Interim Results

  

For immediate release	19 September 2011

 

 

 

 

 

                                                            ELECO PLC

(“Eleco” or the “Group”)

The Construction Software and Building Systems Group

 

Second Interim Results for the 12 Months Ended 30 June 2011

 

“Our strategic emphasis is now firmly set on the growth of our profitable software interests”

John Ketteley, Executive Chairman

 

 

Group Financial Performance – Continuing Operations 

·     Turnover : £47.9m (2010: £53.0m restated)

·     Group operating loss before exceptional items : £0.4m (2010: loss £3.4m restated)

·     Loss before tax :£1.2m (2010: loss £3.8m restated)

·     Loss per share :2.2p (2010: loss 5.6p restated)

·     Net bank debt at 30 June 2011 :£8.6m (2010:  £1.9m)

 

Group Operational Performance

·     Software delivered strong growth in the 12 months ended 30 June 2011, with turnover and profit both at record levels; turnover and profits of our Software activities now account for 32% of Group turnover. Lubekonsult AB acquired earlier in year performing ahead of targets.

·     Improved operational performance of remaining Building Systems activities, before exceptional items, due to better margin performance and reduced fixed costs.

·     Steps are being taken to improve trading in precast concrete which has been adversely impacted by margin pressure and poor operational performance.

·     Significant progress made with our strategy of closing or disposing of loss making Building Systems and precast concrete operations, including the exit from timber frame and custodial precast concrete loss making activities.

 

Strategy and Outlook

 

·           Strategic direction to concentrate on expansion of Software activities reducing historic emphasis on Building Products and Precast Concrete

·           Current trading in line with management’s expectations

 

Change of Accounting Reference Date

·     The preliminary results for the 18 months ended 31 December 2011, the new Accounting Reference Date will be released no later than 31 March 2012.

 

   

For further information please contact:

 

Eleco plc	0207 422 0044
John Ketteley, Executive Chairman	eleco.com
Matthew Turner, Group Finance Director
Cenkos Securities plc	0207 397 8900
Adrian Hargrave
Buchanan Communications	0207 4665000
Tim Anderson / Isabel Podda

 

Chairman’s Statement

In the second six months of this extended accounting period, we have sought to reduce costs, increase our sales, enhance our margins, improve our finances and begin to implement our corporate strategy of de-risking the Eleco Group by concentrating on the expansion of our construction software interests and reducing the emphasis that we had previously placed on our Precast Concrete and Building Products interests.

Group Performance

Continuing Operations

Group turnover for the 12 months ended 30 June 2011 was £47.9m (2010: £53.0m restated), down 10% compared to the same period last year. However, it should be noted that turnover for the six month period to 30 June 2011 was £24.5m, up 12% compared with the same six month period last year. 

Group turnover in the 12 months to 30 June 2011 was adversely impacted, primarily by lower turnover of our Precast Concrete interests, down £9.8m compared with the same period last year, due to a reduced level of student accommodation and hotel contracts. On the other hand, turnover in Building Products was up 17% and turnover of our Software interests was up 16% compared with the same period last year.

The improvement in gross profit margin was partly due to the change in revenue mix between Building Systems and Software but also a modest increase in margins at both Precast Concrete and Building Products divisions. Software increased its share of Group turnover to 32% from 25% before discontinued operations.

Adjusted Group operating profit before amortisation of intangible assets and restructuring costs amounted to £126,000 compared with an adjusted Group operating loss of £2.9m for the same period last year.

Loss before tax from continuing operations of £1.2m is reached after amortisation charges of £0.5m (2010: £0.5m) and restructuring costs of £0.4m (2010: £1.1m) and net financing expenditure of £0.4m (2010: £0.5m).

Net bank debt at 30 June 2011 increased to £8.6m (2010: £1.9m). Of this £6.7m increase, £4.4m relates to the financing of losses at our timber frame operations and precast concrete custodial activities. The remaining increase is due to higher working capital at Precast Concrete and Building Products divisions. The Group continues to focus on managing its debt and working capital to maximize cash inflows and minimise its exposure to bad debts.

Discontinued Operations

The Precast Concrete factory at Hoveringham, Nottinghamshire used to manufacture and supply the loss making precast concrete custodial contracts was closed in May and the site is being marketed for sale. As recently announced, the Group has divested itself of its loss making timber frame manufacturing business based in Speke, Liverpool. Both these operations have been classified as discontinued operations in the 12 month period to 30 June 2011.

Dividend

As the Group has not yet returned to profit the Board has decided not to pay an interim dividend.

Divisional Performance

Software

Software delivered strong growth in the 12 months ended 30 June 2011, with turnover and profit both at record levels.  

Turnover increased 16% to £15.8m compared to  £13.7m in the same period last year.

Adjusted operating profit was £1.6m before amortisation of intangible assets and restructuring costs for the 12 months compared to £0.6m last year.

Consultec Sweden acquired the business of Lubekonsult AB (“Lube”) on 1 September 2010. Lube, provides cost estimation services and software to the Swedish ventilation market and is already exceeding our expectations in terms of turnover and profit.

The significant profit growth in these businesses in the past three years, including loss reduction and elimination, has taken place despite the unprecedented economic difficulties. This continued growth was largely driven by increased turnover of software and services in the UK, 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 with a view to expand its profitable reseller and distributor network.

Building Systems

Our continuing Precast Concrete and Building Products operations each showed significant improvement in their trading profit in the 12 months to 30 June 2011 compared with the same period last year. Adjusted operating profit before amortisation of intangible assets and restructuring costs was up £2.1m of which £1.5m was at Building Products and £0.6m at Precast Concrete.

Building Products

Turnover was £17.5m in the 12 months, up 17% compared to the same period last year. Turnover in the six months to 30 June 2011 was £8.9m, up 18% against the same period last year.

Adjusted operating profit before amortisation and restructuring costs was £0.7m for the 12 months to 30 June 2011 compared to an adjusted operating loss of £0.7m for the same period last year.

The improvement is due to better trading performance at the roofing, cladding and nail plate businesses in the UK and South Africa. In addition, the elimination of trading losses at the German nail plate business which was sold on 30 June 2010 has benefited the current year performance.

Building Products has successfully reduced its cost base and has started to reinvest again in its sales resources with a renewed effort to profitably grow its market share.

Precast Concrete

Turnover in the 12 months ended 30 June 2011 was £14.9m compared with £24.7m achieved in the same period last year. In contrast, the turnover in the six months to 30 June 2011 of £7.3m was the same as the six month period to 30 June 2010.

Adjusted operating loss before intangible asset amortisation and restructuring costs for the 12 months was £2.2m compared with a loss of £2.8m in the same period last year.

The adverse profit performance of precast concrete was largely due to low contract margins and poor operational performance in connection with certain hotel and student accommodation contracts that were manufactured during the period. We were also unable to recover variation costs incurred during manufacturing and installation from some clients. These operational issues have been addressed internally and the design, manufacturing and erection process of all contracts now have to comply with a much more rigorous evaluation and control process.  

Financial Review

Despite the Group’s significant progress in reducing its fixed costs and restructuring certain businesses the overall financial performance was behind the Board’s expectations for the 12 months ended 30 June 2011. This result partially reflects the time lag between the implementation of the restructuring plan and the realisation of its benefits.

The Group’s cash position was particularly impacted by the adverse performance of the custodial contracts at Precast Concrete and the timber frame operation at Building Products. In addition, increased retentions and the failure of some major customers of our  Building Systems businesses also put a further strain on the Group’s financial resources, although some of these amounts will be recoverable under the Group’s credit insurance policy. Increased restructuring spend, mainly redundancy costs and closure expenses related to the rationalisation of the Group’s properties, together with reduced profitability, 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 Strategy

As stated in the annual report, 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 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 cannot therefore be disclosed at this time.

The Group intends to disclose further details of the above once confirmed. In the meantime the deficit shown in the accounts at 30 June 2011 has reduced by £1.9m from £9.8m to £7.9m.

Change of Accounting Reference Date

As announced on 1 March 2011, the Board 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.

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

Outlook

Three quarters of our software profits were made outside the UK and we believe that Eleco now has the management and technology to take advantage of opportunities from further profitable expansion in its software interests in the UK, Germany and Sweden as they arise. We are encouraged by the progress made by Eleco’s manufacturing operations in the six months ended 30 June 2011, despite the tough economic climate. However, these interests are almost all located in the UK and in common with the UK manufacturing and construction industry generally they will continue to be affected by the severe economic downturn in these sectors.  

 

Corporate Strategy

The Board of Eleco is determined to reduce the operational and financial risk profile of the Group. Our strategy for achieving this objective will be to continue our efforts to expand our successful and profitable international software interests in the UK, Germany, Sweden and other markets. Our existing software interests have produced record turnover and profit in the period under review. We shall also work towards reducing Group risk profile by returning our existing Building Products and Precast Concrete interests to a satisfactory level of profit or eliminating or disposing of loss making businesses.

I am confident that this strategy will enable Eleco to achieve its objective of reducing the Group’s risk profile to an appropriate degree in the current economic climate, of placing our Building Systems and Precast Concrete businesses back onto a sound financial and operational footing, enabling Eleco to concentrate on the expansion of its successful international software interests.

 

John Ketteley

Executive Chairman

19 September 2011

 

Condensed Consolidated Income Statement

For the period ended 30 June 2011

					6 months to 30 June				12 months to 30 June		Year to          30 June
					2011		2010		2011		2010
					(unaudited)		(restated)		(unaudited)		(restated)
				Notes	£’000		£’000		£’000		£’000
	Revenue			3	24,527		21,913		47,853		52,981
	Cost of sales				(12,401)		(12,076)		(23,710)		(31,036)
	Gross profit				12,126		9,837		24,143		21,945
	Distribution costs				(1,542)		(1,639)		(3,737)		(4,022)
	Administrative expenses				(11,017)		(10,978)		(20,769)		(21,359)
	Operating loss before exceptionals				(433)		(2,780)		(363)		(3,436)
	Exceptional items			5	(195)		(2,303)		(388)		(3,216)
	Gain on disposal of business				–		3,378		–		3,378
	Loss from operations			3	(628)		(1,705)		(751)		(3,274)
	Finance income			6	57		126		103		155
	Finance cost			6	(160)		(312)		(514)		(660)
	Loss before tax				(731)		(1,891)		(1,162)		(3,779)
	Tax				(208)		301		(182)		419
	Loss for the financial period from continuing operations				(939)		(1,590)		(1,344)		(3,360)
	Loss for the financial period from discontinued operations			4	(2,697)		(1,762)		(3,972)		(2,096)
	Loss for the financial period				(3,636)		(3,352)		(5,316)		(5,456)
	Attributable to:
	Equity holders of the parent				(3,636)		(3,352)		(5,316)		(5,456)
	Loss per share – basic and diluted
	Continuing operations			7	(1.6)	p	(2.7)	p	(2.2)	p	(5.6)	p
	Discontinued operations			7	(4.5)	p	(2.9)	p	(6.7)	p	(3.5)	p
	Total operations			7	(6.1)	p	(5.6)	p	(8.9)	p	(9.1)	p

 

Condensed Consolidated Statement of Comprehensive Income

For the period ended 30 June 2011

					6 months to 30 June				12 months to 30 June		Year to
					2011		2010		2011		30 June
					(unaudited)		(unaudited)		(unaudited)		2010
					£’000		£’000		£’000		£’000
	Loss for the period				(3,636)		(3,352)		(5,316)		(5,456)
	Other comprehensive income
	Actuarial (loss)/gain on retirement benefit obligation				(119)		(2,561)		1,307		(625)
	Deferred tax on retirement benefit obligation				(126)		605		(525)		63
	Translation differences on foreign currency net investments				(98)		(4)		12		(44)
	Other comprehensive income net of tax				(343)		(1,960)		794		(606)
	Total comprehensive income for the period				(3,979)		(5,312)		(4,522)		(6,062)
	Attributable to:
	Equity holders of the parent				(3,979)		(5,312)		(4,522)		(6,062)

 

  

Condensed Consolidated Statement of Changes in Equity

For the period ended 30 June 2011

		Share capital	Share premium	Merger reserve	Translation reserve	Other reserve	Retained earnings	Total
		£’000	£’000	£’000	£’000	£’000	£’000	£’000
	At 1 January 2011	6,066	6,396	7,371	217	(358)	(4,889)	14,803
	Transactions with owners	–	–	–	–	–	–	–
	Loss for the period	–	–	–	–	–	(3,636)	(3,636)
	Other comprehensive income:
	Actuarial gain on defined benefit pension scheme net of tax	–	–	–	–	–	(245)	(245)
	Exchange differences on translation of net investments in foreign operations	–	–	–	(98)	–	–	(98)
	Total comprehensive income for the period	–	–	–	(98)	–	(3,881)	(3,979)
	At 30 June 2011 (unaudited)	6,066	6,396	7,371	119	(358)	(8,770)	10,824

		Share capital	Share premium	Merger reserve	Translation reserve	Other reserve	Retained earnings	Total
		£’000	£’000	£’000	£’000	£’000	£’000	£’000
	At 1 January 2010	6,066	6,396	7,371	111	(383)	1,097	20,658
	Share-based payments	–	–	–	–	–	(25)	(25)
	Other	–	–	–	–	25	–	25
	Transactions with owners	–	–	–	–	25	(25)	–
	Loss for the period	–	–	–	–	–	(3,352)	(3,352)
	Other comprehensive income:
	Actuarial gain on defined benefit pension scheme net of tax	–	–	–	–	–	(1,956)	(1,956)
	Exchange differences on translation of net investments in foreign operations	–	–	–	(4)	–	–	(4)
	Total comprehensive income for the period	–	–	–	(4)	–	(5,308)	(5,312)
	At 30 June 2010	6,066	6,396	7,371	107	(358)	(4,236)	15,346
		Share capital	Share premium	Merger reserve	Translation reserve	Other reserve	Retained earnings	Total
		£’000	£’000	£’000	£’000	£’000	£’000	£’000
	At 1 July 2010	6,066	6,396	7,371	107	(358)	(4,236)	15,346
	Transactions with owners	–	–	–	–	–	–	–
	Loss for the period	–	–	–	–	–	(5,316)	(5,316)
	Other comprehensive income:
	Actuarial loss on defined benefit pension scheme net of tax	–	–	–	–	–	782	782
	Exchange differences on translation of net investments in foreign operations	–	–	–	12	–	–	12
	Total comprehensive income for the period	–	–	–	12	–	(4,534)	(4,522)
	At 30 June 2011 (unaudited)	6,066	6,396	7,371	119	(358)	(8,770)	10,824
		Share capital	Share premium	Merger reserve	Translation reserve	Other reserve	Retained earnings	Total
		£’000	£’000	£’000	£’000	£’000	£’000	£’000
	At 1 July 2009	6,066	6,396	7,371	151	(383)	1,965	21,566
	Dividends	–	–	–	–	–	(239)	(239)
	Share-based payments	–	–	–	–	–	56	56
	Other	–	–	–	–	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

 

  

Condensed Consolidated Balance Sheet

							30 June
							2011
							(unaudited)		2010
					Notes		£’000		£’000
	Non-current assets
	Goodwill						13,425		12,950
	Other intangible assets						2,592		2,927
	Property, plant and equipment						8,863		11,342
	Deferred tax assets						2,065		2,750
	Total non-current assets						26,945		29,969
	Current assets
	Inventories						3,526		3,977
	Trade and other receivables						11,335		11,639
	Current tax assets						–		325
	Cash and cash equivalents						5,456		6,009
	Assets of disposal group held for sale				4		894		–
	Total current assets						21,211		21,950
	Total assets						48,156		51,919
	Current liabilities
	Borrowings				8		(900)		(225)
	Obligations under finance leases						(147)		(293)
	Trade and other payables						(8,203)		(10,177)
	Provisions						(8)		(1,120)
	Current tax liabilities						(102)		(96)
	Accruals and deferred income						(6,435)		(6,763)
	Total current liabilities						(15,795)		(18,674)
	Non-current liabilities

	Borrowings				8		(13,175)		(7,675)
	Obligations under finance leases						(270)		(100)
	Deferred tax liabilities						(27)		(303)
	Other non-current liabilities						(123)		–
	Retirement benefit obligation						(7,942)		(9,821)
	Total non-current liabilities						(21,537)		(17,899)
	Total liabilities						(37,332)		(36,573)
	Net assets						10,824		15,346
	Equity
	Share capital						6,066		6,066
	Share premium account						6,396		6,396
	Merger reserve						7,371		7,371
	Translation reserve						119		107
	Other reserve						(358)		(358)
	Retained earnings						(8,770)		(4,236)
	Equity attributable to shareholders of the parent						10,824		15,346

 

 

Condensed Consolidated Statement of Cash Flows

For the period ended 30 June 2011

					6 months to 30 June		12 months to 30 June	Year to
					2011	2010	2011	30 June
					(unaudited)	(unaudited)	(unaudited)	2010
				Notes	£’000	£’000	£’000	£’000
	Cash flows from operating activities
	Loss before interest and tax				(3,426)	(3,454)	(4,840)	(5,355)
	Depreciation and impairment charge				1,189	1,307	2,211	2,254
	Amortisation and impairment charge				361	1,015	593	1,284
	(Profit)/loss on sale of property, plant and equipment				(5)	34	(283)	16
	Profit on sale of business				–	(3,378)	–	(3,378)
	Share-based payment charge				–	1	–	82
	Retirement benefit obligation				(463)	(633)	(803)	(964)
	(Decrease)/increase in provisions				(447)	892	(1,112)	892
	Cash generated from operations before working capital movements				(2,791)	(4,216)	(4,234)	(5,169)
	Decrease in trade and other receivables				2,955	3,138	681	1,332
	Decrease/(increase) in inventories and work in progress				221	(298)	314	(248)
	Decrease in trade and other payables				(2,828)	(1,273)	(2,955)	(1,289)
	Cash used in operations				(2,443)	(2,649)	(6,194)	(5,374)
	Interest paid				(94)	(53)	(161)	(112)
	Interest received				119	146	166	185
	Income tax paid				(173)	(216)	(28)	(362)
	Net cash outflow from operating activities				(2,591)	(2,772)	(6,217)	(5,663)
	Net cash used in investing activities
	Purchase of intangible assets				(61)	(127)	(235)	(178)
	Purchase of property, plant and equipment				(251)	(541)	(738)	(1,049)
	Acquisition of subsidiary undertakings net of cash acquired			9	–	–	(172)	–
	Proceeds from sale of property, plant, equipment  and intangible assets				98	54	824	133
	Sale of business net of expenses				–	3,679	–	3,679
	Net cash (outflow)/inflow from investing activities				(214)	3,065	(321)	2,585

	Net cash used in financing activities
	Proceeds from new bank loan				4,900	6,200	6,400	7,200
	Repayment of bank loans				(225)	(2,800)	(225)	(3,800)
	Repayments of obligations under finance leases				(160)	(197)	(357)	(388)
	Equity dividends paid				–	–	–	(239)
	Net cash inflow from financing activities				4,515	3,203	5,818	2,773
	Net increase/(decrease) in cash and cash equivalents				1,710	3,496	(720)	(305)
	Cash and cash equivalents at beginning of period				3,746	2,398	6,009	6,091
	Effects of changes in foreign exchange rates				–	115	167	223
	Cash and cash equivalents at end of period				5,456	6,009	5,456	6,009

 

 

Notes to the Condensed Consolidated Interim Financial Statements

1. General information

The 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 preparation

The second interim statement is provided due to the change in the year end of Eleco plc from 30 June to 31 December.

The condensed consolidated second interim financial statements for the twelve months to 30 June 2011 have been prepared in accordance with the accounting policies which will be applied in the 18 months financial statements to 31 December 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 30 June 2011.

The condensed consolidated second 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 strategy identified in the interim report for the six months to December 2010 is on track to deliver the planned results. Of the current bank loans in place at 30 June 2011, repayments on the term loan commenced in April 2011 and are scheduled to continue quarterly until January 2016. The revolving credit facility is due for repayment on 10 July 2012 and the directors are currently in negotiations with the Group’s bankers to discuss the detail of the facility required beyond that date. Following the progress on the elimination of loss making operations and a forecast reduction in bank borrowings over the next twelve months 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 second 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.

In accordance with IFRS 5, prior year income statement comparatives have been restated so as to report the timber frame operation based in Liverpool and the precast concrete custodial operation based at Hoveringham, Nottinghamshire as a discontinued operation.

Assets held for sale and discontinued operations

Assets and businesses are classified as held for sale, and stated at the lower of carrying amount and fair value less costs to sell, if their carrying amount will be recovered or settled principally through a sale transaction rather than through continuing use. A discontinued operation is a component of the Group’s business that represents a separate major line of business that has been disposed of, has been abandoned or meets the criteria to be classified as held for sale.

Estimates

Application 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 second 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 uncertainties

A 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.

3. Segmental information

Operating segments

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

Discontinued operations comprise timber frame operations at Liverpool that were actively being marketed for sale at 30 June. In addition, the Group previously recorded its intention to exit the precast concrete custodial market and closed its Hoveringham factory in May, principally used to supply this market, are included under discontinued operations.

 

	6 months to 30 June 2011 (unaudited)
				Building Systems
			Software	Building Products	Precast Concrete	Elimination	Continuing operations	Discontinued operations	Group
			£’000	£’000	£’000	£’000	£’000	£’000	£’000
	Revenue		8,330	8,944	7,253	–	24,527	2,178	26,705
	Inter-segment revenue		172	–	–	(172)	–	–	–
	Total segment revenue		8,502	8,944	7,253	(172)	24,527	2,178	26,705
	Adjusted operating profit/(loss)		839	377	(1,388)		(172)	(2,158)	(2,330)
	Amortisation of intangible assets		(210)	–	(51)		(261)	(3)	(264)
	Impairment charges		(11)	–	–		(11)	(375)	(386)
	Restructuring costs		(15)	(42)	(127)		(184)	(262)	(446)
	Segment result		603	335	(1,566)		(628)	(2,798)	(3,426)
	Net finance cost						(103)	37	(66)
	Loss before tax						(731)	(2,761)	(3,492)
	Tax						(208)	64	(144)
	Loss after tax						(939)	(2,697)	(3,636)

	6 months to 30 June 2010 (restated)
				Building Systems
			Software	Building Products	Precast Concrete	Elimination	Continuing operations	Discontinued operations	Group
			£’000	£’000	£’000	£’000	£’000	£’000	£’000
	Revenue		7,065	7,584	7,264	–	21,913	3,597	25,510
	Inter-segment revenue		131	–	–	(131)	–	–	131
	Total segment revenue		7,196	7,584	7,264	(131)	21,913	3,597	25,641
	Adjusted operating profit/(loss)		385	(273)	(2,607)		(2,495)	(1,707)	(4,202)
	Amortisation of intangible assets		(189)	(3)	(93)		(285)	(6)	(291)
	Gain on disposal of business		–	3,378	–		3,378	–	3,378
	Impairment charges		–	–	(1,151)		(1,151)	–	(1,151)
	Restructuring costs		(101)	(148)	(539)		(788)	(36)	(824)
	Intellectual property dispute		–	(364)	–		(364)	–	(364)
	Segment result		95	2,590	(4,390)		(1,705)	(1,749)	(3,454)
	Net finance cost						(186)	(13)	(199)
	Loss before tax						(1,891)	(1,762)	(3,653)
	Tax						301	–	301
	Loss after tax						(1,590)	(1,762)	(3,352)

	12 months to 30 June 2011 (unaudited)
				Building Systems
			Software	Building Products	Precast Concrete	Elimination	Continuing operations	Discontinued operations	Group
			£’000	£’000	£’000	£’000	£’000	£’000	£’000
	Revenue		15,525	17,473	14,855	–	47,853	10,641	58,494
	Inter-segment revenue		264	–	–	(264)	–	–	–
	Total segment revenue		15,789	17,473	14,855	(264)	47,853	10,641	58,494
	Adjusted operating profit/(loss)		1,593	719	(2,186)		126	(3,237)	(3,111)
	Amortisation of intangible assets		(387)	–	(102)		(489)	(7)	(496)
	Impairment charges		(11)	–	–		(11)	(375)	(386)
	Restructuring costs		(30)	(195)	(152)		(377)	(470)	(847)
	Segment result		1,165	524	(2,440)		(751)	(4,089)	(4,840)
	Net finance cost						(411)	18	(393)
	Loss before tax						(1,162)	(4,071)	(5,233)
	Tax						(182)	99	(83)
	Loss after tax						(1,344)	(3,972)	(5,316)

	12 months to 30 June 2010 (restated)
				Building Systems
			Software	Building Products	Precast Concrete	Elimination	Continuing operations	Discontinued operations	Group
			£’000	£’000	£’000	£’000	£’000	£’000	£’000
	Revenue		13,412	14,905	24,664	–	52,981	5,028	58,009
	Inter-segment revenue		249	–	–	(249)	–	–	249
	Total segment revenue		13,661	14,905	24,664	(249)	52,981	5,028	58,258
	Adjusted operating profit/(loss)		648	(742)	(2,795)		(2,889)	(2,034)	(4,923)
	Amortisation of intangible assets		(357)	(5)	(185)		(547)	(11)	(558)
	Gain on disposal of business		–	3,378	–		3,378	–	3,378
	Impairment charges		–	–	(1,151)		(1,151)	–	(1,151)
	Restructuring costs		(101)	(441)	(605)		(1,147)	(36)	(1,183)
	Intellectual property dispute		–	(918)	–		(918)	–	(918)
	Segment result		190	1,272	(4,736)		(3,274)	(2,081)	(5,355)
	Net finance cost						(505)	(15)	(520)
	Loss before tax						(3,779)	(2,096)	(5,875)
	Tax						419	–	419
	Loss after tax						(3,360)	(2,096)	(5,456)

 

 

Geographical segments

Segment revenue by geographical segment represents revenue from external customers based on the geographical location of the customer.

			6 months to 30 June				12 months to 30 June		Year to       30 June
			2011		2010		2011		2010
			£’000		£’000		£’000		£’000
	UK		15,905		14,859		32,073		39,593
	Scandinavia		4,354		3,361		7,959		6,283
	Rest of Europe		2,497		2,355		4,351		4,446
	Rest of World		1,771		1,338		3,470		2,659
			24,527		21,913		47,853		52,981

 

4. Discontinued operations

On 1 March 2011, Eleco plc announced it wanted to reduce its commitment to certain operations within its Building Product division and Precast Concrete division. Following a detailed review of operations the Group has put the timber frame operation based in Liverpool up for sale and ceased production of custodial contracts at the Hoveringham factory and is marketing the site.

The assets and liabilities related to both these business operations have been presented as held for sale and the disposal group has been classified as a discontinued operation in the consolidated income statement. In the cash flow statement, the cash flows of both timber frame and custodial operations mentioned above have been aggregated with those of continuing operations, but are shown separately in the note below.

The information presented in this note is presented at the lower of cost and fair value less costs to sell as prescribed in IFRS 5. As a result of this treatment an impairment charge of £375,000 relating to leasehold improvements and plant and equipment at both sites has been recognised in the condensed consolidated income statement in the 6 months to 30 June 2011.

The results from discontinued operations which have been included in the condensed consolidated income statement are set out below:

 

 

				6 months to 30 June				12 months to 30 June		Year to          30 June
				2011		2010		2011		2010
				£’000		£’000		£’000		£’000
	Revenue			2,178		3,597		10,641		5,028
	Cost of sales			(3,299)		(4,164)		(11,775)		(5,520)
	Gross profit			(1,121)		(567)		(1,134)		(492)
	Distribution costs			(28)		(73)		(73)		(106)
	Administrative expenses			(912)		(1,068)		(1,938)		(1,431)
	Other operating costs			(362)		(41)		(568)		(52)
	Loss on re-measurement			(375)		–		(375)		–
	Operating profit/(loss)			(2,798)		(1,749)		(4,088)		(2,081)
	Finance income			75		–		75		–
	Finance cost			(38)		(13)		(57)		(15)
	Profit/(loss) before tax			(2,761)		(1,762)		(4,070)		(2,096)
	Taxation on discontinued operations			64		–		98		–
	Loss for the period from discontinued operations			(2,697)		(1,762)		(3,972)		(2,096)

 

 

 

									30 June
									2011
									£’000
	Assets classified as held for sale
	Other intangible assets								4
	Property, plant and equipment								711
	Other assets								179
	Assets classified as held for sale								894
	Liabilities classified as held for sale
	Liabilities classified as held for sale								–
	Net assets of disposal group								894

 

Cash flows from investing activities relates to capital expenditure. Cash flows from financing activities comprise finance lease principal payments.

				6 months to 30 June				12 months   to 30 June		Year to          30 June
				2011		2010		2011		2010
				£’000		£’000		£’000		£’000
	Operating activities			(2,198)		(1,578)		(4,245)		(2,096)
	Investing activities			(42)		(175)		(68)		(199)
	Financing activities			(24)		(28)		(37)		(28)
	Total cash flows			(2,264)		(1,781)		(4,350)		(2,323)

 

 

 

 

5. Exceptional items

Exceptional items represent costs considered necessary to be separately disclosed by virtue of their size or nature.

			6 months to 30 June				12 months to 30 June		Year to           30 June
			2011		2010		2011		2010
			£’000		£’000		£’000		£’000
	Impairment of intangible assets		11		726		11		726
	Impairment of tangible assets		–		425		–		425
	Restructuring costs		184		788		377		1,147
	Intellectual property dispute		–		364		–		918
			195		2,303		388		3,216

 

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.

  

6. Net finance (cost)/income

		6 months to 30 June				12 months to 30 June		Year to          30 June
		2011		2010		2011		2010
		£’000		£’000		£’000		£’000
	Finance income
	Bank and other interest receivable	57		26		103		55
	Loan note interest receivable	–		100		–		100
	Finance costs
	Bank overdraft and loan interest	(67)		(31)		(104)		(66)
	Finance leases and hire purchase contracts	(8)		(13)		(19)		(33)
	Net return on pension scheme assets and liabilities	(85)		(268)		(391)		(561)
	Total net finance cost	(103)		(186)		(411)		(505)

 

 

7. Loss per share

The 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.

		6 months to 30 June				12 months to 30 June		Year to          30 June
		2011		2010		2011		2010
	Loss after taxation	£(3,636,000)		£(3,352,000)		£(5,316,000)		£(5,456,000)
	Weighted average number of shares in issue in the period	59,761,646		59,725,713		59,761,646		59,713,514
	Dilutive effect of share options	–		–		–		–
	Number of shares for diluted earnings per share	59,761,646		59,725,713		59,761,646		59,713,514
	Loss per share – basic and diluted
	Continuing operations	(1.6)	p	(2.7)	p	(2.2)	p	(5.6)	p
	Discontinued operations	(4.5)	p	(2.9)	p	(6.7)	p	(3.5)	p
	Total operations	(6.1)	p	(5.6)	p	(8.9)	p	(9.1)	p

 

There is no dilution in the loss per share calculation at 30 June 2011 due to the loss for the period. The diluted loss per share is the same as the basic loss per share for the current period.

 

8. Borrowings

The bank loans are repayable as follows:

								at 30 June	at 30 June
								2011	2010
								£’000	£’000
	In one year or less							900	225
	Between one and two years							10,700	4,300
	Between two and five years							2,475	2,700
	More than five years							–	675
								14,075	7,900

 

 

9. Acquisitions

On 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	Fair value adjustments	Provisional fair value
							£’000	£’000	£’000
	Tangible assets						20	–	20
	Inventories						11	–	11
	Other debtors						3	–	3
							34	–	34
	Deferred income						(7)	–	(7)
	Other creditors						(14)	–	(14)
							(21)	–	(21)
	Net assets						13	–	13
	Goodwill								380
	Total consideration								393
	Satisfied by:
	Cash								172
	Deferred purchase consideration								221
									393

 

Goodwill recognised above contains certain intangible assets that cannot be individually, separately and reliable 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.  

 

10. Related Party Disclosures

All intra-group transactions have been eliminated on consolidation at 30 June 2011.

An amount of £13,000 (H1 2010:  £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.