Elecosoft Regulatory News (ELCO)

2 Oct 2007 07:01

Eleco PLC09 October 2007 For release 7.00am 02 October 2007 ELECO PLC (ELCO.L) ("Eleco" or "the Group") The Building Systems and Construction Software Group PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2007 "Eleco's performance as measured by all key indicators is again most encouraging. We have made a strong start to the current year" Highlights Turnover increased 12.5% to £62.1m from £55.2m driven by innovative buildingcomponents and software Operating profit up 35.8% at £5.6m (2006: £4.1m) driven by higher margins inBuilding Systems and reduced loss in Software Profit after tax up 38.4% at £4.6m (2006: £3.3 m restated) Operating cash flow was again strong and net funds in hand marginally up at£4.8m (2006: £4.7m) Earnings per share up 27.9% to 8.7p (2006: 6.8p restated). Proposed full year dividends up 19% to 2.5p per share (2006: 2.1p). Software now in profit before goodwill amortisation charges Good start to the current year and in a strong financial position John Ketteley, Executive Chairman of Eleco plc, commented: "We finished the year with substantially higher orders and in a strong financialposition. We will continue our emphasis on strong cash generation in ouroperations. Our products are increasingly well regarded in the market place andwe have a dedicated management team backed by an experienced workforce. We havemade a strong start to the year". "For these reasons, and despite the current turmoil in financial markets, I haveevery confidence in the year ahead for Eleco". Enquiries to: Eleco plc http://www.elecoplc.com Tel: 01920 443 830John Ketteley, Executive Chairman john.ketteley@eleco.com Eleco plc Tel: 01920 443 830David Dannhauser, Finance Director david.dannhauser@eleco.com Collins Stewart Europe Limited Tel: 020 8523 8350(Nominated Adviser)Nick Ellis / Philip P. Roe Adventis Financial PR Tel: 020 7034 4758 / 59Tarquin Edwards/Chris Steele Chairman's Statement I am pleased to present my statement for the year ended 30 June 2007, includingthe review of our business activities and the outlook for the current year. PERFORMANCE SUMMARY Group turnover for the year was £62,078,000 (2006: £55,197,000), an increase of12.5 per cent. Group operating profit was 35.8 per cent. higher at £5,591,000 (2006: £4,116,000restated). Group operating profit was arrived at after deducting goodwillamortisation costs for the year of £596,000 (2006: £744,000) and included afirst year contribution of £497,000 from Asta Development, which was acquired inDecember 2006. Profit on ordinary activities before tax was £5,650,000 (2006: £4,436,000restated), an increase of 27.3 per cent after net interest receivable of £59,000(2006: £156,000 payable). Group profit for the year after tax was £4,614,000 (2006: £3,333,000 restated)equivalent to 8.7p per share (2006: 6.8p per share), an increase of 27.9 percent. Operating cash flow was again strong and net funds in hand at 30 June 2007 weremarginally higher at £4,760,000 (2006: £4,682,000). It should be noted that thecash cost of financing the acquisition of Asta Development during the year was£2,587,000 net of the cash balances acquired with that company. We continued to invest significantly in new products and enhanced softwaredevelopment during the year and such expenditure increased to £1,963,000 (2006:£1,281,000). The Company's performance as measured by the above key performance indicators isagain most encouraging. Dividends The Board proposes an increased final dividend of 1.80p per share (2006: 1.50pper share), which subject to approval by shareholders, will be paid on 23November 2007 to shareholders on the Register on 19 October 2007. The final dividend, together with the interim dividend of 0.70p already paid,would result in total dividends for the year ended 30 June 2007 of 2.50p pershare (2006: 2.10p per share), an increase of 19.0 per cent. REVIEW OF BUSINESS ACTIVITIES BUILDING SYSTEMS In the UK, our building systems operations are principally involved in thedesign, off-site manufacture and supply of structural building components inprecast concrete, metal roofing and cladding and engineered timber products; andalso in the supply of timber engineering systems. In South Africa and Germany wealso supply timber engineering systems. Turnover of our building systems operations increased by 6.7 per cent. to£51,793,000 (2006: £48,544,000). Building systems operating profit increased by 12.4 per cent to £6,087,000(2006: £5,418,000 restated). Operating profit before goodwill was £6,119,000(2006: £5,450,000 restated) Precast Bell & Webster Concrete again experienced strong demand for its FastBuild Roomsfor hotels and student accommodation projects in the second half of the year.Demand for its retaining wall and other products also remained firm. As aconsequence, its operating profits were significantly higher than last year. Evidence of Bell & Webster Concrete's growing reputation for its products andservice is that it has been short listed by the Concrete Society for its 2007Annual Awards in the category "New Structures". It has also been nominated forthe Interbuild Off-site Construction Awards for 2007 in the category "Best useof Concrete" in connection with the highly regarded Docklands Student Villagefor the University of East London. Engineered Building Components Profit contributions from the roofing and cladding operations SpeedDeck BuildingSystems and Downer Cladding were lower in a difficult market. However,management has taken steps to remedy this situation and will be launching newproducts at the forthcoming Interbuild Exhibition in October. I am pleased toreport that Eleco Timber Frame made a welcome breakthrough to profit in thesecond half and that orders for the ElecoFrame(R) patented timber frame systemcontinue to grow. Timber Engineering Systems Gang-Nail Systems was adversely affected by the atrocious wet weather conditionsexperienced in the UK in the latter part of the year. The consequent disruptionto activity on building sites affected Gang-Nail Systems' customers' ability tosupply roof trusses and Ecojoist(R) to those sites. In the circumstancesGang-Nail performed well although profits for the year were marginally lowerthan the record profit achieved last year. Eleco Bauprodukte performed well in the German market and sales and profits weresignificantly higher than last year. In South Africa, International Truss Systems yet again delivered anotheroutstanding performance, with profits again ahead of last year's record insterling terms despite a somewhat weaker Rand. SOFTWARE Turnover of our software operations increased by 54.7per cent to £10,285,000(2006: £6,653,000), of which £2,432,000 was attributable to Asta Development,acquired in December 2006. The operating loss of our software operations fell to £496,000 (£1,302,000restated) after goodwill charges of £564,000 (2006: £712,000). Fully expenseddevelopment costs were £1,379,000 (2006: £858,000). The operating profit before goodwill of our software interests was £68,000(2006: loss £590,000 restated), including the contribution of £497,000 from AstaDevelopment. Construction software The construction software interests namely, Consultec Sweden and Consultec UKand Asta Development performed well, the latter in line with our expectations atthe time of its acquisition in December 2006. All our software operations have benefited from the adoption of AstaDevelopment's software management techniques and disciplines. In particular,cross initiatives with Asta Development have contributed to improved performancefrom the Consultec companies in Sweden and the UK and I look forward to furtherprogress in this quarter. Visualisation Software ArCon(R) and Esign sustained operating losses due to continuing high developmentcosts. However, substantial increases in sales of both products during the yearwere most encouraging. Since the year end, we have completed the development ofArCon 2007, following which we have entered into a new 3 year agreement withMicro Application, the leading French software distributor, to continue itsdistribution of ArCon 3D. We are actively negotiating agreements withdistributors in 10 other countries. We have also signed a distribution agreementto target major UK retailers with own brand consumer software for homeimprovement. MANAGEMENT AND EMPLOYEES I would like to take this opportunity to formally welcome Michael McCullen, whojoined the Board following the acquisition of Asta Development, of which he isManaging Director. I would also like to thank on your behalf the employees in the UK, Germany,Sweden and South Africa all of whose hard work, dedication and skill have madepossible these significantly improved results. OUR VALUE PROPOSITION The building industry has been moving progressively towards the use of off-sitemanufactured structural building components for some time. The increasing use of design and engineering software in recent years has alsofacilitated the selection of off-site manufactured building elements, enablingthem to be more accurately dimensioned, costed and manufactured for speedyinstallation when delivered to site. Visualisation software enables builders andtheir clients to view projects and building components in virtual form beforebuilding begins and the build process itself is now normally managed by projectmanagement software. Our strategy is to satisfy the requirements of the construction industry in thismodern, progressive approach to the build process and to anticipate theindustry's future needs. Thus we design and manufacture innovative andefficient building components in precast concrete, metal and timber; we developand utilise the latest design and engineering software in our manufacturingprocesses; and we develop for use by our customers design and engineeringsoftware, estimating software, visualisation software, plant management softwareand project management software. FINANCE Following the recovery in the Company's fortunes over the last decade, we haveconsistently applied measured financing policies as we have moved forward. Therecent turmoil in the financial markets would seem to justify this approach andwe continue to strive to maintain a strong financial position. In thisconnection, I am pleased to inform you that we recently agreed with our bankersa significant increase in our committed medium term banking facilities, which,together with our net cash position and continuing strong operating cash flows,will provide significant resources to support the expansion of the Group. OUTLOOK The outlook for the major part of our operations for the year ahead is firm,although the effect of the current turmoil in the financial markets on those ofour operations that are directly involved in the UK housing market remains to beseen. That said, the Prime Minister has made clear that one of his majorobjectives is to bring about a step change in the construction of affordablehousing in this country and I am encouraged by the fact that this laudable andambitious target will be achieved only by the increased application of thosemodern building systems and technologies on which Eleco's business is based. We finished the year with substantially higher orders and in a strong financialposition. Our products are increasingly well regarded in the market place and wehave a dedicated management team backed by an experienced workforce. We havealso made a strong start to the current year and we will continue our emphasison strong cash generation in our operations. For all these reasons, and despitethe current turmoil in financial markets, I have every confidence in the yearahead for Eleco. John KetteleyEXECUTIVE CHAIRMAN2 October 2007 Eleco plcConsolidated Profit and Loss Account (Unaudited)For the year ended 30 June 2007 Notes 2007 2007 2006 (restated) £'000 £'000 £'000Turnover Continuing operations 59,646 55,197 Acquisitions 2,432 -Total Continuing operations 3 62,078 55,197Operating profit Continuing operations 5,308 4,116 Acquisitions 283 -Total Continuing operations 3 5,591 4,116 Profit on sale of tangible assets - 476 Profit on ordinary activities before interest and taxation 5,591 4,592Net interest receivable/(payable) 18 (114)Other finance income/(charges) 41 (42)Profit on ordinary activities before taxation 5,650 4,436 Taxation (1,036) (1,103) Profit for the financial year 4,614 3,333 Basic earnings per ordinary 10p share 5 8.7p 6.8p Diluted earnings per ordinary 10p share 5 8.7p 6.7p Statement of Total Recognised Gains and Losses (Unaudited)for the year ended 30 June 2007 Notes 2007 2006 (restated) £'000 £'000 Profit for the financial year 4,614 3,333 Translation differences on foreign currency net investments (154) (125) Actuarial gain on retirement benefit scheme 1,125 1,354 Associated deferred tax on retirement benefit scheme (407) (406) Total recognised gains for the period 5,178 4,156 Prior year adjustment 7 (8) Total gains and losses recognised since last annual report 5,170 Reconciliation of Movement in Shareholders' Equity (Unaudited)for the year ended 30 June 2007 Notes 2007 2006 (restated) £'000 £'000 Profit for the financial year 4,614 3,333 Other recognised profits relating to the year 564 823 LTIP expense net of vesting credit (114) (126) Increase in own shares held by ESOT (204) (52) Dividends 4,8 (1,122) (786) Issue of ordinary shares 4,727 324 Increase in shareholders' equity 8,465 3,516 Opening shareholders' equity as previously reported 12,210 8,677 Prior year adjustments:FRS 20 Share based payments (25) (8) Opening shareholders' equity as restated 12,185 8,669 Increase in shareholders' equity 8,465 3,516 Closing shareholders' equity 20,650 12,185 Eleco plcSummarised Consolidated Balance Sheet (Unaudited)at 30 June 2007 2007 2006 (restated) £'000 £'000 Fixed assets 20,601 13,935 Current assets Stocks 3,441 2,821 Debtors 13,151 9,891 Cash at bank and in hand 5,940 6,852 22,532 19,564Creditors: amounts falling due within one year (19,049) (16,394) Net current assets 3,483 3,170 Total assets less current liabilities 24,084 17,105 Creditors: amounts falling due after more than one year (630) (954)Provisions for liabilities and charges (274) (425)Net assets excluding retirement benefit liability 23,180 15,726Retirement benefit liability (2,530) (3,541)Net assets 20,650 12,185 Capital and reserves Called up share capital 5,674 5,033 Share premium account 10,310 6,024 Merger reserve 367 367 Other reserve (306) (102) Profit and loss account 4,605 863Shareholders' Equity 20,650 12,185 Eleco plcConsolidated Cash Flow Statement (Unaudited)for the year ended 30 June 2007 Notes 2007 2006 (restated) £'000 £'000 Net cash inflow from continuing operations 9 6,133 7,975 Net cash inflow from operating activities 9 6,133 7,975 Returns on investment and servicing of finance Net interest paid (9) (119) Net cash outflow from returns on investment and servicing of finance (9) (119) Net cash outflow from taxation (663) (494) Capital expenditure and financial investment Purchase of fixed assets (1,348) (1,384) Disposal of fixed assets 315 930 Purchase of investments - (29) Net cash outflow from capital expenditure and financial investment (1,033) (483) Acquisitions and disposals Purchase of subsidiary undertakings (3,969) (1,151) Cash acquired with subsidiary undertakings 1,382 33 Net cash outflow from acquisitions and disposals (2,587) (1,118) Equity dividends paid (1,122) (786) Net cash inflow before financing 719 4,975 Financing New bank loans - 650 Repayment of principal under finance leases (374) (321) Repayment of bank loans (891) (885) Issue of ordinary shares - 31 Own shares purchased by Employee Share Ownership Trust (204) (52) Net cash outflow from financing (1,469) (577) (Decrease)/increase in cash in the year 10 (750) 4,398 Eleco plc Notes 1. The financial information in this announcement, which is unaudited, 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 from 17th October 2007. The comparative figures for the year to 30 June 2006 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. The information herein has been prepared on the basis of the accounting policies adopted for the year ended 30 June 2006, as set out in the Company's Annual Report and Accounts as modified by the adoption of new Financial Reporting Standards as detailed in note 7 below. 3. Turnover and Segmental analysis Group turnover and profits were attributable as follows: Turnover Operating profit/(loss) 2007 2007 2007 2006 2007 2007 2007 2007 2006 Prior to goodwill Goodwill Continuing Acquisition Continuing Acquisition Charges (restated) £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Continuing operations Building Systems 51,793 - 51,793 48,544 6,119 - (32) 6,087 5,418 Software 7,853 2,432 10,285 6,653 (429) 497 (564) (496) (1,302) Total continuing 59,646 2,432 62,078 55,197 5,690 497 (596) 5,591 4,116 operations Exceptional - 476 profit/(loss) Net interest 59 (156) Profit before 5,650 4,436 taxation 4. A dividend of 0.70p per share was declared at the interim stage. A final dividend representing 1.80p per share is being proposed and, if approved at the Annual General Meeting, will be payable on 23 November 2007 to shareholders on the Register on 19 October 2007. 5. The calculation of basic earnings per share is based on the profit attributable to equity shareholders of £4,614,000 (2006: £3,333,000) and on 52,855,635 ordinary shares (2006: 48,961,869), being the weighted average number of ordinary shares in issue during the year. The calculation of diluted earnings per share is based on the profit attributable to equity shareholders of £4,614,000 (2006: £3,333,000) and on 52,855,635 ordinary shares (2006: 50,003,519), being the weighted average diluted number of ordinary shares in issue during the year. 6. On 15 December 2006, the Group acquired Asta Group Limited and subsidiaries for a consideration of £7.65 million. The consideration comprised the payment of £3,229,871 in cash, satisfied from the Group's existing resources, the placing on behalf of the vendor of 3,750,000 of new ordinary shares to raise £3,000,000 and the further issue to the vendors of £1,420,129 of new ordinary shares. Goodwill on acquisition of £7,261,692 has been capitalised and included within fixed assets. Cash amounting to £1,382,000 was acquired 7. The Company has adopted the following accounting standards in the year. The comparative figures at 30 June 2006 have been restated. FRS 20 Share-based payments - requires that the fair value of equity-settled, share-based payments, determined at the date of the grant, be expensed over the vesting period based on the Group's estimate of the options that will eventually vest. The Group has taken advantage of the transitional provisions of FRS 20 and has only applied FRS 20 to equity-settled options and awards granted after 7 November 2002 that had not vested on or before 1 July 2006. The effect of implementing FRS 20 is to increase profit before tax for the year June 2006 by £57,000 with related decreases in equity. 8. Dividends 2007 2006 Pence Pence Final dividend (previous year) 1.50 1.00 Interim dividend (current year) 0.70 0.60 Dividend included in movement in shareholders equity 2.20 1.60 9. Reconciliation of operating profit to net cash flow from operating activities Continuing 2007 2006 (restated) £'000 £'000 Operating profit 5,591 4,116 Depreciation charge 1,456 1,373 Amortisation of intangible assets 808 894 LTIP expense 181 167 Profit on sale of tangible assets (250) (17) Working capital (increase)/decrease (1,653) 1,442 Net cash inflow from operating activities 6,133 7,975 10. Reconciliation of net cash flow to movement in net funds 2007 2006 £'000 £'000 (Decrease)/increase in cash in the year (750) 4,398 Cash flow from movements in debt and lease financing 1,265 556 Increase in net funds resulting from cash flows 515 4,954 Other non-cash items: New finance leases (282) (414) Effects of changes in foreign exchange rates (155) (34) Increase in net funds in the year 78 4,506 Opening net funds 4,682 176 Closing net funds 4,760 4,682 11. The Annual General Meeting of Eleco plc will be held at The London Capital Club, 15 Abchurch Lane, London EC4N 7BB at 12:00 noon on 15 November 2007. 12. Copies of the Report and Accounts will be sent to shareholders from 17 October 2007 and will be available free of charge from the Secretary at the Company's registered office, Eleco House, 15 Gentleman's Field, Westmill Road, Ware, Hertfordshire, United Kingdom, SG12 0EF. This information is provided by RNS The company news service from the London Stock Exchange