Elektron shares move lower after firm swings to profit

Elektron Technology shares were in the red on Thursday morning, after it announced its final audited results for the year ended 31 January , reporting an uptick in net cash at year end to £5.2m from £1.0m.

The AIM-traded company said group revenues from continuing operations were £29.8m, an 11.2% improvement from £26.8m in the prior year, while it swung to an operating profit from continuing operations of £2.6m from a 2017 loss of £0.6m.

Its board also reported a strengthened balance sheet, given its policy is to amortise Checkit intangibles over a short period.

Depreciation and amortisation on continuing operations in the year was £2.5m, rising from £1.9m.

On the operational front, Elektron said its five-year streamlining programme was completed shortly after year-end, allowing management to focus on the three remaining businesses offering growth potential - Bulgin, Checkit and Elektron Eye Technology (EET).

A total of three disposals were completed during the year, generating £1.9m in cash, with the disposal of Queensgate Nano generating an additional £0.8m in cash proceeds shortly after the year-end.

The group said it had continued to invest a “substantial proportion” of Bulgin operating cash flow into Checkit in view of the “outstanding opportunities” that business offered.

EET was a smaller-scale business, with growth potential and a limited need for investment, the board explained.

Bulgin's strategy ensured minimal capital requirement with high return on capital employed.

“The group has recently completed its streamlining, which has raised £1.9m from disposal proceeds in FY18, and will allow it to concentrate on its three remaining businesses,” said CEO John Wilson.

“Bulgin experienced record demand in the year, more than doubling its operating profit, [while] Checkit is building momentum with annualised recurring revenue recently exceeding £1m, and EET has been restructured with a distribution led focus and early signs are encouraging.

“The group will continue its investment in growth opportunities, in particular with Checkit.”