TIDMELCO
RNS Number : 7699I
Eleco PLC
04 June 2014
4 June 2014
Eleco plc
("Eleco" or the "Group")
Specialist Software Applications for the Construction
Industry.
Preliminary Results
(for the Year Ended 31 December 2013)
Group Performance
Continuing Operations
-- Revenue of GBP16.3m (2012: restated GBP15.8m) of which 45%
was from recurring maintenance and support revenue, itself up
8%
-- Adjusted operating profit of GBP3.6m before product
development costs of GBP2.6m (2012: restated profit of GBP2.9m
before product development costs of GBP2.0m)
-- Profit before tax of GBP1.0m (2012: restated GBP0.5m)
-- Earnings per share - basic and diluted of 1.4p (2012: restated 0.7p)
-- EBITDA of GBP2.0m (2012: restated GBP1.3m)
-- EBITDA per share - basic and diluted of 2.4p (2012: restated 1.8p)
Group Borrowings
-- Net bank borrowings at 31 December 2013 of GBP4.3m (31 December 2012: GBP6.5m)
Outlook
-- The board remains optimistic about the prospects for 2014
with a positive start to the first half in most of the core markets
in which the Group operate.
Executive Chairman, John Ketteley said:
"The Group's software businesses began the year well
particularly in the UK in line with the improved climate in the UK
construction sector. Our development teams also developed a number
of new state of the art software programs and I am confident that
the improvement in Eleco's financial position will enable it to
launch and deliver these to Eleco's already strong customer base in
its established markets and to exploit them in new overseas
markets".
"I am confident that the actions taken to restructure the group
and to explore opportunities to refinance its operations will
together create a positive outlook for the Group. In short, I am
confident that the future for Eleco is bright".
For further information
please contact:
Eleco plc http://www.eleco.com
John Ketteley, Executive Tel: 0207 422 0044
Chairman
Peckwater PR
Tarquin Edwards Tel: 07879 458 364 /
0207 808 7340
Cenkos Securities plc
Nicholas Wells Tel: 0207 397 8900
Chairman's statement
2013 was the year in which we divested our loss-making UK
building systems businesses; the year in which we approached
Barclays and began the process of refinancing and re-banking ELECO;
a year in which we concentrated on the expansion of our profitable
international construction software businesses in the UK, Germany
and Sweden. In 2014 we are currently raising new equity capital and
have agreed to transfer our Group banking arrangements and
relationships from Lloyds Banking Group ("Lloyds") to Barclays.
I am therefore pleased to report that ELECO has now emerged as a
profitable, well financed international specialist software group
serving the construction industry in its main markets in the UK,
Germany, the Benelux and Sweden. Our Asta, Esign, Arcon and
Consultec software brands and applications also continued to hold
leading positions in the construction sector in their home markets
in the year under review.
I shall comment on the performance of our software businesses in
2013 and the outlook in the current year. I will also explain the
reasons for the Board's decision to seek to raise new equity
capital and to transfer our lead banking relationship to
Barclays.
Performance in the year under review
As a consequence of the substantial de facto reconstruction of
ELECO that has taken place in the past eighteen months, our
Software interests in the UK, Germany and Sweden, which are engaged
in the sale of software applications for project management,
estimation, 3D design, visualisation and Building Information
Modelling ("BIM) systems, site management and visual marketing, now
constitute the whole of our continuing business.
Prior year comparatives have been restated below, where
appropriate, in order to reflect the impact of the necessary
divestment of the Group's loss-making ElecoBuild and ElecoPrecast
businesses in May 2013 and December 2013 respectively.
Revenues of our continuing businesses in the year under review
amounted to GBP16.3m (2012: GBP15.8m), of which recurring
maintenance revenue amounted to GBP7.3m (2012: GBP6.8m).
EBITDA in 2013 was higher at GBP2.0m, (2012: restated GBP1.3m)
and Operating Profit was GBP1,365,000, including an exceptional
profit of GBP384,000 from a sale of assets (2012 restated:
GBP690,000 after deducting an exceptional expense of
GBP152,000).
Software development costs amounted to GBP2.6m, all of which was
written off as incurred. (2012: GBP2.1m, of which GBP2.0m was
written off as incurred). Costs incurred with third parties in
connection with the supervision of our banking facilities with
Lloyds bank during the year amounted to GBP175,000 (2012: Nil).
Bank interest paid in the year was GBP340,000 (2012:
GBP201,000); and banking, pension and other professional fees
amounted to GBP1.0m (2012: GBP600,000) were incurred partly at the
behest of the Bank and partly because of the need to dispose of our
Building Systems interests.
The Group's net bank debt, which had been GBP6.5m at 1 January
2013, was reduced at 31 December 2013 to GBP4.3m. UK borrowings,
which had been GBP7.3m at 1 January 2013 and cash held by our
software subsidiaries in Sweden and Germany had totalled
GBP822,000; at 31 December 2013 UK borrowings had been reduced to
GBP5.0m by 31 December 2013 and cash held by our software
subsidiaries in Sweden and Germany had totalled GBP710,000. A
reconciliation of the Group's net bank debt is set out in the
Operating and Financial Review.
The reduction in our net bank debt during 2013 was achieved
despite the increase in software development costs as well as the
substantial increase in interest and banking costs, together with
other bank related and professional costs, which we had to bear in
the period under review.
Software Development
The maintenance and improvement of existing products and the
development of new products is the very essence of a successful
software operation.
Therefore, as mentioned above, despite the significant financial
constraints placed upon the Group in the year under review, we
increased our software development spend from GBP2.1m in 2012 to
GBP2.6m in 2013. Apart from undertaking their routine maintenance
routines and improvements to existing software applications, our
development teams also developed a new integrated BIM suite,
comprising project management, 3D design compression, cloud storage
and data exchange modules. We are confident that this system will
enable our customers to participate in and benefit from the
increasing trend towards the use of BIM and operate efficiently in
the new and exciting BIM environment.
I was particularly impressed by the technical excellence and
creative flair shown by our development teams across the Group, who
collaborated in a truly international team effort to produce the
ELECO BIM Suite. I would also like to thank a number of our
customers for the constructive contribution that they made to the
specification and concept of the system. This support was very much
appreciated by the teams who worked on this development.
Last year, I reported that as part of our BIM initiative, we
planned to enable our range of construction software products to
exchange information with each other and with third party products
using IFC, an industry standard data format. I am therefore pleased
to inform you that at Asta's 2014 National User Forum, which was
held at the British Museum in March this year, my colleagues at
Asta, together with colleagues from Consultec in Sweden and ELECO
Software in Germany, introduced a number of new software products,
and were able to demonstrate the extent to which ELECO's programs
are now able to exchange data with each other by using our new
"ELECO BIMCloud(TM) " technology. As a consequence, ELECO is now in
a position to provide its customers with 5D BIM functionality
(3D+time+cost) using programs solely from our own product
portfolio.
Asta also introduced its new "Site Progress Mobile" a
comprehensive mobile application which was also very well received
at the National User Forum in London, and also at the recent BIM
Show Live in Manchester. Android and Apple iOS versions of "Site
Progress Mobile" app were available in April 2014, and a Windows
Mobile version will be launched shortly
Group Restructuring
During extended negotiations for the renewal of our banking
facilities in May 2013, our bankers insisted that we accepted a
substantial reduction in our banking facilities and much higher
interest rates. It was also made clear to the Board that banking
facilities would only be granted to ELECO, the parent company, and
that no banking facilities would be granted to any of our
manufacturing businesses, as had previously been the case.
The Board's decision to divest our building products
manufacturing businesses based at Yaxley, was prompted in the first
instance by the anticipated financial pressures that would arise as
a consequence of the substantial reduction in our available bank
facilities as well as by the adverse cash flow effect of the
atrocious weather conditions experienced by our manufacturing units
in the first four months of 2013. Given the lack of financial
resources which would have enabled ELECO to provide temporary
financial assistance to these businesses, the Board decided to seek
a buyer for them and accordingly, in May 2013, ELECO duly disposed
of SpeedDeck, Downer Cladding, Stramit Panel Products and Prompt
Profiles.
The asset disposal of the ElecoBuild businesses gave rise to a
total book loss of GBP5.3m, which is included in losses of
discontinued businesses below. However, ELECO retained the property
at Yaxley, and entered into a short term lease of the property to
the buyer of the businesses. This lease has now terminated and the
property is actively being marketed for disposal.
In December 2013, ELECO also disposed of its loss-making precast
concrete manufacturing businesses based at Grantham and Lydney,
namely Bell & Webster and Milbury Systems. The decision to
dispose of these businesses was prompted in this case by a
considerable delay in their anticipated recovery. It was clear that
they would also have required ELECO to provide significant
additional financial support, which would have enabled them to
continue trading pending the receipt of some significant orders
that were under negotiation at the time. However, ELECO was not in
a position to provide any financial assistance, temporary or
otherwise, to enable our precast concrete manufacturing interests
to continue to trade and recover.
Accordingly, the Board of ELECO, having concluded that it was
not in a position to continue to provide financial support to these
businesses, decided to seek a buyer for them. Milbury Systems was
sold on 20 December 2013. However, when it became apparent that a
sale of Bell & Webster could not be concluded likewise, the
directors of Bell & Webster decided on 20 December 2013 to
cease trading and apply to the Court to appoint an Administrator;
regrettably, Bell & Webster duly went into administration on 6
January 2014.
The disposal of the ElecoPrecast businesses gave rise to a book
loss on this asset disposal of GBP2.6m. The properties, which had
been leased by ELECO to these businesses were also sold by ELECO to
the buyer of the businesses for GBP2.2m which gave rise to a loss
of GBP0.6m, net of expenses.
The decisions that led to the divestment of the ElecoBuild and
ElecoPrecast businesses were each unavoidable in the circumstances,
for the reasons stated above. ELECO was not in a position in either
case to provide the necessary financial assistance to these
businesses when requested to do so, because of the unrelenting
pressure on ELECO's own finances at the time.
The divestment of all our Building Systems businesses and assets
in 2013 gave rise to a total loss of GBP5.3m; and the divestment of
our Precast Concrete businesses gave rise to a total loss of
GBP5.5m. The total loss for the period from discontinued
operations, including the transaction losses referred to above was
GBP11.1m, equivalent to 18.4p per share, (2012: restated loss
GBP3.1m, equivalent to 5.3p per share).
Loss of Capital
The divestment of the Group's building systems and precast
concrete businesses triggered an impairment to the value of the
inter-company investments and loans to the subsidiaries in the
accounts of ELECO plc. These adjustments resulted in a significant
loss of capital in the Company in the year under review.
Accordingly, we will shortly be writing to shareholders to convene
the necessary meeting of shareholders, in pursuance of the
requirements of Section 656 of the Companies Act 2006.
ELECO Retirement and Benefits Scheme
Gang-Nail Systems, SpeedDeck Building Systems, Stramit Panel
Products and Bell & Webster Concrete had all been Statutory
Employers of the ELECO Retirement and Benefits Scheme ("ERBS") when
their respective businesses were sold in the circumstances
explained above. The responsibility for the funding of ERBS
involved all four companies until December, 2011, when the
Gang-Nail Systems business was sold and the funding responsibility
was devolved to the remaining three statutory employers. In May
2013, when the businesses of SpeedDeck Building Systems and Stramit
Panel Products had to be sold, Bell & Webster Concrete then
became solely responsible for funding ERBS; and then in December
2013, when the business and assets of Bell & Webster Concrete
had to be sold, I regret to say that an application was made for
the Scheme to be taken into the Pensions Protection Fund which is
now under consideration by the Pensions Regulator.
Employees
Implementing the above changes placed significant and stressful
demands on our employees, even though in all cases, ELECO sought
assurances from the buyers of its building systems businesses that
they would fully implement TUPE provisions.
It is a matter of regret that the number of our employees in the
UK fell by more than two thirds in the year under review, i.e. from
158 at the beginning of 2013 to 45 by the end of the year
We now have 194 employees in the Group of which 53 are based in
the UK, 97 in Sweden; 41 in Germany; and 3 in India. I would like
to thank them all on your half for their hard work in a difficult
and stressful working environment.
Dividend
The Board does not propose to recommend the payment of a
dividend in respect of the period under review.
Refinancing
In my Chairman's Statement last year, I said that over the past
five years our UK and international software interests had made
good progress, had grown substantially in value and were cash
generative while at the same time, our UK building systems
businesses had experienced extraordinarily difficult trading
conditions and had consumed substantial amounts of cash.
As a consequence the ELECO Group had become financially
unbalanced and this together with other financial pressures
mentioned above had placed it under considerable financial strain.
I also said that I believed that despite the many difficult
decisions that your Board had had to take to deal with this
situation, a number of them were beginning to bear fruit.
Lloyds recently informed ELECO that following the divestment of
our UK manufacturing interests, it was now essentially an
international software business and as such, its profile as a
borrower, did not now fit in with Lloyd's profile as a lender to
companies with predominantly UK domestic interests. The Board of
ELECO were accordingly requested to seek to re-bank, perhaps with
another bank that had a more international lending profile.
Fortunately, when Lloyds broached this subject the Board of ELECO
had already concluded in December 2013 that it should take steps to
refinance and re-bank ELECO and had already made an approach to
Barclays.
I am pleased to say that we had a very positive response from
Barclays to our approach. Barclays proceeded to conduct its normal
thorough due diligence on our software businesses, and having
completed this process to its satisfaction, agreed in principle to
become bankers to ELECO. It subsequently agreed to consider
providing a medium term facility of GBP3.0m and an overdraft
facility of GBP2.0m, on terms to be agreed provided that ELECO
raised a minimum amount of GBP1.5m of new equity capital.
Having made appropriate soundings, I am pleased to report that
we have received a number of indications of firm intention to
subscribe for GBP2.3m (in aggregate) of new ordinary shares at 24p,
which is marginally higher than the current market price of 23.75p.
I would like to say how much we appreciate the confidence and
support shown by those who have indicated their firm intention to
participate in the intended equity raising in such difficult
circumstances.
The Board also intends, subject to shareholder approval, to
raise up to an additional GBP1.7m by subscription of additional new
ordinary shares and shareholders will shortly be sent a circular
giving full details of the intended subscription arrangements.
My colleagues and I very much welcome and appreciate the
constructive approach adopted by Barclays in the negotiation of our
new banking arrangements and we look forward to a long and
constructive relationship with Barclays in the years ahead.
Following the implementation of such proposals, ELECO would be in a
position to discharge its indebtedness to Lloyds.
Outlook
ELECO's software businesses are sound, profitable and cash
generative; Asta, Consultec, Arcon and Esign enjoy excellent
reputations in the markets in which they operate enjoy excellent
relationships with their customers; and our software development
teams in the UK, Germany and Sweden are both technically very
talented and creative.
The strengthening of ELECO's finances following the successful
refinancing and the re-banking exercise currently being put in
place in conjunction with Barclays, together with the depth of our
software management that we have in those countries in which we
currently operate, give me great confidence in the future for
ELECO.
Operating & Financial Review
Income from licence sales in the year under review was GBP4.0m
up 2% against 2012 and revenue from recurring maintenance and
support was GBP522,000 higher, up 8% compared to the previous year.
This increase in recurring maintenance income is principally due to
increased customer activity and is expected to continue into 2014.
Operating profit after product development costs and before
exceptionals was GBP981,000, up GBP139,000, 17% compared to
2012.
2013 2012
--------------- ---------------
GBP'000 % GBP'000 %
Licence
sales 4,003 25% 3,940 25%
Recurring maintenance
and support revenue 7,319 45% 6,797 43%
Services
income 4,996 30% 5,042 32%
Total revenue 16,318 100% 15,779 100%
------------------------ -------- ----- -------- -----
Development spend was higher in 2013 at GBP2.6m (2012: GBP2.1m)
due to a number of strategic initiatives, the most significant of
which was the development of ELECO BIMCloud(TM) , a cloud hosted
database for sharing construction project data in an industry
standard format known as IFC. Of the total increase in product
development costs, GBP336,000 was due to the temporary reallocation
of internal resources from operations to product development
activities. BIM has been mandated for use on UK Government projects
by 2016. Most of Scandinavia has already mandated BIM and its use
is gathering pace throughout Europe and North America.
In addition to the ELECO BIMCloud(TM) , new "BIM enabled"
versions of ELECO's products for 3D CAD/design, project management
and cost estimation were also developed in the year under review.
These products are able to exchange data with each other via the
ELECO BIMCloud(TM) to facilitate greater collaboration between the
different disciplines involved in construction projects. We believe
that the development of our new suite of "BIM enabled" software
products will in due course significantly increase opportunities
for cross-selling our products in all markets
.
2013 2012
GBP'000 GBP'000
Adjusted operating
profit (note 2) 3,955 3,285
Product development (2,598) (2,024)
Amortisation of
intangible assets (376) (419)
Operating profit before
exceptionals 981 842
-------------------------- -------- --------
Development costs
capitalised - 78
-------------------------- -------- --------
ELECO's software business has three product development areas,
namely, in the UK for Project Management; in Sweden for Estimation
and Engineering; and in Germany for Visualisation. Customer
training and support services are also provided locally by these
businesses.
Project Management
Asta Development in the UK is responsible for producing ELECO's
range of project management tools, which are distributed in Germany
and Sweden through its sister companies and in other international
markets via distributors. After a significant management
restructure at the end of 2012, Asta delivered an excellent result
in 2013, increasing revenues by 4% and growing profits by 70%
compared with 2012.
As part of ELECO's strategic plan to unite its international
product set, Asta made good on the development of Asta Powerproject
BIM and connecting it to the new ELECO BIMCloud(TM) progress in the
year under review. These were successfully demonstrated to
customers at our National User Forum held in London in March 2014,
where they were very well received. This project will shortly
undergo preliminary field trials with some customers and we expect
to launch it officially in mid-2014.
In response to customer demand in 2013 and in collaboration with
them, we also began the development of a new mobile site progress
reporting tool, "Asta SiteProgress(R)", and also in collaboration
with customers, made a number of improvements to our Asta
Powerproject multi-user enterprise offering. Both of these projects
have now been successfully completed. The improved enterprise
offering was available from January 2014; the new mobile progress
reporting tool in an Android version was available from April 2014
and iOS and Windows version will be available shortly.
Internationally, Asta established a foothold in the US market
with the appointment of 3 new resellers. We have also experienced
an increasing level of interest from customers in the US after the
approval of Asta Powerproject by the US Army Corps of Engineers in
2013 and this market holds great promise for Asta products.
Estimation, Engineering and Consultancy
The Consultec Group of companies in Sweden is responsible for
ELECO's cost estimation, engineering and stair design software
together with architectural and construction services. 2013 saw a
marked slowdown in the Swedish economy, which impacted the sale of
services throughout the year although, to a lesser extent, product
sales and maintenance renewals. The resulting revenues and profits
were below those achieved in 2012.
However, the economic situation Sweden showed some improvement
in the latter part of 2013, and Consultec Arkitekter &
Konstrucktörer, our architectural and construction services
businesses, opened a new office in Umeå, Sweden to expand its
customer base by providing architectural and project management
services to the local market. The office opened in January 2014 and
new projects have already been secured for the whole of 2014.
International sales of stair design and production system,
Staircon, were also given a boost after the acquisition of a small
but very strategic competitor, namely, Wagemeyer GmbH, in Germany.
The acquisition was the result of collaboration between Consultec
in Sweden and its sister company ELECO Software GmbH in Germany and
was completed in March 2013. This transaction not only removed a
competitor, but it also strengthened the route to market for
Staircon in Germany and other European countries (50% of
Wagemeyer's customers are outside Germany). Additionally, the UK
distribution for Staircon was taken under direct control of
Consultec. These changes detracted from normal operations initially
and together with the additional overhead costs adversely impacted
Consultec System's profitability during the period. However, we are
confident that the acquisition of Wagemayer, with its outstanding
reputations and technology in this field, will strengthen
Consultec's position in the engineered stair market.
Consultec Byggprogram supplies estimation and project management
software services to 17 out of the top 20 construction companies in
Sweden. Several strategic initiatives took place in 2014 in
response to demand from larger customers. Our development team
accelerated their work on a unified cost estimation product for
multiple construction disciplines and some of our service personnel
with the required expertise were temporarily assigned to product
development duties, although this temporarily increased our
development costs. However, the end result, namely, a single
product capable of producing cost estimations for construction,
civil engineering, electrical and plumbing works, will be available
to our customers shortly and ventilation estimations will be added
to the program in due course. This is an important strategic move,
which will assist us in retaining and increasing sales of our
estimating offering to larger customers. We also believe that in
the long term, our new Bidcon multi-product estimation tool, will
be both easier and cheaper to maintain than the current multiple
product-set - and importantly in a format that we have developed in
collaboration. The new product was previewed to customers at a
major exhibition in Sweden during April 2014, where it was well
received. We are aiming for it to be available for release later in
the second half of 2014.
Following collaboration between Asta Development in the UK,
Consultec Byggprogram also developed direct links between its
estimation product, Bidcon, and Asta Powerproject. Consultec has
begun marketing Asta Powerproject to its customers in Scandinavia.
Importantly, Consultec also produced a new version of its main
estimation product, Bidcon BIM, in the year under review, which
will link with the ELECO BIMCloud(TM) , enabling it to exchange
data with other BIM enabled products from ELECO and making it part
of ELECO's BIM suite of products.
In the past customers in Sweden had been supplied with Plancon,
a third party project management system. Consultec's aim is now to
migrate its Plancon customers to Asta Powerproject, as soon as
practicable.
Visualisation
ELECO's visualisation software businesses in Germany delivered
increased revenues in 2013 offset by increased costs relating to a
number of strategic initiatives. Esign delivered increased revenues
from its flooring visualisation system. Development efforts were
focussed on its Marketing Management system, which will help to
make Esign's product-set a strategic purchase for flooring
manufacturers and wholesalers. Its flooring visualisation system
was extended from horizontal to vertical surfaces with the
introduction of a door visualisation module in order to target a
new market segment. The business received its first order from the
USA in 2013.
ELECO Software Germany released an updated version of its 3D
home designer software, Arcon+ 2013. It also completed the
development of its first iPhone App and o2c Cloud Player - a
technology for displaying animated 3D objects directly from the
Internet in a browser window on any device. However the primary
development project, which is nearing completion is Arcon NG, the
next generation of 3D CAD software. This is expected to be
available in the middle of 2014. It will also be "BIM enabled" so
that it will be form part of ELECO's BIM suite of products and will
be able to exchange data in the ELECO BIMCloud(TM) with ELECO's
project management software from Asta and Estimation software from
Consultec.
In addition, the stair software business, Wagemeyer GmbH, was
acquired in collaboration with sister company Consultec in March
2013. This cemented ELECO Software's position as a distributor of
stair design software in the German market and has created
opportunities to upgrade legacy Wagemeyer customers to
Staircon.
Capital and financing
The existing UK facilities comprise the following:
-- A remaining term loan of GBP1.3m, with quarterly loan
repayments of GBP100,000 to April 2015 and a bullet repayment of
GBP925,000 on 30 April 2015, carrying a blended interest rate of
5.5% over base rate; and
-- A new GBP4.0m overdraft for the period to 30 April 2015,
carrying a blended interest rate of 6.5% over base rate.
Security provided to the bank for the provision of these
facilities is:
-- First legal charge on property freeholds at Yaxley;
-- Pledge on the shares of the software companies.
Pension overview
In December 2013, Bell & Webster Concrete Limited, part of
the Group's Precast interests, went into administration; it was the
last remaining trading statutory employer of the ELECO Retirement
and Benefits Scheme ("ERBS"). The Court appointed the administrator
on 6 January 2014.
Following the appointment of the Administrator to Bell &
Webster earlier this year, the Company are in discussions with the
Pension trustees about the transfer of the Pension Scheme to the
Pensions Protection Fund. The table set out below shows the Group
net assets at 31 December before the pension scheme liability net
of deferred tax.
2013 2012
-------------- ---------------
GBP'000 % GBP'000 %
Net assets before pension
scheme liability 3,837 n/a 13,496 152%
Retirement benefits liability
(net of deferred tax) (6,190) n/a (4,646) -52%
Total net
assets (2,353) n/a 8,850 100%
-------------------------------- -------- ---- -------- -----
Shareholders' equity and net assets
At 31 December 2013, shareholders' negative equity amounted to
GBP(2.4)m (2012: equity GBP8.9m), after recognising GBP6.2m (2012:
GBP4.6m), net of the related deferred tax asset, as a retirement
benefits liability.
Summary Group cash flow and net bank borrowings
During the year, the Group reduced its net bank borrowings from
GBP6.5m at 31 December 2012 to GBP4.3m at 31 December 2013. This
was largely due to cash generation by the Group's profitable
Software operations together with the disposal of the Group's
ElecoBuild interests and its Precast property assets. The table
below shows an increase in net cash balances of GBP0.6m and net
loan repayments of GBP1.6m during the year.
GBP'000
Net bank borrowings at
1 January 2013 (6,538)
Increase in net
cash balances 600
Net loan repayments 1,600
Net bank borrowings at
31 December 2013 (4,338)
------------------------- --------
The balances that comprise the net bank borrowings at 31
December are set out in the table below:
2013 2012
GBP'000 GBP'000
Cash and cash
equivalents 770 888
Bank overdraft (3,783) (4,501)
Bank loans (1,325) (2,925)
(4,338) (6,538)
---------------- -------- --------
Free cash flow included net cash payments relating to
discontinued operations of GBP1.2m (2012: restated GBP5.6m). The
cash from the sale of the ELECOBuild businesses and Precast
property was mainly used to repay the bank loan as set out in the
analysis below.
2013 2012
GBP'000 GBP'000
Cash flow from operations 373 (1,946)
Net capital
proceeds 2,682 87
Net interest
paid (295) (205)
Tax
paid (464) (396)
Free cash flow 2,296 (2,460)
Acquisitions and
disposals 164 208
Net loan repayments (1,600) (5,900)
Finance lease repayments (259) (170)
Net cash inflow/(outflow) 601 (8,322)
Exchange difference (1) (39)
Increase/(decrease) in net
cash balances 600 (8,361)
---------------------------- -------- --------
Earnings/loss per share and dividends
The earnings per share on continuing operations is 1.4p (2012:
restated 0.7p).
The loss per share on total operations was 17.1p (2012:
4.6p).
In consideration of 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 year ended 31 December
2013, but will consider a return to recommending dividend payments
as and when the Company's trading position and performance improve
and the deficit on the profit and loss reserve has been
resolved.
Summary
The continuing businesses in the Group are currently profit
generating and budgeted to grow profit and cash over the next year.
The final stages of the Group's restructuring are almost complete
and the Group's management are confident that the overall Group
will return to consistent profitability by expanding its customer
base in its established markets and exploiting its range of
products in new overseas markets.
This together with new bank facilities, funding from a share
placing and a new management structure create a positive outlook
for the Group.
Consolidated Income Statement
for the year ended 31 December 2013
2013 2012
Notes GBP'000 GBP'000
---------------------------- ------ --------- -----------
Continuing
operations (restated)
Revenue 1 16,318 15,779
Cost of sales (2,189) (2,084)
Gross profit 14,129 13,695
Administrative
expenses (13,148) (12,853)
Operating profit before
exceptionals 2 981 842
Exceptional
items 3 384 (152)
Operating profit 1,365 690
Finance income 4 10 17
Finance cost 4 (367) (240)
Profit before
tax 1,008 467
Tax (174) (69)
Profit for the financial
period from continuing
operations 834 398
Loss for the financial
period from discontinued
operations 5 (11,052) (3,145)
Loss for the financial
period (10,218) (2,747)
---------------------------- ------ --------- -----------
Attributable
to:
Equity holders of
the parent (10,218) (2,747)
---------------------------- ------ --------- -----------
Earnings/(loss) per
share - basic and diluted
Continuing
operations 1.4 p 0.7 p
Discontinued
operations (18.5) p (5.3) p
Total operations (17.1) p (4.6) p
---------------------------- ------ --------- -----------
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2013
2013 2012
GBP'000 GBP'000
--------------------------------- --------- --------
Loss for the
period (10,218) (2,747)
Other comprehensive
income:
Items that will not be reclassified subsequently
to profit or loss:
Actuarial loss on retirement
benefit obligation (787) (2,475)
Deferred tax on retirement
benefit obligation 159 99
Other losses on retirement
benefit obligation (350) (81)
(978) (2,457)
Items that will be reclassified subsequently to
profit or loss:
Translation differences
on foreign operations (7) (101)
Other comprehensive income
net of tax (985) (2,558)
Total comprehensive income
for the period (11,203) (5,305)
---------------------------------- --------- --------
Attributable
to:
Equity holders
of the parent (11,203) (5,305)
---------------------------------- --------- --------
Consolidated Statement of Changes in Equity
for the year ended 31 December 2013
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 January 2013 6,066 6,396 7,371 (214) (358) (10,411) 8,850
Reclassification
of merger reserve
on business disposals - - (3,285) - - 3,285 -
Transactions with
owners - - (3,285) - - 3,285 -
--------- --------- --------- ------------ --------- ---------- ---------
Loss for the period - - - - - (10,218) (10,218)
Other comprehensive
income:
Actuarial loss on
defined benefit pension
scheme net of tax
and other scheme
losses - - - - - (978) (978)
Exchange differences
on translation of
foreign operations - - - (7) - - (7)
Total comprehensive
income for the period - - - (7) - (11,196) (11,203)
--------- --------- --------- ------------ --------- ---------- ---------
At 31 December 2013 6,066 6,396 4,086 (221) (358) (18,322) (2,353)
========= ========= ========= ============ ========= ========== =========
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 January 2012 6,066 6,396 7,371 (113) (358) (5,207) 14,155
Transactions with
owners - - - - - - -
--------- --------- --------- ------------ --------- ---------- ---------
Loss for the period - - - - - (2,747) (2,747)
Other comprehensive
income:
Actuarial loss on
defined benefit pension
scheme net of tax
and other scheme
losses - - - - - (2,457) (2,457)
Exchange differences
on translation of
foreign operations - - - (101) - - (101)
Total comprehensive
income for the period - - - (101) - (5,204) (5,305)
--------- --------- --------- ------------ --------- ---------- ---------
At 31 December 2012 6,066 6,396 7,371 (214) (358) (10,411) 8,850
========= ========= ========= ============ ========= ========== =========
Consolidated Balance Sheet
At 31 December 2013
2013 2012
GBP'000 GBP'000
----------------------------- --------- ---------
Non-current
assets
Goodwill 10,690 13,009
Other intangible
assets 1,462 1,904
Property, plant and
equipment 589 7,223
Deferred tax
assets 1,548 1,389
Total non-current
assets 14,289 23,525
----------------------------- --------- ---------
Current assets
Inventories 17 2,144
Trade and other receivables 4,447 6,905
Current tax
assets 281 5
Cash and cash equivalents 770 888
Other current
assets 474 800
Assets of disposal
group 3,459 -
Total current
assets 9,448 10,742
----------------------------- --------- ---------
Total assets 23,737 34,267
----------------------------- --------- ---------
Current liabilities
Bank overdraft (3,783) (4,501)
Borrowings (1,325) (900)
Obligations under
finance leases (247) (212)
Trade and other payables (3,214) (4,962)
Provisions (786) (256)
Current tax
liabilities (49) (56)
Accruals and deferred
income (5,643) (5,819)
Liabilities of disposal
group (2,694) -
Total current
liabilities (17,741) (16,706)
----------------------------- --------- ---------
Non-current
liabilities
Borrowings - (2,025)
Obligations under
finance leases (195) (319)
Deferred tax
liabilities (149) (170)
Non-current
provisions (195) (77)
Other non-current
liabilities (72) (85)
Retirement benefit
obligation (7,738) (6,035)
Total non-current
liabilities (8,349) (8,711)
----------------------------- --------- ---------
Total liabilities (26,090) (25,417)
----------------------------- --------- ---------
Net assets (2,353) 8,850
============================= ========= =========
Equity
Share capital 6,066 6,066
Share premium
account 6,396 6,396
Merger reserve 4,086 7,371
Translation
reserve (221) (214)
Other reserve (358) (358)
Retained earnings (18,322) (10,411)
Equity attributable to
shareholders of the parent (2,353) 8,850
============================= ========= =========
Consolidated Statement of Cash Flows
for the year ended 31 December 2013
2013 2012
GBP'000 GBP'000
------------------------------------ -------- --------
Cash flows from operating
activities
Loss before tax (including
discontinued) (4,751) (2,641)
Net finance
costs 622 480
Depreciation and impairment
charge 869 1,004
Amortisation and impairment
charge 514 1,210
Loss/(profit) on sale of
property, plant and equipment 210 (114)
Retirement benefit
obligation - (803)
Increase in
provisions 648 200
Cash used in operations before
working capital movements (1,888) (664)
Decrease in trade and
other receivables 769 3,438
(Increase)/decrease in inventories
and work in progress (4) 134
Decrease in trade and
other payables (234) (4,854)
Net decrease in discontinued
operations working capital 1,730 -
Cash generated/(used)
in operations 373 (1,946)
Interest
paid (297) (239)
Interest received 2 34
Income tax paid (464) (396)
Net cash outflow from
operating activities (386) (2,547)
------------------------------------ -------- --------
Net cash used in investing
activities
Purchase of
intangible assets (78) (149)
Purchase of property,
plant and equipment (287) (157)
Acquisition of subsidiary
undertakings net of
cash acquired (110) (192)
Proceeds from sale
of property, plant,
equipment and intangible
assets 3,047 393
Sale of business net
of expenses 274 400
Net cash inflow from
investing activities 2,846 295
------------------------------------ -------- --------
Net cash used in financing
activities
Proceeds from
new bank loan 4,000 -
Repayment of
bank loans (5,600) (5,900)
Repayments of obligations
under finance leases (259) (170)
Net cash outflow from
financing activities (1,859) (6,070)
------------------------------------ -------- --------
Net increase/(decrease)
in cash and cash equivalents 601 (8,322)
------------------------------------ -------- --------
Cash and cash equivalents
at beginning of period (3,613) 4,748
Effects of changes
in foreign exchange
rates (1) (39)
Cash and cash equivalents
at end of period (3,013) (3,613)
------------------------------------ -------- --------
Cash and cash equivalents
comprise:
Cash and short-term
deposits 770 888
Bank overdrafts (3,783) (4,501)
(3,013) (3,613)
------------------------------------ -------- --------
Notes to the Consolidated Financial Statements
1. Revenue
Revenue from continuing operations disclosed in the income
statement is analysed as follows:
2013 2012
GBP'000 GBP\'000
Licence
sales 4,003 3,940
Recurring maintenance
and support revenue 7,319 6,797
Services
income 4,996 5,042
Total revenue 16,318 15,779
------------------------ -------- --------
2. Segment information
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker to
allocate resources to the segments and to assess their
performance.
The chief operating decision maker has been identified as the
Executive Directors. The Group revenue is derived entirely from the
sale of software licences, software maintenance and support and
related services. Consequently the Executive Directors have
determined that the Group comprises of software business activity
only and as such the information is presented in line with
management information.
The structure of the segment note has changed from that reported
in the 2013 interim report as a result of the disposal of the
ElecoPrecast operations in December 2013. Consequently the prior
year comparatives have been restated on the revised basis.
2013 2012
Software Software
GBP'000 GBP'000
Revenue 16,318 15,779
------------------------------ --------- ---------
Adjusted operating
profit 3,955 3,285
Product development (2,598) (2,024)
Amortisation of
intangible assets (376) (419)
Operating profit
before exceptionals 981 842
Restructuring costs - (152)
Segment result 981 690
Net finance cost (357) (223)
Segment profit before
tax 624 467
Tax (174) (69)
------------------------------
Segment profit after
tax 450 398
------------------------------ --------- ---------
Exceptional profit 384 -
Continuing operations profit
after tax 834 398
============================== ========= =========
Segment assets 18,730 18,639
Unallocated assets 5,007 15,628
Total Group assets 23,737 34,267
------------------------------ --------- ---------
Segment liabilities 15,658 15,512
Unallocated liabilities 10,432 9,905
Total Group liabilities 26,090 25,417
------------------------------ --------- ---------
Other segment information
Capital expenditure:
Property, plant
and equipment 50 208
Intangible assets 70 133
Goodwill acquired 30 81
Intangible assets
acquired 30 -
Depreciation 222 234
EBITDA 1,963 1,343
The unallocated assets and liabilities represent pension scheme
obligations and related deferred tax together with disposal group
assets and liabilities and assets and liabilities of discontinued
operations.
Unallocated assets
2013 2012
GBP'000 GBP'000
Deferred
tax assets 1,548 1,389
Assets of disposal
group 3,459 -
Discontinued
operations - 14,239
5,007 15,628
-------------------- -------- --------
Unallocated liabilities
2013 2012
GBP'000 GBP'000
Retirement benefit
obligation 7,738 6,035
Liabilities of
disposal group 2,694 -
Discontinued
operations - 3,870
10,432 9,905
-------------------- -------- --------
Geographical information
Revenue by geographical area represents continuing operations
revenue from external customers based upon the geographical
location of the customer.
Revenue by geographical destination is as follows
2013 2012
GBP'000 GBP'000
UK 3,598 3,431
Scandinavia 8,333 8,209
Germany 2,428 2,181
Rest of Europe 1,666 1,707
Rest of World 293 251
16,318 15,779
---------------- -------- --------
Non-current assets excluding deferred tax by geographical area
represent the carrying amount of assets based in the geographical
area in which the assets are located.
Non-current assets by geographical location are as follows:
2013 2012
GBP'000 GBP'000
UK 5,512 14,491
Scandinavia 5,787 6,310
Germany 1,442 1,335
12,741 22,136
------------- -------- --------
Information about major customers
Revenues arising from sales to the Group's largest customer were
below the reporting threshold (2012: Below reporting
threshold).
3. Exceptional items
Exceptional items represent income and costs considered
necessary to be separately disclosed by virtue of their size or
nature:
2013 2012
GBP'000 GBP'000
Restructuring
costs - (152)
Profit on disposal
of land 384 -
384 (152)
-------------------- -------- --------
The profit on disposal relates to excess land sold during the
year and is not part of discontinued operations. Restructuring
costs, mainly in the UK, related to employee redundancy costs.
4. Net finance income/(cost)
Finance income and costs from continuing operations is set out
below:
2013 2012
GBP'000 GBP'000
Finance income
Bank and other interest
receivable 10 17
Finance costs
Bank overdraft
and loan interest (350) (218)
Finance leases and hire purchase
contracts (17) (22)
Total net
finance cost (357) (223)
------------------------------------ -------- --------
5. Discontinued operations
During the year, the Group disposed of the following business
units within its ElecoBuild division and they are no longer part of
the Group:
SpeedDeck Building Systems sold May 2013
Downer Cladding sold May 2013
Prompt Profiles sold May 2013
Stramit Panel Products sold May 2013
December
Milbury Systems sold 2013
Bell & Webster Concrete - intention December
to appoint Administrator 2013
------------------------------------ ----- ---------
All these businesses have been presented as discontinued
operations in the income statement and the 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 Directors of Bell & Webster Concrete became aware that
the business could not meet its financial obligations and
consequently applied to the court on 20 December 2013 and trading
ceased on 20 December 2013. The Administrator was appointed to the
business on 6 January 2014 and as a result the Directors have
concluded that this business was discontinued on 31 December and
the business assets and liabilities at 31 December have been
presented as assets and liabilities held for sale. The net carrying
value of the assets and liabilities of Bell & Webster Concrete
reported in the Consolidated Balance Sheet is GBPnil.
The results from discontinued operations which have been
included in the income statement are set out below:
2013 2012
GBP'000 GBP'000
-------------------------------- --------- ---------
Revenue 16,144 18,398
Cost of sales (13,154) (13,969)
Gross profit 2,990 4,429
Distribution costs (1,211) (1,894)
Administrative expenses (4,524) (4,060)
Other operating costs (1,279) (1,326)
Loss on re-measurement (1,471) -
Operating loss (5,495) (2,851)
Finance income - 17
Finance cost (264) (274)
Loss before tax (5,759) (3,108)
Taxation on discontinued
operations 26 (37)
Loss after tax on discontinued
operations (5,733) (3,145)
-------------------------------- --------- ---------
The net loss from the disposal of the business units listed
above and included in the income statement are set out below:
2013 2012
GBP'000 GBP'000
--------------------------------- --------- --------
Consideration on disposals 2,710 -
Net assets on disposals (5,570) -
Goodwill on disposal (2,346) -
Other disposal costs (113) -
Loss on business disposals
before tax (5,319) -
Tax on disposal of discontinued
operations - -
Loss on business disposals
after tax (5,319) -
--------------------------------- --------- --------
Loss after tax on discontinued
operations (5,733) (3,145)
--------------------------------- --------
Net Loss for the period from
discontinued operations (11,052) (3,145)
--------------------------------- --------- --------
The consideration on disposals of GBP2,710,000 comprises
GBP274,000 from the sale of the businesses listed above, GBP226,000
from the sale of stock at Milbury and GBP2,210,000 from the
disposal of the freehold property at Grantham in Lincolnshire and
Lydney in Gloucestershire.
The assets and liabilities classified under disposal group in
the balance sheet are set out below:
at 31 December
2013
--------------------------------
Bell
& Webster
Concrete Property Total
GBP'000 GBP'000 GBP'000
------------------------------- ----------- --------- --------
Assets classified as disposal
group
Property, plant and equipment 1,391 765 2,156
Current assets 1,303 - 1,303
Assets classified as disposal
group 2,694 765 3,459
------------------------------- ----------- --------- --------
Liabilities classified as
disposal group
Current liabilities (2,694) - (2,694)
Liabilities classified as
disposal group (2,694) - (2,694)
------------------------------- ----------- --------- --------
Net assets of disposal group - 765 765
------------------------------- ----------- --------- --------
The results from discontinued operations which have been
included in the cash flow statement are set out below:
2013 2012
GBP'000 GBP'000
---------------------- -------- --------
Operating activities (1,620) (5,646)
Investing activities 387 41
Financing activities (69) (544)
Total cash flows (1,302) (6,149)
---------------------- -------- --------
The Yaxley factory in Suffolk is classified as held for sale at
31 December 2013 at its book value of GBP765,000. The expected sale
proceeds are in excess of this value.
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 12
months to 31 December 2012 have been taken from, but do not
constitute, the Company's statutory financial statements for that
financial year.
2. The Company recently agreed terms for new banking facilities
with Barclays Bank plc comprising a GBP3.0m, 4 year term loan and a
GBP2.0m overdraft. The drawdown of these new facilities will be
used to repay borrowings with the Group's current UK bankers.
These new facilities are not yet in effect and one of the
conditions precedent that needs to be satisfied prior to drawdown
is the raising of a minimum of GBP1.5m of equity finance which the
Board are confident will be completed over the next few weeks.
Certain existing and potential new shareholders were contacted
regarding the raising of the equity finance outlined above and most
of them have indicated commitment to support the investment.
In setting the financial covenants under the new facilities with
Barclays, the Directors have negotiated appropriate headroom based
upon the Group's latest forecast. The new funding structure
outlined above shows sufficient headroom over the period of the
overdraft facilities.
Alternatively, if the Board are unable to satisfy the conditions
precedent outlined above, the current banking arrangements are in
place through to 30 April 2015. These arrangements at 31 December
2013 comprised a GBP1.3m term loan and a GBP4.3m overdraft. The
covenants associated with these arrangements require the disposal
of the Group's vacant property in Suffolk and the Board are aware
this transaction is near to exchange.
If the Board are unable to deliver the condition precedent or
the disposal of the vacant property in the time available the Board
will seek further alternative arrangements. The Board are unclear
at this time what these alternative arrangements would be as they
are optimistic they can secure the new banking arrangements with
Barclays.
The Group's activities, together with the factors likely to
affect its future development, performance and position are set out
in the Operating and Financial Review.
The Directors have reviewed the Group's borrowing requirements
for the next 12 months and the financial covenant tests set out in
the current and new banking facilities agreements and expect that
the Group will have adequate resources for the Groups current
requirements. 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 2013,
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 31 December 2012.
4. The calculation of the loss per share is based on the total
loss after tax attributable to ordinary equity shareholders of
GBP10,218,000 (2012: GBP2,747,000) and on 59,761,646 ordinary
shares (2012: 59,761,646), 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
London Capital Club, 15 Abchurch Lane, London EC4N 7BB on 30 June
2014 at 12 noon.
6. The Annual Report and Accounts for the year ended 31 December
2013 will be available to view on the Company's website,
www.eleco.com, from Friday 6(th) June 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UGUBCQUPCGMW
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