TIDMELCO
RNS Number : 0927C
Eleco PLC
01 March 2011
1 March 2011
("Eleco" or the "Group")
The Construction Software and Building Systems Group
Interim Results for the Six Months Ended 31 December 2010
Strategic emphasis now placed on growth of profitable
construction software interests
Group Financial performance
-- Turnover amounted to GBP31.8m (H1 2009: GBP32.5m)
-- Group adjusted operating loss before amortisation and
restructuring costs of GBP0.7m (H1 2009: loss GBP0.7m)
-- Loss before tax of GBP1.7m (H1 2009: loss GBP2.2m)
-- Loss per share of 2.8p (H1 2009: loss 3.5p)
-- Net bank debt at 31 December 2010 of GBP5.7m (H1 2009:
GBP2.1m)
Group Operational performance
-- Improved operating performance at Software with strong growth
in turnover and profits.
-- Building Products marginally profitable with poor performance
at Eleco Timber Frame offset by profits in other businesses.
-- Further loss, albeit significantly less than in second half
of last year, in Precast Concrete operations, principally caused by
losses on custodial contracts and adverse weather in December.
-- Gross margin maintained due to change in revenue mix.
-- Reduced cost base with administrative expenses down over 10%
compared to the previous six month period.
Software
-- Turnover increased 13% to GBP7.3m (H1 2009: GBP6.4 m)
-- Adjusted operating profit before amortisation and
restructuring costs more than doubled to GBP0.7m (H1 2009:
GBP0.3m)
-- Acquisition of Lubekonsult AB, the ventilation software and
estimating business, in Sweden for GBP393,000 is performing ahead
of expectations.
-- All software businesses now profitable and growing both top
line and operating profit.
Building Products
-- Turnover increased to GBP10.3m (H1 2009: GBP8.8m)
-- Adjusted operating profit before amortisation and
restructuring costs of GBP10,000 (H1 2009: loss GBP0.8m) Loss of
GBP0.4m at Eleco Timber Frame more than offset by profits in other
businesses.
-- Market conditions remain tough but cost base reduced and all
businesses performing ahead of H2 last year.
Precast Concrete
-- Turnover amounted to GBP14.3m (H1 2009: GBP17.4m)
-- Adjusted operating loss of GBP1.5m before amortisation and
restructuring costs (H1 2009: loss GBP0.2m)
-- Trading adversely impacted by the poor performance of the
custodial contracts, now almost complete, and adverse weather
experienced during December.
Pension
-- The deficit shown in the accounts at 30 June 2010 has reduced
by GBP1.5m, from GBP9.8m to GBP8.3m, primarily due to investment
performance in the period.
Board appointment
-- Group management strengthened with the appointment of Matthew
Turner as initially part time Group Finance Director in
January.
Change of accounting date
-- Change of accounting reference date to 31 December for
operational reasons. An unaudited second interim report will be
released for the period ended 30 June 2011. The preliminary results
for the eighteen months ended 31 December 2011 will be released no
later than 31 March 2012.
Outlook
-- Our Precast Concrete and Building Products businesses were
affected by further adverse weather in January 2011. However, the
Board is of the view that our Building Products operations will
produce a modest improvement although our Precast Concrete
interests will continue to experience operational difficulties
until the four major custodial accommodation contracts have been
completed, which is expected by the end of June 2011. The Board is
also of the view that our Software interests will perform well in
the second six months.
Strategy
-- The Board plans to concentrate on expansion of its software
and service operations while reducing the current emphasis on
Building Products and currently loss making Precast Concrete
manufacturing interests.
-- The Board believes that this strategy will significantly
reduce the financing requirements of the Group's Building Products
and Precast Concrete interests while facilitating the planned
expansion of the Group's Software interests, both in the UK and
internationally.
For further information please contact:
Eleco plc Tel: 0207 422 0044
John Ketteley, Executive Chairman http://www.eleco.com
Craig Slater, Chief Operating Officer
Matthew Turner, Group Finance Director
Cenkos Securities plc 0207 397 8900
Adrian Hargrave / Martin Green
Chairman's Statement
Group Performance
Group turnover for the six months ended 31 December 2010 was
GBP31.8m (2009: GBP32.5m), down 2% compared to the same period last
year but up 25% compared to the second half of last year.
Group turnover in the period was adversely impacted, primarily
in Precast Concrete, by approximately GBP1.8m due to the severe
weather conditions experienced during December 2010. However,
turnover in Building Products and Software divisions was up 17% and
13% respectively compared with the same period last year.
The Group maintained its gross profit margin in spite of margin
pressures at both Precast Concrete and Building Products divisions
due to the change in revenue mix. Software increased its share of
Group turnover to 23%.
Adjusted Group operating loss before amortisation of intangible
assets and restructuring costs amounted to GBP0.7m compared with an
adjusted Group operating loss of GBP0.7m for the same period last
year and an adjusted Group operating loss of GBP4.2m in the second
half of last financial year.
Software delivered strong growth in the period with turnover and
profit both at record levels and continues the significant growth
in these businesses achieved in the past three years despite the
unprecedented economic difficulties experienced over that period.
Consultec Sweden acquired the business of Lubekonsult AB ("Lube")
on 1 September 2010 for GBP393,000, of which GBP172,000 has been
paid. Lube, provides cost estimation services and software to the
Swedish ventilation market and is already exceeding our
expectations in terms of turnover and profit.
Within Building Products, Eleco Timber Frame generated an
operating loss of GBP0.4m in the six months ended 31 December 2010
which was offset by profits generated in the other Building
Products businesses.
The significant improvement in profit performance at Software
and Building Products compared to last year was offset by a weak
performance at Precast Concrete. This is largely due to the poor
financial performance and operational problems relating to the
custodial contracts, all of which are planned to complete in the
next quarter. Completion of these custodial contracts will lead to
reduced costs and facilitate greater focus on the student
accommodation and hotel business.
The Group loss before tax of GBP1.7m is arrived at after
amortisation charges of GBP0.2m (2009: GBP0.3m) and restructuring
costs of GBP0.5m (2009: GBP0.4m) and net financing costs of GBP0.3m
(2009: GBP0.3m). The negative impact of the adverse weather during
December 2010 was approximately GBP0.5m at the pre tax level.
Net bank debt at 31 December 2010 increased to GBP5.7m (2009:
GBP2.1m). Of this GBP3.6m increase, GBP2.0m was attributable to
additional working capital required by the custodial contracts
referred to above and a further GBP0.6m relates to extended credit
taken by Eleco Timber Frame customers. The Group continues to focus
on managing its debt and working capital to maximize cash inflows
across all the divisions.
Dividend
The Group not having returned to profit, the Board has decided
not to pay an interim dividend.
Divisional Performance
Software
Turnover increased to GBP7.3m against GBP6.4m in the same period
last year, up more than 13%.
Adjusted operating profit was GBP0.7m before amortisation of
intangible assets and restructuring costs for the six months
compared to GBP0.3m last year and to GBP0.5m in the second half of
the last financial year.
This continued growth was largely driven by increased turnover
of software and services in Sweden and Germany, together with the
acquisition of Lubekonsult in Sweden, which has proved successful
in delivering the anticipated benefits. Software continues to
explore opportunities in other overseas markets and recently opened
a sales office in Belgium.
Building Products
Turnover was GBP10.3m in the six months, up 17% compared with
GBP8.8m in the same period last year and up 14% compared with
GBP9.0m in the second half of last year.
Building Products broke even in the period before amortisation
and restructuring costs compared to an adjusted operating loss of
GBP0.8m for the same period last year and to a GBP1.0m loss in the
second half of last financial year.
The improved performance is due to better trading performance at
the roofing, cladding and UK and South African nail plate
businesses and the elimination of trading losses at the German nail
plate business which was sold on 30 June 2010.
Building Products has successfully reduced costs and started to
reinvest again in sales resources
Precast Concrete
Turnover in the six months ended 31 December 2011 was GBP14.3m
compared with GBP17.4m achieved in the same period last year and
only GBP9.4m in the second half of last year.
Adjusted operating loss before intangible asset amortisation and
restructuring costs for the first half was GBP1.5m compared with a
loss of GBP0.2m in the same period last year and of GBP3.7m in the
second half of last year.
The major part of turnover in the period related to the
custodial contracts, each of which produced poor returns. These
contracts are now fully manufactured and deliveries are expected to
be completed in the next quarter. Working capital directly held in
these contracts, amounting to approximately GBP2.0m at 31 December
2010, and will reduce as the contracts are completed and amounts
due under the contracts are received.
Completion of the custodial contracts will result in a reduction
in headcount of approximately 75% and create a lower overhead
business as we focus on manufacture of hotels and student
accommodation.
The current market continues to be tough and margins remain
under pressure. However, the current level of enquiries is
encouraging and procedures are in place to ensure that contracts
are not entered into at unsustainable margins.
Financial Review
Group financial performance in the six months ended 31 December
2010 was in line with expectations before the impact of the adverse
weather conditions in December 2010. The estimated impact of the
severe weather was a reduction in turnover and operating profit of
GBP1.8m and GBP0.5m respectively.
The Group's cash position was impacted by an increase in trade
debtors over the period, partly due to the increased level of
invoicing, particularly annual maintenance and support revenues at
Software, but also to higher retention amounts at the contract
based businesses, specifically Precast Concrete and Eleco Timber
Frame. In addition, increased restructuring spend, mainly
redundancy costs and expenses related to the rationalisation of the
Group's properties, together with reduced profit before interest
and tax accounted for cash used in operations during the
period.
The Group continues to closely monitor its cash flow and working
capital and efforts are being made to recover overdue debt and
retentions as speedily as possible.
Pension Strategy
As mentioned in the Preliminary Statement in October 2010, the
Group has been working with the Trustees to reduce investment risk
and manage the deficit of the pension plan, which was closed to
future accrual in December 2009.
Revisions to the investment strategy have now been agreed,
detailed aspects of the transition are now being discussed and the
resultant changes are being implemented with a view to full
implementation in the coming weeks.
In parallel, certain liability reduction measures have now been
agreed and others are in discussion with the Trustees. These are
expected to lead in certain cases to increased choices for the
members and reduced liabilities and exposure for the fund.
Implementation of some of these measures is dependent upon final
agreement between the Trustees and the Group and the overall
financial impact of the measures agreed and to be agreed cannot
therefore be disclosed at this time.
The Group intends to disclose further details of the above once
implemented. In the meantime the deficit shown in the accounts at
30 June 2010 has reduced by GBP1.5m, primarily due to investment
performance in the period from GBP9.8m to GBP8.3m.
Change of Accounting Date
The Board has decided for operational reasons to change the
accounting reference date of Eleco plc to 31 December. Accordingly,
the next audited report and accounts will be for the 18 month
period ending 31 December 2011. The preliminary announcement of
results for the 18 month period ending 31 December 2011 will be
made no later than 31 March 2012 and the audited accounts will be
published shortly thereafter.
The Company will also produce a second interim unaudited report
for the year and six month period ending 30 June 2011.
We believe this change will give operational advantages in
dealing with year end procedures at our overseas businesses,
particularly Sweden and Germany.
Board Appointment
The Board is pleased to note that our management was
strengthened by the appointment on 27 January of Matthew Turner, as
Group Finance Director, initially on a part time basis. He was
previously a partner at Grant Thornton UK LLP in their financial
advisory division.
Outlook
Our Precast Concrete and Building Products businesses were
affected by further adverse weather in January 2011. However, the
Board is of the view that our Building Products operations will
produce a modest improvement although our Precast Concrete
interests will continue to experience operational difficulties
until the four major custodial accommodation contracts have been
completed, which is expected by the end of June 2011. The Board is
also of the view that our Software interests will perform well in
the second six months.
Strategy
I am pleased to report on the excellent progress that has been
made by our Software interests, particularly in overseas markets
and in the difficult trading conditions of the past three years. I
am pleased not least because I was very much involved in our
initial decision to invest in construction software. Since then we
have assembled a portfolio of leading software brands in Sweden,
Germany and the UK and our software has been involved in the
project management of major buildings such as "The Shard", in the
preparation of the master plan for the Olympics, and has been
offered free to all colleges in the UK which are engaged in the
provision of construction courses.
On the other hand I have been very disappointed to have had to
report the poor operating performance of some of our Building
Products interests and our Precast Concrete interests, albeit in
market conditions that can only be described as ferocious.
Fortunately, we had been conscious at the outset of the need to
ensure that adequate cash resources and financing were in place
before we embarked on the manufacture of custodial accommodation
but the financial and operational risks of our involvement in such
major manufacturing projects were far more significant than
anticipated at the time.
The custodial accommodation contracts are now nearing completion
and my colleagues and I have been reconsidering what our corporate
strategy going forward, when these contracts have been completed
and worked through our system, should be. We have decided that
Eleco should concentrate on the expansion of its profitable and
growing software and service operations on the one hand and on
reducing our exposure to our currently loss making Precast Concrete
and Building Products interests on the other.
We have so decided because such a strategy would reduce
significantly our financing requirements as a Group, because our
reduced commitment to Building Products and Precast Concrete would
significantly reduce the financial requirements of those businesses
which would enable us increasingly to allocate our resources to the
expansion of our Software interests. We also believe that such a
strategy would have the support of our shareholders.
I therefore look forward with my colleagues to changing the
emphasis of Eleco from Building Products and Precast Concrete to
the expansion of our successful and growing software interests.
John Ketteley
Executive Chairman
1 March 2011
Condensed Consolidated Income Statement
Year to
6 months to 31 December 30 June
--------------------------
2010 2009 2010
(unaudited) (unaudited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ ------------ ---------
Revenue 3 31,789 32,499 58,009
Cost of turnover (19,786) (20,316) (36,556)
Gross profit 12,003 12,183 21,453
Distribution costs (2,240) (2,416) (4,128)
Administrative
expenses (10,731) (10,755) (22,806)
Operating loss before
exceptionals 3 (968) (988) (5,481)
Exceptional items 4 (446) (913) (3,252)
Gain on disposal of
business - - 3,378
Loss from operations (1,414) (1,901) (5,355)
Finance income 5 46 29 155
Finance cost 5 (373) (350) (675)
Loss before tax (1,741) (2,222) (5,875)
Tax 61 118 419
Loss for the year (1,680) (2,104) (5,456)
------------------------------- ------ ------------ ------------ ---------
Attributable to:
Equity holders of the
parent (1,680) (2,104) (5,456)
------------------------------- ------ ------------ ------------ ---------
Total and continuing loss
per share (EPS)
- basic and diluted 6 (2.8)p (3.5)p (9.1)p
------------------------------- ------ ------------ ------------ ---------
Condensed Consolidated Statement of Comprehensive Income
Year to
6 months to 31 December 30 June
--------------------------
2010 2009 2010
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ------------ ---------
Loss for the
period (1,680) (2,104) (5,456)
Other comprehensive income
Actuarial gain/(loss) on retirement
benefit obligation 1,426 1,936 (625)
Deferred tax on retirement benefit
obligation (399) (542) 63
Translation differences on foreign
currency net investments 110 (40) (44)
Other comprehensive income net
of tax 1,137 1,354 (606)
Total comprehensive income for
the period (543) (750) (6,062)
------------------------------------- ------------ ------------ ---------
Attributable
to:
Equity holders of the
parent (543) (750) (6,062)
------------------------------------- ------------ ------------ ---------
Condensed Consolidated Statement of Changes in Equity
Share Share Merger Translation Other Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- ------------ -------- --------- --------
At 1 July 2010 6,066 6,396 7,371 107 (358) (4,236) 15,346
Transactions
with owners - - - - - - -
-------- -------- -------- ------------ -------- --------- --------
Loss for the
period - - - - - (1,680) (1,680)
Other
comprehensive
income:
Actuarial gain
on defined
benefit
pension
scheme net of
tax - - - - - 1,027 1,027
Exchange
differences
on
translation
of net
investments
in foreign
operations - - - 110 - - 110
Total
comprehensive
income for
the period - - - 110 - (653) (543)
-------- -------- -------- ------------ -------- --------- --------
At 31 December
2010
(unaudited) 6,066 6,396 7,371 217 (358) (4,889) 14,803
======== ======== ======== ============ ======== ========= ========
Share Share Merger Translation Other Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- ------------ -------- --------- --------
At 1 July 2009 6,066 6,396 7,371 151 (383) 1,965 21,566
Dividends - - - - - (239) (239)
Share-based
payments - - - - - 81 81
Transactions
with owners - - - - - (158) (158)
-------- -------- -------- ------------ -------- --------- --------
Loss for the
period - - - - - (2,104) (2,104)
Other
comprehensive
income:
Actuarial gain
on defined
benefit
pension
scheme net of
tax - - - - - 1,394 1,394
Exchange
differences
on
translation
of net
investments
in foreign
operations - - - (40) - - (40)
Total
comprehensive
income for
the period - - - (40) - (710) (750)
-------- -------- -------- ------------ -------- --------- --------
At 31 December
2009
(unaudited) 6,066 6,396 7,371 111 (383) 1,097 20,658
======== ======== ======== ============ ======== ========= ========
Share Share Merger Translation Other Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- ------------ -------- --------- --------
At 1 July 2009 6,066 6,396 7,371 151 (383) 1,965 21,566
Dividends - - - - - (239) (239)
Share-based
payments - - - - - 56 56
Other - - - - 25 - 25
Transactions
with owners - - - - 25 (183) (158)
-------- -------- -------- ------------ -------- --------- --------
Loss for the
period - - - - - (5,456) (5,456)
Other
comprehensive
income:
Actuarial loss
on defined
benefit
pension
scheme net of
tax - - - - - (562) (562)
Exchange
differences
on
translation
of net
investments
in foreign
operations - - - (44) - - (44)
Total
comprehensive
income for
the period - - - (44) - (6,018) (6,062)
-------- -------- -------- ------------ -------- --------- --------
At 30 June
2010 6,066 6,396 7,371 107 (358) (4,236) 15,346
======== ======== ======== ============ ======== ========= ========
Condensed Consolidated Balance Sheet
31 December 30 June
--------------------------
2010 2009 2010
(unaudited) (unaudited)
Notes GBP'000 GBP'000 GBP'000
------------------------------ ------- ------------ ------------ ---------
Non-current assets
Goodwill 13,383 13,470 12,950
Other intangible
assets 2,888 3,319 2,927
Property, plant and equipment 10,389 12,123 11,342
Deferred tax assets 2,338 2,135 2,750
Total non-current
assets 28,998 31,047 29,969
--------------------------------------- ------------ ------------ ---------
Current assets
Inventories 3,947 3,692 3,977
Trade and other receivables 14,211 15,086 11,639
Current tax assets 120 234 325
Cash and cash equivalents 3,746 2,398 6,009
Total current assets 22,024 21,410 21,950
--------------------------------------- ------------ ------------ ---------
Total assets 51,022 52,457 51,919
--------------------------------------- ------------ ------------ ---------
Current liabilities
Borrowings (675) - (225)
Obligations under finance
leases (276) (356) (293)
Trade and other payables (10,893) (11,445) (10,177)
Provisions (455) - (1,120)
Current tax liabilities (207) (313) (96)
Accruals and deferred
income (6,351) (6,644) (6,763)
Total current liabilities (18,857) (18,758) (18,674)
--------------------------------------- ------------ ------------ ---------
Non-current liabilities
Borrowings (8,725) (4,500) (7,675)
Obligations under finance
leases (100) (231) (100)
Deferred tax liabilities (70) (585) (303)
Other non-current liabilities (119) (101) -
Retirement benefit obligation (8,348) (7,624) (9,821)
Total non-current liabilities (17,362) (13,041) (17,899)
--------------------------------------- ------------ ------------ ---------
Total liabilities (36,219) (31,799) (36,573)
--------------------------------------- ------------ ------------ ---------
Net assets 14,803 20,658 15,346
======================================= ============ ============ =========
Equity
Share capital 6,066 6,066 6,066
Share premium account 6,396 6,396 6,396
Merger reserve 7,371 7,371 7,371
Translation reserve 217 111 107
Other reserve (358) (383) (358)
Retained earnings (4,889) 1,097 (4,236)
Equity attributable to shareholders
of the parent 14,803 20,658 15,346
======================================= ============ ============ =========
Condensed Consolidated Statement of Cash Flows
Year
6 months to 31 to
December 30 June
--------------------------
2010 2009 2010
(unaudited) (unaudited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ ------------ ---------
Cash flows from operating
activities
Loss before interest
and tax (1,414) (1,901) (5,355)
Depreciation and impairment
charge 1,022 947 2,254
Amortisation and impairment
charge 232 269 1,284
(Profit)/loss on sale of
property, plant and
equipment (278) (18) 16
Profit on sale of
business - - (2,460)
Share-based payment
charge - 81 82
Retirement benefit
obligation (340) (331) (964)
(Decrease)/increase in
provisions (665) - 892
Cash generated from operations before
working capital movements (1,443) (953) (4,251)
(Increase)/decrease in trade
and other receivables (2,273) (1,760) 1,332
Decrease/(increase) in
inventories and work in
progress 93 50 (248)
Decrease in trade and other
payables (127) (16) (1,289)
Cash used in operations (3,750) (2,679) (4,456)
Interest
paid (67) (59) (112)
Interest received 47 39 185
Income tax received/(paid) 145 (146) (362)
Net cash outflow from
operating activities (3,625) (2,845) (4,745)
------------------------------- ------ ------------ ------------ ---------
Net cash used in investing
activities
Purchase of intangible
assets (174) (51) (178)
Purchase of property, plant
and equipment (487) (508) (1,049)
Acquisition of subsidiary
undertakings net of cash
acquired 7 (172) (46) -
Proceeds from sale of
property, plant, equipment
and intangible assets 726 79 133
Sale of business net of
expenses - - 2,761
Net cash (outflow)/inflow from
investing activities (107) (526) 1,667
------------------------------- ------ ------------ ------------ ---------
Net cash used in financing
activities
Proceeds from new
bank loan 5,200 1,000 7,200
Repayment of bank
loans (3,700) (1,000) (3,800)
Repayments of obligations
under finance leases (197) (191) (388)
Equity dividends
paid - (239) (239)
Net cash inflow/(outflow) from
financing activities 1,303 (430) 2,773
------------------------------- ------ ------------ ------------ ---------
Net decrease in cash and cash
equivalents (2,429) (3,801) (305)
------------------------------- ------ ------------ ------------ ---------
Cash and cash equivalents at
beginning of period 6,009 6,091 6,091
Effects of changes in foreign
exchange rates 166 108 223
Cash and cash equivalents
at end of period 3,746 2,398 6,009
------------------------------- ------ ------------ ------------ ---------
Notes to the Condensed Consolidated Interim Financial
Statements
1. General information
The company is a public limited company incorporated and
domiciled in the UK. The address of its registered office is 66
Clifton Street, London, EC2A 4HB.
The company is listed on the Alternative Investment Market
("AIM")
The condensed consolidated interim financial information does
not constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The Group's consolidated financial statements
for the year ended 30 June 2010 have been filed and the audit
report was not qualified and did not contain a statement under
section 498(2) or section 498(3) of the Companies Act 2006.
2. Basis of preparation
The condensed consolidated interim financial statements for the
six months to 31 December 2010 have been prepared in accordance
with the accounting policies which will be applied in the year end
financial statements to 31 December 2011. These accounting policies
are drawn up in accordance with International Accounting Standards
(IAS) and International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board and as
adopted for use in the European Union that are effective at 31
December 2010.
The condensed consolidated interim financial statements are
unaudited and have not been subject to review. They do not include
all the information and disclosures required in the annual
financial statements, and therefore should be read in conjunction
with the Group's annual financial statements as at 30 June
2010.
The implementation of the Group's turnaround plan is ongoing and
the Directors have reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing the condensed consolidated interim
financial information.
New accounting standards and interpretations are effective for
the first time in the current period but have had no impact on the
results or financial position of the Group. Furthermore, new
standards, new interpretations and amendments to standards and
interpretations that have been issued but are not effective for the
current period have not been adopted early.
Estimates
Application of the Group's accounting policies in preparing
condensed consolidated interim financial statements requires
management to make judgements and estimates that affect the
reported amount of assets and liabilities, revenues and expenses.
Actual results may ultimately differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 30 June
2010.
Risks and uncertainties
A summary of the Group's principal risks and uncertainties was
provided on page 11 of the 2010 annual report and accounts. The
Board considers these risks and uncertainties are still relevant to
the current financial year and the impact of changes in the UK
economy is reviewed in the Chairman's statement contained in this
report.
3. Segmental information
For management purposes, the Group is organised into three
operating divisions, Precast Concrete, Building Products and
Software.
6 months to 31 December 2010
(unaudited)
Building Systems
----------------------
Precast Building
Concrete Products Software Elimination Group
---------- ---------- --------- ------------ --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 14,317 10,277 7,195 - 31,789
Inter-segment
revenue - - 95 (95) -
Total segment
revenue 14,317 10,277 7,290 (95) 31,789
------------------- ---------- ---------- --------- ------------ --------
Adjusted operating
profit/(loss) (1,457) 10 711 (736)
Amortisation of
intangible
assets (51) (4) (177) (232)
Restructuring
costs (233) (198) (15) (446)
Segment result (1,741) (192) 519 (1,414)
Net finance cost (327)
Loss before tax (1,741)
Tax 61
------------------- ---------- ---------- --------- ------------ --------
Loss after tax (1,680)
------------------- ---------- ---------- --------- ------------ --------
6 months to 31 December 2009
(unaudited)
Building Systems
----------------------
Precast Building
Concrete Products Software Elimination Group
---------- ---------- --------- ------------ --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 17,399 8,753 6,347 - 32,499
Inter-segment
revenue - 3 101 (104) -
Total segment
revenue 17,399 8,756 6,448 (104) 32,499
Adjusted operating
profit/(loss) (185) (797) 263 (719)
Amortisation of
intangible
assets (93) (8) (168) (269)
Restructuring
costs (66) (293) - (359)
Intellectual
property dispute - (554) - (554)
Segment result (344) (1,652) 95 (1,901)
Net finance cost (321)
Loss before tax (2,222)
Tax 118
------------------- ---------- ---------- --------- ------------ --------
Loss after tax (2,104)
------------------- ---------- ---------- --------- ------------ --------
12 months to 30
June 2010
Building Systems
----------------------
Precast Building
Concrete Products Software Elimination Group
---------- ---------- --------- ------------ --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 26,838 17,759 13,412 - 58,009
Inter-segment
revenue 249 (249) -
Total segment
revenue 26,838 17,759 13,661 (249) 58,009
Adjusted operating
profit/(loss) (3,898) (1,794) 769 (4,923)
Amortisation of
intangible
assets (185) (16) (357) (558)
Gain on disposal
of business - 3,378 - 3,378
Impairment charges (1,151) - - (1,151)
Restructuring
costs (605) (477) (101) (1,183)
Intellectual
property dispute - (918) - (918)
Segment result (5,839) 173 311 (5,355)
Net finance cost (520)
Loss before tax (5,875)
Tax 419
------------------- ---------- ---------- --------- ------------ --------
Loss after tax (5,456)
------------------- ---------- ---------- --------- ------------ --------
4. Exceptional items
Exceptional items represent costs considered necessary to be
separately disclosed by virtue of their size or nature.
Year to
6 months to 31 December 30 June
--------------------------
2010 2009 2010
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
-------------------------- ------------ ------------ ---------
Impairment of intangible
assets - - 726
Impairment of tangible
assets - - 425
Restructuring costs 446 359 1,183
Intellectual property
dispute - 554 918
446 913 3,252
------------ ------------ ---------
Restructuring costs comprise cash and non-cash costs associated
with the Group restructuring programme, mainly in the UK, and
primarily relate to redundancy and business relocation costs.
Intellectual property costs relate to the legal dispute
concerning the ownership and rights of software used in the German
nail plate business disposed on 30 June 2010. The costs for the
year to 30 June 2010 have been restated to show the comparative
against the costs incurred for the six month period to 31 December
2009.
5. Net finance (cost)/income
Year to
6 months to 31 December 30 June
--------------------------
2010 2009 2010
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ------------ ---------
Finance income
Bank and other interest receivable 46 29 55
Loan note interest receivable - - 100
Finance costs
Bank overdraft and loan interest (56) (37) (81)
Finance leases and hire purchase
contracts (11) (20) (33)
Net return on pension scheme
assets and liabilities (306) (293) (561)
Total net finance cost (327) (321) (520)
------------------------------------ ------------ ------------ ---------
6. Loss per share
The calculations of the loss per share are based on the total
loss after tax attributable to ordinary equity shareholders of the
Company and the weighted average number of shares in issue for the
reporting period.
Year to
6 months to 31 December 30 June
------------------------------------
2010 2009 2010
(unaudited) (unaudited)
--------------- --------------- --------------- ---------------
Loss after
taxation GBP(1,680,000) GBP(2,104,000) GBP(5,456,000)
Weighted
average
number of
shares in
issue in the
period 59,761,646 59,701,646 59,713,514
Dilutive
effect of
share options - - -
Number of
shares for
diluted
earnings per
share 59,761,646 59,701,646 59,713,514
--------------- --------------- --------------- ---------------
Basic loss per
share (2.8) p (3.5) p (9.1) p
Diluted loss
per share (2.8) p (3.5) p (9.1) p
There is no dilution in the loss per share calculation at 31
December 2010 due to the non-achievement of the share option
performance requirements. The diluted loss per share is the same as
the basic loss per share for the current period.
7. Acquisitions
On the 1 September 2010 the Group acquired the business and
certain assets of Lubekonsult AB, which provides cost estimation
services and software to the Swedish ventilation market, for a
total consideration of GBP393,000. The consideration comprised the
payment of GBP172,000 in cash satisfied from the Group's existing
resources and deferred consideration of GBP221,000.
An analysis of the provisional fair value of the Lubekonsult AB
net assets acquired and the fair value of the consideration paid is
set out below:
Fair value Provisional
Book value adjustments fair value
GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ------------- ------------
Tangible assets 20 20
Inventories 11 11
Other debtors 3 3
34 - 34
Deferred income (7) (7)
Other creditors (14) (14)
(21) - (21)
Net assets 13 - 13
Goodwill 380
Total consideration 393
--------------------------------- ----------- ------------- ------------
Satisfied by:
Cash 172
Deferred purchase consideration 221
393
--------------------------------- ----------- ------------- ------------
Included in the GBP380,000 of goodwill recognised above are
certain intangible assets that cannot be individually, separately
and reliably measured from the acquiree due to their nature. These
items include the value of the management and workforce together
with synergies that are expected to be gained from being part of
the Group.
8. Related Party Disclosures
All intra-group transactions have been eliminated on
consolidation at 31 December 2010.
An amount of GBP13,000 (H1 2009: GBP13,000) was paid to J H B
Ketteley & Co Limited under a lease for occupation by the Group
of 66 Clifton Street, London, EC2A 4HB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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