Checkit Regulatory News (CKT)

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 trading covering its financial year ended 31 January 2017.

Group Trading

Group revenue from continuing operations of approximately £34.5m (unaudited) compared with £35.5m (on a like for like basis) for the previous year. Trading in the second half of the year on continuing operations showed some recovery from the slowdown in the first half. Revenue from continuing operations in the second half was £17.9m (unaudited) (2016: £17.7m) compared with £16.6m (unaudited) for the first half. Underlying trading performance from continuing operations benefitted from the improved mix of sales and further cost savings to offset the impact of the overall fall of £1m in sales when compared to the previous financial year.

As announced on 8 December 2016, the Group proposes to close its Torquay site in August of this year at a cost of approximately £0.8m, for which the Group has made a full provision at 31 January 2017.

During the year Bulgin successfully rolled out its 4000 series through its distribution channel and will launch its new "M-series" connector series during the first quarter, followed by a number of other new products during the course of the year.

Further investment in new products has been made in Queensgate to demonstrate the capability of its technology and widen its accessible market size (planned for release in late Spring of 2017).

Checkit launched two new products in the second half of the year being the next generation Checkit Automated Monitoring system and the Checkit Solo Work Management system for SMEs. The interest from the food sector remains strong with a number of pilots underway and a major facilities management company signing up at a number of sites. Checkit is now operational across a number of UK sites across a diverse customer base, ranging from food manufacturing plants to high end restaurants.

Elektron Eye Technology continues to grow its ophthalmic market share and will show a fifth consecutive year of organic sales growth, following investment and phased launch of its new product suite. Further product enhancements and functionality are planned in the current year.

Following a review of Sheen's product offering a number of products have been identified for enhancement and value engineering to drive sales and margin growth.

Net cash as at 31 January 2017 was £1.0m (unaudited) (31 January 2016: net debt £1.6m) benefitting from proceeds of £2.6m received from business disposals in the year. As planned, cash generated from operations fully funded the Group's investment programme. 

Outlook 

The Board continues to be cautious in its outlook due to macro-economic conditions and continued sales order visibility of 5-7 weeks.

In the current financial year the Group will continue to pursue its rationalisation programme and aims to conclude the sale of Digitron and Titman Tip Tools. Once these businesses have been disposed of, Elektron will be in a position to target a return to growth in sales across each of the remaining businesses. The Group plans to maintain its focus on new product development and will invest the excess of the cash generated from its operations in FY18 in order to grow and maintain the momentum in the established brands, fledgling growth brands and in completing the proposed site consolidation.

John Wilson, Chief Executive Officer of Elektron, said:

"The sale of low growth and non-core businesses has enabled the Group to not only return to a net cash position for the first time in many years but has enabled greater focus of management time on the areas of the business targeted for growth. Further simplification is planned for the current financial year creating a more focussed group with greater growth opportunities. We shall maintain investment in new product development."

For further information:

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 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:

- Demand for ubiquitous power and data: Bulgin

- New waves of "aware" business applications: Checkit

- The effect of ageing on sight: Elektron Eye Technology

- Quality testing and inspection instruments: Sheen

- Growth in high precision manufacture: Queensgate

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.