REG - Eleco PLC - Final Results
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RNS Number : 9349G Eleco PLC 01 May 2025
RNS
1 May 2025
Eleco Plc
("Eleco", the "Group" or the "Company")
Annual Results
Audited Results for the Year Ended 31 December 2024
Strong 2024: Ahead of Market Expectations in Revenue, Profitability and Cash
The Board of Eleco plc (AIM: ELCO), the specialist software provider for the
built environment, is pleased to announce its audited results for the year
ended 31 December 2024:
Financial highlights
Revenues
· Annualised Recurring Revenues (ARR)(1): £26.6m (2023: £22.6m), an
increase of 18%
· Total Recurring Revenue (TRR)(2): £24.9m (2023: £20.7m), an
increase of 20%, representing 77% of reported revenue (2023: 74%)
· Headline Total Reported Revenues: £32.4m (at constant currency
£32.8m) (2023: £28.0m), an increase of 16% and 17% at constant currency
Profitability
· EBITDA(3): £7.2m (2023: £5.8m), an increase of 24%
· Profit before taxation (PBT): £4.3m (2023: £3.4m), an increase of
26%
· Profit after taxation (PAT): £3.3m (2023: £2.7m), an increase of
22%
· Basic earnings per share: 4.0p (2023: 3.2p), an increase of 25%
· Adjusted EBITDA(4): £7.7m (2023: £6.1m), an increase of 26%
· Adjusted profit before tax(4): £5.4m (2023: £4.2m), an increase of
29%
· Adjusted profit after tax(4): £4.2m (2023: £3.3m), an increase of
27%
· Adjusted basic earnings per share(4): 5.1p (2023: 4.0p), an increase
of 28%
Cash and dividends
· Cash: post M&A activity, £14.0m (2023: £10.9m). The Group
remains free of debt
· Free cash flow(5): £6.3m (2023: £3.8m), an increase of 66%
· Final dividend: 0.70p per share (2023: 0.55p per share), an increase
of 27%
· Total proposed final and interim dividends: 1.00p per share (2023:
0.80p per share), an increase of 25%
Operational highlights
M&A Strategy
· Acquisition in April 2024 of the Vertical Digital group of companies
to enhance the Group's technical capabilities for a multinational audience,
providing agile and innovative software development, technical consulting, and
upskilling solutions.
· Acquisition post year end of PMI Software Ltd (PEMAC), Ireland, a
recognised leader in providing SaaS Computerised Maintenance and Management
Software (CMMS), complementing the Group's existing ShireSystem CMMS software.
Technology
· Asta Powerproject® awarded 'Project Management Software of the Year'
at the UK Construction Computing Awards for the eleventh consecutive year,
recognising Eleco's commitment to innovation and excellence in the
construction industry.
· Asta Vision Live(TM) launched in May 2024, providing multiple project
collaboration capabilities for planners and schedulers.
· AstaGPT(TM), Generative AI support developed in-house and launched in
March 2024. Shortlisted for the Innovation of the Year at the Digital
Construction Awards 2024.
Growth
· Record recurring revenue growth and year-on-year revenue growth.
· ISO 27001 accreditation achieved by Elecosoft UK Limited and
BestOutcome Limited in recognition of their IT systems meeting or exceeding
the latest industry standards, and information security and data protection
best practices being followed.
· Great Place to Work® certification additionally achieved for the
Netherlands and Romania.
Jonathan Hunter, Chief Executive Officer of Eleco plc, said:
"We are extremely pleased to report Eleco's further success and achievements
in 2024. The financial performance in the period has been ahead of market
expectations for revenue, profitability, and cash generation.
We have built on this successful organic performance with the enhancement of
our portfolio of building lifecycle product solutions. In 2024, the
acquisition of the Vertical Digital group of companies brought agile and
innovative software development, technical consulting, and upskilling
capability to our software solutions. The post year-end acquisition of PEMAC
then broadened our Asset Management capabilities and customer base.
We remain confident that with the initiatives and investments we are making,
Eleco will see a strong growth trajectory going forward, despite the present
geopolitical and macroeconomic situation."
(1) ARR is defined as normalised annualised recurring revenues and includes
revenues from subscription licences, contract values of annual support and
maintenance, and SaaS contracts. Normalisation is calculated as recurring
revenue in the final month of the year multiplied by twelve. This ARR figure
is calculated including the contribution from acquisitions to the Group going
forward.
(2) TRR is defined as the recurring revenues from subscription licences,
contract values of annual support and maintenance, and SaaS contracts.
(3) EBITDA is defined as Earnings before Interest, Tax, Depreciation, and
Amortisation and Impairment of Intangible Assets.
(4) Adjusted measures are further defined in note 8.
(5) Free cash flow is defined as adjusted operating cash flow, adjusted for
tax, interest and any disposals of property, plant and equipment.
For further information, please contact:
Eleco plc +44 (0)20 7422 8000
Jonathan Hunter, Chief Executive Officer
Neil Pritchard, Chief Financial Officer
Cavendish Capital Markets Limited +44 (0)20 7220 0500
Geoff Nash / Seamus Fricker / Elysia Bough (Corporate Finance)
Louise Talbot (Sales) / Harriet Ward (ECM)
SEC Newgate UK +44 (0)20 3757 6882
Bob Huxford / Molly Gretton eleco@secnewgate.co.uk (mailto:eleco@secnewgate.co.uk)
About Eleco plc
Eleco plc is an AIM-listed (AIM: ELCO) specialist international provider of
software and related services to the built environment through its operating
brands Elecosoft, BestOutcome, PEMAC, Vertical Digital and Veeuze from centres
of excellence in the UK, Ireland, Sweden, Germany, the Netherlands, Romania,
Australia and the USA.
The Company's software solutions are trusted by international customers and
used throughout the building lifecycle from early planning and design stages
to construction, interior fit out, asset management and facilities management
to support project management, estimation, visualisation, Building Information
Modelling (BIM) and property management.
For further information please visit www.eleco.com
(http://www.elecosoft.com/) .
Chairman's Statement
Introduction
I am delighted to report another excellent set of results for Eleco plc. 2024
was a year of significant progress as we emerged from our SaaS transition with
a strong financial performance and a clear strategy for further growth in
2025.
Industry continues to adopt digital solutions to support cloud and AI
technology and Eleco is extremely well positioned to benefit from this trend,
with its comprehensive software portfolio covering the product lifecycle, from
cost management and scheduling, project delivery and facilities management.
Strategic Progress
The Eleco team has been strengthened with senior strategic hires which,
alongside targeted acquisitions, will underpin our growth plans for the years
ahead.
In April 2024, we acquired the Vertical Digital group of businesses for
£1.1m. We have been impressed with the knowledge and agility of our Romanian
colleagues in delivering to global customers, their information ecosystems,
and in enhancing our internal product roadmaps. After the year end, in January
2025, we acquired PEMAC in Ireland for £5.1m, expanding and strengthening our
facilities management capabilities alongside our ShireSystem existing
offering, and adding to our geographic expansive footprint.
We continue to identify and target potential M&A opportunities that fit
our strategic plans and deliver greater shareholder value.
Performance
The performance of the Group has strengthened in recent reporting periods. The
2024 year demonstrates successful strategic implementation ahead on both
revenue and profitability market expectations.
Total revenue increased by 16 per cent to £32.4m (or 17 per cent on a
constant currency basis), from £28.0m in 2023. Recurring revenues represented
77 per cent of total revenues (2023: 74 per cent of revenues). ARR (Annualised
Recurring Revenue) was up 18 per cent to £26.6m (2023: £22.6m). TRR (Total
Recurring Revenue) increased by 20 per cent to £24.9m (2023: £20.7m).
Adjusted EBITDA increased by 26 per cent to £7.7m (2023: £6.1m), Adjusted
profit before taxation was up 29 per cent to £5.4m (2023: £4.2m) and
Adjusted EPS rose by 28 per cent to 5.1 pence per share (2023: 4.0 pence per
share).
The business also continues to enjoy strong cash flows and cash generation;
even though we have been active on the acquisition front and increased
dividend payments to our loyal shareholders. We ended the year with a cash
position of £14.0m (2023: cash £10.9m), though this was before the outflow
associated with the PEMAC acquisition. The Group remains free of debt.
Employees
In line with our ambitions to scale up the Company, we continue to invest in
our people systems and in good governance. Post year end, we also welcomed, as
part of our most recent acquisition, our new colleagues from PEMAC in Ireland,
who integrated successfully into our strategic plans.
Our employees are fundamental to our success and many achievements. On behalf
of the Board, I would like to extend my sincere thanks to them all for their
continued dedication, enthusiasm and support.
Dividend
In line with the continued success of the Group and our growth in
profitability, and as a reflection of our progressive and sustainable dividend
policy, the Board is proposing a final dividend of 0.70 pence per share (2024:
0.55 pence per share), which, with the interim dividend of 0.30 pence per
share (2024: 0.25 pence per share), gives a combined total for the year of
1.00 pence per share, up 25 per cent.
Current trading and outlook
We have delivered impressive improvements in 2024 in our operational and
financial performance. We continue to deliver on our strategic plans to scale
the business to new heights, with dynamic future prospects in markets where
our customers are increasingly looking to us to accelerate their digital
journeys.
We are a high recurring revenue software business that provides great customer
satisfaction and a high level of performance predictability for our loyal and
supportive shareholders. We are well positioned for further strong results and
growth.
The future of Eleco is positive, despite global macroeconomic and geopolitical
challenges, and our business model provides for a resilient and predictable
performance as we continue to trade in line with market expectations.
Mark Castle
Non-Executive Chairman
30 April 2025
CEO Report
I am pleased to report that annual results for the full year ended 31 December
2024 are ahead of market expectations for revenue, profitability and cash, and
that we are once again reporting enhanced EPS and increasing our final
dividend to our valued shareholders.
Continued, strong momentum in Eleco's trading performance - despite the
challenging macroeconomic environment - has resulted in the completion of the
Group's SaaS financial transformation, resulting in 77 per cent (2023: 74 per
cent) of revenues now being on a recurring basis. With overhead costs covered
by these recurring revenues, shareholders now own a company that is more
resilient, and more predictable, with Annualised Recurring Revenues providing
certainty in outlook for the year ahead of £26.6m. Lastly, it is highly cash
generative, with subscriptions paid 12 months in advance. Commentators and
investors have reported that the transformation of the Group has been well
executed, of which my colleagues and I are understandably proud.
The Group enters the next phase of growth in an advantageous position and is
now intensifying efforts to attain new customers, retain existing customers
and expand customer business accounts to deliver growth in market share.
Inorganically, we continue to focus on optimising our business strengths
including targeting acquisitions. In 2024, strategic acquisitions included the
Vertical Digital group of companies in Romania and post year end, the
acquisition of PMI Software Ltd (trading as "PEMAC") in Ireland.
Trading
The Board is delighted with the positive trading performance in the year ended
31 December 2024, despite global macroeconomic and geopolitical uncertainty.
Group revenues grew to £32.4m, an increase of 16 per cent (2023: £28.0m),
and by 17 per cent in constant currency terms. Estimated organic growth was 9
per cent, excluding acquisition effects. Annualised Recurring Revenue
(recurring revenue in the last month multiplied by twelve months) to 31
December 2024 increased by 18 per cent to £26.6m (2023: £22.6m). Total
Recurring Revenue (recurring revenues across the whole 12-month period)
increased 20 per cent to £24.9m (2023: £20.7m). Recurring revenues represent
77 per cent of the total Group revenues (2023: 74 per cent) and is now at
anticipated levels following the transformation to a SaaS business model.
The revenue growth has led to noticeably higher profitability for the
business, with Adjusted Operating Profit at £5.2m, representing a 27 per cent
increase over the prior year (2023: £4.1m). Adjusted EBITDA at £7.7m is a 26
per cent improvement over the £6.1m for 2023. Adjusted profit before taxation
improved by 29 per cent to £5.4m (2023: £4.2m) with Adjusted profit after
taxation up 27 per cent to £4.2m (2023: £3.3m). Adjusted basic EPS was 5.1
pence per share, a 28 per cent increase over the prior year of 4.0 pence per
share.
In statutory reported measures, operating profit has increased by 28 per cent
to £4.1m (2023: £3.2m); EBITDA enhanced by 24 per cent to £7.2m (2023:
£5.8m); profit before taxation is up by 26 per cent to £4.3m (2023: £3.4m);
and profit after taxation has risen by 22 per cent to £3.3m (2023: £2.7m).
Overall, basic earnings per share was 4.0 pence per share, a 25 per cent
increase over 2023, which was 3.2 pence per share.
The business remains free of debt and continues to be highly cash generative.
Even with the acquisition of the Vertical Digital group of companies in
mid-April 2024 for £1.1m before acquisition expenses and increased dividend
payments to a total of £0.7m, the cash position ended the year at £14.0m
(2023: cash of £10.9m). It should be noted that post year end of 31 December
2024, net cash had reduced for the £5.1m acquisition of PEMAC before
acquisition expenses.
Geographically, UK revenues increased by 16 per cent to £15.9m (2023:
£13.0m), the equivalent of 49 per cent of Group revenues. Overseas revenues
also increased by 10 per cent to £16.5m (2023: £15.0m), the equivalent of 51
per cent of Group revenues. While Germany's revenues were impacted by
macroeconomic challenges in the Visualisation sector, this was more than made
up for by a strong performance from our Benelux and Romanian operations.
Strategy
Eleco's long-term vision focuses on ongoing enhancements of its digital
presence, improving customer engagement, and expanding its market reach
through strategic investments, technological advancements, and a clear brand
direction. This comprehensive approach aims to position Eleco as a leader in
providing digitally transformative solutions for the built environment.
Our established platform for growth underpins three strategic pillars, namely:
1. Go-to-Market
2. Technology and Innovation
3. Mergers and Acquisitions (M&A)
Go-to-Market
The Group continued to develop its sales and marketing techniques and enhanced
its resources throughout the period, utilising new methods of sales forecast
reporting, sales enablement and other growth initiatives.
Despite the macroeconomic challenges, Net Revenue Retention in 2024 was
exceptional at 109 per cent, a significant advance over the 104 per cent in
the prior year. The number of net new customers for the Group continued to
advance in 2024 over 2023.
Strong growth was driven by our Building Lifecycle operations, where our
strategy was to drive growth through working more closely with customers on
their digital transformation plans. Substantial perpetual and consulting deals
were closed in the USA and Germany in H1 2024 which were not repeated in H2
but subscription orders continued throughout the year, reaching a new high of
£28.8m ARR at 31 December 2024 and Total Recurring Revenue of £24.9m now
covering total overheads of £24.8m.
Following our US Innovation Summit in February 2024, net new customers in the
US was 36, including ENR 400 customers STO and Granite Construction. We
continued to work with The Pennsylvania Department of Transportation to
support their adoption of our Asta Vision scheduling platform. The USA is a
sizeable yet highly competitive market where we are gaining brand recognition
and increasing our sales and marketing capability to harness further
opportunities.
Technology and Innovation
The Group's solutions remain best of breed, feature rich and are therefore
valued by customers whilst being difficult to displace by new entrants to the
market. The Group reinvested 17 per cent of revenue (2023: 17 per cent) on
R&D to enhance its core product solutions while developing new solutions
and improvements for customers. During the period, Asta won the Construction
Computing Project Management Software of the Year Award for the eleventh
consecutive year and at the same awards Elecosoft was named runner-up for
Company of the Year.
The release of Asta Vision Live(TM) in early 2024 excited our customers, with
its intensely powerful capability to enable multiple planners and other
stakeholders to collaborate in real time on the same project without
compromising on functionality, security or performance.
As part of the Group's Artificial Intelligence ('AI') roadmap, AstaGPT was
released in March 2024. This Generative AI solution saves valuable time for
our customers by providing tailored, expert guidance and intuitive access to
decades of our high-quality data documentation. Queries have reduced the time
both customers and our employees spend on support desk tasks, allowing for
greater upskilling opportunities. It was pleasing to see Asta GPT shortlisted
for the Innovation of the Year in 2024 at the Digital Construction Awards.
We expect that the increased use of AI will provide improved analysis and
productivity gains for our customers, but it is not at the stage of replacing
skilled operators. Internal AI projects continue to be developed by the Group
to reduce time on tendering, data migration, customer onboarding and code
testing.
Ongoing innovation initiatives are focused on data accessibility and
visibility, such as cloud collaboration solutions, mobile applications,
reporting and analytics.
Mergers and Acquisitions
The Group's acquisition strategy aims, through evaluated targets, to enhance
the value of the Group and expand its capabilities and profitability. As part
of this strategy, Eleco will actively pursue opportunities where acquisitions
complement or extend its solutions or increase the customer dimensions,
sometimes with the benefit of an added geographical footprint.
In April 2024, Eleco acquired the Vertical Digital group of companies for an
initial consideration of €1.3m. With its bespoke R&D development,
consulting, upskilling and appraisal services, it has enhanced our technical
capabilities, talent pool, customer centricity and R&D scalability and
agility. We have drawn on their experience and expertise across many European
and multinational end-customers including Lufthansa Technik, PwC, VW Financial
Services, Deloitte and Zoopla and have already seen substantial cost savings
by utilising Vertical Digital's capability internally to the Group.
In January 2025, post year end, we announced the acquisition of Ireland-based
PEMAC for an initial consideration of €6.0m (circa £5.1m), funded from our
internal cash resources.
Located in Cork and Dublin, PEMAC is a recognised leader in providing SaaS
Computerised Maintenance and Management Software ("CMMS") and specialist
services in the market. Used by over 100 blue-chip international manufacturing
companies, PEMAC has developed a strong reputation for its ability to support
clients in highly regulated sectors, including life sciences and healthcare,
through its robust software capabilities, tailored to meet industry-specific
regulatory requirements.
The acquisition of PEMAC highlights Eleco's commitment to delivering
innovative, customer-focused solutions in manufacturing, regulated industries.
PEMAC's expertise and proven capabilities will complement the Group's existing
ShireSystem CMMS, enhancing the overall offering to support customers'
evolving needs. PEMAC and ShireSystem are committed to maintaining the
exceptional standards of service and support their customers rely on. Over
time, it is intended that both organisations will collaborate to deliver
technological advancements, ensuring their customers benefit from enhanced
solutions.
People and Culture
We are proud of our people and culture at Eleco and we strive to foster an
inclusive, high-performance environment where everyone feels valued and
empowered to contribute to the collective success of the Group. A
responsibility to our supportive shareholders, valued customers, and the long
history of business success at Eleco is something we feel profoundly. This
commitment results in a high degree of care and diligence by the Board and
management in overseeing the business.
We made a number of strategic appointments in 2024, with James Pellatt joining
the Board as a Non-Executive Director, and Alex Gheboianu, co-founder of
Vertical Digital, becoming Eleco's Chief Technology Officer. Richard Fletcher
was appointed Chief Revenue Officer in the latter part of the year. We are
already experiencing the benefit of their skills and expertise, and I am
delighted that Eleco continues to attract and retain people of such high
quality, in these roles as well as in all other areas of our business.
In recent years, we have published an internal 'Year in Review' magazine, to
highlight and celebrate all of the excellent activities and initiatives
happening around the Group; I am extremely proud of what we are achieving
together.
Systems
We understand that secure and reliable systems are crucial for scaling and
meeting our growth ambitions. During 2024, we successfully implemented
NetSuite ERP in the UK, the US, The Netherlands, at one subsidiary in Germany
and in Australia. The phased implementation has continued across the remaining
regions in 2025, together with additional system enhancements and
functionality into 2026.
ESG Credentials
We have advanced our environmental, social and governance credentials,
demonstrating the seriousness of our intention to remain focused on
sustainability throughout Eleco's growth, to bring value to all stakeholders,
and to be an enabler for our customers. During the period, we utilised a new
ESG advisor to support us in these efforts. Full details of our work in
relation to ESG can be viewed in our Sustainability Report and ESG Committee
Report.
Examples of positive contributions to society include the provision of
software products to some 7,000 educational institutions, and an increase in
the percentage of employees utilising their allocated volunteering day across
all regions and using at least one day of self-development/training.
Building on Elecosoft UK and BestOutcome Ltd's accreditation with the
international standard ISO 27001, which recognises that companies are
following information and data security best practices, and that all of their
IT systems either meet or exceed the latest industry standards, Elecosoft
Sweden and PEMAC are also fully engaged in this process.
Our Markets
In every field of endeavour, technology drives progress. Building technology
continues to enhance efficiency, productivity, safety, and quality. While
construction and property sectors are often criticised for slow technology
adoption, they face increasingly complex sustainability, legal, and regulatory
demands. These pressures create challenges for our customers, pushing them to
not only keep pace with technological change but also manage more complex
projects, deliver sustainably, and ensure long term operational efficiency,
while meeting higher environmental and social standards.
Eleco operates across markets shaped by macroeconomic and societal trends
including population growth, urbanisation, digitalisation, and regulation. By
2050, the global population is expected to reach 9.7bn, with 6.5bn in cities,
and urban areas growing by 200k people daily-driving demand for sustainable
urban construction.
Margins remain under pressure in this cost-intensive, multi-disciplinary
industry, where projects are long, complex, and increasingly regulated. The
need for higher environmental standards continues to rise globally.
The market potential for Eleco is significant. FMI research shows a US$1.9bn
opportunity in Construction Project Management software, US$3.4bn in
Maintenance and Facility Management, and more broadly US$6bn in BIM software
solutions, all growing at high single to mid double-digit rates.
Critical to the success of any and every project is the management of time,
cost, and resources from early stages through to construction and operations,
and that is an area of focus for Eleco. And of course, our best-of-breed
software extends beyond project and cost management to our BIM, data and
visualisation offerings.
The Group is seeking to capitalise on the industry's digitalisation inflection
point, with data as the common thread across all departments of what are
increasingly multinational clients. This provides opportunities to sell more
capabilities across organisations and, excitingly, fulfil the need for joined
up thinking from our customers. To meet this demand, Vertical Digital and our
consulting services offer bespoke solutions that embed Eleco's software at the
centre of our customer's digital ecosystems, driving integrated, data-led
workflows.
Summary and Outlook
The digital transformation of companies working in the built environment
remains a considerable and exciting opportunity for Eleco, and we commit in
2025 to delivering growth through the execution of our refined strategy:
attaining new customers, retaining existing customers and expanding customer
relationships, building on the revenue and operational gearing as well as
seeking value enhancing acquisitions that complement the Group.
The results for 2024 have been excellent, and I would like to take this
opportunity to thank our employees for their contribution and for the passion,
dedication and creativity that they bring to their roles. I would also like to
acknowledge our loyal customer base for the inspiration and challenge they
provide us with every day to ensure that we are playing at the very top of our
game.
The Board of Eleco remains confident in the Group's growth trajectory and
expects the Company to continue to perform in line with full-year
expectations.
Jonathan Hunter
Chief Executive Officer
30 April 2025
CFO Review
Introduction and overview
2024 was a year of superior financial performance for Eleco plc Group, in
which we reported high growth in revenues, cash and profitability, all ahead
of market expectations. We are now a high recurring revenue business, with
strong cash generation and a resilient business model in an otherwise
increasingly uncertain world.
Shareholders now have revenues and earnings that are more sustainable,
predictable and resilient. Matched with this forward visibility, operational
gearing, where there is more than proportionate growth in profit from
increasing revenues over given fixed costs, has meaningfully advanced in 2024
on its onward march.
Eleco is a trusted, proven, customer-centric interplay of best-of-breed,
innovative software solutions provider for the built environment. Playing to
its strengths in the European theatre, Eleco is also expanding into other
geographies including the USA and Australasia. The built environment is
utilising increased digitalisation of workflows, technology ecosystems and the
joining up of data. Eleco is front and centre in catering to these market
trends, providing meaningful end-to-end solutions for the whole building
lifecycle. The core drivers behind this inexorable net growth in the verticals
we service are well known to all: population growth; urbanisation; regulatory
and compliance requirements; and the increased demands, complexities and
pressures of projects.
Revenue and gross margins
I am delighted to report a 16 per cent year-on-year increase in overall
revenues to £32.4m (2023: £28.0m), ahead of market expectations. This £4.4m
breakout increase above £30.0m demonstrates successful execution of our
focused strategy over the last three years.
Taking into account currency movements being adverse in general, the increase
in revenue would have been 17 per cent or £0.4m increase in revenue in
constant currency terms, and excluding acquisition effects 9 per cent, though
to be clear acquisitions made are an ongoing part of the business going
forward.
Geographically speaking, the biggest revenue components of the Group remain
the UK and Republic of Ireland at 49 per cent (including the contribution of a
full year of BestOutcome Limited); Scandinavia at 18 per cent; 'Rest of
Europe' at 16 per cent, incorporating the Benelux and Romanian businesses and
other non-separated European jurisdictions; and Germany at 10 per cent (where
we have two businesses). Our German B2B2C Visualisation business continues to
be more closely linked to the recessionary nature of the German economy and
its environs. Group wide, as a well-diversified business blessed with
thousands of customers and a portfolio of end-to-end product solutions, we
continue to have no material customer concentration within our revenue.
To assist disclosure to our investors we also report by revenue type, split
between perpetual licences, recurring revenues, and services. As expected, as
we exit the SaaS financial transition, perpetual licence sales at £1.0m in
2024 were once again lower than the previous year (2023: £1.5m).
Annualised Recurring Revenues (ARR) and Total Recurring Revenues (TRR) remain
key metrics for the Group, signalling our substantive progress in building a
more predictable and sustainable business model. ARR is the exit rate of the
year, calculated by multiplying recurring revenue for the month of December by
twelve. ARR is often taken as a reliable, forward-looking indicator for
businesses by investors.
ARR, as at 31 December 2024, increased by 18 per cent (or £4.0m) to £26.6m
(2023: £22.6m). TRR, reflecting recurring revenues across the whole year, was
up 20 per cent to £24.9m (2023: £20.7m). Testament to the new business
operating model, these recurring revenues represent 77 per cent (or 79 per
cent before the acquisition of Vertical Digital) of Group revenues (2023: 74
per cent of Group revenues).
Services income, more discretionary in nature and the one part of the business
slightly more impacted by macroeconomic pressures, did increase in headline
terms at £6.4m (2023: £5.7m), though £0.9m of this variance stemmed from
the revenue contribution of the Vertical Digital group of companies from April
2024 onwards. As such, underlying revenue from services continues to be
challenged.
The Group has higher gross margins than a typical software or technology
business, and this in many ways demonstrates the superb value and level of
customer-centricity we provide. In recent years we have further enhanced our
margins by, for example, divesting of the underperforming Arcon (Eleco
Software GmbH) architectural CAD business in 2022; incorporating LMS training
in SaaS software terms, and the decision to End-Of-Life three Swedish-based
product lines in 2023. The Group gross margin in 2024 was 89.3 per cent (2023:
89.8 per cent). Had we not acquired the Vertical Digital group of companies
for strategic R&D purposes, being a software development consulting house
rather than a SaaS software provider, the gross margin would have increased to
91.0 per cent in 2024.
I am pleased to report that the level of deferred income, revenues carried
into the future, as at 31 December 2024, increased by 23 per cent to £12.1m
(2023: £9.8m).
Operating expenses and R&D investment
Total selling and administrative expenses increased by £3.0m, or 14 per cent,
to £24.9m in 2024 from £21.9m in 2023.
The 2024 selling and administrative expenses include one-off advisor fees and
stamp duties relating to the Vertical Digital acquisition and in relation to
the due diligence for the PEMAC acquisition post year end of £0.4m (2023:
£0.3m).
Also within this total spend, depreciation and amortisation of intangible
assets was ahead of the previous year at £3.2m (2023: £2.4m). This reflected
increased investment in innovative development, internal systems and our
M&A activity.
Outside of the above commentary, the main operating costs at £21.2m for 2024
was ahead by 11 per cent from £19.1m in 2023. However, when you remove the
addition of the cost bases of approximately three quarters of a year's
overheads from the inclusion of the Vertical Digital group of companies and
the additional six months of overheads from the inclusion for BestOutcome,
totalling £1.3m, then the movement in underlying selling and administrative
expenses was £0.8m or 4.2 per cent between 2024 and 2023, in line with
inflationary and headcount releases in line with the increasing scale and
complexity of the Group.
Operating expenses included negative FX of £0.1m, consistent with 2023
(negative FX of £0.1m). Share option payment costs were lower at £0.1m
(2023: £0.2m) year on year.
A key benefit of being a software company is the ease in which software can be
deployed, thus reducing time-to-market returns. The Group invests in R&D
to remain at the forefront of innovation and enhance its customer offer. Total
software product research and development spend (before amortisation)
increased to £5.4m for the year (2023: £4.8m) of which £3.0m (2023: £2.3m)
was capitalised. Total R&D investment remained relatively in proportion
with Group revenues: being 17 per cent of revenue (2023: 17 per cent).
Profitability
Software businesses like ours are fortunate to be able to scale up revenues
without experiencing constraints in inventory build. This creates agility in
meeting customer demands, with relatively short time to market.
Increased revenues, high gross profits, and a less than proportionate increase
in overheads, yields improved levels of overall profitability over prior
years. We see in the 2024 results this operational leverage beginning to flow
through in both Adjusted and Statutory reported measures and anticipate this
further improving as percentage revenues in future years.
Operating profit increased by 28 per cent to £4.1m (2023: £3.2m).
EBITDA increased by 24 per cent to £7.2m (2023: £5.8m), with Adjusted EBITDA
up 26 per cent to £7.7m (2023: £6.1m). A reconciliation between Adjusted
EBITDA (adjusting earnings for interest, taxation, depreciation, amortisation
and impairment of assets) and adjusted operating profit is provided in note 8.
Net finance income of £0.2m (2023: £0.1m) reflects an improved interest rate
environment that has continued post year end.
Group Adjusted profit before tax was up 29 per cent to £5.4m (2023: £4.2m)
and reported profit before tax increased by 26 per cent to £4.3m (2023:
£3.4m).
The Group tax charge in the year was £1.0m (2023: £0.8m). This increased due
to the higher underlying profit both in UK and overseas jurisdictions; a
higher statutory rate for the UK businesses being 25 per cent (2023: 23.5 per
cent); and slightly higher current and deferred tax credit adjustments in
respect of previous years. The underlying effective rate of 22.4 per cent was
very similar to the prior year (2023: 22.3 per cent).
Profit after tax was therefore 22 per cent ahead at £3.3m (2023: £2.7m) and
Adjusted profit after taxation increased by 27 per cent to £4.2m (2023:
£3.3m). Profit after taxation divided by the number of issued shares gives
the key earning per share metrics. I am delighted to report a basic earnings
per share figure of 4.0 pence per share (2023: 3.2 pence per share), equating
to a 25 per cent increase in this metric for our shareholders.
Indeed, adjusted basic earnings per share was ahead further at 5.1 pence per
share, equating to a 28 per cent increase (2023: 4.0 pence per share). A
reconciliation of diluted and adjusted basic earnings per share is provided in
note 8.
Operating cash, cash and liquidity
A feature of Eleco is its strong cash generation. As discussed earlier, we
provide great value to our loyal and valuable customers. This is evident in
our high gross margins, and high levels of recurring revenues (being both
predictable and with excellent retention rates driven by customer
satisfaction), we do not need to scale using inventory build, and payment for
software by our loyal customers is typically timely.
This cash generation is enviable to our competitors, and allows us to: have a
more resilient and robust business model in darker macroeconomic times; fund
M&A where possible from internal resources; and fund a progressive,
sustainable and attractive dividend policy.
The Group's cash position, as at 31 December 2024, was £14.0m (2023:
£10.9m), despite the increase in dividend amounts and the payment of £1.1m
plus advisor costs for the Vertical Digital group of companies. It is
important to note that this balance after the year end did reduce by £5.1m in
relation to the acquisition of the PEMAC business. The Group remains free of
debt.
Cash generated from operations before working capital was £7.3m (2023:
£5.8m) following on from higher profits. Cash generated from operations after
working capital movements was also very positive at £10.7m (2023: £6.4m).
Net tax cash paid in 2024 in Group jurisdictions amounted to £1.7m (2023:
£0.5m) with scaling up taking us into new prepayment regimes.
Capital expenditure on intangible assets, principally comprising the
capitalisation of software product development costs, was £3.3m (2023:
£2.4m). Capital expenditure on property, plant and equipment at £0.1m was
broadly similar to the prior year (2023: £0.1m).
The acquisition of the Vertical Digital group of companies, together with
associated acquisition costs net of cash acquired, gave rise to an outflow in
investing activities of £1.3m. The prior year showed a similar natured net
outflow of £3.8m for the acquisition of BestOutcome Limited in July 2023.
Free cash flow, taking cash generated from operations less the intangibles and
tangibles additions, and more stringently defined as net of finance and
taxation, increased 66 per cent to £6.3m (2023: £3.8m). This represents 156
per cent of operating profits (2023: 119 per cent).
Consideration paid on acquisitions, lease liabilities, equity dividends and
any issue of shares, resulted in net outflows of £1.0m (2023: net outflow of
£1.6m). Included within this were dividends paid in 2024, pertaining to the
2024 interim dividend and 2023 final and special dividends, amounting to
£0.7m (2023: £1.1m).
The net overall inflow of cash in the year was therefore £3.4m (2023: an
outflow of £1.5m).
Dividends
The Company has an appropriate progressive and sustainable dividend policy,
not something that many other technology or AIM-related investments provide to
their shareholders. The growth in our business and our unencumbered and robust
cash status, allows us to do this alongside investing in the Company to
provide both organic and inorganic growth.
We are grateful to all our shareholders and thank them for their support as
the dimensions of the business have changed over the last three years and
more. The Board has therefore proposed a final dividend of 0.70 pence per
share, a 27 per cent increase (2023: 0.55 pence per share), which, with the
interim dividend of 0.30 pence per share, gives a total for the year of 1.00
pence per share (2023: 0.80 pence). The proposed final dividend will be paid
on 27 June 2025 to shareholders on the share register as at 13 June 2025 with
an associated ex-dividend date of 12 June 2025.
Summary
2024 has been a further transformational year, where the performance of the
business has stepped up a gear. But we do not and will not stop there. We
continue to see a dynamic and bright future for the Eleco Group where our
best-of-breed software and services are embraced by customers looking to solve
their real-world challenges and gain certainty over their productivity, impact
on the environment, cost profile, and project delivery.
We create true value, not only through innovation but also through our people.
All our dedicated professionals, with their experience and skills in finding
solutions, building customer relationships and understanding their needs, are
an asset not necessarily measurable or identifiable on our Group balance
sheet.
As we continue to successfully execute on our strategy at pace, we remain
focused on all our stakeholders and delivering continuing shareholder value
for our owner investors.
Neil Pritchard
Chief Financial Officer
30 April 2025
Consolidated Income Statement
For the year ended 31 December 2024
2024 2023
Continuing operations £'000 £'000
Revenue 32,394 28,006
Cost of sales (3,482) (2,855)
Gross profit 28,912 25,151
Depreciation and amortisation of intangible assets (3,183) (2,404)
Acquisition related expenses and stamp duties (432) (279)
Share-based payments (60) (190)
Other selling and administrative expenses (21,181) (19,075)
Selling and administrative expenses (24,856) (21,948)
Operating profit 4,056 3,203
Gain on business disposal - 152
Finance expense (72) (65)
Finance income 310 127
Profit before taxation 4,294 3,417
Taxation (960) (762)
Profit after taxation for the financial year 3,334 2,655
Attributable to:
Equity holders of the parent 3,334 2,655
Earnings per share (pence per share)
Basic earnings per share 4.0p 3.2p
Diluted earnings per share 4.0p 3.2p
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
2024 2023
£'000 £'000
Profit for the year 3,334 2,655
Other comprehensive expense:
Items that will be reclassified subsequently to profit or loss: (196) (124)
Translation differences on foreign operations
Other comprehensive expense net of taxation (196) (124)
Total comprehensive income for the year 3,138 2,531
Attributable to:
Equity holders of the parent 3,138 2,531
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
Share Share Merger Translation Share options reserve Employee share ownership trust Retained
capital premium reserve reserve earnings Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2023 832 2,406 1,002 (385) 553 (358) 21,792 25,842
Dividends - - - - - - (1,094) (1,094)
Share-based payments - - - - 190 - - 190
Deferred tax on intrinsic value of vested options - - - - (122) - - (122)
Issue of share capital - 12 - - - - - 12
Transactions with owners - 12 - - 68 - (1,094) (1,014)
Profit for the year - - - - - - 2,655 2,655
Other comprehensive expense:
Exchange differences on translation of net investments in foreign operations - - - (124) - - - (124)
Total comprehensive (expense)/income for the year - - - (124) - - 2,655 2,531
At 31 December 2023 832 2,418 1,002 (509) 621 (358) 23,353 27,359
Dividends - - - - - - (665) (665)
Share-based payments - - - - 41 - 19 60
Deferred tax on intrinsic value of vested options - - - - 229 - - 229
Issue of share capital 1 50 - - - - - 51
Transactions with owners 1 50 - - 270 - (646) (325)
Profit for the year - - - - - - 3,334 3,334
Other comprehensive expense:
Exchange differences on translation of net investments in foreign operations - - - (196) - - - (196)
Total comprehensive (expense)/income for the year - - - (196) -- - 3,334 3,138
At 31 December 2024 833 2,468 1,002 (705) 891 (358) 26,041 30,172
Consolidated Balance Sheet
At 31 December 2024
2024 2023
£'000 £'000
Non-current assets 18,852 18,544
Goodwill
Other intangible assets 10,333 9,000
Property, plant and equipment 629 766
Right-of-Use assets 1,290 1,274
Deferred tax assets 549 111
Total non-current assets 31,653 29,695
Current assets
Inventories 4 113
Trade and other receivables 5,434 5,033
Current tax assets 746 232
Cash and cash equivalents 13,975 10,903
Total current assets 20,159 16,281
Total assets 51,812 45,976
Current liabilities
Lease liabilities (578) (542)
Trade and other payables (2,269) (1,904)
Accruals and deferred income (15,264) (12,574)
Current tax liabilities (65) (253)
Total current liabilities (18,176) (15,273)
Non-current liabilities
Lease liabilities (882) (918)
Deferred tax liabilities (2,556) (2,400)
Provisions (26) (26)
Total non-current liabilities (3,464) (3,344)
Total liabilities (21,640) (18,617)
Net assets 30,172 27,359
Equity
Share capital 833 832
Share premium 2,468 2,418
Merger reserve 1,002 1,002
Translation reserve (705) (509)
Share options reserve 891 621
Employee share ownership trust (358) (358)
Retained earnings 26,041 23,353
Equity attributable to shareholders of the parent 30,172 27,359
Consolidated Statement of Cash Flows
For the year ended 31 December 2024
2024 2023
£'000 £'000
Cash flows from operating activities 3,334 2,655
Profit after taxation for the year
Income tax expense 960 762
Amortisation of intangible assets 2,492 1,774
Depreciation charge 691 630
Profit on sale of property, plant and equipment 6 (13)
Finance expense 72 65
Finance income (310) (127)
Share-based payments expense 60 190
Gain on business disposal - (152)
Cash generated from operations before working capital movements 7,305 5,784
Increase in trade and other receivables (206) (780)
Decrease /(increase) in inventories and work in progress 109 (70)
Increase in trade and other payables, accruals and deferred income 3,468 1,461
Cash generated from operations 10,676 6,395
Net taxation paid (1,716) (501)
Net cash inflow from operating activities 8,960 5,894
Investing activities (2,958) (2,256)
Investment in development expenditure
Investment in other intangible assets (271) (127)
Purchase of property, plant and equipment (85) (133)
Acquisition of subsidiary undertakings net of cash acquired (1,252) (3,838)
Net proceeds on disposal of subsidiary undertakings - 510
Proceeds from sale of property, plant and equipment 2 37
Finance income 310 127
Net cash outflow from investing activities (4,254) (5,680)
Financing activities
Finance expense (72) (65)
Repayments of principal of lease liabilities (650) (595)
Equity dividends paid (665) (1,094)
Issue of share capital 50 12
Net cash outflow from financing activities (1,337) (1,742)
Net increase/(decrease) in cash and cash equivalents 3,369 (1,528)
Cash and cash equivalents at 1 January 10,903 12,538
Exchange losses on cash and cash equivalents (297) (107)
Cash and cash equivalents at 31 December 13,975 10,903
1. General Information
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 Dawson House,
5 Jewry Street, London EC3N 2EX, United Kingdom and the principal place of
business is Dawson House, 5 Jewry Street, London EC3N 2EX.
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 2024 and are unchanged from those previously
disclosed in the Group's Annual Report and Accounts for the year ended 31
December 2023.
Statutory accounts for 2023 have been delivered to the Registrar of Companies
and those for 2024 will be delivered in due course. The Company's auditors RSM
UK LLP, have reported on the 2024 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 2023 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.
The Annual Report and Accounts for the year ended 31 December 2024 will be
available on the Company's website https://eleco.com/results/latest-results
The information in this results announcement was approved by the Board on 30
April 2025.
2. Segment reporting and revenue
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 makers have 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.
During the year, the Executive Directors reviewed the three revenue streams,
having previously reviewed these as one. 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.
Revenue
Revenue from continuing operations disclosed in the income statement is
analysed as follows:
2024 2023
£'000 £'000
Perpetual licence revenue 1,013 1,532
Recurring maintenance, support and subscription revenue 24,933 20,732
Services revenue 6,448 5,742
Total revenue 32,394 28,006
Revenue is recognised for each category as follows:
• Perpetual licence revenue - recognised at the point of transfer
(delivery) of the licence to a
customer.
• Recurring revenue: SaaS, maintenance, support, subscriptions and
hosting - as these services are provided over the term of the contract,
revenue is recognised over the life of the contract.
• Services income revenue - recognised on delivery of the service.
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:
2024 2023
£'000 £'000
UK 15,891 13,034
Scandinavia 5,830 5,880
Germany 3,058 3,950
USA 1,642 1,184
Rest of Europe 5,217 3,364
Rest of World 756 594
32,394 28,006
Revenue by product group represents continuing operations revenue from
external customers.
Revenue by product group is as follows:
2024 2023
£'000 £'000
Software for:
Building Lifecycle 24,052 19,824
CAD and Visualisation 6,499 6,775
Other - third party software 1,843 1,407
32,394 28,006
3. Taxation
Taxation on profit on ordinary activities
The tax charge in the income statement from continuing operations is as
follows:
2024 2023
£'000 £'000
Current tax:
UK corporation tax on profits of the year 808 508
Tax adjustments in respect of previous years (76) (54)
732 454
Foreign tax 328 282
Tax adjustments in respect of previous years (57) 23
Total current tax 1,003 759
Deferred tax:
Origination and reversal of temporary differences (42) (80)
Tax adjustments in respect of previous years (1) 83
Total deferred tax (43) 3
Tax charge in the consolidated income statement 960 762
Income tax for the UK has been calculated at the weighted average rate of UK
corporation tax of 25 per cent (2023: 23.5 per cent) on the estimated
assessable profit for the period. Taxation for foreign companies is calculated
at the rates prevailing in the relevant jurisdictions.
4. Basic and diluted earnings per share
2024 2023
Net profit attributable to shareholders Weighted average number of Earnings Net profit attributable to shareholders Weighted average number of Earnings
shares per share shares per share
Ordinary Shares £'000 (millions) (pence) £'000 (millions) (pence)
Basic earnings per share 3,334 82.3 4.0 2,655 82.3 3.2
Diluted earnings per share 3,334 83.2 4.0 2,655 83.7 3.2
Adjusted basic earnings per share 4,172 82.3 5.1 3,272 82.3 4.0
In determining the diluted earnings per share the dilutive impact of share
options on weighted average number of shares was included.
5. Dividends
Dividends declared and to be paid
The Directors have recommended a final dividend of 0.70 pence per ordinary
share (2023: final dividend of 0.55 pence per ordinary share). The dividend is
subject to approval by shareholders at the AGM and has not been included as a
liability in these financial statements.
Dividends paid in the year
Dividends paid in the year were 0.85 pence per ordinary share (2023: 1.33
pence per ordinary share). Cash dividends of £700,000 (2023: £1,094,000)
were paid during the year. Unclaimed dividends of £35,000 were returned to
the Company during the year.
2024 2023 2024 2023
Ordinary Shares pence per share pence per share £'000 £'000
Declared and paid during the year
Interim - Full Year 2024 0.30 0.25 247 206
Special - Full Year 2022 - 0.58 - 477
Final - Full Year 2023 0.55 0.50 453 411
0.85 1.33 700 1,094
6. Acquisition of Vertical Digital group of companies
On 16 April 2024, the Group, through its wholly owned subsidiary Elecosoft
Limited, acquired 100 per cent of the share capital of the Vertical Digital
group of companies, consisting of Vertical Digital SRL and Sons of Coding SRL
(the 'Acquisition') for a consideration of €1.3m (£1.1m). The Acquisition's
completion date was 16 April 2024. The Group funded the Acquisition
exclusively by utilisation of its existing internal cash resources for this
initial consideration. Cash and cash equivalents within the Acquisition
entities at the acquisition date totaled £0.1m and the Acquisition had no
debt.
Vertical Digital has a proven track record, in providing agile and innovative
software development, technical consulting and upskilling solutions across
many European and multinational end-customers including Lufthansa Technik,
PwC, VW Financial Services, Deloitte and Zoopla.
The Acquisition adds critical capabilities to Eleco, including the ability to
service and scale its customers by connecting systems and providing technical
consulting which will support their digital transformation journeys, thus
increasing the Group's product breadth and focus on customer centricity.
The Acquisition also provides for elastic augmentation of our internal
research and development capacity which will further improve product time to
value.
The transaction terms provide for a cumulative potential deferred and
contingent outflow ('Earn Out') of up to a €250,000 maximum for financial
years ending 31 December 2024 and 31 December 2025, based on the local senior
management (the former owners) attaining specific performance targets set by
Eleco plc in those years. These specific performance targets are linked to
achievement of revenue over those two financial years, subject to minimum
gross margin and net margin thresholds. The Earn Out being treated as
remuneration.
For the above explanatory reasons, including the ability to repurpose the
acquisition towards our internal research and development roadmap, combined
with the anticipated profitability of the Acquisition in other Group markets,
synergies arising, plus the ability to hire the assembled workforce of the
Acquisition (including the founders and management team), the Group
understandably paid a premium over the acquisition net assets, giving rise,
aside from the value of customer relationships, to goodwill. All intangible
assets, in accordance with IFRS3 Business Combinations, were recognised at
their provisional fair values on acquisition date, with the residual excess
over net assets being recognised as customer relationships, order backlog and
goodwill. Intangibles arising from the acquisition have been independently
valued by professional advisors.
The following table summarises the consideration and fair values of assets
acquired and liabilities assumed at the date of acquisition:
£'000
Intangible fixed assets:
Customer relationships 459
Order backlog 18
Property, plant and equipment 49
Trade receivables and prepayments 196
Cash and cash equivalents 55
Trade and other payables (91)
Corporation tax (11)
Net assets acquired 675
Goodwill 435
Acquisition cost 1,110
There are no non-controlling interests in relation to the Acquisition.
Receivables at the acquisition date are expected to be collected in accordance
with the gross contractual amounts.
The review of the fair value of assets and liabilities acquired will be
completed within twelve months of the acquisition date. The acquisition cost
was satisfied by:
£'000
Cash 1,110
Share consideration -
Total consideration 1,110
The net cash outflow arising on acquisition was:
£'000
Cash consideration paid 1,110
Acquisition related costs 197
Cash and cash equivalents within the Vertical Digital business on acquisition (55)
Total net cash outflow on acquisition 1,252
Other costs relating to the acquisition have not been included in the
consideration cost. Directly attributable acquisition costs include external
legal and accounting costs incurred in compiling the acquisition legal
contracts and the performance of due diligence activity and the fair value
exercise, together with stamp duty, total £0.2m. These costs have been
charged in selling and administrative expenses in the consolidated income
statement.
The Vertical Digital group of companies, in common with other Group companies,
has a 31 December calendar year end. In the year to 31 December 2023, before
Eleco plc Group control, Vertical Digital delivered revenue of €1.2m
(c.£1.0m) and a net profit before taxation of €0.3m (c.£0.2m) based on
unaudited figures and Vertical Digital's accounting policies.
Had the acquisition taken place from the start of the Group's financial year
(from 1 January 2024) and based on figures and accounting policies prior to
Eleco plc Group control, management estimate that Acquisition would have
contributed revenue of £1.2m and loss before taxation of £0.1m and an
Adjusted profit before taxation (Adjusted for acquisition costs borne by the
Company) of £nil to the Group results in the year.
Vertical Digital contributed revenue of £0.9m, net profit before taxation of
£nil since joining the Eleco plc Group in mid-April 2024.
7. Post-balance sheet event
On 14 January 2025, after the 2024 year end, the Group, through its wholly
owned subsidiary Elecosoft Limited, acquired 100 per cent of the share capital
of PMI Software Limited ("PEMAC") (the 'Acquisition') for a consideration of
€6.0m (circa £5.1m). The Acquisition's completion date was therefore 14
January 2025. The Group funded the Acquisition exclusively by utilisation of
its existing internal cash resources for this initial consideration. Cash and
cash equivalents within the Acquisition entity at the acquisition date totaled
£1.0m and the Acquisition has no debt.
PEMAC, located in Cork and Dublin, Ireland, is a recognised leader in
providing SaaS Computerised Maintenance and Management Software ("CMMS") and
specialist services in the market, used by over 100 blue-chip international
manufacturing companies. PEMAC has developed a strong reputation for its
ability to support clients in highly regulated sectors, including life
sciences and healthcare, through its robust software capabilities tailored to
meet industry-specific regulatory requirements.
The acquisition of PEMAC by Eleco plc highlights Eleco's shared commitment to
delivering innovative, customer-focused solutions in manufacturing, regulated
industries. PEMAC's expertise and proven capabilities will complement the
Group's existing ShireSystem Computerised Maintenance Management Software
("CMMS"), enhancing the overall offering to support customers' evolving needs.
PEMAC and ShireSystem are committed to maintaining the exceptional standards
of service and support their customers rely on. Over time, it is intended that
both organisations will collaborate to deliver technological advancements,
ensuring their customers benefit from enhanced solutions.
The transaction terms also provide for additional earn-out consideration of up
to €2.4m payable in two tranches in 2026 and 2027, subject to the PEMAC
business attaining performance targets agreed with Eleco plc during the
financial years ending 31 December 2025 and 31 December 2026. These specific
performance targets are linked to achievement of revenue over those two
financial years, subject to minimum gross margin thresholds. There are no
non-controlling interests in relation to the Acquisition.
PEMAC, in common with other Group companies, has a 31 December calendar year
end. In the year to 31 December 2024, before Eleco plc Group control, PEMAC
delivered revenue of €2.6m (c.£2.2m) and a net profit before taxation of
€nil (c.£nil) based on unaudited figures and PEMAC's accounting policies.
Had the acquisition taken place from the start of the Group's financial year
(from 1 January 2024) and based on figures and accounting policies prior to
Eleco plc Group control, management estimate the contribution towards Group
revenues would be of a similar quanta.
Given the proximity of the acquisition to the annual report and accounts being
published, and its relatively immaterial size of the acquisition relative to
the Group's scale, the Group is therefore unable at this stage to reasonably
estimate and determine the fair value of net assets acquired and resulting
goodwill and other associated intangibles under IFRS 3 Business Combinations
at the date of this report. The Group will work through the fair value
exercise under IFRS 3 and provisional disclosures will be reported in the
Group's 2025 interim results.
In accordance with the provisions of IAS 10 Events After the Reporting Period,
the Directors consider that the acquisition is a non-adjusting post balance
sheet event, meaning an event after the reporting period end that is
indicative of a condition that arose after the end of the reporting period,
and therefore the full year 2024 numbers prior to this acquisition have not
been adjusted. An estimate of its financial effect is described above.
8. Additional performance measures
The Group uses adjusted figures, which are not defined by generally accepted
accounting principles ("GAAP") such as UK-IAS. Adjusted figures and underlying
growth rates are presented as additional performance measures used by
management, as they provide additional relevant information in assessing the
Group's performance, position and cash flows. In addition to the standard
measures in the financial statements, the measures enable investors to track
the core operational performance of the Group, for example by separating out
items of income or expenditure relating to acquisitions, disposals and capital
items. For example, one-off acquisition expenses due to advisor fees would not
ordinarily be incurred in normal trading. Amortisation will vary considerably
where the Group has to recognise separable purchased intangibles and
amortisation on those intangibles will therefore fluctuate. Management uses
these financial measures, along with UK-IAS financial measures, in evaluating
the operating performance of the Group.
Year ended 31 December Year ended 31 December
2024 2023
£'000 £'000
Operating profit 4,056 3,203
Gain on business disposal - 152
Amortisation of intangible assets 2,492 1,774
Depreciation charge 691 630
EBITDA 7,239 5,759
EBITDA 7,239 5,759
Gain on business disposal - (152)
Acquisition related expenses 432 279
Share-based payments 60 190
Adjusted EBITDA 7,731 6,076
Operating profit 4,056 3,203
Acquisition related expenses 432 279
Amortisation of acquired intangible assets 626 474
Share-based payments 60 190
Adjusted operating profit 5,174 4,146
Profit before taxation 4,294 3,417
Gain on business disposal - (152)
Acquisition related expenses 432 279
Amortisation of acquired intangible assets 626 474
Share-based payments 60 190
Adjusted profit before taxation 5,412 4,208
Taxation charge (960) (762)
Tax effect of gain on business disposal - 48
Tax effect of acquisition related expenses (108) (66)
Tax effect of amortisation of acquired intangible assets (157) (111)
Tax effect of share-based payments (15) (45)
Adjusted taxation charge (1,240) (936)
Profit after taxation 3,334 2,655
Gain on business disposal - (104)
Acquisition related expenses 324 213
Amortisation of acquired intangible assets 469 363
Share-based payments 45 145
Adjusted profit after taxation 4,172 3,272
Adjusted profit after taxation 4,172 3,272
Weighted average number of shares 82.3 82.3
Adjusted earnings per share (pence) 5.1 4.0
Cash generated from operations 10,676 6,395
Purchase of intangible assets (3,229) (2,383)
Purchase of property, plant and equipment (85) (133)
Acquisition related expenses 432 279
Adjusted operating cash flow 7,794 4,158
Adjusted operating cash flow 7,794 4,158
Net interest received/(paid) 238 62
Taxation paid (1,716) (501)
Proceeds from disposal of property, plant and equipment 2 37
Free cashflow 6,318 3,756
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