Elecosoft Regulatory News (ELCO)

15 Mar 2007 07:00

Eleco PLC14 March 2007 For release 7.00am 15 March 2007 ELECO PLC The Building Systems and Software Group INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006 Enquiries to:John Ketteley, Executive Chairman Tel: 01920 443 830Eleco plc john.ketteley@eleco.com David Dannhauser, Finance Director Tel: 01920 443 830Eleco plc david.dannhauser@eleco.com Richard Thompson/Philip Davies Tel: 020 7149 6457Charles Stanley Securities (Nomad) Tarquin Edwards Tel: 07879 458 364Adventis Financial PR Tel: 020 7034 4758 "Continued strong growth by this specialist provider of offsite building systems and software solutions" Highlights • Turnover increased 9.2% from £26.5m to £28.9m • Profit before tax increased by 16.9% to £2.25m (2005: £1.93m) • Increase of 15.6% in EPS to 3.3p from 2.9p • Interim dividend increased by 16.7% to 0.7p (2005: 0.6p), 4.4 times covered • Software interests significantly strengthened by the acquisition of Asta Development, a leader in the provision of project and resource management software to the UK construction and engineering industries. John Ketteley, Executive Chairman of Eleco plc, commented: "The level of enquiries received by our offsite building systems businessesremains strong and our UK order position remains healthy; we have strengthenedconsiderably our software interests with the acquisition of Asta Development, aleader in project management software; and the Group maintains its soundfinancial position. For these reasons, I remain confident in the prospects forEleco going forward". Chairman's Statement I am pleased to present my statement for the half year ended 31 December 2006.The Group's performance in the period under review as measured by the keyperformance indicators as set out below is again encouraging. Performance Summary Group turnover in the six months ended 31 December 2006 amounted to £28,926,000(2005: £26,499,000), an increase of 9.2 per cent. Group operating profit was11.1 per cent higher at £2,243,000 (2005: £2,019,000) after higher goodwillamortisation costs of £221,000 (2005: £183,000). Profit on ordinary activities before tax was £2,250,000 (2005: £1,925,000), anincrease of 16.9 per cent after accounting for net interest receivable of £7,000(2005: payable of £94,000). Group profit for the year after tax was up 19.5 per cent to £1,661,000 (2005:£1,390,000) equivalent to earnings of 3.3p per share (2005: 2.9p per share), anincrease of 15.6 per cent. Net funds in hand at 31 December 2006 decreased to £1,418,000 compared withtotal net funds in hand at 30 June 2006 of £4,682,000. This is after taking intoaccount the cash impact, net of cash acquired, of £2,587,000 expended on theacquisition of Asta Development in December 2006. Dividends The Board has declared an interim dividend of 0.70p per share (2005: 0.60p pershare), an increase of 16.7 per cent, which will be paid on 13 April 2007 toshareholders on the Register on 23 March 2007. The interim dividend is covered 4.4 times by earnings (2005: 4.8 times). Review of Business Activities ELECO BUILDING SYSTEMS Turnover of our Building Systems operations increased by 6.6 per cent to£24,951,000 (2005: £23,412,000). The operating profit increased by 17.7 per centto £2,685,000 (2005: £2,282,000). Our Building Systems operations in the UK are involved principally in thedesign, manufacture and supply of offsite manufactured building products andsystems in precast concrete, metal and timber. We also provide timberengineering systems in the UK, Germany and South Africa, involving the supply ofengineering design and CADCAM software, related support services and componentsused in the product manufacturing process. Eleco Precast and Eleco TimberEngineering Systems delivered period on period improvements in performance withEleco Building Components' performance being disappointingly behind that of theequivalent period last year. Eleco Precast Continuing demand for its FastBuild Room system for hotels and studentaccommodation projects enabled Bell & Webster Concrete to achieve higherturnover and operating profits in the period. Bell & Webster Concrete'sstrengthened management team is working to enhance productivity on the Granthammanufacturing site as well as exploring opportunities that may lead toestablishing additional production capacity on another site. Eleco Timber Engineering Systems Our timber engineering businesses in the UK, Germany and South Africa performedwell in the period under review, with sales activity ahead of the equivalentperiod in all regions. Operating profit growth was however held back due toincreased input prices and continuing restrictions in steel availability. Eleco Building Components The performance of our roofing and cladding and ElecoFrame(R) businesses weresomewhat adversely affected by workflow continuity issues. These resulted from acombination of planning delays on projects, for which capacity was reserved inour works and adverse weather conditions, particularly rain and high winds inthe latter part of the period. Such conditions render installation difficult onsome occasions, impossible on others. SOFTWARE Turnover of our Software operations increased by 28.8 per cent to £3,975,000(2005: £3,087,000) including a first time contribution of £324,000 from AstaDevelopment. Although the headline operating loss was higher at £442,000 (2005:£263,000), the operating loss before goodwill amortisation charges was closer tothe previous year at £237,000 (2005: £96,000) including a first year profitcontribution from Asta Development of £66,000. In the equivalent period lastyear, we enjoyed the start up benefit from revised arrangements established inthe French and German markets for the distribution of our ArCon(R) software. As indicated in my last full-year report, we have undertaken a thorough strategic review of our Visualisation Software businesses and actions have now been taken with a view to obtaining the desired improvement in their performance. Dan Naylor has been appointed Chief Executive of our Visualisation Software interests. ACQUISITION Asta Development The major event in the period under review was the acquisition of AstaDevelopment in December 2006 for a consideration of £7.65 million. Asta Development is a leading provider of project and resource managementsoftware applications and support services principally to the UK Constructionand Engineering sectors and also to Information Technology and ProfessionalServices organisations. Its Powerproject software is used by 43 out of the top50 main contractors in the UK by turnover and by 9 out of the top 10 UK housebuilders by turnover. Asta Development is also active in Germany, Holland andSweden. It has an experienced management team, led by its Managing DirectorMichael McCullen. Further details of the acquisition are to be found on the Eleco website atwww.eleco.com and in the notes accompanying this statement. Additionalinformation on Asta Development can be found on its website at www.astadev.com. Following the acquisition, Michael McCullen has been appointed to the Board of Eleco as Chief Executive of our construction software interests which comprises the Asta Development and Consultec construction software brands. I would like to take this opportunity to welcome all employees of Asta Development into the Eleco Group and to report that the integration of Asta Development is progressing well. OUTLOOK The level of enquiries received by our offsite building systems businessesremains strong and our UK order position remains healthy; we have strengthenedconsiderably our software interests with the acquisition of Asta Development, aleader in project management software; and the Group maintains its soundfinancial position. For these reasons, I remain confident in the prospects forEleco going forward. John KetteleyEXECUTIVE CHAIRMAN15 March 2007 Eleco plc ----------- Consolidated Profit and Loss Account -------------------------------------- (Unaudited) (Audited) Half year ended Year ended 31 December 30 June 2006 2005 2006 (Restated) (Restated) £'000 £'000 £'000-------------------------------------- ------ -------- --------Turnover Continuing operations 28,602 26,499 55,197 Acquisitions 324 - --------------------------------------- ------ -------- -------- Total Continuing operations 28,926 26,499 55,197-------------------------------------- ------ -------- --------Operating profit Continuing operations 2,177 2,019 4,474 Acquisitions 66 - - Impairment of investment - - (358) -------------------------------- ------ -------- -------- Total Continuing operations 2,243 2,019 4,116 Profit on disposal of tangible fixed - - 476 assets -------------------------------------- ------ -------- --------Profit on ordinary activities before interest and taxation 2,243 2,019 4,592Net interest receivable/(payable) 28 (91) (114)Other financecharges (21) (3) (42)----------------------------------- ------ -------- --------Profit on ordinary activitiesbefore taxation 2,250 1,925 4,436Taxation (589) (535) (1,103)----------------------------------- ------ -------- --------Profit for the period 1,661 1,390 3,333----------------------------------- ------ -------- --------Earnings per share (Note 3) 3.3p 2.9p 6.8pDiluted earnings per share (Note 4) 3.2p 2.9p 6.7p----------------------------------- ------ -------- -------- 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 2006, 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 0.70p has been declared and will be payable on 13 April 2007 to shareholders on the Register on 23 March 2007. 3. Based on the profit attributable to shareholders and a weighted average of 50,164,945 ordinary shares (Dec 2005: 48,683,868 and Jun 2006: 48,961,869). 4. Based on the profit attributable to shareholders and a diluted weighted average of 51,206,595 ordinary shares (Dec 2005: 48,726,345 and Jun 2006: 50,003,519). The dilution is caused by outstanding share options. 5. 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 of 3,750,000 of new ordinary shares to raise £3,000,000 and the issue to the vendors of £1,420,129 of new ordinary shares. Goodwill on acquisition of £7,305,000 has been capitalised and included within fixed assets. Cash amounting to £1,382,000 was acquired. 6. The comparative figures for the year ended 30 June 2006 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 2005 and 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 six months ended 31 December 2006 by £25,000 (Dec 2005: £12,000 and the year ended 30 June 2006 by £57,000) with related decreases in equity. 8. Copies of this interim statement and results, which were approved by the Board on 14 March 2007 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) (Audited) Half year ended Year ended 31 December 30 June 2006 2005 2006 (Restated) (Restated) £'000 £'000 £'000 ------------------------------------- ------ -------- ------- Profit for the period 1,661 1,390 3,333 Translation differences on foreign (125) 165 (125) currency net investments ------------------------------------- ------ -------- ------- Actuarial gain on retirement benefit - - 1,354 scheme Associated deferred tax on retirement - - (406) benefit scheme ------------------------------------- ------ -------- ------- Total recognised gains for the period 1,536 1,555 4,156 -------- ------- Prior year adjustment (8) ------------------------------------- ------ Total recognised gains since last annual 1,528 report ---------------------------------- ------ Reconciliation of Movement in Shareholders' Equity ---------------------------------------------------- (Unaudited) (Audited) Half year ended Year ended 31 December 30 June 2006 2005 2006 (Restated) (Restated) £'000 £'000 £'000 ------------------------------------- ------ -------- -------- Profit for the period 1,661 1,390 3,333 Other recognised (losses)/gains relating (125) 165 823 to the period Share-based payments net of vesting 79 61 (126) charge Increase in own shares held by ESOT - - (52) Dividends (750) (487) (786) Proceeds from issue of ordinary shares 4,420 1 324 ------------------------------------- ------ -------- -------- Increase in shareholders' equity 5,285 1,130 3,516 ------------------------------------- ------ -------- -------- Opening shareholders' equity as 12,210 8,677 8,677 previously reported Prior year adjustments: FRS 20 Share-based payments (25) (8) (8) ------------------------------------- ------ -------- -------- Opening shareholders' equity as restated 12,185 8,669 8,669 Increase in shareholders' equity 5,285 1,130 3,516 ------------------------------------- ------ -------- -------- Closing shareholders' equity 17,470 9,799 12,185 ------------------------------------- ------ -------- -------- Eleco plc ----------- Summarised Consolidated Balance Sheet --------------------------------------- (Unaudited) (Audited) 31 December 30 June 2006 2005 2006 (Restated) (Restated) £'000 £'000 £'000---------------------------------------- -------- -------- --------Fixed assets Intangible assets 12,658 6,217 5,625 Tangible assets 8,431 8,505 8,310---------------------------------------- -------- -------- -------- 21,089 14,722 13,935---------------------------------------- -------- -------- --------Current assets Stocks 3,902 2,433 2,821 Debtors 13,462 9,661 9,891 Cash at bank and in hand 3,089 3,382 6,852---------------------------------------- -------- -------- -------- 20,453 15,476 19,564Creditors: amounts falling due within oneyear (19,668) (14,360) (16,394)---------------------------------------- -------- -------- --------Net current assets/(liabilities) 785 1,116 3,170---------------------------------------- -------- -------- --------Total assets less current liabilities 21,874 15,838 17,105 Creditors: amounts falling due after morethan one year (473) (1,365) (954) Provisions for liabilities and charges (509) (210) (425)---------------------------------------- -------- -------- --------Net assets excluding retirementbenefit liability 20,892 14,263 15,726 Retirement benefit liability (3,422) (4,464) (3,541)---------------------------------------- -------- -------- --------Net assets 17,470 9,799 12,185---------------------------------------- -------- -------- --------Capital and reserves Called up share capital 5,570 4,911 5,033 Share premium account 10,107 6,023 6,024 Merger reserve 367 367 367 Other reserve (102) (50) (102) Profit and loss account 1,528 (1,452) 863---------------------------------------- -------- -------- --------Shareholders' equity 17,470 9,799 12,185---------------------------------------- -------- -------- -------- Eleco plc ----------- Consolidated cash flow statement ---------------------------------- (Unaudited) (Audited) Half year ended Year ended 31 December 30 June 2006 2005 2006 (Restated) (Restated) £'000 £'000 £'000---------------------------------------------- -------- -------- --------Net cash inflow from operating activities 1,372 3,547 7,975---------------------------------------------- -------- -------- --------Returns on investment and servicing offinance Net interest received/(paid) 28 (96) (119)---------------------------------------------- -------- -------- --------Net cash inflow/(outflow) from returns oninvestment and servicing of finance 28 (96) (119)---------------------------------------------- -------- -------- --------Net cash outflow from taxation (477) (409) (494)---------------------------------------------- -------- -------- --------Capital expenditure and financial investment Purchase of fixed assets (635) (729) (1,384) Disposal of tangible fixed assets and 11 56 930 investments Purchase of investment - (37) (29)---------------------------------------------- -------- -------- --------Net cash outflow from capital expenditureand financial investment (624) (710) (483)---------------------------------------------- -------- -------- --------Acquisitions and disposals Purchase of subsidiary undertakings (2,587) (1,092) (1,118) net of cash acquired---------------------------------------------- -------- -------- --------Net cash outflow from acquisitionsand disposals (2,587) (1,092) (1,118)---------------------------------------------- -------- -------- --------Equity dividends paid (750) (487) (786)---------------------------------------------- -------- -------- --------Net cash (outflow)/inflow before financing (3,038) 753 4,975---------------------------------------------- -------- -------- --------Financing New bank loans - 650 650 Repayment of principal under finance (160) (149) (321) leases Repayment of bank loans (445) (445) (885) Issue of ordinary shares - 1 31 Own shares purchased by Employee Share - - (52) Ownership Trust---------------------------------------------- -------- -------- --------Net cash (outflow)/inflow from financing (605) 57 (577)---------------------------------------------- -------- -------- --------(Decrease)/increase in cash in the period (3,643) 810 4,398---------------------------------------------- -------- -------- -------- Eleco plc ----------- Consolidated cash flow statement - reconciliations ---------------------------------------------------- Reconciliation of operating profit to net cash flow from operating activities Continuing (Unaudited) (Audited) Half year ended Year ended 31 December 30 June 2006 2005 2006 (Restated) (Restated) (Restated) £'000 £'000 £'000 -------------------------------------- -------- -------- -------- Operating profit 2,243 2,019 4,116 Depreciation charge 712 699 1,373 Amortisation of intangible assets 301 234 894 Profit on sale of tangible fixed assets (2) (7) (17) Share-based payments 79 61 167 Retirement benefit liability (191) (95) (139) Working capital (increase)/decrease (1,770) 636 1,581 -------------------------------------- -------- -------- -------- Net cash inflow from operating activities 1,372 3,547 7,975 -------------------------------------- -------- -------- -------- Reconciliation of net cash flow to movement in net funds (Unaudited) (Audited) Half year ended Year ended 31 December 30 June 2006 2005 2006 £'000 £'000 £'000 -------------------------------------- -------- -------- -------- (Decrease)/increase in cash in the period (3,643) 810 4,398 Cash flow from movements in debt and 605 (56) 556 lease financing -------------------------------------- -------- -------- -------- (Decrease)/increase in net funds (3,038) 754 4,954 resulting from cash flows New finance leases (51) (220) (414) Finance lease obligations acquired with (57) - - subsidiary undertakings Effects of changes in foreign exchange (118) 87 (34) rates -------------------------------------- -------- -------- -------- (Decrease)/increase in net funds (3,264) 621 4,506 Opening net funds 4,682 176 176 -------------------------------------- -------- -------- -------- Closing net funds 1,418 797 4,682 -------------------------------------- -------- -------- -------- Segmental analysis Group turnover and profits were attributable as follows External sales ----------------------------------------------- (Unaudited) (Audited) Half year ended Year ended 31 December 30 June 2006 2006 2006 2005 2006 Continuing Acquisitions £'000 £'000 £'000 £'000 £'000------------------- -------- -------- ------ -------- ---------Continuing activities Building systems 24,951 - 24,951 23,412 48,544 Software 3,651 324 3,975 3,087 6,653------------------- -------- -------- ------ -------- ---------Total continuing 28,602 324 28,926 26,499 55,197------------------- -------- -------- ------ -------- --------- Profit ----------------------------------------------- (Unaudited) (Audited) Half year ended Year ended 31 December 30 June 2006 2006 2006 2006 2005 2006 Prior to goodwill Goodwill Continuing Acquisitions charges (Restated) (Restated) £'000 £'000 £'000 £'000 £'000 £'000----------- -------- -------- -------- ------- -------- ---------Continuing activities Building 2,701 - (16) 2,685 2,282 5,418systems Software (303) 66 (205) (442) (263) (1,302)----------- -------- -------- -------- ------- -------- ---------Total 2,398 66 (221) 2,243 2,019 4,116continuing ----------- -------- -------- -------- ------- -------- ---------Profit on disposal oftangible fixed assets - - 476----------- -------- -------- -------- ------- -------- ---------Profit beforeinterest and taxation 2,243 2,019 4,592----------- -------- -------- -------- ------- -------- --------- This information is provided by RNS The company news service from the London Stock Exchange