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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 97.00 | 96.00 | 98.00 | 97.00 | 97.00 | 97.00 | 39,993 | 08:00:02 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Programming Service | 26.57M | 2.4M | 0.0291 | 33.33 | 79.83M |
From Apr 2019 to Apr 2024
TIDMELCO
RNS Number : 3757N
Elecosoft PLC
24 September 2019
24 September 2019
Elecosoft plc
("Elecosoft", the "Company" or the "Group")
Interim Results for the Six Months Ended 30 June 2019
Elecosoft plc (AIM: ELCO), the AIM-listed international construction software specialist, is pleased to announce its unaudited results for the six months ended 30 June 2019.
Financial Highlights
-- Revenue up 20% to GBP12,711,000 (2018 H1: GBP10,554,000); up 22% at constant exchange rates -- Operating profit up 40% to GBP1,746,000 (2018 H1: GBP1,250,000) -- Adjusted operating profit* up 20% to GBP2,138,000 (2018 H1: GBP1,784,000) -- Basic earnings per share up 33% to 1.6p (2018 H1: 1.2p) -- Adjusted earnings per share* up 11% to 2.0p (2018 H1: 1.8p) -- 56% of revenue recurring (2018 H1: 55% of revenue) -- Cash generated in operations GBP3,130,000 (2018 H1: GBP3,137,000) -- Net bank debt GBP198,000 (2018: GBP1,814,000) -- Interim dividend up 7% to 0.30p per share (2018 interim: 0.28p per share)
(* Adjusted profit measures exclude acquisition and corporate finance related costs and amortisation of acquired intangible assets.)
Operational Highlights
-- Elecosoft products Powerproject SaaS, IconSystem and ShireSystem listed on 'G-Cloud 11' the Crown Commercial Service's ("CCS") digital marketplace, a service for supply of cloud applications and public sector procurement
-- Release of highly anticipated Powerproject XV the latest version of the market leading project management software
-- Release of ShireSystem software version 3.2.6 and the development of a new mobile application for iOS users
-- Increased adoption of IconSystem software into sectors outside of its traditional retail market
-- Development of an integrated product set from Active Online and ESIGN for their joint customer offering providing synergistic opportunities
-- Milestone for Elecosoft in July celebrating 80 years of being incorporated in the UK
Executive Chairman, John Ketteley said: "Elecosoft has improved operating profit, and strengthened its financial position in the period, despite having to operate in markets that have been less buoyant than they have been for some time.
That said the spread of the markets that we serve worldwide; the innovative and increasingly synergistic content of Elecosoft's software range; our highly regarded and profitable worldwide training and support facilities are all factors which, in the absence of unforeseen circumstances, lead me to be cautiously optimistic regarding the outlook for the remainder of the year."
For further information please contact: Elecosoft plc Tel: 020 7422 8000 JHB Ketteley, Executive Chairman www.ir.elecosoft.com Jonathan Hunter, Chief Operating Officer Ben Moralee, Finance Director finnCap Ltd Geoff Nash / Kate Washington (Corporate Tel: 020 7220 0500 Finance) Camille Gochez (Corporate Broking) Newgate Communications Elisabeth Cowell / Fiona Norman Tel: 020 3757 6880
About Elecosoft plc
Elecosoft is a specialist international provider of software and related services to the Architectural, Engineering, Construction and Owner-Operator 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, and cloud based digital marketing solutions. Elecosoft is listed on the Alternative Investment Market in London (AIM: ELCO).
Chairman's Statement
Trading Performance
Unaudited revenues in the first half of 2019 were GBP12,711,000 (2018: GBP10,554,000) an increase of 20%; or 22% at constant currencies.
Elecosoft's revenue profile also remains strong. Revenues derived from recurring maintenance, support contracts, and other subscription-based contracts, was 56% of revenues in the period (2018: 55%). Unaudited operating profit for the period was GBP1,746,000 (2018: GBP1,250,000), and is stated after deducting GBP97,000 (2018: GBP323,000) of acquisition and corporate finance related costs.
Unaudited Operating profit before charging acquisition and corporate finance related expenses (GBP97,000 (2018: GBP323,000)) and amortisation of acquired intangible assets of GBP295,000 (2018: GBP211,000) was GBP2,138,000 (2018: GBP1,784,000) an increase of 20% reflecting the continuing strength of our core business, and our continuing focus on cost management.
Unaudited profit for the period before tax was GBP1,567,000 (2018: GBP1,168,000). Unaudited profit after tax for the period was GBP1,288,000 (2018: GBP943,000) an increase of 36% compared with the comparable prior period in 2018, equivalent to basic earnings per share for the period of 1.6 pence (2018: 1.2 pence), an increase of 33%.
Elecosoft's Management also use performance measures which are not defined by IFRS to monitor the Group's performance. These additional performance measures are set out in note 14 and reconciled to reported IFRS measurements. Adjusted earnings per share for the period were 2.0p per share (2018: 1.8p), an increase of 11%.
Financial Performance
The Group generated cash from operations in the period of GBP3,130,000 (2018: GBP3,137,000).
Management have worked hard in the period and with good effect to improve the Group's already strong financial position. As a consequence, the Group's net bank debt position of GBP1,814,000 at 31 December 2018 was reduced in the period and as at 30(th) June 2019 the group had a net bank debt position of GBP198,000.
Elecosoft also implemented IFRS 16 using the Full Retrospective Approach. Accordingly, right of use assets and finance leases liabilities of have been included on the Group's Balance Sheet for all comparable periods
Our software portfolio and our software teams are the lifeblood of our business world-wide. Software Development expenditure in the period amounted to GBP1,524,000 (2018: GBP1,423,000) and reflect our continuing efforts to enhance our software offering to the market the equivalent of 12% (2018: 13%) of software revenue in the period. Software development expenditure capitalised in the period totalled GBP633,000 (2018: GBP551,000), mainly relating to Powerproject XV which has been released in the UK.
In addition to continuing enhancement of our existing software programs, there is no doubt that the completion and release of Powerproject XV was an outstanding achievement by our software teams.
Our Swedish colleagues are also to be congratulated on the development and release of the latest module of Elecosoft's Bidcon Estimation tool that provides combined climate and cost calculations using two different cost bases, one for buildings and one for civil engineering projects of a new and revolutionary climate module of software program.
Operational Highlights
Elecosoft continues to make progress towards achieving its strategic objectives of producing software to address all phases of the building life cycle and in doing so to invest in research and development of new products and technologies.
We are very pleased to have a number of our leading software programs listed on the HMRC Government's G-Cloud 11 framework, because we now to have the opportunity to work with the public sector and to provide them with our cloud-based Project Planning, Project Management, Building Information Management and Maintenance Management software and related services. Thus the public sector will now be able to take advantage of the efficiencies that Elecosoft's solutions are able to deliver.
As mentioned above, we released in the period Powerproject XV, the latest and highly anticipated version of Powerproject, which has been designed for use by planners and project managers across the whole spectrum of the planning and construction management sector.
Powerproject XV has a completely refreshed user interface and was created for the sophisticated project planner, enabling them to visualise plans in 4D with realistic real-time project simulations. Its Schedule Quality Check feature also assures the quality and integrity of the planners' schedules, and allows the planners to communicate effectively across teams with better control over the presentation of their plans.
In the first half of this year Active Online and E-Sign have jointly exhibited at key trade fairs Bau and Domotex and have integrated key product sets for a customer offering that leverages the synergies of both companies' technologies. They have successfully acquired joint customers in the first half of the year for this combined product offering. Additionally both companies have acquired new customers across North America.
IconSystem has had a strong start to the year with the successful on-boarding of two new customers and has increased the adoption of IconSystem software into sectors outside of its traditional retail market as part of its strategic objective to diversify outside the retail space.
ShireSystem continues to increase Elecosoft's coverage of software solutions across the lifecycle of property assets and facilities. I am pleased to report the successful release in H1 of this year of its latest version of the ShireSystem software 3.2.6 which has been positively received by customers and is continuously being developed in conjunction with customer feedback. It is also finalising the development of a new mobile application for iOS users to be released late in September.
Elecosoft is fortunate to have been incorporated for 80 years and this really is a cause for celebration. We are pleased to have been able to evolve as a company during that time, and we are also very fortunate to have had such a loyal and resilient workforce over the years.
Interim Dividend
Having regards to Elecosoft's strong performance and cash generation in the period under review, the Board has decided to declare an increase interim scrip dividend of 0.30p per ordinary share (2018: 0.28p), or alternative cash dividend of 0.30p per ordinary share (2018: 0.28p), an increase of 7%.
The scrip reference price is 77.9p, calculated from the average of the closing price for an ordinary share of the company as derived from the daily official list of the London Stock Exchange during the period of five dealing days ending 20 September 2019. The interim dividend will be paid on 31 October 2019 to shareholders on the register at the close of business on 4 October 2019 and the ex-dividend date will be the 3 October 2019. The cash alternative election will close at 5pm on 21 October 2019.
Outlook
Brexit continues to be a disruptive factor in our markets, and in the construction industry in particular.
The construction and retail sectors are being affected by prevailing uncertainties and macro-economic weaknesses, with signs of delays and hesitation in orders, but Elecosoft remains resilient.
We have experienced some slowing of the momentum in some of our markets but we continue to experience increasing acceptance of our software and services outside the EU and the UK and this is encouraging. Much of our software is aimed at delivering ease of use and efficiencies to our customers, to enable them to reduce their own and their customers' costs in difficult markets.
We significantly improved our operating profit, and strengthened our financial position in the period, despite having to operate in markets that have been less buoyant than they have been for some time. That said, the positive performance of Elecosoft in the first six months of 2019; the spread of the markets that we serve worldwide; the innovative and increasingly synergistic content of Elecosoft's software range; our highly regarded and profitable worldwide training and support facilities; and the strength of our financial position, are all factors which, in the absence of unforeseen circumstances, lead me to be cautiously optimistic regarding the outlook for the remainder of the year.
John Ketteley
Executive Chairman
24 September 2019
Condensed Consolidated Income Statement
for the financial period ended 30 June 2019
Hot Features
Premium
Six months to 30
June Year Ended
--------------------------------
2019 2018 31 December
(restated) 2018
(unaudited) (unaudited) (restated)
Notes GBP'000 GBP'000 GBP'000
------------------------------ ----------- ---- ------ ------------ --- ------------- --- ------------
Revenue 3,4 12,711 10,554 22,220
Cost of sales (1,319) (1,230) (2,684)
Gross
profit 11,392 9,324 19,536
Amortisation and impairment of intangible
assets (653) (435) (1,124)
Acquisition and corporate
finance related expenses (97) (323) (689)
Other selling and administrative
expenses (8,896) (7,316) (15,056)
------------------------------------------------- ------ ------------ --- ------------- --- ------------
Selling and administrative expenses (9,646) (8,074) (16,869)
Operating profit 4,5 1,746 1,250 2,667
Finance
cost 6 (179) (82) (281)
Profit before tax 1,567 1,168 2,386
Tax (279) (225) (598)
Profit for the financial period 1,288 943 1,788
------------------------------------------------- ------ ------------ --- ------------- --- ------------
Attributable to:
Equity holders of the parent 1,288 943 1,788
------------------------------------------- ---- ------ ------------ --- ------------- --- ------------
Earnings per share (pence per share)
Basic earnings per share 7 1.6p 1.2p 2.3p
------------------------------------------- ---- ------ ------------ --- ------------- --- ------------
Diluted earnings per share 7 1.6p 1.2p 2.3p
------------------------------------------- ---- ------ ------------ --- ------------- --- ------------
Condensed Consolidated Statement of Comprehensive Income
for the financial period ended 30 June 2019
Six months to 30
June Year Ended
--------------------------------
2019 2018 31 December
(restated) 2018
(unaudited) (unaudited) (restated)
GBP'000 GBP'000 GBP'000
------------------- ----------------- ------- ------ ------------ --- ------------- --- ------------
Profit for the
period 1,288 943 1,788
Other comprehensive
income:
Items that will be reclassified subsequently
to profit or loss:
Translation differences on foreign
operations 8 (70) (82)
Other comprehensive income/(loss) net
of tax 8 (70) (82)
Total comprehensive income for the
period 1,296 873 1,706
------------------------------------------------------- ------------ --- ------------- --- ------------
Attributable
to:
Equity holders
of the parent 1,296 873 1,706
-------------------------------------- -------------- ------------ --- ------------- --- ------------
Condensed Consolidated Statement of Changes in Equity
for the financial period ended 30 June 2019
Share Share Merger Translation Other Retained
capital premium reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 1 January 2019 (restated) 818 2,049 1,004 (148) (177) 11,966 15,512
Dividends - - - - - (141) (141)
Share-based payments - - - - 12 - 12
Issue of share capital 2 - (2) - - - -
Transactions with owners 2 - (2) - 12 (141) (129)
----------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Profit for the period - - - - - 1,288 1,288
Other comprehensive income:
Exchange differences on
translation of net investments
in foreign operations 1 - - 8 - - 9
Total comprehensive income
for the period 1 - - 8 - 1,288 1,297
----------------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 30 June 2019 (unaudited) 821 2,049 1,002 (140) (165) 13,113 16,680
=================================== ========= ========= ========= ============ ========= ========== ========
Share Share Merger Translation Other Retained
capital premium reserve reserve reserve earnings Total
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) - - - - - (121) (121)
----------------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 1 January 2018 (restated) 774 - 575 (66) (283) 10,365 11,365
Dividends - - - - - (110) (110)
Share-based payments - - - - 52 - 52
Issue of share capital 5 - (5) - - - -
Transactions with owners 5 - (5) - 52 (110) (58)
----------------------------------- --------- --------- --------- ------------ --------- ---------- --------
Profit for the period - - - - - 943 943
Other comprehensive income:
Exchange differences on
translation of net investments
in foreign operations - - - (70) - - (70)
Total comprehensive income
for the period - - - (70) - 943 873
----------------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 30 June 2018 (restated
unaudited) 779 - 570 (136) (231) 11,198 12,180
=================================== ========= ========= ========= ============ ========= ========== ========
Share Share Merger Translation Other Retained
capital premium reserve reserve reserve earnings Total
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) - - - - - (121) (121)
----------------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 1 January 2018 (restated) 774 - 575 (66) (283) 10,365 11,365
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 - - - - - 1,788 1,788
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) - 1,789 1,706
----------------------------------- --------- --------- --------- ------------ --------- ---------- --------
At 31 December 2018 (restated) 818 2,049 1,004 (148) (177) 11,966 15,512
=================================== ========= ========= ========= ============ ========= ========== ========
Condensed Consolidated Balance Sheet
at 30 June 2019
30 June
--------------------------
2019 2018 31 December
(restated) 2018
(unaudited) (unaudited) (restated)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ------ ------------ ------------ ------------
Non-current assets
Goodwill 15,684 11,439 15,746
Other intangible assets 9 7,445 3,545 7,536
Property, plant and equipment 1,152 759 1,203
Right-of-Use assets 12 1,817 2,010 2,153
Deferred tax assets 155 202 139
Total non-current assets 26,253 17,955 26,777
--------------------------------- ------ ------------ ------------ ------------
Current assets
Inventories 85 8 8
Trade and other receivables 3,920 2,838 4,491
Current tax assets 54 36 54
Cash and cash equivalents 10 6,763 5,253 6,036
Total current assets 10,822 8,135 10,589
-------------------------------- ------ ------------ ------------ ------------
Total assets 37,075 26,090 37,366
-------------------------------- ------ ------------ ------------ ------------
Current liabilities
Bank overdraft and
borrowings 10 (1,647) (1,125) (1,648)
Lease liabilities 10,12 (579) (511) (652)
Trade and other payables (1,304) (1,152) (1,600)
Provisions (144) (209) (144)
Current tax liabilities (375) (137) (343)
Accruals and deferred income 11 (7,786) (6,930) (7,713)
Total current liabilities (11,835) (10,064) (12,100)
-------------------------------- ------ ------------ ------------ ------------
Non-current liabilities
Borrowings 10 (5,314) (1,185) (6,202)
Lease liabilities 10,12 (1,740) (1,910) (1,958)
Deferred tax liabilities (1,465) (710) (1,553)
Non-current provisions (41) (41) (41)
Total non-current liabilities (8,560) (3,846) (9,754)
--------------------------------- ------ ------------ ------------ ------------
Total liabilities (20,395) (13,910) (21,854)
-------------------------------- ------ ------------ ------------ ------------
Net assets 16,680 12,180 15,512
================================== ====== ============ ============ ============
Equity
Share capital 821 779 818
Share premium account 2,049 - 2,049
Merger reserve 1,002 570 1,004
Translation reserve (140) (136) (148)
Other reserve (165) (231) (177)
Retained earnings 13,113 11,198 11,966
Equity attributable to shareholders
of the parent 16,680 12,180 15,512
========================================== ============ ============ ============
Condensed Consolidated Statement of Cash Flows
for the financial period ended 30 June 2019
six months to 30
June Year Ended
--------------------------
2019 2018 31 December
(restated) 2018
(unaudited) (unaudited) (restated)
GBP'000 GBP'000 GBP'000
-------------------------------------------- ------------ ------------ ------------
Cash flows from operating
activities
Profit before tax 1,567 1,168 2,386
Net finance costs 179 82 281
Depreciation charge 450 367 777
Amortisation charge 653 435 1,124
Profit on sale of property,
plant and equipment (4) (5) (16)
Share-based payment
charge 12 52 106
Decrease in provisions - - (63)
Cash generated in operations before
working capital movements 2,857 2,099 4,595
Decrease/(increase) in trade and other
receivables 571 916 (753)
Decrease/(increase) in inventories and
work in progress (75) 7 15
Increase/(decrease) in trade and other
payables and accruals and deferred income (223) 115 1,160
Cash generated in
operations 3,130 3,137 5,017
Interest
paid (150) (38) (151)
Net income tax paid (239) (314) (618)
Net cash inflow from operating
activities 2,741 2,785 4,248
---------------------------------------------- ------------ ------------ ------------
Investing activities
Purchase of intangible
assets (633) (551) (1,064)
Purchase of property, plant
and equipment (50) (70) (123)
Acquisition of subsidiary
undertakings net of cash
acquired - - (7,169)
Proceeds from sale of property,
plant, equipment and intangible
assets 53 47 83
Net cash outflow from investing
activities (630) (574) (8,273)
---------------------------------------------- ------------ ------------ ------------
Financing activities
Proceeds from new
bank loan - - 6,025
Repayment of bank
loans (823) (395) (807)
Repayments of leasing liabilities (392) (340) (701)
Issue of share capital - - 2,083
Equity dividends
paid (141) (110) (188)
Net cash (outflow) / inflow from financing
activities (1,356) (845) 6,412
----------------------------------------------- ------------ ------------ ------------
Net increase in cash and
cash equivalents 755 1,366 2,387
---------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at beginning
of period 6,036 3,725 3,725
Effects of changes in foreign
exchange rates (28) (173) (76)
Cash and cash equivalents
at end of period 6,763 4,918 6,036
---------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents
comprise:
Cash and short term
deposits 6,763 5,253 6,036
Bank overdrafts - (335) -
6,763 4,918 6,036
-------------------------------------------- ------------ ------------ ------------
Notes to the Condensed Consolidated Interim Financial Statements
1. General information
The company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 66 Clifton Street, London, EC2A 4HB.
The company is listed on the Alternative Investment Market ("AIM").
The condensed consolidated interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's consolidated financial statements for the year ended 31 December 2018 have been filed at Companies House. The audit report was not qualified and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.
2. Basis of preparation
The condensed consolidated interim financial statements for the six months to 30 June 2019 have been prepared in accordance with the accounting policies which will be applied in the twelve months financial statements to 31 December 2019. These accounting policies are drawn up in accordance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and as adopted for use in the European Union that are effective at 30 June 2019.
The condensed consolidated interim financial statements are unaudited. They do not include all the information and disclosures required in the annual financial statements, and therefore should be read in conjunction with the Group's published financial statements for the year ended 31 December 2018. The comparative figures for the year ended 31 December 2018 are not the Company's statutory accounts for that period but have been extracted from these accounts. The accounting policies applied in these interim financial statements are the same as those applied in the annual financial statements for the year ended 31 December 2018, with the exception that IFRS 16 has been adopted for the first time in these financial statements.
The Directors, having considered the Group's current financial resources, have concluded that they are adequate for the Group's present requirements. Therefore, the condensed consolidated interim financial information has been prepared on the going concern basis.
The Group has adopted new accounting pronouncements, which have become effective this year, as follows:
Leases
The Group has adopted IFRS 16 'Leases' (hereinafter referred to as 'IFRS 16') with effect from 1 January 2019 under which leases will be recorded in the statement of financial position in the form of a right-of-use asset and a lease liability.
The new standard has been applied using the Full Retrospective Approach which requires application of the new standard to each prior reporting period presented as required by IAS8 Accounting Policies, Changes in Accounting Estimates and Errors.
Further information on the impact of the new policy is disclosed in Note 12.
For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'.
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability.
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
In the statement of financial position, for these interim accounts, the right-of-use assets and lease liabilities have been included separately in the statement.
Furthermore, new standards, new interpretations and amendments to standards and interpretations that have been issued but are not effective for the current period have not been adopted early.
Estimates
Application of the Group's accounting policies in preparing condensed consolidated interim financial statements requires management to make judgements and estimates that affect the reported amount of assets and liabilities, revenues and expenses. Actual results may ultimately differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2018.
Risks and uncertainties
A summary of the Group's principal risks and uncertainties was set out on page 14 of the 2018 annual report and accounts. The Board considers these risks and uncertainties are still relevant to the current financial year and the impact of changes in the UK economy is reviewed in the Chairman's statement contained in this report.
The Interim Report was approved by the Directors on 23 September 2019.
3. Revenue
Revenue disclosed in the income statement is analysed as follows:
Six months to 30 Year to
June 31 December
-------------------
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------------ --------- -------- -------------
Licence sales 3,010 2,771 5,271
Recurring maintenance, support and
subscription revenue 7,157 5,792 12,595
Services income 2,544 1,991 4,354
12,711 10,554 22,220
------------------------------------ --------- -------- -------------
The categories of revenue have been updated to include subscription-based revenue in recurring maintenance, support and subscription revenue, and prior period amounts have been adjusted to conform them to the current year presentation.
Revenue is recognised for each category as follows:
-- Licence sales - recognised at the point of transfer (delivery) of the licence to a customer.
-- Maintenance, support and subscriptions - as these services are provided over the term of the contract, revenue is recognised over the life of the contract.
-- Services - recognised on delivery of the service.
4. Segmental information
Operating segments
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 licenses, software maintenance and support and related services. Consequently, the Executive Directors review the three revenue streams, but as the costs are not recorded in the same way, the information is presented as one segment and as such the information is presented in line with management information.
six months to 30
June Year ended
---------------------
31 December
2019 2018 2018
(restated) (restated)
GBP'000 GBP'000 GBP'000
------------------------------------- -------- ----------- ------------
Revenue 12,711 10,554 22,220
-------------------------------------- -------- ----------- ------------
Adjusted EBITDA 2,946 2,375 5,257
Amortisation and impairment of
purchased intangible assets (358) (224) (529)
Depreciation (450) (367) (777)
-------------------------------------- -------- ----------- ------------
Adjusted operating profit 2,138 1,784 3,951
Amortisation of acquired intangible
assets (295) (211) (595)
Acquisition and corporate finance
related expenses (97) (323) (689)
-------------------------------------- -------- ----------- ------------
Operating profit 1,746 1,250 2,667
Net finance cost (179) (82) (281)
-------------------------------------- -------- ----------- ------------
Segment profit before tax 1,567 1,168 2,386
Tax (279) (225) (598)
-------------------------------------- -------- ----------- ------------
Segment profit after tax 1,288 943 1,788
Operating profit 1,746 1,250 2,667
Amortisation of intangible assets 653 435 1,124
Depreciation charge 450 367 777
Acquisition and corporate finance
related expenses 97 323 689
-------------------------------------- -------- ----------- ------------
Adjusted EBITDA 2,946 2,375 5,257
-------------------------------------- -------- ----------- ------------
Geographical, product and sales channel information
Revenue by geographical segment represents revenue from external customers based upon the geographical location of the customer.
Six months to 30
June Year ended
-------------------
31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
---------------- --------- -------- ------------
UK 4,704 3,732 8,227
Scandinavia 3,380 3,593 6,772
Germany 2,206 1,479 3,442
USA 442 337 777
Rest of Europe 1,717 1,160 2,482
Rest of World 262 253 520
12,711 10,554 22,220
---------------- --------- -------- ------------
Revenue by product group represents revenue from external customers.
Year ended
Six months to 30 June 31 December
------------------------
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ------------
Project Management 5,104 5,015 9,774
Site Management 192 219 411
Estimating 1,403 1,464 2,843
Engineering 1,100 1,225 2,350
CAD/Design 1,037 1,052 2,070
Information Management 710 595 1,180
Visualisation 2,020 984 2,395
Maintenance Management 1,145 - 1,197
12,711 10,554 22,220
------------------------ ----------- ----------- ------------
The Group utilises resellers to access certain markets. Revenue by sales channel represents revenue from external customers.
Year ended
Six months to 30
June 31 December
-------------------
2019 2018 2018
GBP'000 GBP'000 GBP'000
---------- --------- -------- ------------
Direct 12,077 9,945 20,950
Reseller 634 609 1,270
12,711 10,554 22,220
---------- --------- -------- ------------
5. Operating profit
Operating profit for the period is after charging the following items:
Year ended
Six months to 30
June 31 December
---------------------
2019 2018 2018
(restated) (restated)
GBP'000 GBP'000 GBP'000
------------------------------------- -------- ----------- ------------
Software product development 891 872 1,770
Depreciation of property, plant
and equipment 450 367 777
Amortisation of acquired intangible
assets 295 211 595
Amortisation of other intangible
assets 358 224 529
Profit on disposal of property,
plant and equipment (4) (6) (16)
Foreign exchange losses / (gains) 23 24 (31)
Acquisition and corporate finance
related expenses 97 323 689
-------------------------------------- -------- ----------- ------------
6. Net finance cost
Finance income and costs disclosed in the income statement is set out below:
Year ended
Six months to 30
June 31 December
---------------------
2019 2018 2018
(restated) (restated)
GBP'000 GBP'000 GBP'000
-------------------------------------------- -------- ----------- ------------
Finance costs:
Bank overdraft and loan interest (136) (35) (187)
Interest expense for leasing arrangements (43) (47) (94)
Total net finance
cost (179) (82) (281)
--------------------------------------------- -------- ----------- ------------
7. Earnings per share
The calculations of the earnings per share are based on profit after tax attributable to the ordinary equity shareholders of the Company and the weighted average number of shares in issue for the reporting period.
Six months to 30 June
--------------------------------------------------------------------
Year to 31 December
2019 2018 (restated) 2018 (restated)
--------------------------------- --------------------------------- --------------------------------
Profit Weighted Profit Weighted Profit Weighted
attributable average attributable average attributable average
to number to number to number
shareholders of shares EPS shareholders of shares EPS shareholders of shares EPS
(GBP'000) (millions) (p) (GBP'000) (millions) (p) (GBP'000) (millions) (p)
---------- ------------- ----------- ----- ------------- ----------- ----- ------------- ----------- ----
Basic
earnings
per
share 1,288 81.1 1.6 943 76.6 1.2 1,788 77.4 2.3
Diluted
earnings
per
share 1,288 81.9 1.6 943 77.2 1.2 1,788 78.2 2.3
Adjusted
earnings
per
share 1,621 81.1 2.0 1,401 76.6 1.8 2,959 77.4 3.8
---------- ------------- ----------- ----- ------------- ----------- ----- ------------- ----------- ----
Shares held by the Employee Share Ownership Trust are excluded from the weighted average number of shares in the period. Adjusted profit attributable to shareholders is reconciled to reported profit attributable to shareholders in note 14.
8. Dividends
Dividends paid in the six months to 30 June 2019 comprised the 2018 final dividend of 0.40 pence per ordinary share (2018: 0.40 pence per ordinary share).
The 2018 final dividend was declared as a scrip dividend, with a scrip reference price of 74.74 pence per ordinary share, with shareholders having the opportunity to receive an alternative cash dividend of 0.40p per share.
Scrip dividends were issued in the six months to 30 June 2019 as follows:
Year to 31
Six months to 30 June December
--------------------------------------
2019 2019 2018 2018 2018 2018
shares shares shares
Ordinary shares issued GBP'000 issued GBP'000 issued GBP'000
-------------------------- -------- -------- -------- -------- -------- --------
Declared and paid during
the year
Interim - current year - - - - 153,240 126
Final - previous year 248,585 186 414,178 205 414,178 202
248,585 186 414,178 205 567,418 328
-------------------------- -------- -------- -------- -------- -------- --------
Cash dividends of GBP141,000 (2018: GBP110,000) were paid in the six months to 30 June 2019 as follows:
Year to 31
Six months to 30 June December
------------------------------------
2019 2019 2018 2018 2018 2018
per per per
Ordinary shares share GBP'000 share GBP'000 share GBP'000
-------------------------- ------- -------- ------- -------- ------- --------
Declared and paid during
the year
Interim - current year - - - - 0.28 88
Final - previous year 0.40 141 0.40 110 0.40 100
0.40 141 0.40 110 0.68 188
-------------------------- ------- -------- ------- -------- ------- --------
The Directors have recommended the payment of an interim scrip dividend of 0.30p per ordinary share, or an alternative cash dividend of 0.30p per ordinary share (2018 interim: 0.28p). The scrip reference price is 77.9p, calculated from the average of the closing price for an ordinary share of the Company as derived from the official list of the London Stock Exchange during the period of five dealing days ending 20 September 2019. The interim dividend will be paid on 31 October 2019 to shareholders registered at the close of business on 4 October 2019. The ex-dividend date will be 3 October 2019. The cash alternative election will close at 5pm on 21 October 2019.
9. Other intangible assets
Other intangible assets comprise capitalised development costs, acquired customer relationships and purchased intangible assets. Additions in the six months to 30 June 2019 represent purchased intangible assets of GBPnil (2018: GBP20,000) and internal development costs capitalised of GBP633,000 (2018: GBP531,000) Internal development relates to software development projects that meet the accounting policy criteria for capitalisation.
10. Cash and borrowings
The net cash position of the group as at 30 June 2019 is set out below.
At 31
At 30 June December
---------------------
2019 2018 2018
(restated) (restated)
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 6,763 5,253 6,036
Bank loans (6,961) (1,975) (7,850)
Bank overdrafts - (335) -
Lease liabilities (2,319) (2,421) (2,610)
(2,517) 522 (4,424)
-------------------------------- -------- ----------- -----------
Maturity profile of borrowings
In one year
or less (1,647) (1,125) (1,648)
Between one and two years (1,647) (790) (1,648)
Between two and five years (3,667) (395) (4,554)
(6,961) (2,310) (7,850)
-------------------------------- -------- ----------- -----------
On 4 July 2018 the group refinanced its existing borrowings into a new five year fixed term loan of GBP8m with Barclays Bank. The new facility was used to finance the acquisition of Shire Systems Ltd for GBP6.3m on a cash and debt free basis.
The new facility is repayable over five years, with equal quarterly instalments of GBP400,000. The interest rate has been fixed for three years at 3.768%. The group also retains its existing GBP1.0m overdraft facility. Security provided to the bank comprises a cross guarantee and debenture between Elecosoft plc and certain group subsidiaries.
11. Accruals and deferred income
At 31
At 30 June December
------------------
2019 2018 2018
GBP'000 GBP'000 GBP'000
Accruals 1,957 2,030 2,053
Deferred income 5,829 4,900 5,660
7,786 6,930 7,713
----------------- -------- -------- ----------
Deferred income represents income from software maintenance and support contracts and is taken to revenue in the income statement on a straight-line basis in line with the service and obligations over the term of the contract.
12. Explanation of transition to IFRS 16 Leases
As highlighted in note 2, Basis of preparation under "Leases", the Group has adopted IFRS 16 on the basis of the Full Retrospective Approach under which leases will be recorded in the statement of financial position in the form of a right-of-use asset and a lease lability. As a result, the Group has recognised the cumulative effect as an adjustment to the opening net assets at 1 January 2018.
The Group has historically purchased plant and equipment, the exception being a small number of leased vehicles for the sales team. However, it has lease contracts for office accommodation in the UK, Sweden, Germany and the Netherlands.
The financial impact of the adoption of IFRS 16, will result in a reduction in the Group's annual operating expenses of GBP640,000 and additional depreciation costs of GBP583,000 and finance costs payable of GBP80,000. Details of lease liabilities and right of use assets are provided below.
On adoption of IFRS 16, the Group recognised a lease liability at the date of initial application, for leases previously classified as an operating lease under IAS17, at the present value of the remaining lease payments, discounted using the Group's estimated incremental borrowing rate.
The Group has assessed the lease liability on each individual lease and applied an appropriate incremental borrowing rate.
There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.
The Group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less). Payments made under such leases are expensed on a straight-line basis.
The following is a reconciliation of total operating lease commitments at 31 December 2017 to the lease liabilities recognised at 1 January 2018:
GBP'000 GBP'000
Total operating lease commitments disclosed
at 31 December 2017 2,862
Other minor adjustments relating to commitment
disclosures 34
--------
34
--------
Operating lease liabilities before discounting 2,896
Discounting using incremental borrowing rate (433)
Total lease liabilities recognised under IFRS
16 at 1 January 2018 2,463
--------
13. Related Party Disclosures
Transactions between Group undertakings, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
The Directors of the Company had no material transactions with the Company during the six months to 30 June 2019, other than a result of service agreements. An amount of GBP37,500 (2018: GBP36,250) was paid to JHB Ketteley & Co Limited under a lease for occupation by the Group of its London head office and GBP2,500 (2018: GBP2,500) was paid to JHB Ketteley & Co Limited for a contribution to the office costs at Burnham-on-Crouch.
14. 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
Six months to
30 June 31 December
---------------------
2019 2018 2018
(restated) (restated)
GBP'000 GBP'000 GBP'000
------------------------------------- -------- ----------- ------------
Operating profit 1,746 1,250 2,667
Acquisition and corporate finance
related expenses 97 323 689
Amortisation of acquired intangible
assets 295 211 595
Adjusted operating profit 2,138 1,784 3,951
------------------------------------- -------- ----------- ------------
Profit before tax 1,567 1,168 2,386
Acquisition and corporate finance
related expenses 97 323 689
Amortisation of acquired intangible
assets 295 211 595
Adjusted profit before tax 1,959 1,702 3,670
------------------------------------- -------- ----------- ------------
Tax charge (279) (225) (598)
Acquisition and corporate finance
related expenses - (40) -
Amortisation of acquired intangible
assets (59) (36) (113)
Adjusted tax charge (338) (301) (711)
------------------------------------- -------- ----------- ------------
Profit after tax 1,288 943 1,788
Acquisition and corporate finance
related expenses 97 283 689
Amortisation of acquired intangible
assets 236 175 482
Adjusted profit after tax 1,621 1,401 2,959
------------------------------------- -------- ----------- ------------
Cash generated in operations 3,130 3,137 5,017
Purchase of intangible assets (633) (551) (1,064)
Purchase of property, plant and
equipment (50) (70) (123)
Acquisition and corporate finance
related expenses 72 43 689
Adjusted operating cash flow 2,519 2,559 4,519
------------------------------------- -------- ----------- ------------
15. Exchange rates
The following exchange rates have been applied in preparing the condensed consolidated financial statements:
Year to 31 December
Income statement Balance sheet 2018
------------------- ---------------- ----------------------
Six months to
30 June As at 30 June Income Balance
2019 2018 2019 2018 statement sheet
----------------------- --------- -------- ------- ------- ------------ --------
Swedish Krona to
Sterling 11.97 11.58 11.79 11.81 11.59 11.32
Euro to Sterling 1.14 1.14 1.12 1.13 1.13 1.11
US Dollar to Sterling 1.29 1.37 1.27 1.32 1.33 1.28
----------------------- --------- -------- ------- ------- ------------ --------
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
IR PGUPCBUPBPGW
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September 24, 2019 02:01 ET (06:01 GMT)
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