RNS Number:4481L
Eleco PLC
11 October 2001
11 October 2001
ELECO PLC
PRELIMINARY RESULTS FOR THE YEAR
ENDED 30 JUNE 2001
Enquiries to:
John Ketteley, Executive Chairman Tel: 01920 443 830
Eleco plc
David Millham/Tarquin Edwards Tel: 020 7256 5756
Millham Communications
Chairman's Statement
In my statement in March, which accompanied the results for the first half
year, I warned that the key to our performance for the remainder of the
financial year would be the extent to which our customers would be able to
make up the backlog of work that had built up in the first quarter caused by
severe weather.
In the event, the problems of site access persisted beyond the end of March
and this, together with planning delays, prevented a strong recovery in
activity in the fourth quarter. In common with other companies in the
construction industry, Eleco was affected by these factors which contributed
to the reduction in profits for the year under review. The results were also
affected by charges for pensions, depreciation and amortization considerably
higher than in the previous year.
During the past 12 months we have continued to work on a strategy directed
towards:
* The introduction of new products;
* The strengthening of our software capability in order to serve our
customers;
* Adding value by developing online systems for the design and delivery of
our products; and
* The realisation of assets invested in non-core activities
In September 2000 we acquired MBA Computing, a specialist developer of
architectural and timber frame software. In December 2000 we purchased Forma
Communications, a specialist in the design of software and internet solutions.
In July 2001, we completed the disposal of the rail and marine business of
Abtus. As a result, Eleco is now focused on building systems and related
software development and design.
Results
Group turnover for the year ended 30 June 2001 was #26.8 million (2000:#27.5
million. Turnover of our continuing operations was #25.8 million (2000: #25.4
million), including the contribution from the acquired businesses.
Group operating profit was a disappointing #1,055,000 (2000: #1,719,000).
Profit on ordinary activities before tax was #629,000 (2000: # 1,519,000).
Earnings per share were 1.7p (2000:3.6p). Before the exceptional loss on the
sale of the Abtus business, principally due to the writing off of goodwill,
earnings per share were 2.0p.
Capital expenditure in the year under review was #634,000 (2000: #2,816,000).
Net bank borrowings and leasing increased to #2,246,000 at 30 June 2001 from #
1,857,000 at 30 June 2000. The initial proceeds of #740,000 from the sale of
the business of Abtus were received after the 30 June 2001.
Dividend
The Board has proposed a final dividend of 0.65 per share (2000: 0.65p)
payable on 14 December 2001 to shareholders on the Register on 30 November
2001. The proposed final dividend, if approved by shareholders, would result
in the payment of dividends for the year ended 30 June 2001 totalling 1.00p
per share (2000:1.00p) and would be covered 1.7 times by earnings and 2.0
times by earnings before exceptional losses.
OPERATING REVIEW
Building Systems
Turnover in the year under review was #25.0 million (2000: #25.4 million), a
decrease of 1.6 per cent. Operating profit was #1.73 million (2000: #2.28
million), a decrease of 24.2 per cent.
Structural Precast Concrete Systems - Bell and Webster Concrete
Bell and Webster Concrete and Gang-Nail Systems were the two main casualties
of the adverse weather. Persistent flooding and high winds created site
accessibility problems, preventing clients taking deliveries to schedule.
These factors, together with planning delays experienced by clients, which
impacted on order placement, contributed to the disappointing outcome for the
year.
Earnings are of course a most important criterion for judging corporate
performance, but the performance of Bell and Webster Concrete's management
team and workforce in bedding down a significantly expanded manufacturing
facility in a difficult trading environment, is worthy of note.
Recent comment in the trade press by users of our flat pack room system
suggests that our system has the potential to halve construction time compared
with more traditional methods. This is in line with our own experience and is
a good indication of the potential of our modern precast manufacturing
facility at Grantham and its products.
Hitherto Bell and Webster Concrete has been successful in penetrating the
market for construction of budget hotels with its 'flat pack room' system but
is now increasingly directing its marketing effort on student accommodation
projects and the PFI providers of accommodation to universities, the National
Health Service and Ministry of Defence. In this connection, Bell & Webster
Concrete has just recently received the letter of intent for the design of its
'flat pack room' system for a PFI project for new university accommodation
halls. The order for supply, if received, will be worth approximately #5M to
Bell & Webster Concrete.
Timber Engineering Systems - Gang-Nail Systems, Elecobauprodukte,
International Truss Systems
Gang-Nail Systems and Elecobauprodukte both made reduced contributions to the
overall result while International Truss Systems continued to repay our
perseverance with operations in South Africa and produced a record profit.
Gang-Nail Systems was badly affected in the second half by continuing weather
related factors, which resulted in relatively weak demand for connector plates
from fabricators despite the underlying buoyant housing market. In Germany,
Elecobauprodukte was also adversely affected in the second half by heavy price
discounting by its main competitor of up to 40 per cent in some instances.
The new Gang-Nail Roof and Truss Software programmes were successfully
introduced during the year. An updated version will soon be available,
incorporating many unique features requested by our fabricators. A new version
of the Ecojoist Software programme developed by MBA Computing has also been
released. Gang-Nail Systems has already established excellent working
relationships with MBA Computing and Forma Communications.
Roof and Panel Systems - SpeedDeck Building Systems, Stramit Industries
Results of SpeedDeck Building Systems were broadly in line with those achieved
last year.
Useful progress was made during the year in developing the market for Vitesse
(R), the high specification bi-modular panel which is aimed at the prestige
commercial building sector. We also expanded the product offering with the
introduction of a range of structural decks and composite wall panels, which
now enables SpeedDeck to offer "one stop" total roofing and wall cladding
solutions.
I believe that SpeedDeck's unique "20 year Latent Defect Guarantee," which was
introduced during the year, will be of benefit in the market for schools and
other PFI projects.
I am pleased to say that Stramit Industries moved into profit in the year
under review by adopting a strategy of targeting larger scale fitting out
projects and concentrating on the manufacture of higher added value panels.
Software and Internet Solutions - MBA Computing, Forma Communications
MBA Computing joined the Eleco Group in September 2000 and Forma
Communications in December 2000. Both achieved their profit forecasts made at
the time of their acquisition in the year under review. Turnover in the year
was #0.84 million and operating profit was #0.11 million.
While MBA Computing's results for the period to 30 June 2001 met our
expectations, its business has since been affected by the change of control of
its largest customer with a consequent reduction in purchases by it for the
time being. MBA's management are making vigorous efforts to recover the
position, and given the excellent reputation of its architectural software, I
am confident that they will succeed.
In addition to its primary goal of developing its business with third parties,
MBA Computing has since joining the Eleco Group become involved in the
development of a number of software projects for Group companies which I
believe will considerably enhance their product offerings.
Since joining the Eleco Group, Forma Communications has become a Microsoft
Partner, which has enabled it to win a number of important internet based
development assignments. These include projects for Sony, Xerox, Redbus CPD,
Sinfonia 21 and The British Cycling Federation.
Employees
I would like to thank our employees for all their hard work and enthusiasm in
what has been a tough year.
Our Employee Home Computer Scheme continued to attract employee membership
during the year under review and the number of employee members now represents
more than 75 per cent of our workforce. I am also pleased to say that a number
of employees also enrolled for Open University courses under our Further
Education Sponsorship Scheme.
We have introduced appropriate stakeholder pension arrangements for the
Group's employees.
Board Changes
Our Deputy Chairman, John Morgan has decided to retire from the Board
following the Annual General Meeting. I would like to thank him personally and
on your behalf for the invaluable contribution that he has made during his
time as a member of the Board. We have also benefited from his valuable
guidance as Chairman of Trustees of our Group Pension.
I would also like to take this opportunity to welcome Tom Quinn as a
Non-Executive Director.
Current Trading
Performance in the first three months of the current year is broadly in line
with that for the corresponding period for the previous year, with the
exception of MBA Computing.
Recent world events may well have an impact on the general trading outlook for
the remainder of the year but at this point in time, it is too early to
quantify any impact on sales. Our management are however fully alert to the
necessity of keeping the cost base in balance with business levels achieved.
The Future
The priority is to restore profits to levels achieved in the past two years
while at the same time developing the capability of the group as a focussed
supplier of high quality building products and systems, backed by advanced
software skills, offering enhanced efficiency and improved economies to our
customers.
John Ketteley
Executive Chairman
Eleco plc
Consolidated Profit and Loss Account (Unaudited)
for the year ended 30 June 2001
Notes 2001 2000
#'000 #'000
Turnover
Continuing operations 3 24,957 25,369
Acquisitions 3 838 -
25,795 25,369
Discontinued operations 3 1,044 2,180
26,839 27,549
Operating profit
Continuing operations 3 940 1,585
Acquisitions 3 105 -
1,045 1,585
Discontinued operations 3 10 134
1,055 1,719
Loss on disposal of discontinued operations 8 (177) -
Loss on disposal of tangible assets - (53)
Profit on ordinary activities before interest 878 1,666
Net interest payable (249) (147)
Profit on ordinary activities before taxation 629 1,519
Taxation 59 (131)
Profit for the financial year 688 1,388
Dividends (412) (387)
Retained profit 276 1,001
Dividends per share 4 1.00p 1.00p
Basic earnings per ordinary 10p share 5 1.7p 3.6p
Diluted earnings per ordinary 10p share 6 1.7p 3.5p
Eleco plc
Statement of Total Recognised Gains and Losses (Unaudited)
for the year ended 30 June 2001
2001 2000
#'000 #'000
Profit for the financial year 688 1,388
Translation differences on foreign currency net investments (43) (27)
Total recognised gains for the year 645 1,361
Reconciliation of Movement in Equity Shareholders' Funds
(Unaudited)
for the year ended 30 June 2001
2001 2000
#'000 #'000
Profit for the financial year 688 1,388
Other recognised losses relating to the year (43) (27)
Dividends (412) (387)
Proceeds from issue of ordinary shares 362 2
Issue of ordinary shares on acquisition of subsidiaries 646 -
Net increase in equity shareholders funds 1,241 976
Opening equity shareholders' funds 7,541 6,565
Closing equity shareholders' funds 8,782 7,541
Eleco plc
Summarised Consolidated Balance Sheet (Unaudited)
at 30 June 2001
2001 2000
#'000 #'000
Fixed assets 8,777 7,724
Current assets
Stocks 1,825 2,107
Debtors 6,450 6,307
Cash at bank and in hand 482 469
8,757 8,883
Creditors: amounts falling due within one year (7,222) (7,799)
Net current assets 1,535 1,084
Creditors: amounts falling due after more than one year (1,397) (1,267)
Provisions for liabilities and charges (133) -
Net assets 8,782 7,541
Capital and reserves
Called up share capital 4,259 3,864
Share premium account 5,048 4,435
Merger reserve 367 367
Profit and loss account (892) (1,125)
Equity shareholders' funds 8,782 7,541
Eleco plc
Consolidated Cash Flow Statement (Unaudited)
for the year ended 30 June 2001
Notes 2001 2000
#'000 #'000
Net cash inflow from operating activities - continuing 9 1,913 2,246
operations
Net cash inflow from operating activities - discontinued 9 228 311
operations
Net cash inflow from operating activities 2,141 2,557
Returns on investment and servicing of finance
Interest received 42 27
Interest paid (247) (157)
Interest element of finance lease rentals (44) (17)
Net cash outflow from returns on investment and servicing (249) (147)
of finance
Net cash outflow from taxation (132) (193)
Capital expenditure and financial investment
Increase in loans to Employee Share Ownership Trust (352) -
Purchase of fixed assets (634) (2,816)
Sale of tangible fixed assets 10 15
Net cash outflow from capital expenditure and financial (976) (2,801)
investment
Acquisitions and disposals
Purchase of subsidiary undertakings net of cash acquired 7 (713) -
Sale of discontinued operations 8 (64) -
Net cash outflow from acquisitions and disposals (777) -
Equity dividends paid (395) (444)
Net cash outflow before financing (388) (1,028)
Financing
New bank loans 500 500
Repayment of principal under finance leases (250) (164)
Repayment of bank loans (273) (615)
Issue of ordinary shares 362 2
Net cash inflow/ (outflow) from financing 339 (277)
Decrease in cash in the period 10 (49) (1,305)
Eleco plc
Notes
1. The financial information in this announcement does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985.
Statutory accounts of the Company, on which the Auditors will report, will
be delivered to the Registrar of Companies and posted to shareholders on 24
October 2001. The comparative figures for the year to 30 June 2000 have been
taken from, but do not constitute, the Company's statutory financial
statements for that financial year. Those financial statements have been
reported on by the Auditors and delivered to the Registrar of Companies. The
Report of the Auditors was unqualified and did not contain a statement under
s237(2) or (3) of the Companies Act 1985.
2. The information herein has been prepared on the basis of the accounting
policies adopted for the year ended 30 June 2000, as set out in the
Company's Annual Report and Accounts, except as modified by the adoption of
the following standards:
FRS 17 - Retirement Benefits
FRS 18 - Accounting Policies
The adoption of these standards has no effect on the results reported in
either the current or previous period.
3. Turnover and Segmental analysis
Group turnover and profits were attributable
as follows
External Operating Profit/
sales (loss)
2001 2000 2001 2000
#'000 #'000 #'000 #'000
Continuing activities
Building systems 24,957 25,369 1,726 2,277
Software systems 838 - 105 -
Corporate - - (786) (692)
Total continuing operations 25,795 25,369 1,045 1,585
Discontinued activities
Rail and marine 1,044 2,180 10 134
Total discontinued operations 1,044 2,180 10 134
26,839 27,549 1,055 1,719
4. An interim dividend of #143,000 was declared at the interim stage. A final
dividend representing 0.65p per share is being proposed and, if approved at
the Annual General Meeting, will be payable on 14 December 2001 to
shareholders on the register on 30 November 2001.
5. The calculation of basic earnings per share is based on the profit
attributable to equity shareholders of #688,000 (2000: #1,388,000) and on
39,940,305 ordinary shares (2000: 38,631,517), being the weighted average
number of ordinary shares in issue during the period.
6. The calculation of fully diluted earnings per share is based on the profit
attributable to equity shareholders of #688,000 (2000: #1,388,000) and a
fully diluted weighted average of 40,398,128 ordinary shares (2000 -
39,325,776).
7. On 8 September 2000, the Group acquired the entire issued share capital of
MBA Computing Limited for a total initial consideration, including
acquisition expenses, of #600,000. Provision has been made for #46,000
deferred consideration payable. Goodwill on acquisition of #728,000 has been
capitalised and included within fixed assets. #100,000 of the total
consideration was settled by the issue of 333,330 new ordinary shares with
the balance paid, or to be paid, in cash.
On 15 December 2000, the group acquired the entire issued share capital of
Forma Communications Limited for a total initial consideration, including
acquisition expenses, of #769,000. Provision has been made for #87,000
deferred consideration payable. Goodwill on acquisition of #796,000 has been
capitalised and included within fixed assets. #546,000 of the total
consideration was settled by the issue of 1,820,000 new ordinary shares with
the balance paid, or to be paid, in cash.
8. With effect from 30 April 2001, the group sold the business of Abtus Limited
including the former business of Tergor Electronics Limited.
9. Reconciliation of operating profit to net cash flow from
operating activities
Continuing Discontinued
2001 2000 2001 2000
#'000 #'000 #'000 #'000
Operating profit 1,045 1,585 10 134
Depreciation charge 1,004 628 70 61
Amortisation of intangible assets 48 - - 9
Loss/(profit) on sale of fixed assets 11 (7) - -
Working capital (increase)/decrease (195) 40 148 107
1,913 2,246 228 311
10. Reconciliation of net cash flow to movement in net debt
2001 2000
#'000 #'000
Decrease in cash in the period (49) (1,305)
Cash flow from movements in debt and lease financing 23 279
Increase in net debt resulting from cash flows (26) (1,026)
Other non-cash items:
New finance leases (368) (312)
Finance lease obligations disposed of on sale of business 47 -
Finance lease obligations acquired with subsidiaries (10) -
Effects of changes in foreign exchange rates (32) (17)
Increase in net debt in the period (389) (1,355)
Opening net debt (1,857) (502)
Closing net debt (2,246) (1,857)
11. The Annual General Meeting of Eleco plc will be held at The Baltic
Exchange, St. Mary Axe, London EC3A 8BH at 12:00 noon on 21 November 2001.
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