TIDMELCO
RNS Number : 5416A
Eleco PLC
02 April 2012
For immediate release 2 April 2012
Eleco plc
("Eleco" or the "Group")
The Construction Software and Building Systems Group
Preliminary Results for the 18 Month Period Ended 31 December
2011
Financial Performance - Continuing Operations
-- Turnover GBP56.8m for 18 months to December 2011 (2010 12 months: GBP45.9m restated)
-- Operating profit before exceptionals GBP143,000 for 18 months
to December 2011 (2010 12 months loss GBP3.3m restated)
-- Exceptional costs GBP365,000 for 18 months to December 2011 (2010 12 months GBP2.8m)
-- Profit from operations for the six months to December 2011 GBP334,000
-- Loss before tax of GBP930,000 for 18 months to December 2011
(2010 12 months loss GBP3.2m restated)
-- Loss per share of 2.0p for the 18 months to December 2011
(2010 12 months: loss 4.8p restated)
-- Net bank debt at 31 December 2011 GBP4.1m (2010: GBP1.9m)
-- Deferred consideration receivable at 31 December 2011 held in escrow GBP1.2m
Software (ElecoSoft(R))
-- Turnover GBP23.0m (2010 12 months GBP13.4m)
-- Operating profit before exceptionals GBP1.6m (2010 12 months GBP290,000)
Building Systems (ElecoBuild(R)) - Continuing Operations
-- Turnover GBP33.8m (2010 12 months: GBP32.5m)
-- Operating loss before exceptionals GBP1.4m (2010 12 months: GBP3.6m)
Strategy and Outlook
-- Eleco's strategy of reducing its risk profile, strengthening
its financial position and rebalancing its operations towards its
profitable Software interests has resulted in Eleco's continuing
operations returning to operating profit in the six months ended 31
December 2011.
-- Eleco is currently tracking in line with its financial plan
for the 12 month period to December 2012 and Software has again
made an excellent start to the year.
Executive Chairman, John Ketteley said
"Eleco's continuing businesses made a welcome return to
operating profit before exceptional items in the six months ended
31 December 2011, after successfully weathering extraordinarily
difficult economic and financial conditions in the first twelve
months of the period under review and in the year before.
In the past eighteen months, we have strengthened Eleco's
financial position, restructured and reduced the risk profile of
ElecoBuild(R), our UK building systems interests, and expanded
Elecosoft(R), our international software interests, both
organically and by acquisition. Accordingly, I consider that Eleco
is now well placed to take advantage of any improvement in any of
the markets it serves."
For further information please contact:
Eleco plc 0207 422 0044
John Ketteley, Executive Chairman http://www.eleco.com
Matthew Turner, Group Finance Director
Cenkos Securities plc - Adrian Hargrave 0207 397 8900
Buchannan Communications - Tim Anderson 0207 466 5000
Chairman's Statement
In the last six months of the eighteen month period ended 31
December 2011, we continued to implement our strategy of
restructuring and rebalancing our Building Systems and Software
operations with a view to reducing the Group's risk profile and
strengthening its financial position. Our operating performance
also improved and in the six month period ended 31 December 2011,
our continuing operations produced operating profits of GBP334,000
compared with operating losses of GBP556,000 in the twelve months
ended 30 June 2011. This has resulted in an operating loss for
continuing operations of GBP222,000 after exceptional costs of
GBP365,000, mainly relating to restructuring costs, in the period
under review. Operating profit before exceptional costs amount to
GBP143,000 compared to a loss of GBP3.3m for the 12 months ended 30
June 2010.
In the interim statement for the 12 months ended 30 June 2011, I
referred to the profits from our software interests being more than
offset by significantly increased losses of our precast concrete
custodial accommodation and timber frame businesses because of a
significant reduction in sales and lower margins. We have since
disposed of Bell & Webster's precast concrete custodial
products business based at Hoveringham; we have also disposed of
the timber frame operations based at Speke; finally, in December
2011, we disposed of our remaining timber engineering businesses,
namely Gang-Nail Systems in the United Kingdom and International
Truss Systems in South Africa.
The purpose and effect of these transactions was to reduce the
risk profile of our Building Systems interests and to enable us to
refinance a substantial portion of the trading and exceptional
losses incurred by Bell & Webster Concrete's custodial
accommodation contracts business and by the timber frame
manufacturing business.
Eleco is now made up of ElecoSoft(R) and ElecoBuild(R)
ElecoSoft(R)comprises all our software interests based in
Sweden, Germany and the United Kingdom. These include the
Consultec(R) software brand originating in Sweden, the Esign(R) and
Arcon(R) software brands originating in Germany, and the Asta
software brand originating in the United Kingdom.
ElecoBuild(R)comprises our roofing, cladding and partitioning
interests, all of which are now based in the United Kingdom and
include SpeedDeck(R) Building Systems, Stramit(R) Panel Products
and Downer Cladding Systems; together with our remaining Precast
Concrete interests, namely Bell & Webster Concrete and Milbury
Systems.
Details of these interests and their respective brands are set
out in the Operating and Financial Review section of this
report.
Continuing Operations Performance Summary
Please bear in mind when reviewing the information contained in
this statement, that the comparative figures shown are in respect
of a twelve month period ended 30 June 2010, whereas the figures
for the period under review are in respect of the eighteen month
period ended 31 December 2011.
Turnover of Continuing Operations for the period under review
amounted to GBP56.8m; Turnover for the year to 30 June 2010
amounted to GBP45.9m.
Operating profit from continuing operations for the period under
review before exceptional losses amounted to GBP143,000 (2010 12
months: loss before exceptional losses GBP3.3m) and the reported
loss from operations for the period under review was GBP222,000
(2010 12 months: GBP2.7m). The exceptional costs of GBP365,000 for
the period under review mainly relate to redundancy costs from
business restructuring (2010: GBP2.8m). The Group's continuing
operations sustained a loss before tax in the period under review
of GBP930,000 (2010 12 months: GBP3.2m)
Total Group operating loss for the eighteen month period under
review of GBP2.7m (2010 12 months: GBP5.5m), is equivalent to a
loss per share of 4.6p (2010: 9.1p loss per share).
The total reported Group loss includes losses of GBP4.0m of
non-cash items including depreciation, amortisation and impairment
of assets; it also includes the benefit of a net gain on disposal
of the connector plate and timber frame businesses of GBP5.4m. As a
consequence total cash outflow overall was limited to GBP2.2m in
the eighteen month period under review. It should be noted that
GBP1.2m in connection with the sale of our remaining timber
engineering businesses was also placed in escrow in the period
under review.
In the light of the sharp reduction that has occurred for
ElecoBuild's Precast Concrete and Building Products interests,
Eleco has moderated its investment in new capital projects for
these businesses. Capital investment for the period under review
was GBP1.3m (2010 12 months: GBP1.2m) and we anticipate that this
lower level of capital investment in our ElecoBuild(R) interests to
continue in the current year. However, we expect the development of
software programs by our ElecoSoft(R) interests to continue as
before.
The actions that the Board undertook during the eighteen month
period under review to maintain the financial stability of the
Group in a very difficult trading and financial climate gave rise
to significant additional and unavoidable advisory, legal, banking
and other professional fees, compared with equivalent costs
incurred in the year ended 30 June 2011. These costs impacted
significantly both our trading performance and our cash
resources.
Operational Overview
ElecoSoft(R)
Our Software businesses performed well and made a positive
contribution in turnover and profits to the Group in the period
under review. Turnover amounted to GBP23.4m in the period under
review (2010 12 months: GBP13.7m), and the adjusted operating
profit amounted to GBP2.3m (2010 12 months: GBP0.6m). ElecoSoft(R)
has started the current year well.
ElecoBuild(R)
Building Products
Our Building Products businesses turnover in the period under
review amounted to GBP14.7m (2010 12 months: GBP8.5m) and the
adjusted operating profit was GBP817,000 (2010 12 months: loss
GBP597,000).
On 19 December 2011 we announced the disposal of the business
and assets of these businesses to Illinois Toolworks Inc. ("ITW")
for a total consideration of GBP8.0m, of which GBP1.2m is currently
held in escrow. These activities made a profit before tax of
GBP42,000 in the period under review and their net assets at the
date of disposal amounted to GBP1.7m. I would like on your behalf
to express our thanks to our former colleagues for their efforts
and positive contribution to Eleco over the years and to wish them
well in future as part of ITW.
ElecoBuild's Building Products businesses have experienced an
improving order intake since the beginning of the year, albeit from
a low base. Improvements in marketing techniques and product
initiatives are also making a positive impact.
Precast Concrete
Turnover for the period under review was lower at GBP20.2m
(2010: GBP24.7m) and the adjusted operating loss for the period
amounted to GBP2.1m (2010 -12 months : GBP2.8m).
Bell & Webster Concrete closed down its custodial contracts
operations in the period under review and has since disposed of its
Hoveringham facility; its hotel and student accommodation
activities also contracted in the period under review due to lower
demand. However, in the past few weeks it has received an
increasing number of project enquires, which may be an early
indication of a potential upturn in demand for its products. That
said, management are very conscious of the need to contain costs
and in the absence of firm orders for its RoomSolutions (TM)
products at acceptable margins, to have in place contingency plans
to reduce still further its manufacturing capacity.
Milbury has experienced a reasonable level of orders for its
retaining walls since the beginning of the year; Bell & Webser
Concrete less so. Both appear to be benefitting from the withdrawal
of a number of direct competitors from their market, although the
market itself remains subdued.
Finance
Disposals of assets and businesses, together with a reduction in
capital expenditure and cash generated from the profitable trading
of our Software businesses have partially offset the adverse cash
impact of the poor performance of our concrete and timber frame
businesses in a very difficult market environment.
As a consequence, the Group was able to restrict its net bank
borrowings at 31 December 2011 to GBP4.1m (2010: GBP1.9m) and as
noted above, GBP1.2m of the consideration for the sale of Gang-Nail
Systems and International Truss Systems is also held in escrow. It
should also be noted that Group net bank borrowings as at 29
February 2012 had reduced further to GBP3.7m (28 February 2011:
GBP9.3m)
I am pleased to say that our UK bankers, Lloyds Banking Group
has renewed the Group's banking facilities with effect from 30
March 2012 for one year and the Directors are satisfied that the
Group has sufficient working capital for its present requirements.
We very much appreciate Lloyds Banking Group's continued working
relationship with us in such a difficult trading climate.
Dividends
The Board do not propose to recommend the payment of a dividend
in respect of the period under review. However, the Board has noted
the improvement in the Company's financial position and also in the
recent performance of its continuing businesses. It will in due
course consider recommending to its shareholders a return to
dividend payments as and when the Company's trading position and
performance permits.
Employees
Implementing the changes noted above in current markets has
placed very significant and stressful demands on our employees, 100
of whom unfortunately became redundant in the period under review
because of the need to restructure and down size some of our
Building Systems businesses. Therefore, on behalf of shareholders
and the Board, I would like to thank all our employees for their
hard work and dedication during the period under review.
Outlook
ElecoSoft(R), continues to perform well and behind its
outstanding portfolio of construction software, is a highly
talented, creative and motivated team of software professionals who
are engaged on a number of exciting opportunities for expansion in
the construction software space. The challenge for our colleagues
in ElecoSoft(R) in the year ahead is to streamline our software
businesses, to enhance its internal and external initiatives and
software development collaboration, to bear down on its cost base -
and to deliver the promise.
Our colleagues involved in our ElecoBuild(R) businesses, have
begun to apply improved marketing techniques to good effect, which
has enabled them to recover sales and to put in place a number of
interesting and creative business initiatives which have already
resulted in improved performance. ElecoBuild(R) will continue to
bear down on costs in the year ahead and may need to consider
further rationalisation to remain competitive. However, even though
demand remains weak in certain sectors and the UK economy continues
to be fragile, I am confident that our colleagues in ElecoBuild(R)
will deal positively with any new challenges faced by their
businesses as they arise.
Eleco has come through an extraordinarily difficult period this
past eighteen months. However, I am satisfied, that as a
consequence of the judgements we made and the actions we took to
tackle the problems we faced, Eleco is now a much better balanced
and financed Group.
I am confident that Eleco is now well placed to take advantage
of any improvement in the markets we serve in the year ahead.
John Ketteley
Executive Chairman
2 April 2012
Operating and Financial Review
Market Background
Eleco activities are focussed on the construction market with
operations in UK, Sweden, Germany and Belgium. These operations
address their local markets, with the Software businesses also
addressing markets in other countries by direct-to-market activity
and via distributors.
All markets served by the Group were challenging in the period
under review with depressed demand stemming from the direct impact
of a lack of financial confidence and economic growth.
However, this backdrop has served the Group well to restructure
its activities to provide a lower cost base from which to exploit
its various markets in the future.
Group Strategy and Results
In the period the Group has followed a five point strategy
to:
-- Reduce operational overhead and stop trading losses
-- Sell excess assets and operations where value can be achieved
-- Where possible reduce bank borrowings and renew working capital facilities
-- Strategically acquire incremental and complementary software activities
-- Actively manage the legacy pension liability
The result has been a small operational profit for the
continuing businesses before exceptionals of GBP143,000 for the 18
months ended 31 December 2011 (2010: loss GBP3.3m) and a loss for
the period, including all discontinued activities of GBP2.7m (2010:
GBP5.5m).
Key events in the 18 months to 31 December 2011 and post the
balance sheet date have been:
-- Renewal of Group working capital bank facilities with Lloyds TSB Bank in March 2012
-- Acquisition of Novator Projektstyming in March 2012
-- Sale of the long leasehold precast site at Hoveringham and associated plant in February 2012
-- Disposal of the assets and undertaking of Gang-Nail and
International Truss Systems' in December 2011
-- Disposal of the assets and undertaking of Eleco Timber
Frame's activities in Speke together with extraction from the
leasehold property in August 2011
-- Acquisition of Nilsson & Sahlin Arkitekter in August 2011
-- Acquisition of Lubekonsolt in September 2010
-- Cessation of custodial precast contract work, together with
agreeing the final account on all past contracts
-- A 100 employee reduction in the continuing Building Systems
businesses from 238 people at 1 July 2010 to 138 people at 31
December 2011.
-- Implementation of a Group-led pension strategy including the
completion of a new investment strategy and the first liability
management programme, Pension Increase Exchange.
The Board continues to monitor the markets and operations of the
continuing businesses and will take further corrective action if
necessary.
An annual impairment review by the Group has resulted in
impairment charges against continuing businesses property, plant
and equipment and intangible assets totalling GBP22,000 for the
period (2010: GBP726,000)
Net interest receivable from total operations excluding pension
related items was GBP63,000 (2010: GBP41,000). Under IAS19, a
finance charge of GBP0.5m (2010: GBP0.6m) is reported, being the
difference between the net investment return on assets of the Eleco
Retirement and Benefits Scheme expected at the outset of the year
and the unwinding of the discount during the year used to determine
the Scheme liabilities at the beginning of the year.
Segmental Results for Continuing Operations
Software
2011
18 months 2010
12 months
GBP'000 GBP'000
-------------------------- ---------- -----------
Revenue 23,449 13,661
Adjusted operating profit 2,322 647
Segment result 1,526 189
-------------------------- ---------- -----------
Software comprises three main businesses; Project and Resource
Management software primarily in the UK, Estimating, Site Control
and Timber Engineering software in Sweden and Visualisation
software in Germany. Each of these businesses grew revenue this
year as their business models benefit from stable recurring
maintenance revenues.
United Kingdom
Project and Resource Management Software
Based in Thame and Telford, Asta provides market-leading project
and resource management tools to an impressive list of construction
customers in the UK and in international markets. It accounted for
22% of total software sales in the period under review. Revenue
amounted to GBP5.2m for the eighteen months ended 31 December 2011
(2010: GBP3.3m).
Asta has a strong level of recurring income from a dedicated
customer base and is committed to a continuous programme of
development of its core product in consultation with customer user
groups as well as providing a high quality of customer service and
training.
Asta's international revenue amounted to GBP1.1 m for the
eighteen months ended 31 December 2011 (2010: GBP0.7m). Asta
software programs were used in a number of high profile
international projects including the re-development of Christchurch
in New Zealand, following the earthquake there, the Dubai Metro in
the Emirates and in the original strategic planning phase for the
London Olympic Games.
Sweden
Estimating, Site Control and Timber Engineering Software;
Architectural and Engineering Services
Headquartered in Skelleftea, Sweden, Consultec accounted for 53%
of total software sales in the period under review. Revenue
amounted to GBP12.3m for the eighteen months ended 31 December 2011
(2010: GBP6.3m.
Consultec provides estimation software and services to an
impressive customer list in the construction, manufacturing,
electrical and plumbing industries mainly in Sweden, but also
increasingly in international markets. In September 2010 it
extended this offering to the ventilation market with the
acquisition of LUBEkonsult AB and earlier this month acquired the
Swedish distributor of Asta project management software.
Consultec also lists project management and site control
software within its product portfolio and has strengthened the
links between these products and its estimation tools to produce a
broader offering for larger clients. Its timber engineering
products include software for stair design and manufacture and
structural analysis software for load-bearing beams.
Consultec is also engaged in the provision of architectural and
engineering services. In 2011, it expanded these activities with
the acquisition of Nilsson and Sahlin, a leading firm of architects
and engineers to further strengthen its position in these markets
in the North of Sweden and to bring in new skills for the design of
large timber buildings.
Germany
Visualisation Software, Marketing Software and Project and
Resource Management Software
Our Visualisation, Marketing Software and Project and Resource
Management Software in Germany accounted for 23% of total software
sales in the period under review. Revenue amounted to GBP3.7m for
the eighteen months ended 31 December 2011 (2010: GBP2.4m).
Visualisation Software
Eleco Software continued to distribute Arcon(R), the well
established design and visualisation software popular with
architectural and design firms across Germany. Development of the
next generation of Arcon(R) our 3D visualisation software, is now
well under way and made good progress in the period. This new
version of Arcon(R) will include advances in the user interface
design as well as major improvements in its graphics and rendering
capabilities.
Marketing and Visualisation Software
Our colleagues at Esign(R) have again created major new features
for it visualisation programs for manufacturers, retailers and
their customers. It has continued to add leading brands and
companies to its customer base. It now includes many leading
flooring companies in its customer base. It also experienced a
particularly successful Domotex Exhibition in Hannover this year
and as a direct consequence is now engaged in discussions with a
leading Chinese Flooring distributor. It launched its latest
software program, Marketing Management System, at Domotex which was
well received and will more tightly integrate the software with
existing business systems.
Project and Resource Management Software
In 2010, we acquired the German distributor of Asta products,
which is based in Karlsruhe. Revenue of Asta Development GmbH
amounted to GBP1.6m for the eighteen months ended 31 December 2011
2010: GBP1.0m).
On 18 December 2011, we learnt of the untimely death of our
colleague Stefan Wolf Managing Director of Asta Development GmbH.
He made an outstanding contribution to our business and we wish to
record our sadness at the loss of such a valued friend and
colleague.
Building Systems
Building Products
2011 2010
18 months 12 months
GBP'000 GBP'000
--------------------------------- ----------- -----------
Revenue 14,692 8,497
Adjusted operating profit/(loss) 817 (597)
Segmental result 677 1,441
--------------------------------- ----------- -----------
Building Products comprises the SpeedDeck(R), Stramit(R) and
Prompt roofing and partitioning businesses and the Downer cladding
business. Despite the challenging market, the management of these
businesses now operating from one main manufacturing location,
together with some rationalisation, has enabled a return to
operating profit.
Precast Concrete
2011 2010
18 months 12 months
GBP'000 GBP'000
-------------------------- ---------- ----------
Revenue 20,173 24,664
Adjusted operating (loss) (2,088) (2,795)
Segment result (2,425) (4,311)
-------------------------- ---------- ----------
Bell & Webster Concrete continues to operate in the
contractual supply chain of the UK construction industry targeting
new build hotels and student accommodation. All contracts to supply
and erect in the more technically demanding market of custodial
projects have been successfully concluded. The number of projects
coming to the physical delivery phase in the UK from our core hotel
and student accommodation markets has resulted in a substantial
downsizing of the activities of Bell & Webster. The market
conditions continue to represent a challenging environment for Bell
& Webster to return to profit.
Milbury Systems supplies pre cast concrete products to the
agricultural, waste recycling, flood defence and construction
markets. Milbury Systems also suffered losses on some contractual
supply work in the period, but such work has been discontinued with
appropriate reductions in overheads.
Bell & Webster Concrete has generated significant profits
and cash for the group in the past but, as with Milbury Systems,
return to making a positive contribution to the Group is
significantly influenced by recovery and growth in the UK
construction, specifically precast concrete industry.
Key Performance Indicators and Business Monitoring
Each business is monitored in detail by the Board using a range
of key performance indicators some of which are specific to the
particular business.
Business performance is monitored by the setting of budgets with
each management team, monthly review of delivery to budget with
reference to the following measures:
-- Sales and order intake
-- Project and product profitability
-- Profitability and forecast profitability
-- Historic and forecast cash flow
-- Overhead control
-- Headcount
Key Risks
The markets in which the Group operates, especially the UK
building systems market, continues to be the key risk the Board
considers to be the main restriction to allowing the Group to
achieve improved sales and profitability, hence;
-- The turnaround Plan reported in the last annual review, while
in part complete, has remaining tasks to deliver all parts of the
Group to profitability, specifically the Precast operations.
-- Whilst both public and private sector finance remains
restricted and uncertain, the inherent uncertainty in the Group's
markets will continue. Macro economic events that effect the flow
of finance to construction projects in a positive or negative way
will impact on the Group's results.
-- With the current financial environment and the strains put on
the Group's customers, the risk of customer insolvency leading to
loss of business and potential bad debts is a concern. Credit
insurance is however maintained at all Precast Concrete and
Building Products businesses to mitigate such bad debt events.
-- Suppliers to the Group's businesses are influenced by the
credit rating agencies views on sectors and operations as they
change from time to time. This is managed by maintaining the strong
relationships the Group's companies have developed with their
suppliers during the recent past challenging trading period.
-- Sustaining profitable growth in all the Group's businesses is
determined by retaining our existing high quality team and
attracting new talent. This will become more challenging as any
recovery in the Groups' markets arises.
Capital and Financing
The Group's capital structure has changed during the period.
Specifically in relation to the bank facilities enjoyed by the
Group, while the term loan that is due to be repaid by July 2016
continues, the GBP10m revolving credit facility used to fund
working capital and previously reported as due for renewal by July
2012 was replaced by a GBP4.5m overdraft facility in March
2012.
Pension Strategy
In the period under review the following has been
implemented:
-- Revised investment strategy that aims to significantly lower
the investment risk but maintain a return at or in excess of the
valuation assumptions;
-- Execution of a Pension Increase Exchange programme.
Further Implementation of other deficit reduction measures in
respect of which the Company, the Trustee Company and beneficiary
interests are aligned are being explored but remain dependent upon
final agreement in detail between the Trustee Company and the
Group. The financial impact cannot therefore be disclosed at this
time
Loss Per Share and Dividend
The loss per share on continuing operations was 2.0 pence (2010:
loss 4.8 pence).
The loss per share on total operations activities was 4.6 pence
(2010: loss 9.1 pence).
Having regard to the Company's current financial position and
performance, the Board is not in a position to recommend the
payment of a dividend in respect of the 18 months ended 31 December
2011 but will consider a return to recommending dividend payments
as and when the Company's trading position and performance
permits.
Shareholders' Equity and Net Assets
At 31 December 2011, shareholders' equity amounted to GBP14.2m
(2010: GBP15.3m), after recognising GBP3.7m (2010: GBP7.1m), net of
the related deferred tax asset, as a retirement benefits
liability.
At 31 December 2011, net tangible assets, after taking account
of the retirement benefits liability accounted for under IAS19,
represent 14% (2010: 43%) of total net assets.
2011 2010
-------------- --------------
GBP'000 % GBP'000 %
------------------------------ ------- ----- ------- -----
Intangible assets 15,905 112% 15,877 103%
Retirement benefits liability
(net of deferred tax) (3,670) (26%) (7,071) (46%)
Other net assets 1,920 14% 6,540 43%
------------------------------ ------- ----- ------- -----
Total net assets 14,155 100% 15,346 100%
------------------------------ ------- ----- ------- -----
Summary Group Cash Flow
2011 2010
18 months 12 months
ended ended
December June
GBP'000 GBP'000
Cash flow from operations (7,076) (5,374)
Net capital expenditure (413) (1,094)
Net finance income 66 73
Taxation (59) (362)
Free cash flow (7,482) (5,839)
Acquisitions and disposals 5,816 2,761
Repayment of principal under
finance leases (456) (388)
Equity dividends paid - (239)
Net cash flow (2,122) (3,705)
Exchange adjustment (66) 223
Decrease in net cash balances (2,188) (3,482)
------------------------------- ---------- ----------
The Group's cash position reflects trading performance, sale of
businesses and excess assets, and was in net debt at 31 December
2011 of GBP4.1m (2010: net debt GBP1.9m).
Of all the strategic transactions in the period under review the
sale of the connector plate activities of Gang-Nail and
International Truss Systems' for GBP8.0m in December 2011, of which
GBP6.8m was paid in cash at completion was the most significant
reduction in the accumulated debt of the Group.
Summary
The recovery of the Building Systems businesses under the Plan
reported in the last annual review was less readily achievable than
envisaged in the Plan due to the continuing weakness of demand in
the Building Systems markets. However, much progress had been made,
despite the market conditions and the continuing operations are
well placed to exploit their chosen markets.
Matthew Turner
Group Finance Director
2 April 2012
Consolidated Income Statement
for the financial period ended 31 December 2011
18 months
ended 31 Year ended
December 30 June
2011 2010
(restated)
Notes GBP'000 GBP'000
-------------------------------- ------- ---------- -----------
Continuing operations
Revenue 56,822 45,908
Cost of sales (27,220) (26,488)
Gross profit 29,602 19,420
Distribution costs (4,651) (3,820)
Administrative
expenses (24,808) (18,887)
Operating profit/(loss) before
exceptionals 143 (3,287)
Exceptional items (365) (2,772)
Gain on disposal of business - 3,378
Loss from operations (222) (2,681)
Finance income 96 106
Finance cost (804) (660)
Loss before tax (930) (3,235)
Tax (279) 350
Loss for the financial period
from continuing operations (1,209) (2,885)
Loss for the financial
period from discontinued
operations (1,528) (2,571)
Loss for the financial
period (2,737) (5,456)
----------------------------------------- ---------- -----------
Attributable to:
Equity holders of the
parent (2,737) (5,456)
----------------------------------------- ---------- -----------
Loss per share - basic
and diluted
Continuing operations (2.0) p (4.8) p
Discontinued operations (2.6) p (4.3) p
Total operations (4.6) p (9.1) p
----------------------------------------- ---------- -----------
Consolidated Statement of Comprehensive Income
for the financial period ended 31 December 2011
18 months
ended 31 Year ended
December 30 June
2011 2010
Notes GBP'000 GBP'000
------------------------------------- ------ ---------- -----------
Loss for the period (2,737) (5,456)
Other comprehensive income
Actuarial gain/(loss) on retirement
benefit obligation 24 3,720 (625)
Deferred tax on retirement benefit
obligation 23 (1,461) 63
Other losses on retirement benefit
obligation (493) -
Translation differences on foreign
currency net investments (220) (44)
Other comprehensive income net of
tax 1,546 (606)
Total comprehensive income for the
period (1,191) (6,062)
-------------------------------------- ------ ---------- -----------
Attributable to:
Equity holders of the parent (1,191) (6,062)
-------------------------------------- ------ ---------- -----------
Consolidated Statement of Changes in Equity
For the financial period ended 31 December 2011
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 - - - - - (2,737) (2,737)
Other comprehensive
income:
Actuarial gain on defined
benefit pension scheme
net of tax - - - - - 1,766 1,766
Exchange differences
on translation of net
investments in foreign
operations - - - (220) - - (220)
Total comprehensive
income for the period - - - (220) - (971) (1,191)
--------- --------- --------- ------------ --------- ---------- --------
At 31 December 2011 6,066 6,396 7,371 (113) (358) (5,207) 14,155
========= ========= ========= ============ ========= ========== ========
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
========= ========= ========= ============ ========= ========== ========
Consolidated Balance Sheet
At 31 December 2011
at 30
June
2011 2010
GBP'000 GBP'000
------------------------------------- --------- ---------
Non-current assets
Goodwill 13,567 12,950
Other intangible
assets 2,338 2,927
Property, plant and equipment 7,909 11,342
Deferred tax assets 1,289 2,750
Other non-current
assets 800 -
Total non-current assets 25,903 29,969
------------------------------------- --------- ---------
Current assets
Inventories 2,281 3,977
Trade and other receivables 8,394 11,639
Current tax assets - 325
Cash and cash equivalents 4,748 6,009
Other current assets 400 -
Assets of disposal group
held for sale 440 -
Total current assets 16,263 21,950
------------------------------------- --------- ---------
Total assets 42,166 51,919
------------------------------------- --------- ---------
Current liabilities
Borrowings (5,900) (225)
Obligations under finance
leases (141) (293)
Trade and other payables (6,618) (10,177)
Provisions (60) (1,120)
Current tax liabilities (87) (96)
Accruals and deferred income (6,355) (6,763)
Total current liabilities (19,161) (18,674)
------------------------------------- --------- ---------
Non-current liabilities
Borrowings (2,925) (7,675)
Obligations under finance
leases (359) (100)
Deferred tax liabilities (421) (303)
Non-current provisions (73) -
Other non-current liabilities (113) -
Retirement benefit obligation (4,959) (9,821)
Total non-current liabilities (8,850) (17,899)
------------------------------------- --------- ---------
Total liabilities (28,011) (36,573)
------------------------------------- --------- ---------
Net assets 14,155 15,346
===================================== ========= =========
Equity
Share capital 6,066 6,066
Share premium account 6,396 6,396
Merger reserve 7,371 7,371
Translation reserve (113) 107
Other reserve (358) (358)
Retained earnings (5,207) (4,236)
Equity attributable to shareholders
of the parent 14,155 15,346
===================================== ========= =========
Consolidated Statement of Cash Flows
for the financial period ended 31 December 2011
18 months
ended 31 Year ended
December 30 June
2011 2010
GBP'000 GBP'000
----------------------------------------- ---------- -----------
Cash flows from operating
activities
Loss before interest
and tax (7,232) (5,355)
Depreciation and impairment
charge 3,078 2,254
Amortisation and impairment
charge 926 1,284
(Profit)/loss on sale of property,
plant and equipment (345) 16
(Profit) on sale
of business - (3,378)
Share-based payment
charge - 82
Retirement benefit
obligation (1,664) (964)
(Decrease)/increase in provisions (987) 892
Cash used in operations before working
capital movements (6,224) (5,169)
Decrease in trade and other
receivables 5,586 1,332
Decrease/(increase) in inventories
and work in progress 957 (248)
(Decrease) in trade and other
payables (7,395) (1,289)
Cash used in operations (7,076) (5,374)
Interest
paid (278) (112)
Interest received 344 185
Income tax paid (59) (362)
Net cash outflow from operating
activities (7,069) (5,663)
----------------------------------------- ---------- -----------
Net cash used in investing
activities
Purchase of intangible
assets (329) (178)
Purchase of property, plant
and equipment (992) (1,049)
Acquisition of subsidiary
undertakings net of cash
acquired (316) -
Proceeds from sale of property,
plant, equipment and intangible
assets 908 133
Sale of business net of expenses 6,134 3,679
Net cash inflow from investing
activities 5,405 2,585
----------------------------------------- ---------- -----------
Net cash used in financing
activities
Proceeds from new
bank loan 6,600 7,200
Repayment of bank
loans (5,675) (3,800)
Repayments of obligations under finance
leases (456) (388)
Equity dividends
paid - (239)
Net cash inflow from financing
activities 469 2,773
----------------------------------------- ---------- -----------
Net Decrease in cash and
cash equivalents (1,195) (305)
----------------------------------------- ---------- -----------
Cash and cash equivalents
at beginning of period 6,009 6,091
Effects of changes in foreign
exchange rates (66) 223
Cash and cash equivalents
at end of period 4,748 6,009
----------------------------------------- ---------- -----------
Segment Information
for 18 months to 31 December 2011
18 months to 31
December 2011
Building Systems
----------------------
Building Precast Continuing
Software Products Concrete Elimination operations
--------- ---------- ---------- ------------ ------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 23,047 13,602 20,173 - 56,822
Inter-segment revenue 402 1,090 - (1,492) -
Total segment revenue 23,449 14,692 20,173 (1,492) 56,822
--------------------------- --------- ---------- ---------- ------------ ------------
Adjusted operating
profit/(loss) 2,322 817 (2,088) 1,051
Amortisation of
intangible assets (755) - (153) (908)
Impairment charges (11) - (11) (22)
Restructuring costs (30) (140) (173) (343)
Segment result 1,526 677 (2,425) - (222)
Net finance cost (708)
Loss before tax (930)
Tax (279)
--------------------------- --------- ---------- ---------- ------------ ------------
Loss after tax (1,209)
--------------------------- --------- ---------- ---------- ------------ ------------
Segment assets 16,281 5,371 12,783 34,435
Unallocated assets 7,731
Total Group assets 42,166
--------------------------- --------- ---------- ---------- ------------ ------------
Segment liabilities 6,223 2,224 3,408 11,855
Unallocated liabilities 16,156
Total Group liabilities 28,011
--------------------------- --------- ---------- ---------- ------------ ------------
Other segment information
Capital expenditure:
Property, plant
and equipment 655 257 421 1,333
Intangible assets 298 2 29 329
Goodwill acquired 604 - - 604
Depreciation 320 350 1,476 2,146
Segment Information
for 12 months to 30 June 2010 (restated)
12 months to 30 June 2010
(restated)
Building Systems
----------------------
Building Precast Continuing
Software Products Concrete Elimination operations
--------- ---------- ---------- ------------ ------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 13,412 7,832 24,664 45,908
Inter-segment revenue 249 665 - (914) -
Total segment revenue 13,661 8,497 24,664 (914) 45,908
---------------------------- --------- ---------- ---------- ------------ ------------
Adjusted operating
profit/(loss) 647 (597) (2,795) (2,745)
Amortisation of intangible
assets (357) (185) (542)
Gain on disposal of
business 3,378 3,378
Impairment charges (726) (726)
Restructuring costs (101) (422) (605) (1,128)
Intellectual property
dispute (918) (918)
Segment result 189 1,441 (4,311) (2,681)
Net finance cost (554)
Loss before tax (3,235)
Tax 350
---------------------------- --------- ---------- ---------- ------------ ------------
Loss after tax (2,885)
---------------------------- --------- ---------- ---------- ------------ ------------
Segment assets 14,715 10,130 17,667 42,512
Unallocated assets 9,407
Total Group assets 51,919
---------------------------- --------- ---------- ---------- ------------ ------------
Segment liabilities 5,060 4,474 8,024 17,558
Unallocated liabilities 19,015
Total Group liabilities 36,573
---------------------------- --------- ---------- ---------- ------------ ------------
Other segment information
Capital expenditure:
Property, plant and
equipment 115 314 831 1,260
Intangible assets 171 7 49 227
Depreciation 247 308 970 1,525
Geographical segments
Revenue by geographical area represents continuing operations
revenue from external customers based upon the geographical
location of the customer.
Revenue by geographical destination:
18 months ended Year ended
31 December 30 June
2011 2010
GBP'000 GBP'000
UK 38,766 35,341
Scandinavia 11,866 6,283
Rest of Europe 5,899 4,188
Rest of World 291 96
56,822 45,908
---------------- ---------------- -----------
Exceptional items
Exceptional items represent costs considered necessary to be
separately disclosed by virtue of their size or nature:
18 months ended Year ended
31 December 30 June
2011 2010
GBP'000 GBP'000
Impairment of intangible
assets 11 726
Impairment of tangible
assets 11 -
Restructuring
costs 343 1,128
Intellectual property
dispute - 918
365 2,772
-------------------------- ---------------- -----------
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.
Net finance income/(cost)
18 months ended Year ended
31 December 30 June
2011 2010
GBP'000 GBP'000
Finance income
Bank and other interest receivable 96 6
Loan note interest receivable - 100
Finance costs
Bank overdraft and loan
interest (250) (66)
Finance leases and hire purchase contracts (32) (33)
Net return on pension scheme assets
and liabilities (522) (561)
Total net finance
cost (708) (554)
---------------------------------------------- ---------------- -----------
Discontinued operations
On 1 March 2011, Eleco plc announced it wished to reduce its
commitment to certain operations within its Building Product and
Precast Concrete divisions. During the 18 month period to 31
December 2011 the following businesses were sold and are no longer
part of the Group.
Timber frame manufacturer and supplier UK Sold August 2011
Connector plate manufacturer and supplier UK Sold December
2011
Connector plate supplier South Africa Sold December 2011
In addition, the Group ceased production of custodial contracts
at its pre cast concrete factory in Hoveringham, Nottinghamshire
and completed on the sale of the site on 3 February 2012. The
contracting activities at the Group's pre cast concrete operation
in Lydney, Gloucestershire was closed during the period to
eliminate underperforming parts of the business.
All of these businesses and major activities have been presented
as discontinued operations in the income statement and the
management are of the view that this presentation of information
enables the users of the financial statements to understand the
financial effects of these operations no longer being part of the
Group.
The assets of the Hoveringham factory have been presented as
assets of disposal group held for sale in the consolidated balance
sheet. In the cash flow statement, the cash flows of the businesses
that were sold and major activities that have ceased during the
period have been aggregated with those of continuing operations,
but are shown separately in the note below.
The information presented in this note is presented at the lower
of cost and fair value less costs to sell as prescribed in IFRS 5.
As a result of this treatment an impairment charge of GBP290,000
relating to leasehold improvements and plant and equipment has been
recognised in the income statement in the 18 months to 31 December
2011.
The results from discontinued operations which have been
included in the income statement are set out below:
18 months ended Year ended
31 December 30 June
2011 2010
--------------------------------------- ---------------- -----------
Revenue 27,039 12,603
Cost of sales (22,924) (10,570)
Gross profit 4,115 2,033
Distribution costs (443) (308)
Administrative expenses (8,099) (3,955)
Other operating costs (1,902) (19)
Loss on re-measurement (681) (425)
Operating loss (7,010) (2,674)
Finance income 249 34
Loss before tax (6,761) (2,640)
Taxation on discontinued operations (207) 69
Loss for the period from discontinued
operations (6,968) (2,571)
--------------------------------------- ---------------- -----------
The net profit from the disposal of the connector plate and
timber frame operations included in the income statement are set
out below:
18 months ended Year ended
31 December 30 June
2011 2010
------------------------------------------- ---------------- -----------
Consideration on disposals 7,703 -
Net assets on disposals (1,929) -
Foreign exchange gain on disposals 35 -
Other disposal costs (369) -
Profit on business disposals before
tax 5,440 -
Tax on disposal of discontinued operations - -
Profit on business disposals after
tax 5,440 -
------------------------------------------- ---------------- -----------
The consideration on sale of the connector plate businesses
includes deferred consideration payable of GBP1,200,000 and is
shown net of a working capital adjustment of GBP133,000. Interest
income on the disposal of GBP150,000 is included in the income
statement under discontinued operations.
The assets from discontinued operations which have been included
in the balance sheet are set out below:
As at
31 December
2011
------------------------------------ ------------
Assets classified as held for sale
Property, plant and equipment 440
Assets classified as held for sale 440
------------------------------------ ------------
Liabilities classified as held for
sale -
Liabilities classified as held for
sale -
------------------------------------ ------------
Net assets of disposal group 440
------------------------------------ ------------
The Hoveringham factory classified as held for sale at 31
December 2011 was sold for GBP440,000 on 3 February 2012.
Cash flows from investing activities relates to net capital
expenditure. Cash flows from financing activities comprise finance
lease principal payments.
18 months ended Year ended
31 December 30 June
2011 2010
---------------------- ---------------- -----------
Operating activities (1,431) (3,263)
Investing activities (127) (191)
Financing activities (18) (56)
Total cash flows (1,576) (3,510)
---------------------- ---------------- -----------
Notes
1. The financial information in this announcement, which is
audited, does not constitute statutory accounts within the meaning
of section 435 of the Companies Act 2006. 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(th) June 2010 have been taken from, but do not constitute, the
Company's statutory financial statements for that financial
year.
2. The Board has considered a number of factors in determining
the principle of going concern in the preparation of the report and
accounts for the 18 month period to 31 December 2011.
One of the key factors was the approval of a new day-to-day
working capital facility through the use of an overdraft facility
which was set up on 30 March 2012 for a period of one year. The
Directors have no reason to doubt that this facility cannot be
renegotiated beyond one year. This facility replaces the revolving
credit facility that was due to expire in July 2012. In addition,
the Group has a longer term debt financing requirement which it
funds through a Term Loan repayable in 20 quarterly instalments
that commenced in April 2011. In setting the financial covenants
the Directors have negotiated appropriate cash flow headroom to
allow a degree of flexibility were there to be a further downturn
in economic conditions.
In addition to the approved new funding from the Group's
bankers, the Groups latest budget shows an acceptable UK headroom
over the period to 30 June 2013 together with all overseas business
forecasting profits and positive cash flows. Other factors that
were considered include the deferred consideration receivable of
GBP1.2m. Of the total, GBP400,000 is payable in December 2012 and
the remaining GBP800,000 in December 2013. Furthermore, the Group
recognises that it still has assets surplus to requirements,
specifically in the form of freehold properties which it may be
able to realise into cash.
The Directors have reviewed the Group's borrowing requirements
for the next 12 months and the financial covenant tests set out in
the banking facilities agreement and confirm 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 annual financial statements
3. The information herein has been prepared on the basis of the
accounting policies adopted for the year ended 31 December 2011,
set out in the Company's Annual Report and Accounts and as
previously disclosed in the Company's Annual Report and Accounts
for the year ended 30 June 2010.
4. The calculation of the loss per share is based on the total
loss after tax attributable to ordinary equity shareholders of
GBP2,737,000 (2010: GBP5,456,000) and on 59,761,646 ordinary shares
(2010: 59,713,514), being the weighted average number of ordinary
shares in issue during the year.
5. The Annual General Meeting of Eleco plc will be held at
Brewers' Hall, Aldermanbury Square, London EC2V 7HR on 29 May 2012
at 12 noon.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR WGUQWWUPPGBU
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