thehierarchy, sums it up.30 May 2014 08:56
What is going on at Elektron Tech ?
John Wilson CEO of Elektron Technology: Picture Keith Heppell
There has been something of an ill wind blowing through Cambridge University’s West Site of late, the impending storm clouds of which have gathered over AIM-listed Elektron Technology.
A relative newcomer to the city, having relocated from Essex, the company has managed to anger an increasingly vocal retail shareholder base and, arguably, others with a bit more clout.
Regular readers of this column will recall my visit last year to the Broers Building where Elektron is based, meeting with the CEO John Wilson, who was eager to tell me about the company’s plans. This coincided with a falling share price on the back of previous profit warnings, which were compounded by significant disquiet from a number of retail holders.
At the time of raising these concerns, they were largely dismissed by the CEO, who put them down to a small group of individuals failing to recognise the need for change at the company and the strategy it needed to adopt. Although thankfully I wasn’t tempted to buy into this particular story, I have nonetheless remained a watcher from the sidelines, of what has been something of a rapid descent into the market basement and growing resentment from shareholders towards the Elektron board.
The company, which has a number of diverse operations, claims to be a global technology company that manufactures and markets products vital to a connected world. And indeed, a quick look at the annual revenues confirms it is a sizeable operation with recognised brands such as Bulgin helping sales last year of £55.7m.
While, on that basis, one could be forgiven for thinking this was a story well worth buying into, the reality for holders has been something altogether different.
Apart from profit warnings, and the selling off of businesses previously acquired, such as Total Carbide, the company has resided over a rising tide of net debt on the balance sheet.
Ironically, back in 2008 it entered into a sale and leaseback arrangement concerning properties relating to subsidiaries in Bucks, Devon and Essex, in order to reduce its borrowings.
The deal saw around £4.5m raised for the company, as Andrew Perloff’s Panther Securities, which today sits on 6% of the company, effectively became landlord. However, a few years later, Elektron stumped up some £8.2m for another listed entity, Hartest, to give what it described as critical mass.
Now, amid claims of failing to maximise potential from that and previous acquisitions, the whole Elektron business is valued at just £4.8m, while debt has ballooned to £8m, according to recent statements. While other listed companies have been sharing in recovery, Elektron appears to have moved in the opposite direction, which has recently culminated in the company effectively putting itself up for sale.
Cynics, of course, raise the s
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