ElecoAR2007

Eleco plcEleco House15 Gentlemen’s FieldWestmill RoadWare, HertfordshireUnited KingdomSG12 0EF

t +44 (0)1920 443830f +44 (0)1920 [email protected]

building on technology

Eleco plc Annual Report and Accounts 2007

Contents

Financial Highlights ................................................................ 1

Chairman’s Statement............................................................ 2

Financial Review ...................................................................... 4

Group Directory........................................................................ 8

Board of Directors and Company Advisers ........................ 9

Directors’ Report...................................................................... 10

Corporate Governance............................................................ 13

Report on Remuneration ....................................................... 14

Report of the Auditors........................................................... 19

Consolidated Profit and Loss Account ............................... 20

Consolidated Statement of Total Recognised Gains and Losses ..................................................................... 21

Consolidated Reconciliation of Movements inShareholders’ Equity ............................................................... 21

Consolidated Balance Sheet ................................................. 22

Company Balance Sheet ........................................................ 23

Consolidated Cash Flow Statement .................................... 24

Notes to the Financial Statements ..................................... 25

Five Year Summary.................................................................. 44

Financial Calendar................................................................... 44

Explanation of Annual General Meeting

Special Business....................................................................... 44

Notice of Annual General Meeting..................................... 45

Form of Proxy

Front cover:Docklands Student Village, University of East LondonBell and Webster Concrete

1

Financial Highlights

2007 2006(Restated)

£’000 £’000

Turnover 62,078 55,197

Operating profit 5,591 4,116

Profit on ordinary activities after tax 4,614 3,333

Earnings per share 8.7p 6.8p

Dividends per share

Interim 0.7p 0.6p

Proposed final 1.8p 2.5p 1.5p 2.1p

Cover 3.3 times 3.2 times

Capital expenditure 1,348 1,384

Net funds 4,760 4,682

ArCon 3D VisualisationEleco Software UK

2 Annual Report and Accounts 2007

Chairman’s Statement

I am pleased to present my statement for the year ended 30 June2007, including the review of our business activities and theoutlook for the current year.

Performance SummaryGroup turnover for the year was £62,078,000 (2006:£55,197,000), an increase of 12.5 per cent.

Group operating profit was 35.8 per cent. higher at £5,591,000(2006: £4,116,000 restated). Group operating profit was arrived atafter deducting goodwill amortisation costs for the year of£596,000 (2006: £744,000) and included a first year contributionof £497,000 from Asta Development, which was acquired inDecember 2006.

Profit on ordinary activities before tax was £5,650,000 (2006:£4,436,000 restated), an increase of 27.3 per cent. after netinterest receivable of £59,000 (2006: £156,000 payable).

Group profit for the year after tax was £4,614,000 (2006:£3,333,000 restated) equivalent to 8.7p per share (2006: 6.8p pershare restated), an increase of 27.9 per cent.

Operating cash flow was again strong and net funds in hand at30 June 2007 were marginally higher at £4,760,000 (2006:£4,682,000). It should be noted that the cash cost of financingthe acquisition Asta Development during the year was£2,622,000 net of the cash balances acquired with that company.

We continued to invest significantly in new products andenhanced software development during the year and suchexpenditure increased to £1,963,000 (2006: £1,281,000).

The Company’s performance as measured by the above keyperformance indicators is again most encouraging.

DividendsThe Board proposes an increased final dividend of 1.80p per share(2006: 1.50p per share), which subject to approval byshareholders, will be paid on 23 November 2007 to shareholderson the Register on 19 October 2007.

The final dividend, together with the interim dividend of 0.70palready paid, would result in total dividends for the year ended 30June 2007 of 2.50p per share (2006: 2.10p per share), an increaseof 19.0 per cent.

Review of Business ActivitiesBuilding SystemsIn the UK, our building systems operations are principallyinvolved in the design, off-site manufacture and supply ofstructural building components in precast concrete, metalroofing and cladding and engineered timber products; and also inthe supply of timber engineering systems. In South Africa andGermany we also supply timber engineering systems.

Turnover of our building systems operations increased by 6.7 percent. to £51,793,000 (2006: £48,544,000).

Building systems operating profit increased by 12.4 per cent. to£6,087,000 (2006: £5,418,000 restated). Operating profit beforegoodwill was £6,119,000 (2006: £5,450,000).

PrecastBell & Webster Concrete again experienced strong demand for itsFastBuild Rooms for hotels and student accommodation projects

in the second half of the year. Demand for its retaining wall andother products also remained firm. As a consequence, itsoperating profits were significantly higher than last year.

Evidence of Bell & Webster Concrete’s growing reputation for itsproducts and service is that it has been short listed by theConcrete Society for its 2007 Annual Awards in the category”New Structures”. It has also been nominated for the InterbuildOff-site Construction Awards for 2007 in the category “Best useof Concrete” in connection with the highly regarded DocklandsStudent Village for the University of East London.

Engineered Building ComponentsProfit contributions from the roofing and cladding operationsSpeedDeck Building Systems and Downer Cladding were lower ina difficult market. However, management has taken steps toremedy this situation and will be launching new products at theforthcoming Interbuild Exhibition in October. I am pleased toreport that Eleco Timber Frame made a welcome breakthrough toprofit in the second half and that orders for the ElecoFrame®patented timber frame system continue to grow.

Timber Engineering SystemsGang-Nail Systems was adversely affected by the atrocious wetweather conditions experienced in the UK in the latter part of theyear. The consequent disruption to activity on building sitesaffected Gang-Nail Systems’ customers’ ability to supply rooftrusses and Ecojoist® to those sites. In the circumstances Gang-Nail performed well although profits for the year were marginallylower than the record profit achieved last year.

Eleco Bauprodukte performed well in the German market andsales and profits were significantly higher than last year.

In South Africa, International Truss Systems yet again deliveredanother outstanding performance, with profits again ahead oflast year’s record in sterling terms despite a somewhat weakerRand.

SoftwareTurnover of our software operations increased by 54.7per cent. to£10,285,000 (2006: £6,653,000), of which £2,432,000 wasattributable to Asta Development, acquired in December 2006.

The operating loss of our software operations fell to £496,000(2006: £1,302,000) after goodwill charges of £564,000 (2006:£712,000). Fully expensed development costs were £1,379,000(2006: £858,000).

Birmingham Super HospitalAsta Powerproject Enterprise Software, Asta Development

3

The operating profit before goodwill of our software interests was£68,000 (2006: loss £590,000), including the contribution of£497,000 from Asta Development.

Construction softwareThe construction software interests namely, Consultec Sweden,Consultec UK and Asta Development performed well. Inparticular, the latter performed in line with our expectations atthe time of its acquisition in December 2006.

All our software operations have benefited from the adoption ofAsta Development’s software management techniques anddisciplines. In particular, cross initiatives with Asta Developmenthave contributed to improved performance from the Consulteccompanies in Sweden and the UK and I look forward to furtherprogress in this quarter.

Visualisation SoftwareArCon® and Esign sustained operating losses due to continuinghigh development costs. However, substantial increases in salesof both products during the year were most encouraging. Sincethe year end, we have completed the development of ArCon2007, following which we have entered into a new 3 yearagreement with Micro Application, the leading French softwaredistributor, to continue its distribution of ArCon 3D. We areactively negotiating agreements with distributors in 10 othercountries. We have also signed a distribution agreement to targetmajor UK retailers with own brand consumer software for homeimprovement.

Management and EmployeesI would like to take this opportunity to formally welcome MichaelMcCullen, who joined the Board following the acquisition of AstaDevelopment, of which he is Managing Director.

I would also like to thank on your behalf the employees in the UK,Germany, Sweden and South Africa all of whose hard work,dedication and skill have made possible these significantlyimproved results.

Our Value PropositionThe building industry has been moving progressively towards theuse of off-site manufactured structural building components forsome time.

The increasing use of design and engineering software in recentyears has also facilitated the selection of off-site manufacturedbuilding elements, enabling them to be more accuratelydimensioned, costed and manufactured for speedy installationwhen delivered to site. Visualisation software enables buildersand their clients to view projects in virtual form before buildingbegins and the build process itself is now normally managed byproject management software.

Our strategy is to satisfy the requirements of the constructionindustry in this modern, progressive approach to the buildprocess and to anticipate the industry’s future needs. Thus wedesign and manufacture innovative and efficient buildingcomponents in precast concrete, metal and timber; we developand utilise the latest design and engineering software in ourmanufacturing processes; and we develop for use by ourcustomers design and engineering software, estimating software,visualisation software, plant management software and projectmanagement software.

FinanceFollowing the recovery in the Company’s fortunes over the lastdecade, we have consistently applied measured financing policiesas we have moved forward. The recent turmoil in the financialmarkets would seem to justify this approach and we continue tostrive to maintain a strong financial position. In this connection,I am pleased to inform you that we recently agreed with ourbankers a significant increase in our committed medium termbanking facilities, which, together with our net cash position andcontinuing strong operating cash flows, will provide significantresources to support the expansion of the Group.

OutlookThe outlook for the major part of our operations for the yearahead is firm, although the effect of the current turmoil in thefinancial markets on those of our operations that are directlyinvolved in the UK housing market remains to be seen. Thatsaid, the Prime Minister has made clear that one of his majorobjectives is to bring about a step change in the construction ofaffordable housing in this country and I am encouraged by thefact that this laudable and ambitious target will be achievedonly by the increased application of those modern buildingsystems and technologies on which Eleco’s business is based.

We finished the year with substantially higher orders and in astrong financial position. Our products are increasingly wellregarded in the market place and we have a dedicatedmanagement team backed by an experienced workforce. We havealso made a strong start to the current year and we will continueour emphasis on strong cash generation in our operations. For allthese reasons, and despite the current turmoil in financialmarkets, I have every confidence in the year ahead for Eleco.

John KetteleyEXECUTIVE CHAIRMAN

19 October 2007

Residential Apartments, North WalesEleco Timber Frame


Financial Review

The year has been another one of continuing growth in turnover, which has increased by 12.5% year on year, and in overall operating margins ofthe Group, which have increased by 20.8% year on year, to 9.0%. Building Systems again achieved profit growth with year on year improvementin all major key trading performance indicators. Software moved into overall profit before goodwill amortisation charged including thecontribution from Asta Development, acquired in December 2006.

FRS 20 Share-based payments was adopted during the year and 2006 comparatives in the financial statements have been restated whereindicated and where necessary also in this Financial Review.

Key performance indicator highlights for the year, which are discussed further below, were:

2007 2006 % change

Revenue from continuing operations (£m):Building Systems 51.8 48.5 6.7Software 10.3 6.7 54.6Group total 62.1 55.2 12.5

Operating margin from continuing operations before goodwill amortisation (%):Building Systems 11.8% 11.2% 5.1Software 0.7% (8.9%) (107.4)Group total 10.0% 8.8% 13.2

Net cash at year end (£’000): 4,760 4,682 1.7

Free cash flow generated (£’000): 4,428 6,908 (35.9)

Capital expenditure and investment in R & D (£’000): 3,311 2,665 24.2

Pre-interest return on average assets managed (%): 17.5% 17.2% 1.9

Trading resultsThe year’s trading results include the contribution to Software from Asta Development plc, about which fuller details are given in note 25 to theaccounts, which was acquired in December 2006. The business produced an operating profit of £283,000 in the year after amortisation of goodwill.

Group turnover from continuing operations rose by £4,449,000 in the year to £59,646,000, an increase of 8.1% on the previous year. £2,432,000was the additional impact of the acquired operations, referred to above. Software contributed £10,285,000 turnover, an increase of £3,632,000year on year, representing 16.6% of the total of turnover, as compared with 12.1% in the previous year. Building Systems increased turnover by£3,249,000, representing a 6.7% increase overall. The overseas nail-plate operations in Germany and South Africa increased their combinedturnover by 5.3% and the UK Building Systems businesses increased turnover by 7.0% overall. At £20,900,000, Bell & Webster Concrete remainedthe largest contributing entity to Group turnover, achieving an 11.6% year on year increase.

Operating profits of continuing operations increased by £1,475,000 to £5,591,000. This compares with £4,116,000 the previous year, restated forthe adoption of FRS 20, the impact of which was to increase previously reported operating profits by £57,000. £596,000 of goodwill charges and£229,000 of other intangible asset amortisation was charged to operating profits in the year, an aggregate of £825,000 compared with £894,000in the previous year.

The segmental analysis of results is shown in note 2 to the financial statements. Building Systems produced a 12.3% higher operating profit of£6,087,000, representing an operating margin of 11.8%, compared with 11.2% in the previous year. Software produced an operating loss of £496,000,much reduced from £1,302,000 in the previous year. The operating results of Software include £564,000 of goodwill and £212,000 of other intangibleasset amortisation charged and £1,379,000 of software development expenditure, the latter an increase of £521,000 over the previous year. Asidefrom the increase attributable to Asta Development, acquired during the year, the deferred income creditor increased by £158,000, the increasereflecting sales concluded in the period for which the income will not be recognised until next year. The total deferred income creditor at 30 June2007 amounted to £2,123,000.

The proportion of total Group turnover generated by the overseas subsidiaries in Germany, Sweden and South Africa marginally declined toapproximately 23.9% from 24.2% last year. Operating profits, before goodwill amortisation, generated by the Group’s overseas subsidiariesaccount for approximately 32.4% compared with approximately 42.8% last year. The translation impact of the movement in average exchangerates from last year to this year was to reduce turnover originating in Germany, Sweden and South Africa by approximately 6.3% and to reduceoperating profits generated overseas by 12.1%. The movement in the average rate of the Euro resulted in a reduction to operating profit generatedon sales to Europe during the year of approximately £23,000. The overall £351,000 adverse translation impact on operating profits of movementsin the currencies to which the Group is principally exposed mainly reflects the 17% weakening in the SA Rand exchange rate, the adverse effectof which substantially outweighed the 7% local, general inflation impact.

Net bank and lease interest receivable was £18,000 (2006: £114,000 payable). Average UK bank base rates during the year were 0.52 percentagepoints higher than the year before. In addition, there was further finance income of £41,000 (2006: £42,000 charge) reported under FRS 17, beingthe difference between the expected return of assets of the Eleco Retirement and Benefits Scheme and the interest calculated on Schemeliabilities. Following total expenditure in the period of £3,655,000 on capital expenditure, investments and acquisitions, cash balances net of bankand lease borrowings at 30 June 2007 were £4,760,000, compared with £4,682,000 at 30 June 2006.

Taxation, earnings and dividendA full reconciliation of the tax charge for the current year of £1,036,000 representing an effective rate on profits before goodwill amortisationcharges of 16.6% (2006: 21.3%) is detailed in note 9 to the financial statements. The principal items of note, contributing to the reduced taxcharge are (i) the benefit of £652,000 share option deduction on exercised options including £364,000 on options exercised in Asta Group Limitedon its acquisition and (ii) the benefit of £200,000 obtained this year from the utilisation of brought forward trading losses and unrelieved ACT,for which no deferred tax asset had been previously recognised. Included in the overall tax charge for the year is a deferred tax credit of £123,000arising on accelerated capital allowances and other timing differences, bringing the total deferred taxation provided for (other than in respect ofthe pension scheme deficit discussed below) to £214,000 at 30 June 2007, which is now provided in the UK at a rate of 28%. Of this amount,£276,000 related to Industrial Building Allowances received in excess of the accumulated depreciation on buildings. This liability will not ordinarilystart to crystallise until after 2015 but has not been discounted.

Other than for tax losses available to our operations in Germany, there are no tax losses directly available to our mainstream trading subsidiariesto reduce future taxable profits. Other than for the benefit from tax losses of overseas subsidiaries, which may be utilised in future, the increasedincidence of goodwill amortisation, which is not deductible for tax, and ongoing provision for deferred tax on the benefit, which may arise in anyyear, from accelerated capital allowances and other timing differences, will result in the future rate of charge for taxation being likely to bemarginally above the full rate of mainstream UK corporation tax.

Profits after tax for the year were £4,614,000 (2006: £3,333,000). Basic earnings per share were 8.7p (2006: 6.8p). Fully diluted earnings per share,reflecting the impact of outstanding share options and share awards were 8.7p (2006: 6.7p).

The final dividend proposed of 1.8 pence per share makes a total of 2.5 pence paid and proposed for the year, a 19% increase on the previousyear. The Employee Share Ownership Trust has waived its rights to dividends on the 729,120 shares held by it and there are 56,017,509 sharesranking for the final dividend proposed. The total ordinary dividends paid during the year of £1,122,000 are covered 4.1 times by the earningsattributable to ordinary shareholders (2006: 4.2 times). The paid interim dividend and proposed final dividend for the year are together covered3.3 times by the year’s earnings (2006: 3.2 times).

Shareholders’ equity and net assetsAt 30 June 2007, shareholders’ equity amounted to £20,650,000, after recognising £2,530,000 as a retirement benefits liability, compared with£12,185,000 restated at 30 June 2006. In addition to the retained profit for the year of £3,492,000, other recognised gains of £564,000 (comprising£718,000 recognised gain in respect of net movements in the deficit of the Eleco Retirement and Benefits Scheme and £154,000 currencytranslation losses on the net investment in overseas subsidiaries), a decrease of £318,000, associated with accounting for the operation of theEmployee Share Ownership Trust and LTIP awards and £4,727,000 issued share capital in the year, account for the movement in shareholders’equity, as set out in the Reconciliation of Movements in Shareholders’ Equity.

A consequence of the strategic development of Software has been the significant increase in goodwill and other intangible assets. As these mayincrease through acquisitions and an element of debt may be employed to part finance the acquisitions, enabling the Group’s operating cash flowgeneration capability to be better used to enhance the earnings per share potential of the acquisitions over time, so the proportion of the Group’s netassets represented by net tangible assets may be reduced. As retained earnings accumulate, the initial dilution in the proportion attributable to nettangible assets is progressively reversed. So, at 30 June 2007, net tangible assets, after taking account of the retirement benefits liability now accountedfor under FRS 17, represent 53% of total net assets compared with 83% the previous year and 87% in 2005, as further detailed below and reflectingthe acquisition during the year of Asta Group Limited and subsidiaries with the associated initial goodwill of £7,262,000.

2007 2006 2005£’000 £’000 £’000

Intangible assets 12,184 59% 5,625 46% 5,668 65%Retirement benefits liability (2,530) (12%) (3,541) (29%) (4,556) (52%)Other net tangible assets 10,996 53% 10,101 83% 7,557 87%

20,650 100% 12,185 100% 8,669 100%

The analysis of the Group’s nets assets and borrowings by currency at 30 June 2007 is as follows:

Net assets Net assets after£000’s before financing Net cash bank financing 2006

Sterling 16,637 1,066 17,703 9,291Euro 101 1,217 1,318 1,671Swedish Krona (1,483) 836 (647) (337)South African Rand (68) 2,321 2,253 1,551Other 4 19 23 9

15,191 5,459 20,650 12,185

110% (2006: 115%) of the Group’s net assets before bank financing and 86% (2006: 76%) of net assets are Sterling denominated. Further analysisof the Group’s transactional currency and interest rate exposures is given in note 32 to the financial statements.

5


Financial Review

The Group’s financial risks associated with interest rate and foreign currency movements are managed centrally within policies approved by theBoard. Where appropriate, hedging is undertaken to manage transactional risks arising from operational activities. There is no present policy tohedge the Group’s exposures arising from profit translation or the effect of exchange rate movements on the Group’s overseas net assets.

The details of the Group’s UK final salary scheme are set out in note 5 to the financial statements. At 30 June 2007, the deficit in the Schemereduced by £1,544,000 from the previous year and the liability net of deferred tax, accordingly included in the financial statements under FRS 17,has reduced by £1,011,000. The improvement in investment markets resulted in returns on the Scheme’s assets held being greater than theassumed return and this was the major contributing factor to the reduction in the Scheme deficit. The increase in the current year service costreflects the impact of the previous changes in actuarial assumptions, which outweighed the impact of a reduction in active membership of theScheme. During the year £630,000 (2006 – £387,000) of employer contributions were made to the UK final salary scheme, the increase resultingfrom the additional £450,000 employer contributions agreed to be paid above the ongoing pensionable service cost calculated under the 2005triennial valuation. Under FRS 17, not all this amount has been expensed to the profit and loss account and, of the contributions paid in the year,£378,000 has served to reduce the deficit of the Scheme. The Group’s balance sheet now includes a net liability, taking account of deferred tax,of £2,530,000. Subject to the actuarial assumptions used in this year’s FRS 17 valuation and set out in note 5 remaining unchanged, the additionalpayments to be made should progressively reduce the liability included in the accounts in respect of the Scheme.

In Sweden, the Consultec companies paid contributions of £148,000 (2006: £163,000) to provide final salary benefits through a multi-employerscheme operated by Alecta, a Swedish insurance company. At 30 June 2007, the fund had a solvency margin of 164.6% (2006: 142.7%).

Net current assets of the Group amounted to £3,335,000 at the year-end compared with £3,170,000 the previous year.

Gearing and cash flowTotal net cash in hand at 30 June 2007 amounted to £4,760,000 (2006: 4,682,000). This was comprised of balances outstanding under term loanswith a maturity of one year or more of £71,000, those with a maturity of less than one year of £410,000 and lease borrowings of £699,000 offsetby net bank deposits of £5,940,000. Hence, the Group remains ungeared, with net cash balances representing at 30 June 2007 approximately23.1% of shareholders funds.

The summary Group cash flow is shown below. Operating cash flow was again extremely strong at £6,168,000, representing 110% of operatingprofit. Working capital remained under tight control and, despite the further increase in the Group’s activities during the year, at 30 June 2007the Group maintained negative working capital.

Capital expenditure during the year on tangible fixed assets, excluding assets acquired under leasing arrangements, amounted to £1,220,000 and£128,000 was spent on intangible assets, an aggregate reduction of £36,000 on the expenditure in the previous year.

Free cash flow, representing the cash available to finance the payment of dividends, acquisitions and investments, the repayment of termborrowings and other financing items, was an inflow of £4,428,000 (2006: £6,908,000).

£2,622,000, net of £1,382,000 cash acquired, was expended on the acquisition of Asta Group Limited and subsidiaries.

Summary Group cash flowYear ended Year ended

30 June 2007 30 June 2006£’000 £’000

Cash inflow from continuing operations 6,168 7,975Capital expenditure net of proceeds from fixed asset disposals (1,033) (454)Interest (9) (119)Tax (663) (494)

Free cash flow 4,463 6,908Acquisitions and disposals (2,622) (1,118)Financial investments net of sale proceeds – (29)Loan to Employee Share Ownership Trust (204) (52)Repayment of principal under finance leases (374) (321)Equity dividends paid (1,122) (786)Proceeds from issue of shares – 31

Net cash inflow 141 4,633Exchange adjustment (162) (26)

Increase in net cash balances (21) 4,607

Average year-end working capital of the trading subsidiaries as a percentage of annual sales was negative at 0.9% of annual turnover(2006: negative 2.1%, 2005: 0.7%). Average year-end trade working capital, i.e. stocks and trade debtors less trade creditors, of the tradingsubsidiaries as a percentage of annual sales was 10.9% (2006: 6.0%, 2005: 6.9%). While these key indicators of our cash management activitiesare below the records reported last year, partly reflecting the higher levels of activity in the later part of the year, they are still excellent. Year-end debtor days were 47 days, the number of days cost of sales accounted for by year-end stocks was 27 days and year-end creditor days were58 days. Debtor days increased from the 41 days equivalent last year, stock days were reduced from the 29 days equivalent last year, despite rawmaterial prices being higher than during the equivalent period, and creditor days were reduced from the 66 days equivalent last year. We remainfocused on efficient asset utilisation and avoiding unnecessary investment in this area and much of the increase in year-end debtors is accountedfor by high level of activity at Bell & Webster Concrete in the later part of the year. We continue to work well with trade suppliers.

FundingThe structure of the maturity profile of the Group’s borrowings and bank borrowing facilities at 30 June 2007 are set out in notes 21 and 32 tothe financial statements. The principal financial borrowing covenants in relation to the facilities are for net interest to be covered not less than3 times by operating profits.

Since establishing arrangements with them in 1999, we have had an excellent relationship with Lloyds TSB Bank plc and I am pleased to reportthat new committed, unsecured facilities were recently put in place. These included a 7 year £4.5m term loan and £10.0m revolving loan repayablein July 2012.

The undrawn facilities provide resources available to support the Group’s future investments, in addition to substantial working capital support.While the Group has demonstrated its strong operational cash flow capabilities it also has significant committed lending facilities available tounderpin its development plans and to reduce liquidity risk.

IFRS implementationThe Group will adopt International Financial Reporting Standards (IFRS) in reporting its consolidated financial statements for the year ending30 June 2008. Under IFRS, the results for the year ended 30 June 2007 will be restated and reconciled to those prepared under UK accountingstandards in these financial statements. The interim results for the 6 months ending 31 December 2007 will be the first to be reported inaccordance with IFRS. The process of dealing with implementation is under way.

David S DannhauserFINANCE DIRECTOR

19 October 2007

Vitesse architectural panelsSpeedDeck Building Systems

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Group Directory

Building SystemsBELL & WEBSTER CONCRETE LIMITEDGrantham, LincolnshireTel: +44 (0) 1476 562277 Fax: +44 (0) 1476 562944E-mail: [email protected]: www.eleco.com/bellandwebsterManufacturer and supplier of FastBuildTM precast concreterooms, retaining walls, terracing units and other contreteproducts.

GANG-NAIL SYSTEMS LIMITEDAldershot, HampshireTel: +44 (0) 1252 334691 Fax: +44 (0) 1252 334562E-mail: [email protected]: www.eleco.com/gangnailManufacturer and supplier of roof truss connector plates,Ecojoist® floor joist webs and associated design andengineering software.

ELECO BAUPRODUKTE GmbHMunich, GermanyTel: +49 (0) 816 187960 Fax: +49 (0) 816 1879633E-mail: [email protected]: www.eleco.com/elecobauprodukteSupplier of roof truss connector plates and associated designand engineering software.

INTERNATIONAL TRUSS SYSTEMS (PTY) LIMITEDJohannesburg, South AfricaTel: +27 (0) 11 397 4441 Fax: +27 (0) 11 397 4929E-mail: [email protected]: www.eleco.com/itsSupplier of roof truss connector plates and associated designand engineering software.

SPEEDDECK BUILDING SYSTEMS LIMITEDYaxley, SuffolkTel: +44 (0) 1379 788166 Fax: +44 (0) 1379 788161E-mail: [email protected]: www.eleco.com/speeddeckManufacturer and supplier of secret-fix and standing seammetal roofing and Vitesse® wall and rainscreen claddingsystems.

DOWNER CLADDING SYSTEMS LIMITEDYaxley, SuffolkTel: +44 (0) 1379 787215 Fax: +44 (0) 1379 788161E-mail: [email protected]: www.eleco.com/downerSupplier of fixing and support systems for rainscreen cladding.

PROMPT PROFILES LIMITEDNorwich, NorfolkTel: +44 (0) 1603 720090 Fax: +44 (0) 1603 720202E-mail: [email protected]: www.eleco.com/promptprofilesManufacturer and supplier of profiled metal products for theroofing systems industry.

ELECO TIMBER FRAME LIMITEDYaxley, Suffolk Liverpool, MerseysideTel: +44 (0) 1379 783465 Tel: +44 (0) 151 448 0066Fax: +44 (0) 1379 783659 Fax: +44 (0) 151 448 0066Website: www.eleco.com/elecotimberframeManufacturer and supplier of ElecoFrame® timber frame,EcoJoist® floor joist and ElecoFloor® acoustic flooring productsand internal panel systems.

SoftwareASTA DEVELOPMENT PLCThame, OxfordshireTel: +44 (0) 1844 261700 Fax: +44 (0) 1844 261314E-mail: [email protected]: www.astadev.comDeveloper and supplier of project and resource managementsoftware.

CONSULTEC BYGGPROGRAM ABSkellefteå, SwedenTel: +46 (0) 910 87878 Fax: +46 (0) 910 87809E-mail: [email protected]: www.consultec.seDeveloper and supplier of building project software.

CONSULTEC SYSTEM ABSkellefteå, SwedenTel: +46 (0) 910 87800 Fax: +46 (0) 910 87849E-mail: [email protected]: www.consultec.seDeveloper and supplier of design and engineering software.

CONSULTEC ARKITEKTER & KONSTRUKTORER ABSkellefteå, SwedenTel: +46 (0) 910 87800 Fax: +46 (0) 910 87809E-mail: [email protected]: www.consultec.seArchitectural consultancy and software reseller.

ELECO SOFTWARE LIMITEDAldershot, HampshireTel: +44 (0) 1252 334695 Fax: +44 (0) 1252 332287E-mail: [email protected]: www.eleco.com/softwareDeveloper and supplier of 3D design and engineering software.Trading as Consultec, ArCon and 3D Architect.

ELECO SOFTWARE GmbHHameln, GermanyTel: +49 (0) 5151 787 9928 Fax: +49 (0) 5151 787 9929E-mail: [email protected]: www.elecosoftware.deDeveloper and supplier of 3D design software.

ESIGN SOFTWARE GmbHHanover, GermanyTel: +49 (0) 511 856 14340 Fax: +49 (0) 511 856 14343E-mail: [email protected]: www.e-sign.com

Developer and supplier of software solutions for the floorcoverings industry.

Board of Directors and Company Advisers

John Ketteley FCAAppointed Executive Chairman in 1997, John Ketteley has an investmentbanking background. He was formerly non-executive Chairman of BTP plc,Country Casuals plc and Prolific Income plc. Age 68.

David Dannhauser MA ACAAppointed Finance Director in February 1994. David Dannhauser was previouslya director of Caverdale Group PLC. Age 52.

Michael McCullenAppointed a Director in March 2007. Michael McCullen was founding partner ofAsta Development and is Managing Director of Eleco Construction Software.Age 45.

Fred NewbyAppointed a Director in April 2005. Fred Newby has been Managing Director ofBell & Webster Concrete Limited since 1994. Age 60.

Paul TaylorAppointed Chief Executive of Eleco Building Products in July 2004 havingpreviously held the position of Group Operations Director and GroupCommercial Director since July 2000. Prior to that Paul Taylor was head of theEuropean operations of the NASDAQ listed company DeVlieg-Bullard Inc.Age 42.

Jonathan Cohen TD MA FCA*Chairman of the Audit Committee

Appointed a Non-Executive Director in November 2002. Jonathan Cohen waspreviously Chief Executive of County NatWest Limited and Vice Chairman ofCharterhouse Bank Limited. He is currently a director of Independent DirectionDirectors Advisory Service Limited, a non-executive director of The RosePartnership Limited, Laird Capital Limited and Fairplace PLC. Age 63.

Tom Quinn*Chairman of the Remuneration Committee

Appointed a Non-Executive Director in November 2000. Tom Ouinn waspreviously a partner of W Greenwell and Company, stockbrokers, a director ofSamuel Montague and Company Limited, Barclays de Zoete Wedd Limited andHambros Bank plc. Age 68.

* Member of the Audit, Remuneration and Nomination Committees.

SecretaryIvor A Barton ACIS

Registered officeEleco House15 Gentlemen's FieldWestmill RoadWareHerts SG12 OEFTel: +44 (0)1920 443830Fax: +44 (0)1920 469681E-mail: [email protected]: www.eleco.com

Registered number354915

AuditorsGrant Thornton UK LLP

BankersLloyds TSB Bank plc

Nominated Adviser & BrokerCollins Stewart Europe Limited

SolicitorsBerwin Leighton Paisner

Financial Public RelationsBuchanan Communications

Registrars and transfer officeCapita RegistrarsNorthern HouseWoodsome ParkFenay BridgeHuddersfieldWest Yorkshire HD8 0LATel: +44 (0) 870 162 3100

9

University of East LondonBell and Webster Concrete


Directors’ Report

The Directors present their report and the audited financial statements for the year ended 30 June 2007.

Review of the businessThe Group’s principal activities include the manufacture and supply of building systems and products, and the design and supplyof software systems. A list of the principal operating subsidiaries is set out in note 15 to the financial statements.

The accompanying Chairman’s Statement and Financial Review provide a more detailed description of activities during the year,including comments on sales, sales volumes and margins and future prospects. The principal risks and uncertainties in thebusinesses are the underlying levels of activity in the markets in which they operate and the related impact on customer demand,significant movements in raw materials costs, unforeseen delay in the implementation of software development projects andchanges to building codes, which might impact on the products supplied,

The assessment of the major financial risks applicable to the Group is in note 32 to the financial statements.

Results for the yearThe Group profit on ordinary activities before taxation was £5,650,000 (2006: £4,436,000 restated). The detailed financialstatements of the Group are set out on pages 20 to 43.

DividendsAn interim dividend of 0.70 pence per share was paid during the year. The Directors recommend for payment on 23 November 2007a final dividend of 1.80 pence per share to ordinary shareholders on the register at the close of business on 19 October 2007.Combined with the interim dividend, this will make a total distribution of 2.50 pence per share (2006: 2.10 pence per share).

AcquisitionOn 15 December 2006, the Group acquired the entire issued share capital of Asta Group Limited for £8.4m consideration.

Share capital and share option schemesDetails of the share capital and share options schemes are shown in note 23 to the financial statements.

Directors and their interestsThe current composition of the Board of Directors is shown on page 9 and all the Directors, except for M B McCullen, who wasappointed on 1 March 2007, held office throughout the year.

D S Dannhauser and T Quinn retire by rotation at the forthcoming Annual General Meeting and, being eligible, will offer themselvesfor re-election. M B McCullen will retire at the Annual General Meeting in accordance with the Company’s Articles of Associationand, being eligible, will offer himself for election.

Details of the interests of each Director who held office at 30 June 2007 in, and options and awards over, the share capital of theCompany, together with details of service agreements entered into by the Group companies are shown in the Report onRemuneration on pages 14 to 18.

Substantial interestsAs at the date of this Report, the Company has been notified of the following interests in the issued share capital of the Company:

Number of shares Percentage

J H B Ketteley 7,386,530 13.02%

H A Allen 5,592,828 9.86%

Lowland Investment Company PLC 3,078,443 5.42%

Rights and Issues Investment Trust PLC 3,075,000 5.42%

PR and MJ Ketteley 2,500,000 4.41%

Schroder Institutional UK Smaller Companies Fund 2,028,991 3.58%

Research and developmentProduct innovation and development is a continuous process. The Group commits resources to the development of new productsand quality improvements to existing products and processes in all its business segments.

11

Employee involvementThe Group is committed to a policy of involvement by keeping its employees fully informed regarding its performance andprospects. Employees are encouraged to present their suggestions and views. The Group operates a Long Term Incentive Planinvolving share-based incentives.

Employment of disabled personsThe Company’s policy is to provide equality of opportunity for all employees without discrimination and continues to encouragethe employment, training and advancement of disabled persons in accordance with their abilities and aptitudes, provided that theycan be employed in a safe working environment. Suitable employment would, if possible, be found for any employee who becomesdisabled during the course of their employment with the Group.

Policy regarding the payment of suppliersThe Company’s policy is to agree terms of payment with suppliers at the commencement of the trading or contractual relationship,and to operate within such terms subject to satisfactory completion of the suppliers’ obligations. At 30 June 2007, the Group’saverage creditor payment period was 59 days.

Charitable contributionsDuring the financial year donations to charities and good causes totalled £2,032. The Group does not make any political donations.

Directors’ responsibilities in relation to the financial statementsThe following statement, which should be read in conjunction with the Report of the Auditors set out on page 19, is made so thatshareholders may distinguish between the respective responsibilities of the Directors and of the auditors in relation to the financialstatements. The Directors are required by the Companies Act 1985 to prepare financial statements for each financial year, whichgive a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profitor loss for the financial year.

The Directors consider that, in preparing the financial statements, the Company has used appropriate accounting policies, appliedconsistently and supported by reasonable and prudent judgements and estimates, and that all applicable accounting standardshave been followed and are prepared in accordance with UK GAAP.

The Directors have responsibility for ensuring that accounting records are kept which disclose with reasonable accuracy thefinancial position of the Company and the Group and which enable them to ensure that the financial statements comply with theCompanies Act 1985 and are prepared in accordance with UK GAAP.

The Directors have responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company andthe Group and to prevent and detect fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on theCompany’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements maydiffer from legislation in other jurisdictions.

This Report embodies the separate statement on Corporate Governance, which can be found on page 13.

Directors' statement as to disclosure of information to AuditorsThe Directors who were members of the board at the time of approving the Directors’ Report are listed on page 9. Having madeenquiries of fellow Directors and of the Company’s auditors, each of these Directors confirms that to the best of each Director’sknowledge and belief, there is no information relevant to the preparation of their report of which the Company’s auditors areunaware and each Director has taken all steps a Director might reasonably be expected to have taken to be aware of relevant auditinformation and to establish that the Company’s auditors are aware of that information.

Directors’ IndemnitiesQualifying third party indemnity provisions (as defined in Section 309B(1) of the Companies Act 1985) are in force for the benefitof the Directors.


Directors’ Report

Annual General MeetingYour attention is drawn to the Notice of Meeting on page 45 of this report convening the Annual General Meeting of the Companyat 12:00 noon on 15 November 2007 at the London Capital Club, 15 Abchurch Lane, London EC4N 7BB. The Notice of Meeting setsout and explains the special and ordinary business to be conducted at the meeting. At the Annual General Meeting an ordinaryresolution regarding the use of the Company’s website as a means of communication with shareholders will be proposed.

AuditorsMessrs. Grant Thornton UK LLP were appointed during the year and have indicated their willingness to continue in office. Aresolution will be proposed at the forthcoming Annual General Meeting to re-appoint them as Auditors and to fix theirremuneration.

By order of the Board

I A BartonSECRETARY

Eleco House15 Gentlemen’s FieldWestmill RoadWareHerts SG12 0EF

19 October 2007

13

Corporate Governance

The Company’s shares have been listed on the Alternative Investment Market since March 2006. Although companies listed on AIMare not required to comply with the Combined Code on Corporate Governance, the Board is committed to ensuring that highstandards of corporate governance are followed as appropriate to the Company’s size and activity.

The Board of Directors, which consists of the Executive Chairman, Group Finance Director, three other Executive Directors and twoindependent Non-Executive Directors, meets at least ten times throughout the year.

The Directors have access to independent professional advice in executing their duties on behalf of the Company.

Audit CommitteeThe Audit Committee, which consists of the Non-Executive Directors, has specific terms of reference and meets with the auditorsat least twice a year. The Committee reviews the financial statements prior to their recommendation to the Board for approval andassists the Board in ensuring that appropriate accounting policies, internal financial controls and compliance procedures are inplace.

Internal audit activity continues to be monitored by the Audit Committee.

Remuneration CommitteeThe Remuneration Committee consists of the Non-Executive Directors and is responsible for determining the remunerationarrangements of the Executive Directors and for advising and recommending to the Board on the Company’s remuneration policyfor senior executives. Information on Directors’ remuneration is set out in the Report on Remuneration on pages 14 to 18.

No Director is involved in deciding his own remuneration.

Nominations CommitteeThe Nominations Committee consists of the Non-Executive Directors and other Directors appointed by the Board, and is responsiblefor reviewing the structure, size and composition of the Board and its committees and evaluating potential candidates fornomination when and if it is deemed necessary to appoint a new Director to the Board. The Committee will make itsrecommendations to the full Board for its consideration and approval.

Relations with ShareholdersThe Board places great emphasis on its relationship with shareholders. Directors meet with institutional investors from time to timeand are available to enter into dialogue with such shareholders. The Company communicates with all shareholders through theissue of regular press releases and through its website at www.eleco.com and encourages all shareholders to make positive use ofthe Company’s Annual General Meeting. Through the Annual and Interim Reports of the Company, and market announcementswhere appropriate, the Directors seek to present a balanced and understandable assessment of the Company’s position andprospects.

Control EnvironmentThe Board acknowledges its responsibility for the Group’s systems of internal financial and other control. These are designed to givereasonable, though not absolute, assurance as the reliability of information, the maintenance of proper accounting records, thesafeguarding of assets against un-authorised use or disposition and that the Group’s businesses are being operated effectively andefficiently with appropriate awareness of the operational risks to which they are exposed.

The Directors have established an organisational structure with clear lines of responsibility and delegated authority.

The systems include:

• the appropriate delegation of responsibility to operational management;

• financial reporting, within a comprehensive financial planning and accounting framework, including the approval by theBoard of the detailed annual budget and the regular consideration by the Board of actual results compared with budgets andforecasts;

• clearly defined capital expenditure and investment control guidelines and procedures; and

• monitoring of business risks, with key risks identified and reported to the Board.

Going ConcernThe financial statements, which appear on pages 20 to 43 have been prepared on a going concern basis. Having made appropriateenquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existencefor the foreseeable future.


Report on Remuneration

1 The Remuneration CommitteeThe Remuneration Committee consists entirely of the Non-Executive Directors under the chairmanship of T Quinn. The Committee,in determining its proposals, takes specialist advice from independent consultants, Halliwell Consulting, on the level and structureof executive remuneration generally in relation to the UK market. The Remuneration Committee has responsibility for makingrecommendations to the Board to determine the Company’s general policy on remuneration and also specific packages forindividual Directors. It carries out the policy on behalf of the Board and meets at least twice a year. The Executive Chairman attendsthe meetings when the Committee discusses matters concerning senior executives within the Group other than the ExecutiveDirectors.

2 Policy on remuneration of Executive Directors and senior executivesa) The Remuneration Committee aims to ensure that the remuneration packages offered encourage and reward performance in

a manner which is consistent with the long-term interests of shareholders.

b) The remuneration of the Executive Directors comprises five elements:

i) a basic salary together with benefits-in-kind (such as company car, private petrol and medical insurance);

ii) a non-pensionable performance-related annual bonus based on the Group’s performance. The Executive Directors arecontractually entitled to a bonus scheme, but the amount to be paid is determined by the Remuneration Committee;

iii) a contribution to the personal pension schemes of the Executive Directors based solely on basic salary;

iv) performance-related share awards and non-pensionable bonuses under the Company’s Long Term Incentive Plans;

v) share options granted under the Company’s Executive Share Option Scheme and Sharesave Scheme.;

c) Executive Directors’ contracts

The Executive Directors have service agreements, which provide for a notice period for termination of up to 12 months. In theevent that employment with the Company is terminated without notice, the contracts do not provide for payment of aspecific sum for compensation.

Commencement dates for contracts (as amended) were as follows: D S Dannhauser (15 December 1994); J H B Ketteley (3 July1997); P J Taylor (20 October 2000); F E Newby (8 April 1998); M B McCullen (1 March 2007).

d) Incentives

i) Annual bonus

Senior executives within the Group currently receive a monetary bonus related to the profits of the part of the Group’soperations for which they are responsible for the specific financial year in question.

ii) Share options and Long Term Incentive Plan

The Committee believes that share ownership by Executive Directors and senior executives strengthens the link betweentheir personal interests and those of shareholders.

Awards under the Company’s Long Term Incentive Plan have been made to a range of employees, including the ExecutiveDirectors and senior executives, in accordance with terms recommended annually by the Remuneration Committee. A trust has been established for the purpose of administering the Plan, including making awards, acquiring the sharesnecessary to satisfy awards that vest and transferring vested shares to participants.

Two types of award have been made under the Plan: Performance Share Awards for the Executive Directors and seniorexecutives, which are subject to performance targets based upon the growth in Company’s earnings per share or growthin returns on assets managed of the operations in which they have executive responsibility, and Restricted Share Awards,which are not subject to performance targets. The performance targets cover the period from the end of the financialyear of the Company immediately preceding the date of grant to that immediately preceding the vesting date and areup to RPI +6% p.a. over the period. No consideration is required from participants in respect of either type of award,either at the time the awards are made or on the vesting of the awards. Further details are shown in note 23 to thefinancial statements.

15

iii) Long-term performance bonuses

Executive Directors are also entitled to non-pensionable bonuses under long-term incentive plans. Bonus awards arepayable after no less than three years if the Company’s performance over the relevant period exceeds the target growthin earnings per share. The target increases are up to RPI + 7% per annum over the period.

e) Non-Executive Directors

The remuneration of Non-Executive Directors is determined by the Board. The Non-Executive Directors do not have servicecontracts but are appointed for an initial fixed term of three years, which may thereafter be renewed from year to year. They cannot participate in any of the Group’s share option or pension schemes.

3 Directors’ remuneration and interestsThe emoluments of the Directors for the years to 30 June 2007 and 2006 were:

Performance Total emoluments related excluding pensions Pension contributions

Basic salary Fees Benefits pay 2007 2006 2007 2006£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Executive

J H B Ketteley 250 5 25 120 400 300 88 68

D S Dannhauser 150 5 16 – 171 198 108 34

M B McCullen* 46 2 4 – 52 – 5 –

F E Newby 125 5 23 85 238 134 13 24

P J Taylor 125 5 12 58 200 159 19 17

Non-Executive

J Cohen – 33 – – 33 30 – –

T Quinn – 33 – – 33 31 – –

Total 2007 696 88 80 263 1,127 233

Total 2006 582 87 54 140 852 143

* From 1 March 2007, the date of appointment.

F E Newby is a member of the Eleco Retirement and Benefits Scheme, which provides pensions and other benefits within InlandRevenue limits. Details of benefits as at 30 June 2007 and movements over the year ended 30 June 2007 are as follows:

Transfer value Gross Increase Total Transfer value Transfer value of increase increase In in accrued accrued of accrued of accrued Change in

Pensionable in accrued accrued pension net pension at pension at pension at transferservice at pension* pension of inflation 2007 2007 2006 value*

2007 £’000 £’000 £’000 £’000 £‘000 £’000 £‘000

F E Newby 15.5 years 4 1 1 21 301 247 54

* Amounts are net of the Director’s contributions.



The value of outstanding bonus and share awards under the long-term incentive plans were as follows:

Outstanding Lessat 30 June amounts Accrued Outstanding

2006 paid or during the at 30 June(Restated) vested year 2007

£‘000 £’000 £’000 £’000

J H B Ketteley 497 (189) 307 615

D S Dannhauser 58 (67) 57 48

P J Taylor 49 (54) 37 32

F E Newby 20 – 20 40

During the year, for expenses or services provided in the normal course of business, the Group paid £8,350 (2006: £5,000) toJ H B Ketteley & Co Limited of which J H B Ketteley is a director and in which he has an interest.

4 Directors’ shareholdingsThe interests, beneficial unless otherwise indicated, in the ordinary shares of 10p each in the Company of the Directors who heldoffice at 30 June 2007, were as follows:

At 30 June 2007 At 30 June 2006

J H B Ketteley 7,386,530 6,794,530

D S Dannhauser 926,759 745,365

M B McCullen 652,944 652,944*

P J Taylor 247,051 103,448

F E Newby 28,802 28,802

J Cohen 38,333 38,333

T Quinn – –

* Date of appointment.

There have been no changes in the Directors’ interests since 30 June 2007.

17

5 Directors’ optionsPerformance Share Options granted to the Executive Directors under the Company’s Long Term Incentive Plan were as follows:

Award At 30 June 2006 Exercised during year Granted during year At 30 June 2007 Exercise date

J H B Ketteley 2004 502,000 (502,000) – – 1 May 2007 to31 October 2010

2006 240,000 – – 240,000 1 January 2009 to31 October 2011

2007 – – 200,000 200,000 1 January 2010 to31 October 2012

D S Dannhauser 2004 301,200 (301,200) – – 1 May 2007 to31 October 2010



P J Taylor 2003 70,000 – – 70,000 1 April 2006 to1 December 2008

2004 238,450 (238,450) – – 1 May 2007 to31 October 2010



F E Newby 2006 110,000 – – 110,000 1 January 2009 to31 October 2011


The middle market price of the Company’s ordinary shares on 30 June 2007 was 97.5p and the range during the year was 61.75pto 97.5p.

Performance GraphThe graph below shows the total shareholder return (with dividends reinvested) for each of the last five financial years in a holdingof the Company’s shares against the corresponding total shareholder return in a hypothetical holding of shares in the FTSE AIMAll-Share Index and the FTSE All-Share Index. These indices have been selected as they represent indices in which the Company’sshares were constituent members during the year.

Eleco TSR (net), FTSE All-Share TSR (net), AIM All-Share TSR (net), rebased to 100 – 01/07/02 to 30/06/07

On behalf of the Board.

T QuinnCHAIRMAN, REMUNERATION COMMITTEE

19 October 2007

50

100

150

200

250

300

350

400

450

500

550

2002 2003 2004 2005 2006 2007

ELECO

FTSE ALL SHARE AIM ALL SHARE



19

Report of the Auditors

Independent Auditors’ report to the members of Eleco plcWe have audited the Group and parent company financial statements (the “financial statements”) of Eleco plc for the year to30 June 2007 which comprise clauses 3 and 5 of the Remuneration Report, the Consolidated Profit and Loss Account, the Consolidated Statementof Total Recognised Gains and Losses, the Consolidated Reconciliation of Movements in Shareholders’ Equity, the Consolidated and CompanyBalance Sheets, the Consolidated Cash Flow Statement, and the related notes 1 to 32. These financial statements have been prepared under theaccounting policies set out therein.

This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work hasbeen undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and forno other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and theCompany’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and AuditorsThe Directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and United KingdomAccounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the statement of Directors’ responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal and regulatory requirements andInternational Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with theCompanies Act 1985. We also report to you whether, in our opinion the information given in the Directors’ Report is consistent with the financialstatements. The information given in the Directors’ Report includes that specific information presented in Chairman’s Statement and FinancialReview that is cross referenced from the Directors’ Report. In addition we report to you if the Company has not kept proper accounting records,if we have not received all the information and explanations we require for our audit, or if information specified by law regarding Directors’remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. The otherinformation comprises only the Chairman’s Statement, Financial Review, Directors’ Report, Corporate Governance Report and clauses 1, 2 and 4of the Remuneration Report. We consider the implications for our report if we become aware of any apparent misstatements or materialinconsistencies with the financial statements. Our responsibility does not extend to any other information.

Basis of audit opinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An auditincludes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes anassessment of the significant estimates and judgments made by the Directors in the preparation of the financial statements, and of whether theaccounting policies are appropriate to the circumstances of the Company and the Group, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide uswith sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraudor other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financialstatements.

OpinionIn our opinion:

• the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the stateof the Group’s and the Company’s affairs as at 30 June 2007 and of the Group’s profit for the year to 30 June 2007;

• the financial statements have been properly prepared in accordance with the Companies Act 1985; and

• the Directors’ Report is consistent with the financial statements.

Grant Thornton UK LLPCHARTERED ACCOUNTANTS AND REGISTERED AUDITORS

Cambridge

19 October 2007


Consolidated Profit and Loss Accountfor the year ended 30 June 2007

2007 2007 2006 2006(Restated) (Restated)

Notes £’000 £’000 £’000 £’000

TurnoverContinuing operations 2, 3 59,646 55,197Acquisitions 2,432 62,078 – 55,197

Turnover 2, 3 62,078 55,197

Cost of sales 3 (32,142) (30,062)

Gross profit 3 29,936 25,135Distribution costs (2,818) (2,510)Administration expenses (21,527) (18,509)

Operating profitContinuing operations 5,308 4,116Acquisitions 283 –

Operating profit 2, 3 5,591 4,116

Profit on disposal of tangible assets 8 – 476

Profit on ordinary activities before interest and taxation 5,591 4,592Net interest receivable/(payable) 6, 7 18 (114)Other finance income/(charges) 5 41 (42)

Profit on ordinary activities before taxation 8 5,650 4,436Taxation 9 (1,036) (1,103)

Profit for the financial year 4,614 3,333

Basic earnings per ordinary 10p share 12 8.7p 6.8pDiluted earnings per ordinary 10p share 12 8.7p 6.7p

21

Consolidated Statement of Total Recognised Gains and Lossesfor the year ended 30 June 2007

2007 2006(Restated)

Notes £’000 £’000

Profit for the financial year 4,614 3,333Translation differences on foreign currency net investments (154) (125)Actuarial gain on retirement benefit scheme 1,125 1,354Associated deferred tax on retirement benefit scheme (407) (406)

Total recognised gains for the financial year 5,178 4,156

Prior year adjustment 1 (8)

Total gains and losses recognised since last annual report 5,170

Consolidated Reconciliation of Movements in Shareholders’ Equityfor the year ended 30 June 2007

2007 2006(Restated)

Notes £’000 £’000

Profit for the financial year 4,614 3,333Other recognised profits relating to the year 564 823LTIP expense net of vesting charge (114) (126)Increase in own shares held by ESOT (204) (52)Dividends 11 (1,122) (786)Issue of ordinary shares 4,727 324

Increase in shareholders’ equity 8,465 3,516

Opening shareholders’ equity as previously reported 12,210 8,677Prior year adjustments:FRS20 Share based payments 1 (25) (8)

Opening shareholders’ equity as restated 12,185 8,669Increase in shareholders’ equity 8,465 3,516

Closing shareholders’ equity 20,650 12,185


Consolidated Balance Sheetat 30 June 2007

2007 2006(Restated)

Notes £’000 £’000

Fixed assetsIntangible assets 13 12,184 5,625Tangible assets 14 8,417 8,310

20,601 13,935

Current assetStocks 18 3,441 2,821Debtors 19 13,151 9,891Cash at bank and in hand 5,940 6,852

22,532 19,564Creditors: amounts falling due within one year 20 (19,197) (16,394)

Net current assets 3,335 3,170

Total assets less current liabilities 23,936 17,105Creditors: amounts falling due after more than one year 21 (457) (954)Provisions for liabilities and charges 22 (299) (425)

Net assets excluding retirement benefit liability 23,180 15,726

Retirement benefit liability 5 (2,530) (3,541)

Net assets 20,650 12,185

Capital and reservesCalled up share capital 23 5,674 5,033Share premium account 24 6,224 6,224Merger reserve 24 4,453 367Other reserve 24 (306) (102)Profit and loss account 24 4,605 663

Shareholders’ equity 20,650 12,185

The financial statements on pages 20 to 43 were approved by the Board of Directors on 19 October 2007 and signed on its behalfby:

J H B KetteleyEXECUTIVE CHAIRMAN

23

Company Balance Sheetat 30 June 2007

2007 2006Notes £’000 £’000

Fixed assetsIntangible assets 13 129 226Tangible assets 14 3,461 3,557Investments 15 44,899 32,552

48,489 36,335

Current assetsDebtors 19 2,446 1,176Cash at bank and in hand 508 3,682

2,954 4,858

Creditors: amounts falling due within one year 20 (16,350) (12,313)

Net current liabilities (13,396) (7,455)

Total assets less current liabilities 35,093 28,880Creditors: amounts falling due after more than one year 21 (71) (486)Provisions for liabilities and charges 22 (138) (401)

Net assets 34,884 27,993

Capital and reservesCalled up share capital 23 5,674 5,033Share premium account 24 6,224 6,224Other reserve 24 13,737 9,855Profit and loss account 24 9,249 6,881

Shareholders’ equity 34,884 27,993

The financial statements on pages 20 to 43 were approved by the Board of Directors on 19 October 2007 and signed on its behalfby:

J H B KetteleyEXECUTIVE CHAIRMAN


Consolidated Cash Flow Statementfor the year ended 30 June 2007

2007 2006(Restated)

Notes £’000 £’000

Operating activitiesNet cash inflow from continuing operations 26 6,168 7,975

Net cash inflow from operating activities 6,168 7,975

Returns on investment and servicing of financeInterest received 241 190Interest paid (203) (269)Interest element of finance lease rentals (47) (40)

Net cash outflow from returns on investment and servicing of finance (9) (119)

Net cash outflow from taxation (663) (494)

Capital expenditure and financial investmentPurchase of fixed assets (1,348) (1,384)Disposal of tangible fixed assets 315 930Purchase of investment – (29)

Net cash outflow from capital expenditure and financial investment (1,033) (483)

Acquisitions and disposalsPurchase of subsidiary undertakings (4,004) (1,151)Cash acquired with subsidiary undertakings 1,382 33

Net cash outflow from acquisitions and disposals (2,622) (1,118)

Equity dividends paid (1,122) (786)

Net cash inflow before financing 719 4,975

FinancingNew bank loans – 650Repayment of principal under finance leases (374) (321)Repayment of bank loans (891) (885)Issue of ordinary shares – 31Own shares purchased by Employee Share Ownership Trust (204) (52)

Net cash outflow from financing (1,469) (577)

(Decrease)/increase in cash in the year 27, 28 (750) 4,398

25

Notes to the Financial Statementsfor the year ended 30 June 2007

1 Accounting policies

The financial statements have been prepared in accordance with applicable accounting standards in the United Kingdom. A summary of the more important Group accounting policies, which have been applied consistently, is set out below.

Changes in accounting policyThe accounting policies adopted are the same as the previous year except that the Group has adopted FRS 20 Share-basedpayments.

The Group has taken advantage of the transitional provisions of FRS 20 in respect of equity-settled awards so as to apply FRS 20only to those equity-settled awards granted after 7 November 2002 that had not vested before 1 July 2006.

In the financial statements for the year ended 30 June 2007, the impact on the net assets on adoption of FRS 20 as at 1 July 2005has been shown as a prior year adjustment. Shareholders’ equity has been reduced by £8,000 as at 1 July 2005 and £25,000 as at30 June 2006. Post-tax profits for the years ended 30 June 2007 and 30 June 2006 have been increased by £42,000 and £40,000respectively.

Basis of accountingThe financial statements are prepared in accordance with the historical cost convention.

Basis of consolidationThe consolidated profit and loss account and balance sheet include the financial statements of the Company and its subsidiaryundertakings for the year ended 30 June 2007. As permitted by Section 230 of the Companies Act 1985, a separate profit and lossaccount for the Company is not included. The results of subsidiaries acquired or sold in the year are included in the consolidatedprofit and loss account from or up to the date control passes. Intra-group sales and profits are eliminated fully on consolidation.

On acquisition of a subsidiary, all of the subsidiary’s assets and liabilities that exist at the date of acquisition are recorded at theirfair values reflecting their condition at that date. All changes to those assets and liabilities, and the resulting gains and losses, thatarise after the Group has gained control of the subsidiary are charged to the post-acquisition profit and loss account.

TurnoverTurnover, which excludes value added tax, sales between Group companies and trade discounts, represents the value of goods andservices supplied to third parties. Turnover from software maintenance and support contracts is recognised on a straight line basisover the term of the contract.

GoodwillGoodwill arising on acquisitions prior to 30 June 1998 was written off against reserves in accordance with accounting standardsthen in force. The subsequent disposal of any business to which such goodwill related would result in the goodwill being chargedor credited to the profit and loss account. For subsequent acquisitions, goodwill, representing the excess of the fair value of thepurchase price over the fair value of the identifiable net assets acquired, is capitalised in the year in which it arises and amortisedon a straight-line basis over its useful economic life, which ranges between five to twenty years. The carrying value of goodwill issubject to review at the end of the first financial year following acquisition, and if subsequent events or changes in circumstancesindicate that the carrying value may not be recoverable. To the extent that the carrying amount is less than the higher of its fairvalue net of disposal costs and the net present value of its value in use, any impairment loss is charged to profit and loss.

Intangible and tangible fixed assetsThe cost of fixed assets is their purchase cost, together with any incidental costs of acquisition.

The Group owns intellectual property both in its software tools and software products. Intellectual property acquired is capitalised atcost and is amortised on a straight-line basis over its expected useful life not exceeding twenty years. The carrying value of intangibleassets is subject to review at the end of the first financial year following acquisition, and if subsequent events or changes incircumstances indicate that the carrying value may not be recoverable. To the extent that the carrying amount is less than the higherof its fair value net of disposal costs and the net present value of its value in use, any impairment loss is charged to profit and loss.

InvestmentsFixed asset investments are shown at cost, together with any incidental costs of acquisition, less any provision for impairment.

DepreciationDepreciation is provided on all tangible fixed assets, except freehold land and assets in the course of construction, at annual ratescalculated to write-off the cost, less the estimated residual value of each asset, over its expected useful life as follows:

Freehold buildings - 50 yearsShort leasehold property – over the term of the leasePlant, equipment and vehicles – 2 to 10 yearsSoftware – 2 to 5 years



1 Accounting policies (continued)

Stocks and work-in-progressStocks, including work-in-progress, are valued at the lower of cost and net realisable value. Cost is the cost of direct materials andlabour plus attributable overheads based on the normal level of activity. Net realisable value is based on estimated selling price lessfurther costs expected to be incurred to completion and on disposal.

Long-term contract work-in-progressThe amount of profit attributable to the stage of completion of a long-term contract is recognised when the outcome of thecontract can be foreseen with reasonable certainty. Turnover for such contracts is stated at an amount appropriate to their stageof completion as measured by work performed. Provision is made for any losses which are foreseen.

Contract work-in-progress is stated at costs incurred, less those transferred to the profit and loss account, after deductingforeseeable losses and payments on account not matched with turnover.

Amounts recoverable on contracts are included in debtors and represent turnover recognised in excess of payments on account.

Finance and operating leasesLeasing arrangements, which transfer to the Group substantially all of the benefits and risks of ownership of an asset, are treatedas if the asset had been purchased outright (“finance leases”). Assets acquired under finance leases are capitalised in the balancesheet as tangible fixed assets and are depreciated accordingly. The capital element of the lease commitments is shown asobligations under finance leases. The capital element of finance lease rentals is applied to reduce the outstanding obligations underfinance leases. The interest element of the rental obligations is charged to the profit and loss account over the period of the leasein proportion to the reducing capital balance outstanding. Amounts payable under operating leases are recognised in the profit andloss account on a straight line basis over the term of the lease.

Research and developmentResearch and product development expenditure is written off as incurred.

PensionsThe Group operates a defined benefit pension scheme, which provides benefits based on final pensionable pay. The defined benefitscheme is valued every three years by a professionally qualified independent actuary, the rates of contribution payable beingdetermined by the actuary.

The service cost of providing retirement benefits to employees during the year is charged to the operating profit or loss in the year.The full cost of providing amendments to benefits in respect of past service, where benefits vest immediately, is also charged to theoperating profit or loss in the year. The expected return on the assets of the scheme during the year based on the market value ofscheme assets at the start of the financial year is included within interest receivable/interest payable. This also includes a chargerepresenting the expected increase in liabilities of the scheme during the year, arising from the liabilities of the scheme being oneyear closer to payment. The resulting net financial charge is reported separately in the financial statements. Differences betweenactual and expected returns on assets during the year are recognised in the statement of total recognised gains and losses in theyear, together with differences from actual experience and from changes in actuarial assumptions. The net deficit on the definedbenefit pension scheme, representing the difference between the present value of the defined benefit obligation (using a discountrate based upon high quality corporate bonds) and the fair value of scheme assets (based upon market price information and inthe case of quoted securities the published bid price), after related deferred tax, is reported on the balance sheet.

Contributions to defined contribution pension schemes are charged to the profit and loss account as they become payable.

Share based paymentsThe cost of equity-settled transactions with employees is measured by reference to the fair value at that date at which they aregranted and is recognised as an expense over the vesting period, which ends on the date on which the relevant employees becomefully entitled to the award. Fair value is determined using an appropriate pricing model. In valuing equity-settled transactions, noaccount is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company (marketconditions). No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upona market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that allother performance conditions are satisfied.

At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting periodhas expired and management’s best estimate of the achievement or otherwise of non-market conditions. The movement in cumulativeexpense since the previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.

Accounting for shares held by the ESOT have been made in accordance with UITF 38 Accounting for ESOP.

27

1 Accounting policies (continued)

Foreign currency translationAssets and liabilities of foreign subsidiaries are translated into sterling at the rate of exchange ruling at the end of the financialyear and results of foreign subsidiaries are translated at the average rate of exchange for the year. Differences on exchange arisingfrom the retranslation of the opening net investment in subsidiary companies, and from the translation of the results of thosecompanies at an average rate, are taken to reserves and reported in the statement of total recognised gains and losses. All otherforeign exchange differences are taken to the profit and loss account for the year in which they arise.

Deferred taxationDeferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet datewhere transactions or events have occurred at the date will result in an obligation to pay more tax or a right to pay less or to receivemore tax, with the following exceptions:

• provision is made for tax on gains arising from the revaluation (and similar fair value adjustments) of fixed assets, and gainson disposal of fixed assets that have been rolled over into replacement assets, only to the extent that, at the balance sheetdate, there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on the basis ofall available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over intoreplacement assets and charged to tax only where the replacement assets are sold;

• provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiary undertakingsonly to the extent that, at the balance sheet date, dividends have been accrued as receivable;

• deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there willbe suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timingdifferences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

2 Turnover and segmental analysis

Group turnover, profits and net assets were attributable as follows:

Turnover Profit/(loss)2007 2007 2007 2006 2007 2007 2007 2007 2006

Prior to goodwill GoodwillContinuing Acquisitions Continuing Acquisitions charges (Restated)

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Continuing operationsBuilding Systems 51,793 – 51,793 48,544 6,119 – (32) 6,087 5,418Software 7,853 2,432 10,285 6,653 (429) 497 (564) (496) (1,302)

Total continuing operations 59,646 2,432 62,078 55,197 5,690 497 (596) 5,591 4,116

Exceptional items – 476Net interest 59 (156)

Profit before taxation 5,650 4,436

Turnover Profit/(loss)2007 2006 2007 2006

(Restated)£’000 £’000 £’000 £’000

Geographic segment by originUnited Kingdom 47,221 41,839 3,901 2,712Mainland Europe 10,279 8,743 411 153Rest of World 4,577 4,615 1,279 1,251

62,078 55,197 5,591 4,116Exceptional items – 476Net interest 59 (156)

Profit before taxation 5,650 4,436



2 Turnover and segmental analysis (continued)

Turnover

2007 2006£’000 £’000

Geographic segment by destinationUnited Kingdom 43,717 41,357Mainland Europe 13,694 9,292Rest of World 4,667 4,548

62,078 55,197

Net assets2007 2006

(Restated)£’000 £’000

Class of businessBuilding Systems 8,818 4,639Software 9,485 2,960Corporate 589 3,351

Net operating assets 18,892 10,950Unallocated net assets/(liabilities)Net cash 5,459 5,480Corporate tax (982) (364)Deferred tax (189) (340)Retirement benefit liability (2,530) (3,541)

20,650 12,185

Geographic segmentUnited Kingdom 15,502 7,323Mainland Europe 3,047 3,198Rest of World 343 429

Net operating assets 18,892 10,950

3 Turnover, cost of sales and other operating expenses

2007 2006Continuing Acquisitions Total Total

(Restated)£’000 £’000 £’000 £’000

Turnover 59,646 2,432 62,078 55,197Cost of sales (32,023) (119) (32,142) (30,062)

Gross profit 27,623 2,313 29,936 25,135

Operating expensesDistribution costs (2,818) – (2,818) (2,510)Administration expenses (19,115) (1,816) (20,931) (17,765)Goodwill (382) (214) (596) (744)

(22,315) (2,030) (24,345) (21,019)

Operating profit 5,308 283 5,591 4,116

29

4 Employee information

The average monthly number of employees during the year, including Directors, was made up as follows:

2007 2006Number Number

Building Systems 373 356Software 140 92Corporate 10 14

Total 523 462

Staff costs during the year, including Directors, amounted to:2007 2006

(Restated)£’000 £’000

Wages and salaries 14,476 12,336Social Security costs 2,078 1,839Pension costs (note 5) 975 691

17,529 14,866

5 Pensions

Eleco plc operates one defined benefit scheme in the UK, the Eleco Retirement and Benefits Scheme (“ERBS”). The ERBS providesbenefits on two scales based on final pensionable pay. The assets of the ERBS are held in a separate trustee administered fund andcontributions into the ERBS are determined by a qualified actuary on the basis of triennial valuations.

The valuation used for FRS 17 disclosures has been based on the most recent full actuarial valuation as at 30 June 2005 updatedto 30 June 2007 by an independent qualified actuary under the attained age method as the ERBS is closed to new members.Company contributions totalled £630,000 (2006: £387,000). The Company contribution rates during the year were 12.2% ofpensionable salaries for 1/80th accrual members and 14.9% of pensionable salaries for 1/60th accrual members.

Consultec Group AB and subsidiaries contribute to a defined benefits scheme under the ITP pension arrangement operated byAlecta, a Swedish insurance company. Contributions to the scheme totalling £148,000 (2006: £163,000) were made during the year.This is a multi-employer scheme and accordingly the Group is unable to identify its share of the surplus in the scheme on areasonable and consistent basis. Consequently, the scheme has been accounted for as a defined contribution scheme.

Contributions are paid into the fund operated by Alecta in respect of each employee at rates defined by Alecta each year, havingtaken account of the solvency margin of the scheme. The solvency margin represents the extent to which the market value of theassets of the fund, calculated by Alecta, exceeds its pension commitments. At 30 June 2007, the fund had a solvency margin of164.6 per cent.

The principal assumptions used by the actuary for the ERBS were (in nominal terms):At At At At

30 June 2007 30 June 2006 30 June 2005 30 June 2004

Rate of increase in salaries 3.65% 3.25% 3.25% 3.50%Rate of increase in pensions in payment

– pre 97 increases 2.65% 2.25% 2.25% 2.25%– 97 to 05 increases 3.15% 2.75% 2.50% 2.75%– post 05 increases 2.00% 2.00% – –

Discount rate 5.75% 5.25% 5.00% 5.75%Inflation assumption 3.40% 3.00% 2.75% 3.00%



5 Pension costs (continued)

The assets in the scheme and the expected rate of return were:Long-term Value at Long-term Value at Long-term Value at Long-term Value at

rate of return 30 June rate of return 30 June rate of return 30 June rate of return 30 Juneexpected at 2007 expected at 2006 expected at 2005 expected at 2004

30 June 2007 £’000 30 June 2006 £’000 30 June 2005 £’000 30 June 2004 £’000

Equities 8.25% 12,786 8.0% 10,998 8.0% 9,462 8.0% 8,406Fixed interest bonds 5.25% 3,398 5.0% 3,162 5.0% 3,221 5.5% 2,732Property 8.25% 136 8.0% 180 8.0% 128 8.0% 94Total market value of assets 16,320 14,340 12,811 11,232Present value of scheme liabilities (19,834) (19,398) (19,320) (14,627)Deficit in the scheme (3,514) (5,058) (6,509) (3,395)Related deferred tax asset 984 1,517 1,953 1,019Net pension liability (2,530) (3,541) (4,556) (2,376)

2007 2006£’000 £’000

Analysis of the amount charged to operating profit:Current service cost 252 248Past service cost – –

Total operating charge 252 248

2007 2006£’000 £’000

Analysis of the amount credited to other financial income:Expected return on pension scheme assets 1,048 911Interest on pension scheme liabilities (1,007) (953)

Net finance charge 41 (42)

2007 2006£’000 £’000

Analysis of amount recognised in Statement of Total Recognised Gains and Losses:Actual return less expected return on pension scheme assets 972 1,010Experience (losses)/gains arising on the scheme liabilities (76) 161Changes in assumptions underlying the present value of the liabilities 229 183

Actuarial gains 1,125 1,354

2007 2006£’000 £’000

Movement in deficit during the year:Deficit in scheme at 1 July 2006 (5,058) (6,509)Movement in year:

Current service cost (252) (248)Contributions 630 387Other finance income/(cost) 41 (42)Actuarial gains 1,125 1,354

Deficit in scheme at 30 June 2007 (3,514) (5,058)

31

5 Pension costs (continued)

History of experience gains and losses

2007 2006 2005 2004% £’000 % £’000 % £’000 % £’000

Difference between the expected and actual return on scheme assets:Amount (£’000) 972 1,010 881 588Percentage of scheme assets 6% 7% 7% 5%

Experience gains/(losses) on scheme liabilities:Amount (£’000) (76) 161 (854) 18Percentage of the present value of the scheme liabilities 0% 1% (4%) 0%

Amount recognised in Statement of Total Recognised Gains and Losses:Amount (£’000) 1,125 1,354 (3,335) 1,272Percentage of the present value of the scheme liabilities 6% 7% (17%) 9%

6 Interest receivable

2007 2006£’000 £’000

Bank and other interest receivable 265 190

7 Interest payable

2007 2006£’000 £’000

Bank loans and overdrafts 199 247Finance leases 47 49Other 1 8

247 304

8 Profit on ordinary activities before taxation

2007 2006£’000 £’000

Profit on ordinary activities before taxation is stated after charging/(crediting):Profit on disposal of fixed assets (250) (17)Amortisation of goodwill and intangible assets 825 536Impairment of investment – 358Depreciation charge for the year

Tangible owned fixed assets 1,110 1,070Tangible fixed assets held under finance lease and hire purchase agreements 330 303

Amortisation of LTIP awards (note 23) 181 167Fees payable to the Company’s auditor for:

the audit of the Company’s annual accounts 30 –the audit of the Company’s subsidiaries 85 –other services 42 –

Fees payable to the Company’s previous auditor for:the audit of the Company’s annual accounts 50 27the audit of the Company’s subsidiaries – 60other services 9 4

Research and development 1,963 1,281Hire of plant, machinery and vehicles - operating leases 62 49Hire of other assets - operating leases 894 830Exceptional items:Profit on disposal of freehold and leasehold property – (476)



9 Taxation

(a) Tax on profit on ordinary activities2007 2006

(Restated)£’000 £’000

Current tax:UK corporation tax on profits of the year 625 464Adjustments in respect of previous years (58) (67)

567 397Foreign tax 592 506

Total current tax 1,159 903

Deferred tax:Origination and reversal of timing differences (107) 200Impact of prospective reduction in the rate of corporation tax (16) –

Total deferred tax (123) 200

Tax on profit on ordinary activities 1,036 1,103

(b) Factors affecting current tax chargeThe tax assessed on the profit on ordinary activities for the year is lower than the standard rate of corporation tax in the UK (30%).The differences are explained below:

2007 2006(Restated)

£’000 £’000

Profit on ordinary activities before tax 5,650 4,436

Tax calculated at the standard rate of UK corporation tax of 30%(2006: 30%) applied to profits on ordinary activities before tax 1,695 1,331

Effects of:Expenses not deductible for tax purposes 143 85Share option deduction (652) –Amortisation and impairment of goodwill not deductible for tax purposes 178 208Capital allowances for the year in excess of depreciation and amortisation (16) (31)Short term timing differences 36 83Utilisation of losses (200) (677)Losses carried forward – 82Adjustments to tax charge in respect of previous years (44) (73)Secondary tax on dividend paid by overseas subsidiary – 116Tax rate differences 19 (27)Exchange rate differences – (12)Capital gain covered by unrecognised capital losses – (175)Marginal relief – (7)

Current tax charge for the year 1,159 903

(c) Factors that may affect future tax chargesThe Group has tax losses of £1,159,000 (2006: £932,000) arising overseas for which no deferred tax asset has been recognised. Nodeferred tax is recognised on the unremitted earnings of overseas subsidiaries.

10 Profit on ordinary activities after taxation

As permitted by section 230 of the Companies Act 1985, the parent Company’s profit and loss account has not been included inthese financial statements. The parent Company’s profit for the financial year was £3,637,000 (2006: £2,882,000).

33

11 Dividends paid and proposed

2007 2006 2007 2006(Restated)

Ordinary shares per share per share £’000 £’000

Declared and paid during the yearInterim – current year 0.70p 0.60p 375 299Final – previous year 1.50p 1.00p 747 487

2.20p 1.60p 1,122 786

The Directors propose a final dividend of 1.80p per share at a cost of £1,008,000. The liability in respect of the 2007 final dividendhas not been accrued for at 30 June 2007, in accordance with FRS 21 Events after the balance sheet date.

12 Earnings per share

The calculation of earnings per share is based upon the profit attributable to members of the holding company of £4,614,000(2006: £3,333,000) and on 52,855,635 (2006: 48,961,869) ordinary shares, being the weighted average number of ordinary sharesin issue during the year.

The calculation of diluted earnings per share is based upon the profit attributable to members of the holding company of£4,614,000 (2006: £3,333,000) and on 52,855,635 (2006: 50,003,519) ordinary shares, being the weighted average number ofordinary shares after an adjustment of nil (2006: 1,041,650) shares in relation to share options.

13 Intangible fixed assets

Intellectualproperty rights Goodwill Total

£’000 £’000 £’000

GroupCostAt 1 July 2006 617 7,653 8,270Additions 128 – 128Goodwill in respect of subsidiaries acquired – 7,262 7,262Exchange differences (6) (9) (15)

At 30 June 2007 739 14,906 15,645

AmortisationAt 1 July 2006 442 2,203 2,645Charge for the year 229 596 825Exchange differences (4) (5) (9)

At 30 June 2007 667 2,794 3,461

Net book value 30 June 2007 72 12,112 12,184

Net book value 30 June 2006 175 5,450 5,625Intellectual

property rights£’000

CompanyCostAt 1 July 2006 664Additions 110

At 30 June 2007 774

AmortisationAt 1 July 2007 438Charge for the year 207

At 30 June 2007 645

Net book value 30 June 2007 129

Net book value 30 June 2006 226



14 Tangible fixed assets

PlantLand and equipmentbuildings and vehicles Software Total

£’000 £’000 £’000 £’000

GroupCostAt 1 July 2006 4,849 12,112 1,274 18,235Additions 75 1,370 – 1,445Subsidiaries acquired – 187 – 187Disposals – (304) – (304)Exchange differences – (48) (3) (51)

At 30 June 2007 4,924 13,317 1,271 19,512

Accumulated depreciationAt 1 July 2006 1,229 7,516 1,180 9,925Charge for the year 100 1,291 49 1,440Disposals – (238) – (238)Exchange differences – (30) (2) (32)

At 30 June 2007 1,329 8,539 1,227 11,095

Net book value 30 June 2007 3,595 4,778 44 8,417

Net book value 30 June 2006 3,620 4,596 94 8,310

2007 2006£’000 £’000

Land and buildings net book value comprises:Freehold property 3,473 3,513Short leasehold property and improvements 122 107

3,595 3,620

The net book value of plant, equipment and vehicles includes an amount of £868,000 (2006: £951,000) in respect of assets heldunder finance leases and hire purchase agreements. Included within freehold property, is land of £524,000 (2006: £524,000) whichis not depreciated.

Plant,Land and equipmentBuildings and vehicles Total

£’000 £’000 £’000

CompanyCostAt 1 July 2006 4,577 134 4,711Additions – 4 4

At 30 June 2007 4,577 138 4,715

Accumulated depreciationAt 1 July 2006 1,064 90 1,154Charge for the year 80 20 100

At 30 June 2007 1,144 110 1,254

Net book value 30 June 2007 3,433 28 3,461

Net book value 30 June 2006 3,513 44 3,557

The net book value of plant, equipment and vehicles includes an amount of £10,000 (2006: £18,000) in respect of assets held underfinance leases and hire purchase agreements. Included within freehold property, is land of £524,000 (2006: £524,000) which is notdepreciated.

35

15 Investments

Investment insubsidiaries’

shares at cost Loans Total£’000 £’000 £’000

CompanyCostAt 1 July 2006 21,015 40,960 61,975Additions 4,338 – 4,338Transfer to subsidiary (4,338) – (4,338)Increase in loans – 13,397 13,397

At 30 June 2007 21,015 54,357 75,372

Accumulated provisionAt 1 July 2006 9,173 20,250 29,423Increase in provisions – 1,050 1,050

At 30 June 2007 9,173 21,300 30,473

Net book value 30 June 2007 11,842 33,057 44,899

Net book value 30 June 2006 11,842 20,710 32,552

The principal subsidiary undertakings are unlisted and wholly owned. They are registered in England and Wales, where theiroperations are located in the United Kingdom. Overseas subsidiary undertakings are incorporated in their country of operations.Company Country of Operations

Building SystemsBell & Webster Concrete Limited* UKSpeedDeck Building Systems Limited* UKDowner Cladding Systems Limited* UKEleco Timber Frame Limited* UKPrompt Profiles Limited* UKGang-Nail Systems Limited* UKEleco Bauprodukte GmbH* GermanyInternational Truss Systems (Pty) Limited* South Africa

SoftwareAsta Development PLC* UKEleco Software Limited* UKConsultec Group AB* SwedenConsultec Byggprogram AB* SwedenConsultec Arkitekter & Konstruktorer AB* SwedenConsultec System AB* SwedenEleco Software GmbH* GermanyEsign Software GmbH Germany

Where indicated by an * the shareholding is in ordinary shares and held through an intermediate holding company.

16 Operating lease obligations

The Group has the following annual commitments as at 30 June 2007 in respect of non-cancellable operating leases which expire:2007 2007 2006 2006

Property Other Property Other£’000 £’000 £’000 £’000

Within one year 159 3 147 20Between two and five years 108 15 407 32After five years 327 – 263 –

594 18 817 52

The property leases are subject to periodic rent reviews. The Group has annual rent income in respect of property sub-leases of£72,000 (2006: £308,000).



17 Capital commitments

Capital expenditure contracts of £28,000 (2006: £103,000) have been placed with suppliers at 30 June 2007.

18 StocksGroup

2007 2006£’000 £’000

Raw materials and components 1,861 1,296Work-in-progress – 46Finished goods 1,580 1,479

3,441 2,821

19 DebtorsGroup Company

2007 2006 2007 2006(Restated)

£’000 £’000 £’000 £’000

Trade debtors 11,569 8,194 85 194Amounts recoverable on contracts 33 582 – –Other debtors 422 106 324 47Prepayments and accrued income 1,127 1,009 427 92Amounts due from subsidiary undertakings – – 1.610 843

13,151 9,891 2,446 1,176

20 Creditors: amounts falling due within one yearGroup Company

2007 2006 2007 2006£’000 £’000 £’000 £’000

Bank loans and overdrafts 410 891 1,180 891Trade creditors 8,337 7,789 176 188Payments on account 297 164 – –Other creditors 223 360 98 9Accruals and deferred income 6,389 5,016 1,249 1,268Obligations under finance leases 313 325 5 10Other taxation and social security 2,246 1,485 72 61Corporation tax 723 219 433 54Overseas tax 259 145 – –Amounts due to subsidiary undertakings – – 13,137 9,832

19,197 16,394 16,350 12,313

The bank loans and overdrafts are secured by fixed and floating charges over the Group’s assets.

37

21 Creditors: amounts falling due after more than one year

Group Company2007 2006 2007 2006£’000 £’000 £’000 £’000

Bank loans 71 481 71 481Obligations under finance leases 386 473 – 5

457 954 71 486

The bank loans are secured by fixed and floating charges over the Group’s assets.

Group Company2007 2006 2007 2006£’000 £’000 £’000 £’000

Bank loans and overdrafts are repayable as follows:In one year or less 410 891 1,180 891Repayable by instalments:Between one and two years 71 412 71 412Between two and five years – 69 – 69

481 1,372 1,251 1,372

The principal commitments of the Group under finance leases are repayable as follows:2007 2006£’000 £’000

In one year or less 313 325Between one and two years 192 251Between two and five years 194 222

699 798

22 Provisions for liabilities and charges

Deferred tax Other Total£’000 £’000 £’000

GroupAt 1 July 2006 (restated) 340 85 425Credit to profit and loss account (123) – (123)Exchange differences (3) – (3)

At 30 June 2007 214 85 299

At 30 June 2006 (restated) 340 85 425

Other provisions represent potential liabilities on vacated properties.

The deferred tax liability provided based on a corporation tax rate of 28% (2006: 30%) comprises:Group Company

2007 2006 2007 2006(Restated)

£’000 £’000 £’000 £’000

Excess of capital allowances over depreciation 462 484 268 283Short term timing differences (248) (144) (230) (138)

214 340 38 145

Provisions forlosses in Deferred

subsidiaries tax Total£’000 £’000 £’000

CompanyAt 1 July 2006 256 145 401Credit to profit and loss account (156) (107) (263)

At 30 June 2007 100 38 138



23 Called up share capital2007 2006£’000 £’000

Authorised: 65,000,000 (2006: 65,000,000) ordinary shares of 10p each 6,500 6,500Allotted, called up and fully paid: 56,746,629 (2006: 50,331,051) ordinary shares of 10p each 5,674 5,033

During the year, (i) 5,373,928 ordinary shares were issued as part consideration to the vendors of Asta Group Limited and (ii)1,041,650, ordinary shares were issued for consideration of £307,000 to the Employee Share Ownership Trust to satisfy LTIP options.

The following awards and options over ordinary shares granted under various share schemes were outstanding at 30 June 2007:

Long Term Incentive PlanWeighted

averageremaining Weighted

contractual averageNumber of Vesting dates life Dividend fair value

Date awarded ordinary shares Earliest Latest (months) yield (%) per share (p)

1 April 2003 70,000 1 April 2006 1 December 2008 17 4.48% 5.125 January 2006 680,000 1 January 2009 31 October 2011 52 4.15% 34.912 January 2007 620,000 1 January 2010 31 October 2012 64 2.95% 70.416 March 2007 30,000 1 March 2010 31 December 2012 66 2.36% 41.2

1,400,000 56 49.3

All the awards and options have a £nil exercise price. Certain of the awards are subject to performance requirements described innote 2 of the Report on Remuneration on pages 14 to 18. Awards may vest in certain circumstances earlier than the dates given.

Details of the number of options over ordinary shares outstanding during the year are as follows:

2007 2006Number Number

Outstanding at the beginning of the year 1,791,650 2,228,800Granted during the year 650,000 680,000Exercised during the year (1,041,650) (1,117,150)

Outstanding at the end of the year 1,400,000 1,791,650

The expense recognised for share-based payments under the Long Term Incentive Plan in respect of employee services during theyear ended 30 June 2007 was £181,000 (2006: £167,000). The weighted average market price of the Company’s ordinary shares onthe dates of exercise was 92.9p and the aggregate gains upon exercise amounted to £968,000.

In determining the fair value per share, regard is taken of market price of the Company’s ordinary shares at the date of grant, thecurrent dividend yield and the probability of the shares, the subject of the awards, vesting.

The Employee Share Ownership Trust held 729,120 shares at 30 June 2007 with a market value of £710,000 and has waived itsentitlement to dividends on ordinary shares held by it until such time as they are vested in employees.

24 Reserves

Share Merger Other Profit andpremium reserve reserve* loss account

(Restated)£’000 £’000 £’000 £’000

GroupAt 1 July 2006 6,224 367 (102) 663Acquisition of subsidiary – 4,086 – –Profit for the year – – – 4,614Dividends – – – (1,122)Movement during the year† – – (204) (114)Other recognised profits for the year – – – 564

At 30 June 2007 6,224 4,453 (306) 4,605

39

24 Reserves (continued)Share Merger Other Profit and

premium reserve reserve* loss account(Restated)

£’000 £’000 £’000 £’000

CompanyAt 1 July 2006 6,224 – 9,855 6,881Intragroup transfer of investment – – 4,086 –Profit for the year – – – 3,637Dividends – – – (1,122)Movement during the year† – – (204) (147)At 30 June 2007 6,224 – 13,737 9,249

Accumulated goodwill charged to Group reserves at 30 June 2007 in respect of retained businesses is £8,704,000 (2006: £8,704,000).

* The other reserve of the Group relates to shares in the Company held by the Employee Share Ownership Trust. The other reserveof the Company relates to shares in the Company held by the Employee Share Ownership Trust and the unrealised profit on theintragroup transfer of investments.

† The movement during the year in both the Group and the Company reflects the impact of purchases of own shares, held bythe Employee Share Ownership Trust, the vesting of 1,041,650 shares and the related charges in respect of LTIP options.

25 Acquisitions

Asta Group LimitedOn 15 December 2006, the Group acquired Asta Group Limited and subsidiaries for a consideration of £7.65 million (beforeacquisition costs). The consideration comprised the payment of £3,229,871 in cash, satisfied from the Group’s existing resources,the issue to and placing on behalf of the vendors of 3,750,000 of new ordinary shares to raise £3,000,000 and the further issue ofthe vendors of £1,420,129 of new ordinary shares. Goodwill on acquisition of £7,262,000 has been capitalised and amortisedthrough the profit and loss account (note 13).

The summarised consolidated profit and loss account for Asta Group Limited for the year ended 31 December 2005 and thesubsequent period to acquisition is as follows:

Profit and Loss AccountAsta Group

Period Yearended ended

14 December 31 December2006 2005£’000 £’000

Turnover 3,985 3,782Operating profit 830 573Profit on ordinary activities before taxation 866 597Profit on ordinary activities after taxation 600 430

During the year Asta Group Limited and subsidiaries contributed turnover of £2,432,000 and an operating profit of £283,000, afteramortisation of goodwill, to the results of the Software division.

The consolidated net assets at 30 June 2007 of Asta Group Limited were £919,000.

Asta Group Limited and subsidiaries have no recognised gains and losses, other than the profits above, and therefore no separatestatement of recognised gains and losses is presented.



25 Acquisitions (continued)

The acquired assets and liabilities of Asta are set out below:Fair value

Book value adjustmentsAsta to Asta Fair value

£’000 £’000 £’000

Tangible fixed assets 187 – 187Current assets:Stock 9 – 9Trade and other debtors 1,001 – 1,001Deferred tax 2 – 2Cash at bank and in hand 1,382 1,382Total assets 2,581 – 2,581Liabilities:Trade and other creditors (1,094) – (1,094)Obligations under finance leases (57) – (57)Corporation tax (268) – (268)Net assets 1,162 – 1,162Goodwill 7,262Consideration 8,424Satisfied by:Cash 3,230Shares 4,420Acquisition expenses 774

8,424

Impact on cash flowsIn the period since acquisition, Asta contributed a net operating cash inflow of £866,000. In addition it received £41,000 cash inflowfrom returns on investment. It paid £13,000 on capital expenditure and investment and £26,000 on servicing of finance leases.

26 Reconciliation of operating profit to net cash flow from operating activities

Continuing2007 2006

(Restated)£’000 £’000

Operating profit 5,591 4,116Depreciation charge 1,440 1,373Amortisation of intangible assets 825 894LTIP expense 181 167Profit on sale of fixed assets (250) (17)Increase in stocks (628) (683)(Increase)/decrease in debtors (1,948) 180Increase in prepayments (387) (283)Increase in creditors 853 758Increase in accruals 268 1,671Decrease/(increase) in other taxes and social security 601 (62)Difference between pension charge and cash contributions (378) (139)

Net cash inflow from operating activities 6,168 7,975

41

27 Reconciliation of net cash flow to movements in net funds

2007 2006£’000 £’000

(Decrease)/increase in cash in the year (750) 4,398Cash flow from movements in debt and lease financing 1,265 556

Increase in net funds resulting from cash flows 515 4,954Other non-cash items:Finance leases – subsidiaries acquired (57) –New finance leases (225) (414)Effects of changes in foreign exchange rates (155) (34)

Increase in net funds in the year 78 4,506Opening net funds 4,682 176

Closing net funds 4,760 4,682

28 Analysis of net funds

OtherAt 30 June Cash non-cash Exchange At 30 June

2006 flow changes movements 2007£’000 £’000 £’000 £’000 £’000

Cash in hand, at bank 6,852 (750) – (162) 5,9406,852 (750) – (162) 5,940

Debt due after one year (481) 410 – – (71)Debt due within one year (891) 481 – – (410)Finance leases (798) 374 (282) 7 (699)

(2,170) 1,265 (282) 7 (1,180)Total 4,682 515 (282) (155) 4,760

During the year, the Group entered into finance lease and hire purchase agreements in respect of fixed assets with a total capitalvalue at the inception of the agreements of £225,000 (2006: £414,000).

29 Contingent liabilities

The Company has guaranteed banking facilities of certain subsidiary undertakings. At 30 June 2007 the sum guaranteed by theCompany in respect of obligations of subsidiary undertakings totalled £nil (2006: £81,000).

30 Directors’ emoluments

Directors’ individual remuneration, including that of the highest paid Director, shareholdings and share options are detailed in theReport on Remuneration on pages 14 to 18 and form part of these financial statements.

31 Related party transactions

Related party transactions with Directors are detailed in the Report on Remuneration on pages 14 to 18.



32 Financial instruments

a) Exclusion of short-term debtors and creditorsShort-term debtors and creditors have been excluded from all the following disclosures (except currency disclosures) aspermitted by FRS13 - “Derivatives and other financial instruments”.

b) Objectives, policies and strategiesThe Group’s interest rate risks, liquidity risks and currency risks are managed centrally within policies approved by the Board.

Interest rate risks are moderated by the use of a mixture of fixed and floating rate borrowings.

The net interest receivable for the year was £18,000 compared to £114,000 payable last year. This has been due to acombination of marginally higher interest rates and lower average floating rate borrowings.

Committed borrowing facilities with a range of terms are used in combination with central management of the Group’s cashresources to minimise liquidity risks.

Where appropriate, hedging using forward contracts is undertaken to manage transactional currency risks arising fromoperational activities. No speculative transactions are undertaken.

At present, there is no policy to hedge the Group’s currency exposures arising from profit translation or the effect of exchangerate movements on the Group’s overseas net assets.

c) Interest rate risk profile of financial assets and liabilitiesThe interest rate risk profile of the Group’s financial assets at 30 June 2007 was:

Floatingrate Total

financial financialassets assets£’000 £’000

Sterling 1,547 1,547Euro 1,217 1,217Swedish Krona 836 836South African Rand 2,321 2,321Other 19 19At 30 June 2007 5,940 5,940

Sterling 2,959 2,959Euro 1,842 1,842Swedish Krona 796 796South African Rand 1,241 1,241Other 14 14

At 30 June 2006 6,852 6,852

There are no fixed rate financial assets. Floating rate financial assets earn interest at rates based on local bank deposit rates.

The interest rate risk profile of the Group’s financial liabilities at 30 June 2007 was:Fixed rate Fixed rate Fixed Floatingweighted weighted rate rate Total

average average financial financial financialperiod interest rate liabilities liabilities liabilitiesYears % £’000 £’000 £’000

Sterling 2.6 5.21 (478) (481) (959)Swedish Krona 3.2 5.05 (221) – (221)At 30 June 2007 2.7 5.16 (699) (481) (1,180)

Sterling 2.8 5.11 (616) (1,372) (1,988)Swedish Krona 2.7 4.86 (182) – (182)

At 30 June 2006 2.8 5.06 (798) (1,372) (2,170)

Floating rate financial liabilities bear interest at rates based on the Bank of England Base Rate or relevant national equivalents.

43

32 Financial instruments (continued)

d) Maturity analysis of debtAn analysis of debt maturity is shown in note 21.

e) Maturity analysis of undrawn committed borrowing facilitiesAt 30 June 2007, the Group had available to it the following undrawn committed borrowing facilities expiring in the periodsshown.

2007 2006£’000 £’000

Expiring in one year or less 19 300Expiring between one and two years – –Expiring between two and five years – 5,922Expiring after more than five years 14,500 –

14,519 6,222

f) Currency riskNet foreign currency monetary assets/(liabilities)

Swedish South AfricanSterling Euro Krona US Dollar Rand Other Total

£’000 £’000 £’000 £’000 £’000 £’000 £’000

Functional currency of group operationSterling – 638 (110) (49) – 3 482Euro (1,382) – – – – – (1,382)Swedish Krona 769 66 – 5 – 29 869South African Rand (1) – – – – 1 –At 30 June 2007 (614) 704 (110) (44) – 33 (31)

Sterling – 1,562 35 13 166 – 1,776Euro (1,179) – – – – – (1,179)Swedish Krona 500 42 – 3 – 18 563South African Rand 29 – – – – – 29

At 30 June 2006 (650) 1,604 35 16 166 18 1,189

g) Credit riskGroup policies are aimed at minimising losses due to customer payment default. Deferred payment terms are only granted tocustomers who satisfy creditworthiness procedures and who demonstrate a satisfactory payment history and individualexposures to customers are monitored. Where the cost is not excessive when compared to the exposure being covered, someoperations purchase credit insurance.

h) Fair valueThere is no difference between the fair value and the book values of all financial assets and liabilities.

i) Hedging instrumentsThere were no hedging instruments outstanding at 30 June 2007 or 30 June 2006.


Five Year Summary

2007 2006 2005 2004 2003(Restated) (Restated)

£’000 £’000 £’000 £’000 £’000

TurnoverContinuing operations 62,078 55,197 47,836 44,320 36,609Discontinued operations – – 182 442 551

Profit before taxation 5,650 4,436 2,325 936 1,856Taxation (1,036) (1,103) (242) (625) (615)

Profit after taxation 4,614 3,333 2,083 311 1,241Dividends (1,122) (786) (621) (592) (498)

Retained profit/(loss) 3,492 2,547 1,462 (281) 743

Shareholders’ equity 20,650 12,185 8,669 9,422 12,043

Net earnings per share 8.7p 6.8p 4.3p 0.6p 2.8p

Dividend per share 2.2p 1.6p 1.275p 1.225p 1.175p

2006 has been fully restated and 2005 shareholders’ equity restated for the impact of the adoption of FRS 20 Share-basedpayments. All years have been restated for the adoption of FRS 21.

Financial Calendar

15 November 2007 Annual General Meeting12 noon at the London Capital Club 15 Abchurch Lane London EC4N 7BB

March 2008 Announcement of half year results

Ordinary shares - dividends

Final17 October 2007 Ex-dividend19 October 2007 Record date23 November 2007 Payment date

Explanation of Annual General Meeting Special BusinessNew provisions contained in the Companies Act 2006 came into force on 20 January 2007 regarding electronic communications inrelation to the sending of accounts, reports and financial statements, the appointment of proxies, notices of meetings and othercompany information. Resolution 12 is designed to enable the Company to take advantage of these new provisions.

Capital Gains TaxThe price of one ordinary share of 10p on 31 March 1982 (unadjusted) was 70.5p.

45

Notice of Meeting

NOTICE is hereby given that the sixty-eighth Annual General Meeting of Eleco plc (the “Company”) will be held at the LondonCapital Club, 15 Abchurch Lane, London EC4N 7BB on 15 November 2007 at 12.00 noon for the purpose of considering and, ifthought fit, passing the following resolutions. Resolutions numbered 1 to 9 and 12 will be proposed as Ordinary Resolutions andResolutions numbered 10 and 11 will be proposed as Special Resolutions.

Ordinary Business1. To receive the financial statements for the year ended 30 June 2007, together with the Reports of the Directors and Auditors2. To approve the Report on Remuneration3. To declare a final dividend of 1.80p on the ordinary shares4. To re-elect D S Dannhauser, who retires by rotation, as a Director of the Company5. To re-elect T Quinn , who retires by rotation, as a Director of the Company6. To elect M B McCullen, who retires in accordance with the Company’s Articles of Association, as a Director of the Company7. To re-appoint Grant Thornton UK LLP as Auditors, appointed as such by the Directors during the year to fill the casual vacancy

caused by the resignation of Ernst & Young LLP, and to authorise the Directors to fix their remuneration.

Special Business8. Increase of authorised share capital

That the authorised share capital of the Company be increased from £6,500,000 to £8,500,000 by the creation of an additional20,000,000 ordinary shares of 10 pence each, ranking pari passu with the existing ordinary shares in the capital of theCompany.

9. Authority to allot sharesThat, in substitution for any existing authority under that section, the Directors be and they are hereby generally andunconditionally authorised to exercise all powers of the Company to allot relevant securities (within the meaning of Section80 of the Companies Act 1985) up to an aggregate nominal amount of £1,891,554 provided that this authority shall expireon the earlier of the conclusion of the Annual General Meeting of the Company in 2012 or five years from the date of thisresolution, save that the Company may before such expiry make an offer or agreement which would or might require relevantsecurities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such offer oragreement as if the authority conferred hereby had not expired.

10. Disapplication of pre-emption rightsThat the Directors be and they are hereby empowered pursuant to Section 95(1) of the Companies Act 1985 to allot equitysecurities (within the meaning of Section 94 of that Act) for cash as if Section 89(1) of the said Act did not apply to any suchallotment provided that this power shall be limited to:

a. the allotment of equity securities in connection with an issue by way of rights, open offer or otherwise in favour ofordinary shareholders where the equity securities respectively attributable to the interests of all ordinary shareholdersare proportionate (as nearly as may be) to respective number of ordinary shares held by them (but subject to suchexclusions, variations or other arrangements on such allotment as the Directors may deem necessary or expedient inrelation to fractional entitlements or as a result of legal or practical problems under the laws of, or the requirements of,any recognised regulatory body or any stock exchange in any territory or otherwise howsoever); and

b. the allotment (otherwise than pursuant to sub-paragraph (a) hereof or to an employees’ share scheme (within themeaning of Section 743 of the Companies Act 1985)) of equity securities up to an aggregate nominal amount of£283,733

at any time or times before the earlier of the conclusion of the next Annual General Meeting of the Company after the passingof this resolution and 15 February, 2009 save that the Company may prior to such expiry make offers or agreements whichwould or might require equity securities to be allotted after such expiry and the Directors may allot equity securities inpursuance of such offers or agreements notwithstanding the expiry of any power conferred by this resolution.

11. Purchase of the Company’s own sharesThat the Company be and is hereby generally and unconditionally authorised to make market purchases (within the meaningof Section 163(3) of the Companies Act 1985) of equity securities of the Company up to an aggregate nominal amount of£567,466, at a price per share (exclusive of expenses) of not less than 10 pence and not more than 105% of the average ofthe middle market quotations for such equity securities as derived from the London Stock Exchange Daily Official List for thefive dealing days immediately preceding the date on which the equity securities are contracted to be purchased, provided thatthis authority shall expire on the earlier of the conclusion of the next Annual General Meeting after the passing of this


Notice of Meeting

resolution and 15 February, 2009 save that the Company may purchase equity securities pursuant to this authority at any laterdate where such purchase is pursuant to any contract made by the Company before the expiry of this authority. There is nopresent intention to exercise this authority.

12. Shareholder communicationThat, any notice or other document or information sent or supplied by or to the Company (whether authorised or required tobe sent or supplied by the Companies Acts or otherwise) to or by a member, or to or by a person entitled to enjoy or exerciseall or any specified rights of a member in relation to the Company, may be sent or supplied in any way in which the CompaniesAct 2006 provides for documents or information to be sent or supplied by or to the Company for the purposes of theCompanies Acts including in particular by the Company making them available on a website. For the purposes of thisresolution, the “Companies Acts” means the company law provisions of the Companies Act 2006, the Companies Act 1985,the Companies Consolidation (Consequential Provisions) Act 1985 and the Companies Act 1989 in so far as the same are inforce from time to time.

By order of the Board

I A BartonSECRETARY

19 October 2007

NOTESA member entitled to attend and vote at this meeting may appoint one or more proxies (who need not be members of theCompany) to attend and vote instead of him. A proxy form is enclosed. To be effective, an instrument appointing a proxy must bereturned so as to reach the Company's registrars, Capita Registrars, PO Box 25, Beckenham, Kent BR3 4BR at least 48 hours beforethe time appointed for the holding of the meeting or any adjournment thereof. The appointment of a proxy will not preclude amember from attending and/or voting at the meeting should he subsequently decide to do so.

The Register of Directors' Interests in the capital of the Company will be available for inspection at the registered office of theCompany during normal business hours from the date hereof until the close of the above meeting and at the place of the meetingfor 15 minutes prior to and during the meeting.

Registered Office:Eleco House

15 Gentlemen’s FieldWestmill Road

Ware, HertfordshireSG12 0EF

Form of Proxy Eleco plc

I/We...................................................................................................................................................................................................................................................................(BLOCK LETTERS PLEASE)

of........................................................................................................................................................................................................................................................................

being (a) member(s) of Eleco plc hereby appoint.............................................................................(name)/the Chairman of the meeting (note 1) as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting to be held at the London Capital Club,London EC4N 7BB at 12 noon on 15 November 2007 and at any adjournment thereof.

I/We wish to vote as follows:

RESOLUTIONS FOR AGAINST

1 Financial Statements and Directors’ and Auditor’s Reports

2 Approval of the Remuneration Report

3 Approval of the declaration of a dividend

4 Re-election of D S Dannhauser

5 Re-election of T Quinn

6 Election of M B McCullen

7 Re-appointment of the Auditors

8 Increase of authorised share capital

9 Authority to allot shares

10 Disapplication of pre-emption rights*

11 Purchase of Company’s own shares*

12 Shareholder communications

*Special resolution – requires the support of not less than 75% of the votes cast for the resolution to be carried.

Signature...................................................................................................................... Date .....................................................................................................................

NOTES

1. If you wish to appoint a proxy other than the Chairman of the meeting, please insert the name of the person you wish to appoint in the space provided anddelete the words “Chairman of the meeting". A proxy need not be a member of the Company, but must attend the meeting in person to represent you. Aproxy may vote on a poll only and not on a show of hands.

2. Please indicate with an "X" in the spaces above how you wish to vote, unless so indicated the proxy may vote as he thinks fit or abstain from voting.

3. In the case of a corporation, a form of proxy should be under its common seal or otherwise duly executed in accordance with its Articles of Association orunder the hand of an officer or attorney so authorised. In the case of joint holders, the vote of the senior holder, whether in person or by proxy, will beaccepted to the exclusion of the votes of the other joint holder, seniority being determined by the order in which the names stand in the Register of Members.

4. To be valid, a form of proxy duly completed, together with the power of attorney or other authority, if any, under which it is assigned or a notarially certifiedcopy of such power of authority, must reach the Company's registrars at the address over-leaf not later than 48 hours before the time fixed for the meeting.

Third Fold and Tuck in

Second Fold

First

Fold

11BUSINESS REPLY SERVICE

Licence No. MB 122

Capita Registrars (Proxies)

PO Box 25

BECKENHAM

Kent

BR3 4BR

Contents

Financial Highlights ................................................................ 1

Chairman’s Statement............................................................ 2

Financial Review ...................................................................... 4

Group Directory........................................................................ 8

Board of Directors and Company Advisers ........................ 9

Directors’ Report...................................................................... 10

Corporate Governance............................................................ 13

Report on Remuneration ....................................................... 14

Report of the Auditors........................................................... 19

Consolidated Profit and Loss Account ............................... 20

Consolidated Statement of Total Recognised Gains and Losses ..................................................................... 21

Consolidated Reconciliation of Movements inShareholders’ Equity ............................................................... 21

Consolidated Balance Sheet ................................................. 22

Company Balance Sheet ........................................................ 23

Consolidated Cash Flow Statement .................................... 24

Notes to the Financial Statements ..................................... 25

Five Year Summary.................................................................. 44

Financial Calendar................................................................... 44

Explanation of Annual General Meeting

Special Business....................................................................... 44

Notice of Annual General Meeting..................................... 45

Form of Proxy

Front cover:Docklands Student Village, University of East LondonBell and Webster Concrete

Eleco plcEleco House15 Gentlemen’s FieldWestmill RoadWare, HertfordshireUnited KingdomSG12 0EF

t +44 (0)1920 443830f +44 (0)1920 [email protected]

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Eleco plc Annual Report and Accounts 2007

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