REG - Eleco PLC - Final Results
31/03/2022 07:00
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RNS Number : 6823G Eleco PLC 31 March 2022
Eleco plc
("Eleco", the "Company" or the "Group")
Audited Results for the Year Ended 31 December 2021
The Board of Eleco plc (AIM: ELCO) is pleased to announce its results for the
year ended 31 December 2021.
Financial Highlights
· Revenue increased 8%, slightly ahead of expectations, to £27.3m
with growth in all regions (2020: £25.2m)
· Recurring revenue up 9% to £15.4m, representing 56% of revenue
(2020: 56%)
· EBITDA ahead of expectations at £7.2m (2020: £6.7m)
· Adjusted EBITDA of £7.3m (2020: £7.0m)*
· Development spend at over 12% of revenue
· EPS at 3.3 pence per share (2020: 3.9 pence per share) - impacted
by UK corporate tax rise in 2023
· Net cash of £10.0m (2020: £6.2m) after full repayment of UK
bank debt and furlough payments
· Final recommended dividend of 0.40 pence per share: full year
dividend 0.6 pence per share (2020:0.40 pence per share)
Operational Highlights
· The introduction of subscription-based pricing to new Building
Lifecycle customers in Q4 2021 will lead to increased Recurring Revenue and
enhanced Customer Lifetime Value.
· The successful merger of our UK Building Lifecycle businesses and
separately of our German Visualisation operations, providing greater business
development opportunities.
· Winner of the Megabuyte Quoted 25 award for Best Performing
Software Company in Industrials.
· Winner of Project Management Software of the Year at the UK
Construction Computing awards.
* Adjusted to exclude former Directors' payments.
** EBITDA is defined as Earnings before Interest, Tax,
Depreciation, and Amortisation and impairment of Intangible Assets
Eleco CEO Jonathan Hunter said:
"We are delighted to present these positive results just 12 months after
unveiling our revised strategy for growth. The successful implementation of
this strategy has enabled Eleco to embark on its transition to SaaS earlier
than expected. This marks a pivotal change to our business as we focus on
securing and increasing our predictable recurring revenues.
Our customers in the built environment are embracing technology to address
issues such as compliance, improvements in productivity and efficiency, the
reduction of waste, and other environmental considerations. Our established
presence, customer-centric approach, strong values and clear vision make us
well placed to compete with the best in the market, and we look forward with
confidence to the year ahead."
Enquiries
Eleco plc +44 (0)20 7422 8000
Jonathan Hunter, Chief Executive Officer
Rose Clark, Interim Chief Financial Officer
finnCap Limited +44 (0)20 7220 0500
Geoff Nash / Kate Bannatyne / James Balicki (Corporate Finance)
Charlotte Sutcliffe / Harriet Ward (ECM)
SEC Newgate UK +44 (0)20 3757 6882
Elisabeth Cowell / Bob Huxford / Isabelle Smurfit eleco@secnewgate.co.uk (mailto:eleco@secnewgate.co.uk)
Chairman's Statement
As an award-winning specialist provider of world-class software to the £8.5bn
built environment market, Eleco is well positioned to expand.
A year ago, we set out our refreshed strategy and the last twelve months have
been focused on setting the foundations for further growth. It has been a
truly transformative year for Eleco. We are very much a customer-focused
organisation and have a clear purpose and a values statement developed through
a truly interactive process with our people. A strong engaging culture is key
to enable us to attract and retain talent in such a competitive market.
I am pleased to report that our strategy is already generating results, with
our organic growth rate increasing to 8.0 per cent (2020: -1.0 per cent),
underpinned by double-digit sales growth from our core Building Lifecycle
portfolio. This was achieved at the same time as implementing our move to a
subscription licensing model for new customers in the last quarter. Recurring
revenue (subscription and SaaS licences, maintenance and support contracts)
increased by 9.0 per cent to £15.4m.
We have maintained strong cash generation, despite Covid-19 continuing to
impact our ability to undertake face to face sales and training, having fully
repaid monies given to Eleco through the UK Government furlough scheme as well
as clearing our UK bank debt. We are now debt free after settling the
remaining £0.1m of subsidiary bank debt in Q1 2022.
We were delighted to win the Megabuyte Quoted 25 Award for best performing
software company in the industrials peer group in March 2022 showing the
strength of our overall financial performance.
Implementing our strategy for organic growth
We are aligning our business with clear customer segment strategies and
through product portfolio alignment, driven by our Chief Product Officer (CPO)
Fredrik Pantze who was appointed in April 2021, and we have started on the
journey to adapt our software to become next generation cloud-based solutions.
Our aim is to help our customers reimagine their businesses by creating
software which allows them to better collaborate, get faster access to data
for analytics and ensure interoperability. As a result, we are seeing an
increase in new customer wins away from our competitors.
This has also been bolstered by the strengthening demand for our products in
our core regions where we are in a strong position with Powerproject being
used for the master construction plan. Collaboration is driving us to partner
and share data with other parties. As a result, we have formed several
partnerships and data integrations during the last 12 months, as we continue
to leverage/understand our strong customer relationships.
With our move to subscription, we are more focused on customer success through
account management and services. We believe that building on our customer
relationships will allow Eleco to better support the management and leadership
teams of those organisations which are starting to look for an integrated end
to end approach.
Our new Chief Technology Officer, Luben Kirov, was appointed in December
2021 This role has the remit to bring together all the separate development
teams, break down the product silos and drive forward our integrated
technology roadmap in conjunction with our CPO. Having started in February
2022, we look forward to reporting on the results of this appointment as we go
through the current year.
From a customer perspective, digitalisation is increasingly being recognised
for its ability to manage the complex supply chain and inflationary issues,
while rising pressures on companies to reduce wastage provides another
tailwind as regulation around this increases. We are a well-known provider of
innovative technology for the construction and built environment sectors, with
87 per cent of the top 100 UK construction contractors on our books. This
provides us with a strong and established platform for growth and new contract
wins.
The move to subscription-based pricing of our products will benefit our
customers with a lower upfront cost for an enhanced product, as well as
creating increased value for our shareholders through higher Recurring Revenue
growth.
In the year, Eleco's US business grew 16 per cent predominantly through our
reseller channel which the Company will continue to support. Following this
growth, the Executive team are re-focusing on potential strategic
opportunities for expansion into the US.
We continue our strategy to provide best of breed software targeted at our
chosen customer segments.
Board appointments and Environmental, Social and Governance (ESG)
Aligned to the new strategy, I undertook a full skills audit of the Board and
in March we brought in Paul Boughton as a NED, adding more technology PLC
experience to the business as well as additional financial and acquisition
expertise.
In a desire to refresh our Board and further improve our corporate governance,
this was followed by a further extensive search to recruit the best candidates
for our other skills gaps. This led to two further NED appointments in the
summer, with Dr Annette Nabavi and Mark Castle joining the Board in August and
September, respectively. Annette Nabavi is a highly qualified board director
with more than 30 years' experience in the technology, telecoms and digital
industries who brings additional expertise to advise with the shift from a
perpetual to SaaS licence model while Mark Castle is an experienced business
leader, bringing the voice of the customer to the Board - a vital stakeholder
group for Eleco - with his wealth of experience in the Property, Construction,
Consultancy and Built Environment sectors.
Kevin Craig and David Dannhauser stepped down from the Board at the end of
August and I would like to take this opportunity to thank them both for the
immense contribution that they made to this business throughout their tenure.
Paul Boughton took over as Chair of Audit and Annette Nabavi took over as
Chair of Remuneration. Over the next twelve months, we plan to strengthen our
ESG disclosures, building on the steps taken during 2021. With this in mind,
we set up an ESG Committee at the end of period under review, chaired by Mark
Castle. This will assist the Board in fulfilling its oversight
responsibilities regarding environmental, health and safety, corporate social
responsibility, sustainability, customer satisfaction, employee wellbeing and
retention, corporate governance, diversity, equity and inclusion. We look
forward to building our disclosure on these areas over the months and years
ahead as we develop our Net Zero Strategy and our ESG Scorecard.
On 29 March 2021 Robert Tearle was appointed as CFO as we launched our
refreshed strategy. On 7 February 2022 we announced that Robert was resigning
from the Board. This is obviously disappointing for both the Company and for
Robert personally. We thank Robert for his valued contribution to the planning
of the steps needed for the delivery of our move towards a SaaS environment
for our most successful products. The process to recruit a permanent CFO is
underway. In the meantime, we have Rose Clark, an experienced CFO, covering
the position.
Proposed dividend
In light of Eleco's resilient trading performance and cash generation in 2021,
the Board has decided to recommend a final cash dividend 0.40 pence per share.
Payment of the final dividend will follow approval by shareholders at the
Annual General Meeting. The record date is the close of business on 27 May
2022; with the ex-dividend date being 26 May 2022.
Outlook
Eleco continues to be well positioned in a very exciting and attractive market
as technology is seen as the catalyst to meet the growing demands of the
building industry. Our customer base has been facing unprecedented labour
challenges and escalating materials costs. Eleco's software plays a crucial
role in mitigating these issues, driving productivity for our customers, and
enabling them to better plan their resources. There is a drive for more
efficient and sustainable building methodologies and techniques. Our
technology solutions are widely recognised for allowing better decision making
and collaboration across our clients' projects, positioning us to benefit from
increasing digitalisation trends in our core markets. As a result, the
increasing digital transformation within the built environment is a
significant opportunity for Eleco to leverage its position as a proven
provider of software for the construction and built environment sectors,
strengthen its platform, and continue to drive organic growth.
Over the next twelve months, we intend to continue to focus the business on
our core Building Lifecycle products and on further growing our recurring
revenues. Our strategy, as previously announced, is to transition that part of
our product portfolio which has traditionally been sold through perpetual
licences towards a subscription pricing basis and eventually to a full SaaS
service. This has well established benefits by giving choice for our customers
and enhanced Customer Lifetime Value for our shareholders. While this is
expected to reduce the revenues we report relating to perpetual licences
moving forward, our Recurring Revenues will increase, creating strong
visibility of income. This is an exciting transition that will deliver
multiple benefits to both our customers and shareholders.
We will also continue to strengthen our business in our core markets and look
for further opportunities for meaningful expansion in the US. Additionally, we
will be proactively assessing the market for M&A opportunities, that will
further place Eleco at the forefront in assisting our customers to solve the
future challenges of the built environment.
By creating more value for our customers, we will be increasing our Customer
Lifetime Value, expanding beyond our current users into the operations
management of our customer base. The importance of our existing customers and
growth opportunities leads us to continue to focus on direct sales in our core
geographic regions.
2021 has been an exciting year for Eleco and I would like to take this
opportunity to thank our skilled and hard-working team and valued customers
for their support over the past twelve months. With the foundations set in
place, we are well positioned for continued growth, and increased market share
through further product evolution and potential acquisition opportunities,
supported by favourable market dynamics.
Serena Lang
Chairman
30 March 2022
CEO Report
2021 was a transformational year for Eleco as we reshaped and repositioned the
Group. We launched our refined growth strategy with a focus on our people and
our organic performance.
As part of this strategy, we made new board appointments, implemented a new
matrix organisational design and strengthened the leadership team to drive
growth in the regions and across product solutions.
I am pleased to report that we are already seeing positive results. We have
made strong progress towards Eleco becoming a world-class customer-centric
organisation which people want to work with and for to meet the needs of our
core customer segments, driven by our purpose: Solving the challenges of the
built environment through digital transformation.
This is reflected in our three strategic objectives:
· Growing in a customer-centric way
· World-class through prioritised innovation
· Efficient and effective through resilient operations
I believe that a highly-focused, empowered and high-performing workforce
provides us with the greatest opportunity of success in delivering our vision.
With this in mind, during the period we brought in our new Group
Transformation Director, Birgit Lenton, appointed a Chief Product Manager,
Fredrik Pantze and in February 2022, brought in our new Group Chief Technology
Officer, Luben Kirov. Additionally, we have strengthened our sales teams and
added in customer success management.
Culture will play an important part in the successful implementation of our
strategy, and we have invested time with our people in 2021 to develop an
expected behaviours approach for Eleco that aligns to our core values.
Retaining and attracting talent has never been more challenging than in 2022
and we are committed to ongoing investment in our diverse workforce to
complement and enhance the skills, thinking and decision-making throughout the
organisation. We remain proud of the fact that over 30 per cent of our
workforce comprises talented women across all areas of the business, which is
above the industry average.
Importantly, our clear strategy and skilled team of people have driven our
strong financial performance, with revenues experiencing organic growth of 8
per cent during the full year period. We also continued to expand our customer
base in 2021, as well as introducing subscription licensing to new customers
for our Building Lifecycle portfolio in the second half of the year. This is a
significant step forward for the Group as we focus on expanding our already
established recurring revenue to support our excellent cash generation.
Strengthening our engagement with our external stakeholders has also been a
priority for the Board. Our strong customer loyalty is an investable quality
of Eleco, and our strategic intent is to further enhance the offer to our
customers. Throughout the year, we released new versions of our software and
added measures to ensure the continued growth of the Group and retention of
our customers, who value our products, our brand and the level of service we
provide.
In this report, I will outline how we intend to build on our already robust
position, refining our proposition and expanding our presence internationally
beyond our current core areas of operation to create value for shareholders
and customers alike.
2021 Review
The Board launched the refined Eleco growth strategy in March 2021, and this
has focused and energised the whole organisation, resulting in growth in all
regions. Eleco continued to add new customers and leveraged our strong
customer relationships to support them with their digital transformation.
Eleco delivered a robust and resilient financial performance in another year
of challenges brought about by the Covid-19 pandemic. The strong first half
performance in 2021 facilitated the introduction of a subscription-based
pricing model to new Building Lifecyle product customers in Q4. The
introduction of subscription-based pricing is a key stage on our SaaS journey
which will improve the predictability of our revenue and increase the Customer
Lifetime Value.
The transformation programme started with identifying and focusing on Eleco's
core customer segments of construction businesses, maintenance managers,
building asset owners and specialist interior product manufacturers, staircase
and timber frame manufacturers and residential architects. During the year, we
reorganised our business to build our product strategies, sales and marketing
functions around customer segments. As a result, our products are now defined
in two groups: Building Lifecycle and CAD & Visualisation.
Our 'Building Lifecycle' portfolio is adopted by construction contractors,
asset owners and maintenance managers. The second category, the 'CAD and
Visualisation' solutions, comprise what can be defined as niche products with
minimal synergies between customer segments of the Building Lifecycle
portfolio.
Organising our business in this way has provided better understanding and
focus on our core customer needs, or 'sweet spots', allowing Eleco to better
solve the challenges of the built environment through digital transformation.
The Group Leadership Team, now comprising the Chief Executive Officer, Chief
Product Officer, Chief Technology Officer and Group Transformation Director,
is responsible for steering and implementing the Group's strategy. The
Operational Leadership Team comprises the Building Lifecycle operations which
are managed by three Regional Managing Directors, along with a Managing
Director for each of our CAD and Visualisation businesses, Veeuze, Staircon
and Arcon, who are responsible for these product lines in their international
markets. There is now a more diverse mix of nationalities, gender and
experience and we have an opportunity to further enhance this team as we
select our new Chief Financial Officer.
Building Lifecycle
Our focused and streamlined organisational design led us to strengthen our
growth platform by merging our three UK operations under a single Building
Lifecycle management team so that we are now offering all UK Building
Lifecycle products from a single business unit.
Our regional focus delivered revenue growth in the core regions where our
customers reside.
The US revenue increased through our reseller channel while efforts to sell
Powerproject directly in the US were met with recruitment challenges and the
resignation of our US country manager.
We also worked on introducing ShireSystem into Germany, carrying out product
development and localisation as well as setting up sales, marketing and
support functions. There were lessons learnt as we had underestimated the
volume of work required, however I am pleased to report that we are showcasing
ShireSystem at the Maintenance Dortmund exhibition at the end of March.
Project Management
Voted the Best Project Management Software of 2021 at the Construction
Computing Awards, Powerproject continues to be central to driving digital
innovation in project planning and critical to underpinning project success
despite the myriad challenges the construction industry faces.
Some customer successes include:
· Empowering organisations with the data necessary for informed
decision making (Careys).
· Supporting the use of pre-fabrication practices to model and
streamline build process and reduce the project's carbon footprint (Willmott
Dixon).
· Modelling and managing supply chain disruptions by bridging the
gap between the office and site (JJ Rhatigan & Company).
· Supporting business transformation with digital solutions that
make best practice sustainable (Vinci).
Estimating
Our Bidcon estimating software revenues surpassed the all-time high of 2020,
irrespective of the transition to SaaS for new customers. One of the reasons
for our success was our investment in new product functionality to meet
customer requirements and to secure larger customers. The importance of
sustainability in construction and the fact that Swedish law now mandates
climate declarations has resulted in a growing interest and demand for the
Bidcon Climate module.
Site Management
We continued the development of mobile and SaaS site management applications
used by construction and maintenance operations and valued by existing
customers in our Swedish market.
Property Management
2021 was a record year for service delivery, with increased customer demand
from non-essential retailers who began to recover somewhat from the pandemic
closures. With less focus on new build, the emphasis in retail was the
regeneration of existing property estates and development of in-store
concepts.
New product enhancements to introduce workflow management continued and
included the release of a new digital forms solution in Q4 2021.
Maintenance
I am proud of what our colleagues have achieved with our maintenance solution,
ShireSystem, which was runner-up in Asset Management category at the UK
Construction Computing Awards 2021 ('The Hammers').
ShireSystem's revenue growth has made it the second largest product by revenue
for Eleco. The migration to SaaS revenues continued across both existing and
new customer contracts, with a third of customers now on hosted solutions.
ShireSystem has managed to attract an impressive list of new accounts,
including Cambridge Weight Plan and global food conglomerate Cargill. Existing
customers also fueled growth, with further deployments at G's Group and Fox's
Biscuits.
CAD and Visualisation
Veeuze
The Active Online and ESIGN visualisation businesses experienced a significant
year of change and improvement, relaunching as Veeuze (pronounced 'views'), to
combine the service portfolio and product material library of both companies
and expand their offerings to all customers.
Veeuze now offers personalised product visualisation across a multitude of
marketing channels with the support of its AI tools as well as Augmented
Reality and Virtual Reality technologies. We released our Confimerce platform
which provides our interior product business customers with a combined
portfolio approach to online selling through ecommerce, with integrated
visualisation tools and a Product Information Management (PIM) data management
system.
Staircon
The development of our new generation Staircon CAD continued according to the
releases planned in 2022 and 2023. During 2021, the team also strengthened
its management and sales capabilities by adding more than 18 years of stair
manufacturing experience to the team via successful recruitments, including a
new Head of Staircon. We also appointed new Staircon resellers in Poland and
the Netherlands.
Arcon
Our Arcon business experienced a challenging year, with a reduction in sales
through partners and active competition in our core German market. Arcon
direct sales were negatively impacted as major exhibitions did not take place
during the period, and these have traditionally been a successful sales
channel.
Financial Summary
Revenue increased by 8 per cent to £27.3m (2020: £25.2m)
Recurring Revenue (maintenance, subscription and SaaS revenue) increased by 9
per cent to £15.4m from £14.1m in 2020. Licence sales were £5.9m compared
with £5.4m in 2020 representing an increase of 9 per cent, despite the
introduction to subscription licensing in Q4 2021. The impact of the
transition to subscription will change the profile of our revenue, with
one-off perpetual licence revenue, which is recognised immediately, being
transitioned to a higher lifetime value subscription revenue which is
recognised over a longer period of time. Thus our total reported revenue
growth will temporarily soften during this transition to higher value and
predictable recurring revenue.
Service revenue increased to £6.0m compared to £5.6m in 2020, which
represents an increase of 7 per cent, despite continuing challenges presented
by the pandemic during the period.
Building Lifecycle revenue increased by 11 per cent, which was driven by new
customers and recurring revenue growth. CAD and Visualisation revenue
increased by 2.9 per cent.
Revenues by customer location were positive, with the UK and Scandinavia
increasing by 11 per cent and 8 per cent respectively. Overall, revenue from
customers based in Germany was at a level comparable with 2020. This was
largely due to increased sales in the building lifecycle customers offset by a
decrease in CAD perpetual licence sales. The Rest of Europe grew by 7 per
cent, USA revenue increased by 16 per cent and revenue from the Rest of World
increased by 38 per cent, compared with 2020, which was supported by good
growth in Australia.
We invested 12 per cent of Revenue in product development across our portfolio
during 2021. One product was identified as unlikely to generate new customer
revenues as anticipated however provides an upgrade path to existing supported
customers. The Board took a prudent approach and decided to impair the
carrying value of the product during the year reducing Profit Before Tax by
£0.6m.
Outlook
Eleco has proven its resilience during the pandemic, although the recent
crisis in Ukraine has added a further level of uncertainty to the markets.
We have taken measures to temporarily cease providing our solutions to
resellers and customers in Russia and Belarus, and we do not expect this to
have a substantial impact on revenues.
Digitalisation is increasingly embraced as a critical solution for the issues
that our customers are facing and is at the heart of our strategy. We will
invest in product development and our technology environment to create our
next generation solutions with a customer-centric experience and the
foundations of the Elecosoft Cloud for all our Building Lifecycle products.
This will also enable our customers to have access to other Elecosoft products
through a unified platform. We see the rising demand for buildings with green
credentials as a key driver for Eleco, as our products support the reduction
of waste, drive efficiency and deliver essential data required by our
customers. Our roadmap will ensure that in the future we will be able to offer
full lifecycle support, addressing carbon challenges, productivity
improvements and compliance issues through one suite of solutions.
Our people are the lifeblood of our organisation, and their commitment is key
to Eleco's success. Our biggest challenge in the coming year, apart from
rising inflation and the competitive job market, is our ability to retain and
attract talent. During 2022 and beyond we will therefore continue to invest in
our employee value proposition and global company culture by further embedding
the cultural values in the way we do business. As Eleco grows, we will review
and update our policies and procedures across the organisation to maintain
good practice and gain the benefits of alignment whilst ensuring our people
feel empowered.
Our customer-centric approach, strong values and clear vision make us well
placed to compete with the best in the market, and we look forward with
confidence to the year ahead. Our transition to subscription, continued
investment in software development and increased focus on software strategies
will open further exciting prospects for growth in our core markets.
Jonathan Hunter
CEO
30 March 2022
Consolidated Income Statement
for the year ended 31 December 2021
2021 2020
£'000 £'000
Continuing operations
Revenue 27,344 25,232
Cost of sales (2,754) (2,529)
Gross profit 24,590 22,703
Amortisation and impairment of intangible assets (2,361) (1,658)
Former Directors' payments (69) (328)
Other administrative expenses (18,061) (16,566)
Administrative expenses (20,491) (18,552)
Operating profit 4,099 4,151
Finance cost (173) (262)
Profit before tax 3,926 3,889
Tax (1,195) (726)
Profit for the financial period 2,731 3,163
Attributable to:
Equity holders of the parent 2,731 3,163
Earnings per share - (pence per share)
Basic 3.3p 3.9p
Diluted 3.3p 3.9p
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
2021 2020
£'000 £'000
Profit for the period 2,731 3,163
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Translation differences on foreign operations (258) 193
Other comprehensive (loss)/ income net of tax (258) 193
Total comprehensive income for the period 2,473 3,356
Attributable to:
Equity holders of the parent 2,473 3,356
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Share Share Merger Translation Other Retained
capital premium reserve reserve reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2020 822 2,047 1,002 (198) (108) 14,359 17,924
Dividends - - - - - - -
Share-based payments - - - - 131 - 131
Elimination of exercised share-based - 25 - - (25) - -
payments 3 110 - - - - 113
Transactions with owners 3 135 - - 106 - 244
Profit for the period - - - - - 3,163 3,163
Other comprehensive income:
Exchange differences on translation of
net investments in foreign operations - - - 190 - 3 193
Other - - - - - - -
Total comprehensive income for the
period - - - 190 - 3,166 3,356
At 31 December 2020 825 2,182 1,002 (8) (2) 17,525 21,524
Dividends - - - - - (493) (493)
Share-based payments - - - - 81 - 81
Elimination of exercised share-based
payments - - - - (83) 83 -
Issue of share capital 7 253 - - - - 260
Transactions with owners 7 253 - - (2) (410) (152)
Profit for the period - - - - - 2,731 2,731
Exchange differences on translation of
net investments in foreign operations - - - (270) - 12 (258)
Other - reserve reclassifications - (29) - (1) (1) 31 -
Total comprehensive income for the
period - (29) - (271) (1) 2,774 2,473
At 31 December 2021 832 2,406 1,002 (279) (5) 19,890 23,846
Consolidated Balance Sheet
At 31 December 2021
2021 2020
Notes £'000 £'000
Non-current assets
Goodwill 9 15,593 15,762
Other intangible assets 10 6,554 7,195
Property, plant and equipment 11 717 651
Right-of-Use assets 22 1,728 2,208
Deferred tax assets 19 65 85
Total non-current assets 24,657 25,901
Current assets
Inventories 13 16 23
Trade and other receivables 14 4,277 3,911
Current tax assets 216 90
Cash and cash equivalents 10,055 10,668
Total current assets 14,564 14,692
Total assets 39,221 40,593
Current liabilities
Borrowings 16 (45) (1,647)
Lease liabilities 16, 22 (471) (582)
Trade and other payables 15 (1,793) (1,660)
Provisions 17 (10) (125)
Current tax liabilities - -
Accruals and deferred income 18 (9,689) (8,880)
Total current liabilities (12,008) (12,894)
Non-current liabilities
Borrowings 16 (56) (2,867)
Lease liabilities 16, 22 (1,464) (1,850)
Deferred tax liabilities 19 (1,806) (1,417)
Non-current provisions 17 (41) (41)
Total non-current liabilities (3,367) (6,175)
Total liabilities (15,375) (19,069)
Net assets 23,846 21,524
Equity
Share capital 20 832 825
Share premium account 2,406 2,182
Merger reserve 1,002 1,002
Translation reserve (279) (8)
Other reserve (5) (2)
Retained earnings 19,890 17,525
Equity attributable to shareholders of the parent 23,846 21,524
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
2021 2020
Note £'000 £'000
Cash flows from operating activities
Profit before tax 3,926 3,889
Net finance costs 173 262
Depreciation charge 722 866
Amortisation and impairment charge 2,361 1,658
Profit on sale of property, plant and equipment (7) (16)
Share-based payments charge 81 131
Cash generated in operations before working capital movements 7,256 6,790
Decrease in provisions (115) (17)
(Increase)/decrease in trade and other receivables (366) 428
Decrease in inventories and work in progress 7 23
Increase in trade and other payables and accruals and deferred income 942 914
Cash generated in operations 7,724 8,138
Interest paid (124) (206)
Net income tax paid (903) (785)
Net cash inflow from operating activities 6,697 7,147
Investing activities
Purchase of intangible assets (1,727) (1,603)
Purchase of property, plant and equipment (279) (99)
Proceeds from sale of property, plant, equipment and intangible assets 60 71
Net cash outflow from investing activities (1,946) (1,631)
Financing activities
Repayment of bank loans 16 (4,447) (1,647)
Repayments of principal of lease liabilities 22 (650) (761)
Equity dividends paid (493) -
Issue of share capital 260 -
Net cash (outflow) from financing activities (5,330) (2,408)
Net (decrease) / increase in cash and cash equivalents (579) 3,108
Cash and cash equivalents at beginning of period 10,668 7,236
Effects of changes in foreign exchange rates (34) 324
Cash and cash equivalents at end of period 10,055 10,668
Cash and cash equivalents comprise:
Cash and short-term deposits 10,055 10,668
10,055 10,668
Extract from Notes to the Consolidated Financial Statements
1. Revenue
Revenue from continuing operations disclosed in the income statement is
analysed as follows:
2021 2020
£'000 £'000
Licence sales 5,913 5,442
Recurring maintenance, support and subscription revenue 15,424 14,186
Services income 6,007 5,604
Total revenue 27,344 25,232
Revenue recorded in the year includes £6.4m (2020: £5.9m) of income that had
been deferred in the balance sheet in the previous year because the associated
performance obligations were not fully satisfied. Payments are received from
certain customers on maintenance or subscription contracts either three months
or one year in advance, which leads to the recognition of deferred income in
advance of satisfaction of the performance obligation over time.
The Group has applied the practical expedient of IFRS15.121 in respect of
transaction price allocated to remaining performance obligations as the
performance obligations relate to contracts which have a duration of one year
or less. Contract liabilities in respect of contracts with customers have been
disclosed in note 18 under deferred income.
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:
2021 2020
£'000 £'000
UK 10,446 9,470
Scandinavia 6,550 6,080
Germany 4,911 4,858
USA 1,030 890
Rest of Europe 3,916 3,538
Rest of World 491 396
27,344 25,232
Revenue by product group represents continuing operations revenue from
external customers.
Revenue by product group is as follows:
2021 2020
£'000 £'000
Software for:
Building Lifecycle 17,650 15,897
CAD and Visualisation 7,997 7,771
Other - third party software 1,697 1,564
27,344 25,232
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:
2021 2020
£'000 £'000
Direct 26,068 24,000
Reseller 1,276 1,232
27,344 25,232
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 during the year
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.
2021 2020
Software Software
£'000 £'000
Revenue 27,344 25,232
Adjusted EBITDA 7,251 7,003
Amortisation and impairment of purchased intangible assets (1,786) (1,068)
Depreciation (722) (866)
Adjusted operating profit 4,743 5,069
Amortisation of acquired intangible assets (575) (590)
Former Directors' payments (69) (328)
Operating profit 4,099 4,151
Net finance cost (173) (262)
Segment profit before tax 3,926 3,889
Tax (1,195) (726)
Segment profit after tax 2,731 3,163
Operating profit 4,099 4,151
Amortisation and impairment of intangible assets 2,361 1,658
Depreciation charge 722 866
EBITDA 7,182 6,675
Former Directors' payments 69 328
Adjusted EBITDA 7,251 7,003
Former Directors' payments are upfront costs borne by the Group and are
adjusted to reflect their services provided.
Development project costs are expensed as incurred unless they meet the
accounting policy requirements for capitalisation.
2021 2020
Software Software
£'000 £'000
Group assets and liabilities
Segment assets 39,221 40,593
Total Group assets 39,221 40,593
Segment liabilities 15,375 19,069
Total Group liabilities 15,375 19,069
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:
2021 2020
£'000 £'000
UK 14.780 14,967
Scandinavia 6,759 7,737
Germany 3,072 3,146
USA 2 3
Rest of Europe 44 48
Rest of World - -
24,657 25,901
Information about major customers
Revenues arising from sales to the Group's largest customer were below the
reporting threshold of 10 per cent of Group revenue (2020: Below 10 per cent
reporting threshold).
3. Operating profit
The continuing operations operating profit for the period is stated after
charging/(crediting) the following items:
2021 2020
£'000 £'000
Software product development expense 1,660 1,590
Depreciation of property, plant and equipment 213 220
Depreciation of right-of-use assets 509 646
Amortisation of acquired intangible assets 575 590
Amortisation of other intangible assets 1,150 1,068
Impairment of other intangible assets 636 -
Share-based payments 81 131
Employer furlough scheme repayments / (credits) 135 (150)
Profit on disposal of property, plant and equipment (7) (16)
Foreign exchange (gains)/losses 127 (34)
Fees payable to the Company's auditor for:
The audit of the parent company and consolidated financial statements 83 70
Fees payable to the Company's auditor and its associates for other services:
The audit of the Company's subsidiaries 104 94
Other services 8 7
Operating lease rentals:
Plant, equipment and vehicles 13 30
Properties 68 13
Former Directors' payments 69 328
4. Employee information
The average number of employees during the period, including Directors, in
continuing operations was made up
as follows:
2021 2020
Number Number
Sales & marketing 57 56
Client services 76 78
Software development 69 68
Management and administration 43 44
245 246
Staff costs during the period, including Directors, in continuing operations
amounted to:
2021 2020
£'000 £'000
Wages and salaries 11,145 11,350
Social security 1,985 2,002
Pension costs 648 547
Share-based payments 81 131
13,859 14,030
Less: Development staff costs capitalised (1,578) (1,602)
12,281 12,428
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.
The remuneration of the Directors, who are the key management personnel of the
Group, is set out below:
2021 2020
£'000 £'000
Short-term employee benefits 995 974
Post-employment benefits 58 52
Former Directors' benefits 69 304
Share-based payments 123 112
Executive Directors 1,245 1,442
Fees - Non-Executive Directors 166 132
1,411 1,574
The emoluments and share based payments of the highest paid Director totalled
£426,000 (2020: £525,000).
The remuneration of the Non-Executive Directors is determined by the Board.
The Non-Executive Directors are engaged through service contracts and each is
appointed for an initial term of three years, which may thereafter be renewed.
The Company has chosen for all directors to stand for annual re-election at
each year's AGM. The Non-Executive Directors do not participate in any of the
Group's share-based incentive or pension schemes. Share options currently held
by Serena Lang were granted to her during her tenure as Executive Chairman.
5. Dividends
Dividends paid in the year were 0.60 pence per ordinary share (2020: nil pence
per ordinary share)
Cash dividends of £493,000 (2020: £nil) were paid during the year:
2021 2020
pence per pence per 2021 2020
Ordinary Shares share share £'000 £'000
Declared and paid during the year
Interim - current year 0.20 - 164 -
Final - previous year 0.40 - 329 -
0.60 - 493 -
The Directors have recommended a final dividend of 0.40 pence (2020: 0.40).
The dividend is subject to approval by shareholders at the Annual General
Meeting and has not been included as a liability in these financial
statements.
6. Basic and diluted earnings per share
2021 2020
Weighted Weighted
Net profit average Net profit average
attributable to number of attributable to number of
shareholders shares EPS shareholders shares EPS
Ordinary Shares £'000 (millions) (pence) £'000 (millions) (pence)
Basic earnings per share 2,731 82.0 3.3 3,163 81.4 3.9
Diluted earnings per share 2,731 82.9 3.3 3,163 82.0 3.9
Adjusted basic earnings per share 3,253 82.0 4.0 3,907 81.4 4.8
In determining the diluted earnings per share the dilutive impact of share
options on weighted average number of shares was included.
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
With effect from 1 January 2022 the trade and assets of Integrated Computing
and Office Networking Limited and Shire Systems Limited were transferred to
Elecosoft UK Limited.
With effect from 1 January 2022 ESIGN GmbH and Active Online GmbH were merged
under one German trading company VEEUZE GmbH.
Notes:
1. Eleco plc ("the Company") and its subsidiaries (together "the Group")
are primarily involved in software sales and development. Eleco plc, a Public
Limited Company incorporated and domiciled in England, is the Group's ultimate
parent Company. The address of Eleco plc's registered office is 6 Bevis Marks,
London EC3A 7BA, United Kingdom and the principal place of business is 6 Bevis
Marks, London, EC3A 7BA.
2. Statutory accounts for 2020 have been delivered to the Registrar of
Companies and those for 2021 will be delivered in due course. The Company's
auditors RSM UK LLP, have reported on the 2021 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. The 2020 audit 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 preliminary results'
announcement has been prepared in accordance with the recognition and
measurement requirements of UK-adopted International Accounting Standards
this announcement does not itself contain sufficient information to comply
with UK-adopted International Accounting Standards and does not constitute
statutory accounts for the purposes of section 434 of the Companies Act 2006.
The principal accounting policies used in preparing this preliminary results
announcement are those that the Company has adopted for its statutory accounts
for the year ended 31 December 2021 and are unchanged from those previously
disclosed in the Group's Annual Report and Accounts for the year ended 31
December 2020.
Full financial statements for the year ended 31 December 2021 will be posted
and made available to shareholders in due course.
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