Elektron Technology : Trading Update

Elektron Technology plc

(AIM: EKT, 'Elektron' or the 'Group')

Year-end trading update

Elektron Technology plc, the global technology group, is pleased to provide an update on recent trading covering its financial year ended 31 January 2016 and on developments in its growth brands.

Group Trading

Trading in the fourth quarter continued the pattern of the first three quarters. Group revenue from continuing operations for the year amounted to £43.5m (unaudited) (2015: £44.4m), with revenue in the second half of £22.0m (unaudited) (2015: £22.1m). Higher margin sales from the growth businesses detailed below, combined with further improvements in efficiency, have, despite continued erosion of sales in a number of the low growth brands, led to an aggregate trading performance for existing businesses, excluding Checkit (which is effectively a start-up), comfortably ahead of last year.

There were no cash operating or finance related exceptional charges in the year.

Net debt at 31 January 2016 was £1.6m (unaudited) (31 January 2015: £2.7m) and, as forecast in the announcement of 10 November 2015, was marginally higher than net debt at the end of the third quarter of £1.5m.

Developments in the Group's growth brands are as follows:

Bulgin

Bulgin continues to demonstrate organic growth as a result of the successful implementation of a multi-faceted strategic plan focussing on continuous product development, bespoke customer solutions and optimising distribution and sales channels. Bulgin has begun to receive stocking orders from global catalogue houses and regional distribution for its new 4000 series range of connectors, launched in the final quarter of our financial year.

Ophthalmic

Ophthalmic delivered another strong year. The main products within this range are the Henson 9000 perimeter, launched in 2014, and the MPS (macular pigment screener). Henson 9000 exports grew with the appointment of new channel partners in China, Canada, Mexico and the US. The strategy to promote the MPS as a device to measure the efficacy of dietary supplements in improving macular pigment density was further developed in the year, with the appointment of a new distributor in China and increased sales of the MPS in the US.

Queensgate

Following investment over several years, Queensgate revenues increased strongly over the prior year as the new digital controller with nano-positioner was adopted by a key customer as the fine positioning component in its hard disc testing system. 'Plug and play' technology was introduced and development of proprietary dual sensor technology continued with an EPSRC (Engineering and Physical Sciences Research Council) award in conjunction with Manchester University. This will continue in the current year as our capabilities are extended to multi axis positioning to deliver dynamic performance as well as greater precision.

Queensgate's focus is on markets and applications where speed, resolution and linearity really matter with end customers involved in optical inspection, microscopy, big science - telescopes and synchrotrons, defence, medical devices and space.

Checkit

As announced in the third quarter trading update, Checkit launched its innovative Work Management service in October, aimed at replacing paper systems and improving compliance in people intensive businesses. The reception has been extremely positive in our initial target market - food service and manufacture - with a number of early adopters signing up. Plans for pilot projects are at an advanced stage with several national and multi-national operators including food service chains, outsourced caterers, supermarkets and hospitals.

The second phase of Checkit's major new product development programme is now undergoing initial field trials and will be launched during the first quarter of FY17. The result will be a leading edge cloud based platform that combines monitoring and support for human activities with automated checks that are applicable across a wide range of industries.

Outlook

The Group continues to have limited visibility, given that the order book is a maximum of approximately five to seven weeks' duration.

The Board continues to be cautious in its outlook due to macro-economic conditions which are having some impact on demand. In particular sales from brands in very low growth and declining markets continue to show weakness. However, these are increasingly being offset by sales of higher margin products from brands in which we have invested.

In the current financial year, as in the previous year, Elektron will continue to invest substantially all of its operating cash flow into new product development, particularly Checkit.

John Wilson, Chief Executive Officer of Elektron, said:

'Our new product development activity in our targeted growth brands resulted in pleasing sales growth in these areas during the year. This, together with our continued focus on efficiency, has delivered improved performance from our businesses. Checkit is already generating significant opportunities and plans for pilot projects with a range of substantial users are at an advanced stage.'

For further information:

Notes to Editors

Elektron conceives, designs and markets innovative engineered products and services for businesses 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 trends in the following areas:

-- New waves of 'aware' business applications: Checkit

-- Demand for ubiquitous power and data: Bulgin

-- Growth in high precision manufacture: Queensgate

-- Instrumentation for high growth niche markets: Ophthalmic

In addition, Elektron owns a portfolio of well-established products and brands that provide cash flow as well as customer access and feedback

Forward looking statements

Statements contained in this trading statement are based on the knowledge and information available to the Company's directors at the date it was prepared and therefore the facts stated and views expressed may change after that date. By their nature, the statements concerning the risks and uncertainties facing the Company in this Statement involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this Statement contains any statement dealing with any time after the date of its preparation such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur. The Company undertakes no obligation to update these forward looking statements.

Elektron Technology plc issued this content on 22 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 22 February 2016 08:52:29 UTC

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