Final Results

Eleco PLC
2 October 2000



                       Preliminary results for the year ending
                                     30 June 2000

 
                                      Highlights

                                Building on Technology

 
 
* Turnover up 2.6% at £27.5m (£26.9m)   

* Operating profit up 2.3% at £1.72m (£1.68m) 

* Profit before tax on ordinary activities up 1.1% at £1.519m (£1.503m) 

* Building Systems turnover up 2.9% to £25.4m (£24.7m). Operating profit up
  19.8% to £2.28m (£1.90m) 

* Earnings up 2.8% at 3.6p per share (3.5p) 

* Dividends up 25% at 1.0p per share (0.8p) 

* Capital expenditure of £2.8m (£1.1m) 


Chairman John Ketteley commented:
 
'Our objective this year has been to transform Eleco into a modern building
systems and engineering Group that is confident in its ability to sustain a
strategy for growth and the creation of shareholder value. The year has
started in line with expectations and we are well positioned to meet the
challenge ahead.'
 
 
 
Enquiries to:
 
John Ketteley, Executive Chairman               01992 440 311
Eleco plc
 
David Dannhauser, Finance Director              01992 440 311
Eleco plc
 
David Millham/Tarquin Edwards                   020 7256 5756
Millham Communications


Chairman's Statement 
 
I am pleased to report on a year during which the Group has continued to make
progress and build on the recovery started in 1997. Sales and operating
profit have again increased and operational cash flow has been strong,
enabling us to finance a major capital investment programme whilst
maintaining low gearing and a sound financial position. As a consequence,
your Board is again in a position to recommend an increased final dividend,
well covered by earnings.
 
During the last twelve months we have continued to work on the implementation
of a strategy directed towards:
 
 
* Upgrading and broadening the core product range; 
 
* Providing high quality technical support to our customers; 
 
* Enhancing the Group's capabilities for developing innovative and practical
  solutions to the problems facing the construction industry. 
  

The realisation of these aims will be greatly assisted by the recent
acquisition of MBA Computing, a leading developer of software which is
tailored to the design needs of architects and housebuilders.


Results

Group turnover for the year ended 30 June 2000 was £27.5 million (1999: £26.9
million), an increase of 2.6 per cent.
 
Group operating profit was £1,719,000 (1999: £1,680,000), an increase of 2.3
per cent. Net interest charges were £147,000 (1999: £192,000) and were
covered 11.7 times by operating profit (1999: 8.8 times).
 
Profit on ordinary activities before tax was £1,519,000 (1999: £1,503,000).
Earnings per share were 3.6p (1999: 3.5p).
 
Capital expenditure in the year under review was £2,816,000 compared with
£1,119,000 in the previous year, and was financed partly from operating cash
flow and partly by increased borrowings. Net bank borrowings and leasing
obligations increased accordingly to £1,857,000 at 30 June 2000 from £502,000
at 30 June 1999. Gearing at 30 June 2000 was 24.6 per cent. compared with 7.6
per cent. at 30 June 1999.


Dividend

The Board has proposed a final dividend of 0.65p per share (1999: 0.50p per
share) payable on 12 December 2000 to shareholders on the Register on 1
December 2000. The proposed final dividend, if approved by shareholders,
would result in the payment of dividends per share totalling 1.00p (1999:
0.80p), an increase of 25 per cent., and would be covered 3.6 times by
earnings (1999: 4.4 times).

 
Operating Review 
 
Building Systems  
 
Sales of Building Systems in the year under review were £25.4 million (1999:
£24.7 million), an increase of 2.9 per cent. Operating profit amounted to
£2.28 million (1999: £1.90 million), an increase of 19.8 per cent. Building
Systems accounted for 92.1 per cent. of Group sales in the year under review.
 
Roof and Panel Systems 
 
SpeedDeck recorded an improved performance in the latter part of the year,
which enabled it to recover from a slow start to the year and to achieve
record profits for the year as a whole. Major projects undertaken included
the on-site rolling of a 53,000 square metre SpeedDeck roof on Amazon.com's
major new warehousing complex at Milton Keynes. A second mobile rollformer
for on-site rolling is in the final stages of commissioning. It is expected
to be fully operational by October and will add greater flexibility to our
on-site rolling operations. The production line for Vitesse(R) composite
wall-cladding panels is also expected to come on stream in the latter part of
2000.
 
The SpeedDeck Designer 2.0 software package, which was developed in
conjunction with Forma Communications, has been very well received by
architects, roofing specifiers and the technical trade press. I am confident
that it will make a significant contribution to the development of
SpeedDeck's roofing business.
 
The actions taken by Stramit in the first half of the year to counter
pressure on selling prices had a beneficial effect on performance in the
second half.

Structural Precast Concrete Systems

Bell & Webster Concrete made excellent progress. Sales and profit improved
and the major expansion of its production facilities at Grantham was
successfully completed in May 2000. The increased capacity will enable us to
satisfy continuing demand for our factory made, precast concrete 'flat-pack'
rooms, which are increasingly used in fast-track building projects,
particularly in the hotel and student accommodation sectors.
 
Bell & Webster Concrete is also a major supplier of retaining walls and
ground beams, as well as terracing for sports stadia and cinemas. Projects
completed and in hand include terracing for the Star City cinema complex in
Birmingham, Virgin Cinemas and West Ham United F.C.

Timber Engineering Systems

Gang-Nail Systems, Eleco Bauprodukte and International Truss Systems have all
made important contributions to the success of our Timber Engineering Systems
business in the year under review.
 
In the UK, Gang-Nail Systems benefited from a buoyant housing sector and
strong demand for connector plates from Eleco Bauprodukte. In Sterling terms,
the profit contribution of Eleco Bauprodukte was diluted by of the weakness
of the Euro. International Truss Systems made an increased contribution to
Group profit despite the weakness of the South African Rand.
 
Gang-Nail's Ecojoist floor system is gaining market share and has now been
approved by three leading national housebuilders. In September 2000, we
installed a powerful new software program to enable Gang-Nail to provide a
rapid response design service for the Ecojoist flooring system to Gang-Nail
fabricators and housebuilders. The software program was developed in
conjunction with MBA Computing.
 
The final version of the new Gang-Nail Roof and Gang-Nail Truss software, the
beta version of which was released earlier this year, will be available in
October 2000. Customer training has already commenced and will gather impetus
during the winter, when truss fabricator activity normally slackens.
 
Rail and Marine 
 
Sales of Rail and Marine in the year under review were £2.2 million (1999:
£2.1 million), an increase of 2.7 per cent. Operating profit was £134,000
(1999: £375,000). Rail and Marine accounted for 7.9 per cent. of Group sales
in the year under review.
 
The results of Rail and Marine were adversely affected last year by three
factors, namely the anticipated reduction of demand from the UK rail and
defence industries; development costs relating to a new rail measurement and
data logging trolley; and costs associated with the relocation of Tergor's
business to Abtus at Haverhill. The current year will benefit from the
reduction in the cost base resulting from the consolidation of our rail and
marine operations at Haverhill.
 
Whilst defence industry demand continues at a low level, prospects for rail
equipment in the current year, particularly in overseas markets, are
positive. The rail measurement and data logging trolley and the RailRod
ultrasonic measuring device for overhead electric cables, the rights to which
were acquired during the year, were well received at the REMSA Global Railway
Expo 2000 Exhibition in Dallas, USA in September 2000.
 
Employees 
 
I would like to welcome Paul Taylor to the Board as Group Operations
Director. He has already made a valuable contribution in his short time with
Eleco.
 
I am pleased to say that the Employees' Home Computer Scheme introduced
earlier this year was taken up by more than 70 per cent. of eligible
employees. I am also encouraged by the number of employees enrolling for Open
University courses under our Employee Further Education Sponsorship Scheme.
 
The Sharesave Scheme, which was available for participation by all of our
employees, expired in 1999. Your Board consider that the Scheme provided an
appropriate and worthwhile way for our employees to invest in Eleco.
Accordingly, a proposal to introduce a new Sharesave Scheme will be submitted
at the forthcoming Annual General Meeting for consideration by shareholders.
 
Our employees are the keys to our future success and I should like to thank
them all on your behalf for their individual and collective contribution in
this past year.
 
Current Trading 

The Group has started the year in line with expectations. We are well placed
to take advantage of our investment over the past two years in increased
capacity and new products and services.
 
The Future 
 
Our objective this year has been to transform Eleco into a modern building
systems and engineering Group that is confident in its ability to sustain a
strategy for growth and the creation of shareholder value.
 
There are signs of some slow-down in the economy and we continue to operate
in intensely competitive marketplaces. Our response has been to initiate a
number of major strategic projects and acquisitions across the Group, the
success of which is key to its development as a modern building systems
Group. They are:
 
 
*    Software programs for Gang-Nail Systems' Windows-based truss, roof and
     floor joist engineering; 
 
*    Design and specification software for architects and roofing contractors
     to facilitate the implementation of SpeedDeck's unique roofing products; 

 
*    The acquisition of MBA Computing, the specialist architectural design
     software developer;  
 
*    The addition of the RailRod ultrasonic measurement equipment for
     overhead cables and the new Abtus electronic rail measurement trolley and
     related software to the Abtus product range;
 
*    A major increase in Bell & Webster Concrete's production capacity to
     meet the increasing demand for fast-track, precast concrete building
     components. 
 
I believe that they provide a clear indication of the focussed approach of
our management to grow our businesses, remain competitive and improve
shareholder value. Our strong financial position and positive cash flow has
enabled us to finance this major investment in our future, whilst maintaining
relatively low gearing. Eleco is therefore now well placed to meet the
challenge ahead.
 
 
John Ketteley 
Executive Chairman 
 
 
Consolidated Profit and Loss Account (Unaudited) 
FOR THE YEAR ENDED 30 JUNE 2000 
 
                                              2000     2000     1999     1999 
                                      Notes  £'000    £'000    £'000    £'000 
 
 
Total turnover - continuing operations    2          27,549            26,863 
 
Cost of sales                                       (17,261)          (17,880)
------------------------------------------------------------------------------
Gross profit                                         10,288             8,983 
------------------------------------------------------------------------------
     
Total operating profit - continuing
operations                                2           1,719             1,680 
 
(Loss)/Profit on disposal of tangible 
fixed assets                                            (53)               15 
------------------------------------------------------------------------------
Profit on ordinary activities before
interest                                              1,666             1,695 
 
Interest receivable                             27                33 
 
Interest payable                              (174)             (225) 
------------------------------------------------------------------------------
                                                       (147)             (192)
------------------------------------------------------------------------------
Profit on ordinary activities before
taxation                                              1,519             1,503 
 
Taxation                                               (131)             (149)
------------------------------------------------------------------------------
Profit on ordinary activities after
taxation                                              1,388             1,354 
------------------------------------------------------------------------------
Dividends                                3             (387)             (309)
------------------------------------------------------------------------------
Retained profit for the year                          1,001             1,045 
------------------------------------------------------------------------------
Earnings per 10p ordinary share 
 
-basic                                   4             3.6 p             3.5 p

-diluted                                 5             3.5 p             3.5 p
------------------------------------------------------------------------------
     
 
 
Consolidated Balance Sheet (Unaudited) 
AT 30 JUNE 2000 
 
                                                                2000     1999 
                                                               £'000    £'000 
 
Fixed assets 
 
Intangible assets                                                219      127 
 
Tangible assets                                                7,505    5,180 
----------------------------------------------------------------------------- 
                                                               7,724    5,307 
----------------------------------------------------------------------------- 
    
Current assets 
 
Stocks                                                         2,107    1,849 
 
Debtors                                                        6,307    6,097 
 
Cash at bank and in hand                                         469    1,121 
----------------------------------------------------------------------------- 
                                                               8,883    9,067 
 
Creditors: amounts falling due within one year                (7,799)  (6,871)
-----------------------------------------------------------------------------
Net current assets                                             1,084    2,196 
----------------------------------------------------------------------------- 
    
Total assets less current liabilities                          8,808    7,503 
 
Creditors: amounts falling due after more than one
year                                                          (1,267)    (938)
-----------------------------------------------------------------------------
Net assets                                                     7,541    6,565 
----------------------------------------------------------------------------- 
    
Capital and reserves 
 
Called up share capital                                        3,864    3,863 
 
Share premium account                                          4,435    4,434 
 
Merger reserve                                                   367      367 
 
Profit and loss account                                       (1,125)  (2,099)
-----------------------------------------------------------------------------
Equity shareholders' funds                                     7,541    6,565 
----------------------------------------------------------------------------- 
    
 


Consolidated Cash Flow Statement (Unaudited) 
FOR THE YEAR ENDED 30 JUNE 1999 
 
                                                                2000     1999 
                                                     Notes     £'000    £'000 
 
Operating activities 
 
Net cash inflow from operating activities 
- continuing operations                                (i)     2,557    2,733 
----------------------------------------------------------------------------- 
Returns on investment and servicing of finance 
 
Interest received                                                 27       33 
 
Interest paid                                                   (157)    (205)

Interest element of finance lease rentals                        (17)     (20)
-----------------------------------------------------------------------------
Net cash outflow from returns on investment 
and servicing of finance                                        (147)    (192)
-----------------------------------------------------------------------------
Net cash outflow from taxation                                  (193)     (26)
-----------------------------------------------------------------------------
Capital expenditure and financial investment 
 
Purchase of fixed assets                                      (2,816)  (1,119)

Sale of tangible fixed assets                                     15      887 
----------------------------------------------------------------------------- 
Net cash outflow from capital expenditure 
and financial investment                                      (2,801)    (232)
-----------------------------------------------------------------------------
Equity dividends paid                                           (444)     (97)
----------------------------------------------------------------------------- 
Net cash (outflow)/inflow before financing                    (1,028)   2,186 
----------------------------------------------------------------------------- 
Financing 
 
New bank loans                                                   500    1,380 

Repayment of principal under finance leases                     (164)    (152)

Repayment of bank loans                                         (615)  (1,480)

Issue of share capital                                             2        - 
----------------------------------------------------------------------------- 
Net cash outflow from financing                                 (277)    (252)
-----------------------------------------------------------------------------
(Decrease)/Increase in cash in the period            (ii)     (1,305)   1,934 
----------------------------------------------------------------------------- 
    
  
 
(i) Reconciliation of operating profit to net cash flow  
 
                                                                Continuing    
                                                              2000      1999  
                                                             £'000     £'000  
   
Operating profit                                             1,719     1,680  
   
Depreciation and amortisation                                  698       550  
   
(Profit)/loss on sale of tangible fixed assets                  (7)        4  
   
Working capital change                                         147       499  
----------------------------------------------------------------------------  
Net cash inflow from operating activities                    2,557     2,733  
----------------------------------------------------------------------------
      
 
 
(ii) Reconciliation of net cash flow to movement in net debt 
 
                                                              2000      1999 
                                                             £'000     £'000 
 
(Decrease)/increase in cash in the period                   (1,305)    1,934 
Cash flow from decrease in debt and lease financing            279       252 
----------------------------------------------------------------------------  
Change in net debt resulting from cash flows                (1,026)    2,186 
Other non-cash items: 
      New finance leases                                      (312)     (138) 
      Effects of foreign exchange rates                        (17)        5 
----------------------------------------------------------------------------  
Movement in net debt in the period                          (1,355)    2,053 
Opening Net debt                                              (502)   (2,555) 
----------------------------------------------------------------------------  
Closing Net debt                                            (1,857)     (502) 
----------------------------------------------------------------------------  
   
 
 
Notes: 
 
1.      The financial information in this announcement does not constitute
        statutory accounts within the meaning of section 240 of the Companies 
        Act 1985. Statutory accounts of the Company, on which the Auditors    
        will report, will be delivered to the Registrar of Companies and  
        posted to shareholders on 18 October. The comparative figures for the 
        year to 30 June 1999 have been taken from, but do not constitute, the 
        Company's statutory financial statements for that financial year.  
        Those financial statements have been reported on by the Auditors and  
        delivered to the Registrar of Companies. The Report of the Auditors   
        was unqualified and did not contain a statement under s237(2) or (3)  
        of the Companies Act 1985. 
 
2.      Turnover and segmental analysis 
 
        Group turnover and operating profits were attributable as follows 
                                                                 Operating 
                                   External sales               Profit/(loss)
                                   --------------               -------------
                                     2000     1999              2000     1999 
                                    £'000    £'000             £'000    £'000 
  
        Continuing activities 
 
        Building systems           25,369   24,653             2,277    1,900 
        Rail and marine             2,180    2,123               134      375 
        Property                        -       87                 -       22 
        Corporate                       -        -              (692)    (617)

        --------------------------------------------------------------------- 
        Total continuing           27,549   26,863             1,719    1,680 
        --------------------------------------------------------------------- 

 
3.      An interim dividend of £135,230 was declared at the interim stage. A
        final dividend of £251,472 representing 0.65p per share will be paid  
        on 12 December 2000 to shareholders on the register at 1 December 
        2000. 
 
4.      The calculation of basic earnings per share is based upon the earnings
        attributable to members of the holding company of £1,388,000 (1999:
        £1,354,000) and on 38,631,517 (1999: 38,629,731) ordinary shares,  
        being the weighted average number of ordinary shares in issue during  
        the year. 
      
5.      The calculation of fully diluted earnings per share is based upon the
        earnings attributable to members of the holding company of £1,388,000 
        (1999:£1,354,000) and on a fully diluted weighted average of 
        39,325,776 (1999:38,929,403) ordinary shares. 
 
6.      The information herein has been prepared on the basis of the
        accounting policies set out in the financial statements for the year
        ended 30 June 1999, except for the implementation of FRS15 and FRS16. 
        It has not been necessary to restate comparative figures to reflect
        these changes of policy. 
     
7.      The only other recognised gains not reported in the Profit & Loss
        Account are exchange losses of £27,000 on translation of overseas net 
        assets. 
 
8.      The Directors approved the financial statements on 29 September 2000. 
 
        The Annual General Meeting of Eleco plc will be held at Brewers Hall,
        Aldermanbury Square, London EC2V 7HR at 12:00 noon on 20 November
        2000.