Interim Results

Elektron PLC
26 September 2002

Embargoed for release: 0730hrs, Thursday, 26 September 2002



                                  Elektron PLC

             Interim Results for the six months ended 31 July 2002

Elektron PLC ('Elektron'), the AIM quoted group of companies involved in the
delivery and conditioning of electrical and electromagnetic power, announces
interim results for the six months ended 31 July 2002.

Key Points:

•         Level of operating losses significantly reduced to £463,000 compared
          with £784,000 in the previous six month period

•         Turnover down 9% to £7,983,000 (22% excluding turnover from the
          acquisition of Powertron) despite 35% fall in market, but stabilised 
          compared to the previous six months.

•         Rigorous cost reduction programme continues, benefits beginning to
          show

•         The Components Division returned to a satisfactory level of profits,
          with approximately £800,000 annualised cost savings

•         Approximately £820,000 of annualised cost savings implemented at the
          Power Electronics Division

•         Powertron contributed turnover of £1.1m in the period

•         Gearing net of cash improved to 67% (31 January 2002: 100%)

•         Recent healthy flow of orders to the Power Electronics Division


Alastair Winter, Chairman, Elektron PLC, commented 'The Board of Elektron has
taken urgent action to return the Group to future profitability in continuing
poor market conditions.  The Components Division improved performance is
expected to continue while the Power Electronics Division will now benefit both
from cost savings and a recent healthy flow of orders.  Moreover, the Group
remains well placed to exploit any market recovery in 2003. We are determined to
resume our strategy of growth in 2003.'


For further information please contact:

Brian Emerson                                       Lulu Bridges
Chief Executive                                     Katy Pratt
Elektron PLC                                        Tavistock Communications Ltd
Tel: [phone]                                   Tel: [phone]

26 September 2002


                              Chairman's Statement

                              
Over the last 18 months shareholders will have become increasingly aware of the
depressed state of the manufacturing sector. In the 2001/02 Annual Report I drew
attention to the severe impact of these unfavourable markets and the Board's
determined efforts to stabilise the Group's trading position. Now, three months
later, although there is still little sign of improvement in general market
conditions, I am able to report on progress in the Group's recovery plans. The
Board remains convinced that Elektron can make attractive returns from its
manufacturing base in the UK.


Results

In the six months to 31 July 2002 the Group's turnover of £7,983,000 was 8.6%
below the level in the corresponding period in 2001 (£8,737,000). Powertron,
acquired in August 2001, contributed turnover of £1,143,000 in the period,
without which turnover would have declined by 21.7%. This compares favourably
with industry statistics which show a market decline of some 35%. The Components
Division has benefited from restocking by customers which began last November
after a twelve month downturn.  The Power Electronics Division continued to
suffer from the collapsing demand in the telecommunications sector and the
hiatus that has beset many US industrial corporations since last September. In
addition, our subsidiary Milmega, experienced the downside of uneven customer
ordering patterns that challenge capital goods manufacturers. This combination
of market factors meant that the Group turnover in the first half of this year
was 2% below the level in the second half of the last financial year.



The Board had already anticipated a lower level of turnover and consequently
stepped up the cost reduction programmes.  Such programmes always have to be
balanced against the possible lost opportunities for developing new markets and
products, or being prepared to respond to a return to normal levels of demand.
In the Components Division the annualised savings of £800,000 implemented
between April and December 2001 have brought about a return to satisfactory
levels of profit. In the Power Electronics Division cuts of approximately
£400,000 in annualised costs were implemented earlier this year and we are now
starting to see the benefits. The Board has identified and implemented
approximately £420,000 of further savings in the Power Electronics Division.
These savings arise from both the further integration of Powertron and
discontinuing less profitable product lines. These will partially feed through
in the second half with the full benefit coming through in the first half of
next year.



Trading trends rarely fit neatly into regular reporting periods and,
accordingly, the recovery currently under way within the Group has not prevented
an operating loss of £463,000 in these first six months to 31 July 2002. This
compares with a profit of £39,000 in the first half of last year and is before
exceptional reorganisation charges of £151,000 (six months to 31 July 2001:
£338,000) and goodwill amortisation of £201,000 (six months to 31 July 2001:
£98,000). Gross margins weakened to 33.5% (six months to 31 July 2001: 35.9%) as
lack of higher margin Power Electronics turnover took effect in the period.
More significantly, and as a direct result of the recovery plans that the Board
has put in place, this result is a sharp improvement on the operating loss in
the second half of 2001/02.



At 31 July 2002 the Components Division order book stood at £1.6 million (31
July 2001: £1.5 million) and the Power Electronics Division order book stood at
£3.3 million (31 July 2001: £3.8 million).



Cash decreased by £323,000 compared with a decrease of £919,000 in the six
months to 31 July 2001. Gross gearing improved from 137% at 31 January 2002 to
116% at 31 July 2002.  Gearing net of cash improved from 100% at 31 January 2002
to 67% at 31 July 2002.



Loss per share and dividends

The loss per share was 1.2p (six months to 31 July 2001: 0.97p loss).
Accordingly, the Board is not proposing the payment of an interim dividend.
Shareholders should be aware of the need to retain cash for capital investment
and for higher working capital as turnover increases.



Outlook

Your Board has taken urgent action to return the Group to future profitability
in continuing poor market conditions.  The Components Division improved
performance is expected to continue while the Power Electronics Division will
now benefit both from cost savings and a recent healthy flow of orders which
should increase margins across the Group. Moreover, the Group remains well
placed to exploit any market recovery in 2003.  The acquisitions of Milmega and
Powertron have been a success as has the rigorous cost reduction programme.  We
are determined to resume our strategy of growth in 2003.



A.S. Winter
Chairman
26 September 2002



Group Profit and Loss Account
Unaudited Interim Results to 31 July 2002


                                                             Half year to       Half year to            Year to
                                                                  31 July            31 July         31 January
                                                                     2002               2001               2002
                                                                    £'000              £'000              £'000


Turnover - continuing operations                                    7,983              8,737             16,911

Operating (loss)/profit - before exceptional items
and goodwill amortisation                                            (463)                39               (745)
Exceptional items                                                    (151)              (338)            (1,501)
Goodwill amortisation                                                (201)               (98)              (287)
Operating loss - continuing operations                               (815)              (397)            (2,533)
Profit on disposal of freehold property                                61                  -                122

Loss on ordinary activities before interest                          (754)              (397)            (2,411)
Net interest payable                                                 (100)              (105)              (241)

Loss on ordinary activities before taxation                          (854)              (502)            (2,652)
Tax on loss on ordinary activities                                    195                 45                525

Loss on ordinary activities after taxation                           (659)              (457)            (2,127)
Minority Interests                                                     37                 19                 35

Loss for the financial period                                        (622)              (438)            (2,092)
Dividends                                                               -                  -                  -

Transfer from reserves                                               (622)              (438)            (2,092)

Loss per share - Basic                                             (1.20p)            (0.97p)            (4.49p)

               - Diluted                                           (1.20p)            (0.97p)            (4.48p)


Group Statement of Total Recognised Gains and Losses
Unaudited Interim Results to 31 July 2002


                                                            Half year to       Half year to            Year to
                                                                 31 July            31 July         31 January
                                                                    2002               2001               2002
                                                                   £'000              £'000              £'000

Loss for the financial period                                       (622)              (438)            (2,092)
Exchange translation differences                                      (4)                 -                  -

Total recognised gains and
losses for the financial period                                     (626)              (438)            (2,092)


Note of Historical Cost Profits and Losses

                                                            Half year to       Half year to            Year to
                                                                 31 July            31 July         31 January
                                                                    2002               2001               2002
                                                                   £'000              £'000              £'000

Reported loss on ordinary activities
  before taxation                                                   (854)              (502)            (2,652)
Realisation of property revaluations of
  previous years                                                     982                  -                (84)
Difference between an historical cost depreciation
  charge and the actual depreciation charge for
  the period calculated on the revalued amount                         3                  7                  5

Historical cost profit/(loss) on ordinary
  activities before taxation                                         131               (495)            (2,731)
Taxation on loss on ordinary activities                              195                 45                525
Dividends                                                              -                  -                  -
Minority interests                                                    37                 19                 35

Historical cost profit/(loss) for the period
  after taxation, minority interests
  and dividends                                                      363               (431)            (2,171)


Group Balance Sheet
Unaudited Interim Results at 31 July 2002

                                                               31 July               31 July         31 January
                                                                  2002                  2001               2002
                                                                 £'000                 £'000              £'000

Fixed assets
Intangible assets                                                1,423                   902              1,624
Tangible assets                                                  2,513                 5,373              4,433

                                                                 3,936                 6,275              6,057

Current assets
Stocks                                                           2,131                 2,212              2,335
Debtors                                                          3,353                 3,348              3,951
Cash at bank and in hand                                         1,731                 1,031              1,535

                                                                 7,215                 6,591              7,821
Creditors:
Amounts falling due within
  one year                                                      (6,890)               (5,890)            (7,873)

Net current assets/(liabilities)                                   325                   701                (52)

Total assets less
  current liabilities                                            4,261                 6,976              6,005
Creditors:
Amounts falling due after
  more than one year                                              (713)               (1,534)            (1,792)
Provision for liabilities
  and charges                                                        -                  (174)                 -

Net assets                                                       3,548                 5,268              4,213

Capital and reserves
Called up share capital                                          2,602                 2,263              2,602
Share premium                                                      270                    36                270
Revaluation reserve                                                  -                   899                985
Profit and loss account                                            679                 2,057                320

Shareholders' funds - equity                                     3,551                 5,255              4,177
Minority interests - equity                                         (3)                   13                 36

Capital employed                                                 3,548                 5,268              4,213


Group Cash Flow Statement
Unaudited Interim Results to 31 July 2002


                                                                 31 July             31 July          31 January
                                                                    2002                2001                2002
                                                                   £'000               £'000               £'000

Cash flow from operating activities                                 (419)               (321)                137
Returns on investments and
  servicing of finance                                              (122)                (99)               (202)
Taxation                                                              (1)                (39)                (39)
Capital expenditure and financial investment                       2,572                (376)               (500)
Acquisitions and disposals                                          (178)                (49)             (1,386)
Equity dividends paid                                                  -                   -                (113)

Net cash inflow/(outflow) before financing                         1,852                (884)             (2,103)
Financing                                                         (2,175)                (35)              1,441

Decrease in cash                                                    (323)               (919)               (662)


Reconciliation of operating loss to net cash flow from operating activities

                                                                 31 July             31 July          31 January
                                                                    2002                2001                2002
                                                                   £'000               £'000               £'000

Operating loss                                                      (815)               (397)             (2,533)
Amortisation of goodwill                                             201                  98                 287
Depreciation charges                                                 365                 333                 738
Amortisation of development costs                                      -                 100                 216
Provision for exceptional administration costs                      (111)                 71                 489
Loss on disposal of tangible fixed assets                              -                  11                 327
Decrease in stocks                                                   204                  36                 222
(Increase)/decrease in debtors                                      (195)                218               1,260
Decrease in creditors                                                (64)               (791)               (873)
Exchange adjustments                                                  (4)                  -                   4

Cash flow from operating activities                                 (419)               (321)                137


Included in cash flow from operating activities is £262,000 (year ended 31
January 2002 - £1,012,000,  six months ended 31 July 2001 - £267,000) net
outflow in respect of exceptional items.


Notes

1. The financial information in this statement does not constitute statutory
accounts. The financial information in respect of the year ended 31 January 2002
has been extracted from the statutory accounts which have been filed with the
Registrar of Companies. The auditors' report on those accounts was unqualified
and did not contain any statement under Section 237 of the Companies Act 1985.

2. The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year ended
31 January 2002. Fixed annual charges are apportioned to the interim period on
the basis of time elapsed. Other expenses are accrued in accordance with the
same principles used in the preparation of the annual accounts.


                      This information is provided by RNS
            The company news service from the London Stock Exchange