RNS No 5718c
ELECO HOLDINGS PLC
20th October 1998
Preliminary results for the year ending
30 June 1998
Eleco returns to profit and the dividend list
Highlights
* Turnover on continuing operations up 12% to #24.5m
(1997: #21.8m)
* Operating profit on continuing operations increased to
#1,322,000 (1997: #255,000)
* Profit before tax on ordinary activities of #9,000
(1997: Loss #1,319,000)
* Resumption of Dividends
Recommended final dividend of 0.25p (1997: Nil)
* Net bank borrowings virtually halved to #2,340,000
(1997: #4,619,000)
Gearing reduced to 46.3% (1997: 82.2%)
John Ketteley, Executive Chairman, commented:
"I am pleased to report continuing progress in the year
under review and am delighted this has resulted in a return
to profit before tax (operating profit on our continuing
businesses increased significantly) and the proposed
resumption of dividend payments. The Board's prime
objective over the past eighteen months has been to reduce
borrowings and put in place a business and management
structure, which will provide the Group with a sound basis
for the future. We are well on the way to achieving
these objectives. We have made a good start to the year and
all our businesses are performing well. I believe
therefore, that we are well placed to meet the challenges
ahead."
Enquiries to:
Eleco Holdings plc
John Ketteley, Executive Chairman Tel: 01992 440 311
David Dannhauser, Finance Director Tel: 01992 440 311
Millham Communications
David Millham / Tarquin Edwards Tel: 0171 256 5756
Chairman's Statement accompanying preliminary announcement
of figures for the year ended 30 June 1998
I am pleased to report that continuing progress in the year
under review has resulted in a return to profit before tax
and a resumption of dividend payments. In addition, the
sale during the year of the loss making Davis International
business and assets surplus to requirements of our
continuing operations has enabled us to significantly
reduce borrowings.
Results
Turnover of continuing operations amounted to #24,525,000
(1997: #21,810,000) and from acquisitions amounted to
#487,000 (1997: Nil). Total operating profit was #1,324,000
(1997: Loss #742,000). Operating profit on continuing
operations was #1,322,000 compared with #255,000 for the
previous year. Operating profit from acquisitions was
#89,000 (1997: Nil).
After taking into account the exceptional losses on the sale
and termination of discontinued operations of #390,000
(1997: Nil) and on the disposal of tangible assets and
associated investments of #531,000 (1997: #116,000), the
profit on ordinary activities before interest amounted to
#403,000 (1997: Loss #858,000). Profit on ordinary
activities before taxation was #9,000 (1997: Loss
#1,319,000).
The financial position of the Group was strengthened during
the year under review and net bank borrowings as at 30 June
1998 were cut to #2,340,000 compared with #4,619,000 at 30
June 1997.
Dividend
Although the general outlook for the economy is less
promising than it has been for some time, the current year
has started well. In the light of this and the excellent
progress which has been made by our continuing businesses in
the year under review, the Board has decided that it is
appropriate to recommend a final dividend of 0.25p per share
(1997: Nil).
Trading
Building Systems
The turnover of Eleco's Building Systems businesses was
#22,877,000 (1997: #20,064,000) and operating profits
increased to #1,307,000 (1997: #750,000). All companies
contributed to this improvement in performance.
Roofing Systems
SpeedDeck Building Systems achieved excellent results. The
business has made a strong start to the current year and has
a number of projects in hand, which are aimed at enhancing
its market position. The recent launch of the "SpeedDeck
Designer", a unique software programme for the design of
SpeedDeck roofs, has been very well received by architects
and designers.
Panel Products
Stramit Industries has performed well overall in a very
competitive marketplace. The plasterboard business achieved
significant growth in the period. However, its increased
profit contribution was partly offset by a modest loss in
the strawboard business.
Precast Concrete Systems
Bell & Webster again performed well, achieving increased
turnover and profits. The year saw considerable progress
made in developing the market for its "flat pack" rooms
system. As a consequence, the current year has begun with a
substantial increase in the order book for "flat pack"
rooms, both for hotel and student accommodation products,
which augurs well for the rest of the year.
Gang-Nail Systems
Our Gang-Nail Systems business in the UK performed well in
the second half and has made an excellent start to the
current year. The development of the new Windows based
software programmes is progressing well and we are confident
that Gang-Nail Systems' fabricators will have a significant
leading edge over the competition, when the new programmes
are introduced.
Our German subsidiary, which already has Windows based
software programmes in its market equivalent to those
currently under development for UK fabricators, performed
solidly in the year under review. The current year has
started well and local industry prospects are showing signs
of improvement.
Our South African subsidiary produced an improved
performance in the second half and made a positive
contribution to the year, despite difficult local market
conditions.
Rail and Marine
Our rail and marine businesses performed well, despite
intensified competition, particularly on margins. Tergor
Electronics, a supplier of marine communications systems,
was acquired in December 1997 and made a positive
contribution in the second half. A major part of its
operations have been integrated with Abtus.
Outlook
In the past year and a half, my Board colleagues and I have
focussed on a programme of activities designed to return the
Eleco Group to profit, to reduce borrowings to reasonable
levels and to put in place a business and management
structure, which will provide the Group with a sound base
for the future. We are well on the way to achieving these
objectives. Our intent is to build on these foundations and
to grow Eleco organically and by acquisition.
Any comment on the current outlook must be tempered by the
possibility that increasingly difficult trading conditions
in the building sector may well occur as a result
of the recent turbulence in world financial markets.
Nevertheless, as a result of the successful restructuring
programme and the hard work and dedication of all its
employees over the past eighteen months, Eleco is now much
stronger and better equipped to satisfy the needs of its
customers in a highly competitive environment. We have made
a good start to the year and all our businesses are
performing well. I believe therefore, that we are well
placed to meet the challenges ahead.
JHB Ketteley
Executive Chairman
20 October 1998
Unaudited Consolidated Profit and Loss Account
FOR THE YEAR ENDED 30 JUNE 1998
1998 1998 1997 1997
Notes #'000 #'000 #'000 #'000
Turnover
Continuing operations 2 24,525 21,810
Acquisitions 2 487 -
----------------------------------------------------------------------
25,012 21,810
Discontinued operations 2 2,883 7,431
----------------------------------------------------------------------
Total turnover 27,895 29,241
cost of sales (19,082) (20,267)
-----------------------------------------------------------------------
Gross profit 8,813 8,974
Operating profit/(loss)
Continuing operations 1,322 255
Acquisitions 89 -
---------------------------------------------------------------------
1,411 255
Discontinued operations (87) (997)
-----------------------------------------------------------------------
Total operating profit/(loss) 1,324 (742)
Loss on sale and termination of
discontinued operations 3 (390) -
Loss on disposal of tangible fixed
assets and associated investments 3 (531) (116)
-------------------------------------------------------------------------
Profit/(loss) on ordinary 403 (858)
activities before interest
Interest receivable 18 24
Interest payable (412) (485)
-------------------------------------------------------------------------
(394) (461)
-------------------------------------------------------------------------
Profit/(loss) on ordinary 9 (1,319)
activities before taxation
Taxation (35) (166)
-------------------------------------------------------------------------
Loss on ordinary activities (26) (1,485)
after taxation
-------------------------------------------------------------------------
Dividends 4 (97) -
-------------------------------------------------------------------------
Retained loss for the year (123) (1,485)
-------------------------------------------------------------------------
loss per 10p ordinary share
Net basis 5 (0.1)p (3.8)p
Unaudited Statement of Total Recognised Gains and Losses
FOR THE YEAR ENDED 30 JUNE 1998
1998 1997
#'000 #'000
Loss for the financial year (26) (1,485)
--------------------------------------------------------------
Currency translation differences on
foreign currency net investments (72) (72)
Permanent diminution in value of (321) (120)
freehold properties
--------------------------------------------------------------
Other recognised losses relating to the year (393) (192)
--------------------------------------------------------------
Total recognised losses for the year (419) (1,677)
--------------------------------------------------------------
Unaudited Consolidated Balance Sheet
AT 30 JUNE 1998
1998 1997
Notes #'000 #'000
Fixed assets
Intangible assets 134 -
Tangible assets 5,338 6,675
Investments - 126
------------------------------------------------------------
5,472 6,801
------------------------------------------------------------
Current assets
Stocks 2,356 3,796
Debtors 6,007 6,917
Cash at bank and in hand 636 244
------------------------------------------------------------
8,999 10,957
Creditors: amounts falling due
within one year (7,531) (10,274)
------------------------------------------------------------
Net current assets 1,468 683
------------------------------------------------------------
Total assets less current 6,940 7,484
liabilities
------------------------------------------------------------
Creditors: amounts falling due (1,426) (1,421)
after more than one year
Provisions for liabilities and charges - (33)
-------------------------------------------------------------
Net assets 5,514 6,030
-------------------------------------------------------------
Capital and reserves
Called up share capital 3,863 3,863
Share premium account 4,434 4,434
Merger reserve 367 367
Revaluation reserve - 388
Profit and loss account (3,150) (3,022)
--------------------------------------------------------------
Equity shareholders' funds 5,514 6,030
--------------------------------------------------------------
Unaudited Consolidated Cash Flow Statement
FOR THE YEAR ENDED 30 JUNE 1998
1998 1997
Notes #'000 #'000
Operating activities
Net cash inflow from continuing operations 2,072 1,029
Net cash inflow/(outflow) from 95 (46)
discontinued operations
----------------------------------------------------------------------
Net cash inflow from operating activities (i) 2,167 983
----------------------------------------------------------------------
Returns on investment and servicing of
finance
Interest received 18 24
Interest paid (388) (453)
Interest element of finance lease rentals (24) (32)
-----------------------------------------------------------------------
Net cash outflow from returns on (394) (461)
investment and servicing of finance
-----------------------------------------------------------------------
Taxation
UK corporation tax paid (10) (48)
Overseas tax paid (11) (12)
-----------------------------------------------------------------------
Net cash outflow from taxation (21) (60)
-----------------------------------------------------------------------
Capital expenditure and financial
investment
Purchase of fixed assets (848) (483)
Investments in associated undertakings (19) (45)
Sale of tangible fixed assets 105 445
Cash outflows on disposal of tangible
fixed assets (313) (73)
-----------------------------------------------------------------------
Net cash outflow from capital expenditure (1,075) (156)
and financial investment
-----------------------------------------------------------------------
Acquisitions and disposals
Purchase of subsidiary net of cash (337) -
acquired
Sale and closure of subsidiary 2,126 -
undertakings
-----------------------------------------------------------------------
Net cash inflow from acquisitions and 1,789 -
disposals
-----------------------------------------------------------------------
Equity dividends paid - (194)
-----------------------------------------------------------------------
Net cash inflow before financing 2,466 112
-----------------------------------------------------------------------
Financing
New bank loans 250 -
Repayment of principal under finance (162) (145)
leases
Repayment of bank loans (822) (1,083)
-----------------------------------------------------------------------
Net cash outflow from financing (ii) (734) (1,228)
------------------------------------------------------------------------
Increase/(decrease) in cash in the period (ii) 1,732 (1,116)
(i) Reconciliation of operating profit/(loss) to net cash flow
1998 1997
#'000 #'000
Operating profit/(loss) 1324 (742)
Depreciation and amortisation 665 1004
Profit on sale of tangible fixed assets (24) (24)
Working capital change - continuing 106 389
Working capital change - discontinued 96 356
----------------------------------------------------------------------
Net cash inflow from operating activities 2,167 983
(ii) Reconciliation of net cash flow to movement in net debt
1998 1997
#'000 #'000
Increase/(decrease) in cash in the period 1,732 (1,116)
Cash flow from decrease in debt and lease 734 1,228
financing
-----------------------------------------------------------------------
Change in net debt resulting from cash flows 2,466 112
Other non-cash items:
New finance leases (135) (157)
Finance leases eliminated on disposal 87 -
Effects of foreign exchange rates (18) 18
------------------------------------------------------------------------
Movement in net debt in the period 2,400 (27)
Net debt at 1 July 1998 (4,955) (4,928)
------------------------------------------------------------------------
Net debt at 30 June 1998 (2,555) (4,955)
-----------------------------------------------------------------------
Notes:
1. The financial information in this announcement does not
constitute statutory accounts within the meaning of section
240 of the Companies Act 1985. Statutory accounts of the
Company, on which the Auditors will report, will be delivered
to the Registrar of Companies and posted to shareholders at
the end of October. The comparative figures for the year to 30
June 1997 have been taken from, but do not constitute,
the Company's statutory financial statements for that
financial year.Those financial statements have been reported
on by the Company's auditors and delivered to the
Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under s237(2)
or (3) of the Companies Act 1985.
2. Turnover and segmental analysis
Group turnover and profits were attributable as follows
External sales Profit/(loss)
1998 1997 1998 1997
#'000 #'000 #'000 #'000
Continuing activities
Building systems 22,877 20,064 1,307 750
Rail and marine 1,721 1,188 321 286
Property 414 558 45 (3)
Corporate - - (262) (778)
---------------------------------------------------------------------
Total continuing 25,012 21,810 1,411 255
---------------------------------------------------------------------
Discontinued activities
Building systems 2,882 7,317 (78) (869)
Other 1 114 (9) (128)
---------------------------------------------------------------------
Total discontinued 2,883 7,431 (87) (997)
--------------------------------------------------------------------
Total continuing and discontinued 27,895 29,241 1,324 (742)
--------------------------------------------------------------------
Exceptional losses (921) (116)
Profit/(loss) before interest 403 (858)
---------------------------------------------------------------------
Continuing activities include Tergor Electronics Limited, a
company acquired during the year, and which contributed
turnover of #487,000 and operating profit of #89,000 to the
results of the rail and marine division.
The discontinued Building System activities comprise the
businesses of Davis International Limited, which was sold
during the year, and Gang-Nail Hungary Kft, which was closed
during the year.
Other discontinued activities comprised Housing Development
activities, which were discontinued in previous years.
3. Loss on sale and termination of discontinued operations arises
from the disposal of Davis International Limited and the closure of
Gang-Nail Hungary Kft as noted above.
Loss on disposal of tangible fixed assets and associated investment
principally arises from the assignment or surrender of property
leases in respect of properties no longer utilised by the Group's
continuing activities.
4. The final dividend of 0.25p per share will be paid on 8
January 1999 to shareholders on the register at 27 November
1998.
5. The calculation of loss per share on the net basis is
based upon the loss attributable to members of the holding
company of #26,000 (1997: #1,485,000) and on 38,629,731
(1997: 38,629,731) ordinary shares, being the weighted
average number of ordinary shares in issue during the year.
6. The information herein has been prepared on the basis of the accounting
policies set out in the financial statements for the year ended 30 June 1997,
except for the implementation of FRS10 'Goodwill and Intangible Assets' in
respect of the accounting for goodwill on acquisition of subsidiary
undertakings as explained below. As allowed by the standard there has been no
retrospective re-instatement to intangible assets of goodwill on acquisition
written off to reserves in earlier years.
Goodwill arising on consolidation, representing the excess of purchase price
over the fair value of the identifiable net assets acquired, is capitalised
and amortised through the profit and loss account over periods not exceeding
twenty years.
7. The directors approved the preliminary announcement on 19 October 1998.
The Annual General Meeting of Eleco Holdings plc will be held a Belcon House,
Essex Road, Hoddesdon, Hertfordshire EN11 0DR, on 4 December 1998, at 10.00
a.m.
END
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