The outlook for the construction and built environment sector is looking very positive at present, with a sustained recovery anticipated over the coming years. (Glenigan UK report 2021).
Alongside that, rising material costs and increased regulation are anticipated to squeeze the industry’s margins, making technologies such as ours, which use automation and data to improve margins, ever more critical to our customers and potential customers.
Together these developments create a substantial opportunity for Eleco. The Company’s management team defined a growth strategy with a clear focus on securing a high-value customer base in both core and additional markets. The Company’s vision is aligned with industry drivers and the real core of its customer’s needs to drive better decision making, timely delivery, and the reduction of cost in a safe, sustainable way.
Eleco has an experienced team in place to create shareholder value. Eleco’s sales and marketing functions are built around customer segments, designed to target customer sweet-spots and to drive sales internationally. Its divisions are:
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.
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.
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.
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.
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.
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.
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.