Elektron Technology completes sale of Queensgate Nano

Elektron Technology announced the completion of the sale of the wholly-owned trade and assets of Queensgate Nano on Friday, to Prior Scientific Instruments, for an initial cash consideration of £0.8m.

The AIM-traded firm said that in addition, Elektron would be due a further cash payment of 50% of Queensgate product sales in excess of £0.9m in the 12 months ending on the first anniversary of completion of the sale, subject to a maximum further payment of £0.8m.

It said the disposal was in line with its strategy to rationalise its portfolio in order to focus on Bulgin, Checkit and Elektron Eye Technology.

The disposal would be earnings-accretive, and the cash proceeds would be used by Elektron for working capital purposes.

Elektron described Queensgate as a specialist nanopositioning business.

In the year ended 31 January 2017, sales at Queensgate were £0.7m, and negative ‘brand contribution' was £1.20m.

Brand contribution is an internal measure of profitability before the allocation of certain group pooled costs such as finance, information technology and human resources, the Elektron board explained.

After making a deduction for a share of those costs, the board estimated Queensgate's operating loss to be £1.46m for that year.

The net assets of Queensgate at 31 January 2017 amounted to £0.6m.

“The disposal of Queensgate represents the final step in our strategy of simplifying our operations and will enable management to focus solely on those businesses which the board believes offer potential for sales and margin growth, namely Bulgin, Checkit and Elektron Eye Technology,” said chief executive John Wilson.