News Column

Elektron Technology Loss Widens, Raises GBP2.3 Million In Placing

June 23, 2014

Hana Stewart-Smith



LONDON (Alliance News) - Elektron Technology PLC Monday posted a widened loss for the year to end-January and announced that is has raised GBP2.3 million through the placing of 46.8 million new shares with existing investors at 5 pence each, following a review of its business.


Elektron plans to raise a further GBP1.2 million through an open offer of up to GBP23.2 million new shares at the same price.


Shares in Elektron were trading up 5.6% at 4.75 pence Monday morning.


Elektron said it will use the proceeds from the placing and open offer to reduce its borrowings, fund working capital, and invest in new product development and marketing.


The company posted a pretax loss of GBP5.3 million, widened from GBP1.1 million, as revenue declined to GBP46.3 million from GBP47.4 million, and as it also posted GBP5.0 million in exceptional costs.


Elektron's performance was hit by the move of its China-based manufacturing operations into its existing operations in Tunisia, which saw "significant issues". The move of its UK business from Redhill to Torquay was also more complicated than it had expected, it said.


As a result of the issues with relocation, revenues for the company's Connectivity business in the first half were lower, although they improved in the second half. Elektron posted one-off costs of GBP1.4 million to maintain supplies to its customers for this business.


In its Instrumentation, Monitoring and Control business revenues declined to GBP17.2 million from GBP19.1 million, as new products launches boosted sales of its Ophthalmic range, but this was offset by the decline of its Sheen and Wallace brands due to the relocation of the UK factory and increased competition.


The company said its operation performance had now stabilised, but further action was required to drive up efficiencies across all of its operating sites.


Elektron opted not to pay a dividend for the year as a result of the resources it requires to support new product development.


The company said its revenue in the first quarter of the new year was in line with expectations, although the second quarter has been hit by customer de-stocking.


Elektron said that a shareholder in the company, identified only as a "Mr B Bridge", has filed a claim against a group of directors and former directors in the company. If the claim is continued, Elektron said, it would be expected to come to court in 2015 or 2016.


Bridge is alleging breaches of duty by the directors involved, including dishonesty, "a reckless acquisition spree", illegal share price manipulation, and unfair bonus and share schemes implemented without proper right of refusal. Elektron said that the directors refute these allegations.


The court must grant permission for the claim to go ahead, and if this is successful, the company expects to be ordered to indemnify Bridge's legal costs, which it expects to recover from its insurance policy.


If permission is not granted, or is granted but the claim is unsuccessful, the company will be liable for the directors costs' that are irrevocable and or not covered by their insurance, and it will not be able to recover these costs through insurance.


Elektron said it is not possible to estimate uninsured costs, and in a "worst case scenario they could be significant."


"The tough decisions we have taken over the past few years have had some painful short term consequences, but will make the group stronger in the long term," said Chief Executive John Wilson in a statement. "Our immediate aim is to focus on maximising revenues from existing products and drive further operational efficiency, whilst continuing to invest in new product development."







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Source: Alliance News


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