Final Results

Elektron PLC
29 May 2002

Embargoed for release: 29 May 2002



                                Elektron PLC



            Preliminary results for the year ended 31st January 2002



Elektron PLC ('Elektron'), the AIM quoted components and power electronics
company announces results for the year ended 31st January 2002.



            Elektron reorganises to counter market recession



                        Well placed to gain from upturn



Key Points:



•         Elektron is now firmly positioned in the global market for delivery
          and conditioning of electrical and electromagnetic power



•         Turnover experienced a 4% decline to £16.9 million (2001: £17.53
          million)



•         Operating losses before exceptional items and goodwill amortisation of
          £0.7 million (2001: Profits of £1.2 million)



•         Exceptional expenses totalling £1.5 million



•         Reduced indebtedness achieved



•         Elektron continued to focus on the North American market



•         Good continued performance at Milmega with increased turnover of £3.5
          million (£1.7 million for 7 months of previous year following its 
          acquisition in June 2000)



•         Powertron, acquired in August 2001 is progressing well, increasing
          Elektron's exposure to the rail market in the UK and abroad, a growing 
          sector.  Powertron turnover of £1.6m, profits in line with 
          expectations



•         Continued new product development for organic growth



Alastair Winter, Chairman, commented 'The Board continues to look for new
acquisition targets, especially in selected areas of the power electronics
sector upon which we continue to concentrate whilst ensuring that the
traditional components business still provides an adequate return in the future.
Of our existing businesses Bulgin Components has so far had the best start to
the year with the others experiencing slow order bookings and some rescheduling
of orders into the second half.  While the telecommunications sector remains
subdued we are concentrating on the wireless communications, transport,
utilities, defence and medical sectors and have a healthy rate of new products
coming on stream. The very unfavourable market conditions that worsened during
the year under review have delayed the Group's plans for expansion and
challenged the company's management to effect large scale reorganisation in
response.  However, the restructuring that has taken place provides a base for a
return to profitability in the current year, but with the economic outlook
remaining uncertain we will continue to ensure that our overhead structure is
matched to revenue streams.  When the recovery comes we will be very well placed
to gain from it.'



For further information please contact:


Brian Emerson                                        Ana Nogales
Chief Executive                                      Tavistock Communications
Elektron PLC                                         Tel: [phone]
Tel: [phone]



Chairman's Statement



In August 2001 the Company's name was changed to Elektron Plc, reflecting the
change from concentrating on manufacturing electromechanical components.
Elektron is now firmly positioned in the global market for delivery and
conditioning of electrical and electromagnetic power.



Results

In the year to 31 January 2002 the Group experienced a 4% fall in total turnover
to £16,911,000 and a 14% fall in turnover on continuing operations.
Shareholders will recall that the Board has been attempting to improve
productivity and limit the Group's exposure to the electromechanical components
sector.  The 24% fall in annual turnover at Bulgin Components is a most
unwelcome vindication of that policy and is in line with the sector as a whole.
However, in a market of staple products such an extreme downturn lasting for 12
months was inevitably going to end in restocking, which began in November 2001.



Recent official statistics show that UK manufacturing has been in a depressed
state for much of the last 12 months.  Our UK acquisitions performed well but
Bulgin Power Source was affected by the downturn.



Gross margins came under pressure and were down from 36.6% to 34.3%.  Operating
expenses increased from £5,358,000 to £6,828,000, the extra cost largely
relating to a whole year of Milmega's ownership, the inclusion of the
acquisitions in the year and increased goodwill amortisation.



Few companies can prevent such sharp falls in turnover from causing operating
losses.  The Group incurred an operating loss of £745,000 (2001: £1,155,000
operating profit) and to these were added a number of substantial exceptional
items and the amortisation arising from our aggressive policy of writing off
goodwill over only 5 years.  The resulting loss on ordinary activities after
taxation of £2,127,000 (2001: £610,000 profit) represents a setback for the
Group and actions have been taken to correct performance in the current year.



Gross gearing increased substantially from 54% to 137%, mainly as a consequence
of the losses and the purchase of Powertron.  However, in such uncertain
economic conditions it is appropriate to seek to reduce indebtedness, which has
been achieved by the sale and leaseback of the freehold properties completed
post year end. Had these completed by 31 January 2002 gearing would have been
85% gross and 36% net.



Exceptional items

These are of sufficient magnitude as to warrant specific comments. During the
year negotiations were pursued to an advanced stage for the Group to acquire an
electromechanical components business in the UK, merge it with Bulgin Components
and implement a very substantial cost saving programme. Unfortunately, the sharp
deterioration in the sector made it impossible to agree an appropriate price
with the vendor. Aborted acquisition costs of £211,000 have been fully written
off in the year.



Bulgin Components, however, did press on with its own restructuring programme
giving rise in the year under review to an exceptional charge of £347,000 but
generating from this year onwards annual savings of £800,000.  Such figures
constitute major productivity gains and mean that the break-even level of
turnover is now much lower.



A discordant note in the ongoing productivity programme at Bulgin Components has
been the planned new IT system. We have been obliged to abandon implementation
and have made full provision against the costs incurred of £343,000 of what
should have been productive capital investment. We are currently taking legal
action against the supplier.



During the year under review we were able to complete the restructuring and
consolidation of the Group's many pension schemes, an exercise that has been
underway since 1998. I am pleased to say Elektron no longer has the long shadow
of large and ever increasing pension liabilities of the sort that I fear may
threaten many UK companies. However, this has meant that an exceptional charge
of £600,000 has been taken.



On the positive side, the sale and leaseback of our property at Lincoln resulted
in an exceptional gain of  £122,000 and a £700,000 repayment of borrowings in
February 2002. A similar exercise in respect of our property at Barking has
created a further exceptional gain, albeit delayed until the current year, and
made possible the complete repayment of the Group's commercial mortgage
facility.



Loss per share and dividends

Loss per share before goodwill amortisation was 3.87p (2001: 1.57p earnings per
share) and the loss per share after goodwill amortisation was 4.49p (2001: 1.35p
earnings per share). In accordance with its declared policy the Board does not
propose that a dividend is paid in respect of the year. The Board intends to
resume the payment of dividends as soon as earnings permit.



Share placing

In November 2001 6.8 million new shares were issued at 9p each, mainly to the
first new institutional investors for many years.  The proceeds assisted the
working capital requirements of the Group. The Board feels that it is entirely
justifiable to utilise our listing on AIM to raise new equity funding for this
purpose and will be seeking further appropriate authorities from shareholders.



Acquisitions

Shareholders will already be aware of the acquisition in August 2001 of
Powertron Limited for a total consideration of £1,128,000 and its profits since
then have been in line with expectations.  Early in the current year the first
stage of integration with Bulgin Power Source has been completed and this will
bring about recurring annual savings of approximately £400,000.



AFI LLC, which was acquired in February 2001, has incurred an operating loss as
a result of the depressed state of the North American market.  An improved
performance is anticipated in the current year.



Future strategy and outlook

The Board continues to look for new acquisition targets, especially in selected
areas of the power electronics sector upon which we continue to concentrate
whilst ensuring that the traditional components business still provides an
adequate return in the future. Of our existing businesses Bulgin Components has
so far had the best start to the year with the others experiencing slow order
bookings and some rescheduling of orders into the second half.



While the telecommunications sector remains subdued we are concentrating on the
wireless communications, transport, utilities, defence and medical sectors and
have a healthy rate of new products coming on stream.



The very unfavourable market conditions that worsened during the year under
review have delayed the Group's plans for expansion and challenged the company's
management to effect large scale reorganisation in response.  However, the
restructuring that has taken place provides a base for a return to profitability
in the current year, but with the economic outlook remaining uncertain we will
continue to ensure that our overhead structure is matched to revenue streams.
When the recovery comes we will be very well placed to gain from it.





AS Winter

Chairman





Chief Executive's Review



Bulgin Components designs and manufactures connectors, switches and other
electromechanical products for industrial markets. Products are sold through
distribution channels worldwide and directly to Original Equipment
Manufacturers.



Demand fell sharply and remained very weak throughout the year under review.
Industry statistics pointed to the worst market conditions for at least 10
years. Distributors found themselves faced with slowing demand while holding
stocks of Bulgin product.  Turnover declined by 24% to £8,292,000.



In response to the market downturn, the company's workforce was reduced by 24%
through redundancy and productivity programmes implemented in April and December
2001. These will result in future annualised savings of approximately £800,000
at a cost of £347,000.



Despite the poor trading environment, Bulgin Components pressed ahead with new
product developments and expanded its range of connectors, fuseholders and
switches. Each year new products contribute 5% - 6% of turnover.



A £278,000 investment in automated production was commissioned in May 2001 and
has significantly increased capacity and flexibility in the IEC connector
section of the Barking factory.



The company continued to focus on sales efforts in the North American market,
which is 40% of the world market for electromechanical components.



There are indications of recovery in the market with current year turnover up on
the same period last year.  While the market will not recover all the ground
lost in the year under review, because Bulgin Components is leaner, more
efficient and continues to release attractive new products, a robust recovery in
financial performance is expected.





BP Purchasing sources electronic and electromechanical components on behalf of
client companies (including other Elektron group companies).   Turnover fell by
59% to £748,000 as the market became flooded with excess stocks of components
due to the worldwide downturn in the manufacturing sector.



In the early months of the current year there are signs that the market is
recovering with turnover ahead of the comparative period in the year under
review.





Bulgin Power Source designs and manufactures power supplies and power management
products for applications in information technology, security and access,
automation, process control and communications.



Turnover fell by 17% to £2,609,000 due to slippage in customer delivery
schedules and weaker demand generally. The power supply market had been growing
steadily for some years but suffered a steep decline in the second half of the
year under review.



During the year under review the Oracle series product range was upgraded and
relaunched. Bulgin Power Source has also continued with other new product
developments to improve its competitiveness.  This move away from custom
manufacture to product portfolio development means that research and development
costs are written off as incurred rather than allocated over future accounting
periods.



New order bookings have been slow in the early months of the current year
although that is as much a reflection of the negotiation process as it is a
comment on the current state of the market.





Powertron (acquired in August 2001) designs and manufactures power supplies for
the rail and other industries.  This acquisition increases our exposure to the
rail market both in the UK and abroad. It is anticipated that large scale
rolling stock and trackside investment programmes will provide a growing revenue
stream in future years.



In approximately six months as an Elektron company, Powertron turnover was
£1,569,000 and profits were in line with expectations.  During the first few
months of the current year, Powertron activities have been integrated with those
of Bulgin Power Source. All Powertron manufacturing activity has been
transferred to the Bulgin Power Source facility in Lincoln. Powertron marketing
and technical staff have been relocated to a newly leased facility at Knapwell,
near Cambridge and the former Powertron site in Cambridge has been vacated.
David Brannock, who joined Bulgin Power Source in March 2001 from Intelek Plc,
has assumed overall responsibility for the consolidated businesses.



While the market remains challenging the combined and enlarged power management
division is negotiating a number of important contracts with the expanded
customer base.





Milmega designs and manufactures high power, solid state microwave amplifiers
for use in electronic pollution test systems, medical equipment, wireless
communications, defence systems and scientific research.



Due to the strong order book at the beginning of the year under review, turnover
was £3,510,000 compared with £1,660,000 for 7 months of the previous year
following acquisition in June 2000. Milmega produced another excellent profit
performance.



New orders weakened in the latter part of calendar 2001 as the telecoms sector,
which accounted for approximately 35% of turnover, slid into turmoil.



Milmega has put substantial effort and resources into redesign of the product
range for more efficient manufacture and has introduced several new products
which offer customers unrivalled microwave power efficiency and density.



Milmega's growth prospects remain significantly (but not exclusively) tied to
the wireless communications sector. The company has completed development of
amplifier products which will be vital tools in testing next generation networks
and driving base station performance. Presence and progress in this market
remains a strategic goal for the Elektron group.





AFI (61% acquired in February 2001, since increased to 75%) markets Elektron and
third party high frequency products to the North American industrial and
scientific markets.



Turnover in the year under review was £183,000 following a slower than expected
start as part of the Elektron group and the depressed North American market in
the months following the terrorist attacks in America.  The market is picking up
and we are hopeful of a better performance in the current year.





Summary and strategy

In the light of difficult market conditions the company's executive management
reviewed product and marketing strategy in October 2001 and again in January
2002. The conclusion reached was that strategic goals and objectives remained
valid and would be pursued with vigour.



Elektron possesses a wealth of market knowledge and design know-how. Despite the
setback of the year under review these resources will continue to be applied to
the specific business sectors where growth is anticipated as markets recover.





B Emerson

Group Chief Executive





Financial Review



Results

Group operating loss before exceptional items and goodwill amortisation was
£745,000  (2001: £1,155,000 profit).   Exceptional expenses were £1,501,000
(2001: Nil) and goodwill amortisation was £287,000 (2001: £100,000).



The tax credit of £525,000 (2001: £295,000 charge) reflected an effective tax
rate of 19.8% (2001: 32.6%).  In February 2002 the Group submitted early loss
relief claims to extinguish the taxation payable relating to the year ended 31
January 2001 of £295,000.



Information technology

In November 2000 Bulgin Components contracted for the purchase of a new computer
system to replace the system originally purchased in 1986.  The Company
appointed an independent IT expert to assist in the software selection and
several software suppliers responded to an invitation to tender.  Implementation
of the system selected proved problematic and it became evident that the
supplier had mis-represented many aspects of their system to the extent that
full implementation would have put the Company's operations at serious risk.
The contract has therefore been terminated and legal action has commenced for
recovery of the amount paid.   Consequently, we have made full provision against
the costs incurred of £343,000.





Pension schemes

Bulgin Components, in common with many businesses of long standing, operated a
defined benefit pension scheme for its employees.  As disclosed in the annual
report last year it was anticipated that the MFR deficit would increase as a
result of falling yields and rising mortality rates.  The actuarial valuation as
of 2 June 2001 revealed an MFR deficit of £958,000. The Company closely
monitored the deficit and subsequently commenced winding up of the Scheme as of
21 September 2001 when the MFR deficit was £667,000.  Consequently, full
provision has been made at 31 January 2002 for the deficit as of that date and
£600,000 has been expensed through the profit and loss account as an exceptional
item.   It is anticipated that the liability will be extinguished over the next
two years.



Since the balance sheet date, the remaining defined benefit scheme operated via
Cirkit Holdings Plc has also been closed and is now in winding up.  The MFR
deficit at 1 April 2002 has been calculated by the Actuary to be £65,000 and
this is fully provided in the accounts.





Acquisitions

Elektron completed the purchase of Powertron Limited for a total consideration
of £1,128,000 on 16 August 2001.  The consideration comprised £503,000 in cash
together with bank guaranteed loan notes of £625,000 supported by cash deposits.
The funding came from additional property related loans of £700,000, (which
have now been repaid from the proceeds of the property disposals) and new
facilities provided by Fortis Bank up to a maximum of £800,000.



During the year, the Company increased its shareholding in AFI LLC from 61% to
75% by the issue of new equity in AFI in order to achieve compliance with the
rules regarding Venture Capital Trusts.



Subsequently, in accordance with the authority granted to the Board at the last
AGM, the Company was able to place 6,777,777 ordinary shares at 9 pence per
share raising £610,000 gross.





Property disposals

Given deteriorating economic conditions and the effect on the financial results
in the second half of the year under review, the Board decided to reduce
borrowings as far as possible.  Consequently, purchasers for the freehold
properties at the operations based in Lincoln and Barking were sought on a sale
and leaseback basis.



The Lincoln freehold was sold for £980,000 gross with exchange on 31 January
2002 and completion shortly thereafter and has been accounted for in the year
under review.  The Barking property was sold for £1,730,000 gross with exchange
on 25 April 02 and completion on 24 May 2002.  These two disposals, after paying
off related loans, realised £945,000.



Balance Sheet and cash flow

Equity shareholders' funds decreased to £4,177,000 (2001: £5,694,000), after
deducting the retained losses for the year of £2,092,000.



Cash decreased in the year by £662,000 (2001: £1,579,000).    The impact of the
operating losses on cash flow was reduced by tight control of working capital,
net capital expenditure running below depreciation and amortisation and inward
investment following the equity placing.



The Company's capital expenditure programme was cut back as the recession began
to impact.  In total, £1,063,000 gross was paid during the year, £516,000 net of
finance.  The majority of the investment took place at Bulgin Components and at
Milmega where the gross cost was £674,000 and £242,000 respectively and was
mainly for tooling, automated machinery and test equipment.



Funding facilities

All long-term borrowings have been repaid following the sale and leaseback of
the properties.



Borrowings at the year-end were £5,769,000 (2001: £3,078,000) giving a gross
gearing of 137% (2001: 54%) and gearing net of cash of 100% (2001: 38%).   Had
the sale and leaseback of the properties been completed by 31 January 2002, the
resultant borrowings would have been reduced to £3,619,000 and gearing to 85%
gross and 36% net of cash.  The resulting net current assets would have been
£746,000.



The Group's funding facilities are now principally related to working capital
requirements and are in the form of invoice discounting and overdraft facilities
supported by fixed charges over certain book debts.  Currently, £1,900,000 of
funds are available of which £1,450,000 is utilised.



Amounts outstanding at 31 January 2002 on finance leases and hire purchase
contracts totalled £1,037,000 of which £391,000 is repayable within one year.





C Leigh

Finance Director


Group Profit and Loss Account


Year ended 31 January 2002

                                                                          Unaudited          Audited

                                                                               2002             2001
                                                                              £'000            £'000


Turnover                  - continuing operations                            15,159           17,536
                          - acquisitions                                      1,752                -
                                                                             16,911           17,536
Cost of sales                                                               (11,115)         (11,123)


Gross profit                                                                  5,796            6,413


Net operating expenses    - normal                                           (6,828)          (5,358)
                          - exceptional                                      (1,501)               -


Operating (loss)/profit   - continuing operations                            (2,381)           1,055
                          - acquisitions including

                          goodwill amortisation                                (152)               -


Operating (loss)/profit                                                      (2,533)           1,055


Profit on disposal of freehold property                                         122                -


(Loss)/profit on ordinary activities before interest                         (2,411)           1,055


Net interest payable                                                           (241)            (150)


(Loss)/profit on ordinary activities before taxation                         (2,652)             905


Taxation on (loss)/profit on ordinary activities                                525             (295)


(Loss)/profit on ordinary activities after taxation                          (2,127)             610


Minority interests                                                               35                -


Dividends                                                                         -             (226)


Transfer (from)/to reserves                                                  (2,092)             384





Note - analysis of operating (loss)/profit


Operating (loss)/profit     - before exceptional items and

                              goodwill amortisation                            (745)           1,155
                            - exceptional items                              (1,501)               -
                            - goodwill amortisation                            (287)            (100)


                                                                             (2,533)           1,055








Statement of Total Recognised Gains and Losses


Year ended 31 January 2002

                                                                              Unaudited         Audited

                                                                                   2002             2001
                                                                                  £'000            £'000


(Loss)/profit attributable                                                       (2,092)             610

to shareholders


Unrealised surplus on                                                                  -             787

revaluation of properties


Total recognised gains and

losses for the financial year                                                    (2,092)           1.397




Note of Historical Cost Profits and Losses


Year ended 31 January 2002

                                                                              Unaudited         Audited

                                                                                   2002            2001
                                                                                  £'000           £'000


Reported (loss)/profit on                                                        (2,652)            905

ordinary activities before

taxation


Realisation of property                                                             (84)              -

revaluations of previous

years


Difference between a

historical cost depreciation

charge and the actual depreciation                                                     5              6

charge for the year calculated

on the revalued amount


Historical cost (loss)/profit

 on ordinary activities                                                          (2,731)            911

 before taxation


Taxation on (loss)/profit                                                            525           (295)

on ordinary activities


Minority interests                                                                    35              -


Dividends                                                                              -           (226)


Historical cost (loss)/profit

for the year after taxation

and dividends                                                                    (2,171)            390





Notes



 1. No final dividend is being proposed.



 2. (Loss)/earnings per share



The calculation of the basic (loss)/earnings per share is based on the (losses)/
earnings attributable to ordinary shareholders divided by the weighted average
number of shares in issue during the year.



The calculation of the diluted (loss)/earnings per share is based on the basic
(loss)/earnings per share, adjusted to allow for the issue of shares on the
assumed conversion of dilutive options.



The adjusted (loss)/earnings per share have been provided in order that the
effects of goodwill amortisation on reported (losses)/earnings can be fully
appreciated.



The calculation of (losses)/earnings is based on the Group (loss)/profit after
taxation and is set out below:


                                                     Unaudited                    Audited
                                                       2002                        2001
                                                              Per-share                   Per-share
                                               (Losses)          Amount     Earnings         Amount
                                                  £'000           Pence       £'000           Pence


(Loss)/profit after taxation                     (2,092)         (4.49)         610           1.35
Amortisation of goodwill                            287           0.62          100           0.22


Adjusted (loss)/profit                           (1,805)         (3.87)         710           1.57

after taxation





The weighted average number of shares used in the calculations is set out below:


                                                   Unaudited                        Audited
                                                      2002                            2001
                                              Basic         Diluted           Basic          Diluted
Weighted average

number of shares

in issue
- Ordinary shares                        46,575,083       46,575,083      45,190,000      45,190,000


- share options                                    -          50,547          17,122         103,562


                                         46,575,083       46,625,630      45,207,122      45,293,562


(Loss)/earnings

per share
- standard                                   (4.49p)          (4.48p)           1.35p           1.35p
- adjusted earnings per share                (3.87p)          (3.87p)           1.57p           1.57p








Group Balance Sheet


Year ended 31 January 2002


                                                                            Unaudited      Audited
                                                                                 2002         2001
                                                                                £'000        £'000
Fixed assets
Intangible assets                                                               1,624          950
Tangible assets                                                                 4,433        5.134
                                                                                6,057        6,084


Current assets
Stocks                                                                          2,335        2,237
Debtors                                                                         3,951        3,553
Cash at bank and in hand                                                        1,535          941


                                                                                7,821        6,731


Creditors: amounts falling                                                     (7,873)      (5,325)

due within one year


Net current (liabilities)/assets                                                  (52)       1,406


Total assets less current liabilities                                           6,005        7,490


Creditors: amounts falling                                                     (1,792)      (1,589)

due after more than one year


Provisions for liabilities and charges                                              -         (207)


Net assets                                                                      4,213        5,694


Capital and reserves
Called - up share capital                                                       2,602        2,263
Share premium                                                                     270           36
Revaluation reserve                                                               985          906
Profit and loss account                                                           320        2,489


Shareholder's funds

Equity                                                                          4,177        5,694


Minority interests                                                                 36            -


Capital employed                                                                4,213        5,694






Group Cash Flow Statement


Year ended 31 January 2002


                                                                            Unaudited      Audited
                                                                                 2002         2001
                                                                                £'000        £'000


Cash flow from                                                                    137        1,160

operating activities


Returns on investments                                                           (202)        (155)

 and servicing of finance


Taxation                                                                          (39)        (106)


Capital expenditure and                                                          (500)        (717)

financial investment


Acquisitions and disposals                                                     (1,386)      (1,303)


Equity dividends paid                                                            (113)        (226)




Net cash (outflow)                                                             (2,103)      (1,347)

before financing


Financing                                                                       1,441         (232)


(Decrease) / increase                                                            (662)      (1,579)

in cash in the year



Notes:



1.      Audited financial statements will be sent to shareholders on Monday 24
June 2002.  Copies of this announcement are available at the Company's
registered office at Hurst House, 131 / 133 New London Road, Chelmsford, Essex,
CM2 0QN and copies of the audited financial statements will be so available for
at least 14 days from Monday 24 June 2002.



2.      The Company's financial statements for 2002, from which the figures
contained in this statement have been extracted, have not yet been reported on
by the Company's auditors or filed with the Registrar of Companies.  The
financial statements for 2001, from which the figures contained in this
preliminary statement have been extracted, have been filed and contain an
unqualified audit report with no reference to section 237 of the Companies Act
1985.





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