Elektron Technology cautious on outlook as turnaround makes progress

AIM-listed Elektron Technology said it would report a fall in revenue for 2016 as it turns around the company by selling low growth and non-core businesses, remaining cautious in the wider outlook.

In a year-end trading statement, the technology company said revenue from continuing operations fell slightly to £34.5m and said the caution was due to macroeconomic conditions and continued sales order visibility of only five to seven weeks.

In 2017 the company will continue to pursue its rationalisation programme and aims to conclude two more sales to enable it to target a return to growth in sales across each of the remaining businesses.

The company maintained that its focus will be on new product development and that it will invest the excess of the cash generated from its operations in 2018 in order to grow and maintain the momentum in the established brands and fledgling growth brands, with products from the Queensgate business due to be launched in late spring.

Chief executive John Wilson said the sales had so far enabled the group to return to a net cash position "for the first time in many years" and provided more management time for ongoing areas of the business.

“Further simplification is planned for the current financial year creating a more focused group with greater growth opportunities. We shall maintain investment in new product development."

Although revenues fell, the company said that the underlying trading performance from continuing operations benefitted from the improved mix of sales and further cost savings to offset the impact £1m sales decline, with net cash at the end of January of £1m compared to net debt of £1.6m last year.