TIDMELCO
RNS Number : 7242T
Eleco PLC
29 March 2021
29 March 2021
Eleco plc
("Eleco", the "Company" or the "Group")
Audited Results for the Year Ended 31 December 2020
Directorate Change
The Board of Eleco plc (AIM: ELCO) is pleased to announce its
results for the year ended 31 December 2020.
Financial Highlights
-- Revenues are in line with last year at GBP25.2m (2019: GBP25.4m)
-- Recurring revenues increased to 56% (2019: 53%) (includes
maintenance, support, subscription and SaaS revenue)
-- Reported operating profit up 9% to GBP4.2m (2019: GBP3.8m)
-- Profit before tax up 12% to GBP3.9m (2019: GBP3.5m)
-- Reported basic earnings per share up 18% to 3.9p (2019: 3.3p)
-- Adjusted operating profit* up 12% to GBP5.1m (2019: GBP4.5m)
-- Adjusted basic earnings per share* up 17% to 4.8p (2019: 4.1p)
-- Free cash flow** up 36% to GBP5.5m (2019: GBP4.1m)
-- Net cash GBP6.2m, with GBP10.7m cash at year end (2019: GBP1.1m net cash)
-- Final recommended dividend of 0.40p
(* Adjusted profit measures exclude acquisition related
expenses, amortisation of acquired intangible assets and former
Director payments.)
(* Non-GAAP measures, see note 8.)
(** Free cash flow represents cash generated in operations less
purchase of intangible assets and property, plant and equipment,
net of finance costs and tax plus any proceeds from disposals of
property, plant and equipment.)
Operational Highlights
-- Continued to expand our customer base and maintained high customer retention levels.
-- Transitioned the global workforce to home working in the face
of Covid-19 restrictions. Continued our daily business and customer
support and training without any disruption to customers.
-- Released our ShireSystem Wallboard leading performance
indicator module which visually shares relevant, actionable data
with a number of stakeholders.
-- Continued to invest in the development of Memmo, our SaaS
site management software which received a positive response with
both new and existing customers in our Swedish markets.
-- Released Powerproject subscription licencing.
-- Released the first version of Bidcon Connect enabling
customers to get read access to estimations in the cloud.
-- Winner of best 'Project Management Software of the Year' of
the seventh consecutive year at the UK Construction Computing
Awards.
Executive Chairman, Serena Lang said:
" The year under review has shown Eleco's resilience during a
period of uncertainty, with profit before tax and net cash both
improving in a meaningful way. This robust financial performance,
together with our established position as a provider of
best-in-breed software solutions for blue chip customers in the
construction and built environment sectors, provides us with a
strong platform for growth.
"I am therefore pleased to present our relaunched growth
strategy today. Following our strategic review, which commenced in
Q4 2020, Eleco now has a clear focus on securing a high-value
customer base in additional markets outside of those we currently
count as our core, both organically and through M&A. This
strategy, outlined in detail below, has been informed by the market
and our customers, and we have an excellent team in place, with the
right experience, to create shareholder value. I would like to
thank our colleagues for the way they responded to the Covid-19
pandemic.
"Importantly, the market opportunity for Eleco is compelling;
the markets we serve are experiencing an accelerated adoption of
technology due to the pandemic, rising material costs and increased
regulation. The strong start to trading that we have experienced
since the beginning of 2021 attests to this. With a strong customer
base and a high level of recurring revenue, we look to 2021 and
beyond with confidence and to building further shareholder
value."
For further information, please contact:
Eleco plc Tel: +44 (0)20 7422 8000
Serena Lang, Executive Chairman
Jonathan Hunter, Chief Executive Officer
Robert Tearle , Chief Financial Officer
finnCap Limited, NOMAD and broker Tel: +44 (0)20 7220 0500
Geoff Nash / Kate Bannatyne (Nomad)
Richard Chambers / Charlotte Sutcliffe (ECM)
SEC Newgate Tel: +44 (0)20 3757 6880
Elisabeth Cowell / Bob Huxford/ Isabelle Smurfit eleco@secnewgate.co.uk
About Eleco plc
Eleco PLC is an AIM-listed (AIM: ELCO) specialist international
provider of software and related services to the Architectural,
Engineering, Construction and Owner/Operator (AECO) industries and
interior furnishing industries from centres of excellence in the
UK, Sweden, Germany, Netherlands and the USA.
The Company's market leading software solutions are developed by
teams in the United Kingdom, Sweden and Germany, and its solutions
include project management, estimating, timber engineering, CAD and
visualisation, asset and facility management and cloud based
digital marketing solutions.
For further information please visit www.eleco.com
Executive Chairman's Statement
The year under review has shown Eleco's resilience during a
period of uncertainty, with profit before tax and net cash both
improving in a meaningful way. I am extremely proud of the way our
colleagues responded to the Covid-19 pandemic and continue to do
so. I am also grateful to our customers for their willingness to
embrace new ways of working with us, especially for services that
are traditionally face-to-face such as training and consultancy.
This enabled us to prioritise the health and wellbeing of our
employees, customers, resellers and suppliers whilst playing our
part in reducing the spread of the virus.
In March 2020, we closed all offices and implemented home
working for all our employees. Not knowing what the impact of the
pandemic was likely to be on our business we quickly put in place
tighter financial controls and cost management whilst ensuring that
our focus remained on our customers. There was an immediate
financial impact on training and services which ground to a halt
when the countries in which we operate went into lockdown, leading
us to furlough a small proportion of staff for Q2. The teams
quickly moved to on-line training in small blocks with good uptake
but much lower revenues and as the year progressed our team and our
customers worked together to embrace changing delivery of training
fully to on-line and our furloughed staff were quickly returned to
working.
Despite the unprecedented disruption to businesses worldwide,
overall revenues were in line with the prior year, recurring
revenues were at 56 per cent (2019: 53 per cent) and profit before
tax was up 12 per cent on 2019 at GBP3.9m. We also improved our net
cash position from GBP1.1m as at 31 December 2019 to GBP6.2m at 31
December 2020, all of which puts the Company in a strong position
to drive its growth strategy. Based upon these results, the Board
has taken the decisions to repay furlough payments that are
possible to be repaid. This is GBP98,000 furlough repayments of the
GBP150,000 which will be repaid in the coming months.
The Company's resilience in these challenging times is testament
to the dedication and commitment of the whole team at Eleco and I
am hugely grateful for their hard work and dedication, especially
during these difficult times when they have worked tirelessly to
support our customers whilst managing the impact of Covid-19 on
them personally.
Strategy
Eleco is already a cash generative provider of software
solutions with a strong blue-chip customer base across the
construction and built environment sectors. However, the pandemic
has created new industry drivers and has enhanced the market
opportunity for Eleco. Since my appointment in September, the Board
has undertaken a full strategic review of both external (product,
customer and competitive) trends and internal capabilities,
resulting in the development of a clear growth strategy to better
capitalise on the opportunities before the Company.
Construction was disrupted in 2020 as the pandemic shut down
sites and staff were furloughed, however the outlook for 2021 and
beyond for the sector is one of growth. Resource shortages, rising
material costs and increased regulation are anticipated to squeeze
the industry's margins even further in the months and years ahead.
This means that technologies such as ours, which help to improve
margins through automation and the provision of data, are becoming
more critical to our existing and potential customers than ever
before.
Also in our favour is the change in working practices prompted
by the pandemic. Covid-19 has changed the way many businesses will
work permanently, with increased remote working and adoption of
cloud-based tools. Our conversations with existing and prospective
customers highlight the accelerated digitalisation anticipated in
our core target markets.
With this in mind, our aim is to develop Eleco to become a
customer-centric market leader in the provision of software which
creates certainty for customers in the construction and built
environment sectors, targeting expansion in key growth markets.
We intend to lead the way by identifying future needs of our
core customer base and creating software solutions to enable them
to be more efficient, including by leveraging collaborative data
exchanges to power better decision making, timely delivery and the
reduction of cost in a safe, sustainable way.
In doing this, we intend to build value for shareholders by:
-- Transitioning Eleco from being a product-led company to a
customer-centric, nimble matrix organisation built around customer
segments for a set of priority geographical locations, supported by
a strategic holding group;
-- Aggressively growing a more focused, high-value customer base
through product portfolio alignment and clear customer segment
strategies;
-- Targeting customer 'sweet spots', building on our strengths
and developing the capabilities to better serve specific customer
segments' needs with tailored solutions; and
-- Developing next generation solutions that are cloud based and
help our customers reimagine their businesses by creating software
which enables our customers to better collaborate, get quicker
access to data for analytics and ensure interoperability. We will
leverage our deep knowledge of our customer base to identify and
address future needs and create solutions in-house, through
partnership and/or acquisition.
We will focus our sales efforts on our best of breed, highest
value suites of products, listed below. We will organise our
solutions into two categories, Building Lifecycle which comprise
Project Management, Estimating, Site Management, Maintenance and
Property Management solutions and CAD and Visualisation which
comprise niche solutions that will be run as individual standalone
businesses.
Building Lifecycle
-- Powerproject
-- ShireSystem
-- IconSystem
-- Bidcon
-- Memmo
CAD and Visualisation
-- ActiveOnline and Esign which are being integrated
-- Arcon
-- Staircon
The market for building lifecycle software is circa GBP8.0bn and
the 8-15 per cent compound annual growth rate (CAGR) provides a
compelling rationale for refining our portfolio of core software
solutions. We will move from individual companies for each product
to a customer centric sales and marketing organisation for each of
our core geographies - UK, Nordics and Northern Europe (Germany,
Belgium and Netherlands), allowing a greater ability to provide
multiple products into each customer segment and streamlining our
back-office operations.
Our market leading E-Sign and ActiveOnline businesses are key
players in a GBP450m market.
We are actively integrating these businesses today having
already created a single sales team after the acquisition of
ActiveOnline. New systems and processes will enable a more
efficient organisation, better able to drive growth and streamlined
reporting into the Group.
In terms of geographic expansion, growth in the Building
Lifecycle division will initially be focused in those areas where
Eleco currently has a strong presence; the UK, Sweden and to a
lesser extent Germany. This provides us with a solid platform from
which to drive growth more quickly. For example, we will be
introducing the ShireSystem asset management and maintenance
software into the German market as well as stepping up our sales
and marketing for the strategic customer segments that purchase
Powerproject. We see opportunities for the Swedish business to
expand into Norway and Denmark. We are testing Bidcon in the UK
market and the Government's recent commitment to infrastructure
projects in the UK will further drive new licence sales
opportunities. In the USA we will target small and mid-size
contractors with a direct sales model whilst continuing to work
with resellers on enterprise deals.
Our Visualisation and Staircon solutions will also be driving
their growth internationally.
Building a Stronger Executive Team
In September 2020, Jonathan Hunter was appointed interim CEO and
I am delighted that we have now made that position permanent.
Jonathan has such a wealth of knowledge and understanding about the
business, having been both the UK MD and COO, and he has led the
development of our new strategy based upon a clear vision for the
business.
I am delighted to welcome Robert Tearle to the business as the
new Chief Financial Officer from 29 March 2021. Robert's extensive
expertise in financial planning and his previous experience in the
SaaS space will be invaluable to Eleco as we focus on the delivery
of our new strategic growth initiatives.
I would like to thank Ben Moralee for his hard work and
contribution to the success of Eleco over the past three years and
wish him all the best in his future endeavours.
I would also like to take this opportunity to highlight and
thank another key Executive, Anders Karlsson. Anders, who has been
a Board member since March 2017 has been heavily involved in the
new strategy formulation and, whilst his core responsibility is for
the Nordics, Anders also acted as Interim UK MD ahead of the
appointment of Richard Choi on 22 March 2021, as well as owner of a
number of the new strategic initiatives.
In order to be able to achieve our strategy we will be investing
in key strategic positions throughout the business. New roles at a
leadership level include a Chief Product Officer who will be
responsible for delivering real value to customers, a Chief
Technology Officer who will be responsible for ensuring we get the
most value from our development spend, a Group HR Manager to
support the organisational changes and a Group Transformation
Director accountable both for initiatives coming out of the
strategy as well as M&A; focused not just on the deals but the
successful integration the acquired companies to ensure early value
capture and synergies.
The first thing I did when I was appointed Executive Chairman in
September was to reach out and have a conversation with all our
senior colleagues. It was such a great reminder of the high calibre
of people we already have in the organisation. That real passion to
provide the best customer solutions and have the best products
prevails throughout the organisation and we look forward to
bringing in new team members to augment that.
Corporate Governance
When the position of Executive Chairman was vacated, the Board
unanimously asked me to step into that role fulltime to, amongst
other things, help coach and mentor the Executives as well as
providing my expertise in the development and implementation of the
new strategy to transform ourselves for the future. I accepted the
appointment to the role of Executive Chairman on 24 September 2020
on the understanding that it would be for a temporary period
pending me returning to my previous non-executive capacity as
Non-Executive Chairman within a year and therefore, the intention
is that I will, at the right time within the next few months, step
back into that. Following my appointment as Executive Chairman, the
roles and responsibilities of Executive Chairman and CEO have been
separately delineated in accordance with the fundamental principles
of good corporate governance.
The Board has established a new strategy and business model that
promotes long term value for shareholders through its very detailed
review of the markets and full understanding of the risks as well
as the opportunities in front of us.
In January 2021, we appointed Stella Toresse to the position of
full-time Company Secretary replacing the previous limited,
part-time external resource. With a background and degree in Law,
Stella is a Chartered Company Secretary and Fellow of the CGI
(formerly ICSA). Stella has a Masters in Corporate Governance and
brings with her a wealth of experience in diverse sectors.
We started to look for another Non-Executive Director to add to
the independent non-executive presence on the Board when I took
over as Executive Chairman and I am pleased to report that we
appointed Paul Boughton into the role on 23 March 2021. Paul's
extensive M&A experience, knowledge of the US, German and
Scandinavian markets (as well as the UK) and of transitioning from
a perpetual to a SaaS/recurring revenue model will add tremendous
value to the Board. Paul will be a member of both the Audit and
Remuneration Committees.
Over the course of the next six months, the Board also plans to
appoint another Non-Executive Director to further strengthen the
board leadership at Eleco.
Proposed Dividend
In light of Eleco's resilient trading performance and cash
generation in 2020, the Board has decided to recommend a final
scrip dividend of 0.40 pence per share, with a cash alternative
dividend of 0.40 pence per share.
Payment of the final dividend will follow approval by
shareholders at the Annual General Meeting. The record date is the
close of business on 14 May 2021; the ex-dividend date will be 13
May 2021.
Outlook
The start to trading this year has been strong, with revenues
for the two months to February 4 per cent higher than the
equivalent, pre-Covid-19 period in 2020.
We are confident that our business will begin to bear the fruit
of its new refined vision and strategy over the next 12 months and
beyond. Market trends are in our favour, providing strong tailwinds
for our future growth and, as a cash generative, IP backed,
award-winning provider of software solutions to the construction
and built environment sectors, we have a strong foundation for
future growth. We look forward to updating the market in respect to
our execution milestones, including progress with R&D,
international expansion and extending our management team.
Importantly, the market opportunity for Eleco is compelling; the
markets we serve are experiencing an accelerated adoption of
technology due to the pandemic, rising material costs and increased
regulation. The strong start to trading that we have experienced
since the beginning of 2021 attests to this. With a strong customer
base and a high level of recurring revenue, we look to 2021 and
beyond with confidence and to building further shareholder
value.
Serena Lang
Executive Chairman
26 March 2021
Consolidated Income Statement
For the year ended 31 December 2020
2020 2019
Notes GBP'000 GBP'000
------------------------------------- ------ ---------- ----------
Continuing operations
Revenue 1,2 25,232 25,398
Cost of sales (2,529) (2,647)
Gross profit 22,703 22,751
-------------------------------------- ------ ---------- ----------
Amortisation of intangible assets 2,3 (1,658) (1,445)
Acquisition and corporate
finance related expenses 3 - (143)
Former Directors' payments 3 (328) -
Other selling and administrative
expenses (16,566) (17,351)
--------------------------------------- ------ ---------- ----------
Selling and administrative expenses 3 (18,552) (18,939)
----------------------------------------- ------ ---------- ----------
Operating profit 2,3 4,151 3,812
Finance income - -
Finance cost (262) (339)
Profit before
tax 3,889 3,473
Tax (726) (772)
----------------------------------------- ------ ---------- ----------
Profit for the financial
period 3,163 2,701
--------------------------------------- ------ ---------- ----------
Attributable
to:
Equity holders of the
parent 3,163 2,701
--------------------------------------- ------ ---------- ----------
Earnings per share -
(pence per share)
--------------------------------------- ------ ---------- ----------
Basic 6 3.9 p 3.3p
Diluted 6 3.9 p 3.3p
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
---------------------------------------------- -------- --------
Profit for the
period 3,163 2,701
Other comprehensive income:
------------------------------------------------ -------- --------
Items that will be reclassified subsequently
to profit and loss:
Translation differences on
foreign operations 197 (51)
Other comprehensive income net
of tax 197 (51)
Total comprehensive income for
the period 3,360 2,650
------------------------------------------------- -------- --------
Attributable
to:
Equity holders of the
parent 3,360 2,650
------------------------------------------------ -------- --------
Consolidated Statement of Changes in Equity
For the year 31 December 2020
Share Share Merger Translation Other Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 1 January 2019 818 2,049 1,004 (148) (177) 11,933 15,479
Dividends - - - - - (275) (275)
Share-based payments - - - - 70 - 70
Issue of share capital 4 (4) - - - - -
Transactions with owners 4 (4) - - 70 (275) (205)
----------------------------- --------- --------- --------- ------------ --------- ---------- --------
Profit for the period - - - - - 2,701 2,701
Other comprehensive income:
Exchange differences
on translation of net
investments in foreign
operations - - - (51) - - (51)
Other - 2 (2) 1 (1) - -
----------------------------- --------- --------- --------- ------------ --------- ---------- --------
Total comprehensive income
for the period - 2 (2) (50) (1) 2,701 2,650
----------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 31 December 2019 822 2,047 1,002 (198) (108) 14,359 17,924
Dividends - - - - - - -
Share-based payments - - - - 131 - 131
Elimination of exercised
share-based payments - 25 - - (25) - -
Issue of share capital 3 106 - - - - 109
Transactions with owners 3 135 - - 106 - 240
----------------------------- --------- --------- --------- ------------ --------- ---------- --------
Profit for the period - - - - - 3,163 3,163
Exchange differences
on translation of net
investments in foreign
operations - - - 188 - - 188
Other - 4 - 2 - 3 9
Total comprehensive income
for the period - 4 - 190 - 3,166 3,360
----------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 31 December 2020 825 2,182 1,002 (8) (2) 17,525 21,524
============================= ========= ========= ========= ============ ========= ========== ========
Consolidated Balance Sheet
At 31 December 2020
2020 2019
Notes GBP'000 GBP'000
------------------------------------- ------- --------- ---------
Non-current assets
Goodwill 15,762 15,598
Other intangible
assets 7,195 7,242
Property, plant and equipment 651 734
Right-of-Use assets 2,208 2,048
Deferred tax assets 85 118
Total non-current assets 25,901 25,740
--------------------------------------- ------- --------- ---------
Current assets
Inventories 23 46
Trade and other receivables 3,911 4,339
Current tax assets 90 105
Cash and cash equivalents 10,668 7,236
Total current
assets 14,692 11,726
-------------------------------------- ------- --------- ---------
Total assets 40,593 37,466
-------------------------------------- ------- --------- ---------
Current liabilities
Borrowings (1,647) (1,645)
Lease liabilities (582) (558)
Trade and other payables (1,660) (1,704)
Provisions (125) (142)
Current tax liabilities - (117)
Accruals and deferred
income (8,880) (7,747)
Total current
liabilities (12,894) (11,913)
-------------------------------------- ------- --------- ---------
Non-current liabilities
Borrowings (2,867) (4,490)
Lease liabilities (1,850) (1,691)
Deferred tax liabilities (1,417) (1,407)
Non-current provisions (41) (41)
Total non-current liabilities (6,175) (7,629)
--------------------------------------- ------- --------- ---------
Total liabilities (19,069) (19,542)
-------------------------------------- ------- --------- ---------
Net assets 21,524 17,924
================================================== ========= =========
Equity
Share capital 825 822
Share premium
account 2,182 2,047
Merger reserve 1,002 1,002
Translation reserve (8) (198)
Other reserve (2) (108)
Retained earnings 17,525 14,359
Equity attributable to shareholders
of the parent 21,524 17,924
======================================== ======= ========= =========
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
2020 2019
Notes GBP'000 GBP'000
---------------------------------------------- ------- -------- --------
Cash flows from operating
activities
Profit before
tax 3,889 3,473
Net finance costs 262 339
Depreciation charge 866 902
Amortisation charge 1,658 1,445
Profit on sale of property,
plant and equipment (16) (8)
Share-based payments
charge 131 70
Decrease in provisions (17) (2)
Cash generated in operations
before working capital movements 6,773 6,219
Decrease in trade and other
receivables 428 152
Decrease/(increase) in inventories
and work in progress 23 (39)
Increase in trade and other
payables and accruals and
deferred income 914 337
Cash generated in
operations 8,138 6,669
Interest
paid (206) (268)
Net income tax paid (785) (1,052)
Net cash inflow from operating
activities 7,147 5,349
------------------------------------------------ ------- -------- --------
Investing activities
Purchase of intangible
assets (1,603) (1,237)
Purchase of property, plant
and equipment (99) (110)
Proceeds from sale of property,
plant, equipment and intangible
assets 71 67
Net cash inflow from investing
activities (1,631) (1,280)
------------------------------------------------ ------- -------- --------
Financing activities
Repayment of bank
loans (1,647) (1,646)
Repayments of leasing liabilities (761) (755)
Equity dividends paid (275)
Net cash (outflow) from financing activities (2,408) (2,676)
------------------------------------------------- ------- -------- --------
Net increase in cash and
cash equivalents 3,108 1,393
------------------------------------------------ ------- -------- --------
Cash and cash equivalents at beginning of
period 7,236 6,036
Effects of changes in foreign
exchange rates 324 (193)
Cash and cash equivalents
at end of period 10,668 7,236
------------------------------------------------ ------- -------- --------
Cash and cash equivalents
comprise:
Cash and short-term
deposits 10,668 7,236
10,668 7,236
------------------------------------------------------ -------- --------
Extract from Notes to the Consolidated Financial Statements
1. Revenue
Revenue disclosed in the income statement is analysed as
follows:
2020 2019
(restated)
GBP'000 GBP'000
Licence sales 5,442 5,877
Recurring maintenance, support
and subscription revenue 14,186 13,557
Services income 5,604 5,964
--------------------------------- -------- -----------
Total revenue 25,232 25,398
--------------------------------- -------- -----------
Geographical, Product and sales channel information
Revenue by geographical area represents continuing operations
revenue from external customers based upon the geographical
location of the customer.
Revenue by geographical destination is as follows:
2020 2019
GBP'000 GBP'000
UK 9,470 9,436
Scandinavia 6,080 6,548
Germany 4,858 4,487
USA 890 1,021
Rest of Europe 3,538 3,407
Rest of World 396 499
25,232 25,398
----------------- ---- -------- --------
Revenue by product group represents continuing operations
revenue from external customers.
Revenue by product group is as follows:
2020 2019
Software
for: GBP'000 GBP'000
Project management 9,599 10,090
Site management 379 395
Estimating 2,834 2,737
Engineering 2,137 2,232
CAD/Design 1,722 1,969
Information management 1,221 1,400
Visualisation 4,553 4,150
Maintenance management 2,787 2,425
25,232 25,398
---- ------------------------------------ -------- --------
The Group utilises resellers to access certain markets. Revenue
by sales channel represents continuing operations revenue from
external customers.
Revenue by sales channel is as follows:
2020 2019
GBP'000 GBP'000
Direct 24,000 24,149
Reseller 1,232 1,249
-------------- -------- --------
25,232 25,398
---------- -------- --------
2. Segment information
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker to
allocate resources to the segments and to assess their
performance.
The Chief Operating Decision maker has been identified as the
Executive Directors. The Group revenue is derived from the sale of
software licences, software maintenance and support and related
services. Consequently, the Executive Directors review the three
revenue streams but as the costs and profits are not monitored or
recorded in the same way the information is presented as one
segment and as such the information is presented in line with
management information.
2020 2019
Software Software
GBP'000 GBP'000
Revenue 25,232 25,398
----------------------------- --------- ---------
Adjusted EBITDA 7,003 6,302
Amortisation and impairment
of purchased intangible
assets (1,068) (855)
Depreciation (866) (902)
-----------------------------
Adjusted operating profit 5,069 4,545
Amortisation of acquired
intangible assets (590) (590)
Acquisition and corporate
finance related expenses - (143)
Former Directors' payments (328) -
----------------------------- --------- ---------
Operating profit 4,151 3,812
Net finance cost (262) (339)
----------------------------- --------- ---------
Segment profit before tax 3,889 3,473
Tax (726) (772)
-----------------------------
Segment profit after tax 3,163 2,701
============================= ========= =========
Operating profit 4,151 3,812
Amortisation of intangible
assets 1,658 1,445
Depreciation charge 866 902
Acquisition expenses - 143
Former Directors' payments 328 -
Adjusted EBITDA 7,003 6,302
============================= ========= =========
Development project costs are expensed as incurred unless they
meet the accounting policy requirements for capitalisation. The
software projects that have been capitalised in the twelve months
to 31 December 2020 are explained in the Financial Review. Adjusted
EBITDA is earnings before interest, tax, depreciation and
amortisation, and adjusted to exclude acquisition expenses.
3. Operating profit
The continuing operations operating profit for the period is
stated after charging/(crediting) the following items.
2020 2019
GBP'000 GBP'000
---------------------------------------------------- -------- --------
Software product development 1,590 1,862
Depreciation of property, plant and
equipment 220 241
Depreciation of right-of-use assets 646 661
Amortisation of acquired intangible
assets 590 590
Amortisation of other intangible
assets 1,068 855
Share based payments 131 71
Employer furlough scheme credits (150) -
Profit on disposal of property, plant
and equipment (16) (8)
Foreign exchange (gains)/losses (34) 110
Fees payable to the Company's
auditor for:
The audit of the parent company and consolidated
financial statements 70 108
Fees payable to the Company's auditor and its
associates for other services:
The audit of the Company's
subsidiaries 94 81
Other services 7 7
Operating lease rentals:
Plant, equipment and
vehicles 268 290
Properties 222 238
Acquisition
expenses - 143
Former Directors'
payments 328 -
----------------------------------------------------- -------- --------
4. Employee information
The average number of employees during the period, including
Directors, in continuing operations was made up as follows:
2020 2019
Number Number
Sales & marketing 56 58
Client services 78 82
Software development 68 66
Management and administration 44 45
246 251
---- ------------------------------------ ------- -------
Staff costs during the period, including Directors amounted
to:
2020 2019
GBP'000 GBP'000
Wages and salaries 11,350 11,133
Social security 2,002 2,145
Pension costs 547 589
Share-based payments 131 71
14,030 13,938
Less: Development staff
costs capitalised (1,602) (1,234)
----------------------------
12,428 12,704
------------------------- -------- --------
Pension costs relate to contributions to defined contribution
pension schemes. Development staff costs are charged to projects
and capitalised if those projects meet the criteria for
capitalisation.
5. Dividends
No 2019 final dividend was paid during the year.
No 2020 interim dividend was paid during the year.
No cash dividends were paid during the year (2019:
GBP275,000).
2020 2019 2020 2019
pence pence
Ordinary Shares per share per share GBP'000 GBP'000
------------------------------- ------------ ----------- -------- --------
Declared and paid during the
year
Interim - current
year - 0.30 - 134
Final - previous year - 0.40 - 141
- 0.70 - 275
------------------------------------------- ----------- -------- --------
No scrip dividends were issued in the year.
Value of shares issued
Shares issued (GBP'000)
----------------- -------------------------
Ordinary Shares 2020 2019 2020 2019
--------------------------- ------- -------- ------------ -----------
Declared and paid during
the year
Interim - current year - 171,658 - 133
Final - previous year - 248,585 - 186
- 420,243 - 319
---------------------------------- -------- ------------ -----------
The Directors have recommended a final dividend of 0.40 pence
(2019: nil pence). The dividend is subject to approval by
shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
6. Basic and diluted earnings per share
2020 2019
---------------------------------------- ----------------------------------------
Weighted Weighted
Net profit average Net profit average
attributable number attributable number
to shareholders of shares EPS to shareholders of shares EPS
GBP'000 (millions) (pence) GBP'000 (millions) (pence)
Basic earnings per
share 3,163 81.4 3.9 2,701 81.1 3.3
Diluted earnings
per share 3,163 82.0 3.9 2,701 81.8 3.3
Adjusted basic earnings
per share 3,907 81.4 4.8 3,322 81.1 4.1
Shares held by the Employee Share Ownership Trust are excluded
from the weighted average number of shares in the period.
7. Post-balance sheet events
The Board has taken the decision to repay furlough payments that
are possible to be repaid, given the underlying performance of
Eleco for the year as a whole. This is GBP98,000 furlough
repayments of the GBP150,000 which will be repaid in the coming
months.
After the Balance Sheet date, share awards were made under the
Company's Long Term Incentive Plan (LTIP) amounting to 700,000
shares at an exercise price of 100.4 pence per share.
A total of 700,000 share options were granted to the Executive
Directors and are exercisable after 3.0 years, subject to EPS for
the 12 months ended 31 December 2023 being at least 20 per cent
higher than EPS as per the accounts for the year ended 31 December
2020. In the event that the employee leaves within the initial
3.0-year period they may (depending upon the timing and
circumstances of their departure) be entitled to retain some of
their options but only if certain yearly earnings per share targets
have at that time been met. The options are exercisable until 23
February 2031, 10 years after the date of grant.
8. Additional performance measures
The Group uses adjusted figures, which are not defined by
generally accepted accounting principles ("GAAP") such as IFRS.
Adjusted figures and underlying growth rates are presented as
additional performance measures used by management, as they provide
relevant information in assessing the Group's performance, position
and cash flows. We believe that these measures enable investors to
track more clearly the core operational performance of the Group,
by separating out items of income or expenditure relating to
acquisitions, disposals and capital items. Our management uses
these financial measures, along with IFRS financial measures, in
evaluating the operating performance of the Group.
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
------------------------------------------- ------------ ------------
Operating profit 4,151 3,812
Acquisition related expenses - 143
Former Directors' payments 328 -
Amortisation of acquired intangible
assets 590 590
Adjusted operating profit 5,069 4,545
------------------------------------------- ------------ ------------
Profit before tax 3,889 3,473
Acquisition related expenses - 143
Former Directors' payments 328 -
Amortisation of acquired intangible
assets 590 590
Adjusted profit before tax 4,807 4,206
------------------------------------------- ------------ ------------
Tax charge (726) (772)
Acquisition related expenses - -
Former Directors' payments (62) -
Amortisation of acquired intangible
assets (112) (112)
Adjusted tax charge (900) (884)
------------------------------------------- ------------ ------------
Profit after tax 3,163 2,701
Acquisition related expenses - 143
Former Directors' payments 266 -
Amortisation of acquired intangible
assets 478 478
Adjusted profit after tax 3,907 3,322
------------------------------------------- ------------ ------------
Cash generated in operations 8,138 6,669
Purchase of intangible assets (1,603) (1,237)
Purchase of property, plant and equipment (99) (110)
Acquisition related expenses - 143
Former Directors' payments 328 -
Adjusted operating cash flow 6,764 5,465
------------------------------------------- ------------ ------------
Notes
1. Eleco plc ("the Company") and its subsidiaries (together "the
Group") are primarily involved in software sales and development.
Eleco plc, a Public Limited Company incorporated and domiciled in
England, is the Group's ultimate parent Company. The address of
Eleco plc's registered office is 66 Clifton Street, London, EC2A
4HB and the principal place of business is 66 Clifton Street,
London, EC2A 4HB.
Statutory accounts for 2019 have been delivered to the Registrar
of Companies and those for 2020 will be delivered in due course.
The Company's auditors RSM UK LLP, have reported on the 2020
accounts; their report was unqualified, did not draw attention to
any matters by way of emphasis without qualifying their report and
did not contain statements under s498 (2) or (3) Companies Act
2006. The 2019 audit report was unqualified, did not draw attention
to any matters by way of emphasis without qualifying their report
and did not contain statements under s498 (2) or (3) Companies Act
2006.
Whilst the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement requirements of I nternational Accounting Standards in
conformity with the requirements of the Companies Act 2006 this
announcement does not itself contain sufficient information to
comply with I nternational Accounting Standards in conformity with
the requirements of the Companies Act 2006 and does not constitute
statutory accounts for the purposes of section 435 of the Companies
Act 2006.
The principal accounting policies used in preparing this
preliminary results announcement are those that the Company has
adopted for its statutory accounts for the year ended 31 December
2020 and are unchanged from those previously disclosed in the
Group's Annual Report and Accounts for the year ended 31 December
2019, with the addition of a Government grants policy and new
standards adopted as described below.
New standards that have been adopted in the annual financial
statements for the year ended 31 December 2020, but have not had a
significant effect on the Group are:
-- Amendments to IAS 1 and IAS 8: Definition of Material
Full financial statements for the year ended 31 December 2020
will be posted and made available to shareholders in due
course.
2. The Group's activities, together with the factors likely to
affect its future development, performance and position are set out
in the Operating Review and Financial Review.
3. The Group's clients include many top contractors in the
building and construction sector in the UK, Sweden, Germany,
Benelux and the United States with no significant client
concentration. The software products and services provided by the
Group are reasonably embedded in their client's core operations and
56% (2019: 53%) of the Group's revenue is from recurring revenue
contracts.
These recurring revenue contracts are renewed throughout the
year although there is a slightly greater weighting in the fourth
quarter. For these reasons, the Group has good visibility on any
potential deterioration in its trading outlook and potential risk
to the business. Not-withstanding the Group has net current assets
of GBP1,798,000 at 31 December 2020 (2019 net current liabilities:
GBP187,000) these amounts are after deferred income of GBP6,393,000
(2019: GBP5,862,000) relating to annual maintenance contracts which
are non-refundable. Historically, there is a low level of contract
cancellations each year and the Board closely monitors clients that
are potentially at risk of cancellation as well as the pipeline of
new business.
The Group has both cash and undrawn credit facilities available
to support its business operations and therefore the Board believes
that the Group is well-positioned to manage the business risks.
Revenue, operating profit and cash flow budgets have been prepared
at business unit level. After making appropriate enquiries, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operation for the foreseeable future.
Accordingly, the Group continues to adopt the going concern basis
in preparing its consolidated financial statements.
Details of conference call for equity analysts
A webinar for bona-fide equity analysts will be held today at
09:30 a.m. (UK time), hosted by Serena Lang, Executive Chairman,
and Jonathan Hunter, CEO. To register you interest in joining the
webinar, please contact SEC Newgate by email at
Eleco@SECNewgate.co.uk .
Details of webinar for investors
The Company is pleased to announce that Jonathan Hunter and
Serena Lang will provide a live presentation relating to Full Year
Results via the Investor Meet Company platform on Wednesday 31st
March 2021 at 11:00am BST.
The presentation is open to all existing and potential
shareholders. Questions can be submitted pre-event via your
Investor Meet Company dashboard up until 9am the day before the
meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet Eleco plc via:
https://www.investormeetcompany.com/eleco-public-limited-company/register-investor
The following information is disclosed about Robert Andrew
Charles Tearle, age 55, pursuant to Schedule Two paragraph (g) of
the AIM Rules for Companies:
Current Directorships / Partnerships:
CFO DRAGON LIMITED
Previous Directorships / Partnerships (held in the past five
years)
Global Processing Services Limited
Currency Cloud Limited
Robert Tearle does not currently hold any ordinary shares in the
Company. There are no other disclosures required in relation to
Rule 17 or paragraph (g) of Schedule 2 of the AIM Rules for
Companies
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END
FR PPUCGWUPGPUR
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