As a management team we have a number of medium-term objectives which include moving to become a genuinely integrated business, achieving predictable growth in both revenue and profit ahead of the wider software market, financial stability and being recognised as a creator of innovative solutions. With our legacy business largely behind us, 2015 allowed us to concentrate solely on our future as a software business and on making progress towards these objectives. There were of course challenges but I believe the progress made in the year has set us well for another solid performance in 2016.
Revenue grew £0.1m to £15.3m. At constant exchange rates revenue would have grown £1.4m to £16.6m.
Profit before tax was £1.0m up from £0.7m in 2014.
Net bank borrowings were down 61% from £2.0m at 31 December 2014 to £0.8m by year end.
Historically, due to our structure, we had made limited efforts to integrate our businesses – something we addressed in 2015. As our customers are increasingly seeing the benefit of integrating offerings and owning a range of complementary, marketing-leading solutions it was a logical step to consolidate our branding. We changed the majority of our Operating Company and our plc to Elecosoft – reflecting both our long heritage (Eleco) and our future focus (Software). From early 2016, we now trade in all markets bar Germany under the Elecosoft banner. This is part of a wider marketing restructure covering all major areas including product branding, websites and collateral. That work continues and we hope will be largely completed in 2016.
We brought disparate teams together, most notably our developer community to meet and talk regularly, to a structured agenda for the first time. This has already led us to work collectively in a number of areas including planning a common licensing platform, integrated product roadmap, sharing of resource for problem solving and a move towards a standard User Interface Design across our platform.
2015 was the first time as a software-only business that we gave external guidance to the market on our performance. Taking into account currency we were in-line on revenue and ahead on PBT. In part this was due to improvements made to our reporting and planning activities. Our business model is based on growing revenue and profitability in tandem which we achieved in the year under review. Resource investment in 2015 (and budgeted for 2016) was predominately in sales and marketing roles and, in the main, hiring for new positions such as dedicated UK Bidcon, US channel resource and French Staircon sales staff.
2015 saw the launch of two significant releases of our BIM tool, a 3D viewer for our project scheduling tool (Asta Powerproject) and estimating (Bidcon). That the tool is designed to link to our Estimation tool has also helped us differentiate by bringing our two core products together to deliver a unique 5D BIM. Our ability to be agile and accommodating to customer specific requirements also helps set us apart from competitors who lack this flexibility due to their size or structure.
The complete rewrite of our main estimating solution, Bidcon gave us the opportunity to sell meaningfully in markets outside of Sweden for the first time. Despite competition from well-established local providers we were able to win customers in these new markets due to the technical strength of the offering. This was a significant milestone, validating the rewrite and underscoring the quality of the original Swedish-based approach.
The anticipated release of a new version of our CAD solution, Arcon Evo, also highlighted the benefit of our Research and Development (R&D) programme, with a significant increase in maintenance contracts reflecting customer confidence in the future development path of the products.
Our project management solution (Asta Powerproject) remains in great health and was the engine of our growth again in 2015. Our commitment to the US coincided with our largest license deal of the year, through a reseller to a US state department of transport which was strong validation of what great resellers can do in assisting with the scaling of our business. We also had a record turnout for our UK National User Forum in the Autumn.
Our Swedish based businesses had a mixed year – a stable domestic performance in Bidcon and Statcon was not matched internationally and we also faced challenges in our growing Staircon businesses. Considerable progress was made in the year to address the issues as part of a wider restructuring of our Swedish businesses.
We continued to see a strong performance from our Flooring visualisation business (ESIGN) and solid German domestic activity by Arcon. Growth was slower overall in our Arcon Evo business due to issues with our international reseller activity but work is underway to address this.
With the backdrop of a buoyant UK construction market, we saw another strong year of growth in this market in our core offerings. We introduced two significant new offerings across our BIM and Bidconsolutions and saw increased interest in both product areas through the year that have carried into 2016.
As reported in our 2014 accounts, in Sweden we undertook a complete overhaul of our business, including installing an entirely new management team and a complete reorganisation of our operations. This included the disposals of our non-core consulting business to Tyrens AB, a consolidation of development teams, and restructuring of our sales teams. We believe this makes us more streamlined and better places us for an improved financial performance in 2016.
We expanded our direct investment in three key markets – the US, the Netherlands and Germany. The focus in the first two will initially be on Asta Powerproject but will expand beyond this as we become more established in these markets in 2016. The timing and size of our largest US win has helped create the momentum we needed to gain credibility in the market and saw underlying sales grow by 55% even with that deal excluded.
One of our biggest challenges in 2015, as with 2014 was the impact of currency and consequently our activity in mainland Europe was adversely impacted by the strengthening of Sterling. We made improvements to our day to day reporting and enhanced our budgeting process – all aimed at providing a more cohesive, standardised operating model across the Group.
Elecosoft’s long-term goal remains to be a leading provider of integrated software solutions to the global architectural, engineering and construction (“AEC”) industry. We made good progress towards this goal in 2015, in 2016 we will focus predominately in growing in the markets we are already committed to.
15 April 2016
Download the 2015 annual report
The Elecosoft annual accounts for the period ended 31st December 2015 are now available to download.
Shareholders can elect to receive hard copy shareholder documents at any time by informing Capita Asset Services at The Registry, 34 Beckenham, Kent BR3 4TU.