Interim Results

RNS Number : 0927C

Eleco PLC

01 March 2011

 



1 March 2011

("Eleco" or the "Group")

The Construction Software and Building Systems Group

Interim Results for the Six Months Ended 31 December 2010

Strategic emphasis now placed on growth of profitable construction software interests

Group Financial performance 

·     Turnover amounted to £31.8m (H1 2009: £32.5m)

·     Group adjusted operating loss before amortisation and restructuring costs of £0.7m (H1 2009: loss £0.7m)

·     Loss before tax of £1.7m (H1 2009: loss £2.2m)

·     Loss per share of 2.8p (H1 2009: loss 3.5p)

·     Net bank debt at 31 December 2010 of £5.7m (H1 2009:  £2.1m)

Group Operational performance

·     Improved operating performance at Software with strong growth in turnover and profits.

·     Building Products marginally profitable with poor performance at Eleco Timber Frame offset by profits in other businesses.

·     Further loss, albeit significantly less than in second half of last year, in Precast Concrete operations, principally caused by losses on custodial contracts and adverse weather in December.

·     Gross margin maintained due to change in revenue mix.

·     Reduced cost base with administrative expenses down over 10% compared to the previous six month period.

Software

·     Turnover increased 13% to £7.3m (H1 2009: £6.4 m)

·     Adjusted operating profit before amortisation and restructuring costs more than doubled to £0.7m (H1 2009: £0.3m)

·     Acquisition of Lubekonsult AB, the ventilation software and estimating business, in Sweden for £393,000 is performing ahead of expectations.

·     All software businesses now profitable and growing both top line and operating profit.

Building Products

·     Turnover increased to £10.3m (H1 2009: £8.8m)

·     Adjusted operating profit before amortisation and restructuring costs of £10,000 (H1 2009: loss £0.8m) Loss of £0.4m at Eleco Timber Frame more than offset by profits in other businesses.

·     Market conditions remain tough but cost base reduced and all businesses performing ahead of H2 last year.

Precast Concrete

·     Turnover amounted to £14.3m (H1 2009: £17.4m)

·     Adjusted operating loss of £1.5m before amortisation and restructuring costs (H1 2009: loss £0.2m)

·     Trading adversely impacted by the poor performance of the custodial contracts, now almost complete, and adverse weather experienced during December.

Pension

·     The deficit shown in the accounts at 30 June 2010 has reduced by £1.5m, from £9.8m to £8.3m, primarily due to investment performance in the period.

Board appointment

·     Group management strengthened with the appointment of Matthew Turner as initially part time Group Finance Director in January.

Change of accounting date

·     Change of accounting reference date to 31 December for operational reasons. An unaudited second interim report will be released for the period ended 30 June 2011. The preliminary results for the eighteen months ended 31 December 2011 will be released no later than 31 March 2012.

Outlook    

·     Our Precast Concrete and Building Products businesses were affected by further adverse weather in January 2011. However, the Board is of the view that our Building Products operations will produce a modest improvement although our Precast Concrete interests will continue to experience operational difficulties until the four major custodial accommodation contracts have been completed, which is expected by the end of June 2011. The Board is also of the view that our Software interests will perform well in the second six months.  

Strategy

·     The Board plans to concentrate on expansion of its software and service operations while reducing the current emphasis on Building Products and currently loss making Precast Concrete manufacturing interests.

·     The Board believes that this strategy will significantly reduce the financing  requirements of the Group's Building Products and Precast Concrete interests while facilitating the planned expansion of the Group's Software interests, both in the UK and internationally.

For further information please contact:

Eleco plc	Tel: [phone]
John Ketteley, Executive Chairman	http://www.eleco.com
Craig Slater, Chief Operating Officer Matthew Turner, Group Finance Director
Cenkos Securities plc	0207 397 8900
Adrian Hargrave / Martin Green

Chairman's Statement

Group Performance

Group turnover for the six months ended 31 December 2010 was £31.8m (2009: £32.5m), down 2% compared to the same period last year but up 25% compared to the second half of last year.

Group turnover in the period was adversely impacted, primarily in Precast Concrete, by approximately £1.8m due to the severe weather conditions experienced during December 2010. However, turnover in Building Products and Software divisions was up 17% and 13% respectively compared with the same period last year.

The Group maintained its gross profit margin in spite of margin pressures at both Precast Concrete and Building Products divisions due to the change in revenue mix. Software increased its share of Group turnover to 23%.

Adjusted Group operating loss before amortisation of intangible assets and restructuring costs amounted to £0.7m compared with an adjusted Group operating loss of £0.7m for the same period last year and an adjusted Group operating loss of £4.2m in the second half of last financial year.  

Software delivered strong growth in the period with turnover and profit both at record levels and continues the significant growth in these businesses achieved in the past three years despite the unprecedented economic difficulties experienced over that period. Consultec Sweden acquired the business of Lubekonsult AB ("Lube") on 1 September 2010 for £393,000, of which £172,000 has been paid. Lube, provides cost estimation services and software to the Swedish ventilation market and is already exceeding our expectations in terms of turnover and profit.

Within Building Products, Eleco Timber Frame generated an operating loss of £0.4m in the six months ended 31 December 2010 which was offset by profits generated in the other Building Products businesses.

The significant improvement in profit performance at Software and Building Products compared to last year was offset by a weak performance at Precast Concrete. This is largely due to the poor financial performance and operational problems relating to the custodial contracts, all of which are planned to complete in the next quarter. Completion of these custodial contracts will lead to reduced costs and facilitate greater focus on the student accommodation and hotel business.

The Group loss before tax of £1.7m is arrived at after amortisation charges of £0.2m (2009: £0.3m) and restructuring costs of £0.5m (2009: £0.4m) and net financing costs of £0.3m (2009: £0.3m). The negative impact of the adverse weather during December 2010 was approximately £0.5m at the pre tax level.

Net bank debt at 31 December 2010 increased to £5.7m (2009: £2.1m). Of this £3.6m increase, £2.0m was attributable to additional working capital required by the custodial contracts referred to above and a further £0.6m relates to extended credit taken by Eleco Timber Frame customers. The Group continues to focus on managing its debt and working capital to maximize cash inflows across all the divisions.

Dividend

The Group not having returned to profit, the Board has decided not to pay an interim dividend.

Divisional Performance

Software

Turnover increased to £7.3m against £6.4m in the same period last year, up more than 13%.

Adjusted operating profit was £0.7m before amortisation of intangible assets and restructuring costs for the six months compared to £0.3m last year and to £0.5m in the second half of the last financial year.

This continued growth was largely driven by increased turnover of software and services in Sweden and Germany, together with the acquisition of Lubekonsult in Sweden, which has proved successful in delivering the anticipated benefits. Software continues to explore opportunities in other overseas markets and recently opened a sales office in Belgium.

Building Products

Turnover was £10.3m in the six months, up 17% compared with £8.8m in the same period last year and up 14% compared with £9.0m in the second half of last year.

Building Products broke even in the period before amortisation and restructuring costs compared to an adjusted operating loss of £0.8m for the same period last year and to a £1.0m loss in the second half of last financial year.

The improved performance is due to better trading performance at the roofing, cladding and UK and South African nail plate businesses and the elimination of trading losses at the German nail plate business which was sold on 30 June 2010.

Building Products has successfully reduced costs and started to reinvest again in sales resources

Precast Concrete

Turnover in the six months ended 31 December 2011 was £14.3m compared with £17.4m achieved in the same period last year and only £9.4m in the second half of last year.

Adjusted operating loss before intangible asset amortisation and restructuring costs for the first half was £1.5m compared with a loss of £0.2m in the same period last year and of £3.7m in the second half of last year.

The major part of turnover in the period related to the custodial contracts, each of which produced poor returns. These contracts are now fully manufactured and deliveries are expected to be completed in the next quarter. Working capital directly held in these contracts, amounting to approximately £2.0m at 31 December 2010, and will reduce as the contracts are completed and amounts due under the contracts are received.

Completion of the custodial contracts will result in a reduction in headcount of approximately 75% and create a lower overhead business as we focus on manufacture of hotels and student accommodation.

The current market continues to be tough and margins remain under pressure. However, the current level of enquiries is encouraging and procedures are in place to ensure that contracts are not entered into at unsustainable margins.

Financial Review

Group financial performance in the six months ended 31 December 2010 was in line with expectations before the impact of the adverse weather conditions in December 2010. The estimated impact of the severe weather was a reduction in turnover and operating profit of £1.8m and £0.5m respectively.

The Group's cash position was impacted by an increase in trade debtors over the period, partly due to the increased level of invoicing, particularly annual maintenance and support revenues at Software, but also to higher retention amounts at the contract based businesses, specifically Precast Concrete and Eleco Timber Frame. In addition, increased restructuring spend, mainly redundancy costs and expenses related to the rationalisation of the Group's properties, together with reduced profit before interest and tax accounted for cash used in operations during the period.  

The Group continues to closely monitor its cash flow and working capital and efforts are being made to recover overdue debt and retentions as speedily as possible.

Pension Strategy

As mentioned in the Preliminary Statement in October 2010, the Group has been working with the Trustees to reduce investment risk and manage the deficit of the pension plan, which was closed to future accrual in December 2009.

Revisions to the investment strategy have now been agreed, detailed aspects of the transition are now being discussed and the resultant changes are being implemented with a view to full implementation in the coming weeks.

In parallel, certain liability reduction measures have now been agreed and others are in discussion with the Trustees. These are expected to lead in certain cases to increased choices for the members and reduced liabilities and exposure for the fund.

Implementation of some of these measures is dependent upon final agreement between the Trustees and the Group and the overall financial impact of the measures agreed and to be agreed cannot therefore be disclosed at this time.

The Group intends to disclose further details of the above once implemented. In the meantime the deficit shown in the accounts at 30 June 2010 has reduced by £1.5m, primarily due to investment performance in the period from £9.8m to £8.3m.

Change of Accounting Date

The Board has decided for operational reasons to change the accounting reference date of Eleco plc to 31 December. Accordingly, the next audited report and accounts will be for the 18 month period ending 31 December 2011. The preliminary announcement of results for the 18 month period ending 31 December 2011 will be made no later than 31 March 2012 and the audited accounts will be published shortly thereafter.

The Company will also produce a second interim unaudited report for the year and six month period ending 30 June 2011.

We believe this change will give operational advantages in dealing with year end procedures at our overseas businesses, particularly Sweden and Germany.

Board Appointment

The Board is pleased to note that our management was strengthened by the appointment on 27 January of Matthew Turner, as Group Finance Director, initially on a part time basis. He was previously a partner at Grant Thornton UK LLP in their financial advisory division.

Outlook

Our Precast Concrete and Building Products businesses were affected by further adverse weather in January 2011. However, the Board is of the view that our Building Products operations will produce a modest improvement although our Precast Concrete interests will continue to experience operational difficulties until the four major custodial accommodation contracts have been completed, which is expected by the end of June 2011. The Board is also of the view that our Software interests will perform well in the second six months.  

Strategy

I am pleased to report on the excellent progress that has been made by our Software interests, particularly in overseas markets and in the difficult trading conditions of the past three years. I am pleased not least because I was very much involved in our initial decision to invest in construction software. Since then we have assembled a portfolio of leading software brands in Sweden, Germany and the UK and our software has been involved in the project management of major buildings such as "The Shard", in the preparation of the master plan for the Olympics, and has been offered free to all colleges in the UK which are engaged in the provision of construction courses.

On the other hand I have been very disappointed to have had to report the poor operating performance of some of our Building Products interests and our Precast Concrete interests, albeit in market conditions that can only be described as ferocious. Fortunately, we had been conscious at the outset of the need to ensure that adequate cash resources and financing were in place before we embarked on the manufacture of custodial accommodation but the financial and operational risks of our involvement in such major manufacturing projects were far more significant than anticipated at the time.

The custodial accommodation contracts are now nearing completion and my colleagues and I have been reconsidering what our corporate strategy going forward, when these contracts have been completed and worked through our system, should be.  We have decided that Eleco should concentrate on the expansion of its profitable and growing software and service operations on the one hand and on reducing our exposure to our currently loss making Precast Concrete and Building Products interests on the other.

We have so decided because such a strategy would reduce significantly our financing requirements as a Group, because our reduced commitment to Building Products and Precast Concrete would significantly reduce the financial requirements of those businesses which would enable us increasingly to allocate our resources to the expansion of our Software interests.  We also believe that such a strategy would have the support of our shareholders. 

I therefore look forward with my colleagues to changing the emphasis of Eleco from Building Products and Precast Concrete to the expansion of our successful and growing software interests.

John Ketteley

Executive Chairman

1 March 2011

Condensed Consolidated Income Statement

						6 months to 31 December				Year to  30 June
						2010		2009		2010
						(unaudited)		(unaudited)
					Notes	£'000		£'000		£'000
	Revenue				3	31,789		32,499		58,009
	Cost of turnover					(19,786)		(20,316)		(36,556)
	Gross profit					12,003		12,183		21,453
	Distribution costs					(2,240)		(2,416)		(4,128)
	Administrative expenses					(10,731)		(10,755)		(22,806)
	Operating loss before exceptionals				3	(968)		(988)		(5,481)
	Exceptional items				4	(446)		(913)		(3,252)
	Gain on disposal of business					-		-		3,378
	Loss from operations					(1,414)		(1,901)		(5,355)
	Finance income				5	46		29		155
	Finance cost				5	(373)		(350)		(675)
	Loss before tax					(1,741)		(2,222)		(5,875)
	Tax					61		118		419
	Loss for the year					(1,680)		(2,104)		(5,456)
	Attributable to:
	Equity holders of the parent					(1,680)		(2,104)		(5,456)
	Total and continuing loss per share (EPS)
	- basic and diluted				6	(2.8)p		(3.5)p		(9.1)p

Condensed Consolidated Statement of Comprehensive Income

						6 months to 31 December				Year to     30 June
						2010		2009		2010
						(unaudited)		(unaudited)
						£'000		£'000		£'000
	Loss for the period					(1,680)		(2,104)		(5,456)
	Other comprehensive income
	Actuarial gain/(loss) on retirement benefit obligation					1,426		1,936		(625)
	Deferred tax on retirement benefit obligation					(399)		(542)		63
	Translation differences on foreign currency net investments					110		(40)		(44)
	Other comprehensive income net of tax					1,137		1,354		(606)
	Total comprehensive income for the period					(543)		(750)		(6,062)
	Attributable to:
	Equity holders of the parent					(543)		(750)		(6,062)

Condensed Consolidated Statement of Changes in Equity

		Share capital	Share premium	Merger reserve	Translation reserve	Other reserve	Retained earnings	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
	At 1 July 2010	6,066	6,396	7,371	107	(358)	(4,236)	15,346
	Transactions with owners	-	-	-	-	-	-	-
	Loss for the period	-	-	-	-	-	(1,680)	(1,680)
	Other comprehensive income:
	Actuarial gain on defined benefit pension scheme net of tax	-	-	-	-	-	1,027	1,027
	Exchange differences on translation of net investments in foreign operations	-	-	-	110	-	-	110
	Total comprehensive income for the period	-	-	-	110	-	(653)	(543)
	At 31 December 2010 (unaudited)	6,066	6,396	7,371	217	(358)	(4,889)	14,803
		Share capital	Share premium	Merger reserve	Translation reserve	Other reserve	Retained earnings	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
	At 1 July 2009	6,066	6,396	7,371	151	(383)	1,965	21,566
	Dividends	-	-	-	-	-	(239)	(239)
	Share-based payments	-	-	-	-	-	81	81
	Transactions with owners	-	-	-	-	-	(158)	(158)
	Loss for the period	-	-	-	-	-	(2,104)	(2,104)
	Other comprehensive income:
	Actuarial gain on defined benefit pension scheme net of tax	-	-	-	-	-	1,394	1,394
	Exchange differences on translation of net investments in foreign operations	-	-	-	(40)	-	-	(40)
	Total comprehensive income for the period	-	-	-	(40)	-	(710)	(750)
	At 31 December 2009 (unaudited)	6,066	6,396	7,371	111	(383)	1,097	20,658
		Share capital	Share premium	Merger reserve	Translation reserve	Other reserve	Retained earnings	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
	At 1 July 2009	6,066	6,396	7,371	151	(383)	1,965	21,566
	Dividends	-	-	-	-	-	(239)	(239)
	Share-based payments	-	-	-	-	-	56	56
	Other	-	-	-	-	25	-	25
	Transactions with owners	-	-	-	-	25	(183)	(158)
	Loss for the period	-	-	-	-	-	(5,456)	(5,456)
	Other comprehensive income:
	Actuarial loss on defined benefit pension scheme net of tax	-	-	-	-	-	(562)	(562)
	Exchange differences on translation of net investments in foreign operations	-	-	-	(44)	-	-	(44)
	Total comprehensive income for the period	-	-	-	(44)	-	(6,018)	(6,062)
	At 30 June 2010	6,066	6,396	7,371	107	(358)	(4,236)	15,346

Condensed Consolidated Balance Sheet

						31 December				30 June
						2010		2009		2010
						(unaudited)		(unaudited)
					Notes	£'000		£'000		£'000
	Non-current assets
	Goodwill					13,383		13,470		12,950
	Other intangible assets					2,888		3,319		2,927
	Property, plant and equipment					10,389		12,123		11,342
	Deferred tax assets					2,338		2,135		2,750
	Total non-current assets					28,998		31,047		29,969
	Current assets
	Inventories					3,947		3,692		3,977
	Trade and other receivables					14,211		15,086		11,639
	Current tax assets					120		234		325
	Cash and cash equivalents					3,746		2,398		6,009
	Total current assets					22,024		21,410		21,950
	Total assets					51,022		52,457		51,919
	Current liabilities
	Borrowings					(675)		-		(225)
	Obligations under finance leases					(276)		(356)		(293)
	Trade and other payables					(10,893)		(11,445)		(10,177)
	Provisions					(455)		-		(1,120)
	Current tax liabilities					(207)		(313)		(96)
	Accruals and deferred income					(6,351)		(6,644)		(6,763)
	Total current liabilities					(18,857)		(18,758)		(18,674)
	Non-current liabilities
	Borrowings					(8,725)		(4,500)		(7,675)
	Obligations under finance leases					(100)		(231)		(100)
	Deferred tax liabilities					(70)		(585)		(303)
	Other non-current liabilities					(119)		(101)		-
	Retirement benefit obligation					(8,348)		(7,624)		(9,821)
	Total non-current liabilities					(17,362)		(13,041)		(17,899)
	Total liabilities					(36,219)		(31,799)		(36,573)
	Net assets					14,803		20,658		15,346
	Equity
	Share capital					6,066		6,066		6,066
	Share premium account					6,396		6,396		6,396
	Merger reserve					7,371		7,371		7,371
	Translation reserve					217		111		107
	Other reserve					(358)		(383)		(358)
	Retained earnings					(4,889)		1,097		(4,236)
	Equity attributable to shareholders of the parent					14,803		20,658		15,346

Condensed Consolidated Statement of Cash Flows

						6 months to 31 December				Year to  30 June
						2010		2009		2010
						(unaudited)		(unaudited)
					Notes	£'000		£'000		£'000
	Cash flows from operating activities
	Loss before interest and tax					(1,414)		(1,901)		(5,355)
	Depreciation and impairment charge					1,022		947		2,254
	Amortisation and impairment charge					232		269		1,284
	(Profit)/loss on sale of property, plant and equipment					(278)		(18)		16
	Profit on sale of business					-		-		(2,460)
	Share-based payment charge					-		81		82
	Retirement benefit obligation					(340)		(331)		(964)
	(Decrease)/increase in provisions					(665)		-		892
	Cash generated from operations before working capital movements					(1,443)		(953)		(4,251)
	(Increase)/decrease in trade and other receivables					(2,273)		(1,760)		1,332
	Decrease/(increase) in inventories and work in progress					93		50		(248)
	Decrease in trade and other payables					(127)		(16)		(1,289)
	Cash used in operations					(3,750)		(2,679)		(4,456)
	Interest paid					(67)		(59)		(112)
	Interest received					47		39		185
	Income tax received/(paid)					145		(146)		(362)
	Net cash outflow from operating activities					(3,625)		(2,845)		(4,745)
	Net cash used in investing activities
	Purchase of intangible assets					(174)		(51)		(178)
	Purchase of property, plant and equipment					(487)		(508)		(1,049)
	Acquisition of subsidiary undertakings net of cash acquired				7	(172)		(46)		-
	Proceeds from sale of property, plant, equipment  and intangible assets					726		79		133
	Sale of business net of expenses					-		-		2,761
	Net cash (outflow)/inflow from investing activities					(107)		(526)		1,667
	Net cash used in financing activities
	Proceeds from new bank loan					5,200		1,000		7,200
	Repayment of bank loans					(3,700)		(1,000)		(3,800)
	Repayments of obligations under finance leases					(197)		(191)		(388)
	Equity dividends paid					-		(239)		(239)
	Net cash inflow/(outflow) from financing activities					1,303		(430)		2,773
	Net decrease in cash and cash equivalents					(2,429)		(3,801)		(305)
	Cash and cash equivalents at beginning of period					6,009		6,091		6,091
	Effects of changes in foreign exchange rates					166		108		223
	Cash and cash equivalents at end of period					3,746		2,398		6,009

Notes to the Condensed Consolidated Interim Financial Statements

1. General information

The company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 66 Clifton Street, London, EC2A 4HB.

The company is listed on the Alternative Investment Market ("AIM")

The condensed consolidated interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's consolidated financial statements for the year ended 30 June 2010 have been filed and the audit report was not qualified and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.

2. Basis of preparation

The condensed consolidated interim financial statements for the six months to 31 December 2010 have been prepared in accordance with the accounting policies which will be applied in the year end financial statements to 31 December 2011. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and as adopted for use in the European Union that are effective at 31 December 2010.

The condensed consolidated interim financial statements are unaudited and have not been subject to review. They do not include all the information and disclosures required in the annual financial statements, and therefore should be read in conjunction with the Group's annual financial statements as at 30 June 2010.

The implementation of the Group's turnaround plan is ongoing and the Directors have reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the condensed consolidated interim financial information. 

New accounting standards and interpretations are effective for the first time in the current period but have had no impact on the results or financial position of the Group. Furthermore, new standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the current period have not been adopted early.

Estimates

Application of the Group's accounting policies in preparing condensed consolidated interim financial statements requires management to make judgements and estimates that affect the reported amount of assets and liabilities, revenues and expenses.  Actual results may ultimately differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30 June 2010.

Risks and uncertainties

A summary of the Group's principal risks and uncertainties was provided on page 11 of the 2010 annual report and accounts. The Board considers these risks and uncertainties are still relevant to the current financial year and the impact of changes in the UK economy is reviewed in the Chairman's statement contained in this report.

3. Segmental information

For management purposes, the Group is organised into three operating divisions, Precast Concrete, Building Products and Software.

	6 months to 31 December 2010 (unaudited)
			Building Systems
			Precast Concrete	Building Products	Software	Elimination	Group
			£'000	£'000	£'000	£'000	£'000
	Revenue		14,317	10,277	7,195	-	31,789
	Inter-segment revenue		-	-	95	(95)	-
	Total segment revenue		14,317	10,277	7,290	(95)	31,789
	Adjusted operating profit/(loss)		(1,457)	10	711		(736)
	Amortisation of intangible assets		(51)	(4)	(177)		(232)
	Restructuring costs		(233)	(198)	(15)		(446)
	Segment result		(1,741)	(192)	519		(1,414)
	Net finance cost						(327)
	Loss before tax						(1,741)
	Tax						61
	Loss after tax						(1,680)
	6 months to 31 December 2009 (unaudited)
			Building Systems
			Precast Concrete	Building Products	Software	Elimination	Group
			£'000	£'000	£'000	£'000	£'000
	Revenue		17,399	8,753	6,347	-	32,499
	Inter-segment revenue		-	3	101	(104)	-
	Total segment revenue		17,399	8,756	6,448	(104)	32,499
	Adjusted operating profit/(loss)		(185)	(797)	263		(719)
	Amortisation of intangible assets		(93)	(8)	(168)		(269)
	Restructuring costs		(66)	(293)	-		(359)
	Intellectual property dispute		-	(554)	-		(554)
	Segment result		(344)	(1,652)	95		(1,901)
	Net finance cost						(321)
	Loss before tax						(2,222)
	Tax						118
	Loss after tax						(2,104)
	12 months to 30 June 2010
			Building Systems
			Precast Concrete	Building Products	Software	Elimination	Group
			£'000	£'000	£'000	£'000	£'000
	Revenue		26,838	17,759	13,412	-	58,009
	Inter-segment revenue				249	(249)	-
	Total segment revenue		26,838	17,759	13,661	(249)	58,009
	Adjusted operating profit/(loss)		(3,898)	(1,794)	769		(4,923)
	Amortisation of intangible assets		(185)	(16)	(357)		(558)
	Gain on disposal of business		-	3,378	-		3,378
	Impairment charges		(1,151)	-	-		(1,151)
	Restructuring costs		(605)	(477)	(101)		(1,183)
	Intellectual property dispute		-	(918)	-		(918)
	Segment result		(5,839)	173	311		(5,355)
	Net finance cost						(520)
	Loss before tax						(5,875)
	Tax						419
	Loss after tax						(5,456)

4. Exceptional items

Exceptional items represent costs considered necessary to be separately disclosed by virtue of their size or nature.

				6 months to 31 December				Year to  30 June
				2010		2009		2010
				(unaudited)		(unaudited)
				£'000		£'000		£'000
	Impairment of intangible assets			-		-		726
	Impairment of tangible assets			-		-		425
	Restructuring costs			446		359		1,183
	Intellectual property dispute			-		554		918
				446		913		3,252

Restructuring costs comprise cash and non-cash costs associated with the Group restructuring programme, mainly in the UK, and primarily relate to redundancy and business relocation costs.

Intellectual property costs relate to the legal dispute concerning the ownership and rights of software used in the German nail plate business disposed on 30 June 2010. The costs for the year to 30 June 2010 have been restated to show the comparative against the costs incurred for the six month period to 31 December 2009.

5. Net finance (cost)/income

			6 months to 31 December				Year to 30 June
			2010		2009		2010
			(unaudited)		(unaudited)
			£'000		£'000		£'000
	Finance income
	Bank and other interest receivable		46		29		55
	Loan note interest receivable		-		-		100
	Finance costs
	Bank overdraft and loan interest		(56)		(37)		(81)
	Finance leases and hire purchase contracts		(11)		(20)		(33)
	Net return on pension scheme assets and liabilities		(306)		(293)		(561)
	Total net finance cost		(327)		(321)		(520)

6. Loss per share

The calculations of the loss per share are based on the total loss after tax attributable to ordinary equity shareholders of the Company and the weighted average number of shares in issue for the reporting period.

		6 months to 31 December				Year to 30 June
		2010		2009		2010
		(unaudited)		(unaudited)
	Loss after taxation	£(1,680,000)		£(2,104,000)		£(5,456,000)
	Weighted average number of shares in issue in the period	59,761,646		59,701,646		59,713,514
	Dilutive effect of share options	-		-		-
	Number of shares for diluted earnings per share	59,761,646		59,701,646		59,713,514
	Basic loss per share	(2.8)	p	(3.5)	p	(9.1)	p
	Diluted loss per share	(2.8)	p	(3.5)	p	(9.1)	p

There is no dilution in the loss per share calculation at 31 December 2010 due to the non-achievement of the share option performance requirements. The diluted loss per share is the same as the basic loss per share for the current period.

7. Acquisitions

On the 1 September 2010 the Group acquired the business and certain assets of Lubekonsult AB, which provides cost estimation services and software to the Swedish ventilation market, for a total consideration of £393,000. The consideration comprised the payment of £172,000 in cash satisfied from the Group's existing resources and deferred consideration of £221,000.

An analysis of the provisional fair value of the Lubekonsult AB net assets acquired and the fair value of the consideration paid is set out below:

							Book value	Fair value adjustments	Provisional fair value
							£'000	£'000	£'000
	Tangible assets						20		20
	Inventories						11		11
	Other debtors						3		3
							34	-	34
	Deferred income						(7)		(7)
	Other creditors						(14)		(14)
							(21)	-	(21)
	Net assets						13	-	13
	Goodwill								380
	Total consideration								393
	Satisfied by:
	Cash								172
	Deferred purchase consideration								221
									393

Included in the £380,000 of goodwill recognised above are certain intangible assets that cannot be individually, separately and reliably measured from the acquiree due to their nature. These items include the value of the management and workforce together with synergies that are expected to be gained from being part of the Group.  

8. Related Party Disclosures

All intra-group transactions have been eliminated on consolidation at 31 December 2010.

An amount of £13,000 (H1 2009:  £13,000) was paid to J H B Ketteley & Co Limited under a lease for occupation by the Group of 66 Clifton Street, London, EC2A 4HB.  

 

END

 

 

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