Eleco PLC 15 November 2007 For immediate release 15 November 2007 Eleco plc Statement on current trading and prospects; acquisition of Milbury Systems Limited ("Milbury") and its related freehold manufacturing facility for an aggregate £7,065,000, of which £75,000 will be performance related, and vendor placing of 3,000,000 Ordinary Shares of Eleco plc ("Eleco") at 101p per share. Eleco (ELCO.L), the building systems and construction software group, will hold its Annual General Meeting ("AGM") at 12 noon today. At the AGM John Ketteley, Executive Chairman, will say that turnover and profit of both the building systems and software businesses were substantially higher in the first quarter than at the same time last year and that the outlook for the major part of its business is buoyant. A separate AGM statement has been released today and is contained in full later in this announcement. Eleco plc is also pleased to announce the £7,065m acquisition of Milbury part financed by a £3.03m vendor placing with Delta Lloyd Asset Management N.V.*. A summary of key points of the acquisition follows : Information on Milbury • Founded in 1978 with operations near Bristol and in Lydney, Gloucestershire, Milbury produces pre-cast and pre-stressed concrete products and provides a comprehensive design, manufacture and installation service to its clients. • Milbury is an established provider of environmental control products for flood prevention and storage tanks in steel and concrete for the water and waste management industries. • Milbury is also a supplier of security solutions including underground parking, fire walls, security and blast walls. • Turnover for the nine months ended 30 September 2007 was £6.8m with adjusted EBIT of £0.9m and net assets of £1.9m. Rationale • Complementary to the retaining wall and terracing operations of Eleco's subsidiary, Bell & Webster Concrete. • Strategic geographical location for Eleco's concrete business enabling it to expand into areas where Milbury's lower transportation costs could be advantageous. • Milbury's agricultural products complement the retaining walls business of Bell & Webster Concrete. John Ketteley, Executive Chairman of Eleco, commented: "We are delighted to announce the acquisition of Milbury Systems which has a recent record of good profits growth and which, we believe, will enable us to accelerate the expansion of our existing concrete business. It will also give us the opportunity to target different areas in the market. Eleco has had a strong start to the year with overall trading significantly ahead of the same period last year. We look forward to the challenges of the year ahead with confidence." For further information please contact: Eleco plc Tel: 01920 443 830 John Ketteley, Executive Chairman http://www.elecoplc.com john.ketteley@eleco.com David Dannhauser, Finance Director david.dannhauser@eleco.com Collins Stewart Europe Limited 020 7523 8350 Nick Ellis / Philip Roe Buchanan Communications 020 7466 5000 Tim Anderson / Isabel Podda *Delta Lloyd Asset Management N.V., a subsidiary of Aviva plc, is an asset manager based in the Netherlands with a long established and successful track record of investment in small and medium-sized companies. It is acquiring shares in Eleco for its newly launched Delta Lloyd Europees Deelnemingem Fonds N.V.. A more detailed release follows: 15 November 2007 Eleco plc Statement on current trading and prospects; acquisition of Milbury Systems Limited ("Milbury") and its related freehold manufacturing facility for an aggregate £7,065,000, of which £75,000 will be performance related, and vendor placing of 3,000,000 Ordinary Shares of Eleco at 101p per share. Trading Statement The Board of Eleco approved the following trading statement which will be made by the Executive Chairman at the Company's Annual General Meeting later today:- ELECO PLC ('Eleco' or the 'Company') Annual General Meeting Statement Eleco plc, ( ELCO.L), the building systems and software group, wishes to update the market on current trading and prospects ahead of its Annual General Meeting which will be held at 12.00 noon today. Updating shareholders on current trading, John Ketteley, Executive Chairman of Eleco, said: "I am pleased to report that turnover and profit of both our building systems and software businesses were substantially higher in the first quarter than the same period last year and that we continue to experience strong demand for our products. "The outlook for the majority of our business remains buoyant, as evidenced by a significantly higher order book for our offsite construction products, strong demand for our software and by our strong financial position and cash generation. We therefore look forward with confidence to meeting the challenge of the year ahead." Acquisition The Board of Eleco plc ("Eleco" or the "Company") today announces the acquisition of the entire issued share capital of Milbury Systems Limited (" Milbury") (the "Acquisition"). The total consideration for the Acquisition of up to £6.035 million is to be satisfied as to £2.78 million in cash, as to £225,000 by the issue to the shareholders of Milbury (the "Vendors") of new Ordinary Shares in Eleco subject to lock in arrangements (the "Consideration Shares") and by the issue to the Vendors of 3,000,000 new Ordinary Shares in Eleco which have been conditionally placed on behalf of the Vendors (the "Placing Shares"). Application has been made for the Placing Shares and the Consideration Shares to be admitted to trading on AIM ("Admission") and trading is expected to commence on 21 November 2007. Eleco is also acquiring the freehold of a factory site of approximately 5.75 acres, currently occupied under a lease by Milbury, for a total cash consideration of £1,030,000 (the "Property Purchase"). The cash element of the consideration for the Acquisition and the Property Purchase will be satisfied from Eleco's existing cash and bank resources. Of the cash consideration £75,000 is performance related. Vendor Placing The 3,000,000 Placing Shares, representing approximately 5.29 per cent. of the current issued share capital of Eleco, have been conditionally placed on behalf of the Vendors with Delta Lloyd Asset Management N.V. ("Delta Lloyd") at 101p per share to realise £3.03 million. The Placing Shares will on issue rank pari passu in all respects with the existing issued Ordinary Shares although, being issued since the record date of 19 October 2007, they will not rank for the proposed final dividend of 1.80p per share to be paid on 23 November 2007, if approved by Eleco shareholders at the Annual General Meeting today. The Vendor Placing is conditional only on the Placing Shares being admitted to trading on AIM. Information regarding Milbury Milbury is a business established in 1978, based in Tickenham (near Bristol) and Lydney (in Gloucestershire) in the UK, that engages in the production of pre-cast and pre-stressed concrete products used for soil retention, cellars and underground parking, materials and waste storage, security and blast walls, pre-stressed floors and beams and columns. In addition, Milbury produces concrete products for agricultural use including silage panels as well as slurry and grain storage. Milbury also supplies concrete and steel tanks and aerobic treatment systems and anaerobic digesters. Milbury is certified to ISO 9001:2000 and provides a comprehensive design, manufacture and installation service to its clients principally operating in the construction, agriculture and environmental management sectors. Financial Milbury's financial year end is 31 December. Set out below is Milbury's financial performance in the last three financial periods: Year ended 31 December Year ended 31 December Unaudited 9 months ended 30 2005 2006 September 2007 £'000 £'000 £'000 Turnover 7,124 8,365 6,806 Reported EBIT 303 682 808 Adjusted EBIT* 475 1,008 893 Net assets 954 1,364 1,899 *Adjusted for rentals paid on property and other assets being acquired as part of the Acquisition and Property Purchase and for certain other payments made in relation to shareholder directors. Milbury has 53 staff and is headed by Robert Honey as Managing Director, who is one of the original founders of the business and who is being retained under consultancy arrangements for a period of six months. Background to and reasons for the Acquisition Eleco's subsidiary, Bell & Webster Concrete, is a major part of the Building Systems operations of the Eleco Group. The Board of Eleco and the management of Bell & Webster Concrete and Milbury have identified a number of positive reasons why the businesses of Bell & Webster and Milbury would complement each other and have identified a number of product, marketing and geographical synergies that they believe will benefit both businesses. Some of these opportunities are summarised below: - Milbury provides new market opportunities for Eleco. For example, its pre-stressed business is an area into which Eleco has considered expanding. - Milbury is in a strategic geographical location for Eleco's concrete business enabling it to expand into areas where Milbury's lower transportation costs could be advantageous. - Milbury's agricultural products complement the retaining walls business of Bell & Webster Concrete. - Milbury has an established position as a provider of environmental control products for flood prevention and storage tanks in steel and concrete for water and waste management. - Eleco considers that the opportunity exists for investing in production facilities at Milbury's site to facilitate expansion of production, including of products currently manufactured by Bell & Webster Concrete and to improve operational efficiencies. Terms of the Acquisition The consideration of up to £6.035 million comprises the payment of £2.78 million in cash (to be satisfied out of the Company's existing resources) and the issue of the Placing Shares and the Consideration Shares. In addition, Eleco will be acquiring a freehold property owned by The Milbury Systems Retirement and Benefits Scheme for a total cash consideration of £1,030,000. Save for deferred consideration of £75,000, which is contingent on the EBITDA of Milbury for the year ending 31 December 2007 being not less than £1.247 million, the consideration is to be satisfied on completion, which will be following Admission which is anticipated to occur on 21 November 2007. Under the share purchase agreement the Vendors have given warranties and indemnities in relation to Milbury and its business (including a covenant in relation to taxation). These are subject to certain financial and other limitations. The Placing Shares have been placed, conditional upon Admission, with Delta Lloyd at a price of 101p per share on behalf of the Vendors. This price represents a discount of approximately 5.2 per cent. to the closing mid market price of the existing Ordinary Shares on 14 November 2007 (the business day immediately preceding the publication date of this announcement). The Placing Shares will represent approximately 5.0 per cent. of the enlarged issued share capital of the Company. Collins Stewart Europe Limited is acting exclusively for Eleco and for no one else in relation to the Acquisition and will not regard any other person as its client nor be responsible to anyone other than Eleco for providing the protections afforded to clients of Collins Stewart Europe Limited, nor for providing advice in relation to the Acquisition or any other matter referred to in this announcement. Collins Stewart Europe Limited is authorised and regulated by the Financial Services Authority. - ENDS - This information is provided by RNS The company news service from the London Stock Exchange