13 September 2022
Eleco Plc
("Eleco", "Group" or "the Company")
Interim Results for the Six Months Ended 30 June 2022
The Board of Eleco plc (AIM: ELCO), the AIM-listed international construction software specialist, is pleased to announce its unaudited results for the six months ended 30 June 2022.
Financial Highlights
· Recurring revenue up 9% to £8.2m (2021: £7.5m), showing delivery on our SaaS transition
· Revenue of £13.4m (2021: £13.8m) and £13.8m at constant currency
· Adjusted EBITDA* of £2.8m (2021: £3.6m)
· Profit before tax of £1.7m (2021: £2.3m)
· Basic earnings per share of 1.6p (2021: 2.2p)
· Adjusted earnings per share** of 1.9p (2021: 2.6p)
· Cash generative with free cash flow*** of £2.1m (2021: £2.8m)
· Interim dividend of 0.20 pence (2021: 0.20 pence)
The Board remains confident in delivering in line with market expectations for the full year
* Adjusted to exclude amortisation of intangible assets, depreciation charge and former Directors' payments.
** Adjusted earnings per share represents adjusted profit after tax, divided by a weighted average number of shares.
*** Free cash flow represents cash generated in operations less purchase of intangible assets and property, plant and equipment, net of finance costs and tax plus any proceeds from disposals of property, plant and equipment.
Operational Highlights
· Successfully commenced phase two of the Group's SaaS strategy, to offer subscription licences to existing customers, thereby supporting customer success initiatives
· Development of a new Permit to Work module for Eleco's scalable maintenance and facilities software, ShireSystem, for release in H2 2022. This will be a key component in assisting customers with managing safety and compliance procedures
· Development of the Last Planner web solution which will allow on-site and final stage planning for customers. We plan to release to market in 2023
· A leading UK construction and regeneration group, Morgan Sindall, reported how they have been using Powerproject to drive productivity and manage modular building techniques
· Project management specialists Treo chose Eleco's leading project management tool, Powerproject, to manage scheduling in their South African mining and mineral processing projects
· Furthered ESG initiatives by becoming Carbon Neutral
· Certified as a Great Place to Work® and implemented wellbeing and personal development programmes for employees
· Winner of the Megabuyte Quoted 25 Award for Best Performing Software Company in Industrials
Chairman, Serena Lang, said:
"Eleco delivered a positive performance in the first half of 2022, with growth in subscription revenues, a key indicator in our transition to a SaaS business. We operate in a very exciting market and are well positioned to meet the growing demands of the built environment thanks to our planning and productivity-driving best in class software.
Over the next six months, we will remain focused on growing our recurring revenues. We are migrating all hosting to a single cloud provider, driving connectivity across the Group, which will allow us to scale more effectively. We continue to explore M&A opportunities that would support our growth strategy.
Importantly, we remain well capitalised and I would like to thank our talented team and valued customers for their support. We remain confident of meeting market expectations for the full year to 31 December 2022."
Details of conference call for equity analysts
There will be a webinar / conference call for equity analysts at 11:30am UK on Tuesday 13 September hosted by CEO Jonathan Hunter and Interim CFO Rose Clark. Any equity analysts wishing to register should contact SEC Newgate at eleco@secnewgate.co.uk where further details will be provided.
Details of webinar for investors
As a result of the bank holiday on Monday 19 September, Eleco announces that Jonathan Hunter and Rose Clark will now provide a live presentation via the Investor Meet Company platform on Tuesday 20 September 2022 at 9:00am UK.
The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet Eleco via:
https://www.investormeetcompany.com/eleco-public-limited-company/register-investor
Enquiries:
Eleco plc | +44 (0)20 7422 8000 |
Jonathan Hunter, Chief Executive Officer | |
Rose Clark, Interim Chief Financial Officer | |
| |
finnCap Limited | +44 (0)20 7220 0500 |
Geoff Nash/ James Balicki (Corporate Finance) | |
Charlotte Sutcliffe / Harriet Ward (ECM) | |
| |
SEC Newgate UK | +44 (0)20 3757 6882 |
Elisabeth Cowell / Bob Huxford / Isabelle Smurfit | eleco@secnewgate.co.uk |
About Eleco Plc
Eleco plc is an AIM-listed (AIM:ELCO) specialist international provider of software and related services to the built environment through its operating brands Elecosoft and Veeuze from centres of excellence in the UK, Sweden, Germany and the Netherlands. The Company's software solutions are trusted by international customers and used throughout the building lifecycle from early planning and design stages to construction, interior fit out, asset management and facilities management to support project management, estimation, visualisation, Building Information Modelling (BIM) and property management.
Chairman's Statement
I am pleased to report that during the first half of 2022, Eleco has once again achieved a robust performance. During a period of significant macro-economic and geo-political upheaval and increased pressure on overheads and talent, the business has continued to deliver on its growth strategy.
Our strategy to focus on delivering best of breed products to core customer segments within a selection of geographies and transitioning our business to SaaS has generated recurring revenue growth of 9% to £8.2m compared with the previous year (H1 2021: £7.5m). This means that recurring revenue now accounts for approximately 61% of total revenue, up from 55%. Eleco was also strongly cash generative, providing us with the resilience to navigate the inflationary pressures affecting businesses around the world.
We have continued to invest in product development in line with our customer-centric approach, having launched new versions of our core building lifecycle products. We also released our Artificial Intelligence (AI) wall tool in our visualisation business, and it is already being well received by our paint manufacturing customers.
Delivering on our strategy for organic growth
Overall recurring revenue at constant currency increased by 11%, demonstrating the positive progress we are making in the delivery of our strategy.
We previously stated that our total reported revenue growth will temporarily soften during our SaaS transition and the financial performance during the period is in line with our expectations. In moving to a SaaS model, we are giving choice for our customers and enhanced Customer Lifetime Value as well as underpinning visibility of income for our shareholders.
We have continued to strengthen our business, achieving new customer growth in the UK, growth in the US and strong demand in the Swedish market, where we secured our largest deal of the year so far. Existing customers continue to expand their software usage and we are seeing more demand for hosted solutions.
In line with our previously announced strategy to focus on our core customer segments and businesses, we are holding our German ARCON architectural CAD business, for sale. This will further streamline the business and the Board believes that the customers, staff and product life can thrive within a business with a common customer base and product type.
Due to geo-political factors and inflationary pressures, which have severely impacted the timing of operational programmes for our customers, there has been a slowdown in demand for services and sales of new licences across Eleco's portfolio, especially in Germany where the economy has been hit more severely by repercussions of the invasion of Ukraine. However, the Group is successfully absorbing these pressures thanks to our strong cash balance, with profits remaining in line with expectations.
Overall, we have continued to increase our customer numbers and monthly recurring revenue, making progress in our goal to become a word-class customer-centric organisation.
Board Update and Environmental, Social and Governance (ESG)
The first half of this year saw us strengthen our ESG disclosures. We formed an ESG committee, chaired by Mark Castle, and set Key Performance Indicators that we are measuring against in 2022. A key element of this is to consume renewable energy across our business, building on the 25% of our energy which currently comes from renewable energy suppliers. We are pleased to announce that Eleco is now carbon neutral, having offset our 2021 carbon emissions and we will continue to focus on sustainability and reducing our impact on the environment. Additionally, we are also very focused on how we, as a software player can help our customer base reduce their carbon footprint and the impact the built environment has on sustainability.
Attraction and retention of talent continues to be a core focus in a tight market, and we have continued to invest in our people throughout the period, recognising that a strong, engaging culture is key to this. We are delighted to have received the Great Place to Work® certification for our UK and Swedish regions, which is an acknowledgement of the commitment we have made to our people initiatives.
This is a great foundation to build upon as we continue to embrace our vision of becoming an employer people want to work with and for. The wellbeing of our people is a key pillar of our overall strategy and we have invested in an Employee Assistance Programme and Employee Hub, as well as encouraging our employees to spend time volunteering for a charitable cause.
Work continues on our policy framework, with updates to our Whistleblowing Policy as well as the introduction of an Anti-Slavery and Human Trafficking Policy during the first quarter. Matters of governance remain a key focus for the Board as we build on the changes made to its composition in the prior year, ensuring that Eleco is stewarded by a diverse mix of views and experience.
Our Group Leadership Team was further strengthened through the appointment of a Chief Technology Officer and I am delighted that in October we will welcome Neil Pritchard onto the Board as Chief Financial Officer.
Dividend
Dividends paid in the six months to 30 June 2022 were 0.40 pence per ordinary share (2021: 0.40 pence).
Having regard to the trading performance and cash generation in the period, the Board has decided to declare a dividend of 0.20 pence (2021: 0.20 pence), which would be covered 8 times by unaudited earnings for the period of 1.6 pence per share.
The interim dividend will be paid on 7 October 2022 to shareholders on the register at the close of business on 23 September 2022 and the ex-dividend date will be 22 September 2022.
Outlook
Eleco is operating in a very exciting market and is well positioned to meet the growing demands of the built environment thanks to our planning and productivity-driving software.
Over the next six months, we remain focused on growing our recurring revenues. We are migrating all hosting to a single cloud provider, driving connectivity across the Group and allowing us to scale more effectively.
Our people are important to the success of Eleco, and we will build on the positive momentum we have already seen with our people initiatives. We will continue to upskill, build career pathways and provide a working environment that motivates, retains and attracts new talent in what is a competitive environment.
Our strategy continues to focus on both organic recurring revenues and profit growth, as well as exploring M&A opportunities that will support our strategy.
Eleco delivered a positive performance in the first half of 2022, with growth in subscription revenues. Importantly we were also able to strengthen our financial position considerably and I would like to thank our talented team and valued customers for their support. We are confident of meeting market expectations for the full year to 31 December 2022.
Serena Lang
Chairman
12 September 2022
Condensed Consolidated Income Statement
for the financial period ended 30 June 2022
| Six months to 30 June | | ||
| | | Year ended | |
2021 | 31 December | |||
(unaudited) | 2021 | |||
| Notes | £'000 | £'000 | £'000 |
Revenue | 3, 4 | 13,435 | 13,831 | 27,344 |
Cost of sales | | (1,607) | (1,318) | (2,754) |
Gross profit | | 11,828 | 12,513 | 24,590 |
Amortisation and impairment of intangible assets | | (744) | (846) | (2,361) |
Former Directors' payments | | - | (69) | (69) |
Other selling and administrative expenses | | (9,290) | (9,232) | (18,061) |
Selling and administrative expenses | | (10,034) | (10,147) | (20,491) |
Operating profit | 4, 5 | 1,794 | 2,366 | 4,099 |
Finance cost | 6 | (61) | (106) | (173) |
Profit before tax | | 1,733 | 2,260 | 3,926 |
Tax | | (394) | (463) | (1,195) |
Profit for the financial period | | 1,339 | 1,797 | 2,731 |
Attributable to: Equity holders of the parent | |
1,339 |
1,797 | 2,731 |
Earnings per share (pence per share) Basic earnings per share |
7 |
1.6p |
2.2p |
3.3p |
Diluted earnings per share | 7 | 1.6p | 2.2p | 3.3p |
Condensed Consolidated Statement of Comprehensive Income
for the financial period ended 30 June 2022
Six months to 30 June
| 2022 (unaudited) £'000 | 2021 (unaudited) £'000 | Year ended 31 December 2021 £'000 |
Profit for the period | 1,339 | 1,797 | 2,731 |
Other comprehensive income: | | | |
Items that will be reclassified subsequently to profit or loss: Translation differences on foreign operations |
(115) |
(107) |
(258) |
Other comprehensive (loss) net of tax | (115) | (107) | (258) |
Total comprehensive income for the period | 1,224 | 1,690 | 2,473 |
Attributable to: Equity holders of the parent |
1,224 |
1,690 | 2,473 |
|
| | |
Condensed Consolidated Statement of Changes in Equity
for the financial period ended 30 June 2022
| Share capital | Share premium | Merger reserve | Translation reserve | Other reserve | Retained earnings |
Total |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 January 2022 | 832 | 2,406 | 1,002 | (279) | (5) | 19,890 | 23,846 |
Dividends |
|
|
|
|
| (329) | (329) |
Share-based payments | - | - | - | - | 69 | - | 69 |
Elimination of exercised share based payments | - | - | - | - | (69) | 69 | - |
Issue of share capital | - | - | - | - | - | - | - |
Transactions with owners | - | - | - | - | - | (260) | (260) |
Profit for the period |
|
|
|
|
| 1,339 | 1,339 |
Other comprehensive income: | | | | | | | |
Exchange differences on translation of net investments in foreign operations |
- |
- |
- |
(115) |
- |
- |
(115) |
Total comprehensive income for the period | - | - | - | (115) | - | 1,339 | 1,224 |
At 30 June 2022 (unaudited) | 832 | 2,406 | 1,002 | (394) | (5) | 20,969 | 24,810 |
|
Share |
Share |
Merger |
Translation |
Other |
Retained | |
| capital | premium | reserve | reserve | reserve | earnings | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 1 January 2021 | 825 | 2,182 | 1,002 | (8) | (2) | 17,525 | 21,524 |
Dividends | - | - | - | - | - | (329) | (329) |
Share-based payments | - | - | - | - | 40 | - | 40 |
Elimination of exercised share based payments | - | - | - | - | (66) | 66 | - |
Issue of share capital | 6 | 218 | - | - | - | - | 224 |
Transactions with owners | 6 | 218 | - | - | (26) | (263) | (65) |
Profit for the period | - | - | - | - | - | 1,797 | 1,797 |
Other comprehensive income: | | | | | | | |
Exchange differences on translation of net investments in foreign operations |
- |
- |
- |
(107) |
- |
(1) |
(108) |
Total comprehensive income for the period | - | - | - | (107) | - | 1,796 | 1,689 |
At 30 June 2021 (unaudited) | 831 | 2,400 | 1,002 | (115) | (28) | 19,058 | 23,148 |
|
Share |
Share |
Merger |
Translation |
Other |
Retained | |
| capital | premium | reserve | reserve | reserve | earnings | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 1 January 2021 | 825 | 2,182 | 1,002 | (8) | (2) | 17,525 | 21,524 |
Dividends | - | - | - | - | - | (493) | (493) |
Share-based payments | | | | | 81 | - | 81 |
Elimination of exercised share based payments | | | | | (83) | 83 | - |
Issue of share capital | 7 | 253 | - | - | - | - | 260 |
Transactions with owners | 7 | 253 | - | - | (2) | (410) | (152) |
Profit for the period | - | - | - | - | - | 2,731 | 2,731 |
Other comprehensive income: | -- | | | | | | |
Exchange differences on translation of net investments in foreign operations | | | | (270) | - | 12 | (258) |
Comprehensive income for the period | - | (29) | - | (1) | (1) | 32 | 1 |
Total comprehensive income for the period | - | (29) | - | (271) | (1) | 2,775 | 2,474 |
At 31 December 2021 | 832 | 2,406 | 1,002 | (279) | (5) | 19.890 | 23,846 |
Condensed Consolidated Balance Sheet
at 30 June 2022
30 June
|
Notes |
2022 (unaudited) £'000 |
2021 (unaudited) £'000 |
31 December 2021 £'000 |
Non-current assets | | | | |
Goodwill | | 15,247 | 15,729 |
15,593 |
Other intangible assets | 9 | 6,713 | 7,140 | 6,554 |
Property, plant and equipment |
| 728 | 595 | 717 |
Right-of-Use assets | | 1,436 | 1,867 | 1,728 |
Deferred tax assets | | 85 | 85 | 65 |
Total non-current assets | | 24,209 | 25,416 | 24,657 |
Current assets | | | | |
Inventories | | 26 | 8 | 16 |
Trade and other receivables | | 3,746 | 3,491 | 4,277 |
Current tax assets | | 305 | 100 | 216 |
Assets of disposal group held for sale | 10 | 842 | - | - |
Cash and cash equivalents | | 10,926 | 12,163 | 10,055 |
Total current assets | | 15,845 | 15,762 | 14,564 |
Total assets | | 40,054 | 41,178 | 39,221 |
Current liabilities | | | | |
Borrowings | 11 | - | (1,645) | (45) |
Lease liabilities | | (402) | (484) | (471) |
Trade and other payables | | (1,748) | (1,446) | (1,793) |
Provisions | | - | (125) | (10) |
Current tax liabilities | | - | (123) | - |
Liabilities of disposal group held for sale | 12 | (184) | - | - |
Accruals and deferred income | 13 | (9,831) | (9,116) | (9,689) |
Total current liabilities | | (12,165) | (12,939) | (12,008) |
Non-current liabilities | | | | |
Borrowings | 11 | - | (2,048) | (56) |
Lease liabilities | | (1,216) | (1,595) | (1,464) |
Deferred tax liabilities | | (1,837) | (1,407) | (1,806) |
Non-current provisions | | (26) | (41) | (41) |
Total non-current liabilities | | (3,079) | (5,091) | (3,367) |
Total liabilities | | (15,244) | (18,030) | (15,375) |
Net assets | | 24,810 | 23,148 | 23,846 |
Equity | | | | |
Share capital | | 832 | 831 | 832 |
Share premium account | | 2,406 | 2,400 | 2,406 |
Merger reserve | | 1,002 | 1,002 | 1,002 |
Translation reserve | | (394) | (115) | (279) |
Other reserve | | (5) | (28) | (5) |
Retained earnings | | 20,969 | 19,058 | 19,890 |
Equity attributable to shareholders of the parent | | 24,810 | 23,148 | 23,846 |
Condensed Consolidated Statement of Cash Flows
for the financial period ended 30 June 2022
| | ||
| | ||
| Six months to 30 June | | |
| | Year ended | |
| 2021 | 31 December | |
| (unaudited) | 2021 | |
Note | £'000 | £'000 | £'000 |
Cash flows from operating activities Profit before tax |
1,733 |
2,260 |
3,926 |
Net finance costs | 61 | 106 | 173 |
Depreciation charge | 271 | 368 | 722 |
Amortisation charge | 744 | 846 | 2,361 |
(Profit)/Loss on sale of property, plant and equipment | (6) | 3 | (7) |
Share-based payment charge | 69 | 40 | 81 |
Decrease in provisions | (25) | - | (115) |
Cash generated in operations before working capital movements | 2,847 | 3,623 | 7,141 |
Decrease/(Increase) in trade and other receivables | 498 | 421 | (366) |
Increase/(Decrease) in inventories and work in progress | (10) | 14 | 7 |
Increase in trade and other payables and accruals and deferred income | 206 | 21 | 942 |
Cash generated in operations | 3,541 | 4,079 | 7,724 |
Interest received/ (paid) | 38 | (57) | (124) |
Net income tax paid | (470) | (360) | (903) |
Net cash inflow from operating activities | 3,109 | 3,662 | 6,697 |
Investing activities Purchase of intangible assets |
(902) |
(795) |
(1,727) |
Purchase of property, plant and equipment | (134) | (60) | (279) |
Proceeds from sale of property, plant, equipment and intangible assets | 15 | 48 | 60 |
Net cash outflow from investing activities | (1,021) | (807) | (1,946) |
Financing activities Repayment of bank loans |
(101) |
(823) |
(4,447) |
Repayments of leasing liabilities | (265) | (355) | (650) |
Issue of share capital | - | 224 | 260 |
Equity dividends paid | (329) | (329) | (493) |
Net cash (outflow) from financing activities | (695) | (1,283) | (5,330) |
Net increase/(decrease) in cash and cash equivalents | 1,393 | 1,572 | (579) |
Cash and cash equivalents at beginning of period |
10,055 |
10,668 | 10,668 |
Effects of changes in foreign exchange rates | (110) | (77) | (34) |
Cash and cash equivalents at end of period | 11,338 | 12,163 | 10,055 |
Cash and cash equivalents comprise: Cash and short term deposits Cash held for Sale 10 |
10,926 412 |
12,163 - |
10,055 - |
| 11,338 | 12,163 | 10,055 |
Notes to the Condensed Consolidated Interim Financial Information
1. General information
The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 6 Bevis Marks, London, EC3A 7BA.
The Company is listed on the Alternative Investment Market ("AIM").
The condensed consolidated interim financial information does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's consolidated financial statements for the year ended 31 December 2021 have been filed at Companies House. The audit report was not qualified and did not contain a reference to any matter to which the auditor drew attention by way of emphasis and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.
2. Basis of preparation
The condensed consolidated interim financial statements for the six months to 30 June 2022 have been prepared in accordance with the accounting policies which will be applied in the twelve months financial statements to 31 December 2022. These accounting policies will be drawn up in accordance with Applicable law and UK-adopted International Accounting Standards (UK-IAS) that are effective at 31 December 2022.
The condensed consolidated interim financial statements are unaudited. They do not include all the information and disclosures required in the annual financial statements or for full compliance with UK-IAS, and therefore should be read in conjunction with the Group's published financial statements for the year ended 31 December 2021. The comparative figures for the year ended 31 December 2021 are not the Company's statutory accounts for that period but have been extracted from these accounts.
The Directors, having considered the Group's current financial resources, have concluded that they are adequate for the Group's present requirements. Therefore, the condensed consolidated interim financial information has been prepared on the going concern basis.
The impending sale of a subsidiary company operating a niche product which is no longer core to Eleco's strategy meets the criteria for classification in accordance with IFRS 5. The assets of the company have been presented as a disposal group held for sale and the associated liabilities have been presented separately on the face of the statement of financial position.
Estimates
Application of the Group's accounting policies in preparing condensed consolidated interim financial statements requires management to make judgements and estimates that affect the reported amount of assets and liabilities, revenues and expenses. Actual results may ultimately differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2021.
Risks and uncertainties
A summary of the Group's principal risks and uncertainties was set out on pages 16 to 19 of the 2021 Annual Report and Accounts. The Board considers these risks and uncertainties are still relevant to the current financial year and the impact of changes in the UK economy is reviewed in the Chairman's statement contained in this report.
The Interim Report was approved by the Directors on 12 September 2022.
3. Revenue
Revenue disclosed in the income statement is analysed as follows:
| Six months to 30 June | | |
| 2022 £'000 | 2021 £'000 | Year to 31 December 2021 £'000 |
Licence sales | 2,247 | 3,253 | 5,913 |
Recurring revenue | 8,204 | 7,543 | 15,424 |
Services income | 2,984 | 3,035 | 6,007 |
| 13,435 | 13,831 | 27,344 |
Revenue is recognised for each category as follows: | | | |
• Licence sales - recognised at the point of transfer (delivery) of the licence to a customer. • Recurring revenue : SaaS, maintenance, support and subscriptions - as these services are provided over the term of the contract, revenue is recognised over the life of the contract. • Services - recognised on delivery of the service. | | | |
4. Segmental information
Operating segments
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and to assess their performance.
The chief operating decision maker has been identified as the Executive Directors. The Group revenue is derived entirely from the sale of software licences, software maintenance and support and related services. Consequently, the Executive Directors review the three revenue streams, but as the costs are not recorded in the same way, the information is presented as one segment and as such the information is presented in line with management information.
| Six months to 30 June | | |
| 2022 £'000 | 2021 £'000 | Year ended 31 December 2021 £'000 |
Revenue | 13,435 | 13,831 | 27,344 |
Adjusted EBITDA |
2,809, |
3,649 | 7,251 |
Amortisation and impairment of purchased intangible assets | (494) | (551) | (1,786) |
Depreciation | (271) | (368) | (722) |
Adjusted operating profit | 2,044 | 2,730 | 4,743 |
Amortisation of acquired intangible assets | (250) | (295) | (575) |
Former Directors' payments | - | (69) | (69) |
Operating profit | 1,794 | 2,366 | 4,099 |
Net finance cost | (61) | (106) | (173) |
Segment profit before tax | 1,733 | 2,260 | 3,926 |
Tax | (394) | (463) | (1,195) |
Segment profit after tax | 1,339 | 1,797 | 2,731 |
Operating profit | 1,794 | 2,366 | 4,099 |
Amortisation of intangible assets | 744 | 846 | 2,361 |
Depreciation charge | 271 | 368 | 722 |
Former Directors' payments | - | 69 | 69 |
Adjusted EBITDA | 2,809 | 3,649 | 7,251 |
|
| |
|
Geographical, product and sales channel information
Revenue by geographical segment represents revenue from external customers based upon the geographical location of the customer.
Six months to 30 June
| 2022 £'000 | 2021 £'000 | Year ended 31 December 2021 £'000 |
UK | 5,276 | 5,236 | 10,446 |
Scandinavia | 3,354 | 3,311 | 6,550 |
Germany | 2,180 | 2,457 | 4,911 |
USA | 594 | 488 | 1,030 |
Rest of Europe | 1,742 | 2,082 | 3,916 |
Rest of World | 289 | 257 | 491 |
| 13,435 | 13,831 | 27,344 |
Revenue by product group represents revenue from external customers.
Six months to 30 June
| 2022 £'000 | | 2021 £'000 | Year ended 31 December 2021 £'000 |
Revenue from software & related services:
Building Lifecycle |
8,883 | |
8,871 |
17,650
|
CAD & Visualisation
| 3,638 | | 4,119 | 7,997 |
Other - third party software | 914 | | 841 | 1,697 |
| 13,435 | | 13,831 | 27,344 |
The Group utilises resellers to access certain markets. Revenue by sales channel represents revenue from external customers.
Six months to 30 June
| 2022 £'000 | | 2021 £'000 | Year ended 31 December 2021 £'000 |
Direct | 12,749 | | 13,117 | 26,068 |
Reseller | 686 | | 714 | 1,276 |
| 13,435 | | 13,831 | 27,344 |
5. Operating profit
Operating profit for the period is after charging the following items:
| Six months to 30 June | | |
| 2022 £'000 | 2021 £'000 | Year ended 31 December 2021 £'000 |
Software product development expense | 887 | 838 | 1,660 |
Depreciation of property, plant and equipment | 98 | 112 | 213 |
Depreciation of Right-of-Use assets | 173 | 256 | 509 |
Amortisation of acquired intangible assets | 250 | 295 | 575 |
Amortisation of other intangible assets | 494 | 551 | 1,150 |
Impairment of other intangible assets | - | - | 636 |
Share based payments | 69 | 40 | 81 |
Employer furlough scheme repayments | - | 135 | 135 |
(Profit)/Loss on disposal of property, plant and equipment | (6) | 3 | (7) |
Foreign exchange losses | 10 | 29 | 127 |
Former Director's payments | - | 69 | 69 |
|
| |
|
6. Net finance cost
Finance income and costs disclosed in the income statement is set out below:
Six months to 30 June
| 2022 £'000 | 2021 £'000 | Year ended 31 December 2021 £'000 |
Finance costs: Bank overdraft and loan interest |
(1) |
(73) | (110) |
Interest expense for leasing arrangements | (60) | (33) | (63) |
Total net finance cost | (61) | (106) | (173) |
7. Earnings per share
The calculations of the earnings per share are based on profit after tax attributable to the ordinary equity shareholders of the Company and the weighted average number of shares in issue for the reporting period.
Six months to 30 June
2022 | 2021 | Year to 31 December 2021 | |||||||
| Profit | Weighted | | Profit | Weighted | | Profit | Weighted | |
| attributable | average | | attributable | average | | attributable | average | |
| to | number of | | to | number of | | to | number of | |
| shareholders | shares | EPS | shareholders | shares | EPS | shareholders | shares | EPS |
| (£'000) | (millions) | (p) | (£'000) | (millions) | (p) | (£'000) | (millions) | (p) |
Basic earnings per share | 1,339 | 82.2 | 1.6 | 1,797 | 82.0 | 2.2 | 2,731 | 82.0 | 3.3 |
Diluted earnings per share | 1,339 | 82.7 | 1.6 | 1,797 | 82.8 | 2.2 | 2,731 | 82.9 | 3.3 |
Adjusted earnings per share |
1,541 |
82.2 |
1.9 |
2,092 |
82.0 |
2.6 | 3,253 | 82.0 | 4.0 |
Shares held by the Employee Share Ownership Trust are excluded from the weighted average number of shares in the period. Adjusted profit attributable to shareholders is reconciled to reported profit attributable to shareholders in note 15.
8. Dividends
Dividends paid in the six months to 30 June 2022 were 0.40 pence per ordinary share (2021: 0.40 pence per ordinary share).
Cash dividends of £329,000 (2021: £329,000) were paid in the six months to 30 June 2022 as follows:
| Six months to 30 June | Year to 31 December
| ||||
| 2022 | 2022 | 2021 | 2021 | 2021 | 2021 |
Ordinary Shares | per share | £'000 | per share | £'000 | per share | £'000 |
Declared and paid during the year Interim - current year |
- |
- |
0.20 |
164 |
0.20 |
164 |
Final - previous year | 0.40 | 329 | 0.40 | 329 | 0.40 | 329 |
| 0.40 | 329 | 0.60 | 493 | 0.60 | 493 |
The Directors have recommended an interim dividend of 0.20 pence per ordinary share (2021: 0.20 pence per ordinary share).
9. Other intangible assets
Other intangible assets comprise capitalised development costs, acquired customer relationships and purchased intangible assets. Additions in the six months to 30 June 2022 represent purchased intangible assets of £164,000 (2021 half year: £5,000) and internal development costs capitalised of £738,000 (2021 half year: £790,000). Internal development relates to software development projects that meet the accounting policy criteria for capitalisation.
10. Assets of disposal group held for sale
In line with our previously announced strategy to focus on our core customer segments and businesses, we are holding our German ARCON architectural CAD business, for sale. IFRS 5 disclosure treatment is adopted here.
The table below reflects assets held for sale measured at the lower of carrying amount and fair value less costs to sell in the statement of financial position.
|
|
|
|
|
|
|
|
|
Assets Held for Sale |
|
| Six months to 30 June |
| Year Ended | |||
|
|
|
| 2022 |
| 2021 |
| 31 December |
|
|
|
| (unaudited) |
| (unaudited) |
| 2021 |
|
|
|
| £'000 |
| £'000 |
| £'000 |
|
|
|
|
|
|
|
|
|
Goodwill | | | | 336 |
| - | | - |
Other intangible assets | | | 1 |
| - | | - | |
Property, plant and equipment | | | 9 |
| - | | - | |
Right-of-Use assets | | | 74 |
| - | | - | |
Trade and other receivables | | | 10 |
| - | | - | |
Cash and cash equivalents | | | 412 |
| - | | - | |
| | | |
|
| | | |
Total Assets Held for sale | | | 842 | | - | | - |
11. Cash and borrowings
The net cash position of the Group as at 30 June 2022 is set out below:
At 30 June | At 31 December | ||
| | | |
| 2022 £'000 | 2021 £'000 | 2021 £'000 |
Cash and cash equivalents | 11,338 | 12,163 | 10,055 |
Bank loans | - | (3,693) | (101) |
Lease liabilities | (1,693) | (2,079) | (1,935) |
| 9,645 | 6,391 | 8,019 |
Maturity profile of borrowings | | | |
In one year or less | - | (1,645) | (45) |
Between one and two years | - | (1,645) | (56) |
Between two and five years | - | (403) | - |
| - | (3,693) | (101) |
The UK banking facilities are with Barclays Bank plc and the Group facilities comprise a £1.0m overdraft facility, carrying an interest rate of 2.75 percent over base rate (undrawn at 30 June 2022, 31 December 2021 and 30 June 2021).
12. Liabilities of disposal group held for sale
Liabilities classified as Held for sale on the face of the Statement of Financial Position are as follows:
Liabilities Held for Sale |
|
| Six months to 30 June |
| Year Ended | |||
|
|
|
| 2022 |
| 2021 |
| 31 December |
|
|
|
| (unaudited) |
| (unaudited) |
| 2021 |
|
|
|
| £'000 |
| £'000 |
| £'000 |
|
|
|
|
|
|
|
|
|
Lease liabilities | | | | (76) |
| - | | - |
Trade and other payables | | | (53) |
| - | | - | |
Accruals and deferred income | | | (55) |
| - | | - | |
| | | |
|
| | | |
Total Liabilities held for sale | | | (184) | | - | | - |
13. Accruals and deferred income
| At 30 June | | At 31 December |
2022 £'000 | 2021 £'000 | 2021 £'000 | |
Accruals | 2,570 | 2,255 | 2,603 |
Deferred income | 7,261 | 6,861 | 7.086 |
| 9,831 | 9,116 | 9,689 |
Deferred income represents income from the sale of software subscription licenses and from software maintenance and support contracts and is taken to revenue in the income statement on a straight-line basis in line with the service and obligations over the term of the contract.
14. Related party disclosures
Transactions between Group undertakings, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
The Directors of the Company had no material transactions with the Company during the period, other than a result of service agreements.
15. Additional performance measures
The Group uses adjusted figures, which are not defined by generally accepted accounting principles ("GAAP") such as UK-IAS. Adjusted figures and underlying growth rates are presented as additional performance measures used by management, as they provide relevant information in assessing the Group's performance, position and cash flows. We believe that these measures enable investors to track more clearly the core operational performance of the Group, by separating out items of income or expenditure relating to acquisitions, disposals and capital items. Our management uses these financial measures, along with UK-IAS financial measures, in evaluating the operating performance of the Group.
Six months to 30 June
| 2022 £'000 | 2021 £'000 | Year ended 31 December 2021 £'000 |
Operating profit | 1,794 | 2,366 | 4,099 |
Former Directors' payments | - | 69 | 69 |
Amortisation of acquired intangible assets | 250 | 295 | 575 |
Adjusted operating profit | 2,044 | 2,730 | 4,743 |
Profit before tax |
1,733 |
2,260 |
3,926 |
Former Directors' payments | - | 69 | 69 |
Amortisation of acquired intangible assets | 250 | 295 | 575 |
Adjusted profit before tax | 1,983 | 2,624 | 4,570 |
Tax charge |
(394) |
(463) |
(1,195) |
Former Directors' payments | - | (13) | (13) |
Amortisation of acquired intangible assets | (48) | (56) | (109) |
Adjusted tax charge | (442) | (532) | (1,317) |
Profit after tax |
1,339 |
1,797 |
2,731 |
Former Directors' payments | - | 56 | 56 |
Amortisation of acquired intangible assets | 202 | 239 | 466 |
Adjusted profit after tax | 1,541 | 2,092 | 3,253 |
Cash generated in operations |
3,541 |
4,079 | 7,724 |
Purchase of intangible assets | (902) | (795) | (1,727) |
Purchase of property, plant and equipment | (134) | (60) | (279) |
Former Directors' payments | - | 69 | 69 |
Adjusted operating cash flow | 2,505 | 3,293 | 5,787 |
|
| |
|
| Six months to 30 June | | |
| 2022 £'000 | 2021 £'000 | Year ended 31 December 2021 £'000 |
Adjusted operating cash flow | 2,505 | 3,293 | 5,787 |
Net interest received/(paid) | 38 | (57) | (124) |
Tax paid | (470) | (360) | (903) |
Proceeds from disposal of PPE | 15 | 48 | 60 |
Former Directors' payments | - | (69) | (69) |
Free cashflow | 2,088 | 2,855 | 4,751 |
16. Exchange rates
The following exchange rates have been applied in preparing the condensed consolidated financial statements:
| | | ||||
| Income statement | Balance sheet | | |||
| Six months to 30 June | As at 30 June | Year to 31 December 2021 | |||
|
| |
| | Income | Balance |
| 2022 | 2021 | 2022 | 2021 | Statement | sheet |
Swedish Krona to Sterling | 12.41 | 11.68 | 12.45 | 11.82 | 11.80 | 12.23 |
Euro to Sterling | 1.19 | 1.15 | 1.16 | 1.17 | 1.16 | 1.19 |
US Dollar to Sterling | 1.30 | 1.39 | 1.22 | 1.38 | 1.37 | 1.35 |
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