RNS Number:1176H
Eleco PLC
13 March 2000
ELECO PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 1999
'Excellent progress and prospects at Eleco'
Highlights
* Profit before tax up 27% to #677,000 (1998: #533,000)
* Earnings per share increase 32% to 1.45p (1998: 1.10p)
* Interim dividend of 0.35p per share declared (1998: 0.30p)
* Major expansion of production capacity at Bell & Webster Concrete
* Gang-Nail Systems has introduced its new Windows-based Gang-Nail Roof and
Gang-Nail Truss software programs
* Eleco is introducing a home computer scheme under which all employees and
their families will, should they so wish, be able to have a computer,
software and training made available to them
Executive Chairman, John Ketteley commented:
"The improved trading performance achieved in the last financial year
continued in the first six months of the current year. The second half has
started well and I am optimistic about our prospects for the remainder of the
year".
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 report that we have continued to build on last year's
encouraging performance, with a 27% increase in profits before tax to #677,000
in the six months ended 31 December 1999 (1998: #533,000); an improvement in
net cash inflow from operating activities to #938,000 (1998: #264,000); and an
increase in earnings per share of 32% to 1.45p (1998: 1.10p). We also made
excellent progress in the period with major investment projects to increase
capacity at Bell & Webster Concrete and SpeedDeck and the launch of new
software and products at Gang-Nail Systems.
Operating margins of our continuing businesses overall improved to 5.97%
(1998: 5.73%) and resulted in operating profits of #737,000 (1998: #744,000)
on turnover of #12,335,000 (1998: #12,987,000). Turnover and operating
profits in the corresponding period last year included the benefit of Stramit
Industries' strawboard operations, which were sold in January 1999.
In the light of the above results, the Board has declared an interim dividend
of 0.35p per share (1998: 0.30p) payable on 10 May 2000 to shareholders on the
Register on 25 April 2000. The interim dividend is covered 4.2 times by
earnings and represents an increase of 16.7% over last year's interim
dividend.
Capital expenditure in the period under review was #1,333,000. However, the
improved operational cash flow enabled net borrowings to be held to
#1,470,000, representing gearing of 21%, which is well within our targeted
range.
I am also pleased to be able to report a number of significant commercial and
other developments that have taken place in the period under review, namely:
(i) the major expansion of production capacity at Bell & Webster
Concrete is proceeding rapidly and we expect the new facilities to
be fully operational by May 2000, on time and on budget;
(ii) the installation of a new production line for composite panel wall
cladding at SpeedDeck is in the final stages of commissioning;
(iii)SpeedDeck is expecting delivery of a new upgraded mobile rollformer
in April 2000;
(iv) Gang-Nail Systems has introduced its new Windows-based Gang-Nail
Roof and Gang-Nail Truss software programs, which have been very
well received;
(v) Abtus has launched a new electronic rail measuring trolley and has
expanded its product range with the purchase of Railrod, an
ultrasonic measuring device for overhead electric cables; and
(vi) Eleco is introducing a home computer scheme under which all
employees and their families will, should they so wish, be able to
have a computer, software and training made available to them
Trading Review
Bell & Webster Concrete continued to make excellent progress in the period,
increasing turnover by 28% and more than doubling operating profits on the
corresponding period last year. A major project to expand production capacity
started in September with site clearance and roadway construction. Building
commenced in February and the new facilities will become fully operational in
May. Demand for the company's fast-track build, "flat-pack rooms" system
continues to be strong and the system is being extended to residential schemes
as well as the established hotel and student accommodation markets.
SpeedDeck Building Systems was not able to repeat last year's very good first
half performance, which included the major Rugby Sky Blue project and turnover
in the current year was down 19% on the corresponding period last year,
although the level of orders secured resulted in a strong order book at 31
December 1999, which augurs well for the second half. We are particularly
pleased to have secured the order for the roofing of Amazon.com's prestigious
new warehouse in Milton Keynes and to be associated with this project. A
second mobile rollformer becomes operational in April, which will enable
SpeedDeck to offer a more comprehensive on-site rolling capability, including
on sites in Mainland Europe and, following commissioning of the new composite
panel production line, it will launch its new range of Vitesse wall cladding
panels later this year.
Stramit Industries' performance was affected by pressure generally on selling
prices and slower than expected progress in introducing its Roomspace panel
sets. However, steps have been taken to improve margins, the effect of which
will increasingly be felt in the second half.
The nail plate businesses performed well during the period under review,
particularly in the UK and in South Africa. Overall sales were increased by
3% on the corresponding period last year despite a 2.1% adverse translation
effect attributable to Sterling's movement during the period.
In the UK, Gang-Nail Systems distributed its new Windows-based Gang-Nail Roof
and Gang-Nail Truss software programs to customers at the end of December
1999. Intensive customer training programmes are now well under way and
customer reaction has been very positive. The introduction of the new
Ecojoist flooring system continues to progress well with increasing adoption
of the system by housebuilders.
In Germany, Eleco Bauprodukte maintained a solid position in its market
despite pressure from competitive prices. We are progressing the introduction
of new products, which should improve its competitive position. In South
Africa, International Truss Systems had a very creditable first half and made
a notable contribution to the overall Group performance.
Rail and Marine
Abtus and Tergor operations produced results broadly in line with those
achieved for the corresponding period last year. However, current curbs on
investment expenditure in the UK railway and defence industries may be
expected to affect its performance in the second half, offset to some extent
by opportunities in export markets. Abtus continues to develop its
relationship with one of the leading USA suppliers to the railway industries
worldwide. It has also expanded its product range with the purchase of
Railrod, an ultrasonic measuring device for overhead electric cables.
Employees Computer Scheme
I am pleased to say that our further education scheme for all employees under
which we pay for further education courses continues to be well supported and
we are sponsoring an increasing number of employees in degree courses with the
Open University and on computer training courses.
We continue to consider ways in which we can assist our employees to develop
their skills in an environment which is increasingly influenced by
developments in information technology. With this in mind, we are introducing
a home computer scheme for all employees and their families, together with
appropriate computer training courses in collaboration with the Knowledge
Media Institute of the Open University. Under the scheme, we will be making
available to every employee, should they so wish, a home computer, printer,
software and training. I believe that this initiative and our further
education scheme both represent a very worthwhile investment in our employees.
Outlook
A number of major projects will be completed in the second half, which will
improve the Group's competitive position and increase production capacity in a
number of key areas. The improved trading performance achieved in the last
full financial year continued in the six months ended 31 December 1999. The
second half of the current financial year has started well and I am optimistic
about our prospects for the remainder of the year.
John Ketteley
Executive Chairman
13 March 2000
Consolidated profit and loss account
(Unaudited) (Audited)
Half year Year
ended ended
31 December 30 June
1999 1998 1999
#'000 #'000 #'000
----------------------------------------------------------
Turnover
Continuing operations 12,335 12,987 26,863
----------------------------------------------------------
Operating profit
Continuing operations 737 744 1,680
Profit/(loss) on disposal of
tangible assets
and associated investments - (82) 15
----------------------------------------------------------
Profit on ordinary activities
before interest 737 662 1,695
Net interest payable (60) (129) (192)
Profit on ordinary activities
before tax 677 533 1,503
Tax on ordinary activities (115) (108) (149)
Profit on ordinary activities
after tax 562 425 1,354
Dividend on ordinary shares (Note 2) (135) (116) (309)
Retained profit 427 309 1,045
-----------------------------------------------------------
Dividends per share 0.35p 0.30p 0.80p
Earnings per share (Note 3) 1.45p 1.10p 3.51p
Diluted earnings per share (Note 4) 1.43p 1.10p 3.48p
------------------------------------------------------------
Notes
1.The interim results have been prepared on the basis of the accounting
policies adopted for the year ended 30 June 1999, as set out in the
Company's Annual Report and Accounts, except as modified by the adoption
of the following standards:
FRS 15 - Tangible fixed assets
FRS 16 - Current tax
The adoption of these standards has no effect on the results reported in
either the current or previous period.
2. The dividend will be payable on 10 May 2000 to shareholders on the
register on 25 April 2000.
3. Based on the profit attributable to shareholders and a weighted average
of 38,629,731 ordinary shares.
4. Based on the profit attributable to shareholders and a fully diluted
weighted average of 39,228,643 ordinary shares (Dec 1998 - 38,768,534
and Jun 99 - 38,929,403). The dilution is caused by outstanding share options.
5. The comparative figures for the year to 30 June 1999 have been taken from
but do not constitute the Company's statutory accounts for that financial
year. Those accounts 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 section 237(2) or (3) of
the Companies Act 1985.
6. Copies of this interim statement and results, which were approved by the
Board on 10 March 2000, are available from the registered office of the
Company, which is at Belcon House, Essex Road, Hoddesdon, Herts, EN11 0DR.
Summarised consolidated balance sheet
(Unaudited) (Audited)
31 December 30 June
1999 1998 1999
#'000 #'000 #'000
--------------------------------------------------------------
Fixed assets 6,418 5,720 5,307
--------------------------------------------------------------
Current assets
Stocks 1,644 2,330 1,849
Debtors 6,010 5,357 6,097
Cash and bank balances 666 446 1,121
--------------------------------------------------------------
8,320 8,133 9,067
Creditors falling due within one
year
Bank loans and overdrafts (1,161) (1,918) (634)
Obligations under finance (107) (107) (95)
leases
Other creditors (5,630) (4,605) (6,142)
---------------------------------------------------------------
Net current assets 1,422 1,503 2,196
---------------------------------------------------------------
Creditors falling due after more
than one year
Bank loans (743) (1,267) (788)
Obligations under finance (125) (103) (106)
leases
Overseas tax - - (44)
--------------------------------------------------------------
Net assets 6,972 5,853 6,565
--------------------------------------------------------------
Capital and reserves
Called up share capital 3,863 3,863 3,863
Share premium account 4,434 4,434 4,434
Merger reserve 367 367 367
Profit and loss account (1,692) (2,811) (2,099)
--------------------------------------------------------------
Shareholders' funds 6,972 5,853 6,565
--------------------------------------------------------------
Reconciliation of movement in
equity shareholders' funds
Profit for the period 562 425 1,354
Dividends (135) (116) (309)
Other recognised (20) 30 6
gains/(losses)
--------------------------------------------------------------
Net increase in equity 407 339 1,051
shareholders' funds
Opening equity shareholders' 6,565 5,514 5,514
funds
--------------------------------------------------------------
Closing equity shareholders' 6,972 5,853 6,565
funds
--------------------------------------------------------------
Consolidated cash flow statement
(Unaudited) (Audited)
Half year ended Year ended
31 December 30 June
1999 1998 1999
#'000 #'000 #'000
------------------------------------------------------------------
Net cash inflow from operating 938 264 2,733
activities
------------------------------------------------------------------
Returns on investment and
servicing of finance
Net interest paid (60) (129) (192)
------------------------------------------------------------------
Net cash outflow from returns on
investment and servicing of
finance (60) (129) (192)
------------------------------------------------------------------
Taxation (96) (6) (26)
------------------------------------------------------------------
Capital expenditure and
financial investment
Purchase of fixed assets (1,333) (462) (1,119)
Sale of tangible fixed 11 2 887
assets
------------------------------------------------------------------
Net cash outflow from capital
expenditure and financial
investment (1,322) (460) (232)
------------------------------------------------------------------
Equity dividends paid (309) - (97)
------------------------------------------------------------------
Net cash (outflow)/inflow before (849) (331) 2,186
financing
------------------------------------------------------------------
Financing
New bank loans - - 1,380
Repayment of principal under
finance leases (72) (95) (152)
Repayment of bank loans (545) (105) (1,480)
------------------------------------------------------------------
Net cash outflow from financing (617) (200) (252)
------------------------------------------------------------------
(Decrease)/increase in cash in (1,466) (531) 1,934
the period
------------------------------------------------------------------
Reconciliation of operating
profit to net cash flow
from operating activities
Operating profit 737 744 1,680
Depreciation charge 311 229 543
Loss/(profit) on sale of
fixed assets (4) 1 4
Amortisation of intangible
assets 3 3 7
Working capital change (109) (713) 499
-----------------------------------------------------------------
938 264 2,733
-----------------------------------------------------------------
Reconciliation of net cash flow
to movement in net debt
(Decrease)/increase in cash
in the period (1,466) (531) 1,934
Cash flow from decrease in
debt and lease financing 617 200 252
-----------------------------------------------------------------
Change in net debt resulting
from cash flows (849) (331) 2,186
New finance leases (104) (89) (138)
Translation difference (15) 26 5
-----------------------------------------------------------------
Movement in net debt in the
period (968) (394) 2,053
Opening net debt (502) (2,555) (2,555)
-----------------------------------------------------------------
Closing net debt (1,470) (2,949) (502)
-----------------------------------------------------------------
Turnover and segmental analysis
Group turnover and profits were
attributable as follows
External sales Profit/(loss)
-------------------------------------------
(Unaudited) (Audited) (Unaudited)(Audited)
Half Year Half Year
year ended ended year ended ended
31 December 30 June 31 December 30 June
1999 1998 1999 1999 1998 1999
#'000 #'000 #'000 #'000 #'000 #'000
--------------------------------------------------------------------
Continuing activities
Building systems 11,300 12,048 24,653 875 788 1,900
Rail and marine 1,035 935 2,123 102 113 375
Property - 4 87 - - 22
Corporate - - - (240) (157) (617)
--------------------------------------------------------------------
Total continuing 12,335 12,987 26,863 737 744 1,680
--------------------------------------------------------------------
Exceptional losses - (82) 15
--------------------------------------------------------------------
Profit before interest 737 662 1,695
--------------------------------------------------------------------
END
IR IFFVIVSIILII
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