Offer for Howle Holdings plc

Elektron PLC 28 September 2006 Not for release, publication or distribution in or into the United States of America, Canada, Australia, Republic of Ireland, Republic of South Africa or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of such jurisdiction For immediate release 28 September 2006 Recommended Offer by Beaumont Cornish Limited ('Beaumont Cornish') on behalf of Elektron plc ('Elektron') for Howle Holdings plc ('Howle') Highlights â€¢ The Boards of Elektron and Howle today announce that they have reached agreement on the terms of a recommended offer to be made by Beaumont Cornish, on behalf of Elektron, for the whole of the issued and to be issued ordinary share capital of Howle â€¢ The Offer values each Howle Share at 9.97 pence (based on the Closing Price of one Elektron Share of 18.25 pence on 27 September 2006, being the last practicable Dealing Day prior to this announcement) and comprises: 29 New Elektron Shares and 468 pence in cash for every 100 Howle Ordinary Shares â€¢ The Offer values the entire issued and to be issued share capital of Howle at approximately Â£3.077 million and each Howle Ordinary Share at 9.97 pence representing a premium of 28.7 per cent. over the Closing Price of a Howle Ordinary Share of 7.75 pence on 27 September 2005, being the last practicable Dealing Day prior to this announcement â€¢ The Elektron Directors believe that the acquisition of Howle represents a diversification from Elektron's existing business of electromechanical components but that Elektron and Howle share similar characteristics since they both manufacture engineered components for industrial customers â€¢ The Offer will enable Howle Shareholders to participate in the benefits expected to arise from Howle becoming part of the enlarged Elektron Group â€¢ In aggregate, irrevocable undertakings to accept, or to procure the acceptance of, the Offer have been received in respect of 19,860,585 Howle Shares, representing 68.42 per cent. of the existing issued share capital of Howle Commenting on the Offer, Matthew Chaloner, Chief Executive of Howle, said: 'The Howle Group is currently at a crossroads. The Board has stabilised the Group, reducing net debt and returning it to profitability over a three year restructuring period. The next phase of the Howle Board's strategy involves significant investment to modernise the business and an increase in borrowings to fund acquisitions. This strategy is not without risk and the margin for error is small. The Offer by Elektron gives the Howle Group greater stability and access to funding for future expansion' Commenting on the Offer, Adrian Girling, Executive Chairman of Elektron, said: 'Following the strengthening of our sales organisation in North America and Asia Pacific and the combining of the manufacturing operations of our existing electromechanical businesses, we are eager to move forward with this timely acquisition which will complement our existing activities. We are pleased to welcome Howle Shareholders, Customers and Employees to the Elektron Group and look forward to working with them to make the acquisition a success.' Enquiries Elektron Tel: 07966 116664 Adrian Girling, Executive Chairman Beaumont Cornish (Financial advisor to Elektron) Tel: 020 7628 3396 Roland Cornish Howle Tel: 07808 320855 Matthew Chaloner, Chief Executive of Howle City Financial Associates Limited (Financial advisor to Howle) Tel: 0207 090 7800 Ross Andrews This summary should be read in conjunction with the full text of the attached announcement. The Offer will be subject to the conditions set out in Appendix I to this announcement and to the full conditions and further terms which will be set out in the Offer Document and the form of acceptance which will be posted to Howle Shareholders as soon as practicable and in any event within 28 days of this announcement. Appendix II contains the sources and bases of information used in this announcement. Appendix III contains the definitions of certain expressions used in this announcement. Beaumont Cornish Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Elektron and for no-one else in connection with the Offer and will not be responsible to anyone other than Elektron for providing the protections afforded to customers of Beaumont Cornish Limited, nor for providing advice in relation to the Offer or any matters referred to herein. City Financial Associates Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Howle and for no-one else in connection with the Offer and will not be responsible to anyone other than Howle for providing the protections afforded to customers of City Financial Associates Limited, nor for providing advice in relation to the contents of the Offer or any matters referred to herein. This Announcement does not constitute, or form part of, an offer or an invitation to purchase or subscribe for any securities. The Offer will be made solely by the Offer Document and the Form of Acceptance, which will contain the full terms and conditions of the Offer, including details of how the Offer may be accepted. Dealing Disclosure Requirements Under the provisions of Rule 8.3 of the Takeover Code (the 'Code'), if any person is, or becomes, 'interested' (directly or indirectly) in one per cent. or more of any class of 'relevant securities' of Howle or Elektron, all 'dealings' in any 'relevant securities' of Howle or Elektron (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the 'Offer Period' otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an 'interest' in 'relevant securities' of Howle or Elektron, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code. Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant securities' of Elektron or Howle by Elektron or Howle, or by any of their respective 'associates', must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction. A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, and the number of such securities in issue, can be found on the Panel's website at www.thetakeoverpanel.org.uk. 'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any agreement to purchase, option in respect of, or derivative referenced to, securities. Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to the application of Rule 8 of the Code to you, please contact an independent financial adviser duly authorised under the Financial Services and Markets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk or contact the Panel on telephone number +44 (0) 20 7382 9026 or fax number +44 (0) 20 7236 7005. If you are in any doubt as to whether or not you are required to disclose a 'dealing' under Rule 8 of the Code, you should consult the Panel. In accordance with Rule 2.10 of the Code, Elektron has 78,308,602 ordinary shares of 5p each in issue with ISIN GB00B0C5RG72. Howle has 29,025,759 ordinary shares of 5p each in issue with ISIN GB0004413208. Not for release, publication or distribution in or into the United States of America, Canada, Australia, Republic of Ireland, Republic of South Africa or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of such jurisdiction For immediate release 28 September 2006 Recommended Offer by Beaumont Cornish on behalf of Elektron plc ('Elektron') for Howle Holdings plc ('Howle') 1. Introduction The Elektron Board and the Howle Board announced today that they had reached agreement on the terms of a recommended offer to be made by Beaumont Cornish, on behalf of Elektron, to acquire the entire issued and to be issued share capital of Howle. 2. Summary terms of the Offer On behalf of Elektron, Beaumont Cornish hereby offers to acquire, on the terms and subject to the conditions set out or referred to in the Offer Document and the Form of Acceptance (in respect of certificated Howle Shares), the Howle Shares, on the following basis: For every 100 Howle Ordinary 29 New Elektron Shares and 468 pence in Shares cash and so in proportion for any other number of Howle Shares held. The Offer extends to the holders of all of the issued Howle Shares and to the holders of any Howle Shares which are unconditionally allotted or issued prior to the date on which the Offer closes (or by such earlier date as Elektron may, subject to the Code, decide) including Howle Shares to be issued pursuant to the exercise of rights under the Howle Share Schemes. Based on the Closing Price of an Elektron Share on 27 September 2006, being the last business day prior to the publication of the announcement of the Offer, the Offer values the entire issued share capital of Howle (assuming full exercise of options and entitlements under the Howle Share Schemes) at approximately Â£3.077 million and each Howle Share at 9.97 pence. At 9.97 pence, the Offer represents a premium of approximately 28.7 per cent to the Closing Price of 7.75 pence per Howle Share on 27 September 2006, being the last Business Day prior to the commencement of the Offer Period. Full acceptance of the Offer (assuming full exercise of options and entitlements under the Howle Share Schemes) on the basis set out above and on the Bases and Sources of Information set out in Appendix II of this Announcement would result in the issue of up to 8,949,553 New Elektron Shares (representing approximately 10.26 per cent. of the enlarged share capital of the Enlarged Group) and a cash payment of approximately Â£1.445 million. The cash payment under the Offer is being funded by Elektron from its existing cash balances and facilities. As fractions of New Elektron Shares will not be allotted or issued to accepting Howle Shareholders, fractional entitlements to New Elektron Shares will be aggregated and sold in the market and the net proceeds of sale will be retained for the benefit of the Enlarged Group. Fractions of pence to which accepting Howle Shareholders would be entitled will not be distributed but will also be retained for the benefit of the Enlarged Group. The Howle Shares will be acquired pursuant to the Offer fully paid and free from all liens, charges, equitable interests, encumbrances and rights of pre-emption and any other interests of any nature whatsoever and together with all rights now or hereafter attaching thereto including, without limitation, voting rights and the right to receive and retain all dividends or other distributions declared, made or paid after the date of this announcement. The New Elektron Shares will be issued credited as fully paid and will rank pari passu in all respects with existing Elektron Shares and will be entitled to all dividends and other distributions declared, made or paid after 27 September 2006. The Offer is subject to the applicable rules and regulations of the London Stock Exchange and the City Code. The Offer is governed by English law and is subject to the jurisdiction of the English courts and to the terms and conditions set out in this Document and in the Form of Acceptance (in respect of certificated Howle Shares), including, without limitation, the acquisition or receipt of valid acceptances in respect of not less than 90 per cent of the Howle Shares to which the Offer relates (or such lower percentage, not being less than 50 per cent, as Elektron may decide). Details of the further terms and conditions of the Offer are set out below and in Appendix 1 of this Announcement. 3. Howle Share Schemes The Offer will extend to Howle Shares issued or unconditionally allotted upon the exercise of options under the Howle Share Option Scheme or entitlements under the Howle SAYE Share Scheme whilst the Offer remains open for acceptance (or by such earlier date as Elektron may, subject to the Code, decide) not being earlier than the date on which the Offer becomes unconditional as to acceptances, or if later, the first Closing Date of the Offer. To the extent that such options or entitlements have not been exercised in full, in the event that the Offer becomes or is declared unconditional in all respects, Elektron will make appropriate proposals to the holders of options or entitlements granted under the Howle Share Schemes as soon as is reasonably practicable thereafter. 4. Howle Deferred Shares Elektron is not making an offer for the existing unconditionally allotted or issued and fully paid Deferred Shares of 20p each. The holders of the Deferred Shares have no voting or dividend rights whatsoever. On a winding up the Deferred Shares shall have no rights to participate in any surplus until after the holders of Howle Shares have been repaid in full plus an amount of Â£10,000,000 per Howle Ordinary Share. Howle is entitled to execute transfers of, cancel or acquire these Deferred Shares without sanction of the holders thereof. It is the intention of Elektron to procure that the Howle Deferred Shares are cancelled or acquired by Elektron once the offer has become unconditional. 5. Irrevocable undertakings to accept the Offer Elektron has received irrevocable undertakings from all of the Howle Directors and their connected persons and family members who hold Howle Shares to accept, or procure the acceptance of the Offer in respect of their beneficial interests in Howle Shares amounting, in aggregate, to 5,625,108 Howle Shares, representing 19.38 per cent. of Howle's entire issued ordinary share capital. All of these undertakings are binding, even if a higher competing offer is announced by a third party unless the Offer lapses or is withdrawn. In addition, Elektron has received irrevocable undertakings received from certain Howle Shareholders to accept, or procure the acceptance of the Offer in respect of their beneficial interests in Howle Shares amounting, in aggregate, to 14,235,477 Howle Shares, representing 49.04 per cent. of Howle's entire issued ordinary share capital. All of these undertakings are binding, even if a higher competing offer is announced by a third party unless the Offer lapses or is withdrawn. Accordingly, Elektron has received irrevocable undertakings to accept, or procure the acceptance of the Offer from Howle Shareholders in respect of, in aggregate, to 19,860,585 Howle Shares, representing 68.42 per cent. of Howle's entire issued ordinary share capital. 6. Background to and reasons for the Offer Although Elektron and Howle operate in different product and customer markets, Elektron and Howle are similar in so far as they are both manufacturers of small engineered components serving industrial customers. The Directors of Elektron believe that the management skills required to manage both companies are essentially the same. The Directors of Elektron further believe that the addition of Howle's subsidiaries of Howle Carbides (a tungsten carbide hard metal tip and wear parts manufacturer) and Titman Tip Tools (a tungsten carbide wood routing tools manufacturer) to the Elektron Group will represent a valuable diversification from Elektron's traditional business of electromechanical components. 7. Future intentions regarding Howle Elektron believes that it can add value to Howle Carbides and Titman Tip Tools in that: â€¢Elektron has considerable experience of marketing its products worldwide. In the year ended 31 January 2006, 66 per cent. of Elektron's products were sold outside the UK. In the year ended 30 September 2005 only 21 per cent. of Howle's products were sold outside the UK. The Directors of Elektron believe that there is an opportunity to increase the proportion of sales of Howle Carbides and Titman Tip Tools in overseas markets. â€¢Elektron operates lower cost manufacturing plants in Tunisia and China as well as the UK. The Directors of Elektron intend in due course to seek to establish satellite manufacturing plants offshore in order to facilitate any increase in sales at Howle Carbides and Titman Tip Tools. â€¢The Directors of Elektron believe that the Enlarged Group will be better positioned with greater financial resources to maintain an appropriate level of investment in Howle Carbides and Titman Tip Tools. â€¢In due course the Directors of Elektron intend to locate suitable acquisitions to increase the size of Howle Carbides and Titman Tip Tools. On completion of the Offer, Elektron will review the operating activities of the Howle Group's other subsidiaries of Richard Lloyd (an engineers' cutting and milling tool manufacturer) and NPE-Innotek (a dies and forming tools manufacturer). Elektron also intends in due course to dispose of Howle's property assets located at Tenbury Wells, Princes Risborough, Clacton and Neath by way of sale and leaseback arrangements. 8. Management and employees The Elektron Board has given assurances to the Howle Directors that, on the Offer becoming or being declared unconditional in all respects, the Elektron Board intends that the existing rights, including pension rights, of all Howle Group management and employees will be respected. Subject to the review of the operating activities referred to above, Elektron has no current plans to make significant cuts in employee numbers or to change the current locations of Howle Carbides or Titman Tip Tools. The headcount at two subsidiaries, Richard Lloyd and NPE-Innotek, will need to be reviewed in the light of losses currently being made. The Elektron Board does not expect that the acquisition will affect the employment prospects of existing Elektron employees. 9. Information on Elektron The principal activity of the Elektron Group is the design and manufacture of components for industrial companies, principally in electromechanical markets. The registered office of Elektron is: Alfred's Way Barking Essex IG11 0AZ The Board of Elektron comprises the following Directors: Adrian Charles Nigel Girling Executive Chairman Christopher Michael Leigh Finance Director Keith Anthony Daley Non-executive Director Financials Elektron's Annual Report for the year ended 31 January 2006 was approved on 23 June 2006, and Elektron's interim results for the 6 months ending on 31 July 2006 were announced on 18 September 2006. For the 6 month period ended 31 July 2006, Elektron reported turnover on continuing operations of Â£12.95 million (2005: Â£11.11 million), and profit before taxation and exceptional costs of Â£1.17 million (2005: Â£1.06 million) and underlying earnings per share before exceptional costs of 1.08 pence (2005: 0.97 pence). As at 31 July 2006, the Elektron Group had net assets of Â£6.89 million (2005: Â£6.20 million) and gross assets of Â£10.89 million (2005: Â£10.54 million). The Elektron Group employs approximately 923 people The Elektron Chairman's statement included in the interim results for the 6 month period ended 31 July 2006 is reproduced below: 'Chairman's Statement The first half of the current financial year has seen good progress in our long term plans to develop the Group. The recent past has seen us successfully transition from a UK manufacturer incurring losses to a profitable UK and offshore manufacturer with much lower costs of production. The closure of the Barking based Bulgin factory later this year and consequent transfer to our Tunisian factory will elicit further annualised savings in the region of Â£900,000. We have also been taking action to secure future growth in revenue streams by investing in sales and product development capability. In particular, we have recruited sales managers in Beijing and Shanghai to target opportunities in China as well as designing and developing a number of new electronic products which will be exhibited at the Electronica exhibition in November. Financial results Group sales have increased by 17% with increases in all the markets we serve. Domestic sales were up 15% to Â£4.3 million, European sales by 15% to Â£4.3m, North American sales by 20% to Â£2.1 million and rest of the world by 22% to Â£2.2 million. Group operating profits of Â£1,173,000 before exceptional items were 11% ahead of those in first half of last year. Gross margins have remained steady at 38% as a result of increasing metal prices offset by a reduction in labour costs and product mix. The dramatic increases in raw material costs have allowed us to persuade customers in most of our markets to accept price increases, the benefits of which should be seen in the second half. Since the year-end, moulding plant and machinery used by Bulgin has begun to be transferred to Tunisia following the leasing of additional space and it is expected that this process will be largely completed by our coming year-end. Consequently, all Bulgin manufacturing will cease at Barking and the factory vacated by March 2007. This will incur one-time revenue costs of Â£1 million of which Â£476,000 has been incurred in the first half. The weakening of the US dollar has impacted and we have incurred a loss on foreign currency transactions and translations of Â£91,000 compared with a gain of Â£75,000 in the comparative period last year. Cash generated from operations was up 25% on the corresponding period to Â£972,000. Â£419,000 was spent on plant and equipment, Â£280,000 on repayment of hire purchase and lease finance obligations and Â£132,000 on purchase of own shares. At 31 July 2006, net funds, being cash less borrowings, had increased to Â£886,000. Acquisitions In the Annual Report I stated that the Board was optimistic about concluding a transaction in the current year. At that time we were considering two opportunities having reached agreements on price subject to due diligence. The first opportunity, which is a manufacturer of components in Europe and Tunisia, is still under discussion as a result of findings during the due diligence process. Due diligence is currently continuing on another opportunity. We have written off Â£41,000 as exceptional costs in respect of these potential transactions. Earnings per share, share buy back and dividends The underlying earnings per share before exceptional costs were 1.08p compared with 0.97p in 2005. Basic and diluted earnings per share were 0.60p (2005: 0.93p). During the period 764,500 shares were bought on-market at a cost of Â£132,000. The Board has considered the payment of an interim dividend, but in the light of current projects has decided to retain cash. Providing progress continues to be made the Directors intend to review the rate of the dividend at the year-end. Employees I should like to thank all of our staff for their continued hard work, particularly those at Bulgin who have worked diligently and professionally in the light of the announcement that the factory would close and operations be transferred to Tunisia. Outlook Orders received to date are currently up 8% on this time last year and with new products coming on stream we are well placed to continue progress. Adrian Girling Executive Chairman' 10. Current trading and prospects for Elektron As set out in the Chairman's statement of Elektron's interim results for the period ended 31 July 2006, which is repeated in full above and which was announced on 18 September 2006, orders received to date are currently up 8 per cent. on this time last year and with new products coming on stream the Elektron Directors believe Elektron is well placed to continue progress. On a pro forma basis calculated by reference to the most recent Interim accounts of Elektron and Howle (and without taking into account any changes since the date of the respective interim accounts) the Enlarged Group would have consolidated tangible net assets of approximately Â£8.5 million and borrowings of approximately Â£5.7 million. The Board of Elektron intends however to dispose of the freehold properties and review the operations of the two subsidiaries, Richard Lloyd and NPE-Innotek. In addition it will be necessary to bring the accounting policies of Howle into line with the rest of the Elektron Group. The effect of these actions (which cannot be precisely quantified at the present time) may lead to a reduction in Enlarged Group tangible net assets, borrowings and financial gearing. The Enlarged Group is expected to have annual sales of around Â£30 million after these structural changes have been made. The acquisition is not expected to have a material effect on the profits of the Enlarged Group in the current financial year. 11. Information on Howle The principal activities of companies in the Howle Group are the manufacture of engineers' cutting tools, tungsten carbide hard metal tips, tungsten carbide tipped wood routing tools and other tungsten carbide wear products. The Howle Board comprises: Richard Guy Anniss Chairman Matthew Chaloner Chief Executive John Frederick Gibson Executive Director Richard Anniss, being a non-executive director of Howle, will resign from the Howle Board upon the Offer becoming or being declared unconditional in all respects. Financials For the six months ended 31 March 2006, Howle reported turnover of Â£5.13 million and a pre-tax profit of Â£82,000. For the year ended 30 September 2005, Howle reported turnover of Â£10.20 million (2004: Â£11.15 million), a loss before taxation of Â£52,000 (2004: profit of Â£53,000) and a loss per share of 0.4 pence (2004: loss 0.1 pence). As at 31 March 2006, the Howle Group had net assets of Â£ 5.65 million and gross assets of Â£11.81 million. The Howle Group employs approximately 216 people. The Howle Chairman's statement included in the interim results announcement for the six months ended 31 March 2006 is reproduced below: 'Chairman's Report The six months to 31 March 2006 has seen modest progress in the Group's trading performance with turnover increasing by Â£192,000 (3.9%) against the second half of 2005. There was a small reduction in sales of Â£137,000 (2.6%) over the same period last year but adjusting for the loss of a major oil contract in the first quarter of 2005, sales actually increased. The Group has seen a recovery in business across the majority of Group Companies particularly at Titman Tip Tools Limited ('Titman'). The Group started to see a recovery in the latter part of January and this has continued. It is pleasing to report an improvement in the markets served by Richard Lloyd Limited ('Galtona'). Financial Results Profit before tax was Â£82,000 (2005: loss of Â£8,000). Improvements in operating efficiencies at Howle Carbides Limited ('Carbides') and Galtona have helped to offset the raw material price increases and maintain margins. We are beginning to see some easing in raw material prices. The earnings per share for the period was 0.1p (2005: loss per share 0.1p). In view of the high level of borrowings the Directors are unable to recommend a dividend for the period. The Group's borrowings during the period remained static at Â£4.9 million. Net Cash inflow from operating activities for the period was Â£94,000 as an adverse working capital swing of Â£306,000 eroded cash flows. The working capital movement is mainly due to increased trade debtors as the Group is trading up on the back of improving markets. Included within the operating cash flows are exceptional cash outflows of Â£119,000, which will reduce significantly in the second half of the year. The Group continues to pay down hard-core debt with capital repayments totalling Â£228,000 in the period. There are 16 loans, which will be finally paid off between now, and May 2007 which will improve net cash flows by over Â£500,000 a year. As part of the Board's strategy to maximise the full potential of the Group's freehold properties, the Board commissioned an independent valuation of all Group freehold properties. The valuations have now been finalised and the Board can report that the market value of all Group freehold properties as at the 28th April 2006 is Â£5,060,000. This valuation has been incorporated in the Balance sheet for the 2006 interims. The revaluation has significantly strengthened the Group' Balance Sheet with net assets increasing by Â£2,016,000 (50%) from September 2005, before the effects of deferred tax provisions on the revaluation which have been imposed on us by IFRS. The net asset value per share is now 19.5 pence and the Gearing has fallen from 120% to 85%. Operating Companies Carbides turnover for the period reduced marginally from the same period last year due to the loss of a major oil contract, but more notably saw an increase of 5.4% to the second half of 2005. Export sales have recovered well and we anticipate this will continue. Investment in CNC equipment will lead to increased capacity for product ranges, which can be grown. Titman saw a marginal increase in turnover from the same period last year but an increase of 15.6% over the second half of 2005. Germany continues to perform well. Galtona did experience a decline in turnover from the same period last year but did see a recovery from the second half of 2005 with turnover 4.6% up. The new management structure is settling in well and the order book continues to stabilise. New opportunities in aerospace are being explored. NPE saw turnover increase marginally in the period. The Company has seen a recovery in business from customers in the Canning industry. The Board has approved an investment of up to Â£250,000 to modernise the Company's CNC turning and milling capabilities. The investment will be implemented on a piecemeal basis with one CNC mill and one CNC Lathe being installed in May of this year. The investment is being part funded by Grant aid of up to 47.5% of the investment cost from the Welsh Regional Assembly Government. People The Group headcount remained unchanged at 204 employees. I would like to thank all our dedicated employees for their hard work during this period. Outlook The Board are encouraged by the upturn in trading as seen in the second half of the period. With increased resources in sales and marketing and selective investment in capital equipment the Board remain confident that sales can be grown and with the reduced cost base the Group should start delivering sustainable profits, provided that the manufacturing sector continues to improve.' 12. Financing arrangements Full acceptance of the Offer by Howle Shareholders (assuming the full exercise of rights and entitlements under the Howle Share Schemes) will result in a maximum consideration payable by Elektron of approximately Â£1.445 million in cash. Beaumont Cornish is satisfied that sufficient resources are currently available to Elektron to satisfy full acceptance of the Offer. 13. Inducement fees Elektron and Howle have entered into an inducement fee agreement (with the consent of the Panel). Under this agreement, to enable Elektron to make the Offer, Howle has agreed to pay Elektron a fee equal to 1 per cent. of the value of the Offer (including the net amount payable to holders of options and entitlements under the Howle Share Schemes), in the event that, inter alia, the Howle Directors withdraw their unanimous recommendation of the Offer. Similarly Elektron has agreed to pay to Howle a fee of the same amount should it fail to make an Offer substantially on the terms contained in this announcement. 14. Compulsory acquisition, de-listing and re-registration If Elektron receives acceptances under the Offer in respect of 90 per cent. or more of the Howle Shares to which the Offer relates, Elektron intends to exercise its right pursuant to the provisions of Schedule 2 of the Takeovers Directive (Interim Implementation) Regulations 2006 to acquire compulsorily the remaining Howle Shares to which the Offer relates on the same terms as the Offer. As soon as it is appropriate and possible to do so, subject to the Offer becoming or being declared unconditional in all respects and subject to any applicable requirements of the London Stock Exchange and UKLA (including the requirement that Elektron has acquired or agreed to acquire 75 per cent. of the ordinary share capital of Howle), Elektron intends to procure that Howle applies for cancellation of the listing of Howle Shares on the Official List of the London Stock Exchange. It is anticipated that the cancellation of the listing of the Howle Shares will take effect no earlier than 20 Business Days following the date upon which the Offer becomes or is declared unconditional in all respects. Cancellation of the trading of Howle Shares on the Official List of the London Stock Exchange would significantly reduce the liquidity and marketability of any Howle Shares which are not acquired by Elektron. Following the Offer becoming or being declared unconditional in all respects and the cancellation of the trading of the Howle Shares, it is also the intention of Elektron to procure that a resolution is proposed to re-register Howle as a private company. 15. Overseas Shareholders The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the jurisdictions in which they are resident. Persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe any applicable legal and regulatory requirements. The Offer referred to in this announcement is not being made, directly or indirectly, in or into, or by use of the postal services or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or by any facilities of a national, state or other securities exchange of, the United States, Canada, Australia, Republic of Ireland, Republic of South Africa or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of such jurisdiction, and the Offer cannot be accepted by any such use, means or instrumentality or otherwise from or within the United States, Canada, Australia, Republic of Ireland, Republic of South Africa or Japan or any other such jurisdiction and doing so may render invalid any proposed acceptance of the Offer. 16. United Kingdom taxation The comments set out below are intended as a general guide only to the position under current United Kingdom law and HM Revenue and Customs practice (both of which may change). They relate to the position of Howle Shareholders who are resident or ordinarily resident in the UK for tax purposes and who hold their Howle Shares beneficially as an investment otherwise than under a personal equity plan or ISA. This section is not intended to be, and should not be construed to be, legal or taxation advice to any particular Howle Shareholder. The tax treatment of non-UK resident Howle Shareholders may differ from that described in the following paragraphs. In particular, non-UK resident Howle Shareholders will generally not be liable to tax in the United Kingdom in respect of any gain accruing to them as a result of accepting the Offer. Any Howle Shareholders who are in any doubt as to their taxation position or are not resident in the UK or are subject to tax in any jurisdiction other than the UK should consult an appropriate independent professional adviser without delay. (a) UK taxation of chargeable gains Liability to United Kingdom taxation on chargeable gains will depend upon the individual circumstances of each Howle Shareholder. Share consideration Any Howle Shareholder who, alone or together with persons connected with him, does not hold more than 5 per cent of, or of any class of, shares in Howle should not be treated as having made a disposal of Howle Shares for the purposes of United Kingdom tax on chargeable gains as a result of accepting the Offer to the extent that he receives New Elektron Shares as consideration. Any gain or loss which would otherwise have arisen on a disposal of his Howle Shares in exchange for New Elektron Shares should be ''rolled over'' into the New Elektron Shares and the New Elektron Shares should be treated as the same asset as those Howle Shares and as acquired at the same time as those Howle Shares. Any Howle Shareholder who, alone or together with persons connected with him, holds more than 5 per cent of, or of any class of, shares in Howle is advised that an application for clearance in respect of the Offer may be made to the Inland Revenue under section 138 of the Taxation of Chargeable Gains Act 1992. If such clearance is granted, any such Shareholder should be treated in the manner described in the preceding paragraph. However Elektron does not currently intend to apply for such clearance and the Offer is not conditional on such clearance being obtained. A subsequent disposal of all or any of the New Elektron Shares received under the Offer may, depending on the particular circumstances of the Shareholder, give rise to a liability to tax on chargeable gains. Any chargeable gain or allowable loss on a disposal of New Elektron Shares should be calculated taking into account the appropriate proportion of the allowable original cost to the holder of acquiring his Howle Shares, and (when calculating a chargeable gain but not an allowable loss), for the purposes of corporation tax, indexation allowance will be calculated by reference to the date of disposal of the New Elektron Shares. For individual Shareholders, indexation allowance will be applied until April 1998 (for Howle Shares acquired before that date) and taper relief may apply to reduce the percentage of the gain chargeable to tax thereafter until disposal, depending on the number of complete years for which the shares have been held. Cash consideration To the extent that a Howle Shareholder who accepts the Offer receives cash consideration, that Shareholder will be treated as making a disposal or part disposal for the purposes of taxation of chargeable gains. This may, depending on the Shareholder's personal circumstances, give rise to a chargeable gain or an allowable loss for tax purposes. For Howle Shareholders who are subject to corporation tax, indexation allowance on the acquisition cost of the Howle Shares should be available until the date of disposal of the Howle Shares. Indexation allowance increases the acquisition cost of an asset for tax purposes in line with the rise in the retail prices index and thus reduces the amount of the chargeable gain on disposal of the asset. Indexation allowance cannot be used to create or increase a loss. Where an individual Howle Shareholder acquired his Howle Shares prior to April 1998, indexation allowance on the acquisition of the Howle Shares will be available up to and including April 1998. For periods after April 1998, taper relief may reduce the proportion of the gain chargeable to tax on a disposal of Howle Shares in accordance with the number of complete years for which the Howle Shareholder has owned the Howle Shares. Where an individual acquired his Howle Shares on or after 6 April 1998, taper relief runs from the date of acquisition. The allowable original cost of an Howle Shareholder's original holding of Howle Shares should, broadly, be apportioned between the New Elektron Shares and cash received by reference to the amount of cash received and the market value of the New Elektron Shares at the time that Howle Shareholder accepts the Offer or at the time that the Offer becomes unconditional in all respects (whichever is the later). (b) Stamp duty and stamp duty reserve tax No stamp duty or stamp duty reserve tax will be payable by a Howle Shareholder as a result of accepting the Offer. (c) Taxation of dividends on New Elektron Shares Under current United Kingdom tax legislation, no amounts in respect of tax will be withheld at source from dividends paid by Elektron. Where Elektron pays a dividend, a holder of the New Elektron Shares who is an individual resident (for tax purposes) in the United Kingdom and who receives that dividend will be entitled to a tax credit equal to one-ninth of the dividend. The individual will be taxed on the aggregate of the dividend and the related tax credit (the ''gross dividend''), which will be regarded as the top slice of the individual's income. The tax credit will, however, be treated as discharging the individual's liability to income tax in respect of the gross dividend, unless and except to the extent that the gross dividend falls above the threshold for the higher rate of income tax. In that case, the individual will, to that extent, be liable to pay tax on the gross dividend of an amount calculated as (currently) 32.5 per cent of the gross dividend less the related tax credit. So, for example, a dividend of Â£80 will carry a tax credit of Â£8.89 (one-ninth of Â£80) and to the extent that the aggregate of the dividend and the related tax credit falls above the threshold for the higher rate of income tax, the income tax payable on the dividend by an individual liable to income tax at the higher rate will be 32.5 per cent of Â£88.89 (i.e. dividend of Â£80 plus tax credit of Â£8.89), namely Â£28.89, less the tax credit of Â£8.89, leaving a net charge of Â£20 (or 25 per cent of the cash dividend). United Kingdom exempt approved pension funds and charities will not be liable to income tax or corporation tax on dividends received by them from Elektron and will not be entitled to claim a refund of all or part of the tax credits in respect of those dividends. A corporate holder of New Elektron Shares that is resident for tax purposes in the United Kingdom and that receives a dividend paid by Elektron will not generally be taxable on the receipt of the dividend. Persons who are not resident in the United Kingdom should consult their own tax adviser concerning their tax liabilities (in the United Kingdom and any other country or jurisdiction). For the avoidance of doubt, the foregoing comments should not be considered to constitute advice and Shareholders are recommended to seek independent professional advice before taking any further action. 17. Listing Application will be made to the London Stock Exchange for the New Elektron Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings on AIM (for normal settlement) will commence shortly following the date on which the Offer becomes or is declared unconditional in all respects (save for any condition relating to Admission). No application is being made for the New Elektron Shares to be admitted to listing or to be dealt in on any other exchange. Temporary documents of title will not be issued pending the dispatch, where applicable, by post of definitive certificates for New Elektron Shares in accordance with the terms of the Offer. Pending the issue of definitive certificates for the New Elektron Shares, transfers will be certified against the register held by Capita. 18. Elektron and Howle issued share capital In accordance with Rule 2.10 of the City Code, Elektron confirms that it has 78,308,602 Ordinary Shares in issue. The International Securities Identification Number for Elektron ordinary shares is GB00B0C5RG72. Howle confirms that it has 29,025,759 Howle Shares in issue. The International Securities Identification Number for Howle Shares is GB0004413208. 19. General The Offer Document and Form of Acceptance will be posted to Howle Shareholders as soon as reasonably practicable and in any event within 28 days of this Announcement, other than to Howle Shareholders in a Restricted Jurisdiction. The Howle Directors accept responsibility for the information contained in this announcement relating to the Howle Group (other than statements expressed to be opinions of the Elektron Directors), the Howle Directors and members of their immediate families and related trusts and persons connected to them. To the best of the knowledge and belief of the Howle Directors (who have taken all reasonable care to ensure that such is the case), such information contained herein for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. The Elektron Directors accept responsibility for the information contained in this announcement, other than the information for which the Howle Directors accept responsibility in accordance with the immediately preceding paragraph. To the best of the knowledge and belief of the Elektron Directors (who have taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. The Offer will be subject to the applicable requirements of the Code and the Panel, the London Stock Exchange and the UK Listing Authority. 20. Appendices (a) Appendix I to this announcement contains the conditions and a summary of certain further terms of the Offer. (b) Appendix II to this announcement contains further details of the bases and sources of the financial and other information set out in this announcement. (c) Appendix III to this announcement contains definitions of certain expressions used in this announcement. Enquiries Elektron Tel: 07966 116664 Adrian Girling, Executive Chairman Beaumont Cornish (Financial advisor to Elektron) Tel: 020 7628 3396 Roland Cornish Howle Tel: 07808 320855 Matthew Chaloner, Chief Executive of Howle City Financial Associates (Financial advisor to Howle) Tel: 0207 090 7800 Ross Andrews This announcement does not constitute an offer or an invitation to purchase or subscribe for any securities. The Offer will be made solely by the Offer Document and (in respect of certificated Howle Shares) in the Form of Acceptance, which will contain the full terms and conditions of the Offer, including details of how the Offer may be accepted. Beaumont Cornish Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Elektron and for no-one else in connection with the Offer and will not be responsible to anyone other than Elektron for providing the protections afforded to customers of Beaumont Cornish Limited, nor for providing advice in relation to the Offer or any matters referred to herein. City Financial Associates Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Howle and for no-one else in connection with the Offer and will not be responsible to anyone other than Howle for providing the protections afforded to customers of City Financial Associates Limited, nor for providing advice in relation to the contents of the Offer or any matters referred to herein. If you are in any doubt about the Offer or the action you should take, you should consult an independent financial advisor authorised under the Financial Services and Market Act 2000 if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial advisor, who specialises in advising on the acquisition of shares and other securities. APPENDIX I Conditions and further terms of the Offer Part A: Conditions of the Offer The Offer, which is being made by Beaumont Cornish on behalf of Elektron, will comply with applicable rules and regulations of the City Code. The Offer and any acceptances under it will be governed by English law and subject to the jurisdiction of the courts of England and Wales and to the terms and conditions in the Offer Document and Form of Acceptance. The Offer will be subject to the following conditions: (a) valid acceptances being received (and not, where permitted, withdrawn) by not later than 1:00pm (London time) on the First Closing Date of the Offer (or such later time(s) and/or date(s) as Elektron may, subject to the rules of the City Code or with the consent of the Panel, decide) in respect of not less than 90 per cent. (or such lower percentage as Elektron may decide) in nominal value of the Howle Shares to which the Offer relates, provided that this condition will not be satisfied unless Elektron (together with any of its associates) shall have acquired or agreed to acquire, whether pursuant to the Offer or otherwise, Howle Shares carrying, in aggregate, more than 50 per cent. of the voting rights then exercisable at general meetings of Howle, including for this purpose (to the extent, if any, required by the Panel) any such voting rights attaching to any Howle Shares which are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances, whether pursuant to the exercise of any outstanding conversion or subscription rights or otherwise and, for this purpose: (i) the expressions ''Howle Shares to which the Offer relates'' and ''associates'' shall be construed in accordance with Schedule 2 of the Takeovers Directive (Interim Implementation) Regulations 2006; and (ii) Howle Shares which have been unconditionally allotted but not issued shall be deemed to carry the voting rights which they will carry upon issue; and (iii) valid acceptances shall be treated as having been received in respect of any Howle Shares that Elektron shall, pursuant to Schedule 2 of the Takeovers Directive (Interim Implementation) Regulations 2006, be treated as having acquired or contracted to acquire by virtue of acceptances of the Offer; (b) the admission of the New Elektron Shares to trading on AIM becoming effective in accordance with the AIM Rules or (if Elektron so determines and subject to the consent of the Panel) the London Stock Exchange agreeing to admit such shares to trading on AIM subject only to the allotment of such shares; (c) no Third Party having taken, instituted, implemented or threatened in writing any action, proceedings, suit, investigation or enquiry, or made, proposed or enacted, any statute, regulation or order or taken any other steps and there continuing not to be outstanding any statute, regulation, order or other matter which in each case would reasonably be expected to: (i) make the Offer, its implementation or the acquisition or proposed acquisition by Elektron of any or all shares or other securities in (or the equivalent), or control or management of, Howle or any member of the Howle Group void, illegal or unenforceable in or under the laws of any relevant jurisdiction, or otherwise directly or indirectly materially restrain, prevent, prohibit, materially restrict or materially delay the same or impose additional material conditions or obligations with respect to the Offer or such acquisition, or otherwise materially impede, challenge or interfere with the Offer or such acquisition, or require material amendment to the terms of the Offer or the acquisition or proposed acquisition of any Howle Shares or the acquisition of control of Howle or the Wider Howle Group by Elektron; (ii) impose any material limitation or result in any material delay in the ability of any member of the Elektron Group or any member of the Howle Group to acquire or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise voting or management control over, any member of the Howle Group or any member of the Elektron Group to an extent which is material in the context of the Offer; (iii) require, prevent or materially delay the divestiture or alter the terms envisaged for any proposed divestiture by any member of the Elektron Group of any shares or other securities (or the equivalent) in Howle to an extent which is material in the context of the Offer; (iv) require, prevent or delay the divestiture or alter the terms envisaged for any proposed divestiture by any member of the Elektron Group or by any member of the Howle Group of all or any material portion of their respective businesses, assets or properties or limit the ability of any of them to conduct any of their respective businesses or to own or control any of their respective assets or properties or any part thereof to an extent which is material in the context of the Wider Howle Group taken as a whole or the Elektron Group taken as a whole; (v) except pursuant to Part XIIIA of the Companies Act, require any member of the Elektron Group or of the Howle Group to acquire, or to offer to acquire, any shares or other securities (or the equivalent) in any member of either group owned by any third party or to sell or offer to sell any shares or other securities (or the equivalent) in, or any asset or any member of the Howle Group to an extent which is material in the context of the Wider Howle Group taken as a whole or the Elektron Group taken as a whole; (vi) impose any material limitation on the ability of any member of the Elektron Group or of the Howle Group to conduct or integrate or coordinate its business, or any material part of it, with the businesses or any part of the businesses of any other member of the Elektron Group or of the Howle Group to an extent which is material in the context of the Offer; (vii) result in any member of the Elektron Group or the Howle Group ceasing to be able to carry on business under any name under which it presently does so to an extent which is material in the context of the Wider Howle Group taken as a whole or the Elektron Group taken as a whole; or (viii) otherwise adversely affect the business, assets, profits, financial or trading position of any member of the Howle Group or of the Elektron Group to an extent which is material in the context of the Offer; and all applicable time periods during which any Third Party could decide to take, institute or threaten any such action, proceeding, suit, investigation, enquiry or reference or otherwise intervene under the laws or regulations of any relevant jurisdiction having expired, lapsed or been terminated; (d) insofar as the merger provisions of the Enterprise Act 2002 may be applicable, the Office of Fair Trading indicating in terms satisfactory to Elektron, that it does not intend to refer the proposed acquisition of Howle by Elektron, or any matter arising therefrom, to the Competition Commission, or the statutory period for any such referral expiring without such reference having been made, or the Office of Fair Trading accepting undertakings from Elektron in terms satisfactory to Elektron, in lieu of referring the proposed acquisition by Elektron of Howle, or any matter arising therefrom, to the Competition Commission; (e) all necessary notifications and filings having been made, all applicable time periods (including any extensions of such waiting and other time periods) under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory or regulatory obligations in any relevant jurisdiction having been complied with in each case in connection with the Offer or the acquisition or proposed acquisition of any shares or other securities (or the equivalent) in Howle or control (directly or indirectly) of Howle or any other member of the Howle Group by any member of the Elektron Group or the carrying on by any member of the Howle Group of its business, where the absence thereof would have a material adverse affect in the context of the Wider Howle Group taken as a whole; (f) all material and necessary Authorisations in any jurisdiction for or in respect of the Offer or the acquisition or proposed acquisition of any shares or other securities in Howle or control (directly or indirectly) of Howle or any other member of the Howle Group by any member of the Elektron Group or the carrying on by any member of the Howle Group of its business in any jurisdiction having been obtained, in terms and in a form satisfactory to Elektron, from all appropriate Third Parties or from any persons or bodies with whom any member of the Howle Group has entered into contractual arrangements, in each case where the absence of such Authorisation would have a material adverse effect in the context of the Offer and all such Authorisations remaining in full force and effect at the time at which the Offer becomes otherwise unconditional in all respects and there being no notice of any intention to revoke, suspend, restrict, adversely modify or not to renew any of the same; (g) except as fairly disclosed to Elektron by or on behalf of Howle, or as disclosed in the Annual Report and Accounts of Howle, or as publicly announced by Howle (by the delivery of an announcement to a Regulatory Information Service), prior to the date of the Offer Announcement, there being no provision of any arrangement, agreement, licence, permit, franchise or other instrument to which any member of the Howle Group is a party, or by or to which any such member or any of its assets is or are or may be bound, entitled or subject or any circumstance, which, in each case, as a consequence of the Offer or the acquisition or proposed acquisition of any shares or other securities in, or control of, Howle or any other member of the Howle Group by any member of the Elektron Group or otherwise, could or might reasonably be expected to result in, (in any case to an extent which is or would be material in the context of the Wider Howle Group taken as a whole): (i) any monies borrowed by or any other indebtedness or liabilities (actual or contingent) of, or any grant available to, any member of the Howle Group being or becoming repayable or capable of being declared repayable immediately or prior to its stated repayment date or the ability of any member of the Howle Group to borrow monies or incur any indebtedness being withdrawn or inhibited or becoming capable of being withdrawn; (ii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any material part of the business, property, assets or interests of any member of the Howle Group or any such mortgage, charge or other security interest (wherever created, arising or having arisen) becoming enforceable; (iii) any such arrangement, agreement, licence, permit, franchise or instrument, or the rights, liabilities, obligations or interests of any member of the Howle Group thereunder, being, or becoming capable of being, terminated or adversely modified or affected or any adverse action being taken or any onerous obligation or liability arising thereunder; (iv) any asset or interest of any member of the Howle Group being or falling to be disposed of or ceasing to be available to any member of the Howle Group or any right arising under which any such asset or interest could be required to be disposed of or could cease to be available to any member of the Howle Group, in each case, otherwise than in the ordinary course of business; (v) any member of the Howle Group ceasing to be able to carry on business under any name under which it presently does so; (vi) the creation of any material liabilities (actual or contingent) by any member of the Howle Group, otherwise than in the ordinary course of business; (vii) the rights, liabilities, obligations or interests of any member of the Howle Group under any such arrangement, agreement, licence, permit, franchise or other instrument or the interests or business of any such member in or with any other person, firm, company or body (or any arrangement or arrangements relating to any such interests or business) being terminated or adversely modified or affected; or (viii) the financial or trading position of any member of the Howle Group being prejudiced or adversely affected; and no event having occurred which, under any provision of any such arrangement, agreement, licence, permit or other instrument, could result in any of the events or circumstances which are referred to in paragraphs (i) to (viii) of this condition (g) in any case to an extent which is or would be material in the context of the Wider Howle Group taken as a whole; (h) since 31 March 2006 and except as disclosed in the unaudited Interim Results of Howle for the six month period ended on that date, or as otherwise publicly announced by Howle (by the delivery of an announcement to a Regulatory Information Service), or as otherwise fairly disclosed to Elektron by or on behalf of Howle prior to the date of the Offer Announcement, no member of the Howle Group having: (i) issued or agreed to issue, or authorised or proposed the issue of, additional shares or securities of any class, or securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities other than as between Howle and wholly owned subsidiaries of Howle and other than any options granted as disclosed to Elektron prior to the date of the Offer Announcement and any shares issued upon the exercise of any such options; (ii) purchased or redeemed or repaid any of its own shares or other securities or reduced or made any other change to any part of its share capital (other than with respect to any wholly owned subsidiary of Howle) which in either case would be material in the context of the Wider Howle Group taken as a whole; (iii) recommended, declared, issued, paid or made or proposed to recommend declare, pay, issue or make any bonus, dividend or other distribution whether payable in cash or otherwise (other than to Howle or a wholly owned subsidiary of Howle); (iv) made, committed to make, authorised, proposed or announced an intention to propose any material change in its share or loan capital; (v) merged with, demerged or acquired any body corporate, partnership or business, or (other than a transaction between Howle and a wholly owned subsidiary of Howle) other than in the ordinary course of business, acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any assets (including shares in any undertaking and trade investments) or authorised the same (which is material in the context of the Wider Howle Group taken as a whole); (vi) issued, authorised or proposed the issue of, or authorisation of or made any change in or to any debentures or (except in the ordinary course of business) incurred or increased any indebtedness or liability (actual or contingent), including pursuant to any agreements or arrangements existing prior to the date of the Offer Announcement, which in any case is material in the context of the Wider Howle Group taken as a whole; (vii) entered into, varied, or authorised any agreement, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise), and which in any case is reasonably likely to be material in the context of the Wider Howle Group taken as a whole or the Elektron Group taken as a whole, as the case may be, which: (A) is of a long term, onerous or unusual nature or magnitude or which is reasonably likely to involve an obligation of such nature or magnitude; or (B) which is reasonably likely to restrict the business of any member of the Howle Group or any member of the Elektron Group; or (C) is other than in the ordinary course of business; (viii) entered into or varied or made any offer to enter into or vary the terms of, any material contract, agreement or arrangement with any of the Directors of Howle; (ix) (other than in respect of any member which is or was at this time dormant) taken or proposed any corporate action or had any legal proceedings instituted or threatened in writing against it or petition presented or order made for its winding-up (voluntarily or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any part of its assets and revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction which in any case is material in the context of the Wider Howle Group taken as a whole; (x) been unable, or admitted in writing that it is unable, to pay its debts as they fall due or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business which in any case is material in the context of the Wider Howle Group taken as a whole; (xi) waived or compromised or settled any claim in a manner which is material in the context of the Wider Howle Group taken as a whole; (xii) made any alteration to its memorandum or articles of association that is material in the context of the Offer; (xiii) implemented, effected or authorised, or proposed or announced its intention to implement, effect, authorise or propose any reconstruction, amalgamation, commitment, merger, scheme or other transaction or arrangement except (in the case of members of the Howle Group other than Howle) to an extent which is not material in the context of the Wider Howle Group taken as a whole; (xiv) amended the terms (including the terms relating to acceleration or vesting) of any Howle Share Scheme in a manner that is material in the context of the Wider Howle Group taken as a whole; and (xv) entered into any agreement, commitment or arrangement or passed any resolution or made any offer (which remains open for acceptance) or proposed or announced any intention with respect to any of the transactions, matters or events referred to in this condition (h); (i) since 31 March 2006 and except as disclosed in the unaudited Interim Results of Howle for the six month period ended on that date, or as otherwise publicly announced by Howle (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed to Elektron by or on behalf of Howle prior to the date of the Offer Announcement: (i) there having been no adverse change or deterioration in the business, assets, financial or trading position or profit or prospects of any member of the Howle Group which in any case is material in the context of the Wider Howle Group taken as a whole; (ii) no contingent or other liability of any member of the Howle Group having arisen or become apparent or increased which in any case is material in the context of the Wider Howle Group taken as a whole; (iii) no material litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Howle Group is or is reasonably likely to become a party (whether as plaintiff, defendant or otherwise) having been threatened, announced, implemented or instituted by or against or remaining outstanding against or in respect of any member of the Howle Group which in any case is material in the context of the Wider Howle Group taken as a whole; and (iv) Elektron not having discovered that any member of the Howle Group or any partnership, company or other entity in which any member of the Wider Howle Group has a significant economic interest and which is not a subsidiary undertaking of Howle is subject to any liability (actual or contingent) which is not disclosed in the Annual Report and Accounts of Howle and which in any case is material in the context of the Wider Howle Group taken as a whole; (j) except as disclosed in the Annual Report and Accounts of Howle, or as otherwise publicly announced by Howle (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed to Elektron by or on behalf of Howle prior to the date of the Offer Announcement, Elektron not having discovered that any financial or business or other information concerning the Howle Group disclosed at any time by or on behalf of any member of the Howle Group, to any member of the Elektron Group, whether publicly or otherwise, is materially misleading or contains any material misrepresentation of fact or omits to state a fact necessary to make any information contained therein not misleading and which was not subsequently corrected before the date of the Offer Announcement by disclosure either publicly or otherwise to Elektron to an extent which in any case is material in the context of the Wider Howle Group taken as a whole; and (k) except as disclosed in the Annual Report and Accounts of Howle, or as otherwise publicly announced by Howle (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed to Elektron by or on behalf of Howle prior to the date of the Offer Announcement, Elektron not having discovered that: (i) any past or present member of the Howle Group has not complied with any applicable legislation or regulations of any relevant jurisdiction with regard to the use, treatment, handling, storage, transport, release, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health, or otherwise relating to environmental matters or the health and safety of any person, or that there has otherwise been any such use, treatment, handling, storage, transport, release, disposal, discharge, spillage, leak or emission (whether or not this constituted a non-compliance by any person with any legislation or regulations and wherever the same may have taken place) which, in any case, would be reasonably likely to give rise to any liability (whether actual or contingent) or cost on the part of any member of the Howle Group which in any case is material in the context of the Wider Howle Group taken as a whole; (ii) there is, or is reasonably likely to be, any liability, whether actual or contingent, or requirement to improve or install new plant or equipment or to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the Howle Group or any other property or any controlled waters under any environmental legislation, regulation, notice, circular, order or other lawful requirement of any relevant authority or third party or otherwise which in any case is material in the context of the Wider Howle Group taken as a whole; or (iii) circumstances exist whereby a person or class of persons would be reasonably likely to have a claim in respect of any product or process of manufacture or materials used therein now or previously manufactured, sold or carried out (including without limitation with respect to ownership or infringement of intellectual property) by any member of the Howle Group which is or would be material in the context of the Wider Howle Group taken as a whole. For the purpose of these conditions: (a) ''Third Party'' means any government, government department or governmental, quasigovernmental, supranational, statutory, regulatory, administrative or investigative body, authority (including any national antitrust, competition or merger control authorities or similar authorities), court, trade agency, association, institution or professional or environmental body in any relevant and applicable jurisdiction; (b) a Third Party shall be regarded as having ''intervened'' if it has decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or made, proposed or enacted any statute, regulation, decision or order or taken any measures or other steps or required any action to be taken or information to be provided or otherwise having done anything and ''intervene'' shall be construed accordingly; (c) ''Elektron Group'' means Elektron and its subsidiary undertakings; (d) ''Authorisations'' means authorisations, orders, recognitions, determinations, certificates, consents, permissions, licenses, clearances, and approvals other than those the need for which has been fairly disclosed prior to the date of this announcement; (e) ''Howle Group'' means Howle and its subsidiary undertakings; and (f) ''Wider Howle Group'' means the Howle Group and associated undertakings and any other body corporate, partnership joint venture or person in which the Howle Group and such undertakings (aggregating their interests) have an interest of more than 20 per cent. of the voting or equity capital or the equivalent. Subject to the requirements of the Panel, Elektron reserves the right to waive all or any of the above conditions, in whole or in part, except condition (a). Conditions (b) to (k) (inclusive) must be fulfilled, be determined by Elektron to be or remain satisfied or (if capable of waiver) waived within 21 days after the later of the First Closing Date of the Offer and the date on which condition (a) is fulfilled (or in each case such later date as the Panel may agree) failing which the Offer will lapse. Elektron will not invoke conditions (b) to (k) (inclusive) so as to cause the Offer to lapse or be withdrawn unless the circumstances which give rise to the right to invoke the relevant condition are of material significance to Elektron in the context of the Offer. Elektron shall be under no obligation to waive, to determine to be or to remain satisfied or to treat as fulfilled any of conditions (b) to (k) inclusive by a date earlier than the date specified above for the fulfilment thereof notwithstanding that the other conditions of the Offer may at such earlier date have been fulfilled and that there are as at such earlier date no circumstances indicating that any of such conditions may not be capable of fulfilment. The conditions are inserted for the benefit of Elektron and no Howle Shareholder shall be entitled to waive any of the conditions without the prior consent of Elektron. Elektron reserves the right, subject to the consent of the Panel, to extend the time allowed under the rules of the City Code for satisfaction of condition (a) above and accordingly for the satisfaction, fulfilment or, where permitted, waiver of other conditions, and thus, to extend the duration of the initial Offer Period. If Elektron is required by the Panel to make an offer for Howle Shares under the provisions of Rule 9 of the City Code, Elektron may make such alterations to the conditions, including the acceptance condition in paragraph (a) above, as are necessary to comply with the provisions of that Rule. The Offer will lapse (unless otherwise agreed by the Panel) if the acquisition of Howle is referred to the UK Competition Commission before the First Closing Date of the Offer, or the date on which the Offer becomes or is declared unconditional as to acceptances, whichever is the later. If the Offer lapses it will cease to be capable of further acceptance. Howle Shareholders who have accepted the Offer and Elektron shall then cease to be bound by acceptances delivered on or before the date on which the Offer lapses. The Offer will be on the terms and will be subject, inter alia, to the conditions which are set out in this Appendix and the other terms set out in this announcement, the Document and the Form of Acceptance and such further terms as may be required to comply with the provisions of the City Code. The Offer and any acceptances thereunder will be governed by English law and subject to the jurisdiction of the English courts. APPENDIX II Sources and Bases of Information In this announcement: (a) financial information relating to Elektron for the two years ended 31 January 2006 has been extracted from the audited report and accounts of Elektron for the year ended 31 January 2006. Financial information relating to Elektron for the year ended 31 January 2004 has been extracted from the audited accounts of Elektron for the year ended 31 January 2005. The notes to the financial information of Elektron have been extracted from the notes to the audited report and accounts of Elektron for the years ended 31 January 2006, 31 January 2005 and 31 January 2004; (b) the financial information relating to Elektron for the six months ended 31 July 2006 has been extracted from the announcement of the interim results made by Elektron to the London Stock Exchange on 18 September 2006; (c) financial information relating to Howle for the two years ended 30 September 2005 has been extracted from the audited report and accounts of Howle for the year ended 30 September 2005. Financial information relating to Howle for the year ended 30 September 2003 has been extracted from the audited accounts of Howle for the year ended 30 September 2004, (d) the financial information relating to Howle for the six months ended 31 March 2006 has been extracted from the announcement of the interim results made by Howle to the London Stock Exchange on 15 May 2006; (e) the value of the existing issued share capital of Howle at the Offer Price is based upon 29,025,759 Howle Shares in issue on 27 September 2006 (being the last Business Day prior to the publication of this announcement) and the full exercise of all rights to subscribe for Howle Shares under the Howle Share Schemes for a further 1,834,768 Howle Shares and the Closing Price of an Elektron Share as at 27 September 2006 (being the last Business Day prior to the publication of this announcement) of 18.25 pence; (f) the amount of cash payment in respect of full acceptance of the Offer is calculated based on the number of Howle Shares in issue (as described in paragraph (e) above) resulting in a cash payment of approximately Â£1.445 million; and (g) all prices quoted for Elektron Shares and Howle Shares are Closing Prices. APPENDIX III Definitions The following definitions apply throughout this announcement, unless the context requires otherwise: 'Acquisition' the proposed acquisition of the entire issued and to be issued share capital of Howle under the Offer 'Admission' the admission of the New Elektron Shares to the AIM market of the London Stock Exchange in accordance with the AIM Rules 'Alternative TTE a Transfer to Escrow instruction (as described in the CREST Instruction' Manual issued by CRESTCo) in relation to Howle Shares in uncertificated form 'Acting in as defined in the City Code concert' 'AIM' AIM, the market of that name operated by the London Stock Exchange 'AIM Rules' the rules governing the admission to, and operation of, AIM as set out in the AIM Rules for companies published by the London Stock Exchange from time to time 'Australia' the Commonwealth of Australia, its states, possessions and territories and all areas subject to its jurisdiction and any political sub-division thereof 'Beaumont Beaumont Cornish Limited, which is authorised and regulated in Cornish' the United Kingdom by the Financial Services Authority and has its registered address Lewis House, 12 Smith Street, Rochdale, Lancashire OL16 1TX 'Business Day' any day other than a Saturday or a Sunday when banks are open in London for general banking business 'Canada' Canada, its possessions, provinces and territories and all areas subject to its jurisdiction and any political sub-division thereof 'Capita' or Capita Registrars (a trading division of Capita IRG Plc), The 'Capita Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, Registrars' Elektron's receiving agent for the purposes of the Offer and a trading division of Capita IRG Plc 'Certificated' a share or other security which is not in uncertificated form or 'in (that is, not in CREST) certificated form' 'City Code' or The City Code on Takeovers and Mergers 'Code' 'City Financial City Financial Associates Limited which is authorised and Associates' regulated in the United Kingdom by the Financial Services Authority and has its registered address at Pountney Hill House, 6 Laurence Pountney Hill, London EC4R 0BL. 'Closing Price' the closing middle market quotation of a Howle Share or of an Elektron Share as the case may be as derived from the the Daily Official List or its AIM Appendix 'Companies Act' the Companies Act 1985 (as amended) or 'the Act' 'CREST' the relevant system (as defined in the Regulations) in respect of which CRESTCo is the Operator (as defined in the Regulations) 'CRESTCo' CRESTCo Limited, the operator of CREST 'CREST Manual' the reference manual issued by CRESTCo from time to time 'CREST member' a person who has been admitted by CRESTCo as a system-member (as defined in the Regulations) 'CREST a person who is, in relation to CREST, a system-participant (as participant' defined in the Regulations) 'CREST sponsor' a CREST participant admitted to CREST as a CREST sponsor 'CREST sponsored a CREST member admitted to CREST as a sponsored member member' 'Daily Official The Daily Official List of the London Stock Exchange List' 'Document' or the document proposed to be sent to Howle Shareholders 'Offer Document' containing, inter alia, the details of the Offer ''Electronic the inputting and settling of a TTE Instruction which Acceptance'' constitutes or is deemed to constitute an acceptance of the Offer on the terms set out in this Document 'Elektron' or Elektron Plc, incorporated under the Companies Act with company the 'Company' number 00448274 and having its registered office at Alfred's Way, Barking Essex IG11 0AZ 'Elektron the directors of Elektron Directors' or 'Elektron Board' 'Elektron Group' Elektron and its subsidiaries and subsidiary undertakings 'Enlarged Group' the combined business of the Elektron Group and the Howle Group following the Offer becoming or being declared unconditional in all respects 'Elektron ordinary shares of 5 pence each in the capital of Elektron Shares' or 'Elektron Ordinary Shares' 'ESA an Escrow Adjustment Instruction (AESN), transaction type 'ESA' Instruction' (as defined in the CREST Manual) 'Escrow Agent' Capita in its capacity as escrow agent (as defined by the CREST Manual) for the purposes of the Offer 'First Closing the first closing date of the Offer, being 1.00 p.m. 19 October Date' 2006 'Form of the form of acceptance and authority for use in connection with Acceptance' or the Offer in respect of certificated Howle Shares accompanying 'Form' this Document 'Howle Carbides' Howle Carbides Limited, a wholly-owned subsidiary of Howle Holdings Plc 'Howle' Howle Holdings Plc incorporated under the Companies Act with company number 1310502 and having its registered office at Cromwell Works, Boraston Lane, Tenbury Wells, Worcestershire WR15 8LF 'Howle Board' the directors of Howle or 'Howle Directors' 'Howle Deferred the existing unconditionally allotted or issued and fully paid Shares' deferred shares of 20p each in the capital of Howle. 'Howle Executive the executive bonus scheme operated by Howle in which the Bonus Scheme' participants are Matthew Chaloner (Chief Executive of Howle) and John Gibson (Executive Director of Howle) 'Howle Group' Howle and its subsidiaries and subsidiary undertakings 'Howle SAYE the Howle savings related share option scheme approved by Howle Share Scheme' Shareholders at its Annual General Meeting held 14 April 2005 'Howle Share the options granted over Howle Shares under the Howle Share Options' Option Scheme 'Howle Share the approved executive share option scheme of Howle dated 1 May Option Scheme' 1997 'Howle Share the Howle Share Option Scheme and the Howle SAYE Share Scheme Schemes' 'Howle holder(s) of Howle Shares Shareholder(s)' or 'Shareholder(s)' 'Howle Ordinary the existing unconditionally allotted or issued and fully paid Shares', 'Howle ordinary shares of 5p pence each in the capital of Howle and Shares' or any further such ordinary shares which are unconditionally 'Shares' allotted and/or issued and fully paid (including pursuant to the exercise of the Howle Share Schemes) before the Offer closes or before such earlier date as the Elektron Directors may (subject to the City Code) decide, not being earlier than the date on which the Offer becomes or is declared unconditional as to acceptances or, if later, the First Closing Date. 'Japan' Japan, its cities and prefectures, territories and possessions and all other areas subject to its jurisdiction and any political sub-division thereof 'Listing Rules' the listing rules and regulations of the UKLA as amended from time to time, and contained in the UKLA's publication of the same name 'London Stock London Stock Exchange plc Exchange' 'Member account the identification code or number attached to any member ID' account in CREST 'New Elektron the new Elektron Shares proposed to be issued and credited as Shares' fully paid up pursuant to the Offer 'NPE-Innotek' NPE-Innotek Limited, a wholly owned subsidiary of Howle Holdings Plc 'Offer' the recommended offer to be made by Beaumont Cornish on behalf of Elektron, on the terms and subject to the conditions set out in the Document and the Form of Acceptance (in respect of certificated Howle Shares) to acquire all of the Howle Shares, (including, where the context so requires, any subsequent revision, variation, extension or renewal thereof) 'Offer Period' the period commencing on 28 September 2006 and ending on whichever of the following shall be the latest: (i) the First Closing Date; (ii) the time and date on which the Offer becomes or is declared unconditional as to acceptances; and (iii) the time and date on which the Offer lapses 'Overseas holders of Howle Shares resident in, or nationals or citizens Shareholders' of, jurisdictions outside the UK or who are nominees of, or custodians, trustees or guardians for, citizens or nationals of other countries 'Panel' The Panel on Takeovers and Mergers 'Participant ID' the identification code or membership number used in CREST to identify a particular CREST member or their CREST participant 'Recognised any investment exchange operating in the United Kingdom Investment recognised by the Financial Services Authority as a Recognised Exchange' Investment Exchange 'Regulations' the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), as amended from time to time 'Republic of the Republic of Ireland and all other areas subject to its Ireland' jurisdictions and any political sub-divisions thereof 'Republic of the Republic of South Africa and all other areas subject to its South Africa' jurisdictions and any political sub-divisions thereof 'Restricted Australia, Canada, Japan, Republic of Ireland, Republic of Jurisdiction' South Africa or the United States of America or any other jurisdiction where the release, publication or distribution of this Document would constitute a violation of the relevant laws of such jurisdiction 'RIS' Regulatory Information Service, The Announcements Office and/or RNS and/or any other channel recognised from time to time as a channel for the dissemination of regulatory information by listed and AIM companies under the Listing Rules and the AIM Rules 'Richard Lloyd' Richard Lloyd Limited, a wholly owned subsidiary of Howle Holdings Plc 'SDRT' Stamp Duty Reserve Tax 'TFE a transfer from escrow instruction (as defined in the CREST Instruction' Manual) 'TTE a transfer to escrow instruction (as defined in the CREST Instruction' Manual) 'Titman Tip Titman Tip Tools Limited, a wholly owned subsidiary of Howle Tools' Holdings Plc 'UKLA' the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 'uncertificated' a share or security which is for the time being recorded on the or 'in relevant register of the share or security concerned as being uncertificated held in uncertificated form in CREST, and title to which, by form' virtue of the Regulations, may be transferred by means of CREST 'United Kingdom' the United Kingdom of Great Britain and Northern Ireland or 'UK' 'United States the United States of America, its territories and possessions, of America' or any state of the United States of America and the District of 'United States' Columbia, and all other areas subject to its jurisdictions and any political sub-divisions thereof 'US Person' a US person as defined in Regulation S of the United States Securities Act 1933 as amended Throughout this announcement and where the context so requires, the masculine gender shall include the feminine and the singular shall include the plural and vice versa and all times shall be construed as references to London time. Save where otherwise stated, for the purposes of this Document the terms 'subsidiary', 'subsidiary undertaking', 'associated undertaking' and 'undertaking' shall have the respective meanings given by the Companies Act. Terms defined in the CREST Manual shall, unless the context requires otherwise, bear the same meanings where used in this Document. This information is provided by RNS The company news service from the London Stock Exchange

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Currys impressed this morning as sales performance improved after Christmas, whilst the reshaped Vodafone also found support from full yar earnings. On The Beach was however looking stranded as the cost of living crisis continues to bite.

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