Our strategic objectives remain to continue to innovate and to grow, with the solid foundation of a stable and efficient organisation.

Strategy graphic

Objectives give our business a clearly defined target and are used as the foundation for business and product development plans. Read more below where our three core objectives are explained:

Innovation

Developing a portfolio of increasingly integrated software solutions, available across multiple platforms and devices, that continue to lead in their segments.

Progress in 2019

  • Major release of Powerproject XV, the latest version of Elecosoft’s project management and planning software.
  • Powerproject SaaS, IconSystem and ShireSystem listed on G-Cloud 11, the Crown Commercial Service’s (“CCS”) digital marketplace, a service for supply of cloud applications and public sector procurement.
  • Release of ShireSystem software version better supporting facilities management and new release of ShireSystem mobile application for iOS users.
  • Development of an integrated product set from ActiveOnline and ESIGN for their joint customer offering, providing synergistic opportunities.
  • Powerproject awarded Project Management Software of the Year at the UK Construction Computing Awards for the sixth consecutive year.
  • Release of Artificial Intelligence (AI) visualisation tool for the interior flooring segment.
Growth

Expanding sales and marketing capabilities, channel capacity and operational territories.

Progress in 2019

  • Successfully secured an order for IconSystem in the hospitality sector.
  • Expanded our portfolio and customer base to address maintenance phases of the building lifecycle.
  • Expanded our customer base including over 1,400 newly supported customers from the acquisition of ShireSystem and ActiveOnline.
  • Continued to grow our US customer base, now supporting 82 of the ENR400 US construction contractors.
  • Continued to centralise marketing collaboration to better control and manage the brand and its assets.
  • Expansion of Australian Powerproject construction client to Powerproject Vision.
Stability

Continuing to strengthen financial position, whilst consolidating and simplifying its operations.

Progress in 2019

  • Strong cash conversion which resulted in net bank cash of £1.1m.
  • Maintained tight control of overhead costs, maintaining flat organic overhead costs.
  • Introduction of an HR system in 2019, with continued roll out across remaining core locations in 2020.
  • Simplified Elecosoft’s exhibition presence with portfolio demonstrations at each event.
  • Corporate and product brands to emphasise a single company strategy.

Key Performance Indicators

The Eleco Board and businesses utilise a number of appropriate Key Performance Indicators (‘’KPIs’’) as well as a structured planning and reporting process. This begins with long term planning, through to annual budgeting, quarterly reviews and monthly reporting. KPIs regularly used by the Group include:

KPIs  2019
2018
Change
Product development spend (£m) 3.1 2.8 +11%
Software developers headcount 66 58 +14%
Revenue (£m) 25.4 22.2 +14%
Reseller revenue (£m) 1.2 1.3 -2%
Free cash flow (£m) 4.1 3.1
Net cash/ (debt) (£m)  1.1 (1.8)

Our business model

We create customer and shareholder value by investing in the research and development of our software solutions which are sold directly in our core markets of the UK, Sweden, Germany, the Netherlands and USA and indirectly through our international reseller channel. We reinvest 12 per cent of revenue in research and development.

Value model 2019

Summary of principal risks

Eleco aims to deliver sustainable growth combined with continued investment in software product development, sales and marketing resources.

The development of new products and the enhancing of existing requires continual appraisal of investments and the returns. Product development is planned, reported and reviewed frequently, and Eleco works closely with key customers and channel partners while monitoring industry trends to ensure that new products and features align to market needs and expectations.

Product development risks

Description
Changing customer requirements, industry and technological innovation contribute to the risk and challenges associated with developing complex software applications.

Mitigation
New product development and the enhancement of existing products both require continual appraisal of investment and returns.

Product development is planned, reported and reviewed frequently. Eleco works closely with key customers and channel partners while monitoring industry trends to ensure that new products and features align to the market needs and expectations.

Market risks

Description
The health of domestic and global economies strongly influences the commercial construction business cycle. A downturn in the construction business cycle can adversely affect Eleco’s performance.

Mitigation
The market risk is mitigated through operational spread between countries with plans to expand geographical reach through reseller channels. Eleco’s position is strengthened by servicing the maintenance stages of the building lifecycle and manufacturing, property and retail markets.

Eleco remains conscious of the need to manage and conserve its cash resources carefully and in present conditions caused by Covid-19, Eleco has been even more vigilant in the control of operational costs.

Unfortunately it is not possible to predict with any degree of certainty the impact on our business, whether positive or negative, as we enter the transitional period of Brexit.

Foreign exchange risks

Description
The Group earns a proportion of its revenue in currencies other than Sterling. The two largest currencies in which it trades are Swedish Krona (SEK) and Euro (EUR). Changes in these exchange rates can expose Eleco to exchange gains and losses.

Mitigation
Our businesses predominantly trade in their own local currencies and have local operational and development staff which creates a natural hedge against currency movements. In addition, we will continue to review foreign exchange contracts to manage risk.

Protection of Intellectual Property

Description
Eleco’s success is built upon the development of sophisticated software which requires continual protection from competitive businesses who may seek to copy or otherwise replicate the software.

Mitigation
Eleco uses a variety of licensing technologies and defines the rights of customers in licence agreements. In addition, the Group seeks to ensure its intellectual property rights are protected by appropriate means and defends its rights where practicable.

Employees and organisation

Description
Eleco’s reputation depends upon its products and services and, in turn, these are built upon the innovation and dedication of its employees.

Mitigation
Eleco endeavours to ensure that employees are motivated in their work and there is regular feedback on their performance. There are pay reviews and a range of incentive schemes to reward achievement over different time periods. Eleco attracts new talent by maintaining its focus on developing new and innovative applications.

Operations risks

Description
There is an increasing reliance on IT systems, local and cloud, to perform the daily operations of a business. Exposure to technology in general is rapidly increasing with cloud offerings and remote connections.

Mitigation
Good, effective technology risk management and close monitoring is essential to robustly handle potential IT security incidents and system failures, as well as ensuring customer information is protected from unauthorised access or disclosure. Continued investment and adhering to regulatory standards mitigates these risks.