RNS Number : 4929D
Eleco PLC
16 September 2008
For Immediate Release 16 September 2008
ELECO PLC
("Eleco" or the "Group")
The Building Systems and Software Group
Preliminary Results for the Year Ended 30 June 2008
Group Highlights
* Turnover increased by 37.1% to �84.9m (2007: �61.9m)
* Group operating profit increased by 37.8% to �8.0m (2007: �5.8m)
* Profit before tax increased by 39.9% to �8.2m (2007: �5.9m)
* Profit after tax increased by 24.2% to �6.1m (2007: �4.9m)
* Proposed final dividend 2.0p per share (2007: 1.8p) making total for year of 3.0p per share (2007: 2.5p) covered 3.5 times (2007:
3.7 times)
Building Systems
* Turnover increased by 37.8 % to �71.4m (2007: �51.8m)
* Operating profit increased by 20.9% to �7.4m (2007: �6.1m)
* Substantial increased contribution from expanded Precast Concrete operations
* Limited exposure to housing markets
Software
* Turnover increased by 33.2% to �13.5m (2007: �10.1m)
* Operating profit of �945,000 (2007: Loss of �297,000)
* Record turnover and profit for Construction Software operations
John Ketteley, Executive Chairman of Eleco plc, commented:
"Trading conditions will be tough this year. However, we will apply the same measured and positive approach to our business in the year
ahead, albeit against a backdrop of increasingly difficult market conditions. Given our strong financial position and the strength we derive
from the balance of the products and business that we now have in the Group, I am confident that Eleco will perform well in the
circumstances."
For further information please contact:
Eleco plc Tel: 01920 443 830
John Ketteley, Executive Chairman http://www.eleco.com
john.ketteley@eleco.com
David Dannhauser, Finance Director
david.dannhauser@eleco.com
Collins Stewart Europe Limited 020 7523 8350
Nick Ellis
Buchanan Communications 020 7466 5000
Tim Anderson / Isabel Podda / Christian Goodbody
Chairman's Statement
I am pleased to present my statement for the year ended 30 June 2008, which includes the review of our business activities and the
outlook for the current year.
Eleco continued its progress in the year under review due to a strong performance from our expanded precast concrete operations, limited
exposure to the UK and Irish housing markets, accounting for only 14% of Group turnover, and a significantly improved performance from our
software interests.
Performance Summary
Group turnover for the year increased by 37.1% to �84.9m (2007: �61.9m).
Group operating profit was 37.8% higher at �8.0m (2007: �5.8m). Group operating profit was arrived at after deducting intangible asset
amortisation costs for the year of �531,000 (2007: �435,000) and included a first year contribution of �521,000 from Millbury Systems, which
was acquired in November 2007, before deducting acquisition accounting adjustments of �128,000 and intangible asset amortisation costs of
�108,000.
Profit on ordinary activities before tax was 39.9% higher at �8.2m (2007: �5.9m), after net interest receivable of �202,000 (2007:
�59,000).
Group profit for the year after tax increased 24.2% to �6.1m (2007: �4.9m) equivalent to 10.6p earnings per share (2007: 9.3p earnings
per share).
Operating cash flow was again strong and net funds in hand at 30 June 2008 increased to �5.8m (2007: �4.8m). The cash cost of financing
the acquisition of Milbury Systems during the year was �2.9m net of the cash balances acquired with the company.
Investment in new products and enhanced software development increased by 26.9% to �2.9m (2007: �2.3m).
Dividends
The Board proposes an increased final dividend of 2.00p per share (2007: 1.80p per share), which subject to approval by shareholders,
will be paid on 14 November 2008 to shareholders on the Register on 17 October 2008.
The proposed final dividend, together with the interim dividend of 1.00p already paid, would result in total dividends in respect of the
year ended 30 June 2008 of 3.00p per share (2007: 2.50p per share), an increase of 20%.
The total of dividends paid and proposed was covered 3.5 times by earnings per share of 10.6p (2007 Dividend Cover: 3.7 times earnings
per share of 9.3p per share).
Employees
I would like to thank our employees in the UK, Germany, Sweden and South Africa whose hard work, dedication and skill have made possible
these significantly improved results in a particularly difficult trading environment.
Review of Business Activities
Building Systems
Our Building Systems products are designed and engineered for projects that lend themselves to the efficient application of Modern
Methods of Construction. They give our customers a competitive edge by maximizing the speed, efficiency and economy of the build process.
Turnover of our Building Systems operations increased by 37.9% to �71.4m (2007: �51.8m) and operating profit increased by 20.9% to �7.4m
(2007: �6.1m). Operating profit before acquisition accounting adjustments and amortisation of intangible assets was �7.7m (2007: �6.2m).
Precast Concrete
Turnover of our Precast Concrete operations increased by 81.3% to �37.9m (2007: �20.9m) and operating profit increased by 57.7% to �4.1m
(2007: �2.6m). Operating profit before acquisition accounting adjustments and amortisation of intangible assets was �4.4m (2007: �2.6m).
Bell & Webster Concrete achieved a significant increase in sales of its FastBuild Rooms for hotels and student accommodation projects in
the second half of the year; sales of its retaining wall and other products also remained firm. As a consequence, operating profits were
significantly higher than last year.
Bell & Webster Concrete also acquired a new site at Hoveringham which now enables it also to supply pre-stressed reinforced concrete
panels. The site opens up new markets such as schools, prisons, nursing/residential homes and key worker accommodation for its FastBuild
Rooms and is now fully operational. The plant was commissioned on time and budget and the costs of commissioning have been fully accounted
for in the year under review.
Milbury Systems performed particularly well in its first full six month period as part of the Group and its management and employees are
to be congratulated on the enthusiasm and initiative they have shown on joining Eleco.
We are committed to a policy of good environmental practice and continual improvement. Bell & Webster Concrete and Milbury Systems are
currently engaged on a major environmental improvement project at their production plants at Grantham, Hoveringham and Lydney with the
object of gaining ISO14001:2004 accreditation, an international standard for environmental management that is applied and recognised
worldwide. The initial audit for the registration process will take place in October 2008 and we are aiming to gain accreditation during
February 2009.
Bell & Webster Concrete has also applied to register its Grantham production, design and administrative operations for the British
Standards Institute OHSAS 18001: 2007 standard for occupational health and safety management systems. The first stage of the registration
process began in September 2008. Application for registration will also be made in respect of the site at Hoveringham and Milbury Systems'
site at Lydney in due course. We are aiming for the first stage accreditation during January 2009.
I believe that the gaining of these accreditations will enhance our reputation as a leading manufacturer of precast concrete elements
for the UK construction industry.
I am pleased to say that a Bell & Webster Concrete project has again been shortlisted for a Construction Excellence Award in the
*Project of the Year Category*. The shortlisted project is the highly acclaimed Mason Hall student accommodation project for the University
of Birmingham.
Other Building Systems
Our Other Building Systems operations comprise roofing and cladding; timber frame and engineered timber products; and timber engineering
systems.
Turnover increased by 8.7% to �33.5m (2007: �30.9m). Operating profit reduced by 8.3% to �3.3m (2007: �3.5m). Operating profit before
amortisation of intangible assets was �3.3m (2007: �3.6m).
Roofing and Cladding
SpeedDeck Building Systems launched two new products at the Interbuild Exhibition in October, 2007. SpeedRoof�, a secret fix roofing
product and Elan, a cladding product were well received by the market. SpeedDeck Building Systems also successfully directed its main
marketing effort in the second half on the Government's educational building programme. Its order book at the end of the year was
significantly higher than at the beginning. Downer Cladding Systems also performed well in the second half. As a consequence the
improvement in performance by our roofing and cladding operations that I reported in the first half year, continued in the second half.
Timber frame and engineered timber products
Eleco Timber Frame made a higher profit in the second half in a weak market. However, by the end of the year even this sector of the
housing market had come under severe pressure and steps have now been taken to market its patented ElecoFrame� product more actively for use
in commercial projects as well as social housing projects. ElecoFrame� is particularly suitable for the latter, due to its ability to
achieve level 4,5 and 6 of the Code for Sustainable Homes, in combination with relevant technologies.
Timber Engineering Systems
In my interim statement, I reported that the overall profits of our timber engineering businesses were some 20% lower at the half year
mainly because of significant weakness in the Irish, UK and South African housing markets. Lower profits from Gang-nail Systems in the UK
and International Truss Systems in South Africa were offset to some extent by increased profits from Eleco Bauprodukte which is principally
involved in the commercial market in Germany.
In the second half, the weakness in the Irish and UK housing markets accelerated and the South African market experienced a marked drop
in confidence. As a consequence, profits of Gang-Nail Systems and International Truss Systems were significantly lower, offset again by
increased profits from Eleco Bauprodukte. This limited the drop in profits of our timber engineering businesses overall to 26.2% for the
year.
Software
Our Software operations comprise Construction Software and Visualisation Software.
Turnover of our Software operations increased by 33.2% to �13.5m (2007: �10.1m).
Our Software operations made an operating profit of �0.9m, after total acquisition accounting adjustments and amortisation of intangible
assets of �0.4m (2007: Operating loss �0.3m, after total acquisition accounting adjustments and amortisation of intangible assets: �0.5m).
Fully expensed development costs were �2.3m (2007: �1.8m).
Operating profit before acquisition accounting adjustments and amortisation of intangible assets was �1.4m (2007: �0.2m).
Construction Software
Consultec and Asta Development both performed well. Consultec Sweden achieved a significant improvement in profit for the year and Asta
Development record turnover and profit. However, Consultec UK's was adversely affected by the downturn in the UK housing market and its
profits were lower.
Consultec Sweden successfully completed the development of its new .Net based Bidcon� Estimating package, which will be launched this
autumn in Sweden. Asta Development also successfully released a new version of the Asta Powerproject software and expanded their
distribution network to include Australia and Dubai. The release of Consultec UK's new objectivised Timber Frame software program was also
well received.
Visualisation Software
Sales of Visualisation Software, particularly of our retail products, increased in the period. We also reached agreement with 9 of the
10 international distributors that we had targeted for our consumer applications. Increased costs of investing in new programs again
resulted in a modest loss, but Visualisation Software improved its position overall during the year and is well placed for the year ahead.
For example, we recently secured a trademark license to produce software in the UK under the highly successful "Grand Designs" brand. "Grand
Designs 3D" will be launched in October 2008 and will mark a significant step change in the profile and performance of Eleco's home design
software in the UK.
Finance
We have consistently applied sound financing policies since the Company's recovery in the past decade and I am again pleased to report
that our strong operating cash flows in the year under review improved our net cash position at the year end. Our cash resources, together
with the committed medium term banking facilities that we put in place last year, in anticipation of the tightening credit conditions,
provides a strong underpinning for our trading operations and will also enable us to take advantage of investment opportunities as they
arise. As credit conditions in the financial markets continue to tighten, increasing importance is being placed by customers on the
financial standing of their suppliers. Given our strong financial position, Eleco is well placed to provide the necessary assurances and I
believe that this may well give us a competitive edge in current conditions.
Outlook
Trading conditions will be tough this year. However, we will apply the same measured and positive approach to our business in the year
ahead, albeit against a backdrop of increasingly difficult market conditions. Our Building Systems operations will concentrate their efforts
on opportunities in the infrastructure, hotel and educational sectors; and our Software operations will focus on international and consumer
markets. Given our strong financial position and the strength we derive from the balance of the products and business that we now have in
the Group, I am confident that Eleco will perform well in the circumstances
Consolidated Income Statement
For the year ended 30 June 2008
2008 2007
�'000 �'000
Revenue 84,909 61,923
Cost of sales (46,090) (32,142)
Gross profit 38,819 29,781
Distribution costs (4,087) (2,818)
Administrative expenses (26,710) (21,142)
Profit from operations 8,022 5,821
Finance income 475 306
Finance cost (273) (247)
Profit before tax 8,224 5,880
Tax (2,091) (942)
Profit for the period 6,133 4,938
Attributable to:
Equity holders of the parent 6,133 4,938
Total and continuing earnings per share (EPS)
- basic 10.6p 9.3p
- diluted 10.5p 9.3p
Consolidated Statement of Recognised Income and Expense
For the year ended 30 June 2008
2008 2007
�'000 �'000
Actuarial (loss)/gain on retirement benefit obligation (3,992) 1,125
Associated deferred tax on retirement benefit obligation 986 (407)
Translation differences on foreign currency net investments (57) (154)
Net (expense)/income recognised directly in equity (3,063) 564
Profit for the period from operations 6,133 4,938
Total recognised income and expense in the period 3,070 5,502
Attributable to:
Equity holders of the parent 3,070 5,502
Consolidated Balance Sheet
As at 30 June 2008
2008 2007
�'000 �'000
Non-current assets
Goodwill 14,174 10,249
Other intangible assets 3,827 3,187
Property, plant and equipment 12,175 8,372
Deferred tax assets 1,969 984
Total non-current assets 32,145 22,792
Current assets
Inventories 4,599 3,441
Trade and other receivables 16,585 13,151
Cash and cash equivalents 6,808 5,940
Total current assets 27,992 22,532
Total assets 60,137 45,324
Current liabilities
Borrowings - (410)
Obligations under finance leases (364) (313)
Trade and other payables (16,222) (11,103)
Current tax liabilities (1,687) (982)
Accruals and deferred income (7,237) (6,468)
Total current liabilities (25,510) (19,276)
Non-current liabilities
Borrowings - (71)
Obligations under finance leases (596) (386)
Deferred tax liabilities (1,110) (1,051)
Provisions - (85)
Retirement benefit obligation (7,034) (3,514)
Total non-current liabilities (8,740) (5,107)
Total liabilities (34,250) (24,383)
Net assets 25,887 20,941
Equity
Share capital 5,995 5,674
Share premium account 6,224 6,224
Merger reserve 7,371 4,453
Translation reserve (211) (154)
Other reserve (321) (306)
Retained earnings 6,829 5,050
Equity attributable to shareholders 25,887 20,941
Consolidated Cash Flow Statement
For the year ended 30 June 2008
2008 2007
�'000 �'000
Cash flows from operating activities
Profit before interest and tax 8,022 5,821
Depreciation charge 1,642 1,407
Amortisation charge 531 425
Profit on sale of property, plant and equipment (37) (250)
Amortisation of share-based payments 252 181
Retirement benefit obligation (384) (378)
Cash generated from operations before working capital movements 10,026 7,206
Increase in trade and other receivables (1,474) (2,335)
Increase in inventories and work in progress (140) (628)
Increase in trade and other payables 3,499 1,925
Cash generated from operations 11,911 6,168
Interest paid (250) (250)
Interest received 388 241
Income tax paid (1,956) (663)
Net cash generated from operating activities 10,093 5,496
Net cash used in investing activities
Purchase of intangible assets (70) (115)
Purchase of property, plant and equipment (3,946) (1,233)
Acquisition of subsidiary undertakings net of cash acquired (2,963) (2,622)
Proceeds from sale of property, plant, equipment and intangible assets 149 315
Net cash outflow from investing activities (6,830) (3,655)
Net cash used in financing activities
Proceeds from new bank loan 4,600 -
Repayment of bank loans (5,140) (891)
Repayments of obligations under finance leases (428) (374)
Equity dividends paid (1,600) (1,122)
Own shares purchased by ESOT (15) (204)
Net cash outflow from financing activities (2,583) (2,591)
Net increase/(decrease) in cash and cash equivalents 680 (750)
Cash and cash equivalents at beginning of period 5,940 6,852
Effects of changes in foreign exchange rates 188 (162)
Cash and cash equivalents at end of period 6,808 5,940
Business Segment Analysis
For the year ended 30 June 2008
Building Systems
Precast Other Software Elimination Group
�'000 �'000 �'000 �'000 �'000
Revenue 37,864 33,554 13,491 - 84,909
Inter-segment revenue - 583 243 (826) -
Total segment revenue 37,864 34,137 13,734 (826) 84,909
Adjusted operating profit 4,379 3,286 1,368 9,033
Acquisition accounting (128) (33) (161)
adjustments
Amortisation of intangible assets (108) (33) (390) (531)
Segment result 4,143 3,253 945 8,341
Abortive merger costs (319)
Profit from operations 8,022
Net finance income 202
Profit before tax 8,224
Tax (2,091)
Profit after tax 6,133
Segment assets 18,984 15,391 17,665 52,040
Unallocated assets 8,097
Total Group assets 60,137
Segment liabilities 14,515 8,942 7,567 31,024
Unallocated liabilities 3,226
Total Group liabilities 34,250
Other segment information
Capital expenditure:
Property, plant and equipment 3,450 862 394 4,706
Intangible assets 1,071 - 70 1,141
Goodwill acquired 3,902 - - 3,902
Depreciation 673 707 262 1,642
Business Segment Analysis
For the year ended 30 June 2007
Building Systems
Precast Other Software Elimination Group
�'000 �'000 �'000 �'000 �'000
Revenue 20,900 30,893 10,130 61,923
Inter-segment revenue 570 221 (791) -
Total segment revenue 20,900 31,463 10,351 (791) 61,923
Adjusted operating profit 2,569 3,603 186 6,358
Acquisition accounting (112) (112)
adjustments
Amortisation of intangible assets (54) (371) (425)
Segment result 2,569 3,549 (297) - 5,821
Exceptional items -
Profit from operations 5,821
Net finance income 59
Profit before tax 5,880
Tax (942)
Profit after tax 4,938
Segment assets 7,721 13,512 17,751 38,984
Unallocated assets 6,340
Total Group assets 45,324
Segment liabilities 6,876 7,393 6,793 21,062
Unallocated liabilities 3,321
Total Group liabilities 24,383
Other segment information
Capital expenditure:
Property, plant and equipment 620 503 300 1,423
Intangible assets - - 3,241 3,241
Goodwill acquired - - 4,804 4,804
Depreciation 487 709 211 1,407
Notes
1. The financial information in this announcement, which is audited, 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. The comparative figures for the year to 30 June 2007 have been taken from, but do not constitute, the Company*s statutory
financial statements for that financial year restated for the effect of transition to International Financial Reporting Standards.
2. The information herein has been prepared on the basis of the accounting policies adopted for the year ended 30 June 2008, set out in the
Company*s Annual Report and Accounts and as previously disclosed in the Company*s Interim Report for the six months to December 2007.
3. A dividend of 1.0p per share was declared at the interim stage. A final dividend representing 2.0p per share is being proposed and, if
approved at the Annual General Meeting, will be payable on the 14 November 2008 to shareholders on the Register on 17 October 2008.
4. The calculation of basic earnings per share is based on the profit attributable to equity shareholders of �6,133,000 (2007: �4,938,000)
and on 57,970,071 ordinary shares (2007: 52,855,635), being the weighted average number of ordinary shares in issue during the year.
5. The calculation of diluted earnings per share is based on the profit attributable to equity shareholders of �6,133,000 (2007: �4,938,000)
and on 58,675,041 ordinary shares (2007: 52,855,635), being the weighted average number of ordinary shares in issue during the year.
6. On 22 November 2007, the Group acquired the entire issued share capital of Milbury Systems Limited and the freehold of the property
occupied by Milbury Systems Limited for a total consideration of �6,974,000 before expenses of which �1,030,000 relates to the separate
purchase of the freehold property. At completion, �3,735,000 was settled in cash from the Group*s existing resources, �3,030,000 was settled
by the issue and placing of shares on behalf of the vendors and �209,000 by allotment to the vendors of new ordinary shares in the Company.
During the year Milbury Systems Limited contributed turnover of �5,355,000 and an adjusted operating profit of �521,000 to the results of
the Precast division which after the acquisition accounting adjustments related to profit in inventory at the date of acquisition of
�128,000 and intangible asset amortisation �108,000, resulted in a reported operating profit of �285,000.
7. The Annual General Meeting of Eleco plc will be held at Brewers* Hall, Aldermanbury Square, London EC2V 7HR on 5 November 2008 at 12
noon.
8. Copies of the Report and Accounts will be sent to shareholders from 25 September 2008 and will be available from the Secretary at the
Company*s registered office, Eleco House, 15 Gentleman*s Field, Westmill Road, Ware, Hertfordshire, England, SG12 0EF.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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