18th Sep 2006 15:53
Elektron PLC18 September 2006 For immediate release 18 September 2006. ELEKTRON PLC Interim results for the period ended 31 July 2006 Elektron PLC ("Elektron"), the AIM quoted Engineered Components manufacturerannounces results for the half-year ended 31 July 2006. Key Points: • Turnover up 17% to £12,954,000 (2005: £11,112,000) • Operating profits before exceptional items up 11% to £1,173,000 (2005: £1,057,000) • Cash generated from operations up 25% to £972,000 (2005: £776,000) • Transfer of remaining Bulgin production to Tunisia anticipated to produce future annualised cost savings of £900,000. • Underlying earnings per share before exceptional costs up 11% to 1.08p (2005: 0.97p) • Net cash increased to £886,000 from £443,000 at 31 January 2006 For further information please contact: Adrian Girling Roland CornishExecutive Chairman ChairmanElektron PLC Beaumont Cornish LimitedTel: 020 8477 9300 Tel: 020 7628 3396 Chairman's Statement The first half of the current financial year has seen good progress in our longterm plans to develop the Group. The recent past has seen us successfullytransition from a UK manufacturer incurring losses to a profitable UK andoffshore manufacturer with much lower costs of production. The closure of theBarking based Bulgin factory later this year and consequent transfer to ourTunisian factory will elicit further annualised savings in the region of£900,000. We have also been taking action to secure future growth in revenue streams byinvesting in sales and product development capability. In particular, we haverecruited sales managers in Beijing and Shanghai to target opportunities inChina as well as designing and developing a number of new electronic productswhich will be exhibited at the Electronica exhibition in November. Financial results Group sales have increased by 17% with increases in all the markets we serve.Domestic sales were up 15% to £4.3 million, European sales by 15% to £4.3m,North American sales by 20% to £2.1 million and rest of the world by 22% to £2.2million. Group operating profits of £1,173,000 before exceptional items were 11% ahead ofthose in first half of last year. Gross margins have remained steady at 38% as aresult of increasing metal prices offset by a reduction in labour costs andproduct mix. The dramatic increases in raw material costs have allowed us to persuadecustomers in most of our markets to accept price increases, the benefits ofwhich should be seen in the second half. Since the year-end, moulding plant and machinery used by Bulgin has begun to betransferred to Tunisia following the leasing of additional space and it isexpected that this process will be largely completed by our coming year-end.Consequently, all Bulgin manufacturing will cease at Barking and the factoryvacated by March 2007. This will incur one-time revenue costs of £1 million ofwhich £476,000 has been incurred in the first half. The weakening of the US dollar has impacted and we have incurred a loss onforeign currency transactions and translations of £91,000 compared with a gainof £75,000 in the comparative period last year. Cash generated from operations was up 25% on the corresponding period to£972,000. £419,000 was spent on plant and equipment, £280,000 on repayment ofhire purchase and lease finance obligations and £132,000 on purchase of ownshares. At 31 July 2006, net funds, being cash less borrowings, had increased to£886,000. Acquisitions In the Annual Report I stated that the Board was optimistic about concluding atransaction in the current year. At that time we were considering twoopportunities having reached agreements on price subject to due diligence. The first opportunity, which is a manufacturer of components in Europe andTunisia, is still under discussion as a result of findings during the duediligence process. Due diligence is currently continuing on another opportunity.We have written off £41,000 as exceptional costs in respect of these potentialtransactions. Earnings per share, share buy back and dividends The underlying earnings per share before exceptional costs were 1.08p comparedwith 0.97p in 2005. Basic and diluted earnings per share were 0.60p (2005:0.93p). During the period 764,500 shares were bought on-market at a cost of £132,000. The Board has considered the payment of an interim dividend, but in the light ofcurrent projects has decided to retain cash. Providing progress continues to bemade the Directors intend to review the rate of the dividend at the year-end. Employees I should like to thank all of our staff for their continued hard work,particularly those at Bulgin who have worked diligently and professionally inthe light of the announcement that the factory would close and operations betransferred to Tunisia. Outlook Orders received to date are currently up 8% on this time last year and with newproducts coming on stream we are well placed to continue progress. Adrian GirlingExecutive Chairman Group Income Statement Unaudited Interim Results to 31 July 2006 Half year to Half year to Year to 31 July 31 July 31 January 2006 2005 2006 As restated As restated £'000 £'000 £'000 Revenue from continuing operations 12,954 11,112 22,467Cost of sales (8,077) (6,899) (14,041) --------- --------- ---------Gross profit 4,877 4,213 8,426Net operating expenses (includingexceptional items) (4,221) (3,205) (6,666) --------- --------- -------------------------------------- --------- --------- ---------Operating profit before exceptionalitems 1,173 1,057 1,791Exceptional items (517) (49) (31)----------------------------- --------- --------- --------- Operating profit from continuingoperations 656 1,008 1,760 Finance costs (13) (12) (16) --------- --------- ---------Profit on ordinary activities beforetaxation 643 996 1,744 Taxation on profit on ordinaryactivities (174) (283) (477) --------- --------- ---------Profit attributable to shareholders 469 713 1,267 --------- --------- --------- --------- --------- ---------Earnings per share - basic 0.60p 0.93p 1.63p - diluted 0.60p 0.93p 1.63p --------- --------- --------- Group Balance Sheet Unaudited Interim Results at 31 July 2006 31 July 31 July 31 January 2006 2005 2006 £'000 £'000 £'000Assets As As restated restatedNon-current assetsProperty, plant and equipment 2,096 2,256 2,165Deferred tax 285 72 89 -------- --------- --------- 2,381 2,328 2,254 -------- --------- ---------Current assetsInventories 3,282 3,263 3,266Trade receivables 4,575 4,062 3,979Other current assets 613 594 606Cash and cash equivalents 2,421 2,624 1,714 -------- --------- --------- 10,891 10,543 9,565 -------- --------- --------- Total assets 13,272 12,871 11,819 -------- --------- --------- Equity and liabilitiesEquity attributable to equity holders of theparentCalled - up share capital 3,916 4,021 3,954Share premium 244 244 244Capital redemption reserve 105 - 67Other reserves 59 50 46Retained earnings 2,568 1,905 2,255Own shares - (20) - -------- --------- ---------Total equity 6,892 6,200 6,566 -------- --------- --------- Non-current liabilitiesLong-term borrowings 160 202 -Long-term provisions 269 347 357 -------- --------- ---------Total non-current liabilities 429 549 357 -------- --------- --------- Current liabilitiesTrade and other payables 3,350 3,648 2,869Short-term borrowings 1,087 671 758Current portion of long-term borrowings 288 608 513Current tax payable 644 886 678Short-term provisions 582 309 78 -------- --------- ---------Total current liabilities 5,951 6,122 4,896 -------- --------- --------- Total liabilities 6,380 6,671 5,253 -------- --------- --------- Total equity and liabilities 13,272 12,871 11,819 -------- --------- --------- Group Cash Flow Statement Unaudited Interim Results to 31 July 2006 31 July 31 July 31 January 2006 2005 2006 £'000 £'000 £'000 As restated As restatedCash flows from operating activitiesProfit before taxation 643 996 1,744Adjustments for:Depreciation 481 453 902Interest expense 13 12 16 -------- -------- --------Operating profit before working capitalchanges 1,137 1,461 2,662Increase in trade and other receivables (626) (764) (748)Increase in inventories (15) (263) (236)Increase in trade payables 477 418 243Other non-cash movements 429 (4) (285) -------- -------- --------Cash generated from operations 1,402 848 1,636Interest paid (36) (48) (81)Taxation paid (394) (24) (814) -------- -------- --------Net cash from operating activities 972 776 741 -------- -------- -------- Cash flows from investing activitiesSale of subsidiaries - 50 150Purchase of property, plant andequipment (419) (180) (546)Proceeds of sale of property, plant andequipment - 11 28Interest received 23 36 66 -------- -------- --------Net cash used in investing activities (396) (83) (302) -------- -------- -------- Cash flows from financing activitiesIssue of shares - 200 200Purchase of own shares (132) - (205)Proceeds from long term borrowings 214 - -Movement in short term borrowings 329 443 529Payment of hire purchase and financeliabilities (280) (293) (589)Dividends paid - - (241) -------- -------- --------Net cash used in financing activities 131 350 (306) -------- -------- -------- Net increase in cash and cashequivalents 707 1,043 133Cash and cash equivalents at thebeginning of period 1,714 1,581 1,581 -------- -------- --------Cash and cash equivalents at the end ofperiod 2,421 2,624 1,714 -------- -------- -------- Group statement of changes in equity Unaudited Interim Results to 31 July 2006 Share Share Capital Other Retained Total Capital Premium Redemption reserves earnings Reserve £'000 £'000 £'000 £'000 £'000 £'000At 31 January2006 3,954 244 67 2 2,286 6,553Changes inaccountingpolicy - - - 44 (31) 13Restatedbalance 3,954 244 67 46 2,255 6,566Share purchase (38) - 38 - (132) (132)Exchangedifferences - - - - (24) (24)Retainedprofit for theperiod - - - 13 469 482 ------- -------- --------- -------- -------- --------At 31 July 2006 3,916 244 105 59 2,568 6,892 ------- -------- --------- -------- -------- -------- Notes to the Unaudited Interim Results to 31 July 2006 1. Accounting Policies The interim financial information has been prepared on the basis ofInternational Financial Reporting Standards (IFRS). This interim statement isthe first consolidated financial report prepared in accordance with IFRS. Fulldetails of accounting policies will be included in the Annual Report for theyear ending 31 January 2007. These are not expected to be materially differentfrom those set out in the Group's statutory accounts for the year ended 31January 2006 with the exception of the policy in relation to share-basedpayments. The Group will implement the requirements of Financial Reporting Standard 20(IFRS 2) 'Share-based payment' in the 2007 Annual Report, and this standard hasaccordingly been adopted in the interim accounts with the comparative figuresbeing restated. This change in accounting policy has resulted in a pre-taxcharge of £13,000 for the six months ended 31 July 2006, £14,000 for the sixmonths ended 31 July 2005 and £27,000 for the year ended 31 January 2006. In accordance with FRS 20 (IFRS 2) 'Share-based payment', the Group reflects theeconomic cost of awarding shares and share options to employees by recording anexpense in the income statement equal to the fair value of the benefit awarded,fair value being estimated by an independent third party using a proprietarybinomial probability valuation model. The expense is recognised in the incomestatement over the vesting period of the award. Fixed annual charges are apportioned to the interim period on the basis of timeelapsed. Other expenses are accrued in accordance with the same principles usedin the preparation of the annual accounts. 2. Other information The financial information in this statement does not constitute statutoryaccounts. The financial information in respect of the year ended 31 January 2006has been extracted from the statutory accounts, as adjusted for IFRS, which havebeen filed with the Registrar of Companies. The auditors' report on thoseaccounts was unqualified and did not contain any statement under Section 237 ofthe Companies Act 1985. Copies of the interim results will be sent to shareholders and are availablefree of charge from the Company's registered office at Alfreds Way, Barking,Essex IG11 0AZ. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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