Eleco : Annual Report

Eleco plc

Interim Report

for the six months ended 30 June 2023

Creating certainty forthebuilt environment

Introduction

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, BestOutcome and Veeuze from centres of excellence in the UK, Sweden, Germany, the 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 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

01 Highlights

02 Chairman's Statement

04 Chief Executive's Statement

Financial Statements

06 Condensed Consolidated Income Statement

06 Condensed Consolidated Statement of Comprehensive Income

07 Condensed Consolidated Statement of Changes in Equity

1. Condensed Consolidated Balance Sheet
2. Condensed Consolidated Statement of Cash Flows
3. Notes to the Condensed Consolidated Interim Financial Information

IBC Company Advisors

Highlights

six months to 30 June 2023

	Six months to 30 June
	2023	2022
	£'000	£'000
Financial Highlights
Annualised Recurring Revenue (ARR)1	19,665	16,749
Total Recurring Revenue (TRR)	9,692	8,204
Total Revenue	13,486	13,435
Total Revenue: at constant currency rates	13,588	13,435
EBITDA2	2,198	2,809
Adjusted EBITDA3	2,608	2,878
Profit before taxation	1,255	1,733
Adjusted Profit before taxation4	1,767	1,983
Basic earnings per share (pence per share)	1.2	1.6
Adjusted earnings per share5 (pence per share)	1.7	1.9
Net cash6	9,410	11,338
Interim dividend (pence per share)	0.25	0.20

1. ARR is defined as normalised annualised recurring revenues and includes revenues from subscription licences, contract values of annual support and maintenance, and SaaS contracts. Normalisation is calculated using the recurring revenue in the final month of the period, multiplied by twelve. This ARR figure is calculated prior to the inclusion of the forthcoming contribution from the BestOutcome Ltd acquisition.
2. EBITDA is defined as Earnings before Interest, Taxation, Depreciation, Amortisation and Impairment of Intangible Assets. This includes the gain on disposal of the ARCON business in H1 2023. See note 14.
3. Adjusted EBITDA is adjusted for acquisition related expenses and amortisation of acquired intangibles. See note 14.
4. Adjusted profit before tax is adjusted for acquisition related expenses and amortisation of acquired intangibles. See note 14.
5. Adjusted earnings per share represents profit after tax as adjusted for acquisition related expenses and amortisation of acquired intangibles, divided by a weighted average number of shares. See note 7 and note 14.
6. Post acquisition of BestOutcome Ltd.

Overview

Financial Statements

Operational Highlights

• Execution of M&A strategy:

Acquisition of profitable SaaS business, BestOutcome - a leading UK provider of scalable Project Portfolio Management (PPM) software to complement Building Lifecycle products and broaden Eleco's customer base.

Profitable disposal of non-core German architectural CAD business.

• Strategic partnerships announced with:

C-Tech Club, partnerships with innovative construction technology start-ups.

Nodes & Links, to bring AI into the world of construction planning.

• Return of Asta brand, drawing on our innovation heritage.
• Ongoing improvements in ESG initiatives such as environmental data gathering and monitoring; enhanced scores with our Great Place to Work® certifications, and implemented training and updated group policy framework for all employees.
• Elecosoft UK obtained ISO 27001 certification in continued commitment to customer data security.

Interim Report 2023 Eleco plc

01

Overview

Chairman's Statement

"The Group's transformation to a high recurring revenue, SaaS driven business is now well advanced and entering a new phase that

will bring further significant operational and financial benefits."

Introduction

In an era of increased global instability and macroeconomic headwinds, it is pleasing to report, in this first statement in my capacity as Interim Chair, that Eleco continues to execute on its strategy and deliver stable, more predictable and growing recurring revenues as it successfully navigates through its SaaS transition.

Eleco, alongside its customer centricity, continues to benefit from international industry trends and drivers, such as digitalisation and the incorporation of Artificial Intelligence (AI) to improve productivity, the reduction of waste and carbon footprint, efficient delivery models across the lifecycle utilising greater data collaboration and integration.

Performance and future

Recurring revenue in the first half grew by 18 per cent to £9.7m (H1 2022: £8.2m) and now accounts for 72 per cent of total revenue (H1 2022: 61 per cent of total revenue). This significant uplift in performance emphasises the benefits in our SaaS transition. Similarly, annualised recurring revenues increased by 18 per cent to £19.7m (H1 2022: £16.7m). Revenue was slightly ahead of forecast, despite the absence of revenue from a number of Swedish-basedend-of-life products and a planned disposal. Profitability was in line with management's expectations.

For the full year 2023, we expect to see revenues in line with our plan and as a result of the SaaS transition, longer term sustainable growth and overall shareholder returns coming through.

Strategic progress

These organic developments and overall prospects have been supplemented by progress in other corporate activity. In February 2023, we sold the ARCON architectural CAD business, enabling increased focus on our core Building Lifecycle businesses.

In June 2023, we acquired a UK provider of easy-to-use, scalable Project Portfolio Management (PPM) software for a net consideration of £3.6m. The value enhancing addition of the BestOutcome business broadens our customer base and provides potential extended cross fertilisation of solutions to our existing customers.

Environmental, Social and Governance (ESG)

As Chair of our ESG Committee, I am keen to ensure that Eleco is at the forefront of initiatives that deliver on and fulfil our important responsibilities and ESG commitments. Having adopted a balanced scorecard approach, environmentally, we are measuring our performance against KPIs, building on the short-term objective of our Net Zero carbon offset. Internal measures continue to minimise our own footprint and we are looking at other ways to assist our customers' ability to measure and reduce their own emissions.

Socially, we have been building our Employee Value Proposition, internal management training, and Eleco's impact in the community through volunteering and wellness initiatives. We were pleased to achieve higher scoring in the Great Place to Work® certifications this year, deepening the bonds within and across the Group. Also, in Governance, new Group policies are being progressively and regularly rolled out to employees via an internal training platform.

Dividend

Having regard to both the organic and inorganic needs of the business and recent performance, the Board is increasing the interim dividend by 25 per cent to 0.25 pence per share (H1 2022: 0.20 pence per share), payable on 6 October 2023 to shareholders on the Register on 22 September 2023, and the ex-dividend date will be 21 September 2023.

Employees

The key to any successful business, and our biggest asset, is our people; the management and colleagues without whom the Group cannot achieve the success it strives for. We are very fortunate in having highly dedicated, talented and hardworking colleagues across the world. On behalf of the Board, I wish to express my thanks for their continued efforts and their support.

Board updates

We are currently at an advanced stage of recruiting a new Chair and an Independent Non-Executive Director who will in turn become Chair of the Audit & Risk Committee. Announcements on these two roles are expected to be forthcoming prior to the year end.

Current trading and outlook

The Group's transformation to a high recurring revenue, SaaS driven business is now well advanced and entering a new phase that will bring further significant operational and financial benefits.

02 Eleco plc Interim Report 2023

We are confident that we will continue to weather economic and market headwinds given our clearly defined and executed strategy for growth. Our technological solutions help our customers drive efficiencies in these challenging environments.

We continue to deliver organic growth and accelerate delivery of our plan via complementary acquisitions that enable us to scale up and exploit market opportunities.

We are well positioned to grow our international markets and see continued progress and positive momentum for the future with current trading in line with our internal expectations for the full year.

Mark Castle

Interim Non-Executive Chairman

11 September 2023

Overview

Financial Statements

Interim Report 2023 Eleco plc

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