RNS Number:8310R
Eleco PLC
2 October 2000
Preliminary results for the year ending
30 June 2000
Highlights
Building on Technology
* Turnover up 2.6% at #27.5m (#26.9m)
* Operating profit up 2.3% at #1.72m (#1.68m)
* Profit before tax on ordinary activities up 1.1% at #1.519m (#1.503m)
* Building Systems turnover up 2.9% to #25.4m (#24.7m). Operating profit up
19.8% to #2.28m (#1.90m)
* Earnings up 2.8% at 3.6p per share (3.5p)
* Dividends up 25% at 1.0p per share (0.8p)
* Capital expenditure of #2.8m (#1.1m)
Chairman John Ketteley commented:
"Our objective this year has been to transform Eleco into a modern building
systems and engineering Group that is confident in its ability to sustain a
strategy for growth and the creation of shareholder value. The year has
started in line with expectations and we are well positioned to meet the
challenge ahead."
Enquiries to:
John Ketteley, Executive Chairman 01992 440 311
Eleco plc
David Dannhauser, Finance Director 01992 440 311
Eleco plc
David Millham/Tarquin Edwards 020 7256 5756
Millham Communications
Chairman's Statement
I am pleased to report on a year during which the Group has continued to make
progress and build on the recovery started in 1997. Sales and operating
profit have again increased and operational cash flow has been strong,
enabling us to finance a major capital investment programme whilst
maintaining low gearing and a sound financial position. As a consequence,
your Board is again in a position to recommend an increased final dividend,
well covered by earnings.
During the last twelve months we have continued to work on the implementation
of a strategy directed towards:
* Upgrading and broadening the core product range;
* Providing high quality technical support to our customers;
* Enhancing the Group's capabilities for developing innovative and practical
solutions to the problems facing the construction industry.
The realisation of these aims will be greatly assisted by the recent
acquisition of MBA Computing, a leading developer of software which is
tailored to the design needs of architects and housebuilders.
Results
Group turnover for the year ended 30 June 2000 was #27.5 million (1999: #26.9
million), an increase of 2.6 per cent.
Group operating profit was #1,719,000 (1999: #1,680,000), an increase of 2.3
per cent. Net interest charges were #147,000 (1999: #192,000) and were
covered 11.7 times by operating profit (1999: 8.8 times).
Profit on ordinary activities before tax was #1,519,000 (1999: #1,503,000).
Earnings per share were 3.6p (1999: 3.5p).
Capital expenditure in the year under review was #2,816,000 compared with
#1,119,000 in the previous year, and was financed partly from operating cash
flow and partly by increased borrowings. Net bank borrowings and leasing
obligations increased accordingly to #1,857,000 at 30 June 2000 from #502,000
at 30 June 1999. Gearing at 30 June 2000 was 24.6 per cent. compared with 7.6
per cent. at 30 June 1999.
Dividend
The Board has proposed a final dividend of 0.65p per share (1999: 0.50p per
share) payable on 12 December 2000 to shareholders on the Register on 1
December 2000. The proposed final dividend, if approved by shareholders,
would result in the payment of dividends per share totalling 1.00p (1999:
0.80p), an increase of 25 per cent., and would be covered 3.6 times by
earnings (1999: 4.4 times).
Operating Review
Building Systems
Sales of Building Systems in the year under review were #25.4 million (1999:
#24.7 million), an increase of 2.9 per cent. Operating profit amounted to
#2.28 million (1999: #1.90 million), an increase of 19.8 per cent. Building
Systems accounted for 92.1 per cent. of Group sales in the year under review.
Roof and Panel Systems
SpeedDeck recorded an improved performance in the latter part of the year,
which enabled it to recover from a slow start to the year and to achieve
record profits for the year as a whole. Major projects undertaken included
the on-site rolling of a 53,000 square metre SpeedDeck roof on Amazon.com's
major new warehousing complex at Milton Keynes. A second mobile rollformer
for on-site rolling is in the final stages of commissioning. It is expected
to be fully operational by October and will add greater flexibility to our
on-site rolling operations. The production line for Vitesse(R) composite
wall-cladding panels is also expected to come on stream in the latter part of
2000.
The SpeedDeck Designer 2.0 software package, which was developed in
conjunction with Forma Communications, has been very well received by
architects, roofing specifiers and the technical trade press. I am confident
that it will make a significant contribution to the development of
SpeedDeck's roofing business.
The actions taken by Stramit in the first half of the year to counter
pressure on selling prices had a beneficial effect on performance in the
second half.
Structural Precast Concrete Systems
Bell & Webster Concrete made excellent progress. Sales and profit improved
and the major expansion of its production facilities at Grantham was
successfully completed in May 2000. The increased capacity will enable us to
satisfy continuing demand for our factory made, precast concrete 'flat-pack'
rooms, which are increasingly used in fast-track building projects,
particularly in the hotel and student accommodation sectors.
Bell & Webster Concrete is also a major supplier of retaining walls and
ground beams, as well as terracing for sports stadia and cinemas. Projects
completed and in hand include terracing for the Star City cinema complex in
Birmingham, Virgin Cinemas and West Ham United F.C.
Timber Engineering Systems
Gang-Nail Systems, Eleco Bauprodukte and International Truss Systems have all
made important contributions to the success of our Timber Engineering Systems
business in the year under review.
In the UK, Gang-Nail Systems benefited from a buoyant housing sector and
strong demand for connector plates from Eleco Bauprodukte. In Sterling terms,
the profit contribution of Eleco Bauprodukte was diluted by of the weakness
of the Euro. International Truss Systems made an increased contribution to
Group profit despite the weakness of the South African Rand.
Gang-Nail's Ecojoist floor system is gaining market share and has now been
approved by three leading national housebuilders. In September 2000, we
installed a powerful new software program to enable Gang-Nail to provide a
rapid response design service for the Ecojoist flooring system to Gang-Nail
fabricators and housebuilders. The software program was developed in
conjunction with MBA Computing.
The final version of the new Gang-Nail Roof and Gang-Nail Truss software, the
beta version of which was released earlier this year, will be available in
October 2000. Customer training has already commenced and will gather impetus
during the winter, when truss fabricator activity normally slackens.
Rail and Marine
Sales of Rail and Marine in the year under review were #2.2 million (1999:
#2.1 million), an increase of 2.7 per cent. Operating profit was #134,000
(1999: #375,000). Rail and Marine accounted for 7.9 per cent. of Group sales
in the year under review.
The results of Rail and Marine were adversely affected last year by three
factors, namely the anticipated reduction of demand from the UK rail and
defence industries; development costs relating to a new rail measurement and
data logging trolley; and costs associated with the relocation of Tergor's
business to Abtus at Haverhill. The current year will benefit from the
reduction in the cost base resulting from the consolidation of our rail and
marine operations at Haverhill.
Whilst defence industry demand continues at a low level, prospects for rail
equipment in the current year, particularly in overseas markets, are
positive. The rail measurement and data logging trolley and the RailRod
ultrasonic measuring device for overhead electric cables, the rights to which
were acquired during the year, were well received at the REMSA Global Railway
Expo 2000 Exhibition in Dallas, USA in September 2000.
Employees
I would like to welcome Paul Taylor to the Board as Group Operations
Director. He has already made a valuable contribution in his short time with
Eleco.
I am pleased to say that the Employees' Home Computer Scheme introduced
earlier this year was taken up by more than 70 per cent. of eligible
employees. I am also encouraged by the number of employees enrolling for Open
University courses under our Employee Further Education Sponsorship Scheme.
The Sharesave Scheme, which was available for participation by all of our
employees, expired in 1999. Your Board consider that the Scheme provided an
appropriate and worthwhile way for our employees to invest in Eleco.
Accordingly, a proposal to introduce a new Sharesave Scheme will be submitted
at the forthcoming Annual General Meeting for consideration by shareholders.
Our employees are the keys to our future success and I should like to thank
them all on your behalf for their individual and collective contribution in
this past year.
Current Trading
The Group has started the year in line with expectations. We are well placed
to take advantage of our investment over the past two years in increased
capacity and new products and services.
The Future
Our objective this year has been to transform Eleco into a modern building
systems and engineering Group that is confident in its ability to sustain a
strategy for growth and the creation of shareholder value.
There are signs of some slow-down in the economy and we continue to operate
in intensely competitive marketplaces. Our response has been to initiate a
number of major strategic projects and acquisitions across the Group, the
success of which is key to its development as a modern building systems
Group. They are:
* Software programs for Gang-Nail Systems' Windows-based truss, roof and
floor joist engineering;
* Design and specification software for architects and roofing contractors
to facilitate the implementation of SpeedDeck's unique roofing products;
* The acquisition of MBA Computing, the specialist architectural design
software developer;
* The addition of the RailRod ultrasonic measurement equipment for
overhead cables and the new Abtus electronic rail measurement trolley and
related software to the Abtus product range;
* A major increase in Bell & Webster Concrete's production capacity to
meet the increasing demand for fast-track, precast concrete building
components.
I believe that they provide a clear indication of the focussed approach of
our management to grow our businesses, remain competitive and improve
shareholder value. Our strong financial position and positive cash flow has
enabled us to finance this major investment in our future, whilst maintaining
relatively low gearing. Eleco is therefore now well placed to meet the
challenge ahead.
John Ketteley
Executive Chairman
Consolidated Profit and Loss Account (Unaudited)
FOR THE YEAR ENDED 30 JUNE 2000
2000 2000 1999 1999
Notes #'000 #'000 #'000 #'000
Total turnover - continuing operations 2 27,549 26,863
Cost of sales (17,261) (17,880)
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Gross profit 10,288 8,983
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Total operating profit - continuing
operations 2 1,719 1,680
(Loss)/Profit on disposal of tangible
fixed assets (53) 15
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Profit on ordinary activities before
interest 1,666 1,695
Interest receivable 27 33
Interest payable (174) (225)
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(147) (192)
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Profit on ordinary activities before
taxation 1,519 1,503
Taxation (131) (149)
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Profit on ordinary activities after
taxation 1,388 1,354
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Dividends 3 (387) (309)
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Retained profit for the year 1,001 1,045
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Earnings per 10p ordinary share
-basic 4 3.6 p 3.5 p
-diluted 5 3.5 p 3.5 p
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Consolidated Balance Sheet (Unaudited)
AT 30 JUNE 2000
2000 1999
#'000 #'000
Fixed assets
Intangible assets 219 127
Tangible assets 7,505 5,180
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7,724 5,307
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Current assets
Stocks 2,107 1,849
Debtors 6,307 6,097
Cash at bank and in hand 469 1,121
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8,883 9,067
Creditors: amounts falling due within one year (7,799) (6,871)
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Net current assets 1,084 2,196
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Total assets less current liabilities 8,808 7,503
Creditors: amounts falling due after more than one
year (1,267) (938)
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Net assets 7,541 6,565
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Capital and reserves
Called up share capital 3,864 3,863
Share premium account 4,435 4,434
Merger reserve 367 367
Profit and loss account (1,125) (2,099)
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Equity shareholders' funds 7,541 6,565
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Consolidated Cash Flow Statement (Unaudited)
FOR THE YEAR ENDED 30 JUNE 1999
2000 1999
Notes #'000 #'000
Operating activities
Net cash inflow from operating activities
- continuing operations (i) 2,557 2,733
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Returns on investment and servicing of finance
Interest received 27 33
Interest paid (157) (205)
Interest element of finance lease rentals (17) (20)
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Net cash outflow from returns on investment
and servicing of finance (147) (192)
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Net cash outflow from taxation (193) (26)
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Capital expenditure and financial investment
Purchase of fixed assets (2,816) (1,119)
Sale of tangible fixed assets 15 887
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Net cash outflow from capital expenditure
and financial investment (2,801) (232)
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Equity dividends paid (444) (97)
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Net cash (outflow)/inflow before financing (1,028) 2,186
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Financing
New bank loans 500 1,380
Repayment of principal under finance leases (164) (152)
Repayment of bank loans (615) (1,480)
Issue of share capital 2 -
-----------------------------------------------------------------------------
Net cash outflow from financing (277) (252)
-----------------------------------------------------------------------------
(Decrease)/Increase in cash in the period (ii) (1,305) 1,934
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(i) Reconciliation of operating profit to net cash flow
Continuing
2000 1999
#'000 #'000
Operating profit 1,719 1,680
Depreciation and amortisation 698 550
(Profit)/loss on sale of tangible fixed assets (7) 4
Working capital change 147 499
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Net cash inflow from operating activities 2,557 2,733
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(ii) Reconciliation of net cash flow to movement in net debt
2000 1999
#'000 #'000
(Decrease)/increase in cash in the period (1,305) 1,934
Cash flow from decrease in debt and lease financing 279 252
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Change in net debt resulting from cash flows (1,026) 2,186
Other non-cash items:
New finance leases (312) (138)
Effects of foreign exchange rates (17) 5
----------------------------------------------------------------------------
Movement in net debt in the period (1,355) 2,053
Opening Net debt (502) (2,555)
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Closing Net debt (1,857) (502)
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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 18 October. The comparative figures for the
year to 30 June 1999 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. Turnover and segmental analysis
Group turnover and operating profits were attributable as follows
Operating
External sales Profit/(loss)
-------------- -------------
2000 1999 2000 1999
#'000 #'000 #'000 #'000
Continuing activities
Building systems 25,369 24,653 2,277 1,900
Rail and marine 2,180 2,123 134 375
Property - 87 - 22
Corporate - - (692) (617)
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Total continuing 27,549 26,863 1,719 1,680
---------------------------------------------------------------------
3. An interim dividend of #135,230 was declared at the interim stage. A
final dividend of #251,472 representing 0.65p per share will be paid
on 12 December 2000 to shareholders on the register at 1 December
2000.
4. The calculation of basic earnings per share is based upon the earnings
attributable to members of the holding company of #1,388,000 (1999:
#1,354,000) and on 38,631,517 (1999: 38,629,731) ordinary shares,
being the weighted average number of ordinary shares in issue during
the year.
5. The calculation of fully diluted earnings per share is based upon the
earnings attributable to members of the holding company of #1,388,000
(1999:#1,354,000) and on a fully diluted weighted average of
39,325,776 (1999:38,929,403) ordinary shares.
6. 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 1999, except for the implementation of FRS15 and FRS16.
It has not been necessary to restate comparative figures to reflect
these changes of policy.
7. The only other recognised gains not reported in the Profit & Loss
Account are exchange losses of #27,000 on translation of overseas net
assets.
8. The Directors approved the financial statements on 29 September 2000.
The Annual General Meeting of Eleco plc will be held at Brewers Hall,
Aldermanbury Square, London EC2V 7HR at 12:00 noon on 20 November
2000.
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