Fast moving 
engineered  
products
Annual Report and Financial Statements 2012  
Elektron Technology plc
Elektron Technology  plc        Annual Report and Financial Statements 2012
Elektron Technology plc
Broers Building
JJ Thomson Avenue
Cambridge
CB3 0FA
info@elektron-technology.com
www.elektron-technology.com  
Elektron 
Technology  
is focused on 
innovation in  
fast moving 
engineered 
products 
See page 02
The Group now has a 
streamlined organisation  
that can be scaled up  
as opportunities arise
See page 06
Our strategy is to invest  
in innovation and build  
global sales, with a 
transformed organisation 
See page 05
Our Innovation Resource 
Planning™ process, run  
from our Cambridge 
Technology Centre, delivers 
solutions to around 7,000 
distribution partners and 
around 100,000 end users
See page 09
The majority of our  
business delivers key 
building blocks for  
today’s connected world
See page 08
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Overview
Elektron Technology plc
Annual Report and Financial Statements 2012
Business review Governance Financial statements Ten year record
Overview At a glance  02
Our strategy 04
Business review 
Governance 
Financial statements 
Chairman’s statement 06
Chief Executive’s review 08
Chief Financial Officer’s report 12
Directors and advisers 14 
Report of the Directors 16
Remuneration report 24
Directors’ responsibilities statement 28
Independent auditor’s report 29
Consolidated statement of comprehensive income 30
Consolidated balance sheet 31 
Consolidated statement of changes in equity 32 
Consolidated statement of cash flows 33 
Notes to the consolidated financial statements 34 
Parent company balance sheet 61 
Notes to the parent company financial statements 62
Ten year record Consolidated ten year record 67
Ten year share price 67 02
Overview
Elektron Technology plc
Annual Report and Financial Statements 2012
At a glance
Connectivity 
Meeting the need for delivery 
of data and power in the most 
demanding of situations.
Instrumentation, 
Monitoring & 
Control
Quantifying real world 
environments; processing  
and acting on the results.
Materials 
Specialised materials  
for industry.
Elektron Technology develops 
fast moving engineered 
products (FMEP) that serve  
a connected world. 
We invent, manufacture and 
market critical technology 
building blocks for the 
networked economy.
7 ,000
Approximately 7 ,000  
customers
1 00,000
Approximately 100,000 end-users, 
with products used in all seven 
continents and in space
Why FMEP?
We categorise what we do for our  
target markets as fast moving  
engineered products (FMEP):
•	 Fast moving – like fast moving 
consumer goods (FMCG), but  
in the business to business world –  
our products typically sell in significant 
numbers, moving quickly through  
the manufacture and sales process. 
This involves rapid response to 
customer needs.
•	 Engineer ed – our customers rely on 
engineered excellence and just the  
right amount of precision being built  
into our products. 45%
of group sales
45%
of group sales
10%
Group sales
EMEA ex UK 
24%
UK 
44%
Asia Pacific 
19%
Americas 
13%
Elektron Technology plc
Annual Report and Financial Statements 2012
03
Overview
Key products
•	 Connectors for demanding 
environments
•	 Switches, knobs and meters  
for consumer electronics
Key products
•	 Temperature measurement instruments 
for laboratory and industry
•	 Wireless environmental monitoring 
equipment
•	 Nanopositioning and sensing 
equipment
•	 Coating and surface measurement 
instruments
•	 Power monitoring and control systems
Key products
•	 Tungsten carbide manufacture
•	 Router cutter design and manufacture
£29.2m
Sales
£2.4m
Operating profit*
£28.7m
Sales
£2.4m
Operating profit*
£6.4m
Sales
£0.2m
Operating profit*
Revenue split %
* Before non-recurring or special items. Elektron Technology plc
Annual Report and Financial Statements 2012
04
Overview
Our strategy
Elektron
Technology
Market situation
•	 Significant market share in UK in core niches
•	 Untapped potential in mainland Europe,  
Americas and Asia Pacific
•	 Economic environment favouring growth outside Europe
Key trends 
•	 Renewable power, next-generation wireless 
communications and plug and play industrial  
devices all require robust connectors
•	 Growth of machine to machine integration,  
linking measurement devices with smart networks 
•	 ‘Consumerisation’ creates demand for instruments  
aimed at non-expert users 
Assets
•	 Strong brands and products in global niches
•	 Global sales and distribution network
•	 Cambridge Technology Centre
•	 Over 1 ,100 quality staff around the world
Competencies
•	 Expertise in sensing, precision measurement and 
connectivity especially for harsh environments
•	 Multidisciplinary engineering skills 
•	 Proprietary NPD process:  
Innovation Resource Planning™ Risks and 
uncertainties
See page 17
Elektron Technology plc
Annual Report and Financial Statements 2012
05
Overview
Objectives
•	 Upgrade product lines, especially 
where there has been under-
investment in recent years
•	 Expand addressable market  
by extending current ranges
•	 Develop innovative propositions  
which address emerging, high  
growth opportunities
Key activities
•	 Establish and grow Cambridge 
Technology Centre, using Innovation 
Resource Planning™ process
•	 Expand new product development 
pipeline
•	 Create innovation links with  
outside groups
Strategy
Invest in  
new product 
development
•	 Rebalance revenue and  
margin contributions to  
reflect global opportunity
•	 Develop regional sales and  
marketing organisations
•	 Rebalance teams to face high  
growth markets 
•	 Transfer knowledge from UK
Build global sales
•	 Create a scalable organisation  
to support growth
•	 Develop expert teams in global 
support functions
•	 Complete implementation of global 
ERP and CRM systems
•	 Consolidate UK sites and continue  
to control costs
Transform 
organisation Elektron Technology plc
Annual Report and Financial Statements 2012
06
Business review
Key highlights
•	 Revenue: £64.3m (2011: £50.0m),  
up 29%, including a full year’s 
contribution from Hartest  
(acquired September 2010) 
•	 Operating profit before non-recurring  
or special items (‘trading profit’):  
£5.0m (2011: £5.3m)
•	 Non-recurring or special items,  
largely relating to UK streamlining: 
£2.2m (2011: £1.5m)
•	 Reported operating profit: £2.8m 
(2011: £3.8m)
•	 Basic earnings per share (‘Basic  
EPS’): 1.82p (2011: 3.00p); earnings 
per share before non-recurring  
or special items (‘Adjusted EPS’): 
3.33p (2011: 4.20p) 
•	 Proposed final dividend of 0.56p 
per share, making a total of 0.83p 
for the year, a 3.8% increase. Eighth 
consecutive year of dividend growth
•	 Resilient sales performance  
against backdrop of challenging 
trading conditions
•	 Completed management 
reorganisation to exploit scale  
and expertise. Rationalisation  
of UK sites continues
Keith Daley
Chairman
Chairman’s statement
The results for the year ending  
31 January 2012 demonstrate a resilient 
sales performance against a backdrop of 
protracted economic slowdown and the 
ongoing European debt crisis that made 
trading conditions particularly challenging 
in the second half of the year. The Group 
has however been less severely impacted 
than in earlier economic downturns, 
which is attributed to efforts to broaden 
the business both geographically and in 
terms of product range and particularly 
the acquisition in the prior year of Hartest 
Holdings plc (‘Hartest’). Whilst the 
results fell short of the Group’s original 
expectations, progress in the Americas 
was strong and results are second only 
to last year’s record outturn with sales, 
operating profit before non-recurring or 
special items (‘trading profit’), operating 
cash flow and adjusted earnings per 
share all exceeding any year prior to the 
Hartest acquisition in 2010.
Organisational change
Once again this has been a transformative 
year in which the Group has continued  
to build foundations which will enable  
it to move to the next level.
Elektron Technology (Elektron) has 
grown over a number of years through 
numerous largely UK-based acquisitions. 
The Group has made significant progress 
with its programme of streamlining  
the enlarged organisation as it moves 
from a group of subscale, siloed 
manufacturing businesses to a single 
organisation focused on technology,  
new product development and global 
sales and marketing. 
The Group now employs a matrix 
structure that provides its global sales 
organisation with expert functional 
support. The sales effort is organised 
into three separate regions (Americas, 
Asia Pacific and Europe, Middle East and 
Africa) that are better able to promote 
the Group’s range of products, creating 
channels for further growth.
The Group has the infrastructure in place 
to support the business as it grows, with 
centralised marketing, technology and 
operational expertise and also strong HR, 
IT and finance functions. The impact of 
this is already being seen in increased 
efficiency and operational visibility. The 
Group also successfully implemented the 
first stages of a move to a new Enterprise 
Resource Planning system during the 
year. This roll-out, along with the adoption 
of a Group-wide Customer Relationship 
Management system, will be completed 
during 2012-13.
The Group has also closed its former 
head office in Romford, announced the 
closure of the legacy manufacturing sites 
at West Molesey and Redhill and moved 
to a new head office and Technology 
Centre in Cambridge. 
In short the Group has now designed 
a streamlined organisation that can be 
scaled up as opportunities arise.
Product development and marketing
The Group’s integrated management 
organisation is already making an impact 
on new product development (NPD). 
Market driven NPD is key to the Group’s 
future success and the right foundations 
are now in place. 
The Group has the infrastructure 
in place to increase efficiency and 
support the business as it grows 08 07 06 05 04 03 09 10 11 12
0.45 0.46
0.50
0.80
0.83
nil
0.35
nil
0.40
0.30
Elektron Technology plc
Annual Report and Financial Statements 2012
07
Business review
8 years
Eight consecutive years of dividend growth
The Group’s marketing team is 
addressing the previously fragmented 
nature of Group branding and messaging, 
with the first results of a progressive 
brand overhaul visible on the corporate 
website. Changes to 26 other websites 
will follow. It is expected that this will not 
only create a distinct, unified identity for 
the Group, but will also deliver a basis for 
increased cross selling across its portfolio 
of brands.
People
The Group has hired several experienced 
professionals for key leadership roles 
during the year. For technical and 
marketing roles, the move to Cambridge 
has proved particularly successful, giving 
the Group access to a much larger pool 
of qualified people with experience of 
fast-growing companies. 
The Board has put in place incentive 
plans, which have been designed to 
keep the Group competitive within the 
marketplace and to reward the building 
of value aligned to shareholder interests. 
Elektron values its people and recognises 
the need to look after them, including 
those times when the Group’s plans 
have meant disruption for some. The 
commitment of many Elektron people 
throughout the world in a challenging 
environment has been remarkable and 
deserves recognition.
Dividend
The Board is continuing its progressive 
dividend policy, recommending a final 
dividend of 0.56p (2011: 0.55p) making  
a total dividend for the year of 0.83p 
(2011: 0.80p). This represents an  
increase of 3.8% and is the eighth year 
running that the Board has been able  
to recommend an increased dividend. 
The dividend is expected to be paid  
on 17 August 2012 to shareholders  
on the register at the close of business  
on 4 May 2012.
The Board is proposing a scrip issue 
alternative, subject to a resolution 
being passed at the Annual General 
Meeting allowing the Directors to 
issue shares other than pro rata to 
existing shareholders. Full details will 
be contained in the documentation 
convening the AGM. 
Outlook
Trading in the early months of the year 
has given the Group no reason to change 
its outlook. In the current uncertain 
economic climate Elektron retains its 
cautious stance.
At a more fundamental level however, 
the prospects for Elektron are strong. 
The Group is putting in place measures 
to reduce its exposure to the economic 
cycle and is in a good position to help 
its customers as they become more 
connected whether by creating physical 
power and data links, or by measuring, 
monitoring and controlling key physical 
processes. The Group’s brands already 
provide proven, sector-leading products 
in specific geographies, with considerable 
potential to expand into further territories. 
Elektron will continue to invest in its 
portfolio of market leading products  
as it increases the pace of NPD and 
expands its international network.
Keith Daley 
Chairman
Dividends paid and proposed per share p
0.83p Elektron Technology plc
Annual Report and Financial Statements 2012
08
Business review
During 2011-12, revenues increased from 
£50.0m to £64.3m, largely as a result  
of a full year of contribution from the 
Hartest businesses, which were acquired 
on 1 September 2010, but trading 
profit was slightly lower at £5.0m (2011: 
£5.3m). Whilst these results did not meet 
the Group’s original expectations, they 
show that the Group is able to remain 
profitable and resilient even in uncertain 
times and are an encouraging basis for 
future growth. 
Serving a connected world
Elektron designs fast moving engineered 
products (FMEP) and has market leading 
positions in connectivity, instrumentation 
and monitoring and control markets. 
The majority of the business delivers key 
building blocks for today’s connected 
world. These products are managed 
in two segments: Connectivity and 
Instrumentation, Monitoring & Control (IMC).
Connectivity serves the need for delivery 
of data and power in the most demanding 
of situations. Examples include the 
Buccaneer power and data connectors 
for wired and wireless communications. 
In 2011-12 this segment delivered 
revenues of £29.2m (2011: £29.7m) and 
trading profit of £2.4m (2011: £3.7m).
IMC includes technologies that measure 
and monitor environments, materials and 
processes and increasingly can capture, 
process and act on data to automate 
decision making and improve business 
performance. Examples include the  
Kyros wireless temperature-monitoring 
system and Genisys vehicle power 
management products. In 2011-12  
this segment delivered revenues of 
£28.7m (2011: £14.5m) and trading  
profit of £2.4m (£1.5m).
Additionally the Group operates a  
small specialist FMEP segment focused 
on Materials. This serves specialised 
markets in the manufacture of tungsten 
carbide and the creation of tungsten 
carbide router cutter tools.
Elektron goes to market globally and  
the Group’s products are sold worldwide 
to over 7 ,000 customers and around 
100,000 end-users. They are used in  
all seven continents, as well as in space. 
Strategy and progress
Elektron’s strategy is based on the 
significant opportunity to grow revenue 
by accelerating the pace of innovation, 
unlocking the significant potential of 
marketing the product portfolio to more 
international customers and exploiting the 
efficiency that the improved organisational 
structure provides. Therefore the Group is 
both building global sales and investing in 
new product development (NPD).
 
Building global sales 
The Group has a wide geographic reach for 
an organisation of its size, and has already 
successfully demonstrated its ability to 
take its products to worldwide markets. 
However, there remains considerable 
further opportunity for growth on a global 
basis. For example, the Asia Pacific region 
is approximately 40% of the market 
but currently only 19% of sales, while 
the Americas account for only 13% of 
sales. The Group’s strategy is to use its 
international sales capability to realise this 
potential and achieve a geographic balance 
more closely matching the scale of the 
underlying markets. 
During 2011-12 the Group made 
important organisational changes and 
investments to pave the way for further 
advances in 2012-13. Cross selling of 
products to existing customers of one 
brand has also been under-exploited in 
the past; this is now being addressed.
Key highlights
•	 There remains considerable  
further opportunity for growth  
on a global basis 
•	 One of the Group’s key assets  
is its new product development 
capability, based in its Technology 
Centre in Cambridge
•	 Investment in sales resources  
has more than doubled to £8m  
in three years
John Wilson
Chief Executive 
Chief Executive’s review 08 07 06 05 04 03 09 10 11 12
34.9 35.6
29.9
50.0
64.3
9.3
22.5
9.1
26.0
22.7
Elektron Technology plc
Annual Report and Financial Statements 2012
09
Business review
The Group now operates with three 
regional sales and support organisations 
that are charged with driving direct and 
indirect channels across all its ranges. 
This represents a move to a more 
scalable model for some of the recently 
acquired instrumentation product lines 
that previously relied on EMEA-based 
expertise to service global markets. 
To support this agenda, the Group’s 
investment in sales resources has more 
than doubled to nearly £8m in three 
years, including increased training for  
the global sales force.
Investing in NPD 
One of the Group’s key developing  
assets is its NPD capability, based in  
its Technology Centre in Cambridge.  
It forms the hub of a multidisciplinary 
team that works together using Elektron’s 
development process – Innovation 
Resource Planning™. The Technology 
Centre allows the Group to coordinate 
activities and apply best practice and 
high quality engineering talent to new 
and existing products. All projects start 
with a marketing-led justification and 
are subject to rigorous technical and 
financial evaluation before significant 
development funds are committed. 
Multiple developments are now in train.
These are aimed at: 
•	 Upgrading current product lines, 
especially where there has been 
under-investment in recent years;
•	 Expanding the addressable market 
for current product ranges. Examples 
include using new materials for 
the popular connector ranges or 
simplifying instruments so that they  
are suitable for use by a less skilled 
user population; and
•	 Developing new propositions that 
combine instrumentation and 
measurement with networks and 
computing. The latter is particularly 
promising, given the growth 
in machine to machine (M2M) 
communications, which leads to 
increased demand for measurement 
devices and opportunities to develop 
smart solutions and services where 
Elektron’s domain knowledge and 
technology will be highly valuable.
Current developments in the NPD 
pipeline include:
•	 Major extensions to the key Buccaneer 
connector ranges to meet emerging 
customer requirements for end-use 
and expand the addressable market;
•	 Envir onment-sensing softwar e, 
hardware and networks for specific 
vertical markets to automate essential 
routine tasks, reduce risk and assist 
with compliance;
•	 Extensions to the ophthalmological 
instruments range to expand 
addressable markets to different skill 
levels and professional user groups;
•	 A new generation of controllers 
and positioners/sensors for the 
nanopositioning range to extend  
the Group’s offering to new areas 
such as scanning probe microscopy, 
interferometry, x-ray imaging, confocal 
microscopy and aerospace; and 
•	 Upgrades to viscometry instruments 
to increase their utility to existing 
customers and open up new sectors.
Business transformation 
The initial phase of restructuring the 
business is now largely complete. 
Elektron is now a matrixed organisation 
that has created centres of excellence in 
key functions of marketing, technology 
and production, and has ensured more 
scalable global operations for sales. As 
reported in the Chairman’s statement this 
has also included a move to a Cambridge 
head office and the establishment of the 
Technology Centre there. 
The second phase of this process is the 
rationalisation of the Group’s operational 
footprint in the UK, closing and consolidating 
three major leased sites. The office in 
Romford is now closed and its activities 
have transferred to Cambridge, Torquay 
and Stansted. The existing factory in 
Torquay will become the Group’s new  
UK centre for high-tech manufacturing. 
Activities at the Redhill and West Molesey 
factories will relocate to Torquay over  
the next 12-18 months, as the leases  
on those sites expire. When complete, 
this programme is expected to deliver 
savings in excess of £2m per annum.
Revenue – continuing operations £m
£64.3m Elektron Technology plc
Annual Report and Financial Statements 2012
10
Business review
Several new product lines are being 
prepared for release in this category, 
which are expected to suit a considerably 
larger set of end user applications, 
increasing the total addressable market. 
Arcolectric switches continued to make 
a strong contribution but face strong 
price competition from larger scale 
manufacturers. The Group continues 
to review its cost base and supply 
chain in response, as well as seeking 
opportunities for innovation: for example, 
during 2011 Elektron introduced a 
range of switches that incorporate anti-
microbial properties, aimed at hygiene-
sensitive OEM applications such as food 
preparation and medical devices.
Due to unprecedented increases in raw 
material prices throughout the year, 
margins were adversely impacted. 
However, this was partially offset by 
implementing price increases during  
the year. 
Instrumentation, Monitoring and 
Control (sales £28.7m, trading profit 
£2.4m; 2011: £14.5m, trading profit 
£1.5m). IMC experienced additional 
weakening of demand due to reduced 
government funding of national metrology 
laboratories and, in the UK, reductions in 
NHS capital spending which particularly 
impacted the QADOS products. 
The Group is actively refocusing 
Queensgate’s nanopositioning products, 
at present a small percentage of 
Group sales, to capitalise on increased 
opportunities in the sector. The Group is 
also involved in an important collaborative 
R&D programme funded by the UK 
government’s Technology Strategy Board 
in this area. The results from this project, 
when combined with the Group’s existing 
laboratory supplies (Agar) and metrology 
(ASL) brands, are expected to enable 
Elektron to serve the scientific laboratory 
market more effectively.
Regional performance
In the Americas (sales £8.3m;  
2011: £6.6m) there has been a 
particularly good performance in the 
Connectivity segment, with continuing 
strong sales growth and a record 
forward order book. This is a result of 
considerable effort in strengthening 
the sales infrastructure and distributor 
organisation in the region. Signing 
agreements with strategic national 
distributors allowed Connectivity 
to flourish this year. Other existing 
distributors started selling the Arcolectric 
line for the first time which should result  
in increased sales. 
The next challenges are to expand sales 
in South America and to generate growth 
for the Instrumentation, Monitoring & 
Control (IMC) product lines. In both areas 
2012-13 will be a period of establishing 
Elektron’s presence and initial sales. 
Several key hires have been made to 
support this initiative during 2011-12, 
and the Group has also increased its 
investment in marketing in this region.
In the Asia Pacific region (sales  
£12.5m; 2011: £9.1m), sales growth 
is largely attributable to the full year of 
contribution from Hartest and underlying 
growth was less than anticipated. As 
the majority of current Chinese sales 
are to original equipment manufacturers 
(OEMs) whose products are exported, 
mainly to Europe, there was impact from 
the downturn on demand. The Group 
has however invested in developing its 
organisation to support improved growth, 
focusing on China, South Korea, Japan 
and India. A new regional head office has 
been created in Singapore and a sales 
office opened in Shanghai. The Group 
is seeing growing opportunities in India 
and a new, enlarged office in New Delhi 
is expected to be opened in the coming 
year. The Group has also expanded its 
sales force in South Asia and India to 
take advantage of significant untapped 
opportunities in those areas.
In EMEA (sales £43.5m; 2011: £34.3m) 
the Group continues to increase the 
emphasis on developing sales outside the 
UK. Sales to key growth areas in Germany 
and Eastern Europe increased by over 
10% year on year, but there has been 
weaker demand and increased uncertainty 
from customers elsewhere, especially in 
southern Europe. The Group has therefore 
rebalanced its focus, with more resource 
being applied to the north and east of 
Europe. Elektron continues to see potential 
for the Sheen and Ophthalmic product 
ranges in the Middle East. 
Segmental performance  
Connectivity (sales £29.2m, trading 
profit £2.4m; 2011: £29.7m, trading 
profit £3.7m). Elektron’s Connectivity 
segment saw a softening of demand 
in Asia Pacific and parts of EMEA, in 
particular in Italy, historically the largest 
revenue-generator for Connectivity 
in Europe outside the UK (but now 
overtaken by Germany). There were 
encouraging levels of success in the 
Americas, where sales of connectivity 
products have increased by more than 
50% over the last two years.
In terms of industries served, there 
was some impact from a slowdown in 
demand for connectors from the solar 
power market related to changes in 
government subsidies in several key 
markets, offset by successes in the 
power grid and telecoms industries.
In 2011-12 the Group continued to 
increase its focus on direct sales to OEMs 
to ensure that it is not over-dependent 
on distributors, while also ensuring that 
it is working with the highest quality 
distributors, leading to the developments 
noted above. 
The Bulgin brand, and in particular 
Buccaneer connectors, continued to 
perform well, confirming its ability to 
command a strong competitive position in 
products with a large engineered content. 
Chief Executive’s review 
continued 08 07 06 05 04 03 09 10 11 12
2.1
1.1
1.8
5.3
5.0
0.8
1.8
-0.4
1.9
1.7
Elektron Technology plc
Annual Report and Financial Statements 2012
11
Business review
+50%
During the year there was positive growth 
for the Sheen and Wallace ranges, with 
customers and applications across 
various industries such as automotive, 
aerospace and rubber production. 
There are a number of new product 
developments underway to further 
enhance the product range, which  
will not only give greater appeal and 
scope in existing sectors but also offer 
expansion possibilities in areas such  
as plastics, pharmaceuticals, cosmetics 
and FMCG testing. 
The year has also seen growth for the 
ophthalmic instruments product line 
as well as a number of new regional 
distribution deals. NPD activity is in  
train to build on these trends.
Particularly strong performance came 
from the Tinsley instrumentation range 
in India. This business is now providing 
a springboard to increase the range of 
products marketed in India and to create 
stronger local presence.
Carnation Designs continued to perform 
well in the specialist vehicle automation 
system market, with its products used  
in 95% of the UK’s frontline ambulances. 
Highlights included a £1m+ order for  
use in UK prisoner transport vehicles 
and the supply of a solution for a 
large Japanese corporation’s outside 
broadcast vehicles to use in China. The 
Group is investing to develop the profile  
of Carnation Designs globally, starting 
with selected priority markets. 
Materials (sales £6.4m, trading profit 
£0.2m; 2011: £5.8m, trading profit 
£0.1m). The small Materials business 
showed 10% revenue growth in the  
year, but continued to deliver lower 
profitability than the rest of the Group.  
A 40% increase in tungsten carbide 
prices was offset by price increases but 
with an adverse effect on overall margins. 
The Group is now focusing on developing 
new production processes to increase 
efficiency. Titman Tip Tools won some 
important new contracts in 2011-12, 
which are now beginning to generate 
increased volumes, and the Group is 
currently evaluating the potential of  
recent new product developments in 
connection with cutter technologies.
John Wilson
Chief Executive  
Sales of Connectivity products have increased by more 
than 50% in the Americas in the last two years
Adjusted operating profit/(loss)* £m
£5.0m
* Adjusted for goodwill, discontinued operations and non-recurring or special items. Elektron Technology plc
Annual Report and Financial Statements 2012
12
Business review
Group sales in 201 1-12 were £64.3m, a 
29% increase on prior year. This increase 
was essentially attributable to the full year 
of contribution from the Hartest business 
acquired during 2010-11. Underlying 
sales performance was affected by the 
weakening global economic climate in the 
second half of the year and, adjusted for 
the acquisition and currency movements, 
was little changed from prior year.
Trading margins were 7.8%, down from 
10.6% in 2010-11, largely as a result of the 
lower than expected sales. Margins were 
also affected by:
•	 Increases in commodity prices, 
notably for metals and plastics, which 
particularly affected the Connectivity 
and Materials segments. The average 
market price per kilo of the Group’s net 
basket of metals increased by some 
75% compared with the previous year;
•	 A full year of contribution from the 
traditionally lower margin Hartest 
business also had an impact. 
However, the profitability of the  
Hartest businesses was substantially 
improved compared with the 
preceding 12 months.
Despite these factors, trading profit reached 
£5m for the second consecutive year.
Apart from driving sales, the Group is 
taking steps on many fronts to improve 
profitability, including the programme  
to streamline operations. The cost of 
streamlining the business in the UK  
is expected to total £4.3m over a two 
year period. This includes £3.5m of 
exceptional charges, of which £1.9m 
was recorded in 2011-12, and 
approximately £0.8m of capital 
expenditure. Savings in occupancy  
costs from the site closures are 
expected to exceed £0.8m per annum 
and when complete, the streamlining 
programme is expected to yield savings 
in excess of £2m per annum. The recent 
announcement that most of the Group’s 
UK operations will trade as a single  
legal entity with effect from the current 
financial year should bring a further 
reduction in costs.
Other non-recurring or special items 
include £0.1m of costs incurred in 
exploring an abandoned potential 
acquisition, and £0.2m amortisation 
of intangible assets arising from past 
acquisitions. The costs of share-based 
incentive plans, comprising share options 
and the Joint Share Ownership Plan, are 
also included in non-recurring and special 
items, but amount to less than £0.1m.
The consolidated net interest charge  
of £0.3m is covered 15 times by  
trading profit.
The Group’s effective tax rate has 
increased from 18% to 24%, as brought 
forward tax losses have been substantially 
utilised. It is expected that the Group’s 
tax rate will remain fairly stable at this new 
level, as the scheduled decline in the UK 
rate of corporation tax from 26% to 22% 
over the next two years should offset 
the use of the Group’s last remaining tax 
losses and anticipated growth in profits 
from overseas markets including the USA 
and India, which are subject to higher 
rates of tax than profits earned in the UK.
Group pre-tax profit before non-recurring 
or special items was £4.7m (2011: 
£5.0m). Reported pre-tax profit was 
£2.5m (2011: £3.5m).
The Group is taking steps to improve 
profitability, including the programme  
to streamline operations.
Noah Franklin
Chief Financial Officer
Chief Financial Officer’s report
Key highlights
•	 Trading profit once again reached  
£5m
•	 The streamlining programme is 
expected to yield savings in excess  
of £2m per annum
•	 The Hartest acquisition has significantly 
enhanced earnings during the year, 
contributing approximately 1.3p  
to the Group’s Adjusted EPS 08 07 06 05 04 03 09 10 11 12
2.48
0.61
1.50
4.20
3.33
1.53
1.65
0.82
1.73
1.52
Elektron Technology plc
Annual Report and Financial Statements 2012
13
Business review
+29%
The average number of ordinary shares 
in issue during the year was 106.4m, 
compared with 97.2m in the prior year,  
so Basic EPS and Adjusted EPS  
were 1.82p and 3.33p respectively  
(2011: 3.00p and 4.20p). If the tax rate 
had remained unchanged from 2011, 
Adjusted EPS would have been 3.69p.
It is estimated that approximately 2.0p 
of Adjusted EPS is attributable to the 
‘old’ Elektron business. The Hartest 
acquisition has significantly enhanced 
earnings during the year, contributing 
approximately 1.3p to the Group’s 
Adjusted EPS.
The Group’s financial position  
remains strong, with net debt of  
£4.4m (2011: £4.3m) and net gearing  
(net debt divided by total equity) of 
only 28% (2011: 29%), both virtually 
unchanged from prior year. This is 
pleasing after a year where the dividend 
payments have increased by 60% 
and capital investment has more than 
doubled to £2.2m, including £0.8m 
related to the development and supply 
of new products. Capital investment 
is expected to increase again in 2012-
13, when major projects will include 
the investment in the new high-tech 
manufacturing facility in Torquay, the 
completion of the global Enterprise 
Resource Planning system  
and further acceleration of the new 
product development programme.
Since the end of the year, the Group has 
refreshed its financing arrangements via 
a new four year £6.8m revolving credit 
facility, replacing the £1.6m term loan 
that was taken out to fund the Hartest 
acquisition. This new facility provides 
financial stability for the medium term.  
It is on slightly improved terms compared 
with the previous term loan and no 
capital repayments are due in the first 
12 months. As the Group grows its 
international operations, the facility 
also allows for the financing of certain 
overseas assets with local currency 
borrowings, effectively mitigating 
exchange rate risks.
The Board wishes to continue its 
progressive dividend policy and is 
proposing a final dividend of 0.56p  
per share, bringing the total for the  
year to 0.83p an increase of 3.8%.
Noah Franklin
Chief Financial Officer
Group sales in 2011-12 were £64.3m,  
a 29% increase on prior year
Adjusted earnings/(loss) per share* p
3.33p
* Adjusted for goodwill, discontinued operations and non-recurring or special items. Elektron Technology plc
Annual Report and Financial Statements 2012
14
Governance
Directors and advisers
Keith Daley (56)
Chairman
Appointed to the Board in 2004 and 
as Chairman in 2008, Keith originally 
trained as a corporate banker. He is 
an experienced serial entrepreneur 
and Chairman with a strong sales and 
marketing focus. He has managed, 
owned, invested in and sold a number 
of businesses over the past 30 years.
Simon Acland (54)
Non-Executive Director
Appointed to the Board in November 
2010, Simon has over 30 years of 
experience in the technology sector as 
an entrepreneur and venture capitalist. 
He has sat on the boards of over 30 
companies, both private and publicly 
listed on AIM, the main market, and 
Nasdaq, often which he backed as 
private companies and helped to  
guide to flotation. Simon chairs  
the Remuneration Committee.
John Wilson (36)
Chief Executive 
Appointed to the Board in August 
2010 and as Chief Executive on  
17 December 2010, John originally 
joined Elektron Technology in March 
2008 as Technical Director before 
being appointed Managing Director of 
the Technology Division in April 2010. 
Prior to this he had spent his career 
in senior management positions in 
the UK and North America as well 
as consulting for a world-leading 
technology consultancy. Elektron Technology plc
Annual Report and Financial Statements 2012
15
Governance
Noah Franklin (52)
Chief Financial Officer
Appointed to the Board in July 2011, 
Noah is a Chartered Accountant with 
extensive experience in senior financial 
roles and within publicly quoted 
companies. His previous appointments 
include 12 years as a senior executive 
with Cadbury Schweppes plc, where 
his roles included Finance Director for 
Europe, the Middle East and Africa 
and Group Financial Controller, as 
well as Managing Director of Global 
Business Services and a country 
Managing Director position. 
Jeremy Thorn (64)  
Non-Executive Director
Appointed to the Board in March 
2010, Jeremy 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. 
Jeremy chairs the Audit Committee. 
Company Secretary
Martin Reeves
BA Hons, FCIS
Registered office
Broers Building
JJ Thomson Avenue
Cambridge CB3 0FA
Registered in England
No. 448274
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Nominated adviser  
and broker
finnCap
60 New Broad Street
London EC2M 1JJ
Solicitors
Birketts LLP
Brierly Place
New London Road
Chelmsford CM2 0AP
Auditor
Deloitte LLP
City House
126-130 Hills Road
Cambridge CB2 1RY
Bankers
HSBC Bank plc
70 Pall Mall
London SW1Y 5EZ Elektron Technology plc
Annual Report and Financial Statements 2012
16
Governance
The Directors present their Annual Report on the affairs of the Group together with the audited financial statements for the year 
ended 31 January 2012.
Principal activity
Elektron Technology plc (‘Elektron’) is a global Group managing, exploiting and developing its technologies within the fast moving 
engineered products sector in business to business markets. The principal activity of the Company is that of a holding company. 
The principal operating subsidiaries of the Group as at 31 January 2012 are listed in Note 14.
Business review
Information that fulfils the business review requirements applicable to the Group is contained in the Chairman’s statement, the 
Chief Executive’s review and Chief Financial Officer’s report on pages 6 to 13. 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:
2012 2011
Gross profit margin
The ratio of gross profit to revenue expressed as a percentage 40.4% 42.2%
Net operating profit percentage of revenue, before non-recurring or special items
The ratio of net operating profit before non-recurring or special items, to revenue,  
expressed as a percentage 7.8% 10.6%
Interest cover
The ratio of profit before finance and non-recurring or special costs to net interest payable  
on borrowings 14.9 21.7
Basic earnings per share 
The profit after tax divided by the weighted average number of ordinary shares in issue during the year 1.82p 3.00p
Adjusted earnings per share
The profit after tax before non-recurring or special items, divided by the weighted average number  
of ordinary shares in issue during the year 3.33p 4.20p
Net gearing
The ratio of total borrowings less cash to shareholders’ funds expressed as a percentage 27.6% 29.3%
Net assets per share
Net assets divided by the number of ordinary shares in issue at the balance sheet date, excluding 
treasury shares, expressed in pence per share 14.8p 13.7p
Change of name
The name of the Company was changed from Elektron plc to Elektron Technology plc on 29 July 2011.
Report of the Directors Elektron Technology plc
Annual Report and Financial Statements 2012
17
Governance
Principal risks and uncertainties
The management of the business and the nature of Elektron’s strategy are subject to a number of risks and uncertainties. 
Elektron’s risk management processes are forward-looking in the identification, management and mitigation of the key  
business risks that could impact the Group’s immediate and long-term performance. The following risks are those that  
the Group considers could have the most serious adverse effect on its performance and reputation.
Risk Mitigation
Commercial risks 
including sales, 
product costs 
Elektron’s revenues are, and will be, principally from sales of 
its products. There can be no assurance that current product 
revenues can be maintained or increased in the future. Product 
sales and product costs may be affected by adverse market 
conditions or other factors, including: pricing pressures from 
governments or other authorities, competition from other 
products, the withdrawal of a product because of a regulatory  
or other reason, or the financial or commercial failure of  
a marketing partner.
The Group sells globally and manufactures a proportion of its 
products outside the United Kingdom, which in turn exposes  
the Group to the commercial environments of those locations.
The Group has approximately  
7 ,000 customers and approximately 
100,000 end-users worldwide. Its 
diverse portfolio of brands and products 
assists in reducing the risk related to 
limited offerings or the failure of one  
of our partners. 
Risks associated 
with pipeline 
products
Elektron’s strategy is partly based on the continual  
development of new products. The technical feasibility  
and commercial success of such developments is generally  
not assured in advance.
The Group’s Innovation Resource 
Planning™ process is designed to  
ensure that such risks are minimised.
Changing political 
and economic 
and social 
environment
Elektron is subject to political, economic and regulatory factors in 
several countries. This includes the types of risks that manifested 
themselves during the last year, including the earthquake and 
tsunami in Japan, the Arab Spring and the economic slowdown  
in the Eurozone countries.
The global spread of the Group’s 
operations limits its exposure to  
such risks in any single territory.
Loss of operating 
facilities
Elektron is in the process of restructuring a number of its UK 
operations including transitioning production and distribution 
facilities. This could result in some disruption to operations.
The Group has extensive experience 
of handling such change programmes 
successfully. Business continuity plans 
are in place to minimise the impact of 
normal, foreseeable risks and specific 
restructuring-related issues.
Competition Elektron experiences competition both from emerging suppliers 
based in low-cost countries and traditional European suppliers 
seeking to maintain market share by reducing prices.
A number of technologies claim to deliver similar benefits  
in a different way. This could potentially reduce Elektron’s  
pricing power in the markets in which we operate.
The Group continually monitors 
competitive development and seeks to 
develop innovative products for niche 
applications to ensure the Group retains 
a competitive advantage. Elektron Technology plc
Annual Report and Financial Statements 2012
18
Governance
Principal risks and uncertainties continued
Risk Mitigation
Commodity 
prices
A significant amount of Elektron’s purchases are plastic  
moulding powders, metal parts and rare metal powders. 
Consequently exposure to movements in oil, copper, silver, 
tungsten and cobalt market prices can affect profitability. 
Product design is kept under review to 
ensure that Elektron’s products use no 
more of such commodities than product 
offerings of our direct competitors.
Foreign exchange 
rate movements
A significant portion of Elektron’s sales are in US Dollars 
and Euros. Elektron is therefore exposed to foreign currency 
fluctuations. Elektron manages its foreign exchange risk by 
purchasing materials in matching currencies where possible  
in order to partially offset this exposure.
Financial and treasury controls limit 
exposure to foreign currency, interest 
rate and credit risk.
Control of 
overseas 
operations
In order to achieve competitively priced products Elektron  
has manufacturing facilities in Tunisia and China, as well as in 
the UK. It also has sales offices in India, Singapore, Germany 
and the USA. Risks and uncertainties of this strategy include  
management issues at the factories, the possibility of changes  
in import duties, taxes and shipping and payment delays.
The Group manages these risks by 
employing suitably experienced local 
staff and a UK-based team that works 
closely with them. If necessary, the 
majority of products manufactured at 
one overseas location could be moved  
to another location.
Legal The Group operates in countries where bribery and corruption  
are known risks.
The growing volume of legislation and regulation increases  
non-compliance risk and the associated penalties. 
The Group has a strict anti-bribery  
policy and has communicated the 
essential features of the UK Bribery  
Act to staff worldwide.
Quality Certain products supplied by Elektron are critical to the operation 
of customers’ equipment, where consequential losses due to 
malfunction may lead to customer costs significantly in excess  
of the value of the products supplied.
The Group continually monitors product 
quality and seeks to respond rapidly  
to address the root cause of any 
customer complaints.
Reliance on key 
individuals and 
retention of  
high-quality staff
The Group is dependent on key persons in commercial or 
management areas. The profitability and reputation of the 
business may be adversely impacted if they were to depart 
without due warning.
The Group continues to invest in 
recruiting high-calibre staff, with a view 
to strengthening the depth of talent 
throughout the business. Staff retention 
is closely monitored and remuneration 
packages are designed to promote 
retention of key individuals.
Report of the Directors
continued Elektron Technology plc
Annual Report and Financial Statements 2012
19
Governance
Results and dividends
There was a profit for the year after taxation of £1.9m (2011: £2.9m) and the Directors are recommending the payment of a final 
dividend of 0.56p per share (2011: 0.55p per share). In addition, an interim dividend of 0.27p per share was paid to shareholders 
in December 2011 (2010: 0.25p per share). The Directors are proposing a scrip issue alternative in respect of the final dividend for 
the year ended 31 January 2012 and all future dividends for a period of five years. Full details are contained in the separate Notice 
of Annual General Meeting (AGM) and the Scrip Dividend Circular accompanying this Annual Report and financial statements.
Research and development
The continuous advancement of technology and processes by the Group means costs are incurred each year in research and 
development. The Directors consider 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 Notes 4 and 12 to the financial statements.
Health, safety and environment
The Group recognises and accepts its responsibilities for health and safety and is committed to achieving the highest practicable 
standards in health and safety management for all its operations to safeguard its employees, customers and the local community. 
The Group is committed to the care of the environment and the maintenance of environmental controls as they relate to the 
business and aims to ensure that its activities comply at all times with relevant environmental legislation. 
Directors and their interests
Biographical details of the current Directors are set out on pages 14 to 15 and details of Directors’ beneficial interests in the  
shares of the Company as at 31 January 2012 are set out in the report of the Remuneration Committee on pages 24 to 27.
Jeremy Thorn retires by rotation at the 2012 AGM and will offer himself for reappointment. The Board recommends the 
reappointment of Jeremy Thorn as it considers that he brings considerable management experience to the Group’s business. 
Additionally, Noah Franklin, who was appointed as a Director on 29 July 2011, seeks reappointment at the first AGM since his 
appointment. The Board recommends the reappointment of Noah Franklin and considers that he brings considerable financial 
and corporate finance experience to the Group’s business. Details of the resolutions to reappoint them will be contained in the 
notice of AGM.
Share capital
As at the date of this report, the total number of shares in issue (being ordinary shares of 5p each) is 119,296,987. During the  
year the Company issued 12,888,728 new shares. Details of the share capital are given in Note 21 to the financial statements. Elektron Technology plc
Annual Report and Financial Statements 2012
20
Governance
Substantial shareholdings
As at the date of this report, the Company was aware or has been notified in accordance with chapter 5 of the Disclosure 
Transparency Rules of the following interests of 3% or more in its issued ordinary share capital, in addition to Directors’ holdings 
which are disclosed in the Remuneration Committee report:
Mr J Kinder 14.78%
Elektron Technology 2012 Employee Benefit Trust 10.64%
Mr & Mrs N Slater 7.79%
Henderson Global Investors 6.28%
D & A Income Limited 5.03%
Mr A Perloff & Panther Securities Plc 3.94%
Charitable and political donations
The Group made no political contributions (2011: £nil) and no charitable donations (2011: £1,650) during the year.
Supplier payment policy
The 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 trade payables days in the year for the Group were 51 days (2011: 56 days) and  
for the Company were 47 days (2011: nil).
Employees
The Group has human resources policies designed to meet the needs of its Group companies and employees around the world. 
Recognition is given to individual employees’ needs and requirements and employees are encouraged to apply their skills, 
knowledge and energy. The Group recognises the importance of its employees and their training.
The Group is committed to equality of opportunity for all regardless of gender, race, age, disability, religion or sexual orientation, 
where it is reasonable and practicable within existing legislation. This applies equally to recruitment and to the promotion, 
development and training of staff. Each operating company within the Group operates its own communication and consultative 
programmes relevant to its own particular workforce.
Corporate governance statement
As an AIM listed group, the Group is not required to follow the provisions of the UK Corporate Governance Code 2010 (‘2010 
Code’), as set out in the Financial Services Authority’s Listing Rules. The Directors, however, recognise the importance of, and 
accordingly support, the principles of good corporate governance as contained within the 2010 Code. The Directors normally  
seek to follow the 2010 Code to the extent considered relevant for an AIM listed Group. The Group is unable to achieve 
compliance with the 2010 Code in a number of areas this year, among other matters because of the number of independent  
Non-Executive Directors. The Directors will continue to assess compliance with the 2010 Code. These matters are explained  
in further detail in the sections that follow.
Report of the Directors
continued Elektron Technology plc
Annual Report and Financial Statements 2012
21
Governance
Directors
(i) The Board
The Board currently comprises the Chairman, two Executive Directors and two Non-Executive Directors. Brief biographical 
details of the Directors appear on pages 14 and 15. These illustrate the level and range of business experience which, the Board 
believes, enables it to provide clear and effective leadership of the Group. The composition of the Board is reviewed regularly. 
Appropriate training, briefings and induction are available to all Directors on appointment and subsequently, as necessary, taking 
into account existing qualifications and experience. New Directors are subject to election by shareholders at the first AGM after 
their appointment.
The Company is not compliant with the requirement of the 2010 Code, which states that more than half of the Board should be 
comprised of independent Non-Executive Directors. 
The Board meets at least ten times each year and more frequently where business needs require. The Board receives written and 
oral reports from the Executive Directors ensuring matters are considered fully and enabling Directors to discharge their duties 
properly. 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 whereby Directors wishing to take independent professional advice in furtherance of their duties 
may do so, if necessary, at the Group’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 Board procedures are followed and relevant regulations are complied with.
(ii) Chairman and Chief Executive
The division of responsibilities between the Chairman and the Chief Executive is clearly established and understood. 
The Board operates with a number of Board Committees.
(iii) Audit and Remuneration Committees
Jeremy Thorn chairs the Audit Committee and Simon Acland chairs the Remuneration Committee.
The Audit Committee consists of the Non-Executive Directors. The Executive Directors are invited to attend Audit Committee 
meetings but at least one meeting is held each year with the external auditor at which the Executive Directors are not present. 
The Audit Committee considers the adequacy and effectiveness of the risk management and control systems of the Group and 
reports the results to the Board. It reviews the scope and results of the external audit, its cost effectiveness and the objectivity  
of the auditor. The Committee also reviews the interim statement, the preliminary announcement and accounting policies.
The Remuneration Committee, which comprises the Non-Executive Directors, determines and agrees with the Board the 
framework and policy of executive remuneration packages, including bonuses, incentive payments, share options or awards  
and pension arrangements. The remuneration of the Executive Directors is recommended by the Chief Executive. The 
remuneration of the Non-Executive Directors is agreed by the Board.
The terms of reference for each of the Board Committees are available on the Company’s website and on request from the 
Company Secretary.  Elektron Technology plc
Annual Report and Financial Statements 2012
22
Governance
Directors continued
(iv) Supply of information
To enable the Board to perform its duties 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 Chief Executive’s report and a report from the Chief Financial Officer together 
with documents regarding specific matters.
(v) Appointments to the Board
The 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) Reappointment
Any 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 AGM. The Articles also require that one third, but not more than  
one third, of the Directors retire by rotation each year and seek re-appointment at the AGM. The Directors required to retire  
will be those who have been longest in office since their last appointment or reappointment and the date for determination  
of the number of Directors is not earlier than 28 days prior to the date of the Notice of AGM.
Directors’ remuneration
Details of Directors’ remuneration are contained in the Remuneration Committee report on pages 24 to 27.
Directors’ indemnities
The 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 Act 2006 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) Dialogue
The Group recognises the importance of constructive communication with its shareholders to ensure its strategy and performance 
are understood. This is achieved principally through the Group’s Interim Report, Annual Report and AGM. In addition, a range of 
corporate information is available to investors on the Group’s website. 
(ii) Use of the Annual General Meeting
All shareholders have the opportunity to put questions at the Group’s AGM. 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.
Report of the Directors
continued Elektron Technology plc
Annual Report and Financial Statements 2012
23
Governance
Accountability and audit
(i) Internal financial control
The Board 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:
•	 A comprehensive budgeting system including reviews at operating unit level and formal reviews and approvals of the annual 
budget by the Directors;
•	  Monitoring of actual results and comparison to budget for each operating unit on a monthly basis;
•	  A clearly defined organisation structure within which individual responsibilities are identified and can be monitored; and
•	  Defined procedures for the appraisal, review and authorisation of capital and major revenue and development expenditure.
(ii) Financial reporting
It is the Board’s responsibility always to present a balanced assessment of the Group’s position and prospects. The respective 
responsibilities of the Directors and the auditor in connection with these financial statements are explained on pages 28 and 29.
 
Going concern
The 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 6 and 7 and the Chief Executive’s Operations review on pages 8 to 11.  
The principal risks and uncertainties facing the business are described in the Report of the Directors on pages 16 to 23.  
The Chief Financial Officer’s report on pages 12 and 13 gives details of the Group’s principal banking facilities.
The Directors have reviewed current cash flow projections for the coming 12 months taking account of reasonably possible 
changes in trading performance, borrowing facilities and forecast covenant compliance. The Directors have no reason to believe 
that any of the existing borrowing facilities might be withdrawn or that there would be any other material change in the current 
financial projections of the Group. As a result the Directors have 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.
Auditor and disclosure of information to auditor
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 Group’s auditor is 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 Group’s auditor is aware of that 
information. This confirmation is given and should be interpreted in accordance with Section 418 of the Companies Act 2006.
Deloitte LLP has indicated its willingness to continue in office as auditor and a resolution concerning their reappointment will  
be proposed at the forthcoming AGM.
Annual General Meeting
The Group’s AGM will be held on 28 June 2012. Accompanying this Annual Report and Financial Statements is a letter from  
the Chairman and Notice of AGM which set out the resolutions to be considered and approved at the meeting.
On behalf of the Board
Martin Reeves Registered Number
Company Secretary 448274
11 April 2012 Elektron Technology plc
Annual Report and Financial Statements 2012
24
Governance
Unaudited information
Companies with securities listed on AIM are not required to comply with either the Directors’ Remuneration Report Regulations 
2002 or the UKLA Listing Rules or the provisions under schedule 8 of the Companies Act 2006. However, the Remuneration 
Committee is committed to maintaining high standards of corporate governance and open communication with shareholders  
and has applied the guidelines as far as practical given the current size and development of the Group. The Committee  
is therefore pleased to present its first formal report to shareholders.
Composition and role of the Remuneration Committee
The Remuneration Committee consists only of independent Non-Executive Directors. During the financial year ended 31 January 
2012 its members were Simon Acland and Jeremy Thorn. None of the Committee has any personal financial interest (other than 
as shareholders), conflicts of interests arising from cross-directorships or day-to-day involvement in running the business.
The Committee is responsible for setting policy on Directors’ remuneration and for determining the individual remuneration 
packages of the Group’s Executive Directors. It is also responsible for considering management proposals for remuneration  
and employment terms for the Group’s senior staff including arrangements for bonus payments and long term incentive plans.
Remuneration policy
The Group’s remuneration policy is designed to attract, motivate and retain Directors and senior executives of the high calibre 
necessary for a business with Elektron’s international scope and ambitions and to ensure that their interests are closely aligned 
with those of shareholders. 
The Remuneration Committee actively reviews the Group’s remuneration structure, seeking independent advice where 
appropriate, to ensure that it is designed to deliver this policy efficiently and effectively balancing this with the need to obtain  
value for money for the Group. The Committee has taken several steps in the past year to bring elements of the Group’s 
remuneration arrangements up to date and, more recently, it has initiated an independent review of the arrangements as  
a whole; any recommendations from this independent review will be taken into account during 2012-13.
Remuneration packages
The main elements of the Executive Director remuneration packages are basic salary and benefits, pension arrangements,  
annual bonus plans and long term share-based incentive plans. 
Basic salary, benefits and pension arrangements
Basic salary and benefits are reviewed annually, unless there are any changes to an individual’s role or responsibility. No salary 
increases for the Executive Directors were awarded in 2011-12. Any awards for 2012-13 will be finalised after the independent 
review of Executive Directors’ remuneration has been completed. It is anticipated that any changes arising as a result of the 
independent review will be implemented with effect from 1 May 2012, 15 months after the last review.
Benefits in kind include company car or car allowance and private medical insurance for self and dependants. The healthcare 
arrangements for Executive Directors are the same as those for all UK employees entitled to such cover.
The Group operates a defined contribution pension plan and makes contributions to the plan equivalent to 10% of the basic 
salary of Executive Directors. Executive Directors may opt to receive this amount as a payment in lieu of pension contribution.
All Executive Directors are employed on service contracts with 6 months’ notice.
Annual bonus plan
The Group operates a bonus scheme for Executive Directors and for senior management, which is reviewed annually. There  
are no guaranteed bonuses.
A bonus of £17 ,000 was paid during the year ended 31 January 2012 to John Wilson in relation to specific targets. No other 
bonuses were paid or are payable to Executive Directors in relation to the year.
The bonus plan for the Executive Directors for the year to 31 January 2013 will be finalised after the independent review  
of Executive Directors’ remuneration has been completed. 
Remuneration report Elektron Technology plc
Annual Report and Financial Statements 2012
25
Governance
Total emoluments
Emoluments for the Executive Directors and Non-Executive Directors are set out below. The figures below represent emoluments 
earned as Directors during the relevant financial year. Such emoluments are paid in the same financial year with the exception of 
bonuses, which may be paid in the year following that in which they are earned but are charged in the year to which they relate.
Year to 31 January 2011
Basic
pay
£’000
Paid to 
third parties
£’000
Benefits*
 £’000
Bonuses
 £’000
Severance
 £’000
Total
£’000
Pension
contribution**
£’000
Executive Directors       
Keith Daley 193 27 1 – – 221 –
John Wilson  
(appointed August 2010) 68 – 6 99 – 173 5
Geoff Spink  
(appointed September 2010) 46 – 1 40 – 87 7
Chris Leigh  
(resigned September 2010) 97 – 8 5 216 326 15
Neill Ricketts (appointed 
September 2010, resigned 
December 2010) 42 – 4 – 100 146 3
Non-Executive Directors
Simon Acland  
(appointed November 2010) 5 – – – – 5 –
Jeremy Thorn  
(appointed March 2010) 28 2 – – – 30 –
Malcolm Argent (appointed 
February 2010, resigned  
August 2010) 15 – – – – 15 –
Total 2011 494 29 20 144 316 1,003 30
Year to 31 January 2012
Basic
pay
£’000
Paid to 
third parties
£’000
Benefits*
 £’000
Bonuses
 £’000
Severance
 £’000
Total
£’000
Pension
contribution** 
£’000
Executive Directors       
Keith Daley 200 – 11 – – 211 20
John Wilson 200 – 11 17 – 228 20
Geoff Spink (resigned July 2011) 67 – 6 – 94 167 10
Noah Franklin (appointed July 2011) 91 – 6 – – 97 9
Non-Executive Directors
Simon Acland 30 – – – – 30 –
Jeremy Thorn 30 – – – – 30 –
Total 2012 618 – 34 17 94 763 59
* Benefits include car or car allowance and private medical insurance for self and dependants.
** Includes payment made in lieu of pension contributions.
The emoluments of the highest paid Director were £228,000 (2011: £326,000) and the Group made pension contributions  
of £20,000 (2011: £15,000) on his behalf. Elektron Technology plc
Annual Report and Financial Statements 2012
26
Governance
Long Term Incentive Plan
Until recently, the Group has not operated a significant long term incentive plan of any kind. This increasingly placed the Group  
at a disadvantage in the marketplace, making it difficult to attract and retain the executive talent that it needs. The historic 
remuneration structures were unduly weighted to basic salary and benefits, in a manner which did not adequately align  
executive interests with those of shareholders, or reward them properly for success. 
The Remuneration Committee has taken the necessary steps to address these issues as explained below:
 
In January 2011, share options were awarded to 17 executives including the Executive Directors under the Company Share Option 
Plan (‘CSOP’) up to the £30,000 individual limit for HMRC approved options. Options to this limit were also awarded to Noah 
Franklin shortly after his appointment as an Executive Director. Movements in Directors’ interests in share options are shown  
in the table below.
Directors’ interests in approved options  
over ordinary shares of 5p each
Exercise
 period
Option 
price
No of
 options at
 31 January
 2011
Options
 awarded
 during the
 year
Options
 lapsed
 during the
 year
No of
 options at
 31 January
 2012
Keith Daley 2014-2021 38.0p 78,000 – – 78,000
Noah Franklin 2014-2021 37.0p – 81,000 – 81,000
Geoff Spink 2014-2021 38.0p 78,000 – 78,000 –
John Wilson 2014-2021 38.0p 78,000 – – 78,000
Total 234,000 81,000 78,000 237,000
Following consultation with several large institutional and private shareholders, the CSOP was supplemented by the introduction 
of a comprehensive long term incentive plan for the Group’s most senior executives, in the form of a Joint Share Ownership Plan 
(‘JSOP’), which was approved by the Remuneration Committee on 9 January 2012. The JSOP is designed to provide an efficient 
long term incentive to participants in the Plan which effectively aligns their interests with those of all shareholders by providing  
a clear focus on maximising the long term value of the Group.
Each participant has entered into a co-ownership agreement with the trustee of the Elektron Technology 2012 Employee Benefit 
Trust (the ‘Trust’). Under the terms of each co-ownership agreement the participant has a right to receive the sale proceeds on 
disposal above a 30p per share hurdle (the ‘Base Amount’), a 42% premium to the average closing share price of the Company in 
the 30 working days before the grants. The earliest realisation date is the third anniversary of the awards date in respect of 75% of 
the award and the fifth anniversary of the awards date in respect of 25% of the award. The amount payable by each participant in 
respect of the jointly owned interests is the higher of 0.75p per share or the amount equal to the unrestricted market value for tax 
purposes of the interest as agreed with HM Revenue & Customs. In the event that HM Revenue & Customs were to determine that 
a higher amount is payable, the excess may remain as loans to the participants until such time as the interest is realised or lapses.
In addition to their interest in jointly owned shares, the participants were granted stock appreciation rights which entitle them  
to the growth in value of a share from 25p up to the Base Amount and which may be settled in shares or cash at the discretion  
of the Group’s Remuneration Committee, concurrently with the realisation of the interest in the jointly owned shares.
12 senior executives have participated in the Plan, including the Executive Directors. As a condition for participating in the Plan,  
the participants have invested approximately £100,000 in aggregate in the Group, which is committed for minimum periods of  
three and five years. This investment will be lost if the share price does not rise above the hurdle price. 
The awards to Executive Directors under the JSOP are set out in the table on Directors’ share ownership below. The awards 
to Keith Daley and John Wilson take account of delays in the introduction of a long term incentive plan, which had been under 
discussion for several years and to recognise their contribution to the Group before the long term incentive plan was implemented. 
In addition a further JSOP participation in respect of 800,000 shares was awarded to Keith Daley in recognition of waived bonuses 
in previous years.
There have been no variations to the terms and conditions or performance criteria for share options during the financial year.
Remuneration report
continued Elektron Technology plc
Annual Report and Financial Statements 2012
27
Governance
Directors’ share ownership
The shares owned by the Directors serving at 31 January 2012, including their interests in shares via the JSOP which are jointly 
held with the trustee of the Trust, are as follows:
Shares owned
 outright at 
31 January 2011
Shares owned
 outright at 
31 January 2012
JSOP interests at 
31 January 2012
Total at 
31 January 2012
Executive Directors
Keith Daley 8,107,433 8,695,395 4,722,000 13,417,395
Noah Franklin N/A 325,000 1,919,000 2,244,000
John Wilson 33,180 33,180 3,922,000 3,955,180
Non-Executive Directors
Simon Acland 65,000 65,000 – 65,000
Jeremy Thorn 40,000 40,000 – 40,000
Total 8,245,613 9,158,575 10,563,000 19,721,575
The Remuneration Committee is encouraged that the Chairman saw fit to increase his investment in the Group during the year 
and that the Chief Financial Officer acquired a significant number of shares on his appointment.
Widening employee share ownership
The Group is committed to widening employee share ownership significantly beyond historic levels, to engage employees and  
to enable them to participate in the future success of the Group.
During 2011-12, in addition to awards to Executive Directors, the Remuneration Committee approved the award of:
•	 Options over 1,402,000 shares under the HMRC approved CSOP to eight employees; 
•	  Interests and stock appreciation rights in relation to 2,130,000 shares under the JSOP to nine employees, on the same terms  
as for Executive Directors.
During 2012-13, the Group expects to extend participation in the HMRC approved CSOP to further tiers of management. 
Preparations are also underway for the introduction in the near future of an HMRC approved all employee Save As You Earn  
Share Option Plan in the UK.
Non-Executive Directors
All Non-Executive Directors serve under letters of appointment and either party can terminate on three months’ written notice. 
Their remuneration is determined by the Board within the limits set by the Articles of Association and is based on information  
on fees paid in similar companies and the skills and expected time commitment of the individual concerned. The Non-Executive 
Directors have no right to compensation on the early termination of their appointment.
Approval
This report was approved by the Board of Directors on 11 April 2012 and signed on its behalf by:
Simon Acland
Chairman of the Remuneration Committee
11 April 2012 Elektron Technology plc
Annual Report and Financial Statements 2012
28
Governance
Directors’ responsibilities statement
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:
•	 Select suitable accounting policies and then apply them consistently;
•	 Make judgements and accounting estimates that are reasonable and prudent;
•	  State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and 
explained in the financial statements; and
•	  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:
•	 Properly select and apply accounting policies;
•	  Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and  
understandable information;
•	  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 
•	 Make an assessment of the Group’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 Group’s 
transactions and disclose with reasonable accuracy at any time the financial position of the Group 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 Group 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 Group’s 
website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from 
legislation in other jurisdictions.
Directors’ responsibilities statement 
We confirm that to the best of our knowledge:
•	 The financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view  
of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation 
taken as a whole; and
•	 The management report, which is incorporated into the Directors’ report, includes a fair review of the development and 
performance of the business and the position of the Company and the undertakings included in the consolidation taken  
as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
Noah Franklin
Director
11 April 2012 Elektron Technology plc
Annual Report and Financial Statements 2012
29
Financial statements
Independent auditor’s report to the  
members of Elektron Technology plc
We have audited the financial statements of Elektron Technology plc for the year ended 31 January 2012 which comprise the 
consolidated statement of comprehensive income, the consolidated and parent Company balance sheets, the consolidated 
statement of changes in equity, the consolidated statement of cash flows and the related Notes 1 to 26 and Notes 1 to 13 for  
the Company. The financial reporting framework that has been applied in the preparation of the Group 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 auditor’s 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 auditor
As 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 and express an opinion on 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 Ethical Standards for Auditors.
Scope of the audit of the financial statements
An 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. In addition, we read all the financial and non-financial information 
in the Annual Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent 
material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion:
•	  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 2012 and of the Group’s profit for the year then ended;
•	 The Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; 
•	  The parent company financial statements have been properly prepared in accordance with United Kingdom Generally 
Accepted Accounting Practice; and
•	 The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Separate opinion in relation to IFRSs as issued by the IASB
As 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 Group financial statements comply with IFRSs as issued by the IASB.
Opinion on other matters prescribed by the Companies Act 2006
In 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 exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
•	 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
•	 The parent company financial statements are not in agreement with the accounting records and returns; or
•	 Certain disclosures of Directors’ remuneration specified by law are not made; or
•	 We have not received all the information and explanations we require for our audit.
Stuart Henderson (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Cambridge
United Kingdom
11 April 2012 Elektron Technology plc
Annual Report and Financial Statements 2012
30
Financial statements
Consolidated statement of comprehensive income
year ended 31 January 2012
Notes
2012
£m
2011
£m
Revenue 2 64.3 50.0
Cost of sales (38.3) (28.9)
Gross profit 26.0 21.1
Operating expenses
Operating expenses (excluding non-recurring or special items) 3 (21.0) (15.8)
Operating profit before non-recurring or special items 5.0 5.3
Non-recurring or special items 4 (2.2) (1.5)
Total operating expenses 3 (23.2) (17.3)
Operating profit 4 2.8 3.8
Finance costs 5 (0.3) (0.3)
Profit before taxation 2.5 3.5
Taxation 8 (0.6) (0.6)
Profit for the year attributable to equity shareholders 1.9 2.9
Other comprehensive income
Available-for-sale financial assets – gains arising during the year – 0.4
Total other comprehensive income – 0.4
Total comprehensive income for the financial year attributable  
to equity shareholders 1.9 3.3
Earnings per share – basic 10 1.82p 3.00p
 – basic, before non-recurring or special items 10 3.33p 4.20p
 – diluted 10 1.82p 2.98p
 – diluted, before non-recurring or special items 10 3.32p 4.17p
All activities derive from continuing operations. Elektron Technology plc
Annual Report and Financial Statements 2012
31
Financial statements
Consolidated balance sheet
as at 31 January 2012
Notes
2012
£m
2011
£m
Assets 
Non-current assets
Goodwill 11 1.3 1.3
Other intangible assets 12 3.4 3.5
Property, plant and equipment 13 5.0 4.2
Deferred tax 15 0.3 0.2
Total non-current assets 10.0 9.2
Current assets
Inventories 16 9.5 9.2
Trade and other receivables 17 11.9 11.8
Cash and cash equivalents 0.8 1.2
Total current assets 22.2 22.2
Total assets 32.2 31.4
Current liabilities
Trade and other payables 18 9.2 9.4
Borrowings 19 2.6 1.9
Current portion of long-term borrowings 19 1.3 1.6
Current tax payable 0.2 1.0
Provisions 20 1.0 0.5
Total current liabilities 14.3 14.4
Non-current liabilities
Long-term borrowings 19 1.3 2.0
Accruals and deferred income 0.1 0.1
Long-term provisions 20 0.7 0.3
Total non-current liabilities 2.1 2.4
Total liabilities 16.4 16.8
Net assets 15.8 14.6
Equity attributable to equity holders of the parent
Called-up share capital 21 6.0 5.3
Share premium 21 5.4 2.9
Merger reserve 21 1.1 1.1
Capital redemption reserve 21 0.2 0.2
Own shares 21 (3.0) –
Other reserves 21 0.1 0.1
Retained earnings 21 6.0 5.0
Total equity 15.8 14.6
The financial statements of Elektron Technology plc (registered no. 448274) were approved by the Board of Directors and 
authorised for issue on 11 April 2012 and were signed on its behalf by:
Keith Daley Noah Franklin
Director Director Elektron Technology plc
Annual Report and Financial Statements 2012
32
Financial statements
Consolidated statement of changes in equity
year ended 31 January 2012
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Own
shares
£m
Other
reserves
£m
Retained
earnings
£m
Total
£m
At 1 February 2010 4.4 0.1 1.1 0.2 – 0.1 2.6 8.5
Total comprehensive income 
for the year – – – – – – 3.3 3.3
Share issues 0.9 2.7 – – – – – 3.6
Expenses incurred in share issue – (0.2) – – – – – (0.2)
Adjustment for scrip dividend 
element in respect of prior year – 0.2 – – – – (0.2) –
Dividends paid on ordinary shares – – – – – – (0.7) (0.7)
Adjustment for scrip dividend 
element – 0.1 – – – – – 0.1
At 31 January 2011 5.3 2.9 1.1 0.2 — 0.1 5.0 14.6
Total comprehensive income 
for the year – – – – – – 1.9 1.9
Share issues 0.7 2.4 – – – – – 3.1
Purchase of treasury shares* – – – – (3.0) – – (3.0)
Dividends paid on ordinary shares – – – – – – (0.9) (0.9)
Adjustment for scrip dividend 
element – 0.1 – – – – – 0.1
At 31 January 2012 6.0 5.4 1.1 0.2 (3.0) 0.1 6.0 15.8
Amounts in relation to foreign currency translation differences and share based payments have been accounted appropriately  
in the above statement and amount to less than £0.1m (2011: less than £0.1m).
* The treasury shares are held by the Elektron Technology 2012 Employee Benefit Trust. Elektron Technology plc
Annual Report and Financial Statements 2012
33
Financial statements
Consolidated statement of cash flows
year ended 31 January 2012
Notes
2012
£m
2011
£m
Net cash inflow from operating activities 6 2.7 3.1
Investing activities
Purchase of property, plant and equipment (1.9) (0.7)
Purchase of other intangible assets (0.3) (0.3)
Proceeds of sale of property, plant and equipment 0.1 0.1
Acquisition of subsidiary – (5.9)
Net cash used in investing activities (2.1) (6.8)
Financing activities
Proceeds on issue of shares 0.1 3.6
Expenses associated with share issues – (0.2)
New bank loans raised – 1.9
Repayment of borrowings (0.4) –
New finance leases 0.6 0.2
Payment of hire purchase and finance liabilities (0.5) (0.6)
Dividends paid 9 (0.8) (0.5)
Net cash (used in)/generated from financing activities (1.0) 4.4
Net (decrease)/increase in cash and cash equivalents (0.4) 0.7
Cash and cash equivalents at the beginning of period 1.2 0.5
Cash and cash equivalents at the end of period 0.8 1.2 Elektron Technology plc
Annual Report and Financial Statements 2012
34
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012
General information
Elektron Technology plc (the ‘Group’ or ‘Elektron’) is a public limited liability company incorporated in England and Wales  
and domiciled in the UK. The address of its registered office is Broers Building, JJ Thomson Avenue, Cambridge, CB3 0FA.  
The nature of the Group’s operations and its principal activities are set out in the Report of the Directors on pages 16 to 23. 
These financial statements are presented in Sterling, the currency of the primary economic environment in which the Group 
operates, and all values are rounded to the nearest one million (£m) except where otherwise stated.
Foreign operations are included in accordance with the accounting policies set out in Note 1.
1. Summary of significant accounting policies
The particular accounting policies adopted by the Directors in the preparation of these consolidated financial statements are 
described below:
Basis of accounting
The consolidated financial statements of Elektron Technology plc have been prepared in accordance with International Financial 
Reporting Standards (IFRSs). The financial statements have also been prepared in accordance with IFRSs adopted by the 
European Union and therefore the Group financial statements comply with Article 4 of the EU IAS Regulation. 
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. 
Adoption of new and revised standards
No standards have been adopted during the period which have affected the amounts reported in these financial statements.
Standards not affecting the reported results nor the financial position
At the date of authorisation of these financial statements, the following standards and interpretations which have not been applied 
in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
IFRS7 ‘Financial Instruments’
IFRS9 ‘Financial Instruments’
IFRS10 ‘Consolidated Financial Statements’
IFRS11 ‘Joint Arrangements’
IFRS12 ‘Disclosure of Interests in Other Entities’
IFRS13 ‘Fair Value Measurement’
IAS1 ‘Presentation of Financial Statements’
IAS19 ‘Employee Benefits’
IAS32 (amended) ‘Classification of Rights Issues’
IAS27 ‘Consolidated and Separate Financial Statements’
IAS28 ‘Investment in Associates and Joint Ventures’
Improvements to IFRSs (May 2010).
The adoption of IFRS9, which the Group plans to adopt for the year beginning on 1 February 2013, will impact both the 
measurement and disclosures of financial instruments.
The Directors do not expect that the adoption of the other standards listed above will have a material impact on the financial 
statements of the Group in future periods. Elektron Technology plc
Annual Report and Financial Statements 2012
35
Financial statements
1. Summary of significant accounting policies continued
Key sources of estimation and uncertainty
The preparation of the financial statements in conformity with IFRSs 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:
•	  The classification of non-recurring or special items (Note 3): Non-recurring or special items are disclosed separately to improve 
visibility of the underlying business performance. Management has defined such items as restructuring and site closure  
costs, acquisition costs, amortisation of acquired intangible assets, share-based payments and other non-recurring and  
non-operating items; 
•	  The impairment of goodwill (Note 11): Determining whether goodwill is impaired requires an estimation of the value in use of  
the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate 
future cash flows expected from the cash-generating unit and a suitable discount rate in order to calculate present value;
•	  The recoverability of internally generated intangible assets (Note 12): At each balance sheet date, the Group reviews the 
carrying amounts of its internally generated intangible assets to determine whether there is any indication that those assets 
have suffered an impairment loss. Estimated future cash flows deriving from these assets must be determined and an 
appropriate discount rate applied to calculate present value;
•	  The estimation of the deferred income tax asset (Note 15): Deferred taxation assets are recognised for subsidiaries with a past 
history of profitable trends where there is persuasive and reliable evidence in the form of management accounts and financial 
projections that taxable profits are anticipated to arise in the year ending 31 January 2013;
•	  The estimation of the net realisable value of inventory (Note 16): Provision is made to write down slow-moving and obsolete 
items to net realisable value, based on an assessment of technological and market developments and an analysis of historic 
and projected usage of quantities on hand; and
•	 The estimation of the cost of restructuring activities, warranties and dilapidations (Note 20). 
Going concern
The 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 6 and 7 and the Chief Executive’s review on pages 8 to 11. The principal risks and 
uncertainties facing the business are described in the Report of the Directors on pages 16 to 23. The Chief Financial Officer’s 
report on pages 12 and 13 gives details of the Group’s principal banking facilities.
The Directors have reviewed current cash flow projections for the 12 months from the date of signing this report taking account 
of reasonably possible changes in trading performance, borrowing facilities, and forecast covenant compliance. The Directors 
have no reason to believe that any of the existing borrowing facilities might be withdrawn or that there would be any other material 
change in the current financial projections of the Group. As a result 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.
Consolidation
The consolidated financial statements incorporate the financial statements of Elektron Technology plc and all subsidiary 
undertakings drawn up to 31 January each year. Subsidiaries are all entities over which the Group has the power to control  
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.  Elektron Technology plc
Annual Report and Financial Statements 2012
36
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
1. Summary of significant accounting policies continued 
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The consideration for each acquisition 
is measured at the aggregate of the fair value (at the date of exchange) of assets given, liabilities incurred or assumed, and equity 
instruments issued and cash paid by the Group in exchange for control of the acquiree. Acquisition related costs are recognised  
in the statement of comprehensive income as incurred.
Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured  
to fair value at the acquisition date. 
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS3 (2008) 
‘Business Combinations’ are recognised at their fair value at the acquisition date.
Goodwill 
Goodwill 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 IFRS1, goodwill previously capitalised or written off to reserves under UK GAAP  
is not recycled to the statement of comprehensive income on calculating a gain or loss on disposal.
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. For the purpose of impairment 
testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the 
combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently 
where there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the 
carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the 
unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment 
loss recognised for goodwill is not reversed in a subsequent period. 
Impairment losses are recognised in the statement of comprehensive income.
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 IFRS3, recognised in the statement of comprehensive income in the year of acquisition.
Other intangible assets 
Expenditure on research activities is recognised as an expense in the period in which it is incurred. 
An internally generated intangible asset arising from the Group’s development is recognised only if all of the following conditions 
are met:
•	 An asset is created that can be identified (such as software and new processes);
•	 It is probable that the asset created will generate future economic benefits; and
•	 The development cost of the asset can be measured reliably.
The cost of acquiring software (including associated implementation costs where applicable) that is not specific to an item  
of property, plant and equipment is classified as an intangible asset.
Other intangible assets that are separately acquired by the Group are stated at fair value. The category of other intangible assets 
also includes marketing, customer and technology related assets arising from the acquisition of Hartest Holdings plc recognised  
at fair value. 
Amortisation of intangible assets is charged on a straight line basis over the estimated useful lives of intangible assets determined 
on an asset by asset basis. The estimated useful lives are as follows:
•	 Computer software 3-10 years
•	 Marketing, customer and technology related assets 10-20 years
•	 Development costs 4 years Elektron Technology plc
Annual Report and Financial Statements 2012
37
Financial statements
1. Summary of significant accounting policies continued 
Property, plant and equipment
The cost of property, plant and equipment is their purchase cost, together with any incidental costs of acquisition. Depreciation is 
calculated on the cost or valuation of each property, plant and equipment 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
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. Assets held under finance leases  
are depreciated over their expected useful lives on the same basis as owned assets.
Impairment of tangible and intangible assets excluding goodwill
The carrying amount of the Group’s assets is reviewed at each balance sheet date to determine whether there is any indication  
of impairment. If any such indication exists, the assets recoverable amount is estimated. 
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future 
cash flows are discounted to their present value. If the recoverable amount of an asset is estimated to be less than its carrying 
amount, the carrying amount is reduced to its recoverable amount with the impairment loss recognised as an operating  
expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its 
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been 
determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised 
as income immediately.
Inventories
Inventories are stated 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 First In First Out method. Net realisable value represents the estimated selling price 
less all estimated costs to completion.
Employee benefits
Pensions 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.
Share-based employee remuneration
The Group’s management awards certain employee incentives from time to time on a discretionary basis and through its 
Company Share Option Plan (CSOP) and its Joint Share Ownership Plan (JSOP).
In accordance with IFRS2 ‘Share-based Payment’, the Group reflects the economic cost of awarding shares and share 
options to employees by recording an expense in the statement of comprehensive income equal to the fair value of the benefit 
awarded, fair value being estimated using the Black-Scholes option pricing model. The expense is recognised in the statement 
of comprehensive income over the vesting period of the award. Equity-settled share-based payments to employees and others 
providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the 
effect of non-market based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based 
transactions are set out in Note 21. Elektron Technology plc
Annual Report and Financial Statements 2012
38
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
1. Summary of significant accounting policies continued 
Share capital
(a) Treasury shares
  Where the Group purchases its own equity share capital (treasury shares) the consideration paid, including any directly 
attributable incremental costs (net of taxes), is deducted from equity attributable to the Company’s shareholders until the 
shares are cancelled, reissued or disposed of.
(b) Trust shares
  The Elektron Technology 2012 Employee Benefit Trust (the Trust) uses funds provided by the Group to meet the Group’s 
obligations under the employee share option plans and the JSOP . All shares acquired by the Trust are purchased on the open 
market or, in the case of the JSOP shares, may be issued directly to the Trust at the then market value. Where the Group holds 
its own equity shares through the Trust these shares are shown as a reduction in equity, consideration paid or received is 
shown in the reconciliation of equity movements and no gain or loss is recognised within the consolidated income statement  
or the statement of comprehensive income on the purchase, sale, issue or cancellation of these shares.
Leases
In accordance with IAS17 ‘Leases’, 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.
Financial liabilities/assets
The 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 ‘borrowings’, ‘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 statement of comprehensive income.
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 statement of comprehensive income.
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.
Equity instruments
Share 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 equity instruments are realised by the employee. Elektron Technology plc
Annual Report and Financial Statements 2012
39
Financial statements
1. Summary of significant accounting policies continued 
Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less, net  
of outstanding bank overdrafts and 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. The carrying value of these assets is approximately equal to their fair value.
Accounting for taxes
Current 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 statement of comprehensive income, any related tax generated is 
recognised as a component of tax expense in the statement of comprehensive income. Where an item is recognised directly  
to equity and presented within the statement of comprehensive income, any related tax generated is treated similarly.
Deferred taxation
Deferred 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 based on tax laws and rates that have been enacted at the balance sheet date. 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 statement 
of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax  
is also dealt with in equity.
Revenue recognition 
Revenue 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 products to industrial markets. Sales of goods are recognised when  
a Group entity has despatched products to the customer, the customer has full discretion over the use of the components,  
and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery does not occur until  
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. 
Service revenue is recognised at the point at which the service is provided to the customer. Maintenance and support revenue  
is recognised proportionally on a straight line basis over the life of the contract. Elektron Technology plc
Annual Report and Financial Statements 2012
40
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
1. Summary of significant accounting policies continued 
Foreign currencies 
The 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.
Provisions
Provisions 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. 
Financial risk management
The 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. Further details are included  
in the report of the Directors.
The Group does not hold or use derivative financial instruments.
(i) Foreign currency risk
Foreign 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 frequently 
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.
The Group’s policy is 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 statement of comprehensive income and  
net assets of overseas subsidiaries. The Group’s policy is not to hedge the translational exposure that arises on consolidation  
of the statements of comprehensive income of overseas subsidiaries. Elektron Technology plc
Annual Report and Financial Statements 2012
41
Financial statements
1. Summary of significant accounting policies continued 
Financial risk management continued
(ii) Interest rate risk
Interest rate risk arising from borrowing at variable rates is not hedged.
(iii) Liquidity risk
Liquidity 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 2012 are set out in Note 25.
(iv) Credit risk
Credit 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.
Capital management
Ordinary 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 21.
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. Elektron Technology plc
Annual Report and Financial Statements 2012
42
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
2. Segmental reporting
The Group has continued to adopt the provisions of IFRS8 ‘Operating Segments’ and historically shown summary information  
in respect of these segments. This segmentation is consistent with internal reports to the Chief Operating Decision Maker  
for use in assessing business performance and allocating Group resources. This segmentation reflects the new operating 
structure of the Group implemented during the year and is therefore different from the segmentation reported in the prior year.  
The Chief Operating Decision Maker is the Chief Executive of the Group. The activity of each segment is explained in the  
Chief Executive’s report.
Segment revenue
Operating profit
before non-recurring  
or special items Operating profit
Segment revenues and results
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
Connectivity 29.2 29.7 2.4 3.7 1.4 2.7
Instrumentation, Monitoring and Control 28.7 14.5 2.4 1.5 1.3 1.1
Materials 6.4 5.8 0.2 0.1 0.1 –
Total 64.3 50.0 5.0 5.3 2.8 3.8
Finance costs (net) (0.3) (0.3)
Profit before tax 2.5 3.5
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 share of central administration costs, which are allocated 
on the basis of actual use or pro-rata to sales. This is the measure reported to the Chief Operating Decision Maker for the 
purposes of resource allocation and assessment of segment performance.
Segment assets
2012
£m
2011
£m
Connectivity 13.6 11.5
Instrumentation, Monitoring and Control 13.3 15.0
Materials 5.3 4.9
Consolidated assets 32.2 31.4
Segment liabilities
2012
£m
2011
£m
Connectivity 5.6 4.6
Instrumentation, Monitoring and Control 5.9 8.2
Materials 4.9 4.0
Consolidated liabilities 16.4 16.8 Elektron Technology plc
Annual Report and Financial Statements 2012
43
Financial statements
2. Segmental reporting continued
Depreciation and 
amortisation
Additions to 
non-current assets
Other segment information
2012
£m
2011
£m
2012
£m
2011
£m
Connectivity 0.4 0.5 1.2 0.7
Instrumentation, Monitoring and Control 0.6 0.4 0.5 0.2
Materials 0.4 0.4 0.5 0.1
Total 1.4 1.3 2.2 1.0
Geographical information
The Group considers its operations to be in the following geographical regions:
Revenue from 
external customers Non-current assets
2012
£m
2011
£m
2012
£m
2011
£m
United Kingdom 27.9 21.3 8.7 8.1
Rest of Europe, Middle East and Africa 15.6 13.0 0.2 0.2
Asia Pacific and China 12.5 9.1 1.0 0.9
Americas 8.3 6.6 0.1 –
Total 64.3 50.0 10.0 9.2
3. Net operating expenses
2012
£m
2011
£m
Net operating expenses
Selling and distribution costs 8.6 6.9
Administrative expenses 12.4 8.9
Operating expenses excluding non-recurring or special items 21.0 15.8
Non-recurring or special items (see Note 4) 2.2 1.5
Total operating expenses 23.2 17.3
Non-recurring or special items are disclosed separately to improve visibility of the underlying business performance.
Management has defined such items as restructuring and site closure costs, acquisition costs, amortisation of acquired intangible 
assets, share-based payments and non-recurring items incurred outside the normal course of business.  Elektron Technology plc
Annual Report and Financial Statements 2012
44
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
4. Operating profit
2012
£m
2011
£m
Operating profit is after charging:
Depreciation on owned property, plant and equipment 0.9 1.1
Depreciation on property, plant and equipment held under finance leases 0.1 0.1
Amortisation of non-acquisition intangible assets 0.2 –
Amortisation of other intangible assets 0.2 0.1
Research and development expenditure 0.9 0.7
Operating lease rentals:
 – land and buildings 1.6 1.2
 – plant and machinery 0.1 0.1
Auditor’s remuneration:
 –  fees payable to the Company’s auditor for the audit of the Company’s 
annual accounts – –
 –  the audit of the Company’s subsidiaries pursuant  
to legislation 0.2 0.2
Total audit fees for audit services 0.2 0.2
 – tax services 0.1 0.1
Total auditor’s remuneration 0.3 0.3
Non-recurring or special items:
 – restructuring costs 1.9 0.9
 – acquisition costs – 0.3
 – write down of Chinese assets – 0.2
 – aborted development costs – 0.1
 – other income – (0.1)
 – aborted acquisition costs 0.1 –
 – amortisation of acquisition intangible assets 0.2 0.1
2.2 1.5
Loss on foreign currency translation 0.1 0.2
Included within auditor’s remuneration for audit services is less than £0.1m (2011: less than £0.1m) for the audit  
of overseas subsidiaries carried out by auditors other than Deloitte LLP .
The restructuring costs include amounts payable in respect of staff redundancies during the year due to the consolidation  
of operations in the UK and related factory closure costs. Non-recurring or special items also include share based payments  
of less than £0.1m (2011: less than £0.1m) (Note 21).
5. Finance costs
2012
£m
2011
£m
Bank overdrafts and loans wholly repayable within five years 0.2 0.3
Finance leases and hire purchase contracts 0.1 –
0.3 0.3 Elektron Technology plc
Annual Report and Financial Statements 2012
45
Financial statements
6. Net cash flows from operating activities
2012
£m
2011
£m
Profit before taxation 2.5 3.5
Adjustments for:
Depreciation 1.0 1.2
Restructuring or other special items 2.2 1.5
Amortisation of intangible assets 0.2 0.1
Interest payable 0.3 0.3
Operating cash flow before working capital changes  
and non-recurring or special items 6.2 6.6
Increase in trade and other receivables (0.1) (0.1)
Increase in inventories (0.3) (1.2)
(Decrease)/increase in trade payables (0.9) 0.7
Payments for restructuring and other special items (1.0) (1.9)
Other non-cash movements (0.1) (0.2)
Cash generated from operations 3.8 3.9
Interest paid (0.3) (0.2)
Taxation paid (0.8) (0.6)
Net cash inflow from operating activities 2.7 3.1
7. Staff information (including Directors)
Employee costs were:
Note
2012
£m
2011
£m
Wages and salaries 15.8 12.3
Social security costs 1.5 1.3
Other pension costs 24 0.5 0.3
17.8 13.9
In addition redundancy costs of £1.0m (2011: £0.6m) were incurred in the year and included within restructuring costs (see Note 4).
The average monthly number of persons employed by the Group during the year including Executive Directors was as follows:
2012
Number
2011
Number
Administration and sales 238 208
Production  907 847
1,145 1,055
Details of Directors’ remuneration are included in the Report of the Remuneration Committee on pages 24 to 27. Elektron Technology plc
Annual Report and Financial Statements 2012
46
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
8. Taxation
(a) Analysis of tax charge for the year 
Note
2012
£m
2011
£m
Current taxation:
UK corporation tax on profit for the year 0.2 0.2
Under (over) provision for prior year 0.1 (0.1)
Foreign tax on income for the year 0.4 0.2
Total current taxation 0.7 0.3
Deferred taxation:
Origination and reversal of timing differences 15 (0.1) 0.3
Tax charge on continuing operations 0.6 0.6
(b) Factors affecting taxation charge for the year
The taxation charge differs from that resulting by applying the weighted average standard rate of corporation tax in the UK of 26.3% 
(2011: 28%) and is explained below:
2012 2011
Tax rate £m Tax rate £m
Profit on ordinary activities before taxation 2.5 3.5
Profit on ordinary activities multiplied by weighted average  
standard rate of corporation tax in the UK of 26.3% 26.3% 0.7 28.0% 1.0
Effects of:
Expenses not deductible for tax purposes – – 2.6% 0.1
Adjustments of taxation charge in respect of previous periods 4.0% 0.1 (2.3)% (0.1)
Utilisation of tax losses not previously recognised and other (6.3)% (0.2) (10.4)% (0.4)
24.0% 0.6 17.9% 0.6
(c) Factors that may affect future taxation charges
Deferred taxation assets amounting to £0.2m (201 1: £0.5m) have not been provided in respect of unutilised income tax losses that can 
be carried forward against future taxable income as there is currently insufficient evidence that these assets will be recovered. 
In March 2011, the UK government announced a reduction in the standard rate of UK corporation tax to 26% effective 1 April 2011. 
This rate reduction was substantively enacted in March 2011.
In March 2012, the UK government announced the main rate of UK corporation tax would reduce to 24% with effect from 1 April 2012, 
with subsequent 1% reductions annually to 22% by April 2014. These changes were substantively enacted on 26 March 2012.
The effect of these tax rate reductions on the deferred tax balance will be accounted for in the period in which the tax rate 
reductions are substantively enacted. Elektron Technology plc
Annual Report and Financial Statements 2012
47
Financial statements
9. Dividends paid
2012
£m
2011
£m
Final dividend 2011 of 0.55p per share (2010: 0.46p per share) 0.6 0.4
Interim dividend 2012 of 0.27p per share (2011: 0.25p per share) 0.3 0.3
Total dividend 0.9 0.7
Amount of dividend satisfied by scrip issue (0.1) (0.2)
Dividend paid 0.8 0.5
A proposed final dividend of 0.56p per share was proposed after the year end; this is subject to approval by shareholders at  
the AGM 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 AGM circular accompanying this Annual Report and financial statements.
10. Earnings per share
The calculation of the basic earnings per share (Basic EPS), diluted earnings per share (Diluted EPS) and earnings per share 
before non-recurring or special items (Adjusted EPS) is based on the following data. Shares held in treasury are excluded from 
the number of shares in issue for the purposes of earnings per share calculations. The calculation of the diluted earnings per 
share is based on the basic earnings per share adjusted to allow for the issue of shares on the assumed conversion of all dilutive 
options. However, in accordance with IAS33 ‘Earnings Per Share’, potential ordinary shares are only considered dilutive when their 
conversion would decrease the profit per share or increase the loss per share from continuing operations attributable to the equity 
shareholders. As at 31 January 2012 there were 275,000 potential ordinary shares which have been disregarded in the calculation 
of diluted earnings per share as they were considered non-dilutive at this date.
Earnings
2012
£m
2011
£m
Earnings for the purposes of Basic and Diluted EPS being net profit 
attributable to the owners of the Company 1.9 2.9
Adjustment in respect of non-recurring or special items net  
of taxation £0.6m (2011: £0.3m) 1.6 1.2
Earnings for the purposes of Adjusted EPS 3.5 4.1
Number of shares
2012
No.
2011
No.
Weighted average number of ordinary shares for the purposes of Basic EPS 106,444,780 97,153,164
Effect of dilutive potential ordinary shares:
Share options 275,000 693,904
Weighted average number of ordinary shares for the purposes  
of Diluted EPS 106,719,780 97,847,068 Elektron Technology plc
Annual Report and Financial Statements 2012
48
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
10. Earnings per share continued
Earnings per share
2012 2011
Basic EPS 1.82p 3.00p
Diluted EPS 1.82p 2.98p
Adjusted EPS 3.33p 4.20p
Diluted Adjusted EPS 3.32p 4.17p
11. Goodwill
Cost and net  
book value
2012
£m
2011
£m
At 1 February 1.3 –
Recognised on acquisition of a subsidiary – 1.3
At 31 January 1.3 1.3
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected 
to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill has been 
allocated to one CGU, being Hartest Holdings plc.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. 
The recoverable amount of the CGU is determined from value in use calculations, the key assumptions being discount rates, 
growth rates and expected changes to selling prices and costs during the period.
The Group has prepared cash flow forecasts derived from the most recent financial budgets approved by management for the 
period to 31 January 2013 assuming a 3% growth in cash flows in perpetuity thereafter. The rate used to discount forecast cash 
flows is 13%. Further, suitable sensitivity tests are also applied in conjunction with cash flow forecasts for the CGU in question. 
This exercise did not indicate any need for impairment provision at 31 January 2012. Elektron Technology plc
Annual Report and Financial Statements 2012
49
Financial statements
12. Other intangible assets
Development
costs
£m
Computer
software
£m
Acquired
intangible
assets
£m
Total
£m
At 1 February 2010 – – – –
Additions 0.2 0.1 – 0.3
Transfers from property, plant and equipment (see Note 13) – 0.5 – 0.5
Acquired on acquisition of a subsidiary 0.2 0.1 2.5 2.8
At 31 January 2011 0.4 0.7 2.5 3.6
Additions 0.2 0.1 – 0.3
At 31 January 2012 0.6 0.8 2.5 3.9
Amortisation
At 1 February 2010 – – – –
Charge for the year – – 0.1 0.1
At 31 January 2011 – – 0.1 0.1
Charge for the year 0.1 0.1 0.2 0.4
At 31 January 2012 0.1 0.1 0.3 0.5
Carrying amount
At 31 January 2011 0.4 0.7 2.4 3.5
At 31 January 2012 0.5 0.7 2.2 3.4
During the year, the Group made further significant progress with its ERP development project including the implementation  
of the system within its Connectivity businesses following which amortisation of project costs has commenced over a period  
of seven years.
Acquired intangible assets include marketing (£0.9m), customer (£1.3m) and technology (£0.3m) related assets arising from the 
acquisition of Hartest Holdings plc, which are being amortised over their estimated useful lives, which are estimated to be between 
10 and 20 years. In accordance with the requirements of IAS12 a deferred tax liability of £0.7m has been recognised separately  
in respect of these assets. Elektron Technology plc
Annual Report and Financial Statements 2012
50
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
13. Property, plant and equipment
Group
Leasehold
improvements
£m
 Plant and
machinery
£m
Equipment,
fixtures,
 fittings
and vehicles
£m
Total
£m
Cost or valuation
At 1 February 2010 0.3 16.1 2.4 18.8
Currency translation – 0.1 – 0.1
Acquisition of subsidiary 0.2 0.3 0.5 1.0
Additions – 0.4 0.3 0.7
Disposals – (1.7) (0.2) (1.9)
Transfer to intangible assets (see Note 12) – – (0.5) (0.5)
At 31 January 2011 0.5 15.2 2.5 18.2
Additions – 1.0 0.9 1.9
Disposals – (0.8) (0.3) (1.1)
At 31 January 2012 0.5 15.4 3.1 19.0
Depreciation
At 1 February 2010 0.1 12.9 1.5 14.5
Charge for the year 0.1 0.9 0.2 1.2
Disposals – (1.6) (0.1) (1.7)
At 31 January 2011 0.2 12.2 1.6 14.0
Charge for the year 0.1 0.6 0.3 1.0
Disposals – (0.7) (0.3) (1.0)
At 31 January 2012 0.3 12.1 1.6 14.0
Net book value
At 1 February 2010 0.2 3.2 0.9 4.3
At 31 January 2011 0.3 3.0 0.9 4.2
At 31 January 2012 0.2 3.3 1.5 5.0
The net book value of assets held under finance leases and hire purchase contracts was £1.4m (2011: £1.6m). Elektron Technology plc
Annual Report and Financial Statements 2012
51
Financial statements
14. Investment in subsidiary undertakings 
The principal subsidiary undertakings at 31 January 2012 were:
Name
Country of
incorporation Nature of business
Shares held
by parent
Shares held
by Group
Elektron Technology UK Ltd England and Wales Design, manufacture and sale of 
electromechanical components and 
instrumentation products
100% 100%
Elektron Components 
Corporation
USA Sale of electromechanical components 
and instrumentation products
0% 100%
Elektron Components  
Tunisie Sarl
Tunisia Manufacture of electromechanical 
components
0% 100%
Elektron Components 
(Shenzhen) Company Limited
China Manufacture and sale of 
electromechanical components and 
sale of instrumentation products
0% 100%
Elektron Technology PTE Ltd Singapore Sale of electromechanical components 
and instrumentation products
100% 100%
Hartest Precision Instruments 
Limited
England and Wales Manufacture and sale of instrumentation 
products
0% 100%
Hartest Precision Instruments 
India Private Limited
India Sale of electromechanical components 
and instrumentation products
0% 100%
Titman Tip Tools Ltd England and Wales Design, manufacture and sale of 
tungsten carbide routing tools
0% 100%
Total Carbide Ltd England and Wales Design, manufacture and sale of 
tungsten carbide wear components
0% 100%
All subsidiary undertakings operated primarily in the country of incorporation, except for Hartest Precision Instruments Limited, 
which also operates through a branch in India established under the Foreign Exchange Resolution Act 1973.
15. Deferred tax
2012
£m
2011
£m
Deferred tax assets recoverable after more than one year 0.3 0.2 Elektron Technology plc
Annual Report and Financial Statements 2012
52
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
15. Deferred tax continued
The gross movement on the deferred tax asset is as follows:
Notes
2012
£m
2011
£m
At 1 February 2011 0.2 0.6
Deferred tax acquired 8a – 0.5
Deferred tax on intangible assets 8a 0.1 (0.6)
Origination and reversal of timing differences 8a – (0.3)
At 31 January 2012 0.3 0.2
Depreciation in excess of capital allowances 0.1 0.2
Taxation losses 0.3 0.5
Short term timing differences 0.4 0.1
Deferred tax on separately identifiable intangible assets (0.5) (0.6)
Undiscounted asset for deferred taxation 0.3 0.2
Deferred taxation assets have only been recognised for subsidiaries with a past history of profitable trends where there is 
persuasive and reliable evidence in the form of management accounts and financial projections that taxable profits are anticipated 
to arise in the year to 31 January 2013. Deferred taxation assets amounting to £0.2m (2011: £0.5m) have not been provided in 
respect of unutilised income tax losses that can be carried forward against future taxable income as there is currently insufficient 
evidence that these assets will be recovered. 
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 £2.2m (2011: £5.0m).
16. Inventories
2012
£m
2011
£m
Raw materials 5.1 4.6
Work in progress 1.4 1.5
Finished goods and goods for resale 3.0 3.1
9.5 9.2
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 £0.1m (2011: £0.1m) which are included within operating profit.
The amount of inventory recognised as an expense within the cost of sales amounted to £38.3m (2011: £28.9m). Elektron Technology plc
Annual Report and Financial Statements 2012
53
Financial statements
17. Trade and other receivables
2012
£m
2011
£m
Trade receivables 10.9 10.8
Less: provision for impairment (0.5) (0.4)
Trade receivables – net 10.4 10.4
Other receivables 0.2 0.2
Prepayments 1.3 1.2
11.9 11.8
The fair values of trade and other receivables are considered to be as stated above.
Trade receivables can be analysed as follows:
2012
£m
2011
£m
Not past due 7.6 8.0
Past due but not impaired 2.8 2.4
Past due and impaired 0.5 0.4
10.9 10.8
The ageing of trade receivables classed as past due but not impaired is as follows:
2012
£m
2011
£m
Up to one month past due 2.1 1.7
Over one month past due 0.7 0.7
2.8 2.4
Trade receivables are normally due within 30 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 £0.5m (2011: £0.4m) are considered potentially impaired. The specifically impaired receivables relate to a 
wide variety of individual customers. Provisions for impairment are management’s best estimates based on prior experience and 
an assessment of the current economic environment. Trade receivable days are 56 days (2011: 60 days).
Ageing of impaired receivables:
2012
£m
2011
£m
Between one month and two months past due 0.1 0.1
Over two months past due 0.4 0.3
0.5 0.4 Elektron Technology plc
Annual Report and Financial Statements 2012
54
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
17. Trade and other receivables continued
Movements on the provision for impairment of trade receivables are as follows:
2012
£m
2011
£m
At 1 February 2011 0.4 0.3
Acquisition of subsidiary – 0.1
Increase in provision for receivables impairment 0.1 –
At 31 January 2012 0.5 0.4
The carrying amounts of trade and other receivables are denominated in the following currencies:
2012
£m
2011
£m
Sterling 7.8 7.9
US Dollars 1.5 1.1
Euro 0.8 1.1
Indian Rupee 1.6 1.4
Other 0.2 0.3
11.9 11.8
18. Trade and other payables
2012
£m
2011
£m
Trade payables 6.0 5.9
Other payables 0.7 0.5
Accruals and deferred income 2.5 3.0
9.2 9.4
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.
Trade payable days are 51 days (2011: 56 days).  Elektron Technology plc
Annual Report and Financial Statements 2012
55
Financial statements
19. Borrowings
2012
£m
2011
£m
Bank overdrafts and invoice discounting facilities 2.6 1.9
Obligations under finance leases and hire purchase contracts 1.0 0.9
Bank loans 1.6 2.7
5.2 5.5
Short-term borrowings 2.6 1.9
Current portion of long-term borrowing 1.3 1.6
Long-term borrowings 1.3 2.0
5.2 5.5
Analysis of repayments
Bank overdrafts and invoice discounting facilities:
Within one year 2.6 1.9
Finance leases and hire purchase contracts:
Within one year 0.4 0.5
In two to five years 0.6 0.4
1.0 0.9
Bank loans:
Within one year 0.9 1.1
In two to five years 0.7 1.6
1.6 2.7
5.2 5.5
Bank overdrafts and invoice discounting facilities of £2.6m (2011: £1.9m) and bank loans of £1.6m (2011: £2.7m) are secured  
by debentures and fixed charges over certain of the assets of the Group. Balances have been offset where appropriate. 
Bank overdrafts and invoice discounting facilities of £2.6m (2011: £1.9m) attract interest at 2.0% to 2.2% over base rate.
Bank loans attract interest at 2.75% to 6.00% over LIBOR plus an Additional Regulatory Cost Rate.
Finance leases and hire purchase contracts of £1.0m attract interest at 2.2% to 3.65% over base rates. Elektron Technology plc
Annual Report and Financial Statements 2012
56
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
20. Provisions
2012
£m
2011
£m
Non-current 0.7 0.3
Current 1.0 0.5
1.7 0.8
Dilapidation
costs
£m
Warranty
costs
£m
Restructuring
costs
£m
Total
£m
At 1 February 2011 0.5 0.1 0.2 0.8
Charged to income statement – – 2.0 2.0
Utilised in the year – – (1.1) (1.1)
At 31 January 2012 0.5 0.1 1.1 1.7
Anticipated utilisation
Within one year 0.3 0.1 0.6 1.0
More than one year 0.2 – 0.5 0.7
The dilapidation costs relate to redecoration, maintenance and reinstatement 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 redundancy and other costs of streamlining the Group based on detailed plans that 
have been communicated to the affected parties.
21. Share capital and reserves
Share capital
2012
£m
2011
£m
Authorised
200,000,000 (2011: 200,000,000) ordinary shares of 5p each 10.0 10.0
Allotted, called up and fully paid
119,296,987 (2011: 106,408,259) ordinary shares of 5p each 6.0 5.3
During the year the Group issued the following shares:
•	 On 16 August 2011, 113,769 scrip dividend shares were issued for a consideration of 40.80p per share;
•	 On 14 December 2011, 81,959 scrip dividend shares were issued for a consideration of 27.02p per share; and
•	 On 19 January 2012, 12,693,000 shares were issued for a consideration of 24p per share to satisfy the JSOP awards  
to the Directors and senior management. Elektron Technology plc
Annual Report and Financial Statements 2012
57
Financial statements
21. Share capital and reserves continued
Share capital continued
Of the allotted, called up and fully paid share capital, 12,693,000 shares are held by the Elektron Technology 2012 Employee 
Benefit Trust and are treated as treasury shares. Excluding these shares, the issued share capital at 31 January 2012 was 
106,603,259 (2011: 106,408,259).
The middle market price of the ordinary shares at 31 January 2012 was 21.125p per share and the range during the year was 
19.25p per share to 45p per share. 
Share options
Elektron Technology plc Executive Share Option Scheme
Year of grant
Exercise 
period
Option 
price
2012
‘000
2011
‘000
2004 2007-2014 15.81p 550 750
During the year 200,000 options lapsed as a result of employees leaving the Group. In accordance with the transitional provisions, IFRS2 
‘Share Based Payments’ has been applied to all grants of equity instruments after 7 November 2002 that were unvested at 1 January 2005.
Elektron Technology plc Company Share Option Plan
Year of grant
Exercise 
period
Option 
price
2012
‘000
2011
‘000
2011 2014-2021 38.00p 780 1,326
2011 2014-2021 37.00p 81 –
2012 2015-2022 25.00p 780 –
During the year 468,000 share options lapsed as a result of employees leaving the Group.
On 29 July 201 1 81,000 share options were granted under the Company Share Option Plan (CSOP), exercisable after three years  
but before ten years, with an option price of 37p. On 19 January 2012, 1,402,000 share options were granted with an option price of  
25p per share, including 780,000 under the CSOP and 622,000 in the form of stock appreciation rights for employees outside the UK.
Share-based payments including awards under the CSOP and the JSOP are valued using an independent probability valuation 
model and take account of performance criteria (if any). The significant inputs into the model for awards during the year were:
•	 Risk-free interest rate – yield on zero coupon UK Government bonds at date of grant of 0.5-1.0%;
•	 Weighted average contractual life – 3-5 years; 
•	 Weighted average share price – 21p; 
•	 Strike price – 25p;
•	 Volatility of share price – 40%; and
•	 Forfeiture rate – 20% (nil for JSOP shares).
The Group recognised a charge of £25,000 in the year (2011: £10,000). Elektron Technology plc
Annual Report and Financial Statements 2012
58
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
21. Share capital and reserves continued
Reserves
The nature of the reserves shown in the consolidated balance sheet and consolidated statement of changes in equity is as follows:
Share premium
Amount subscribed for share capital in excess of nominal value.
Merger reserve
Amount arising on an acquisition in prior years 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 reserve
The cumulative nominal value of own shares acquired by the Company.
Own shares
The value of the Company’s shares held by the Elektron Technology 2012 Employee Benefit Trust.
Other reserves comprise:
•	  Translation reserves – gains and losses arising on retranslating the net assets of overseas operations into Sterling of less  
than £0.1m (2011: less than £0.1m);
•	 Other reserves – includes a reserve arising from the application of IFRS2 ‘Share-based Payments’ of £0.1m  
(2011: £0.1m).
Retained earnings
Cumulative gains and losses recognised in the consolidated statement of comprehensive income not included above.
22. Capital commitments
Expenditure sanctioned but not contracted for amounted to £0.8m (2011: £0.3m), and expenditure contracted but not provided 
for in the financial statements amounted to £0.2m (2011: £0.1m).
23. Operating lease commitments
At 31 January 2012 the Group had total commitments under non-cancellable operating leases as follows:
Land and buildings Other
2012
£m
2011
£m
2012
£m
2011
£m
Minimum lease payments: 
Expiring within one year – 1.2 0.1 0.1
Expiring between two and five years 2.3 2.9 0.5 0.6
Expiring after five years 4.1 0.7 – –
6.4 4.8 0.6 0.7
24. Retirement benefit schemes
The Group operates a Group Personal Pension Plan (which is a defined contribution scheme) for all qualifying employees.  
The assets of the schemes are held separately from those of the Group in funds under the control of the trustees.
Contributions to the Group Personal Pension Plan and to other personal pension plans are charged to the statement of 
comprehensive income as they become payable. The pension cost charge for the year was £0.5m (2011: £0.3m) and  
outstanding contributions at the year end amounted to £0.1m (2011: £0.1m). Elektron Technology plc
Annual Report and Financial Statements 2012
59
Financial statements
25. Financial assets and liabilities
(i)Financial instruments
The 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 2012 gross gearing on net assets 
was 32.8% (2011: 37.5%).
(ii)Financial assets: excluding receivables due within one year
Details of trade and other receivables are provided in Note 17. The only other current financial asset held is cash and cash 
equivalents. The balances as at 31 January are detailed below:
2012
£m
2011
£m
Sterling accounts 0.4 0.6
US Dollar accounts 0.2 0.2
Tunisian Dinar accounts – 0.1
Euro accounts 0.1 0.3
Hong Kong Dollar accounts 0.1 –
0.8 1.2
(iii)Financial liabilities: excluding non-debt current liabilities
The 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:
2012
£m
2011
£m
Floating rate financial liabilities 5.2 5.5
(iv) Maturity
The maturity profile is shown in Note 19.
(v) Fair value of financial assets and liabilities
IFRS7 ‘Financial instruments’ requires disclosure of fair value measurements by level of the following fair value measurement 
hierarchy:
•	 Quoted prices (unadjusted) in active markets (Level 1);
•	 Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly (Level 2); and
•	 Inputs for the asset or liability that are not based on observable market data (Level 3).
There were no applicable assets or liabilities at 31 January 2012 (2011: nil).
(vi) Committed undrawn borrowing facilities
At the year end the Group had committed undrawn facilities of £2.8m (2011: £3.6m) which related to invoice discounting  
facilities repayable on demand in the event of any breaches in the covenants given by the Group. Elektron Technology plc
Annual Report and Financial Statements 2012
60
Financial statements
Notes to the consolidated financial statements
year ended 31 January 2012 continued
25. Financial assets and liabilities continued
(vii) Currency risk
The 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 2012 the Group had no commitments under non-cancellable forward contracts (2011: £nil).
The Group’s currency exposure, being those transactional exposures that give rise to net currency gains and losses recognised  
in the statement of comprehensive income, was as follows:
Assets Liabilities
2012
£m
2011
£m
2012
£m
2011
£m
US Dollar 2.0 1.2 0.3 0.2
Euro 0.9 1.3 0.9 1.4
Indian Rupee 2.1 1.3 0.5 0.4
5.0 3.8 1.7 2.0
(viii) Sensitivity analysis
For the year ended 31 January 2012 it is estimated that, for a 10% exchange rate movement, the Group’s Sterling-reported profit 
before tax would have changed by:
•	 £0.2m (2011: £0.1m) for the US Dollar; 
•	 £0.2m (2011: £0.1m) for the Indian Rupee.
Sensitivity to other currencies and interest rates are not considered to be material in the context of the 2012 results.
(ix) Categories of financial instruments
Financial assets
2012
£m
2011
£m
Cash and bank balances 0.8 1.2
Loans and receivables 11.9 11.8
12.7 13.0
Financial liabilities
2012
£m
2011
£m
Other financial liabilities at amortised cost 
Trade and other payables 6.7 6.5
Current tax payable 0.2 1.0
6.9 7.5
26. 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 Keith Daley is a Director and shareholder, charged fees of £nil (2011: 
£25,600) in respect of his services as part-time Chief Executive during 2012 and earned fees of £nil (2011: £1,600)  
in respect of consultancy services during that period.
(c)   Jeremy Thorn, a Director and shareholder, charged fees of £nil (2011: £2,100) in respect of consultancy services during  
the year.
(d)   The Group occupies a number of leasehold properties with annual rentals of £0.6m (2011: £0.7m), the landlord  
of which is part of Panther Securities Plc, a significant shareholder in Elektron Technology plc. Elektron Technology plc,  
the Company, has also given rental guarantees to Panther Securities Plc as described in Note 12 to the parent company 
financial statements. Elektron Technology plc
Annual Report and Financial Statements 2012
61
Financial statements
Notes
2012
£m
2011
£m
Fixed assets
Tangible assets 3 0.9 0.6
Investments in subsidiary undertakings 4 15.5 15.5
16.4 16.1
Current assets
Debtors 5 8.4 3.0
Cash at bank and in hand – 0.2
8.4 3.2
Creditors: amounts falling due within one year 6 (9.7) (7.4)
Net current liabilities (1.3) (4.2)
Total assets less current liabilities 15.1 11.9
Creditors: amounts falling due after more than one year 7 (1.0) (1.8)
Provisions for liabilities 9 (0.1) (0.1)
Net assets 14.0 10.0
Capital and reserves
Called-up share capital 10 6.0 5.3
Share premium 10 5.4 2.9
Merger reserve 10 1.1 1.1
Capital redemption reserve 10 0.2 0.2
Other reserves 10 0.1 0.1
Profit and loss account 10 1.2 0.4
Shareholders’ funds 14.0 10.0
The financial statements were approved by the Board of Directors and authorised for issue on 11 April 2012 and were signed  
on its behalf by:
Keith Daley Noah Franklin
Director Director
Parent company balance sheet
as at 31 January 2012 Elektron Technology plc
Annual Report and Financial Statements 2012
62
Financial statements
1. Accounting policies
Basis of preparation
The 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 FRS8 ‘Related Party Disclosure’ not to show transactions with companies 
in the Group headed by Elektron Technology plc which are publicly available.
The Company has taken advantage of the exemption in paragraph 2d of FRS29 ‘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 IFRS7 ‘Financial Disclosure’.
Tangible fixed assets
The cost of fixed assets is their purchase cost less depreciation. 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. Assets are not depreciated until they are brought into use. The estimated useful lives are:
•	 Equipment 3-7 years
•	 Motor vehicles 4 years
Investments in subsidiary undertakings
Investments are included at cost net of any provision for impairment.
Taxation
Current tax, including UK corporation tax, is provided at amounts expected to paid (or recovered) using the tax rates and laws  
that have been enacted or substantively enacted by the balance sheet date.
Deferred taxation
Deferred 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.
Retirement benefits
Defined contribution pension scheme
The pension costs charged against profits are the contributions payable to individual policies in respect of the accounting period.
Financial instruments
Income 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.
Share-based payments
The Company has applied the requirements of FRS20 ‘Share-based Payment’. In accordance with the transitional provisions, 
FRS20 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.
Notes to the parent company financial statements
year ended 31 January 2012 Elektron Technology plc
Annual Report and Financial Statements 2012
63
Financial statements
1. Accounting policies continued
Share-based payments continued
The fair value of all equity-settled share-based payments is measured using the Black-Scholes option 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. 
Cash flow statement
The Company has not presented a separate cash flow statement in accordance with the exemption provided by FRS1 (Revised), 
as its cash flows are included within the cash flows of the Group, as set out on page 33 of this report.
2. Profit for the financial year
As 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 profit for the financial year amounted to £1.7m (2011 loss: £0.7m).
3. Tangible fixed assets
Equipment
and vehicles
£m
Cost
At 1 February 2011 0.7
Additions 0.4
At 31 January 2012 1.1
Depreciation
At 1 February 2011 0.1
Charge for the year 0.1
At 31 January 2012 0.2
Net book value
At 31 January 2012 0.9
At 31 January 2011 0.6
Equipment above includes Group IT project hardware and software costs which have commenced depreciation following the 
implementation of the Management Information System during the year.
4. Investments in subsidiary undertakings
2012
£m
2011
£m
At 1 February 15.5 7.1
Additions – 8.4
At 31 January 15.5 15.5
Details of subsidiary companies are given in Note 14 of the notes to the consolidated financial statements. The additions in 2011 
relate to the acquisition of Hartest Holdings plc in the prior year for a consideration of £8.0m and acquisition costs of £0.4m. Elektron Technology plc
Annual Report and Financial Statements 2012
64
Financial statements
Notes to the parent company financial statements
year ended 31 January 2012 continued
5. Debtors
2012
£m
2011
£m
Amounts owed by subsidiary undertakings 8.2 3.0
Other debtors 0.1 –
Prepayments 0.1 –
8.4 3.0
6. Creditors: amounts falling due within one year
2012
£m
2011
£m
Bank loans and overdrafts (Note 8) 3.7 1.1
Amounts owed to subsidiary undertakings 5.2 5.5
Finance leases (Note 8) 0.1 0.1
Trade payables 0.3 0.1
Other taxes and social security costs 0.1 0.1
Other creditors 0.1 0.1
Accruals and deferred income 0.2 0.4
9.7 7.4
7. Creditors: amounts falling due after more than one year
2012
£m
2011
£m
Bank loans (Note 8) 0.7 1.6
Finance leases (Note 8) 0.3 0.2
1.0 1.8 Elektron Technology plc
Annual Report and Financial Statements 2012
65
Financial statements
8. Loans and other borrowings
2012
£m
2011
£m
Bank overdrafts 2.8 —
Bank loans 1.6 2.7
Finance leases 0.4 0.3
4.8 3.0
Maturity of financial liabilities
In one year or less 3.8 1.2
In more than one year, but not more than two years 0.8 1.0
In more than two years, but not more than five years 0.2 0.8
4.8 3.0
Bank loans of £1.6m are secured by debentures and fixed charges over certain of the assets of the Company and the Group  
and are repayable at £0.2m per quarter. Bank loans attract interest at 2.75% to 6.00% over LIBOR plus an Additional Regulatory 
Cost Rate.
9. Provisions
Restructuring
costs
£m
Total
£m
At 1 February 2011 0.1 0.1
Charged to profit and loss account 0.1 0.1
Utilised in the year (0.1) (0.1)
At 31 January 2012 0.1 0.1 Elektron Technology plc
Annual Report and Financial Statements 2012
66
Financial statements
Notes to the parent company financial statements
year ended 31 January 2012 continued
10. Share capital and reserves
Details of the share capital and reserves are given in Note 21 of the notes to the consolidated financial statements.
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Other
reserves
£m
Profit
and loss
account
£m
Total
£m
At 1 February 2011 5.3 2.9 1.1 0.2 0.1 0.4 10.0
Profit for the year – – – – – 1.7 1.7
Share issues 0.7 2.4 – – – – 3.1
Dividends paid on ordinary shares – – – – – (0.9) (0.9)
Adjustment for scrip dividend 
element – 0.1 – – – – 0.1
At 31 January 2012 6.0 5.4 1.1 0.2 0.1 1.2 14.0
11. Capital expenditure commitments and operating lease commitments
Capital expenditure contracted but not provided for in the financial statements amounted to £nil (2011: £nil). The Company  
had £0.1m annual operating lease commitments for land and buildings at 31 January 2012 (2011: £nil).
12. Contingent liabilities
The Company has given certain guarantees in respect of invoice discounting arrangements of certain subsidiary companies  
up to £2.6m and has guaranteed rental obligations of certain subsidiary companies up to £1.9m.
13. Related party transactions
Related party transactions are the same for the Company as for the Group. Details can be found in Note 26 of the notes  
to the consolidated financial statements. Elektron Technology plc
Annual Report and Financial Statements 2012
2012
£m
2011
£m
2010
£m
2009
£m
2008
£m
2007
£m
2006
£m
2005**
£m
2004**
£m
2003**
£m
Revenue  –  continuing 
operations 64.3 50.0 29.9 35.6 34.9 26.0 22.5 22.7 9.3 9.1
 –  d i s c o n ti n u e d 
operations – – – – 1.0 0.6 — 0.3 2.6 5.6
64.3 50.0 29.9 35.6 35.9 26.6 22.5 23.0 11.9 14.7
Adjusted operating profit/(loss)* 5.0 5.3 1.8 1.1 2.1 1.9 1.8 1.7 0.8 (0.4)
Profit/(loss) before taxation 2.5 3.5 0.2 (2.3) 2.0 0.5 1.7 2.6 1.6 (3.4)
Shareholders’ funds 15.8 14.6 8.5 7.9 10.2 8.0 6.6 5.5 3.3 1.0
Adjusted earnings/(loss)  
per share* 3.33p 4.20p 1.50p 0.61p 2.48p 1.73p 1.65p 1.52p 1.53p (0.82)p
Earnings/(loss) per share 1.82p 3.00p 0.34p (2.36p) 2.76p 0.50p 1.63p 2.67p 2.42p (6.18)p
Dividends paid and proposed  
per share 0.83p 0.80p 0.50p 0.46p 0.45p 0.40p 0.35p 0.30p nil nil
* Adjusted for goodwill, discontinued operations and non-recurring or special items.
** The figures for 2005, 2004 and 2003 are presented under UK GAAP.
Consolidated ten year record
67
Ten year record
08 07 06 05 04 03 09 10 11 12 02
500
450
400
350
300
250
200
150
100
50
Ten year share price
indexed to base of 100
 Elektron Technology plc FTSE AIM All-Share Index Further information
For further information about Elektron Technology  
and our businesses, please visit our website at:
www.elektron-technology.com
Elektron Technology plc
Annual Report and Financial Statements 2012  
Elektron 
Technology  
is focused on 
innovation in  
fast moving 
engineered 
products 
See page 02
The Group now has a 
streamlined organisation  
that can be scaled up  
as opportunities arise
See page 06
Our strategy is to invest  
in innovation and build  
global sales, with a 
transformed organisation 
See page 05
Our Innovation Resource 
Planning™ process, run  
from our Cambridge 
Technology Centre, delivers 
solutions to around 7,000 
distribution partners and 
around 100,000 end users
See page 09
The majority of our  
business delivers key 
building blocks for  
today’s connected world
See page 08
Printing and paper: This report has been printed in the UK. The printers are 
accredited with ISO14001, hold full FSC chain of custody and are also carbon 
neutral. All inks used are vegetable-based. The paper used is a coated silk  
stock which is fully recyclable and biodegradable and is FSC accredited.
If you have finished reading this report and no longer wish to retain it,  
please pass it on to other interested readers or recycle it. Thank you.
Designed and produced by The College www.the-college.com Fast moving 
engineered  
products
Annual Report and Financial Statements 2012  
Elektron Technology plc
Elektron Technology  plc        Annual Report and Financial Statements 2012
Elektron Technology plc
Broers Building
JJ Thomson Avenue
Cambridge
CB3 0FA
info@elektron-technology.com
www.elektron-technology.com