Final Results

Eleco PLC 10 October 2003 10 October 2003 ELECO PLC The Building Systems and Technology Group PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2003 Enquiries to: John Ketteley, Executive Chairman Tel: 01920 443 830 Eleco plc mail@eleco.com David Dannhauser, Finance Director Tel: 01920 443 830 Eleco plc mail@eleco.com Tarquin Edwards/Chris Steele Tel: 020 7929 5599 Holborn tarquin.edwards@holbornpr.co.uk chris.steele@holbornpr.co.uk 'A year of progress' Change Year ended Year ended 30 June 2003 30 June 2002 £m £m Turnover up 13% 37.2 32.9 Operating Profit up 5.2% 1.97 1.87 Profit Before Tax up 7% 1.85 1.74 Dividend per Share up 4.3% 1.20p 1.15p Earnings per Share down 7.0% 2.80p 3.01p Highlights • Eleco Building Systems - Excellent progress: Turnover up 9.4% and Operating Profit up 27.8% • Eleco Technology - Existing software businesses reorganised and a balanced portfolio of construction software businesses acquired; the integration of these businesses into Eleco Technology continues apace. • Sound financial position: Gearing at 20 per cent; Net interest cover 23 times; Strong cash generation • Earnings per share at 2.8p (2002: 3.0p) due in part to the increase in issued share capital relating to the acquisition of Consultec. • Dividends: Final Dividend: 0.85p per share (2002: 0.80p per share) Total Dividends for the year: 1.20p per share (2002:1.15p per share) John Ketteley, Executive Chairman of Eleco plc, commented: 'The Group's established core businesses have again made excellent progress during the year under review and have entered the current year with healthy order books. I also anticipate that the task of integrating our newly acquired construction software businesses and tailoring their software programmes to the needs of our existing markets, with the attendant costs, should be completed by the end of the current financial year.' CHAIRMAN'S STATEMENT I am pleased to report on the Group's performance for the year ended 30 June 2003. Group turnover for the year was £37.2 million (2002: £32.9 million), an increase of 13.0 per cent. Group operating profit was £1,975,000 (2002: £1,878,000), an increase of 5.2 per cent. with profit on ordinary activities before tax at £1,856,000 (2002: £1,736,000), an increase of 6.9 per cent. Earnings per share were lower at 2.8p (2002: 3.0p), reflecting in part the increase in share capital following the acquisition of Consultec in February 2003. Net borrowings at 30 June 2003 amounted to £2,405,000 (Net cash balances at 30 June 2002: £464,000), representing gearing of 20.7 per cent. (2002: Nil) and reflecting our £4.2 million investment programme this year. Operating cash flow generation has remained strong at £2.6 million as has interest cover, with net interest covered 23 times by operating profits. Eleco Building Systems continued to make excellent progress. Turnover for the Division in the year under review increased by 9.4 per cent. to £34.49 million (2002: £31.52 million), representing 93% of Group turnover. Operating profit, before the allocation of central costs was £3.34 million (2002: £2.61 million), 27.8 per cent. ahead of the previous year, with our precast concrete and timber engineering businesses making particularly strong contributions to this performance. Operating margins improved to 9.7 per cent. from 8.3 per cent. Turnover of the Eleco Technology Division in the year under review was £2.67 million (2002: £1.35 million), of which £1.67 million was contributed by operations acquired during the year; its operating loss, before the allocation of central costs was £0.50 million (2002: loss £0.16 million). The task ahead now is to weld our software interests into a well co-ordinated, profitable construction software business. We have now assembled within Eleco Technology a group of construction software businesses and programmes which are complementary as regards the industry they serve and the technologies they use. During the year we undertook a major reorganisation of Eleco's existing software businesses and in July 2003, we also completed the acquisition of Softhold GmbH, which owns the rights to 'Arcon' the leading German visual architectural software for £263,000 in cash. These are all significant steps towards achieving our objective of establishing Eleco as an international provider of high quality construction software and technologies. Dividend The Board has proposed a final dividend of 0.85p per share (2002: 0.80p) payable on 28 November 2003 to Shareholders on the Register on 14 November 2003. The final dividend, if approved by shareholders, would result in the payment of dividends for the year totalling 1.20p per share (2002: 1.15p), an increase of 4.3 per cent., which would be covered 2.2 times by earnings (2001: 2.6 times). OPERATING REVIEW ELECO BUILDING SYSTEMS PRECAST CONCRETE Bell & Webster Concrete Bell & Webster Concrete, Eleco's pre-cast concrete business, was able to sustain the progress it made in the first six months of the year, despite being subjected early in the second half year to delays in starting production of a major student accommodation project. Demand for other products as well as FastBuild(R) rooms for hotel projects ensured that the Grantham plant continued to operate at high levels of capacity. First orders were placed for newly developed precast bases for social housing units with a national house builder. Ground beams, railway platforms and retaining walls all enjoyed a satisfactory year. ROOFING, CLADDING AND PANELS SpeedDeck Building Systems The number of roofing projects supplied by SpeedDeck Building Systems during the year under review was higher than last year, although a reduction in the number of major orders received contributed to an overall 26 per cent. fall in sales. This, together with increased pressure on roofing margins, resulted in significantly lower operating profits. Demand increased for the successful Vitesse(R) composite wall panel with the product continuing to be installed on Porsche franchise dealerships across the country. Vitesse(R) was also supplied to two leading supermarket chains during the year. To enable SpeedDeck Building Systems better to compete in an increasingly competitive market, it has introduced SpeedZip(R), a true standing seam roofing product, to complement its existing SpeedDeck(R) secret fix roofing system. The product has seen an encouraging reception by our customers. Downer Cladding Systems Downer Cladding Systems, acquired in May 2002, continues to be acknowledged as a leading provider of fixing systems for rainscreen cladding and related technical assistance; the business made a useful contribution to Group profits. Stramit Industries I am pleased to say that the measures taken last year to restructure Stramit Industries' business and reduce its cost base were effective and the Company returned to profitability in the year under review. Management are now actively engaged in seeking new products to manufacture at Stramit Industries' factory at Eye in Suffolk. TIMBER ENGINEERING Gang-Nail Systems Gang-Nail Systems had another excellent year, driven by a number of factors, the principal of which was the increased sales of metal webs for its successful Ecojoist(R) flooring product. The number of Ecojoist(R) licensed fabricators increased to ten during the year as the product increased its market share and gained technical approval from more national house builders. New versions of the Gang-Nail Truss and Roof software were released during the year and were well received. The excellence of its software continues to be a key element in Gang-Nail Systems' success. Eleco Bauprodukte Eleco Bauprodukte continues to be affected by highly competitive local pricing but despite this it was able to maintain its market share in Germany. The continued investment in enhanced software for its truss fabrication business is an important contributor to its continued market penetration. It is also working closely with Consultec to introduce the latter's 'Staircon' and 'Post and Beam' software to the German market. International Truss Systems International Truss Systems produced an excellent trading performance. Sales increased by 44 per cent. and the Company made an outstanding contribution to Group profits for the year. International Truss Systems' move to its new office and warehousing facilities undoubtedly enabled it to improve its distribution, product flow and customer service. ELECO TECHNOLOGY Consultec became part of Eleco in February 2003 and made a contribution to Group profit for the year before the amortisation of goodwill. Consultec UK (Formerly MBA Computing) made a loss in the year under review, which included the costs of the termination of its lease and relocation to other Group premises, as well as redundancies due to the reorganisation of its operations. Jason Ruddle was appointed Managing Director of Consultec UK in July 2003. Forma Communications experienced cost overruns on some major projects, which resulted in the Company making a loss for the year. Leonardo Internet, based in Stafford, became part of the Eleco Group in February 2003 and has already developed a close working relationship with Forma Communications. Forma Communications was also responsible for the design of our Group intranet, which it installed during the year. Steven Tolley was appointed Managing Director of both companies in April 2003. The o2c software and business was acquired in March 2003 and made a loss in the period. MANAGEMENT AND EMPLOYEES Paul Taylor has been appointed Group Commercial Director, responsible for corporate development and new product initiatives in addition to his existing responsibilities as Managing Director of SpeedDeck Building Systems and Stramit Industries. He was formerly Group Operations Director. Tom Bayne has been appointed Group Operations Director. He is an engineer by training an also a Chartered Accountant. He was previously a Corporate Finance Director at Hawkpoint, the independent investment bank. The number of people employed by Eleco companies increased again during the year. I welcome those who have joined us and, on your behalf, I would like to thank all our employees for the contribution they have made towards achieving these results. OUTLOOK We have a sound financial base, strong operating cash generation and a range of high quality, innovative building products and software to offer to the building industry. The Group's established core businesses have again made excellent progress during the year under review and have entered the current year with healthy order books. I anticipate that the task of integrating our newly acquired software businesses and tailoring their software programmes to the needs of our existing markets, with the attendant costs, should be completed by the end of the current financial year. Against this background, and despite the current economic uncertainties, I have every confidence in our strategy for growing Eleco for the longer-term benefit of our customers, our shareholders and our employees. John Ketteley Executive Chairman 10 October 2003 Eleco plc Consolidated Profit and Loss Account (Unaudited) For the year ended 30 June 2003 Notes 2003 2002 £'000 £'000 Turnover Continuing operations 3 35,494 32,873 Acquisitions 3 1,666 - 37,160 32,873 Operating profit Continuing operations 3 2,100 1,878 Acquisitions 3 (125) - 1,975 1,878 Loss on disposal of tangible fixed assets of continuing operations (33) - Profit on ordinary activities before interest and taxation 1,942 1,878 Net interest payable (86) (142) Profit on ordinary activities before taxation 1,856 1,736 Taxation (615) (497) Profit for the financial year 1,241 1,239 Dividends 4 (571) (477) Retained profit 670 762 Dividends per share 4 1.20p 1.15p Basic earnings per ordinary 10p share 5 2.8p 3.0p Diluted earnings per ordinary 10p share 6 2.8p 3.0p Reconciliation of Movement in Equity Shareholders' Funds (Unaudited) for the year ended 30 June 2003 2003 2002 £'000 £'000 Profit for the financial year 1,241 1,239 Other recognised losses relating to the year 221 (115) Dividends (571) (477) Proceeds from issue of ordinary shares 45 5 Issue of ordinary shares on acquisition of subsidiaries 1,455 50 Net increase in equity shareholders funds 2,391 702 Opening equity shareholders' funds 9,247 8,545 Closing equity shareholders' funds 11,638 9,247 Eleco plc Summarised Consolidated Balance Sheet (Unaudited) at 30 June 2003 2003 2002 £'000 £'000 Fixed assets 14,077 8,808 Current assets Stocks 1,864 1,838 Debtors 8,704 7,026 Cash at bank and in hand 2,334 3,333 12,902 12,197 Creditors: amounts falling due within one year (13,018) (9,874) Net current (liabilities)/assets (116) 2,323 Total assets less current liabilities 13,961 11,131 Creditors: amounts falling due after more than one year (1,939) (1,601) Provisions for liabilities and charges (384) (283) Net assets 11,638 9,247 Capital and reserves Called up share capital 4,879 4,282 Share premium account 5,983 5,080 Merger reserve 367 367 Profit and loss account 409 (482) Equity shareholders' funds 11,638 9,247 Eleco plc Consolidated Cash Flow Statement (Unaudited) for the year ended 30 June 2003 Notes 2003 2002 £'000 £'000 Net cash inflow from operating activities 11 2,560 4,191 Returns on investment and servicing of finance Interest received 133 31 Interest paid (199) (142) Interest element of finance lease rentals (23) (31) Net cash outflow from returns on investment and servicing of finance (89) (142) Net cash outflow from taxation (632) (6) Capital expenditure and financial investment Increase in loans to Employee Share Ownership Trust (39) (60) Purchase of fixed assets (1,457) (914) Disposal of tangible fixed assets 22 65 Purchase of investments (369) - Sale of investments 73 - Net cash outflow from capital expenditure and financial investment (1,770) (909) Acquisitions and disposals Purchase of subsidiary undertakings net of cash acquired 7,8,9 (2,383) (538) Sale of subsidiary undertakings' operations - 770 Net cash (outflow)/inflow from acquisitions and disposals (2,383) 232 Equity dividends paid (497) (412) Net cash (outflow)/inflow before financing (2,811) 2,954 Financing New bank loans 1,000 750 Repayment of principal under finance leases (246) (282) Repayment of bank loans (551) (301) Issue of ordinary shares 45 5 Net cash inflow from financing 248 172 (Decrease)/increase in cash in the year 12 (2,563) 3,126 Eleco plc Notes 1. The financial information in this announcement does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. Statutory accounts of the Company, on which the Auditors will report, will be delivered to the Registrar of Companies and posted to shareholders on 21 October 2003. The comparative figures for the year to 30 June 2002 have been taken from, but do not constitute, the Company's statutory financial statements for that financial year. Those financial statements have been reported on by the Auditors and delivered to the Registrar of Companies. The Report of the Auditors was unqualified and did not contain a statement under s237(2) or (3) of the Companies Act 1985. 2. The information herein has been prepared on the basis of the accounting policies adopted for the year ended 30 June 2003, as set out in the Company's Annual Report and Accounts. 3. Turnover and Segmental analysis Group turnover and profits were attributable as follows Turnover Operating profit/(loss) 2003 2002 2003 2002 £'000 £'000 £'000 £'000 Continuing activities Building systems 34,494 31,523 2,667 2,610 Software systems 2,666 1,350 (692) 12 Corporate - - - (744) Total continuing operations 37,160 32,873 1,975 1,878 For 2003, Corporate costs of £863,000 have been allocated, £670,000 to the Building Systems division and £193,000 to the Software Systems division. 4. A dividend of £164,000 (0.35p per share) was declared at the interim stage. A final dividend representing 0.85p per share is being proposed and, if approved at the Annual General Meeting, will be payable on 12 December 2003 to shareholders on the register on 28 November 2003. 5. The calculation of basic earnings per share is based on the profit attributable to equity shareholders of £1,241,000 (2002: £1,239,000) and on 44,326,775 ordinary shares (2002: 41,195,519), being the weighted average number of ordinary shares in issue during the year. 6. The calculation of diluted earnings per share is based on the profit attributable to equity shareholders of £1,241,000 (2002: £1,239,000) and a diluted weighted average of 44,571,887 ordinary shares (2002: 41,769,703). 7. On 3 February 2003, the Group acquired the entire issued share capital of Consultec Group AB for a total consideration, including acquisition expenses, of £4,877,000 of which £1,455,000 was satisfied by the issue of 5,705,660 ordinary shares credited as fully paid and ranking pari-passu with existing ordinary shares except that they did not rank for the interim dividend. Under a Software Licence Agreement dated 19 July 2002, entered into on the same date as an option agreement to acquire 100% of the issued share capital of Consultec Group AB, Eleco plc acquired certain limited rights to software products of Consultec Group AB and its subsidiaries at a cost of £344,000. The receipt of this amount paid by Eleco plc under the Software Licence Agreement, was included within the consolidated reserves of Consultec Group AB at the date of acquisition. The directors consider that, in view of the fact that the relevant rights are not rights acquired from a third party to the Group, the £344,000 paid represents in substance an increase in the effective price paid to acquire the 100% shareholding in Consultec Group AB. Accordingly in the consolidated accounts, the amount has been included as part of the consideration paid and the goodwill increased. Goodwill on acquisition of £4,219,000 has been capitalised and included within fixed assets. £3,422,000 of the total consideration, including expenses and the £344,000 referred to above, was paid in cash and £1,270,000 cash was acquired. 8. On 7 February 2003, the Group acquired the entire issued share capital of Leonardo Internet Limited for a total consideration, including acquisition expenses, of £236,000 paid in cash. Goodwill on acquisition of £56,000 has been capitalised and included within fixed assets. £110,000 cash was acquired. 9. On 3 March 2003, the Group acquired the business and intellectual property of o2c for a total consideration, including acquisition expenses, of £101,000 paid in cash. There was nil goodwill. 10. Post balance sheet events On 1 July 2003 the Group acquired the entire issued share capital of Softhold GmbH, the owner of the intellectual property in the Arcon software, for a total consideration, including acquisition expenses, of £263,000, paid in cash. 11. Reconciliation of operating profit to net cash flow from operating activities 2003 2002 £'000 £'000 Operating profit 1,975 1,878 Depreciation charge 1,126 1,182 Amortisation of intangible assets 166 94 Profit on sale of fixed assets (12) (9) Working capital (increase)/decrease (695) 1,046 2,560 4,191 12. Reconciliation of net cash flow to movement in net debt 2003 2002 £'000 £'000 (Decrease)/increase in cash in the year (2,563) 3,126 Cash flow from movements in debt and lease financing (203) (167) (Decrease)/increase in net debt resulting from cash flows (2,766) 2,959 Other non-cash items: New finance leases (173) (162) Finance lease obligations acquired with subsidiaries (144) - Effects of changes in foreign exchange rates 214 (87) Decrease/(increase) in net debt in the year (2,869) 2,710 Opening net funds/(debt) 464 (2,246) Closing net (debt)/funds (2,405) 464 13. The Annual General Meeting of Eleco plc will be held at The London Capital Club, 15 Abchurch Lane, London EC4N 7BB at 12:00 noon on 19 November 2003. This information is provided by RNS The company news service from the London Stock Exchange

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