RNS No 4457n
ELECO PLC
4 October 1999
Preliminary results for the year ending
30 June 1999
ELECO RECOVERY CONTINUES
SUBSTANTIAL INCREASE IN PROFITS AND DIVIDENDS
MAJOR REDUCTION IN BORROWINGS AND GEARING
Highlights
* Profit on ordinary activities before tax of
#1,503,000 (1998 - #9,000)
* Earnings per share 3.50p (1998 - loss 0.10p)
* Recommended final dividend of 0.50p per share,
making a total of 0.80p (1998 - 0.25p)
* Gearing cut to 8 per cent (1998 - 46 per cent)
* Chairman, John Ketteley, comments:
'Over the past two years Eleco has achieved a
strong recovery in its profitability and finances
and has developed a clear corporate strategy. I
am pleased to say that the Group has started the
year in line with expectations and that Eleco is
now in an excellent position to take full
advantage of growth opportunities as they arise'.
Enquiries to:
John Ketteley, Executive Chairman 01992 440 311
Eleco plc
David Dannhauser, Finance Director 01992 440 311
Eleco plc
David Millham/Tarquin Edwards 0171 256 5756
Millham Communications
Chairman's Statement
I am pleased to be able to report a further significant
improvement in Eleco's trading performance and financial
position this year. During the past year, Eleco's
ongoing businesses have again increased both sales and
operating profits, the financial position has continued
to strengthen with bank borrowings considerably reduced,
and the proposed total dividend for the year is more than
trebled.
Results
Turnover of our businesses ongoing from last year was up
#1.9 million for the year ended 30 June 1999 to #26.9
million (1998: #25.0 million), a 7.6 per cent increase.
Group turnover in the previous year was #27.9 million,
including #2.9 million in respect of Davis International
which was sold during that year.
Total operating profit of our ongoing operations
increased by 19.1 per cent. to #1,680,000 from #1,411,000
for the year ended 30 June 1998. The improvement in
profit on ordinary activities before tax was even more
marked with an increase to #1,503,000 compared with
#9,000 for the year ended 30 June 1998 and a loss before
tax of #1,319,000 for 1997. Earnings per share for the
year ended 30 June 1999 amounted to 3.5p per share
compared with losses in the two previous years of 0.1p
per share for the year ended 30 June 1998 and 3.8p per
share in 1997.
Group borrowings and gearing were again reduced
considerably in the year under review. At 30 June 1999,
net bank borrowings and leasing obligations totalled
#502,000 compared with #2,555,000 at 30 June 1998 and
#4,955,000 in 1997. As a result, net interest charges
halved to #192,000 in the year under review from #384,000
in the previous year and were covered 8.8 times by
operating profits before exceptional items. As a
consequence of the reduction in Group borrowings over the
past two years, gearing at 30 June 1999 stood at
approximately 8 per cent. compared with 46 per cent. in
1998 and 82 per cent. in 1997.
Dividend
In light of the results and the progress that is being
made, the Board have proposed a final dividend for the
year of 0.50p per share (1998: 0.25p per share) payable
on 14 December 1999 to shareholders on the Register as at
26 November 1999. The proposed final dividend, if
approved by shareholders, together with the interim
dividend of 0.30p per share would result in the payment
of total dividends for the year of 0.80p per share (1998:
0.25p per share) and would be covered 4.4 times by
earnings.
Operating Review
Building Systems Division
Turnover of the Building Systems Division in the year
under review increased by 7.8% to #24.7m (1998: #22.9m)
and operating profits increased by 45.5 per cent. to
#1.90 million (1998: #1.3 million).
Roofing Systems
SpeedDeck Building Systems made good progress during the
year. Initiatives are being progressed which are
targeted at broadening SpeedDeck's current range of
products and strengthening its competitive position.
Panel Products
Stramit, despite meeting with intense competition in its
markets, nevertheless succeeded in making an overall
contribution to operating profit. During the year it
exited from its strawboard panel product range.
Precast Concrete Products
Bell & Webster again performed well, increasing factory
output by 51 per cent. year on year. Good progress was
made in further developing opportunities for its 'flat-
pack' rooms particularly for the hotel and student
accommodation markets. The management's confidence in the
future for the product range is reflected in the plans
now being implemented for a significant expansion of the
works at Grantham, which will provide additional capacity
to meet the demand anticipated for the next few years.
The new plant is planned to be fully operational by late
Spring next year.
Nail-Plate Systems
Gang-Nail Systems had a good year. Its new Windows-based
truss and roof software programmes, 'GN Roof' and 'GN
Truss', will be launched later this year to complement
'GN Manager', our Windows-based management suite which is
also under development. We are confident that these
programmes, which are being developed in close
collaboration with customer steering groups, will achieve
our objective of giving Gang-Nail Systems' customers a
leading edge in their market.
In addition to the new Windows based software programmes,
Gang-Nail Systems has had a number of new timber
engineering products under development during the year
and in July, it successfully launched the first of these,
'Ecojoist', a steel web and timber engineered floor joist
system, designed specifically for the housing market. I
am pleased to say that 'Ecojoist' has been very well
received by a number of leading housebuilders, with whom
it is now on trial.
Elecobauprodukte in Germany, again performed well,
particularly in the second half-year. Although margins
continued to remain under pressure, sales were increased
by some 18% and the demand for connector plates generated
by our German colleagues brings added contribution to the
success of our manufacturing unit in the UK.
International Truss Systems in South Africa encountered
difficult trading conditions for most of the financial
year. However, an improvement in conditions in the
latter part of the financial year, which has continued
since, enabled it to make a positive contribution to
Group operating profits.
Rail and Marine Division
Turnover of the Rail and Marine Division increased by
23.4 percent to #2.1 million (1998: #1.7 million),
including a full contribution from Tergor Electronics,
which was acquired in December 1997. Operating profits
increased by 16.8 per cent. to #0.38 million (1998: #0.32
million).
Abtus, the railtrack measurement equipment business, and
Tergor, the marine communications business, together
acquitted themselves well in a difficult trading
environment. During the course of the year, Abtus
entered into an agreement with one of the world's leading
suppliers to the railway industry to market and
distribute Abtus' product range in North America, which
should considerably enhance the future prospects for this
business.
Current Trading and Outlook
We have identified a number of investment projects which
will broaden our range of products, increase the
production capacity of existing products and involve the
development of new and enhanced software programmes. Our
much strengthened financial position will enable us to
support the capital investment required and I am
confident that these projects, when completed, will
considerably strengthen our competitive position in a
number of our markets.
Over the past two years Eleco has achieved a strong
recovery in its profitability and finances and has
developed a clear corporate strategy. I am pleased to
say that the Group has started the year in line with
expectations and that Eleco is now in an excellent
position to take full advantage of growth opportunities
as they arise.
John Ketteley
Executive Chairman
Consolidated Profit and Loss Account (Unaudited)
FOR THE YEAR ENDED 30 JUNE 1999
1999 1999 1998 1998
Notes #'000 #'000 #'000 #'000
Turnover
Continuing operations 26,863 24,525
Acquisitions - 487
------------------------------------------------------------------------------
26,863 25,012
Discontinued operations - 2,883
------------------------------------------------------------------------------
Total turnover 2 26,863 27,895
Cost of sales (17,880) (19,082)
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Gross profit 8,983 8,813
------------------------------------------------------------------------------
Operating profit/(loss)
Continuing operations 1,680 1,322
Acquisitions - 89
------------------------------------------------------------------------------
1,680 1,411
Discontinued operations - (87)
------------------------------------------------------------------------------
Total operating profit 2 1,680 1,324
Loss on sale and termination of
discontinued operations - (390)
Profit/(loss) on disposal of
tangible fixed assets and
associated investments 3 15 (531)
------------------------------------------------------------------------------
Profit on ordinary activities
before interest 1,695 403
Interest receivable 33 18
Interest payable (225) (412)
------------------------------------------------------------------------------
(192) (394)
------------------------------------------------------------------------------
Profit on ordinary activities
before taxation 1,503 9
Taxation (149) (35)
------------------------------------------------------------------------------
Profit/(loss) on ordinary
activities after taxation 1,354 (26)
------------------------------------------------------------------------------
Dividends 4 (309) (97)
------------------------------------------------------------------------------
Retained profit/(loss) for the year 1,045 (123)
------------------------------------------------------------------------------
Earnings per 10p ordinary share
(net basis) 5 3.5 p (0.1)p
Diluted earnings/(loss) per
10p ordinary share (net basis) 6 3.5 p (0.1)p
------------------------------------------------------------------------------
Consolidated Balance Sheet (Unaudited)
AT 30 JUNE 1999
1999 1998
#'000 #'000
Fixed assets
Intangible assets 127 134
Tangible assets 5,180 5,338
Investments - -
---------------------------------------------------------------
5,307 5,472
---------------------------------------------------------------
Current assets
Stocks 1,849 2,356
Debtors 6,097 6,007
Cash at bank and in hand 1,121 636
---------------------------------------------------------------
9,067 8,999
Creditors: amounts falling due
within one year (6,871) (7,531)
---------------------------------------------------------------
Net current assets 2,196 1,468
---------------------------------------------------------------
Total assets less current liabilities 7,503 6,940
Creditors: amounts falling due after
more than one year (938) (1,426)
Provisions for liabilities and charges - -
---------------------------------------------------------------
Net assets 6,565 5,514
---------------------------------------------------------------
Capital and reserves
Called up share capital 3,863 3,863
Share premium account 4,434 4,434
Merger reserve 367 367
Revaluation reserve - -
Profit and loss account (2,099) (3,150)
---------------------------------------------------------------
Equity shareholders' funds 6,565 5,514
---------------------------------------------------------------
Consolidated Cash Flow Statement (Unaudited)
FOR THE YEAR ENDED 30 JUNE 1999
1999 1998
Notes #'000 #'000
Operating activities
Net cash inflow from continuing operations 2,725 2,072
Net cash inflow/(outflow) from discontinued operations - 95
--------------------------------------------------------------------------
Net cash inflow from operating activities (i) 2,725 2,167
--------------------------------------------------------------------------
Returns on investment and servicing of finance
Interest received 33 18
Interest paid (205) (388)
Interest element of finance lease rentals (20) (24)
--------------------------------------------------------------------------
Net cash outflow from returns on investment
and servicing of finance (192) (394)
--------------------------------------------------------------------------
Taxation
UK corporation tax paid (52) (10)
Overseas tax received/(paid) - (11)
--------------------------------------------------------------------------
Net cash outflow from taxation (52) (21)
--------------------------------------------------------------------------
Capital expenditure and financial investment
Purchase of fixed assets (1,085) (848)
Investments in associated undertakings - (19)
Sale of tangible fixed assets 887 105
Cash outflows on disposal of tangible fixed assets - (313)
--------------------------------------------------------------------------
Net cash outflow from capital expenditure and
financial investment (198) (1,075)
--------------------------------------------------------------------------
Acquisitions and disposals
Purchase of subsidiary net of cash acquired - (337)
Sale and closure of subsidiary undertakings - 2,126
--------------------------------------------------------------------------
Net cash inflow from capital expenditure and
financial investment - 1,789
--------------------------------------------------------------------------
Equity dividends paid (97) -
--------------------------------------------------------------------------
Net cash inflow before financing 2,186 2,466
--------------------------------------------------------------------------
Financing
New bank loans 1,380 250
Repayment of principal under finance leases (152) (162)
Repayment of bank loans (1,480) (822)
--------------------------------------------------------------------------
Net cash outflow from financing (ii) (252) (734)
--------------------------------------------------------------------------
Increase in cash in the period (ii) 1,934 1,732
--------------------------------------------------------------------------
(i) Reconciliation of operating profit/(loss) to net cash flow
Continuing Discontinued
-------------- ---------------
1999 1998 1999 1998
#'000 #'000 #'000 #'000
Operating profit/(loss) 1,680 1,411 - (87)
Depreciation and amortisation 550 577 - 88
Profit on sale of tangible fixed assets (4) (22) - (2)
Working capital change 499 106 - 96
--------------------------------------------------------------------------
Net cash inflow from operating activities 2,725 2,072 - 95
--------------------------------------------------------------------------
(ii) Reconciliation of net cash flow to movement in net debt
1999 1998
#'000 #'000
Increase in cash in the period 1,934 1,732
Cash flow from decrease in debt and
lease financing 252 734
------------------------------------------------------------------------------
Change in net debt resulting from cash flows 2,186 2,466
Other non-cash items:
New finance leases (138) (135)
Finance leases eliminated on disposal - 87
Effects of foreign exchange rates 5 (18)
------------------------------------------------------------------------------
Movement in net debt in the period 2,053 2,400
Opening Net debt (2,555) (4,955)
------------------------------------------------------------------------------
Closing Net debt (502) (2,555)
------------------------------------------------------------------------------
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
shareholders at the end of October. The comparative figures for the year
to 30 June 1998 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 Company's 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. Turnover and segmental analysis
Group turnover and profits were attributable as follows
External sales Profit/(loss)
----------------- ----------------
1999 1998 1999 1998
#'000 #'000 #'000 #'000
Continuing activities
Building systems 24,653 22,877 1,900 1,307
Rail and marine 2,123 1,721 375 321
Property 87 414 22 45
Corporate - - (617) (262)
------------------------------------------------------------------------------
Total continuing 26,863 25,012 1,680 1,411
------------------------------------------------------------------------------
Discontinued activities
Building systems - 2,882 - (78)
Other - 1 - (9)
------------------------------------------------------------------------------
Total discontinued - 2,883 - (87)
------------------------------------------------------------------------------
Total continuing and discontinued 26,863 27,895 1,680 1,324
------------------------------------------------------------
Exceptional profit/(loss) 15 (921)
------------------------------------------------------------------------------
Profit before interest 1,695 403
------------------------------------------------------------------------------
3. Exceptional items before tax amounted to #15,000. A loss of #82,000 on
the sale of the freehold property previously occupied by Davis
International was previously reported in the interim results. The second
half-year results principally include the profit on the sale of the
strawboard production equipment sold by Stramit Industries.
4. An interim dividend of #115,889 was declared at the interim stage, a
final dividend of #193,147 representing 0.50p per share will be paid on
14 December 1999 to shareholders on the register at 26 November 1999.
5. The calculation of earnings per share on the net basis is based upon
the earnings attributable to members of the holding company of
#1,354,000(1998: loss of #26,000) and on 38,629,731 (1998:38,629,731)
ordinary shares, being the weighted average number of ordinary shares in
issue during the year.
6. The calculation of fully diluted earnings per share on the net basis is
based upon the earnings attributable to members of the holding company
of #1,354,000 (1998: loss of #26,000) and on a fully diluted weighted
average of 38,929,403 (1998: 38,713,277) ordinary shares.
7 The information herein has been prepared on the basis of the accounting
policies set out in the financial statements for the year ended 30
June 1998, except for the implementation of FRS11, FRS12, FRS13 and FRS14.
It has not been necessary to restate comparative figures to reflect
these changes of policy.
8. The only other recognised gains not reported in the Profit & Loss
Account are exchange gains on translation of overseas assets of #6,000.
9. The directors approved the financial statements on 1 October 1999.
The Annual General Meeting of Eleco plc will be held at Brewers Hall,
Aldermanbury Square, London EC2V 7HR at 10:00 on 19 November 1999.
END
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