Last checked at 27 Jan 2009 07:00
| For immediate release | 27 January 2009 |
ELECO PLC
Specialist provider of offsite building systems and software
TRADING UPDATE FOR SIX MONTHS ENDED 31 DECEMBER 2008
The Board of Eleco plc (the "Company " or "Eleco"), the specialist building systems and software group, today issues a trading statement prior to entering its closed period ahead of its interim statement of half-year results ended 31 December 2008.
We reported at the Annual General Meeting at the beginning of November 2008, that operating profits for the first quarter were lower than for the same period the previous year, reflecting the increasingly tough trading conditions then prevailing in the UK construction industry. Subsequently, all our businesses, and particularly our UK businesses, experienced worsening trading conditions in the second quarter, exacerbated by the sharp deterioration in the availability of credit in UK financial markets.
The performances of our UK Building Systems businesses were affected to a greater or lesser degree by these deteriorating conditions and by resulting delays in the confirmation of orders and site starts. Clients of our precast concrete interests in particular, appeared increasingly to experience difficulty in finalising their funding and supply chain arrangements, with consequent disruption to our scheduled production programmes.
However, we take some encouragement from the fact that the problems causing these project delays in relation to a number of projects now appear to be resolving, and production on these is planned to begin in the second half-year ending 30 June 2009. We have also experienced a sustained level of enquiries for our precast products in the period, and continue to do so, despite the difficult trading environment in which we are operating. Our international Building Systems businesses performed in line with the Board's expectations.
The turnover of our Construction Software interests was broadly in line with the Board's expectations although they exhibited some weakness in the latter part of the period, reflecting the general weakness in house building and new project activity. Turnover of our Visualisation Software interests was affected by the disruption in UK consumer software distribution caused by Entertainment UK Ltd, a subsidiary of Woolworth plc being placed into administration in November, 2008.
Taking all these factors into account, we expect to report a small operating profit for the Group for the six months to 31 December 2008.
The Group's financial position remains strong. In addition to £0.6m net cash balances at 31 December 2008, the Group retains the benefit of its £14.5m term and revolving credit facilities which are committed through to 2012 and beyond. Hence, the Company remains well placed to work through the current economic uncertainties.
The Board has already taken action to reduce costs across the Group in response to the sharp deterioration in trading conditions in the second quarter and will continue to monitor and, where necessary, act to deal with the impact on our businesses of any further deterioration in the markets in which we operate.
Given the sustained level of enquiries received, new project opportunities, and the impending resolution of earlier project delays, prospects for our non-housing focused Building Systems activities are more encouraging.
Eleco expects to announce its half year results for the six month period ended 31 December 2008 on 26 February 2009.
Enquiries:
| Eleco plc | Tel: 01920 443830 |
| John Ketteley (Executive Chairman) | |
| David Dannhauser (Finance Director) | |
| Collins Stewart | 020 7523 8000 |
| Bruce Garrow | |
| Buchanan Communications | Tel: 020 7466 5000 |
| Tim Anderson/Isabel Podda |
This trading update may contain 'forward looking statements', that by their nature involve risk and uncertainty in relation to future events, future market conditions, many of which relate to factors that are beyond the Group's control, or which cannot be estimated accurately such as market movements, future market conditions and actions by third parties. Therefore, it must be appreciated that the actual outcome or results may differ materially from any outcome or results expressed or implied by such forward looking statements. Moreover, nothing contained in this trading statement is intended to be or should be construed as a profit forecast.