Eleco plc | Annual Report and Accounts 2012 · r Consultec System commenced a StatCon development project for the Swedish Glulam Association in conjunction XJUIø-VMFÇ 5FDIOPMPHZ

Building on Technology®

Eleco plc | Annual Report and Accounts 2012

Eleco plc (AIM: ELCO) is a UK AIM-listed company,

which is committed to the key components of

modern construction projects.

These include software development and services

for the architectural, engineering and construction

industries and sustainable building systems that

deliver sustainable performance.

“ ElecoSoft® maintained its profitability in the

year under review, a resilient performance

given the general weakness in the

construction markets that it serves.

I am pleased to say that ElecoSoft®

has begun the current year well.”

John Ketteley – Executive Chairman

For additional informationvisit www.eleco.com

Front cover image – The Reichstag Dome, Berlin

Inside cover – The Shard, London

1www.eleco.com

Overview FinancialsGovernanceBusiness Review

Highlights

Year ended 31 December

2012£’000

18 months ended

31 December

2011

£’000

Continuing Operations

Revenue 34,177 56,822

Operating (loss)/profit before exceptionals (290) 143

EBITDA 312 3,101

Loss before interest and tax (1,902) (222)

Loss for the period (2,321) (1,209)

Loss per share (3.9)p (2.0)p

Product development 2,118 3,186

Total OperationsCapital expenditure 503 1,663

Net borrowings (7,069) (4,577)

ElecoSoftRevenue 15,821 23,448

Operating profit before exceptionals 1,793 2,214

ElecoBuildRevenue 18,405 34,865

Operating loss before exceptionals (1,152) (465)

Contents

Overview

1 Highlights2 Group Operations4 Our Year At a Glance6 Our Marketplace8 Chairman’s Statement

Business Review

10 Operating and Financial Review

Governance

16 Board of Directors and Company Advisors 17 Directors’ Report

Financials

22 Independent Auditors’ Report23 Consolidated Income Statement24 Consolidated Statement of Comprehensive Income25 Consolidated Statement of Changes in Equity26 Consolidated Balance Sheet27 Consolidated Statement of Cash Flows28 Significant Accounting Policies34 Notes to the Consolidated Financial Statements58 Independent Auditors’ Report59 Company Balance Sheet60 Statement of Company Accounting Policies61 Notes to the Company Financial Statements66 Five Year Summary67 Notice of MeetingIBC Group Directory


Group Operations Eleco comprises ElecoSoft® and ElecoBuild®

Our international software interests based principally

in Sweden, Germany and the UK develop and deliver

great ideas and outstanding software and services with

cutting-edge technology to the project management,

construction, pharmaceutical, timber engineering and

design, 3D visualisation, data compression, site control,

stair design, flooring and marketing sectors of the

construction industry. In particular, our “Asta Powerproject”

project management software was used during the

strategic planning phase for the London 2012 Olympics.

Our Services and Operations

Project Management Design and Engineering Estimation CAD and 3D Visualisation

Consultec ByggProgram

AB

Esign Software GmbHConsultec System AB

Consultec Arkitekter &

Konstruktörer AB

Consultec UK

Eleco Software GmbH

Eleco Software Ltd

Asta Development plc

Asta Development GmbH

Share of Group revenue

£2,219£15,821

15,82116,158

14,503

Revenues £’000

2012

727170

Gross Margin %

72%

2012

2,219

2,045

1,573

EBITDA £’000

2012

6,9727,016

6,365

Recurring Maintenance

Revenue £’000

£6,972

2012

2010*

2010*

2010*

2010*

2011*

2011*

2011*

2011*

* 2010 and 2011 restated 12 months to 31 December.

46%2012

41%

2011

29%

2010

3www.eleco.com


Our UK building systems interests design, manufacture

and supply precast concrete and metal roofing and

cladding off-site building systems which enhance

materials’ efficiency and improve construction speed.

In addition, we manufacture building products including

standard precast concrete units, acoustic flooring and

internal partitioning panels.

Our Services and Areas of Operation

Precast ConcreteMetal Roofing

And CladdingPartition Walls

Bell & Webster Concrete

Ltd

Stramit Panel Products

Ltd

Milbury Systems Ltd

Share of Group revenue

£(658)27%£18,40518,405

22,943

28,641

Revenues £’000

2011*

2012

27

2523

Gross Margin %

2010

2011*

2012

EBITDA £’000

6,277

3,621

8,848

Order Book £’000

£6,277

2010

2011

2012

2010*

2011*

2010*

(658)

2012

(2,089)

SpeedDeck Building

Systems Ltd

Prompt Profiles Ltd

Downer Cladding

Systems Ltd

54%2012

59%

2011

71%

2010

754


Our Year At a Glance

ESIGN GmbH launched their Marketing Manager software at Bau Munich.

Asta Development announced the release of Asta Powerproject version 12.

Eleco Software GmbH signed a collaboration partnership with ARGE Neue Medien, a consortium of over 100 leading manufacturers in the plumbing, heating and air conditioning industries providing a large database of over 45,000 products to ArCon architectural users.

Consultec System developed Joma Hangers and Eurocode fire design in StatCon.

Delay and Disruption courses entered their second year and are becoming very popular. As part of the course, delegates have to present their case to a Chartered Arbitrator.

Consultec Arkitekter & Konstruktörer, the building was nominated for the Swedish Association of Architects northern Sweden architecture award 2012.

January February

audience of Asta customers at the Powerproject National User Forum.

improvement magazines, continued in which ArCon is used to redraw their readers’ home plans to appear in their printed publication and online each month.

Stramit Panel Products commenced the delivery of ElecoFloor® to the

installation time on site while meeting Part E of Building Regulations.

Downer Cladding supplied the grey metallic aluminium composite cassette panels to uplift the face of this prestigious refurbishment project.

Consultec System signed a new StairCon Distributor for the Baltic countries.

Downer Cladding provided both a rainscreen support system and intricate

International Headquarters extension for the Pharmaceutical services provider, Ashfield In2Focus.

SpeedDeck completed their first SpeedZip® Green roof system for Sheringham Shoal off shore wind farm.

Asta Powerproject was used on the £50 million restoration project.

April

March

Consultec Arkitekter & Konstruktörer produced the total architectural

Consultec ByggProgram AB enhanced its range of project planning software through the acquisition of Novator Projektstyrning AB.

ArCon ProfessionalHomebuilding & Renovating Show and remains the tool of choice for many

visualisations with professional results.

Consultec System commenced the developed StairCon Showroom, a new web stair catalogue.

SpeedDeck commenced deliveries of 7,000m2 of Structural Deck for

one of the largest single investments in a shared community and education building in Wales.

ElecoSoft® and ElecoBuild® brands were formed to define Eleco’s software and building systems interest.

June

Esign introduced its new concept, Marketing Manager – Product

ElecoSoftware UK and Consultec UK moved into Lower Barn offices, Hampshire, providing improved training facilities for clients.

SpeedDeck 2 of standing seam roof.

Asta Powerproject was chosen by the Banora Point Upgrade Alliance who is responsible for upgrading the Pacific Highway near the New South Wales and Queensland border in Australia.

Bell & Webster delivered the final load to complete 122 rooms for the Express by Holiday Inn in Harlow.

SpeedDeck Building Systems supplied the metallic silver structural roofing tray for the cable car terminals.

May

Bell & Webster Concrete received two medals from British Precast, at the biggest precast event of 2012, in recognition for their contribution to the London 2012 Olympics.

ElecoPrecast®

sales operations of Bell & Webster Concrete and Milbury Systems.

Consultec System delivered the StairCon solution to a respected new customer in Austria, Weitzer Parkett, who commissioned a significant software development project.

Bell & Webster Concretefor Hampton by Hilton, Luton.

SpeedDeck roofing system to install 925m2 of top sheet per day.

5www.eleco.com


Consultec System commenced a StatCon development project for the Swedish Glulam Association in conjunction

and continued to offer Grand Designs 3D on the shelves of PC World as one of the main home design software packages in store.

SpeedDeck standing seam system for Stirling Burghmuir which is set to become one of Stirlings’ prestigious shopping destinations.

AugustJuly

Downer Cladding Systems supplied rainscreen façade and framing system to the Genesis

approach to the London 2012 Olympic village.

Esign started its first “door project” for Westag. Westag were so impressed, they plan

London 2012 Olympics successfully took place. Many Asta Powerproject clients, including the Olympic Delivery Authority, were involved with the strategic planning and construction.

Asta Powerproject was used by Mace Ltd, for the project management of the building programme.

Consultec ByggProgram AB completed the development

for IV Produkter AB, a supplier of ventilation materials and machinery.

providers, chose Consultec BidCon for the installation estimation of electrical, plumbing and ventilation services.

SpeedDeck Building Systems made the final delivery 2

City College, Specialist Business Enterprise Centre.

October

Asta Development signed an agreement with a new US distributor to support the growing demand for Powerproject in the US.

Consultec ByggProgram AB supported the

who are using BidCon and PlanCon to educate students in virtual design and construction (BIM).

SpeedDeck Building Systems received the order for 21,000m2 of standing seam roof

Network Rail project which will become the nerve centre of railway operations in Sussex.

September

November

Over 70% of Gold and Silver Construction Manager of the Year Award 2012 winners are Asta Powerproject customers.

Eleco Software UKand home improvement consumer magazines offering trial versions of ArCon and Grand Designs Software through major retail outlets.

Milbury Systems completed their largest 4m Rocket Wall project to date

SpeedDeck

Building Systems’ Vitesse insulated wall panels.

Bell & Webster Concrete won the order for 457 student accommodation rooms at Reading University from Brookfield Multiplex Construction Europe Limited.

December

Asta Powerproject

BAM Construction Ltd won many awards, including the Major Building Project of the Year at the British Construction Industry Awards.

Sydenham. SpeedDeck 2 roof area encompassing a B&Q Store.

Asta Powerproject, ran throughout the year .


Our Marketplace

Building Information Modelling (BIM) products and service solutions

will rise from about $1.8 billion in 2012 to nearly $6.5 billion in 2020.

The market for BIM software and services is still emerging but evolving

rapidly. The Architecture, Engineering and Construction (AEC) industry

is coming to the realisation that its tools and processes are antiquated

and inefficient when compared to other global industries such as

manufacturing. BIM software and processes are evolving to allow new

ways of collaboration, work sharing and virtual design capabilities that

serve to reduce costs for building owners and add visibility to the overall

design and construction process. With this added visibility and upfront

understanding of a project’s detailed characteristics, building owners

and operators are realising that the lifecycle costs of a building can

be significantly reduced.

Source: Pike Research

ElecoSoft’s® Global Marketplace

ElecoBuild’s® Role in the UK Construction Sector

Despite an unpredictable and declining economic environment, Eleco

remains well placed to take advantage of improvements in the markets

it serves. Highlights during the year include:

B Residential – a 6% rise in the number of contracts awarded in 2012

over 2011. A raft of measures promised by Government to include

relaxing of planning laws and first-time buyer help are hoped to

continue expansion in 2013.

B Industrial – overall a 17% decrease from 2011, however there was

an encouraging close to 2012, with the level of contracts awarded

up 42% in the final quarter compared to the previous quarter. The

continued push towards internet shopping offers further opportunities

in this sector as demand for distribution warehouses continues.

B Hotel, Leisure & Sport – a somewhat unexpected bonus for the

sector following the Olympic hotel rush saw levels of contracts

awarded up a massive 26% in quarter 4 2012 from the previous

quarter and 29% up on the same quarter for 2011.

B Commercial and Retail – major office development in the City

of London and the continued expansion of the major food retailers

contributed to a 45% increase on the number of contracts awarded

in 2012 versus 2011.

B Education – expected cuts in public spending along with the abolition

of the previous Government’s Building Schools for the Future scheme

meant a difficult year in 2012. However growth is anticipated in early

2013 with the launch of the Priority School Building Programme (PSBP)

to renew, repair and refurbish some of the county’s most out-of-date

schools. Universities and private schools are both expected to spend

considerably on expansion in the next year.

B Civils – continued expansion in the rail sector, including Crossrail

and High Speed Two (HS2), the move to renewable alongside the

green deal and the long awaited PFI scheme all lead hope for strong

performance for 2013.

Source: Barbour ABI

ElecoPrecast® Units Manufactured

26,8712011: 28,547

SpeedDeck® Aluminium and Steel Manufactured

289,514m22011: 272,212m2

Supported Professional Software Users

50,000

Supported Business Software Customers

14,200

7www.eleco.com


Map Key

Eleco

Head Office

ElecoSoft®

Office

Distributor

l 64% UK

l 24% Scandinavia

l 12% Rest of World

2012 Geographical Revenue

2011 Geographical Revenue

l 68% UK

l 21% Scandinavia

l 11% Rest of World

Case Study: The Shard, London Case Study: On Site Manufacturing

The Shard, the tallest building

in Western Europe was officially

inaugurated; Asta Powerproject was

used by Mace Ltd for the project

management of the building programme.

S & G Industrial Roofing Ltd saved

three weeks on site by using the

SpeedDeck roofing system to

install 925m2 of top sheet per day.

To read morevisit page 11

To read morevisit page 14

ElecoBuild®

Office

£34.2m

£56.8m


I will comment separately on the performance

of ElecoBuild®, ElecoSoft®, and the Eleco

Group. For ease of comparison, the

comparative figures shown are those for the

12-month period ended 31 December 2011.

ElecoSoft®

ElecoSoft® maintained its profitability in the year

under review, which was a resilient performance

given the general weakness in the construction

markets. I am also pleased to say that

ElecoSoft® has begun the current year well.

Turnover of ElecoSoft® in the year under

review amounted to £15.8m (2011: £16.2m)

of which recurring maintenance revenue

amounted to £6,972,000 (2011: £7,016,000).

The weakness of Sterling against both the

Euro and the Swedish Kronor in 2011, when

compared with 2012, accounted for the

marginal reduction in both turnover and

recurring maintenance revenue.

EBITDA was higher at £2.2m (2011: £2.0m).

Operating profit for the year ended

31 December 2012 amounted to £2.0m

(2011: £1.9m) before exceptional costs

of £152,000 (2011: £nil) related principally

to redundancy costs. The cost of software

product development in the year under

review was £2.1m of which £2.0m was

written off as incurred, the same as last year.

Outlook for ElecoSoft® ElecoSoft® has made a good start in 2013.

It will be launching a number of new software

programs during the course of the year,

including the launch in Germany of ArConNG,

the next generation of its leading ArCon

3D Architectural Software, and an iPad

version of ElecoSoft®’s “o2c®” 3D compression

and visualisation software. ElecoSoft® recently

acquired the Wagemeyer® stair software

brand, which will be exhibited with Consultec®’s

StairCon® software at the LIGNA Fair in

Hannover. The acquisition of Wagemeyer

will strengthen Consultec®’s already strong

position in the European stair software market.

ElecoSoft®’s leading brands now include:

B Consultec®, StairCon® BidCon® StatCon®

ElecoM@trix® and SiteCon®, which are

all developed in Sweden;

B Esign®, ArCon®; ArConNG®, Wagemayer®,

and o2c®, all of which are developed

in Germany; and

B the Asta Powerproject® project

management brand, which is

developed in the United Kingdom.

Details of these brands are set out in the

Operating and Financial Review section of this

report. As part of a BIM (Building Information

Modelling) initiative, plans are also underway

to allow ElecoSoft®’s range of construction

software products to exchange information

with each other and third party products using

an industry standard data format.

Despite challenging market conditions in 2012,

ElecoSoft®’s businesses in Germany delivered

improved operating profits. In the UK, buyers

were cautious, however a significant number

of product licences were reactivated by larger

clients indicating an increase in their project

workload. In Sweden meanwhile, the

demand for ElecoSoft® products and

services remained positive.

In March 2013, ElecoSoft® also opened an

office in Bangalore, India, in response to the

number of enquiries for its software programs

that we received from that region.

ElecoBuild®

The continued contraction of the UK

Construction Industry, and in particular that

sector of the industry in which ElecoBuild®

operates, meant that 2012 would inevitably

be another difficult year. Poor trading led

to further redundancies and downsizing

of our precast concrete operations.

Following the major downsizing last year,

ElecoBuild®’s precast concrete operations now

comprise Bell & Webster Concrete, which is

based in Grantham, Lincolnshire, and Milbury

Systems, based in Lydney, Gloucestershire.

Its building products operations now comprise

SpeedDeck Building Systems, Downer

Cladding, Stramit Panel Products and Prompt

Profiles, all of which are based in Yaxley, Suffolk.

Turnover of ElecoBuild®’s continuing operations

in the year under review amounted to £18.4m

(2011: £22.9m), and reflects the elimination

of our loss making precast custodial contract

capacity, the sale of our Hoveringham concrete

manufacturing plant, and the sale of our connector

plate interests in the UK and South Africa.

The loss of ElecoBuild®’s continuing operations

in the year under review, before exceptional

costs, was £1.2m (2011: £0.4m). Exceptional

costs amounted to £1.1m (2011: £42,000),

principally due to goodwill impairment of

£0.6m (2011: £nil) and redundancy costs

of £0.4m (2011: £42,000) relating to

restructuring activities.

Outlook for ElecoBuild®

The atrocious mix of ice, snow, rain and wind

experienced in the first quarter regrettably

resulted in a poor start in 2013 for all of

ElecoBuild®’s operating units, the performance

of which were below budget in the first quarter.

However, Bell & Webster Concrete’s orders are

now significantly higher than they were at this

time last year. Orders for Milbury Systems’

standard concrete products are also higher.

However, I regret to say that our Building

Products businesses have yet to experience

an improvement in trading conditions thus far.

Eleco GroupGroup Trading Summary

Group Turnover of Continuing Operations for

the year under review amounted to £34.2m;

(2011: £38.1m) with turnover of ElecoSoft®

approaching that of ElecoBuild®.

Chairman’s Statement

“ In the past five years our UK and international software interests have

made good progress, have grown substantially in value and have been

cash generative, while in the same period, our UK building systems

businesses have experienced extraordinarily difficult trading.”

9www.eleco.com


Group Operating Losses from continuing

operations for the year under review, before

exceptional losses of £1.6m amounted

to £290,000 (2011: profit £236,000,

before exceptional losses of £130,000).

Group continuing operations sustained a loss

before tax in the period under review of £2.4m

(2011: £0.3m) after Corporate Costs of £0.9m

(2011: £1.0m) and exceptional costs of £1.6m

(2011: £0.1m). Of the exceptional costs, £0.6m

(2011: £0.1m) related mainly to redundancy

costs from operational restructuring and £0.4m

(2011: £nil) to Pension Scheme restructuring

fees and expenses. Most of the remaining

exceptional costs relate to goodwill impairment

at ElecoBuild®, £0.6m (2011: £nil).

The Group loss after tax for the year was £2.7m.

(2011: £2.1m) which is equivalent to a loss per

share of 4.6p (2011: 3.6p loss per share).

FinanceThe proceeds from the sale of the Hoveringham

site together with the deferred consideration

received from the sale of our connector

plate businesses of £0.7m were allocated

to ElecoBuild®. However, despite this and

£1.3m of additional financial support provided

to ElecoBuild®, Group bank borrowings at

31 December 2012 of £7.4m were all

attributable to activities related to ElecoBuild®.

Group net bank borrowings on the same

date amounted to £6.5m, after taking account

of cash balances of £0.9m attributable to

businesses that are part of ElecoSoft®. Group

net bank borrowings at 28 February 2013

were £6.4m compared with £6.4m at

28 February 2012.

£800,000 of the consideration for the sale

of Gang-Nail Systems and International Truss

Systems will continue to be held in escrow

until 16 December 2013.

Disposals of assets and businesses, together

with a reduction in capital expenditure and with

cash generated from the profitable trading of

our Software businesses, partially offset the

adverse cash impact of the poor performance

of our concrete and timber frame businesses.

This outcome enabled the Group to restrict its

net bank borrowings at 31 December 2012 to

£6.5m (2011: £4.1m), despite having to finance

the £595,000 cost of discharging a Section 75

obligation to the Pension Scheme together with

£375,000 of related professional costs and was

expenditure that was clearly not incurred in the

ordinary course of trading.

Lloyds Banking Group renewed the Group’s

banking facilities with effect from 13 May 2013.

The Directors are satisfied that the Group

has sufficient working capital for its present

requirements and as a consequence

shareholders should be aware of the increase

in the rates of interest charged by the Bank

on our renewed facilities and the extent of the

security required by the Bank and arrangement

fees charged by the Bank in agreeing to these

facilities, details of which are set out in the

Operating and Financial Review section of

this report.

In the light of the continuing trading pressures,

which continue to be experienced by its

ElecoBuild® businesses, Eleco continues to

moderate its investment in new capital projects.

Capital investment for the year under review

was reduced to £503,000 (2011: £1.0m),

however I am pleased to report that software

product development continued unabated

at £2.1m (2011:£2.1m), of which £0.1m

(2011: £0.1m) was capitalised.

Actions taken by the Board during 2012 to

maintain the financial stability of the Group

in a very difficult trading and financial climate,

inevitably gave rise to a substantial increase

in legal, banking and other professional fees,

which doubled to £0.6m (2011: £0.3m). This

is more than we were able to invest in capital

equipment for our businesses. Unfortunately

such costs impact both our trading

performance and our cash resources.

We anticipate that these pressures will ease

as the Eleco Group achieves a full recovery.

EmployeesOn behalf of shareholders and the Board, I would

like to thank all our employees for their hard work

and dedication during the period under review.

Implementing the above changes has placed

very significant and stressful demands on them

and unfortunately, 20 more employees became

redundant in the downsizing of our building

businesses during the year.

DividendsThe Board does not propose to recommend

the payment of a dividend in respect of the

period under review.

OutlookIn the past five years our UK and international

software interests have made good progress,

have grown substantially in value and have

been cash generative, while in the same period,

our UK building systems businesses have

experienced extraordinarily difficult trading and

have consumed substantial amounts of cash.

This unbalanced the Group and placed it under

considerable financial strain.

However, I believe that the many difficult

decisions that your Board has had to take

to deal with this situation are now beginning

to bear fruit and I am becoming increasingly

confident that Eleco will arrive at a position

from which, in the absence of unforeseen

circumstances, it will be able to make a full

recovery. I can assure you that I and all my

colleagues will continue to do all we can

to achieve this objective.

John Ketteley

Executive Chairman

14 May 2013


Operating and Financial Review

Market backgroundEleco’s operations serve the construction

market in the UK, Scandinavia, Germany,

the rest of Europe and the world with revenue

exposure as set out in segmental information.

The physical operations of ElecoBuild® are

based solely in the UK, whereas the major

ElecoSoft® offices are based in the UK,

Sweden, Germany and Belgium. In the year

new distributors were appointed in the USA

and Estonia and in March 2013 ElecoSoft®

established a sales office in India.

The market for building products produced

by the ElecoBuild® businesses in the UK has

continued to be affected by depressed demand.

The demand for software across all ElecoSoft®

markets has also been subdued.

Within this market environment the Group

has continued to restructure its operations

to ensure that they are well placed to

profitably exploit markets in the future.

Group strategy and resultsGiven the continuing challenging market in

the period the Group has followed its strategy

from the previous reporting period to:

B Reduce operational overhead and stop

on-going trading losses;

B Sell excess assets and operations

where value can be achieved;

B Limit increase in bank borrowings and

enable renewal of working capital facilities

for continuing operations;

B Strategically acquire incremental and

complementary software activities; and

B Actively manage the legacy pension liability.

The 2012 result has been a small operational

loss for the continuing businesses before

exceptionals of £290,000 for the year ended

31 December 2012 (2011 18 months: profit

£143,000) and a loss for the period

before discontinued activities of £2.3m

(2011 18 months: £1.2m). The prime driver

to this loss has been the major management

restructuring of the precast concrete activities

of ElecoBuild® and the costs incurred on

resolving legacy pension matters in the period.

Key events in the year ended 31 December 2012

and post the balance sheet date have been:

B Renewal of Group working capital bank

facilities with Lloyds TSB Bank in April 2013.

B Agreement reached in March 2013 to defer

all fixed monthly contributions and scheme

expenses payable to the Eleco Retirement

Benefit Scheme by the Statutory Employers

of the Scheme (Bell & Webster Concrete

Limited, SpeedDeck Building Systems

Limited, Stramit Panel Products Limited and

Eleco (GNS) Limited) until 1 March 2014.

These total cash costs were £1.2m

per annum.

B Disposal of excess land at Yaxley, Suffolk

for £0.4m net of expenses in May 2013.

B Acquisition of Wagemeyer GmbH, a CAD/

CAM software supplier to stair manufacturers,

by Eleco Software GmbH in April 2013.

B Opening of ElecoSoft® office in Bangalore,

India in March 2013.

B Management re-structure at ElecoSoft®’s

Asta UK operation in December 2012.

B Winning of Reading student accommodation

phase III contract in November 2012.

B Settlement by Eleco plc of £0.6m obligation

to the Eleco Retirement Benefit Scheme

under Sections 75 and 75A of the

Pension Act 1995 in September 2012.

B Consolidation of ElecoBuild® precast

management reducing top grade management

from six to two people in May 2012.

B A 34 employee reduction in the Group

from 320 people at 1 January 2012

to 286 people at 31 December 2012.

B Strategic acquisition of Novator Projeckstyrning,

the Swedish distributor of Asta Powerproject,

based in Stockholm, in March 2012.

B Sale of the long leasehold precast site

at Hoveringham and associated plant

in February 2012.

The Board continues to monitor the markets

and operations of the continuing businesses

and will take further corrective action if necessary.

An annual impairment review by the Group

has resulted in impairment charges against

continuing businesses’ property, plant and

equipment and intangible assets totalling

£687,000 for the period (2011: £22,000).

Net interest cost from total operations

excluding pension related items was £211,000

(2011: £63,000). Under IAS 19, a finance

charge of £0.3m (2011: £0.5m) is reported,

being the difference between the net

investment return on assets of the Eleco

Retirement and Benefits Scheme expected at

the outset of the year and the unwinding of the

discount during the year used to determine the

Scheme liabilities at the beginning of the year.

Segmental results for continuing operations

The ElecoSoft® performance, using key ElecoSoft®

trading performance measures, is as follows:

Year ended31 December

2012£’000

18 months ended

31 December

2011

£’000

Revenue 15,821 23,448

Operating profit

before exceptionals 1,793 2,214

Segment result 1,641 2,203

“ Sustaining profitable growth in all the Group’s businesses is determined

by retaining our existing high quality team and attracting new talent.”

11www.eleco.com


Recently opening to the public on

1 February 2013, the 310m Shard is already

one of the UK’s most recognisable structures.

Western Europe’s tallest building, designed

by Master Architect Renzo Piano, has already

redefined London’s skyline and offers what

its creators proudly call Europe’s first “vertical

city”. A genuinely mixed-use scheme, The

Shard’s 95 storeys offer world-class offices,

luxury residences, a hotel, restaurants and

a public viewing gallery.

Acting as principal contractor on the

development, Mace saw the complex

construction programme through from

conception to completion. To help meet the

challenge, Mace required a programme and

project management tool that could handle the

significant technical challenges yet be flexible

and robust enough to take on such a huge

construction project. As well as Mace’s expertise

from large scale global projects, they chose

Asta Powerproject to help them drive the

innovative solutions required.

Demolition and subsequent works were carefully

planned and innovative methods were adopted

to find the fastest way of delivering the project.

Top-down construction allowed the sub and

super-structure to be worked on simultaneously,

saving time on the programme. The result was

that Mace implemented a “jump start” of the

core, even though the technique had not been

used before on a building of this scale, which

meant that work on the core and steelwork

above ground could go ahead while the core

continued to be built downwards into the

basement. Mace also introduced the “jumplift

strategy”, a self-climbing elevator system that

provided an alternative to exterior hoists which

improved the efficiency of the construction

allowing operatives and materials to be efficiently

and safely distributed around the project.

This had not been done before in Europe.

The project itself provided several logistical

challenges. One of the biggest was the concrete

pour into The Shard’s base which required

700 truckloads over 36 hours with trucks arriving

on site at two minute intervals. In a busy part of

London, surrounded by narrow access roads

and with thousands of commuters entering the

train station, nearby bus station and hospital,

safe planning was essential to safely move

materials to and from site.

Mace uses Asta Powerproject for the construction of The Shard

“ Using Asta Powerproject not only made the job of scheduling a much

easier process but also meant we could consult more easily with the

local council and communicate our plans to all stakeholders. It has a

powerful “what-if” functionality which allows us to be innovative and

overcome technical challenges, even when a technique has not been

used before. Everything can be risk assessed.”

Rob Owen, Mace Director

For more information about ElecoSoft® go to www.elecosoft.com

12Eleco plc | Annual Report and Accounts 2012

Operating and Financial Review continued

Segmental results for continuing operations continued

Software comprises three main business areas;

project and resource management software

operating primarily from the UK; estimating,

site control and timber engineering software

operating from Sweden; and visualisation

software operating in Germany.

A Building Information Modelling (BIM)

software team was established in 2012

to develop a Cloud based data store for

holding common information that will be

used throughout the lifecycle of a construction

project. The aim is that all ElecoSoft® products

will be able to interact with this data store

in order to share data in a common industry

standard format with each other and with

other third-party applications.

United KingdomProject and resource management software

Based in Thame and Telford, Asta provides

market-leading project and resource

management tools to an impressive list

of construction customers in the UK and in

international markets. It accounted for 25% of

total software sales in the period under review

(2011: 23%). Revenue amounted to £3.9m

for the year ended 31 December 2012

(2011 18 months: £5.6m).

In 2012 Asta took steps to increase

its international distribution with success

in Eastern Europe and growing interest

from specialist distribution in the USA.

Asta’s customers include 69 of the UK’s top

75 main contractors (source: Building Magazine).

In addition to a very high software maintenance

renewal rate a significant number of dormant

software licences were reactivated by this

group in 2012, a first sign that business may

be improving for many of these companies.

Asta’s international revenue amounted to

£0.8m for the year ended 31 December 2012

(2011 18 months: £1.1m). Asta software

programmes were used in a number of high

profile international projects including the

strategic planning phase for the

London 2012 Olympics.

SwedenEstimating, site control and timber

engineering software; architectural

and engineering services

Headquartered in Skellefteå, Sweden, Consultec

accounted for 55% of total software sales

in the period under review (2011: 54%).

Revenue amounted to £8.6m for the year ended

31 December 2012 (2011 18 months: £12.3m).

The Consultec group of companies provides

design, estimation, engineering and planning

software and software-related services

primarily to the Scandinavian market

and increasingly international markets.

The professional services branch of Consultec

provides architectural, engineering and

design services to the construction industry

in Sweden. This combination of software

and professional services gives Consultec

a strong market position, with many of the

top construction companies in Scandinavia

listed among its clients.

In March 2012 Consultec acquired the Swedish

distributor of Asta project management software

to strengthen its portfolio of products further

and bring in-house the distribution of Asta

Powerproject from its sister company in the UK.

GermanyVisualisation software, marketing

software and project and resource

management software

Our visualisation, marketing software and

project and resource management software

in Germany accounted for 22% of total

software sales in the period under review

(2011: 23%). Revenue amounted to £3.4m

for the year ended 31 December 2012

(2011 18 months: £5.1m).

Visualisation software

Eleco Software continued to distribute its

well-established design and visualisation

software, ArCon®, which is popular with

architectural and design firms across Germany.

The professional version, supplied directly to

businesses, is complimented by a retail version

of the product, which is sold through specialist

retail partners.

Development of a new generation of ArCon®

software made good progress and a retail

version of the software will be available in 2013

with a new professional version to follow in

2014. The new version of ArCon® will include

an updated user interface, major improvements

to its graphics capabilities and improved data

exchange with other CAD and design tools.

Marketing and visualisation software

Esign® supplies a range of sophisticated

marketing software solutions for flooring

manufacturers and retailers. At the heart of

Esign®’s solution is the Marketing Management

System, a reference database bringing

together all marketing information relating

a customer’s complete product range.

By utilising only the highest quality scanning

techniques this provides a single source

of information for the production of printed

and on line marketing materials.

In addition to counting Europe’s leading flooring

companies among its customers the company

is now targeting door manufacturers with its

products. In response to positive feedback from

customers the Marketing Management System

is being enhanced to become a Product

Information Manager, which is a complete

repository for all product related information.

Project and resource management software

Asta Development GmbH is the former

distributor of Asta products in Germany,

Austria and Switzerland, based in Karlsruhe.

Revenue of Asta Development GmbH

amounted to £0.9m for the year ended

31 December 2012 (2011 18 months: £1.6m)

and accounts for 7% of the total software

sales in the period under review.

The company remains focussed on retaining

the dominant market position of Asta products

in the German construction industry and has

also had some success at expanding into the

machine-building segment.

continued

13

Overview FinancialsGovernance

www.eleco.com

Business Review


2012£’000

18 months ended

31 December

2011

£’000

Revenue 18,405 34,865

Operating loss

before exceptionals (1,152) (465)

Segment result (2,235) (731)

ElecoBuild® comprises the building products

operations of SpeedDeck®, Prompt, Stramit®

and Downer together with the Group’s precast

concrete activities of Bell & Webster Concrete

and Milbury Systems.

The low demand market conditions in the UK

construction sector continued to represent

a challenging environment for ElecoBuild®,

especially the precast concrete operations,

to return to profit.

As a result of the prolonged down

turn in demand, in 2012 the precast

management team was restructured, resulting

in six senior positions in Milbury Systems and

Bell & Webster Concrete being reduced to

two. This inevitably resulted in weaker trading

during this necessary restructuring process

and hence an increased operating loss

before exceptional costs over the period.

A significant one off cost of £0.4m occurred

in 2012 to achieve this restructuring.

Trading at ElecoPrecast® is beginning

to recover, under the new management

team, and the ElecoPrecast® order book at

31 December 2012 was £4.0m, up £1.5m,

38% compared to 31 December 2011.

Key performance indicators and business monitoringEach business is monitored in detail by the

Board using a range of key performance

indicators, some of which are specific

to the particular business.

Business performance is monitored by the

setting of budgets with each management

team monthly review of delivery to budget

with reference to the following measures:

B Order intake, reoccurring revenue and

revenue trends;

B Project and product profitability;

B Profitability and forecast profitability;

B Historic and forecast cash flow;

B Overhead control; and

B Headcount.

Key performance indicator data is included

on page 3 of this report.

The new facilities, which replaced the remaining

outstanding term loan balance of £2.9m and

overdraft facility of £5.25m that existed

at 31 December 2012, totalled £8.75m,

and comprised the following:

B A new £4.0m term loan, with £2.0m amortising

over five years and a bullet repayment of £2.0m

at the end of year 5, carrying an interest

rate of 4% over base; and

B A new £4.75m overdraft for the period to

30 April 2014, carrying a blended interest

rate of 4.8% over base.

Security provided to the bank for the provision

of these facilities is:

B First legal charge on property freeholds

at Grantham, Lydney, Yaxley;

B Pledge on the shares of the

software companies.

The Group is committed to reducing the level

of bank borrowing and the bank has committed

to the release of certain elements of the security

provided on this refinance in the event of

a material reduction in bank debt.

The Group’s bank debt facilities are further

described in Note 21.

Pension strategyAs reported in the 2012 interim, following

the payment by Eleco plc of £0.6m to

the Eleco Retirement Benefit Scheme the

Group companies who remain the Statutory

Employers responsible for the continued

funding of the Scheme are Bell & Webster

Concrete Limited, SpeedDeck Building

Systems Limited, Stramit Panel Products

Limited and Eleco (GNS) Limited.

As a result of this change, and in co-ordination

with the latest tri-annual valuation, the Trustees

of the Scheme commissioned a covenant

review of the remaining Statutory Employers

to assist in making their proposal for future

contributions and deficit recovery payments.

In recognition of the weak trading environment the

Trustees proposed, and the Statutory Employers

agreed, a contribution and expenses deferral

until 1 March 2014, with certain conditions and

a subsequent recovery plan to eliminate the

deficit by March 2028 under current actuarial

assumptions. The annualised cash cost

of contributions and expenses in 2012

was £1.2m.

The next tri-annual valuation is due

at 31 December 2013.

Further detail on the Eleco Retirement Benefit

Scheme is set out in Note 24.

Key risksThe markets in which the Group operates,

especially the ElecoBuild® markets, continue

to be the key risk to the Board. The final return

to profit of ElecoBuild® by improved sales and

profitability is the main remaining element

of the Turnaround Plan reported in the 2010

annual review.

The continued fragility of the financial markets

has a direct impact on the flow of finance

to construction projects which can affect

the Group’s activities. Supply of finance

to construction development can drive

recovery in the sector and hence the Group.

However, should finance to such projects

be further restricted Group revenue is likely

to decline further.

Suppliers to the Group’s businesses are

influenced by the credit rating agencies views

on sectors and operations as they change

from time to time. This is managed by

maintaining the strong relationships the

Group’s companies have developed with their

suppliers during the recent challenging trading

period. Further, with the current financial

environment and the strains put on the Group’s

customers, the risk of customer insolvency

leading to loss of business and potential

bad debts is a concern. Credit insurance

is, however, maintained at all ElecoBuild®

businesses to mitigate such bad debt events.

Sustaining profitable growth in all the Group’s

businesses is determined by retaining our

existing high quality team and attracting new

talent. This will become more challenging as

any recovery in the Groups’ markets arises.

Capital and financingDuring the year the Group’s capital structure

changed specifically in relation to the bank

facilities. The term loan that is due to be

repaid by July 2016 continued. In March 2012

the Group’s other facilities were changed

from a £10m revolving credit facility to a £4.5m

overdraft facility. This reduction was achieved

with the completion proceeds from the sale

of Gang-Nail Systems and International

Truss Systems previously reported.

In October 2012 the Group’s bankers provided

an increase of £0.75m to the overdraft facility

to enable the settlement of the £0.6m demand

from Trustees of the Eleco Retirement Benefit

Scheme under Sections 75 and 75a of the

Pensions Act 1995 and associated

professional costs.

Subsequent to the year end, on 13 May 2013

the Group’s bank facilities were restructured

with the existing Group banker Lloyds TSB

Bank plc.


Operating and Financial Review continued

Record-breaking installation of SpeedDeck’s “Secret Fix” standing seam roofing

For more information about ElecoBuild® go to www.elecobuild.com

“ We would recommend SpeedDeck again to our customers; it is a very

good system with uncomplicated and quick installation bundled with

the support that makes for a smoother running project. We support

SpeedDeck because they can offer us a full envelope solution including

green roofing, structural decking and refurbishment solutions. We now

will actively promote utilising their systems in upcoming projects.”

Sean Partridge,

Senior Director of S & G Industrial Roofing

SpeedDeck Building Systems Limited

supplied S & G Industrial Roofing with their

SpeedDeck standing seam “Secret Fix”

roofing system to cover a roof area of

5,555m2. The SpeedDeck roof profile

was manufactured on-site at the eaves

of the building within three days and installed

a following six days later, demonstrating

the speediness of SpeedDeck.


manufacture three different types of “Zip Up”

and “Secret Fix” standing seam roof profiles in

both aluminium and steel, providing customers

with a real choice in roofing solutions. The

SpeedDeck standing seam system has double

interlocking ribs and clips ensuring strength,

watertight integrity and a fast installation

process. This is the reason why more and

more customers are choosing SpeedDeck

over other standing seam systems.

Sean Partridge, Senior Director of S & G

Industrial Roofing, believes that if SpeedDeck

was not available and a “Zip Up” standing

seam roof profile had been chosen instead,

a further three weeks of installation would

have been required, meaning the plant would

have had to remain on-site for longer, further

increasing costs. When comparing the two

different types of systems, the benefits of the

SpeedDeck “Secret Fix” system to “Zip Up”

standing seam systems include less setting

out, less perimeter components and less

time installing the product. With SpeedDeck,

there is also no time-consuming zipping of

the seams, so once the sheet is landed, it is

just locked into position. With other systems

that require zipping, installers have to wait

for the zipping machine to travel up and

over the seam and then back; this in turn

incurs downtime on labour and results

in a slower installation.

Mr Partridge also found other significant

benefits from on-site rolling as there were

less transportation costs for materials

on-site compared to other systems that

would require approximately eight lorry loads

of materials under police escort due to the

length of material. Had S & G been hoisting

materials from the floor, i.e. 51m long sheets,

on two of the days of on-site rolling, they

would not have been able to crane lift the

sheets due to adverse wind conditions, thus

incurring extra costs for crane hire and down

time; this also bodes well for the architect’s

BREEAM credits.

S & G Industrial Roofing were not only

pleased with the overall outcome but were

also pleased with the excellent customer

service; from the sales team that were of

great help and support from the time of

enquiry to the delivery of materials on-site,

to the technical support team who aided

with their in-depth knowledge by answering

any queries.

SpeedDeck has over 30 years’ extensive

experience in the UK construction industry

and has earned the reputation as the original

“Secret Fix” roofing company, providing

metal roofing systems for the new build

and refurbishment sectors.

15www.eleco.com


Loss per share and dividendThe loss per share on continuing operations

was 3.9p (2011 18 months: loss 2.0p).

The loss per share on total operations was

4.6p (2011 18 months: loss 4.6p).

Having regard to the Company’s current

financial position and performance, the Board

is not in a position to recommend the payment

of a dividend in respect of the year ended

31 December 2012 but will consider a return

to recommending dividend payments as and

when the Company’s trading position and

performance permits.

SummaryElecoSoft® is experiencing marginal growth,

but in a challenging European market. The

profitable recovery of all ElecoBuild® businesses

is still to be realised due to the continuing

weakness of demand in UK construction

markets in which ElecoBuild® operate.

New bank facilities and a new deficit recovery

plan for the Eleco Retirement Benefit Scheme

have now been agreed giving scope for the

Group’s businesses to exploit their chosen

markets in the immediate future.

Matthew Turner

Group Finance Director

14 May 2013

Shareholders’ equity and net assetsAt 31 December 2012, shareholders’ equity amounted to £8.9m (2011: £14.2m), after recognising

£4.6m (2011: £3.7m), net of the related deferred tax asset, as a retirement benefits liability.

2012 2011

£’000 % £’000 %

Retirement benefits liability (net of deferred tax) (4,646) -52% (3,670) -26%

Other net assets 13,496 152% 17,825 126%

Total net assets 8,850 100% 14,155 100%

Summary Group cash flow


2012£’000

18 months ended

31 December

2011

£’000

Cash flow from operations (1,946) (7,076)

Net capital expenditure 87 (413)

Net interest paid (205) 66

Tax paid (396) (59)

Free cash flow (2,460) (7,482)

Acquisitions and disposals 208 5,818

Loan (repayments)/proceeds (5,900) 925

Finance lease repayments (170) (456)

Net cash flow (8,322) (1,195)

Exchange difference (39) (66)

Decrease in net cash balances (8,361) (1,261)

The Group’s cash position reflects trading performance, sale of businesses and excess assets

and resulted in net bank debt at 31 December 2012 of £6.5m (2011: net bank debt £4.1m).

Specifically free cash flow included net cash payments relating to discontinued operations of

£0.8m (2011: £1.4m). There were only significant sales of businesses in 2011. The cash from

the sale of these business assets in 2011 was used to repay bank loans in 2012 as set out

in the analysis above.


Board of Directors and Company Advisors

Jonathan Cohen TD MA FCA*Chairman of the Remuneration Committee

Appointed a Non-executive Director in

November 2002. Jonathan Cohen was

previously Chief Executive of County

NatWest Limited and Vice Chairman of

Charterhouse Bank Limited. He is currently

Senior Executive Director of Savile Group plc

and Chairman of Clearwater Hampers Limited.

Jonathan Edwards LLB ACA*Chairman of the Audit Committee

A Chartered Accountant and Barrister,

Jonathan Edwards is a Director of

Harpenden Sports Group Limited.

John Ketteley FCAExecutive Chairman

Appointed Executive Chairman in 1997,

John Ketteley has an investment banking

background. He was formerly Non-Executive

Chairman of BTP plc, Country Casuals plc

and Prolific Income plc.

Matthew Turner FCA CFGroup Finance Director

Appointed a Director in January 2011.

Matthew Turner, formerly a partner in

Grant Thornton UK LLP, is currently

a partner in Shore Mountain LLP. He is

Chairman of the Bishop Stopford School

Academy Trust.

Michael McCullen BSc MBAChief Executive – Software

Michael McCullen was founder member of

Asta Development and Managing Director from

2000 to 2009 leading the company up to its

acquisition by Eleco plc in 2006. He joined

the Board in 2007.

* Member of the Audit, Remuneration

and Nominations Committees.

Secretary

Ivor A Barton ACIS

Registered office

66 Clifton Street

London EC2A 4HB

Tel: +44 (0) 20 7422 0044

E-mail: [email protected]

Website: www.eleco.com

Registered number

354915

Auditors

Grant Thornton UK LLP

Bankers

Lloyds TSB Bank plc

Nominated Advisor and Broker

Cenkos Securities plc

Solicitors

Berwin Leighton Paisner LLP

Reynolds Porter Chamberlain LLP

Registrars and transfer office

Capita Registrars

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Tel: +44 (0) 871 664 0300

E-mail: shareholder.services@

capitaregistrars.com

17www.eleco.com


The Directors present their report and the audited financial statements for the year ended 31 December 2012.

Review of the businessThe Group’s principal activities include the manufacture and supply of building systems and products and the design and supply of software

systems. A list of the principal operating subsidiary companies is set out in Note 6 to the Company financial statements.

The accompanying Chairman’s Statement and Operating Financial Review provide a more detailed description of activities during the year, including

comments on sales, sales volumes and margins and future prospects. The principal risks and uncertainties in the business are the underlying levels

of activity in the markets in which they operate and the related impact on customer demand, significant movements in raw material costs, which might

impact on the products supplied and unforeseen delay in the implementation of software development projects.

Results for the year ended 31 December 2012The Group loss on ordinary activities of continuing operations before taxation was £2,397,000 (2011 18 months: £930,000). The detailed financial

statements of the Group are set out on pages 23 to 57.

Risks and uncertaintiesThere are a number of potential risks and uncertainties which could have a material impact on the Group’s long term performance and which could

cause actual results to differ from those expected. Those considered by the Directors to be the principal risks facing the Group are set out in the

Operating and Financial Review on pages 10 to 15.

Financial risk management objectives and policies, together with an indication of market risk and liquidity risk, are set out in Note 28 of the Notes

to the consolidated financial statements.

DividendsNo interim dividend was paid during the year (2011 18 months: nil). The Directors do not intend to recommend a final dividend for the year ended

31 December 2012 (2011 18 months: nil).

Share capitalDetails of the share capital and share options scheme are shown in Notes 25 and 26 to the consolidated financial statements.

Share priceThe middle market price of the Company’s ordinary shares on 31 December 2012 was 7.75p and the range during the year was 6.50p to 11.00p.

Disposal of manufacturing facilityOn 3 February 2012, the Group disposed of its manufacturing facility at Hoveringham, Nottinghamshire.

Acquisition of Swedish software businessOn 14 March 2012, the Group acquired the business of Novator Projeckstyrning AB, of Sweden, enhancing its range of project planning software.

DirectorsThe current composition of the Board of Directors is shown on page 16 and all the Directors held office throughout the period.

John H B Ketteley and Jonathan Cohen retire by rotation at the forthcoming Annual General Meeting and, being eligible, will offer themselves

for re-election.

Directors’ remunerationThe emoluments of the Directors for the year ended 31 December 2012, excluding pension entitlements, share options and bonuses under

long-term incentive plans, were:

Basic

salary

£’000

Fees

£’000

Benefits

£’000

Year to31 December

2012Total

£’000

18 months period to

31 December

2011

Total

£’000

Executive

J H B Ketteley 285 3 41 3291 402

M L Turner 111 3 — 1142 127

M B McCullen 160 3 15 178 267

Non-executive

J Cohen — 29 — 29 44

J B Edwards — 27 — 27 42

1 John H B Ketteley waived £10,000 of salary and benefits during the period.

2 Paid to Shore Mountain LLP, of which Matthew L Turner is a Director.

Directors’ Report


Directors’ remuneration continuedJohn H B Ketteley received a cash supplement from the Company, in lieu of pension, amounting to £68,650. Contributions were made by the

Company to the personal pension plan of Michael B McCullen of £16,000.

Outstanding performance share options granted to the Executive Directors under the Company’s Long Term Incentive Plan are as follows:

Award

At

31 December

2011

Vested

during

year

Lapsed

during

year

Granted

during

year

At 31 December

2012 Vesting date

J H B Ketteley 2007 200,000 — (200,000) — —1 January 2010 to

31 October 2012

Directors’ shareholdingsThe interests, beneficial unless otherwise indicated, in the ordinary shares of 10p each in the Company of the Directors who held office

at 31 December 2012 were as follows:

At 31 December

2012

At

31 December

2011

J H B Ketteley 7,423,255 7,423,255

M L Turner 59,574 —

M B McCullen 652,944 652,944

J Cohen 65,708 65,708

J B Edwards 50,000 50,000

There have been no changes in the Directors’ interests since 31 December 2012.

Substantial interestsAs at the date of this report, the Company has been notified of the following interests in the issued share capital of the Company:

Shareholder

Number

of shares Percentage

J H B Ketteley 7,423,255 12.24

Delta Lloyd NV 6,360,277 10.49

H A Allen 5,643,170 9.30

Lowland Investment Company PLC 3,153,443 5.20

Rights & Issues Investment Trust PLC 3,075,000 5.07

P R & M J Ketteley 2,520,000 4.15

Policy on remuneration of Executive Directors and senior executivesThe Remuneration Committee aims to ensure that the remuneration packages offered encourage and reward performance in a manner which

is consistent with the long-term interests of shareholders.

The remuneration of the Executive Directors comprises four elements:

i) a basic salary together with benefits-in-kind (such as company car, private petrol and medical insurance);

ii) a non-pensionable performance related annual bonus based on the Group’s performance and individual contribution to that performance. The

Executive Directors are contractually entitled to a bonus scheme, but the amount to be paid is determined by the Remuneration Committee;

iii) pension benefits based solely on basic salary; and

iv) performance related share awards and non-pensionable bonuses under the Company’s Long Term Incentive Plan.

Directors’ Report continued

19www.eleco.com


Executive Directors’ contractsThe Executive Directors have service agreements, which provide for a notice period as stated hereunder. In the event that employment with the

Company is terminated without notice, the contracts do not provide for payment of a specific sum for compensation.

Commencement dates and notice periods of contracts (as amended) are as follows:

B John H B Ketteley (3 July 1997: twelve months);

B Matthew L Turner (27 January 2011: one month); and

B Michael B McCullen (1 March 2007: twelve months).

Interest in contractsThere are no contracts of significance between the Company or its subsidiary companies and any of the Directors. During the year, for expenses

or services provided in the normal course of business, the Group paid £5,000 (2011 18 months: £7,500) to J H B Ketteley & Co Limited

of which John H B Ketteley is a Director and in which he has an interest. An amount of £25,000 (2011 18 months: £37,500) was paid to

J H B Ketteley & Co Limited under a lease for occupation by the Company of 66 Clifton Street, London EC2A 4HB.

Corporate governanceAlthough companies listed on AIM are not required to comply with the UK Corporate Governance Code, the Board is committed to ensuring that

high standards of corporate governance are followed as appropriate to the Company’s size and activity.

The Board of Directors, which consisted during the whole year of the Executive Chairman, Group Finance Director, one other Executive Director and

two independent Non-Executive Directors, meets at least ten times throughout the year. John H B Ketteley acts in the capacity of both Chairman

and Chief Executive and it is considered that it is appropriate to merge these two roles, given the overall size of the Eleco group. Jonathan Cohen

is the Senior Independent Director.

The Directors have access to independent professional advice in executing their duties on behalf of the Company.

The Board has established the following committees:

Audit Committee

The Audit Committee, which consists of the two Non-Executive Directors, and is chaired by Jonathan B Edwards, has specific terms of reference and

meets with the auditors at least twice a year. The Committee reviews the financial statements prior to their recommendation to the Board for approval

and assists the Board in ensuring that appropriate accounting policies, internal financial controls and compliance procedures are in place.

Remuneration Committee

The Remuneration Committee, which consists of the two Non-Executive Directors and is chaired by Jonathan Cohen, is responsible for determining

the remuneration arrangements of the Executive Directors and for advising the Board on the Company’s remuneration policy for senior executives.

Nominations Committee

The Nominations Committee consists of the Non-Executive Directors and chaired by the Executive Chairman, is responsible for reviewing the

structure, size and composition of the Board and its Committees and evaluating potential candidates for nomination when and if it is deemed

necessary to appoint a new Director to the Board. The Committee makes its recommendations to the full Board for its consideration and approval.

Control environmentThe Board acknowledges its responsibility for the Group’s systems of internal financial and other control. These are designed to give reasonable,

though not absolute, assurance as to the reliability of information, the maintenance of adequate accounting records, the safeguarding of assets

against unauthorised use or disposition and that the Group’s businesses are being operated with appropriate awareness of the operational risks

to which they are exposed.

The Directors have established an organisational structure with clear lines of responsibility and delegated authority.

The systems include:

B the appropriate delegation of responsibility to operational management;

B financial reporting, within a comprehensive financial planning and accounting framework, including the approval by the Board of the detailed

annual budget and the regular consideration by the Board of actual results compared with budgets and forecasts;

B clearly defined capital expenditure and investment control guidelines and procedures; and

B monitoring of business risks, with key risks identified and reported to the Board.


Directors’ Report continued

Directors’ responsibilities in relation to the financial statementsThe Directors are responsible for preparing the report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have to prepare the financial

statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). Under company law the

Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit

or loss of the Company and Group for that period. In preparing these financial statements, the Directors are required to:

B select suitable accounting policies and then apply them consistently;

B make judgements and accounting estimates that are reasonable and prudent; and

B state whether applicable IFRS have been followed, subject to any material departures disclosed and explained in the financial statements.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and

disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial

statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and Group and hence

for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as each of the Directors is aware:

B there is no relevant audit information of which the Company’s auditors are unaware; and

B the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that

the auditors are aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors’ statement as to disclosure of information to auditorsThe Directors who were members of the Board at the time of approving the Directors’ Report are listed on page 16. Having made enquiries of fellow

Directors and of the Company’s auditors, each of these Directors confirms that to the best of each Director‘s knowledge and belief, there is no

information relevant to the preparation of their report of which the Company’s auditors are unaware and each Director has taken all steps a Director

might reasonably be expected to have taken to be aware of relevant audit information and to establish that the Company’s auditors are aware of

that information.

Going concernA statement regarding the going concern of the business is set out in Significant Accounting Policies on page 29.

Research and developmentProduct innovation and development is a continuous process. The Group commits resources to the development of new products and quality

improvements to existing products and processes in all its business segments.

Employee involvementThe Group is committed to a policy of involvement by keeping its employees fully informed regarding its performance and prospects. Employees

are encouraged to present their suggestions and views.

Employment of disabled personsThe Company’s policy is to provide equality of opportunity for all employees without discrimination and continues to encourage the employment,

training and advancement of disabled persons in accordance with their abilities and aptitudes, provided that they can be employed in a safe

working environment. Suitable employment would, if possible, be found for any employee who becomes disabled during the course of their

employment with the Group.

Policy regarding the payment of suppliersThe Company’s policy is to agree terms of payment with suppliers at the commencement of the trading or contractual relationship and to operate

within such terms subject to satisfactory completion of the suppliers’ obligations. At 31 December 2012, the Group’s average creditor payment

period was 48 days.

Heading Underhead

21www.eleco.com


Charitable contributionsDuring the financial year no donations to charities and good causes were made. The Group does not make any political donations.

Directors’ indemnitiesQualifying third party indemnity provisions (as defined in Section 234(2) of the Companies Act 2006) are in force for the benefit of the Directors.

Annual General MeetingYour attention is drawn to the Notice of Meeting on pages 67 and 68 of this report convening the Annual General Meeting of the Company

at 12.00 noon on 25 June 2013 at the Brewers’ Hall, Aldermanbury Square, London EC2V 7HR. The Notice sets out and explains the special

and ordinary business to be conducted at the meeting.

AuditorsThe Board and Audit Committee have approved an extension to the engagement term of the Senior Statutory Auditor responsible for the audit

opinion in relation to Eleco plc for the year ended 31 December 2012. The term was extended from five to six years. The Audit Committee believes

that in the current circumstances of the Group continuity is important to the quality of the Group’s audit and is satisfied that the safeguards

proposed by the auditor mean that the extension will not threaten the objectivity and independence of the audit.

Grant Thornton UK LLP have indicated their willingness to continue in office and a resolution will be proposed at the Annual General Meeting

to re-appoint them as auditors and to determine their remuneration.

By Order of the Board

Ivor A Barton

Secretary

Eleco plc

66 Clifton Street

London EC2A 4HB

14 May 2013


Independent Auditors’ Report To the members of Eleco plc

We have audited the Group financial statements of Eleco plc for the period ended 31 December 2012 which comprise the Consolidated Income

Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Balance

Sheet, the Consolidated Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their

preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union.

This report is made solely to the Company’s members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit

work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report

and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and

the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditorsAs explained more fully in the Directors’ Responsibilities Statement set out on page 20, the Directors are responsible for the preparation of the

Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the

Group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require

us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.

Opinion on financial statementsIn our opinion the Group financial statements:

B give a true and fair view of the state of the Group’s affairs as at 31 December 2012 and of its loss for the year then ended;

B have been properly prepared in accordance with IFRS as adopted by the European Union; and

B have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Directors’ report for the financial year for which the Group financial statements are prepared is consistent

with the Group financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

B certain disclosures of Directors’ remuneration specified by law are not made; or

B we have not received all the information and explanations we require for our audit.

Other matterWe have reported separately on the parent Company financial statements of Eleco plc for the year ended 31 December 2012.

John Corbishley

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Cambridge

14 May 2013

23www.eleco.com


Consolidated Income Statement For the year ended 31 December 2012

Notes

2012£’000

18 months ended

31 December

2011

£’000

Continuing operations

Revenue 1 34,177 56,822

Cost of sales (16,053) (27,220)

Gross profit 18,124 29,602

Distribution costs (1,894) (4,651)

Administrative expenses (16,520) (24,808)

Operating (loss)/profit before exceptionals 2 (290) 143

Exceptional items 3 (1,612) (365)

Loss from operations 4 (1,902) (222)

Finance income 6 19 96

Finance cost 6 (514) (804)

Loss before tax (2,397) (930)

Tax 7 76 (279)

Loss for the financial period from continuing operations (2,321) (1,209)

Loss for the financial period from discontinued operations 8 (426) (1,528)

Loss for the financial period (2,747) (2,737)

Attributable to:

Equity holders of the parent (2,747) (2,737)

Loss per share – basic and diluted

Continuing operations 10 (3.9)p (2.0)p

Discontinued operations 10 (0.7)p (2.6)p

Total operations (4.6)p (4.6)p


Consolidated Statement of Comprehensive Income For the year ended 31 December 2012

Notes

2012£’000

18 months ended

31 December

2011

£’000

Loss for the period (2,747) (2,737)

Other comprehensive income

Actuarial (loss)/gain on retirement benefit obligation 24 (2,475) 3,720

Deferred tax on retirement benefit obligation 23 99 (1,461)

Other losses on retirement benefit obligation (81) (493)

Translation differences on foreign operations (101) (220)

Other comprehensive income net of tax (2,558) 1,546

Total comprehensive income for the period (5,305) (1,191)

Attributable to:

Equity holders of the parent (5,305) (1,191)

25www.eleco.com


Consolidated Statement of Changes in Equity For the year ended 31 December 2012

Share capital£’000

Share premium

£’000

Merger reserve

£’000

Translation reserve

£’000

Other reserve

£’000

Retained earnings

£’000Total

£’000

At 1 January 2012 6,066 6,396 7,371 (113) (358) (5,207) 14,155

Transactions with owners — — — — — — —

Loss for the period — — — — — (2,747) (2,747)

Other comprehensive income:

Actuarial loss on defined benefit pension

scheme net of tax and other scheme losses — — — — — (2,457) (2,457)

Exchange differences on translation of

foreign operations — — — (101) — — (101)

Total comprehensive income for the period — — — (101) — (5,204) (5,305)

At 31 December 2012 6,066 6,396 7,371 (214) (358) (10,411) 8,850

Share

capital

£’000

Share

premium

£’000

Merger

reserve

£’000

Translation

reserve

£’000

Other

reserve

£’000

Retained

earnings

£’000

Total

£’000

At 1 July 2010 6,066 6,396 7,371 107 (358) (4,236) 15,346

Transactions with owners — — — — — — —

Loss for the period — — — — — (2,737) (2,737)

Other comprehensive income:

Actuarial gain on defined benefit pension

scheme net of tax and other scheme losses — — — — — 1,766 1,766

Exchange differences on translation of

foreign operations — — — (220) — — (220)

Total comprehensive income for the period — — — (220) — (971) (1,191)

At 31 December 2011 6,066 6,396 7,371 (113) (358) (5,207) 14,155


Consolidated Balance Sheet At 31 December 2012

Notes

2012£’000

2011

£’000

Non-current assets

Goodwill 11 13,009 13,567

Other intangible assets 12 1,904 2,338

Property, plant and equipment 13 7,223 7,909

Deferred tax assets 23 1,389 1,289

Other non-current assets 14 — 800

Total non-current assets 23,525 25,903

Current assets

Inventories 17 2,144 2,281

Trade and other receivables 19 6,905 8,394

Current tax assets 5 —

Cash and cash equivalents 888 4,748

Other current assets 14 800 400

Assets of disposal group held for sale 8 — 440

Total current assets 10,742 16,263

Total assets 34,267 42,166

Current liabilities

Bank overdraft 21 (4,501) —

Borrowings 21 (900) (5,900)

Obligations under finance leases 21 (212) (141)

Trade and other payables 20 (4,962) (6,618)

Provisions 22 (256) (60)

Current tax liabilities (56) (87)

Accruals and deferred income (5,819) (6,355)

Total current liabilities (16,706) (19,161)

Non-current liabilities

Borrowings 21 (2,025) (2,925)

Obligations under finance leases 21 (319) (359)

Deferred tax liabilities 23 (170) (421)

Non-current provisions 22 (77) (73)

Other non-current liabilities (85) (113)

Retirement benefit obligation 24 (6,035) (4,959)

Total non-current liabilities (8,711) (8,850)

Total liabilities (25,417) (28,011)

Net assets 8,850 14,155

Equity

Share capital 25 6,066 6,066

Share premium account 6,396 6,396

Merger reserve 7,371 7,371

Translation reserve (214) (113)

Other reserve (358) (358)

Retained earnings (10,411) (5,207)

Equity attributable to shareholders of the parent 8,850 14,155

The financial statements of Eleco plc, registered number 00354915, on pages 23 to 57 were approved by the Board of Directors on 14 May 2013

and signed on its behalf by:

John Ketteley

Executive Chairman

27www.eleco.com


Consolidated Statement of Cash Flows For the year ended 31 December 2012

Notes

2012£’000

18 months ended

31 December

2011

£’000

Cash flows from operating activities

Loss before tax (including discontinued) (2,641) (7,691)

Net finance costs 480 459

Depreciation and impairment charge 1,004 3,078

Amortisation and impairment charge 1,210 926

Profit on sale of property, plant and equipment (114) (345)

Retirement benefit obligation (803) (1,664)

Increase/(decrease) in provisions 200 (987)

Cash used in operations before working capital movements (664) (6,224)

Decrease in trade and other receivables 3,438 5,586

Decrease in inventories and work in progress 134 957

(Decrease) in trade and other payables (4,854) (7,395)

Cash used in operations (1,946) (7,076)

Interest paid (239) (278)

Interest received 34 344

Income tax paid (396) (59)

Net cash outflow from operating activities (2,547) (7,069)

Net cash used in investing activities

Purchase of intangible assets (149) (329)

Purchase of property, plant and equipment (157) (992)

Acquisition of subsidiary undertakings net of cash acquired 27 (192) (316)

Proceeds from sale of property, plant, equipment and intangible assets 393 908

Sale of business net of expenses 14 400 6,134

Net cash inflow from investing activities 295 5,405

Net cash used in financing activities

Proceeds from new bank loan — 6,600

Repayment of bank loans (5,900) (5,675)

Repayments of obligations under finance leases (170) (456)

Net cash (outflow)/inflow from financing activities (6,070) 469

Net decrease in cash and cash equivalents (8,322) (1,195)

Cash and cash equivalents at beginning of period 4,748 6,009

Effects of changes in foreign exchange rates (39) (66)

Cash and cash equivalents at end of period (3,613) 4,748

Cash and cash equivalents comprise:

Cash and short-term deposits 888 4,748

Bank overdrafts (4,501) —

(3,613) 4,748


Significant Accounting Policies

Eleco plc is a public limited company incorporated and domiciled in the United Kingdom under the Companies Act 2006. The consolidated

financial statements for the year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the “Group”)

The consolidated and parent company financial statements were authorised for issuance on 14 May 2013.

The address of the registered office is given on page 16. The nature of the Group’s operations and its principal activities are set out in the Chairman’s

Statement on pages 8 to 9, Operating and Financial Review on pages 10 to 15, Directors’ Report on page 17 and Note 2 on pages 34 to 37.

These financial statements are presented in Pounds Sterling which is the currency of the primary economic environment within which the Group

operates. Foreign operations are included in accordance with the accounting policies set out below.

A. Statement of complianceThe Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards

(“IFRS”) adopted for use by the European Union and the Companies Act 2006 applicable for Companies reporting under IFRS. On publishing the

Company financial statements together with the Group financial statements the Company has taken advantage of the exemption in s408 of the

Companies Act 2006 not to present its individual income statement and related notes that form part of the approved financial statements.

B. Basis of preparationThe consolidated financial statements have been prepared on the historical cost basis except assets classified as held for sale and all financial

information has been rounded to the nearest thousand.

These consolidated financial statements have been prepared in accordance with the accounting policies, which follow IFRS in issue, adopted

by the EU and effective at 31 December 2012.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

Significant accounting judgements and estimates

Application of the Group’s accounting policies in conformity with generally accepted accounting principles requires judgements and estimates

that affect the amounts of assets, liabilities, revenues and expenses reported in the financial statements. These judgements and estimates may

be affected by subsequent events or actions such that actual results may ultimately differ from the estimates.

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date that have a significant risk

of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating

units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from

the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Further details are

given in Note 11.

Retirement benefit costs

The Group operates a defined benefit scheme that provides benefits to a number of current and former employees and closed to future accrual

on 31 December 2010. The value of the scheme deficit is sensitive to the market value of the scheme’s assets, the discount rates and actuarial

assumptions related to mortality and other factors. Further details are given in Note 24.

Taxation

Taxation legislation is highly complex. In preparing the financial statements the taxation liability is estimated taking appropriate professional advice. However,

determination of the agreed liabilities may take some time and the eventual amounts paid may differ from the liabilities recorded in the financial statements.

Similarly, judgement is required in relation to the recognition of assets and liabilities in relation to deferred taxation, in particular the extent to which

assets should be recognised.

Revenue recognition on long-term contracts

Revenue and profit is recognised based upon the extent of completion and expected outcomes of profit, once these can be estimated with

reasonable reliability. However, unforeseen events may adversely impact on the accuracy of the estimates. Where the outcome of a long-term

contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable.

Provisions and contingent liabilities

In accordance with the accounting policy outlined below, judgement is made of the likely outcome of any disputes. Where it is judged to be probable

that an outflow of resources will be required to settle the obligation, an estimate will be made of the provision where it can be reliably made.

Discontinued operations and assets held for sale

Costs associated with the connector plate businesses in the UK and South Africa and the timber frame business sold in 2011 that were excluded

or under estimated at 31 December 2011 have been recognised in the consolidated income statement under discontinued operations.

Assets and businesses are classified as held for sale, and stated at the lower of carrying amount and fair value less costs to sell, if their carrying

amount will be recovered or settled principally through a sale transaction rather than through continuing use. A discontinued operation is a

component of the Group’s business that represents a separate major line of business that has been disposed of, has been abandoned or meets

the criteria to be classified as held for sale and where its operations and cash flows can be clearly identified.

29www.eleco.com


B. Basis of preparation continuedAdoption of new and revised standards

New accounting standards and interpretations are effective for the first time in the current period but have had no impact on the results or the

financial position of the Group. Furthermore, new standards, new interpretations and amendments to standards and interpretations that have

been issued, but are not effective for the current period, have not been adopted early.

C. Going concernThe Board has considered a number of factors in determining the principle of going concern in the preparation of the Report and Accounts for the

year to 31 December 2012.

One of the key factors was the approval of a new day-to-day working capital facility of £4.75m through the use of an overdraft which was set up on

13 May 2013 for a period of one year. The Directors have no reason to doubt that this facility cannot be renegotiated beyond one year. This facility

replaces the previous overdraft facility that recently expired.

In addition, the Group has renegotiated its longer term debt financing requirement with a £4.0m, 5 year term loan commencing 13 May 2013

repayable in equal quarterly instalments of £0.1m with a bullet payment of £2.0m at the end of the term. This new facility is secured against the

Group’s freehold properties and replaces the previous term loan which was due to expire in July 2016. Further details of the security structure

of the new facilities are outlined in the Operating and Financial Review.

In setting the financial covenants the Directors have negotiated appropriate headroom based on the Group’s latest forecast to allow a degree

of flexibility were there to be a further downturn in economic conditions. The new funding structure outlined above shows sufficient headroom

over the period of the overdraft facilities.

The Group’s activities, together with the factors likely to affect its future development, performance and position are set out in the Operating

and Financial Review.

The Directors have reviewed the Group’s borrowing requirements for the next 12 months and the financial covenant tests set out in the banking

facilities agreement and confirm the Group has adequate resources for the Group’s current requirements. Thus they continue to adopt the going

concern basis of accounting in preparing the annual financial statements.

D. Basis of consolidationThe consolidated financial statements include the financial statements of the Company and its subsidiary undertakings for the year ended 31 December 2012

and the comparative 18 months ended 31 December 2011. Subsidiaries are entities controlled by the Group and their results have been adjusted, where

necessary, to ensure accounting policies are consistent with those of the Group. Control exists where the Group has the power to govern the financial and

operating policies of an entity so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

All intercompany balances and transactions, including unrealised profits and losses arising from intra-Group transactions, are eliminated in full.

The results of subsidiaries acquired or sold in the year are included in the consolidated income statement from or up to the date control passes until

control ceases.

Business combinations

The acquisition of subsidiaries is dealt with using the purchase method. The purchase method involves the recognition at fair value of all identifiable

assets and liabilities at the acquisition date, including contingent liabilities of the subsidiary regardless of whether or not they were recorded in the

financial statements of the subsidiary prior to acquisition. Acquisition costs are expensed as incurred.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the consideration transferred over the

Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired.

E. RevenueRevenue from the sale of goods represents the fair value of consideration received or receivable in respect of goods supplied to third parties in the

period, excluding value added tax and trade discounts, and is recognised when goods are delivered. Service revenue from software maintenance

and support contracts is treated as deferred income and taken to revenue in the Income Statement on a straight line basis in line with the service

and obligations over the term of the contract.

Revenue is recognised on contract work in progress at an amount appropriate to the stage of completion as measured by work performed.

The amount of profit attributable to the stage of completion of a contract is recognised when the outcome of the contract can be estimated with

reasonable reliability. Provision is made for foreseen losses as soon as there is an indication that a loss is apparent. Amounts due from customers

under long-term contracts are included within trade and other receivables and amounts recoverable on contracts. Amounts recoverable on

contracts represent revenue recognised in excess of invoiced amounts. Variations in contract work are included to the extent that they can

be measured reliably and have been agreed with the customer.

F. Finance income and costsFinancing costs comprise interest payable on borrowings calculated on an effective interest basis. Interest income and cost is recognised in

the income statement as it accrues. The net finance cost in respect of pensions includes interest cost on scheme liabilities and expected return

on scheme assets.


Significant Accounting Policies continued

G. TaxationCurrent tax is the tax payable based on taxable profit for the year, calculated using tax rates that have been enacted, or substantially enacted,

by the balance sheet date.

Deferred tax is calculated using the liability method on temporary differences and provided on the difference between the carrying amounts of

assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill nor on the initial recognition

of an asset or liability, unless the related transaction is a business combination or affects tax or accounting profit.

Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying

deductible temporary differences will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated at tax rates

that are expected to apply to their respective period of realisation, provided the expected tax rates are enacted or substantively enacted at the

balance sheet date and charged or credited to the income statement or statement of comprehensive income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities

and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities

on a net basis.

H. Intangible assetsGoodwill arising on consolidation represents the excess of the consideration transferred, excluding expenses, over the Group’s interest in the fair

value of the identifiable net assets acquired. The carrying value of goodwill is recognised as an asset and reviewed for impairment at least annually

and any impairment is recognised immediately in the income statement. On disposal, the attributable amount of goodwill is included in the

determination of profit or loss on disposal.

Other intangible assets acquired separately are capitalised at cost and on a business combination are capitalised at fair value as at the date of

acquisition. Following initial recognition, an intangible asset is held at cost less accumulated amortisation and any accumulated impairment losses.

Intangible assets excluding goodwill are amortised on a straight line basis over their useful economic lives and charged to administration expenses

in the income statement. The useful economic life of each class of intangible asset is as follows:

Customer relationships – up to twelve years

Intellectual property – up to five years

The Group owns intellectual property both in its software tools and software products. Intellectual property purchased is capitalised at cost and

is amortised on a straight-line basis over its expected useful life.

Research expenditure is written off as incurred. Development expenditure on a project is written off as incurred unless it can be demonstrated

that the following conditions for capitalisation, in accordance with IAS 38 “Intangible Assets”, are met:

B the intention to complete the development of the intangible asset and use or sell it;

B the development costs are separately identifiable and can be measured reliably;

B management are satisfied as to the ultimate technical and commercial viability of the project, so that it will be available for use or sale;

B management are satisfied with the availability of technical, financial and other resources to complete the development and to use or sell

the intangible asset; and

B it is probable that the asset will generate future economic benefit.

Any subsequent development costs are capitalised and are amortised from the date the product or process is available for use, on a straight-line

basis over its estimated useful life.

The carrying amounts of intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying

amount may not be recoverable and in the case of capitalised development expenditure reviewed for impairment annually while the asset is not

yet in use.

31www.eleco.com


I. Property, plant and equipmentProperty, plant and equipment is stated at purchase cost, together with any directly attributable costs of acquisition. The carrying amount and useful

lives of property, plant and equipment with material residual values are reviewed at each balance sheet date.

Depreciation is provided on all property, plant and equipment, except land, on a straight-line basis to write down the assets to their estimated

residual value over the useful economic life of the asset as follows:

Freehold buildings – 50 years

Long leasehold buildings – 50 years or term of the lease, if shorter

Short leasehold property – over the term of the lease

Plant, equipment and vehicles – two to ten years

When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items

of property, plant and equipment.

J. Impairment of assetsGoodwill

The carrying amounts of the Group’s goodwill assets are assessed annually as to whether an impairment adjustment may be required. When

annual impairment testing for assets is required, the assets under review are grouped under the appropriate cash-generating unit for which there

are separately identifiable cash flows. Goodwill is held at CGU level and allocated directly to the CGU under review. The Group makes an estimate

of the asset’s recoverable amount, based on the higher of the asset’s value in use and fair value less costs to sell. In assessing value in use,

the estimated future cash flows of the CGU are discounted to their present value using an appropriate discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset. An impairment charge is initially made against goodwill of the CGU

and thereafter against other assets. Any impairment is charged to the income statement under the relevant expense heading.

Property, plant and equipment and intangible assets excluding goodwill

At each balance sheet date the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine

whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset

is estimated to determine the extent of any impairment loss. The recoverable amount is the higher of the asset’s value in use and its fair value less

costs to sell. Value in use is calculated using cash flow projections for the asset discounted at the Group’s cost of capital. If the recoverable amount

of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment

loss is recognised as an expense in the income statement.

A previously recognised impairment loss, other than goodwill, is reversed only if there has been a change in the previous indicator used to determine

the assets recoverable amount since the last impairment loss was recognised. The reinstated carrying amount cannot exceed the carrying amount

that would have been determined, net of amortisation, had no impairment loss been recognised for the asset in prior years.

K. InventoriesInventories are stated at the lower of cost and net realisable value. Cost includes expenditure incurred in acquiring the inventories and bringing them

to their existing location and condition. The cost of manufactured inventories and work in progress includes related production overheads based

on normal operating activity and is calculated using the first in first out method. Net realisable value is based on estimated selling price less further

costs expected to be incurred to completion and marketing, selling and distribution.

L. LeasesFinance leases, which transfer to the Group substantially all of the benefits and risks of ownership of an asset, are capitalised at the inception of

the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned

between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.

Finance charges are charged directly against income.

Capitalised leased assets are depreciated over the shorter of the estimated life of the asset or the lease term. Leases, where the lessor retains

substantially all the risks and benefits of ownership of the asset, are classified as operating leases. Operating lease payments are recognised

as an expense in the income statement on a straight-line basis over the term of the lease.

M. Provisions and contingent liabilitiesA provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event and

it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined

by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value on money and,

where appropriate, the risks specific to the liability.

Contingent liabilities are possible obligations whose existence depends on the outcome of uncertain future events or present obligations where

the outflow of resources is uncertain or cannot be measured reliably. Contingent liabilities are not recognised in the financial statements but are

disclosed unless they are remote.


Significant Accounting Policies continued

N. Employee benefitsPension schemes

The Group operates a defined benefit pension scheme, which provides benefits based on final pensionable pay. The scheme closed to future

accrual on 31 December 2009. The defined benefit scheme is valued every three years by a professionally qualified independent actuary, the rates

of contribution payable being determined by the actuary.

The service cost of providing retirement benefits to employees during the year is charged to the income statement in the year. The full cost of

providing amendments to benefits in respect of past service, where amendments to benefits vest immediately, is also charged to the income

statement in the year. The expected return on the assets of the scheme during the year, based on the market value of scheme assets at the start

of the financial year, is included within finance income/charge. This also includes a charge representing the expected increase in liabilities of the

scheme during the year, arising from the liabilities of the scheme being one year closer to payment. The resulting net finance amount is reported

in the income statement.

Differences between actual and expected returns on assets during the year are recognised in the statement of other comprehensive income in the

year, together with differences from actual experience and from changes in actuarial assumptions. The net deficit on the defined benefit pension

scheme, representing the difference between the present value of the defined benefit obligation and the fair value of scheme assets (based upon

market price information and in the case of quoted securities the published bid price), is reported on the balance sheet.

Contributions to defined contribution pension schemes and multi-employer schemes are charged to the income statement as they become payable.

Share-based payments

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted and is

recognised as an expense over the vesting period, which ends on the date on which the relevant employees is unconditionally entitled to the award.

The fair value of the employee’s services is determined by reference to the fair value of instruments granted using an appropriate pricing model.

In valuing equity-settled transactions, account is taken of the probabilities of performance achievement and other conditions linked to the price

of the shares of the Company (market conditions).

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which

are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired

and management’s best estimate of the achievement or otherwise of non-market conditions. The movement in cumulative expense since the

previous balance sheet date is recognised in the income statement, with a corresponding entry in equity. The estimate of the number of options

that are expected to vest at each balance sheet date are reviewed annually at the balance sheet date.

Shares, the subject of share awards granted under the Long Term Incentive Plan, may be allotted to the employee share ownership trust at any

time from the date of grant. The shares held by the trust do not qualify for dividends and are deducted from equity attributable to shareholders

of the parent through other reserves. The shares allotted to the trust are accounted for at the mid market price on the date of transaction.

O. Foreign currenciesThe individual financial statements of each Group company are presented in the currency of the primary economic environment in which it

operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each Group

company are expressed in UK Pounds Sterling, which is the functional currency of the Company and the presentational currency for the

consolidated financial statements.

Transactions in foreign currencies are translated at the exchange rate ruling at the date of transaction. Foreign exchange differences arising on

the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised

in the income statement in the period in which they arise.

Assets and liabilities of subsidiaries denominated in a different functional currency to that of the Group’s presentational currency are translated into

Pounds Sterling at the rate of exchange ruling at the balance sheet date and results are translated at the average rate of exchange for the year.

The use of an average exchange rate for the year rather than actual exchange rates at the dates of transactions is considered to approximate

to actual rates for the translation of the results of foreign subsidiaries.

Differences on exchange, arising from the retranslation of the opening net investment in subsidiary companies which have functional currencies

that differ to Pound Sterling, and from the translation of the results of those companies at an average rate, are taken to reserves and reported in

the statement of comprehensive income. Exchange differences arising on the retranslation of non-trading inter-group balances reported in foreign

subsidiaries are regarded as part of the net investment in the subsidiary and treated as a movement in the translation reserve on consolidation.

When an operation is sold, amounts recognised in reserves on the translation of foreign operations are recycled through the income statement.

33www.eleco.com


P. Financial instrumentsFinancial assets

Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument and arise principally through the

provision of goods and services to customers (trade and other receivables) but also include other types of contractual monetary assets. Trade and

other receivables are initially recorded at fair value and subsequently carried at amortised cost using the effective interest method. A financial asset

is derecognised only where the contractual rights to the cash flows from the asset expire or the financial asset is transferred and that transfer

qualifies for de-recognition.

Trade receivables

Trade receivables do not carry any interest and are initially stated at their fair value. Subsequent measurement is at amortised cost as reduced

by appropriate allowances for estimated irrecoverable amounts. Allowances for irrecoverable amounts are made when there is evidence that the

Group may not be able to collect the amount due. The impairment recorded is the difference between the carrying value of the receivables and

the estimated future cash flows. Any impairment required is recorded in the income statement in administrative expenses.

Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three

months or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents are net of outstanding bank overdrafts.

Financial liabilities

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual

provisions of the instrument. Trade payables and other short-term monetary liabilities are initially recorded at fair value and subsequently carried at

amortised cost using the effective interest rate method. Bank borrowings are initially recognised at the fair value on initial recognition date, which in

the case of an arm’s length transaction is the amount advanced, exclusive of any transaction costs directly attributable to the issue of the instrument

and subsequently carried at amortised cost. A financial liability is derecognised when the obligation is discharged, cancelled or expires.

Q. EquityThe balances classified as share capital and share premium represent the proceeds of the nominal value and premium value respectively on the

issue of the Company’s equity share capital net of issue costs (see page 65).

The merger reserve is an un-distributable reserve and represents the premium not recognised on the issues of shares pursuant to s131 of the

Companies Act 1985 on acquisition of subsidiary companies. The translation reserve is used to record exchange differences arising from the

retranslation of the opening net investment and income statement of foreign subsidiaries. Shares in the Company held by the ESOT are reported

in the other reserves.

R. New standards and interpretations not appliedAt the date of authorisation of these financial statements, the following new standards and interpretations have been published but are not yet

effective for accounting periods commencing on 1 January 2012:

Effective date

International Accounting Standards (IAS/IFRS)

IFRS 9 “Financial Instruments” 1 January 2015

IFRS 10 “Consolidated Financial Statements” 1 January 2013

IFRS 11 “Joint Arrangements” 1 January 2013

IFRS 12 “Disclosure of Interests in Other Entities” 1 January 2013

IFRS 13 “Fair Value Measurement” 1 January 2013

IAS 19 “Employee Benefits” (revised June 2011) 1 January 2013

IAS 27 (revised) “Separate Financial Statements” 1 January 2013

IAS 28 (revised) “Investments in Associates and Joint Ventures” 1 January 2013

IAS 1 (amendments) – Presentation of items of other comprehensive income 1 July 2012

IFRS 7 (amendments) – Disclosures, offsetting financial assets and liabilities 1 January 2013

IAS 32 (amendments) – Offsetting financial assets and liabilities 1 January 2014

IFRS 9 and IFRS 7 (amendments) – Mandatory effective date and transition disclosures 1 January 2015

International Financial Reporting Interpretation Committee (IFRIC)

IFRIC 20 – Stripping costs in the production phase of a surface mine 1 January 2013

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial

statements of the Group except for additional disclosures when the relevant standard comes into effect.


Notes to the Consolidated Financial Statements

1. RevenueRevenue from continuing operations disclosed in the income statement is analysed as follows:


2012£’000

18 months ended

31 December

2011

£’000

Sale of goods 20,645 30,583

Income from services 11,476 15,615

Long-term contracts 2,056 10,624

Total revenue 34,177 56,822

2. Segment informationOperating segments

For management purposes, the Group is organised into two operating divisions based on the type of products and services supplied by each

business unit. The operating divisions are ElecoSoft® and ElecoBuild®. 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 principal activities of each segment are as follows:

ElecoSoft®: Developer and supplier of resource management software, building project software, design and engineering software and

3D design software.

ElecoBuild®: Manufacturer and supplier of a range of building products including metal roofing, cladding systems, acoustic flooring and floor joist

webs. Manufacturer and supplier of precast concrete rooms, retaining walls, terracing units and pre-stressed and precast retaining structures.

Head office costs that cannot reasonably be allocated to the operating segments and related assets and liabilities are reported under the

corporate segment.

The accounting policies of the reportable segments are the same as described in the Group’s significant accounting policies. Segment revenue

represents revenue from external customers arising from the sale of goods and services, plus inter-segment revenue. Inter-segment transactions

are priced on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that

can be allocated on a reasonable basis.

The structure of the reportable operating segments has changed from those reported in the 2010/11 report and accounts as a result of the disposal

of various ElecoBuild® operations during the 18 months to 31 December 2011. Consequently the prior year comparatives have been restated on

the revised basis.

35www.eleco.com


2. Segment information continuedOperating segments continued

Twelve months to 31 December 2012

ElecoSoft®

£’000ElecoBuild®

£’000Corporate

£’000Elimination

£’000

Continuing operations

£’000

Revenue 15,779 18,398 — — 34,177

Inter-segment revenue 42 7 — (49) —

Total segment revenue 15,821 18,405 — (49) 34,177

Adjusted operating profit/(loss) 4,177 (1,025) (872) 2,280

Product development (2,024) (16) — (2,040)

Amortisation of intangible assets (360) (111) (59) (530)

Operating profit/(loss) before exceptionals 1,793 (1,152) (931) (290)

Impairment charges — (687) — (687)

Restructuring costs (152) (396) (377) (925)

Segment result 1,641 (2,235) (1,308) (1,902)

Net finance cost (495)

Profit/(loss) before tax 1,641 (2,235) (1,308) (2,397)

Tax 76

Loss after tax (2,321)

Segment assets 16,612 14,239 1,134 31,985

Unallocated assets 2,282

Total Group assets 34,267

Segment liabilities 6,471 3,870 858 11,199

Unallocated liabilities 14,218

Total Group liabilities 25,417

Other segment information

Capital expenditure:

Property, plant and equipment 189 146 19 354

Intangible assets 133 16 — 149

Goodwill acquired 81 — — 81

Depreciation 218 779 — 997


Notes to the Consolidated Financial Statements Continued

2. Segment information continuedOperating segments continued

18 months to 31 December 2011

ElecoSoft®

£’000

ElecoBuild®

£’000

Corporate

£’000

Elimination

£’000

Continuing

operations

£’000

Revenue 23,047 33,775 — 56,822

Inter-segment revenue 401 1,090 (1,491) —

Total segment revenue 23,448 34,865 (1,491) 56,822

Adjusted operating profit/(loss) 5,993 (288) (1,606) 4,099

Product development (3,027) (25) — (3,052)

Amortisation of intangible assets (752) (152) — (904)

Operating profit/(loss) before exceptionals 2,214 (465) (1,606) 143

Impairment charges (11) (11) — (22)

Restructuring costs — (255) (88) (343)

Segment result 2,203 (731) (1,694) (222)

Net finance cost (708)

Profit/(loss) before tax 2,203 (731) (1,694) (930)

Tax (279)

Loss after tax (1,209)

Segment assets 16,281 18,154 1,694 36,129

Unallocated assets 6,037

Total Group assets 42,166

Segment liabilities 6,223 5,632 1,364 13,219

Unallocated liabilities 14,792

Total Group liabilities 28,011

Other segment information

Capital expenditure:

Property, plant and equipment 656 622 56 1,334

Intangible assets 271 31 27 329

Goodwill acquired 574 — — 574

Depreciation 320 1,826 — 2,146

The unallocated assets and liabilities represent cash and cash equivalents, borrowings, tax (including deferred tax) and pension scheme obligations.

An analysis of the unallocated assets and liabilities are as follows:

Unallocated assets

2012£’000

2011

£’000

Deferred tax assets 1,389 1,289

Current tax assets 5 —


2,282 6,037

37www.eleco.com


2. Segment information continuedUnallocated liabilities

2012£’000

2011

£’000

Bank overdraft and borrowings 7,426 8,825

Obligations under finance leases 531 500

Deferred tax liabilities 170 421

Current tax liabilities 56 87

Retirement benefit obligation 6,035 4,959

14,218 14,792

Geographical information

Revenue by geographical area represents continuing operations revenue from external customers based upon the geographical location of the customer.

Revenue by geographical destination:


2012£’000

18 months ended

31 December

2011

£’000

UK 21,829 38,766

Scandinavia 8,209 11,866

Rest of Europe 3,888 5,899

Rest of World 251 291

34,177 56,822

Non-current assets excluding deferred tax by geographical segment represent the carrying amount of assets based on the geographical area

in which the assets are located.

Non-current assets by geographical location:

2012£’000

2011

£’000

UK 14,491 17,198


Rest of Europe 1,335 1,230

22,136 24,614

Information about major customers

Revenues arising from sales to the Group’s largest customer were below the reporting threshold (2011: below reporting threshold).

3. Exceptional itemsExceptional items represent costs considered necessary to be separately disclosed by virtue of their size or nature:


2012£’000

18 months ended

31 December

2011

£’000

Impairment of intangible assets 680 11

Impairment of property, plant and equipment 7 11

Restructuring costs 550 343

Pension scheme restructuring costs 375 —

1,612 365

As a result of the annual goodwill impairment review required under IAS 36 “Impairment of Assets”, see Note 11, an impairment of £510,000 has

been recognised in the accounts in respect of goodwill related to Milbury Systems and £130,000 has been recognised in the accounts in respect

of goodwill related to Prompt Profiles. In addition, a review of the intangible assets at Milbury Systems identified certain intellectual property that

was considered to have no future value to the business. As such, the carrying value of £40,000 was impaired at 31 December 2012.

Restructuring costs comprise cash and non-cash costs associated with the Group restructuring programme, mainly in the UK, and primarily

relate to redundancy and business merger costs. Legal and professional fees associated with the discharge of the parent company as a statutory

employer of the pension scheme are reported under pension scheme restructuring costs.



4. Operating lossThe continuing operations operating loss for the period is stated after charging/(crediting) the following items:


2012£’000

18 months ended

31 December

2011

£’000

Raw materials and consumables 9,663 18,282

Research and development 2,040 3,052

Depreciation of property, plant and equipment 997 2,146

Amortisation of intangible assets 530 904

Profit on disposal of property, plant and equipment (114) (345)

Foreign exchange losses 26 59

Fees payable to the Company’s auditors for:

The audit of the Company’s annual accounts 49 48

The audit of the Company’s subsidiaries 102 108

Other services 19 48

Operating lease rentals:

Plant, equipment and vehicles 67 257

Other assets 353 435

5. Employee informationThe average number of employees during the period, including Directors, in continuing operations was made up as follows:


2012number

18 months ended

31 December

2011

£’000

ElecoSoft® 174 168

ElecoBuild® 127 200

Corporate 10 13

311 381

Staff costs during the period, including Directors, in continuing operations amounted to:


2012£’000

18 months ended

31 December

2011

£’000

Wages and salaries 10,971 20,265

Social security 1,958 3,386

Pension costs 670 1,037

13,599 24,688

Pension costs relate to contributions to defined contribution pension schemes.

39www.eleco.com


5. Employee information continuedThe remuneration of the Directors, who are the key management personnel of the Group, is set out below:


2012£’000

18 months ended

31 December

2011

£’000

Short-term employee benefits 621 1,127

Post-employment benefits 85 296

Termination benefits — 146

Executive Directors 706 1,569

Fees – Non-Executive Directors 56 86

762 1,655

The emoluments of the highest paid Director were £329,000 (2011: £402,000). In addition, a supplementary cash payment, in lieu of pension, in respect

of this Director was £69,000 (2011: £107,000). Employers’ NIC payments in respect of the Directors remuneration was £81,000 (2011: £135,000).

The remuneration of the Non-Executive Directors is determined by the Board. The Non-Executive Directors do not have service contracts but

are appointed for an initial term of three years, which may thereafter be renewed from year to year. They do not participate in any of the Group’s

share-based incentive or pension schemes.

6. Net finance income/(cost)Finance income and costs from continuing operations is set out below:


2012£’000

18 months ended

31 December

2011

£’000

Finance income

Bank and other interest receivable 19 96

Finance costs

Bank overdraft and loan interest (221) (250)

Finance leases and hire purchase contracts (24) (32)

Net return on pension scheme assets and liabilities (269) (522)

Total net finance cost (495) (708)

7. Taxation(a) Tax on profit on ordinary activities

The tax charge/(credit) in the income statement from continuing operations is as follows:


2012£’000

18 months ended

31 December

2011

£’000

Current tax:

UK corporation tax on profits of the year — —

Tax adjustments in respect of previous years 3 16

3 16

Foreign tax 171 321

Total current tax 174 337

Deferred tax:

Origination and reversal of temporary differences (262) (113)

Tax adjustments in respect of previous years 12 55

Total deferred tax (250) (58)

Tax (credit)/charge in the income statement (76) 279

Income tax for the UK has been calculated at the standard rate of UK corporation tax of 24% effective from 1 April 2012 (2011: 26%) on the

estimated assessable profit for the period. Taxation for foreign companies is calculated at the rates prevailing in the relevant jurisdictions.



7. Taxation continued(b) Reconciliation of total operations tax charge

The tax assessed on total operations accounting profit before income tax for the year is higher than the standard rate of UK corporation tax

of 24.5% for the period under review. The differences are explained below:


2012£’000

18 months ended

31 December

2011

£’000

Loss on ordinary activities before tax (including discontinued) (2,641) (2,251)

Tax calculated at the average standard rate of UK corporation tax of 24.5% (2011: 27%) applied to profits before tax (647) (608)

Effects of:

Expenses not deductible for tax purposes 63 682

Impairment of intangible assets not deductible for tax purposes 159 4

Deferred tax not recognised 114 1,969

Profit on non-qualifying assets — (1,666)

Share option deduction 43 72

Prior year adjustments 15 71

Tax rate differences 149 63

Prior year adjustments – discontinued operations 227 —

Other differences (17) (101)

Total tax charge for the year (including discontinued) 106 486

(c) Unrecognised tax losses

The Group has tax losses of £995,000 (2011: £1,094,000) arising overseas for which no deferred tax asset has been recognised and tax losses

of £15,721,000 (2011: £12,466,000) arising in the UK. No deferred tax is recognised on the unremitted earnings of overseas subsidiaries.

8. Discontinued operationsBusiness disposal adjustments and costs associated with the sale of the two connector plate businesses and the timber frame business in 2011

that were not accrued are recognised in the consolidated income statement under discontinued operations.

The results from discontinued operations which have been included in the income statement are set out below:


2012£’000

18 months ended

31 December

2011

£’000

Revenue 28 27,039

Cost of sales (17) (22,924)

Gross profit 11 4,115

Distribution costs — (443)

Administrative expenses (404) (8,099)

Other operating income/(costs) 134 (1,902)

Loss on re-measurement — (681)

Operating loss (259) (7,010)

Finance income 15 249

Loss before tax (244) (6,761)

Taxation on discontinued operations (182) (207)

Loss after tax on discontinued operations (426) (6,968)

Profit on business disposals after tax — 5,440

Net loss for the period from discontinued operations (426) (1,528)

41www.eleco.com


8. Discontinued operations continuedThe results from discontinued operations which have been included in the cash flow statement are set out below:


2012£’000

18 months ended

31 December

2011

£’000

Operating activities (780) (1,431)

Investing activities — (127)

Financing activities — (18)

Total cash flows (780) (1,576)

The Hoveringham factory classified as held for sale at 31 December 2011 was sold at its carrying value of £440,000 on 3 February 2012. Proceeds

received on completion were £290,000 and included in the cash flow statement under proceeds on sale of property, plant and equipment. Deferred

consideration of £150,000 is payable monthly over a period of 30 months from completion.

9. Dividends paid and proposed

Ordinary shares

2012per share

2011

per share


2012£’000

18 months ended

31 December

2011

£’000

Declared and paid during the year

Interim – current year — — — —

Final – previous year — — — —

— — — —

The Directors recommend that no final dividend be paid and a resolution to this effect will be proposed at the Annual General Meeting to be held

on 25 June 2013. Therefore the total dividend for the year amounts to £nil (2011: £nil).

10. Loss per shareThe calculations of the loss per share are based on the total loss after tax attributable to ordinary equity shareholders of the Company and the

weighted average number of shares in issue for the reporting period.


2012

18 months ended

31 December

2011

Loss after taxation £(2,747,000) £(2,737,000)

Weighted average number of shares in issue in the period 59,761,646 59,761,646

Dilutive effect of share options — —

Number of shares for diluted earnings per share 59,761,646 59,761,646

Loss per share – basic and diluted

Continuing operations (3.9)p (2.0)p

Discontinued operations (0.7)p (2.6)p

Total operations (4.6)p (4.6)p

The diluted loss per share is the same as the basic loss per share for the current year and preceding period.



11. Goodwill

2012£’000

2011

£’000

Cost:

B/f 15,067 14,450

Acquisition of businesses 81 574

Exchange 1 43

15,149 15,067

Impairment:

B/f 1,500 1,500

Impairment charge 640 —

2,140 1,500

Net book value 13,009 13,567

Goodwill acquired through acquisitions net of impairments is set out below:

2012£’000

2011

£’000

ElecoBuild®

Milbury Systems 1,942 2,452

Downer Cladding 258 258

Prompt Profiles 146 276

ElecoSoft®

Asta Development UK 4,804 4,804

Asta Development Germany 219 226

Consultec Sweden 4,934 4,845

Eleco Software Germany 336 336

Esign Software Germany 370 370

13,009 13,567

The Group considers each of the operating businesses listed above, which are those units for which a separate cash flow is computed, to be a

cash-generating unit (CGU) and each CGU is reviewed annually for impairment. For each CGU the Group has determined its recoverable amount

based on value in use calculations.

The value in use was derived from discounted management cash flow forecasts for the businesses, using the budgets and strategic plans based

on past performance and expectations for the market development of the CGU incorporating an appropriate business risk. The key assumptions for

the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the

period based on industry sector forecasts.

These budgets and strategic plans cover a five year period. The growth rate used to extrapolate the cash flows beyond this period is 2.25% which

is in line with the long-term GDP forecasts. In addition, a business risk factor of 1% is applied to ElecoBuild® CGU cash flows and 2% to ElecoSoft®

CGU cash flows to reflect the different business risks associated with the ElecoBuild® and ElecoSoft® operating segments. Sensitivity analysis is

carried out on all budgets and strategic plans used in the calculations. The discount rates used for all CGUs is 10.60% (2011: 10.20%) based

on the Group’s weighted average cost of capital.

The value in use calculations identified a shortfall in the Milbury Systems value in use compared to the CGU asset carrying value and resulted in an

impairment charge of £510,000. Cash flows from this CGU are generated from the sale of pre-stressed and precast retaining structures. A shortfall

in the value in use calculations compared to the CGU asset carrying value of Prompt Profiles resulted in an impairment charge of £130,000. Cash

flows from this CGU are generated from the sale of profiled metal products for the roofing systems industry.

The market in the UK continues to be weak and the Group has revised its expectations about the level of activity in these markets in the short and

medium term. Future projections used in the calculation allow for a modest recovery over this period.

43www.eleco.com


11. Goodwill continuedThe key sensitivities in assessing the value in use of goodwill are forecast cash flows and the discount rate applied. The value in use headroom/

(deficit) for the CGUs with a significant amount of goodwill together with the results of the sensitivities are shown below:

Base scenario

£’000

Sensitivity 1% reduction

in growth rate pa

£’000

Sensitivity 1% increase

in discount rate pa

£’000

Milbury Systems (509) (597) (925)

Asta Development UK 5,520 4,403 4,172

Consultec Sweden 7,018 5,471 5,414

The cumulative impairment charge recognised to date was £2,140,000 (2011: £1,500,000). The cumulative impairment charge relating

to Milbury Systems was £2,010,000 and Prompt Profiles £130,000.

12. Other intangible assets

Customer relationships

£’000

Intellectual property

£’000Total

£’000

Cost:

At 1 January 2012 3,228 2,254 5,482

Prior year restatement — (80) (80)

Additions — 71 71

Additions – internal development — 78 78

Disposals — (4) (4)

Exchange — (5) (5)

At 31 December 2012 3,228 2,314 5,542

Accumulated amortisation and impairment:

At 1 January 2012 1,367 1,777 3,144

Prior year restatement — (80) (80)

Amortisation charge for the year 269 261 530

Impairment charge for the year — 40 40

Exchange — 4 4

At 31 December 2012 1,636 2,002 3,638

Net book value at 31 December 2012 1,592 312 1,904

The values attributed to the customer relationships represent the fair value of acquired customer contracts and relationships held by the acquired

company at the date of acquisition. Similarly, values attributed to intellectual property represent the fair value of acquired intellectual property.

The prior year restatement represents fully amortised intangible assets that were part of the disposal of the timber frame operation in 2011.

Additions in the year represent purchased intangible assets of £71,000 (2011: £195,000) and internal development costs capitalised of £78,000

(2011: £134,000).

An impairment charge of £40,000 was recognised against the carrying value of certain intellectual property at Milbury Systems that was considered

to have no future value to the business. In 2011, the impairment charge of £11,000 was recognised against the carrying value of certain other

Precast Concrete licence agreements following a decision to discontinue the sale of these products.

Amortisation charges are included within administrative expenses and impairment charges are recorded within exceptional items.



12. Other intangible assets continued

Customer

relationships

£’000

Intellectual

property

£’000

Total

£’000

Cost:

At 1 July 2010 3,228 3,056 6,284

Additions — 195 195

Additions – internal development — 134 134

Disposal of businesses — (1,135) (1,135)

Exchange — 4 4

At 31 December 2011 3,228 2,254 5,482


At 1 July 2010 964 2,393 3,357

Amortisation charge for the period 403 512 915

Impairment charge for the period — 11 11

Disposal of businesses — (1,135) (1,135)

Exchange — (4) (4)

At 31 December 2011 1,367 1,777 3,144

Net book value at 31 December 2011 1,861 477 2,338

13. Property, plant and equipment

Freehold land and buildings

£’000

Leasehold buildings

£’000

Plant, equipment

and vehicles£’000

Total£’000

Cost:

At 1 January 2012 5,233 452 14,854 20,539

Prior year restatement — (144) (234) (378)

Additions — 13 341 354

Acquisition of businesses — — 2 2

Disposals — — (672) (672)

Exchange — — 1 1

At 31 December 2012 5,233 321 14,292 19,846

Accumulated depreciation and impairment:

At 1 January 2012 1,510 250 10,870 12,630

Prior year restatement — (144) (234) (378)

Depreciation charge for the year 91 35 871 997

Impairment charge for the year — — 7 7

Disposals — — (632) (632)

Exchange — — (1) (1)

At 31 December 2012 1,601 141 10,881 12,623

Net book value at 31 December 2012 3,632 180 3,411 7,223

The net book value of plant, equipment and vehicles includes an amount of £557,000 (2011: £495,000) in respect of assets held under finance

leases and hire purchase agreements. Freehold land of £724,000 (2011: £724,000) is not depreciated.

45www.eleco.com


13. Property, plant and equipment continued

Freehold

land and

buildings

£’000

Leasehold

land and

buildings

£’000

Plant,

equipment

and vehicles

£’000

Total

£’000

Cost:

At 1 July 2010 5,588 1,172 18,263 25,023

Additions 21 52 1,261 1,334

Acquisition of businesses — — 21 21

Disposals (376) — (1,096) (1,472)

Disposal of businesses — (244) (2,858) (3,102)

Transfer to assets held for sale — (528) (816) (1,344)


At 31 December 2011 5,233 452 14,854 20,539

Accumulated depreciation and impairment:

At 1 July 2010 1,402 637 11,642 13,681

Depreciation charge for the period 136 74 2,304 2,514

Impairment charge for the period — 69 495 564

Disposals (28) — (881) (909)

Disposal of businesses — (236) (2,401) (2,637)

Transfer to assets held for sale — (294) (352) (646)


At 31 December 2011 1,510 250 10,870 12,630

Net book value at 31 December 2011 3,723 202 3,984 7,909

14. Deferred consideration receivable

2012£’000

2011

£’000

Non-current deferred consideration receivable — 800

Current deferred consideration receivable 800 400

800 1,200

The disposal of the Group’s connector plate operations in December 2011 included deferred consideration of £1,200,000. An amount of £400,000

was received in December 2012 and the remaining £800,000 is receivable in December 2013. No conditions are attached to the deferred

consideration receivable.

15. Operating lease commitmentsFuture minimum rentals payable under non-cancellable operating leases are as follows:

Property2012£’000

Other2012£’000

Property

2011

£’000

Other

2011

£’000

Within one year 356 22 335 18

Between two and five years 405 22 513 19

After five years — — 690 —

761 44 1,538 37

Operating lease payments represent rentals payable by the Group for certain of its properties and other assets. The property leases are subject

to periodic rent reviews.

16. Capital commitmentsCapital expenditure commitments of £20,000 (2011: £nil) have been placed with suppliers at 31 December 2012.



17. Inventories

2012£’000

2011

£’000

Raw materials and components 1,075 1,023

Finished goods 1,069 1,258

2,144 2,281

At 31 December 2012 the Group’s inventory provisions were £109,000 (2011: £137,000). The amount written off to the income statement in respect

of written down inventories was £60,000 (2011: £58,000). There is no material difference between the book value and the replacement cost of the

inventories shown.

18. Construction contractsContracts in progress at the balance sheet date were as follows:

2012£’000

2011

£’000

Amounts due from contract customers included in trade and other receivables 9 97

Amounts due to contract customers included in trade and other payables (59) (383)

(50) (286)

Contract costs incurred plus recognised profits less recognised losses to date 3,086 9,930

Less: progress invoicing (3,136) (10,216)

(50) (286)

Retentions held by customers for construction contracts at 31 December 2012 were £214,000 (2011: £388,000).

19. Trade and other receivables

2012£’000

2011

£’000

Gross trade receivables 6,178 7,277

Impairment (453) (282)

Net trade receivables 5,725 6,995

Amounts recoverable on contracts 9 97

Other receivables 320 374

Prepayments and accrued income 851 928

6,905 8,394

The Group offers credit terms to customers depending on the credit status of the customer. The Group makes provision against trade receivables

when it considers them to be impaired and takes into account the specific circumstances of the receivable and the Group’s relationship with the

customer. The average credit period taken on the sales of goods and services is 55 days (2011: 58 days). No interest is charged on past due trade

receivables (2011: £nil).

The carrying amounts of trade and other receivables are denominated in the following currencies:

2012£’000

2011

£’000

Sterling 4,024 5,908

Euro 597 353

Swedish Krona 2,220 2,092

South African Rand — 13

Other 64 28

6,905 8,394

47www.eleco.com


19. Trade and other receivables continuedMovement in the provision for doubtful debts in respect of trade receivables during the period was as follows:

2012£’000

2011

£’000

B/f (282) (246)

Restatement in respect of previous year (262) —

Written off as uncollectable 195 324

Recovered during the period 33 80

Provided against during the period (136) (437)

Exchange (1) (3)

(453) (282)

Provision amounts associated with fully provided doubtful debts were excluded from the opening balance at 1 January 2012 and are shown

as a restatement adjustment.

The ageing of trade receivables at the balance sheet date that are past due but against which no provision has been made is as follows:

2012£’000

2011

£’000

Not more than three months 431 370

More than three months but less than six months 73 94

More than six months but less than one year 1 133

More than one year — —

505 597

Credit insurance is purchased by the ElecoBuild® division to mitigate exposure to credit risk. The main factors used in assessing the impairment

of trade receivables are the age of the balance and the circumstances of the individual customer. Management has no indication that unimpaired

amounts will be irrecoverable.

20. Trade and other payables

2012£’000

2011

£’000

Trade payables 3,589 3,756

Payments received on account 59 383

Other taxation and social security 856 1,595

Deferred consideration payable 66 146

Other liabilities 392 738

4,962 6,618

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken

for trade purchases is 48 days (2011: 45 days). The Directors consider that the carrying amount of trade payables approximates to their fair value.

21. Borrowings

2012£’000

2011

£’000

Current liabilities:

Bank loans and overdrafts 5,401 5,900

Obligations under finance leases and hire purchase contracts 212 141

5,613 6,041

Non-current liabilities:

Bank loans 2,025 2,925

Obligations under finance leases and hire purchase contracts 319 359

2,344 3,284

Total loans and borrowings 7,957 9,325

The Group’s facilities with Lloyds Banking Group are explained on page 13 of the Operating and Financial Review.



21. Borrowings continuedThe bank loans and overdrafts are repayable as follows:

2012£’000

2011

£’000

In one year or less 5,401 5,900

Between one and two years 900 900

Between two and five years 1,125 2,025

More than five years — —

7,426 8,825

The principal commitments of the Group under finance leases are repayable as follows:

2012£’000

2011

£’000

Plant, equipment and vehicles:

In one year or less 212 141


Between two and five years 90 186

531 500

The minimum lease payments of the Group under finance leases are as follows:

Present

lease

value

£’000

Interest

£’000

Minimum

lease

payments

£’000

In one year or less 212 21 233

Between one and two years 229 11 240

Between two and five years 90 3 93

At 31 December 2012 531 35 566

In one year or less 141 19 160

Between one and two years 173 13 186

Between two and five years 186 5 191

At 31 December 2011 500 37 537

22. Provisions

Onerous

contract

provision

£’000

Property

dilapidation

provision

£’000

Restructuring

provision

£’000

Insurance

premium

provision

£’000

Total

£’000

At 1 January 2012 — — — 133 133

Charge to the income statement 173 65 — — 238

Utilised in the year — — — (38) (38)

At 31 December 2012 173 65 — 95 333

Current liabilities 173 65 — 18 256

Non-current liabilities — — — 77 77

173 65 — 95 333

Contract provisions are made based upon management’s best estimate, where the expected economic benefits from specific contracts are less

than those costs of meeting those contract obligations, and principally relate to ongoing contract disputes. The period over which these are

expected to unwind is in the year to 31 December 2013.

The property dilapidation provision relates to various properties where notice has been given to terminate the lease arrangement.

The insurance premium provision represents the expected cost of the professional indemnity run off insurance premiums following the sale of the

timber frame manufacturing business and the two connector plate businesses in 2011.

49www.eleco.com


22. Provisions continued

Onerous

contract

provision

£’000

Property

dilapidation

provision

£’000

Restructuring

provision

£’000

Insurance

premium

provision

£’000

Total

£’000

At 1 July 2010 268 87 765 — 1,120

Charge to the income statement — — — 133 133

Utilised in the period (268) (87) (765) — (1,120)

At 31 December 2011 — — — 133 133

Current liabilities — — — 60 60

Non-current liabilities — — — 73 73

— — — 133 133

23. Deferred taxThe movement in the deferred tax liabilities analysed by category is shown below:

Temporary differences

Non-

deductible

intangible

assets

£’000

Accelerated

capital

allowances

£’000

Share-based

payments

£’000

Other

£’000

Total

£’000

At 1 January 2012 544 (40) (46) (37) 421

(Credit)/charge to the income statement (146) (134) 46 (16) (250)

Exchange — — — (1) (1)

At 31 December 2012 398 (174) — (54) 170

At 1 July 2010 737 (211) (132) (91) 303

(Credit)/charge to the income statement (193) 171 86 43 107

Exchange — — — 11 11

At 31 December 2011 544 (40) (46) (37) 421

Deferred tax on temporary differences has been calculated at the rate of 23.0% (2011: 26.0%).

The movement in the retirement benefit obligation deferred tax asset is shown below:

2012£’000

2011

£’000

B/f 1,289 2,750

(Credit)/charge to the statement of comprehensive income 100 (1,461)

1,389 1,289

Deferred tax assets, excluding deferred tax relating to the retirement benefit obligation, and liabilities are presented as non-current in the

consolidated balance sheet. Deferred tax unprovided in respect of investments in subsidiaries is £4,492,000 (2011: £4,131,000) due to

the unpredictability of future profit streams against which these losses may be offset. These losses may be carried forward indefinitely.



24. Retirement benefit obligationsEleco plc operates one defined benefit scheme in the UK, the Eleco Retirement and Benefits Scheme (ERBS). The ERBS provides benefits

on two scales based on final pensionable pay. The assets of the ERBS are held in a separate trustee administered fund and contributions into

the ERBS are determined by a qualified actuary on the basis of triennial valuations.

The valuation used for disclosures has been based on the most recent full actuarial valuation as at 30 June 2008 updated at 31 December 2012

by an independent qualified actuary under an appropriate method given the ERBS is closed to new members. Company contributions totalled

£1,668,000 (2011: £1,205,000) and the scheme closed to future accrual on 31 December 2010. The estimated amount of contributions expected

to be paid to the scheme during 2013 is £1,078,000.

Consultec Group AB and subsidiaries contribute to a defined benefits scheme under the ITP pension arrangement operated by Alecta, a Swedish

insurance company. Contributions to the scheme totalling £243,000 (2011: £362,000) were made during the period. This is a multi-employer

scheme and accordingly the Group is unable to identify its share of the surplus in the scheme on a reasonable and consistent basis. Consequently,

the scheme has been accounted for as a defined contribution scheme.

Contributions are paid into the fund operated by Alecta pension insurance in respect of each employee at rates defined by Alecta each year, having

taken account of the solvency margin of the scheme. The solvency margin, which Alecta is required to maintain below 155%, represents the extent

to which the market value of the assets of the fund, calculated by Alecta, exceeds its pension commitments. At 31 December 2012, the fund had

a solvency margin of 144.0% (2011: 126.0%).

The principal assumptions used by the actuary for the ERBS were (in nominal terms):

At 31 December

2012

At

31 December

2011

At

30 June

2010

At

30 June

2009

At

30 June

2008

Rate of increase in salaries n/a n/a 3.70% 4.35% 3.65%

Rate of increase in pension payment:

– Pre-1997 increases 2.10% 2.15% 3.00% 3.00% 3.00%

– 1997 to 2005 increases 2.75% 2.85% 3.10% 3.10% 3.95%

– Post-2005 increases 1.85% 1.90% 2.50% 2.50% 2.50%

Discount rate 4.35% 4.90% 5.40% 6.40% 6.50%

Price inflation 2.87% 3.00% 3.20% 3.20% 4.10%

The cash commutation used was 100% tax free cash on retirement (2011: 100%).

The mortality rate used is PA92 medium cohort with 1% floor, rated up one year advised by the Institute of Actuaries. The assumed life expectations

are as follows:

2012Years

2011

Years

Future expected lifetime of current pensioner at age 65:

– Male aged 65 22.0 22.0

– Female aged 65 25.3 25.3

Future expected lifetime of future pensioner at age 65:

– Male aged 65 24.0 24.0

– Female aged 65 27.4 27.4

The assets in the scheme and the expected rate of return were:

Long-termrate of returnexpected at

31 December2012

Value at31 December

2012£’000

Long-term

rate of return

expected at

31 December

2011

Value at

31 December

2011

£’000

Equities 6.10% 2,842 6.80% 6,128

Fixed interest bonds 3.05% 5,325 3.85% 8,241

Hedge fund 6.10% 11,166 — —

Insurance annuity contracts 4.05% 253 4.90% 225

Cash 2.30% 625 3.00% 3,937

Total market value of assets 5.15% 20,211 4.66% 18,531

Present value of scheme obligations (26,246) (23,490)

Liability in the scheme (6,035) (4,959)

51www.eleco.com


24. Retirement benefit obligations continuedAnalysis of the amounts charged to administrative expenses in the income statement:


2012£’000

18 months ended

31 December

2011

£’000

Past service cost — (459)

Total operating credit — (459)

Analysis of the amount (charged)/credited to financial income in the income statement:


2012£’000

18 months ended

31 December

2011

£’000

Expected return on pension scheme assets 859 1,442

Interest on pension scheme liabilities (1,128) (1,964)

Net finance cost (269) (522)

The analysis of actual return on plan assets is as follows:


2012£’000

18 months ended

31 December

2011

£’000

Expected return on pension scheme assets 859 1,442

Gain on pension scheme assets 106 1,984

Actual return on plan assets 965 3,426

Analysis of the amount recognised in the statement of comprehensive income is as follows:


2012£’000

18 months ended

31 December

2011

£’000

Actual return less expected return on pension scheme assets 106 1,984

Changes in assumptions underlying the present value of the liabilities (2,581) 1,736

Actuarial (loss)/gain (2,475) 3,720

The cumulative amount recognised in the other comprehensive income statement since the date of transition is a gain of £7,369,000 (2011: £9,844,000).

The movement in the fair value of plan assets during the year is as follows:

2012£’000

2011

£’000

B/f 18,531 15,405

Expected return on scheme assets 859 1,442

Surplus in actual return on scheme assets 106 1,984

Contributions 1,073 1,205

Section 75 contribution 595 —

Benefits paid (953) (1,505)

20,211 18,531



24. Retirement benefit obligations continuedThe movement in the defined benefit obligation during the year is as follows:

2012£’000

2011

£’000

B/f 23,490 25,226

Interest cost 1,128 1,964

Past service cost — (459)

Actuarial losses/(gains) 2,581 (1,736)

Benefits paid (953) (1,505)

26,246 23,490

The five year history of experience adjustments is as follows:

At 31 December

2012£’000

At

31 December

2011

£’000

At

30 June

2010

£’000

At

30 June

2009

£’000

At

30 June

2008

£’000

Present value of defined benefit obligations (26,246) (23,490) (25,226) (22,530) (22,669)

Fair value of scheme assets 20,211 18,531 15,405 12,931 14,708

Deficit in the scheme (6,035) (4,959) (9,821) (9,599) (7,961)

Experience adjustments on scheme assets:

Amount 106 2,047 1,679 (2,760) (2,745)

Percentage of scheme assets 1% 11% 11% -21% -19%

Experience (losses)/gains on scheme liabilities:

Amount (472) 81 (251) (391) 624

Percentage of scheme liabilities -2% 0% -1% -2% 3%

25. Called up share capital

2012Nominal

value£’000

2011

Nominal

value

£’000

Authorised:

85,000,000 (2011: 85,000,000) ordinary shares of 10p each 8,500 8,500

Allotted, called up and fully paid:


53www.eleco.com


26. Share-based paymentsThe Company operates one share scheme and all outstanding options over ordinary shares granted under this scheme had lapsed


Details of the number of options over ordinary shares outstanding during the year are as follows:

At 31 December 2012 At 31 December 2011

Number

Weighted average

fair value per share Number

Weighted

average

fair value per

share

Outstanding at the beginning of the year 210,000 79.4 540,000 79.5

Granted during the year — — — —

Exercised during the year — — — —

Lapsed during the year (210,000) 79.4 (330,000) 79.6

Outstanding at the end of the year — — 210,000 79.4

Exercisable at the end of the year — — 210,000 —

The options outstanding at 31 December 2012 were nil and no options were exercised in the period (2011: nil).

The expense recognised by the Group for share-based payments under the Long Term Incentive Plan in respect of employee services during the

year ended 31 December 2012 was £nil (2011: £nil).

The Employee Share Ownership Trust held 896,593 shares at 31 December 2012 with a market value of £69,000 (2011: £87,000) and has waived

its entitlement to dividends on ordinary shares held by it until such time as they are vested in employees.

27. AcquisitionsOn 14 March 2012 the Group acquired the business and certain assets of Novator Projekstyrning AB, of Sweden, enhancing its range of product

planning software for a total consideration of £83,000. The consideration comprised the payment of £46,000 in cash from the Group’s existing

resources and deferred consideration of £37,000.

In addition to the cash consideration paid for Novator in the year, £117,000 of deferred consideration was paid for Lubekonsult AB, acquired

in 2010, and £29,000 of deferred consideration was paid for Nilsson & Sahilin Arkitekter AB, acquired in 2011.

An analysis of the provisional fair value of the Novator net assets acquired and the fair value of the consideration paid is set out below:

Book value

£’000

Fair value

adjustments

£’000

Provisional

fair value

£’000

Property, plant and equipment 2 — 2

2 — 2

Deferred income — — —

— — —

Net assets 2 — 2

Goodwill 81

Total consideration 83

Satisfied by:

Cash 46

Deferred purchase consideration 37

83

In the period since acquisition, Novator contributed £44,000 to the Group’s operating profit. It utilised £nil for purchase of property plant and

equipment and £nil for financing activities.

Included in the £81,000 of goodwill recognised above are certain intangible assets that cannot be individually, separately and reliably measured from

the acquiree due to their nature. These items include the value of the management and workforce together with synergies that are expected to be

gained from being part of the Group.

If the acquisition had been completed at the beginning of the reporting period, turnover from continuing operations would have been £193,000

higher, and loss from continuing operations of £44,000 lower.



28. Financial instruments(a) Financial assets and liabilities

The carrying amount and fair value of financial assets and liabilities at the period end are set out below:

2012£’000

2011

£’000

Financial assets:


Trade and other receivables 6,054 7,466

Deferred consideration 800 1,200

Loans and other receivables 7,742 13,414

Financial liabilities:

Trade and other payables 4,106 5,023


Obligations under finance leases 531 500

Non-current liabilities 85 113

Financial liabilities held at amortised cost 12,148 14,461

The carrying value of the Group’s financial assets and liabilities are considered to approximate their respective fair values.

(b) Interest rate and currency profile of financial assets and liabilities

The interest rate and currency profiles of the Group’s financial assets and liabilities are set out below:

Financial liabilities Financial assets

Floating

rate

£’000

Total

£’000

Floating

rate

£’000

Total

£’000

Net financial

(assets)/

liabilities

£’000

Sterling 10,902 10,902 4,194 4,194 6,708

Euro 102 102 953 953 (851)

Swedish Krona 1,141 1,141 2,465 2,465 (1,324)

South African Rand 3 3 64 64 (61)

Other — — 66 66 (66)

At 31 December 2012 12,148 12,148 7,742 7,742 4,406

Sterling 13,117 13,111 9,197 9,197 3,920

Euro 49 49 810 810 (761)

Swedish Krona 1,288 1,288 2,569 2,569 (1,281)

South African Rand 7 7 775 775 (768)

Other — — 63 63 (63)

At 31 December 2011 14,461 14,461 13,414 13,414 1,047

There are no fixed rate financial assets.

The interest rate risk profile of the Group’s finance leases at the period end was:

Weighted average period Weighted average interest rate

2012Years

2011

Years

2012%

2011

%

Sterling 1.9 1.5 7.01 6.77

Euro n/a 0.1 n/a 4.20

Swedish Krona 1.8 2.8 5.37 7.51

The Group finances its operations through a mixture of retained profits, a term loan and a bank overdraft. The interest rate on the term loan and

overdraft facility is linked to the Bank of England base rate. These facilities are not secured against any assets of the Group at 31 December 2012.

55www.eleco.com


28. Financial instruments continued(c) Currency profile of net foreign currency monetary assets and liabilities

The table below shows the net un-hedged monetary assets/(liabilities) of the Group that are not denominated in the functional currency of the

operating unit and which therefore give rise to exchange gains and losses in the income statement:

Functional currency of Group operation

Sterling

£’000

Euro

£’000

Swedish

Krona

£’000

US Dollar

£’000

South African

Rand

£’000

Other

£’000

Total

£’000

Sterling — 19 — 14 — 24 57

Euro — — — — — — —

Swedish Krona — 13 — 2 — 26 41

At 31 December 2012 — 32 — 16 — 50 98

Sterling — 59 — 3 — — 62

Euro — — — — — — —

Swedish Krona 1 13 — 1 — 59 74

At 31 December 2011 1 72 — 4 — 59 136

(d) Market risk: objectives, policies and strategies

The Group’s interest rate risks, liquidity risks and currency risks are managed centrally within policies approved by the Board.

The net interest payable for the year, before interest on pension scheme assets and liabilities, was £211,000 compared to £63,000 receivable last

year. No speculative transactions are undertaken.

At present there is no policy to hedge the Group’s currency exposures arising from the profit translation or the effect of exchange rate movements

on the Group’s overseas net assets.

(e) Market risk: sensitivities

A sensitivity analysis for financial assets and liabilities affected by market risk is set out below. Each risk is analysed separately and shows the

sensitivity of financial assets and liabilities when a certain parameter is changed. The sensitivity analysis has been performed on period end

balances each year and therefore is not representative of transactions throughout the year. The rates used are based on historical trends and,

where relevant, projected forecasts.

(i) Currencies

The Group is exposed to currency risk in relation to the value of its financial assets and liabilities that are denominated in currencies other than

Sterling (see Note 28c above), arising from fluctuations in exchange rates. The table below shows the impact on the value of the Group’s reported

net financial assets at 31 December of exchange rates either strengthening or weakening by 10%. against Sterling and the impact this would have

on the reported profit or loss and equity. The Group’s reported equity would be £301,000 lower if Sterling strengthen by 10%. and £219,000 higher

if Sterling weakened by 10%.

2012As reported

£’000

Effect of Sterling strengthening by 10% Effect of Sterling weakening by 10%

Rate +10%£’000

Profit/(loss)£’000

Equity£’000

Rate -10%£’000


Equity£’000Net financial (assets)/liabilities

Denominated in Sterling 6,764 — — — — — —

Not denominated in Sterling (2,358) 219 (114) (301) (267) 140 219

Total net financial liabilities 4,406 219 (114) (301) (267) 140 219

2011

As reported

£’000

Effect of Sterling strengthening by 10% Effect of Sterling weakening by 10%

Rate +10%

£’000

Profit/(loss)

£’000

Equity

£’000

Rate -10%

£’000

Profit/(loss)

£’000

Equity

£’000Net financial (assets)/liabilities

Denominated in Sterling 3,920 — — — — — —

Not denominated in Sterling (2,873) 267 (187) (321) (335) 229 573

Total net financial liabilities 1,047 267 (187) (321) (335) 229 573



28. Financial instruments continued(e) Market risk: sensitivities continued

(ii) Interest rates

Changes in market interest rates expose the Group to the risk of fluctuations in the cash flow relating to its financial assets and liabilities some of

which attract interest at floating rates (see Note 28b above). Based upon the interest rate profile of the Group’s financial assets and liabilities as at

31 December, the table below shows the impact of a one percentage point change in the market interest rates on the Group’s profit and equity:

2012As reported

£’000

Effect of increase in interest rates of 1% Effect of decrease in interest rates of 1%

Rate +1%£’000


Equity£’000

Rate -1%£’000


Equity£’000Continuing operations

Net finance cost (226) (68) (68) (68) 53 53 53

2011

As reported

£’000

Effect of increase in interest rates of 1% Effect of decrease in interest rates of 1%

Rate +1%

£’000

Profit/(loss)

£’000

Equity

£’000

Rate -1%

£’000

Profit/(loss)

£’000

Equity

£’000Continuing operations

Net finance cost (186) (159) (159) (159) 145 145 145

The finance cost for the year is before interest on pension scheme assets and liabilities.

(f) Liquidity risk

The Group monitors its liquidity to maintain a sufficient level of undrawn committed debt facilities together with central management of the Group’s

cash resources to minimise liquidity risk.

The contractual maturities of financial liabilities is as follows:

Carrying

amount

£’000

3 months

or less

£’000

3 to 6

months

£’000

6 to 12

months

£’000

Between

1 and 2 years

£’000

Between

2 and 4 years

£’000

Trade and other payables 3,589 3,454 106 29 — —

Bank loans and overdraft 7,550 4,786 234 469 924 1,137

Obligations under finance leases 564 58 58 114 241 93

Non-current liabilities 85 — — — 28 57

At 31 December 2012 11,788 8,298 398 612 1,193 1,287

Trade and other payables 5,023 4,968 20 35 — —

Bank loans 8,986 257 5,257 475 937 2,060

Obligations under finance leases 538 40 40 80 186 192

Non-current liabilities 113 — — — 28 85

At 31 December 2011 14,660 5,265 5,317 590 1,151 2,337

The bank loans and overdraft and obligations under finance leases carrying amounts are inclusive of interest payable in the period.

At 31 December, the Group had available to it the following committed borrowing facilities expiring in the periods shown:

2012£’000

2011

£’000

Expiring in one year or less 6,150 10,900

Expiring between one and two years 900 900

Expiring between two and five years 1,125 2,025

8,175 13,825

57www.eleco.com


28. Financial instruments continued(g) Credit risk

Group policies are aimed at minimising losses due to customer payment default. Deferred payment terms are only granted to those customers who

satisfy creditworthiness criteria and individual exposures to customers are monitored. Credit insurance is purchased for businesses in the ElecoBuild®

division where cost is not excessive compared to the exposure being covered.

The maximum exposure to credit risk for uninsured trade receivables only at the reporting date by geographic region is as follows:

2012£’000

2011

£’000

UK 699 1,393


Rest of Europe 662 260

Rest of World 40 12

3,360 3,491

Deferred consideration of £800,000 receivable in December 2013 is held in Escrow.

(h) Capital risk

The Group’s objective is to minimise its cost of capital by optimising the efficiency of its capital structure, being the balance between equity

and debt. The objective is subject always to an overriding principle that capital must be managed to ensure the Group’s ability to continue as

a going concern in order to provide returns for shareholders and benefits for other stakeholders. The Group uses a range of financial metrics to

monitor the efficiency of its capital structure, including its weighted average cost of capital and net debt to EBITDA and ensures that its capital

structure provides sufficient financial strength to allow it to secure access to debt finance at reasonable cost.

At 31 December 2012, the Group’s EBITDA for the year was £52,000 (2011: £2,212,000) and net bank borrowings were £6,538,000

(2011: £4,077,000).

(i) Hedging instruments

There were no hedging instruments outstanding at 31 December 2012 (2011: nil).

29. Contingent liabilitiesThe Group routinely enters into a range of contractual arrangements in the ordinary course of events which can give rise to claims or potential

litigation against Group companies. It is the Group’s policy to make specific provisions at the balance sheet date for all liabilities which, in the opinion

of the Directors, represent a present obligation and outflow of resources to be probable at the balance sheet date. The Directors have reviewed the

open claims and any pending litigation against the Group at 31 December 2012 and concluded that no material unprovided loss is likely to accrue

from any such unprovided claims.

30. Related party transactionsTransactions between Group undertakings, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

With the exception of Matthew L Turner, the Directors of the Company had no material transactions with the Company during the year, other than

a result of service agreements. An amount of £109,000 (2011: £123,000) was paid to Shoremountain LLP of which Matthew L Turner is a Director.

This was paid under the terms of a consultancy arrangement by the Group.

An amount of £25,000 (2011: £37,500) was paid to J H B Ketteley & Co Limited under a lease for occupation by the Group of 66 Clifton Street,

London EC2A 4HB.

31. Post-balance sheet events On 17 April 2013 the Group acquired the business and assets of Wagemeyer, of Germany, enhancing the Group’s customer base for its stair design

and engineering software for an initial consideration of £42,000 settled by cash from the Group’s existing resources and deferred consideration

amounting to a fixed percentage of turnover over three years from the date of completion.

On 10 May 2013 the Group sold its excess land in Yaxley, Suffolk for a total consideration of £450,000 less expenses received on completion.


Independent Auditors’ Report To the members of Eleco plc

We have audited the parent company financial statements of Eleco plc for the period ended 31 December 2012 which comprise the Company

balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United

Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

This report is made solely to the Company’s members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006.

Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an

auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than

the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditorsAs explained more fully in the Directors’ Responsibilities Statement set out on page 20, the Directors are responsible for the preparation of the

parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion

on the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those

standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.

Opinion on financial statementsIn our opinion the parent company financial statements:

B give a true and fair view of the state of the Company’s affairs as at 31 December 2012;

B have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

B have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with

the parent company financial statements.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

B adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from

branches not visited by us; or

B the parent company financial statements are not in agreement with the accounting records and returns; or

B certain disclosures of Directors’ remuneration specified by law are not made; or

B we have not received all the information and explanations we require for our audit.

Other matterWe have reported separately on the Group financial statements of Eleco plc for the year ended 31 December 2012.

John Corbishley

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditors, Chartered Accountants

Cambridge

14 May 2013

59www.eleco.com


Company Balance Sheet At 31 December 2012

Notes

2012£’000

2011

£’000

Fixed assets

Intangible assets 4 13 22

Tangible assets 5 3,659 3,747

Investments 6 27,593 27,504

Debtor due after more than one year 7 — 800

31,265 32,073

Current assets

Stocks 8 2 4

Debtors 9 13,641 14,051

Cash at bank and in hand — 1,547

13,643 15,602

Creditors: amounts falling due within one year 10 (19,448) (22,150)

Net current liabilities (5,805) (6,548)

Total assets less current liabilities 25,460 25,525

Creditors: amounts falling due after more than one year 11 (2,025) (2,925)

Provisions for liabilities 12 (462) (367)

Net assets 22,973 22,233

Capital and reserves

Called up share capital 13 6,066 6,066

Share premium account 14 6,396 6,396

Other reserve 14 6,779 6,757

Profit and loss account 14 3,732 3,014

Shareholders’ equity 22,973 22,233

The financial statements of Eleco plc, registered number 00354915, on pages 59 to 65 were approved by the Board of Directors on 14 May 2013 and

signed on its behalf by:

John Ketteley

Executive Chairman


Statement of Company Accounting Policies

The financial statements have been prepared under UK GAAP. A summary of the more important Company accounting policies, which have been

applied consistently, is set out below:

Basis of accountingThe financial statements are prepared in accordance with the historical cost convention.

Intangible and tangible fixed assetsTangible fixed assets are stated at their purchase cost, together with any incidental costs of acquisition, net of depreciation and provision for impairment.

The Company owns intellectual property both in its software tools and software products. Intellectual property acquired is capitalised at cost

and is amortised on a straight-line basis over its expected useful life not exceeding 20 years. The current intellectual property assets held by

the Company were attributed a useful life of five years and this amortisation period has been used in the accounts.

Depreciation is provided on all tangible fixed assets, except freehold and leasehold land, at annual rates calculated to write off the cost,

less the estimated residual value of each asset, over its expected useful life as follows:

Freehold and long leasehold buildings – 50 years

Plant, equipment and vehicles – two to ten years

Investments and loans in subsidiariesFixed asset investments are shown at cost, together with any incidental costs of acquisition, less any provision for impairment. Provisions

are reviewed and adjusted annually to reflect any changes in the carrying value of the underlying subsidiary investments.

Finance and operating leasesThe capital element of finance lease commitments is shown as obligations under finance leases. The capital element of finance lease rentals

is applied to reduce the outstanding obligations under finance leases. The interest element of the rental obligations is charged to the profit and

loss account over the period of the lease in proportion to the reducing capital balance outstanding. Amounts payable under operating leases

are recognised in the profit and loss account on a straight line basis over the term of the lease.

Share-based paymentsThe cost of equity-settled transactions with employees is measured by reference to the fair value at that date at which they are granted and is

recognised as an expense over the vesting period, which ends on the date on which the relevant employees is unconditionally entitled to the award.

The fair value of the employees services is determined by reference to the fair value of instruments granted using an appropriate pricing model.

In valuing equity-settled transactions, account is taken of the probabilities of performance achievement and other conditions linked to the price

of the shares of the Company (market conditions).

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which

are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired

and management’s best estimate of the achievement or otherwise of non-market conditions. The movement in cumulative expense since the

previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.

Shares, the subject of share awards granted under the Long Term Incentive Plan, may be allotted to the employee share ownership trust at any time

from the date of grant. The shares held by the trust do not qualify for dividends and are deducted from equity attributable to shareholders of the

parent through other reserves.

Foreign exchangeTransactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated

in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. Any gain or loss arising from a change

in exchange rates subsequent to the date of the transaction is included as an exchange gain/loss in the profit and loss account.

TaxationCurrent UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted

or substantially enacted by the balance sheet date.

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions

or events have occurred at the date will result in an obligation to pay more tax or a right to pay less or to receive more tax, with the following exceptions:

B provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiary undertakings only to the extent

that, at the balance sheet date, dividends have been accrued as receivable; and

B deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable

profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse,

based on tax rates and laws enacted or substantively enacted at the balance sheet date.

61www.eleco.com


1. Profit for the yearAs permitted by Section 408 of the Companies Act 2006, the parent company’s profit and loss account has not been included in these financial

statements. The parent company’s profit for the financial year was £718,000 (2011: loss £2,885,000).

2. EmployeesThe aggregate remuneration of the Directors is shown in the employee note on page 39.

The average number of employees during the year including Directors by function was as follows:

2012Number

2011

Number

Management 5 5

Administration 5 8

10 13

Certain employees considered to be in Group roles were transferred to the parent company at the beginning of the period from other Group companies.

Their aggregate remuneration comprised:


2012£’000

18 months ended

31 December

2011

£’000

Wages and salaries 812 1,259

Social security costs 113 173

Pension costs 67 153

Share-based payments — —

992 1,585

3. Dividends paid and proposed

Ordinary shares

2012per share

2011

per share


2012£’000

18 months ended

31 December

2011

£’000

Declared and paid during the year

Interim – current year — — — —

Final – previous year — — — —

— — — —

The Directors recommend that no final dividend be paid. The total dividend for the year amounts to £nil (2011: £nil).

4. Intangible fixed assets

Intellectual

property

£’000

Cost:

At 1 January 2012 1,476

Additions 50

At 31 December 2012 1,526


At 1 January 2012 1,454

Amortisation charge for the year 59

At 31 December 2012 1,513

Net book value at 31 December 2012 13

Net book value at 31 December 2011 22

Notes to the Company Financial Statements


Notes to the Company Financial Statements Continued

5. Tangible fixed assets

Freehold land

and buildings

£’000

Leasehold

land and

buildings

£’000

Plant,

equipment

and vehicles

£’000

Total

£’000

Cost:

At 1 January 2012 5,232 19 212 5,463

Additions — — 19 19

At 31 December 2012 5,232 19 231 5,482

Accumulated depreciation:

At 1 January 2012 1,510 19 187 1,716

Depreciation charge for the period 90 — 17 107

At 31 December 2012 1,600 19 204 1,823

Net book value at 31 December 2012 3,632 0 27 3,659

Net book value at 31 December 2011 3,722 0 25 3,747

The net book value of plant equipment and vehicles includes an amount of £nil (2011: £nil) in respect of assets held under finance leases and hire

purchase agreements. Freehold land of £724,000 (2011: £724,000) is not depreciated.

6. Investments in subsidiariesInvestments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.

Shares

at cost

£’000

Loans

£’000

Total

£’000

Cost:

At 1 January 2012 21,076 64,275 85,351

Additions — 1,233 1,233

Disposal — (1,144) (1,144)

At 31 December 2012 21,076 64,364 85,440

Accumulated provision:

At 1 January 2012 13,339 44,508 57,847

Charge to profit and loss account — — —

At 31 December 2012 13,339 44,508 57,847

Net book value at 31 December 2012 7,737 19,856 27,593

Net book value at 31 December 2011 7,737 19,767 27,504

The Company reviewed the carrying value of its loans and investments in subsidiaries based on value in use calculations performed on the cash

flow projections of this business. These cash flow projections were based on the business unit budgets and strategic plans discounted by the

Group’s WACC outlined in Note 11 on page 42. The calculations did not identify a shortfall in the value in use of the loans and investments

compared to their carrying amount (2011: £6,218,000).

The principal subsidiary undertakings are unlisted and wholly owned. They are registered in England and Wales, where their operations are located

in the United Kingdom. Overseas subsidiary undertakings are incorporated in their country of operations.

63www.eleco.com


6. Investments in subsidiaries continued

Company Country of operations

ElecoSoft®

Asta Development plc UK

Eleco Software Limited UK

Consultec Group AB Sweden

Consultec ByggProgram AB Sweden

Consultec System AB Sweden

Consultec Arkitekter & Konstruktörer AB Sweden

Asta Development GmbH Germany

Eleco Software GmbH Germany

Esign Software GmbH Germany

ElecoBuild®

Bell & Webster Concrete Limited UK

Milbury Systems Limited UK

SpeedDeck Building Systems Limited UK

Downer Cladding Systems Limited UK

Prompt Profiles Limited UK

Stramit Panel Products Limited UK

The ordinary shares in the above companies are held through intermediate holding companies except Esign Software GmbH.

7. Debtors due after more than one year

2012£’000

2011

£’000

Deferred consideration receivable after more than one year — 800

— 800

8. Stock

2012£’000

2011

£’000

Finished goods 2 4

9. Debtors

2012£’000

2011

£’000

Trade debtors 4 5

Other debtors 121 122

Prepayments and accrued income 333 347

Deferred consideration 800 400

Corporation tax — 3

Deferred tax 48 94

Amounts due from subsidiary undertakings 12,335 13,080

13,641 14,051

The disposal of the Group’s connector plate businesses in December 2011 included deferred consideration of £1,200,000. An amount of £400,000

was received in December 2012 and the remaining £800,000 is receivable in December 2013. No conditions are attached to the deferred

consideration receivable.


Notes to the Company Financial Statements Continued

10. Creditors: amounts falling due within one year

2012£’000

2011

£’000


Trade creditors 513 226

Other creditors 87 388

Accruals and deferred income 434 727

Other taxation and social security 74 2

Amounts due to subsidiary undertakings 12,164 14,907

19,448 22,150

11. Creditors: amounts falling due after more than one year

2012£’000

2011

£’000

Bank loans 2,025 2,925

2,025 2,925

Bank loans and overdrafts are repayable as follows:

2012£’000

2011

£’000

In one year or less 6,176 5,900


Between two and five years 1,125 2,025

More than five years — —

8,201 8,825

12. Provisions

Provisions

for losses in

subsidiaries

£’000

Insurance

premium

provision

£’000

Total

£’000

At 1 January 2012 367 — 367

Reclassification — 133 133

Utilised in the year — (38) (38)

At 31 December 2012 367 95 462

At 31 December 2011 367 — 367

The insurance premium provision represents the expected cost of the professional indemnity run off insurance premiums following the sale of the

timber frame manufacturing business and the two connector plate business in 2011.

13. Called up share capital

2012Nominal

value£’000

2011

Nominal

value

£’000

Authorised:


Allotted, called up and fully paid:


65www.eleco.com


14. Share-based paymentsThe Company operates one share scheme and all outstanding options over ordinary shares granted under this scheme had lapsed


Details of the number of options over ordinary shares outstanding during the year are as follows:

At 31 December 2012 At 31 December 2011

Number

Weighted average fair

value per share Number

Weighted

average fair

value

per share

Outstanding at the beginning of the year 210,000 79.4 540,000 79.5

Granted during the year — — — —

Exercised during the year — — — —

Lapsed during the year (210,000) 79.4 (330,000) 79.6

Outstanding at the end of the year — — 210,000 79.4

Exercisable at the end of the year — — 210,000 —

The options outstanding at 31 December 2012 were nil and no options were exercised in the period (2011: nil).

The expense recognised in respect of services of employees of the Company for share-based payments under the Long Term Incentive Plan during

the year ended 31 December 2012 was £nil (2011: £nil).

15. Reserves

Share premium

£’000

Other reserve

£’000

Profit and loss account

£’000

At 1 January 2012 6,396 6,757 3,014

Profit for the year — — 718

Other movements — 22 —

At 31 December 2012 6,396 6,779 3,732

The other reserve carried forward includes the shares in the Company held by the Employee Share Ownership Trust.

16. Operating lease commitmentsAnnual commitments under operating leases are as follows:

Property2012£’000

Property

2011

£’000

Leases expiring:

Within one year 35 25

Between two and five years 35 25

After five years — —

70 50

17. Related party transactionsThe Company has taken advantage of the exemption granted by paragraph 3(c) of amended FRS 8 not to disclose transactions with other Group

companies as all subsidiaries are wholly owned. The Directors of Eleco plc had no material transactions with the Company during the year, other

than as a result of service agreements or as disclosed in the Directors’ Report. Details of the Directors’ remuneration are disclosed in the Directors’

Report on page 17.


Five Year Summary


2012£’000

18 months ended

31 December

2011

£’000

Year ended

30 June

2010

£’000

Year ended

30 June

2009

£’000

Year ended

30 June

2008

£’000

Revenue (restated)*

ElecoSoft® 15,821 23,448 13,661 13,395 13,734

ElecoBuild® 18,405 34,865 33,161 57,369 72,001

Intercompany elimination (49) (1,491) (914) (209) (826)

Continuing operations 34,177 56,822 45,908 70,555 84,909

Discontinued operations — 27,039 12,603 — —

Profit/(loss) from operations before exceptionals

ElecoSoft® 1,793 2,214 290 (148) 945

ElecoBuild® (1,152) (465) (3,577) 641 7,396

Corporate (931) (1,606) n/a n/a n/a

Continuing operations (290) 143 (3,287) 493 8,341

Exceptionals (1,612) (365) 606 (1,643) (319)

Profit/(loss) from operations (1,902) (222) (2,681) (1,150) 8,022

Finance income/(expense) (495) (708) (554) (280) 202

Profit/(loss) before taxation (2,397) (930) (3,235) (1,430) 8,224

Taxation 76 (279) 350 (39) (2,091)

Profit/(loss) after taxation (2,321) (1,209) (2,885) (1,469) 6,133

Total operations

Shareholders’ equity 8,850 14,155 15,346 21,566 25,887

Earnings/(loss) per share (basic) (4.6)p (4.6)p (9.1)p (2.5)p 10.6p

Dividend per share 0.00p 0.00p 0.00p 2.40p 2.80p

* Restated following disposal of connector plate and timber frame operations in 2011.

Interim resultsSeptember 2013

Annual General Meeting25 June 2013 – 12 noon at the Brewers’ Hall, Aldermanbury Square, London EC2V 7HR

Capital Gains TaxThe price of one ordinary share of 10p on 31 March 1982 was 70.5p

67www.eleco.com


NOTICE is hereby given that the 73rd Annual General Meeting of Eleco plc (the “Company”) will be held at the Brewers’ Hall, Aldermanbury Square,

London EC2V 7HR on 25 June 2013 at 12.00 noon for the purpose of considering and, if thought fit, passing the following resolutions. Resolutions

numbered 1 to 5 will be proposed as Ordinary Resolutions and Resolutions numbered 6 and 7 will be proposed as Special Resolutions.

Ordinary business1. To receive the financial statements for the year ended 31 December 2012, together with the reports of the Directors and Auditors.

2. To re-elect John H B Ketteley, who retires by rotation, as a Director of the Company.

3. To re-elect Jonathan Cohen, who retires by rotation, as a Director of the Company.

4. To re-appoint Grant Thornton UK LLP as auditors of the Company and to authorise the Directors to determine their remuneration.

Special business5. Authority to allot shares

That the Directors be generally and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 (the “Act”) to allot:

(a) shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal

amount of £2,021,941; and in addition

(b) equity securities of the Company (within the meaning of Section 560 of the Act) in connection with an offer of such securities by way of a rights

issue (as defined below) up to an aggregate nominal amount of £2,021,941,

provided that this authority shall expire on the conclusion of the next Annual General Meeting of the Company but so that the Company may,

before such expiry, make an offer or agreement which would or might require shares to be allotted or rights to subscribe for or convert

securities into shares to be granted after such expiry and the Directors may allot shares or grant rights to subscribe for or convert securities

into shares pursuant to such an offer or agreement as if this authority had not expired.

“Rights issue” means an offer of equity securities to holders of ordinary shares in the capital of the Company on the register on a record date fixed

by the Directors in proportion as nearly as may be to the respective numbers of ordinary shares held by them, but subject to such exclusions or

other arrangements as the Directors may deem necessary or expedient to deal with any treasury shares, fractional entitlements or legal or practical

issues arising under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory or any other matter.

6. Disapplication of pre-emption rights

That subject to and conditional on the passing of Resolution 5, the Directors be empowered, pursuant to Section 570 of the Act, to allot equity

securities (within the meaning of Section 560 of the Act) for cash pursuant to the authority conferred by Resolution 5 and as if Section 561(1)

of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities:

(a) in connection with an offer of such securities by way of a rights issue (as defined above); and

(b) otherwise than pursuant to paragraph 6(a) above up to an aggregate nominal amount of £303,291 and shall expire at the conclusion of the next

Annual General Meeting of the Company, save that the Company may, before such expiry, make an offer or agreement which would or might

require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement

as if this power had not expired.

This power applies in relation to a sale of treasury shares as if all references in this resolution to an allotment included any such sale and in the first

paragraph of this resolution the words “pursuant to the authority conferred by Resolutions” were omitted in relation to such sale.

7. Purchase of the Company’s own shares

That subject to and in accordance with the Company’s Articles of Association, the Company be and is hereby generally and unconditionally

authorised for the purposes of Section 701 of the Act to make market purchases (within the meaning of Section 693(4) of the Act) of equity

securities of the Company up to an aggregate nominal amount of £606,582 at a price per share (exclusive of expenses) of not less than 10p and

not more than 105% of the average of the middle market quotations for such equity securities as derived from the London Stock Exchange Daily

Official List for the five dealing days immediately preceding the date on which the equity securities are contracted to be purchased, provided that

this authority shall expire at the conclusion of the next Annual General Meeting provided that the Company may purchase, before such expiry, make

a contract to purchase its own shares which would or might be executed wholly or partly after such expiry and the Company may make a purchase

of its own shares in pursuance of such contract as if the authority hereby conferred had not expired.

By order of the Board

Ivor A Barton Registered Office:

Group Company Secretary Eleco plc

23 May 2013 66 Clifton Street

London EC2A 4HB

Notice of Meeting


Notice of Meeting continued

Notes:1. A member entitled to attend, speak and vote at the Annual General Meeting (AGM) may appoint one or more proxies (who need not be members

of the Company) to exercise these rights instead of him. A proxy form is enclosed. A member may appoint more than one proxy, provided that

each proxy is appointed to exercise the rights attached to different shares. To be effective, an instrument appointing a proxy must be returned

so as to reach the Company’s registrars, Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU no later than 12.00 noon

on 21 June 2013. The appointment of a proxy will not preclude a member from attending and/or voting at the meeting should he subsequently

decide to do so.

2. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, entitlement to attend and vote at the meeting and the number of

votes which may be cast thereat will be determined by reference to the Register of Members of the Company at 6.00pm on the day which is

two working days before the day of the meeting or adjourned meeting. Changes to entries on the Register of Members after that time shall

be disregarded in determining the rights of any person to attend and vote at the meeting.

3. To appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system, CREST

messages must be received by the issuer’s agent (ID number RA10) no later than 12.00 noon on 21 June 2013. For this purpose, the time of

receipt will be taken to be the same (as determined by the timestamp generated by the CREST system) from which the issuer’s agent is able to

retrieve the message. The Company may treat as valid a proxy appointment sent by CREST in the circumstances set out in Regulation 35(5)(a)

of the Uncertificated Securities Regulations 2001.

4. To be effective, all proxies must be lodged no later than 12.00 noon on 21 June 2013 at the Company’s registrars at: Capital Registrars,

PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU.

5. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers

as a member provided that they do not do so in relation to the same shares.

6. Copies of contracts of service and letters of appointment between the Directors and the Company will be available for inspection at the

Registered Office of the Company during normal business hours until the conclusion of the Annual General Meeting and at the place

of the meeting for at least 15 minutes prior to the Annual General Meeting until its conclusion.

Group Directory

ElecoSoft®

Asta Development plc

Thame, Oxfordshire

Tel: +44 (0) 1844 261700


Website: www.asta.eleco.com

Developer and supplier of project and resource management software.

Asta Development GmbH

Karlsruhe, Germany

Tel: +49 (0) 721 95 250


Website: www.astagmbh.eleco.com

Supplier of project and resource management software.

Consultec Arkitekter & Konstruktörer AB

Skellefteå, Sweden

Tel: +46 (0) 910 87800


Website: www.consultecak.eleco.com

Architectural consultancy and software reseller.

Consultec Bygg Program AB

Skellefteå, Sweden

Tel: +46 (0) 910 87898


Website: www.consultecbp.eleco.com

Developer and supplier of building project software.

Consultec System AB

Skellefteå, Sweden

Tel: +46 (0) 910 87891


Website: www.consultecsystem.eleco.com

Developer and supplier of design and engineering software.

Eleco Software Limited

Aldershot, Hampshire

Tel: +44 (0) 1252 267788


Website: www.softwareuk.eleco.com

Developer and supplier of 3D design software.

Eleco Software GmbH

Hameln, Germany

Tel: +49 (0) 5151 822 390


Website: www.softwaregmbh.eleco.com

Developer and supplier of 3D design software.

Esign Software GmbH

Hanover, Germany

Tel: +49 (0) 511 856 14340


Website: www.esign.eleco.com

Developer and supplier of software solutions for the floor coverings industry.

ElecoBuild®

Bell & Webster Concrete Limited

Grantham, Lincolnshire

Tel: +44 (0) 1476 562277


Website: www.bellandwebster.eleco.com

Manufacturer and supplier of precast concrete RoomSolutions™,

StadiaSolutions™, RetainingSolutions™ and other concrete products.

Downer Cladding Systems Limited

Yaxley, Suffolk

Tel: +44 (0) 1379 787215


Website: www.downercladding.eleco.com

Supplier and manufacturer of fixing solutions for man-made and natural

rainscreen façade materials.

Milbury Systems Limited

Lydney, Gloucestershire

Tel: +44 (0) 1594 847500


Website: www.milbury.eleco.com

Manufacturer and supplier of pre-stressed and precast retaining solutions.

Prompt Profiles Limited

Yaxley, Suffolk

Tel: +44 (0) 1379 787211


Website: www.promptprofiles.eleco.com

Manufacturer and supplier of profiled metal products for the roofing

and cladding industry.


Yaxley, Suffolk

Tel: +44 (0) 1379 788166


Website: www.speeddeck.eleco.com

Manufacturer and supplier of Secret Fix and standing seam metal

roofing and Vitesse® wall and rainscreen cladding systems.

Stramit Panel Products Limited

Yaxley, Suffolk

Tel: +44 (0) 1379 783465


Website: www.stramit.eleco.com

Manufacturer and supplier of ElecoFloor® acoustic flooring products,

ConCor® and CanBerra® partitioning panels.

Eleco plc66 Clifton Street

London EC2A 4HB

Tel: +44 (0)20 7422 0044


Website: www.eleco.com

Documents

Eleco plc | Annual Report and Accounts 2012 · r Consultec System commenced a StatCon development project for the Swedish Glulam Association in conjunction XJUIø-VMFÇ 5FDIOPMPHZ