Interim Results

RNS Number : 3056Z
Elecosoft PLC
17 September 2015
 

 

 

 

 17 September 2015

 

              Elecosoft plc

("Elecosoft", the "Group" or the "Company")

Building on Technology®

 

Interim Results

For the six months ended 30 June 2015

 

Elecosoft plc, the AIM listed BIM construction and 3D visualisation software specialist, today announces its unaudited results for the six months to 30 June 2015.

 

Financial Highlights

 

·      Revenue £8.6m (H1 2014: £8.6m) of which 42% was from recurring maintenance and support revenue (H1 2014: 42%)

·      Operating profit £569,000 (H1 2014 restated: £563,000)

·      Profit before tax £502,000 (H1 2014: restated £423,000)

·      EBITDA £893,000 (H1 2014: restated £909,000)

·      Earnings per share - basic and diluted of 0.6p (H1 2014: restated 0.5p)

·      Net borrowings down 25%  to £1.5m (31 December 2014: £2.0m)

 

At constant exchange rates*

·      Revenue £9.5m, up 10%. (H1 2014: £8.6m)

·      Operating profit £599,000, up 6%. (H1 2014 restated £563,000)

·      Profit before tax £533,000, up 26% (H1 2014: restated £423,000)

·      EBITDA £938,000, up 3% (H1 2014: restated £909,000)

 

*2015 restated at 2014 average exchange rates

 

Operational Highlights

 

·      Core product releases including Arcon Evo, Bidcon BIM, Site Progress Mobile for web, Asta Powerproject BIM v2 and Asta Powerproject v13.

·      Investment in growth with the appointment of a Bidcon Sales Manager for the UK, a Staircon Sales Manager for Europe and Channel Managers for North America and Rest of World.

·      Won a significant order for Asta Powerproject in the US and established a new sales operation in that market.

 

Outlook

 

·      Continued investment in developing new markets through new reseller arrangements.

·      Management remain positive on the outlook for the full year supported by upcoming product releases and increased sales resource.

 

 

Executive Chairman, John Ketteley said:

 

"I am pleased to report an overall positive performance for the six months to 30 June 2015, despite the adverse impact of exchange rate movements. Elecosoft's transformation into a specialist international provider of software to the construction industry is beginning to bear fruit."

 

 

For further information please contact:

 

 

 

Elecosoft plc

http://www.elecosoft.com

John Ketteley, Executive Chairman

Nick Caw, Chief Executive Officer

Graham Spratling, Group Finance Director

Tel: 0207 422 0044

 

 

 

Finncap Ltd

 

Geoff Nash / Kate Bannatyne (Corporate Finance)

Malar Velaigam (Corporate Broking)

Tel: 0207 220 0500

 

 

Redleaf Communications

 

 Rebecca Sanders-Hewett / David Ison

/ Susie Hudson

Tel: 0207 7382 4730

elecosoft@redleafpr.com

 

About Elecosoft plc

 

Elecosoft plc provides software solutions which cover the core elements of a construction project - design and visualisation (3D), resource planning (4D) and cost estimation / tracking (5D). It also provides a range of engineering software tools.

 

The Group operates principally in Sweden, Germany and the UK.

 

Elecosoft plc is listed on the Alternative Investment Market in London (AIM:ELCO.L).

 

For more information please visit www.elecosoft.com

 

Chairman's Statement

 

I am pleased to report an improved performance for the six months to 30 June 2015, despite continuing adverse currency movements, and that Elecosoft's transformation into an integrated international specialist provider of market leading software and related services to the construction industry is beginning to bear fruit.

 

Group revenue and operating profit at constant exchange rates climbed 10 per cent and 6 per cent respectively in the period compared with the same period last year. At current exchange rates, group revenue and operating profit were only slightly higher as a consequence of adverse exchange rates in the period.

 

Profit before tax for the period was 19 per cent higher at £502,000 (2014: £423,000), due principally to significantly lower borrowing costs. On a constant currency basis, profit before tax increased significantly to £533,000. However basic and diluted earnings per share were restricted to 2.0 per cent before rounding, as a consequence of the placing of ordinary shares in mid-2014.

 

Group borrowings at 30 June 2015 were at £1.5m, more than 25 per cent lower than borrowings at 31 December 2014.

 

Business overview

We continue to add to and enhance our core software product range. During the period under review, we announced the following new software programs and enhancements of existing programs: (i) the new Arcon Evo 3D architectural visualisation program; (ii) an international version of Bidcon BIM, our new BIM estimating software program; (iii) an enhanced web version of our successful Site Progress Mobile App; (iv) Version 13 enhancement of Asta Powerproject; and finally (v) our new Asta Powerproject BIM 5D project management software program.

 

We also made several key appointments during the period, to support our sales teams in the sale and marketing of these significant product releases. These included the appointment of a dedicated Bidcon Sales Manager for the UK market, and Channel Managers to support our sales and marketing efforts in both North America and Rest of World.  We also held successful partner conferences in Europe and the United States. 

 

Asta Powerproject, Elecosoft's market leading project management software program used within the UK construction market, is now increasingly being marketed in overseas markets; in particular in Sweden, the Netherlands, Germany and the USA. I am also pleased to report that in the period under review, we succeeded in completing the Group's largest single order for the installation of Asta Powerproject software for a very substantial US customer.

 

Our Swedish colleagues released our new multi-discipline Bidcon estimation program, became a Microsoft Gold Partner and completed their largest combined order to date of our Bidcon, Sitecon and Powerproject software to a single customer in Sweden.

 

ESIGN, our interior visualisation and marketing operation, also demonstrated promising progress in the period signing a significant order with a large US floor manufacturer to scan its products and provide marketing and visualisation solutions.

 

Financial overview

Revenue for the first half of 2015 was £8.6m (H1 2014: £8.6m) of which £6.2m (H1 2014: £6.5m) was generated from overseas operations. Currency exchange rates for the Swedish Krona and the Euro have changed materially in the last year with the average rate for both currencies weakening against the pound by 17 per cent and 12 per cent respectively. Consequently, currency headwinds also adversely impacted the Group's revenue performance in the period under review. At constant exchange rates revenue would have been £9.5m, up by 10 per cent compared with last year.

 

Software licence sales grew 17 per cent compared with the same period last year, principally due to gaining a significant new customer in the US. Recurring revenue for the period was £3.6m (£4.0m at constant exchange rates) compared with £3.7m last year. Recurring revenue represents 42 per cent of total sales which is unchanged from last year.

 

Operating profit was £569,000 compared with £563,000 last year after product development expenses of £909,000 (H1 2014: £1.1m) and non-recurring staff costs of £161,000 (H1 2014: £nil). The adverse currency impact on the Group's revenue was partly offset by the favourable impact on the Group's operating costs, of which 75 per cent were incurred overseas (2014 H1: 80 per cent). The operating margin was unchanged at 7 per cent (H1 2014: 7 per cent).

 

Total software development expenditure amounted to £1.2m (2014 H1: £1.4m) of which £293,000 (2014 H1: £313,000) was capitalised in the period. The total spend represents 14 per cent of sales (H1 2014: 16 per cent) and is in line with the Group's commitment to ensuring that its product offerings are expanding, well maintained and leading in their segments.

 

The Group generated cash from operations of £1.2m compared to £1.1m in the first half of 2014. This positive performance helped to further reduce the Group's net debt from £2.0m at 1 January 2015 to £1.5m at 30 June 2015. Investing activities in the period were largely internal capitalised development and intangible asset purchases £50,000 (2014 H1: £78,000).

 

Profit before tax was £502,000, up 19 per cent compared to the same period last year. At constant exchange rates profit before tax would have been £533,000, an increase of some 26 per cent. Basic earnings per share were 0.6p, up 0.1p compared with the same period last year with diluted earnings per share also at 0.6p. (2014 H1: 0.5p).

 

New director

Graham Spratling joined Elecosoft in 2007 as Group Financial Controller and was actively involved in the Group's difficult transition from a Building Products and Software Group to a Specialist International Software Group. The Board was therefore delighted that he accepted the invitation to become Group Finance Director and we look forward to working with him in the continued transformation of Elecosoft.

 

Name change 

The Company completed its name change from Eleco plc to Elecosoft plc during the period. The name change is part of a planned wider, ongoing rebranding and consolidation exercise which will facilitate the promotion of Elecosoft as a specialist integrated international software group. The re-branding exercise has been well received by our customers and the market.

 

Balance sheet reconstruction

The proposed balance sheet reconstruction was duly approved by the High Court and completed successfully on 1 July 2015. As a consequence, the Group is now permitted to resume the payment of dividends when the Board considers it appropriate and prudent to do so. The Board has decided not to resume the payment of dividends at the present time but will review the policy as the growth in the business accelerates and the gearing level declines further.

 

Outlook

We continue to build on the foundations that were put in place following the successful refinancing exercise in 2014. Elecosoft is profitable and cash generative and is beginning to benefit from the market's response to the technical excellence of the software products created by the skill and flair of our development teams.  We remain positive on the outlook for the full year and beyond and look forward to making the best of the opportunities that present themselves in the second half of 2015.

 

 

John Ketteley

Executive Chairman

17 September 2015

 

 

 

Condensed Consolidated Income Statement

for the financial period ended 30 June 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

Year Ended

 

 

 

 

 

 

2015

 

(unaudited-

 

31 December

 

 

 

 

 

 

(unaudited)

 

restated)

 

2014

 

 

 

 

 

Notes

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

3

8,628

 

8,617

 

16,484

 

 

Cost of sales

 

 

 

(1,297)

 

(1,356)

 

(2,715)

 

 

Gross profit

 

 

 

7,331

 

7,261

 

13,769

 

 

Selling and administrative expenses

 

(6,496)

 

(6,340)

 

(12,329)

 

 

Operating profit before amortisation of intangible assets and exceptional items

 

835

 

921

 

1,440

 

 

Amortisation of intangible assets

 

(236)

 

(245)

 

(397)

 

 

Exceptional items

 

5

(30)

 

(113)

 

(138)

 

 

Operating profit

 

4,6

569

 

563

 

905

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

7

-

 

2

 

3

 

 

Finance cost

 

 

7

(67)

 

(142)

 

(224)

 

 

Profit before tax

 

 

502

 

423

 

684

 

 

Tax

 

 

 

(87)

 

(97)

 

(173)

 

 

Profit for the financial period from continuing operations

 

415

 

326

 

511

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the financial period from discontinued operations

 

-

 

5,911

 

5,556

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the financial period

 

415

 

6,237

 

6,067

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

415

6,237

 

6,067

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

 

 

 

 

 

 

 

 

Continuing operations

 

8

0.6

p

0.5

p

0.8

p

 

Discontinued operations

 

8

0.0

p

10.2

p

8.3

p

 

Total operations

 

 

0.6

p

10.7

p

9.1

p

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - diluted

 

 

 

 

 

 

 

 

 

Continuing operations

 

8

0.6

p

0.5

p

0.8

p

 

Discontinued operations

 

8

0.0

p

10.2

p

8.3

p

 

Total operations

 

 

0.6

p

10.7

p

9.1

p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Comprehensive Income

for the financial period ended 30 June 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

 

 

 

 

 

 

 

 

 

 

2014

 

Year  Ended

 

 

 

 

 

 

 

2015

 

(unaudited -

 

31 December

 

 

 

 

 

 

 

(unaudited)

 

restated)

 

2014

 

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

Profit for the period

 

 

 

415

 

6,237

 

6,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Items that will be reclassified subsequently to profit or loss:

 

 

 

 

 

 

 

 

Translation differences on foreign operations

 

 

(118)

 

39

 

60

 

 

Other comprehensive income net of tax

 

 

(118)

 

39

 

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the period

 

297

 

6,276

 

6,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

 

 

297

 

6,276

 

6,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Changes in Equity

for the financial period ended 30 June 2015

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Translation reserve

Other reserve

Retained earnings

Total

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

At 1 January 2015

7,487

7,923

4,086

(161)

(358)

(12,255)

6,722

 

 

 

 

 

 

 

 

 

 

 

 

Share based payments

-

-

-

-

-

13

13

 

 

Transactions with owners

-

-

-

-

-

13

13

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

415

415

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Exchange differences on translation of net investments in foreign operations

-

-

-

(118)

-

-

(118)

 

 

Total comprehensive income for the period

-

-

-

(118)

-

415

297

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2015 (unaudited)

7,487

7,923

4,086

(279)

(358)

(11,827)

7,032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Translation reserve

Other reserve

Retained earnings

Total

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

At 1 January 2014

6,066

6,396

4,086

(221)

(358)

(18,322)

(2,353)

 

 

 

 

 

 

 

 

 

 

 

 

Issue of share capital

303

325

-

-

-

-

628

 

 

Transactions with owners

303

325

-

-

-

-

628

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

6,237

6,237

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Exchange differences on translation of net investments in foreign operations

-

-

-

39

-

-

39

 

 

Total comprehensive income for the period

-

-

-

39

-

6,237

6,276

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2014 (unaudited)

6,369

6,721

4,086

(182)

(358)

(12,085)

4,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Translation reserve

Other reserve

Retained earnings

Total

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

At 1 January 2014

6,066

6,396

4,086

(221)

(358)

(18,322)

(2,353)

 

 

Issue of share capital

1,421

1,527

-

-

-

-

2,948

 

 

Transactions with owners

1,421

1,527

-

-

-

-

2,948

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

6,067

6,067

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Exchange differences on translation of net investments in foreign operations

-

-

-

60

-

-

60

 

 

Total comprehensive income for the period

-

-

-

60

-

6,067

6,127

 

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2014

7,487

7,923

4,086

(161)

(358)

(12,255)

6,722

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheet

at 30 June 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30 June

 

 

 

 

 

 

 

 

 

2015

 

2014

 

31 December

 

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

2014

 

 

 

 

 

 

Notes

£'000

 

£'000

 

£'000

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

 

9

10,514

 

10,620

 

10,571

 

 

Other intangible assets

 

 

9

1,771

 

1,601

 

1,683

 

 

Property, plant and equipment

 

 

571

 

617

 

575

 

 

Total non-current assets

 

 

12,856

 

12,838

 

12,829

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

Inventories

 

 

 

 

10

 

23

 

8

 

 

Trade and other receivables

 

 

2,328

 

2,592

 

3,110

 

 

Current tax assets

 

 

 

189

 

116

 

148

 

 

Cash and cash equivalents

 

 

1,686

 

1,127

 

1,198

 

 

Assets of disposal group

 

 

 

-

 

764

 

-

 

 

Total current assets

 

 

 

4,213

 

4,622

 

4,464

 

 

Total assets

 

 

 

17,069

 

17,460

 

17,293

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

Bank overdraft

 

 

10

(355)

 

(3,329)

 

-

 

 

Borrowings

 

 

 

10

(750)

 

(1,125)

 

(750)

 

 

Obligations under finance leases

 

 

(164)

 

(222)

 

(141)

 

 

Trade and other payables

 

 

(1,193)

 

(2,034)

 

(1,586)

 

 

Provisions

 

 

 

 

(142)

 

(302)

 

(142)

 

 

Current tax liabilities

 

 

 

-

 

(5)

 

-

 

 

Accruals and deferred income

 

11

(5,025)

 

(5,157)

 

(5,189)

 

 

Total current liabilities

 

 

 

(7,629)

 

(12,174)

 

(7,808)

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

Borrowings

 

 

 

10

(1,688)

 

-

 

(2,063)

 

 

Obligations under finance leases

 

 

(262)

 

(265)

 

(279)

 

 

Deferred tax liabilities

 

 

 

(203)

 

(192)

 

(162)

 

 

Non-current provisions

 

 

 

(220)

 

(177)

 

(220)

 

 

Other non-current liabilities

 

 

(35)

 

(101)

 

(39)

 

 

Total non-current liabilities

 

 

(2,408)

 

(735)

 

(2,763)

 

 

Total liabilities

 

 

 

(10,037)

 

(12,909)

-

(10,571)

 

 

Net assets

 

 

 

 

7,032

 

4,551

 

6,722

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

7,487

 

6,369

 

7,487

 

 

Share premium account

 

 

 

7,923

 

6,721

 

7,923

 

 

Merger reserve

 

 

 

4,086

 

4,086

 

4,086

 

 

Translation reserve

 

 

 

(279)

 

(182)

 

(161)

 

 

Other reserve

 

 

 

(358)

 

(358)

 

(358)

 

 

Retained earnings

 

 

 

(11,827)

 

(12,085)

 

(12,255)

 

 

Equity attributable to shareholders of the parent

7,032

 

4,551

 

6,722

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statement of Cash Flows

for the financial period ended 30 June 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

six months to 30 June

 

Year Ended

 

 

 

 

 

 

2015

 

2014

 

31 December

 

 

 

 

 

 

(unaudited)

 

(unaudited)

 

2014

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Profit before tax

 

 

 

502

 

306

 

7,788

 

 

Net finance costs

 

 

67

 

146

 

228

 

 

Depreciation charge

 

 

88

 

101

 

198

 

 

Amortisation charge

 

 

236

 

245

 

397

 

 

(Profit)/loss on sale of property, plant and equipment

(5)

 

3

 

(109)

 

 

Share based payment charge

 

 

13

 

-

 

-

 

 

Retirement benefit obligation - derecognition

 

-

 

-

 

(7,738)

 

 

Decrease in provisions

 

 

-

 

(501)

 

(618)

 

 

Cash generated in operations before working capital movements

901

 

300

 

146

 

 

Decrease/(increase) in trade and other receivables

406

 

1,019

 

(155)

 

 

(Increase)/decrease in inventories and work in progress

(4)

 

(8)

 

8

 

 

Decrease in trade and other payables

 

(102)

 

(172)

 

(244)

 

 

Net increase in discontinued operations working capital

-

 

(101)

 

(108)

 

 

Cash generated/(used) in operations

 

1,201

 

1,038

 

(353)

 

 

Interest paid

 

 

 

(87)

 

(174)

 

(240)

 

 

Interest received

 

 

-

 

3

 

3

 

 

Net income tax (paid)/received

 

 

(95)

 

57

 

(94)

 

 

Net cash inflow/(outflow) from operating activities

1,019

 

924

 

(684)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used)/generated in investing activities

 

 

 

 

 

 

 

Purchase of intangible assets

 

 

(343)

 

(391)

 

(637)

 

 

Purchase of property, plant and equipment

 

(33)

 

(17)

 

(85)

 

 

Acquisition of subsidiary undertakings net of cash acquired

 

-

 

-

 

(26)

 

 

Proceeds from sale of property, plant, equipment  and intangible assets

 

70

 

15

 

1,114

 

 

Sale of businesses net of expenses

 

-

 

-

 

474

 

 

Net cash (outflow)/inflow from investing activities

(306)

 

(393)

 

840

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash (used)/generated in financing activities

 

 

 

 

 

 

 

Proceeds from new bank loan

 

 

-

 

-

 

3,000

 

 

Repayment of bank loans

 

 

(375)

 

(200)

 

(1,513)

 

 

Repayments of obligations under finance leases

(108)

 

(91)

 

(283)

 

 

Issue of share capital

 

 

-

 

628

 

2,948

 

 

Net cash (outflow)/inflow from financing activities

(483)

 

337

 

4,152

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

230

 

868

 

4,308

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

1,198

 

(3,013)

 

(3,013)

 

 

Effects of changes in foreign exchange rates

 

(97)

 

(57)

 

(97)

 

 

Cash and cash equivalents at end of period

 

1,331

 

(2,202)

 

1,198

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents comprise:

 

 

 

 

 

 

 

 

Cash and short term deposits

 

 

1,686

 

1,127

 

1,198

 

 

Bank overdrafts

 

 

(355)

 

(3,329)

 

-

 

 

 

 

 

 

1,331

 

(2,202)

 

1,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Interim Financial Statements

 

 

1. General information

 

The company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 66 Clifton Street, London, EC2A 4HB.

 

The company is listed on the Alternative Investment Market ("AIM")

 

The condensed consolidated interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's consolidated financial statements for the year ended 31 December 2014 have been filed and the audit report was not qualified and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.

 

 

2. Basis of preparation

 

The condensed consolidated interim financial statements for the six months to 30 June 2015 have been prepared in accordance with the accounting policies which will be applied in the twelve months financial statements to 31 December 2015. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and as adopted for use in the European Union that are effective at 30 June 2015.

 

The condensed consolidated interim financial statements are unaudited and have not been subject to review. They do not include all the information and disclosures required in the annual financial statements, and therefore should be read in conjunction with the Group's published financial statements as at 31 December 2014.

 

In accordance with IFRS 5, the prior year comparative figures for the six months to 30 June 2014 have been restated to reflect the reclassification of non-recurring bank fees and charges. Non recurring bank fees and charges of £113,000 were reported in discontinued operations in the Group's condensed consolidated financial statements for the six months to 30 June 2014. These costs were subsequently reclassified to exceptional items in the financial statements for the year to 31 December 2014.

 

The comparative figures for the year ended 31 December 2014 are not the Company's statutory accounts for that period but have been extracted from these accounts.

 

The Directors, having considered the Group's current financial resources, have concluded that they are adequate for the Group's present requirements. Thus the condensed consolidated interim financial information has been prepared on the going concern basis. 

 

 

New accounting standards and interpretations are effective for the first time in the current period but have had no impact on the results or financial position of the Group. Furthermore, new standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the current period have not been adopted early.

 

Estimates

Application of the Group's accounting policies in preparing condensed consolidated interim financial statements requires management to make judgements and estimates that affect the reported amount of assets and liabilities, revenues and expenses.  Actual results may ultimately differ from these estimates.

 

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2014.

 

Risks and uncertainties

A summary of the Group's principal risks and uncertainties was set out on page 17 of the 2014 annual report and accounts. The Board considers these risks and uncertainties are still relevant to the current financial year and the impact of changes in the UK economy is reviewed in the Chairman's statement contained in this report.

 

 

3. Revenue

Revenue disclosed in the income statement is analysed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year ended

 

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Licence sales

 

 

2,636

 

2,246

 

4,008

 

 

Recurring maintenance and support revenue

 

3,642

 

3,657

 

7,351

 

 

Services income

 

 

2,350

 

2,714

 

5,125

 

 

 

 

 

8,628

 

8,617

 

16,484

 

 

 

 

 

 

 

 

 

 

 

 

 

4. Segmental information

 

Operating segments

The Group comprises of software business activity only and as such the information is presented in line with management information, as one segment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year ended

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

£'000

 

£'000

 

£'000

 

 

Revenue

 

8,628

 

8,617

 

16,484

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit

 

1,744

 

2,001

 

3,464

 

 

Product development

 

(909)

 

(1,080)

 

(2,024)

 

 

Operating profit before amortisation of intangible assets and exceptional items

835

 

921

 

1,440

 

 

Amortisation of intangible assets

 

(236)

 

(245)

 

(397)

 

 

Exceptional items

 

(30)

 

(113)

 

(138)

 

 

Segment result

 

569

 

563

 

905

 

 

Net finance cost

 

(67)

 

(140)

 

(221)

 

 

Segment profit before tax

 

502

 

423

 

684

 

 

Tax

 

(87)

 

(97)

 

(173)

 

 

Segment profit after tax

 

415

 

326

 

511

 

 

 

 

 

 

 

 

 

 

 

Development costs capitalised

 

(293)

 

(313)

 

(553)

 

 

Total development costs

 

(1,202)

 

(1,393)

 

(2,577)

 

 

 

 

 

 

 

 

 

 

 

Segment result

 

569

 

563

 

905

 

 

Amortisation of intangible assets

 

236

 

245

 

397

 

 

Depreciation charge

 

88

 

101

 

198

 

 

EBITDA

 

893

 

909

 

1,500

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating profit represents operating profit before expensed product development costs, intangible asset amortisation and exceptional items. Development project costs are expensed as incurred unless they meet the accounting policy requirements for capitalisation. The accounting policy requirements are set out on page 43 of the 2014 annual report and accounts.

 

Geographical and sales channel information

Revenue by geographical segment represents revenue from external customers based upon the geographical location of the customer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year ended

 

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

UK

 

 

2,391

 

2,124

 

4,291

 

 

Scandinavia

 

 

3,855

 

4,350

 

7,917

 

 

Germany

 

 

1,201

 

1,111

 

2,447

 

 

Rest of Europe

 

 

604

 

829

 

1,404

 

 

Rest of World

 

 

577

 

203

 

425

 

 

 

 

 

8,628

 

8,617

 

16,484

 

 

 

 

 

 

 

 

 

 

 

 

The Group utilises Business Partners to access certain markets as resellers. Revenue by sales channel represents revenue from external customers through direct sales and resellers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year ended

 

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Direct

 

 

7,929

 

8,210

 

15,774

 

 

Reseller

 

 

699

 

407

 

710

 

 

 

 

 

8,628

 

8,617

 

16,484

 

 

 

 

 

 

 

 

 

 

 

 

 

5. Exceptional items

Exceptional items represent income and costs considered necessary to be separately disclosed by virtue of their size or nature.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

-

 

(113)

 

(113)

 

 

Capital reduction expenses

 

(30)

 

-

 

(25)

 

 

 

(30)

 

(113)

 

(138)

 

 

 

 

 

 

 

 

 

 

 

 

Legal fees associated with the balance sheet reconstruction that completed on 1 July 2015 are reported under exceptional items.

 

 

6. Operating profit

Operating profit for the period is after charging the following items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Year ended

 

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring staff costs

 

161

 

-

 

102

 

 

Foreign exchange losses

 

31

 

15

 

58

 

 

 

 

 

192

 

15

 

160

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring staff costs principally relates to the reduction in head office personnel that are not expected to be replaced and changes to a Directors' employment contract during the period.

 

 

7. Net finance (cost)/income

Finance income and costs disclosed in the income statement is set out below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

  Bank and other interest receivable

-

 

2

 

3

 

 

 

 

 

 

 

 

 

  Bank overdraft and loan interest

(60)

 

(134)

 

(209)

 

 

  Finance leases and hire purchase contracts

(7)

 

(8)

 

(15)

 

 

Total net finance cost

 

(67)

 

(140)

 

(221)

 

 

 

 

 

 

 

 

 

 

 

 

8. Earnings per share

The calculations of the basic and diluted earnings per share are based on profit after tax attributable to the ordinary equity shareholders of the Company and the weighted average number of basic and diluted shares in issue for the reporting period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

 

six months to 30 June

 

31 December

 

 

 

 

2015

 

2014

 

2014

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

£415,000

 

£326,000

 

£511,000

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations before exceptionals

£0

 

£(117,000)

 

£(634,000)

 

 

Discontinued operations exceptionals

£0

 

£6,190,000

 

£6,190,000

 

 

Discontinued operations

 

£0

 

£6,073,000

 

£5,556,000

 

 

 

 

 

 

 

 

 

 

 

Total operations profit after taxation

£415,000

 

£6,399,000

 

£6,067,000

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average number of shares

73,970,534

 

59,812,119

 

66,610,703

 

 

Dilutive effect of share options

 

675,000

 

-

 

-

 

 

Diluted weighted average number of shares

74,645,534

 

59,812,119

 

66,610,703

 

 

 

 

 

 

 

 

 

 

 

Earnings/(loss) per share - basic

 

 

 

 

 

 

 

Continuing operations

 

0.6

p

0.5

p

0.8

p

 

 

 

 

 

 

 

 

 

 

Discontinued operations before exceptionals

-

p

(0.2)

p

(1.0)

p

 

Discontinued operations exceptionals

-

p

10.4

p

9.3

p

 

Discontinued operations

 

-

p

10.2

p

8.3

p

 

 

 

 

 

 

 

 

 

 

Total operations

 

0.6

p

10.7

p

9.1

p

 

 

 

 

 

 

 

 

 

 

Earnings/(loss) per share - diluted

 

 

 

 

 

 

 

Continuing operations

 

0.6

p

0.5

p

0.8

p

 

 

 

 

 

 

 

 

 

 

Discontinued operations before exceptionals

-

p

(0.2)

p

(1.0)

p

 

Discontinued operations exceptionals

-

p

10.4

p

9.3

p

 

Discontinued operations

 

-

p

10.2

p

8.3

p

 

 

 

 

 

 

 

 

 

 

Total operations

 

0.6

p

10.7

p

9.1

p

 

 

 

 

 

 

 

 

 

 

Shares held by the Employee Share Ownership Trust are excluded from the weighted average number of shares in the period.

 

 

9. Goodwill and other intangible assets

The decrease in goodwill since 31 December 2014 of £57,000 relates to exchange losses on the revaluation of goodwill denominated in foreign currencies. Other intangible assets comprise capitalised development costs, acquired customer relationships and purchased intangible assets.

 

 

10. Borrowings

The bank loans and overdrafts are repayable as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at 30 June

at 30 June

at 31 December

 

 

 

 

 

 

 

2015

2014

2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

In one year or less

 

 

 

1,105

4,454

750

 

 

Between one and two years

 

 

750

-

750

 

 

Between two and five years

 

 

938

-

1,313

 

 

More than five years

 

 

-

-

-

 

 

 

 

 

 

 

2,793

4,454

2,813

 

 

 

 

 

 

 

 

 

 

 

 

 

11. Accruals and deferred income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

at 30 June

at 30 June

at 31 December

 

 

 

 

 

 

 

2015

2014

2014

 

 

 

 

 

 

 

£'000

£'000

£'000

 

 

Accruals

 

 

 

 

1,497

1,813

1,743

 

 

Deferred income

 

 

 

3,528

3,344

3,446

 

 

 

 

 

 

 

5,025

5,157

5,189

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income represents income from software maintenance and support contracts and is taken to revenue in the income statement on a straight line basis in line with the service and obligations over the term of the contract.

 

 

12. Related Party Disclosures

Transactions between Group undertakings, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

 

The Directors of the Company had no material transactions with the Company during the six months to 30 June 2015, other than a result of service agreements. An amount of £18,000 (2014: £18,000) was paid to JHB Ketteley &Co Limited under a lease for occupation by the Group of 66 Clifton Street, London, EC2A 4HB and £3,000 (2014: £3,000) for a contribution to the office costs at Burnham-on-Crouch. An amount of £20,000 was paid to The Boardroom Partnership for recruitment services during the period of which J Cohen (resigned 8 June 2015) is a Director.

 

 

13. Post Balance Sheet Events

On 1 July 2015 the High Court issued an order confirming the capital reduction of Elecosoft plc. As a consequence of the Capital Reduction, the Company's share premium account and share capital reduction shares issued pursuant to the capitalisation of the Company's merger reserve and share based payment reserve have been cancelled, and the nominal share capital of each Ordinary Share has reduced from 10 pence to 1 pence each. Application has been made for the new Ordinary Shares of 1 pence each to be admitted to AIM and admission of the 74,867,127 new Ordinary Shares was effective on 2 July 2015.

 

 

 


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