25th May 2006 07:01
Elektron PLC25 May 2006 Embargoed for release: 7:00 a.m. 25 May 2006 ELEKTRON PLC Preliminary unaudited results for the year ended 31st January 2006 Elektron PLC ("Elektron"), the AIM quoted Engineered Components companyannounces its preliminary results for the year ended 31st January 2006. Key Points: • Profit before taxation, excluding goodwill and discontinued items UP 14% to £1,771,000 • Earnings per share, before goodwill, UP 10% to 1.65p • Proposed final dividend UP 17% to 0.35p per share • Current order intake UP 15% • Share buyback programme commenced with 2.1 million shares purchased to date • A number of growth initiatives in hand including new sales subsidiary in China and portfolio of new products 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 Last year was hard work, but great fun. We are beginning to see the ongoing benefits of our relentless efforts to reducecosts by moving manufacturing offshore, coupled with the enthusiasm of ourglobal distribution partners as they embrace our determined efforts to re-inventthe business by developing innovative products beyond our traditionalelectromechanical experience. At our exhibition stand at Domotechnica in Koeln, the premier EuropeanExhibition for Home Appliances, we displayed a range of new products, includingsmart indicators, temperature logging devices, cooker hood controls and timerswitches. Most important, our distributors as well as OEM customers old and neware starting to recognise Elektron as a forward looking engineering innovator. To date we have invested in excess of £100k in developing electronic products.Whilst it will be some while before the sales of these higher margin productshave a significant impact on the bottom line, we are already seeing the positiveeffects on customer order levels for traditional products, through adistribution chain motivated by the prospect of something new. With a strong balance sheet, we are well positioned to cope with the recentdramatic increases in material prices, especially metals. Where we alreadymaintain good price levels achievable because of high quality and servicelevels, we are not so squeezed as some of our competitors who are now forced toraise prices. Also, owing to a strategy of global procurement and manufacturing,we have some natural hedging to offset the decline in the US dollar. The abilityto 'ride out' the currency and commodity price fluctuations gives usopportunities to win market share. Recognising the ever growing opportunities in China and Asia Pacific in general,we are taking steps to transition our business there from a factory primarilystructured for export, to a 'Wholly Owned Foreign Enterprise' which will allowus to trade directly into that market. We are hiring and training salespersonnel to be based at the major cities. We have transferred the firstauto-assembly machine to our factory in China, as part of the programme toenable the factory to function as a wholly independent designer and manufacturerof Elektron products. Results Turnover on continuing operations was £22,467,000 (2005: £22,683,000). Lastyear's figure included a one-off benefit of around £800,000 relating to theorder backlog following the acquisition of Arcolectric. Gross margins rose from 36.4% to 37.5%, in the face of metal and plastics priceincreases which were more than offset by the transfer of hand assembly toTunisia. Operating profit margins before goodwill rose to 8.0% compared with 6.9% theprevious year. With continued cash generation the net interest charges havereduced to £16,000 compared to £101,000 in the year ended 31 January 2005. In accordance with FRS 21 the comparative figures have been restated to showdividends in the period in which they were paid. Balance sheet & cashflow Robust trading has continued to strengthen the balance sheet with net fundsincreasing to £443,000 after repayment of £589,000 of lease finance obligations.All existing asset loan finance will be repaid by the end of the financial year. Because of the increase in profitability the Group now has to pay UK Corporationtax by instalments instead of in arrears. Consequently £203,000 on account ofthe liability arising in the year has been paid as well as the liability for theprevious year, giving a total tax paid of £814,000. Capital expenditure of £546,000 was paid from cash reserves rather than bytaking on asset finance and cash of £309,000 was paid for provisions previouslymade relating to the transfer of assembly to Tunisia. £150,000 was received from maturing loan notes on the sale of a previoussubsidiary. £205,000 was spent on the consolidation and purchase of our own shares which wasalmost offset by the issue of new shares following the exercise of a third partyoption to sell a cash shell to us in exchange for shares. Earnings per share, dividends and purchase of own shares Basic earnings per share for the year ended 31 January 2006, were 1.65p (yearended 31 January 2005: 1.50p before goodwill). The Board is proposing a final dividend of 0.35p per share (2005: 0.3p) payableon 8 August 2006. The Board will also look for opportunities to purchase the Company's shares onmarket subject to funds not being required elsewhere. Future strategy Whilst continuing to develop new electromechanical products to maintain and growour market share, we are exploiting our position in existing markets tointroduce innovative electronic solutions to existing customers. By winning moreof the wallet of our customers we see the opportunity to grow faster than themarkets we serve. We are strengthening our distribution organisation to grow faster in AsiaPacific, North America and Eastern Europe. The Bulgin business, which has been located in Barking for many decades, isexpected to move its moulding, press, plating and logistics operations by thefirst quarter of 2007 and the lease on the existing site will be surrendered inaccordance with the break clause. This move will be a significant one-time costwith excellent payback. Elektron continues to be active in searching for and assessing suitableacquisition targets. Some proposals have included manufacturers of engineeredproducts operating outside its traditional sphere of activity. The Board isoptimistic about concluding a transaction in the current year. Outlook The current year has started well with orders up 15% to £6,447,000 in the firstquarter compared with the same period last year. Adrian GirlingExecutive Chairman Group Profit and Loss AccountPreliminary unaudited results for year ended 31 January 2006 As restated 2006 2005 2004 £'000 £'000 Turnover - continuing operations 22,467 22,683 - discontinued operations 0 333 22,467 23,016 Cost of sales (14,041) (14,635) Gross profit 8,426 8,381 Net operating expenses (6,639) (5,711) Operating profit/(loss) - continuing 1,787 1,653 operations - negative goodwill release 0 1,080 1,787 2,733 - discontinued operations 0 (63)Operating profit 1,787 2,670 Profit on disposal of discontinued operations 0 33 Profit on ordinary activities before interest 1,787 2,703 Net interest payable (16) (101) Profit on ordinary activities before taxation 1,771 2,602 Taxation on profit on ordinary activities (485) (574) Profit attributable to shareholders 1,286 2,028 Earnings per ordinary share - basic 1.65p 2.67p Earnings per ordinary share before goodwill - 1.65p 1.50pbasic Amo Group Balance Sheet Preliminary unaudited results as at 31 January 2006 As restated 31 January 31 January 2006 2005 £'000 £'000 Fixed assets Tangible assets 2,165 2,528 Current assets Stocks 3,266 3,000 Debtors 4,661 3,946 Cash at bank and in hand 1,714 1,581 9,641 8,527 Creditors: amounts falling due within one year (4,818) (4,363) Net current assets 4,823 4,164 Total assets less current liabilities 6,988 6,692 Creditors: amounts falling due after more than 0 (512) one year Provisions for liabilities and charges (435) (729) Net assets 6,553 5,451 Capital and reserves Called - up share capital 3,954 3,821 Share premium 244 244 Capital redemption reserve 68 0 Other reserves 2 20 Profit and loss account 2,285 1,386 Own shares 0 (20) Shareholders' funds 6,553 5,451 Group Cash Flow Statement Preliminary unaudited results for the year ended31 January 2006 31 January 31 January 2006 2005 £'000 £'000 Cash flow from operating activities 1,636 1,849 Returns on investments and servicing of financeInterest received 66 62Interest paid (32) (53)Interest element of hire purchase andfinance lease payments (49) (110) (15) (101) TaxationUK Corporation tax paid (763) (17)Overseas tax paid (51) (41) (814) (58)Capital expenditure and financial investmentPayments to acquire tangible fixedassets (546) (558)Proceeds of sale of tangible fixedassets 28 11 (518) (547) Acquisitions and disposalsSale of subsidiaries 150 671Cash disposed of on sale of subsidiary 0 (13) 150 658 Equity dividends paid (241) 0 Net cash flow before financing 198 1,801 FinancingIssue of shares 200 100Purchase of own shares (205) 0 Debt due beyond a year:Capital element of hire purchase andfinance lease payments (589) (848) Net cash outflow from financing (594) (748) (Decrease)/Increase in net cash (396) 1,053 Notes to the cashflow statement: 31 January 31 January 2006 2005 £'000 £'0001. Reconciliation of operating profit to netcash inflow from operating activities Operating profit 1,787 2,670Release of negative goodwill 0 (1,080)Depreciation charges 902 847Loss/(profit) on disposal offixed assets (18) 9Increase in stocks (236) (436)Increase in debtors (748) (496)Increase in creditors 243 130Exchange adjustments 0 4(Decrease)/increase inprovisions (294) 201Cashflow from operatingactivities 1,636 1,849 2. Analysis of net funds/(debt) 1 February Cashflow 31 January 2005 2006 £'000 £'000 £'000 Cash at bank and in hand 1,581 133 1,714Bank overdrafts and invoicediscounting facilities (229) (529) (758) 1,352 (396) 956Finance leases and hire purchasecontracts (1,102) 589 (513)Net funds 250 193 443 3. Reconciliation of net cashflow to movement 31 January 31 Januaryin net funds 2006 2005 £'000 £'000 (Decrease)/Increase in cash (396) 1,053Cash outflow from decrease innet debt and lease financing 589 848Change in net funds resultingfrom cashflows 193 1,901Opening net funds/(debt) 250 (1,651)Closing net funds 443 250 Notes: 1. Audited financial statements will be sent to shareholders towards theend of June 2006. 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 2006, 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 2005, 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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