Final Results

Eleco PLC 21 October 2004 21 October 2004 ELECO PLC The Building Systems and Construction Software Group PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2004 Summary • Turnover increased by 20.5 per cent. to £44,762,000 (2003: £37,160,000) • Operating profits on continuing operations increased by 9.8 per cent to £2,169,000 (2003: £1,975,000) following good second half performance across Group • Fully expensed Research and Development increased by 96 per cent. to £964,000 (2003: £491,000) • Group profit on ordinary activities after tax for the year was £311,000 (2003: £1,241,000) • Basic EPS of 0.6p (2003: 2.8p) • Earnings per share on continuing operations, adjusting for the post-tax losses of discontinued operations, amounted to 2.8p (2003: 3.0p) • Increased final dividend of 0.875p per share (2003: 0.85p per share); Total dividend for year of 1.25p (2003: 1.225p) • Improved cash flow generation: Net bank and leasing borrowings reduced to £310,000 (2003: £2,405,000) - with gearing reduced to 2.7 per cent (2003: 20.7%) John Ketteley, Executive Chairman of Eleco plc, commented: 'There has been an increasing trend for builders to adopt building methods which employ offsite manufactured products. There is also an increasing incidence in the use of software by builders and our customers to design, cost, manufacture and market their products. Eleco is now eminently well placed to meet these requirements. There are some signs that demand may be weakening in the construction sector and we also have to deal with rises in steel and cement prices as we go forward. Nevertheless, against a background of good cash generation, the development of new building products and software and the application of innovative software to design and manufacturing processes, I have every confidence in our future.' Enquiries to: John Ketteley, Executive Chairman john@ketteley.com David Dannhauser, Finance Director david.dannhauser@eleco.com Eleco plc Tel: 01920 443 830 Tarquin Edwards tarquin.edwards@holbornpr.co.uk Chris Steele chris.steele@holbornpr.co.uk Holborn Tel: 020 7929 5599 Chairman's Statement I am pleased to present my report on your Company's performance for the year ended 30 June 2004 and on the outlook for the current year. Group turnover for the year was £44,762,000 (2003: £37,160,000), an increase of 20.5 per cent. Group operating profit in the second half of the year was £1,715,000 (2003: £1,038,000). As a consequence of a stronger second half performance, Group operating profit for the year amounted to £2,169,000 (2003: £1,975,000), an increase of 9.8 per cent; operating profit from continuing operations was £2,335,000 (2003: £2,132,000), an increase of 9.5 per cent. Expenditure on research and development, incurred mainly on software programs for use in the Group's businesses or for sale to third parties and fully expensed in the year, rose to £964,000 from £491,000 last year. The decision to restructure our new media operations was reported in the Interim Statement. A loss of £996,000, including a goodwill write-off of £766,000, was incurred on the merger of the operations of Forma Communications in London with those of Leonardo Internet in Stafford. As a consequence, Group profit on ordinary activities after tax for the year was £311,000 (2003: £1,241,000) and earnings per share were lower at 0.6p (2003: 2.8p). Earnings per share on continuing operations, adjusting for the post-tax losses of discontinued operations, amounted to 2.8p (2003: 3.0p). Operating cash flow generation improved significantly during the year to £4,879,000 (2003: £2,560,000). Net bank and leasing borrowings at 30 June 2004 were reduced to £310,000 (2003: £2,405,000), representing gearing of 2.7 per cent (2003: 20.7 per cent). Dividend The Board has proposed a final dividend of 0.875p per share (2003: 0.85p) payable on 10 December 2004 to Shareholders on the Register on 26 November 2004. In doing so, the Board has looked beyond the results of the period and has had regard to the Group's underlying performance and strong cash generation in the year of its continuing businesses. The final dividend, if approved by shareholders, would result in the payment of dividends for the year of 1.25p per share (2003: 1.225p). OPERATING REVIEW Eleco Building Systems The Eleco Building Systems division continued to make excellent progress during the year. Turnover of the division increased by 16.1 per cent to £40,040,000 (2003: £34,494,000), representing 89.5 per cent of Group turnover. Operating profit was £3,433,000 (2003: £2,667,000), 28.7 per cent ahead of the previous year. Operating margins improved to 8.6 per cent from 7.7 per cent. Eleco Precast Bell & Webster Concrete completed Phase 2 of the Student Accommodation Project at Lancaster University and is now working on the design for Phase 3. Other achievements include a contract to supply the terracing for the prestigious Coventry Arena Project. Bell & Webster continues to be successful in winning orders for its FastBuild Rooms product for hotel and student accommodation. Eleco Building Components Roofing, Cladding and Panels SpeedDeck Building Systems performed well in a difficult market. The SpeedZip (R) brand is now well established and Vitesse(R) panels continue to make progress. We will shortly be releasing SpeedDeck(R) Designer 3 which will have the capability to demonstrate technical features in a 3D format provided by our o2c(R) visualisation software. Prompt Profiles, which was acquired in March 2004, has fitted very well into our roofing and cladding activities and we are already benefiting from the synergies that we anticipated at the time of its acquisition. The relocation of Downer Cladding Systems operations to Yaxley has also proved beneficial. We now have a better co-ordinated roofing and cladding business, capable of delivering a broader range of products and a more comprehensive technical service to our customers. Stramit Industries has been concentrating its effort with some success on establishing ElecoFloor(R), its patented acoustic flooring product for the house building and apartment markets. Initial orders have already been received from national builders. It will also be launching later this year a new, patented, acoustic flooring product for use in conjunction with concrete flooring. We have also established Eleco Timber Frame as a manufacturer of patented engineered wall framing components for the house building and apartment markets using Gang-Nail plates. Nail-plate Systems All three nail-plate systems businesses performed well in the year under review. Gang-Nail Systems recorded another excellent year. The core roof and truss systems business held its own in the UK in a very competitive market and its Ecojoist(R) business continued to grow. It also benefited from manufacturing a significantly increased volume of nail plates for its German affiliate, Eleco Bauprodukte. In the latter part of the year Gang-Nail Systems was adversely affected by sharply higher steel prices although more recently it was able to pass a portion of these increases on to customers. Steel price pressures and supply problems are continuing and we are monitoring the situation closely. During the year, Gang-Nail Systems released GNM@trix, a Windows(R) .Net based enterprise management software tool. An o2c(R) based 3D visualization tool for GN Roof and Truss has also been developed and is currently under test. Eleco Bauprodukte continues to maintain market share in Germany. It has also been affected by higher steel prices feeding through in recent months but management has now succeeded in passing a proportion of these on to customers. International Truss Systems delivered another outstanding performance in the year under review despite higher steel prices and supply difficulties. The move to new offices and warehousing facilities has proved very beneficial. International Truss Systems will shortly be introducing GN Roof and Truss Windows(R) based software in South Africa to replace its present DOS based design and engineering software. Eleco Software Turnover of the Eleco Software Division was £4,722,000 (2003: £2,666,000), of which £303,000 came from operations acquired during the year and £215,000 from the discontinued operations of Forma Communications. The Division made an operating loss of £1,264,000 (2003: loss £692,000), £166,000 of which related to discontinued businesses. The operating loss of £1,098,000 of the continuing software businesses is arrived at after charging goodwill amortisation of £260,000 and expenditure of £550,000 on development of existing and new software programs. A significant proportion of this expenditure is in respect of programs that have not yet been launched or are at an early stage in the marketing process. Some progress was made during the year on migrating Consultec programs to international markets but this has been taking longer than we had anticipated at the time of Consultec's acquisition. Nevertheless, Consultec's leading stair design software, StairCon(R) was launched in the UK earlier this year and more recently in the US market. Consultec is also assessing marketing strategies for this program in Germany and Poland. Consultec UK's Whole House Engineering program, developed by Consultec System, is also nearing completion and is at final testing phase. Eleco Software GmbH was acquired on 1 July 2003. It owns the copyright of ArCon (R) and is primarily responsible for the marketing of ArCon and o2c products worldwide. The assets of Online Warehouse, which markets ArCon and o2c in the UK were purchased in April 2004. ArCon and o2c are architectural visualization and 3D compression software tools widely used in Germany. I am pleased to report that this software was used to produce a 3D version of a Technical Manual for Ecojoist, which went on to win the 'Best Technical Information Support Award', sponsored by the Timber Research and Development Association (TRADA), at the recent Timber Trades Journal Awards. We have also supported the start up of Esign GmbH, a company that has developed specialised product catalogue management software and introduced the system to the wood flooring industry in Germany and Poland. The logic behind our investments in the creation of a strong capability in software is that the strategy would support the manufacturing businesses of the Group and also provide opportunities to develop profitable external sales. During the past year, the aim has been (i) to resolve some outstanding issues in relation to the sale of rights to use certain of the recently acquired products; (ii) to develop markets for concepts such as Consultec's stair design package, the architectural visualisation support products of ArCon and o2c and the Esign catalogue management system; and (iii) to establish the basis for increased profit and cash generation in the future. Management and Employees The number of employees of Eleco has increased to reflect the growth in our businesses acquired during the year. I welcome our new colleagues and I would also like to thank all Eleco employees for their contribution. Mats Lovgren, who was appointed a director earlier this year, will step down from the Board at the end of the Annual General Meeting. We would like to thank him for his contribution. He continues as Non Executive Chairman of Consultec Group AB. Organisation On 1 July 2004, all our UK manufacturing operations other than Eleco Precast, have been brought together as Eleco Building Components. Paul Taylor was appointed Chief Executive of Eleco Building Components on 1 July 2004. Fred Newby will continue as Chief Executive of Eleco Precast. Outlook All our Building Systems operations in the UK, Germany and South Africa have made a good start to the year. The Structural Precast business experienced a slow start but should now pick up once confirmation of the major order for Phase 3 of the Lancaster University Student Accommodation project is received and works can begin. We have more major precast projects under consideration for the latter part of the year. Our Software businesses have made a better start to the year, although expenditure on development of new and existing programs continues to exceed profit on sales of current programs. Over the course of the next year, I expect an improvement in performance as development spending falls and the new products are introduced to the market. There has been an increasing trend for builders to adopt building methods which employ offsite manufactured products. There is also an increasing incidence in the use of software by builders and our customers to design, cost, manufacture and market their products. Eleco is now eminently well placed to meet these requirements. There are some signs that demand may be weakening in the construction sector and we also have to deal with rises in steel and cement prices as we go forward. Nevertheless against a background of good cash generation, the development of new building products and software and the application of innovative software to design and manufacturing processes, I have every confidence in our future. John Ketteley EXECUTIVE CHAIRMAN 21 October 2004 Eleco plc Consolidated Profit and Loss Account (Unaudited) For the year ended 30 June 2004 Notes 2004 2003 £'000 £'000 Turnover Continuing operations 3 43,981 37,160 Acquisitions 3 566 - 44,547 37,160 Discontinued operations 215 - Turnover 44,762 37,160 Operating profit Continuing operations 3 2,578 2,132 Acquisitions 3 (243) - 2,335 2,132 Discontinued operations 3 (166) (157) Operating profit 2,169 1,975 Loss on termination of discontinued operations (996) - Loss on disposal of tangible fixed assets of continuing operations - (33) Profit on ordinary activities before interest 1,173 1,942 Net interest payable (237) (86) Profit on ordinary activities before taxation 936 1,856 Taxation (625) (615) Profit for the financial year 311 1,241 Dividends 4 (611) (571) Retained (loss)/profit (300) 670 Dividends per share 4 1.25p 1.225p Basic earnings per ordinary 10p share 5 0.6p 2.8p Diluted earnings per ordinary 10p share 6 0.6p 2.8p Earnings per ordinary 10p share on continuing operations 5 2.8p 3.0p Reconciliation of Movement in Equity Shareholders' Funds (Unaudited) for the year ended 30 June 2004 2004 2003 (restated) £'000 £'000 Profit for the financial year as reported 311 1,241 Other recognised profits relating to the year 47 221 LTIP amortisation expense 175 99 Increase in own shares held by ESOT (45) (39) Dividends (611) (571) Proceeds from issue of ordinary shares 68 45 Issue of ordinary shares on acquisition of subsidiary undertakings - 1,455 (Decrease)/increase in equity shareholders' funds (55) 2,451 Opening equity shareholders' funds as reported 11,636 9,247 Restatement - (62) Opening equity shareholders' funds 11,636 9,185 Closing equity shareholders' funds 11,581 11,636 Eleco plc Summarised Consolidated Balance Sheet (Unaudited) at 30 June 2004 2004 2003 (restated) £'000 £'000 Fixed assets 14,481 14,075 Current assets Stocks 2,370 1,864 Debtors 9,140 8,704 Cash at bank and in hand 2,490 2,334 14,000 12,902 Creditors: amounts falling due within one year (13,628) (13,018) Net current assets/(liabilities) 372 (116) Total assets less current liabilities 14,853 13,959 Creditors: amounts falling due after more than one year (2,859) (1,939) Provisions for liabilities and charges (413) (384) Net assets 11,581 11,636 Capital and reserves Called up share capital 4,910 4,879 Share premium account 6,020 5,983 Merger reserve 367 367 Other reserve (50) (182) Profit and loss account 334 589 Equity shareholders' funds 11,581 11,636 Eleco plc Consolidated Cash Flow Statement (Unaudited) for the year ended 30 June 2004 Notes 2004 2003 £'000 £'000 Net cash inflow from continuing operations 10 5,205 2,582 Net cash outflow from discontinued operations 10 (326) (22) Net cash inflow from operating activities 10 4,879 2,560 Returns on investment and servicing of finance Interest received 130 133 Interest paid (342) (199) Interest element of finance lease rentals (22) (23) Net cash outflow from returns on investment and servicing of finance (234) (89) Net cash outflow from taxation (773) (632) Capital expenditure and financial investment Purchase of fixed assets (1,259) (1,457) Disposal of tangible fixed assets 103 22 Purchase of investments (154) (369) Sale of investments - 73 Net cash outflow from capital expenditure and financial investment (1,310) (1,731) Acquisitions and disposals Purchase of subsidiary undertakings 7,8 (363) (3,763) Cash acquired with subsidiary undertakings 7,8 735 1,380 Net cash inflow/(outflow) from acquisitions and disposals 372 (2,383) Equity dividends paid (597) (497) Net cash inflow/(outflow) before financing 2,337 (2,772) Financing New bank loans 500 1,000 Repayment of principal under finance leases (225) (246) Repayment of bank loans (685) (551) Issue of ordinary shares 68 45 Own shares purchased by Employee Share Ownership Trust (45) (39) Net cash (outflow)/inflow from financing (387) 209 Increase/(decrease) in cash in the year 11 1,950 (2,563) 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 26 October 2004. The comparative figures for the year to 30 June 2003 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 2004, as set out in the Company's Annual Report and Accounts, including the adoption of UITF 38 - Accounting for ESOP Trusts 3. Turnover and Segmental analysis Group turnover and profits were attributable as follows Turnover Operating profit/(loss) 2004 2004 2004 2003 2004 2004 2004 2003 Continuing Acquisitions Continuing Acquisitions £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Continuing operations Building Systems 39,777 263 40,040 34,494 3,358 75 3,433 2,667 Software Systems 4,204 303 4,507 2,171 (780) (318) (1,098) (535) Total continuing 43,981 566 44,547 36,665 2,578 (243) 2,335 2,132 Discontinued operations Software Systems 215 495 (166) (157) Total discontinued 215 495 (166) (157) Total 44,762 37,160 2,169 1,975 4. A dividend of £185,000 (0.375p per share) was declared at the interim stage. A final dividend representing 0.875p per share is being proposed and, if approved at the Annual General Meeting, will be payable on 10 December 2004 to shareholders on the register on 26 November 2004. 5. The calculation of basic earnings per share is based on the profit attributable to equity shareholders of £311,000 (2003: £1,241,000) and on 48,350,144 ordinary shares (2003: 44,326,775), being the weighted average number of ordinary shares in issue during the year. The calculation of earnings per share from continuing operations, which gives a clearer guide to the underlying performance in the period, is based upon the profit attributable to members of £1,354,000 (2003: £1,351,000) and on 48,350,144 (2003: 44,326,775) ordinary shares, 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 £311,000 (2003: £1,241,000) and a diluted weighted average of 48,417,491 ordinary shares (2003: 44,571,887). 7. On 1 July 2003, the Company acquired the entire issued share capital of Eleco Software GmbH (formerly Softhold GmbH) for a total consideration, including acquisition expenses and the matter referred to below, of £456,000. Under a software licence agreement with Eleco Software GmbH, Eleco plc acquired on 5 May 2003 certain limited rights to the Arcon software of Eleco Software GmbH at a cost of £187,000, the receipt of which was included within the reserves of Eleco Software GmbH 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 £187,000 paid represents in substance an increase in the effective price paid to acquire the 100% shareholding in Eleco Software GmbH. Accordingly in the consolidated accounts, the amount has been included as part of the consideration paid and the goodwill increased. Goodwill on acquisition of £396,000 has been capitalized and included within fixed assets. £456,000 of the total consideration, including expenses and the £187,000 referred to above, was paid in cash and £13,000 cash was acquired. 8. On 18 March 2004, the Company acquired the entire issued share capital of RB Fabrications (Norwich) Limited, the holding company of Prompt Profiles Limited, for a total consideration, including acquisition expenses, of £1,269,000. Goodwill on acquisition of £313,000 has been capitalised and included within fixed assets. £94,000 of the total consideration, including expenses, was paid in cash, the balance being settled by the issue of secured loan notes to the value of £1,175,000. £722,000 cash was acquired. 9. Post balance sheet events On 1 July 2004, the Group acquired the entire issued share capital of Ten Data AB, together with the business and assets of Ten Win AB, both companies being sellers of software in Sweden, for a cash consideration of £249,000. 10. Reconciliation of operating profit to net cash flow from operating activities Continuing Discontinued 2004 2003 2004 2003 £'000 £'000 £'000 £'000 Operating profit 2,335 2,132 (166) (157) Termination costs and losses - - (230) - Depreciation charge 1,249 1,112 20 14 Amortisation of intangible assets 352 166 - - Amortisation of LTIP awards 175 99 - - (Profit)/loss on sale of fixed assets (2) (12) 8 - Working capital decrease/(increase) 1,096 (915) 42 121 5,205 2,582 (326) (22) 11. Reconciliation of net cash flow to movement in net debt 2004 2003 £'000 £'000 Increase/(decrease) in cash in the year 1,950 (2,563) Cash flow from movements in debt and lease financing 410 (203) Increase/(decrease) in net debt resulting from cash flows 2,360 (2,766) Other non-cash items: New finance leases (281) (173) Finance lease obligations acquired with subsidiaries - (144) Effects of changes in foreign exchange rates 16 214 Decrease/(increase) in net debt in the year 2,095 (2,869) Opening net (debt)/funds (2,405) 464 Closing net (debt) (310) (2,405) 12. 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 17 November 2004. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Elecosoft Public Limited Company (ELCO)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today