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Concrete setback hits Eleco
Eleco: a major decline in hotel and student accommodation projects took a severe toll on the company’s pre-cast concrete side
Building systems and software specialist Eleco blames a ‘significant setback’ in its pre-cast concrete business for a £1.4 million annual loss.
The Hertfordshire-based company, whose interests range from building systems, pre-cast concrete and timber engineering to construction and visualisation software, says turnover fell 9 per cent to £70.6 million in the year to June, which saw pre-tax profits of £8.2 million turn into a loss of £1.43 million. Eleco, which moved its shares from the Full List to AIM three years ago, responded to falling demand with a ‘major downsizing’ of its workforce and ended the financial year with net cash of £1.59 million, after cutting spending on new capital projects and product development by 27 per cent to £2.94 million.
On the earnings front, Eleco lost 2.5p a share. But the board is still proposing a final dividend of 0.4p a share, for a much reduced 0.8p uncovered annual payout, against 3p for the previous year.
Veteran entrepreneur John Ketteley, Eleco’s executive chairman, says a major decline in hotel and student accommodation projects took a severe toll on the company’s pre-cast concrete side. He adds difficult trading conditions affected most of its other activities, though construction software ‘performed in line with management expectations’, with a greatly reduced £343,000 operating profit turned into a net £461,000 loss after adjustments for acquisition accounting.
Looking ahead, Ketteley warns a recent improvement in business sentiment ‘has not yet produced a tangible change to our key pre-cast concrete businesses’. But he argues Eleco, slimmed down and still with cash in the bank, is ‘well placed’ to take advantage of any upturn ‘when it comes’.
Shares in Eleco, which traded above 110p last year, have rallied from a 26.5p 12-month low to 38.5p. This values the company at £23.3 million.
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