TIDMELCO
RNS Number : 4450V
Elecosoft PLC
18 April 2016
18 April 2016
Elecosoft plc
("Elecosoft", the "Company" or the "Group")
Preliminary Results
For the Year Ended 31 December 2015
Elecosoft plc (AIM: ELCO), the AIM-listed construction software
specialist, today announces its audited results for the year ended
31 December 2015.
Financial Highlights
Continuing operations
-- Revenue GBP15.3m (2014 restated: GBP15.2m) of which 48% was
from recurring maintenance and support revenue (2014 restated:
48%)
-- Operating profit up 24% to GBP1.1m (2014 restated: GBP0.9m)
-- Profit before tax up 47% to GBP1.0m (2014 restated: GBP0.7m)
-- EBITDA up 23% to GBP1.8m (2014 restated: GBP1.5m)
-- Free cash flow increased to GBP0.7m (2014: outflow of GBP0.3m)
-- Earnings per share - basic and diluted up 37% to 1.1p (2014 restated: 0.8p)
-- Net borrowings decreased 61% to GBP0.8m (31 December 2014: GBP2.0m)
-- Share capital reduction successfully completed on 1 July 2015
- positive distributable reserves at 31 December 2015
At constant exchange rates
-- Revenue GBP16.6m, up GBP1.4m, 9% (2014: GBP15.2m)
-- Operating profit GBP1.2m, up 29% (2014: GBP0.9m)
-- Profit before tax GBP1.1m, up 54% (2014: GBP0.7m)
-- Sales growth across all product areas and regions at constant exchange rates
Operational Highlights
-- Launched new products including Bidcon, the leading Swedish
project estimating software, into the UK market
-- Won a significant order to supply a US Government department
-- Won 'Project Management/Planning Software 2015' award at the
Construction Computing awards for the second year in a row
-- Investment in overseas markets including set up of own
operation in the US supporting and growing existing reseller
network
-- Disposal of non-core architectural consultancy business in
Sweden to focus on software and related services
-- Board restructuring as outlined in separate announcement released today
Executive Chairman, John Ketteley said:
"I am pleased to report sales growth across all product areas
and regions in 2015 at constant exchange rates and to confirm that
the transformation of Elecosoft into a profitable international
construction software specialist is complete. We now have the
people with the skills, the experience and the flair together with
an appropriate level of financial resources to achieve our
objective of becoming a key provider of leading-edge software
solutions and related services to the international construction,
interior design and to the architectural industries worldwide.
I am pleased to report that 2016 has started encouragingly and
that we expect to deliver significant revenue and profit growth in
line with market expectations"
For further information please
contact:
Elecosoft plc www.elecosoft.com
JHB Ketteley , Executive Chairman Tel: 0207 422 0044
Jason Ruddle, Chief Operating
Officer
Graham Spratling, Group Finance
Director
finnCap Ltd
Adrian Hargrave / Kate Bannatyne Tel: 0207 220 0500
(Corporate Finance)
Malar Velaigam (Corporate Broking)
Redleaf Communications
Rebecca Sanders-Hewett / David Tel: 0207 382 4730
Ison elecosoft@redleafpr.com
/ Susie Hudson
About Elecosoft plc
Elecosoft is listed on the Alternative Investment Market in
London (AIM: ELCO). It is a specialist international provider of
software and related services to the architectural, engineering,
construction and digital marketing industries from centres of
excellence in the UK, Sweden, Germany and the US. Elecosoft's
market leading software solutions are developed by teams in the
United Kingdom, Sweden and Germany; and its software programs cover
project management, construction site management, estimating,
timber engineering, 3D design and visualisation, and cloud based
digital marketing solutions.
For more information, please visit www.elecosoft.com
Chairman's Statement
Elecosoft
I am pleased to report growth across all product areas and
regions in 2015 at constant exchange rates and to confirm that the
transformation of Elecosoft into a profitable international
construction software specialist is complete. We now have the
people with the skills, the experience and the flair together with
an appropriate level of financial resources to achieve our
objective of becoming a key provider of leading-edge software
solutions and related services to the international construction,
interior design and to the architectural industries worldwide.
Financial Performance in 2015
We continued to expand our sales channels and reseller networks
in our markets in 2015 and established a new sales and marketing
team in the United States during the year despite the fact that the
strength of Sterling against the Swedish Krona, the Euro and the US
Dollar for most of 2015 put considerable pressure on Group Revenue.
Nevertheless, in the year under review, as reported, we succeeded
in maintaining Group Revenue in Sterling terms at GBP15.3m,
compared with Group Revenue of GBP15.2m in 2014. Group recurring
maintenance and support revenue was also relatively flat at GBP7.3m
(2014: GBP7.4m).
The adverse impact of the strength of Sterling on Group Revenue
for most of 2015 can be illustrated by the fact that in constant
currency terms, Group Revenue would have been GBP16.6m in 2015
compared with GBP15.2m in 2014, an increase of 9 per cent.
Thus, Operating Profit in 2015 was GBP1.1m, compared with
GBP0.9m in 2014, an increase of 22 per cent; Profit before Tax was
GBP1.0m compared with GBP0.7m in 2014, an increase of 43 per cent;
EBITDA was GBP1.8m compared with GBP1.5m in 2014, an increase of 20
per cent; and Continuing Operations Earnings per share for 2015
were 1.1p compared with 0.8p in 2014, an increase of 37 per
cent.
The negative effect of the strength of Sterling in 2015 was less
severe with regards to Operating Profit, Profit before Tax, EBITDA
and Earnings per share. For example, Operating Profit at constant
currency would have been GBP1.2m compared to GBP1.1m at actual
rates.
Current trading and potential resumption of dividends in
2016
The Board decided not to propose the payment of a dividend in
respect of the year ended 31 December 2015. However, the Board will
continue to monitor the possibility of a resumption of dividends
under review and will consider whether the declaration of a
well-covered dividend in the latter part of 2016 would be
merited.
Current financial position and Banking arrangements with
Barclays Bank
The agreement with Barclays Bank to provide the banking
facilities which enabled the Board of Elecosoft to complete the
successful refinancing of the Group also resulted in much lower
interest costs in the year under review. Continuing operations
interest costs for 2015 were GBP120,000 compared with GBP220,000 in
2014, a reduction which I consider represents an appropriate
reflection of the improvement in Elecosoft's financial position in
the period. Better than anticipated cash flows from trading in the
year under review and the receipt of the proceeds of the divestment
of our Swedish architectural consultancy business provided an
additional boost.
Group net borrowings at 1 January 2015 consisted of net bank
borrowings of GBP1.6m, together with finance leases of GBP0.4m; and
Group net borrowings at 31 December 2015 consisted of net bank
borrowings of GBP0.4m, together with finance leases of GBP0.4m.
Thus we were able to reduce Group net borrowings totalling GBP2.0m
on 1 January 2015, to GBP0.8m on 31 December 2015 and we expect
interest costs to be reduced significantly going forward.
Divestment of our Swedish Consultancy business and Software
Development Collaboration Agreement with Tyrens
The second half of 2015 saw the divestment of our Swedish
architectural consultancy operations to Tyrens, a leading Swedish
international construction consultancy firm. The consideration for
the acquisition was Swedish Krona 11.1m (GBP862,000) in cash. As a
consequence, Elecosoft is now able to concentrate on the
development of its specialist construction software interests,
particularly in Sweden.
Prior to entering into the above negotiations with Tyrens in the
latter part of 2015 we had been collaborating with our Swedish
colleagues on the development of a state-of-the-art environmental
software program for the construction industry. This was regarded
by both parties as a very worthwhile project. Accordingly the
parties concluded that there would be considerable merit in
continuing with our software development collaboration. We have now
entered into a formal collaboration agreement and look forward to
working with Tyrens on new and innovative software projects within
the framework of this agreement.
Software Development, Program Launches and Awards
Software development and maintenance continued to be one of
Elecosoft's largest areas of expenditure in 2015. Of our total
workforce of 178 employees during the year, 41, or 23 per cent, of
our employees are software developers who work in centres of
excellence in the UK, Sweden and Germany. These teams are
responsible for the development of new software programs as well as
the maintenance of our current portfolio of market leading
software. In 2015, Elecosoft's development and maintenance spend
was GBP2.3m, (2014: GBP2.6m) of which GBP665,000 (2014: GBP553,000)
was capitalised as required pursuant to IAS 38. Software assets
amortised in the year amounted to GBP495,000 (2014:
GBP372,000).
For the second year in succession our development team based at
Elecosoft UK must be congratulated on Asta Powerproject(R) project
management software being voted the "Best Project Management and
Planning Software of 2015" by peers at the Construction Industry
Software Awards.,
(MORE TO FOLLOW) Dow Jones Newswires
April 18, 2016 02:00 ET (06:00 GMT)
Our Swedish colleagues also successfully launched Bidcon(R) BIM,
the new BIM estimating software, which will complement Asta
Powerproject BIM and thus become a key element of Elecosoft's 5D
BIM solution. Bidcon has been very well received by the Swedish
estimating software market and has already penetrated the UK and
Norwegian markets.
Our German colleagues also launched Arcon Evo, our new 3D
architectural visualisation program. It is the successor to the
original, highly regarded Arcon Classic program, which had for so
long dominated this sector of the German 3D architectural
visualisation market. We have also entered into a collaboration
agreement with Buildit(R) magazine to market the Arcon Evo program
in conjunction with the Buildit(R) magazine in the spring of 2016
in the UK.
The Board
This year has seen a couple of changes to the Company's Board.
Nick Caw has left the Company to pursue other interests and we
appreciate his significant contribution to the transformation of
Elecosoft since his appointment as CEO in July 2014 and wish him
every success in the future. In addition, it is my pleasure on your
behalf to welcome Jason Ruddle to the Board. He is currently the
Managing Director of Elecosoft UK and has agreed to become Chief
Operating Officer of the Group.
Jason began his career some 30 years ago as an apprentice in the
construction industry; and early in his career gained a reputation
as an individual who was keen to embrace change by embracing
technology. He also enjoys a reputation among his colleagues for
having a sound and common sense approach to business and under his
leadership Elecosoft UK, of which he became Managing Director,
began to travel very well and it is now our most profitable
business. I was therefore delighted when he agreed to join the
Board and we wish him well in his new Group role.
Employees
Elecosoft is a committed people business and when I say
"committed people" I mean all my fellow Elecosoft employees in the
United States, Sweden, Germany, Belgium, the Netherlands and the UK
and thank them for their continuing dedicated contribution to
Elecosoft, year in and year out,
Our employees consist of software developers who strive to
develop the most innovative products and related services for
Elecosoft's customers worldwide; of support coaches who are the
link between our software and our software users; of sales teams
and trainers who continue to service and expand our customer base
and attend to the requirements of our existing customers; of market
and digital specialists who generate new ideas and bring our
products to the attention of the markets we serve; of our
communications experts and "back office" colleagues, who together
administer Elecosoft's finance, legal, communication and accounting
functions and maintain the fabric of Elecosoft's corporate
structure; and finally of my colleagues on the Board. These are the
people that make Elecosoft tick, and I would like to thank them on
your behalf for what they all do for your Company.
Outlook
Elecosoft has now established itself as an international
provider of market leading software applications for 5D BIM project
management, estimation, 3D architectural visualisation, visual
business systems, engineering software, and cloud based solutions.
Although our software and related services are aimed principally at
the international construction industry market, we also develop
market leading software for digital marketing and architectural
applications. Elecosoft has a major presence in the markets it
serves; it is financially sound; and above all has outstanding
teams of highly dedicated, talented, and creative developers backed
by a strong management team. For these reasons, I have every
confidence in the future of Elecosoft as we move forward. I am
pleased to report that 2016 has started encouragingly and that we
expect to deliver significant revenue and profit growth in line
with market expectations
John Ketteley
Executive Chairman
15 April 2016
Operating Review
As a management team we have a number of medium-term objectives
which include moving to become a genuinely integrated business,
achieving predictable growth in both revenue and profit ahead of
the wider software market, financial stability and being recognised
as a creator of innovative solutions. With our legacy business
largely behind us, 2015 allowed us to concentrate solely on our
future as a software business and on making progress towards these
objectives. There were of course challenges but I believe the
progress made in the year has set us well for another solid
performance in 2016.
An integrated business
Historically, due to our structure, we had made limited efforts
to integrate our businesses - something we addressed in 2015. As
our customers are increasingly seeing the benefit of integrating
offerings and owning a range of complementary, marketing-leading
solutions it was a logical step to consolidate our branding. We
changed the majority of our Operating Company and our plc to
Elecosoft - reflecting both our long heritage (Eleco) and our
future focus (Software). From early 2016, we now trade in all
markets bar Germany under the Elecosoft banner. This is part of a
wider marketing restructure covering all major areas including
product branding, websites and collateral. That work continues and
we hope will be largely completed in 2016.
We brought disparate teams together, most notably our developer
community to meet and talk regularly, to a structured agenda for
the first time. This has already led us to work collectively in a
number of areas including planning a common licensing platform,
integrated product roadmap, sharing of resource for problem solving
and a move towards a standard User Interface Design across our
platform.
Predictable growth in revenue and profits, ahead of industry
averages market
2015 was the first time as a software-only business that we gave
external guidance to the market on our performance. Taking into
account currency we were in-line on revenue and ahead on PBT. In
part this was due to improvements made to our reporting and
planning activities. Our business model is based on growing revenue
and profitability in tandem which we achieved in the year under
review. Resource investment in 2015 (and budgeted for 2016) was
predominately in sales and marketing roles and, in the main, hiring
for new positions such as dedicated UK Bidcon, US channel resource
and French Staircon sales staff.
Delivering Innovation
2015 saw the launch of two significant releases of our BIM tool,
a 3D viewer for our project scheduling tool (Asta Powerproject) and
estimating (Bidcon). That the tool is designed to link to our
Estimation tool has also helped us differentiate by bringing our
two core products together to deliver a unique 5D BIM. Our ability
to be agile and accommodating to customer specific requirements
also helps set us apart from competitors who lack this flexibility
due to their size or structure.
The complete rewrite of our main estimating solution, Bidcon
gave us the opportunity to sell meaningfully in markets outside of
Sweden for the first time. Despite competition from
well-established local providers we were able to win customers in
these new markets due to the technical strength of the offering.
This was a significant milestone, validating the rewrite and
underscoring the quality of the original Swedish-based
approach.
The anticipated release of a new version of our CAD solution,
Arcon Evo, also highlighted the benefit of our Research and
Development (R&D) programme, with a significant increase in
maintenance contracts reflecting customer confidence in the future
development path of the products
Brands
Project management
Our project management solution (Asta Powerproject) remains in
great health and was the engine of our growth again in 2015. Our
commitment to the US coincided with our largest license deal of the
year, through a reseller to a US state department of transport
which was strong validation of what great resellers can do in
assisting with the scaling of our business. We also had a record
turnout for our UK National User Forum in the Autumn.
Our Swedish based businesses had a mixed year - a stable
domestic performance in Bidcon and Statcon was not matched
internationally and we also faced challenges in our growing
Staircon businesses. Considerable progress was made in the year to
address the issues as part of a wider restructuring of our Swedish
businesses.
Visualisation
We continued to see a strong performance from our Flooring
visualisation business (ESIGN) and solid German domestic activity
by Arcon. Growth was slower overall in our Arcon Evo business due
to issues with our international reseller activity but work is
underway to address this.
Territories
With the backdrop of a buoyant UK construction market, we saw
another strong year of growth in this market in our core offerings.
We introduced two significant new offerings across our BIM and
Bidcon solutions and saw increased interest in both product areas
through the year that have carried into 2016.
As reported in our 2014 accounts, in Sweden we undertook a
complete overhaul of our business, including installing an entirely
new management team and a complete reorganisation of our
operations. This included the disposals of our non-core consulting
business to Tyrens AB, a consolidation of development teams, and
restructuring of our sales teams. We believe this makes us more
streamlined and better places us for an improved financial
performance in 2016.
We expanded our direct investment in three key markets - the US,
the Netherlands and Germany. The focus in the first two will
initially be on Asta Powerproject but will expand beyond this as we
become more established in these markets in 2016. The timing and
size of our largest US win has helped create the momentum we needed
to gain credibility in the market and saw underlying sales grow by
55% even with that deal excluded.
Operations
(MORE TO FOLLOW) Dow Jones Newswires
April 18, 2016 02:00 ET (06:00 GMT)
One of our biggest challenges in 2015, as with 2014 was the
impact of currency and consequently our activity in mainland Europe
was adversely impacted by the strengthening of Sterling. We made
improvements to our day to day reporting and enhanced our budgeting
process - all aimed at providing a more cohesive, standardised
operating model across the Group.
Outlook
Elecosoft's long-term goal remains to be a leading provider of
integrated software solutions to the global architectural,
engineering and construction ("AEC") industry. We made good
progress towards this goal in 2015, in 2016 we will focus
predominately in growing in the markets we are already committed
to.
John Ketteley
Executive Chairman
15 April 2016
Financial Review
Earnings per share*
1.1p
2014: 0.8p
+38%
------------------------
* continuing operations
basic EPS.
The execution of the Group's strategy to grow its market share
in existing and new markets during the year had a positive impact
on the scale and growth rate of the Group's operations and
financial performance. Exchange rate movements in the Group's core
trading currencies during the year had an adverse impact but the
Group enjoyed strong underlying sales growth.
Revenue
Continuing operations revenue for the year increased 1% to
GBP15.3m.This increase was adversely impacted by the strength of
Sterling against the Swedish Krona and Euro which account for over
50% of the Group's sales. On a constant currency basis revenue
would have been GBP16.6m which represents a growth of 9%.
The Group continues to enjoy high levels of recurring revenue
from maintenance and support with the balance of the revenue coming
from services and licence sales. The level of deferred income at
the balance sheet date, which is a measure of future maintenance
revenue, increased from GBP3.4m to GBP3.7m during the year
representing a growth rate of over 7%.
Revenue through resellers grew 44% in the year to GBP1.0m and is
key growth area moving into 2016. The revenue mix has changed since
the disposal of the Swedish architectural consultancy business
during the year with a reduced contribution from lower margin
services income. The mix is now at: Licences 30% (2014: 24%),
Maintenance 48% (2014: 45%) and Services 22% (2014: 31%)
The geographic performance of the Group was mixed with strong
sales growth in the UK up 13% to GBP4.9m (2014: GBP4.3m) and the
Rest of World up 100% to GBP0.8m (2014: GBP0.4m). These upsides
were partly offset by weaker sales across the Rest of Europe due to
the currency headwinds referred to above. On a constant currency
basis revenue grew in both Scandinavia and Germany by 2% and 4%
respectively.
Gross profit
Gross profit is revenue less the direct cost of providing
products and services to customers, principally the costs of
training and consultancy staff. In 2015 the gross profit margin
improved slightly from 88% to 89% due to a changed mix of Licences,
Maintenance and Services revenue.
Overheads
Selling and administrative expenses were broadly flat at
GBP12.4m after amortisation of intangible assets of GBP0.5m (2014:
GBP0.4m) as the Group continued its tight control on overheads. The
average number of employees during the year was 178 (2014:
170).
Software product development expenses amounted to GBP2.3m for
the year (2014: GBP2.6m) of which GBP0.7m (2014: GBP0.6m) was
capitalised. The projects which met the requirements of the
accounting policy for capitalisation and were therefore capitalised
in the year relate to the following products: Arcon Evo, BIM APP
v2, BIM APP v3 and Bidcon.net. The carrying value of these software
assets together with the carrying value of software assets
capitalised in previous periods was reviewed for impairment at the
balance sheet date and no impairment was required.
Net borrowings
GBP803,000
2014: GBP2.0m
-61%
---------------
Profit
Continuing operations operating profit was GBP1.1m (2014:
GBP0.9m) a growth of 24% over the prior period. Profit before tax
was GBP1.0m, up GBP0.3m, over 46% compared to the prior period.
Taxation cost was GBP0.2m in the period (2014: GBP0.2m)
representing 20% of profit before tax. (2014: 25%)
Balance Sheet and Cash Flow
Shareholder's equity increased to GBP7.9m, up GBP1.2m, 17% at 31
December compared to 2014. Net borrowings, including finance
leases, were significantly lower at GBP0.8m compared to GBP2.0m in
the prior period. This improvement was driven by strong free cash
flow and business disposal proceeds and resulted in a significant
drop in gearing from 30% at 1 January 2015 to 10% at 31
December.
Trade and other receivables decreased to GBP2.9m (2014: GBP3.1m)
partly due to the business disposal during the year. This
represented 48 days sales outstanding compared to 49 for the prior
period. Trade and other payables decreased to GBP1.3m (2014:
GBP1.6m) and accruals were lower at GBP1.4m (2014: GBP1.7m).
Cash generated from operations amounted to GBP1.6m in the year,
compared to a cash outflow of GBP0.4m in the prior period. Free
cash flow increased to GBP0.7m compared to a cash outflow of
GBP0.3m in the prior period.
The table below summarises the cash flow performance in the
year.
2015 2014
GBP'000 GBP'000
Cash generated/(used) in
operations 1,640 (353)
Net capital (expenditure)/proceeds (645) 392
Net interest paid (152) (237)
Income tax paid (127) (94)
Free cash flow 716 (292)
Acquisitions and disposals 726 448
Loan (repayments)/proceeds (1,091) 1,487
Finance lease repayments (251) (283)
Issue of share
capital - 2,948
Net cash inflow 100 4,308
Exchange difference (15) (97)
Net increase in cash and cash
equivalents 85 4,211
---------------------------------------- -------- --------
Capital and financing
The UK banking facilities are with Barclays Bank plc and the
Group facilities comprise the following:
-- a term loan of GBP3.0m, with 16 quarterly loan repayments of
GBP187,500 commencing from October 2014, carrying an interest rate
of 3.25% over base rate; and
-- a GBP1.0m overdraft facility, carrying an interest rate of
2.75% over base rate
Security provided to the bank for the provision of these
facilities is a cross guarantee and debenture between the parent
company and certain UK subsidiary companies and a commitment of the
shares of the operating companies.
Covenants have been made to the bank in respect of three
elements: EBITA to gross financing costs, net borrowings to EBITDA
and cash flow to debt service. These covenants are tested
quarterly.
A share capital reduction was completed on 1 July 2015 and
consequently the share capital, share premium and other reserve
accounts have been adjusted in both the Group and Company Balance
Sheets.
Business disposal / Discontinued operations
The Group disposed of its non-core architectural consultancy
business in Sweden in December 2015 for a total consideration of
GBP862,000 (Swedish Krona 11,075,000). The profit before tax on
disposal of this business, net of related purchased goodwill, was
GBP468,000. Consequently the trading results of this operation for
the period up to the disposal date have been presented under
discontinued operations and the prior period has been restated
accordingly.
Earnings per share and dividends
The basic earnings per share on continuing operations is 1.1p
(2014: 0.8p).The basic earnings per share on total operations is
1.6p (2014: loss 0.2p before discontinued exceptional items).
The successful completion of the share capital reduction and
improved trading performance during the year will give the Board
the opportunity to consider and recommend dividends in the
foreseeable future. At present the Board has not recommended the
payment of a dividend in respect of the year ended 31 December
2015.
Graham Spratling
Group Finance Director
15 April 2016
Consolidated Income Statement
For the year ended 31 December 2015
2014
2015 (restated)
Notes GBP'000 GBP'000
------------------------------------ ------ --------- -----------
Continuing operations
Revenue 1,2 15,260 15,172
Cost of sales (1,688) (1,858)
Gross profit 13,572 13,314
Operating expenses before amortisation
of intangible assets and exceptionals (11,951) (11,898)
Amortisation of intangible
assets (495) (372)
Exceptional items 3 - (138)
------------------------------------- ------ --------- -----------
Selling and administrative
expenses (12,446) (12,408)
Operating profit 2,4 1,126 906
Finance income 6 1 3
Finance cost 6 (121) (223)
Profit before tax 1,006 686
Tax 7 (204) (173)
Profit for the financial
period from continuing operations 802 513
Profit for the financial
period from discontinued
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operations 8 360 5,554
Profit for the financial
period 1,162 6,067
-------------------------------------- ------ --------- -----------
Attributable to:
Equity holders of the parent 1,162 6,067
-------------------------------------- ------ --------- -----------
Earnings per share - basic
-------------------------------------- ------ --------- -----------
Continuing operations 9 1.1 p 0.8 p
Discontinued operations 9 0.5 p 8.3 p
Total operations 9 1.6 p 9.1 p
------------------------------------- ------ --------- -----------
Earnings per share - diluted
-------------------------------------- ------ --------- -----------
Continuing operations 9 1.1 p 0.8 p
Discontinued operations 9 0.5 p 8.3 p
Total operations 9 1.6 p 9.1 p
------------------------------------- ------ --------- -----------
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2015
2015 2014
GBP'000 GBP'000
----------------------------------- -------- --------
Profit for
the period 1,162 6,067
Other comprehensive
income:
Items that will be reclassified
subsequently to profit and loss:
Translation differences
on foreign operations (11) 60
Other comprehensive income
net of tax (11) 60
Total comprehensive income
for the period 1,151 6,127
-------------------------------------- -------- --------
Attributable
to:
Equity holders
of the parent 1,151 6,127
------------------------------------- -------- --------
Consolidated Statement of Changes in Equity
For the year 31 December 2015
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 2015 7,487 7,923 4,086 (161) (358) (12,255) 6,722
Share-based payments - - - - 20 - 20
Capitalisation of
merger reserve 4,086 - (4,086) - - - -
Capital reduction (10,824) (7,923) - - - 18,747 -
Transactions with
owners (6,738) (7,923) (4,086) - 20 18,747 20
------------------------ --------- --------- --------- ------------ --------- ---------- --------
Profit for the period - - - - - 1,162 1,162
Other comprehensive
income:
Exchange differences
on translation of
net investments in
foreign operations - - - (11) - - (11)
Total comprehensive
income for the period - - - (11) - 1,162 1,151
--------- --------- --------- ------------ --------- ---------- --------
At 31 December 2015 749 - - (172) (338) 7,654 7,893
========= ========= ========= ============ ========= ========== ========
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 2014 6,066 6,396 4,086 (221) (358) (18,322) (2,353)
Issue of share capital 1,421 1,527 - - - - 2,948
Transactions with
owners 1,421 1,527 - - - - 2,948
--------- --------- --------- ------------ --------- ---------- --------
Profit for the period - - - - - 6,067 6,067
Other comprehensive
income:
Exchange differences
on translation of
net investments in
foreign operations - - - 60 - - 60
Total comprehensive
income for the period - - - 60 - 6,067 6,127
--------- --------- --------- ------------ --------- ---------- --------
At 31 December 2014 7,487 7,923 4,086 (161) (358) (12,255) 6,722
========= ========= ========= ============ ========= ========== ========
Consolidated Balance Sheet
At 31 December 2015
2015 2014
GBP'000 GBP'000
----------------------------- -------- ---------
Non-current
assets
Goodwill 10,152 10,571
Other intangible
assets 1,910 1,683
Property, plant
and equipment 503 575
Total non-current
assets 12,565 12,829
------------------------------- -------- ---------
Current assets
Inventories 9 8
Trade and other
receivables 2,871 3,110
Current tax
assets 173 148
Cash and cash equivalents 1,957 1,198
Total current
assets 5,010 4,464
------------------------------ -------- ---------
Total assets 17,575 17,293
------------------------------ -------- ---------
Current liabilities
Bank overdraft (674) -
Borrowings (750) (750)
Obligations under
finance leases (139) (141)
Trade and other
payables (1,255) (1,586)
Provisions (203) (142)
Current tax
liabilities (2) -
Accruals and deferred
income (5,068) (5,189)
Total current
liabilities (8,091) (7,808)
------------------------------ -------- ---------
Non-current
liabilities
Borrowings (972) (2,063)
Obligations under
finance leases (225) (279)
Deferred tax
liabilities (242) (162)
Non-current
provisions (139) (220)
Other non-current
liabilities (13) (39)
Total non-current
liabilities (1,591) (2,763)
------------------------------- -------- ---------
Total liabilities (9,682) (10,571)
------------------------------ -------- ---------
Net assets 7,893 6,722
=================================== ======== =========
Equity
Share capital 749 7,487
Share premium
account - 7,923
Merger reserve - 4,086
Translation
reserve (172) (161)
Other reserve (338) (358)
Retained earnings 7,654 (12,255)
Equity attributable to
shareholders of the parent 7,893 6,722
================================ ======== =========
Consolidated Statement of Cash Flows
for the year ended 31 December 2015
2015 2014
GBP'000 GBP'000
------------------------------------ -------- --------
Cash flows from operating
activities
Profit before tax (including
discontinued operations) 881 7,788
Net finance
costs 123 228
Depreciation
charge 174 198
Amortisation
charge 495 397
Profit on sale of property,
plant and equipment (18) (109)
Share-based
payments charge 20 -
Retirement benefit
obligation - derecognition - (7,738)
Decrease in
provisions (20) (618)
Cash generated in operations
before working capital movements 1,655 146
Decrease/(increase) in trade
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and other receivables 349 (155)
(Increase)/decrease in inventories
and work in progress (1) 8
Decrease in trade and
other payables (363) (244)
Net increase in discontinued
operations working capital - (108)
Cash generated/(used)
in operations 1,640 (353)
Interest
paid (153) (240)
Interest received 1 3
Income tax paid (127) (94)
Net cash inflow/(outflow)
from operating activities 1,361 (684)
--------------------------------------- -------- --------
Investing activities
Purchase of
intangible assets (754) (637)
Purchase of property,
plant and equipment (58) (85)
Acquisition of subsidiary
undertakings net of
cash acquired (28) (26)
Proceeds from sale
of property, plant,
equipment and intangible
assets 167 1,114
Sale of business net
of expenses 754 474
Net cash inflow from
investing activities 81 840
-------------------------------------- -------- --------
Financing activities
Proceeds from
new bank loan - 3,000
Repayment of
bank loans (1,091) (1,513)
Repayments of obligations
under finance leases (251) (283)
Issue of share
capital - 2,948
Net cash (outflow)/inflow
from financing activities (1,342) 4,152
--------------------------------------- -------- --------
Net increase in cash
and cash equivalents 100 4,308
-------------------------------------- -------- --------
Cash and cash equivalents
at beginning of period 1,198 (3,013)
Effects of changes
in foreign exchange
rates (15) (97)
Cash and cash equivalents
at end of period 1,283 1,198
-------------------------------------- -------- --------
Cash and cash equivalents
comprise:
Cash and short-term
deposits 1,957 1,198
Bank overdrafts (674) -
1,283 1,198
------------------------------------ -------- --------
Extract from Notes to the Consolidated Financial Statements
1. Revenue
Revenue from continuing operations disclosed in the income
statement is analysed as follows:
2015 2014
GBP'000 GBP'000
Licence
sales 4,536 4,008
Recurring maintenance
and support revenue 7,278 7,351
Services
income 3,446 3,813
Total revenue 15,260 15,172
------------------------ -------- --------
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 review the
three revenue streams but as the costs are not recorded in the same
way the information is presented as one segment and as such the
information is presented in line with management information.
2015 2014
Software Software
GBP'000 GBP'000
Revenue 15,260 15,172
--------------------------------- --------- ---------
Adjusted operating
profit 3,930 3,999
Depreciation charge (174) (187)
Product development
costs (1,640) (2,024)
Operating profit before
exceptionals and amortisation 1,621 1,416
Amortisation of
intangible assets (495) (372)
Exceptional items - (138)
Operating profit 1,126 906
Net finance cost (120) (220)
Segment profit
before tax 1,006 686
Tax (204) (173)
---------------------------------
Segment profit
after tax 802 513
================================= ========= =========
Development costs
capitalised (665) (553)
Total development
costs (2,305) (2,577)
================================= ========= =========
Operating profit 1,126 906
Amortisation of
intangible assets 495 372
Depreciation charge 174 187
EBITDA 1,795 1,465
================================= ========= =========
2015 2014
Software Software
GBP'000 GBP'000
Group assets and
liabilities
Segment assets 17,575 17,293
Unallocated assets - -
Total Group assets 17,575 17,293
-------------------------- --------- ---------
Segment liabilities 9,682 10,571
Unallocated liabilities - -
Total Group liabilities 9,682 10,571
-------------------------- --------- ---------
Geographical, Product and sales channel 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:
2015 2014
GBP'000 GBP'000
UK 4,857 4,291
Scandinavia 5,950 6,605
Germany 2,308 2,447
Rest of
Europe 1,359 1,404
Rest of
World 786 425
15,260 15,172
------------- -------- --------
Rest of World includes revenue from customers in the USA of
GBP571,000 (2014: GBP163,000)
Revenue by product group represents continuing operations
revenue from external customers.
Revenue by product group is as follows:
2015 2014
GBP'000 GBP'000
Project management 7,493 6,779
Site management 396 398
Estimating 2,557 2,885
Engineering 2,373 2,533
CAD/Design 1,001 1,036
Visualisation 1,440 1,541
15,260 15,172
-------------------- -------- --------
The Group utilises resellers to access certain markets.. Revenue
by sales channel represents continuing operations revenue from
external customers.
Revenue by sales channel is as follows:
2015 2014
GBP'000 GBP'000
Direct 14,236 14,462
Reseller 1,024 710
15,260 15,172
---------- -------- --------
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:
2015 2014
GBP'000 GBP'000
UK 7,130 6,780
Scandinavia 4,350 4,902
Germany 1,040 1,147
Rest of
Europe 44 -
Rest of
World 1 -
12,565 12,829
------------- -------- --------
Information about major customers
Revenues arising from sales to the Group's largest customer were
below the reporting threshold of 10% of Group revenue (2014: Below
10% reporting threshold).
3. Exceptional items
Exceptional items represent income and costs considered
necessary to be separately disclosed by virtue of their size or
nature:
2015 2014
GBP'000 GBP'000
Restructuring
costs - (113)
Capital reduction
expenses - (25)
- (138)
----------------------------- --------
4. Operating profit
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The continuing operations operating profit for the period is
stated after charging/(crediting) the following items.
2015 2014
GBP'000 GBP'000
Software product
development 1,640 2,024
Depreciation of property,
plant and equipment 174 187
Amortisation of intangible
assets acquired 380 360
Amortisation of capitalised
development costs 115 12
Profit on disposal of property,
plant and equipment (18) (17)
Foreign exchange
losses 85 58
Fees payable to the
Company's auditor for:
The audit of the parent company
and consolidated financial statements 35 47
Fees payable to the Company's auditor
and its associates for other services:
The audit of the Company's
subsidiaries 32 47
Other services 22 8
Operating lease
rentals:
Plant, equipment
and vehicles 47 144
Properties 359 247
Non-recurring
items:
Directors termination
payment 11 100
5. Employee information
The average number of employees during the period, including
Directors, in continuing operations was made up as follows:
2015 2014
number number
Sales and
marketing 57 50
Client services 52 50
Software development 41 42
Management and
administration 28 28
178 170
---------------------- ------- -------
Staff costs during the period, including Directors, in
continuing operations amounted to:
2015 2014
GBP'000 GBP'000
Wages and
salaries 6,279 6,546
Social security 1,255 1,381
Pension
costs 379 370
Share-based payments 20 -
7,933 8,297
Less: Development
staff costs capitalised (665) (553)
-----------------------------
7,268 7,744
-------------------------- -------- --------
Pension costs relate to contributions to defined contribution
pension schemes. Development staff costs are charged to projects
and capitalised if those projects meet the criteria for
capitalisation.
The remuneration of the Directors, who are the key management
personnel of the Group, is set out below:
2015 2014
GBP'000 GBP'000
Short-term employee
benefits 643 647
Post-employment
benefits 22 23
Termination
benefits 11 100
Share based payments 20 -
Executive
Directors 696 770
Fees - non-executive
Directors 90 61
------------------------ --------
786 831
---------------------- -------- --------
The emoluments of the highest paid Director were GBP361,000
(2014: GBP382,000). Employers NIC payments in respect of the
Directors remuneration was GBP95,000 (2014: GBP83,000)
The remuneration of the non-executive Directors is determined by
the Board. The non-executive Directors do not have service
contracts but are appointed for an initial term of three years,
which may thereafter be renewed from year to year. They do not
participate in any of the Group's share based incentive or pension
schemes.
6. Net finance income/cost)
Finance income and costs from continuing operations is set out
below:
2015 2014
GBP'000 GBP'000
Finance income:
Bank and other interest
receivable 1 3
Finance costs:
Bank overdraft
and loan interest (107) (209)
Finance leases and hire purchase
contracts (14) (14)
Total net
finance cost (120) (220)
------------------------------------ -------- --------
7. Taxation
(a) Tax on profit on ordinary activities
The tax charge in the income statement from continuing
operations is as follows:
2015 2014
GBP'000 GBP'000
Current
tax:
UK corporation tax
on profits of the
year 2 -
2 -
Foreign
tax 121 153
Total current
tax 123 153
----------------------------- -------- --------
Deferred
tax:
Origination and reversal
of temporary differences 74 20
Tax adjustments in respect
of previous years 7 -
Total deferred
tax 81 20
----------------------------- -------- --------
Tax charge in the
income statement 204 173
------------------------------- -------- --------
Income tax for the UK has been calculated at the standard rate
of UK corporation tax of 20.25% effective from 1 April 2015 (2014:
21.49%) on the estimated assessable profit for the period. Taxation
for foreign companies is calculated at the rates prevailing in the
relevant jurisdictions.
(b) Reconciliation of continuing operations tax charge
The tax assessed on continuing operations accounting profit
before income tax for the year is the same as the standard rate of
UK corporation tax of 20.25% for the period under review. The
reconciliation is explained below:
2015 2014
GBP'000 GBP'000
Profit on continuing
operations before tax 1,006 686
------------------------------------- -------- --------
Tax calculated at the average
standard rate of UK corporation
tax of 20.25% (2014: 21.49%)
applied to profits before tax 204 147
Effects
of:
Expenses not deductible
for tax purposes 46 73
Research & development
tax relief (94) (81)
Group relief/losses
surrendered not paid 4 (13)
Non taxable statutory
compensation (15) -
Deferred tax not
recognised 39 31
Share option deduction 4 -
Prior year adjustments 7 -
Utilisation
of losses (17) -
Tax rate differences
in foreign jurisdictions 24 12
Other differences 2 4
Continuing operations tax
charge for the year 204 173
-------------------------------------- -------- --------
(c) Unrecognised tax losses
The Group has tax losses of GBP762,000 (2014: GBP828,000)
arising at one of its operations in Germany for which no deferred
tax asset has been recognised and tax losses of GBP1,874,000 (2014:
GBP2,127,000) arising in the UK. Deferred tax un-provided in
respect of losses in UK subsidiaries is GBP390,000 (2014:
GBP440,000). No deferred tax is recognised on the unremitted
earnings of overseas subsidiaries.
8. Discontinued operations
The trading results and profit on the disposal of the Swedish
architectural consultancy business net of costs of disposal in the
twelve months to 31 December 2015 are reported under discontinued
operations.
The results from discontinued operations which have been
included in the income statement are set out below:
2015 2014
GBP'000 GBP'000
------------------------------------ -------- --------
Revenue 1,400 1,312
Cost of sales (717) (657)
Gross profit 683 655
Administrative expenses (685) (1,024)
Other operating costs (120) (259)
Operating loss before exceptionals (122) (628)
Exceptionals - 7,738
Operating (loss)/profit (122) 7,110
Finance cost (3) (8)
(Loss)/profit before tax (125) 7,102
Taxation on discontinued
operations 22 (1,548)
(Loss)/profit for the period
from discontinued operations
before disposals (103) 5,554
------------------------------------ -------- --------
Profit on disposals after
tax 463 -
Profit for the period from
discontinued operations 360 5,554
------------------------------------ -------- --------
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The net profit from the disposal of the Swedish architectural
consultancy business sold during the year and included in the
income statement are set out below:
2015 2014
GBP'000 GBP'000
-------------------------------- -------- --------
Consideration on disposal 862 -
Net liabilities on disposal 17 -
Goodwill on disposal (395) -
Other disposal costs (21) -
Profit on disposal before
tax 463 -
Tax on disposal of discontinued
operations - -
Profit on disposal after
tax 463 -
-------------------------------- -------- --------
The cash consideration received on the disposal of the Swedish
architectural consultancy business before liabilities transferred
and expenses was GBP862,000. The net cash proceeds on the disposal
after liabilities transferred and expenses was GBP754,000.
The results from discontinued operations which have been
included in the cash flow statement are set out below:
2015 2014
GBP'000 GBP'000
---------------------- -------- --------
Operating activities 92 (1,250)
Investing activities 54 960
Financing activities (124) (11)
Total cash flows 22 (301)
---------------------- -------- --------
9. Basic and diluted earnings per share
The calculation of the basic and diluted earnings per ordinary
share from continuing operations and discontinued operations is
based on the data below:
2015 2014
-------------------------------------- ------------- -------------
Continuing operations GBP802,000 GBP513,000
Discontinued operations before
exceptionals GBP360,000 GBP(636,000)
Discontinued operations exceptionals GBP0 GBP6,190,000
Discontinued operations GBP360,000 GBP5,554,000
-------------------------------------- ------------- -------------
Total profit after taxation GBP1,162,000 GBP6,067,000
-------------------------------------- ------------- -------------
Basic weighted average number
of shares 73,970,534 66,610,703
Dilutive effect of share
options 882,000 -
Diluted weighted average
number of shares 74,852,534 66,610,703
-------------------------------------- ------------- -------------
Basic earnings per ordinary share is calculated from continuing
operations profit after tax attributable to ordinary equity
shareholders of the Company and the weighted average number of
shares in issue for the reporting period. The basic earnings per
share from discontinued operations is based on the discontinued
operations profit before exceptional items after tax attributable
to ordinary equity shareholders of the Company and the weighted
average number of shares in issue for the reporting period.
Basic earnings/(loss) per
share 2015 2014
Continuing operations 1.1 p 0.8 p
Discontinued operations before
exceptionals 0.5 p (1.0) p
Discontinued operations exceptionals - p 9.3 p
-------------------------------------- ----- ------
Discontinued operations 0.5 p 8.3 p
-------------------------------------- ----- ------
Total operations 1.6 p 9.1 p
-------------------------------------- ----- ------
Dilutive earnings per ordinary share is calculated by adjusting
the weighted average number of shares in issue for the reporting
period to include the assumed conversion of the dilutive share
options outstanding at 31 December 2015.
Diluted earnings/(loss) per
share 2015 2014
Continuing operations 1.1 p 0.8 p
Discontinued operations before
exceptionals 0.5 p (1.0) p
Discontinued operations exceptionals - p 9.3 p
-------------------------------------- ----- ------
Discontinued operations 0.5 p 8.3 p
-------------------------------------- ----- ------
Total operations 1.6 p 9.1 p
-------------------------------------- ----- ------
Shares held by the Employee Share Ownership Trust are excluded
from the weighted average number of shares in the period.
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 2014 have been taken from, but do not
constitute, the Company's statutory financial statements for that
financial year.
2. The Group's activities, together with the factors likely to
affect its future development, performance and position are set out
in the Operating Review and Financial Review.
The Groups' clients include many top contractors in the building
and construction sector in the UK, Sweden, Germany, Benelux and the
United States. The software products provided by the Group are
reasonably embedded in their client's core operations and 48% (2014
restated: 48%) of the Group's revenue is from recurring revenue
contracts. These maintenance contracts are renewed throughout the
year although there is a slightly greater weighting in the fourth
quarter. For these reasons, the Group has good visibility on any
potential deterioration in its trading outlook and potential risk
to the business.
Historically, there is a low level of maintenance cancellations
each year and the Board closely monitors clients that are
potentially at risk of cancellation as well as the pipeline of new
business.
The Group has both cash and undrawn credit facilities available
to support its business operations and therefore the Board believes
that the Group is well-positioned to manage the business risks.
Revenue, operating profit and cash flow budgets have been prepared
at business unit level and as a result, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operation for the foreseeable future. Accordingly, the
Group continues to adopt the going concern basis in preparing its
consolidated financial statements
3. The information herein has been prepared on the basis of the
accounting policies adopted for the year ended 31 December 2015,
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 2014.
4. The Annual General Meeting of Elecosoft plc will be held at
Founders' Hall, 1 Cloth Fair, London EC1A 7HT on 26 May 2016 at 12
noon.
5. The Annual Report and Accounts for the year ended 31 December
2015 will be sent to shareholders by 29 April 2016 and will be
available to view on the Company's website, www.elecosoft.com, from
that date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKODQBBKDBQD
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