Introduction
Eleco plc (AIM: ELCO) is a specialist international provider of world-class software and related services to the built environment through its operating brands Elecosoft, and Veeuze, from centres of excellence in the UK, Sweden, Germany, Netherlands, and the USA.
The Company's software solutions are trusted by international customers and used throughout the building lifecycle from early planning and design stages through to construction, interior fit out, asset management and facilities management to support project management, estimation, visualisation, Building Information Modelling (BIM) and property management.
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Overview
00 Introduction
01
Highlights
Strategic Report
02 Chairman's Statement
05 CEO Report
10 Our Purpose, Mission and Vision
12 Our Products and Services
14 Our Business Model
16 Review of Principal Risks
20 Section 172 Statement
25 Financial Review
Governance
28 Board of Directors
30 Corporate Governance Report
34 Audit Committee Report
36 Nomination Committee Report
38 Remuneration Committee Report
45 ESG Committee Report
48 Directors' Report
Financial Statements
51 Independent Auditor's Report
58 Consolidated Income Statement
59 Consolidated Statement of Comprehensive Income
60 Consolidated Statement of Changes in Equity
61 Consolidated Balance Sheet
62 Consolidated Statement of Cash Flows
63 Significant Accounting Policies
74 Notes to the Consolidated Financial Statements
103 Company Statement of Changes in Equity
104 Company Balance Sheet
105 Statement of Company Accounting Policies
108 Notes to the Company Financial Statements
117 Five-Year Summary
118 Dormant Subsidiary Undertakings
119 Professional Advisors and Registered Offices
Highlights
Overview
2021 | 2020 | ||
£'000 | £'000 | Change | |
Financial | |||
Revenue | 27,344 | 25,232 | +8% |
Of which: Recurring Revenue | 15,424 | 14,186 | +9% |
EBITDA* | 7,182 | 6,675 | +8% |
Adjusted EBITDA** | 7,251 | 7,003 | +4% |
Operating profit | 4,099 | 4,151 | -1% |
Profit before tax | 3,926 | 3,889 | +1% |
Basic earnings per share (pence per share) | 3.3 | 3.9 | -15% |
Free cash flow*** | 4,751 | 5,516 | -14% |
* EBITDA is defined as Earnings before Interest, Tax, Depreciation, Amortisation and Impairment of Intangible Assets
** Adjusted to exclude former Directors' payments
*** 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
Strategic ReportGovernance
Operational | ||
• The introduction of subscription-based pricing | • | Winner of the Megabuyte Quoted 25 award |
to new Building Lifecycle customers in Q4 | for Best Performing Software Company in | |
2021 will lead to increased Recurring Revenue | Industrials. | |
and enhanced Lifetime Customer Value. | ||
• | Winner of Project Management Software of | |
the Year at the UK Construction Computing | ||
Awards. |
Financial Statements
• The successful merger of our UK Building Lifecycle businesses and separately of our German visualisation operations, providing greater business development opportunities.
01
Chairman's Statement
As an award-winning specialist provider of world-class software to the £8.5bn built environment market, Eleco is well-positioned to expand.
A year ago, we set out our refreshed strategy and the last twelve months have been focused on setting the foundations for further growth. It has been a truly transformative year for Eleco. We are very much a customer-focused organisation and have a clear purpose and a values statement developed through a truly interactive process with our people. A strong, engaging culture is key to enable us to attract and retain talent in such a competitive market.
I am pleased to report that our strategy is already generating results, with our organic growth rate increasing to 8 per cent (2020: -1 per cent), underpinned by double-digit sales growth from our core Building Lifecycle portfolio. This was achieved at the same time as implementing our move to a subscription licensing model for new customers in the last quarter. Recurring revenue (subscription and SaaS licences, maintenance and support contracts) increased by 9 per cent to £15.4m.
We have maintained strong cash generation, despite Covid-19 continuing to impact our ability to undertake face to face sales and training, having fully repaid monies given to Eleco through the UK Government furlough scheme as well as clearing our UK bank debt. We are now debt free after settling the remaining £0.1m of subsidiary bank debt in Q1 2022.
We were delighted to win the Megabuyte Quoted 25 Award for best performing software company in the industrials peer group in March 2022, showing the strength of our overall financial performance.
Implementing our strategy for organic growth We are aligning our business with clear customer segment strategies and through product portfolio alignment, driven by our Chief Product Officer (CPO) Fredrik Pantze, who was appointed in April 2021, and we have started on the journey to adapt our software to become next generation cloud-based solutions. Our aim is to help our customers reimagine their businesses by creating software which allows them to better collaborate, get faster access to data for analytics and ensure interoperability. As a result, we are seeing an increase in new customer wins away from our competitors.
02
Eleco plc |www.eleco.com
Overview
This has also been bolstered by the strengthening demand for our products in our core regions where we are in a strong position with Powerproject being used for the master construction plan. Collaboration is driving us to partner and share data with other parties. As a result, we have formed several partnerships and data integrations during the last twelve months, as we continue to leverage/ understand our strong customer relationships.
With our move to subscription, we are more focused on customer success through account management and services. We believe that building on our customer relationships will allow Eleco to better support the management and leadership teams of those organisations which are starting to look for an integrated end to end approach.
Our new Chief Technology Officer, Luben Kirov, was appointed in December 2021. This role has the remit to bring together all the separate development teams, break down the product silos and drive forward our integrated technology roadmap in conjunction with our CPO. Having started in February 2022, we look forward to reporting on the results of this appointment as we go through the current year.
From a customer perspective, digitalisation is increasingly being recognised for its ability to manage the complex supply chain and inflationary issues, while rising pressures on companies to reduce wastage provides another tailwind as regulation around this increases. We are a well-known provider of innovative technology for the construction and built environment sectors, with 87 per cent of the top 100 UK construction contractors on our books. This provides us with a strong and established platform for growth and new contract wins.
The move to subscription-based pricing of our products will benefit our customers with a lower upfront cost for an enhanced product, as well as creating increased value for our shareholders through higher Recurring Revenue growth.
In the year, Eleco's US business grew 16 per cent predominantly through our reseller channel, which the Company will continue to support. Following this growth, the Executive team are refocusing on potential strategic opportunities for expansion into the US.
We continue our strategy to provide best of breed software targeted at our chosen customer segments.
Board appointments and Environmental, Social and Governance (ESG)
Aligned to the new strategy, I undertook a full skills audit of the Board and in March we brought in Paul Boughton as a NED, adding more technology PLC experience to the business as well as additional financial and acquisition expertise.
In a desire to refresh our Board and further improve our corporate governance, this was followed by a further extensive search to recruit the best candidates for our other skills gaps. This led to two further
NED appointments in the summer, with Dr Annette Nabavi and Mark Castle joining the Board in August and September, respectively. Annette Nabavi is a highly-qualified board director with more than 30 years' experience in the technology, telecoms and digital industries who brings additional expertise to advise with the shift from a perpetual to SaaS licence model, while Mark Castle is an experienced business leader, bringing the voice of the customer to the Board - a vital stakeholder group for Eleco - with his wealth of experience in the Property, Construction, Consultancy and Built Environment sectors.
Kevin Craig and David Dannhauser stepped down from the Board at the end of August, and I would like to take this opportunity to thank them both for the immense contribution that they made to this business throughout their tenure.
Paul Boughton took over as Chair of Audit and Annette Nabavi took over as Chair of Remuneration. Over the next twelve months, we plan to strengthen our ESG disclosures, building on the steps taken during 2021. With this in mind, we set up an ESG Committee at the end of period under review, chaired by Mark Castle. This will assist the Board in fulfilling its oversight responsibilities regarding environmental, health and safety, corporate social responsibility, sustainability, customer satisfaction, employee wellbeing and retention, corporate governance, diversity, equity and inclusion. We look forward to building our disclosure on these areas over the months and years ahead as we develop our Net Zero Strategy and our ESG Scorecard.
On 29 March 2021, Robert Tearle was appointed as CFO as we launched our refreshed strategy. On 7 February 2022, we announced that Robert was resigning from the Board. This is obviously disappointing for both the Company and for Robert personally. We thank Robert for his valued contribution to the planning of the steps needed for the delivery of our move towards a SaaS environment
Strategic Report
GovernanceFinancial Statements
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Disclaimer
Eleco plc published this content on 08 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 April 2022 22:04:09 UTC.