maximise sources of value, offering the potential to reduce lead times and increase margins further.  This flexible approach to manufacturing, supported by contingency planning, enables us to run parallel manufacturing at more than one Elektron location with the minimum of disruption.

 

Regional Management

 

Last year we also regionalised our management structure to provide a much needed geographic focus. 

 

 

Regionally, our sales split is as follows:

 

			2010 - 11				2009-10
			Combined	Hartest	Former
			Elektron	Group	Elektron		Elektron
				From 1 September 2010
			£000's	£000's	£000's		£000's
United Kingdom			21,321	5,276	16,045		12,902
Rest of Europe, M East & Africa			13,014	2,105	10,909		8,294
Asia Pacific			9,148	2,890	6,258		3,953
Americas			6,557	372	6,185		4,733
Total			50,040	10,643	39,397		29,882

 

Leveraging the regionalised global sales presence, for the benefit of the Elektron Group, provides worldwide exposure and market access that many of our smaller, UK centric brands could not have accessed individually.  Pooling the sales resources of the Group provides significant economies of scale.  This benefits greatly brands such as Carnation and Queensgate with little global exposure and provides direct support to brands such as Agar, ASL, Digitron, Titman, Sheen, Wallace, Tinsley and Henson. As a Group, these have a major part of their sales outside the UK, but previously no direct sales personnel overseas.

 

In the Americas, we have further restructured and increased our direct sales presence by 50%.  In conjunction with our hybrid selling model, utilising direct employees and manufacturer representatives, our sales team continues to identify record levels of opportunities for standard product and bespoke applications. 

 

Elektron has invested in sales resource to provide comprehensive coverage of Greater China and Asia Pacific.  This has resulted in a sales increase in excess of 50% over prior year.  We continue to expand our sales footprint and plan to recruit a Regional Sales Manager for India to grow our expanding distribution network and target key OEM opportunities, to expand the contribution India makes to Elektron revenues following the Hartest acquisition.

 

The above changes are designed to ensure that we are organised for growth and optimum efficiency. As a result we expect that future acquisitions, when they are made, can be seamlessly integrated into our streamlined structure.

 

Brand Performance

 

The Board considers that most of our brands are recognised worldwide as leaders within their markets and at the forefront of technology in their respective fields.  Significant developments include:

 

Bulgin (Connectors for harsh environments) continues to focus on providing technology solutions to OEM customers and will begin the phased launch of its important new connector series later this year.

 

Queensgate (Nanopositioning systems) has continued its development of a new product range which has recently culminated in the award of £186,000 of UK Government Technology Strategy Board ("TSB") funding.  We regard this recognition of our work by TSB as highly significant.

 

Carnation Designs (Management systems for emergency vehicles) continues to exploit its position as market leader, and is in the process of expanding outside the UK (where it holds the lion's share of the ambulance management system market) into Europe and the Americas.

 

Henson (Ophthalmic instruments) has launched its Henson 8000 Visual Field Analyser which has been met with accolades from the industry and has global sales potential.

 

Tinsley (Calibration Laboratory equipment) has provided the Group with a footprint in India and will play a vital part in the continued expansion of business in this region.

 

Agar (Microscopy supplies) is increasing its profitability and range by manufacturing a greater proportion of its sales.

 

 

John Wilson

Chief Executive Officer

 

 

 

 

Group Finance Director's Report

 

The Group has enjoyed an excellent year, aided by the Hartest acquisition, with overall earnings before interest, tax and non-recurring and special items up three-fold to £5.3 million from £1.8 million on sales up by 67% to £50.0 million from £29.9 million.  Aggregate gross margins also improved, to 42% from 40% in the previous year.

 

Non-recurring and special costsof £1.5 million (2010: £1.4 million) were incurred in the year, mainly comprising redundancy and reorganisation costs in the original Elektron businesses in the early months of the financial year (£0.5 million) followed by costs related to the Hartest acquisition later in the year, including acquisition expenses (£0.4 million), Group Board restructuring (£0.4 million), and post-acquisition restructuring (£0.2 million).

 

At the outset of the financial year, we owned a 23% stake in Hartest which was held in our books at a market value of £1.3 million, subsequently revalued to £1.7 million.  In July 2010, we acquired a further holding of 29.9% in Hartest from the other major shareholder in that group, triggering a mandatory bid by Elektron at a price of 90 pence per Hartest share.  The bid was successfully completed in September 2010 at a total additional cost of £6.3 million, yielding a total cost of investment of £8.0 million, reduced by acquired cash of £0.4 million.  In the five months since acquisition, the Hartest businesses have contributed £1.2 million to Group earnings.

 

The Group has issued a total of 18.3 million Ordinary Shares during the year, at a range of prices, producing an overall cash inflow of £3.3 million net of issue expenses.  The balance of funds required to finance the Hartest acquisition was obtained from an increase to £2.7 million in the three-year Term Loan from the Group's bankers.

 

The tax charge shown in the accounts is £0.6 million, representing 18% of profits (2010: credit £69,000; 31%).  We have gained benefit against the standard rate of UK taxation of 28% as a result of losses brought forward from earlier years and lower prevailing rates in some overseas territories.

 

Earnings per share have been calculated on 97,153,164 shares (2010: 86,771,946), being the average number in issue throughout the year as

-            basic earnings 3.00p (2010: 0.34p)

-            basic earnings before non recurring and special items 4.20p (2010: 1.50p)

-            diluted earnings 2.98p (2010: 0.34p).

 

The Board is proposing a final dividend of 0.55p per share (2010: 0.50p) payable on 16 August 2011 to shareholders on the register at 17 June 2011. The Board is proposing a scrip issue alternative and full details are to be contained in the documentation convening the Annual General Meeting.

 

The Board reviews Group performance against budget on a monthly basis. The key performance indicators regularly monitored by the Board include revenue, gross margin and overhead expenditure trends at each Group company. Working capital utilisation is also closely monitored by regular review of inventory holding periods and debtor/creditor days. Business prospects are assessed by reviewing rolling three month forecasts and order intake trends, supported by order book levels.

 

The Group has continued to adopt the provisions of IFRS8 "Operating Segments" and historically shown summary information in respect of these segments.  In the current year, we have separated the Elektron Technology components information from the other activities that operated within the Elektron group at the commencement of the year, and then shown the separate contribution to Group activities arising from the acquisition of Hartest.  Looking forward, the Group is now implementing a transformational programme to set up key functional departments to provide support to John Wilson in his role as Chief Operating Decision Maker, as fully explained in the Chief Executive Officer's Review.  As a result of these structural changes, the Group will operate as a single segment with effect from 1 February 2011, although we will continue to provide full territory sales information on our world-wide sales achievements.

 

The Group generated £3.1 million of cash from trading after deducting £0.7 million of working capital increases and payment of £1.9 million in restructuring and other non-recurring and special costs. It paid £5.8 million to acquire the outstanding shares in Hartest, £0.6 million (net) to purchase plant and machinery, £0.3 million to purchase intangible assets, repaid £0.3 million in loans and borrowings (net), and paid £0.6 million in dividends thus utilising £4.5 million net cash in the year, prior to receipt of the proceeds of share issue £3.3 million and an increase in the bank term loan of £1.9 million referred to above.

 

The Group meets its day-to-day working capital requirements through invoice discounting facilities and a Term Loan provided by the Group's bankers.  The Directors have reviewed current cash flow projections for the coming twelve months taking account of reasonably possible changes in trading performance, existing borrowing facilities and forecast covenant compliance.  The Directors have no reason to believe that any of the existing borrowing facilities might be withdrawn or that there would be any other material change in the current financial projections of the Group.  As a result the Directors have formed a judgment when approving the financial statements that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements.

 

Net assets of the Group are £14.6 million (2010: £8.5 million) with net debt at 31 January 2011 of £4.3 million (2010: £3.4 million).  Net gearing has decreased to 29% from 40%.

 

 

Geoff Spink

Group Finance Director

   

 

 

 

 

Consolidated statement of comprehensive income     

Year ended 31 January 2011

 

 

				2011	2010
Continuing operations			Notes	£'000	£'000
Revenue			3	50,040	29,882
Cost of sales				(28,969)	(17,941)
Gross profit				21,071	11,941
Operating Expenses
Net operating expenses (excluding non-recurring and special items)				(15,771)	(10,179)
Operating profit before non-recurring and special items			3	5,300	1,762
Non-recurring and special items			4	(1,504)	(1,399)
Total operating expenses				(17,275)	(11,578)
Operating profit				3,796	363
Finance income				1	-
Finance costs				(244)	(141)
Profit before taxation				3,553	222
Taxation				(636)	69
Profit for the year attributable to equity shareholders				2,917	291
Other comprehensive income
Currency translation differences on foreign currency net investments				(28)	(309)
Available-for-sale financial assets - gains arising during the year				409	805
Total other comprehensive income				381	496
Total comprehensive income for the financial year attributable to equity shareholders				3,298	787
Earnings per share	- basic		5	3.00p	0.34p
	- basic, before non-recurring and special items		5	4.20p	1.50p
	- diluted		5	2.98p	0.34p
	- diluted, before non-recurring and special items		5	4.17p	1.50p

 

  

 

  

 

 

Consolidated balance sheet

 

As at 31 January 2011

 

 

		2011	2010
		£'000	£'000
Assets
Non-current assets
Goodwill		1,253	-
Other intangible assets		3,481	-
Property, plant and equipment		4,250	4,300
Available-for-sale financial assets		-	1,315
Deferred tax		164	583
Total non-current assets		9,148	6,198
Current assets
Inventories		9,169	4,892
Trade and other receivables		11,810	6,898
Cash and cash equivalents		1,201	504
Total current assets		22,180	12,294
Total assets		31,328	18,492
Equity and liabilities
Equity attributable to equity holders of the parent
Called-up share capital		5,320	4,406
Share premium		2,902	117
Merger reserve		1,047	1,047
Capital redemption reserve		163	163
Other reserves		107	125
Retained earnings		5,046	2,635
Total equity		14,585	8,493
Non-current liabilities
Long-term borrowings		1,973	1,198
Accruals and deferred income		64	150
Long-term provisions		273	64
Total non-current liabilities		2,310	1,412
Current liabilities
Trade and other payables		9,445	4,562
Short-term borrowings		1,893	1,761
Current portion of long-term borrowings		1,609	911
Current tax payable		1,006	650
Short-term provisions		480	703
Total current liabilities		14,433	8,587
Total liabilities		16,743	9,999
Total equity and liabilities		31,328	18,492

 

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

 

Year ended 31 January 2011

 

 

				Capital
	Share	Share	Merger	redemption	Other	Retained
	capital	premium	reserve	reserve	reserves	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 February 2009	4,279	244	1,047	163	434	1,723	7,890
Profit for the year	-	-	-	-	-	291	291
Currency translation differences on foreign currency net investments	-	-	-	-	(309)	-	(309)
Available-for-sale financial assets - gains arising during the year	-	-	-	-	-	805	805
Total comprehensive income/(expense) for the period	-	-	-	-	(309)	1,096	787
Share issues	127	(127)	-	-	-	-	-
Dividends paid on ordinary shares	-	-	-	-	-	(393)	(393)
Adjustment for scrip dividend element	-	-	-	-	-	209	209
At 1 February 2010	4,406	117	1,047	163	125	2,635	8,493
Profit for the year	-	-	-	-	-	2,917	2,917
Currency translation differences on foreign currency net investments	-	-	-	-	(28)	-	(28)
Available-for-sale financial assets - gains arising during the year	-	-	-	-	-	409	409
Total comprehensive income/(expense) for the period	-	-	-	-	(28)	3,326	3,298
Share issues	878	2,664	-	-	-	-	3,542
Expenses incurred in share issue	-	(202)	-	-	-	-	(202)
Adjustment for scrip dividend element in respect of prior year	-	209	-	-	-	(209)	-
Dividends paid on ordinary shares	-	-	-	-	-	(706)	(706)
Adjustment for scrip dividend element	36	114	-	-	-	-	150
Credit to equity for equity settled share based payments	-	-	-	-	10	-	10
At 31 January 2011	5,320	2,902	1,047	163	107	5,046	14,585

 

 

 

 

  

 

 

 

 

Consolidated statement of cash flows

 

Year ended 31 January 2011

 

 

		2011	2010
		£'000	£'000
Net cash inflow from operating activities		3,109	1,484
Investing activities
Interest received		1	--
Purchase of available-for-sale financial assets		--	(52)
Purchase of property, plant and equipment		(738)	(1,373)
Purchase of intangible assets		(306)	-
Proceeds of sale of property, plant and equipment		130	22
Acquisition of subsidiary	6	(5,889)	-
Net cash used in investing activities		(6,802)	(1,403)
Financing activities
Proceeds on issue of shares		3,543	--
Expenses associated with share issues		(202)	-
New bank loans raised		1,932	245
Repayment of borrowings		-	(400)
New finance leases		225	479
Payment of hire purchase and finance liabilities		(552)	(551)
Dividends paid		(556)	(184)
Net cash generated from/(used in) financing activities		4,390	(411)
Net increase/(decrease) in cash and cash equivalents		697	(330)
Cash and cash equivalents at the beginning of period		504	834
Cash and cash equivalents at the end of period		1,201	504

 

  

 

 

 

Notes to the Consolidated Financial Statements

 

Year ended 31 January 2011

 

 

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 2011. 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 2011 will be delivered to the Registrar of Companies following the Company's Annual General Meeting to be held on 28 July 2011. 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 with IFRS in July 2011.

2. Accounting policies 

Full details of accounting policies will be included in the annual report for the year ended 31 January 2011.  These are not expected to be materially different from those set out in the Group's statutory accounts for the year ended 31 January 2010.

 

3. Segmental reporting

 

The Group has continued to adopt the provisions of IFRS 8 "Operating Segments" and has historically shown summary information in respect of these segments.  In the current year, the Elektron Technology components information has been separated from the other activities that operated within the Elektron group at the commencement of the year, and the separate contribution to Group activities arising from the acquisition of Hartest Holdings plc has been shown separately. This segmentation is consistent with internal reports to the Chief Operating Decision Maker for use in assessing business performance and allocating Group resources.  The Chief Operating Decision Maker is the Chief Executive Officer of the Group.

 

	Segment revenue			Operating profit/(loss) before non recurring and special items			Operating profit/(loss)
	2011	2010		2011	2010		2011	2010
Segment revenues and results	£'000	£'000		£'000	£'000		£'000	£'000
Elektron Technology Division	29,721	21,530		3,921	2,523		3,507	1,326
Other Elektron Operations	9,676	8,352		541	(443)		451	(496)
Hartest Holdings plc from 1 September 2010	10,643	-		1,188	-		1,052	-
Total	50,040	29,882		5,650	2,080		5,010	830
Unallocated central costs				(350)	(318)		(1,214)	(467)
Operating profit				5,300	1,762		3,796	363
Finance costs (net)							(243)	(141)
Profit before tax							3,553	222

 

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 partial allocation of central administration costs. This is the measure reported to the Chief Operating Decision Maker for the purposes of resource allocation and assessment of segment performance.

 

 

 

 

 

 

 

		2011	2010
Segment assets		£'000	£'000
Elektron Technology Division		10,988	10,468
Other Elektron Operations		5,906	6,021
Hartest Holdings plc Operations		13,274	-
Unallocated assets		1,160	2,003
Consolidated assets		31,328	18,492

 

	2011	2010
Segment liabilities	£'000	£'000
Elektron Technology Division	3,688	3,839
Other Elektron Operations	3,748	4,284
Hartest Holdings plc Operations	6,107	-
Unallocated liabilities	3,200	1,876
Consolidated liabilities	16,743	9,999

 

	Depreciation and amortisation			Additions to non-current assets
	2011	2010		2011	2010
Other segment information	£'000	£'000		£'000	£'000
Elektron Technology Division	604	509		636	673
Other Elektron Operations	479	411		171	277
Hartest Holdings plc from 1 September 2010	175	-		165	-
Unallocated	94	7		72	423
Total	1,352	927		1,044	1,373

 

The Elektron Group considers its operations in the following geographical regions:

	Revenue from external customers			Non-current assets
	2011	2010		2011	2010
	£'000	£'000		£'000	£'000
United Kingdom	21,321	12,902		8,083	5,353
Rest of Europe, Middle East and Africa	13,014	8,294		160	223
Asia Pacific and China	9,148	3,953		857	616
Americas	6,557	4,733		48	6
Total	50,040	29,882		9,148	6,198

 

 

4. Non-recurring and special items

 

 

	2011		2010
	£'000		£'000
Restructuring costs	879		1,473
Acquisition costs	359		-
Write down of Chinese assets	177		-
Aborted development costs	60		-
Insurance settlement	-		(117)
Other income	(50)		(78)
Aborted acquisition costs	-		121
Amortisation of acquisition intangible assets	79		-
	1,504		1,399

 

The restructuring costs include amounts payable in respect of staff redundancies during the year due to the transfer of manufacturing facilities offshore and the consolidation of operations in the UK and related factory closure costs, together with restructuring expenses following the acquisition of Hartest Holdings plc.

 

5. Earnings per share

 

The calculation of the basic and diluted earnings per share is based on the following data:

Earnings		2011 £'000s	2010 £'000s
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to owners of the Company		2,917	291
Adjustment in respect of non-recurring and special items net of taxation £336,000 (2010: £392,000)		1,168	1,007
Earnings for the purposes of  earnings per share before non-recurring and special items		4,085	1,298
Number of shares		2011	2010
Weighted average number of ordinary shares for the purposes of basic earnings per share		97,153,164	86,771,946
Effect of dilutive potential ordinary shares:
Share options		693,904	-
Weighted average number of ordinary shares for the purposes of diluted earnings per share		97,847,068	86,771,946
Earnings per share		2011	2010
Earnings per share - basic		3.00p	0.34p
Earnings per share - diluted		2.98p	0.34p
Basic earnings per share before non-recurring and special items		4.20p	1.50p
Diluted earnings per share before non-recurring and special items		4.17p	1.50p

 

6. Acquisition of subsidiary

 

The Group has adopted IFRS 3 (2008) Business Combinations and IAS 27 (2008) Consolidated and Separate Financial Statements with effect from 31 January 2010.

 

On 1 September 2010, the Group acquired control of Hartest Holdings plc ("Hartest"), in order to continue the development of the Elektron plc group. The principal activities of Hartest are the manufacture and sale of specialist scientific instrumentation together with the distribution of specialist healthcare equipment.

 

 

	Book value £'000s		Fair value £'000s
Recognised amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents	424		424
Receivables	4,825		4,825
Deferred tax	276		(109)
Inventory	3,589		3,114
Property, plant and equipment	1,002		1,002
Identifiable intangible assets	204		2,782
Financial liabilities	(4,794)		(4,805)
Provisions	(449)		(449)
Total identifiable assets	5,077		6,784
Goodwill			1,253
Total consideration			8,037
Satisfied by:
Cash			6,313
Value of 23% existing holding in Hartest			1,724
Total consideration transferred			8,037
Cash consideration			(6,313)
Less: cash and cash equivalent balances acquired			424
Net cash outflow arising on acquisition			(5,889)

 

The fair value adjustments comprise the recognition of £2,458,000 of intangible assets representing marketing, customer and technology related assets plus an associated deferred tax liability of £664,000. Inventory values have been re-assessed in line with Elektron policies.

The goodwill of £1,253,000 arising from the acquisition represents the excess of consideration over the fair value of net assets acquired. None of the goodwill is expected to be deductible for income tax purposes.

Acquisition-related costs (included within non-recurring and special items) amount to £359,000.

 

The Hartest Group contributed £10,643,000 revenue and £1,188,000 to the Group's profit for the period between the date of acquisition and the balance sheet date.

If the acquisition of Hartest Holdings plc had been completed on the first day of the financial year, Group revenues for the period would have been £65,303,000 and profit before non-recurring and special items would have been £5,901,000.

7.  Dividend / scrip alternative

The dividend, if approved at the Annual General Meeting on 28 July 2011, will be paid on 16 August 2011 to shareholders on the register at 17 June 2011. Certificates for the scrip alternative if approved at the Annual General Meeting, will be posted to shareholders on 17 August 2011 to shareholders on the register at 17 June 2011. The first day of dealings is expected to be 18 August 2011.

8.  Change of registered office

The company announces today that it has changed it registered office to Broers Building, JJ Thomson Avenue, Cambridge, CB3 0FA

9.   Other information

Audited financial statements will be sent to shareholders at the start of July 2011.  Copies of this announcement can be viewed on the Company's website at www.elektronplc.comand are available free of charge from the Company'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 audited financial statements will be so available for at least 14 days from date of publication.