27th May 2005 07:00
Elektron PLC27 May 2005 Embargoed for release: 7:00 a.m. 27 May 2005 ELEKTRON PLC Preliminary results for the year ended 31st January 2005 Elektron PLC ("Elektron"), the AIM quoted components manufacturer announces itspreliminary results for the year ended 31st January 2005. Key Points: Operating profits on continuing operations before goodwill release of £1,653,000(2004: £796,000) Profit before taxation of £2,602,000 (2004: £1,605,000) Earnings per share before goodwill of 1.50p (2004: earnings 1.26p). Earnings pershare after goodwill 2.67p (2004: earnings 2.42p) Net cash of £250,000 (2004: Net borrowings of £1,651,000) Proposed final dividend of 0.3p per share (2004: nil) Current year has started satisfactorily For further information please contact: Adrian Girling Roland CornishExecutive Chairman ChairmanElektron PLC Beaumont Cornish LimitedTel: 020 8979 3232 Tel: 020 7628 3396 Chairman's Statement I am pleased to be able to report continued improvement in the Group's results. Bulgin Components designs and manufactures connectors, switches and otherelectromechanical components for industrial markets. Turnover was up on the previous year to £8,735,000 (2004: £7,931,000) returningoperating profits of £778,000 (before exceptional charges of £453,000) comparedto £376,000 in the previous year. Gross margins remained stable at 41% despitethe transfer of assembly to Tunisia incurring additional short term labour costswhilst recruitment and training took place. With the large majority of assemblynow in Tunisia margins are expected to improve in the current year. In the first three months of the new financial year incoming orders were£2,447,000 (2004: £2,588,000) and outgoing shipments £2,380,000 (2004:£2,489,000). Arcolectric specialises in the manufacture of appliance switches, indicatorlights and fuseholders for the consumer and industrial markets. Turnover was £13,948,000 returning operating profits of £1,286,000 with grossmargins of 34%. As mentioned previously, sales were boosted by the backlog oforders arising prior to the acquisition of Arcolectric in December 2003. In the first three months of the new financial year incoming orders were£3,169,000 and outgoing shipments of £3,218,000 which is considered to be morerepresentative of ongoing sales. Gearing and balance sheet At 31 January 2005, net cash inflows of £1,901,000 had turned net borrowings atthe previous year-end of £1,651,000 into net cash of £250,000.Tangible net assets at the year-end had increased 14% to £5,242,000, whichequates to a tangible net asset value per share of 6.9p per share compared to6.2p per share at 31 January 2004. Earnings per share and dividends Earnings per share for the year ended 31 January 2005, before goodwill were1.50p (year ended 31 January 2004: 1.26p). Earnings per share for the year ended31 January 2005, after goodwill were 2.67p (year ended 31 January 2004: 2.42p). The Board is proposing a final dividend of 0.3p per share (2004: nil) payable on5 August 2005. Future strategy The need to reduce costs continuously to offset margin pressure by making use oflow cost manufacturing has become part of the culture. Our customers are underpressure to reduce their costs. To meet their price expectations we must reduceour costs too. We are well placed, with our own manufacturing facilities inTunisia and China, to continue this process, also to serve the growing market inChina. Transfer is taking place at a measured pace to make sure we maintain highlevels of customer service, protecting and re-enforcing the Arcolectric andBulgin brand reputations. During the year we explored a number of potential acquisitions. We have not beenin agreement with the high value some owners place on businesses complementaryto ours. Our conclusion is that whilst opportunities may arise from time totime, we cannot rely on acquisitions to grow our business. In 2004 our priority was to get Arcolectric back into shape following theacquisition from the Receiver, and to transfer most of the Bulgin assemblyoperations to Tunisia. With the businesses now on even keel, we are putting greater emphasis on thedevelopment of innovative new products. The Ethernet and USB versions of theBulgin waterproof connectors have been successful beyond our expectations, withimmediate sales growth through catalogue distributors both in Europe and theUSA. The launch of a Firewire (1EEE 1394) version is imminent. This is thebeginning of our determined effort to transition from 'Connectors toConnectivity'. Taking this beyond our traditional expertise in electromechanical products, weintend to explore the opportunities for wireless connectivity, in relation tothe markets we serve.For instance, in December 2004, release of the ZigBee 1.0 specificationconfirmed a global standard for reliable, cost effective, low power wirelessconnectivity, targeted at industrial, building management, home appliancemonitoring and control markets. The Board believes that there will besubstantial growth in the applications that employ this technology. We do not believe in breaking new ground with high technology developments. Wewill develop robust solutions to customer problems based on proven technologiesfor the customers and markets we currently target. By providing componentsubsystems in selected growth markets to customers looking to reduce their fixedcosts we plan to achieve strong organic growth. We have already started to incurcosts towards the development of innovative electronic products. We will adopt aconservative approach to the cost and speed of development based onopportunities as they arise. There are companies who do not have the channels to market enjoyed by Bulgin andArcolectric, who lose money, yet are valued at multiples of sales because theyclaim to have a unique technological business proposition. In contrast, Elektronis profitable, has established brands and experienced management. We areoptimistic that experienced investors will recognise that these strengths,combined with a determined and measured approach to the development ofinnovative products in growth markets will underpin the value of theirinvestment in Elektron. Outlook We anticipate that weakness in some of our markets will be offset by the costsavings in having moved the majority of assembly to Tunisia. The current yearhas started satisfactorily Adrian Girling Executive Chairman Group Profit and Loss Account Preliminary Results for year ended 31 January 2005 2005 2004 2004 2003 £'000 £'000 Turnover - continuing operations 22,683 10,133- discontinued operations 333 1,850 ----------------------------- 23,016 11,983 ----------------------------- Cost of sales (14,635) (7,371) Gross profit 8,381 4,612 Net operating expenses (5,711) (2,866) --------- ---------Operating profit/(loss) - continuing operations 1,653 796- discontinued operations (63) (185)- negative goodwill release 1,080 1,135 --------- --------- -----------------------------Operating profit 2,670 1,746 Profit/(loss) on closure/disposal of discontinuedoperations 33 (47) ----------------------------- Profit on ordinary activities before interest 2,703 1,699 Net interest payable (101) (94) -----------------------------Profit on ordinary activities before taxation 2,602 1,605 Taxation on profit on ordinary activities (574) (299) -----------------------------Profit on ordinary activities after taxation 2,028 1,306 Dividends (229) - -----------------------------Transfer to reserves 1,799 1,306 ----------------------------- Earnings per ordinary share - basic 2.67p 2.42p Earnings per ordinary share before goodwillrelease/ 1.50p 1.26pamortisation - basic Group Balance Sheet Preliminary Results for year ended 31January 2005 31 January 31 January 2005 2004 £'000 £'000Fixed assetsNegative goodwill 0 (1,257)Tangible assets 2,528 3,149Investment in own shares 20 20 ---------------------------- 2,548 1,912 ---------------------------- Current assetsStocks 3,000 2,605Debtors 3,946 4,384Cash at bank and in hand 1,581 1,123 ---------------------------- 8,527 8,112 Creditors: amounts falling due within oneyear (4,592) (4,659) ---------------------------- Net current assets 3,935 3,453 ---------------------------- Total assets less current liabilities 6,483 5,365 Creditors: amounts falling due after morethan one year (512) (1,318) Provisions for liabilities and charges (729) (708) ----------------------------Net assets 5,242 3,339 ---------------------------- Capital and reservesCalled - up share capital 3,821 3,730Share premium 244 235Other reserves 20 -Profit and loss account 1,157 (626) ----------------------------Capital employed 5,242 3,339 ---------------------------- Notes: 1. Audited financial statements will be sent to shareholders towards theend of June 2005. Copies of this announcement are available free of charge fromthe Company's registered office at Alfreds Way, Barking, Essex IG11 0AZ for aperiod of one month from the date hereof and copies of the audited financialstatements will be so available for at least 14 days from date of publication. 2. The Company's financial statements for 2005, from which the figurescontained in this statement have been extracted, have not yet been reported onby the Company's auditors or filed with the Registrar of Companies. Thefinancial statements for 2004, from which the figures contained in thispreliminary statement have been extracted, have been filed and contain anunqualified audit report with no reference to section 237 of the Companies Act1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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