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Share Name Share Symbol Market Type Share ISIN Share Description
Eleco Public Limited Company LSE:ELCO London Ordinary Share GB0003081246 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.50 -0.61% 81.00 80.00 82.00 81.50 81.00 81.50 31,750 09:01:27
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Construction & Materials 25.4 3.5 3.3 24.5 66

Elecosoft PLC Preliminary Results

11/05/2020 7:00am

UK Regulatory (RNS & others)


Eleco Public (LSE:ELCO)
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TIDMELCO

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 GBP25.4m (2018: GBP22.2m) of which 57% was recurring maintenance, support and subscription revenue (2018: 55%)

   --        Reported operating profit up 43% to GBP3.8m (2018***: GBP2.7m) 
   --        Profit before tax up 45% to GBP3.5m (2018***: GBP2.4m) 
   --        Reported basic earnings per share up 43% to 3.3p (2018***: 2.3p) 
   --        Adjusted operating profit* up 15% to GBP4.5m (2018***: GBP4.0m) 
   --        Adjusted earnings per share* up to 4.1p (2018***: 3.8p) 
   --        Free cash flow** up 29% to GBP4.1m (2018***: GBP3.1m) 
   --        Net cash GBP1.1m, with GBP7.2m cash at year end (2018: GBP1.8m 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 (R) 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 GBP1.8m as at 31 December 2018 and generated a net cash position as at 31 December 2019 of GBP1.1m. 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 GBP1.8m as at 31 December 2018 and generated a net cash position as at 31 December 2019 of GBP1.1m. 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 GBP25.4m (2018: GBP22.2m), 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 GBP9.4m in the year under review (2018: GBP8.2m), 15 per cent higher than last year and equivalent to 37 per cent of total group revenues; and overseas revenues accounted for GBP16.0m (2018: GBP14.0m) 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: GBP6.5m (2018: GBP6.8m - impacted by adverse foreign exchange movement against Sterling);

-- Germany: GBP4.5m (2018: GBP3.4m - attributable to increased revenues for Powerproject and ActiveOnline);

-- US GBP1.0m (2018: GBP0.8m - attributable to sales of Staircon in North America and ActiveOnline); and

-- Rest of World: GBP3.9m (2018: GBP3.0m - 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 GBP3.8m (2018: GBP2.7m) an increase of 43 per cent; profit before tax and exceptional acquisition related expenses was GBP3.6m (2018: GBP3.1m) an increase of 17 per cent; profit before tax was GBP3.5m (2018: GBP2.4m) an increase of 45 per cent and profit after tax was GBP2.7m (2018: GBP1.8m) 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 GBP6.7m (2018: GBP5.0m), an increase of 33 per cent. As at 31 December 2019, Elecosoft had net bank cash of GBP1.1m, which compared with its net bank debt of GBP1.8m at 31 December 2018. Group net assets at 31 December 2019 amounted to GBP17.9m (31 December 2018: GBP15.5m) and intangible assets amounted to GBP22.8m at 31 December 2019 (2018: GBP23.3m).

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 GBP3.1m (2018: GBP2.8m), including expenditure on major software development projects totalling GBP1.2m (2018: GBP1.0m), 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) 
                                                          GBP'000          GBP'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) 
                                                      GBP'000      GBP'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      Share     Merger   Translation      Other     Retained 
                                    capital    premium    reserve       reserve    reserve     earnings     Total 
                                                                                             (restated) 
                                    GBP'000    GBP'000    GBP'000       GBP'000    GBP'000      GBP'000   GBP'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        (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                          -          2        (2)          (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) 
                                              GBP'000      GBP'000           GBP'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) 
                                                             GBP'000      GBP'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 
                                         GBP'000   GBP'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 
                                    GBP'000      GBP'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 
                                     GBP'000      GBP'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 
                       GBP'000   GBP'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:                         GBP'000   GBP'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 
                 GBP'000   GBP'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) 
                       GBP'000      GBP'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) 
                                                            GBP'000      GBP'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 
                                 GBP'000   GBP'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 
 Less: Development staff 
  costs capitalised              (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 GBP275,000 (2018: GBP188,000) were paid during the year as follows.

 
                                          2019         2018      2019      2018 
                                         pence        pence 
 Ordinary Shares                     per share    per share   GBP'000   GBP'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.

 
                                                     Value of shares issued 
                                  Shares issued             (GBP'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) 
                           ----------------------------------------  ---------------------------------------- 
                                                 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                                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) 
                                                  GBP'000       GBP'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 GBP187,000 at 31 December 2019 (2018: GBP1,518,000) these amounts are after deferred income of GBP5,862,000 (2018: GBP5,660,000) 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

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