RNS Number:7560Q
Eleco PLC
10 October 2003
10 October 2003
ELECO PLC
The Building Systems and Technology Group
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2003
Enquiries to:
John Ketteley, Executive Chairman Tel: 01920 443 830
Eleco plc mail@eleco.com
David Dannhauser, Finance Director Tel: 01920 443 830
Eleco plc mail@eleco.com
Tarquin Edwards/Chris Steele Tel: 020 7929 5599
Holborn tarquin.edwards@holbornpr.co.uk
chris.steele@holbornpr.co.uk
"A year of progress"
Change Year ended Year ended
30 June 2003 30 June 2002
#m #m
Turnover up 13% 37.2 32.9
Operating Profit up 5.2% 1.97 1.87
Profit Before Tax up 7% 1.85 1.74
Dividend per Share up 4.3% 1.20p 1.15p
Earnings per Share down 7.0% 2.80p 3.01p
Highlights
* Eleco Building Systems - Excellent progress: Turnover up 9.4% and
Operating Profit up 27.8%
* Eleco Technology - Existing software businesses reorganised and a balanced
portfolio of construction software businesses acquired; the integration of
these businesses into Eleco Technology continues apace.
* Sound financial position: Gearing at 20 per cent; Net interest cover 23
times; Strong cash generation
* Earnings per share at 2.8p (2002: 3.0p) due in part to the increase in
issued share capital relating to the acquisition of Consultec.
* Dividends: Final Dividend: 0.85p per share (2002: 0.80p per share)
Total Dividends for the year: 1.20p per share (2002:1.15p
per share)
John Ketteley, Executive Chairman of Eleco plc, commented:
"The Group's established core businesses have again made excellent progress
during the year under review and have entered the current year with healthy
order books. I also anticipate that the task of integrating our newly acquired
construction software businesses and tailoring their software programmes to the
needs of our existing markets, with the attendant costs, should be completed by
the end of the current financial year."
CHAIRMAN'S STATEMENT
I am pleased to report on the Group's performance for the year ended 30 June
2003.
Group turnover for the year was #37.2 million (2002: #32.9 million), an
increase of 13.0 per cent. Group operating profit was #1,975,000 (2002:
#1,878,000), an increase of 5.2 per cent. with profit on ordinary activities
before tax at #1,856,000 (2002: #1,736,000), an increase of 6.9 per cent.
Earnings per share were lower at 2.8p (2002: 3.0p), reflecting in part the
increase in share capital following the acquisition of Consultec in February
2003.
Net borrowings at 30 June 2003 amounted to #2,405,000 (Net cash balances at 30
June 2002: #464,000), representing gearing of 20.7 per cent. (2002: Nil) and
reflecting our #4.2 million investment programme this year. Operating cash flow
generation has remained strong at #2.6 million as has interest cover, with net
interest covered 23 times by operating profits.
Eleco Building Systems continued to make excellent progress. Turnover for the
Division in the year under review increased by 9.4 per cent. to #34.49 million
(2002: #31.52 million), representing 93% of Group turnover. Operating profit,
before the allocation of central costs was #3.34 million (2002: #2.61 million),
27.8 per cent. ahead of the previous year, with our precast concrete and timber
engineering businesses making particularly strong contributions to this
performance. Operating margins improved to 9.7 per cent. from 8.3 per cent.
Turnover of the Eleco Technology Division in the year under review was #2.67
million (2002: #1.35 million), of which #1.67 million was contributed by
operations acquired during the year; its operating loss, before the allocation
of central costs was #0.50 million (2002: loss #0.16 million). The task ahead
now is to weld our software interests into a well co-ordinated, profitable
construction software business.
We have now assembled within Eleco Technology a group of construction software
businesses and programmes which are complementary as regards the industry they
serve and the technologies they use. During the year we undertook a major
reorganisation of Eleco's existing software businesses and in July 2003, we also
completed the acquisition of Softhold GmbH, which owns the rights to "Arcon" the
leading German visual architectural software for #263,000 in cash. These are all
significant steps towards achieving our objective of establishing Eleco as an
international provider of high quality construction software and technologies.
Dividend
The Board has proposed a final dividend of 0.85p per share (2002: 0.80p) payable
on 28 November 2003 to Shareholders on the Register on 14 November 2003. The
final dividend, if approved by shareholders, would result in the payment of
dividends for the year totalling 1.20p per share (2002: 1.15p), an increase of
4.3 per cent., which would be covered 2.2 times by earnings (2001: 2.6 times).
OPERATING REVIEW
ELECO BUILDING SYSTEMS
PRECAST CONCRETE
Bell & Webster Concrete
Bell & Webster Concrete, Eleco's pre-cast concrete business, was able to sustain
the progress it made in the first six months of the year, despite being
subjected early in the second half year to delays in starting production of a
major student accommodation project. Demand for other products as well as
FastBuild(R) rooms for hotel projects ensured that the Grantham plant continued
to operate at high levels of capacity.
First orders were placed for newly developed precast bases for social housing
units with a national house builder. Ground beams, railway platforms and
retaining walls all enjoyed a satisfactory year.
ROOFING, CLADDING AND PANELS
SpeedDeck Building Systems
The number of roofing projects supplied by SpeedDeck Building Systems during the
year under review was higher than last year, although a reduction in the number
of major orders received contributed to an overall 26 per cent. fall in sales.
This, together with increased pressure on roofing margins, resulted in
significantly lower operating profits.
Demand increased for the successful Vitesse(R) composite wall panel with the
product continuing to be installed on Porsche franchise dealerships across the
country. Vitesse(R) was also supplied to two leading supermarket chains during
the year.
To enable SpeedDeck Building Systems better to compete in an increasingly
competitive market, it has introduced SpeedZip(R), a true standing seam roofing
product, to complement its existing SpeedDeck(R) secret fix roofing system. The
product has seen an encouraging reception by our customers.
Downer Cladding Systems
Downer Cladding Systems, acquired in May 2002, continues to be acknowledged as a
leading provider of fixing systems for rainscreen cladding and related technical
assistance; the business made a useful contribution to Group profits.
Stramit Industries
I am pleased to say that the measures taken last year to restructure Stramit
Industries' business and reduce its cost base were effective and the Company
returned to profitability in the year under review. Management are now actively
engaged in seeking new products to manufacture at Stramit Industries' factory at
Eye in Suffolk.
TIMBER ENGINEERING
Gang-Nail Systems
Gang-Nail Systems had another excellent year, driven by a number of factors, the
principal of which was the increased sales of metal webs for its successful
Ecojoist(R) flooring product. The number of Ecojoist(R) licensed fabricators
increased to ten during the year as the product increased its market share and
gained technical approval from more national house builders.
New versions of the Gang-Nail Truss and Roof software were released during the
year and were well received. The excellence of its software continues to be a
key element in Gang-Nail Systems' success.
Eleco Bauprodukte
Eleco Bauprodukte continues to be affected by highly competitive local pricing
but despite this it was able to maintain its market share in Germany. The
continued investment in enhanced software for its truss fabrication business is
an important contributor to its continued market penetration. It is also working
closely with Consultec to introduce the latter's "Staircon" and "Post and Beam"
software to the German market.
International Truss Systems
International Truss Systems produced an excellent trading performance. Sales
increased by 44 per cent. and the Company made an outstanding contribution to
Group profits for the year.
International Truss Systems' move to its new office and warehousing facilities
undoubtedly enabled it to improve its distribution, product flow and customer
service.
ELECO TECHNOLOGY
Consultec became part of Eleco in February 2003 and made a contribution to Group
profit for the year before the amortisation of goodwill. Consultec UK (Formerly
MBA Computing) made a loss in the year under review, which included the costs of
the termination of its lease and relocation to other Group premises, as well as
redundancies due to the reorganisation of its operations. Jason Ruddle was
appointed Managing Director of Consultec UK in July 2003.
Forma Communications experienced cost overruns on some major projects, which
resulted in the Company making a loss for the year. Leonardo Internet, based in
Stafford, became part of the Eleco Group in February 2003 and has already
developed a close working relationship with Forma Communications. Forma
Communications was also responsible for the design of our Group intranet, which
it installed during the year. Steven Tolley was appointed Managing Director of
both companies in April 2003.
The o2c software and business was acquired in March 2003 and made a loss in the
period.
MANAGEMENT AND EMPLOYEES
Paul Taylor has been appointed Group Commercial Director, responsible for
corporate development and new product initiatives in addition to his existing
responsibilities as Managing Director of SpeedDeck Building Systems and Stramit
Industries. He was formerly Group Operations Director.
Tom Bayne has been appointed Group Operations Director. He is an engineer by
training an also a Chartered Accountant. He was previously a Corporate Finance
Director at Hawkpoint, the independent investment bank.
The number of people employed by Eleco companies increased again during the
year. I welcome those who have joined us and, on your behalf, I would like to
thank all our employees for the contribution they have made towards achieving
these results.
OUTLOOK
We have a sound financial base, strong operating cash generation and a range of
high quality, innovative building products and software to offer to the building
industry. The Group's established core businesses have again made excellent
progress during the year under review and have entered the current year with
healthy order books. I anticipate that the task of integrating our newly
acquired software businesses and tailoring their software programmes to the
needs of our existing markets, with the attendant costs, should be completed by
the end of the current financial year. Against this background, and despite the
current economic uncertainties, I have every confidence in our strategy for
growing Eleco for the longer-term benefit of our customers, our shareholders and
our employees.
John Ketteley
Executive Chairman
10 October 2003
Eleco plc
Consolidated Profit and Loss Account (Unaudited)
For the year ended 30 June 2003
Notes 2003 2002
#'000 #'000
Turnover
Continuing operations 3 35,494 32,873
Acquisitions 3 1,666 -
37,160 32,873
Operating profit
Continuing operations 3 2,100 1,878
Acquisitions 3 (125) -
1,975 1,878
Loss on disposal of tangible fixed assets of continuing operations (33) -
Profit on ordinary activities before interest and taxation 1,942 1,878
Net interest payable (86) (142)
Profit on ordinary activities before taxation 1,856 1,736
Taxation (615) (497)
Profit for the financial year 1,241 1,239
Dividends 4 (571) (477)
Retained profit 670 762
Dividends per share 4 1.20p 1.15p
Basic earnings per ordinary 10p share 5 2.8p 3.0p
Diluted earnings per ordinary 10p share 6 2.8p 3.0p
Reconciliation of Movement in Equity Shareholders' Funds (Unaudited)
for the year ended 30 June 2003
2003 2002
#'000 #'000
Profit for the financial year 1,241 1,239
Other recognised losses relating to the year 221 (115)
Dividends (571) (477)
Proceeds from issue of ordinary shares 45 5
Issue of ordinary shares on acquisition of subsidiaries 1,455 50
Net increase in equity shareholders funds 2,391 702
Opening equity shareholders' funds 9,247 8,545
Closing equity shareholders' funds 11,638 9,247
Eleco plc
Summarised Consolidated Balance Sheet (Unaudited)
at 30 June 2003
2003 2002
#'000 #'000
Fixed assets 14,077 8,808
Current assets
Stocks 1,864 1,838
Debtors 8,704 7,026
Cash at bank and in hand 2,334 3,333
12,902 12,197
Creditors: amounts falling due within one year (13,018) (9,874)
Net current (liabilities)/assets (116) 2,323
Total assets less current liabilities 13,961 11,131
Creditors: amounts falling due after more than one year (1,939) (1,601)
Provisions for liabilities and charges (384) (283)
Net assets 11,638 9,247
Capital and reserves
Called up share capital 4,879 4,282
Share premium account 5,983 5,080
Merger reserve 367 367
Profit and loss account 409 (482)
Equity shareholders' funds 11,638 9,247
Eleco plc
Consolidated Cash Flow Statement (Unaudited)
for the year ended 30 June 2003
Notes 2003 2002
#'000 #'000
Net cash inflow from operating activities 11 2,560 4,191
Returns on investment and servicing of finance
Interest received 133 31
Interest paid (199) (142)
Interest element of finance lease rentals (23) (31)
Net cash outflow from returns on investment and servicing of finance (89) (142)
Net cash outflow from taxation (632) (6)
Capital expenditure and financial investment
Increase in loans to Employee Share Ownership Trust (39) (60)
Purchase of fixed assets (1,457) (914)
Disposal of tangible fixed assets 22 65
Purchase of investments (369) -
Sale of investments 73 -
Net cash outflow from capital expenditure and financial investment (1,770) (909)
Acquisitions and disposals
Purchase of subsidiary undertakings net of cash acquired 7,8,9 (2,383) (538)
Sale of subsidiary undertakings' operations - 770
Net cash (outflow)/inflow from acquisitions and disposals (2,383) 232
Equity dividends paid (497) (412)
Net cash (outflow)/inflow before financing (2,811) 2,954
Financing
New bank loans 1,000 750
Repayment of principal under finance leases (246) (282)
Repayment of bank loans (551) (301)
Issue of ordinary shares 45 5
Net cash inflow from financing 248 172
(Decrease)/increase in cash in the year 12 (2,563) 3,126
Eleco plc
Notes
1. The financial information in this announcement does not constitute statutory accounts within the meaning
of section 240 of the Companies Act 1985. Statutory accounts of the Company, on which the Auditors will
report, will be delivered to the Registrar of Companies and posted to shareholders on 21 October 2003. The
comparative figures for the year to 30 June 2002 have been taken from, but do not constitute, the
Company's statutory financial statements for that financial year. Those financial statements have been
reported on by the Auditors and delivered to the Registrar of Companies. The Report of the Auditors was
unqualified and did not contain a statement under s237(2) or (3) of the Companies Act 1985.
2. The information herein has been prepared on the basis of the accounting policies adopted for the year
ended 30 June 2003, as set out in the Company's Annual Report and Accounts.
3. Turnover and Segmental analysis
Group turnover and profits were attributable as follows
Turnover Operating profit/(loss)
2003 2002 2003 2002
#'000 #'000 #'000 #'000
Continuing activities
Building systems 34,494 31,523 2,667 2,610
Software systems 2,666 1,350 (692) 12
Corporate - - - (744)
Total continuing operations 37,160 32,873 1,975 1,878
For 2003, Corporate costs of #863,000 have been allocated, #670,000 to the Building Systems division and
#193,000 to the Software Systems division.
4. A dividend of #164,000 (0.35p per share) was declared at the interim stage. A final dividend representing
0.85p per share is being proposed and, if approved at the Annual General Meeting, will be payable on 12
December 2003 to shareholders on the register on 28 November 2003.
5. The calculation of basic earnings per share is based on the profit attributable to equity shareholders of
#1,241,000 (2002: #1,239,000) and on 44,326,775 ordinary shares (2002: 41,195,519), being the weighted
average number of ordinary shares in issue during the year.
6. The calculation of diluted earnings per share is based on the profit attributable to equity shareholders of
#1,241,000 (2002: #1,239,000) and a diluted weighted average of 44,571,887 ordinary shares (2002:
41,769,703).
7. On 3 February 2003, the Group acquired the entire issued share capital of Consultec Group AB for a total
consideration, including acquisition expenses, of #4,877,000 of which #1,455,000 was satisfied by the issue
of 5,705,660 ordinary shares credited as fully paid and ranking pari-passu with existing ordinary shares
except that they did not rank for the interim dividend.
Under a Software Licence Agreement dated 19 July 2002, entered into on the same date as an option agreement
to acquire 100% of the issued share capital of Consultec Group AB, Eleco plc acquired certain limited
rights to software products of Consultec Group AB and its subsidiaries at a cost of #344,000. The receipt
of this amount paid by Eleco plc under the Software Licence Agreement, was included within the consolidated
reserves of Consultec Group AB at the date of acquisition.
The directors consider that, in view of the fact that the relevant rights are not rights acquired from a
third party to the Group, the #344,000 paid represents in substance an increase in the effective price paid
to acquire the 100% shareholding in Consultec Group AB. Accordingly in the consolidated accounts, the
amount has been included as part of the consideration paid and the goodwill increased.
Goodwill on acquisition of #4,219,000 has been capitalised and included within fixed assets. #3,422,000 of
the total consideration, including expenses and the #344,000 referred to above, was paid in cash and
#1,270,000 cash was acquired.
8. On 7 February 2003, the Group acquired the entire issued share capital of Leonardo Internet Limited for a
total consideration, including acquisition expenses, of #236,000 paid in cash. Goodwill on acquisition of
#56,000 has been capitalised and included within fixed assets. #110,000 cash was acquired.
9. On 3 March 2003, the Group acquired the business and intellectual property of o2c for a total
consideration, including acquisition expenses, of #101,000 paid in cash. There was nil goodwill.
10. Post balance sheet events
On 1 July 2003 the Group acquired the entire issued share capital of Softhold GmbH, the owner of the
intellectual property in the Arcon software, for a total consideration, including acquisition expenses, of
#263,000, paid in cash.
11. Reconciliation of operating profit to net cash flow from operating
activities
2003 2002
#'000 #'000
Operating profit 1,975 1,878
Depreciation charge 1,126 1,182
Amortisation of intangible assets 166 94
Profit on sale of fixed assets (12) (9)
Working capital (increase)/decrease (695) 1,046
2,560 4,191
12. Reconciliation of net cash flow to movement in net debt
2003 2002
#'000 #'000
(Decrease)/increase in cash in the year (2,563) 3,126
Cash flow from movements in debt and lease financing (203) (167)
(Decrease)/increase in net debt resulting from cash flows (2,766) 2,959
Other non-cash items:
New finance leases (173) (162)
Finance lease obligations acquired with subsidiaries (144) -
Effects of changes in foreign exchange rates 214 (87)
Decrease/(increase) in net debt in the year (2,869) 2,710
Opening net funds/(debt) 464 (2,246)
Closing net (debt)/funds (2,405) 464
13. The Annual General Meeting of Eleco plc will be held at The London Capital Club, 15 Abchurch Lane, London EC4N
7BB at 12:00 noon on 19 November 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
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