TIDMEKT
RNS Number : 0421P
Elektron Technology PLC
05 February 2019
Elektron Technology plc (AIM: EKT, "Elektron" or the
"Group")
Trading and Strategic update
Elektron Technology plc, the global technology group, is pleased
to provide updates on trading for the financial year ended 31
January 2019 (FY19) and a strategic update for the Group.
Group Trading
The Board expects performance for the full year to be line with
the upgraded market forecasts notified in the trading update on 1
November 2018.
Group revenue from continuing operations (on a like for like
basis) for the full year is expected to be approximately GBP33.7m
(unaudited) a 13% increase compared with GBP29.8m for FY18,
building on the strong, double-digit growth of 11% in FY18 compared
with the prior year. Revenue in the second half of the year of
GBP17.8m was substantially stronger than the first half (GBP15.9m)
as a result of the conversion of Bulgin's strong H1 order book to
sales revenue.
Revenue
From continuing operations Unaudited
GBPm
FY 2019 FY 2018 % change
-------- -------- ---------
Bulgin 30.1 27.3 +10%
-------- -------- ---------
Elektron Eye Technology 2.6 2.0 +30%
-------- -------- ---------
Checkit 1.0 0.5 +100%
-------- -------- ---------
Total Sales 33.7 29.8 +13%
-------- -------- ---------
Orders
Orders received in the year* Unaudited
GBPm
FY 2019 FY 2018 % change
-------- -------- ---------
Bulgin 32.1 29.3 +10%
-------- -------- ---------
Elektron Eye Technology** 2.2 2.8 -21%
-------- -------- ---------
Total Orders 34.3 32.1 +7%
-------- -------- ---------
*Checkit is excluded from the above table owing to its recurring
revenue, subscription based model. Contracted recurring revenue
(comprising already installed systems and those scheduled to be
installed) as at 31 January 2019 was GBP1.2m per annum (2018:
GBP0.75m), an increase of 60%.
**Orders in the year were lower than the previous year solely
due to EET's largest distributor transitioning from providing
annual order cover to quarterly cover.
Cash
Group net cash was approximately GBP10.1m at 31 January 2019 (31
January 2018: GBP5.2m) despite investment of more than GBP0.3m in
working capital to mitigate potential Brexit related supply chain
issues. The cash was driven by a very strong trading performance as
noted above and the receipt of GBP1.2m cash proceeds from the
disposal of Queensgate.
Bulgin
Bulgin ended the period with both sales and orders significantly
ahead of the prior year driven by the continued successful
implementation of Bulgin's high margin product growth strategy,
aided by operational gearing and in-house capacity
improvements.
During the second half of the year, the Board received an
unsolicited indicative offer for the Bulgin business at a
substantial premium to the Group's current market capitalisation.
The Board engaged with the potential overseas buyer, incurring in
the region of GBP200k of due diligence related costs. Following
this extensive due diligence which confirmed the business's trading
performance and prospects, the offeror decided not to proceed for
its own strategic reasons.
The Board remains committed to maintaining the success of
Bulgin's growth strategy, which has enabled it to achieve record
levels of sales and margin during this period. The order book has
continued strongly into the new financial year and Q1 sales are
expected to set a new record.
Elektron Eye Technology (EET)
EET has grown strongly and is now profitable following the
successful implementation of a distribution led strategy.
Following a strategic review of this business, the Board has now
concluded that due to the growth opportunities presented by both
Checkit and Bulgin, EET is not core to the Group's future plans. As
a result, the Board will now seek to sell the business.
Checkit
Checkit revenue doubled over the period following the successful
acquisition of customers in the year and the launch of new features
and functionality. With a strong balance sheet, and further
simplification of the Group freeing up management bandwidth, the
Board is pursuing an ambitious organic and inorganic Checkit growth
strategy and is continually evaluating potential acquisition
targets to achieve this aim.
A detailed update on the developments at Checkit will be issued
at the time of the full year results announcement.
Brexit and US-China Trade Tariffs
The Board is monitoring the Brexit situation carefully.
Management has put in place contingency plans to mitigate the
impact of a "no-deal" scenario, including increasing component
stocks and working even more closely with our distribution channel
partners to seek to ensure that our end customers are not impacted.
This intensive focus on our internal supply chain has identified
further opportunities for operational efficiency improvements which
will be outlined in due course.
With Bulgin manufacturing predominantly in Tunisia, Bulgin is
well placed to capitalise on the current 25% tariff for Chinese
electronic component goods imported to the United States, Bulgin's
largest market.
Outlook
Whilst the Board is clearly aware of the current macro-economic
uncertainty, and hence expresses some caution going forward, it
expects the strong momentum seen during the year to continue across
the Group's businesses and, to trade at record levels for the
period of current visibility through its first quarter.
John Wilson, Chief Executive Officer of Elektron, said:
"The underlying performance of the Group during the last
financial year has been outstanding and it is expected that
profits, notwithstanding incurring GBP200k of aborted transaction
costs, will remain in line with the most recent, upgraded, market
forecasts for the year."
For further enquiries:
Elektron Technology plc +44 (0) 1223 371 000
www.elektron-technology.com
John Wilson (Chief Executive Officer)
Andrew Weatherstone (Chief Financial Officer & Company
Secretary)
Yellowstone Advisory (Investor Relations)
Alex Schlich
+44 (0) 7710 164 120
N+1 Singer (Nominated Adviser & Broker)
Shaun Dobson / Jen Boorer (Corporate Finance) +44 (0) 20 7496
3000
Rachel Hayes (Corporate Broking)
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Notes to Editors:
Elektron conceives, designs and markets innovative products and
services for business 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 growth in the following areas:
- Demand for ubiquitous power and data: Bulgin
- Real-time operations management using Internet of Things (IoT)
technology: Checkit
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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