Interim Results - 6 Months to 31 December 1999

Eleco PLC 13 March 2000 ELECO PLC INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 1999 'Excellent progress and prospects at Eleco' Highlights * Profit before tax up 27% to £677,000 (1998: £533,000) * Earnings per share increase 32% to 1.45p (1998: 1.10p) * Interim dividend of 0.35p per share declared (1998: 0.30p) * Major expansion of production capacity at Bell & Webster Concrete * Gang-Nail Systems has introduced its new Windows-based Gang-Nail Roof and Gang-Nail Truss software programs * Eleco is introducing a home computer scheme under which all employees and their families will, should they so wish, be able to have a computer, software and training made available to them Executive Chairman, John Ketteley commented: 'The improved trading performance achieved in the last financial year continued in the first six months of the current year. The second half has started well and I am optimistic about our prospects for the remainder of the 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 I am pleased to report that we have continued to build on last year's encouraging performance, with a 27% increase in profits before tax to £677,000 in the six months ended 31 December 1999 (1998: £533,000); an improvement in net cash inflow from operating activities to £938,000 (1998: £264,000); and an increase in earnings per share of 32% to 1.45p (1998: 1.10p). We also made excellent progress in the period with major investment projects to increase capacity at Bell & Webster Concrete and SpeedDeck and the launch of new software and products at Gang-Nail Systems. Operating margins of our continuing businesses overall improved to 5.97% (1998: 5.73%) and resulted in operating profits of £737,000 (1998: £744,000) on turnover of £12,335,000 (1998: £12,987,000). Turnover and operating profits in the corresponding period last year included the benefit of Stramit Industries' strawboard operations, which were sold in January 1999. In the light of the above results, the Board has declared an interim dividend of 0.35p per share (1998: 0.30p) payable on 10 May 2000 to shareholders on the Register on 25 April 2000. The interim dividend is covered 4.2 times by earnings and represents an increase of 16.7% over last year's interim dividend. Capital expenditure in the period under review was £1,333,000. However, the improved operational cash flow enabled net borrowings to be held to £1,470,000, representing gearing of 21%, which is well within our targeted range. I am also pleased to be able to report a number of significant commercial and other developments that have taken place in the period under review, namely: (i) the major expansion of production capacity at Bell & Webster Concrete is proceeding rapidly and we expect the new facilities to be fully operational by May 2000, on time and on budget; (ii) the installation of a new production line for composite panel wall cladding at SpeedDeck is in the final stages of commissioning; (iii)SpeedDeck is expecting delivery of a new upgraded mobile rollformer in April 2000; (iv) Gang-Nail Systems has introduced its new Windows-based Gang-Nail Roof and Gang-Nail Truss software programs, which have been very well received; (v) Abtus has launched a new electronic rail measuring trolley and has expanded its product range with the purchase of Railrod, an ultrasonic measuring device for overhead electric cables; and (vi) Eleco is introducing a home computer scheme under which all employees and their families will, should they so wish, be able to have a computer, software and training made available to them Trading Review Bell & Webster Concrete continued to make excellent progress in the period, increasing turnover by 28% and more than doubling operating profits on the corresponding period last year. A major project to expand production capacity started in September with site clearance and roadway construction. Building commenced in February and the new facilities will become fully operational in May. Demand for the company's fast-track build, 'flat-pack rooms' system continues to be strong and the system is being extended to residential schemes as well as the established hotel and student accommodation markets. SpeedDeck Building Systems was not able to repeat last year's very good first half performance, which included the major Rugby Sky Blue project and turnover in the current year was down 19% on the corresponding period last year, although the level of orders secured resulted in a strong order book at 31 December 1999, which augurs well for the second half. We are particularly pleased to have secured the order for the roofing of Amazon.com's prestigious new warehouse in Milton Keynes and to be associated with this project. A second mobile rollformer becomes operational in April, which will enable SpeedDeck to offer a more comprehensive on-site rolling capability, including on sites in Mainland Europe and, following commissioning of the new composite panel production line, it will launch its new range of Vitesse wall cladding panels later this year. Stramit Industries' performance was affected by pressure generally on selling prices and slower than expected progress in introducing its Roomspace panel sets. However, steps have been taken to improve margins, the effect of which will increasingly be felt in the second half. The nail plate businesses performed well during the period under review, particularly in the UK and in South Africa. Overall sales were increased by 3% on the corresponding period last year despite a 2.1% adverse translation effect attributable to Sterling's movement during the period. In the UK, Gang-Nail Systems distributed its new Windows-based Gang-Nail Roof and Gang-Nail Truss software programs to customers at the end of December 1999. Intensive customer training programmes are now well under way and customer reaction has been very positive. The introduction of the new Ecojoist flooring system continues to progress well with increasing adoption of the system by housebuilders. In Germany, Eleco Bauprodukte maintained a solid position in its market despite pressure from competitive prices. We are progressing the introduction of new products, which should improve its competitive position. In South Africa, International Truss Systems had a very creditable first half and made a notable contribution to the overall Group performance. Rail and Marine Abtus and Tergor operations produced results broadly in line with those achieved for the corresponding period last year. However, current curbs on investment expenditure in the UK railway and defence industries may be expected to affect its performance in the second half, offset to some extent by opportunities in export markets. Abtus continues to develop its relationship with one of the leading USA suppliers to the railway industries worldwide. It has also expanded its product range with the purchase of Railrod, an ultrasonic measuring device for overhead electric cables. Employees Computer Scheme I am pleased to say that our further education scheme for all employees under which we pay for further education courses continues to be well supported and we are sponsoring an increasing number of employees in degree courses with the Open University and on computer training courses. We continue to consider ways in which we can assist our employees to develop their skills in an environment which is increasingly influenced by developments in information technology. With this in mind, we are introducing a home computer scheme for all employees and their families, together with appropriate computer training courses in collaboration with the Knowledge Media Institute of the Open University. Under the scheme, we will be making available to every employee, should they so wish, a home computer, printer, software and training. I believe that this initiative and our further education scheme both represent a very worthwhile investment in our employees. Outlook A number of major projects will be completed in the second half, which will improve the Group's competitive position and increase production capacity in a number of key areas. The improved trading performance achieved in the last full financial year continued in the six months ended 31 December 1999. The second half of the current financial year has started well and I am optimistic about our prospects for the remainder of the year. John Ketteley Executive Chairman 13 March 2000 Consolidated profit and loss account (Unaudited) (Audited) Half year Year ended ended 31 December 30 June 1999 1998 1999 £'000 £'000 £'000 ---------------------------------------------------------- Turnover Continuing operations 12,335 12,987 26,863 ---------------------------------------------------------- Operating profit Continuing operations 737 744 1,680 Profit/(loss) on disposal of tangible assets and associated investments - (82) 15 ---------------------------------------------------------- Profit on ordinary activities before interest 737 662 1,695 Net interest payable (60) (129) (192) Profit on ordinary activities before tax 677 533 1,503 Tax on ordinary activities (115) (108) (149) Profit on ordinary activities after tax 562 425 1,354 Dividend on ordinary shares (Note 2) (135) (116) (309) Retained profit 427 309 1,045 ----------------------------------------------------------- Dividends per share 0.35p 0.30p 0.80p Earnings per share (Note 3) 1.45p 1.10p 3.51p Diluted earnings per share (Note 4) 1.43p 1.10p 3.48p ------------------------------------------------------------ Notes 1.The interim results have been prepared on the basis of the accounting policies adopted for the year ended 30 June 1999, as set out in the Company's Annual Report and Accounts, except as modified by the adoption of the following standards: FRS 15 - Tangible fixed assets FRS 16 - Current tax The adoption of these standards has no effect on the results reported in either the current or previous period. 2. The dividend will be payable on 10 May 2000 to shareholders on the register on 25 April 2000. 3. Based on the profit attributable to shareholders and a weighted average of 38,629,731 ordinary shares. 4. Based on the profit attributable to shareholders and a fully diluted weighted average of 39,228,643 ordinary shares (Dec 1998 - 38,768,534 and Jun 99 - 38,929,403). The dilution is caused by outstanding share options. 5. The comparative figures for the year to 30 June 1999 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, which were approved by the Board on 10 March 2000, 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 1999 1998 1999 £'000 £'000 £'000 -------------------------------------------------------------- Fixed assets 6,418 5,720 5,307 -------------------------------------------------------------- Current assets Stocks 1,644 2,330 1,849 Debtors 6,010 5,357 6,097 Cash and bank balances 666 446 1,121 -------------------------------------------------------------- 8,320 8,133 9,067 Creditors falling due within one year Bank loans and overdrafts (1,161) (1,918) (634) Obligations under finance (107) (107) (95) leases Other creditors (5,630) (4,605) (6,142) --------------------------------------------------------------- Net current assets 1,422 1,503 2,196 --------------------------------------------------------------- Creditors falling due after more than one year Bank loans (743) (1,267) (788) Obligations under finance (125) (103) (106) leases Overseas tax - - (44) -------------------------------------------------------------- Net assets 6,972 5,853 6,565 -------------------------------------------------------------- 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 Profit and loss account (1,692) (2,811) (2,099) -------------------------------------------------------------- Shareholders' funds 6,972 5,853 6,565 -------------------------------------------------------------- Reconciliation of movement in equity shareholders' funds Profit for the period 562 425 1,354 Dividends (135) (116) (309) Other recognised (20) 30 6 gains/(losses) -------------------------------------------------------------- Net increase in equity 407 339 1,051 shareholders' funds Opening equity shareholders' 6,565 5,514 5,514 funds -------------------------------------------------------------- Closing equity shareholders' 6,972 5,853 6,565 funds -------------------------------------------------------------- Consolidated cash flow statement (Unaudited) (Audited) Half year ended Year ended 31 December 30 June 1999 1998 1999 £'000 £'000 £'000 ------------------------------------------------------------------ Net cash inflow from operating 938 264 2,733 activities ------------------------------------------------------------------ Returns on investment and servicing of finance Net interest paid (60) (129) (192) ------------------------------------------------------------------ Net cash outflow from returns on investment and servicing of finance (60) (129) (192) ------------------------------------------------------------------ Taxation (96) (6) (26) ------------------------------------------------------------------ Capital expenditure and financial investment Purchase of fixed assets (1,333) (462) (1,119) Sale of tangible fixed 11 2 887 assets ------------------------------------------------------------------ Net cash outflow from capital expenditure and financial investment (1,322) (460) (232) ------------------------------------------------------------------ Equity dividends paid (309) - (97) ------------------------------------------------------------------ Net cash (outflow)/inflow before (849) (331) 2,186 financing ------------------------------------------------------------------ Financing New bank loans - - 1,380 Repayment of principal under finance leases (72) (95) (152) Repayment of bank loans (545) (105) (1,480) ------------------------------------------------------------------ Net cash outflow from financing (617) (200) (252) ------------------------------------------------------------------ (Decrease)/increase in cash in (1,466) (531) 1,934 the period ------------------------------------------------------------------ Reconciliation of operating profit to net cash flow from operating activities Operating profit 737 744 1,680 Depreciation charge 311 229 543 Loss/(profit) on sale of fixed assets (4) 1 4 Amortisation of intangible assets 3 3 7 Working capital change (109) (713) 499 ----------------------------------------------------------------- 938 264 2,733 ----------------------------------------------------------------- Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the period (1,466) (531) 1,934 Cash flow from decrease in debt and lease financing 617 200 252 ----------------------------------------------------------------- Change in net debt resulting from cash flows (849) (331) 2,186 New finance leases (104) (89) (138) Translation difference (15) 26 5 ----------------------------------------------------------------- Movement in net debt in the period (968) (394) 2,053 Opening net debt (502) (2,555) (2,555) ----------------------------------------------------------------- Closing net debt (1,470) (2,949) (502) ----------------------------------------------------------------- Turnover and segmental analysis Group turnover and profits were attributable as follows External sales Profit/(loss) ------------------------------------------- (Unaudited) (Audited) (Unaudited)(Audited) Half Year Half Year year ended ended year ended ended 31 December 30 June 31 December 30 June 1999 1998 1999 1999 1998 1999 £'000 £'000 £'000 £'000 £'000 £'000 -------------------------------------------------------------------- Continuing activities Building systems 11,300 12,048 24,653 875 788 1,900 Rail and marine 1,035 935 2,123 102 113 375 Property - 4 87 - - 22 Corporate - - - (240) (157) (617) -------------------------------------------------------------------- Total continuing 12,335 12,987 26,863 737 744 1,680 -------------------------------------------------------------------- Exceptional losses - (82) 15 -------------------------------------------------------------------- Profit before interest 737 662 1,695 --------------------------------------------------------------------

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