RNS No 6689h
ELECO PLC
25th March 1999
Interim Results for the six months to
31 December1998
Strong recovery continues at Eleco
Highlights
* Turnover up 10% to #13.0m (1997 - #11.8m)
* Operating profit up 47% to #774,000 (1997 - #504,000)
* Profit before tax of #533,000 (1997 - loss of #573,000)
* Interim dividend of 0.3p per share declared (1997 - nil)
* Gearing at 50% will reduce significantly in the second half
following asset disposals
Executive Chairman, John Ketteley, commented:
"We have now established a sound financial footing on which to base our future
growth. Encouraging progress has been made during the last half-year and, so
long as the main markets in which we operate do not weaken, I look forward
with confidence to prospects for the second half of the financial year."
Enquiries to:
John Ketteley, Executive Chairman 01992 440 311
Eleco plc
David Dannhauser, Finance Director 01992 440 311
Eleco plc
David Millham/Tarquin Edwards 0171 256 5756
Millham Communications
Chairman's Statement
The return to profitability and a sound financial condition, which I
was able to report last year, has continued. I am therefore pleased to
inform you that, for the six months ended 31 December 1998, the profit
before tax was #533,000, compared with a loss of #573,000 for the
corresponding period last year. Gearing at 50 per cent. will be
significantly reduced in the second half and the Board has declared an
interim dividend of 0.3p per share.
Turnover from continuing businesses increased by 10 per cent. to
#12,987,000 (1997 - #11,785,000) and operating profits improved by 47
per cent. to #744,000 (1997 - #504,000). These results take into
account a provision of #82,000 for the loss on the sale in February
1999 of the freehold property previously occupied by Davis
International but do not include the gain on the sale of Stramit
Industries' strawboard production line, which will be accounted for in
the second half results.
The gearing figure of 50 per cent. does not reflect any benefit from
the two asset disposals, which will significantly reduce borrowings in
the second half of the year, in keeping with the Board's objective of
reducing operational borrowings. The restructuring of our borrowing
facilities, following the establishment of Lloyds TSB as the Group's
principal bankers in March 1999, has significantly improved the
facilities now available to the Group.
Having regard to the continuing favourable trend and the strengthening
of the balance sheet, the Directors have declared an interim dividend
of 0.3p per share payable on 9 July 1999 to shareholders on the
register on 7 June 1999, representing an increase of 20 per cent. on
the total dividend for last year paid on 8 January 1999. The dividend
is covered 3.7 times by profits.
Trading Review
Building Systems
Building Systems increased turnover by 8.9 per cent. in the UK and by
9.7 per cent. in all markets compared to the same period last year. In
total operating profits increased by 84 per cent..
SpeedDeck Building Systems has made a good start to the year. Turnover
increased by 9 per cent. and the company maintained its order book at
historically high levels. SpeedDeck Designer software was successfully
launched to architects and others.
Stramit Industries concluded the sale of its strawboard production
line to its German customer, Bio Pack Group. Although total sales of
plasterboard panels products increased by 16 per cent., performance
was affected by reduced purchases from one of the larger customers,
following a change in its business. Margins remained tight and the
attention is focussed on improving operational efficiencies.
Bell & Webster Concrete broadened the customer base for its "flat pack
rooms" and made substantial strides in developing this product as well
as progressing its stadia and cinema terracing and retaining wall
products. Turnover in the first half was 33 per cent. ahead of the
corresponding period last year and the forward order book for "flat
pack rooms" is substantially in excess of that at the same time last
year.
The nail plate operations have made steady progress in the period
under review. A small reduction in Gang-Nail Systems' sales in the UK
has been more than offset by an increase of 26 per cent. in Eleco
Bauprodukte's sales in Germany. We continued with a major investment
in new software programs designed to enhance our nail plate products
in the UK, Continental Europe and South Africa. Good progress
continues to be made particularly in the UK and release of beta
versions of the new software to UK customers has begun. The German
version of the software has been in operation at Eleco Bauprodukte for
some two years and has made a significant contribution to the
development of this company. Local conditions in South Africa have
remained difficult for International Truss Systems, which is seeking
to develop a range of building products complementary to the core nail
plates business.
Rail and Marine
Abtus has made a steady start to the year in line with expectations
and has generated significant interest in its new railgauge products.
This has compensated for the lower level of Ministry of Defence
spending on the marine products side of the business. During the first
half Abtus established agencies for its rail products in Sweden and
Holland and has recently secured a sizeable first order from the USA,
which is expected to lead to repeat opportunities. Tergor Electronics
again contributed positively and, although it was also affected in the
period by the constraints in Ministry spending, more recently activity
levels have improved.
Outlook
The continuing improvement in the Group's trading performance, the
recent disposals of underperforming fixed assets and the significant
improvement in bank facilities now available to the Group are
developments which combine to produce a sound financial footing on
which to base our future growth. Encouraging progress has been made
during the last half-year and, so long as the main markets in which we
operate do not weaken, I look forward with confidence to prospects for
the second half of the financial year.
John Ketteley
Executive Chairman
25 March 1999
Consolidated profit and loss account
(Unaudited) (Audited)
Half year Year
ended ended
31 December 30 June
1998 1997 1998
#'000 #'000 #'000
Turnover
Continuing operations 12,987 11,785 24,525
Acquisitions - - 487
Discontinued operations - 2,882 2,883
------------------------
12,987 14,667 27,895
------------------------
Operating profit/(loss)
Continuing operations 744 504 1,322
Acquisitions - - 89
Discontinued operations - (76) (87)
------------------------
744 428 1,324
Loss on sale and termination of
discontinued operations - (365) (390)
Loss and provisions for loss on
disposal of tangible assets and
associated investments (note 2) (82) (405) (531)
------------------------
Profit/(loss) on ordinary activities
before interest 662 (342) 403
Net interest payable (129) (231) (394)
Profit/(loss) on ordinary activities
before tax 533 (573) 9
Tax on ordinary activities (108) - (35)
Profit/(loss) on ordinary activities
after tax 425 (573) (26)
Dividend on ordinary shares (note 4) (116) - (97)
Retained profit/(loss) 309 (573) (123)
-------------------------
Dividends per share 0.30p Nil 0.25p
Earnings/(loss) per share (net basis) 1.1p (1.5)p (0.1)p
(note 5)
Diluted earnings/(loss) per share 1.1p (1.5)p (0.1)p
(net basis) (note 6) --------------------------
Notes
1. The interim results have been prepared on the basis of the
accounting policies adopted for the year ended 30 June 1998, as set
out in the Company's Annual Report and Accounts, as modified by FRS
11, FRS 12 and FRS 14.
2. The exceptional item relates to the loss on the disposal of the
former Davis freehold property, announced to The London Stock Exchange
on 7 January 1999, for which contracts were exchanged on 13 January
1999.
3. Post-balance sheet event.
As announced to The London Stock Exchange on 7 January 1999, the
Group exchanged contracts for the sale of its strawboard production
line for #503,000 before expenses. These assets are included at 31
December 1998 within tangible fixed assets at a net book value of
#299,000 and the profit on sale is not included within the results.
4. The dividend will be payable on 9 July 1999 to shareholders on
the register on 7 June 1999.
5. Based on the profit (1997 loss) attributable to shareholders and
a weighted average of 38,629,731 ordinary shares.
6. Based on the profit (1997 loss) attributable to shareholders and
a fully diluted weighted average of 38,768,534 ordinary shares (Dec
1997 - 38,653,554 and Jun 98 - 38,713,277).
7. The comparative figures for the year ended 30 June 1998 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.
8. Copies of this interim statement and results, which were approved
by the Board on 24 March 1999, are available from the registered
office of the Company, which is at Belcon House, Essex Road,
Hoddesdon, Herts, EN11 0DR.
Summarised consolidated balance sheet
(Unaudited) (Audited)
31 December 30 June
1998 1997 1998
#'000 #'000 #'000
Fixed assets 5,720 5,227 5,472
------------------------
Current assets
Stocks 2,330 2,816 2,356
Debtors 5,357 5,509 6,007
Cash and bank balances 446 257 636
------------------------
8,133 8,582 8,999
Creditors falling due within one year
Bank loans and overdrafts (1,918) (1,922) (1,642)
Obligations under finance leases (107) (94) (123)
Proposed dividend (212) - (97)
Other creditors (4,393) (5,364) (5,669)
-------------------------
Net current assets 1,503 1,202 1,468
-------------------------
Creditors falling due after more than one year
Bank loans (1,267) (1,160) (1,334)
Obligations under finance leases (103) (96) (92)
Provisions - (51) -
-----------------------
Net assets 5,853 5,122 5,514
-----------------------
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 -
Profit and loss account (2,811) (3,552) (3,150)
-------------------------
Shareholders' funds 5,853 5,122 5,514
-------------------------
Reconciliation of movement in equity shareholders' funds
Profit/(loss) for the period 425 (573) (26)
Dividends (116) - (97)
Other recognised gains/(losses) 30 (335) (393)
------------------------
Net increase/(reduction) in equity 339 (908) (516)
shareholders' funds
Opening equity shareholders' funds 5,514 6,030 6,030
------------------------
Closing equity shareholders' funds 5,853 5,122 5,514
------------------------
Consolidated cash flow statement
(Unaudited) (Audited)
Half year Year
ended ended
31 December 30 June
1998 1997 1998
#'000 #'000 #'000
Operating activities
Net cash inflow from continuing 264 749 2,072
operating activities
Net cash inflow from discontinued - - 95
operating activities ----------------------
Net cash inflow from operating 264 749 2,167
activities ----------------------
Returns on investment and servicing of finance
Net interest paid (129) (231) (394)
Net cash outflow from returns on -----------------------
investment and servicing of finance (129) (231) (394)
-----------------------
Taxation (6) (24) (21)
-----------------------
Capital expenditure and financial investment
Purchase of fixed assets (462) (348) (848)
Investments in associated
undertakings - - (19)
Sale of tangible fixed assets 2 76 105
Cash outflows on disposal of
tangible fixed assets - (106) (313)
------------------------
Net cash outflow from capital (460) (378) (1,075)
expenditure and financial investment ------------------------
Acquisitions and disposals
Purchase of subsidiary net of cash - (338) (337)
acquired
Sale of business of subsidiary - 2,109 2,126
undertaking
-----------------------
Net cash inflow from acquisitions - 1,771 1,789
and disposals -----------------------
Equity dividends paid - - -
------------------------
Net cash (outflow)/inflow before (331) 1,887 2,466
financing ------------------------
Financing
New bank loans - - 250
Repayment of principal under
finance leases (95) (88) (162)
Repayment of bank loans (105) (170) (822)
------------------------
Net cash outflow from financing (200) (258) (734)
------------------------
(Decrease)/increase in cash in the (531) 1,629 1,732
period ------------------------
Reconciliation of operating profit/(loss) to net cash flow
from operating activities
Operating profit/(loss) 744 428 1,411
Depreciation charge 229 379 574
Loss/(profit) on sale of fixed 1 - (22)
assets
Amortisation of intangible assets 3 - 3
Working capital change (713) (58) 106
------------------------
264 749 2,072
------------------------
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the (531) 1,629 1,732
period
Cash flow from decrease in debt 200 258 734
and lease financing ------------------------
Change in net debt resulting from (331) 1,887 2,466
cash flows
New finance leases (89) (32) (135)
Finance lease obligations - 89 87
transferred on disposal of
subsidiary
Translation difference 26 (4) (18)
------------------------
Movement in net debt in the period (394) 1,940 2,400
Opening net debt (2,555) (4,955) (4,955)
-------------------------
Closing net debt (2,949) (3,015) (2,555)
-------------------------
Turnover and segmental analysis
Group turnover and profits were attributable as follows
External sales
(Unaudited) (Audited)
Half year Year
ended ended
31 December 30 June
1998 1997 1998
#'000 #'000 #'000
Continuing activities --------------------------
Building systems 12,048 10,982 22,877
Rail and marine 935 611 1,721
Property 4 192 414
Corporate - - -
--------------------------
Total continuing 12,987 11,785 25,012
--------------------------
Discontinued activities
Building systems - 2,882 2,882
Other - - 1
--------------------------
Total discontinued - 2,882 2,883
--------------------------
Total continuing and discontinued 12,987 14,667 27,895
--------------------------
Profit/(loss)
--------------------------
(Unaudited) (Audited)
Half year Year
ended ended
31 December 30 June
1998 1997 1998
#'000 #'000 #'000
Continuing activities
Building systems 788 428 1,307
Rail and marine 113 85 321
Property - 1 45
Corporate (157) (10) (262)
-------------------------
Total continuing 744 504 1,411
-------------------------
Discontinued activities
Building systems - (76) (78)
Other - - (9)
-------------------------
Total discontinued - (76) (87)
-------------------------
Total continuing and discontinued 744 428 1,324
Exceptional losses (82) (770) (921)
-------------------------
Profit/(loss) before interest 662 (342) 403
-------------------------
END
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