Checkit PLC – Trading Update

Checkit PLC – Trading Update

Checkit plc is pleased to provide a trading update for its financial year ending 31 January 2020 (“FY20”). The Group’s performance for the full year was in line with management expectations.

A summary of its unaudited sales and cash is as follows:

£’m

FY2019 actual

FY2019 normalised*

FY2020

actual

FY2020 normalised*

%

change actual

%

change

normalised*

Sales

Checkit Europe

1.0

1.0

1.3

1.3

30%

30%

Checkit UK

10.8

8.5

11.6

7%

Checkit total

1.0

11.8

9.8

12.8

870%

8%

EET

2.6

2.6

2.0

2.0

-23%

-23%

Total sales

3.6

14.4

11.8

14.8

228%

3%

Cash

10.1

14.3

42.5%

*Normalised sales illustrate sales that would have been included in the Group’s financial results had Checkit UK Limited (“CUK”), which was acquired on 14 May 2019, been owned by the Group throughout both periods.

 

Checkit sales were above market expectations, particularly in the area of Checkit UK’s installation work, which historically has operated at low margins. Checkit Europe and Checkit UK are in the process of being merged. Consequently, the board does not intend to report separately for future accounting periods.

The board continues to be excited by the medium-term prospects of the Checkit businesses. Several opportunities to improve profitability have been identified and are being implemented in the merged businesses.

Elektron Eye Technology (“EET”) experienced a slowdown in sales in the second half of FY20. As previously announced, the board continues to seek a buyer for this non-core business. In view of the limited interest received to date, the board has reduced its expectations regarding potential disposal proceeds.

The cash balance at 31 January 2020 was higher than expected due to repayment of amounts owed (£2.6m) by the Elektron Technology 2012 Employment Benefit Trust following its participation in the recent tender offer. This was partially offset by a working capital adjustment resulting in a return of cash (£0.8m) to the acquirers of the Bulgin business.

The board is currently reviewing its amortisation policy in respect of acquired intangibles and capitalised development costs (in consultation with its auditors) with a view to shortening amortisation periods. This work will be completed by the time of the preliminary announcement scheduled for 14 May 2020.

Keith Daley, Executive Chair said: “This was a good performance during a period of major corporate change as a result of the disposal of the Bulgin business. We are pleased with the performance of Checkit UK, our recent acquisition, and the integration plan we have put in place is on track. The opportunities for the combined group remain attractive and we are optimistic about future growth.”

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