elektron plc annual report and accounts 2010 · · 2013-02-22potential for significant growth....

Elektron plc

Investing in innovation

annual report and accounts 2010

Who we areWho we are

Elektron plc specialises in the design of engineered products. Elektron owns a portfolio of leading brands with potential for significant growth.

Who we are IFC

Financial highlights 01

Group strategyGroup strategyGroup strategy 01

What we do 02

Where we operate 04

How we do itHow we do itHow we do it 06

Chairman’s statement 08

Operational review 10

Finance director’s report 14Directors, management and

professional advisers 16

Report of the directors 18

Statement of directors’ responsibilities 23Independent auditors’ report

(group and company) 24Consolidated statement of comprehensive

income 25

Consolidated balance sheetConsolidated balance sheetConsolidated balance sheet 26

Consolidated statement of changes in equityConsolidated statement of changes in equityConsolidated statement of changes in equity 27

Consolidated statement of cash flows 28Notes to the consolidated

financial statements 29

www.elektronplc.com www.elektronplc.com }}Visit our website to download a copy of this annual report and access our expanded strategy and company descriptions.

Elektron buys Sifam

Bulgin Plc changes to Elektron plc

Elektron purchases Howle Holdings

Elektron buys Arcolectric

Arcolectric forms

Elektron’s mission is to deliver a highly competitive return to shareholders by using its technologies to create innovative solutions for its customers. We are the vital component in a variety of industrial and consumer applications.

A.F. Bulgin Ltd

1923 1932 1948 2000 2003 2006 2007 2009

Growth timeline }

A.F. Bulgin Ltd lists on LSE

New divisional structure: Elektron Technology and Elektron Ventures

}}}

01Elektron plcannual report and accounts 2010

Financial highlights

• Salesof£29.9million(2009:£35.6million)

• EBITforyear(beforeexceptionalitems)of£1.8million(2009:£1.1million)

• Verystrongsecondhalf:EBITof£1.5million(2009:£0.3million)

• Proposedfinaldividendup8.7%to0.50p(2009:0.46p);scripissuealternative

• Strongperformanceinthefinalmonthsoftheyearcontinuinginthecurrentyear

• Interimdividendunderconsideration

Total revenue (continuing operations) (£m)

£30m

2006 2007 2008 2009 2010

30

3635

26

22

Operating profit (pre-exceptionals) (£m)

£1.8m

Dividend per share (pence)

0.50p

Group strategy

TotransformElektronintoahighgrowthinvestmentby:

• Prioritisinginnovation,creativityandtechnologicaladvantage

• Increasingsalesandmarketingresourcesinthefastestexpandingeconomiesoftheworld

• AboveallinvestinginElektronpeoplebyattractingthebestpossiblerecruitsandfosteringthetalentsofourexistingstaff

2006 2007 2008

1.8

1.1

2.1

2009

1.9

2010

1.8

2006 2007 2008

0.50

0.46

0.45

2009

0.40

2010

0.35

02 Elektron plcannual report and accounts 2010

What we do

We design and manufacture products for diverse markets. TheGroupisorganisedintotwodivisionswithsevenoperatingbrandsworldwide.

Elektron Technology }Elektron Technology designs and manufactures a comprehensive range of world class components and custom technology platforms under the Arcolectric, Bulgin and Sifam brands.

Arcolectric specialises in the specialises in the specialises in the specialises in the specialises in the specialises in the specialises in the specialises in the specialises in the specialises in the specialises in the specialises in the design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance design and manufacture of appliance switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and switches, indicator lights and fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product fuseholders for every kind of product from computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffeefrom computers to coffee machines machines machines machines machines machines machines and lighting toand lighting toand lighting toand lighting toand lighting toand lighting toand lighting toand lighting toand lighting toand lighting to laser printers.laser printers.laser printers.laser printers.laser printers.laser printers.laser printers.laser printers.laser printers.laser printers.

Bulgin develops solutions develops solutions develops solutions develops solutions develops solutions develops solutions develops solutions develops solutions develops solutions develops solutions develops solutions develops solutions develops solutions forforforfor thethethethe industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling industrial sector selling connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products connectivity and sealed products forforfor harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.harsh environments.

Sifam designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures designs and manufactures analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and analogue and digital meters and controlcontrolcontrolcontrolcontrolcontrol knobs.knobs.knobs.knobs.knobs.

— www.arcolectric.co.uk — www.bulgin.co.uk — www.sifam.com

Applications include: medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care medical devices, personal care products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, products, vending machines, computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.computers and coffee machines.

Applications include: cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure cell relay towers, military secure personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, personal radios, powerline repeaters, small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.small metering, solar inverters.

Applications include: single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded single and twin shot moulded knobsknobsknobsknobsknobsknobs and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing and sliders for audio mixing equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel equipment and analogue panel meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.meters for the aviation industry.

}


Divisional financials }

— www.digitron.co.uk

Elektron Ventures }Elektron Ventures manages a portfolio of four companies within the industrial and technological sectors.

Digitron offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, offers temperature, pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and pressure, relative humidity and data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments data logging instruments principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, principally to the food industry, butbutbutbut also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, also to the industrial, medical, pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and pharmaceutical, chemical and transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.transportation market sectors.

Queensgate provides provides provides provides provides provides provides nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and sensingsensingsensingsensingsensingsensing solutions for high solutions for high solutions for high solutions for high solutions for high solutions for high solutions for high solutions for high solutions for high solutions for high solutions for high solutions for high technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.technology industries.

Titman is the UK's largest is the UK's largest is the UK's largest is the UK's largest is the UK's largest is the UK's largest is the UK's largest is the UK's largest is the UK's largest is the UK's largest is the UK's largest is the UK's largest manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and manufacturer of industrial and professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide professional Tungsten Carbide router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company router cutters. The Company hashashashas led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit led the way in router bit development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20development for over 20 years.years.years.years.years.years.

Total Carbide is one of the is one of the is one of the is one of the is one of the is one of the is one of the is one of the is one of the European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and European leaders in the design and manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide manufacture of Tungsten Carbide wear parts. wear parts. wear parts. wear parts. wear parts. wear parts. wear parts. wear parts. wear parts.

™™

— www.queensgate.com — www.titman.co.uk — www.totalcarbide.com

Ventures sales }

£8.4mVentures operating loss (pre-exceptional) }

£(0.5)m

Technology sales }

£21.5mTechnology operating profits (pre-exceptional) }

£2.5m

Applications include: pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, pressure and temperature safety, foodfoodfoodfood manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation manufacturing, food preparation and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature and delivery, wireless temperature control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, control systems for hospitality, clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.clinical and pharmaceutical industries.

Applications include: nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and nanopositioning and measurementmeasurementmeasurementmeasurementmeasurementmeasurementmeasurementmeasurementmeasurementmeasurement systems for systems for systems for systems for systems for systems for systems for systems for systems for Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor Microscopy, semiconductor andandandand thethethethe space industry.space industry.space industry.space industry.space industry.space industry.space industry.space industry.space industry.space industry.

Applications include: premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for premium cutting technology for thethethethe woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.woodworking industry.

Applications include: powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke powder metallurgy for bespoke engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil engineered products in the oil andandandand gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture gas sector, food manufacture and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.and metrology industries.


Where we operate

Global network }

UK

From its head office in Essex, the Group manages its two divisions. Elektron Instruments and Elektron Ventures currently manufacture from sites in Buckinghamshire, Essex and Devon.

Germany

Elektron Ventures is represented in Europe from its sales office based in Münster.

USA

Elektron Technology is represented in North America from its sales and distribution office in California.

} Elektron solutions are sold worldwide directtooriginalequipmentmanufacturersandthroughdistributors.

Key locations }

Manufacturing sites Distributors

Elektron presence


Tunisia

Elektron Technology products sold in Europe are manufactured at its wholly‑owned subsidiary in Tunisia.

China

Elektron Technology products sold in Asia and North America are manufactured at its wholly‑owned foreign enterprise in Shenzhen.

Revenue by geographic regionAMERICAS

£4.7mASIA PACIFIC

£4.0m

UK

£12.9m

Turnover by operating division

ELEKTRON TECHNOLOGY

£21.5m

ELEKTRON VENTURES

£8.4m

EMEA

£8.3m

£m


How we do it

Innovation project elements in detail The key elements are:

Acquisition and relocation — acquire underperforming complementary assets— relocate operations to lower cost economies

Growth through innovation — invest in technology based product development— invest in staff – “unlock talent”

The major focus in the current year continues to be growth through innovation. OurInnovationProjectisnowinitssecondyearandhasalreadybeenusedtodevelopnewproductsforgrowingmarkets.

}

Implementing strategies to increase sales of existing product families in new markets

Targeting more aggressively emerging and growth markets, within which Elektron’s brand strengths and core competencies offer growth potential

Utilising technology to evolve beyond the commoditised markets within which Elektron operates, with a structured approach to radical innovation

Developing technology platforms and identifying areas of technology transfer which are applicable across a range of market sectors in volume

Focusing on increased generation of intellectual property rights (IPR) to command higher margins and gain competitive advantage

Using leading edge design tools to halve time to market for new products

Fostering links with suitable departments at various universities


Acquire Acquire Acquire Acquire Acquire Acquire Acquire Acquire Acquire Acquire Acquire Acquire }

Innovate Innovate Innovate Innovate Innovate Innovate Innovate Innovate Innovate Innovate Innovate Innovate }

Expand Expand Expand Expand Expand Expand Expand Expand Expand Expand Expand }

Bulgin“Bulgin’s innovation initiative has resulted in a portfolio of wireless solutions for emerging and growth markets: smart metering, solar power and communications.”

Lisa HamonSales and Marketing Director

Arcolectric“Investment in sales and marketing has expanded Arcolectric’s presence in markets in all six continents, whilst offshoring has ensured Arcolectric remains competitive with all global and local competitors.”

Alan ZhaoSales Manager, Greater China

Queensgate “The separation of Queensgate into a strategic business unit supported by appropriate developmental investment has resulted in a clear plan for growth.”

Anthony CooperGeneral Manager, QueensgateGeneral Manager, Queensgate


Chairman’s statement

The annual figures mask the transformation that has taken place at Elektron in the past twelve months and I thought it would be helpful to break down the results of the Group into six monthly periods as shown above.

There has been a dramatic improvement in margins in the final six months of the year as a result of the action that was taken to cut costs at the beginning of the recession. The task now is to increase sales whilst maintaining margins and this is starting to happen. The Group is highly operationally geared and any increase in sales should significantly improve earnings.

InnovationI said last year that the major focus for the Group would be innovation. We have implemented a structured management process to facilitate radical innovation. Taking a collaborative approach allows us to leverage the multi-disciplinary skill sets we have throughout the Group across a variety of industry sectors. The approach has resulted in a number of new product projects for growth markets, with significant margin potential and which will start to be brought to market at the end of the current year.

The Group is budgeting £1.8 million technical spend for the current year which is the highest amount set aside for this purpose in its history. This will enable Elektron to be positioned at the cutting edge of its technology, within its marketplace, with accelerated time to market.

Elektron peopleAs it grows, the Group is giving more attention to recruiting talent and developing its existing people. A number of new positions have been recently created including

Tohaveincreasedprofitsinthedepthsofthedeepestrecessioninpostwarhistoryisanexcellentachievement.Weareexcitedbytheopportunitiesthatfaceusinthecurrentyearandbeyond

}

Jan 2010 Jul 2009 Jan 2009 Jul 2008 Six months to £’000 £’000 £’000 £’000

Turnover 15,675 14,207 16,203 19,441Gross profit 6,767 5,174 4,729 6,609GP% 43.2% 36.4% 29.2% 34.0%EBIT (before exceptional items) 1,531 231 284 818


a General Manager at Queensgate, an Elektron Technology (ET) Asia Pacific Business Development Director and Regional Sales Managers for Germany, France and Asia Pacific. We shall shortly welcome a new ET Technical Director from a world leading technology consultancy following the promotion of John Wilson to ET Divisional Managing Director. John is a former Management Development Programme (MDP) participant.

We now have four MDP participants including one each from China and the US. This programme was set up for high flyers. In addition a new online Staff Appraisal and Development Review system will go live shortly. This is designed to identify training needs more widely.

It is important that the Elektron ethos is shared by all staff and attention is being paid to improving communication throughout the world. We are shortly to install a videoconferencing system at all our locations to ensure that teams can work together across continents. This is a vital tool as we relocate important functional roles overseas and reduce reliance on the UK. In March 2010 we held our second Senior Management Conference which enabled our staff from around the world to share knowledge and ideas.

Our 2009/10 financial year started amidst great uncertainty and ended with record orders. During the year our staff had to say farewell to many of their colleagues. This was a painful process. I should like to thank them for their professionalism and hard work.

DividendsI am pleased to confirm that the Board is continuing its progressive dividend policy and proposes to pay a final dividend of 0.50p per share (2009: 0.46p) on 17 August 2010. This represents an 8.7% increase. The Board is proposing a scrip issue alternative and full details will be contained in the documentation convening the Annual General Meeting. Last year many shareholders welcomed the opportunity to increase their investment in the Company in this way.

The Board recognises that in the current investment climate, dividends are important to many shareholders. It will therefore give consideration to an interim dividend payment later in the year.

OutlookCurrent sales and EBIT are well ahead of management expectations. Orders for the year to date are currently running at 148% of last year with the current Group order book standing at £8.1 million, 76% up on this time last year. It should however be borne in

mind that prior year comparatives were especially weak and that it will be harder to sustain such dramatic percentage increases as the year progresses.

Success brings its own problems. ET is running into capacity constraints in a couple of areas, namely in plastic moulding and in our supply chain where certain suppliers are unable to keep up with demand. Measures are in place to deal with these issues. In addition in some areas of the Group, management is extremely stretched and a recruitment programme has commenced where we need to build resource. Investment in people, technological advantage and equipment continues to be a key management focus.

The Board continues to be concerned that governments around the world have built up an unsustainable level of debt which will be a drag on global growth for many years to come. Global economies may be subject to sudden losses of confidence which may lead to significant fluctuations in demand. Nevertheless it believes that the Elektron Group is well positioned to prosper and to create excellent long-term value.

Keith DaleyChairman

What we said we would do•Continuouscost-reductionprogramme

•Innovation

•Penetrationofnewgeographicalmarketsandmarketsectors

•Investmentinhighflyersthroughtrainingandmentoring

•Selectivecapexthroughouttherecession

What we achieved •Wehavesubstantiallyincreasedmarginsbyfurtheroffshoringouractivities

•Wehavedevelopedtechnologyplatformsforintegrationintocustomisedproductsandfosteredrelationshipswithuniversitiestoevolveourtechnologies

•Wehavemovedintotherenewableandsustainabilitymarketsprovidingsolutionsforsolarpowerandsmartmetering.WehaverecruitedmanynewsalespeopleinAsia,theAmericasandcontinentalEurope.Wehavecommissionedmarketingreportsforseveralimportantmarkets

•Wehaverecruitedanddevelopedexistingemployeesinsales,operationsandtechnicaldisciplinesacrossalloperatingcompanies.Wehaveexpandedourmanagementdevelopmentprogramme,graduatetrainingschemeanduniversitypartnerships

•Wehaveinvestedinautomatedhighprecisionequipment.WehavecontinuedtoinvestinGroupITinfrastructureandsystems


Operational reviewElektron Technology

Elektron Technology (ET): sales of £21.5 million (2009: £24.9 million); and EBIT before exceptional items of £2.5 million (2009: £1.7 million).

Elektron Technology is the new name for Elektron Components Division. This change reflects our mission to provide technological solutions to current and future customers. The division owns three premium brands of electronic and electrical components: Arcolectric, Bulgin and Sifam. Bulgin in particular offers excellent potential for growth. It operates within the $35 billion connector market. The division operates in six continents and has a comprehensive sales network in 125 countries.

Despite the difficult economic climate in 2009, new products, geographic expansion and efficiency savings allowed the division to remain profitable. Following the divisional reorganisation, the Sifam brand has been integrated within Elektron Technology and its offshoring is nearing completion. This has resulted in economies of scale and a more global profile through our extensive selling network.

ET has regionalised its management structure, providing higher levels of visibility at senior level, of our operations overseas where we look to create demand for our solutions.

This reorganisation has allowed for a greater regional focus with a view to reducing ET’s dependence on sales from the UK and Europe where we command significant market share. We have divided the globe into three regions: Americas, EMEA and Asia Pacific. This approach allows us to focus appropriately on multi-billion pound markets in which we have historically held minimal market share.

The high growth economies of South America, Greater China and Asia Pacific continue to be key markets for Elektron growth.

The Americas business unit has been further restructured and now operates a hybrid selling model through both manufacturers’ representatives and a new, experienced direct sales force. This has served to promote brand awareness in North America and resulted in an increased level of exciting opportunities, both for our core product offering and enhanced technology based capabilities.

Budgeted sales and marketing expenditure for FY2010/11 has increased by 85% to £4.3 million. The majority of the increase relates to new appointments in key geographical markets. This reflects the increased level of sales growth we anticipate as we further penetrate both our existing and emerging markets. We have engaged a PR and advertising firm to assist with consolidating our strong brands under the ET banner.

The technical budget has been increased by 52% to £1.3 million, highlighting the Elektron Group’s focus on new product development. We have embarked on Elektron’s largest ever development programme, a £1.2 million research and development project, due for launch in 2011, which will increase our accessible market by over $1 billion. Technology platforms are being developed that leverage ET’s core competencies namely:

u connectivity;

u environmental sealing;

u monitoring and control; and

u indication and illumination.

}ETcontinuestobuckthetrendindifficulttradingconditionsasitevolvesfromacommoditymarketplayer


This is the foundation of our solutions based approach in which we seek to partner with global OEMs to provide bespoke solutions to challenging technical problems. The approach has resulted in increased margins for custom products, higher value opportunities and significant barriers to entry for potential competitors. We have had notable successes with our technology product offering in the renewable and sustainable market, in particular smart metering and solar power. In addition our wireless portfolio continues to expand.

Operationally, ET has commenced a vertical integration programme to enhance in-house capabilities, reducing dependence on external suppliers which will provide competitive advantage through increased flexibility and reduced lead times. Increased levels of vertical integration will result in even more favourable margins as a result of additional value added activity at the point of manufacture.

ET has introduced a graduate development programme for both our sales and marketing and technical functions. These new team members will benefit from a tailored development programme, providing the division with eager new talent and management for the future.

As 2010 progresses, it is clear that our strategy has gained traction. ET continues to buck the trend in difficult trading conditions as it evolves from a commodity market player. In summary it is well positioned and structured for significant future growth.

John WilsonDivisional Managing DirectorElektron Technology

Increased market to

£3.3bnElektron Technology’s serviced available market will increase by 50% to £3.3bn through the launch of new products in 2010/11

Elektron brand }Bulgin

Elektron Technology Division sales

£21.5mElektron Technology Division operating profit (pre-exceptional)

£2.5m

Bulgin offers excellent potential for growth. It operates within the $35 billion connector market. The division operates in six continents and has a comprehensive sales network in 125 countries.


Operational review continuedElektron Ventures

Elektron Ventures (EV): sales of £8.4 million (2009: £10.7 million); and LBIT before exceptional items of £0.5 million (2009: £0.3 million).EV manages a portfolio of four companies in diverse fields within the industrial and technological sectors, each managed for growth and, where possible, technological innovation. It is designed to act as an incubator for businesses that will become substantial contributors to the Group in the years to come. EV distinguishes itself from purely financial venture capital companies in that it can provide smaller businesses with both financial resources and high quality management that is normally found in larger companies.

Queensgate Instruments: sales of £0.8 million (2009: £0.9 million); and EBIT of £0.2 million (2009: £0.1 million).Queensgate’s growth proposition is to diversify its high technology business from the semiconductor industry by applying its core capability to a variety of industries.

The company made a small profit in the financial year. It has had an excellent start to the current financial year and has already exceeded the current year budgeted operating profit.

Queensgate is a specialist in nanopositioning and measurement and represents one of the highest growth potential business units within the division. Traditionally focusing on the semiconductor and hard disk drive industries, Queensgate is already seeing the benefits of the upturn in these industries with a strong order book in the first half of 2010. Building on the strength of this upturn we are now focusing on diversifying and stabilising the business for the future by making in-roads into other high growth areas such as bio-nanotechnology and microscopy. Focus has also begun on establishing a global distribution and representative network to capitalise on overseas markets.

Capital investment has been allocated to bring the manufacturing and test facilities back to world class level

enabling further efficiency gains in what is already a high margin business. The recruitment of key staff (including a new General Manager who brings with him a strong business development and nanotechnology background), coupled with plans to recruit new engineering staff and build on our existing links with several universities in the UK and abroad, mean that a new exciting range of products will begin to emerge from Queensgate within the coming year.

The Queensgate business is perhaps the best example of the EV philosophy at work. It was acquired as part of Sifam Instruments a few years ago and has suffered from lack of investment as a result of being buried within a number of poorly performing businesses. During the year it was constituted as a separate business which has allowed much greater management focus and this will enable faster growth.

Digitron Instruments: sales of £2.2 million (2009: £2.6 million); and LBIT of £0.2 million (2009: £0.1 million).Digitron’s growth proposition is to target areas of high growth in the mobile and wireless temperature measurement industry.

Digitron is transitioning from a provider of commodity handheld instruments for measuring temperature and pressure, into a company providing high value bespoke solutions for large national and multinational companies. It is at the start of this process and is incurring restructuring costs. It is currently the only loss-making business within the Group.

Digitron is engaged in the design, development and manufacture of a range of handheld and wireless instruments for the food retail, food manufacturing, HVAC and healthcare industries. It recently completed development of Kyros, a wireless sensor network system, which has been installed in a leading hotel complex in Dubai for the real-time temperature monitoring of over 250 fridges and freezers.

}Queensgatehashadanexcellentstarttothecurrentfinancialyearandhasalreadyexceededitsbudgetedoperatingprofit


Current projects include customising Kyros for a major building utilities provider for the remote monitoring of water temperature using both cloud computing and GSM technologies, developing a programmable graphical display based thermometer for a major supermarket chain and developing an oven temperature data logging system for a leading pub food chain.

Total Carbide: sales of £3.1 million (2009: £4.8 million); and LBIT before exceptional items of £0.7 million (2009: £0.3 million).Total Carbide’s growth proposition is to apply its powder metallurgy technology to a variety of sectors including the semiconductor industry.

Total Carbide incurred heavy losses in the past two years as a result of a dramatic drop in demand and heavy restructuring costs. It is now trading profitably.

The company has exited several low margin sectors which it previously served and is now positioned to offer engineered powder metallurgy

components to the oil and gas exploration market. It offers a premium product with focus on fast turnaround and service. Key achievements for this company include the penetration of new markets, new regions and new products. The business has an aggressive budget focused on capturing market share.

The company has targeted the commercialisation of a new powder metallurgy product that offers significant quantifiable customer benefits for the semiconductor industry.

Titman Tip Tools: sales of £2.3 million (2009: £2.4 million); and EBIT of £0.2 million (2009: £nil).Titman’s growth proposition is to develop its premium branded UK router cutter business into overseas markets.

Titman has been traditionally regarded as a “cash cow” business. It was profitable in the last year in spite of the recession. The task now is to grow its sales.

Elektron brand }Digitron

Having developed the company over the previous year the goals are set higher for the coming year with exploitation into North America and aggressive targets for our central European sales office. A directed investment programme focused on developing the current team, and supporting the expansion with new recruits, as appropriate, is in place.

Neill RickettsDivisional Managing DirectorElektron Ventures

Digitron Instruments: sales of £2.2 million (2009: £2.6 million)

Digitron’s growth proposition is to target areas of high growth in the mobile and wireless temperature measurement industry.


Finance director’s report

Given the economic turmoil facing the global economy, results for the year were particularly pleasing, with earnings before interest, tax and exceptional items up 60% to £1.8 million from £1.1 million despite a sales decrease of 16% to £29.9 million.

The gross margin improved to 40% from 32% in the previous year as a result of savings from offshoring and lower material costs. Currency gains in the year were £53,000 compared with £474,000 in the previous year.

Exceptional costs of £1.4 million (2009: £3.2 million) were incurred in the year mainly comprising redundancy and reorganisation costs, primarily incurred in the transfer of moulded knobs and meters offshore, together with the completion of the switch assembly transfer to China.

At the previous year end we wrote down the value of our 23% stake in Hartest Holdings plc (an AIM quoted instrumentation group), to a market value of £0.5 million and the £0.9 million charge was taken through the income statement in exceptional costs. At this year end the market value was £1.3 million. Accounting rules require us to take the £0.8 million gain through equity in the balance sheet.

A tax credit of £69,000 arises from disclaiming capital allowances in the previous year, allowing enhanced utilisation of Group relief in the current year. There are unrecognised deferred tax assets totalling £0.7 million relating to tax losses carried forward in Total Carbide and Elektron Instruments Limited. The Group continues to enjoy the exemption from corporate taxes in its Tunisian operations.

TheBoardisproposingafinaldividendof0.50ppersharepayableon17August2010toshareholdersontheregisterat18June2010

}


Earnings per share metrics were:

u basic earnings of 0.34p (2009: loss 2.36p) and diluted earnings of 0.34p (2009: loss 2.36p).

The replacement of the Group’s legacy IT systems has been ongoing with Total Carbide being the first to go live. Implementation in the Technology division has now commenced. This project, when complete, will greatly enhance management productivity and reporting systems.

The Board is proposing a final dividend of 0.50p per share (2009: 0.46p) payable on 17 August 2010 to shareholders on the register at 18 June 2010. The Board is proposing a scrip issue alternative and full details are to be contained in the documentation convening the Annual General Meeting.

The Group generated £1.6 million of cash from trading including £0.4 million of working capital decreases and payment of £1.3 million in restructuring and other exceptional costs. It paid £0.9 million (net of finance) to purchase

plant and machinery, repaid £0.8 million of borrowings (including interest) and paid £0.2 million in dividends thus utilising £0.3 million net cash in the year.

The Group meets its day-to-day working capital requirements through the invoice discounting facilities. The Group’s forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level and terms of its current facilities. No matters have been drawn to the Company’s attention to suggest that continuation of invoice discounting facilities will not be forthcoming on acceptable terms.

Net assets of the Group are £8.5 million (2009: £7.9 million) with net debt at 31 January 2010 of £3.4 million (2009: £3.3 million). Net gearing has decreased to 40% from 41%.

Chris LeighGroup Finance Director

Current order book

£8.1m

Net gearing

40%Net gearing has decreased to 40% from 41%

Operating profit (pre-exceptional) (£’000)

Technologies Ventures Central costs Total Group profit

(318)

1,762

2,523

Revenue by geographic regionAMERICAS

£4.7mASIA PACIFIC

£4.0m

UK

£12.9m

Turnover by operating division

ELEKTRON TECHNOLOGY

£21.5m

ELEKTRON VENTURES

£8.4m

EMEA

£8.3m

£m

(443)


Directors, management and professional advisers

Keith Daley (55)Executive ChairmanMA CantabKeith trained as a Corporate banker. For the past 25 years he has been an active professional investor specialising in the shares of small quoted companies. He has owned and managed a number of businesses and also invests in the unquoted sector. He has been a shareholder in Elektron since 1996.

Christopher Leigh (50)Group Finance DirectorFCA Chris is a Chartered Accountant with 26 years’ post‑qualification experience. He trained with a large city practice and spent time in industry carrying out projects in the UK and abroad before joining Elektron in 1990.

Malcolm Argent (74)Non‑executive DirectorCBEMalcolm Argent CBE, has had a distinguished career with BT Group plc where he served as a main board executive director for 10 years and a further four years as a non-executive director. Other appointments have included Deputy Chairman of the Civil Aviation Authority (1995–8) and member of the boards of Westminster Healthcare Holdings PLC (1992–9) and Clerical Medical Investment Group Ltd (1994–2001).

Jeremy Thorn (61)Non‑executive DirectorBSc, CEng, CCMgtI, FRSAJeremy Thorn, has held many non-executive director posts in medium sized organisations following a successful executive career. He has considerable experience of high growth, international markets, and innovative technology based companies. During his executive career he has held senior managerial posts in manufacturing and engineering services companies, including Bridon Plc, Staveley Industries Plc and Spear & Jackson Plc.

Neill Ricketts (39)Divisional Managing Director of Elektron VenturesB.Eng (Hons)Neill is a graduate manufacturing engineer with over 20 years of post qualification experience working in sectors including automotive, Formula One, aerospace and defence. He has implemented major capital investment programmes, developed new technology, and optimised production methods for a multi-national NASDAQ company prior to joining Elektron.

John Wilson (34)Divisional Managing Director of Elektron TechnologyBSc DunelmJohn joined Elektron in March 2008 as Technical Director for Elektron Technology before being appointed Divisional Managing Director in April 2010. He has previously held senior management positions in the UK and North America as well as providing technical consultancy to global blue chip organisations. John specialises in fast track, innovative New Product Development.

Directors }

Management } Professional advisers }

Company Secretary Christopher Leigh FCA

Registered officeMelville Court Spilsby Road Romford Essex RM3 8SB

Registered in EnglandNo. 448274

RegistrarsCapita RegistrarsNorthern House Woodsome Park Fenay Bridge Huddersfield West Yorkshire HD8 0GA

Nominated adviser and brokerfinnCap4 Coleman Street London EC2R 5TA

AuditorsBright Grahame Murray131 Edgware Road London W2 2AP

BankersHSBC Bank plc70 Pall Mall London SW1Y 5EZ

SolicitorsWollastonsBrierly Place New London Road Chelmsford Essex CM2 0AP


Keith Daley (55)Executive ChairmanMA CantabKeith trained as a Corporate banker. For the past 25 years he has been an active professional investor specialising in the shares of small quoted companies. He has owned and managed a number of businesses and also invests in the unquoted sector. He has been a shareholder in Elektron since 1996.

Christopher Leigh (50)Group Finance DirectorFCA Chris is a Chartered Accountant with 26 years’ post‑qualification experience. He trained with a large city practice and spent time in industry carrying out projects in the UK and abroad before joining Elektron in 1990.

Malcolm Argent (74)Non‑executive DirectorCBEMalcolm Argent CBE, has had a distinguished career with BT Group plc where he served as a main board executive director for 10 years and a further four years as a non-executive director. Other appointments have included Deputy Chairman of the Civil Aviation Authority (1995–8) and member of the boards of Westminster Healthcare Holdings PLC (1992–9) and Clerical Medical Investment Group Ltd (1994–2001).

Jeremy Thorn (61)Non‑executive DirectorBSc, CEng, CCMgtI, FRSAJeremy Thorn, has held many non-executive director posts in medium sized organisations following a successful executive career. He has considerable experience of high growth, international markets, and innovative technology based companies. During his executive career he has held senior managerial posts in manufacturing and engineering services companies, including Bridon Plc, Staveley Industries Plc and Spear & Jackson Plc.

Neill Ricketts (39)Divisional Managing Director of Elektron VenturesB.Eng (Hons)Neill is a graduate manufacturing engineer with over 20 years of post qualification experience working in sectors including automotive, Formula One, aerospace and defence. He has implemented major capital investment programmes, developed new technology, and optimised production methods for a multi-national NASDAQ company prior to joining Elektron.

John Wilson (34)Divisional Managing Director of Elektron TechnologyBSc DunelmJohn joined Elektron in March 2008 as Technical Director for Elektron Technology before being appointed Divisional Managing Director in April 2010. He has previously held senior management positions in the UK and North America as well as providing technical consultancy to global blue chip organisations. John specialises in fast track, innovative New Product Development.

Directors }

Management } Professional advisers }

Company Secretary Christopher Leigh FCA

Registered officeMelville Court Spilsby Road Romford Essex RM3 8SB

Registered in EnglandNo. 448274

RegistrarsCapita RegistrarsNorthern House Woodsome Park Fenay Bridge Huddersfield West Yorkshire HD8 0GA

Nominated adviser and brokerfinnCap4 Coleman Street London EC2R 5TA

AuditorsBright Grahame Murray131 Edgware Road London W2 2AP

BankersHSBC Bank plc70 Pall Mall London SW1Y 5EZ

SolicitorsWollastonsBrierly Place New London Road Chelmsford Essex CM2 0AP


The Directors present their annual report on the affairs of the Group together with the audited financial statements for the year ended 31 January 2010.

Principal activityThe principal activity of the Group is the design and manufacture of engineered components. The principal operating subsidiaries are listed in Note 13.

Business reviewA review of the Group’s trading operations is contained in the Chairman’s statement, Operational review and Finance Director’s report on pages 8 to 15. We are required by the Companies Act 2006 to include a Business review in the Report of the Directors and describe the principal risks and uncertainties facing the Group. Analysis using financial key performance indicators has to be shown. We produce a wide variety of daily key figures for all of our businesses that enable us to identify performance against budget and the previous year. Other key performance indicators are shown below:

2010 2009

Gross profit marginThe ratio of gross profit to sales expressed as a percentage 40.0% 31.8%

Net operating profit percentage of salesThe ratio of net operating profit before exceptional items, negative goodwill and discontinued operations, to the total of sales invoiced to customers, excluding value added tax, expressed as a percentage 5.9% 3.1%

Interest coverThe ratio of profit before finance and exceptional costs from continuing operations to net interest payable on borrowings 12.5 5.3

Earnings/(loss) per share The profit after tax divided by the weighted average number of ordinary shares in issue during the year 0.34p (2.36p)

Net gearingThe ratio of total borrowings less cash to shareholders’ funds expressed as a percentage 40% 41%

Net assets per shareNet assets divided by the number of ordinary shares in issue at the balance sheet date expressed in pence per share 9.6p 9.2p

Principal risks and uncertaintiesThe management of the business and the nature of the Group’s strategy are subject to a number of risks and uncertainties. The Directors have set out below the principal risks facing the business:

CompetitionThe Group sees increasing levels of competition both from suppliers based in low cost countries and traditional European suppliers struggling to maintain market share by reducing prices. We counter this by continuing to develop innovative products for niche applications with higher margins and by manufacturing in lower cost locations.

Commodity pricesA significant amount of the Group’s purchases are plastic moulding powders, metal parts and rare metal powders. Consequently movements in oil, copper, silver, tungsten and cobalt market prices can lead to significant movements in the gross margin. Whilst it is difficult to pass these costs on to customers in the short term, we are confident that our product designs use less than, or at least no more than, the same amount of these costly materials in product offerings of our competitors which compete directly.

Fluctuations in currency exchange ratesA significant amount of the Group’s sales are in US Dollars and Euros. We are therefore exposed to foreign currency fluctuations. The Group manages its foreign exchange risk by purchasing materials in matching currencies where possible in order to partially offset this exposure. We do not enter into forward foreign exchange contracts and other derivatives/financial instruments since this would only smooth the short-term fluctuations. The longer-term strategy to reduce currency risks is to incur greater proportions of Group costs in currencies linked to our sales.

Report of the directors


Principal risks and uncertainties continuedControl of overseas operationsIn order to achieve competitively priced products the Group has manufacturing facilities in Tunisia and China. Risks and uncertainties of this strategy include management issues at the factories, the possibility of changes in import duties, taxes and shipping delays. We manage these risks by employing suitably experienced local staff and a UK based team that works closely with the factories. If necessary, the majority of products manufactured at one location could be moved to another location.

QualityThe components supplied by the Group are frequently critical to the operation of customers’ equipment, where consequential losses due to component malfunction may lead to customer costs significantly in excess of the component value. The Group relies on robust terms and conditions excluding consequential losses and rapid response to customer complaints to maintain good working relationships.

Skills shortagesIt is becoming increasingly difficult to find the necessary skills to maintain manufacturing in the UK. Coupled with the continuous improvement in skill levels in offshore countries where we operate, the risks associated with the transfer of manufacturing offshore are correspondingly reduced.

IT systemsAs the Group grows it becomes more complex to manage efficiently with the variety of legacy IT systems. The Group has commenced the process of upgrading to modern systems which should lead to efficiency improvements.

Energy pricesThe continuous increases in energy prices impact both the gross margins and operating expenses. Our competitors are also affected by these rising costs.

Financial instrumentsThe financial risk management objectives of the group including credit risk, interest rate risk and currency risk are provided in Note 1 of the financial statements on pages 29 to 34.

Results and dividendsThere was a profit for the year after taxation of £291,000 (2009: loss after taxation of £2,032,000) and the Directors are recommending the payment of a final dividend of 0.50p per share (2009: 0.46p per share). The Directors are proposing a scrip issue alternative in respect of the final dividend for the year ended 31 January 2010 and all future dividends for a period of five years. Full details are contained in the separate Notice of Annual General Meeting and in Scrip Dividend Circulars accompanying this annual report and accounts.

Research and developmentThe Board considers that research and development continues to play a vital role in maintaining and increasing the Group’s competitive position in the market. Details are set out in Note 4 to the financial statements.

Directors and their interestsThe Directors at 31 January 2010 together with their interests in the Company’s ordinary shares of 5p each were:

At 31 January 2010 At 1 February 2009

Beneficial interestsK A Daley 5,701,088 3,400,000C M Leigh 88,683 84,000

Mr K J Roy served as a Director until his resignation on 20 January 2010.

The following Directors were appointed after 31 January 2010:

u Mr M Argent appointed 9 February 2010; and

u Mr J G Thorn appointed 5 March 2010.

.


Executive share option schemesOn 17 January 2001 the shareholders, in General Meeting, approved the adoption of an Executive Share Option Scheme.

Mr C M Leigh was granted the following options to acquire ordinary shares of 5p each at an adjusted price of 15.08p:

u 26 February 2001 – 500,000 ordinary shares; and

u 1 October 2004 – 250,000 ordinary shares.

These options are subject to performance criteria and are exercisable after three years but before ten years from the date of granting.

The middle market price of the ordinary shares at 31 January 2010 was 11.25p per share and the range during the year was 7.375p to 11.5p per share.

Share capitalDetails of share capital are given in Note 18 to the financial statements.

Charitable and political donationsThe Group made no political contributions or charitable donations during the year.

Supplier payment policyThe Group applies a policy of agreeing the terms of payment as part of the commercial arrangement negotiated with suppliers. It is Group policy that payments to suppliers are made in accordance with those terms, provided that suppliers also comply with all relevant terms and conditions. The average creditor days in the year for the Group were 64 days (2009: 49 days) and for the Company were Nil (2009: Nil).

EmployeesAll employees receive equal opportunities for training and career development. The sole criterion for selection and promotion is the individual’s suitability for the position of employment offered. The Group supports the employment of disabled persons wherever appropriate. Each individual operating company within the Group operates its own communication and consultative programmes relevant to its own particular workforce.

Corporate governanceWhilst there is currently no requirement for AIM companies to comply with current corporate governance guidelines, the Board believes that it is appropriate to comply with those provisions insofar as they are appropriate for a company of this size.

Directors(i) The BoardThe Board consists of a Chairman, a Finance Director and two Non-executive Directors and their biographies appear on pages 16 and 17. These indicate the level and range of business experience which, the Board believes, enables it to provide clear and effective leadership of the Company. The Chairman is currently acting as Chief Executive Officer.

The Board meets at least ten times each year and more frequently where business needs require. The Board has a schedule of matters reserved to it for decision and the requirement for Board approval on those matters is known to senior management within the Group. This includes subjects such as material capital and revenue commitments, business acquisitions and disposals and appointments to the boards of subsidiary companies.

There is an agreed procedure for Directors to take independent professional advice if necessary and at the Company’s expense.

In addition, each Director has access to the services of the Company Secretary. The Secretary is charged by the Board with ensuring that all relevant regulations are complied with.

(ii) ChairmanandChiefExecutiveOfficerThe differing roles of Chairman and Chief Executive Officer are acknowledged by the Board. Board composition and structure is currently under review by the Board.

(iii) Remuneration and Audit CommitteesMr J G Thorn chairs the Audit Committee and Mr M Argent chairs the Remuneration Committee. The remuneration of the Executive Directors is recommended by the Chief Executive Officer and is agreed by the Remuneration Committee, excluding the Director whose pay is under review. The remuneration of the Non-executive Directors is agreed by the Board.

Report of the directors continued


Directors continued(iv) Supply of informationTo enable the Board to function effectively and allow Directors to discharge their responsibilities, full and timely access is given to all relevant information.

The agenda for regular Board meetings includes a Chairman’s report and a Finance Director’s report together with documents regarding specific matters.

(v) Appointments to the BoardThe Board does not consider it appropriate to appoint a Nomination Committee given the Board is small in number. It is the Board’s policy to encourage each member to meet individually and collectively with prospective Directors.

(vi) Re-appointmentAny Director appointed during the year is required, in accordance with the Company’s Articles of Association (The Articles), to retire and seek appointment by shareholders at the next Annual General Meeting. The Articles also require that one third, but not more than one third, of the Directors (excluding the Chief Executive Officer) retire by rotation each year and seek re-appointment at the Annual General Meeting. The Directors required to retire will be those who have been longest in office since their last appointment or re-appointment and the date for determination of the number of Directors is not earlier than 28 days prior to the date of the Notice of Annual General Meeting.

Directors’ remuneration(i) Executive remunerationDetails of Directors’ remuneration are contained in Note 8 of the financial statements.

Directors’ indemnitiesThe Company has granted indemnities to each of its Directors in respect of all losses arising out of or in connection with the execution of their powers, duties and responsibilities as Directors to the extent permitted by the Companies Acts and the Company’s Articles of Association. Such qualifying third party indemnity provision remains in force at the date of approving the Directors’ report. In addition, Directors and officers of the Company and its subsidiaries are covered by Directors’ and officers’ liability insurance.

Communication with shareholders(i) DialogueThe Company places a great deal of importance on constructive communication with its shareholders.

(ii) Use of the Annual General MeetingAll shareholders have the opportunity to put questions at the Company’s Annual General Meeting. In view of the low number of attendees at General Meetings, the Board does not make formal business presentations but instead allows time for informal discussion after the conclusion of formal proceedings.

Accountability and audit(i) InternalfinancialcontrolThe Board of Directors has overall responsibility for the Group’s system of internal financial control, which is designed to provide reasonable, but not absolute, assurance against material misstatement or loss.

The key procedures that are in place are:

u a comprehensive budgeting system including reviews at operating unit level and formal reviews and approvals of the annual budget by the Directors;

u monitoring of actual results and comparison to budget for each operating unit on a monthly basis;

u a clearly defined organisation structure within which individual responsibilities are identified and can be monitored; and

u defined procedures for the appraisal, review and authorisation of capital and major revenue and development expenditure.

(ii) Financial reportingIt is the Board’s responsibility to always present a balanced assessment of the Group’s position and prospects. The respective responsibilities of the Directors and the auditors in connection with these financial statements are explained on pages 23 and 24. The Report of the Directors on the business as a going concern is given overleaf.


Going concernThe Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s statement on pages 8 and 9 and the Operational review on pages 10 to 13. The principal risks and uncertainties facing the business are described in the Report of the Directors on pages 18 and 19. The Finance Director’s report on pages 14 and 15 gives details of the Group’s principal banking facilities.

After making due enquiries, the Directors formed a judgement when approving the financial statements that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements.

Auditors and disclosure of information to auditorsBright Grahame Murray have expressed their willingness to continue in office as auditors and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting.

The Directors who held office at the date of approval of this Directors’ report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s auditors are unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

This confirmation is given and should be interpreted in accordance with Section 418 of the Companies Act 2006.

Annual General MeetingThe Company’s Annual General Meeting will be held on 29 July 2010. Accompanying this annual report and accounts is a letter from the Chairman and Notice of Annual General Meeting which sets out the resolutions to be considered and approved at the Meeting.

By order and on behalf of the Board

C M LeighCompany Secretary Melville Court28 June 2010 Spilsby Road Romford Essex RM3 8SB

Registered No. 448274

Report of the directors continued


The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing the parent company financial statements, the Directors are required to:

u select suitable accounting policies and then apply them consistently;

u make judgements and accounting estimates that are reasonable and prudent;

u state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

u prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

In preparing the Group financial statements, International Accounting Standard 1 requires that Directors:

u properly select and apply accounting policies;

u present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

u provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and

u make an assessment of the Company’s ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Statement of directors’ responsibilities


We have audited the financial statements of Elektron plc for the year ended 31 January 2010 which comprise the consolidated statement of comprehensive income, the consolidated and parent company balance sheets, the consolidated statement of cash flows, the consolidated statement of changes in equity, the related Notes 1 to 28 and Notes 1 to 14 for the Company. The financial reporting framework that has been applied in the preparation of the consolidated financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditorsAs explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsAn audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on financial statementsIn our opinion:

u the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 31 January 2010 and of the Group’s profit for the year then ended;

u the consolidated financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

u the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

u the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the consolidated financial statements, Article 4 of the IAS Regulation.

Separate opinion in relation to IFRSs as issued by the IASBAs explained in Note 1 to the Group financial statements, the Group in addition to complying with its legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).

In our opinion the consolidated financial statements comply with IFRSs as issued by the IASB.

Opinion on other matters prescribed by the Companies Act 2006In our opinion the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

u adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

u the parent company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or

u certain disclosures of Directors’ remuneration specified by law are not made; or

u we have not received all the information and explanations we require for our audit.

Robert Moore (Senior Statutory Auditor) For and on behalf of Bright Grahame MurrayChartered Accountants and Statutory Auditors 131 Edgware Road28 June 2010 London W2 2AP

Independent auditors’ report (group and company)to the members of Elektron plc


2010 2009 Continuing operations Notes £’000 £’000

Revenue 2 29,882 35,644Cost of sales 3 (17,941) (24,306)

Gross profit 11,941 11,338Net operating expenses (including exceptional items and negative goodwill) 3 (11,578) (13,395)

Operating profit 1,762 1,102Exceptional items 4 (1,399) (3,159)

Operating profit/(loss) 4 363 (2,057)

Finance income — 41Finance costs 5 (141) (249)

Profit/(loss) before taxation 222 (2,265)Taxation 9 69 233

Profit/(loss) after taxation 291 (2,032)

Profit/(loss) for the year attributable to equity shareholders 291 (2,032)

Other comprehensive incomeCurrency translation differences on foreign currency net investments (309) 298Available-for-sale financial assets – gains arising during the year 805 —

Total other comprehensive income 496 298

Total comprehensive income/(expense) for the financial year attributable to equity shareholders 787 (1,734)

Earnings/(loss) per share – basic 0.34p (2.36p) – diluted 0.34p (2.36p)

The notes on pages 29 to 49 are an integral part of these consolidated financial statements.

Consolidated statement of comprehensive incomeyear ended 31 January 2010


2010 2009 Notes £’000 £’000

Assets Non-current assetsProperty, plant and equipment 12 4,300 3,926Available-for-sale financial assets 14 1,315 458Deferred tax 15 583 485

Total non-current assets 6,198 4,869

Current assetsInventories 16 4,892 5,654Trade and other receivables 17 6,898 5,861Cash and cash equivalents 26 504 834

Total current assets 12,294 12,349

Total assets 18,492 17,218

Equity and liabilitiesEquity attributable to equity holders of the parentCalled-up share capital 18 4,406 4,279Share premium 18 117 244Merger reserve 18 1,047 1,047Capital redemption reserve 18 163 163Other reserves 18 125 434Retained earnings 18 2,635 1,723

Total equity 8,493 7,890

Non-current liabilitiesLong-term borrowings 19 1,198 1,701Accruals and deferred income 150 179Long-term provisions 20 64 64

Total non-current liabilities 1,412 1,944

Current liabilities Trade and other payables 21 4,562 3,776Short-term borrowings 19 1,761 1,516Current portion of long-term borrowings 19 911 880Current tax payable 650 613Short-term provisions 20 703 599

Total current liabilities 8,587 7,384

Total liabilities 9,999 9,328

Total equity and liabilities 18,492 17,218

The financial statements of Elektron plc Registered No. 448274 were approved by the Board of Directors on 28 June 2010 and were signed on its behalf by:

K A Daley C M LeighDirector Director


Consolidated balance sheetas at 31 January 2010


Capital Share Share Merger redemption Other Retained capital premium reserve reserve reserves earnings Total £’000 £’000 £’000 £’000 £’000 £’000 £’000

At 1 February 2008 4,336 244 1,047 106 136 4,304 10,173

Loss for the period — — — — — (2,032) (2,032)Currency translation differences on foreign currency net investments — — — — 298 — 298

Total comprehensive income/(expense) for the period — — — — 298 (2,032) (1,734)Purchase of own shares (57) — — 57 — (164) (164)Dividends paid on ordinary shares — — — — — (385) (385)

At 1 February 2009 4,279 244 1,047 163 434 1,723 7,890

Profit for the period — — — — — 291 291Currency translation differences on foreign currency net investments — — — — (309) — (309)Available-for-sale financial assets – gains arising during the year — — — — — 805 805

Total comprehensive income/(expense) for the period — — — — (309) 1,096 787Share issues 127 (127) — — — — —Dividends paid on ordinary shares — — — — — (393) (393)Adjustment for scrip dividend element — — — — — 209 209

At 31 January 2010 4,406 117 1,047 163 125 2,635 8,493


Consolidated statement of changes in equityyear ended 31 January 2010


Consolidated statement of cash flowsyear ended 31 January 2010

2010 2009 Note £’000 £’000

Net cash inflow from operating activities 6 1,484 1,658

Cash flows from investing activitiesPurchase of available-for-sale financial assets (52) (1,368)Purchase of property, plant and equipment (1,373) (1,521)Proceeds of sale of property, plant and equipment 22 25Interest received — 41

Net cash used in investing activities (1,403) (2,823)

Cash flows from financing activitiesMovement in long-term borrowings (400) 900Movement in short-term borrowings 245 (867)New capital leases 479 749Payment of hire purchase and finance liabilities (551) (221)Dividends paid (184) (385)Purchase of own shares — (164)

Net cash (used in)/generated from financing activities (411) 12

Net decrease in cash and cash equivalents (330) (1,153)Cash and cash equivalents at the beginning of period 834 1,987

Cash and cash equivalents at the end of period 504 834



Notes to the consolidated financial statements

General informationElektron plc is a public limited liability company incorporated and domiciled in the UK. The address of its registered office is Melville Court, Spilsby Road, Romford, Essex RM3 8SB. The nature of the Group’s operations and its principal activities are set out in Note 13, in the Chairman’s statement on pages 8 and 9 and in the Operational review on pages 10 to 13.

These financial statements are presented in Sterling, the currency of the primary economic environment in which the Group operates.

Foreign operations are included in accordance with the accounting policies set out in Note 1.

1. Summary of significant accounting policiesThe particular accounting policies adopted by the Directors in the preparation of these consolidated financial statements are described below:

(a) Basis of preparationThe consolidated financial statements of Elektron plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, Standing Interpretations Committee (SIC) interpretations and International Financial Reporting Interpretation Committee (IFRIC) interpretations issued by the International Accounting Standards Board (IASB) and the Companies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial statements have been prepared on the historical cost basis, except for the revaluation of financial instruments. The principal accounting policies adopted are set out below. These policies have been applied consistently to all years presented, unless otherwise stated.

(b) New standards and interpretationsIn the current financial year, the Group has adopted IAS 1 “Presentation of Financial Statements” (revised 2007), Amendments to IFRS 7 “Financial Instruments” and IFRS 8 “Operating Segments”.

The main change affecting Elektron plc as a result of adopting IAS 1 (revised) requires the presentation of a statement of changes in equity as a primary statement, separate from the income statement and statement of comprehensive income. As a result, a consolidated statement of changes in equity has been included as a primary statement, showing changes in each component of equity for each period presented.

The amendment to IFRS 7 introduces a three level hierarchy for fair value measurement disclosures and requires entities to provide additional disclosures about the relative reliability of fair value measurements, to help improve comparability between entities about the effect of fair value measurements. In addition, the amendments clarify and enhance the existing requirements for the disclosure of liquidity risk. This is aimed at ensuring that the information disclosed enables users of an entity’s financial statements to evaluate the nature and extent of liquidity risk arising from financial instruments and how the entity manages that risk. No comparative disclosures are required for the first year of application.

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 “Segment Reporting”) required the Group to identify two sets of segments (business and geographical), using a risk and rewards approach, with the Group’s system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments.

(c) StandardsnotaffectingthereportedresultsorfinancialpositionThe following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements.

IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance” IAS 23 (amended) “Borrowing Costs” IAS 32/IAS 1(amended) “Puttable Financial Instruments and Obligations Arising on Liquidation” IAS 39 (amended) “Eligible Hedged Items” IAS 40 (amended) “Investment Property” IFRIC 9/IAS 39 (amended) “Clarification Regarding Assessment of Embedded Derivatives” IFRIC 15 “Agreements for the Construction of Real Estate” IFRIC 16 “Hedges of a Net Investment in Foreign Operation” IFRIC 18 “Transfers of Assets from Customers”

At the date of authorisation of these financial statements, a number of new IFRS Standards and IFRIC Interpretations have been issued which are not yet effective for the year ended 31 January 2010 and which have not been adopted early. These are listed below:

IFRS 2 (amended) “Group Cash-settled Share-based Payment Transactions” IFRS 3/IAS 27 (amended) “Business Combination” IFRS 9 “Financial Instruments: Classification and Measurement” IAS 24 (amended) “Related Party Disclosures” IAS 28 (amended) “Investment in Associates” IAS 32 (amended) “Classification of Rights Issues” IAS 38 (amended) “Intangible Assets”


Notes to the consolidated financial statements continued

1. Summary of significant accounting policies continued(c) StandardsnotaffectingthereportedresultsorfinancialpositioncontinuedIFRIC 14 “Prepayments of a Minimum Funding Requirement” IFRIC 17 “Distribution of Non-cash Assets to Owners” IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments”

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group.

(d) Key sources of estimation and uncertaintyThe preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect application of policies and reported amounts in the financial statements. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial statements are:

u the estimation of the deferred income tax asset (Note 15);

u the estimation of the net realisable value of inventory (Note 16); and

u the estimation of the cost of restructuring activities, warranties and dilapidations (Note 20).

(e) ConsolidationThe consolidated financial statements incorporate the financial statements of Elektron plc and all subsidiary undertakings drawn up to 31 January each year. Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies so as to obtain benefit from their activities. The results of businesses acquired during the year are included from the effective date of acquisition. The results of businesses discontinued during the year are included until the date of disposal. Business combinations are accounted for using the purchase method. Balances between Group companies are eliminated and no profit is taken on intra-Group sales.

(f) GoodwillGoodwill arises on the acquisition of subsidiaries and represents any excess of cost of the acquired entity over the Group’s interest in the fair value of the entity’s identifiable assets and liabilities acquired and is capitalised as a separate item. Goodwill is recognised as an intangible asset.

Under the business combination exemption of IFRS 1, goodwill previously capitalised or written off to reserves under UK GAAP is not recycled to the income statement on calculating a gain or loss on disposal.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

An impairment loss is recognised to the extent that an asset’s carrying value exceeds its recoverable amount, which represents the higher of the asset’s fair value less costs to sell and its value in use. The recoverable amount of goodwill is determined by reference to the discounted future cash flows expected to be derived from the cash generating unit to which it is allocated.

Impairment losses are recognised in the income statement.

Negative goodwill, representing the amount by which the net fair value of the assets and liabilities of an acquired business exceeds the acquisition cost is, in accordance with IFRS 3, recognised in the income statement in the year of acquisition.

(g) Development costsAll costs incurred on research and development are written off to the income statement as incurred, unless such expenditure relates to a clearly defined project where the outcome both technically and commercially can be assessed with reasonable certainty.

Deferred costs are written off to the income statement over a period of up to three years commencing from the date of commercial production of the products concerned.

(h) TangiblefixedassetsThe cost of fixed assets is their purchase cost, together with any incidental costs of acquisition. Depreciation is calculated on the cost or valuation of each tangible fixed asset individually on a straight-line basis and is designed to write off the costs of the assets less any residual value over their estimated useful lives. The estimated useful lives are:

Plant, equipment and tools 3–15 years Motor vehicles 4 years Fixtures and fittings 8–16 years Leasehold improvements Term of the lease

The Group’s policy is to write off the book value of each tangible fixed asset evenly over its estimated remaining life. Reviews are made periodically of the estimated remaining lives of individual productive assets, taking account of commercial and technological obsolescence as well as normal wear and tear. The carrying value is reviewed for impairment in the period if events or changes in circumstances indicate the carrying value may not be recoverable.


1. Summary of significant accounting policies continued(i) InventoriesInventories are valued at the lower of cost and net realisable value. Cost comprises all direct expenditure and, where appropriate, production overheads based on the normal level of activity. Where necessary, provision is made for obsolete, slow moving and defective stocks. Cost is calculated using the FIFO method. Net realisable value represents the estimated selling price less all estimated costs to completion.

(j) EmployeebenefitsPensions to employees are provided through defined contribution plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions to an independent entity. The Group has no legal obligations to pay further contributions after payment of the fixed contribution.

The contributions recognised in respect of defined contribution plans are expensed as they fall due. Liabilities and assets may be recognised if underpayment or prepayment has occurred and are included in current liabilities or current assets as they are normally of a short-term nature.

(k) Share-based employee remunerationIn accordance with IFRS 2 “Share-based Payment”, the Group reflects the economic cost of awarding shares and share options to employees by recording an expense in the income statement equal to the fair value of the benefit awarded, fair value being estimated by an independent third party using a proprietary binomial probability valuation model. The expense is recognised in the income statement over the vesting period of the award.

(l) LeasesIn accordance with IAS 17, the economic ownership of a leased asset is transferred to the lessee if they bear substantially all the risks and rewards related to the ownership of the leased asset. The related asset is recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any, to be borne by the lessee. A corresponding amount is recognised as a finance leasing liability.

Subsequent accounting for assets held under finance lease agreements, i.e. depreciation methods and useful lives, correspond to those applied to comparable acquired assets. The corresponding finance leasing liability is reduced by lease payments less finance charges, which are expensed to finance costs. Finance charges represent a constant periodic rate of interest on the outstanding balance of the finance lease liability.

All other leases are treated as operating leases. Payment on operating lease agreements is recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

(m) Financial liabilities/assetsThe Group’s financial liabilities are overdrafts, invoice discounting facilities, trade and other payables and finance leasing liabilities. They are included in the balance sheet line items “short-term borrowings and overdrafts”, “long-term borrowings” and “trade and other payables”.

Financial liabilities are recognised when the Group becomes party to the contractual arrangements of the instrument.

All interest related charges are recognised as an expense in “finance cost” in the income statement.

Finance lease liabilities are measured at initial value less the capital element of lease repayments.

Trade payables are stated at their amortised cost.

Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides goods directly to a debtor. Receivables are subsequently measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment or reversal of impairment is recognised in the income statement.

Provision against trade receivables is made when objective evidence is received that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write down is determined as the difference between the asset’s carrying amount and the present value of estimated future cash flows.

(n) Equity instrumentsShare capital is determined using the nominal value of shares that have been issued. Equity-settled share-based employee remuneration is credited to other reserves until the related share options are exercised.

(o) Cash and cash equivalentsCash and cash equivalents include cash at bank and in hand and bank deposits available at less than 24 hours’ notice. Bank overdrafts and invoice discounting advances are presented as current liabilities to the extent that there is no right of offset with cash balances.



1. Summary of significant accounting policies continued(p) Accounting for taxesCurrent tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year.

Where an item of income or expense is recognised in the income statement, any related tax generated is recognised as a component of tax expense in the income statement. Where an item is recognised directly to equity and presented within the consolidated statement of recognised income and expense, any related tax generated is treated similarly.

(q) Deferred taxationDeferred taxation is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.

Deferred taxation liabilities are generally recognised on all taxable temporary differences. Deferred taxation assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred taxation is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. The carrying value of deferred taxation assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which taxable temporary differences can be utilised. Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

(r) Revenue recognitionRevenue comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

The Group manufactures and sells a range of engineered components to industrial markets. Sales of goods are recognised when a Group entity has delivered products to the customer, the manufacturer has full discretion over the use of the components, and there is no unfulfilled obligation that could affect the manufacturer’s acceptance of the products. Delivery does not occur until the products have been shipped to the specified location, the risks of obsolescence and loss have been transferred, and either the products have been accepted in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

(s) Foreign currenciesThe individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in Sterling, which is the functional currency of the Group, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items and, on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.


1. Summary of significant accounting policies continued(t) ProvisionsProvisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material.

(u) Financial risk managementThe Group’s multinational operations and debt financing expose it to a variety of financial risks. In the course of its business, the Group is exposed to foreign currency risk, interest rate risk, liquidity risk and credit risk. Financial risk management is an integral part of the way the Group is managed. Financial risk management policies are set by the Board of Directors.

The Group does not hold or use derivative financial instruments.

(i) Foreign currency riskForeign currency risk arises both where sale or purchase transactions are undertaken in currencies other than the respective functional currencies of Group companies (transactional exposures) and where the results of overseas companies are consolidated into the Group’s reporting currency of Sterling (translational exposures). The Group has overseas operations which record their results in different local functional currencies. In countries where the Group does not have operations, it invariably has some customers or suppliers that transact in a foreign currency. The Group is therefore exposed to the changes in foreign currency exchange rates between a number of different currencies but the Group’s primary exposures relate to the US Dollar and to the Euro.

It is Group policy not to hedge its exposure using financial instruments, but to mitigate exposure by natural hedges.

The Group’s translational exposures to foreign currency risks can relate both to the income statement and net assets of overseas subsidiaries, its policy is not to hedge the translational exposure that arises on consolidation of the income statements of overseas subsidiaries. The Group finances overseas company investments partly through the use of foreign currency borrowings in order to provide a natural hedge of foreign currency risk arising on translation of the Group’s net investment.

(ii) Interest rate riskInterest rate risk arising from borrowing at variable rates is not hedged.

(iii) Liquidity riskLiquidity risk represents the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing this risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages this risk by maintaining adequate committed lines of funding. The facilities committed to the Group as at 31 January 2010 are set out in Note 26.

(iv) Credit riskCredit risk arises because a counterparty may fail to perform its obligations. The Group is exposed to credit risk on financial assets such as cash balances, trade and other receivables.

The Group’s credit risk is primarily attributable to its trade receivables. The amounts recognised in the balance sheet are net of appropriate allowances for doubtful receivables, estimated by the Group’s management based on prior experience and their assessment of the current economic environment. Trade receivables are subject to credit limits and control and approval procedures in the operating companies. Due to its large geographic base and number of customers, the Group is not exposed to material concentrations of credit risk on its trade receivables.

Credit risk associated with cash balances is managed by transacting with financial institutions with high quality credit ratings. Accordingly the Group’s associated credit risk is limited. The Group has no significant concentration of credit risk.

The Group’s maximum exposure to credit risk is represented by the carrying amount of each financial asset in the Group balance sheet.

(v) Capital managementOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

Details of share-based payments are disclosed in Note 18.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

From time to time the Group purchases its own shares in the market, the timing of these purchases depends on market prices. Buy and sell decisions are made on a specific transaction basis by the Board.

There were no changes to the Group’s approach to capital management during the year.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.



1. Summary of significant accounting policies continued(w) Available-for-salefinancialassetsAvailable-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories, namely fair value through profit or loss and loans and receivables. They are included in non-current assets unless management intends to dispose of the investment within twelve months of the balance sheet date.

Available-for-sale financial assets are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, equating to cost, including transaction costs.

The fair values of quoted investments are based on current market prices.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in equity.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as “gains and losses from investment securities”.

Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement as part of other income. Dividends on available-for-sale equity instruments are recognised in the income statement when the Group’s right to receive payments is established.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

2. Segmental reporting(i) The Group has adopted IFRS 8 “Operating Segments” with effect from 1 February 2009. IFRS 8 requires operating segments to be identified

on the basis of internal reports that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. As a result, following the adoption of IFRS 8, the identification of the Group’s reportable segments has changed. Operating segments are based on similarities of products, customer type and method of distribution. Further information on the nature of products is contained within the operational review.

Operating profit/(loss) Segment revenue pre-exceptional costs Operating profit/(loss)

2010 2009 2010 2009 2010 2009 Segment revenues and results £’000 £’000 £’000 £’000 £’000 £’000

Technology Division 21,530 24,887 2,523 1,706 1,326 378

Ventures Division – Queensgate Instruments 785 869 221 71 221 71– Digitron Instruments 2,216 2,589 (197) (38) (197) (38)– Total Carbide 3,126 4,863 (654) (306) (707) (999)– Titman Tip Tools 2,225 2,436 187 (16) 187 (71)

Ventures Division 8,352 10,757 (443) (289) (496) (1,037)

Total 29,882 35,644 2,080 1,417 830 (659)

Unallocated central costs (318) (315) (467) (1,398)Operating profit/(loss) 1,762 1,102 363 (2,057)Finance costs (net) (141) (208)Profit/(loss) before tax 222 (2,265)

Revenue reported above represents revenue generated from external customers.

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 1.

Segment profit represents the profit earned by each segment including a partial allocation of central administration costs. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.


2. Segmental reporting continued

2010 2009 Segment assets £’000 £’000

Technology Division 10,468 9,477

Ventures Division– Queensgate Instruments 401 601– Digitron Instruments 763 714– Total Carbide 3,761 4,149– Titman Tip Tools 1,096 1,131

Ventures Division 6,021 6,595

Unallocated assets 2,003 1,146

Consolidated assets 18,492 17,218

2010 2009 Segment liabilities £’000 £’000

Technology Division 3,839 3,118

Ventures Division– Queensgate Instruments 304 332– Digitron Instruments 562 477– Total Carbide 3,087 2,846– Titman Tip Tools 331 591

Ventures Division 4,284 4,246

Unallocated liabilities 1,876 1,964

Consolidated liabilities 9,999 9,328

Depreciation Additions to and amortisation non-current assets

2010 2009 2010 2009 Other segment information £’000 £’000 £’000 £’000

Technology Division 509 772 673 479

Ventures Division– Queensgate Instruments 12 12 — —– Digitron Instruments 18 18 — —– Total Carbide 332 315 277 838– Titman Tip Tools 49 87 — —

Ventures Division 411 432 277 838

Unallocated 7 13 423 204

Total 927 1,217 1,373 1,521

In addition the year ended 31 January 2009 included an impairment charge of £109,000 in respect of the Technology segment.



2. Segmental reporting continuedGeographical informationThe Elektron Group considers its operations in the following geographical regions:

Revenue from external customers Non-current assets

2010 2009 2010 2009 £’000 £’000 £’000 £’000

United Kingdom 12,902 15,672 3,455 3,373Rest of Europe, Middle East and Africa 8,294 10,284 223 333Americas 4,733 4,929 6 6APAC 3,953 4,759 616 214

Total 29,882 35,644 4,300 3,926

Major customersIncluded in revenues of the Technology Division are revenues of approximately £2,123,000 (2009: £1,998,000) from sales to the Group’s largest customer.

3. Cost of sales and net operating expenses

2010 2009 Notes £’000 £’000

Cost of sales 17,941 24,306

Net operating expensesDistribution costs 3,863 4,276Administrative expenses 6,316 5,980

Operating expenses 10,179 10,256

Restructuring and related costs 4 1,473 2,249Other exceptional items (net) (195) —Abortive acquisition costs 121 —Fair value losses on financial assets 14 — 910Dividend income on financial assets 22 — (20)

Net operating expenses 11,578 13,395


4. Operating profit/(loss) 2010 2009 £’000 £’000

Operating profit/(loss) is after charging/(crediting):Depreciation on owned tangible fixed assets 763 995Depreciation on tangible fixed assets held under finance leases 164 222Loss on disposal of fixed assets — 17Research and development expenditure:– current year expenditure 629 604Operating lease rentals:– land and buildings 1025 1,118– plant and machinery 68 68Auditors’ remuneration:– audit of the Group’s annual financial statements 30 30– audit of the Group’s subsidiaries, pursuant to legislation 100 110– tax services 37 33Exceptional items:– restructuring costs 1,473 2,140– impairment of tangible fixed assets — 109– fair value losses on financial assets — 910– insurance settlement (117) —– other income (78) —– abortive acquisition costs 121 — 1,399 3,159Gain on foreign currency translation (53) (474)

Included within auditors’ remuneration for audit services is £32,000 (2009: £30,000) for the audit of overseas subsidiaries carried out by auditors other than Bright Grahame Murray.

The restructuring costs include amounts payable in respect of staff redundancies during the year due to the transfer of manufacturing facilities offshore and the consolidation of manufacturing operations in the UK and related factory closure costs.

The fair value losses on financial assets in 2009 relate to impairment charges on available-for-sale investments to reflect market values at the year end.

5. Finance costs 2010 2009 £’000 £’000

Bank overdrafts and loans wholly repayable within five years 85 199Finance leases and hire purchase contracts 56 50

141 249



6. Cash flows from operating activities 2010 2009 £’000 £’000

Cash flows from operating activitiesProfit/(loss) before taxation (continuing activities) 222 (2,265)

Profit/(loss) before taxation 222 (2,265)Adjustments for: Depreciation 927 1,217Loss on disposal of fixed assets — 17Restructuring and other exceptional charges 1,399 2,140Impairment of tangible fixed assets — 109Fair value losses on available-for-sale financial assets — 910Interest receivable — (41)Interest payable 141 249

Operating cash flow before working capital changes 2,689 2,336(Increase)/decrease in trade and other receivables (1,391) 2,042Decrease in inventories 726 1,082Increase/(decrease) in trade payables 1,038 (1,607)Payments for restructuring and other exceptional costs (1,293) (2,202)Other non-cash movements (140) 109

Cash generated from operations 1,629 1,760Interest paid (141) (249)Taxation (paid)/received (4) 147

Net cash inflow from operating activities 1,484 1,658

7. Staff information (including Directors)Employee costs were:

2010 2009 Note £’000 £’000

Wages and salaries 8,873 12,091Social security costs 841 1,173Other pension costs 25 256 345

9,970 13,609

In addition redundancy costs of £946,000 (2009: £1,121,000) were incurred in the year and included within restructuring costs.

The average monthly number of persons employed by the Group during the year was as follows:

2010 2009 Number Number

Administration and sales 168 176Production 963 1,071

1,131 1,247


8. Directors’ remuneration 2010 2009 Note £’000 £’000

Aggregate emoluments 249 265Pension contributions 22 26Sums charged by third parties for Directors’ services 28b 124 57Compensation for loss of office — 135

395 483

Bonuses are payable by reference to individual Directors’ contracts of employment and by reference to performance related targets including acquisitions. Pension contributions are to defined contribution schemes. One Director was accruing benefit under a defined contribution scheme (2009: two Directors).

The emoluments of the highest paid Director were £159,000 (2009: £146,000) and the Group made pension contributions of £22,000 (2009: £12,000) on his behalf.

9. Taxation(a) Analysis of tax credit for the year on continuing operations 2010 2009 Note £’000 £’000

Current taxation: UK corporation tax on profit for the year — —Under provision for prior year 30 12Foreign tax on income for the year 2 2

Total current taxation 32 14

Deferred taxation:Origination and reversal of timing differences 15 (101) (247)

Tax credit on continuing operations (69) (233)



9. Taxation continued(b) Factors affecting taxation charge for the yearThe current taxation charge differs from that resulting by applying the standard rate of corporation tax in the UK (28%) and is explained below:

2010 2009

Tax rate £’000 Tax rate £’000

Profit/(loss) on ordinary activities before taxation 222 (2,265)

Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 28% 28.0% 62 (28.3)% (641)Effects of:Expenses not deductable for tax purposes 8.5% 19 11.1% 252Effects of overseas tax rates (56.8)% (126) (8.5)% (192)Adjustments of taxation charge in respect of previous periods 13.5% 30 0.5% 12Change in tax rates — — 0.9% 19Unprovided deferred tax asset timing differences (24.3)% (54) 14.0% 317

(31.1)% (69) (10.3)% (233)

(c) Factors that may affect future taxation chargesDeferred taxation assets amounting to £653,000 have not been provided in respect of unutilised income tax losses that can be carried forward against future taxable income and fixed assets timing differences of £15,000, as there is currently insufficient evidence that these assets will be recovered.

10. Dividends paid 2010 2009 £’000 £’000

Dividend of 0.46p per share (2009: 0.45p per share) 393 385

Amount of dividend satisfied by scrip issue (209) —

Dividend paid 184 385

A proposed final dividend of 0.50p per share was declared after the year end. The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The Board is proposing a scrip issue alternative, full details of which are included in the Notice of Annual General Meeting circular accompanying this annual report and accounts.

11. Earnings per shareBasic earnings per share is based on profit after taxation on all operations of £291,000 (2009: loss after taxation of £2,032,000) and 86,771,946 (2009: 85,981,893) ordinary shares of 5p each, being the weighted average number of shares in issue during the year.

For diluted earnings per share the weighted average of number of shares in issue is 86,771,946 (2009: 85,981,893).

Basic Diluted

2010 2009 2010 2009 p p p p

Earnings/(loss) per share 0.34 (2.36) 0.34 (2.36)


12. Fixed assets Equipment, Leasehold Plant and fixtures, fittings improvements machinery and vehicles Total Group £’000 £’000 £’000 £’000

Cost or valuationAt 1 February 2008 88 15,078 2,179 17,345Currency translation — 40 53 93Additions 46 1,095 380 1,521Disposals — (694) (185) (879)

At 31 January 2009 134 15,519 2,427 18,080Currency translation (6) (38) (27) (71)Additions 178 694 501 1,373Disposals — (150) (440) (590)Reclassification — 38 (38) —

At 31 January 2010 306 16,063 2,423 18,792

DepreciationAt 1 February 2008 88 11,689 1,693 13,470Currency translation — 12 22 34Charge for the year 1 1,004 212 1,217Impairment charge — 109 — 109Disposals — (526) (150) (676)

At 31 January 2009 89 12,288 1,777 14,154Currency translation (1) (8) (13) (22)Charge for the year 37 721 169 927Disposals — (150) (417) (567)Reclassification — 10 (10) —

At 31 January 2010 125 12,861 1,506 14,492

Net book valueAt 1 February 2008 — 3,389 486 3,875

At 31 January 2009 45 3,231 650 3,926

At 31 January 2010 181 3,202 917 4,300

The net book value of assets held under finance leases and hire purchase contracts was £1,669,000 (2009: £1,179,000).



13. Investment in subsidiary undertakings

Country of Shares held Shares held Name incorporation Nature of business by parent by Group

Elektron Components Limited UK Design, manufacture and sale of electromechanical components 100% 0%

Elektron Components Corporation Inc. USA Sale of electromechanical components 0% 100%

Elektron Components Tunisie Sarl Tunisia Manufacture of electromechanical components 0% 100%

Arcolectric Switches (Hong Kong) Limited Hong Kong Manufacture of electromechanical components 100% 0%

Elektron Components (Shenzen) Company Limited China Manufacture of electromechanical components 0% 100%

Howle Holdings Limited UK Intermediate holding company 100% 0%

Total Carbide Limited UK Design, manufacture and sale of tungsten carbide wear components 0% 100%

Titman Tip Tools Limited UK Design, manufacture and sale of tungsten carbide routing tools 0% 100%

Titman Tip Tools Gmbh Germany Sale of tungsten carbide routing tools 0% 100%

Penyard Industries Limited UK Intermediate holding company 0% 100%

Elektron Instruments Limited UK Design, manufacture and sale of measuring instruments and mouldings 100% 0%

Advanced Electronic Technologies Limited UK Intermediate holding company 0% 100%

Digitron Instrumentation Limited UK Design, manufacture and sale of measuring instruments 0% 100%

All subsidiary undertakings are included in the consolidation and operated primarily in the country of incorporation, except for Arcolectric Switches (Hong Kong) Limited which operated in China.

14. Available-for-sale financial assets 2010 2009 £’000 £’000

At 1 February 458 —

Additions at cost 52 1,368Impairment — (910)Net gains transferred to equity 805 —

At 31 January 1,315 458

Available-for-sale financial assets represent the investment in 23% of the issued share capital of Hartest Holdings plc (an AIM instrumentation group) at market value.

The investment is classified as an available-for-sale financial asset given that there is no current control exercisable over its affairs.


15. Deferred income tax 2010 2009 £’000 £’000

Deferred income assets recoverable after more than one year 583 485Deferred income liabilities recoverable after more than one year — —

Net assets 583 485

The gross movement on the deferred income tax accounts is as follows:

2010 2009 Note £’000 £’000

At 1 February 485 238Currency revaluation of deferred tax balances (3) —Origination and reversal of timing differences 9a 101 247

At 31 January 583 485

Depreciation in excess of capital allowances 296 79Taxation losses 211 406Short term timing differences 76 —

Undiscounted asset for deferred taxation 583 485

Deferred taxation assets have only been recognised for companies with a past history of profitable trends where there is persuasive and reliable evidence in the form of management accounts and financial projections that trading profits are anticipated to arise in the year to 31 January 2011.

No deferred tax liabilities have been provided in respect of the unremitted earnings of the overseas subsidiaries. The amount of such unremitted earnings is estimated to be a retained profit of £3,342,000 (2009: £2,948,000).

16. Inventories 2010 2009 £’000 £’000

Raw materials 2,882 3,454Work in progress 760 614Finished goods and goods for resale 1,250 1,586

4,892 5,654

In the ordinary course of business, the Group makes provision for slow-moving, excess and obsolete inventory as appropriate.

Inventory is stated after charging impairments of £24,000 (2009: £264,000) which are included within operating profit.

The amount of inventory recognised as an expense within the cost of sales amounted to £17,941,000 (2009: £24,306,000).



17. Trade and other receivables 2010 2009 £’000 £’000

Trade receivables 6,038 5,323Less: provision for impairment (334) (284)

Trade receivables – net 5,704 5,039Corporation tax recoverable 13 22Other receivables 750 166Prepayments 431 634

6,898 5,861

The fair values of trade and other receivables are considered to be as stated above.

Trade receivables can be analysed as follows:

2010 2009 £’000 £’000

Not past due 4,893 4,473Past due but not impaired 811 566Past due and impaired 334 284

6,038 5,323

The ageing of trade receivables classed as past due but not impaired is as follows: 2010 2009 £’000 £’000

Up to one month past due 801 525Over one month past due 10 41

811 566

Trade receivables are normally due within 60 to 90 days and do not bear any effective interest rate. Some trade receivables are covered by credit insurance. There is no specific concentration of credit risk as the amounts recognised represent a large number of receivables from various customers.

Trade receivables of £340,000 (2009: £325,000) in excess of 60 days overdue are considered potentially impaired. The specifically impaired receivables relate to a wide variety of individual customers.

Movements on the provision for impairment of trade receivables are as follows:

2010 2009 £’000 £’000

At 1 February 284 215Increase in provision for receivables impairment 34 116Reclassified from creditors 64 —Receivables written off during year (48) (47)


The carrying amounts of trade and other receivables are denominated in the following currencies: 2010 2009 £’000 £’000

Sterling 4,492 3,935US dollars 1,313 1,008Euro 894 830Other 199 88

6,898 5,861


18. Share capital and reserves

Share capital 2010 2009 £’000 £’000

Authorised200,000,000 (2009: 200,000,000) ordinary shares of 5p each 10,000 10,000

Allotted, called up and fully paid88,113,905 (2009: 85,576,003) ordinary shares of 5p each 4,406 4,279

During the year the Company issued 2,537,902 shares at 8.25p in respect of the scrip dividend.

At 31 January 2010 under the Elektron plc Executive Share Option Scheme, there were unexercised options on 1,800,000 (2009: 1,800,000) ordinary shares of 5p each. These options are exercisable after three years but before ten years from the date of granting in whole or in part.

2010 2009 Year of grant Exercise period ’000 ’000

2001 2004–2011 600 600

2004 2007–2014 1,200 1,200

No options were granted during the year and no options lapsed as a result of employees leaving the Group. The exercise price has changed marginally from 15.09p per share to 15.08p per share as a result of the share repurchases made by the Company.

Share options are valued using an independent binominal probability valuation model and take account of performance criteria.

The significant inputs into the model were:

u risk-free interest rate – yield on zero coupon UK government bonds at date of grant;

u volatility of share price – 70%;

u dividend yield – 2%;

u forfeiture rate – 0% to 39% depending upon grantee; and

u performance criteria – market-related conditions are based on Monte Carlo simulations.

The Group recognised a charge of £Nil in the year (2009: £Nil).

ReservesThe nature of the reserves shown in the consolidated balance sheet and consolidated statement of changes in shareholders’ equity are as follows:

Share premiumAmount subscribed for share capital in excess of nominal value.

Merger reserveAmount arising on the acquisition of Howle Holdings, a purchase satisfied substantially by the issue of share capital and thereby eligible for merger relief under the provisions of Section 612 of the Companies Act 2006.

Capital redemption reserveThe cumulative nominal value of own shares acquired by the Company.

Other reserves comprise:u translation reserves – gains and losses arising on retranslating the net assets of overseas operations into Sterling £41,000

(2009: £350,000); and

u other reserves – includes a reserve arising from the application of IFRS 2 “Share-based Payments” of £82,000 (2009: £82,000), plus £2,000 (2009: £2,000) legal reserve.

Retained earningsCumulative gains and losses recognised in the consolidated statement of comprehensive income not included above.



19. Borrowings 2010 2009 £’000 £’000

Bank overdrafts and invoice discounting facilities 1,761 1,516Obligations under finance leases and hire purchase contracts 1,209 1,281Bank loans 900 1,300

3,870 4,097

Short-term borrowings 1,761 1,516Current portion of long-term borrowing 911 880Long-term borrowings 1,198 1,701

3,870 4,097

Analysis of repaymentsBank overdrafts and invoice discounting facilities:Within one year 1,761 1,516

Finance leases and hire purchase contracts:Within one year 511 480In two to five years 698 801

1,209 1,281

Bank loans:Within one year 400 400In two to five years 500 900

900 1,300

3,870 4,097

Bank overdrafts and invoice discounting facilities of £1,761,000 and bank loans of £900,000 are secured by debentures and fixed charges over certain of the assets of the Group.

Bank overdrafts and invoice discounting facilities of £1,761,000 attract interest at 2.0% to 2.2% over base rate.

Bank loans attracted interest at 1.25% to 1.75% over base rates.

Finance leases and hire purchase contracts of £1,209,000 attract interest at 2.2% to 3.65% over base rates.

20. Provisions 2010 2009 £’000 £’000

Non-current 64 64Current 703 599

767 663

Dilapidation Warranty Restructuring costs costs costs Total £’000 £’000 £’000 £’000

At 1 February 2009 114 68 481 663Charged to profit and loss account — 5 1,355 1,360Utilised in the year — — (1,256) (1,256)

At 31 January 2010 114 73 580 767

The dilapidation costs relate to redecoration and maintenance costs required to meet the terms of property leases held by the Group and are quantified by reference to third party reports.

The warranty provision represents management’s best estimate of the Group’s liability for the cost of any replacement product required under normal terms and conditions of sale, the quantification of which is based on past experience.

The restructuring costs relate principally to the costs of transferring production offshore.


21. Trade and other payables 2010 2009 £’000 £’000

Trade payables 3,084 2,309Other payables 315 358Accruals and deferred income 1,163 1,109

4,562 3,776

The fair value of trade payables has not been disclosed as, due to their short-term nature, management considers the carrying amounts recognised in the balance sheet to be a reasonable approximation of their fair value.

22. Dividend income of financial assetsDuring the year the Group received no dividend income from its available-for-sale investment (2009: £20,000).

23. Capital commitmentsExpenditure contracted but not provided for in the financial statements amounted to £10,000 (2009: £746,000).

24. Operating lease commitmentsAt 31 January 2010 the Group had total commitments under non-cancellable operating leases as follows:

Land and buildings Other

2010 2009 2010 2009 £’000 £’000 £’000 £’000

Minimum lease payments: Expiring within one year 1,028 1,096 25 77Expiring between two and five years 2,112 2,932 172 163Expiring after five years 518 825 — —

3,658 4,853 197 240

25. Retirement benefit schemesThe Group operates a Group Personal Pension Plan for all qualifying employees.

Contributions to the Group Personal Pension Plan and to other personal pension plans are charged to the profit and loss account as they become payable. The pension cost charge for the year was £256,000 (2009: £345,000) and outstanding contributions at the year end amounted to £40,000 (2009: £66,000).

26. Financial assets and liabilities(i) Financial instrumentsThe Group’s financial instruments comprise borrowings, cash and cash equivalents and various items such as trade receivables and payables that arise directly from its operations. The main purpose of these instruments is to raise finance for operations. The Group has not entered into derivatives transactions nor does it trade in financial instruments as a matter of policy. The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign currency risk. The Board’s policy on each is described in Note 1 and has not changed since 2009. Operations are financed through working capital management and short-term flexibility is achieved by invoice discounting facilities.

Treasury matters are dealt with on a Group basis and are approved by the Board. At 31 January 2010 gross gearing on net assets was 46% (2009: 52%).

Export revenue for the year accounted for 57% (2009: 56%) of sales.



26. Financial assets and liabilities continued(ii) Financial assets: excluding receivables due within one yearThe only current financial asset held is cash and cash equivalents. The balances as at 31 January are detailed below:

2010 2009 £’000 £’000

Sterling accounts — 249US Dollar accounts 325 79Tunisian Dinar accounts — 225Euro accounts 306 57Hong Kong Dollar accounts 123 195Other — 29

754 834Offset against borrowing (250) —

504 834

(iii) Financial liabilities: excluding non-debt current liabilitiesThe only financial liabilities of the Group which are subject to interest charges are bank loans, invoice discounting facilities, overdrafts and obligations under finance leases and hire purchase contracts. All borrowings attract interest at variable rates.

At 31 January the interest rate profile of the Group’s financial liabilities was as follows:

2010 2009 £’000 £’000

Floating rate financial liabilities 3,870 4,097

(iv) MaturityThe maturity profile is shown in Note 19 on page 46.

(v) FairvalueoffinancialassetsandliabilitiesEffective 1 January 2009 the Group adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value, this requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:

u quoted prices (unadjusted) in active markets (Level 1);

u inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly (Level 2); and

u inputs for the asset or liability that are not based on observable market data (Level 3).

The only applicable asset or liability is the available-for-sale financial asset £1,315,000 (Note 14) which is valued at the quoted market price at the balance sheet date i.e. Level 1.

(vi) Committed undrawn borrowing facilitiesAt the year end the Group had committed undrawn facilities of £2,289,000 (2009: £1,958,000) which related to invoice discounting facilities repayable on demand in the event of any breaches in the covenants given by the Group.


26. Financial assets and liabilities continued(vii) Currency riskThe Group has transactional currency exposure arising from normal trading activity. Such exposure arises from sales and purchases in currencies other than Sterling. The Group does not trade in derivatives or make speculative hedges.

At 31 January 2010 the Group had no commitments under non-cancellable forward contracts (2009: £Nil).

The Group’s currency exposure, being those transactional exposures that give rise to net currency gains and losses recognised in the profit and loss account, was as follows:

Assets Liabilities

2010 2009 2010 2009 £’000 £’000 £’000 £’000

US Dollar 1,049 635 84 98Euro 1,200 887 344 693

2,249 1,522 428 791

(viii) Sensitivity analysisFor the year ended 31 January 2010 it is estimated that, for a 1% exchange rate movement, the Group’s Sterling-reported profit before tax would have changed by:

u £0.05 million (2009: £0.06 million) for the US Dollar; and

u £0.05 million (2009: £0.05 million) for the Euro.

Sensitivity to other currencies and interest rates are not considered to be material in the context of the 2010 results.

27. Major non-cash transactionsDuring the year the Group entered into finance lease and hire purchase arrangements in respect of fixed assets with a total capital value at the inception of these agreements of £479,000 (2009: £749,000).

28. Related party transactions(a) Transactions between Group companies, which are related parties, have been eliminated on consolidation and have therefore not

been disclosed.

(b) Specialist Holdings Limited, a company of which Mr K A Daley is a director and shareholder, charged fees of £Nil (2009: £15,000) during the year in respect of services provided by him as Non-executive Director; £90,000 (2009: £42,000) in respect of services as part-time Chief Executive Officer; and earned fees of £34,000 (2009: £33,000) in respect of consultancy services.

(c) The Group occupies a number of leasehold properties with annual rentals of £744,000, the landlord of which is part of Panther Securities Plc, a significant shareholder in Elektron plc. Elektron plc, the Company, has also given rental guarantees to Panther as described in Note 13 to the parent company financial statements.


Parent company balance sheetas at 31 January 2010

2010 2009 Notes £’000 £’000

Fixed assetsTangible assets 3 613 197Investments in subsidiary undertakings 4 7,057 7,057Available-for-sale financial assets 5 1,315 458

8,985 7,712

Current assetsDebtors 6 4,805 5,135Cash at bank and in hand 5 311

4,810 5,446Creditors: amounts falling due within one year 7 (5,469) (5,192)

Net current (liabilities)/assets (659) 254

Total assets less current liabilities 8,326 7,966

Creditors: amounts falling due after more than one year 8 (803) (1,029)Provisions for liabilities and charges 10 (6) (13)

Net assets 7,517 6,924

Capital and reservesCalled-up share capital 11 4,406 4,279Share premium 11 117 244Merger reserve 11 1,047 1,047Capital redemption reserve 11 163 163Other reserves 11 82 82Profit and loss account 11 1,702 1,109

Shareholders’ funds 7,517 6,924

The financial statements were approved by the Board of Directors on 28 June 2010 and were signed on its behalf by:

K A Daley C M Leigh Director Director

The notes on pages 51 to 54 are an integral part of these financial statements.


Notes to the parent company financial statements

1. Accounting policiesBasis of preparationThe financial statements have been prepared in accordance with applicable United Kingdom accounting standards and under the historical cost convention.

The principal accounting policies of the Company are set out below. Except as stated below, the following accounting policies have remained unchanged from the previous year and continue to be the most appropriate.

The Company has taken advantage of the exemption of FRS 8 “Related Party Disclosure” not to show transactions with companies in the group headed by Elektron plc.

The Company has taken advantage of the exemption in paragraph 2d of FRS 29 “Financial Instruments: Disclosure” and not disclosed information required by that standard, as the Group’s consolidated financial statements in which the company is included, provide equivalent disclosures for the Group under IFRS 7 “Financial Disclosure”.

TangiblefixedassetsThe cost of fixed assets is their purchase cost. Depreciation is calculated on the cost of each tangible fixed asset individually on a straight-line basis and is designed to write off the cost of the asset, less any residual value over their estimated lives. The estimated useful lives are:

Equipment 3–15 years

Motor vehicles 4 years

Investments in subsidiary undertakingsInvestments are included at cost net of any provision for impairment.

Available-for-salefinancialassetsAvailable-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories, namely fair value through profit or loss and loans and receivables. They are included in non-current assets unless management intends to dispose of the investment within twelve months of the balance sheet date.

Available-for-sale financial assets are recognised and derecognised on a trade date where a purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, equating to cost, including transaction costs.

The fair values of quoted investments are based on current market prices.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in equity.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as “gains and losses from investment securities”.

Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement as part of other income. Dividends on available-for-sale equity instruments are recognised in the income statement when the Company’s right to receive payments is established.

The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

Deferred taxationDeferred tax is recognised on all timing differences where the transactions or events that give the Company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised where it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the balance sheet date.

RetirementbenefitsDefined contribution pension schemeThe pension costs charged against profits are the contributions payable to individual policies in respect of the accounting period.

Financial instrumentsIncome and expenditure arising on financial instruments is recognised on an accruals basis and credited or charged to the profit and loss account in the financial period to which it relates.


Notes to the parent company financial statements continued

1. Accounting policies continuedShare-based paymentsThe Company has applied the requirements of FRS 20 “Share-based Payment”. In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2005.

The Company issues equity-settled share-based payments to certain employees. These payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

The fair value of all equity-settled share-based payments is measured using the binomial probability pricing model. The expected life used in these models has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

CashflowstatementThe Company has not presented a separate cash flow statement in accordance with the exemption provided by FRS 1 (Revised), as its cash flows are included within the cash flows of the Group, as set out on pages 28 and 38 of this report.

Own sharesOwn shares purchased are deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Company’s own shares.

2. Profit for the financial yearAs permitted by Section 408 of the Companies Act 2006 the profit and loss account of the parent company is not presented as part of these financial statements. The parent company’s loss for the financial year amounted to £2,000 (2009: profit £189,000).

The average number of employees throughout 2009/10 was seven (2009: four). Staff costs amounted to £482,000 (2009: £757,000). Information about the remuneration of Directors is provided in the notes on page 39.

The audit fee for the Company in 2009/10 was £30,000 (2009: £30,000).

3. Tangible fixed assets Equipment and vehicles £’000

CostAt 1 February 2009 234Additions 423Disposals (5)


DepreciationAt 1 February 2009 37Charge for the year 7Disposals (5)


Net book valueAt 31 January 2010 613


4. Investments in subsidiary undertakings 2010 2009 £’000 £’000

At 1 February 7,057 7,052Additions — 5

At 31 January 7,057 7,057

Details of subsidiary companies are given in Note 13 of the notes to the consolidated financial statements.


5. Available-for-sale financial assets 2010 2009 £’000 £’000

At 1 February 458 1,368Additions at cost 52 —Impairment — (910)Net gains transferred to equity 805 —

At 31 January 1,315 458

Available-for-sale financial assets represent the investment in 23% of the issued share capital of Hartest Holdings plc (an AIM instrumentation group) at market value.

The investment is classified as an available-for-sale financial asset given that there is no current control exercisable over its affairs.

6. Debtors 2010 2009 £’000 £’000

Amounts owed by subsidiary undertakings 4,769 5,102Other debtors 28 1Prepayments 6 3Deferred tax (recoverable after one year) 2 29

4,805 5,135

Deferred tax 2010 2009 £’000 £’000

At 1 February 29 64Transfer to profit and loss account (27) (35)

At 31 January 2 29

Accelerated capital allowances (22) (16)Short-term timing differences — 1Taxation losses 24 44

Undiscounted deferred tax asset 2 29

7. Creditors: amounts falling due within one year 2010 2009 £’000 £’000

Bank loans and overdrafts (Note 9) 638 400Amounts owed to subsidiary undertakings 4,417 4,468Finance leases 96 32Other taxes and social security costs 38 34Other creditors 77 118Accruals and deferred income 203 140

5,469 5,192

8. Creditors: amounts falling due after more than one year 2010 2009 £’000 £’000

Bank loans (Note 9) 500 900Finance leases 303 129

803 1,029


Notes to the parent company financial statements continued

9. Loans and other borrowings 2010 2009 £’000 £’000

Bank overdrafts 238 —Bank loans 900 1,300Finance leases 399 161

1,537 1,461

Maturity of financial liabilitiesIn one year or less 734 432In more than one year, but not more than two years 496 432In more than two years, but not more than five years 307 597

1,537 1,461

Bank overdrafts of £238,000 and bank loans of £900,000 are secured by debentures and fixed charges over certain of the assets of the Company and the Group. Bank loans of £900,000 are repayable at £100,000 per quarter and carry an interest rate of between 1.25%–1.75% over base rate.

10. ProvisionsThe provision relates to a parental guarantee given by Elektron to a customer of a former subsidiary for the performance and technical support of certain power supplies. This remains in force until 2010 and full provision has been made.

2010 2009 £’000 £’000

At 1 February 13 13Utilised in the year (7) —

At 31 January 6 13

11. Share capital and reservesDetails of the share capital and reserves are given in Note 18 of the notes to the consolidated financial statements.

Capital Profit Share Share Merger redemption Other and loss capital premium reserve reserve reserves account Total £’000 £’000 £’000 £’000 £’000 £’000 £’000

At 1 February 2009 4,279 244 1,047 163 82 1,109 6,924Transfer from profit and loss account — — — — — (28) (28)Revaluation of investment — — — — — 805 805Share issues 127 (127) — — — — —Dividends paid on ordinary shares — — — — — (393) (393)Adjustment for scrip dividend element — — — — — 209 209

At 31 January 2010 4,406 117 1,047 163 82 1,702 7,517

12. Capital and lease commitmentsCapital expenditure contracted but not provided for in the financial statements amounted to £Nil (2009: £524,000).

The Company had £10,000 lease commitments at 31 January 2010 (2009: £6,000).

13. Contingent liabilitiesThe Company has given certain guarantees in respect of invoice discounting arrangements of certain subsidiary companies up to £1,639,000 and has guaranteed rental obligations of certain subsidiary companies up to £966,000.

14. Related party transactionsRelated party transactions are the same for the Company as for the Group. Details can be found in Note 28 of the notes to the consolidated financial statements.


Five year record

IFRS IFRS IFRS IFRS IFRS As restated 2010 2009 2008 2007 2006 £’000 £’000 £’000 £’000 £’000

Revenue – continuing operations 29,882 35,644 34,908 26,010 22,467 – discontinued operations — — 1,044 607 —

29,882 35,644 35,952 26,617 22,467

Operating profit excluding goodwill, discontinued operations and exceptional items 1,762 1,102 2,135 1,874 1,791Profit/(loss) before taxation 222 (2,265) 1,949 513 1,744Shareholders’ funds 8,493 7,890 10,173 8,001 6,566Earnings/(loss) per share 0.34p (2.36p) 2.76p 0.50p 1.63pProposed dividends per share 0.50p 0.46p 0.45p 0.40p 0.35p


Investor information

Current shareholdings over 3%

Panther Securities Plc and related parties 19.51%Mr J Kinder 19.49%Mr K Daley 6.47%Rathbone Investment Management 5.35%Schweco Nominees Ltd 5.04%Mr B Bridge 3.72%

Share price listings Financial Times Evening Standard

Group websitewww.elektronplc.com

Operating units

Elektron Technology DivisionElektron Components LimitedMelville Court Spilsby Road Romford Essex RM3 8SB Tel: +44 (0) 1708 336300 Fax: +44 (0) 17 08 374616 Web: www.arcolectric.co.uk Web: www.bulgin.co.uk

Elektron Components Corporation31–315 Plantation Drive Thousand Palms California USA Tel: +01 760 343 3650 Fax: +01 760 343 3651 Web: www.arcolectric.com

Elektron Components (Shenzhen) Company LimitedXingye Industrial Park 23 Xinbu Xin Road Xinbu Village Tongle Longgang District Shenzhen China Tel: +86 755 2893 1218 Fax: +86 755 2893 1132

Elektron Components Tunisie Sarl13 Rue 62128 Zone Industrielle Ibn Khaldoun Citie Ettahir 2042 Tunis Tunisia Tel: +216 71 923 600 Fax: +216 71 924 142

Elektron Instruments LimitedWoodland Road Torquay Devon TQ2 7AY Tel: +44 (0) 1803 407700 Fax: +44 (0) 1803 613926 Web: www.sifam.com

Elektron Ventures DivisionDigitron Instrumentation LimitedWoodland Road Torquay Devon TQ2 7AY Tel: +44 (0) 1803 407693 Fax: +44 (0) 1803 407699 Web: www.digitron.co.uk

Queensgate Instrumentation LimitedWoodland Road Torquay Devon TQ2 7AY Tel: +44 (0) 1803 407700 Fax: +44 (0) 1803 407699 Web: www.queensgate.com

Titman Tip Tools LimitedValley Road Clacton-on-Sea Essex CO15 6PP Tel: +44 (0) 1255 220123 Fax: +44 (0) 1255 221421 Web: www.titman.co.uk

Total Carbide LimitedPicts Lane Princes Risborough Buckinghamshire HP27 9EA Tel: +44 (0) 1844 275171 Fax: +44 (0) 1844 342514 Web: www.totalcarbide.com

Elektron plcMelville Court Spilsby Road Romford Essex RM3 8SB

Tel: +44 (0) 1708 336300 Fax: +44 (0) 1708 347581 Email: [email protected]

Web: www.elektronplc.com

elektron plc annual report and accounts 2010 · · 2013-02-22potential for significant growth....

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