REG - Eleco PLC - Trading Update

ElecoAnnouncement

24/01/2023 07:00

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RNS Number : 6122N  Eleco PLC  24 January 2023

Eleco Plc

("Eleco", "Group" or the "Company")

 

Year-end Trading Update

 

Progressive SaaS transition underpins record Annualised Recurring Revenue
growth

Trading in line with expectations

 

The Board of Eleco Plc (AIM: ELCO), the AIM-listed construction software
specialist, is pleased to provide a trading update for the year ended 31
December 2022, based on unaudited management accounts for the period.

Annualised Recurring Revenues(1) (ARR) at 31 December 2022 were approximately
£18.2m (at 31 December 2021: £16.0m).    Total Recurring Revenues (TRR),
a key metric for the Group, has increased to c£16.9m, or 64% of total revenue
in 2022, representing an 8% uplift on the comparable period (2021: TRR of
£15.4m, or 56% of total revenues).

As a result of this transition away from upfront perpetual licences, unaudited
revenues for the year ended 31 December 2022 are anticipated to be £26.6m
(£27.0m in constant currency terms).  This, together with earnings for the
period, is in line with market expectations(2).

 

Cash generation remains strong, with an increase in free cash flow ahead of
market expectations(1) resulting in a significant increase in cash to £12.5m
at 31 December 2022 (31 December 2021: £10.0m).

 

The Company's debt-free, robust cash status, while maintaining a consistent
dividend policy, allows for the retention of surplus cash for corporate
development initiatives to promote and invest in the future growth of the
Group.

 

 

Jonathan Hunter, Eleco's CEO, commented:

 

"2022 has been a progressive year which has seen Eleco deliver another strong
performance and progress on its SaaS journey.  We ceased offering
Powerproject perpetual licences in the UK and our new cloud-based Lean
planning software, Asta Connect, is set for release imminently.  This is
closely aligned to the significant strides made in the successful
transformation of our business into a customer-centric, high recurring revenue
organisation.

 

In accordance with the Group's ESG objectives, cultural and employee value
initiatives were developed and implemented to address the inflationary
pressures across the Group and support the retention of existing colleagues
and attraction of new talent.

The progress in growing recurring revenues represents an important strategic
step forward for the Group.  Our employees' continuing dedication and
outstanding effort on the SaaS/subscription transition will deliver
sustainable revenue growth and greater predictability of earnings for Eleco
going forward.

When we commenced the transition to SaaS at the end of 2021, we announced that
revenue and profit would be temporarily reduced for the first 18 months of the
three-year process.  H1 of 2023 will therefore mark the mid-point of that
transition.  Looking forward to FY23 as a whole, we expect to see growth in
total revenues for the first time since we announced the SaaS transition.

 

We firmly believe that our strategic progress and growth endorses our
transition to a SaaS model. We end the year with a strong balance sheet and
growth in recurring revenue. This solid financial foundation gives the Board
confidence in the year ahead and we will continue to look for opportunities to
accelerate our growth, both organically and through acquisitions."

 

(2) ARR is defined as normalised annualised recurring revenues and includes
revenues from subscription licenses, contract values of annual support and
maintenance, and SaaS contracts.

(1) Market consensus for 2022 revenues was £27.3m, EBITDA of £5.1m, EBIT of
£2.7m and free cash flow at £2.1m

 

 

Enquiries:

 Eleco plc                                                   +44 (0)20 7422 8000
 Jonathan Hunter, Chief Executive Officer
 Neil Pritchard, Chief Financial Officer

 finnCap Limited                                             +44 (0)20 7220 0500
 Geoff Nash/ Emily Watts/Seamus Fricker (Corporate Finance)
 Charlotte Sutcliffe / Harriet Ward (Sales)

 SEC Newgate UK                                              +44 (0)20 3757 6882
 Elisabeth Cowell/Bob Huxford                                eleco@secnewgate.co.uk (mailto:eleco@secnewgate.co.uk)

 

About Eleco plc

Eleco plc is a London Stock Exchange AIM-listed (AIM: ELCO) specialist
international provider of software and related services to the Architectural,
Engineering, Construction and Owner/Operator (AECO) industries and interior
furnishing industries from centres of excellence in the UK, Sweden, Germany,
Netherlands and the US.

 

The Company's market-leading Elecosoft software solutions are developed by
teams in the United Kingdom, Sweden and Germany, and its solutions cover
project management, estimating, timber engineering, CAD and visualisation,
asset and facility management and cloud-based digital marketing solutions.
For further information please visit www.eleco.com
(http://www.elecosoft.com/) .

 

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