TIDMELCO
RNS Number : 6823G
Eleco PLC
31 March 2022
Eleco plc
("Eleco", the "Company" or the "Group")
Audited Results for the Year Ended 31 December 2021
The Board of Eleco plc (AIM: ELCO) is pleased to announce its
results for the year ended 31 December 2021.
Financial Highlights
-- Revenue increased 8%, slightly ahead of expectations, to
GBP27.3m with growth in all regions (2020: GBP25.2m)
-- Recurring revenue up 9% to GBP15.4m, representing 56% of revenue (2020: 56%)
-- EBITDA ahead of expectations at GBP7.2m (2020: GBP6.7m)
-- Adjusted EBITDA of GBP7.3m (2020: GBP7.0m)*
-- Development spend at over 12% of revenue
-- EPS at 3.3 pence per share (2020: 3.9 pence per share) -
impacted by UK corporate tax rise in 2023
-- Net cash of GBP10.0m (2020: GBP6.2m) after full repayment of
UK bank debt and furlough payments
-- Final recommended dividend of 0.40 pence per share: full year
dividend 0.6 pence per share (2020:0.40 pence per share)
Operational Highlights
-- The introduction of subscription-based pricing to new
Building Lifecycle customers in Q4 2021 will lead to increased
Recurring Revenue and enhanced Customer Lifetime Value.
-- The successful merger of our UK Building Lifecycle businesses and separately of our German Visualisation operations, providing greater business development opportunities.
-- Winner of the Megabuyte Quoted 25 award for Best Performing
Software Company in Industrials.
-- Winner of Project Management Software of the Year at the UK Construction Computing awards.
* Adjusted to exclude former Directors' payments.
** EBITDA is defined as Earnings before Interest, Tax,
Depreciation, and Amortisation and impairment of Intangible
Assets
Eleco CEO Jonathan Hunter said:
" We are delighted to present these positive results just 12
months after unveiling our revised strategy for growth. The
successful implementation of this strategy has enabled Eleco to
embark on its transition to SaaS earlier than expected. This marks
a pivotal change to our business as we focus on securing and
increasing our predictable recurring revenues.
Our customers in the built environment are embracing technology
to address issues such as compliance, improvements in productivity
and efficiency, the reduction of waste, and other environmental
considerations. Our established presence, customer-centric
approach, strong values and clear vision make us well placed to
compete with the best in the market, and we look forward with
confidence to the year ahead. "
Enquiries
Eleco plc +44 (0)20 7422 8000
Jonathan Hunter, Chief Executive Officer
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Rose Clark, Interim Chief Financial Officer
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finnCap Limited +44 (0)20 7220 0500
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Geoff Nash / Kate Bannatyne / James Balicki
(Corporate Finance)
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Charlotte Sutcliffe / Harriet Ward (ECM)
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SEC Newgate UK +44 (0)20 3757 6882
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Elisabeth Cowell / Bob Huxford / Isabelle eleco@secnewgate.co.uk
Smurfit
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Chairman's Statement
As an award-winning specialist provider of world-class software
to the GBP8.5bn built environment market, Eleco is well positioned
to expand.
A year ago, we set out our refreshed strategy and the last
twelve months have been focused on setting the foundations for
further growth. It has been a truly transformative year for Eleco.
We are very much a customer-focused organisation and have a clear
purpose and a values statement developed through a truly
interactive process with our people. A strong engaging culture is
key to enable us to attract and retain talent in such a competitive
market.
I am pleased to report that our strategy is already generating
results, with our organic growth rate increasing to 8.0 per cent
(2020: -1.0 per cent), underpinned by double-digit sales growth
from our core Building Lifecycle portfolio. This was achieved at
the same time as implementing our move to a subscription licensing
model for new customers in the last quarter. Recurring revenue
(subscription and SaaS licences, maintenance and support contracts)
increased by 9.0 per cent to GBP15.4m.
We have maintained strong cash generation, despite Covid-19
continuing to impact our ability to undertake face to face sales
and training, having fully repaid monies given to Eleco through the
UK Government furlough scheme as well as clearing our UK bank debt.
We are now debt free after settling the remaining GBP0.1m of
subsidiary bank debt in Q1 2022.
We were delighted to win the Megabuyte Quoted 25 Award for best
performing software company in the industrials peer group in March
2022 showing the strength of our overall financial performance.
Implementing our strategy for organic growth
We are aligning our business with clear customer segment
strategies and through product portfolio alignment, driven by our
Chief Product Officer (CPO) Fredrik Pantze who was appointed in
April 2021, and we have started on the journey to adapt our
software to become next generation cloud-based solutions. Our aim
is to help our customers reimagine their businesses by creating
software which allows them to better collaborate, get faster access
to data for analytics and ensure interoperability. As a result, we
are seeing an increase in new customer wins away from our
competitors.
This has also been bolstered by the strengthening demand for our
products in our core regions where we are in a strong position with
Powerproject being used for the master construction plan.
Collaboration is driving us to partner and share data with other
parties. As a result, we have formed several partnerships and data
integrations during the last 12 months, as we continue to
leverage/understand our strong customer relationships.
With our move to subscription, we are more focused on customer
success through account management and services. We believe that
building on our customer relationships will allow Eleco to better
support the management and leadership teams of those organisations
which are starting to look for an integrated end to end
approach.
Our new Chief Technology Officer, Luben Kirov, was appointed in
December 2021 This role has the remit to bring together all the
separate development teams, break down the product silos and drive
forward our integrated technology roadmap in conjunction with our
CPO. Having started in February 2022, we look forward to reporting
on the results of this appointment as we go through the current
year.
From a customer perspective, digitalisation is increasingly
being recognised for its ability to manage the complex supply chain
and inflationary issues, while rising pressures on companies to
reduce wastage provides another tailwind as regulation around this
increases. We are a well-known provider of innovative technology
for the construction and built environment sectors, with 87 per
cent of the top 100 UK construction contractors on our books. This
provides us with a strong and established platform for growth and
new contract wins.
The move to subscription-based pricing of our products will
benefit our customers with a lower upfront cost for an enhanced
product, as well as creating increased value for our shareholders
through higher Recurring Revenue growth.
In the year, Eleco's US business grew 16 per cent predominantly
through our reseller channel which the Company will continue to
support. Following this growth, the Executive team are re-focusing
on potential strategic opportunities for expansion into the US.
We continue our strategy to provide best of breed software
targeted at our chosen customer segments.
Board appointments and Environmental, Social and Governance
(ESG)
Aligned to the new strategy, I undertook a full skills audit of
the Board and in March we brought in Paul Boughton as a NED, adding
more technology PLC experience to the business as well as
additional financial and acquisition expertise.
In a desire to refresh our Board and further improve our
corporate governance, this was followed by a further extensive
search to recruit the best candidates for our other skills gaps.
This led to two further NED appointments in the summer, with Dr
Annette Nabavi and Mark Castle joining the Board in August and
September, respectively. Annette Nabavi is a highly qualified board
director with more than 30 years' experience in the technology,
telecoms and digital industries who brings additional expertise to
advise with the shift from a perpetual to SaaS licence model while
Mark Castle is an experienced business leader, bringing the voice
of the customer to the Board - a vital stakeholder group for Eleco
- with his wealth of experience in the Property, Construction,
Consultancy and Built Environment sectors.
Kevin Craig and David Dannhauser stepped down from the Board at
the end of August and I would like to take this opportunity to
thank them both for the immense contribution that they made to this
business throughout their tenure.
Paul Boughton took over as Chair of Audit and Annette Nabavi
took over as Chair of Remuneration. Over the next twelve months, we
plan to strengthen our ESG disclosures, building on the steps taken
during 2021. With this in mind, we set up an ESG Committee at the
end of period under review, chaired by Mark Castle. This will
assist the Board in fulfilling its oversight responsibilities
regarding environmental, health and safety, corporate social
responsibility, sustainability, customer satisfaction, employee
wellbeing and retention, corporate governance, diversity, equity
and inclusion. We look forward to building our disclosure on these
areas over the months and years ahead as we develop our Net Zero
Strategy and our ESG Scorecard.
On 29 March 2021 Robert Tearle was appointed as CFO as we
launched our refreshed strategy. On 7 February 2022 we announced
that Robert was resigning from the Board. This is obviously
disappointing for both the Company and for Robert personally. We
thank Robert for his valued contribution to the planning of the
steps needed for the delivery of our move towards a SaaS
environment for our most successful products. The process to
recruit a permanent CFO is underway. In the meantime, we have Rose
Clark, an experienced CFO, covering the position.
Proposed dividend
In light of Eleco's resilient trading performance and cash
generation in 2021, the Board has decided to recommend a final cash
dividend 0.40 pence per share.
Payment of the final dividend will follow approval by
shareholders at the Annual General Meeting. The record date is the
close of business on 27 May 2022; with the ex-dividend date being
26 May 2022.
Outlook
Eleco continues to be well positioned in a very exciting and
attractive market as technology is seen as the catalyst to meet the
growing demands of the building industry. Our customer base has
been facing unprecedented labour challenges and escalating
materials costs. Eleco's software plays a crucial role in
mitigating these issues, driving productivity for our customers,
and enabling them to better plan their resources. There is a drive
for more efficient and sustainable building methodologies and
techniques. Our technology solutions are widely recognised for
allowing better decision making and collaboration across our
clients' projects, positioning us to benefit from increasing
digitalisation trends in our core markets. As a result, the
increasing digital transformation within the built environment is a
significant opportunity for Eleco to leverage its position as a
proven provider of software for the construction and built
environment sectors, strengthen its platform, and continue to drive
organic growth.
Over the next twelve months, we intend to continue to focus the
business on our core Building Lifecycle products and on further
growing our recurring revenues. Our strategy, as previously
announced, is to transition that part of our product portfolio
which has traditionally been sold through perpetual licences
towards a subscription pricing basis and eventually to a full SaaS
service. This has well established benefits by giving choice for
our customers and enhanced Customer Lifetime Value for our
shareholders. While this is expected to reduce the revenues we
report relating to perpetual licences moving forward, our Recurring
Revenues will increase, creating strong visibility of income. This
is an exciting transition that will deliver multiple benefits to
both our customers and shareholders.
We will also continue to strengthen our business in our core
markets and look for further opportunities for meaningful expansion
in the US. Additionally, we will be proactively assessing the
market for M&A opportunities, that will further place Eleco at
the forefront in assisting our customers to solve the future
challenges of the built environment.
By creating more value for our customers, we will be increasing
our Customer Lifetime Value, expanding beyond our current users
into the operations management of our customer base. The importance
of our existing customers and growth opportunities leads us to
continue to focus on direct sales in our core geographic
regions.
2021 has been an exciting year for Eleco and I would like to
take this opportunity to thank our skilled and hard-working team
and valued customers for their support over the past twelve months.
With the foundations set in place, we are well positioned for
continued growth, and increased market share through further
product evolution and potential acquisition opportunities,
supported by favourable market dynamics.
Serena Lang
Chairman
30 March 2022
CEO Report
2021 was a transformational year for Eleco as we reshaped and
repositioned the Group. We launched our refined growth strategy
with a focus on our people and our organic performance.
As part of this strategy, we made new board appointments,
implemented a new matrix organisational design and strengthened the
leadership team to drive growth in the regions and across product
solutions.
I am pleased to report that we are already seeing positive
results. We have made strong progress towards Eleco becoming a
world-class customer-centric organisation which people want to work
with and for to meet the needs of our core customer segments,
driven by our purpose: Solving the challenges of the built
environment through digital transformation.
This is reflected in our three strategic objectives:
-- Growing in a customer-centric way
-- World-class through prioritised innovation
-- Efficient and effective through resilient operations
I believe that a highly-focused, empowered and high-performing
workforce provides us with the greatest opportunity of success in
delivering our vision. With this in mind, during the period we
brought in our new Group Transformation Director, Birgit Lenton,
appointed a Chief Product Manager, Fredrik Pantze and in February
2022, brought in our new Group Chief Technology Officer, Luben
Kirov. Additionally, we have strengthened our sales teams and added
in customer success management.
Culture will play an important part in the successful
implementation of our strategy, and we have invested time with our
people in 2021 to develop an expected behaviours approach for Eleco
that aligns to our core values. Retaining and attracting talent has
never been more challenging than in 2022 and we are committed to
ongoing investment in our diverse workforce to complement and
enhance the skills, thinking and decision-making throughout the
organisation. We remain proud of the fact that over 30 per cent of
our workforce comprises talented women across all areas of the
business, which is above the industry average.
Importantly, our clear strategy and skilled team of people have
driven our strong financial performance, with revenues experiencing
organic growth of 8 per cent during the full year period. We also
continued to expand our customer base in 2021, as well as
introducing subscription licensing to new customers for our
Building Lifecycle portfolio in the second half of the year. This
is a significant step forward for the Group as we focus on
expanding our already established recurring revenue to support our
excellent cash generation.
Strengthening our engagement with our external stakeholders has
also been a priority for the Board. Our strong customer loyalty is
an investable quality of Eleco, and our strategic intent is to
further enhance the offer to our customers. Throughout the year, we
released new versions of our software and added measures to ensure
the continued growth of the Group and retention of our customers,
who value our products, our brand and the level of service we
provide.
In this report, I will outline how we intend to build on our
already robust position, refining our proposition and expanding our
presence internationally beyond our current core areas of operation
to create value for shareholders and customers alike.
2021 Review
The Board launched the refined Eleco growth strategy in March
2021, and this has focused and energised the whole organisation,
resulting in growth in all regions. Eleco continued to add new
customers and leveraged our strong customer relationships to
support them with their digital transformation.
Eleco delivered a robust and resilient financial performance in
another year of challenges brought about by the Covid-19 pandemic.
The strong first half performance in 2021 facilitated the
introduction of a subscription-based pricing model to new Building
Lifecyle product customers in Q4. The introduction of
subscription-based pricing is a key stage on our SaaS journey which
will improve the predictability of our revenue and increase the
Customer Lifetime Value.
The transformation programme started with identifying and
focusing on Eleco's core customer segments of construction
businesses, maintenance managers, building asset owners and
specialist interior product manufacturers, staircase and timber
frame manufacturers and residential architects. During the year, we
reorganised our business to build our product strategies, sales and
marketing functions around customer segments. As a result, our
products are now defined in two groups: Building Lifecycle and CAD
& Visualisation.
Our 'Building Lifecycle' portfolio is adopted by construction
contractors, asset owners and maintenance managers. The second
category, the 'CAD and Visualisation' solutions, comprise what can
be defined as niche products with minimal synergies between
customer segments of the Building Lifecycle portfolio.
Organising our business in this way has provided better
understanding and focus on our core customer needs, or 'sweet
spots', allowing Eleco to better solve the challenges of the built
environment through digital transformation.
The Group Leadership Team, now comprising the Chief Executive
Officer, Chief Product Officer, Chief Technology Officer and Group
Transformation Director, is responsible for steering and
implementing the Group's strategy. The Operational Leadership Team
comprises the Building Lifecycle operations which are managed by
three Regional Managing Directors, along with a Managing Director
for each of our CAD and Visualisation businesses, Veeuze, Staircon
and Arcon, who are responsible for these product lines in their
international markets. There is now a more diverse mix of
nationalities, gender and experience and we have an opportunity to
further enhance this team as we select our new Chief Financial
Officer.
Building Lifecycle
Our focused and streamlined organisational design led us to
strengthen our growth platform by merging our three UK operations
under a single Building Lifecycle management team so that we are
now offering all UK Building Lifecycle products from a single
business unit.
Our regional focus delivered revenue growth in the core regions
where our customers reside.
The US revenue increased through our reseller channel while
efforts to sell Powerproject directly in the US were met with
recruitment challenges and the resignation of our US country
manager.
We also worked on introducing ShireSystem into Germany, carrying
out product development and localisation as well as setting up
sales, marketing and support functions. There were lessons learnt
as we had underestimated the volume of work required, however I am
pleased to report that we are showcasing ShireSystem at the
Maintenance Dortmund exhibition at the end of March.
Project Management
Voted the Best Project Management Software of 2021 at the
Construction Computing Awards, Powerproject continues to be central
to driving digital innovation in project planning and critical to
underpinning project success despite the myriad challenges the
construction industry faces.
Some customer successes include:
-- Empowering organisations with the data necessary for informed decision making (Careys).
-- Supporting the use of pre-fabrication practices to model and
streamline build process and reduce the project's carbon footprint
(Willmott Dixon).
-- Modelling and managing supply chain disruptions by bridging
the gap between the office and site (JJ Rhatigan &
Company).
-- Supporting business transformation with digital solutions
that make best practice sustainable (Vinci).
Estimating
Our Bidcon estimating software revenues surpassed the all-time
high of 2020, irrespective of the transition to SaaS for new
customers. One of the reasons for our success was our investment in
new product functionality to meet customer requirements and to
secure larger customers. The importance of sustainability in
construction and the fact that Swedish law now mandates climate
declarations has resulted in a growing interest and demand for the
Bidcon Climate module.
Site Management
We continued the development of mobile and SaaS site management
applications used by construction and maintenance operations and
valued by existing customers in our Swedish market.
Property Management
2021 was a record year for service delivery, with increased
customer demand from non-essential retailers who began to recover
somewhat from the pandemic closures. With less focus on new build,
the emphasis in retail was the regeneration of existing property
estates and development of in-store concepts.
New product enhancements to introduce workflow management
continued and included the release of a new digital forms solution
in Q4 2021.
Maintenance
I am proud of what our colleagues have achieved with our
maintenance solution, ShireSystem, which was runner-up in Asset
Management category at the UK Construction Computing Awards 2021
('The Hammers').
ShireSystem's revenue growth has made it the second largest
product by revenue for Eleco. The migration to SaaS revenues
continued across both existing and new customer contracts, with a
third of customers now on hosted solutions. ShireSystem has managed
to attract an impressive list of new accounts, including Cambridge
Weight Plan and global food conglomerate Cargill. Existing
customers also fueled growth, with further deployments at G's Group
and Fox's Biscuits.
CAD and Visualisation
Veeuze
The Active Online and ESIGN visualisation businesses experienced
a significant year of change and improvement, relaunching as Veeuze
(pronounced 'views'), to combine the service portfolio and product
material library of both companies and expand their offerings to
all customers.
Veeuze now offers personalised product visualisation across a
multitude of marketing channels with the support of its AI tools as
well as Augmented Reality and Virtual Reality technologies. We
released our Confimerce platform which provides our interior
product business customers with a combined portfolio approach to
online selling through ecommerce, with integrated visualisation
tools and a Product Information Management (PIM) data management
system.
Staircon
The development of our new generation Staircon CAD continued
according to the releases planned in 2022 and 2023. During 2021,
the team also strengthened its management and sales capabilities by
adding more than 18 years of stair manufacturing experience to the
team via successful recruitments, including a new Head of Staircon.
We also appointed new Staircon resellers in Poland and the
Netherlands.
Arcon
Our Arcon business experienced a challenging year, with a
reduction in sales through partners and active competition in our
core German market. Arcon direct sales were negatively impacted as
major exhibitions did not take place during the period, and these
have traditionally been a successful sales channel.
Financial Summary
Revenue increased by 8 per cent to GBP27.3m (2020: GBP25.2m)
Recurring Revenue (maintenance, subscription and SaaS revenue)
increased by 9 per cent to GBP15.4m from GBP14.1m in 2020. Licence
sales were GBP5.9m compared with GBP5.4m in 2020 representing an
increase of 9 per cent, despite the introduction to subscription
licensing in Q4 2021. The impact of the transition to subscription
will change the profile of our revenue, with one-off perpetual
licence revenue, which is recognised immediately, being
transitioned to a higher lifetime value subscription revenue which
is recognised over a longer period of time. Thus our total reported
revenue growth will temporarily soften during this transition to
higher value and predictable recurring revenue.
Service revenue increased to GBP6.0m compared to GBP5.6m in
2020, which represents an increase of 7 per cent, despite
continuing challenges presented by the pandemic during the
period.
Building Lifecycle revenue increased by 11 per cent, which was
driven by new customers and recurring revenue growth. CAD and
Visualisation revenue increased by 2.9 per cent.
Revenues by customer location were positive, with the UK and
Scandinavia increasing by 11 per cent and 8 per cent respectively.
Overall, revenue from customers based in Germany was at a level
comparable with 2020. This was largely due to increased sales in
the building lifecycle customers offset by a decrease in CAD
perpetual licence sales. The Rest of Europe grew by 7 per cent, USA
revenue increased by 16 per cent and revenue from the Rest of World
increased by 38 per cent, compared with 2020, which was supported
by good growth in Australia.
We invested 12 per cent of Revenue in product development across
our portfolio during 2021. One product was identified as unlikely
to generate new customer revenues as anticipated however provides
an upgrade path to existing supported customers. The Board took a
prudent approach and decided to impair the carrying value of the
product during the year reducing Profit Before Tax by GBP0.6m.
Outlook
Eleco has proven its resilience during the pandemic, although
the recent crisis in Ukraine has added a further level of
uncertainty to the markets. We have taken measures to temporarily
cease providing our solutions to resellers and customers in Russia
and Belarus, and we do not expect this to have a substantial impact
on revenues.
Digitalisation is increasingly embraced as a critical solution
for the issues that our customers are facing and is at the heart of
our strategy. We will invest in product development and our
technology environment to create our next generation solutions with
a customer-centric experience and the foundations of the Elecosoft
Cloud for all our Building Lifecycle products. This will also
enable our customers to have access to other Elecosoft products
through a unified platform. We see the rising demand for buildings
with green credentials as a key driver for Eleco, as our products
support the reduction of waste, drive efficiency and deliver
essential data required by our customers. Our roadmap will ensure
that in the future we will be able to offer full lifecycle support,
addressing carbon challenges, productivity improvements and
compliance issues through one suite of solutions.
Our people are the lifeblood of our organisation, and their
commitment is key to Eleco's success. Our biggest challenge in the
coming year, apart from rising inflation and the competitive job
market, is our ability to retain and attract talent. During 2022
and beyond we will therefore continue to invest in our employee
value proposition and global company culture by further embedding
the cultural values in the way we do business. As Eleco grows, we
will review and update our policies and procedures across the
organisation to maintain good practice and gain the benefits of
alignment whilst ensuring our people feel empowered.
Our customer-centric approach, strong values and clear vision
make us well placed to compete with the best in the market, and we
look forward with confidence to the year ahead. Our transition to
subscription, continued investment in software development and
increased focus on software strategies will open further exciting
prospects for growth in our core markets.
Jonathan Hunter
CEO
30 March 2022
Consolidated Income Statement
for the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
Continuing operations
Revenue 27,344 25,232
Cost of sales (2,754) (2,529)
Gross profit 24,590 22,703
Amortisation and impairment of intangible
assets (2,361) (1,658)
Former Directors' payments (69) (328)
Other administrative expenses (18,061) (16,566)
Administrative expenses (20,491) (18,552)
Operating profit 4,099 4,151
Finance cost (173) (262)
Profit before tax 3,926 3,889
Tax (1,195) (726)
Profit for the financial period 2,731 3,163
Attributable to:
Equity holders of the parent 2,731 3,163
Earnings per share - (pence per share)
Basic 3.3p 3.9p
Diluted 3.3p 3.9p
========================================== ======== =============
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
Profit for the period 2,731 3,163
Other comprehensive income:
Items that will be reclassified subsequently
to profit or loss:
Translation differences on foreign operations (258) 193
Other comprehensive (loss)/ income net of tax (258) 193
Total comprehensive income for the period 2,473 3,356
Attributable to:
Equity holders of the parent 2,473 3,356
============================================== ======= =======
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
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 2020 822 2,047 1,002 (198) (108) 14,359 17,924
Dividends - - - - - - -
Share-based payments - - - - 131 - 131
Elimination of exercised share-based - 25 - - (25) - -
payments 3 110 - - - - 113
Transactions with owners 3 135 - - 106 - 244
Profit for the period - - - - - 3,163 3,163
Other comprehensive income:
Exchange differences on translation of
net investments in foreign operations - - - 190 - 3 193
Other - - - - - - -
Total comprehensive income for the
period - - - 190 - 3,166 3,356
At 31 December 2020 825 2,182 1,002 (8) (2) 17,525 21,524
Dividends - - - - - (493) (493)
Share-based payments - - - - 81 - 81
Elimination of exercised share-based
payments - - - - (83) 83 -
Issue of share capital 7 253 - - - - 260
Transactions with owners 7 253 - - (2) (410) (152)
Profit for the period - - - - - 2,731 2,731
Exchange differences on translation of
net investments in foreign operations - - - (270) - 12 (258)
Other - reserve reclassifications - (29) - (1) (1) 31 -
Total comprehensive income for the
period - (29) - (271) (1) 2,774 2,473
At 31 December 2021 832 2,406 1,002 (279) (5) 19,890 23,846
======================================= ======= ======= ======= =========== ======= ======== =======
Consolidated Balance Sheet
At 31 December 2021
2021 2020
Notes GBP'000 GBP'000
Non-current assets
Goodwill 9 15,593 15,762
Other intangible assets 10 6,554 7,195
Property, plant and equipment 11 717 651
Right-of-Use assets 22 1,728 2,208
Deferred tax assets 19 65 85
======================================= ====== ======== ========
Total non-current assets 24,657 25,901
======================================= ====== ======== ========
Current assets
Inventories 13 16 23
Trade and other receivables 14 4,277 3,911
Current tax assets 216 90
Cash and cash equivalents 10,055 10,668
======================================= ====== ======== ========
Total current assets 14,564 14,692
======================================= ====== ======== ========
Total assets 39,221 40,593
======================================= ====== ======== ========
Current liabilities
Borrowings 16 (45) (1,647)
Lease liabilities 16, 22 (471) (582)
Trade and other payables 15 (1,793) (1,660)
Provisions 17 (10) (125)
Current tax liabilities - -
Accruals and deferred income 18 (9,689) (8,880)
======================================= ====== ======== ========
Total current liabilities (12,008) (12,894)
======================================= ====== ======== ========
Non-current liabilities
Borrowings 16 (56) (2,867)
Lease liabilities 16, 22 (1,464) (1,850)
Deferred tax liabilities 19 (1,806) (1,417)
Non-current provisions 17 (41) (41)
======================================= ====== ======== ========
Total non-current liabilities (3,367) (6,175)
======================================= ====== ======== ========
Total liabilities (15,375) (19,069)
======================================= ====== ======== ========
Net assets 23,846 21,524
======================================= ====== ======== ========
Equity
Share capital 20 832 825
Share premium account 2,406 2,182
Merger reserve 1,002 1,002
Translation reserve (279) (8)
Other reserve (5) (2)
Retained earnings 19,890 17,525
======================================= ====== ======== ========
Equity attributable to shareholders of
the parent 23,846 21,524
======================================= ====== ======== ========
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
2021 2020
Note GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 3,926 3,889
Net finance costs 173 262
Depreciation charge 722 866
Amortisation and impairment charge 2,361 1,658
Profit on sale of property, plant and equipment (7) (16)
Share-based payments charge 81 131
Cash generated in operations before working capital
movements 7,256 6,790
Decrease in provisions (115) (17)
(Increase)/decrease in trade and other receivables (366) 428
Decrease in inventories and work in progress 7 23
Increase in trade and other payables and accruals
and deferred income 942 914
Cash generated in operations 7,724 8,138
Interest paid (124) (206)
Net income tax paid (903) (785)
Net cash inflow from operating activities 6,697 7,147
Investing activities
Purchase of intangible assets (1,727) (1,603)
Purchase of property, plant and equipment (279) (99)
Proceeds from sale of property, plant, equipment
and intangible assets 60 71
Net cash outflow from investing activities (1,946) (1,631)
Financing activities
Repayment of bank loans 16 (4,447) (1,647)
Repayments of principal of lease liabilities 22 (650) (761)
Equity dividends paid (493) -
Issue of share capital 260 -
Net cash (outflow) from financing activities (5,330) (2,408)
Net (decrease) / increase in cash and cash equivalents (579) 3,108
Cash and cash equivalents at beginning of period 10,668 7,236
Effects of changes in foreign exchange rates (34) 324
Cash and cash equivalents at end of period 10,055 10,668
Cash and cash equivalents comprise:
Cash and short-term deposits 10,055 10,668
10,055 10,668
======================================================= ==== ======= =======
Extract from Notes to the Consolidated Financial Statements
1. Revenue
Revenue from continuing operations disclosed in the income
statement is analysed as follows:
2021 2020
GBP'000 GBP'000
Licence sales 5,913 5,442
Recurring maintenance, support and subscription
revenue 15,424 14,186
Services income 6,007 5,604
Total revenue 27,344 25,232
================================================ ======= =======
Revenue recorded in the year includes GBP6.4m (2020: GBP5.9m) of
income that had been deferred in the balance sheet in the previous
year because the associated performance obligations were not fully
satisfied. Payments are received from certain customers on
maintenance or subscription contracts either three months or one
year in advance, which leads to the recognition of deferred income
in advance of satisfaction of the performance obligation over
time.
The Group has applied the practical expedient of IFRS15.121 in
respect of transaction price allocated to remaining performance
obligations as the performance obligations relate to contracts
which have a duration of one year or less. Contract liabilities in
respect of contracts with customers have been disclosed in note 18
under deferred income.
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:
2021 2020
GBP'000 GBP'000
UK 10,446 9,470
Scandinavia 6,550 6,080
Germany 4,911 4,858
USA 1,030 890
Rest of Europe 3,916 3,538
Rest of World 491 396
27,344 25,232
=============== ======= =======
Revenue by product group represents continuing operations
revenue from external customers.
Revenue by product group is as follows :
2021 2020
GBP'000 GBP'000
Software for:
Building Lifecycle 17,650 15,897
CAD and Visualisation 7,997 7,771
Other - third party software 1,697 1,564
27,344 25,232
============================= ======= =======
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:
2021 2020
GBP'000 GBP'000
Direct 26,068 24,000
Reseller 1,276 1,232
27,344 25,232
========= ======= =======
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 during the year as the costs and profits
are not monitored or recorded in the same way the information is
presented as one segment and as such the information is presented
in line with management information.
2021 2020
Software Software
GBP'000 GBP'000
Revenue 27,344 25,232
Adjusted EBITDA 7,251 7,003
Amortisation and impairment of purchased intangible
assets (1,786) (1,068)
Depreciation (722) (866)
Adjusted operating profit 4,743 5,069
Amortisation of acquired intangible assets (575) (590)
Former Directors' payments (69) (328)
Operating profit 4,099 4,151
Net finance cost (173) (262)
Segment profit before tax 3,926 3,889
Tax (1,195) (726)
Segment profit after tax 2,731 3,163
Operating profit 4,099 4,151
Amortisation and impairment of intangible assets 2,361 1,658
Depreciation charge 722 866
EBITDA 7,182 6,675
Former Directors' payments 69 328
Adjusted EBITDA 7,251 7,003
==================================================== ======== ========
Former Directors' payments are upfront costs borne by the Group
and are adjusted to reflect their services provided.
Development project costs are expensed as incurred unless they
meet the accounting policy requirements for capitalisation.
2021 2020
Software Software
GBP'000 GBP'000
Group assets and liabilities
Segment assets 39,221 40,593
Total Group assets 39,221 40,593
Segment liabilities 15,375 19,069
Total Group liabilities 15,375 19,069
============================= ======== ========
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:
2021 2020
GBP'000 GBP'000
UK 14.780 14,967
Scandinavia 6,759 7,737
Germany 3,072 3,146
USA 2 3
Rest of Europe 44 48
Rest of World - -
24,657 25,901
=============== ======= =======
Information about major customers
Revenues arising from sales to the Group's largest customer were
below the reporting threshold of 10 per cent of Group revenue
(2020: Below 10 per cent reporting threshold).
3. Operating profit
The continuing operations operating profit for the period is
stated after charging/(crediting) the following items:
2021 2020
GBP'000 GBP'000
Software product development expense 1,660 1,590
Depreciation of property, plant and equipment 213 220
Depreciation of right-of-use assets 509 646
Amortisation of acquired intangible assets 575 590
Amortisation of other intangible assets 1,150 1,068
Impairment of other intangible assets 636 -
Share-based payments 81 131
Employer furlough scheme repayments / (credits) 135 (150)
Profit on disposal of property, plant and
equipment (7) (16)
Foreign exchange (gains)/losses 127 (34)
Fees payable to the Company's auditor for:
The audit of the parent company and consolidated
financial statements 83 70
Fees payable to the Company's auditor and
its associates for other services:
The audit of the Company's subsidiaries 104 94
Other services 8 7
Operating lease rentals:
Plant, equipment and vehicles 13 30
Properties 68 13
Former Directors' payments 69 328
4. Employee information
The average number of employees during the period, including Directors,
in continuing operations was made up
as follows:
2021 2020
Number Number
Sales & marketing 57 56
Client services 76 78
Software development 69 68
Management and administration 43 44
245 246
Staff costs during the period, including Directors,
in continuing operations amounted to:
2021 2020
GBP'000 GBP'000
Wages and salaries 11,145 11,350
Social security 1,985 2,002
Pension costs 648 547
Share-based payments 81 131
13,859 14,030
Less: Development staff costs capitalised (1,578) (1,602)
12,281 12,428
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:
2021 2020
GBP'000 GBP'000
Short-term employee benefits 995 974
Post-employment benefits 58 52
Former Directors' benefits 69 304
Share-based payments 123 112
Executive Directors 1,245 1,442
Fees - Non-Executive Directors 166 132
1,411 1,574
=============================== ======= =======
The emoluments and share based payments of the highest paid
Director totalled GBP426,000 (2020: GBP525,000).
The remuneration of the Non-Executive Directors is determined by
the Board. The Non-Executive Directors are engaged through service
contracts and each is appointed for an initial term of three years,
which may thereafter be renewed. The Company has chosen for all
directors to stand for annual re-election at each year's AGM. The
Non-Executive Directors do not participate in any of the Group's
share-based incentive or pension schemes. Share options currently
held by Serena Lang were granted to her during her tenure as
Executive Chairman.
5. Dividends
Dividends paid in the year were 0.60 pence per ordinary share
(2020: nil pence per ordinary share)
Cash dividends of GBP493,000 (2020: GBPnil) were paid during the
year:
2021 2020
pence
pence per per 2021 2020
Ordinary Shares share share GBP'000 GBP'000
Declared and paid during the year
Interim - current year 0.20 - 164 -
Final - previous year 0.40 - 329 -
0.60 - 493 -
The Directors have recommended a final dividend of 0.40 pence
(2020: 0.40). The dividend is subject to approval by shareholders
at the Annual General Meeting and has not been included as a
liability in these financial statements.
6. Basic and diluted earnings per share
2021 2020
Weighted Weighted
Net profit average Net profit average
attributable number attributable number
to of to of
shareholders shares EPS shareholders shares EPS
Ordinary Shares GBP'000 (millions) (pence) GBP'000 (millions) (pence)
Basic earnings per share 2,731 82.0 3.3 3,163 81.4 3.9
Diluted earnings per share 2,731 82.9 3.3 3,163 82.0 3.9
Adjusted basic earnings
per share 3,253 82.0 4.0 3,907 81.4 4.8
=========================== ============ ========== ======= ============ ========== =======
In determining the diluted earnings per share the dilutive
impact of share options on weighted average number of shares was
included.
Shares held by the Employee Share Ownership Trust are excluded
from the weighted average number of shares in the period.
7. Post-balance sheet events
With effect from 1 January 2022 the trade and assets of
Integrated Computing and Office Networking Limited and Shire
Systems Limited were transferred to Elecosoft UK Limited.
With effect from 1 January 2022 ESIGN GmbH and Active Online
GmbH were merged under one German trading company VEEUZE GmbH.
Notes:
1. Eleco plc ("the Company") and its subsidiaries (together "the
Group") are primarily involved in software sales and development.
Eleco plc, a Public Limited Company incorporated and domiciled in
England, is the Group's ultimate parent Company. The address of
Eleco plc's registered office is 6 Bevis Marks, London EC3A 7BA,
United Kingdom and the principal place of business is 6 Bevis
Marks, London, EC3A 7BA.
2. Statutory accounts for 2020 have been delivered to the
Registrar of Companies and those for 2021 will be delivered in due
course. The Company's auditors RSM UK LLP, have reported on the
2021 accounts; their report was unqualified, did not draw attention
to any matters by way of emphasis without qualifying their report
and did not contain statements under s498 (2) or (3) Companies Act
2006. The 2020 audit report was unqualified, did not draw attention
to any matters by way of emphasis without qualifying their report
and did not contain statements under s498 (2) or (3) Companies Act
2006.
Whilst the financial information included in this preliminary
results' announcement has been prepared in accordance with the
recognition and measurement requirements of UK-adopted
International Accounting Standards this announcement does not
itself contain sufficient information to comply with UK-adopted
International Accounting Standards and does not constitute
statutory accounts for the purposes of section 434 of the Companies
Act 2006.
The principal accounting policies used in preparing this
preliminary results announcement are those that the Company has
adopted for its statutory accounts for the year ended 31 December
2021 and are unchanged from those previously disclosed in the
Group's Annual Report and Accounts for the year ended 31 December
2020.
Full financial statements for the year ended 31 December 2021
will be posted and made available to shareholders in due
course.
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END
FR BKKBQDBKBFNN
(END) Dow Jones Newswires
March 31, 2022 02:01 ET (06:01 GMT)
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