Interim Results
Clarke(T.) PLC
17 August 2007
T Clarke plc
Interim Results for the six months to 30 June 2007
T CLARKE INCREASES DIVIDEND AT INTERIM STAGE
T. Clarke plc, the electrical engineering and contracting company, has announced
its interim results for the six months to 30 June 2007.
• Profit Before Tax £3.9m (2006: £4.0m)
• Turnover £96m (2006: £100m)
• Basic EPS 6.55p (2006: 6.76p)
• Interim dividend up 6% to 3.9p (2006: 3.675p)
• Order book increased to £205m (2006: £175m)
Major completions include:
- 02 Arena, Greenwich, London
- Unilever Building, Blackfriars, London
- Allen & Overy, Bishopsgate, London
- Maidstone PPP Hospital
Current projects include:
- Westfield, London
- 201 Bishopsgate and Broadgate Tower, London
- RBS, Aldgate Union, London
- ABN Amro Bank, London
- HMP Lindholme
- St Johns College, Cambridge
Major projects won include:
- Ropemaker Place, London, EC2
- BP 2, Canary Wharf
- Kent International Airport
- MOD Tidworth Garrison
- Shires, Leicester
- Gloucester Quays
Repeat business won with range of clients including; Credit Suisse; Bank of
America; Deutsche Bank, Waitrose Stores, JD Sports, McCarthy & Stone; and Greggs
Bakeries.
Pat Stanborough, Chief Executive commented:
' Despite the recent difficulties the group has faced, the outlook is
encouraging. Whilst there are challenges ahead of us, our market is growing in
all sectors. We are confident that following the expected improvement in the
performance of our regional businesses, the group going forward will achieve
the desired revenues and margins.
' We have won a number of important new projects and our forward order book has
grown to £205m, of which £105m is scheduled for completion this year. '
-ends-
Date: 17 August 2007
For further information contact:
T. Clarke plc cityPROFILE
Pat Stanborough, Chief Executive Simon Courtenay
Victoria French, Finance Director William Attwell
Tel: 020-7358-5000 Tel: 020-7448-3244
web: www.tclarke.co.uk
CHAIRMAN'S STATEMENT
INTERIM RESULTS FOR THE HALF YEAR TO 30 JUNE 2007
The interim results are in line with management expectations and are made up of
an improving situation in our London operations offset by specific difficulties
at two of our regional companies. As outlined in the Operations Review, rigorous
action has been taken to address these specific problems, although the full
benefits from this are unlikely to show through until 2008.
We are encouraged by the good performances of the other regional businesses and
by the uplift in activity evident in our core operations which will begin to
come through in the second half of this year and into 2008.
A small decrease in overall turnover in the first half reflects the stage in our
completion cycle, whilst for the group as a whole net margins were broadly
unchanged from the first half of 2006 figure. Cost control and cash generation,
together with the optimization of profits from our regional companies, continue
to be the key objectives for the group over the next year.
Our outlook for the full year is unchanged, and with the excellent prospects for
construction activity country wide, and especially in the South-East leading up
to the London Olympics in 2012, the Board is increasing the interim dividend by
6.12% to 3.9p per share.
At the end of July our Finance Director and Company Secretary, John Daly, left
us to pursue other interests and we wish him well for the future. In John's
place we welcome Victoria French who I am sure will make a major contribution to
the T. Clarke Group.
We can look forward to building upon long term relationships with our clients,
delivering successful projects and a brighter future ahead of us.
R.J.Race
Chairman
17th August 2007
BUSINESS REVIEW
OPERATIONS REVIEW
Our core operations in London and the South East are currently operating at
around 80% of capacity and we are expecting to report a turnover of £90m from
this division for this year. We are confident that the business will continue to
grow and, we are taking steps to increase our capacity in anticipation of a
significant increase in our workload. We are continuing our apprentice intake
and we expect to have over 100 apprentices in various stages of training by the
year end.
The core operations are in excellent shape and we are well positioned to take on
the challenging demands of the current commercial property development boom and
in the run-up to the London Olympics in 2012. Despite a small fall in revenues
in the first six months compared to the same period in 2006, a steady
improvement in margins was achieved as a result of successful project
completions during the period. The forward order book stands at £115m of which
£50m is scheduled for completion this year.
Whilst most of our regional businesses are performing well, we are still
experiencing difficulties in two specific businesses. Senior management changes
have taken place and we will continue to support the new team and review the
performance of these operations. We are confident that these problems will be
overcome and overall our regional business revenues and margins will be much
stronger going forward. Turnover from our regional businesses for this year is
expected to be around £110m. The forward order book is £90m of which £55m is
scheduled for completion this year.
Completions
Completions during the period under review include; 02 arena, Greenwich;
Unilever Building, Blackfriars, EC4; Allen & Overy, Bishopsgate, EC2; Maidstone
PPP Hospital; Huddersfield Media Centre; Liberty Village, Phase I, Lakenheath;
Strodes College, Egham, Surrey; HOPPS (Home Office) Liverpool; Homerton College,
Cambridge; and Garden Jubilee Hospital, Glasgow.
Current Major Projects
Westfield London; 201 Bishopsgate and Broadgate Tower,EC2; RBS Aldgate
Union,EC3; ABN Amro Bank, EC2; HMP Lindholme; South Lynn Millenium Village;
Grand Arcade, Cambridge; Victoria Building, Liverpool; St Johns College,
Cambridge; and Bellsdyke Hospital, Stirlingshire.
Recently Won Contracts
Ropemaker Place, EC2; BP2 Canary Wharf; DLR 3 Car Upgrade; Kent International
Airport; Prince Henry's School, Leeds; MOD Tidworth Garrison; Shires, Leicester;
Barratt Homes, Edinburgh; and Gloucester Quays.
We continue to receive repeat business from; Credit Suisse; Bank of America;
Deutsche Bank, Waitrose Stores, JD Sports, McCarthy & Stone; and Greggs
Bakeries.
Outlook
Whilst still challenging, our market is growing in all sectors, and there are
many opportunities ahead of us. Following the expected improvement in the
performance of our regional businesses, we are confident that the group going
forward will achieve the desired revenues and margins. The group's forward order
book stands at £205m (2006: £175m), of which £105m is scheduled for completion
this year.
Financial Review
Turnover and operating profit
Turnover for the half year decreased by 3.7% to £96.5m (2006: £100.2m). Turnover
in London was £40.8m (2006: £42.4m) and turnover in the regions decreased by
3.5% to £55.7m (2006: £57.8m).
Group operating profit decreased by 4.4% to £3.9m (2006: £4.1m) and operating
margin was static from the same period last year at 4.1%. Administrative
expenses decreased by 11% to £10.3m partly due to a reduction in staff costs and
a reduction in one-off bad debts.
Group operating profit in the core operations in London was £2.3m (2006: £2.1m)
representing an 11% increase from prior year. Operating margin increased to 5.6%
in London (2006: 4.9%) mainly due to favourable completions in the period,
however, it is expected to reduce in the second half of the year as new projects
commence.
Group operating profit in the regional operations was £1.4m (2006: £1.8m), a
decrease of 23% as a result of problems experienced in two subsidiary companies.
As a result, regional operating margin decreased to 2.5% (2006: 3.1%).
Group operating profit from property rental was £0.2m (2006: £0.2m).
Profit before tax
Group profit before tax was £3.9m (2006: £4.0m) which represents a 3.6% decrease
from prior year.
Profit after tax
Group profit after tax was down 3% to £2.6m (2006: £2.7m) after taxation of
£1.3m (2006: £1.3m). The effective tax rate was 33% (2006: 33%).
Net profit margin was static at 2.7% compared to the same period last year.
Earnings per share and dividends
Earnings per share decreased 0.2p or 3% to 6.55p (2006: 6.76p).
However, the interim dividend will be increased by 6.12% to 3.9p per share
(2006: 3.675p) as a measure of the confidence that management have in the
business going forward. The dividend will be paid on 28th September to those
shareholders on the register as at 31st August.
Cash flow
Net cash generated from operating activities was £3m compared with net cash
absorbed of £0.5m in 2006. After the final dividend payment of £2.9m (2006:
£2.8m), net capital expenditure of £0.2m (2006: £0.3m) and payments for tax and
finance costs, there was a net increase of cash and cash equivalents of £1m
(2006: decrease of £2.8m). The improved cash position is mainly due to an
improvement in the cash cycle in our core London operations and due to the
regional companies pursuing debt collection.
Pension obligations
The actuarial gain on the defined benefit scheme of £3.4m (2006: £1.9m) has been
recognised in reserves on the balance sheet and reflects an increase in the
discount rate (from 5.2% to 5.8%). As a result the pension scheme deficit after
taxation has reduced to £2.1m (2006: £3m).
Pat Stanborough Victoria French
Chief Executive Finance Director
17th August 2007 17th August 2007
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
30 06 2007 30 06 2006 31 12 2006
£'000 £'000 £'000
Revenue 96,489 100,197 186,334
Cost of Sales 82,239 84,416 159,217
-------- -------- --------
Gross Profit 14,250 15,781 27,117
Administrative Expenses 10,335 11,684 20,394
-------- -------- --------
Profit from Operations 3,915 4,097 6,723
Finance Cost (31) (69) (146)
-------- -------- --------
Profit Before Taxation 3,884 4,028 6,577
Taxation 1,267 1,329 2,063
-------- -------- --------
Profit for the period from
continuing operations 2,617 2,699 4,514
Earnings per share 6.55p 6.76p 11.30p
======== ======== ========
GROUP STATEMENT OF RECOGNISED INCOME & EXPENSE
Actuarial gains/(losses) on
pension scheme 3,394 1,893 (85)
-------- -------- -------
Tax on items taken directly to
equity (1,018) (568) 25
-------- -------- -------
Net income recognised directly
in equity 2,376 1,325 (60)
-------- -------- -------
Profit for the period 2,617 2,699 4,514
-------- -------- -------
Total recognised income &
expense for the period 4,993 4,024 4,454
======== ======== =======
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
6 months to 6 months to 12 Months to
30 06 2007 30 06 2006 31 12 2006
£'000 £'000 £'000
Non current assets
Goodwill 14,385 14,385 14,385
Tangible fixed assets 7,864 8,335 7,965
Deferred taxation 23 61 66
-------- -------- --------
22,272 22,781 22,416
-------- -------- --------
Current assets
Construction contracts inventories 9,843 15,373 14,371
Debtors 29,500 28,836 23,025
Cash and cash equivalents 6,143 2,039 5,182
-------- -------- --------
45,486 46,248 42,578
-------- -------- --------
Total assets 67,758 69,029 64,994
======== ======== ========
Current liabilities
Bank overdraft 3,489 3,238 2,274
Corporation tax liabilities 1,256 1,427 1,769
Creditors and accruals 35,835 37,154 33,437
-------- -------- --------
40,580 41,819 37,480
Net current assets 4,906 4,429 5,098
-------- -------- --------
Non current liabilities
Retirement benefit obligation 2,088 3,004 4,441
Other 254 388 294
-------- -------- --------
2,342 3,392 4,735
-------- -------- --------
Total liabilities 42,922 45,211 42,215
-------- -------- --------
Net assets 24,836 23,818 22,779
======== ======== ========
Equity
Share capital 3,995 3,995 3,995
Share premium 1,234 1,234 1,234
Profit and loss account 19,575 18,556 17,518
Revaluation reserve 32 33 32
-------- -------- --------
Total equity 24,836 23,818 22,779
======== ======== ========
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 Months to 6 Months to 12 Months to
30 06 2007 30 06 2006 31 12 2006
£'000 £'000 £'000
Net cash from operating
activities (see note 5) 3,005 (556) 5,201
====== ====== ======
Investing activities
Interest received 58 75 114
Purchase of tangible fixed assets (267) (287) (471)
Receipts on disposal of fixed assets 68 12 196
------ ------ ------
Net cash used in investing activities (141) (200) (161)
====== ====== ======
Financing activities
Equity dividends paid (2,936) (2,796) (4,264)
Repayments of obligations under
finance leases (182) (164) (385)
Increase/(decrease) in bank overdrafts 1,215 927 (37)
------ ------ ------
Net cash (used in)/from
financing activities (1,903) (2,033) (4,686)
======= ======= =======
Net increase/(decrease) in cash
and cash equivalents 961 (2,789) 354
Cash and cash equivalents at
beginning of period 5,182 4,828 4,828
------ ------ ------
Cash and cash equivalents at
end of period 6,143 2,039 5,182
======= ======= =======
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months to 6 months to 12 Months to
30 06 2007 30 06 2006 31 12 2006
£'000 £'000 £'000
Balance at start of 22,779 22,590 22,590
period
Profit for period 2,617 2,699 4,513
Interim dividend paid - - (1,468)
Prior year final dividend paid (2,936) (2,796) (2,796)
Actuarial gains/(losses)on defined
benefit pension scheme 3,394 1,893 (85)
Corporation tax provision on
pension benefits. (1,018) (568) 25
-------- ------- -------
Balance at end of period 24,836 23,818 22,779
======== ======= =======
Notes to the interim financial statements
1. Accounting policy
The financial statements have been prepared using accounting policies consistent
with those adopted for the year ended 31st December 2006. The results for the
half year are unaudited.
2. Earnings per share
Earnings per share are calculated on the basis of the weighted average of
39,947,889 ordinary shares in issue (2006: 39,947,889) and profit attributable
to shareholders of £2,617,000 (2006: £2,699,000).
3. Interim Dividend
An interim dividend of 3.9p per share (2006: 3.675p) was approved by the board
on 16th August 2007 and has not been included as a liability as at 30 June 2007.
The shares will go ex-dividend on 29th August 2007 and the dividend will be paid
on 28th September 2007 to shareholders on the register as at 31st August 2007. A
dividend reinvestment plan is available for shareholders. Those shareholders who
have not elected to participate in this plan, and who would like to participate
with respect to the 2007 interim dividend, may do so by contacting Capita
Registrars on 0870 162 3131. The last day for election for the interim dividend
reinvestment is 31 August 2007 and any requests should be made in good time
ahead of that date.
4. Pension commitments
The present value of the defined benefit pension scheme, the related past and
current service costs were measured using the projected unit credit method. The
amount included in the balance sheet arising from the group's obligations in
respect of its defined benefit retirement scheme is as follows:
June 2007 June 2006 Dec 2006
£'000 £'000 £'000
Present value of defined
benefit obligations (21,925) (21,102) (24,035)
Fair values of assets 18,942 16,810 17,692
-------- -------- --------
Deficit in scheme (2,983) (4,292) (6,343)
-------- -------- --------
Related deferred tax asset 895 1,288 1,902
-------- -------- --------
Liability recognised in the
balance sheet (2,088) (3,004) (4,441)
-------- -------- --------
The key assumptions used:
Rate of increase in salaries 4.50% 4.10% 4.25%
Rate of increase in pensions in payment 3.10% 2.70% 2.90%
Discount rate 5.80% 5.20% 5.10%
Inflation assumption 3.50% 3.10% 3.25%
Expected return on scheme assets 7.40% 6.80% 6.70%
-------- -------- --------
5.
Reconciliation of Operating Profit to Net Cash from Operating Activities:
Unaudited Unaudited Audited
6 Months 6 Months Year
Ended Ended Ended
30 06 2007 30 06 2006 31 12 2006
£'000 £'000 £'000
Profit from operations 3,915 4,097 6,723
Depreciation charges 450 478 939
Increase / (decrease) in provisions 5 45 (5)
Loss / (profit) on sale of
fixed assets 33 4 (5)
------- ------- -------
Operating cash flow before 4,403 4,624 7,652
movements in working capital
Increase in debtors (6,475) (6,882) (1,071)
Decrease in work in progress 4,528 2,342 3,344
Increase / (decrease) in creditors 2,398 1,669 (1,999)
Cash generated by operations 4,854 1,753 7,926
Corporation tax paid (1,766) (2,195) (2,527)
Interest paid (83) (114) (198)
------- ------- -------
Net cash from operating activities 3,005 (556) 5,201
======= ======= =======
6. The interim report will be circulated to members on 22 August 2007, from
which date copies will be available at or on application to the Company
Secretary at the Company's registered office: T. Clarke Plc, Stanhope House,
116-118 Walworth Road, London, SE17 1JY, or via the Company's website,
www.tclarke.co.uk or telephone: 020-7358-5000.
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