Eleco PLC Annual Results: Revenue Up 20%, Recurring Revenue Hits Record 81%

Adjusted profit up strongly, statutory profit down sharply: the Veeuze impairment explained

This is the part private investors need to read carefully. On an adjusted basis, Eleco had a very good year: adjusted operating profit rose 40% to £7.3 million, adjusted profit after tax rose 24% to £5.2 million, and adjusted basic earnings per share increased to 6.3p.

On a statutory basis, it looks much weaker. Profit before tax fell 35% to £2.8 million and profit after tax dropped 61% to £1.3 million, mainly because Eleco impaired Veeuze by £2.3 million before later disposing of it post year end.

An impairment is basically an accounting write-down, where management admits an asset is worth less than previously thought. It is non-cash in the year it is booked, but it still matters because it tells you that part of the portfolio was underperforming badly enough to need a reset.

My view is that investors should not ignore the statutory decline, but they also should not panic over it. The underlying trading across the core software operations looks healthy, and the group has now exited the weaker non-core business.

Cash generation, debt-free balance sheet and dividend growth all strengthen the case

One of the most reassuring parts of this update is the cash performance. Eleco finished 2025 with £16.3 million of cash, up from £14.0 million, despite spending £4.6 million on the Pemac acquisition and paying higher dividends.

Free cash flow rose 30% to £8.2 million, and the group remains debt free. That gives Eleco flexibility to invest in product development, fund acquisitions from internal resources and still return cash to shareholders.

The dividend increase looks well supported by the balance sheet. The final dividend was lifted to 0.85p per share, taking the total for the year to 1.20p, up 20% from 1.00p.

Pemac acquisition, Kivue deal and Veeuze disposal show a clearer strategic direction

Eleco was busy on the corporate front. In January 2025 it bought Pemac, an Irish SaaS provider of computerised maintenance management software, for an acquisition cost of £6.4 million, including £5.5 million cash and £0.9 million deferred earn-out consideration.

That deal already looks helpful. Pemac contributed £2.7 million of revenue and £0.8 million of profit before tax in the eleven and a half months since acquisition, according to the RNS.

After the year end, Eleco also acquired Kivue for an enterprise value of £2.3 million, made up of about £1.8 million cash and about £0.5 million in equity. The fair value of net assets and goodwill for Kivue is not disclosed yet, with fuller IFRS 3 details promised in the 2026 interim results.

Then there is Veeuze, which has gone the other way. The disposal price was a nominal €1 upfront plus a share of profit after tax over five years, capped at €250,000, although Eleco is also providing a €1.5 million financing package. That tells you the business was more of a burden than a prize, but the disposal should stop ongoing losses and cash drain.

AI, Asta software launches and product investment support organic growth

Eleco is not just buying growth. Organic revenue growth was 11%, which is a solid number in its own right, and the company continues to invest heavily in research and development at £5.8 million, equal to 15% of revenue.

The product side looks active. Highlights included Asta Vision Plus, which adds API-led integration and supports structured data access for AI tools, and the post year end UK release of Asta Estimate, which combines cost, carbon and scheduling into one workflow.

I also like the fact that management is pitching AI as a support tool rather than a replacement for human judgement. In construction, infrastructure and asset management, that is a more sensible position than pretending everything can be handed over to automation.

What looks strong and what still needs watching in Eleco shares

The positives are clear: recurring revenue is rising fast, margins remain high at 89.6%, cash generation is strong, the balance sheet has no debt, and management says results came in ahead of market expectations for revenue, adjusted profitability and cash.

There are still some weak spots. Revenue from CAD and Visualisation fell to £5.8 million from £6.5 million, Germany remained difficult, US total revenue was 6% lower due to non-repeat service orders, and the reported tax rate was high at 53.8%, or 29.5% excluding the non-tax effecting impairment.

Share-based payment costs also jumped to £0.7 million from £0.1 million, which is not ideal, though management explains that part of the prior year was flattered by option forfeitures. None of this ruins the story, but it does mean investors should keep one eye on cost discipline and integration execution.

My verdict on Eleco’s 2025 annual results

I think this is a good result dressed up in awkward accounting. The core business looks healthier, more predictable and more scalable than it did a year ago, while the Veeuze impairment and disposal seem like a cleanup job that probably needed doing.

If you focus on the direction of travel, Eleco is becoming a more concentrated software group with better recurring revenue, stronger cash conversion and a broader product set after Pemac and Kivue. That does not make it risk free, but it does make the investment case easier to understand.

For retail investors, the main takeaway is simple. Eleco appears to be trading well underneath the bonnet, and once the non-core noise clears, 2026 could show a cleaner picture of what this business can really earn.