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Preliminary Results

RNS Number : 3684M
Elecosoft PLC
11 May 2020

11 May 2020

Elecosoft plc

(“Elecosoft”, the “Company” or the “Group”)

 

Results for the Year Ended 31 December 2019

Notice of AGM and publication of Annual Report

Based on audited annual accounts

 

Elecosoft plc (AIM: ELCO), the construction software specialist, is pleased to announce its results for the year ended 31 December 2019.

 

Financial Highlights

 

·      Revenue up 14% to £25.4m (2018: £22.2m) of which 57% was recurring maintenance, support and subscription revenue (2018: 55%)

·       Reported operating profit up 43% to £3.8m (2018***: £2.7m)

·       Profit before tax up 45% to £3.5m (2018***: £2.4m)

·       Reported basic earnings per share up 43% to 3.3p (2018***: 2.3p)

·       Adjusted operating profit* up 15% to £4.5m (2018***: £4.0m)

·       Adjusted earnings per share* up to 4.1p (2018***: 3.8p)

·       Free cash flow** up 29% to £4.1m (2018***: £3.1m)

·       Net cash £1.1m, with £7.2m cash at year end (2018: £1.8m net bank debt)

 

(* Adjusted profit measures exclude acquisition related expenses and amortisation of acquired intangible assets.)

(* 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.)

(*** 2018 restated for the impact of IFRS16)

 

Operational Highlights

 

·       Major release of Powerproject ® XV.

·      Elecosoft products Powerproject SaaS, IconSystem and ShireSystem listed on “G-Cloud 11” the Crown Commercial Services (“CCS”) digital marketplace, a service for supply of cloud applications and public sector procurement.

·      Release of new Site Progress Mobile application in the UK, Sweden and Germany.

·       Major release of ShireSystem software version better supporting facilities management.

·      ShireSystem release of its Mobile Pro application for iOS.

·      IconSystem successfully secured orders in hospitality.

·      New Staircon all-time-high sales in the US market.

·      Release of Artificial Intelligence (“AI”) visualisation tool for interior flooring segment.

·      UK Construction Computing Award win for sixth successive year.

·      All CMYA Gold winners used Powerproject.

 

Executive Chairman, John Ketteley said:

 

“Elecosoft delivered a year of growth, cash generation and product innovation in 2019, despite the uncertain trading conditions experienced in the lead up to Brexit. We increased our revenues by 14 per cent, our profit before tax by 45 per cent and our earnings per share by 43 per cent.  Powerproject XV, our latest project management programme, also won the “Hammers” award for the UK Project Planning and Management Software of the year, for the sixth time. 

 

During the year under review, we also eliminated our net bank debt of £1.8m as at 31 December 2018 and generated a net cash position as at 31 December 2019 of £1.1m. One cannot underestimate the severity the challenges being experienced in all world markets as a consequence of the impact of Coronavirus, and accordingly since the beginning of 2020, we have concentrated on cash generation and conservation, adjusting product consultancy and training programmes so that they can be delivered better over the web – and thus far, these actions have proved effective in dealing with the Coronavirus threat.

 

Printed copies of the Annual Report and Accounts for the year ended 31 December 2019 and Notice of the Annual General Meeting will be sent to those Shareholders who requested to receive them.  The Report and Accounts are also available for download from the Elecosoft website at www.ir.elecosoft.com.

 

 

For further information, please contact:

 

Elecosoft plc

Tel: +44 (0)20 7422 8000

John Ketteley, Executive Chairman

Jonathan Hunter, Chief Operating Officer

Ben Moralee, Group Finance Director

 

finnCap Limited

 

Tel: +44 (0)20 7220 0500

Geoff Nash/ Kate Bannatyne (Nomad)

Camille Gochez (ECM)

 

Newgate Communications

 

Tel: +44 (0)20 3757 6880

Elisabeth Cowell / Isabelle Smurfit

elecosoft@newgatecomms.com

 

About Elecosoft plc

 

Elecosoft is a specialist international provider of software and related services to the Architectural, Engineering, Construction and Owner/Operator (AECO) industries and digital marketing industries from centres of excellence in the UK, Sweden, Germany and the US. Elecosoft’s market leading software solutions are developed by teams in the United Kingdom, Sweden and Germany; and its software solutions cover project management, construction site management, estimating, timber engineering, 3D design and visualisation, property management and cloud based digital marketing solutions. Elecosoft is listed on the Alternative Investment Market in London (AIM: ELCO).

  

Executive Chairman’s Statement

Elecosoft delivered a year of continuing growth, cash generation and product innovation in the year ended 31 December 2019 and despite the uncertain trading conditions experienced during the year, we increased our revenues by 14 per cent, our profit before tax by 45 per cent and our earnings per share by 43 per cent.

During the year under review, we also eliminated our net bank debt of £1.8m as at 31 December 2018 and generated a net cash position as at 31 December 2019 of £1.1m. As a consequence, Elecosoft is better placed to meet the challenge of Coronavirus that we all face at the beginning of 2020.

 

Trading

Revenues

Group revenues for the year ended 31 December 2019 amounted to £25.4m (2018: £22.2m), 14 per cent higher than in the previous year, and 16 per cent higher at constant currencies. Group revenues are generated principally from sales of specialist construction and property related software programs that are used for Project Management, Site Management, Estimating, Engineering, CAD/ Design, Information Management, AI Visualisation, Property Management and Maintenance, which are major elements of the construction process.

Elecosoft was previously focused on the development of software and related services for the Architectural, Construction and Engineering sectors. However, with the acquisition of IconSystem and ShireSystem in the UK, and ActiveOnline in Germany in the past three years, we have expanded successfully into providing software solutions for the property management, retail and manufacturing sectors, and this has enabled Elecosoft increasingly to supply combinations of our software to our customers to facilitate the delivery of complex solutions that are needed in their operations.

UK revenues accounted for £9.4m in the year under review (2018: £8.2m), 15 per cent higher than last year and equivalent to 37 per cent of total group revenues; and overseas revenues accounted for £16.0m (2018: £14.0m) 14 per cent higher than last year, which was occasioned in part by lower foreign currency rates against Sterling, particularly in Sweden.

Overseas revenues accounted for 63 per cent of total group revenues, which were generated as follows:

• Scandinavia: £6.5m (2018: £6.8m – impacted by adverse foreign exchange movement against Sterling);

• Germany: £4.5m (2018: £3.4m – attributable to increased revenues for Powerproject and ActiveOnline);

• US £1.0m (2018: £0.8m – attributable to sales of Staircon in North America and ActiveOnline); and

• Rest of World: £3.9m (2018: £3.0m – driven by our Netherlands business and ActiveOnline Revenues).

 

We continue to enjoy excellent relationships with our customers, many of whom have collaborated extensively with our own software developers in the design and development of the software programs and features they require. We, in turn, seek to support our customers in the use of our software and in making adjustments to it when requested to do so. Our recurring revenue was 57 per cent of our total revenue which is an indication of the importance to us of our strong customer relationships.

 

Over the years, Elecosoft has also supplied its software products to universities and other educational establishments in the UK, Sweden, Germany, the US and Australia for educational purposes. I am pleased to say that the number of educational establishments, to which we have provided our software programs free of charge has reached 100 this year and I am informed that, as a consequence, more than 8,000 students will have access to Elecosoft’s software programs in their studies this year. I would also like to take this opportunity to congratulate my colleagues who have been directly involved in dealing with Elecosoft’s educational support programme and to thank them for their commitment to such a worthwhile project.

 

Profits

Operating profit for the year under review was £3.8m (2018: £2.7m) an increase of 43 per cent; profit before tax and exceptional acquisition related expenses was £3.6m (2018: £3.1m) an increase of 17 per cent; profit before tax was £3.5m (2018: £2.4m) an increase of 45 per cent and profit after tax was £2.7m (2018: £1.8m) an increase of 50 per cent.

Finance

The Board is conscious of the need to concentrate on satisfying the need for adequate cash generation in these markets. It is also mindful of the requirement to comply with the terms of our banking facilities. I am therefore pleased to report that cash generated from operations in the year under review amounted to £6.7m (2018: £5.0m), an increase of 33 per cent. As at 31 December 2019, Elecosoft had net bank cash of £1.1m, which compared with its net bank debt of £1.8m at 31 December 2018. Group net assets at 31 December 2019 amounted to £17.9m (31 December 2018: £15.5m) and intangible assets amounted to £22.8m at 31 December 2019 (2018: £23.3m).

 

Software Development

Market-leading software development is key to the success of our business and is developed by our teams of experienced developers in the UK, Germany, Sweden and Spain. The need to monitor and improve our existing software programs on a regular basis will be obvious. However, there has always been a need to nurture software innovation and this year I am delighted to report that our German colleagues successfully developed and launched our first Artificial Intelligence tool at the 2020 Domotex Show in Hanover and this was very well received.

 

Other software projects on which our software development teams were working in close collaboration with our customers in the UK and Germany in 2019 were (i) Powerproject XV, (ii) our latest Site Progress Mobile applications in the UK, Sweden and Germany and (iii) ShireSystems’ Mobile Pro application for iOS in the UK. As a consequence of this software development activity, our software development expenditure in the year under review increased to £3.1m (2018: £2.8m), including expenditure on major software development projects totalling £1.2m (2018: £1.0m), which were capitalised in the year.

 

Software Highlights

Having for years supplied our software to the Public Sector in the United States, I am pleased to inform you that Elecosoft was approved during the year by HM Government to supply its products to the Public Sector in the UK and the opportunity for us now to do so was clearly a very welcome development. We have also listed a number of our leading software programs on the Government’s G-Cloud 11 framework, and we look forward to supplying the UK Public Sector with our cloud‑based market leading software solutions, including, Project Planning, Project Management, Building Information Management and Maintenance Management software programs and related services. We are confident that the Public Sector will benefit from the efficiencies that our latest software solutions will deliver.

 

I am also proud to inform you that Elecosoft’s Powerproject software won the award for the UK’s Best Project Planning Software for the sixth year running at the 2019 Construction Software Awards (“The Hammers”); I am even more delighted to report that all six Gold Medal Winners of the Construction Manager of the Year Awards (“CMYA”) were users of Powerproject.

 

Brexit

2019 saw a considerable amount of political uncertainty, which contributed to delays in decision making and orders placed by the UK construction and architectural industries, and across the retail, manufacturing and property sectors. However, the UK formally left the European Union at the end of January 2020 and this provided some clarity for decision making. As a Group, Elecosoft has been able to minimise the impact that uncertainty created by Brexit has played because the Elecosoft Group has natural hedges of local income and expenditure; and combining this with tight cost controls, we have ensured adequate cash being generated and held in each country in which we operate.

Elecosoft Employees

Elecosoft employees are a strong and talented group of people who work with skill, enthusiasm and humour in all the markets we serve; the average number of employees in the Elecosoft team has increased from 228 in 2018 to 251 in 2019 and as mentioned above we will be doing all we can for their wellbeing during the Coronavirus crisis.

 

Coronavirus

It is difficult to gauge at this stage the impact that Coronavirus will have on the economy, but the signs are that it is becoming a seriously disruptive problem for industry and the markets that we serve. Our prime concern as the situation develops is the wellbeing of all our employees and accordingly our management are continually assessing the potential impact of Coronavirus developments, which may adversely impact our business and our employees in particular.

 

As a consequence, we have already succeeded in transferring all our operations, including development, training, support, finance and management into home working environments in each country in which we operate. Our local operating units have and will continue to adopt and implement operational policies and recommendations for dealing with the Coronavirus situation recommended by national governments. I would like to thank and congratulate every employee of Elecosoft for the way in which they have set about dealing with the disruption and for the initiative, thoroughness, understanding and speed that they have shown in transferring all of our business units in all the countries we serve into a very well connected and co-ordinated home working environment which will enable us to continue to provide our  customers with virtually full service.

 

We consider that Coronavirus will inevitably place pressure on our cash resources and our finance colleagues will be assessing the potentially beneficial impact of Government actions to provide financial support in those countries in which we have a presence and will also be considering ways to conserve as much as possible of our existing cash resources.

 

Proposed Dividend

Elecosoft’s strong trading performance and cash generation in 2019, and, ironically, the strong start to trading in 2020, would normally have warranted the payment of an increased final dividend.

 

However, having regard to the uncertainties created by the Coronavirus situation and the need to conserve our cash resources, the Board has decided to not recommend a final dividend.

 

Outlook

It is already clear that the Coronavirus outbreak is one of the most difficult challenges that the present generation has ever had to resolve and it can only be resolved by governments acting in concert applying medically proven solutions across the globe. However, in the meantime we must conduct our business in a manner which will make a contribution to the implementation of the wider strategy.

 

This involves collaborating with governments and following their directions, always having in mind the best interests of our employees, our customers and our shareholders. This has been our policy thus far. We have been reasonably successful in remaining engaged with our customers and this will be our policy going forward and, despite the present difficulty caused by Coronavirus, I believe that Elecosoft has the necessary resilience while we await the success of concerted government action in dealing with it.

 

Although Elecosoft performed well in 2019 and in the first three months of 2020, we must now do our best to confront the impact of Coronavirus worldwide, the breakout of which in the first instance impacted on our employees, and then on our customers. However, I hope that the availability of our software, service and software training as a result of our home working strategy will assist our customers to maintain the momentum of their businesses and to facilitate a return to more normal levels of activity as circumstances allow.

 

 

John Ketteley

Executive Chairman

7 May 2020

Consolidated Income Statement

For the year ended 31 December 2019

2019

2018

(restated)

£’000

£’000

Continuing operations

Revenue

25,398

22.220

Cost of sales

(2,647)

(2,684)

Gross profit

22,751

19,536

Amortisation and impairment of intangible assets

 

 

(1,445)

 

 

(1,124)

Acquisition and corporate finance related expenses

(143)

(689)

Other selling and administrative expenses

(17,351)

(15,057)

Selling and administrative expenses

(18,939)

(16,870)

Operating profit

3,812

2,666

Finance income

Finance cost

(339)

(272)

Profit before tax

3,473

2,394

Tax

(772)

(598)

Profit for the financial period

2,701

1,796

Attributable to:

Equity holders of the parent

2,701

1,796

Earnings per share – (pence per share)

Basic

3.3

p

2.3p

Diluted

3.3

p

2.3p

 

 

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2019

2019

2018

(restated)

£’000

£’000

Profit for the period

2,701

1,796

Other comprehensive income:

Items that will be reclassified subsequently to profit and loss:

  Translation differences on foreign operations

(51)

(82)

Other comprehensive income net of tax

(51)

(82)

Total comprehensive income for the period

2,650

1,714

Attributable to:

Equity holders of the parent

2,650

1,714

Consolidated Statement of Changes in Equity

For the year 31 December 2019

Share capital

Share premium

Merger reserve

Translation reserve

Other reserve

Retained earnings

Total

(restated)

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2018

774

575

(66)

(283)

10,486

11,486

Adjustments for prior periods (IFRS 16)

 

(162)

(162)

At 1 January 2018 (restated)

774

575

(66)

(283)

10,324

11,324

Dividends

(188)

(188)

Share-based payments

106

106

Issue of share capital

44

2,050

429

2,523

Transactions with owners

44

2,050

429

106

(188)

2,441

Profit for the period

1,796

1,796

Other comprehensive income:

Exchange differences on translation of net investments in foreign operations

 

 

(82)

(82)

Other

(1)

1

Total comprehensive income for the period

 

(1)

(82)

1,797

1,714

At 31 December 2018 (restated)

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

70

(275)

(205)

Profit for the period

2,701

2,701

Exchange differences on translation of net investments in foreign operations

 

 

(51)

(51)

Other

2

(2)

1

(1)

Total comprehensive income for the period

(50)

(1)

2,701

2,650

At 31 December 2019

822

2,047

1,002

(198)

(108)

14,359

17,924

 

  

 

 

Consolidated Balance Sheet

At 31 December 2019

2019

2018

As at 1 January

(restated)

2018 (restated)

£’000

£’000

£’000

Non-current assets

Goodwill

15,598

15,746

11,480

Other intangible assets

7,242

7,536

3,432

Property, plant and equipment

734

912

513

Right-of-Use assets

2,048

2,440

2,657

Deferred tax assets

118

139

219

Total non-current assets

25,740

26,773

18,301

Current assets

Inventories

46

8

16

Trade and other receivables

4,339

4,491

3,738

Current tax assets

105

54

37

Cash and cash equivalents

7,236

6,036

4,737

Total current assets

11,726

10,589

8,528

Total assets

37,466

37,362

26,829

Current liabilities

Bank overdraft

(1,012)

Borrowings

(1,645)

(1,648)

(790)

Lease liabilities

(558)

(659)

(565)

Trade and other payables

(1,704)

(1,600)

(1,496)

Provisions

(142)

(144)

(209)

Current tax liabilities

(117)

(343)

(241)

Accruals and deferred income

(7,747)

(7,713)

(6,593)

Total current liabilities

(11,913)

(12,107)

(10,906)

Non-current liabilities

Borrowings

(4,490)

(6,202)

(1,580)

Lease liabilities

(1,691)

(1,980)

(2,257)

Deferred tax liabilities

(1,407)

(1,553)

(721)

Non-current provisions

(41)

(41)

(41)

Total non-current liabilities

(7,629)

(9,776)

(4,599)

Total liabilities

(19,542)

(21,883)

(15,505)

Net assets

17,924

15,479

11,324

Equity

Share capital

822

818

774

Share premium account

2,047

2,049

Merger reserve

1,002

1,004

575

Translation reserve

(198)

(148)

(66)

Other reserve

(108)

(177)

(283)

Retained earnings

14,359

11,933

10,324

Equity attributable to shareholders of the parent

17,924

15,479

11,324

 

 

 

 

Consolidated Statement of Cash Flows

For the year ended 31 December 2019

2019

2018

(restated)

£’000

£’000

Cash flows from operating activities

Profit before tax

3,473

2,394

Net finance costs

339

272

Depreciation charge

902

778

Amortisation charge

1,445

1,124

Profit on sale of property, plant and equipment

(8)

(16)

Share-based payments charge

70

106

Decrease in provisions

(2)

(63)

Cash generated in operations before working capital movements

6,219

4,595

Decrease/(increase) in trade and other receivables

152

(753)

Decrease/(increase) in inventories and work in progress

(39)

15

Increase in trade and other payables and accruals and deferred income

337

1,160

Cash generated in operations

6,669

5,017

Interest paid

(268)

(151)

Net income tax paid

(1,052)

(618)

Net cash inflow from operating activities

5,349

4,248

Investing activities

Purchase of intangible assets

(1,237)

(1,064)

Purchase of property, plant and equipment

(110)

(123)

Acquisition of subsidiary undertakings net of cash acquired

(7,169)

Proceeds from sale of property, plant, equipment and intangible assets

67

83

Net cash inflow from investing activities

(1,280)

(8,273)

Financing activities

Proceeds from new bank loan

6,025

Repayment of bank loans

(1,646)

(807)

Repayment of leasing liabilities

 

(755)

(701)

Equity dividends paid

(275)

(188)

Issue of share capital

2,083

Net cash (outflow)/inflow from financing activities

(2,676)

6,412

Net increase in cash and cash equivalents

1,393

2,387

Cash and cash equivalents at beginning of period

6,036

3,725

Effects of changes in foreign exchange rates

(193)

(76)

Cash and cash equivalents at end of period

7,236

6,036

Cash and cash equivalents comprise:

Cash and short-term deposits

7,236

6,036

Bank overdrafts

7,236

6,036

 

 

 

Extract from Notes to the Consolidated Financial Statements

 

1. Revenue

Revenue disclosed in the income statement is analysed as follows:

2019

2018

£’000

£’000

Licence sales

6,046

5,540

Recurring maintenance, support and subscription revenue

14,435

12,326

Services income

4,917

4,354

Total revenue

25,398

22,220

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 entirely 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.

2019

2018

(restated)

Software

Software

£’000

£’000

Revenue

25,398

22,220

Adjusted EBITDA

6,302

5,257

Amortisation and impairment of purchased intangible assets

(855)

(529)

Depreciation

(902)

(778)

Adjusted operating profit

4,545

3,950

Amortisation of acquired intangible assets

(590)

(595)

Acquisition expenses

(143)

(689)

Operating profit

3,812

2,666

Net finance cost

(339)

(272)

Segment profit before tax

3,473

2,394

Tax

(772)

(598)

Segment profit after tax

2,701

1,796

Operating profit

3,812

2,666

Amortisation of intangible assets

1,445

1,124

Depreciation charge

902

778

Acquisition expenses

143

689

Adjusted EBITDA

6,302

5,257

 

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 2019 are explained in the Financial Review. Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, and adjusted to exclude acquisition expenses.

2. Segment information continued

2019

2018

(restated)

Software

Software

£’000

£’000

Group assets and liabilities

Segment assets

37,466

37,362

Unallocated assets

Total Group assets

37,466

37,362

Segment liabilities

19,542

21,883

Unallocated liabilities

Total Group liabilities

19,542

21,883

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:

2019

2018

£’000

£’000

UK

9,436

8,227

Scandinavia

6,548

6,772

Germany

4,487

3,442

USA

1,021

777

Rest of Europe

3,407

2,482

Rest of World

499

520

25,398

22,220

 

Revenue by product group represents continuing operations revenue from external customers.

Revenue by product group is as follows:

2019

2018

Software for:

£’000

£’000

Project management

10,090

9,774

Site management

395

411

Estimating

2,737

2,843

Engineering

2,232

2,350

CAD/Design

1,969

2,070

Information management

1,400

1,180

Visualisation

4,150

2,395

Maintenance management

2,425

1,197

25,398

22,220

 

 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:

  

2019

2018

£’000

£’000

Direct

24,149

20,950

Reseller

1,249

1,270

25,398

22,220

 

2. Segment information continued

 

Non-current assets excluding deferred tax by geographical area represent the carrying amount of assets based in the geographical area in which the assets are located.

Non-current assets by geographical location are as follows:

2019

2018

(restated)

£’000

£’000

UK

15,005

15,472

Scandinavia

7,565

7,748

Germany

3,117

3,483

USA

1

2

Rest of Europe

52

68

Rest of World

25,740

26,773

 

Information about major customers

Revenues arising from sales to the Group’s largest customer were below the reporting threshold of 10% of Group revenue (2018: Below 10% reporting threshold).

 

3. Operating profit

The continuing operations operating profit for the period is stated after charging/(crediting) the following items.

 

2019

2018

(restated)

£’000

£’000

Software product development

1,862

1,770

Depreciation of property, plant and equipment

241

191

Depreciation of right-of-use assets

661

587

Amortisation of acquired intangible assets

590

595

Amortisation of other intangible assets

855

529

Profit on disposal of property, plant and equipment

(8)

(16)

Foreign exchange (gains)/losses

110

(31)

Fees payable to the Company’s auditor for:

   The audit of the parent company and consolidated financial statements

108

43

Fees payable to the Company’s auditor and its associates for other services:

   The audit of the Company’s subsidiaries

81

64

   Other services

7

4

Operating lease rentals:

  Plant, equipment and vehicles

290

267

  Properties

238

214

Acquisition expenses

143

689

 

 

 

4. Employee information

The average number of employees during the period, including Directors, in continuing operations was made up as follows:

2019

2018

Number

Number

Sales & marketing

58

56

Client services

82

74

Software development

66

58

Management and administration

45

40

251

228

 

Staff costs during the period, including Directors amounted to:

2019

2018

£’000

£’000

Wages and salaries

10,983

9,584

Social security

2,295

1,951

Pension costs

589

679

Share-based payments

71

105

13,938

12,319

(1,234)

(1,014)

12,704

11,305

 

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

Dividends paid during the year comprised a final 2018 dividend of 0.40p per ordinary share (2018: 0.40) and a 2019 interim dividend of 0.30p per ordinary share (2018: 0.28p).

Shareholders were offered an opportunity to receive the 2018 final dividend in the form of new shares in lieu of the proposed final dividend. The 2019 interim dividend was declared as a scrip dividend, with shareholders having the option to receive an alternative cash dividend of the same value.

Cash dividends of £275,000 (2018: £188,000) were paid during the year as follows.

2019

2018

2019

2018

Ordinary Shares

pence per share

pence per share

£’000

£’000

Declared and paid during the year

Interim – current year

0.30

0.28

134

88

Final – previous year

0.40

0.40

141

100

0.70

0.68

275

188

 

Scrip dividends were issued in the year as follows.

Shares issued

Value of shares issued (£’000)

Ordinary Shares

2019

2018

2019

2018

Declared and paid during the year

Interim – current year

171,658

153,240

133

126

Final – previous year

248,585

414,178

186

202

420,243

567,418

319

328

 

The Directors have not recommended a final dividend (2018: 0.40 pence) having regard to the uncertainties created by the Coronavirus situation.

 

6. Basic and diluted earnings per share

2019

2018 (restated)

Net profit attributable to shareholders

Weighted average number of shares

EPS

Net profit attributable to shareholders

Weighted average number of shares

EPS

£’000

(millions)

(pence)

£’000

(millions)

(pence)

Basic earnings per share

2,701

81.1

3.3

1,796

77.4

2.3

Diluted earnings per share

2,701

82.0

3.3

1,796

78.2

2.3

Adjusted basic earnings per share

3,322

81.1

4.1

2,967

77.4

3.8

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 assessment of the Coronavirus situation will need continued attention and will evolve over time. In our view, Coronavirus is considered to be a non-adjusting post statement of financial position event and no adjustment is made in the financial statements as a result. The rapid development and fluidity of the Coronavirus virus make it difficult to predict the ultimate impact at this stage. We have outlined in the Strategic Report and Significant Accounting Policies the actions management have taken to maintain the momentum of the Group’s activities. Management will continue to assess the impact of Coronavirus on the Group and Company, however, it is not possible to reasonably quantify the impact at this stage.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

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

2019

2018

(restated)

£’000

£’000

Operating profit

3,812

2,666

Acquisition related expenses

143

689

Amortisation of acquired intangible assets

590

595

Adjusted operating profit

4,545

3,950

Profit before tax

3,473

2,394

Acquisition related expenses

143

689

Amortisation of acquired intangible assets

590

595

Adjusted profit before tax

4,206

3,678

Tax charge

(772)

(598)

Amortisation of acquired intangible assets

(112)

(113)

Adjusted tax charge

(884)

(711)

Profit after tax

2,701

1,796

Acquisition related expenses

143

689

Amortisation of acquired intangible assets

478

482

Adjusted profit after tax

3,322

2,967

Cash generated in operations

6,669

5,017

Purchase of intangible assets

(1,237)

(1,064)

Purchase of property, plant and equipment

(110)

(123)

Acquisition related expenses

143

689

Adjusted operating cash flow

5,465

4,519

 

 

 

 

Notes

 

1.   Elecosoft plc (“the Company”) and its subsidiaries (together “the Group”) are primarily involved in software sales and development. Elecosoft plc, a Public Limited Company incorporated and domiciled in England, is the Group’s ultimate parent Company. The address of Elecosoft 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 2018 have been delivered to the Registrar of Companies and those for 2019 will be delivered in due course. The Company’s auditors Grant Thornton UK LLP, have reported on the 2019 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. Whilst the financial information included in this announcement has been computed in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”) this announcement does not itself contain sufficient information to comply with IFRS.

 

The principal accounting policies used in preparing this preliminary results announcement are those that the Company will apply in its statutory accounts for the year ended 31 December 2019 and are unchanged from those disclosed in the Company’s Annual Report and Accounts for the year ended 31 December 2018 except for the adoption of new standards effective 1 January 2019 as described in notes to the financial statements for the year ended 31 December 2018. The adoption of those new standards did not have a material impact on the financial statements.

 

Full financial statements for the year ended 31 December 2019 will be posted 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 57% (2018: 55%) of the Group’s revenue is from recurring revenue contracts.

 

These maintenance 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 liabilities of £187,000 at 31 December 2019 (2018: £1,518,000) these amounts are after deferred income of £5,862,000 (2018: £5,660,000) relating to annual maintenance contracts which are non-refundable. Historically, there is a low level of maintenance 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

 

4.   The information herein has been prepared on the basis of the accounting policies adopted for the year ended 31 December 2019, set out in the Company’s Annual Report and Accounts and as previously disclosed in the Company’s Annual Report and Accounts for the year ended 31 December 2018.

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR KKKBBKBKBCPD

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