Interim Results
Eleco PLC
24 March 2006
For release 7.00am 24 March 2006
ELECO PLC
The Building Systems and Construction Software Group
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2005
Enquiries to:
John Ketteley, Executive Chairman Tel: 01920 443 830
Eleco plc john.ketteley@eleco.com
David Dannhauser, Finance Director Tel: 01920 443 830
Eleco plc david.dannhauser@eleco.com
Tarquin Edwards Tel: 07879 458 364
Binns & Co PR Tel: 020 7786 9600
'All major operations contribute to a strong first half performance'
Highlights
•Turnover from continuing operations up 17 per cent. to £26.50m (2004:
£22.73m).
• Operating profits from continuing operations up 147 per cent. to
£2,047,000 (2004: £814,000) - reflecting significantly increased operating
profits from Building Systems and good progress from the Software Division
which, before goodwill amortisation and central costs, has made its first
positive contribution to Group results.
•Profits on ordinary activities before taxation up 317 per cent. to
£1,913,000 (2004: £459,000).
•Earnings per share up 490 per cent. to 2.8p (2004: 0.5p).
•Very strong cash flow. Net operating cash inflow in the half year of
£3,547,000 (2004: net outflow £218,000)
•Interim dividend up 50 per cent. to 0.60p per share (2004: 0.40p).
John Ketteley, Executive Chairman of Eleco plc, commented:
'I believe that the improvement in your Company's performance over the past 12
months is due in part to the synergies we are beginning to realise from the
interaction of our highly skilled software developers and design engineers in
the development of products that the market wants and needs, often as a result
of the introduction of new building regulations.'
'I take encouragement from the strong trading performance and positive
operational cash flow of your Company in the period under review. This follows a
similarly strong performance in the six months ended 30 June 2005. As a
consequence, your Company is in a strong financial position, has made a good
start to the second half year and I look forward to the remainder of the year
with confidence'.
Chairman's Statement
I am pleased to report on a first half in which all major operations contributed
to a strong performance.
Turnover from continuing operations in the six months ended 31 December 2005
amounted to £26,499,000 (2004: £22,732,000), an increase of 16.6 per cent. over
turnover for the corresponding period last year. Building Systems' turnover was
£23,412,000 (2004: £20,174,000), an increase of 16.1 per cent.. Eleco Software's
turnover was £3,087,000 (2004: £2,558,000), an increase of 20.7 per cent..
Following first time adoption of FRS 17 and the corresponding restatement of the
comparative periods, operating profit from continuing operations increased by
147 per cent. to £2,007,000 (2004: £814,000), comprising a significantly
increased operating profit from Building Systems of £2,270,000 (2004:
£1,347,000) and a much reduced operating loss from Eleco Software of £263,000
(2004: £533,000).
Profit on ordinary activities before tax amounted to £1,913,000 (2004: £459,000)
with earnings per share raised to 2.8p (2004: 0.5p).
Net cash balances during the period under review increased by £621,000 to
£797,000, compared with £176,000 at 30 June 2005. Operating cash flow was again
very strong with a net cash inflow of £3,547,000 from operations, compared with
a net outflow of £218,000 in the corresponding period last year.
Having regard to the strong performance in the period under review the Board has
declared an interim dividend, increased by 50 per cent to 0.60p per share (2004:
0.40p), part of the increase being in order to bring a better balance between
the interim and final dividends. The interim dividend will be paid on 21 April
2006 to Shareholders on the Register on 7 April 2006.
Eleco Building Systems
Precast Concrete
The firm interest in Bell & Webster Concrete's products to which I referred in
my Chairman's Statement in October 2005 was translated into a good order flow in
the period under review. In addition to increasing demand for its well-proven
'FastBuild' accommodation products, Bell & Webster Concrete also experienced
good demand for its retaining walls and stadia products.
As a consequence it experienced an excellent six months trading and produced an
appreciably higher contribution to Group profits in the period than for the
corresponding period last year, which had been adversely affected by disruption
to its production caused by the Lancaster University Student accommodation
contract.
Roofing, Cladding and Panels
Turnover and profits of Roofing, Cladding and Panels operations in the period
under review were higher than those for the corresponding period last year.
ElecoFrame(R), our patented engineered wall framing system, continues to gain
acceptance in the market and it has been short listed in the Best Offsite
Solution category of the New Products Awards at the forthcoming Interbuild 2006
Exhibition.
The metal roofing and external cladding activities of SpeedDeck Building
Systems, Downer Cladding Systems and Prompt Profiles experienced a good six
months trading with both turnover and operating profits up on the corresponding
period last year.
Stramit Industries continues to make progress in developing market opportunities
for ElecoFloor(R) and reducing its dependence on its interior partitioning
business.
Timber Engineering Systems
Turnover and profits of our Timber Engineering Systems' operations in the UK,
Germany and South Africa were all ahead of those for the corresponding period
last year.
In the UK, profits of Gang-Nail Systems for the period under review were
comfortably ahead of those for the corresponding period last year. Gang-Nail
Systems is supporting, with the supply of equipment and material to the British
Red Cross, the establishment of a truss plant in Aceh Province, Indonesia to
produce roofs for houses for 10,000 people whose houses were destroyed in the
Tsunami catastrophe there in December 2004.
In Germany, Eleco Bauprodukte again delivered turnover growth and a substantial
increase in profits.
In South Africa, International Truss Systems, having introduced its new
generation software to its clients, achieved record turnover and profits for a
six-month period.
Eleco Software
Eleco Software made good progress in the period under review, evidenced by a
useful increase in turnover and achieved, before goodwill amortisation and
central management cost, its first positive contribution to the Group's results.
In the UK, Eleco Software made excellent progress and converted a loss in the
corresponding period last year into a profit this year. Increased sales of its
market leading, timber frame software and Staircon(R) being largely responsible
for the turnaround. It also developed upgraded software applications for Bell &
Webster Concrete and Eleco Timber Frame, which are already enhancing the
efficiency of their operations.
In Sweden, Consultec Group produced improved results. We intend to introduce for
the timber engineering market a Swedish version of Gang-Nail Systems' M@trix
enterprise management software suite later this year.
In Germany, Eleco Software made a profit in the period under review, compared to
a loss in the corresponding period last year. We understand Arcon(R) continues
to be amongst the best selling 3D architectural visualisation software in this
market and we shall be launching a new digitally re-mastered version with added
features in April this year, as well as restructuring our distribution
arrangements with a view to increasing our retained margins.
We continue to expand our software distribution arrangements in world markets.
In September 2005, an agreement was entered into with Micro Application, a
leading retail software distributor in the French market, to distribute a new
French version of Arcon(R). I am pleased to say that Arcon(R) became the best
selling software in its category in the retail market in France in the quarter
ended December 2005 and significantly higher royalties accrued from this
territory than had been the experience previously.
Outlook
I believe that the improvement in your Company's performance over the past 12
months is due in part to the synergies we are beginning to realise from the
interaction of our highly skilled software developers and design engineers in
the development of products that the market wants and needs, often as a result
of the introduction of new building regulations. The construction industry in
all the markets in which we operate is becoming increasingly more complex and
regulated and it is my view that the value of our software capability to our
Building Systems operations will become increasingly apparent as we go forward.
I take encouragement from the strong trading performance and positive
operational cash flow of your Company in the period under review. This follows a
similarly strong performance in the six months ended 30 June 2005. As a
consequence, your Company is in a strong financial position, has made a good
start to the second half year and I look forward to the remainder of the year
with confidence.
John Ketteley
Executive Chairman
24 March 2006
Eleco plc
Consolidated Profit and Loss Account
(Unaudited)
Half year ended Year ended
31 December 30 June
2005 2004 2005
(Restated) (Restated)
£'000 £'000 £'000
Turnover
Continuing operations 26,499 22,732 47,836
Discontinued operations - 150 182
26,499 22,882 48,018
Operating profit
Continuing operations 2,047 814 2,735
Acquisitions (40) - -
Total Continuing operations 2,007 814 2,735
Discontinued operations - (55) (55)
2,007 759 2,680
Loss on termination of discontinued operations - (155) (124)
Profit on ordinary activities before interest 2,007 604 2,556
Net interest payable (91) (142) (226)
Other finance charge (3) (3) (5)
Profit on ordinary activities before tax 1,913 459 2,325
Taxation (531) (225) (242)
Profit on ordinary activities after tax 1,382 234 2,083
Dividend on ordinary shares (Note 7) (487) (426) (621)
Retained profit/(loss) 895 (192) 1,462
Earnings per share (Note 3) 2.8p 0.5p 4.3p
Diluted earnings per share (Note 4) 2.8p 0.5p 4.3p
Notes
1. The interim results, which are unaudited, have been prepared on the basis of the
accounting policies adopted for the year ended 30 June 2005, as set out in the
Company's Annual Report and Accounts, except as described in note 7 below. These
interim accounts do not constitute the Company's statutory accounts for the
period.
2. An interim dividend of 0.60p has been declared and will be payable on 21 April
2006 to shareholders on the register on 7 April 2006.
3. Based on the profit attributable to shareholders and a weighted average of
48,683,868 ordinary shares (Dec 2004 - 48,677,587 and Jun 2005 - 48,680,560).
4. Based on the profit attributable to shareholders and a diluted weighted average of
48,726,345 ordinary shares (Dec 2004 - 48,695,790 and Jun 2005 - 48,700,519). The
dilution is caused by outstanding share options.
5. On 10 October 2005, the Group acquired the balancing 95% issued share capital of
Esign GmbH, not already owned, for a nominal cash consideration. As a result of
the acquisition, the carrying value of the investment at 30 June 2005 of £740,000
now forms part of the goodwill arising on this acquisition.
Goodwill on acquisition of £793,000 has been capitalised and included within fixed
assets. Cash amounting to £33,000 was acquired.
6. The comparative figures for the year ended 30 June 2005 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.
7. The Company has adopted the following accounting standards in the year. The
comparative figures at 31 December 2004 and 30 June 2005 have been restated.
FRS 17 Retirement benefits - requires changes to the accounting treatment of
defined benefit arrangements. The Company now includes the fair value of assets
and liabilities of these arrangements in the balance sheet. Current and past
service costs together with financial returns are included in the profit and loss
account. Actuarial gains and losses are recognised in the statement of total
recognised gains and losses.
FRS 21 Events after the balance sheet date - includes the requirement that
dividends be recognised when declared, not when proposed.
Half year ended Year ended
31 December 30 June
2005 2004 2005
(Restated) (Restated)
Pence Pence Pence
Final dividend (previous year) 1.00 0.875 0.875
Interim dividend (current year) - - 0.40
1.00 0.875 1.275
8. Copies of this interim statement and results, which were approved by the Board on
23 March 2006 are available from the registered office of the Company, which is at
Eleco House, 15 Gentlemen's Field, Westmill Road, Ware, Herts. SG12 0EF.
Statement of Total Recognised Gains and Losses
(Unaudited)
Half year ended Year ended
31 December 30 June
2005 2004 2005
(Restated) (Restated)
£'000 £'000 £'000
Profit for the period 1,382 234 2,083
Translation differences on foreign currency net 165 34 (78)
investments
Actuarial loss on retirement benefit schemes - - (2,402)
Total recognised profits/(losses) for the period 1,547 268 (397)
Reconciliation of Movement in Equity Shareholders' Funds
(Unaudited)
Half year ended Year ended
31 December 30 June
2005 2004 2005
(Restated) (Restated)
£'000 £'000 £'000
Profit for the period 1,382 234 2,083
Other recognised profits/(losses) relating to the 165 34 (2,480)
period
LTIP expense 73 94 203
Dividends (487) (426) (621)
Issue of ordinary shares 1 3 3
Increase/(decrease) in equity shareholders' funds 1,134 (61) (812)
Opening equity shareholders' funds as previously 8,610 11,581 11,581
reported
Prior year adjustments:
FRS 17 Pension deficit - (2,585) (2,585)
FRS 21 Dividend - 426 426
Opening equity shareholders' funds as restated 8,610 9,422 9,422
Increase/(decrease) in equity shareholders' funds 1,134 (61) (812)
Closing equity shareholders' funds 9,744 9,361 8,610
Eleco plc
Summarised Consolidated Balance Sheet
(Unaudited)
31 December 30 June
2005 2004 2005
(Restated) (Restated)
£'000 £'000 £'000
Fixed assets
Intangible assets 6,217 5,892 5,668
Tangible assets 8,505 8,019 8,289
Investments - 615 740
14,722 14,526 14,697
Current assets
Stocks 2,433 2,819 2,166
Debtors 9,661 9,983 10,035
Cash at bank and in hand 3,382 2,540 2,707
15,476 15,342 14,908
Creditors: amounts falling due within (14,360) (16,277) (14,822)
one year
Net current assets/(liabilities) 1,116 (935) 86
Total assets less current liabilities 15,838 13,591 14,783
Creditors: amounts falling due after more than (1,365) (1,461) (1,409)
one year
Provisions for liabilities and charges (265) (509) (208)
Net assets excluding retirement benefit 14,208 11,621 13,166
liability
Retirement benefit liability (4,464) (2,260) (4,556)
Net assets 9,744 9,361 8,610
Capital and reserves
Called up share capital 4,911 4,911 4,911
Share premium account 6,023 6,022 6,022
Merger reserve 367 367 367
Other reserve (50) (50) (50)
Profit and loss account (1,507) (1,889) (2,640)
Equity shareholders' funds 9,744 9,361 8,610
Eleco plc
Consolidated cash flow statement
(Unaudited)
Half year ended Year ended
31 December 30 June
2005 2004 2005
(Restated) (Restated)
£'000 £'000 £'000
Operating activities
Net cash inflow/(outflow) from continuing 3,547 (198) 3,999
operating activities
Net cash inflow/(outflow) from discontinued - (20) 56
operating activities
Net cash inflow/(outflow) from operating 3,547 (218) 4,055
activities
Returns on investment and servicing of finance
Net interest paid (96) (136) (237)
Net cash outflow from returns on investment and (96) (136) (237)
servicing of finance
Net cash outflow from taxation (409) (349) (532)
Capital expenditure and financial investment
Purchase of fixed assets (729) (548) (1,269)
Disposal of tangible fixed assets and 56 95 100
investments
Purchase of investment (37) (92) (217)
Net cash outflow from capital expenditure and financial (710) (545) (1,386)
investment
Acquisitions and disposals
Purchase of subsidiary undertakings net of cash (1,092) (97) (333)
acquired
Sale of subsidiary undertaking's operations - - 163
Net cash outflow from acquisitions and disposals (1,092) (97) (170)
Equity dividends paid (487) (426) (621)
Net cash inflow/(outflow) before financing 753 (1,771) 1,109
Financing
New bank loans 650 - 150
Repayment of principal under finance leases (149) (88) (293)
Repayment of bank loans (445) (392) (746)
Issue of ordinary shares 1 3 3
Net cash inflow/(outflow) from financing 57 (477) (886)
Increase/(decrease) in cash in the period 810 (2,248) 223
Eleco plc
Consolidated cash flow statement - reconciliations
Reconciliation of operating profit to net cash flow from operating activities
Continuing Discontinued
(Unaudited) (Unaudited)
Half year ended Year ended Half year ended Year ended
31 December 30 June 31 December 30 June
2005 2004 2005 2005 2004 2005
(Restated) (Restated) (Restated) (Restated)
£'000 £'000 £'000 £'000 £'000 £'000
Operating profit/(loss) 2,007 814 2,735 - (55) (55)
Termination costs and - - - - - (124)
losses
Depreciation charge 699 669 1,334 - 10 13
Amortisation of intangible 234 171 545 - - -
assets
LTIP expense 73 94 203 - - -
(Profit)/loss on sale of (7) 3 (5) - - 3
tangible assets
Changes in intra-group - 88 (114) - (88) 114
indebtedness
Retirement benefit (95) (119) (226) - - -
liability
Working capital decrease/ 636 (1,918) (473) - 113 105
(increase)
Net cash inflow/(outflow) 3,547 (198) 3,999 - (20) 56
from operating activities
Reconciliation of net cash flow to movement in net debt
(Unaudited) Year
Half year ended ended
31 December 30 June
2005 2004 2005
£'000 £'000 £'000
Increase/(decrease) in cash in the period 810 (2,248) 223
Cash flow from movements in debt and lease (56) 480 889
financing
Decrease/increase) in net debt resulting from 754 (1,768) 1,112
cash flows
New finance leases (220) (145) (555)
Effects of changes in foreign exchange rates 87 137 (71)
Decrease/(increase) in net debt 621 (1,776) 486
Opening net cash/(debt) 176 (310) (310)
Closing net cash/(debt) 797 (2,086) 176
Segmental analysis
Group turnover and profits were attributable as follows
External sales Profit
(Unaudited) (Unaudited)
Half year ended Year ended Half year ended Year ended
31 December 30 June 31 December 30 June
2005 2004 2005 2005 2004 2005
(Restated) (Restated) (Restated) (Restated)
£'000 £'000 £'000 £'000 £'000 £'000
Continuing activities
Building systems 23,412 20,174 42,333 2,270 1,347 3,768
Software systems 3,087 2,558 5,503 (263) (533) (1,033)
Total continuing 26,499 22,732 47,836 2,007 814 2,735
Discontinued activities
Software systems - 150 182 - (55) (55)
Total discontinued - 150 182 - (55) (55)
Exceptional losses - discontinued - (155) (124)
activities
Profit before interest 2,007 604 2,556
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