Download - Eleco Interim Reports 2010/2011

“Building on technology” defines Eleco which applies the latest technologies to drive improved Modern Methods of Construction, Improved Management and Execution of Projects and continuing improvement in Sustainable Construction methods.

Eleco people and companies aspire to deliver value to Eleco customers, employees, shareholders and their communities by providing them with economical and environmentally sound construction methodologies, first class service and technical support.

Mission and Vision

Eleco applied the principles of modern methods of construction (“MMC”) prior to 1997, the year when Sir John Egan highlighted the benefits to be gained from the application of MMC to the build process. MMC is now increasingly regarded as a key aid to improving quality, reducing time spent on site, improving on-site safety and overcoming skills shortages.

Modern Methods of Construction (MMC)

Construction companies and their clients are increasingly turning to software in pursuit of greater efficiency. Eleco anticipated this demand and began investing in software technology in 2000.

Eleco software now has a suite of software tools to manage each stage of the construction project life cycle from project visualisation, through design, cost estimation and project management to site management.

Improved Project Management and Execution

“Meeting the needs of the present without compromising the ability of future generations to meet their own needs”. Eleco recognises that sustainability is about environmental performance of the product throughout its lifespan. Eleco is focused on achieving materials efficiency, faster construction times and efficient resource management.

Sustainable Construction

Building on Technology

Modern Methods of Construction

Improved Management and Execution of Projects


Building ontechnology

Eleco plc66 Clifton StreetLondon EC2A 4HBTel: +44 (0)20 7422 0044E-mail: [email protected]: www.eleco.com

Eleco plcInterim Report2011

Eleco plc

Partition Walls

Precast Concrete

Timber Engineering

Building Products

Metal Roofing & Cladding

Project Management

Design & Engineering

Estimation CAD and 3D Visualisation

Visualisation

Milbury Systems Ltd

International Truss Systems

(Pty) Ltd

Gang-Nail Systems Ltd

Downer Cladding

Systems Ltd

Prompt Profiles Ltd

ASTA Development

GmbHConsultec A&K AB

Eleco Software GmbH

Stramit Panel Products

Bell & Webster

Concrete LtdEleco Timber

Frame LtdSpeedDeck

Building Systems Ltd

ASTA Development

LtdConsultec System AB

Consultec Byggprogram

ABEleco

Software LtdEsign GmbH

Building Systems Software

Eleco is focused on key components of a modern construction project. Building Systems used in the fabric of the building, Software tools used to manage the construction project and Sustainable Construction to enhance environmental performance.

Eleco Building Systems Eleco Software

Group HighlightsGroup Operations

Group Financial Performance

Turnover amounted to £31.8m (H1 2009: £32.5m).•Group adjusted operating loss before amortisation and •restructuring costs of £0.7m (H1 2009: loss £0.7m).Loss before tax of £1.7m (H1 2009: loss £2.2m).•Loss per share of 2.8p (H1 2009: loss 3.5p).•Net bank debt at 31 December 2010 of £5.7m •(H1 2009: £2.1m).

Group Operational Performance

Improved operating performance at Software with •strong growth in turnover and profits.Building Products marginally profitable with poor •performance at Eleco Timber Frame offset by profits in other businesses.Further loss, albeit significantly less than in second •half of last year, in Precast Concrete operations, principally caused by losses on custodial contracts and adverse weather in December.Gross margin maintained due to change in revenue mix.•Reduced cost base with administrative expenses down •over 10% compared to the previous six month period.

Pension

The deficit shown in the accounts at 30 June 2010 has •reduced by £1.5m, from £9.8m to £8.3m, primarily due to investment performance in the period.

Board Appointment

Group management strengthened with the •appointment of Matthew Turner, initially part time, as Group Finance Director in January.

Change of Accounting Reference Date

Change of accounting reference date to 31 December •for operational reasons. An unaudited second interim report will be released for the period ended 30 June 2011. The preliminary results for the 18 months ended 31 December 2011 will be released no later than 31 March 2012.

Outlook

Our Precast Concrete and Building Products businesses •were affected by further adverse weather in January 2011. However, the Board is of the view that our Building Products operations will produce a modest improvement although our Precast Concrete interests will continue to experience operational difficulties until the four major custodial accommodation contracts have been completed, which is expected by the end of June 2011. The Board is also of the view that our Software interests will perform well in the second six months.

Strategy

The Board plans to concentrate on expansion of its •software and service operations while reducing the current emphasis on Building Products and currently loss making Precast Concrete manufacturing interests.The Board believes that this strategy will significantly •reduce the financing requirements of the Group’s Building Products and Precast Concrete interests while facilitating the planned expansion of the Group’s Software interests, both in the UK and internationally.

Eleco Building Systems focuses on modern methods of construction to provide materials efficiency and construction speed in precast concrete, timber frame and metal.

Eleco Software provides software applications to help construction businesses manage each stage of their project life cycle, satisfying their drive for greater efficiency through improved management of projects.

Trilogy building in Swindon by SpeedDeck Systems

01Eleco plc Interim Report 2011

Divisional Highlights

Software

Turnover increased 13% to £7.3m (H1 2009: £6.4m).•Adjusted operating profit before amortisation and •restructuring costs more than doubled to £0.7m (H1 2009: £0.3m).Acquisition of Lubekonsult AB, the ventilation software •and estimating business, in Sweden for £393,000 is performing ahead of expectations.All software businesses now profitable and growing •both top line and operating profit.

Building Products

Turnover increased to £10.3m (H1 2009: £8.8m).•Adjusted operating profit before amortisation and •restructuring costs of £10,000 (H1 2009: loss £0.8m) Loss of £0.4m at Eleco Timber Frame more than offset by profits in other businesses.Market conditions remain tough but cost base •reduced and all businesses performing ahead of H2 last year.

Precast Concrete

Turnover amounted to £14.3m (H1 2009: £17.4m).•Adjusted operating loss of £1.5m before amortisation •and restructuring costs (H1 2009: loss £0.2m).Trading adversely impacted by the poor performance •of the custodial contracts, now almost complete, and adverse weather experienced during December.

Eleco plc Interim Report 201102

Contents

03 Chairman’s Statement06 Condensed Consolidated Income Statement06 Condensed Consolidated Statement

of Comprehensive Income07 Condensed Consolidated Statement

of Changes in Equity08 Condensed Consolidated Balance Sheet09 Condensed Consolidated Statement of Cash Flows10 Notes to the Condensed Consolidated

Interim Financial Statements14 Board of Directors and Company Advisors15 Group Directory


Group PerformanceGroup turnover for the six months ended 31 December 2010 was £31.8m (2009: £32.5m), down 2% compared to the same period last year but up 25% compared to the second half of last year.

Group turnover in the period was adversely impacted, primarily in Precast Concrete, by approximately £1.8m due to the severe weather conditions experienced during December 2010. However, turnover in Building Products and Software divisions was up 17% and 13% respectively compared with the same period last year.

The Group maintained its gross profit margin in spite of margin pressures at both Precast Concrete and Building Products divisions due to the change in revenue mix. Software increased its share of Group turnover to 23%.

Adjusted Group operating loss before amortisation of intangible assets and restructuring costs amounted to £0.7m compared with an adjusted Group operating loss of £0.7m for the same period last year and an adjusted Group operating loss of £4.2m in the second half of last financial year.

Software delivered strong growth in the period with turnover and profit both at record levels and continues the significant growth in these businesses achieved in the past three years despite the unprecedented economic difficulties experienced over that period. Consultec Sweden acquired the business of Lubekonsult AB (“Lube”) on 1 September 2010 for £393,000, of which £172,000 has been paid. Lube provides cost estimation services and software to the Swedish ventilation market and is already exceeding our expectations in terms of turnover and profit.

Within Building Products, Eleco Timber Frame generated an operating loss of £0.4m in the six months ended 31 December 2010 which was offset by profits generated in the other Building Products businesses.

The significant improvement in profit performance at Software and Building Products compared to last year was offset by a weak performance at Precast Concrete. This is largely due to the poor financial performance and operational problems relating to the custodial contracts, all of which are planned to complete in the next quarter. Completion of these custodial contracts will lead to reduced costs and facilitate greater focus on the student accommodation and hotel business.

Chairman’s Statement

The Group loss before tax of £1.7m is arrived at after amortisation charges of £0.2m (2009: £0.3m) and restructuring costs of £0.5m (2009: £0.4m) and net financing costs of £0.3m (2009: £0.3m). The negative impact of the adverse weather during December 2010 was approximately £0.5m at the pre tax level.

Net bank debt at 31 December 2010 increased to £5.7m (2009: £2.1m). Of this £3.6m increase, £2.0m was attributable to additional working capital required by the custodial contracts referred to above and a further £0.6m relates to extended credit taken by Eleco Timber Frame customers. The Group continues to focus on managing its debt and working capital to maximize cash inflows across all the divisions.

DividendThe Group not having returned to profit, the Board has decided not to pay an interim dividend.

Divisional PerformanceSoftwareTurnover increased to £7.3m against £6.4m in the same period last year, up more than 13%.

Adjusted operating profit was £0.7m before amortisation of intangible assets and restructuring costs for the six months compared to £0.3m last year and to £0.5m in the second half of the last financial year.

This continued growth was largely driven by increased turnover of software and services in Sweden and Germany, together with the acquisition of Lubekonsult in Sweden, which has proved successful in delivering the anticipated benefits. Software continues to explore opportunities in other overseas markets and recently opened a sales office in Belgium.

Building ProductsTurnover was £10.3m in the six months, up 17% compared with £8.8m in the same period last year and up 14% compared with £9.0m in the second half of last year.

Building Products broke even in the period before amortisation and restructuring costs compared to an adjusted operating loss of £0.8m for the same period last year and to a £1.0m loss in the second half of last financial year.

The improved performance is due to better trading performance at the roofing, cladding and UK and South African nail plate businesses and the elimination of trading losses at the German nail plate business which was sold on 30 June 2010.

Building Products has successfully reduced costs and started to reinvest again in sales resources.

Precast ConcreteTurnover in the six months ended 31 December 2010 was £14.3m compared with £17.4m achieved in the same period last year and only £9.4m in the second half of last year.

John KetteleyExecutive Chairman


Chairman’s Statement (continued)

Adjusted operating loss before intangible asset amortisation and restructuring costs for the first half was £1.5m compared with a loss of £0.2m in the same period last year and of £3.7m in the second half of last year.

The major part of turnover in the period related to the custodial contracts, each of which produced poor returns. These contracts are now fully manufactured and deliveries are expected to be completed in the next quarter. Working capital directly held in these contracts, amounting to approximately £2.0m at 31 December 2010, will reduce as the contracts are completed and amounts due under the contracts are received.

Completion of the custodial contracts will result in a reduction in headcount of approximately 75% and create a lower overhead business as we focus on manufacture of hotels and student accommodation.

The current market continues to be tough and margins remain under pressure. However, the current level of enquiries is encouraging and procedures are in place to ensure that contracts are not entered into at unsustainable margins.

Financial ReviewGroup financial performance in the six months ended 31 December 2010 was in line with expectations before the impact of the adverse weather conditions in December 2010. The estimated impact of the severe weather was a reduction in turnover and operating profit of £1.8m and £0.5m respectively.

The Group’s cash position was impacted by an increase in trade debtors over the period, partly due to the increased level of invoicing, particularly annual maintenance and support revenues at Software, but also to higher retention amounts at the contract based businesses, specifically Precast Concrete and Eleco Timber Frame. In addition, increased restructuring spend, mainly redundancy costs and expenses related to the rationalisation of the Group’s properties, together with reduced profit before interest and tax accounted for cash used in operations during the period.

The Group continues to closely monitor its cash flow and working capital and efforts are being made to recover overdue debt and retentions as speedily as possible.

Pension StrategyAs mentioned in the Preliminary Statement in October 2010, the Group has been working with the Trustees to reduce investment risk and manage the deficit of the pension plan, which was closed to future accrual in December 2009.

Revisions to the investment strategy have now been agreed, detailed aspects of the transition are now being discussed and the resultant changes are being implemented with a view to full implementation in the coming weeks.

In parallel, certain liability reduction measures have now been agreed and others are in discussion with the Trustees. These are expected to lead in certain cases to increased choices for the members and reduced liabilities and exposure for the fund.

Implementation of some of these measures is dependent upon final agreement between the Trustees and the Group and the overall financial impact of the measures agreed and to be agreed cannot therefore be disclosed at this time.

The Group intends to disclose further details of the above once implemented. In the meantime the deficit shown in the accounts at 30 June 2010 has reduced by £1.5m, primarily due to investment performance in the period from £9.8m to £8.3m.

Change in Accounting Reference DateThe Board has decided for operational reasons to change the accounting reference date of Eleco plc to 31 December. Accordingly, the next audited report and accounts will be for the 18 month period ending 31 December 2011. The preliminary announcement of results for the 18 month period ending 31 December 2011 will be made no later than 31 March 2012 and the audited accounts will be published shortly thereafter.

The Company will also produce a second interim unaudited report for the year and six month period ending 30 June 2011.

We believe this change will give operational advantages in dealing with year end procedures at our overseas businesses, particularly Sweden and Germany.

Board AppointmentThe Board is pleased to note that our management was strengthened by the appointment on 27 January 2011 of Matthew Turner, as Group Finance Director, initially on a part time basis. He was previously a partner at Grant Thornton UK LLP in their financial advisory division.

OutlookOur Precast Concrete and Building Products businesses were affected by further adverse weather in January 2011. However, the Board is of the view that our Building Products operations will produce a modest improvement although our Precast Concrete interests will continue to experience operational difficulties until the four major custodial accommodation contracts have been completed, which is expected by the end of June 2011. The Board is also of the view that our Software interests will perform well in the second six months.

StrategyI am pleased to report on the excellent progress that has been made by our Software interests, particularly in overseas markets and in the difficult trading conditions of the past three years. I am pleased not least because I was very much involved in our initial decision to invest in construction software. Since then we have assembled a portfolio of leading software brands in Sweden, Germany and the UK and our software has been involved in the project management of major buildings such as “The Shard”, in the preparation of the master plan for the Olympics, and has been offered free to all colleges in the UK which are engaged in the provision of construction courses.

Quantum Manchester by Eleco Timber Frame


On the other hand I have been very disappointed to have had to report the poor operating performance of some of our Building Products interests and our Precast Concrete interests, albeit in market conditions that can only be described as ferocious. Fortunately, we had been conscious at the outset of the need to ensure that adequate cash resources and financing were in place before we embarked on the manufacture of custodial accommodation but the financial and operational risks of our involvement in such major manufacturing projects were far more significant than anticipated at the time.

The custodial accommodation contracts are now nearing completion and my colleagues and I have been reconsidering what our corporate strategy going forward, when these contracts have been completed and worked through our system, should be. We have decided that Eleco should concentrate on the expansion of its profitable and growing software and service operations on the one hand and on reducing our exposure to our currently loss making Precast Concrete and Building Products interests on the other.

We have so decided because such a strategy would reduce significantly our financing requirements as a Group, because our reduced commitment to Building Products and Precast Concrete would significantly reduce the financial requirements of those businesses which would enable us increasingly to allocate our resources to the expansion of our Software interests. We also believe that such a strategy would have the support of our shareholders.

I therefore look forward with my colleagues to changing the emphasis of Eleco from Building Products and Precast Concrete to the expansion of our successful and growing software interests.

John KetteleyExecutive Chairman1 March 2011


6 months to 31 December

Notes

2010 (unaudited)

£’000

2009 (unaudited)

£’000

Year to 30 June

2010 £’000

Revenue 3 31,789 32,499 58,009Cost of sales (19,786) (20,316) (36,556)

Gross profit 12,003 12,183 21,453Distribution costs (2,240) (2,416) (4,128)Administrative expenses (10,731) (10,755) (22,806)

Operating loss before exceptionals 3 (968) (988) (5,481)

Exceptional items 4 (446) (913) (3,252)Gain on disposal of business – – 3,378

Loss from operations (1,414) (1,901) (5,355)

Finance income 5 46 29 155Finance cost 5 (373) (350) (675)

Loss before tax (1,741) (2,222) (5,875)Tax 61 118 419

Loss for the year (1,680) (2,104) (5,456)

Attributable to:Equity holders of the parent (1,680) (2,104) (5,456)

Total and continuing loss per share (EPS)– basic and diluted 6 (2.8)p (3.5)p (9.1)p


2010 (unaudited)

£’000

2009 (unaudited)

£’000

Year to 30 June

2010 £’000

(Loss)/profit for the period (1,680) (2,104) (5,456)

Other comprehensive incomeActuarial gain/(loss) on retirement benefit obligation 1,426 1,936 (625)Deferred tax on retirement benefit obligation (399) (542) 63Translation differences on foreign currency net investments 110 (40) (44)

Other comprehensive income net of tax 1,137 1,354 (606)

Total comprehensive income for the period (543) (750) (6,062)

Attributable to:Equity holders of the parent (543) (750) (6,062)

Condensed Consolidated Income Statement

Condensed Consolidated Statement of Comprehensive Income


Condensed Consolidated Statement of Changes in Equity

Share capital £’000

Share premium

£’000

Merger reserve

£’000

Translation reserve

£’000

Other reserve

£’000

Retained earnings

£’000Total

£’000

At 1 July 2010 6,066 6,396 7,371 107 (358) (4,236) 15,346

Transactions with owners – – – – – – –

Loss for the period – – – – – (1,680) (1,680)Other comprehensive income:Actuarial gain on defined benefit pension scheme

net of tax – – – – – 1,027 1,027Exchange differences on translation of net investments

in foreign operations – – – 110 – – 110

Total comprehensive income for the period – – – 110 – (653) (543)

At 31 December 2010 (unaudited) 6,066 6,396 7,371 217 (358) (4,889) 14,803


Share premium

£’000

Merger reserve

£’000

Translation reserve

£’000

Other reserve

£’000

Retained earnings

£’000Total

£’000

At 1 July 2009 6,066 6,396 7,371 151 (383) 1,965 21,566

Dividends – – – – – (239) (239)Share-based payments – – – – – 81 81

Transactions with owners – – – – – (158) (158)

Loss for the period – – – – – (2,104) (2,104)Other comprehensive income:Actuarial gain on defined benefit pension scheme

net of tax – – – – – 1,394 1,394Exchange differences on translation of net investments

in foreign operations – – – (40) – – (40)

Total comprehensive income for the period – – – (40) – (710) (750)

At 31 December 2009 (unaudited) 6,066 6,396 7,371 111 (383) 1,097 20,658


Share premium

£’000

Merger reserve

£’000

Translation reserve

£’000

Other reserve

£’000

Retained earnings

£’000Total

£’000

At 1 July 2009 6,066 6,396 7,371 151 (383) 1,965 21,566

Dividends – – – – – (239) (239)Share-based payments – – – – – 56 56Other – – – – 25 – 25

Transactions with owners – – – – 25 (183) (158)

Loss for the period – – – – – (5,456) (5,456)Other comprehensive income:Actuarial loss on defined benefit pension scheme

net of tax – – – – – (562) (562)Exchange differences on translation of net investments

in foreign operations – – – (44) – – (44)

Total comprehensive income for the period – – – (44) – (6,018) (6,062)

At 30 June 2010 6,066 6,396 7,371 107 (358) (4,236) 15,346


31 December

2010 (unaudited)

£’000

2009 (unaudited)

£’000

30 June 2010

£’000

Non-current assetsGoodwill 13,383 13,470 12,950Other intangible assets 2,888 3,319 2,927Property, plant and equipment 10,389 12,123 11,342Deferred tax assets 2,338 2,135 2,750

Total non-current assets 28,998 31,047 29,969

Current assetsInventories 3,947 3,692 3,977Trade and other receivables 14,211 15,086 11,639Current tax assets 120 234 325Cash and cash equivalents 3,746 2,398 6,009

Total current assets 22,024 21,410 21,950

Total assets 51,022 52,457 51,919

Current liabilitiesBorrowings (675) – (225)Obligations under finance leases (276) (356) (293)Trade and other payables (10,893) (11,445) (10,177)Provisions (455) – (1,120)Current tax liabilities (207) (313) (96)Accruals and deferred income (6,351) (6,644) (6,763)

Total current liabilities (18,857) (18,758) (18,674)

Non-current liabilitiesBorrowings (8,725) (4,500) (7,675)Obligations under finance leases (100) (231) (100)Deferred tax liabilities (70) (585) (303)Other non-current liabilities (119) (101) –Retirement benefit obligation (8,348) (7,624) (9,821)

Total non-current liabilities (17,362) (13,041) (17,899)

Total liabilities (36,219) (31,799) (36,573)

Net assets 14,803 20,658 15,346

EquityShare capital 6,066 6,066 6,066Share premium account 6,396 6,396 6,396Merger reserve 7,371 7,371 7,371Translation reserve 217 111 107Other reserve (358) (383) (358)Retained earnings (4,889) 1,097 (4,236)

Equity attributable to shareholders of the parent 14,803 20,658 15,346

Condensed Consolidated Balance Sheet


Condensed Consolidated Statement of Cash Flows


Notes

2010 (unaudited)

£’000

2009 (unaudited)

£’000

Year to 30 June

2010 £’000

Cash flows from operating activitiesLoss before interest and tax (1,414) (1,901) (5,355)Depreciation and impairment charge 1,022 947 2,254Amortisation and impairment charge 232 269 1,284(Profit)/loss on sale of property, plant and equipment (278) (18) 16Profit on sale of business – – (3,378)Share-based payment charge – 81 82Retirement benefit obligation (340) (331) (964)(Decrease)/increase in provisions (665) – 892

Cash generated from operations before working capital movements (1,443) (953) (5,169)(Increase)/decrease in trade and other receivables (2,273) (1,760) 1,332Decrease/(increase) in inventories and work in progress 93 50 (248)Decrease in trade and other payables (127) (16) (1,289)

Cash used in operations (3,750) (2,679) (5,374)Interest paid (67) (59) (112)Interest received 47 39 185Income tax received/(paid) 145 (146) (362)

Net cash outflow from operating activities (3,625) (2,845) (5,663)

Net cash used in investing activitiesPurchase of intangible assets (174) (51) (178)Purchase of property, plant and equipment (487) (508) (1,049)Acquisition of subsidiary undertakings net of cash acquired 7 (172) (46) –Proceeds from sale of property, plant, equipment and intangible assets 726 79 133Sale of business net of expenses – – 3,679

Net cash (outflow)/inflow from investing activities (107) (526) 2,585

Net cash used in financing activitiesProceeds from new bank loan 5,200 1,000 7,200Repayment of bank loans (3,700) (1,000) (3,800)Repayments of obligations under finance leases (197) (191) (388)Equity dividends paid – (239) (239)

Net cash inflow/(outflow) from financing activities 1,303 (430) 2,773

Net decrease in cash and cash equivalents (2,429) (3,801) (305)

Cash and cash equivalents at beginning of period 6,009 6,091 6,091Effects of changes in foreign exchange rates 166 108 223

Cash and cash equivalents at end of period 3,746 2,398 6,009


1. General informationThe Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 66 Clifton Street, London, EC2A 4HB.

The Company is listed on the Alternative Investment Market (“AIM”)

The condensed consolidated interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group’s consolidated financial statements for the year ended 30 June 2010 have been filed and the audit report was not qualified and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.

2. Basis of preparationThe condensed consolidated interim financial statements for the six months to 31 December 2010 have been prepared in accordance with the accounting policies which will be applied in the year end financial statements to 30 June 2011. These accounting policies are drawn up in accordance with International Accounting Standards “IAS” and International Financial Reporting Standards “IFRS” as issued by the International Accounting Standards Board and as adopted for use in the European Union that are effective at 31 December 2010.

The condensed consolidated interim financial statements are unaudited and have not been subject to review. They do not include all the information and disclosures required in the annual financial statements, and therefore should be read in conjunction with the Group’s annual financial statements as at 30 June 2010.

The implementation of the Group’s turnaround plan is ongoing and the Directors have reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the condensed consolidated interim financial information.

New accounting standards and interpretations are effective for the first time in the current period but have had no impact on the results or financial position of the Group. Furthermore, new standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the current period have not been adopted early.

EstimatesApplication of the Group’s accounting policies in preparing condensed consolidated interim financial statements requires management to make judgements and estimates that affect the reported amount of assets and liabilities, revenues and expenses. Actual results may ultimately differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30 June 2010.

Risks and uncertaintiesA summary of the Group’s principal risks and uncertainties was provided on page 11 of the 2010 annual report and accounts. The Board considers these risks and uncertainties are still relevant to the current financial year and the impact of changes in the UK economy is reviewed in the Chairman’s statement contained in this report.

Notes to the Condensed Consolidated Interim Financial Statements


3. Segment informationFor management purposes, the Group is organised into three operating divisions, Precast Concrete, Building Products and Software.

Building Systems

6 months to 31 December 2010 (unaudited)

Precast Concrete

£’000

Building Products

£’000Software

£’000Elimination

£’000Group £’000

Revenue 14,317 10,277 7,195 – 31,789Inter-segment revenue – – 95 (95) –

Total segment revenue 14,317 10,277 7,290 (95) 31,789

Adjusted operating profit/(loss) (1,457) 10 711 (736)Amortisation of intangible assets (51) (4) (177) (232)Restructuring costs (233) (198) (15) (446)

Segment result (1,741) (192) 519 (1,414)Net finance cost (327)

Loss before tax (1,741)Tax 61

Loss after tax (1,680)

Building Systems

6 months to 31 December 2009 (unaudited)

Precast Concrete

£’000

Building Products

£’000Software

£’000Elimination

£’000Group £’000

Revenue 17,399 8,753 6,347 – 32,499Inter-segment revenue – 3 101 (104) –


Adjusted operating profit/(loss) (185) (797) 263 (719)Amortisation of intangible assets (93) (8) (168) (269)Restructuring costs (66) (293) – (359)Intellectual property dispute – (554) – (554)

Segment result (344) (1,652) 95 (1,901)Net finance cost (321)



Building Systems

12 months to 30 June 2010

Precast Concrete

£’000

Building Products

£’000Software

£’000Elimination

£’000Group £’000

Revenue 26,838 17,759 13,412 – 58,009Inter-segment revenue 249 (249) –


Adjusted operating profit/(loss) (3,898) (1,794) 769 (4,923)Amortisation of intangible assets (185) (16) (357) (558)Gain on disposal of business – 3,378 – 3,378Impairment charges (1,151) – – (1,151)Restructuring costs (605) (477) (101) (1,183)Intellectual property dispute – (918) – (918)

Segment result (5,839) 173 311 (5,355)Net finance cost (520)




Notes to the Condensed Consolidated Interim Financial Statements (continued)4. Exceptional itemsExceptional items represent costs considered necessary to be separately disclosed by virtue of their size or nature.


2010 (unaudited)

£’000

2009 (unaudited)

£’000

Year to 30 June

2010 £’000

Impairment of intangible assets – – 726Impairment of tangible assets – – 425Restructuring costs 446 359 1,183Intellectual property dispute – 554 918

446 913 3,252

Restructuring costs comprise cash and non-cash costs associated with the Group restructuring programme, mainly in the UK, and primarily relate to redundancy and business relocation costs.

Intellectual property costs relate to the legal dispute concerning the ownership and rights of software used in the German nail plate business disposed on 30 June 2010. The costs for the year to 30 June 2010 have been restated to show the comparative against the costs incurred for the six month period to 31 December 2009.

5. Net finance income/(cost)6 months to 31 December

2010 (unaudited)

£’000

2009 (unaudited)

£’000

Year to 30 June

2010 £’000

Finance income Bank and other interest receivable 46 29 55 Loan note interest receivable – – 100Finance costs Bank overdraft and loan interest (56) (37) (81) Finance leases and hire purchase contracts (11) (20) (33) Net return on pension scheme assets and liabilities (306) (293) (561)

Total net finance cost (327) (321) (520)

6. Loss per shareThe calculations of the loss per share are based on the total loss after tax attributable to ordinary equity shareholders of the Company and the weighted average number of shares in issue for the reporting period.


2010 (unaudited)

2009 (unaudited)

Year to 30 June 2010

Loss after taxation £(1,680,000) £(2,104,000) £(5,456,000)

Weighted average number of shares in issue in the period 59,761,646 59,701,646 59,713,514Dilutive effect of share options – – –

Number of shares for diluted earnings per share 59,761,646 59,701,646 59,713,514

Basic loss per share (2.8)p (3.5)p (9.1)pDiluted loss per share (2.8)p (3.5)p (9.1)p

There is no dilution in the loss per share calculation at 31 December 2010 due to the non-achievement of the share option performance requirements. The diluted loss per share is the same as the basic loss per share for the current period.


7. AcquisitionsOn 1 September 2010 the Group acquired the business and certain assets of Lubekonsult AB, which provides cost estimation services and software to the Swedish ventilation market, for a total consideration of £393,000. The consideration comprised the payment of £172,000 in cash satisfied from the Group’s existing resources and deferred consideration of £221,000.

An analysis of the provisional fair value of the Lubekonsult AB net assets acquired and the fair value of the consideration paid is set out below:

Book value £’000

Fair value adjustments

£’000

Provisional fair value

£’000

Tangible assets 20 – 20Inventories 11 – 11Other debtors 3 – 3

34 – 34Deferred income (7) – (7)Other creditors (14) – (14)

(21) – (21)

Net assets 13 – 13

Goodwill 380

Total consideration 393

Satisfied by:Cash 172Deferred purchase consideration 221

393

Included in the £380,000 of goodwill recognised above are certain intangible assets that cannot be individually, separately and reliably measured from the acquiree due to their nature. These items include the value of the management and workforce together with synergies that are expected to be gained from being part of the Group.

8. Related Party DisclosuresAll intra-group transactions have been eliminated on consolidation at 31 December 2010.

An amount of £13,000 (H1 2009: £13,000) was paid to J H B Ketteley & Co Limited under a lease for occupation by the Group of 66 Clifton Street, London, EC2A 4HB.


John Ketteley FCAExecutive ChairmanAppointed Executive Chairman in 1997, John Ketteley has an investment banking background. He was formerly Non-Executive Chairman of BTP plc, Country Casuals plc and Prolific Income plc.

Craig Slater BA FCA MBAChief Operating OfficerAppointed COO in December 2009, Craig Slater is currently Non-Executive Chairman of CORGI Group Limited.

Matthew Turner BEng FCA CFGroup Finance DirectorAppointed a Director in January 2011. Matthew Turner, formerly a partner in Grant Thornton UK LLP, is currently a partner in Shore Mountain LLP and a Director of Tingene Homes Limited.

Michael McCullen BSc MBADivisional Chief Executive – SoftwareMichael McCullen was founder member of Asta Development and Managing Director from 2000 to 2009 leading the company up to its acquisition by Eleco plc in 2006. He joined the board in 2007.

Jonathan Cohen TD MA FCA*Chairman of the Remuneration CommitteeAppointed a Non-Executive Director in November 2002. Jonathan Cohen was previously Chief Executive of County NatWest Limited and Vice Chairman of Charterhouse Bank Limited. He is currently Chairman of Savile Group plc and a Director of Clearwater Hampers Limited.

Jonathan Edwards LLB ACA*Chairman of the Audit CommitteeA Chartered Accountant and Barrister, Jonathan Edwards is a Director of Guildhall Asset Management (Guernsey) Limited, Guildhall Research and Management Limited and Harpenden Sports Group Limited.

*Member of the Audit, Remuneration and Nominations Committees.

SecretaryIvor A Barton ACIS

Registered office66 Clifton Street London EC2A 4HBTel: +44 (0) 20 7422 0044E-mail: [email protected]: http://www.eleco.com

Registered number354915

AuditorsGrant Thornton UK LLP

BankersLloyds TSB Bank Plc

Nominated Adviser & BrokerCenkos Securities plc

SolicitorsBerwin Leighton PaisnerReynolds Porter Chamberlain

Registrars and transfer officeCapita RegistrarsThe Registry 34 Beckenham Road Beckenham Kent BR3 4TUTel: +44 (0) 871 664 0300 E-mail: [email protected]

Board of Directors and Company Advisors


SoftwareAsta Development plcThame, Oxfordshire Tel: +44 (0) 1844 261700 E-mail: [email protected] Website: www.asta.eleco.com Developer and supplier of project and resource management software.

Asta Development GmbHKarlsruhe, Germany Tel: +49 (0) 721 95 250 Email: [email protected] Website: www.astagmbh.eleco.com Supplier of project and resource management software.

Consultec Byggprogram ABSkellefteå, Sweden Tel: +46 (0) 910 87800 E-mail: [email protected] Website: www.consultecbp.eleco.com Developer and supplier of building project software.

Consultec System ABSkellefteå, Sweden Tel: +46 (0) 910 87800 E-mail: [email protected] Website: www.consultec.eleco.com Developer and supplier of design and engineering software.

Consultec Arkitekter & Konstruktorer ABSkellefteå, Sweden Tel: +46 (0) 910 87800 E-mail: [email protected] Website: www.consultecak.eleco.com Architectural consultancy and software reseller.

Eleco Software LimitedAldershot, Hampshire Tel: +44 (0) 1252 339132 E-mail: [email protected] Website: www.softwareuk.eleco.com Developer and supplier of 3D design software.

Eleco Software GmbHHameln, Germany Tel: +49 (0) 5151 822 390 E-mail: [email protected] Website: www.softwaregmbh.eleco.com Developer and supplier of 3D design software.

Esign Software GmbHHanover, Germany Tel: +49 (0) 511 856 14340 E-mail: [email protected] Website: www.esign.eleco.com Developer and supplier of software solutions for the floor coverings industry.

Building Products Gang-Nail Systems LimitedAldershot, Hampshire Tel: +44 (0) 1252 334691 E-mail: [email protected] Website: www.gangnail.eleco.com Manufacturer and supplier of roof truss connector plates, EcoJoist® floor joist webs and associated design and engineering software.

International Truss Systems (Pty) LimitedJohannesburg, South Africa Tel: +27 (0) 11 397 4441 E-mail: [email protected] Website: www.its.eleco.com Supplier of roof truss connector plates and associated design and engineering software.

SpeedDeck Building Systems LimitedYaxley, Suffolk Tel: +44 (0) 1379 788166 E-mail: [email protected] Website: www.speeddeck.eleco.com Manufacturer and supplier of secret-fix and standing seam metal roofing and Vitesse® wall and rainscreen cladding systems.

Downer Cladding Systems LimitedYaxley, Suffolk Tel: +44 (0) 1379 787215 E-mail: [email protected] Website: www.downercladding.eleco.com Supplier and manufacturer of fixing solutions for man-made and natural rainscreen facade materials.

Prompt Profiles LimitedYaxley, Suffolk Tel: +44 (0) 1379 787211 E-mail: [email protected] Website: www.promptprofiles.eleco.com Manufacturer and supplier of profiled metal products for the roofing systems industry.

Eleco Timber Frame LimitedYaxley, Suffolk Liverpool, Merseyside Tel: +44 (0) 1379 783465 Tel: +44 (0) 151 448 0055 E-mail: [email protected] Website: www.elecotimberframe.eleco.com Manufacturer and supplier of ElecoFrame® timber frame, EcoJoist® floor joist and ElecoFloor® acoustic flooring products.

Precast ConcreteBell & Webster Concrete LimitedGrantham, Lincolnshire Tel: +44 (0) 1476 562277 E-mail: [email protected] Website: www.bellandwebster.eleco.com Manufacturer and supplier of FastBuild™ precast concrete rooms, solutions, retaining walls and other concrete products.

Milbury Systems LimitedLydney, Gloucestershire Tel: +44 (0) 1594 847500 E-mail: [email protected] Website: www.milbury.eleco.com Manufacturer and supplier of prestressed and precast retaining structures.

Group Directory

Eleco plc

Partition Walls

Precast Concrete

Timber Engineering

Building Products

Metal Roofing & Cladding

Project Management

Design & Engineering

Estimation CAD and 3D Visualisation

Visualisation

Milbury Systems Ltd

International Truss Systems

(Pty) Ltd

Gang-Nail Systems Ltd

Downer Cladding

Systems Ltd

Prompt Profiles Ltd

ASTA Development

GmbHConsultec A&K AB

Eleco Software GmbH

Stramit Panel Products

Bell & Webster

Concrete LtdEleco Timber

Frame LtdSpeedDeck

Building Systems Ltd

ASTA Development

LtdConsultec System AB

Consultec Byggprogram

ABEleco

Software LtdEsign GmbH

Building Systems Software

Eleco is focused on key components of a modern construction project. Building Systems used in the fabric of the building, Software tools used to manage the construction project and Sustainable Construction to enhance environmental performance.

Eleco Building Systems Eleco Software

Group HighlightsGroup Operations

Group Financial Performance

Turnover amounted to £31.8m (H1 2009: £32.5m).•Group adjusted operating loss before amortisation and •restructuring costs of £0.7m (H1 2009: loss £0.7m).Loss before tax of £1.7m (H1 2009: loss £2.2m).•Loss per share of 2.8p (H1 2009: loss 3.5p).•Net bank debt at 31 December 2010 of £5.7m •(H1 2009: £2.1m).

Group Operational Performance

Improved operating performance at Software with •strong growth in turnover and profits.Building Products marginally profitable with poor •performance at Eleco Timber Frame offset by profits in other businesses.Further loss, albeit significantly less than in second •half of last year, in Precast Concrete operations, principally caused by losses on custodial contracts and adverse weather in December.Gross margin maintained due to change in revenue mix.•Reduced cost base with administrative expenses down •over 10% compared to the previous six month period.

Pension

The deficit shown in the accounts at 30 June 2010 has •reduced by £1.5m, from £9.8m to £8.3m, primarily due to investment performance in the period.

Board Appointment

Group management strengthened with the •appointment of Matthew Turner, initially part time, as Group Finance Director in January.

Change of Accounting Reference Date

Change of accounting reference date to 31 December •for operational reasons. An unaudited second interim report will be released for the period ended 30 June 2011. The preliminary results for the 18 months ended 31 December 2011 will be released no later than 31 March 2012.

Outlook

Our Precast Concrete and Building Products businesses •were affected by further adverse weather in January 2011. However, the Board is of the view that our Building Products operations will produce a modest improvement although our Precast Concrete interests will continue to experience operational difficulties until the four major custodial accommodation contracts have been completed, which is expected by the end of June 2011. The Board is also of the view that our Software interests will perform well in the second six months.

Strategy

The Board plans to concentrate on expansion of its •software and service operations while reducing the current emphasis on Building Products and currently loss making Precast Concrete manufacturing interests.The Board believes that this strategy will significantly •reduce the financing requirements of the Group’s Building Products and Precast Concrete interests while facilitating the planned expansion of the Group’s Software interests, both in the UK and internationally.

Eleco Building Systems focuses on modern methods of construction to provide materials efficiency and construction speed in precast concrete, timber frame and metal.

Eleco Software provides software applications to help construction businesses manage each stage of their project life cycle, satisfying their drive for greater efficiency through improved management of projects.

“Building on technology” defines Eleco which applies the latest technologies to drive improved Modern Methods of Construction, Improved Management and Execution of Projects and continuing improvement in Sustainable Construction methods.

Eleco people and companies aspire to deliver value to Eleco customers, employees, shareholders and their communities by providing them with economical and environmentally sound construction methodologies, first class service and technical support.

Mission and Vision

Eleco applied the principles of modern methods of construction (“MMC”) prior to 1997, the year when Sir John Egan highlighted the benefits to be gained from the application of MMC to the build process. MMC is now increasingly regarded as a key aid to improving quality, reducing time spent on site, improving on-site safety and overcoming skills shortages.

Modern Methods of Construction (MMC)

Construction companies and their clients are increasingly turning to software in pursuit of greater efficiency. Eleco anticipated this demand and began investing in software technology in 2000.

Eleco software now has a suite of software tools to manage each stage of the construction project life cycle from project visualisation, through design, cost estimation and project management to site management.

Improved Project Management and Execution

“Meeting the needs of the present without compromising the ability of future generations to meet their own needs”. Eleco recognises that sustainability is about environmental performance of the product throughout its lifespan. Eleco is focused on achieving materials efficiency, faster construction times and efficient resource management.


Building on Technology

Modern Methods of Construction

Improved Management and Execution of Projects


Building ontechnology

Eleco plc66 Clifton StreetLondon EC2A 4HBTel: +44 (0)20 7422 0044E-mail: [email protected]: www.eleco.com

Eleco plcInterim Report2011

Download - Eleco Interim Reports 2010/2011

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