Last checked at 3 Jun 2009 07:00
| For immediate release | 3 June 2009 |
ELECO PLC
Specialist provider of offsite building systems and software
Trading Update
The Board of Eleco plc (the "Company" or "Eleco"), the specialist building systems and software group, today issues a trading statement.
We reported in the Interim Statement, issued on 26 February 2009, that the performance of the Group in the months to come would be dependent to a significant degree on an improvement in underlying market conditions and that considerable uncertainty in this regard existed. At that time, more recent progress in order prospects for the Precast Concrete activities offered grounds for cautious optimism that an upturn in performance would become increasingly apparent towards the end of the financial year. However, it is now apparent that the strong finish to the year, envisaged at the time of the Interim Statement, will not now occur owing principally to difficulties affecting our Precast Concrete interests.
In more recent months, evidence from external sources, as well as our own experience, points to a further weakening in the markets for building systems products, including those markets in Europe and South Africa which had been relatively resilient to that point.
More particularly, project orders from which Bell & Webster Concrete was expecting to deliver a significant increase in sales in our fourth quarter have been confirmed later than expected or have mobilised more slowly than originally anticipated. Revenues of our Precast Concrete activities for the four months to April 2009 were 46% below those of the same period in the previous year and, while revenues and operating performance are expected to improve during the last two months of the year, operating profits of Precast are now expected to be significantly below previous expectations.
Additionally, a significant shortfall in anticipated revenues from Visualisation software is expected owing to the disappointing results from the launch of the Grand Designs 3D software in the UK and the failure of the appointed distributor in the USA to deliver an effective launch of the product in this market. The outcome is that Visualisation is not expected to improve on its losses of last year.
While the continued severe downturn affecting house building markets has resulted in modest deterioration in performance of those of our businesses focussed in this area, overall these businesses together with our Roofing and Cladding operations and our Construction Software activities, which have continued to perform creditably, have continued to trade close to expectations.
The outcome is that Group results for the year as a whole are now anticipated to fall significantly short of previous expectations and no improvement from the interim results may be apparent. However, during the year steps have been taken progressively, which will have resulted in a reduction in our operating costs of £2.7m on an annualised basis and capital expenditure is also being carefully controlled. Further cost reductions are under review and the results of these and a strategic appraisal of performance will be reported with the full year results.
John Ketteley
Executive Chairman
Enquiries:
| Eleco plc | Tel: 01920 443830 |
| John Ketteley (Executive Chairman) | |
| David Dannhauser (Finance Director) | |
| Collins Stewart | Tel: 020 7523 8000 |
| Bruce Garrow | |
| Buchanan Communications | Tel: 020 7466 5000 |
| Tim Anderson/Isabel Podda |
This trading statement may contain 'forward looking statements' that by their nature involve uncertainty and risk in relation to future events and future market conditions. Many of these uncertainties and risks 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 outcomes or results may differ materially from any outcomes 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.