RNS No 2908k
ELECO HOLDINGS PLC
12th March 1998
Eleco Holdings plc
Interim Results
for the six months to
31 December 1997
Highlights
* Turnover on continuing operations up 11.7% to #11.8m
(1996: #10.1m)
* Operating profit #428,000 (1996: operating loss
#1,219,000)
* Loss before tax of #573,000, after exceptional
restructuring costs of #770,000, (1996: loss of
#1,556,000 after restructuring costs of #116,000)
* Continuing businesses achieved operating profit of
#504,000 (1996: operating loss #486,000)
* Davis International sold for #2,100,000: Tergor
Electronics acquired for #338,000 plus #348,000 invested
in increased capacity
* Reduction in net debt from #4,955,000 to #3,015,000
John Ketteley, Executive Chairman, commented:
"The Group has continued to make good progress in its
recovery in the first half year and we remain positive
regarding the outlook for the remainder of the year".
For further information contact:
John Ketteley
Executive Chairman
Eleco Holdings plc 01992 440 311
David Dannhauser
Finance Director
Eleco Holdings plc 01992 440 311
David Millham
Millham Communications 0171 256 5756
CHAIRMAN'S STATEMENT
I am pleased to report that in the six months ended 31
December 1997, we have made good progress in returning the
Group to profit and restoring it to a sound financial
condition. The continuing businesses have been profitable
at both the operating and pre-tax level and, following the
sale of the loss making Davis International business, the
realisation of a number of unproductive assets and the
elimination of certain residual long term liabilities, net
debt was reduced in the period under review from #4,955,000
to #3,015,000, reflecting a reduction in gearing from 82%
to 59%. I am particularly encouraged that this reduction
in net debt was achieved despite #686,000 in aggregate
being invested in fixed assets to increase capacity in the
continuing business (#348,000) and the acquisition of
Tergor Electronics Limited (#338,000), the first
acquisition made by the Eleco Group since 1992.
The improvement in the Group's trading performance in the
last six months resulted in a total operating profit of
#428,000 which compares with an operating loss of
#1,219,000 for the corresponding period last year. The
continuing businesses produced operating profits of
#504,000 compared with an operating loss of #486,000 for
those businesses in the corresponding period last year
After exceptional costs arising from our restructuring
programme of #770,000 (1996: #116,000) and net interest
payable of #231,000 (1996: #221,000) the loss on ordinary
activities after tax for the period was #573,000 compared
with a loss of #1,697,000 for the corresponding period last
year. The benefit of the reduction in financing costs
which will arise principally as a result of the disposal of
the loss making Davis International business in December
will not begin to impact until the second half of the year.
The Directors have not declared an Interim Dividend. It
remains, however, an objective of the Board to resume the
payment of dividends as soon as the sustained improvement
in the Group's trading position makes it prudent to do so.
Restructuring Programme
The restructuring programme, which was embarked on in
February 1997, is now largely completed. The actions taken
in the period under review resulted in a further #770,000
of exceptional charges to the profit and loss account but
the Group is now in a much healthier financial position as
a consequence. The principal transaction was the disposal
of Davis International which had sustained in excess of
#6million of operating losses during the last five years.
Further progress was also made in eliminating our long
leasehold property liabilities remaining from the sale of
the Distribution Division in 1994. Of the two long term
liabilities remaining one was surrendered and terms agreed
for the assignment of the other. The exceptional cost
incurred in eliminating the continuing annual rental
commitment of #348,000 was in the aggregate #308,000.
Having disposed of the Group's minority interests in the
Far East as part of the Davis sale we have also taken the
decision to withdraw from associated companies in Europe in
which the Group has a minority involvement. Full provision
of #67,000 has been made against the value of the Group's
interests.
The Group has retained the freehold property occupied by
Davis and this has been let to the acquirer of Davis until
December 1998. It and the remaining investment property
will be disposed of as soon as practicable.
Trading Review
Building Systems Division
The Building Systems Division increased turnover in the UK
by 22% in comparison with the same period last year.
SpeedDeck Building Systems has made an excellent start to
the year with turnover up by 30% and the order book continues to be maintained
at a consistently high level.
Stramit Industries has been successful in securing new
long-term supply contracts for its plasterboard panel
activities resulting in turnover up 91%. However, sales of
the higher margin strawboard panels business were down 8%.
Bell & Webster Concrete has performed very well. Turnover
is 42% ahead of the comparative period and the company
continues to secure repeat business for its recently
introduced pre-cast "flat-pack rooms". The production
facilities at Grantham have been expanded to increase
capacity to meet demand.
The nail-plate business in the UK has been disappointing as
Gang-Nail Systems encountered fierce competition and price
cutting in its sector. A programme to reduce operating
costs has been implemented. However, investment for the
future is being maintained and I am pleased to report that
the software development programme with Consultec is
progressing particularly well and the demonstrations of the
software in development have been well received by
customers.
In the overseas nail-plate operations, steady progress has
been made in Germany, where new business is being secured
despite difficult conditions there generally in the
construction industry. On the other hand, South Africa's
performance in the first half has been disappointing
against the background of a weak market for general
construction and steps have been taken to reduce costs
accordingly.
Rail and Marine Division
Abtus has made a solid start to the year. Tergor
Electronics was acquired on 17 December and already the two
businesses are being operationally integrated wherever
possible.
Outlook
With the structural changes that have been implemented over
the past six months the Group has continued to make good
progress over the period which I expect to continue and we
remain positive regarding the outlook for the rest of the
year.
John Ketteley
Executive Chairman
Consolidated Profit and Loss Account
(Unaudited) (Unaudited) (Audited)
Half year Half year Year
ended ended ended
31 December 31 December 30 June
1997 1996 1997
Notes #'000 #'000 #'000
Turnover
Continuing operations 11,785 10,077 21,810
Discontinued operations 2,882 3,817 7,431
----------------------------------------------------------
14,667 13,894 29,241
==========================================================
Operating profit / (loss)
Continuing operations 504 (486) 259
Discontinued operations (76) (733) (1,001)
-----------------------------------------------------------
428 (1,219) (742)
Loss on sale
and termination of
discontinued operations 1 (365) - -
Loss and provisions for
loss on disposal of
tangible assets and
associated investments (405) (116) (116)
-----------------------------------------------------------
Loss on ordinary activities
before interest (342) (1,335) (858)
Net interest payable (231) (221) (461)
-----------------------------------------------------------
Loss on ordinary activities
before tax (573) (1,556) (1,319)
Tax on ordinary activities - (141) (166)
-----------------------------------------------------------
Loss on ordinary activities
after tax (573) (1,697) (1,485)
Dividend on ordinary shares - - -
-----------------------------------------------------------
Retained loss (573) (1,697) (1,485)
===========================================================
Dividends per share Nil Nil Nil
Loss per share (net basis) 2 (1.5)p (4.4)p (3.8)p
===========================================================
Notes
1. On 11 December 1997, the group sold the business of
Davis International Limited.
2. Based on the loss attributable to shareholders and
38,629,731 issued ordinary shares.
3. On 17 December 1997, the group acquired the business of
Tergor Electronics Limited. The turnover and operating
profits of the acquired business from the date of
acquisition up to 31 December 1997 were not significant
and therefore they have not been disclosed separately
in the profit and loss account. Goodwill on the
acquisition of the business of #129,000 has been
capitalised and included within fixed assets.
4. The interim results have been prepared on the basis of
the accounting policies adopted for the year ended 30
June 1997 as set out in the Company's Annual Report and
Accounts.
5. The comparative figures for the year to 30 June 1997
have been taken from but do not constitute the
Company's statutory accounts for that financial year.
Those accounts have been reported on by the Company's
auditors and delivered to the Registrar of Companies.
The report of the auditors was unqualified and did not
contain a statement under section 237(2) or (3) of the
Companies Act 1985.
6. Copies of this interim statement and results will be
posted to all shareholders on 20 March1998 and will be
available from the registered office of the Company,
which is Belcon House, Essex Road, Hoddesdon, Herts,
EN11 0DR.
Summarised Consolidated Balance Sheet
(Unaudited) (Unaudited) (Audited)
31 December 31 December 30 June
1997 1996 1997
Notes #'000 #'000 #'000
Fixed assets 3 5,227 7,303 6,801
-----------------------------------------------------------
Current assets
Stocks 2,816 4,104 3,796
Debtors 5,509 5,875 6,917
Cash and bank balances 257 258 244
-----------------------------------------------------------
8,582 10,237 10,957
Creditors falling
due within one year
Bank loans and overdrafts (1,922) (2,609) (3,628)
Obligations under
finance leases (94) (120) (150)
Proposed dividend - (97) -
Other creditors (5,364) (5,939) (6,496)
-----------------------------------------------------------
Net current assets 1,202 1,472 683
-----------------------------------------------------------
Creditors falling due
after more than one year
Bank loans' (1,160) (2,636) (1,235)
Obligations under
finance leases (96) (232) (186)
Provisions (51) (125) (33)
-----------------------------------------------------------
Net assets 5,122 5,782 6,030
===========================================================
Capital and reserves
Called up share capital 3,863 3,863 3,863
Share premium account 4,434 4,434 4,434
Merger reserve 367 367 367
Revaluation reserve 10 539 388
Profit and loss account (3,552) (3,421) (3,022)
-----------------------------------------------------------
Shareholders' funds 5,122 5,782 6,030
===========================================================
Reconciliation of movement
in equity shareholders' funds
Loss for the period (573) (1,697) (1,485)
Other recognised losses (335) (228) (192)
-----------------------------------------------------------
Net reduction in equity
shareholders funds (908) (1,925) (1,677)
Opening equity
shareholders' funds 6,030 7,707 7,707
-----------------------------------------------------------
Closing equity
shareholders' funds 5,122 5,782 6,030
===========================================================
Consolidated Cash Flow Statement
(Unaudited) (Unaudited) (Audited)
Half year Half year Year
ended ended ended
31 December 31 December 30 June
1997 1996 1997
Notes #'000 #'000 #'000
Net cash inflow from
operating activities 749 244 983
-----------------------------------------------------------
Returns on investment
and servicing of finance
Net interest paid (231) (221) (461)
-----------------------------------------------------------
Net cash outflow from
returns on investment
and servicing of finance (231) (221) (461)
-----------------------------------------------------------
Taxation (24) (24) (60)
-----------------------------------------------------------
Capital expenditure
and financial investment
Purchase of fixed assets (348) (141) (483)
Investments in associated
undertakings - (44) (45)
Sale of tangible fixed assets 76 7 445
Cash outflows on disposal of
tangible fixed assets (106) (73) (73)
-----------------------------------------------------------
Net cash outflow from capital
expenditure and financial
investment (378) (251) (156)
-----------------------------------------------------------
Acquisitions and disposals
Purchase of subsidiary
net of cash acquired 3 (338) - -
Sale of business of
subsidiary undertaking 1 2,109 - -
-----------------------------------------------------------
Net cash inflow from
acquisitions and disposals 1,771 - -
-----------------------------------------------------------
Equity dividends paid - (97) (194)
-----------------------------------------------------------
Net cash inflow/ (outflow)
before financing 1,887 (349) 112
-----------------------------------------------------------
Financing
Repayment of principal
under finance leases (88) (67) (145)
Repayment of bank loans (170) (294) (1,083)
-----------------------------------------------------------
Net cash outflow
from financing (258) (361) (1,228)
-----------------------------------------------------------
Increase/ (decrease) in
cash in the period 1,629 (710) (1,116)
===========================================================
Reconciliation of operating
profit /(loss) to net cash
flow from operating activities
Operating profit /(loss) 428 (1,219) (742)
Depreciation and amortisation 379 547 1,004
Profit on sale of fixed assets - (2) (24)
Working capital change (58) 918 745
-----------------------------------------------------------
749 244 983
===========================================================
Reconciliation of net cash
flow to movement in net debt
Increase/ (decrease) in cash
in the period 1,629 (710) (1,116)
Cash flow from decrease in
debt and lease financing 258 361 1,228
-----------------------------------------------------------
Change in net debt resulting
from cash flows 1,887 (349) 112
New finance leases (32) (95) (157)
Finance lease obligations
transferred on disposal
of subsidiary 89 - -
Translation difference (4) 33 18
-----------------------------------------------------------
Movement in net debt in
the period 1,940 (411) (27)
Opening net debt (4,955) (4,928) (4,928)
----------------------------------------------------------
Closing net debt (3,015) (5,339) (4,955)
===========================================================
END
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