Disposal of Milmega Limited

Elektron PLC 04 February 2004 FOR IMMEDIATE RELEASE 4 February 2004 ELEKTRON PLC Disposal of Milmega Limited Elektron Plc (the 'Company' or 'Elektron'), the AIM quoted components and electronics group, announces that it has disposed of Milmega Limited ('Milmega') to Frameflair Limited ('Frameflair'), a newly formed company that is partly owned by the management of Milmega, for an initial gross consideration of £1,003,500 free of borrowings and inter-company indebtedness subject to adjustment as described below. Milmega Milmega operates from a 6,000 square foot leasehold facility on the Isle of Wight employing 22 staff. The Company designs and assembles high specification amplifiers for the telecommunications, defence, physics research and electro-magnetic testing sectors. Milmega reported sales and a loss before tax of £2.0 million and £107,000 respectively in its last audited accounts to 31 January 2003. In the eleven months to 31 December 2003, Milmega management accounts show a loss before tax of £24,000 on sales of £1.8 million. Audited net assets as at 31 January 2003 amounted to £538,000. As at 31 December 2003 Milmega management accounts show un-audited net assets of £772,000 excluding inter-company indebtedness and borrowings. Consideration The initial gross consideration payable to Elektron is £1,003,500 less £18,000 in respect of hire purchase liabilities to be retained by Milmega on completion. £735,500 was paid in cash on completion and the balance of £250,000 has been satisfied by the issue of five-year redeemable secured loan notes (the 'Loan Notes'). The final consideration will be determined by the net asset value recorded in the completion accounts to be prepared as at 31 January 2004. The initial consideration will be adjusted pound for pound in respect of any difference between net asset value recorded in the completion accounts and £764,000, save that any adjustment upwards or downwards to the initial consideration is capped at £38,200. The Loan Notes are repayable in tranches. £50,000 is repayable 12 months from completion, £100,000 is repayable 24 months from completion and the balance of £100,000 is repayable 36 months from completion. The Loan Notes bear interest at base lending rate plus 2 per cent per annum payable quarterly in arrears. At the option of Frameflair repayment of the Loan Notes may be deferred providing certain net asset conditions are met but not beyond 31 January 2009. In the event of deferral, interest is payable at base lending rate plus 10% per annum payable quarterly in arrears. The Loan Notes are secured by a second charge over the assets of Milmega and Frameflair. The proceeds of the disposal will be used by the Company to reduce borrowings and provide additional working capital. The profit or loss impact on Elektron relating to the disposal of Milmega is not expected to be material. Related party issues As Frameflair is partly owned by one of the Directors of Milmega, the disposal is a related party transaction for the purposes of the AIM Rules. The Directors of Elektron consider, having consulted with its nominated adviser Beaumont Cornish Limited, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned. Reasons for the disposal Following a strategic review, the Board has decided that the business of Milmega is no longer a core activity. For further information please contact: Adrian Girling Christopher Leigh Executive Chairman Finance Director Elektron Plc Elektron Plc Tel: 0208 477 9300 Tel: 0208 477 9300 Michael Cornish Beaumont Cornish Limited Tel: 0207 628 3396 This information is provided by RNS The company news service from the London Stock Exchange EANLEFE